EXHIBIT 10.1

 
SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of February
16, 2007, by and among ZIOPHARM Oncology, Inc, a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”).
 
RECITALS
 
A. The Company and each Purchaser is executing and delivering this agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule
506 of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission under the Securities Act.

B. The Company desires to raise gross proceeds of up to $35,000,000 pursuant to
the issuance and sale of (i) shares of the Common Stock, par value $0.001 per
share (the “Common Stock”), of the Company (which shares of Common Stock and
shall be collectively referred to herein as the “Shares”), and (ii) and
warrants, in substantially the form attached hereto as Exhibit A (the
“Warrants”).

C. Each Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this Agreement,
(i) that aggregate number of Shares set forth below such Purchaser’s name on the
signature page of this Agreement, and (ii) Warrants to acquire up to that number
of additional shares of Common Stock equal to 20.0% of the number of Shares
purchased by such Purchaser (rounded up to the nearest whole share) (the shares
of Common Stock issuable upon exercise of or otherwise pursuant to the Warrants,
collectively, the “Warrant Shares”).

D. The Shares, the Warrants and the Warrant Shares issued pursuant to this
Agreement are collectively referred to herein as the “Securities”.

E. The Company has engaged Oppenheimer & Co. Inc., Griffin Securities, Inc. and
Paramount BioCapital, Inc. as its placement agents (the “Placement Agents”) for
the offering of the Securities on a “best efforts” basis.

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

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

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ARTICLE I.
DEFINITIONS
 
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
for all purposes of this Agreement, the following terms shall have the meanings
indicated in this Section 1.1:
 
“Action” means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or, to the Company’s Knowledge, threatened in writing against or affecting the
Company or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock exchange or
trading facility.
 
“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 144. With respect to a Purchaser, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.
 
“Agents’ Representative” means Paramount BioCapital, Inc., as representative of
the Placement Agents.
 
“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.
 
“Closing” means the closing of the purchase and sale of the Shares and the
Warrants pursuant to this Agreement.
 
“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied, or
such other date as the parties may agree.
 
“Commission” means the United States Securities and Exchange Commission.
 
“Common Stock” has the meaning set forth in the Recitals, and also includes any
securities into which the Common Stock may hereafter be reclassified or changed.
 
“Common Stock Equivalents” means any securities of the Company which would
entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock.
 
“Company Counsel” means Maslon Edelman Borman & Brand, LLP.

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

   “Company’s Knowledge” means with respect to any statement made to the
knowledge of a party, that the statement is based upon the actual knowledge of
the officers of such party having responsibility for the matter or matters that
are the subject of the statement.

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

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“Disclosure Materials” has the meaning set forth in Section 3.1(h).
 
“Effective Date” means the date on which the initial Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.
 
“Effectiveness Deadline” means the date on which the initial Registration
Statement is required to be declared effective by the Commission under the terms
of the Registration Rights Agreement.
 
“Environmental Laws” has the meaning set forth in Section 3.1(l).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.
 
“GAAP” means U.S. generally accepted accounting principles, as applied by the
Company.
 
“Intellectual Property” has the meaning set forth in Section 3.1(r).
 
“Irrevocable Transfer Agent Instructions” means, with respect to the Company,
the Irrevocable Transfer Agent Instructions, in the form of Exhibit E, executed
by the Company and delivered to and acknowledged in writing by the Transfer
Agent.
 
“Lien” means any lien, charge, claim, encumbrance, security interest, right of
first refusal, preemptive right or other restrictions of any kind.
 
“Losses” has the meaning set forth in Section 4.9(a).
 
“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material and adverse effect on the results of operations, assets, prospects,
business or financial condition of the Company, or (iii) any material adverse
impairment to the Company's ability to perform in any material respect on a
timely basis its obligations under any Transaction Document.
 
“Material Contract” means any contract of the Company that was filed as an
exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.

“Material Permits” has the meaning set forth in Section 3.1(p).
 
“New York Courts” means the state and federal courts sitting in the City of New
York, Borough of Manhattan.
 
“Outside Date” means five Trading Days following the date of this Agreement.
 
“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.
 
“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the NASDAQ Capital Market.

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“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
 
“Purchase Price” means the sum of (i) the closing bid price of the Company’s
Common Stock, as listed on the Principal Trading Market, on the date of this
Agreement, plus (ii) $0.025.
 
“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).
 
“Registration Rights Agreement” has the meaning set forth in the Recitals.
 
“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Registrable Securities (as defined in the Registration Rights
Agreement).
 
“Required Approvals” has the meaning set forth in Section 3.1(e).
 
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
 
“SEC Reports” has the meaning set forth in Section 3.1(h).
 
“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(vii).
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Short Sales” include, without limitation, all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and all types of direct and indirect stock pledges, forward
sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated brokers.
 
“Subscription Amount” means with respect to each Purchaser, the aggregate amount
to be paid for the Shares and the related Warrants purchased hereunder as
indicated on such Purchaser’s signature page to this Agreement next to the
heading “Purchase Price (Subscription Amount)”.
 
“Trading Affiliate” has the meaning set forth in Section 3.2(g).
 
“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its primary Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC
Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
to its functions of reporting prices); provided, that in the event that the
Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
then Trading Day shall mean a Business Day.
 
“Trading Market” means whichever of the New York Stock Exchange, the American
Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the
NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is
listed or quoted for trading on the date in question.

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“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Warrants, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
 
“Transfer Agent” means American Stock Transfer and Trust Company or any
successor transfer agent for the Company.
 
“Warrants” has the meaning set forth in the Preamble to this Agreement. The
Placement Agents and/or their designees are also receiving placement agent
warrants as compensation for services rendered in connection with the
transactions set forth herein, which warrants shall also constitute “Warrants”
for all purposes hereunder.
 
ARTICLE II.
PURCHASE AND SALE
 
2.1 Closing. (a) Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to each Purchaser,
and each Purchaser shall, severally and not jointly, purchase from the Company,
such number of Shares of Common Stock equal to the quotient resulting from
dividing (i) the aggregate purchase price for such Purchaser, as indicated below
such Purchaser’s name on the signature page of this Agreement (the “Subscription
Amount”) by (ii) the Purchase Price, rounded to the nearest whole Share. In
addition, each Purchaser shall receive a Warrant to purchase a number of Warrant
Shares equal to 20% of the number of Shares purchased by such Purchaser, as
indicated below such Purchaser’s name on the signature page of this Agreement.
The Warrants shall have an exercise price equal to 110% of the Purchase Price
and shall be exercisable at any time prior to the fifth anniversary of the date
of issuance.
 
(b) Each Purchaser must complete and return a duly executed, unaltered copy of
this Agreement (including without limitation the completed Accredited Investor
Questionnaire and the Stock Certificate Questionnaire included as Exhibits C-1
and C-2 hereto, respectively) to the Agents’ Representative. The Company and the
Agents’ Representative retain complete discretion to accept or reject any
subscription unless and until the Company executes a counterpart to this
Agreement that includes such Purchaser’s signature. Within five Business Days
after the execution and delivery of this Agreement by Purchaser and the Company,
each Purchaser shall deposit the amount of readily available funds equal to such
Purchaser’s Subscription Amount in a segregated escrow account (the “Escrow
Account”) with an escrow agent designated by the Agents’ Representative (the
“Escrow Agent”) by wire transfer of immediately available funds pursuant to the
instructions provided below:
 
(c) The Closing shall be held at a date and time designated by the Company and
the Placement Agents prior to 11:59 p.m. Eastern Standard Time on the Outside
Date. The Closing shall occur at the offices of the Agents’ Representative,
located at 787 Seventh Avenue, New York, New York 10019, or at such other
locations or remotely by facsimile transmission or other electronic means as the
parties may mutually agree. Upon satisfaction or waiver of all conditions to the
Closing, the Agents’ Representative and the Company shall instruct the Escrow
Agent to release the proceeds held in the Escrow Account to the Company, less
fees and expenses due to the Placement Agents. Interest, if any, that has
accrued with respect to the Subscription Amount while in escrow shall also be
distributed to the Company at the Closing and the Purchaser will have no right
to such interest, even if there is no Closing.

