Exhibit 10.1

Execution Version

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 3, 2019,
is made by and among REGULUS THERAPEUTICS INC., a Delaware corporation (the
“Company”), and the Purchasers listed on Exhibit A hereto, together with their
permitted transferees (each, a “Purchaser” and collectively, the “Purchasers”).

RECITALS:

A. The Company and the Purchasers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by
Section 4(a)(2) of the Securities Act.

B. The Purchasers desire to purchase and the Company desires to sell, upon the
terms and conditions stated in this Agreement, shares of Common Stock (the
“Common Shares”), warrants to purchase Common Stock (“Warrants”) and shares of
Class A Convertible Preferred Stock (the “Preferred Shares” and, together with
the Common Shares, the “Shares”), having an aggregate purchase price of up to
$41,842,218.87 as more fully described in this Agreement.

C. The capitalized terms used herein and not otherwise defined have the meanings
given them in Article 7.

AGREEMENT

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

ARTICLE 1

PURCHASE AND SALE OF SECURITIES

1.1    Initial Closing.

(a)    Purchase and Sale of Securities. At the initial closing of the
transaction contemplated by this Agreement (the “Initial Closing”), the Company
will sell and issue to each Purchaser, and each Purchaser will, severally and
not jointly, purchase from the Company, (A) the number of Common Shares equal to
(x) the dollar amount set forth opposite such Purchaser’s name on Exhibit A
hereto under the heading “Initial Closing Common Shares Subscription Amount”
divided by (y) the Initial Market Price, rounded down to the nearest whole
share; provided, however, in the event the number of Common Shares resulting
from the foregoing calculation would result in such Purchaser, together with its
Attribution Parties, beneficially owning in excess of the Beneficial Ownership
Limitation of the outstanding Common Stock immediately after the Initial
Closing, then (i) the number of Common Shares otherwise issuable to such
Purchaser at the Initial Closing will be reduced by the number (such number, the
“Initial Overage Number”) of Common Shares that would result in such Purchaser
beneficially owning, together with its Attribution Parties, no more than the
Beneficial Ownership Limitation of the outstanding Common Stock immediately
after the Initial Closing, and (ii) the Company will issue to such Purchaser at
the Initial Closing the maximum number of whole Preferred Shares which are
convertible (in the aggregate and without regard to any conversion limitations)
into a number of Preferred Conversion Shares that does not exceed the Initial
Overage Number; and (B) a Warrant in the form attached hereto as Exhibit B
exercisable for a number of shares of Common Stock equal to the number of Common
Shares purchased by the Purchaser at the Initial Closing plus, if applicable,
the number of Preferred Conversion Shares issuable upon conversion of the
Preferred Shares purchased by the Purchaser at the Initial Closing. The Common
Shares, Warrants and Preferred Shares to be issued in the Initial Closing are
collectively referred to herein as the “Initial Closing Securities”.

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(b)    Payment. At the Initial Closing, each Purchaser will pay to the Escrow
Agent for the Initial Closing, by wire transfer of immediately available funds
in accordance with the Escrow Agreement for the Initial Closing, the amount set
forth opposite its name on Exhibit A hereto under the heading “Initial Closing
Common Shares Subscription Amount” plus the product of (x) $0.125 multiplied by
(y) each share of Common Stock issuable upon exercise of the Warrant (without
regard to any exercise limitations set forth in the Warrant) to be issued to
such Purchaser at the Initial Closing (the “Initial Closing Warrant Subscription
Amount”). The Company will (i) instruct its transfer agent to credit each
Purchaser the number of Common Shares purchased by the Purchaser pursuant to
Section 1.1 hereof (and, upon request, will deliver stock certificates to such
Purchaser representing such Common Shares), (ii) deliver to each Purchaser the
Warrant purchased by such Purchaser pursuant to Section 1.1 hereof and (iii) if
applicable, issue a certificate evidencing the Preferred Shares purchased by
such Purchaser pursuant to Section 1.1 hereof.

(c)    Initial Closing Date. The Initial Closing will take place as soon as
reasonably practicable after the date hereof but no later than May 7, 2019 (the
date on which the Initial Closing actually occurs, the “Initial Closing Date”)
and the Initial Closing will be held remotely via the exchange of documents and
signatures, or at such other time and place as agreed upon by the Company and
the Purchasers subscribing for a majority of the Initial Closing Securities to
be sold and issued in the Initial Closing hereunder (the Preferred Shares to be
counted on an as-converted-to-common-stock basis), based on the amounts set
forth on Exhibit A hereto under the heading “Initial Closing Common Shares
Subscription Amount”.

1.2    Milestone Closing.

(a)    Purchase and Sale of Securities. In the event the Company’s Board of
Directors unanimously resolves to recommence the Phase 1 multiple ascending dose
clinical trial of its RGLS4326 product candidate for the treatment of autosomal
dominant polycystic kidney disease (ADPKD) (the “Phase 1 Trial”) based on
correspondence from the FDA’s Division of Cardiovascular and Renal Products, and
thereafter but on or before December 31, 2019 the Company makes a public
announcement of its plan to recommence the Phase 1 Trial (the “Public
Announcement”), there shall be a closing under this Agreement (the “Milestone
Closing” and, together with the Initial Closing, the “Closings” and each a
“Closing”) at which the Company will sell and issue to each Purchaser, and each
Purchaser will, severally and not jointly, purchase from the Company, the
maximum number of whole Preferred Shares which are convertible (in the aggregate
and without regard to any conversion limitations) into a number of Preferred
Conversion Shares that does not exceed the quotient of (x) the dollar amount set
forth opposite such Purchaser’s name on Exhibit A hereto under the heading
“Milestone Closing Shares Subscription Amount” divided by (y) the Milestone
Price, rounded down to the nearest whole share; and (B) a Warrant in the form
attached hereto as Exhibit B exercisable for a number of shares of Common Stock
equal to the number of Preferred Conversion Shares issuable upon conversion of
the Preferred Shares purchased by the Purchaser at the Milestone Closing. The
Preferred Shares and the Warrants to be issued in the Milestone Closing are
collectively referred to herein as the “Milestone Securities” and, together with
the Initial Closing Securities, are referred to herein as the “Securities”.

(b)    Payment. At the Milestone Closing, each Purchaser will pay to the
applicable Escrow Agent for the Milestone Closing, by wire transfer of
immediately available funds in accordance with the applicable Escrow Agreement
for the Milestone Closing, the amount set forth opposite its name on Exhibit A
hereto under the heading “Milestone Closing Shares Subscription Amount” plus the
product of (x) $0.125 multiplied by (y) each share of Common Stock issuable upon
exercise of the Warrant (without regard to any exercise limitations set forth in
the Warrant) to be issued to such Purchaser at the Milestone Closing (the
“Milestone Closing Warrant Subscription Amount”). The Company will deliver to
each Purchaser (i) a certificate evidencing the Preferred Shares purchased by
such Purchaser pursuant to Section 1.2 hereof and (ii) the Warrant purchased by
such Purchaser pursuant to Section 1.2 hereof.

 

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(c)    Milestone Closing Date. The Milestone Closing will take place as soon as
reasonably practicable after the Public Announcement, but no later than the
fifth Business Day after the determination of the Milestone Price (the date on
which the Milestone Closing actually occurs, the “Milestone Closing Date”), or
at such other time and place as agreed upon by the Company and the Purchasers
subscribing for a majority of the Milestone Securities to be sold and issued in
the Milestone Closing hereunder (the Preferred Shares to be counted on an
as-converted-to-common-stock basis), based on the amounts set forth on Exhibit A
hereto under the heading “Milestone Closing Shares Subscription Amount”.
Notwithstanding any other provision of this Agreement, if the Alternative
Milestone Price is less than $0.50 per share (as adjusted for any stock splits
or combinations occurring after the date of this Agreement), then the Milestone
Closing will not occur and no party to this Agreement will have any right or
obligation to sell, issue or purchase the Milestone Securities.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as specifically contemplated by this Agreement, the Company hereby
represents and warrants to the Purchasers and the Placement Agent as of the date
of this agreement that:

2.1    Good Standing of the Company. The Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to own
its property and to conduct its business as described in the reports, schedules,
forms, statements and other documents required to be filed by it with the SEC,
pursuant to the reporting requirements of the Exchange Act (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, the “SEC Documents”) and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a Material Adverse Effect on the Company.

