Exhibit 10.10

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated as of July 26,
2013, by and among Lipocine Inc., a Delaware corporation (the “Company”) (f.k.a.
Marathon Bar Corp.), 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 (the “Commission”) under the
Securities Act.

B. Each Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this
Agreement, that aggregate number of shares of common stock, par value $0.0001
per share (the “Common Stock”), of the Company, determined as set forth in
Section 2.1(a) below (which aggregate amount for all Purchasers together shall
be collectively referred to herein as the “Shares”).

C. The Shares are referred to herein as the “Securities”.

D. The Company has engaged Ladenburg Thalmann & Co. as its exclusive placement
agent (the “Placement Agent”) for the offering of the Shares on a “best efforts”
basis.

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

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

ARTICLE 1

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 (or otherwise) against the
Company or any of their respective properties or any officer, director or
employee of the Company acting in his or her capacity as an officer, director or
employee before or by any federal, state, county, local or foreign court,
arbitrator, governmental or administrative agency, regulatory authority, stock
market, stock exchange or trading facility.

 

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“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.

“Agreement” shall have the meaning ascribed to such term in the Preamble.

“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 by the Purchasers listed on Annex A
hereto and sale by the Company of Shares to such Purchasers pursuant to this
Agreement on the Closing Date as provided in Section 2.1(a) hereof.

“Closing Date” means the third (3rd) Trading Day after the date on which this
Agreement has been executed and delivered by all parties hereto, unless on such
date the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 (other than
those to be satisfied at the Closing) shall not have been satisfied or waived,
in which case the Closing Date shall be on the third (3rd) Trading Day after the
date on which the last to be satisfied or waived of the conditions set forth in
Sections 2.1, 2.2, 5.1 and 5.2 (other than those to be satisfied at the Closing)
shall have been satisfied or waived.

“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.

“Company Counsel” means Cooley 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 the Company, that the statement is based upon the actual knowledge of the
officers of the Company 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.

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

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

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

 

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“Irrevocable Transfer Agent Instructions” means, with respect to the Company,
the Irrevocable Transfer Agent Instructions, in the form of Exhibit D, 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.

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

“Material Contract” means any contract of the Company that has been filed or was
required to have been filed as an exhibit to the SEC Reports pursuant to
Item 601(b)(4) or Item 601(b)(10) of Regulation S-K (including, for purposes
hereof, any contracts that are required to be filed as an exhibit to a Form 10).

“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 August 2, 2013.

“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 or quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the OTC Bulletin Board.

“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 $6.00 per share of Common Stock.

“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).

 

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

“Reverse Merger Transaction” means the transaction whereby the Company (f.k.a.
Marathon Bar Corp.) issued a certain number of shares of Common Stock in
exchange for 100% of the ownership interest of Lipocine Operating Inc. Upon
completion of the Reverse Merger Transaction, Lipocine Operating Inc. became a
direct wholly-owned subsidiary of the Company.

“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)(vi).

“Securities Act” means the Securities Act of 1933, as amended.

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

“Subscription Amount” means with respect to each Purchaser, the aggregate amount
to be paid for the Shares purchased hereunder as indicated on such Purchaser’s
signature page to this Agreement next to the heading “Aggregate Purchase Price
(Subscription Amount)”.

“Subsidiary” means any entity in which the Company, directly or indirectly, owns
capital stock or holds an equity or similar interest.

“Trading Affiliate” has the meaning set forth in Section 3.2(h).

“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal 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 in the “pink sheets”
by Pink Sheets LLC (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 NYSE-Mkt,
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.

“Transaction Documents” means this Agreement, the exhibits attached hereto, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions and
any other documents or agreements executed in connection with the transactions
contemplated hereunder.

 

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“Transfer Agent” means Globex Transfer, LLC, or any successor transfer agent for
the Company.

ARTICLE 2

PURCHASE AND SALE

2.1 Closing.

(a) Amount. Subject to the terms and conditions set forth in this Agreement, at
the Closing, the Company shall issue and sell to each Purchaser listed on Annex
A hereto, and each Purchaser listed on Annex A hereto 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 down to the nearest whole Share.

(b) Closing. The Closing of the purchase and sale of the Shares shall take place
at the offices of Company Counsel, 3175 Hanover Street, Palo Alto, California on
the Closing Date or at such other locations or remotely by facsimile
transmission or other electronic means as the parties may mutually agree.