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(d) The Company shall deliver, or cause to be delivered, a certificate or
certificates, registered in such name or names as the Purchasers may designate,
representing the Shares and Warrants purchased by the Purchaser hereunder as
soon as practical after the Closing, and in any event within five Business Days,
to the Purchaser’s mailing address indicated on the Stock Certificate
Questionnaire included as Exhibit C-2 hereto.
 
2.2 Closing Deliveries.   (a) On or prior to the Closing, the Company shall
issue, deliver or cause to be delivered to each Purchaser the following (the
“Company Deliverables”):
 
(i) this Agreement, duly executed by the Company;
 
(ii) one or more stock certificates, free and clear of all restrictive and other
legends (except as provided in Section 4.1(b) hereof), evidencing the Shares
subscribed for by Purchaser hereunder, registered in the name of such Purchaser
as set forth on the Stock Certificate Questionnaire included as Exhibit C-2
hereto;
 
(iii) a Warrant, executed by the Company and registered in the name of such
Purchaser as set forth on the Stock Certificate Questionnaire included as
Exhibit C-2 hereto, pursuant to which such Purchaser shall have the right to
acquire such number of Warrant Shares equal to 20.0% of the number of Shares
issuable to such Purchaser pursuant to Section 2.2(a)(ii), rounded up to the
nearest whole share, on the terms set forth therein;
 
(iv) a legal opinion of Company Counsel, in the form attached hereto as Exhibit
D, executed by such counsel and addressed to the Purchasers and the Placement
Agents;
 
(v) the Registration Rights Agreement, duly executed by the Company;
 
(vi) duly executed Irrevocable Transfer Agent Instructions acknowledged in
writing by the Transfer Agent;
 
(vii) a certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the resolutions
adopted by the Board of Directors of the Company approving the transactions
contemplated by this Agreement and the other Transaction Documents and the
issuance of the Securities, (b) certifying the current versions of the
certificate of incorporation, as amended and by-laws of the Company and (c)
certifying as to the signatures and authority of persons signing the Transaction
Documents and related documents on behalf of the Company;
 
(viii) the Compliance Certificate referred to in Section 5.1(h);
 
(ix) a certificate evidencing the formation and good standing of the Company in
the State of Delaware issued by the Secretary of State (or comparable office),
as of a date within 10 days of the Closing Date; and

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(x) a certified copy of the Certificate of Incorporation as certified by the
Secretary of State of the State of Delaware within ten (10) days of the Closing
Date.
 
(b) On or prior to the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following (the “Purchaser Deliverables”):
 
(i) this Agreement, duly executed by such Purchaser;
 
(ii) its Subscription Amount, in United States dollars and in immediately
available funds, in the amount set forth as the “Purchase Price” indicated below
such Purchaser’s name on the applicable signature page hereto by wire transfer
to an account designated in writing by the Company for such purpose, as set
forth on Exhibit F attached hereto;
 
(iii) the Registration Rights Agreement, duly executed by such Purchaser;
 
(iv) a fully completed and duly executed Selling Stockholder Questionnaire in
the form attached as Annex B to the Registration Rights Agreement; and
 
(v) a fully completed and duly executed Accredited Investor Questionnaire and
Stock Certificate Questionnaire in the forms attached hereto as Exhibits C-1 and
C-2, respectively.
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
 
3.1 Representations and Warranties of the Company. The Company hereby represents
and warrants to the Purchasers and to the Placement Agents that, except as set
forth in the Schedules delivered herewith:
 
(a) Subsidiaries. With the exception of ZIOPHARM Oncology Limited, a private
limited company incorporated in England and Wales, the Company has no direct or
indirect subsidiaries.
 
(b) Organization and Qualification. The Company is an entity duly incorporated
or otherwise organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own or lease and use its properties and assets
and to carry on its business as currently conducted. The Company is not in
violation of any of the provisions of its certificate of incorporation, bylaws
or other organizational or charter documents. The Company is duly qualified to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to have, individually or in the aggregate,
resulted in a Material Adverse Effect, and no Proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification.
 
(c) Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of each of the Transaction Documents to which it is a party by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including, but not limited to, the sale and delivery of the Shares and
the Warrants and the subsequent issuance of the Warrant Shares upon exercise of
the Warrants) have been duly authorized by all necessary corporate action on the
part of the Company, and no further corporate action is required by the Company,
its Board of Directors or its shareholders in connection therewith other than in
connection with the Required Approvals. Each of the Transaction Documents to
which it is a party has been (or upon delivery will have been) duly executed by
the Company and is, or when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application. Except as set forth on Schedule 3.1(c) hereto, there are no
shareholder agreements, voting agreements, or other similar arrangements with
respect to the Company’s capital stock to which the Company is a party or, to
the Company’s Knowledge, between or among any of the Company’s shareholders.

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(d) No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation by the Company
of the transactions contemplated hereby or thereby (including, without
limitation, the issuance of the Shares and the reservation for issuance and
issuance of the Warrant Shares) do not and will not (i) conflict with or violate
any provision of the Company’s certificate of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument (evidencing a Company
debt or otherwise) or other understanding to which the Company is a party or by
which any property or asset of the Company is bound or affected, or (iii)
subject to the Required Approvals, conflict with or result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company is subject
(including federal and state securities laws and regulations and the rules and
regulations, assuming the correctness of the representations and warranties made
by the Purchasers herein, of any self-regulatory organization to which the
Company or its securities are subject, including all applicable Trading
Markets), or by which any property or asset of the Company is bound or affected,
except in the case of clauses (ii) and (iii), such as would not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
 
(e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents (including
the issuance of the Securities), other than (i) the filing with the Commission
of one or more Registration Statements in accordance with the requirements of
the Registration Rights Agreement, (ii) filings required by applicable state
securities laws, (iii) the filing of a Notice of Sale of Securities on Form D
with the Commission under Regulation D of the Securities Act, (iv) the filing of
any requisite notices and/or application(s) to the Principal Trading Market for
the issuance and sale of the Common Stock and the Warrants and the listing of
the Common Stock for trading or quotation, as the case may be, thereon in the
time and manner required thereby (except as disclosed on Schedule 3.1(e)), (v)
the filings required in accordance with Section 4.8 of this Agreement and (vi)
those that have been made or obtained prior to the date of this Agreement
(collectively, the “Required Approvals”).
 
(f) Issuance of the Securities. The Shares have been duly authorized and, when
issued and paid for in accordance with the terms of the Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of shareholders. The Warrants have been duly
authorized and, when issued and paid for in accordance with the terms of the
Transaction Documents, will be duly and validly issued, free and clear of all
Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of shareholders. The Warrant Shares issuable upon
exercise of the Warrants have been duly authorized and, when issued and paid for
in accordance with the terms of the Transaction Documents and the Warrants, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of shareholders. Assuming the accuracy of the
representations and warranties of the Purchasers in this Agreement, the Shares
and the Warrant Shares will be issued in compliance with all applicable federal
and state securities laws. The Company shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued capital stock, solely for the purpose of effecting the
exercise of the Warrants, 100% of the number of shares of Common Stock issuable
upon exercise of the Warrants..

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(g) Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock, options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) has been set forth in the SEC Reports and has
changed since the date of such SEC Reports only to reflect stock option and
warrant exercises that do not, individually or in the aggregate, have a material
affect on the issued and outstanding capital stock, options and other
securities. All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid and non-assessable, have been issued
in compliance in all material respects with all applicable federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase any capital
stock of the Company. Except as specified in the SEC Reports: (i) no shares of
the Company's capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company; (iii) there are no
outstanding debt securities, notes, credit agreements, credit facilities or
other agreements, documents or instruments evidencing indebtedness of the
Company or by which the Company is or may become bound; (iv) there are no
financing statements securing obligations in any material amounts, either singly
or in the aggregate, filed in connection with the Company; (v) there are no
agreements or arrangements under which the Company is obligated to register the
sale of any of their securities under the Securities Act (except the
Registration Rights Agreement); (vi) there are no outstanding securities or
instruments of the Company or which contain any redemption or similar
provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company is or may become bound to redeem a security of
the Company; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) the Company does not have any stock appreciation rights
or “phantom stock” plans or agreements or any similar plan or agreement; and
(ix) the Company has no liabilities or obligations required to be disclosed in
the SEC Reports (as defined herein) but not so disclosed in the SEC Reports,
other than those incurred in the ordinary course of the Company's businesses and
which, individually or in the aggregate, do not or would not have a Material
Adverse Effect.
 