2.2    Authorization of Capital Stock. The authorized capital stock of the
Company consists of 200,000,000 shares of Common Stock, $0.001 par value per
share, and 10,000,000 shares of Preferred Stock, $0.001 par value per share. As
of May 2, 2019, 10,817,916 shares of Common Stock were issued and outstanding
and no shares of Preferred Stock were issued or outstanding. The shares of
capital stock of the Company, including the Common Stock outstanding prior to
the issuance of the Securities, the shares of Common Stock issuable upon
exercise of the Warrants (the “Warrant Shares”) and the shares of Common Stock
issuable upon conversion of the Class A Convertible Preferred Stock (the
“Preferred Conversion Shares” and, together with the Warrant Shares, the
“Conversion Shares”), have been duly authorized and are validly issued, fully
paid and non-assessable and were not issued in violation of the preemptive or
similar rights of any security holder of the Company.

2.3    Authorization of Shares. The Shares and Conversion Shares have been duly
authorized and, when issued and delivered in accordance with the terms of this
Agreement (and, in the case of the Warrant Shares, the Warrants, and in the case
of the Preferred Conversion Shares, the Certificate of Designation), will be
validly issued, fully paid and non-assessable, and the issuance of such Shares
and Conversion Shares will not be subject to any preemptive or similar rights of
stockholders of the Company.

2.4    Private Placement. Neither the Company nor any of its Affiliates, nor any
Person acting on its or their behalf, has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under any circumstances that would require registration of the Securities under
the Securities Act. Assuming the accuracy of the representations and warranties
of the Purchasers contained in Article 3 hereof, the issuance of the Securities
and the Conversion Shares are exempt from registration under the Securities Act.

 

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2.5    Authorization and Execution of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company. The Company has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.

2.6    Absence of Defaults and Conflicts. Except as otherwise disclosed in the
SEC Documents, the Company is not (i) in violation of its charter, by-laws or
similar incorporation or organizational documents or (ii) in violation or
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or other agreement or instrument to which the
Company is a party or by which it may be bound, or to which any of the property
or assets of the Company is subject (collectively, “Agreements and
Instruments”), except in the case of clause (ii), for such violations and
defaults that would not result in a Material Adverse Effect on the Company; and
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated in this Agreement, and compliance by the
Company with its obligations under this Agreement, do not and will not, whether
with or without the giving of notice or passage of time or both, conflict with
or result in a breach of any of the terms and provisions of, or constitute a
default or Repayment Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company pursuant to, the Agreements and Instruments, nor will such action
result in any violation of the provisions of the charter, by-laws or similar
organizational documents of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its assets, properties or operations, except in each case
(other than with respect to such charter, by-laws or similar organizational
documents of the Company) for such conflicts, violations, breaches or defaults
which would not reasonably be expected to result in a Material Adverse Effect on
the Company. As used herein, a “Repayment Event” means any event or condition
which gives the holder of any note, debenture or other evidence of indebtedness
that is material to the operations or financial results of the Company (or any
person acting on such holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company.

2.7    Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, exemption, qualification or
decree of, any court or governmental authority or agency or any sub-division
thereof is required for the performance by the Company of its obligations
hereunder, in connection with the offering, issuance or sale of the Securities
and Conversion Shares under this Agreement or the consummation of the
transactions contemplated by this Agreement, except such as have been already
obtained or as may be required under the Securities Act or the rules and
regulations of the SEC thereunder, state securities or blue sky laws, the rules
and regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”)
or Nasdaq.

2.8    No Material Adverse Effect. Except as otherwise disclosed in the SEC
Documents, subsequent to the respective dates as of which information is given
in the SEC Documents: (a) the Company has not sustained any material loss or
material interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, (b) there has not been any change
in the capital stock or increase in short-term or long-term debt of the Company,
other than a change in the number of outstanding shares of Common Stock due to
the issuance of shares upon the exercise or settlement of outstanding options,
warrants or restricted stock units as described in the SEC Documents, and
(c) there has not occurred any Material Adverse Effect, or any development that
would result in a prospective Material Adverse Effect, in or affecting the
condition, financial or otherwise, or in or affecting the revenues, business,
assets, management, financial position, stockholders’ equity, operations or
results of operations or prospects of the Company.

2.9    Absence of Proceedings. There are no legal or governmental proceedings,
inquiries or investigations pending or, to the Company’s knowledge, threatened
to which the Company is a party or to which

 

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any of the properties of the Company is subject, other than proceedings
accurately described in all material respects in the SEC Documents or
proceedings that would not have a Material Adverse Effect on the Company, or on
the power or ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated by this Agreement.

2.10    Investment Company Act of 1940. The Company is not, and after giving
effect to the offering and sale of the Securities and the application of the
proceeds thereof as described herein will not be, required to register as an
“investment company” as such term is defined in the Investment Company Act of
1940, as amended.

2.11    Registration Rights. Except as described in the SEC Documents, there are
no contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the Company
or to require the Company to include such securities with the Shares and
Conversion Shares registered pursuant to a Registration Statement other than
rights that have been validly waived.

2.12    Title to Real and Personal Property. Except as set forth in the SEC
Documents, the Company has good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by it
which is material to the business of the Company, in each case free and clear of
all liens, encumbrances and defects, except such as are described in the SEC
Documents or such as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such
property by the Company; and any real property and buildings held under lease by
the Company are held by it 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 buildings by the Company.

2.13    Title to Intellectual Property. Except as disclosed in the SEC
Documents, the Company owns, possesses, licenses or has other rights to use all
patents, patent applications, trade and service marks, trade and service mark
registrations, trade names, copyrights, licenses, inventions, trade secrets,
technology, know-how and other intellectual property that, to the knowledge of
the Company, is necessary for the conduct of the Company’s business as now
conducted (as described in the SEC Documents, collectively, the “Company
Intellectual Property”), and, to the Company’s knowledge, the patents,
trademarks, and copyrights included within the Company Intellectual Property are
valid, enforceable, and subsisting. Except as set forth in the SEC Documents or
except in each case as would not reasonably be expected to have a Material
Adverse Effect on the Company: (a) there are no material rights of third parties
to any such Company Intellectual Property; (b) to the Company’s knowledge, there
is no material infringement by third parties of any such Company Intellectual
Property; (c) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others challenging the Company’s rights in
or to any such Company Intellectual Property; (d) there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Company Intellectual Property;
(e) there is no pending or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise violates
any patent, trademark, copyright, trade secret or other proprietary rights of
others; (f) to the Company’s knowledge, there is no U.S. patent which contains
claims that dominate any Company Intellectual Property described in the SEC
Documents or that interferes under 35 U.S.C. §102(g) with the pending claims of
any Company Intellectual Property; (g) to the Company’s knowledge, there is no
prior art of which the Company is aware that would render any U.S. patent held
by the Company invalid which has not been disclosed to the U.S. Patent and
Trademark Office (the “PTO”); and (h) the Company is not obligated to pay a
material royalty, grant a license, or provide other material consideration to
any third party in connection with the Company Intellectual Property. Except as
otherwise disclosed in the SEC Documents, to the Company’s knowledge, all
patents and patent applications owned by the Company and filed with the PTO or
any foreign or international patent authority (the “Company Patent Rights”) and
all patents and patent applications in-licensed by the Company and filed with
the PTO or any foreign or

 

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international patent authority (the “In-licensed Patent Rights”) have been duly
and properly filed; the Company has complied with their duty of candor and
disclosure to the PTO for the Company Patent Rights and, to the Company’s
knowledge, the licensors of the In-licensed Patent Rights have complied with
their duty of candor and disclosure to the PTO for the In-licensed Patent
Rights.

2.14    Insurance. Except as set forth in the SEC Documents, the Company is
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the business in
which it is engaged; the Company has not been refused any coverage sought or
applied for; and the Company does not have any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse Effect
on the Company.

2.15    Licenses and Permits. Except as set forth in the SEC Documents, the
Company possesses all certificates, authorizations, consents, approvals, orders,
licenses and permits issued by the appropriate federal, state or foreign
regulatory authorities (collectively, the “Permits”), including the FDA and any
other state, federal or foreign agencies or bodies engaged in the regulation of
pharmaceuticals or biohazardous materials, necessary to conduct its business as
now conducted and described in the SEC Documents, other than such certificates,
authorizations, consents, approvals, orders, licenses and permits, the lack of
which would not individually or in the aggregate have a Material Adverse Effect
on the Company. Except as otherwise disclosed in the SEC Documents, all of such
Permits are valid and in full force and effect, except where the invalidity of
such Permits or the failure to be in full force and effect, individually or in
the aggregate, would not have a Material Adverse Effect on the Company. Except
as otherwise disclosed in the SEC Documents, there is no pending or, to the
Company’s knowledge, threatened action, suit, proceeding or investigation that
individually or in the aggregate would reasonably be expected to lead to the
revocation, modification, termination, suspension or any other impairment of the
rights of the holder of any such Permit which revocation, modification,
termination, suspension or other impairment would have a Material Adverse Effect
on the Company.