(c) Form of Payment. On the Closing Date, (i) each Purchaser listed on Annex A
hereto shall wire its Subscription Amount, in United States dollars and in
immediately available funds, in the amount set forth as the “Aggregate Purchase
Price (Subscription Amount)” indicated below such Purchaser’s name on the
applicable signature page hereto by wire transfer to the Company’s account, as
set forth in instructions previously provided to the Purchasers, and (ii) the
Company shall irrevocably instruct the Transfer Agent to deliver to each
Purchaser listed on Annex A hereto one or more stock certificates, free and
clear of all restrictive and other legends except as expressly provided in
Section 4.1(b) hereof, evidencing the number of Shares such Purchaser is
purchasing as is calculated in accordance with Section 2.1(a) above, within
three (3) Business Days after the Closing.

2.2 Closing Deliveries.

(a) On or prior to the Closing with respect to the Purchasers listed on Annex A
hereto, the Company shall issue, deliver or cause to be delivered to such
Purchaser the following (the “Company Deliverables”):

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

(ii) facsimile copies of 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 such Purchaser hereunder, registered in
the name of such Purchaser as set forth on the Stock Certificate Questionnaire
included as Exhibit B-2 hereto (the “Stock Certificates”), with the original
Stock Certificates delivered within three (3) Business Days of Closing;

(iii) a legal opinion of Company Counsel dated as of the Closing Date in the
form attached hereto as Exhibits C executed by such counsel and addressed to
such Purchasers;

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

 

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(v) duly executed Irrevocable Transfer Agent Instructions acknowledged in
writing by the Transfer Agent;

(vi) 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 or a duly authorized committee
thereof 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, in the form attached hereto as Exhibit E;

(vii) the Compliance Certificate referred to in Section 5.1(g);

(viii) a certificate evidencing the formation and good standing of the Company
issued by the Secretary of State of the State of Delaware, as of a date within
five (5) days of the Closing Date;

(ix) a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State of the State of
Utah, as of a date within ten (10) days of the Closing Date; and

(x) a certified copy of the Certificate of Incorporation, as certified by the
Secretary of State of the State of Delaware, as of a date within ten (10) days
of the Closing Date.

(b) On or prior to the Closing with respect to the Purchasers listed on Annex A
hereto, 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 “Aggregate Purchase Price
(Subscription Amount)” indicated below such Purchaser’s name on the applicable
signature page hereto by wire transfer to the Company’s account as previously
provided to the Purchasers;

(iii) a fully completed and duly executed Selling Stockholder Questionnaire in
the form attached as Annex B to the Registration Rights Agreement; and

(iv) a fully completed and duly executed Accredited Investor Questionnaire and
Stock Certificate Questionnaire in the forms attached hereto as Exhibits B-1 and
B-2, respectively.

 

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ARTICLE 3

REPRESENTATIONS AND WARRANTIES

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

(a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than
Lipocine Operating Inc., a Delaware corporation.

(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 State of Delaware, with the requisite corporate 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 or bylaws. 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, would not
have a Material Adverse Effect.

(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)
have been duly authorized by all necessary corporate action on the part of the
Company, and no further corporate action is required by the Company, its Board
of Directors or its stockholders in connection therewith other than in
connection with the Required Approvals. Each of the Transaction Documents to
which 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 legal, 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. 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 stockholders.

(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) do not and will not (i) conflict with or
violate any provisions of the Company’s certificate of incorporation or bylaws
or otherwise result in a violation of the organizational documents of the
Company, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would 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 Material Contract or
(iii) 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 or decree (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 clause
(iii) such as would not, individually or in the aggregate, have 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

 

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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
listing of the Common Stock for trading or quotation, as the case may be,
thereon in the time and manner required thereby, (v) the filings required in
accordance with Section 4.9 of this Agreement and (vi) those that have been made
or obtained prior to the date of this Agreement (collectively, the “Required
Approvals”).

(f) Issuance of the Securities. The Shares have been duly authorized and, when
issued and paid for in accordance with the terms of the Transaction Documents,
will be duly and validly issued, fully paid and nonassessable and free and clear
of all Liens, other than restrictions on transfer provided for in the
Transaction Documents or imposed by applicable securities laws, and shall not be
subject to preemptive or similar rights. Assuming the accuracy of the
representations and warranties of the Purchasers in this Agreement, the Shares
will be issued in compliance with all applicable federal and state securities
laws.