(h) SEC Reports. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the exhibits thereto
and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports” and together with this Agreement and the Schedules
to this Agreement (if any), the “Disclosure Materials”), on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of the date hereof,
the Company is not aware of any event occurring on or prior to the Closing Date
(other than the transactions contemplated by the Transaction Documents) that
requires the filing of a Form 8-K after the Closing. As of their respective
dates, or to the extent corrected by a subsequent restatement, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
 
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(i) Financial Statements. The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing (or to the extent corrected by a
subsequent restatement). Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, year-end audit adjustments. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject are included as part of or specifically identified in
the SEC Reports.
 
(j) Tax Matters The Company (i) has accurately and timely prepared and filed all
foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith, with respect to which adequate
reserves have been set aside on the books of the Company and (iii) has set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply, except, in the case of clauses (i) and (ii) above, where the failure to
so pay or file any such tax, assessment, charge or return would not result in a
Material Adverse Effect. There are no unpaid taxes in any material amount
claimed to be due by the Company by the taxing authority of any jurisdiction.
 
(k) Material Changes. Since the date of the latest audited financial statements
included within the SEC Reports, (i) there have been no events, occurrences or
developments that have had or that could reasonably be expected to result,
either individually or in the aggregate, in a Material Adverse Effect, (ii) the
Company has not incurred any liabilities (contingent or otherwise) other than
(A) trade payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company's financial statements pursuant to
GAAP or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the manner in which it keeps
its accounting books and records, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its shareholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock (other than in connection with repurchases of unvested stock
issued to employees of the Company) and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except Common Stock
issued in the ordinary course as dividends on outstanding preferred stock or
pursuant to existing Company stock option or stock purchase plans or executive
and director corporate arrangements disclosed in the SEC Reports and (vi) there
has not been any material change or amendment to, or any waiver of any material
right under, any contract under which the Company or any of their assets is
bound or subject. Except for the issuance of the Securities contemplated by this
Agreement or as set forth in Schedule 3.1(k) hereto, no event, liability or
development has occurred or exists with respect to the Company or its business,
properties, operations or financial condition that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed at least one Trading
Day prior to the date that this representation is made.
 
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(l) Environmental Matters. To the Company’s Knowledge, the Company (i) is not in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), (ii) does not own or
operate any real property contaminated with any substance that is in violation
of any Environmental Laws, (iii) is not liable for any off-site disposal or
contamination pursuant to any Environmental Laws, and (iv) is not subject to any
claim relating to any Environmental Laws; which violation, contamination,
liability or claim has had or could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate; and there is no pending or, to
the Company’s Knowledge, threatened investigation that might lead to such a
claim.
 
(m) Litigation. There is no Action which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) except as specifically disclosed in the SEC Reports, would,
if there were an unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The Company, nor,
to the Company’s Knowledge, any current director or officer thereof (in his or
her capacity thereof), is or has been during the five-year period prior to the
Closing Date the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been and, to the Company’s Knowledge, there is not
pending or contemplated, any investigation by the Commission involving the
Company or, to the Company’s Knowledge, any current or former director or
officer of the Company (in his or her capacity as such). The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act or the
Securities Act.
 
(n) Employment Matters. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company
which could reasonably be expected to result in a Material Adverse Effect. None
of the Company’s employees is a member of a union that relates to such
employee’s relationship with the Company, and the Company is not a party to a
collective bargaining agreement, and the Company believes that their
relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant, and the continued employment
of each such executive officer does not subject the Company to any liability
with respect to any of the foregoing matters. The Company is in compliance with
all U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
 
(o) Compliance. The Company is not (i) in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company), nor has the Company
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) in
violation of any order of any court, arbitrator or governmental body having
jurisdiction over the Company or its properties or assets, or (iii) in violation
of, or in receipt of notice that it is in violation of, any statute, rule or
regulation of any governmental authority applicable to the Company, except in
each case as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.

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(p) Regulatory Permits. The Company possesses all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct its business as described in the SEC
Reports, except where the failure to possess such permits, individually or in
the aggregate, has not and could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and the Company has not received
any notice of proceedings relating to the revocation or modification of any such
Material Permits.
 
(q) Title to Assets. Except for property that is specifically the subject of,
and covered by, other representations and warranties as to ownership or title
contained herein, the Company has good and marketable title in fee simple to all
real property owned by it that is material to its business and good and
marketable title in all personal property owned by it that is material to its
business, in each case free and clear of all Liens, except for Liens as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
Liens for the payment of federal, state or other taxes, the payment of which is
neither delinquent nor subject to penalties. Any real property and facilities
held under lease by the Company are held by it under valid, subsisting and
enforceable leases of which the Company is in material compliance.
 
(r) Patents and Trademarks. The Company owns, possesses, licenses or has other
rights to use all foreign and domestic patents, patent applications, trade and
service marks, trade and service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, Internet domain names, know-how
and other intellectual property (collectively, the “Intellectual Property”)
necessary for the conduct of its business as now conducted or as proposed to be
conducted. Except as set forth in the SEC Reports and except where such
violations or infringements would not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect, (a) there are no
rights of third parties to any such Intellectual Property; (b) to the Company’s
Knowledge, there is no infringement by third parties of any such 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 Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (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 Intellectual Property; and
(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, and the Company is unaware of any other fact which would form a
reasonable basis for any such claim.
 
(s) Insurance. 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 businesses and location in which the Company is engaged.
The Company does not have any knowledge that it will be unable to renew its
existing insurance coverage for the Company as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
 
(t) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports or reported on a Form 4, 3 or 5 filed with the Commission, in either
case at least ten days prior to the date hereof, none of the officers, directors
or employees of the Company is presently a party to any transaction with the
Company (other than for ordinary course services as employees, officers or
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.

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(u) Internal Accounting Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
 
(v) Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all
material respects with all of the provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it as of the Closing Date. The Company maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the Exchange Act) that are effective in ensuring that information required
to be disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Commission, including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company's
management, including its principal executive officer or officers and its
principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure.
 
(w) Certain Fees. No person or entity will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or a Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Company, other than the Placement Agents with respect to the offer
and sale of the Securities. Such Placement Agent fees and expenses are set forth
on Schedule 3.1(w) hereto and are being paid by the Company. The Company shall
pay, and hold each Purchaser harmless against, any liability, loss or expense
(including, without limitation, attorneys’ fees and out-of-pocket expenses)
arising in connection with any such right, interest or claim.
 
(x) Private Placement.  Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2 of this Agreement, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers under the Transaction Documents. Other than each of
the Purchasers, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company other
than those securities which are currently registered on an effective
registration statement on file with the Commission.
 
(y) No Directed Selling Efforts or General Solicitation. Neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has
conducted any “general solicitation” or “general advertising” (as those terms
are used in Regulation D) in connection with the offer or sale of any of the
Securities.
 
(z) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, at any time within the past six months, made any offers or sales of
any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Securities as contemplated hereby or (ii)
cause the offering of the Securities pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or shareholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market on which any
of the securities of the Company are listed or designated.
 
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(aa) Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to terminate the registration of the Common Stock under
the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration. Except as specified
in the SEC Reports, the Company has not, in the two years preceding the date
hereof, received written notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading Market.
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance in all material respects with the listing
and maintenance requirements for continued trading of the Common Stock on the
Principal Trading Market.
 
(bb) Investment Company The Company is not required to be registered as, and is
not an Affiliate of, and immediately following the Closing will not be required
to register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
 
(cc) Questionable Payments. The Company, nor, to the Company’s Knowledge, any
directors, officers, employees, agents or other Persons acting on behalf of the
Company has, in the course of its actions for, or on behalf of, the Company: (a)
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to foreign or domestic
political activity; (b) made any direct or indirect unlawful payments to any
foreign or domestic governmental officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds; (c) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or (d) made any other unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.
 