2.16    Accounting Controls. The Company has taken all actions reasonably
necessary to ensure that, within the time period required by applicable law, the
Company will have established and will maintain a system of internal control
over financial reporting (as such term is defined in Rule 13a-15(f) under the
Exchange Act) sufficient to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with United States generally accepted
accounting principles (“U.S. GAAP”). Except as set forth in the SEC Documents,
since the end of the Company’s most recent audited fiscal year, there has been
(A) no material weakness in the Company’s internal control over financial
reporting (whether or not remediated) and (B) no change in the Company’s
internal control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

2.17    Disclosure Controls. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act)
that comply with the applicable requirements of the Exchange Act; and such
disclosure controls and procedures have been designed to ensure that material
information relating to the Company is made known to the Company’s principal
executive officer and principal financial officer by others within the Company.
The Company has carried out evaluations of the effectiveness of its disclosure
controls and procedures as required by Rule 13a-15 of the Exchange Act.

2.18    Independent Accountants. Ernst & Young LLP, who have certified the
financial statements and supporting schedules of the Company that are included
in the SEC Documents and which will be included as a part of the Registration
Statement, is an independent registered public accounting firm with respect to
the Company as required by the Securities Act and the rules and regulations of
the SEC thereunder.

 

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2.19    SEC Documents. The Company has timely filed the SEC Documents required
to be filed by it with the SEC since January 1, 2018, pursuant to the reporting
requirements of the Exchange Act. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

2.20    Financial Statements. (a) The financial statements included in the SEC
Documents, together with the related schedules and notes, present fairly, in all
material respects, the financial position of the Company at the dates indicated
and the statement of operations, stockholders’ equity and cash flows of the
Company for the periods specified; said financial statements have been prepared
in conformity with U.S. GAAP applied on a consistent basis throughout the
periods involved except, in the case of unaudited interim financial statements,
for normal year-end audit adjustments and the exclusion of footnotes. The
selected financial data and the summary financial information included in the
SEC Documents present fairly, in all material respects, the information shown
therein and have been compiled on a basis consistent in all material respects
with that of the audited financial statements included in the SEC Documents.
(b) Except as set forth in the SEC Documents, there are no off-balance sheet
arrangements, outstanding guarantees or other contingent obligations of the
Company that would reasonably be expected to have a Material Adverse Effect on
the Company. There are no transactions, arrangements or other relationships
between and/or among the Company, any of its affiliates (as such term is defined
in Rule 405 of the Securities Act) and any unconsolidated entity, including, but
not limited to, any structured finance, special purpose or limited purpose
entity, that would reasonably be expected to materially affect the Company’s
liquidity or the availability of or requirements for its capital resources
required to be described in SEC Documents which have not been described as
required.

2.21    Tax Liabilities and Reserves. Other than as set forth in the SEC
Documents, any tax returns required to be filed by the Company in any
jurisdiction have been filed and any taxes, including any withholding taxes,
excise taxes, penalties and interest, assessments and fees and other charges due
or claimed to be due from the Company have been paid, other than any of those
being contested in good faith and for which adequate reserves have been provided
or any of those currently payable without penalty or interest, except to the
extent that the failure to so file or pay would not result in a Material Adverse
Effect on the Company. There is no material proposed tax deficiency, assessment,
charge or levy against the Company, as to which a reserve would be required to
be established under U.S. GAAP, that has not been so reserved or that should be
disclosed in the SEC Documents that has not been so disclosed, except for any
such deficiency, assessment, charge or levy which, individually or in the
aggregate, would not have a Material Adverse Effect on the Company.

2.22    Related Party Transactions. Except as described in the SEC Documents, no
relationship, direct or indirect, exists between or among the Company, on the
one hand, and the directors, officers, stockholders, licensees, licensors or
suppliers of the Company, on the other hand, that is required to be described in
the SEC Documents which is not so described. There are no outstanding loans,
advances (except normal advances for business expense in the ordinary course of
business) or guarantees of indebtedness by the Company, to or for the benefit of
any of the officers or directors of the Company or any of their respective
family members, except as otherwise disclosed in the SEC Documents.

2.23    Commission Agreements. The Company is not a party to any contract,
agreement or understanding with any person that would give rise to a valid claim
against the Company or the Placement Agent for a brokerage commission, finder’s
fee or like payment in connection with any transaction contemplated by this
Agreement, except for dealings with the Placement Agent, whose commissions and
fees will be paid by the Company.

 

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2.24    Foreign Corrupt Practices Act. Except as otherwise disclosed in the SEC
Documents, neither the Company nor, to the Company’s knowledge, any of its
affiliates, directors, officers, employees, agents or other person acting on
behalf of the Company is aware of or has taken any action, directly or
indirectly, that would result in a material violation by such person of the
Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”), including, without limitation, making use of the mails
or any means or instrumentality of interstate commerce corruptly in furtherance
of an offer, payment, promise to pay or authorization of the payment of money,
or other property, gift, promise to give, or authorization of the giving of
anything of value to any “foreign official” (as such term is defined in the
FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA and the Company and, to
the Company’s knowledge, its affiliates have conducted their businesses in
material compliance with the FCPA and have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance therewith.

2.25    Use of Proceeds. The Company shall use the net proceeds of the sale of
the Securities hereunder for clinical development, working capital and general
corporate purposes.

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

2.27    No Reliance. The Company has not relied upon the Placement Agent or
legal counsel for the Placement Agent for any legal, tax or accounting advice in
connection with the offering and sale of the Securities.

2.28    No Manipulation of Stock. The Company has not taken, directly or
indirectly, any action designed to stabilize or manipulate the price of the
Common Stock or any security of the Company to facilitate the sale or resale of
any of the Securities.

2.29    The Nasdaq Capital Market. The Common Stock is listed on The Nasdaq
Capital Market, and to the Company’s knowledge, there are no proceedings to
revoke or suspend such listing. Except as otherwise disclosed in the SEC
Documents, the Company is in material compliance with the requirements of Nasdaq
for continued listing of the Common Stock thereon and any other Nasdaq listing
and maintenance requirements.

Any certificate signed by an authorized officer of the Company and required to
be delivered to the Placement Agent or to counsel for the Placement Agent in
connection with this Agreement shall be deemed to be a representation and
warranty by the Company to the Placement Agent as to the matters set forth
therein.

ARTICLE 3

PURCHASER’S REPRESENTATIONS AND WARRANTIES

 

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Each Purchaser represents and warrants to the Company and the Placement Agent,
severally and not jointly, with respect to itself and its purchase hereunder,
that as of each Closing:

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

3.2    Information. The Purchaser has been furnished with all relevant materials
relating to the business, finances and operations of the Company necessary to
make an investment decision, and materials relating to the offer and sale of the
Securities, that have been requested by the Purchaser, including, without
limitation, the SEC Documents, and the Purchaser has had the opportunity to
review the SEC Documents. The Purchaser has been afforded the opportunity to ask
questions of the Company. Neither such inquiries nor any other investigation
conducted by or on behalf of such Purchaser or its representatives or counsel
shall modify, amend or affect such Purchaser’s right to rely on the truth,
accuracy and completeness of the SEC Documents and the Company’s representations
and warranties contained in the Agreement.

3.3    Acknowledgement of Risk.

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

(b)    The Purchaser is able to bear the economic risk of holding the Securities
for an indefinite period, and has knowledge and experience in financial and
business matters such that it is capable of evaluating the risks of the
investment in the Securities; and

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

3.4    Governmental Review. The Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.

3.5    Transfer or Resale. The Purchaser understands that:

 

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

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

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

3.6    Legends.

(a)    The Purchaser understands the certificates or book entries representing
the Securities will bear a restrictive legend in substantially the following
form, in addition to any other legend required by applicable state securities
laws or as may be appropriate to legend any restrictions on transfer set forth
in this Agreement (and a stop-transfer order may be placed against transfer of
the certificates or book entries for such Securities):

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

(b)    To the extent the resale of any issued Shares or Warrant Shares is
registered under the Securities Act pursuant to an effective Registration
Statement, the Company agrees to promptly (i) authorize the removal of the
legend set forth in Section 3.6(a) and any other legend not required by
applicable law from such Shares or Warrant Shares and (ii) cause its transfer
agent to issue such Shares or Warrant Shares without such legends to the holders
thereof by electronic delivery at the applicable balance account at the
Depository Trust Company upon surrender of any stock certificates evidencing
such Shares or Warrant Shares. With respect to any Shares or Warrant Shares for
which restrictive legends are removed pursuant to this Section 3.6(b), the
holder thereof agrees to only sell such Shares or Warrant Shares when and as
permitted by the effective Registration Statement covering such resale and in
accordance with applicable securities laws and regulations, or in accordance
with Rule 144.