(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 set forth in such SEC Reports only to reflect stock
option exercises and grants and warrant exercises that have not, individually or
in the aggregate, had 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 set forth
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 (including, for purposes hereof, any liabilities that are

 

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required to be disclosed in a Form 10) 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 twelve (12) months preceding the
date hereof (or such shorter period as the Company was required by law or
regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports” and together with this
Agreement, 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 filing dates, or to the
extent corrected by a subsequent amendment, 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.

(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. 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 and its consolidated
subsidiaries taken as a whole as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, year-end audit adjustments. Each of the
Material Contracts to which the Company is a party or to which the property or
assets of the Company is subject has been filed as an exhibit to the SEC
Reports.

(j) Tax Matters. The Company (i) has 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 have a Material
Adverse Effect.

(k) Material Changes. Since the date of the latest financial statements included
within the SEC Reports, except as specifically disclosed in the SEC Reports,
(i) there have been no events, occurrences or developments that have had or
would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, (ii) the Company has not incurred any material
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 to be disclosed in
filings made with the Commission, (iii) the Company has not materially altered
its method of accounting

 

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or the manner in which it keeps its accounting books and records, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock (other than in connection
with repurchases of unvested stock issued to employees of the Company), (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except Common Stock issued in the ordinary course 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 Material Contract under which the Company or any of its assets is bound or
subject. Except for the issuance of the Securities contemplated by this
Agreement, 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.

(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 would have, individually or in the aggregate, a
Material Adverse Effect; 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, (ii) involves a claim of violation of or liability under any
federal, state, local or foreign laws governing the Company’s operations,
including without limiting the generality of the foregoing, laws regulating the
protection of human health, including without limiting the generality of the
foregoing, laws relating to the manufacture, processing, packaging, labeling,
marketing, distribution, use, inspection, treatment, storage, disposal,
transport or handling of the Company’s products, and regulated or hazardous
substances, as well as all authorizations, codes, decrees, demands or demand
letters, injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder, all as may be in effect from time to time and all successors,
replacements and expansions thereof, (iii) involves injury to or death of any
person arising from or relating to any of the Company’s product or (iv) could,
if there were an unfavorable decision, individually or in the aggregate, have a
Material Adverse Effect. 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 Company’s
Knowledge, is imminent with respect to any of the employees of the Company which
would have 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 its relationship with its employees is good.

(o) Compliance. The Company (i) is not 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 written notice of a claim that it is in default

 

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under or that it is in violation of, any indenture, loan or credit agreement or
any other Material Contract (whether or not such default or violation has been
waived), (ii) is not in violation of any order of any court, arbitrator or
governmental body having jurisdiction over the Company or its properties or
assets and (iii) is not and has not been 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, including without limitation,
all applicable rules and regulations of the Food and Drug Administration (the
“FDA”), and all applicable laws, statutes, ordinances, rules or regulations
(including, without limitation, the Federal Food, Drug and Cosmetic Act of 1938,
as amended and similar foreign laws and regulations) enforced by the FDA or
equivalent foreign authorities, except in each case as would not, individually
or in the aggregate, have a Material Adverse Effect.

(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, including without limitation the FDA, except where the failure to
possess such permits, individually or in the aggregate, has not and would not
have, individually or in the aggregate, a Material Adverse Effect (“Material
Permits”), and (i) the Company has not received any notice of proceedings
relating to the revocation or modification of any such Material Permits and
(ii) the Company is unaware of any facts or circumstances that the Company would
reasonably expect to give rise to the revocation or modification of any Material
Permits.

(q) Title to Assets. The Company does not own any real property. The Company has
good and marketable title to all tangible personal property owned by it which is
material to the business of the Company, in each case free and clear of all
liens, encumbrances and defects except such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by the Company. Any real property and facilities held
under lease by the Company are held by it under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company.