(dd) Application of Takeover Protections; Rights Agreements. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's charter documents or the laws of its
state of incorporation that is or could reasonably be expected to become
applicable to any of the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, the Company's issuance of
the Securities and the Purchasers' ownership of the Securities. The Company has
not adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.
 
(ee) Disclosure. The Company confirms that neither it nor any of its officers or
directors nor any other Person acting on its or their behalf has provided, and
it has not authorized the Placement Agents to provide, any Purchaser with any
information that it believes constitutes or could reasonably be expected to
constitute material, non-public information except insofar as the existence,
provisions and terms of the Transaction Documents and the proposed transactions
hereunder may constitute such information, all of which will be disclosed by the
Company in the Press Release as contemplated by Section 4.8 hereof. The Company
understands and confirms that the Purchasers will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Purchasers regarding the Company, its business and
the transactions contemplated hereby furnished by the Company or authorized by
the Company and furnished by the Placement Agents on behalf of the Company
(including the Company’s representations and warranties set forth in this
Agreement) are true and correct in all material respects and do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. No event or circumstance has
occurred or information exists with respect to the Company or or its business,
properties, operations or financial conditions, which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed, except for the
announcement of this Agreement and related transactions.
 
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(ff) Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its
Exchange Act filings and is not so disclosed or that otherwise would be
reasonably likely to have a Material Adverse Effect.
 
(gg) Consultation with Auditors. The Company has consulted its independent
auditors concerning the accounting treatment of the transactions contemplated by
the Transaction Documents and in connection therewith has furnished such
auditors complete copies of the Transaction Documents. The Company intends to
account for the gross proceeds raised from the financing which is the subject of
this Agreement as equity in its financial statements.
 
(hh) No Additional Agreements. The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.
 
(ii) Use of Form S-3. The Company meets the registration and transaction
requirements for use of Form S-3 for the registration of the Shares and the
Warrant Shares for resale by the Purchasers.
 
3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof
and as of the Closing Date to the Company and the Placement Agents as follows:
 
(a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution, delivery and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or, if such Purchaser is not a corporation, such
partnership, limited liability company or other applicable like action, on the
part of such Purchaser. Each of this Agreement, the Warrant and the Registration
Rights Agreement has been duly executed by such Purchaser, and when delivered by
such Purchaser in accordance with terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.
 
(b) Investment Intent. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities and, upon
exercise of the Warrants, will acquire the Warrant Shares issuable upon exercise
thereof as principal for its own account and not with a view to, or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities laws, provided, however,
that by making the representations herein, such Purchaser does not agree to hold
any of the Securities for any minimum period of time and reserves the right,
subject to the provisions of this Agreement and the Registration Rights
Agreement, at all times to sell or otherwise dispose of all or any part of such
Securities or Warrant Shares pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its business. Such
Purchaser does not presently have any agreement, plan or understanding, directly
or indirectly, with any Person to distribute or effect any distribution of any
of the Securities (or any securities which are derivatives thereof) to or
through any person or entity. Such Purchaser is not a registered broker-dealer
under Section 15 of the Exchange Act or an entity engaged in a business that
would require it to be so registered as a broker-dealer.
 
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(c) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is, and on each date on which it exercises the
Warrants it will be, an “accredited investor” as defined in Rule 501(a) under
the Securities Act.
 
(d) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general advertisement.
 
(e) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.
 
(f) Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and its financial
condition, results of operations, business, properties, management and prospects
sufficient to enable it to evaluate its investment; and (iii) the opportunity to
obtain such additional information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to make an informed
investment decision with respect to the investment. Neither such inquiries nor
any other investigation conducted by or on behalf of 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 Disclosure Materials and
the Company's representations and warranties contained in the Transaction
Documents.
 
(g)  Certain Trading Activities. Other than with respect to the transactions
contemplated herein, since the earlier to occur of (1) the time that such
Purchaser was first contacted by the Company, the Placement Agents or any other
Person regarding the transactions contemplated hereby and (2) the tenth (10th)
day prior to the date of this Agreement, neither the Purchaser nor any Affiliate
of such Purchaser which (x) had knowledge of the transactions contemplated
hereby, (y) has or shares discretion relating to such Purchaser’s investments or
trading or information concerning such Purchaser’s investments, including in
respect of the Securities, and (z) is subject to such Purchaser’s review or
input concerning such Affiliate’s investments or trading (collectively, “Trading
Affiliates”) has directly or indirectly, nor has any Person acting on behalf of
or pursuant to any understanding with such Purchaser or Trading Affiliate,
effected or agreed to effect any transactions in the securities of the Company
(including, without limitation, any Short Sales involving the Company’s
securities). Notwithstanding the foregoing, in the case of a Purchaser and/or
Trading Affiliate that is, individually or collectively, a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser's or Trading Affiliate’s assets and the portfolio managers
have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser's or Trading Affiliate’s
assets, the representation set forth above shall apply only with respect to the
portion of assets managed by the portfolio manager that have knowledge about the
financing transaction contemplated by this Agreement. Other than to other
Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in Short Sales in the securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.8.
 
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(h) Brokers and Finders. No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or any Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Purchaser.
 
(i) Limited Ownership. The purchase by such Purchaser of the Securities issuable
to it at the Closing will not result in such Purchaser (individually or together
with other Person with whom such Purchaser has identified, or will have
identified, itself as part of a “group” in a public filing made with the
Commission involving the Company’s securities) acquiring, or obtaining the right
to acquire, in excess of 19.99% of the outstanding shares of Common Stock or the
voting power of the Company on a post transaction basis that assumes that the
Closing shall have occurred. Such Purchaser does not presently intend to, alone
or together with others, make a public filing with the Commission to disclose
that it has (or that it together with such other Persons have) acquired, or
obtained the right to acquire, as a result of the Closing (when added to any
other securities of the Company that it or they then own or have the right to
acquire), in excess of 19.99% of the outstanding shares of Common Stock or the
voting power of the Company on a post transaction basis that assumes that the
Closing shall have occurred.
 
(j) Independent Investment Decision. Such Purchaser has independently evaluated
the merits of its decision to purchase Securities pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Securities constitutes legal, tax or investment advice. Such
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities. Such Purchaser understands that the Placement Agents
have acted solely as the agent of the Company in this placement of the
Securities and such Purchaser has not relied on the business or legal advice of
the Placement Agents or any of their agents, counsel or Affiliates in making its
investment decision hereunder, and confirms that none of such Persons has made
any representations or warranties to such Purchaser in connection with the
transactions contemplated by the Transaction Documents.
 
(k) Reliance on Exemptions. Such Purchaser understands that the Securities being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgements
and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Securities.
 
(l) No Governmental Review. Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.
 
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The Company acknowledges and agrees that no Purchaser has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
 
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
 
4.1 (a) Compliance with Laws. Notwithstanding any other provision of this
Article IV, each Purchaser covenants that the securities may be disposed of only
pursuant to an effective registration statement under, and in compliance with
the requirements of, the Securities Act, or pursuant to an available exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act, and in compliance with any applicable state and federal
securities laws. In connection with any transfer of the Securities other than
(i) pursuant to an effective registration statement, (ii) to the Company, (iii)
to an Affiliate of a Purchaser, (iv) pursuant to Rule 144 (provided that the
Purchaser provides the Company with reasonable assurances (in the form of seller
and broker representation letters) that the securities may be sold pursuant to
such rule) or Rule 144A, (v) pursuant to Rule 144(k) following the applicable
holding period or (vi) in connection with a bona fide pledge as contemplated in
Section 4.1(b), except as otherwise provided herein, the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Securities
under the Securities Act. As a condition of transfer, any such transferee shall
agree in writing to be bound by the terms of this Agreement and shall have the
rights of a Purchaser under this Agreement and the Registration Rights
Agreement.
 
(b) Legends. Certificates evidencing the Securities shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form, until such time as they are not required under
Section 4.1(c):
 
[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED]
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.
 