(c)    The Purchaser may request that the Company remove, and the Company agrees
to authorize the removal of any legend from any Shares or Warrant Shares issued
to such Purchaser (i) following

 

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any sale of such Shares or Warrant Shares pursuant to Rule 144, or (ii) if such
Shares or Warrant Shares are eligible for sale under Rule 144 following the
expiration of the one-year holding requirement under subparagraphs (b)(1)(i) and
(d) thereof and the Purchaser is not an affiliate of the Company, in each case
following receipt from the Purchaser of an appropriate certification to such
effect. Following the time a legend is no longer required for the Shares or
Warrant Shares under this Section 3.6(c), the Company will, no later than two
Trading Days following the delivery by a Purchaser to the Company or the
Company’s transfer agent of a legended certificate representing such securities
(if any) and appropriate certifications that the applicable requirements have
been satisfied (the “Securities Delivery Date”), deliver or cause to be
delivered to such Purchaser a certificate or evidence of book entry representing
such securities that is free from all restrictive and other legends or, in the
case of Common Shares, if requested by Purchaser, by crediting such Common
Shares to the account of the Purchaser or its designee with The Depository Trust
Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the
Company is then a participant in such system (“DWAC Delivery”); if the Company
fails for any reason to deliver Common Shares via DWAC Delivery (if the Company
is then a participant in DWAC) to a Purchaser as required by this Section 3.6(c)
(other than a failure caused by incorrect or incomplete information provided by
Purchaser to the Company), and if after such Securities Delivery Date such
Purchaser is required to or otherwise purchases (in an open market transaction
or otherwise), shares of Common Stock to deliver in satisfaction of a sale by
such Purchaser of the Common Shares which such Purchaser was entitled to receive
relating to such Securities Delivery Date (a “Buy-In”), then the Company shall
pay in cash to such Purchaser (in addition to any other remedies available to or
elected by such Purchaser) the amount by which (x) such Purchaser’s total
purchase price (including any brokerage commissions) for the shares of Common
Stock so purchased exceeds (y) the product of (1) the lesser of the (a) the
number of shares of Common Stock so purchased and (b) the aggregate number of
Common Shares that such Purchaser was entitled to receive for the Securities
Delivery Date multiplied by (2) the actual sale price at which the sell order
giving rise to such purchase obligation was executed (including any brokerage
commissions). For example, if a Purchaser purchases shares of Common Stock
having a total purchase price of $11,000 to cover a Buy-In with respect to
Common Shares that were not delivered via DWAC Delivery by the Securities
Delivery Date with respect to which the actual sale price (including any
brokerage commissions) giving rise to such purchase obligation was a total of
$10,000, the Company shall be required to pay such Purchaser $1,000. The
Purchaser shall provide the Company written notice, within three (3) Business
Days after the occurrence of a Buy-In, indicating the amounts payable to such
Purchaser in respect of such Buy-In together with applicable confirmations and
other evidence reasonably requested by the Company. Nothing herein shall limit a
Purchaser’s right to pursue any other remedies available to it hereunder, at law
or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely deliver
the Common Shares via DWAC Delivery as required pursuant to the terms hereof.

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

3.8    Residency. Unless the Purchaser has otherwise notified the Company in
writing, the Purchaser is a resident of the jurisdiction set forth immediately
below such Purchaser’s name on the signature pages hereto.

3.9    Acknowledgements Regarding Placement Agent.

 

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(a)    The Purchaser acknowledges that the Placement Agent is acting as
placement agent on a “best efforts” basis for the Securities being offered
hereby and will be compensated by the Company for acting in such capacity. The
Purchaser represents that (i) the Purchaser was contacted regarding the sale of
the Securities by the Placement Agent or the Company (or an authorized agent or
representative thereof) with whom the Purchaser entered into a verbal or written
confidentiality agreement and (ii) no Securities were offered or sold to it by
means of any form of general solicitation or general advertising as such terms
are used in Regulation D of the Securities Act.

(b)    The Purchaser represents that it is making this investment based on the
results of its own due diligence investigation of the Company, and has not
relied on any information or advice furnished by or on behalf of the Placement
Agent in connection with the transactions contemplated hereby. The Purchaser
acknowledges that the Placement Agent has not made, and will not make, any
representations and warranties with respect to the Company or the transactions
contemplated hereby, and the Purchaser will not rely on any statements made by
the Placement Agent, orally or in writing, to the contrary.

ARTICLE 4

COVENANTS

4.1    Reporting Status. The Company’s Common Stock is registered under
Section 12 of the Exchange Act. During the Registration Period, the Company will
timely file all documents with the SEC, and the Company will not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.

4.2    Expenses. The Company and each Purchaser shall be liable for, and will
pay, its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement, including, without limitation,
attorneys’ and consultants’ fees and expenses.

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

4.4    Securities Laws Disclosure; Publicity. On or before the fourth business
day following the date hereof, the Company shall file a Current Report on Form
8-K with the SEC describing the terms of the transactions contemplated by this
Agreement and including as an exhibit to such Current Report on Form 8-K this
Agreement, in the form required by the Exchange Act. From and after the filing
of such Current Report on Form 8-K, the Company represents to the Purchasers
that it shall have publicly disclosed the material terms and conditions of the
transactions contemplated by this Agreement.

4.5    Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by this Agreement, which shall be
disclosed pursuant to Section 4.4, 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 following the date of this Agreement that
constitutes, or the Company reasonably believes constitutes, material non-public
information, unless prior thereto such Purchaser has consented to the receipt of
such information and agreed with the Company to keep such information

 

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confidential. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company, provided that the Purchaser shall remain subject to applicable law.

4.6    Sales by Purchasers; Purchases Prior to the Initial Closing. Each
Purchaser will sell any Shares and, if applicable, any Conversion Shares held by
it in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
No Purchaser will make any sale, transfer or other disposition of the Securities
or, if applicable, Conversion Shares in violation of federal or state securities
laws. Between the date of this Agreement and the Initial Closing, each Purchaser
agrees that neither it nor any of such Purchaser’s Attribution Parties will
acquire any shares of Common Stock or any securities of the Company which would
entitle the holder thereof to acquire at any time Common Stock, other than the
Initial Closing Securities.

4.7    Reservation of Common Stock. The Company shall reserve and keep available
at all times during which the Warrants remain exercisable and the Preferred
Shares remain convertible, free of preemptive rights, a sufficient number of
shares of Common Stock for the purpose of enabling the Company to issue the
Conversion Shares pursuant to the Warrants and the Certificate of Designation,
as applicable.

4.8    Stockholder Approval. After the date of this Agreement and on or before
the 45th day following the Public Announcement (the “Stockholder Meeting
Deadline”), the Company shall, at its own expense, hold an annual or special
meeting of stockholders (the “Stockholder Meeting”), the proxy statement for
which shall solicit the affirmative approval of the Company’s stockholders of
the Company’s issuance of all of the Milestone Securities (and shares of Common
Stock issuable upon conversion or exercise thereof) at the Alternative Milestone
Price (based on the formula set forth in the definition of Alternative Milestone
Price) to the extent the Milestone Price is the Alternative Milestone Price
pursuant to the terms of this Agreement, in accordance with applicable law and
Nasdaq Listing Rule 5635 (such affirmative approval being referred to herein as
the “Stockholder Approval”), and the Company shall use its reasonable best
efforts to solicit the Stockholder Approval and to cause the Board of Directors
of the Company to recommend the Stockholder Approval to the Company’s
stockholders entitled to vote at the Stockholder Meeting. The Company shall be
obligated to use its reasonable best efforts to obtain the Stockholder Approval
by the Stockholder Meeting Deadline. If, despite the Company’s reasonable best
efforts the Stockholder Approval is not obtained on or prior to the Stockholder
Meeting Deadline, the Company shall cause an additional Stockholder Meeting to
be held every three (3) months thereafter until such Stockholder Approval is
obtained. Notwithstanding anything to the contrary contained in this
Section 4.8, the Company shall have no obligation to solicit or obtain the
Stockholder Approval if the Milestone Price is determined to be the Initial
Closing Price rather than the Alternative Milestone Price, and the Company shall
have no obligation to solicit or obtain the Stockholder Approval after March 31,
2020.