(r) Patents and Trademarks. To the Company’s knowledge, 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 and other proprietary rights and processes (collectively, the
“Intellectual Property”) necessary for the conduct of its businesses as now
conducted. Except where such violations or infringements would not have, either
individually or in the aggregate, a Material Adverse Effect, to the Company’s
Knowledge (a) there are no rights of third parties to any such Intellectual
Property; (b) there is no infringement by third parties of any such Intellectual
Property; (c) there is no pending or threatened Action challenging the Company’s
rights in or to any such Intellectual Property; (d) there is no pending or
threatened Action challenging the validity or scope of any such Intellectual
Property; and (e) there is no pending or threatened Action that the Company
infringes or otherwise violates any patent, trademark, copyright, trade secret
or other proprietary rights of others.

(s) Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as the Company
believes to be prudent in the businesses and locations in which the Company is
engaged. The Company has not received any notice of cancellation of any such
insurance, nor does the Company 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.

 

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(t) Transactions With Affiliates and Employees. None of the officers or
directors of the Company and, to the Company’s Knowledge, none of the employees
of the Company, is presently a party to any transaction with the Company or to a
presently contemplated transaction (other than for services as employees,
officers and directors) that would be required to be disclosed pursuant to
Item 404 of Regulation S-K promulgated under the Securities Act, except as
contemplated by the Transaction Documents or set forth in the SEC Reports.

(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 and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any differences.

(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. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act).

(w) Certain Fees. Other than the Placement Agent, 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. The Company shall
indemnify, pay, and hold each Purchaser harmless against, any liability, loss or
expense (including, without limitation, attorneys’ fees and out-of-pocket
expenses) arising in connection with any such right, interest or claim.

(x) Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2 of this Agreement and the accuracy of
the information disclosed in the Accredited Investor Questionnaires, 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.

(y) Registration Rights. 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.

(z) No Directed Selling Efforts or General Solicitation. Neither the Company nor
any Person acting on its or its 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.

(aa) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company nor
any Person acting on its behalf has, directly or indirectly, at any time within
the past six (6) months, made any offers or sales of any Company security or
solicited any offers to buy any 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

 

12.

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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.

(bb) Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to terminate the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration.

(cc) 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.

(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 the
State of Delaware 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) 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 SEC
Reports (including, for purposes hereof, any that are required to be disclosed
in a Form 10) and is not so disclosed or that otherwise would have a Material
Adverse Effect.

(ff) Acknowledgment Regarding the Purchasers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby. The Company
further acknowledges that no Purchaser is acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and any advice
given by any Purchaser or any of their respective representatives or agents in
connection with the Transaction Documents and the transactions contemplated
thereby is merely incidental to the Purchasers’ purchase of the Securities.

(gg) Foreign Corrupt Practices. Neither the Company, nor to the Company’s
Knowledge, any agent or other person acting on behalf of the Company, has:
(i) directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company (or made by any person acting on its behalf of
which the Company is aware) which is in violation of law or (iv) violated in any
material respect any provision of the Foreign Corrupt Practices Act of 1977, as
amended.

(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.

 

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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 in the case of the Purchasers listed on Annex A
hereto to the Company 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 and the Registration Rights
Agreement has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and
legally binding obligation of such Purchaser, enforceable against it in
accordance with its terms, except 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) No Conflicts. The execution, delivery and performance by such Purchaser of
this Agreement and the Registration Rights Agreement and the consummation by
such Purchaser of the transactions contemplated hereby and thereby will not
(i) result in a violation of the organizational documents of such Purchaser,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Purchaser is a party or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such
Purchaser, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to perform its obligations hereunder.

(c) 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 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 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.

 

14.

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(d) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is, an “accredited investor” as defined in Rule
501(a) under the Securities Act.

(e) 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.

(f) 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.

(g) 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 respective
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of 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. Such Purchaser has sought such accounting, legal
and tax advice as it has considered necessary to make an informed decision with
respect to its acquisition of the Securities.

(h) Certain Trading Activities. Other than with respect to the transactions
contemplated herein, since the time that such Purchaser was first contacted by
the Company or any other Person regarding the transactions contemplated hereby,
neither the Purchaser nor, to the knowledge of such Purchaser, any Affiliate of
such Purchaser which (i) had knowledge of the transactions contemplated hereby,
(ii) 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 (iii) 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, and except as otherwise provided in Section 4.11,
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
effectiveness of the Registration Statement as described in Section 4.11.

 

15.

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(i) Brokers and Finders. Other than the Placement Agent, 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.

(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.

(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.