The Company acknowledges and agrees that a Purchaser may from time to time
pledge, and/or grant a security interest in, some or all of the legended
Securities in connection with applicable securities laws, pursuant to a bona
fide margin agreement in compliance with a bona fide margin loan. Such a pledge
would not be subject to approval or consent of the Company and no legal opinion
of legal counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following default by the
Purchaser's transferee of the pledge. No notice shall be required of such
pledge, but Purchaser’s transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure. Each Purchaser acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Securities or for any agreement, understanding
or arrangement between any Purchaser and its pledgee or secured party. At the
appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares, including the
preparation and filing of any required prospectus supplement under Rule
423(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder. Each
Purchaser acknowledges and agrees that, except as otherwise provided in Section
4.1(c), any Shares subject to a pledge or security interest as contemplated by
this Section 4.1(b) shall continue to bear the legend set forth in this Section
4.1(b) and be subject to the restrictions on transfer set forth in Section
4.1(a).

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(c) Removal of Legends. The legend set forth in Section 4.1(b) above shall be
removed and the Company shall issue a certificate without such legend to the
holder of the Securities upon which it is stamped or issue to such holder by
electronic delivery at the applicable balance account at The Depository Trust
Company (“DTC”), if (i) such Securities are registered for resale under the
Securities Act, (ii) such Securities are sold or transferred pursuant to Rule
144 (assuming the transferor is not an Affiliate of the Company) or Rule 144A,
or (iii) such Securities are eligible for sale under Rule 144(k). The Company
shall cause its counsel to issue the legal opinion referred to in the
Irrevocable Transfer Agent Instructions to the Company’s transfer agent on the
Effective Date. Any fees (with respect to the Transfer Agent, counsel to the
Company or otherwise) associated with the issuance of such opinion or the
removal of such legend shall be borne by the Company. If any portion of the
Warrant is exercised at a time when there is an effective registration statement
to cover the resale of the Warrant Shares, or if such Warrant Shares may be sold
under Rule 144(k), then such Warrant Shares shall be issued free of all legends.
Following the Effective Date, or at such earlier time as a legend is no longer
required for certain Securities, the Company will no later than three (3)
Trading Days following the delivery by a Purchaser to the Company or the
Transfer Agent (with notice to the Company) of (i) a legended certificate
representing such Shares or Warrant Shares (endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer) or (ii) an Exercise Notice in the manner stated in
the Warrants to effect the exercise of such Warrant in accordance with its terms
and an opinion of counsel to the extent required by Section 4.1(a), deliver or
cause to be delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section.

(d) Irrevocable Transfer Agent Instructions.  The Company shall issue
irrevocable instructions to its transfer agent, and any subsequent transfer
agent, to issue certificates or credit shares to the applicable balance accounts
at DTC, registered in the name of each Purchaser or its respective nominee(s),
for the Shares and the Warrant Shares in such amounts as specified from time to
time by each Purchaser to the Company in the form of Exhibit E attached hereto
(the “Irrevocable Transfer Agent Instructions”). The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 4(d) will be given by the Company to its transfer agent in
connection with this Agreement, and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents.

(e) Acknowledgement. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell the
Shares, the Warrant Shares or any interest therein without complying with the
requirements of the Securities Act. While the above-referenced registration
statement remains effective, each Purchaser hereunder may sell the shares in
accordance with the plan of distribution contained in the registration statement
and if it does so it will comply therewith and with the related prospectus
delivery requirements unless an exemption therefrom is available. Each
Purchaser, severally and not jointly with the other Purchasers, agrees that if
it is notified by the Company at any time after the date any legend is removed
pursuant to Section 4.1(c) hereof that the registration statement registering
the resale of the Shares or the Warrant Shares is not effective or that the
prospectus included in such registration statement no longer complies with the
requirements of Section 10 of the Securities Act, the Purchaser will refrain
from selling such Shares and Warrant Shares until such time as the Purchaser is
notified by the Company that such registration statement is effective or such
prospectus is compliant with Section 10 of the Exchange Act, unless such
Purchaser is able to, and does, sell such Shares or Warrant Shares pursuant to
an available exemption from the registration requirements of Section 5 of the
Securities Act. Each Purchaser, severally and not jointly with the other
Purchasers, agrees to indemnify the Company for any damages or losses resulting
to the Company from the Purchaser’s breach of its covenants set forth in the
preceding sentence.

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4.2 Reservation of Common Stock. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance from and
after the Closing Date, no less than 100% of the number of shares of Common
Stock issuable upon exercise of the Warrants issued at the Closing (without
taking into account any limitations on exercise of the Warrants set forth in the
Warrants).
 
4.3 Furnishing of Information. In order to enable the Purchasers to sell the
Securities under Rule 144 of the Securities Act, for a period of two years from
the Closing, the Company shall use its commercially reasonable efforts to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act. During such two year period, if the Company
is not required to file reports pursuant to such laws, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Shares and
Warrant Shares under Rule 144. The Company further covenants that it will take
such further action as any holder of Securities may reasonably request, all to
the extent required from time to time to enable such Person to sell the Shares
and Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144.
 
4.4  Reporting Status. During the two year period from and after the Closing,
the Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.
 
4.5  Form D and Blue Sky. The Company agrees to file a Form D with respect to
the Securities as required under Regulation D and to provide a copy thereof to
each Purchaser promptly after such filing. The Company, on or before the Closing
Date, shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Securities for
sale to the Purchasers at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Purchasers on or prior to the Closing Date. The
Company shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or “Blue Sky” laws of the states
of the United States following the Closing Date.
 
4.6  No Integration. The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that will be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that will be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.
 
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4.7 Intentionally Omitted.
 
4.8 Securities Laws Disclosure; Publicity. By 9:00 a.m. (New York City time) on
the Trading Day immediately following the execution of this Agreement, the
Company shall issue a press release (the “Press Release”) reasonably acceptable
to the Placement Agents disclosing all material terms of the transactions
contemplated hereby. On or before 9:00 a.m. (New York City time) on the Trading
Day following the Closing Date, the Company will file a Current Report on Form
8-K with the Commission describing the terms of the Transaction Documents (and
including as exhibits to such Current Report on Form 8-K the material
Transaction Documents (including, without limitation, this Agreement including
the schedule and exhibit thereto, the form of Warrant and the Registration
Rights Agreement)). Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser or an Affiliate of any Purchaser, or
include the name of any Purchaser or an Affiliate of any Purchaser in any press
release or filing with the Commission (other than the Registration Statement) or
any regulatory agency or Trading Market, without the prior written consent of
such Purchaser, except to the extent such disclosure is required by law, request
of the Staff of the Commission or Trading Market regulations. From and after the
issuance of the Press Release, no Purchaser shall be in possession of any
material, non-public information received from the Company or any of its
officers, directors, employees or agents, that is not disclosed in the Press
Release. The Company shall not, and shall cause each of its officers, directors,
employees and agents, not to, provide any Purchaser with any material,
non-public information regarding the Company from and after the filing of the
Press Release without the express written consent of such Purchaser. If a
Purchaser has received from the Company, or any of its officers, directors,
employees or agents, any such material, non-public information regarding the
Company, it shall provide the Company with written notice thereof. The Company
shall within five (5) Trading Days of receipt of such notice, make public
disclosure of such material, non-public information. Each Purchaser, severally
and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.8, such Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
 
4.9  Intentionally Omitted.
 
4.10 Listing of Securities. Promptly following the date hereof, the Company
shall take all necessary action to cause the Shares, the Warrant Shares and the
shares of Common Stock issuable upon exercise of the Placement Agents’ Warrants
to be listed upon the Principal Trading Market, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing. Further, if the Company applies to have its Common Stock or other
securities listed on any other Trading Market, it shall include in such
application the Shares and the Warrant Shares (including the shares of Common
Stock issuable upon exercise of the warrants issued to the Placement Agents) and
will take such other action as is necessary to cause the Shares, and the Warrant
Shares (including the shares of Common Stock issuable upon exercise of the
warrants issued to the Placement Agents) to be listed on such other Trading
Market as promptly as practicable.
 
4.11 Use of Proceeds. The Company intends to use the net proceeds from the sale
of the Securities hereunder for working capital and general corporate purposes.
 