ARTICLE 5

CONDITIONS TO CLOSING

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

(a)    Receipt of Funds. The applicable Escrow Agent shall have received
immediately available funds in the full amount of the Initial Closing Common
Shares Subscription Amount and the Initial Closing Warrant Subscription Amount
or the Milestone Closing Shares Subscription Amount and the Milestone

 

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Closing Warrant Subscription Amount (collectively, “Subscription Amounts”), as
applicable and in accordance with the Escrow Agreement for the applicable
Closing, for the Securities being purchased in the applicable Closing hereunder
as set forth opposite such Purchaser’s name on Exhibit A hereto.

(b)    Representations and Warranties. The representations and warranties made
by each Purchaser in Article 3 shall be true and correct in all material
respects as of the applicable Closing Date.

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

(d)    Blue Sky. The Company shall have obtained all necessary blue sky law
permits and qualifications, or secured exemptions therefrom, required by any
state for the offer and sale of the Securities.

(e)    Nasdaq Qualification. The Shares to be issued shall be duly authorized
for listing by Nasdaq, subject to official notice of issuance, to the extent
required by the rules of Nasdaq.

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

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

(h)    Milestone Closing Stockholder Approval. In the event that the Milestone
Price is the Alternative Milestone Price, the Stockholder Approval shall have
been obtained on or before March 31, 2020.

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

(a)    Representations and Warranties. The representations and warranties made
by the Company in Article 2 shall be true and correct in all material respects
as of the applicable Closing Date.

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

(c)    Blue Sky. The Company shall have obtained all necessary blue sky law
permits and qualifications, or secured exemptions therefrom, required by any
state or foreign or other jurisdiction for the offer and sale of the Securities.

(d)    Nasdaq Qualification. The Shares to be issued shall be duly authorized
for listing by Nasdaq, subject to official notice of issuance, to the extent
required by the rules of Nasdaq.

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

(f)    Certificate of Designation. The Company shall have filed the Class A-1
Certificate of Designation with the Secretary of State of the State of Delaware
prior to the Initial Closing. In the event the

 

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Milestone Price is the Alternative Milestone Price, the Company shall have filed
the Class A-2 Certificate of Designation with the Secretary of State of the
State of Delaware prior to the Milestone Closing.

(g)    No Material Adverse Effect. There shall not have occurred any Material
Adverse Effect, or any development that could reasonably be expected to result
in a Material Adverse Effect, as of the applicable Closing.

(h)    Transfer Agent Instructions. The Company shall have delivered to its
transfer agent irrevocable instructions to issue to such Purchaser or in such
nominee name(s) as designated by such Purchaser in writing such number of Shares
set forth opposite such Purchaser’s name on Exhibit A hereto and the Warrants to
purchase the Warrant Shares set forth opposite such Purchaser’s name on Exhibit
A hereto.

(i)    Milestone Closing Stockholder Approval. In the event that the Milestone
Price is the Alternative Milestone Price, the Stockholder Approval shall have
been obtained on or before March 31, 2020.

ARTICLE 6

REGISTRATION RIGHTS

6.1    As soon as reasonably practicable, but in no event later than 30 days
after the Initial Closing Date (the “Initial Filing Date”), the Company shall
file a registration statement covering the resale of the Registrable Securities
related to the Initial Closing (and, if the Milestone Closing has occurred on or
before the Initial Filing Date, the Registrable Securities related to the
Milestone Closing), with the SEC for an offering to be made on a continuous
basis pursuant to Rule 415, or if Rule 415 is not available for offers and sales
of the Registrable Securities, by such other means of distribution of
Registrable Securities as the Holders of a majority of such Registrable
Securities may reasonably specify (the “First Initial Registration Statement”).
In the event that the Milestone Closing has not occurred on or before the
Initial Filing Date and the Registrable Securities related to the Milestone
Closing are not covered in the Initial Registration Statement, as soon as
reasonably practicable, but in no event later than 30 days after the Milestone
Closing Date (the “Milestone Filing Date”, and together with the Initial Filing
Date, the “Filing Date”), the Company shall file a registration statement
covering the resale of the Registrable Securities related to the Milestone
Closing with the SEC for an offering to be made on a continuous basis pursuant
to Rule 415, or if Rule 415 is not available for offers and sales of the
Registrable Securities, by such other means of distribution of Registrable
Securities as the Holders of a majority of such Registrable Securities may
reasonably specify (the “Milestone Initial Registration Statement” and, together
with the First Initial Registration Statement, the “Initial Registration
Statement”). The applicable Initial Registration Statement shall be on Form S-3
(except if the Company is ineligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on Form S-1)
and the Company shall effect the registration, qualifications or compliances
(including, without limitation, the execution of any required undertaking to
file post-effective amendments, appropriate qualifications or exemptions under
applicable blue sky or other state securities laws and appropriate compliance
with applicable securities laws, requirements or regulations) as promptly as
possible after the filing thereof, but in any event prior to the date which is
five days after the receipt of a notification of no-review in the event of no
review by the SEC, or 90 days after the applicable Filing Date in the event of a
review by the SEC. For purposes of clarification, any failure by the Company to
file the applicable Initial Registration Statement by the applicable Filing Date
or to effect such Registration Statement within such five days after the
notification of no-review or 90 days after the applicable Filing Date, as
applicable, shall not otherwise relieve the Company of its obligations to file
or effect the applicable Initial Registration Statement as set forth above in
this Section 6.1. In the event the SEC informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly

 

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(i) inform each of the Holders thereof, (ii) use its best efforts to file
amendments to the applicable Initial Registration Statement as required by the
SEC and/or (iii) withdraw the applicable Initial Registration Statement and file
a new registration statement (a “New Registration Statement”), in either case
covering the maximum number of applicable Registrable Securities permitted to be
registered by the SEC, on Form S-3 or, if the Company is ineligible to register
for resale the Registrable Securities on Form S-3, Form S-1; provided, however,
that prior to filing such amendment or New Registration Statement, the Company
shall be obligated to use its best efforts to advocate with the SEC for the
registration of all of the Registrable Securities. In the event the Company
amends the applicable Initial Registration Statement or files a New Registration
Statement, as the case may be, under clauses (ii) or (iii) above, the Company
will use its best efforts to file with the SEC, within 30 days following the
date allowed by the SEC, one or more registration statements on Form S-3 or, if
the Company is ineligible to register for resale the Registrable Securities on
Form S-3, Form S-1, to register for resale those Registrable Securities that
were not registered for resale on the applicable Initial Registration Statement,
as amended, or the New Registration Statement (the “Remainder Registration
Statements”). If the SEC limits the number of Registrable Securities permitted
to be registered on a particular Registration Statement (and notwithstanding
that the Company used diligent efforts to advocate with the SEC for the
registration of all or a greater number of Registrable Securities), any required
cutback of Registrable Securities (such Registrable Securities so cut back, the
“Cut Back Securities”) shall be applied to the Purchasers pro rata in accordance
with the number of such Registrable Securities sought to be included in such
Registration Statement by reference to the amount of Registrable Securities set
forth opposite such Purchaser’s name on Exhibit A (and in the case of a
subsequent transfer, the initial Purchaser’s transferee) relative to the
aggregate amount of all Registrable Securities.

6.2    All Registration Expenses incurred in connection with any registration,
qualification, exemption or compliance pursuant to Section 6.1 shall be borne by
the Company. All Selling Expenses relating to the sale of securities registered
by or on behalf of Holders shall be borne by such Holders pro rata on the basis
of the number of securities so registered.

6.3    The Company further agrees that, in the event that (i) the applicable
Initial Registration Statement has not been filed with the SEC within 30 days
after the applicable Closing Date, (ii) the applicable Initial Registration
Statement or the applicable New Registration Statement, as applicable, has not
been declared effective by the SEC (a) within five days after receipt of a
notification of no-review (in the event of a “no-review” by the SEC), or
(b) within 90 days after the applicable Filing Date (in the event of a review by
the SEC), or (iii) after such Registration Statement is declared effective by
the SEC, is suspended by the Company or ceases to remain continuously effective
as to all Registrable Securities for which it is required to be effective, other
than, in each case, within the time period(s) permitted by Section 6.7(b) (each
such event referred to in clauses (i), (ii) and (iii), (a “Registration
Default”)), for more than 20 consecutive days or more than 40 days in any period
of 365 days during which the Registration Default remains uncured, the Company
shall pay to each Purchaser 1.0% of such Purchaser’s Aggregate Purchase Price as
set forth on Exhibit A hereto (the “Aggregate Purchase Price”) of such
Purchaser’s Registrable Securities for each 30-day period (a “Penalty Period”)
(provided the payment amount shall increase by 1.0% of such Purchaser’s
Aggregate Purchase Price as set forth on Exhibit A hereto for each subsequent
30-day period following the initial 30-day period), or pro rata for any portion
thereof, during which the Registration Default remains uncured; provided,
however, that if a Purchaser fails to provide the Company with any information
that is required to be provided in such Registration Statement with respect to
such Purchaser as set forth herein, then the commencement of the Penalty Period
described above shall be extended until two Business Days following the date of
receipt by the Company of such required information; and provided, further, that
in no event shall the Company be required hereunder to pay to any Purchaser
pursuant to this Agreement more than 3.0% of such Purchaser’s Aggregate Purchase
Price of such Purchaser’s Registrable Securities in any Penalty Period and in no
event shall the Company be required hereunder to pay to any Purchaser pursuant
to this Agreement an aggregate amount that exceeds 10.0% of the Aggregate
Purchase Price paid by such Purchaser for such Purchaser’s Securities. The
Company shall deliver

 

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said cash payment to the Purchaser by the fifth Business Day after the end of
such Penalty Period. Notwithstanding any other provision of this Section 6.3, no
Registration Default as to the Cut Back Securities shall be deemed to have
occurred until the date that is 30 days following the date on which the SEC
permits the Cut Back Securities to be registered, and the payment of any penalty
pursuant to this Section 6.3 shall be calculated to apply only to the percentage
of Registrable Securities which are permitted by the SEC to be registered within
the timeframes provided for in this Agreement.