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

(n) Residency. Such Purchaser’s principal executive offices are in the
jurisdiction set forth immediately below Purchaser’s name on the applicable
signature page attached hereto.

(o) Trading Market. Such Purchaser acknowledges that the Securities are quoted
over-the-counter, and that no securities issued by the Company are listed on a
national securities exchange.

(p) Shell Company. Such Purchaser acknowledges that the Company may be deemed to
be a “shell company” as defined by the rules and regulations of the Commission.

(q) Future Financings. Such Purchaser acknowledges that the Company intends to
sell and issue securities in the aggregate amount of up to ten million dollars
($10,000,000) within one hundred eighty (180) days of Closing Date in one or
more financings.

The Company and each of the Purchasers acknowledge and agree that no party to
this Agreement has made or makes any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth
in this Article III and the Transaction Documents.

 

16.

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ARTICLE 4

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) Compliance with Laws. Notwithstanding any other provision of this Article 4,
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 without
restriction following the applicable holding period or (vi) in connection with a
bona fide pledge, 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) (and a stock transfer order may be placed against transfer of the
certificates for the Securities):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

In addition, if any Purchaser is an Affiliate of the Company, certificates
evidencing the Securities issued to such Purchaser shall bear a customary
“affiliates” legend.

(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 or any
other legend to the holder of the applicable Shares 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 sold pursuant
to an effective Registration Statement and the Purchaser has delivered a signed
and completed Purchaser’s Certificate of Subsequent Sale in substantially the
form of Exhibit G attached hereto (the “Certificate of Sale”) with respect to
such Securities, (ii) such Securities are sold or transferred pursuant to
Rule 144 (if the transferor is not an Affiliate of the Company) or (iii) such
Securities are eligible for sale under Rule 144 without restriction. Any fees
(with respect to the Transfer Agent, Company Counsel

 

17.

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or otherwise) associated with the removal of such legend shall be borne by the
Company. Following such 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 a legended certificate representing such Shares (endorsed or with
stock powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer), deliver or cause to be delivered to the
transferee of such Purchaser or such Purchaser, as applicable, 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 4.1. Certificates for Shares subject to legend removal
hereunder may be transmitted by the Transfer Agent to the Purchasers, as
applicable, by crediting the account of the transferee’s Purchaser’s prime
broker with DTC.

(d) Irrevocable Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its Transfer Agent, and any subsequent Transfer Agent, in the
form of Exhibit D attached hereto (the “Irrevocable Transfer Agent
Instructions”). The Company represents and warrants that no instruction other
than the Irrevocable Transfer Agent Instructions or instructions consistent
therewith referred to in this Section 4.1(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, the other Transaction Documents and
applicable law. The Company acknowledges that a breach by it of its obligations
under this Section 4.1(d) will cause irreparable harm to a Purchaser.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 4.1(d) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 4.1(d), that a Purchaser shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

(e) Acknowledgement. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell or
otherwise transfer the Shares or any interest therein without complying with the
requirements of the Securities Act. While the Registration Statement remains
effective, each Purchaser hereunder may sell the Shares 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
in writing at any time that the Registration Statement registering the resale of
the 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 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
pursuant to an available exemption from the registration requirements of
Section 5 of the Securities Act.

4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock.
The Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Shares
pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance may have on
the ownership of the other stockholders of the Company.

 

18.

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4.3 Antidilution Adjustment. As to each Purchaser, during the one hundred eighty
days (180) days following the Closing Date, if any issuance, sale, grant of any
option or right to purchase or other disposition of any equity security or any
equity-linked or related security (including, without limitation, any “equity
security” (as that term is defined under Rule 405 promulgated under the
Securities Act), any securities convertible into such equity securities, any
preferred stock or any purchase rights) is for a consideration per share that is
less than the Purchase Price (adjusted for stock splits, combinations, dividends
and the like occurring after the date hereof) (such lesser price is referred to
herein as the “Discounted Purchase Price”) (the foregoing, a “Dilutive
Issuance”), other than the Excluded Securities (as defined below), then
immediately after such Dilutive Issuance, the Company shall issue to such
Purchaser solely with respect to the Shares acquired pursuant to this Agreement
or in connection with a Dilutive Issuance, without the payment of additional
consideration, in connection with such Dilutive Issuance, a number of additional
shares of Common Stock (the “Additional Shares”) equal to the result of
subtracting (B) from (A) where (A) is the number of shares of Common Stock the
Buyer would have received if the Buyer had paid the Discounted Purchase Price
instead of the Purchase Price (adjusted for stock splits, combinations,
dividends and the like occurring after the Closing Date), and (B) is the number
of shares of Common Stock initially issued to the Purchaser at the Closing
(adjusted for stock splits, combinations, dividends and the like occurring after
the Closing Date) plus any shares of Common Stock previously received by
Purchaser under this Section in respect of a Dilutive Issuance (adjusted for
stock splits, combinations, dividends and the like occurring after the Closing
Date). Upon any issuance of Additional Shares hereunder, such Additional Shares
shall be included as Registrable Securities (as defined in the Registration
Rights Agreement).