4.12  Short Sales and Confidentiality After The Date Hereof. Such Purchaser
shall not, and shall cause its Trading Affiliates not to, engage, directly or
indirectly, in any transactions in the securities of the Company (including,
without limitation, any Short Sales) during the period from the date hereof
until such time as (i) the transactions contemplated by this Agreement are first
publicly announced as described in Section 4.8 or (ii) this Agreement is
terminated in full pursuant to Section 6.18. Notwithstanding the foregoing, in
the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser's assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser's
assets, the representation set forth above shall apply only with respect to the
portion of assets managed by the portfolio manager that have knowledge about the
financing transaction contemplated by this Agreement. Each Purchaser understands
and acknowledges, severally and not jointly with any other Purchaser, that the
Commission currently takes the position that covering a short position
established prior to effectiveness of a resale registration statement with
shares included in such registration statement would be a violation of Section 5
of the Securities Act, as set forth in Item 65, Section 5 under Section A, of
the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.
 
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ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING

5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase
Securities. The obligation of each Purchaser to acquire Securities at the
Closing is subject to the fulfillment to such Purchaser’s satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by such Purchaser (as to itself only):
 
(a) Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all material respects as
of the date when made and as of the Closing Date, as though made on and as of
such date except for representations and warranties that speak as of a specific
date;
 
(b) Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing;
 
(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;
 
(d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities, all of which shall
be and remain so long as necessary in full force and effect;
 
(e) Adverse Changes. Since the date of execution of this Agreement, no event or
series of events shall have occurred that has resulted or reasonably could
result in a Material Adverse Effect;
 
(f) No Suspensions of Trading in Common Stock; Listing. The Common Stock (i)
shall be designated for quotation or listed on the Principal Market and (ii)
shall not have been suspended, as of the Closing Date, by the Commission or the
Principal Market from trading on the Principal Market nor shall suspension by
the Commission or the Principal Market have been threatened, as of the Closing
Date, either (A) in writing by the Commission or the Principal Market or (B) by
falling below the minimum listing maintenance requirements of the Principal
Market;
 
(g) Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a);

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(h) Compliance Certificate. The Company shall have delivered to each Purchaser a
certificate, dated as of the Closing Date and signed by its Chief Executive
Officer or its Chief Financial Officer, dated as of the Closing Date, certifying
to the fulfillment of the conditions specified in Sections 5.1(a), (b), (c), (d)
and (f); and
 
(i) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.18 herein.
 
5.2 Conditions Precedent to the Obligations of the Company to sell Securities.
The Company's obligation to sell and issue the Securities at the Closing is
subject to the fulfillment to the satisfaction of the Company on or prior to the
Closing Date of the following conditions, any of which may be waived by the
Company:
 
(a) Representations and Warranties. The representations and warranties made by
the Purchasers in Section 3.2 hereof shall be true and correct in all material
respects as of the date when made, and as of the Closing Date as though made on
and as of such date (except for representations and warranties that speak as of
a specific date);
 
(b) Performance. The Purchasers shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Purchasers at or prior to the Closing Date;
 
(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;
 
(d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities, all of which shall
be and remain so long as necessary in full force and effect;
 
(e) Purchasers Deliverables. Each Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b); and
 
(f) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.18 herein.

ARTICLE VI.
MISCELLANEOUS
 
6.1 Fees and Expenses. The Company shall provide the Placement Agents with an
aggregate non-accountable expense allowance of $50,000, which is intended to
reimburse the Placement Agents for fees and expenses incurred by them in
connection with the transactions contemplated by this Agreement. The Company and
the Purchasers shall each pay the fees and expenses of their respective
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all
Transfer Agents’ fees, stamp taxes and other taxes and duties levied in
connection with the sale and issuance of the Securities to the Purchasers. Each
party acknowledges that Lowenstein Sandler PC has rendered legal advice to
certain of the Placement Agents and not to such party in connection with the
transactions contemplated hereby, and that such party has relied for such
matters on the advice of its own respective counsel.
 
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6.2 Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements, understandings,
discussions and representations, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect to
the intention of the parties under the Transaction Documents.
 
6.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender receives
a machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 5:00 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 5:00
p.m. (New York City time) on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier service
with next day delivery specified, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as follows:
 
If to the Company:              ZIOPHARM Oncology, Inc.
1180 Avenue of the Americas
19th Floor
New York, New York 10036
Telephone No.: (646) 214-0707
Facsimile No.: (646) 214-0711
Attention: Jonathan Lewis. M.D., Ph.D.

With a copy to:      Maslon Edelman Borman & Brand, LLP
3300 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
Telephone No.: (612) 672- 8200
Facsimile No.: (612) 672-8397
Attention: Alan Gilbert

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

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

6.4 Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived or amended except in a written instrument signed, in the
case of an amendment, by the Company and each of the Purchasers or, in the case
of a waiver, by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such
right. No consideration shall be offered or paid to any Purchaser to amend or
consent to a waiver or modification of any provision of any Transaction Document
unless the same consideration is also offered to all Purchasers who then hold
Securities.

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6.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.
 
6.6 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder, may not be
assigned by the Company without the prior written consent of the Purchasers. Any
Purchaser may assign its rights hereunder in whole or in part to any Person to
whom such Purchaser assigns or transfers any Securities in compliance with this
Agreement and applicable law, provided such transferee shall agree in writing to
be bound, with respect to the transferred Securities, by the terms and
conditions of this Agreement that apply to the “Purchasers”.
 
6.7  No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except the Placement Agents are intended third party beneficiaries of
Article III hereof and each Placement Agent may enforce the provisions of such
Sections directly against the parties with obligations thereunder.
 
6.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. If either party shall
commence a Proceeding to endorse any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorney’s fees and other costs and expenses uncured with the
investigation preparation and prosecution of such Proceeding.
 
6.9 Survival. Subject to applicable statute of limitations, the representations,
warranties, agreements and covenants contained herein shall survive the Closing
and the delivery of the Securities.
 
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6.10 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile signature page were an original thereof.
 
6.11 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
 
6.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.
 
6.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Transfer Agent, a bond in such form and amount as is reasonably required by the
Transfer Agent. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities. If a replacement certificate or
instrument evidencing any Securities is requested due to a mutilation thereof,
the Company may require delivery of such mutilated certificate or instrument as
a condition precedent to any issuance of a replacement.
 
6.14 Intentionally Omitted.
 
6.15 Intentionally Omitted.
 
6.16 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be deemed to be amended to appropriately account for such event.
 
6.17 Independent Nature of Purchasers' Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase Securities
pursuant to the Transaction Documents has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company which may have been made or given by any
other Purchaser or by any agent or employee of any other Purchaser, and no
Purchaser and any of its agents or employees shall have any liability to any
other Purchaser (or any other Person) relating to or arising from any such
information, materials, statement or opinions. Nothing contained herein or in
any Transaction Document, 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 with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the
Purchasers has been provided with the same Transaction Documents for the purpose
of closing a transaction with multiple Purchasers and not because it was
required or requested to do so by any Purchaser. The Company’s obligations to
each Purchaser under this Agreement are identical to its obligations to each
other Purchaser other than such differences resulting solely from the number of
Securities purchased by such Purchaser, but regardless of whether such
obligations are memorialized herein or in another agreement between the Company
and a Purchaser.
 
26

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6.18 Termination. This Agreement may be terminated and the sale and purchase of
the Shares and the Warrants abandoned at any time prior to the Closing by either
the Company or any Purchaser (with respect to itself only) upon written notice
to the other, if the Closing has not been consummated on or prior to 5:00 p.m.
(New York City time) on the Outside Date; provided, however, that the right to
terminate this Agreement under this Section 6.18 shall not be available to any
Person whose failure to comply with its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such time. Nothing in this Section 6.18 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents. In the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section, the Company and the terminating Purchaser(s) shall not have any
further obligation or liability (including arising from such termination) to the
other, and no Purchaser will have any liability to any other Purchaser under the
Transaction Documents as a result therefrom.
 
27

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

       
ZIOPHARM ONCOLOGY, INC.
 