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

(a)    except for such times as the Company is permitted hereunder to suspend
the use of the prospectus forming part of a Registration Statement, use its best
efforts to keep such registration, and any qualification, exemption or
compliance under state securities laws which the Company determines to obtain,
continuously effective with respect to a Holder, and to keep the applicable
Registration Statement free of any material misstatements or omissions, until
the earlier of the following: (i) the second anniversary of the Closing Date or
(ii) the date all Common Shares and Conversion Shares held by or issuable to
such Holder may be sold under Rule 144 without being subject to any volume,
manner of sale or publicly available information requirements. The period of
time during which the Company is required hereunder to keep a Registration
Statement effective is referred to herein as the “Registration Period.”

(b)    advise the Holders within two Business Days:

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

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

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

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

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

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

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

(e)    during the Registration Period, promptly deliver to each such Holder,
without charge, as many copies of each prospectus included in a Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request in writing; and the Company consents to the use, consistent with the

 

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provisions hereof, of the prospectus or any amendment or supplement thereto by
each of the selling Holders of Registrable Securities in connection with the
offering and sale of the Registrable Securities covered by a prospectus or any
amendment or supplement thereto;

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

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

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

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

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

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

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

(m)    permit a single counsel for the Purchasers to review any Registration
Statement and all amendments and supplements thereto (other than supplements to
a Registration Statement on Form S-1 solely for the purpose of incorporating
other filings with the SEC into such Registration Statement and other than an

 

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amendment to a Registration Statement on Form S-1 on Form S-3 for the purpose of
converting such Registration Statement into a Registration Statement on Form
S-3), within two Business Days prior to the filing thereof with the SEC;

provided that, in the case of clauses (l) and (m) above, the Company shall not
be required (A) to delay the filing of any Registration Statement or any
amendment or supplement thereto as a result of any ongoing diligence inquiry by
or on behalf of a Holder or to incorporate any comments to any Registration
Statement or any amendment or supplement thereto by or on behalf of a Holder if
such inquiry or comments would require a delay in the filing of such
Registration Statement, amendment or supplement, as the case may be, or (B) to
provide, and shall not provide, any Purchaser or its representatives with
material, non-public information unless such Purchaser agrees to receive such
information and enters into a written confidentiality agreement with the Company
in a form reasonably acceptable to the Company.

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

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

(b)    Each Holder will severally, and not jointly, indemnify the Company, each
of its directors and officers, and each Person who controls the Company within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof), including any of the
foregoing

 

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

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

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

6.7    (a) Each Holder agrees that, upon receipt of any notice from the Company
of the happening of any event requiring the preparation of a supplement or
amendment to a prospectus relating to Registrable Securities so that, as
thereafter delivered to the Holders, such prospectus shall not contain an untrue
statement

 

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of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, each Holder
will forthwith discontinue disposition of Registrable Securities pursuant to a
Registration Statement and prospectus contemplated by Section 6.1 until its
receipt of copies of the supplemented or amended prospectus from the Company
and, if so directed by the Company, each Holder shall deliver to the Company all
copies, other than permanent file copies then in such Holder’s possession, of
the prospectus covering such Registrable Securities current at the time of
receipt of such notice.

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

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

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

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

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

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

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

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

6.9    The rights to cause the Company to register Registrable Securities
granted to the Holders by the Company under Section 6.1 may be assigned by a
Holder in connection with a transfer by such Holder of all or a portion of its
Registrable Securities, provided, however, that such transfer must be made at
least ten days prior

 

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to the applicable Filing Date and that (i) such transfer may otherwise be
effected in accordance with applicable securities laws; (ii) such Holder gives
prior written notice to the Company at least ten days prior to the applicable
Filing Date; and (iii) such transferee agrees to comply with the terms and
provisions of this Agreement, and such transfer is otherwise in compliance with
this Agreement. Except as specifically permitted by this Section 6.9, the rights
of a Holder with respect to Registrable Securities as set out herein shall not
be transferable to any other Person, and any attempted transfer shall cause all
rights of such Holder therein to be forfeited.

6.10    Prior to the time that Registration Statement(s) covering the resale of
all Registrable Securities have been declared effective by the SEC, the Company
shall not file with the SEC a registration statement under the Securities Act of
any of its equity securities other than a registration statement required to be
filed pursuant to this Agreement; a registration statement on Form S-8 or, in
connection with an acquisition, a registration statement on Form S-4; provided,
however, that the foregoing restrictions in this Section 6.10 shall terminate
upon such time as all of the Registrable Securities (i) have been publicly sold
by the Holders or (ii) may be sold under Rule 144 during any 90-day period.

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

ARTICLE 7

DEFINITIONS

7.1    “Aggregate Purchase Price” has the meaning set forth in Section 6.3.

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

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

7.4    “Alternative Milestone Price” means (a) if the Stockholder Approval is
obtained prior to the Public Announcement, the VWAP over the five full Trading
Days immediately following the Public Announcement or (b) if the Stockholder
Approval is obtained after the Public Announcement, the Alternative Minimum
Price shall be the lower of (i) the VWAP over the five full Trading Days
immediately following the Public Announcement and (ii) the VWAP over the five
full Trading Days immediately following the date on which the Stockholder
Approval is obtained.

7.5     “Attribution Parties” means, with respect to any Person, such Person’s
Affiliates and any other Person whose beneficial ownership of Common Stock would
be aggregated with such Person’s for purposes of Section 13(d) or Section 16 of
the Exchange Act and the applicable regulations of the SEC, including any
“group” of which such Person is a member.

7.6    “Beneficial Ownership Limitation” means the percentage set forth opposite
such Purchaser’s name on Exhibit A hereto under the heading “Beneficial
Ownership Limitation”.

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

 

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7.8    “Certificate of Designation” means the Class A-1 Certificate of
Designation or Class A-2 Certificate of Designation, as applicable.

7.9    “Class A-1 Certificate of Designation” means the Certificate of
Designation of Rights, Preferences and Privileges of the Class A-1 Convertible
Preferred Stock setting forth the preferences, rights and limitations of the
Preferred Shares to be filed prior to the Initial Closing by the Company with
the Secretary of State of Delaware substantially in the form attached hereto as
Exhibit C-1.

7.10    Class A-2 Certificate of Designation” means the Certificate of
Designation of Rights, Preferences and Privileges of the Class A-2 Convertible
Preferred Stock setting forth the preferences, rights and limitations of the
Preferred Shares to be filed prior to the Milestone Closing in the event the
Milestone Price equals the Alternative Milestone Price by the Company with the
Secretary of State of Delaware substantially in the form attached hereto as
Exhibit C-2.

7.11    “Class A Convertible Preferred Stock” includes Class A-1 Convertible
Preferred Stock and Class A-2 Convertible Preferred Stock of the Company.

7.12    “Closing” has the meaning set forth in Section 1.2(a).

7.13    “Common Shares” has the meaning set forth in Recital B to this
Agreement.

7.14    “Common Stock” means the common stock, par value $0.001 per share, of
the Company.

7.15    “Common Stock Equivalents” means any options, warrants or other
securities or rights convertible into or exercisable or exchangeable for,
whether directly or following conversion into or exercise or exchange for other
options, warrants or other securities or rights, shares of Common Stock, or any
swap, hedge or similar agreement or arrangement that transfers in whole or in
part, the economic risk of ownership of, or voting or other rights of, shares of
Common Stock.

7.16    “Company Intellectual Property” has the meaning set forth in
Section 2.13.