   
   
  By:    

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Name:
Title: 

 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

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NAME OF PURCHASER: ____________________________
 
   
   
  By:    

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Name:
Title: 

 
Purchase Price (Subscription Amount): $ ____________________  

 
Number of Shares to be acquired: __________________________
Underlying Shares subject to Warrant: ______________________
(20.0% of the number of Shares to be acquired) 

 
Tax ID No.: ___________________________________________  
 
Address for Notice:
 
____________________________________________________
____________________________________________________
____________________________________________________
 
Telephone No.: ________________________________________
 
Facsimile No.: ________________________________________
 
Attention: ___________________________________________

Delivery Instructions:
(if different than above)

c/o: ________________________________________

Street: ______________________________________
______________________________________
 
 
City/State/Zip:________________________________

Attention: ___________________________________

Telephone No.: _______________________________

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EXHIBITS:
 
A:  Form of Warrant
 
B:  Form of Registration Rights Agreement
 
C-1:  Accredited Investor Questionnaire
 
C-2: Stock Certificate Questionnaire
 
D:  Form of Opinion of Company Counsel
 
E:  Irrevocable Transfer Agent Instructions
 
F: Wire Instructions
 
SCHEDULES:
 
3.1(c) Authorization; Enforcement
 
3.1(e) Filings, Consents and Approvals
 
3.1(w) Certain Fees

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EXHIBIT A
 
Form of Warrant

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EXHIBIT B
 
Form of Registration Rights Agreement

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Instruction Sheet for Exhibits C

(to be read in conjunction with the entire Securities Purchase Agreement and
Registration Rights Agreement)

A.  Complete the following items in the Securities Purchase Agreement and/or
Registration Rights Agreement:

1.   Provide the information regarding the Purchaser requested on the signature
page.  The  Securities Purchase Agreement must be executed by an individual
authorized to bind the Purchaser.

2.   Exhibit C-1 - Accredited Investor Questionnaire:

Provide the information requested by the Accredited Investor Questionnaire

3.    Exhibit C-2 - Stock Certificate Questionnaire

Provide the information requested by the Stock Certificate Questionnaire

4.     Annex B to the Registration Rights Agreement—Selling Securityholder
Notice and Questionnaire

Provide the information requested by the Selling Securityholder Notice and
Questionnaire

5.    Return the signed Securities Purchase Agreement and Registration Rights
Agreement to:

Basil Christakos
Paramount BioCapital, Inc.
787 Seventh Avenue
48th Floor
New York, NY 10019
Tel: (212) 554-4364
Fax: (212) 554-4355
Email: bchristakos@paramountbio.com

B.
Instructions regarding the transfer of funds for the purchase of Securities is
set forth on Exhibit F to the Securities Purchase Agreement.

 

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EXHIBIT C-1

ACCREDITED INVESTOR QUESTIONNAIRE

(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)

To: ZIOPHARM Oncology, Inc.

This Investor Questionnaire (“Questionnaire”) must be completed by each
potential investor in connection with the offer and sale of the shares of the
common stock, par value $0.001 per share, and shares of common stock that may be
issued upon exercise of certain warrants (collectively, the “Securities”), of
ZIOPHARM Oncology, Inc., a Delaware corporation (the “Corporation”). The
Securities are being offered and sold by the Corporation without registration
under the Securities Act of 1933, as amended (the “Act”), and the securities
laws of certain states, in reliance on the exemptions contained in Section 4(2)
of the Act and on Regulation D promulgated thereunder and in reliance on similar
exemptions under applicable state laws. The Corporation must determine that a
potential investor meets certain suitability requirements before offering or
selling Securities to such investor. The purpose of this Questionnaire is to
assure the Corporation that each investor will meet the applicable suitability
requirements. The information supplied by you will be used in determining
whether you meet such criteria, and reliance upon the private offering
exemptions from registration is based in part on the information herein
supplied.
 
This Questionnaire does not constitute an offer to sell or a solicitation of an
offer to buy any security. Your answers will be kept strictly confidential.
However, by signing this Questionnaire, you will be authorizing the Corporation
to provide a completed copy of this Questionnaire to such parties as the
Corporation deems appropriate in order to ensure that the offer and sale of the
Securities will not result in a violation of the Act or the securities laws of
any state and that you otherwise satisfy the suitability standards applicable to
purchasers of the Securities. All potential investors must answer all applicable
questions and complete, date and sign this Questionnaire. Please print or type
your responses and attach additional sheets of paper if necessary to complete
your answers to any item.
 
PART A. BACKGROUND INFORMATION

Name of Beneficial Owner of the Securities:  

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

Business Address:  

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

(Number and Street) 
 

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

(City)
(State)
(Zip Code)

Telephone Number: (___)   

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

 
If a corporation, partnership, limited liability company, trust or other entity:

Type of entity:  

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

State of formation:______________________ Approximate Date of formation:
____________________

Set forth in the space provided below the (i) state(s), if any, in the United
States in which you maintained your principal office during the past two years
and the dates during which you maintained your office in each state, and
(ii) state(s), if any, in which you pay income taxes:

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

 
 
Were you formed for the purpose of investing in the securities being offered?

Yes ____ No ____

If an individual:

Residence Address: 

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

(Number and Street)
 

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

(City)
(State)
(Zip Code)

 
Telephone Number: (___)   

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Age: __________ Citizenship: ____________ Where registered to vote:
_______________ 

Set forth in the space provided below the state(s), if any, in the United States
in which you maintained your residence during the past two years and the dates
during which you resided in each state:

 

Are you a director or executive officer of the Corporation?

Yes ____ No ____

PART B. ACCREDITED INVESTOR QUESTIONNAIRE

 
In order for the Company to offer and sell the Securities in conformance with
state and federal securities laws, the following information must be obtained
regarding your investor status. Please initial each category applicable to you
as a Purchaser of Securities of the Company.
 

  __ (1)
A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and
loan  association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act  whether acting in its individual or fiduciary capacity;

     

  __ (2)
A broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act  of 1934;

     

 
__ (3)
An insurance company as defined in Section 2(13) of the Securities Act;

 
__ (4)
An investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that Act;

 
__ (5)
A Small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;

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

 
 

 
__ (6)
A plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of $5,000,000;

 
__ (7)
An employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors;

 
__ (8)
A private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;

 

 
__ (9)
An organization described in Section 501(c)(3) of the Internal Revenue Code, a
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the Securities, with total assets in
excess of $5,000,000;

     

  __ (10) 
A trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Securities, whose purchase is directed by a
sophisticated person who has such knowledge and experience in financial and
business matters that such person is capable of evaluating the merits and risks
of investing in the Company;

     

  __(11)
A natural person whose individual net worth, or joint net worth with that
person’s spouse, at the time of his purchase exceeds $1,000,000;

     

  __(12) 
A natural person who had an individual income in excess of $200,000 in each of
the two most recent years, or joint income with that person’s spouse in excess
of  $300,000, in each of those years, and has a reasonable expectation of
reaching the same income level in the current year;

 

 
__(13)
An executive officer or director of the Company

     

  __(14)
 An entity in which all of the equity owners qualify under any of the above
subparagraphs. If the undersigned belongs to this investor category only, list
the equity owners of the undersigned, and the investor category which each such
equity owner satisfies:

 
(Continue on a separate piece of paper, if necessary.)

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

 

 
A. FOR EXECUTION BY AN INDIVIDUAL:

       

 
By 

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

Date   Print Name: 

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

 

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

 

B. FOR EXECUTION BY AN ENTITY:
 

   

Entity Name: 
 

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

 

 
By 

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

Date  
Print Name: 

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

 

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

    Title:
 

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

 

 
C. ADDITIONAL SIGNATURES (if required by partnership, corporation or trust
document):
 

   

Entity Name: 
 

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

 

 
By 

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

Date  
Print Name: 

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

 

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

    Title:
 

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

 
       

   

Entity Name: 
 

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

 

 
By 

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

Date  
Print Name: 

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

 

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

 
    Title:
 

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

 

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EXHIBIT C-2
 
Stock Certificate Questionnaire
 
Pursuant to Section 2.2(b) of the Agreement, please provide us with the
following information:
 
1.
The exact name that the Securities are to be registered in (this is the name
that will appear on the stock certificate(s)). You may use a nominee name if
appropriate:
       
2.
The relationship between the Purchaser of the Securities and the Registered
Holder listed in response to Item 1 above:
       
3.
The mailing address, telephone and telecopy number of the Registered Holder
listed in response to Item 1 above:
                               
4.
The Tax Identification Number (or, if an individual, the Social Security Number)
of the Registered Holder listed in response to Item 1 above:
 

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EXHIBIT D
 
Form of Opinion of Company Counsel
 

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EXHIBIT E
 
Form of Irrevocable Transfer Agent Instructions
 
As of February __, 2007
 
American Stock Transfer and Trust Company
6201 15 Avenue
Brooklyn New York 11129
Attn: _________________
 
Ladies and Gentlemen:
 
      Reference is made to that certain Securities Purchase Agreement, dated as
of February __, 2007 (the “Agreement”), by and among ZIOPHARM Oncology, Inc. a
Delaware corporation (the “Company”), and the purchasers named on the signature
pages thereto (collectively, the “Holders”), pursuant to which the Company is
issuing to the Holders shares (the “Shares”) of Common Stock of the Company, par
value $0.001 per share (the “Common Stock”), and warrants (the “Warrants”),
which are exercisable into shares of Common Stock.
 
      This letter shall serve as our irrevocable authorization and direction to
you (provided that you are the transfer agent of the Company at such time and
the conditions set forth in this letter are satisfied):
 
       (i)  to issue shares of Common Stock upon transfer or resale of the
Shares; and
 
       (ii)  to issue shares of Common Stock upon the exercise of the Warrants
(the “Warrant Shares”) to or upon the order of a Holder from time to time upon
delivery to you of a properly completed and duly executed Exercise Notice, in
the form attached hereto as Annex I, which has been acknowledged by the Company
as indicated by the signature of a duly authorized officer of the Company
thereon together with indication of receipt of the exercise price therefor.

      You acknowledge and agree that so long as you have previously received
(a) written confirmation from the Company’s legal counsel that either (1) a
registration statement covering resales of the Shares and the Warrant Shares has
been declared effective by the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “Securities
Act”), or (2) the Shares and the Warrant Shares are eligible for sale in
conformity with Rule 144 under the Securities Act (“Rule 144”) and (b) if
applicable, a copy of such registration statement, then, unless otherwise
required by law, as soon as reasonably practicable following your receipt of
Shares or Warrant Shares, you shall issue the certificates representing the
Shares and the Warrant Shares so sold to the Holders or their transferees, as
the case may be, registered in the names of such Holders or transferees, as the
case may be, and such certificates shall not bear any legend restricting
transfer of the Shares and the Warrant Shares thereby and should not be subject
to any stop-transfer restriction; provided, however, that if such Shares and
Warrant Shares are not registered for resale under the Securities Act or able to
be sold under Rule 144, then the certificates for such Shares and/or Warrant
Shares shall bear the following legend:
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
 
      A form of written confirmation (to be used in connection with any sale)
from the Company’s outside legal counsel that a registration statement covering
resales of the Shares and the Warrant Shares has been declared effective by the
Commission under the Securities Act is attached hereto as Annex II.
 
      Please be advised that the Holders are relying upon this letter as an
inducement to enter into the Agreement and, accordingly, each Holder is a third
party beneficiary to these instructions.
 
      Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions.

Very truly yours,

ZIOPHARM ONCOLOGY, INC.
 
By: __________________________________
Name: ________________________________
Title: ________________________________

Acknowledged and Agreed:

AMERICAN STOCK TRANSFER & TRUST COMPANY

By: __________________________________
Name: ________________________________ 
Title: ________________________________
 
Date: _________________, 2007

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

 
 
Annex I 
 
Form of Exercise Notice
 
(To be executed by the Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrants)
 
To:  ZIOPHARM Oncology, Inc.

(1) The undersigned hereby elects to purchase _________ shares of Common Stock
pursuant to the above-referenced Warrant. Capitalized terms used herein and not
otherwise defined herein have the respective meanings set forth in the Warrant.
  
(2) The Holder intends that payment of the Exercise Price shall be made as
(check one):

o              Cash Exercise under Section 10

o  Cashless Exercise under Section 10

(3) If the Holder has elected a Cash Exercise, the holder shall pay the sum of
$_______ to the Company in accordance with the terms of the Warrant.

(4) Pursuant to this Exercise Notice, the Company shall deliver to the Holder
_____________ Warrant Shares in accordance with the terms of the Warrant.
 
(5) By its delivery of this Exercise Notice, the undersigned represents and
warrants to the Company that in giving effect to the exercise evidenced hereby,
the Holder will not beneficially own in excess of the number of shares of Common
Stock (as determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934) permitted to be owned under Section 11 of this Warrant to which
this notice relates.

 
Dated:_______________, _____
 
Name of Holder: ________________________
 
 
By:_________________________________
Name: ______________________________
Title: _______________________________

(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)

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

 
 
Acknowledgement
 
      The Company hereby acknowledges this Exercise Notice and receipt of the
appropriate exercise price and hereby directs American Stock Transfer & Trust
Company to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated February __ 2007, from the
Company and acknowledged and agreed to by American Stock Transfer & Trust
Company.
 
ZIOPHARM ONCOLOGY, INC.
 
By: __________________________________  
Name: ________________________________
Title: ________________________________
 

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Annex II
 
Form of Notice of Effectiveness of Registration Statement
 
 
 
American Stock Transfer and Trust Company
6201 15 Avenue
Brooklyn New York 11129
Attn: _________________
 
 
 
 
 
Re: ZIOPHARM Oncology, Inc.

 
Ladies and Gentlemen:
 
         We are counsel to ZIOPHARM Oncology, Inc. a Delaware corporation (the
“Company”), and have represented the Company in connection with that certain
Securities Purchase Agreement, dated as of February __, 2007, entered into by
and among the Company and the buyers named therein (collectively, the
“Purchasers”) pursuant to which the Company issued to the Purchasers shares of
the Company’s Common Stock, $0.001 par value per share (the “Common Stock”), and
warrants exercisable for shares of Common Stock (the “Warrants”). Pursuant to
that certain Registration Rights Agreement of even date, the Company agreed to
register the resale of the Common Stock, including the shares of Common Stock
issuable upon exercise of the Warrants (collectively, the “Registrable
Securities”), under the Securities Act of 1933, as amended (the “Securities
Act”). In connection with the Company’s obligations under the Registration
Rights Agreement, on                     , 2007, the Company filed a
Registration Statement on Form S-3 (File No. 333-                    ) (the
“Registration Statement”) with the Securities and Exchange Commission (the
“Commission”) relating to the Registrable Securities which names each of the
Purchasers as a selling shareholder thereunder.
 
        In connection with the foregoing, we advise you that a member of the
Commission’s staff has advised us by telephone that the Commission has entered
an order declaring the Registration Statement effective under the Securities Act
at ____ [a.m.][p.m.] on __________, 200_, and we have no knowledge, after
telephonic inquiry of a member of the staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are
pending before, or threatened by, the Commission and the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.
 
      This letter shall serve as our standing notice to you that the Common
Stock may be freely transferred by the Purchasers pursuant to the Registration
Statement. You need not require further letters from us to effect any future
legend-free issuance or reissuance of shares of Common Stock to the Purchasers
or the transferees of the Purchasers, as the case may be, as contemplated by the
Company’s Irrevocable Transfer Agent Instructions dated February __, 2007. This
letter shall serve as our standing instructions with regard to this matter.

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

 

 
 
 
 
 
 
 
Very truly yours,
 
 
 
 
 
 
 
MASLON EDELMAN BORMAN & BRAND, LLP
 
 
 
 
 
 
 
By:
 
 
 
 
 
 

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

CC:         Purchasers
Oppenheimer & Co. Inc.
Griffin Securities, Inc.
Paramount BioCapital, Inc.

4

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EXHIBIT F
 
WIRE INSTRUCTIONS

 
5

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