7.17    “Conversion Shares” has the meaning set forth in Section 2.2.

7.18    “Cut Back Securities” has the meaning set forth in Section 6.1.

7.19    “Escrow Agent” means, (i) with respect to the Initial Closing, Signature
Bank, a New York State chartered bank, and (ii) with respect to the Milestone
Closing, a bank selected by the Company that is chartered in a State located in
the United States of America.

7.20    “Escrow Agreement” means the escrow agreement entered into for and prior
to the applicable Closing by and among the Company, the Escrow Agent and the
Placement Agent pursuant to which the Purchasers shall deposit their applicable
Subscription Amounts for the Securities to be sold and purchased at the
applicable Closing.

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

7.22    “FDA” means the United States Food and Drug Administration.

7.23    “Filing Date” has the meaning set forth in Section 6.1.

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

 

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

7.26    “First Initial Registration Statement” has the meaning set forth in
Section 6.1.

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

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

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

7.30    “Initial Closing” has the meaning set forth in Section 1.1(a).

7.31    “Initial Closing Securities” has the meaning set forth in
Section 1.1(a).

7.32    “Initial Closing Date” has the meaning set forth in Section 1.1(c).

7.33    “Initial Closing Warrant Subscription Amount” has the meaning set forth
in Section 1.1(b).

7.34    “Initial Filing Date” has the meaning set forth in Section 6.1.

7.35    “Initial Market Price” means (i) $1.08 (the “Threshold Price”) for any
Purchaser that is not an officer, director, employee or consultant of the
Company and (ii) $1.08 for any Purchaser that is an officer, director, employee
or consultant of the Company.

7.36    “Initial Registration Statement” has the meaning set forth in
Section 6.1.

7.37    “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, assets or condition (financial or otherwise) of the
Company, taken as a whole, or (b) the ability of the Company to perform its
obligations pursuant to the transactions contemplated by this Agreement.

7.38    “Milestone Closing” has the meaning set forth in Section 1.2(a).

7.39    “ Milestone Closing Shares” has the meaning set forth in Section 1.2(a).

7.40    “ Milestone Closing Date” has the meaning set forth in Section 1.2(c).

7.41    “Milestone Closing Warrant Subscription Amount” has the meaning set
forth in Section 1.2(b).

7.42    “Milestone Filing Date” has the meaning set forth in Section 6.1.

7.43    “Milestone Initial Registration Statement” has the meaning set forth in
Section 6.1.

7.44    “Milestone Price” means the Initial Market Price; provided, however,
that if the VWAP over the five full Trading Days immediately following the
Public Announcement is not at or above the Threshold Price, then the Milestone
Price shall mean the Alternative Milestone Price; provided further, that each
Purchaser may deem the Milestone Price to be the Initial Market Price in its
sole discretion.

7.45    “Milestone Securities” has the meaning set forth in Section 1.2(a).

 

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7.46    “Nasdaq” means The Nasdaq Stock Market LLC.

7.47    “New Registration Statement” has the meaning set forth in Section 6.1.

7.48    “Penalty Period” has the meaning set forth in Section 6.3.

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

7.50    “Placement Agent” means H.C. Wainwright & Co.

7.51    “Preferred Conversion Shares” has the meaning set forth in Section 2.2.

7.52    “Preferred Shares” has the meaning set forth in Recital B to this
Agreement.

7.53    “Purchasers” has the meaning set forth in the preamble.

7.54    “Public Announcement” has the meaning set forth in Section 1.2(a).

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

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

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

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

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

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

7.61    “Remainder Registration Statement” has the meaning set forth in
Section 6.1.

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

 

25

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

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

7.65    “SEC Documents” has the meaning set forth in Section 2.1.

7.66    “Securities” has the meaning set forth in Section 1.2(a).

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

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

7.69    “Shares” has the meaning set forth in Recital B to this Agreement.

7.70    “Stockholder Approval” has the meaning set forth in Section 4.8.

7.71    “Subscription Amounts” has the meaning set forth in Section 5.1(a).

7.72    “Trading Day” means a day on which the principal Trading Market is open
for trading.

7.73    “Trading Market” means any of the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the NYSE American, Nasdaq, or the New York Stock Exchange (or any successors to
any of the foregoing).

7.74    “VWAP” means, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the Common Stock
for such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or
quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then
reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Purchasers of a majority
in interest of the Securities then outstanding and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the Company.

7.75    “Warrants” has the meaning set forth in Recital B to this Agreement.

7.76    “Warrant Shares” has the meaning set forth in Section 2.2.

ARTICLE 8

GOVERNING LAW; MISCELLANEOUS

8.1    Governing Law; Jurisdiction. This Agreement will be governed by and
interpreted in accordance with the laws of the State of New York without regard
to the principles of conflict of laws (whether

 

26

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of the State of New York or any other jurisdiction) which would result in the
application of the laws of any other jurisdiction.

8.2    Counterparts; Signatures by Facsimile. This Agreement may be executed in
counterparts, all of which are considered one and the same agreement and will
become effective when counterparts have been signed by each party and delivered
to the other parties. This Agreement may also be executed and delivered by
facsimile signature, PDF or any electronic signature complying with the U.S.
federal ESIGN Act of 2000 (e.g., www.docusign.com).

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

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

8.5    Entire Agreement; Amendments. This Agreement (including all schedules and
exhibits hereto) constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement. Any
amendment or waiver by a party effected in accordance with this Section 8.5
shall be binding upon such party, including with respect to any Securities
purchased under this Agreement at the time outstanding and held by such party
(including securities into which such Securities are convertible and for which
such Securities are exercisable) and each future holder of all such securities.

8.6    Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified, (b) when sent by confirmed email or facsimile if sent during
normal business hours of the recipient, and if sent at a time other than during
normal business hours of the recipient, then on the next business day, (c) five
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one business day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. The addresses for such communications are:

 

  If to the Company:

Regulus Therapeutics Inc.

      

10628 Science Center Drive, Suite 100

      

San Diego, CA 92121

      

Attn: Dan Chevallard

      

Email: dchevallard@regulusrx.com

 

  With a copy to:

Cooley LLP

      

4401 Eastgate Mall

      

San Diego, CA 92121

      

Attn: Ken Rollins

      

Email: krollins@cooley.com

If to a Purchaser: To the address set forth immediately below such Purchaser’s
name on the signature pages hereto. Each party will provide ten days’ advance
written notice to the other parties of any change in its address.

 

27

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8.7    Successors and Assigns. This Agreement is binding upon and inures to the
benefit of the parties and their successors and assigns. The Company will not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the Purchasers, and no Purchaser may assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
Company, except as permitted in accordance with Section 6.9 hereof.

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

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

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

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

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

8.13    Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein and no action taken by
any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group, or are deemed affiliates with respect to such obligations or the
transactions contemplated by this Agreement. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose. The Company has elected to provide all Purchasers with the same terms
of this Agreement for the convenience of the Company and not because it was
required or requested to do so by any of the Purchasers. 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.
Notwithstanding anything to the contrary in the foregoing, each of the
Purchasers has been advised, and is being advised by this Agreement, to consult
with an attorney before executing this Agreement, and each Purchaser has
consulted (or had an opportunity to consult) with counsel of such Purchaser’s
choice concerning the terms and conditions of this Agreement for a reasonable
period of time prior to the execution hereof and thereof.

 

28

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8.14    Waiver of Conflicts. Each Purchaser acknowledges that Cooley LLP,
outside general counsel to the Company, may have in the past performed and may
now or in the future represent one or more Purchasers or their affiliates in
matters unrelated to the transactions contemplated by this Agreement (the
“Financing”), including representation of such Purchasers or their affiliates in
matters of a similar nature to the Financing. The applicable rules of
professional conduct require that Cooley LLP inform the Purchasers hereunder of
this representation and obtain their consent. Cooley LLP has served as outside
general counsel to the Company and has negotiated the terms of the Financing
solely on behalf of the Company. Each Purchaser hereby (a) acknowledges that
they have had an opportunity to ask for and have obtained information relevant
to such representation, including disclosure of the reasonably foreseeable
adverse consequences of such representation; (b) acknowledges that with respect
to the Financing, Cooley LLP has represented solely the Company, and not any
Purchaser or any stockholder, director or employee of the Company or any
Purchaser; and (c) gives its informed consent to Cooley LLP’s representation of
the Company in the Financing.

[Signature Pages Follow]

 

29

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

REGULUS THERAPEUTICS INC. By:   /s/ Joseph P. Hagan Name:   Joseph P. Hagan
Title:   President and Chief Executive Officer

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: GROWTH EQUITY OPPORTUNITIES FUND V, LLC By:   /s/ Louis S. Citron
Name:        Louis S. Citron Title:        Chief Legal Officer

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

BIOTECHNOLOGY VALUE FUND, LP By:   /s/ Mark Lampert Name:  

Mark Lampert

Title:  

President BVF Inc., General Partner of BVF Partners L.P., itself GP of
Biotechnology Value Fund, L.P.

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

BIOTECHNOLOGY VALUE FUND II, LP By:   /s/ Mark Lampert Name:  

Mark Lampert

Title:  

President BVF Inc., General Partner of BVF Partners L.P., itself GP of
Biotechnology Value Fund II, L.P.

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

BIOTECHNOLOGY VALUE TRADING FUND OS, LP By:   /s/ Mark Lampert Name:  

Mark Lampert

Title:  

President BVF Inc., General Partner of BVF Partners L.P., itself sole member of
BVF Partners OS Ltd., itself GP of Biotechnology Value Trading Fund OS, L.P.

[Signature Page to Securities Purchase Agreement]

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

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

MSI BVF SPV, L.L.C. By:   /s/ Mark Lampert Name:  

Mark Lampert

Title:  

President BVF Inc., itself General Partner of BVF Partners L.P., itself sole
member of BVF Partners Partners L.P., itself attorney-in-fact for MSI BVF SPV,
L.L.C.

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

EcoR1 Capital Fund, L.P. By: EcoR1 Capital, LLC, its General Partner By:   /s/
Oleg Nodelman Name:  

Oleg Nodelman

Title:  

Managing Director

 

EcoR1 Capital Fund Qualified, L.P. By: EcoR1 Capital, LLC, its General Partner
By:   /s/ Oleg Nodelman Name:  

Oleg Nodelman

Title:  

Managing Director

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: ACORN BIOVENTURES, L.P. By:

ACORN CAPITAL ADVISORS GP, LLC,

A Delaware limited liability company

Its: General Partner

By:   /s/ Anders Hove Name:  

Anders Hove

Title:  

Managing Member

[Signature Page to Securities Purchase Agreement]

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

IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: Sarissa Capital Catapult Fund LLC By:   /s/ Patrice Bonfiglio Name:  

Patrice Bonfiglio

Title:  

CFO

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: Sarissa Capital Hawkeye Fund LP By:   /s/ Patrice Bonfiglio Name:  

Patrice Bonfiglio

Title:  

CFO

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: Sarissa Capital Offshore Master Fund LP By:   /s/ Patrice Bonfiglio
Name:  

Patrice Bonfiglio

Title:  

CFO

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: ALTIUM GROWTH FUND, LP By:   /s/ Mark Gottlieb Name:  

Mark Gottlieb

Title:  

COO

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: CVI Investments, Inc.

By: Heights Capital Management, Inc.

its authorized agent

By:   /s/ Martin Kobinger Name:  

Martin Kobinger

Title:  

Investment Manager

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: AMZAK HEALTH INVESTORS, L.L.C. By:   /s/ Joyce E. Erony Name:  

Joyce E. Erony

Title:  

Partner

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: Samsara BioCapital, L.P.

By: Samsara BioCapital GP, LLC,

       General Partner

By:   /s/ Dr. Srinivas Akkaraju, MD, PhD Name:  

Dr. Srinivas Akkaraju, MD, PhD

Title:  

Managing Member

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: Stelios Papadopoulos By:   /s/ Stelios Papadopoulos Name:  

Stelios Papadopoulos Ph.D.

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: PENSCO Trust Company Custodian FBO Joseph P. Hagan IRA By:   /s/
Chris Rains Name:  

Chris Rains

Title:  

Authorized Signatory

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: The Rastetter Family Trust By:   /s/ William Rastetter Name:  

William Rastetter

Title:  

Trustee

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: Pascale Witz By:   /s/ Pascale Witz Name:  

Pascale Witz

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: John Chambers By:   /s/ John Chambers Name:  

John Chambers

[Signature Page to Securities Purchase Agreement]

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

PURCHASER: Richard E. Gormley By:   /s/ Richard E. Gormley Name:  

Richard E. Gormley

[Signature Page to Securities Purchase Agreement]

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EXHIBIT A

SCHEDULE OF PURCHASERS

 

Purchaser

   Beneficial
Ownership
Limitation     Initial Closing
Common Shares
Subscription
Amount      Initial Closing
Warrant
Subscription
Amount      Milestone Closing
Shares
Subscription
Amount      Milestone
Closing
Warrant
Subscription
Amount      Aggregate
Purchase Price  

Acorn Bioventures, L.P.

     4.99 %    $ 799,999.20      $ 92,592.50      $ 1,199,999.88      $
138,888.88      $ 2,231,480.46  

Amzak Health Investors, LLC

     4.99 %    $ 358,506.00      $ 41,493.75      $ 537,759.00      $ 62,240.63
     $ 999,999.38  

Altium Growth Fund, LP

     9.99 %    $ 1,434,025.08      $ 165,975.13      $ 2,151,037.08      $
248,962.63      $ 3,999,999.92  

Biotechnology Value Fund, L.P.

     9.99 %    $ 1,388,262.24      $ 160,678.50      $ 2,082,393.36      $
241,017.75      $ 3,872,351.85  

Biotechnology Value Fund II, L.P.

     9.99 %    $ 1,170,142.20      $ 135,433.13      $ 1,755,212.76      $
203,149.63      $ 3,263,937.72  

Biotechnology Value Trading Fund OS, L.P.

     9.99 %    $ 192,782.16      $ 22,312.75      $ 289,173.24      $ 33,469.13
     $ 537,737.28  

MSI BVF SPV, LLC

     9.99 %    $ 48,812.76      $ 5,649.63      $ 73,218.60      $ 8,474.38     
$ 136,155.37  

EcoR1 Capital Fund, L.P.

     9.99 %    $ 199,761.12      $ 23,120.50      $ 299,641.68      $ 34,680.75
     $ 557,204.05  

EcoR1 Capital Fund Qualified, L.P.

     9.99 %    $ 1,000,237.68      $ 115,768.25      $ 1,500,357.60      $
173,652.50      $ 2,790,016.03  

Growth Equity Opportunities Fund V, LLC

     9.99 %    $ 4,000,000.32      $ 462,963.00      $ 5,999,999.40      $
694,444.38      $ 11,157,407.10  

Samsara BioCapital, L.P.

     9.99 %    $ 1,199,999.88      $ 138,888.88      $ 1,799,999.28      $
208,333.25      $ 3,347,221.29  

Sarissa Capital Offshore Master Fund LP

     19.99 %    $ 1,266,723.36      $ 146,611.50      $ 1,900,085.04      $
219,917.25      $ 3,533,337.15  

Sarissa Capital Catapult Fund LLC

     19.99 %    $ 412,944.48      $ 47,794.50      $ 619,417.80      $ 71,691.88
     $ 1,151,848.66  

Sarissa Capital Hawkeye Fund LP

     19.99 %    $ 320,331.24      $ 37,075.38      $ 480,496.32      $ 55,613.00
     $ 893,515.94  

Heights Capital Management, Inc.

     4.99 %    $ 579,999.96      $ 67,129.63      $ 869,999.40      $ 100,694.38
     $ 1,617,823.37  

Stelios Papadopoulos

     19.99 %    $ 399,999.60      $ 46,296.25      $ 599,999.40      $ 69,444.38
     $ 1,115,739.63  

The Rastetter Family Trust

     19.99 %    $ 100,320.12      $ 11,611.13      $ 150,479.64      $ 17,416.63
     $ 279,827.52  

Pascale Witz

     19.99 %    $ 32,000.40      $ 3,703.75      $ 47,999.52      $ 5,555.50  
   $ 89,259.17  

Pensco Trust Company LLC Custodian FBO Joseph Hagan IRA

     19.99 %    $ 35,849.52      $ 4,149.25      $ 53,774.28      $ 6,223.88  
   $ 99,996.93  

Richard Gormley

     19.99 %    $ 39,999.96      $ 4,629.63      $ 59,999.40      $ 6,944.38  
   $ 111,573.37  

John Chambers

     19.99 %    $ 19,999.44      $ 2,314.75      $ 30,000.24      $ 3,472.25  
   $ 55,786.68  

Total:

     $ 15,000,696.72      $ 1,736,191.79      $ 22,501,042.92      $
2,604,287.44      $ 41,842,218.87  

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EXHIBIT B

FORM OF WARRANT

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EXHIBIT C-1

FORM OF CLASS A-1 CERTIFICATE OF DESIGNATION

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EXHIBIT C-2

FORM OF CLASS A-2 CERTIFICATE OF DESIGNATION