Excluded Securities include: (a) shares of Common Stock issued upon conversion
of any convertible securities outstanding as of the date hereof; (b) shares of
Common Stock or securities convertible into Common Stock issued to employees,
officers or directors of, or consultants or advisors to the Company or any
subsidiary pursuant to stock purchase agreements, stock option plans or other
arrangements that are approved by the Company’s board of directors; (c) shares
of Common Stock or securities convertible into Common Stock issued in connection
with strategic transactions involving the Company and other entities approved by
the Company’s board of directors; and (d) shares of Common Stock or securities
convertible into Common Stock that the holders of a majority of the outstanding
Shares elect in writing to deem Excluded Securities.

4.4 Furnishing of Information. In order to enable the Purchasers to sell the
Securities under Rule 144 of the Securities Act, for a period of one year from
the Closing Date, 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 one 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 under Rule 144.

4.5 Form D and Blue Sky. The Company agrees to timely file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof
to each Purchaser who requests a copy in writing 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 who request in
writing such evidence 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.

 

19.

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4.6 No Integration. The Company shall not, and shall use its commercially
reasonable 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.

4.7 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”) disclosing all
material terms of the transactions contemplated hereby. On or before 9:00 a.m.,
New York City time, on the second Trading Day following the execution of this
Agreement (or such earlier time as required by law), 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 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 (i) as
required by federal securities law in connection with (A) any registration
statement contemplated by the Registration Rights Agreement and (B) the filing
of final Transaction Documents (including signature pages thereto) with the
Commission or (ii) to the extent such disclosure is required by law, request of
the Staff of the Commission or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior written notice of such
disclosure permitted under this subclause (ii). 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 respective
officers, directors, employees or agents, that is not disclosed in the Press
Release unless a Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. 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 this Section 4.7, 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).

4.8 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, 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, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information.

4.9 Indemnification.

(a) Indemnification of the Purchasers. In addition to the indemnity provided in
the Registration Rights Agreement, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Purchaser (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such

 

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titles notwithstanding a lack of such title or any other title) of such
controlling person (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such Purchaser Party may
suffer or incur, as a result of or relating to third party claims against such
Purchaser relating to any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents, provided that that such a claim for indemnification
relating to any breach of any of the representations or warranties made by the
Company in this Agreement is made within one (1) year from the Closing. The
Company will not be liable to any Purchaser Party under this Agreement to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents.

(b) Conduct of Indemnification Proceedings. Promptly after receipt by any Person
(the “Indemnified Person”) of notice of any demand, claim or circumstances which
would or might give rise to a claim or the commencement of any action,
proceeding or investigation in respect of which indemnity may be sought pursuant
to Section 4.9(a), such Indemnified Person shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Person, and
shall assume the payment of all fees and expenses; provided, however, that the
failure of any Indemnified Person so to notify the Company shall not relieve the
Company of its obligations hereunder except to the extent that the Company is
actually and materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; (ii) the Company shall
have failed promptly to assume the defense of such proceeding and to employ
counsel reasonably satisfactory to such Indemnified Person in such proceeding;
or (iii) in the reasonable judgment of counsel to such Indemnified Person,
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. The Company shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned. Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, delayed or conditioned, the Company
shall not effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.

4.10 Listing of Securities. In the time and manner required by the Principal
Trading Market, the Company shall prepare and file with such Trading Market an
additional shares listing application covering all of the Shares and shall use
its commercially reasonable efforts to take all steps necessary to maintain, so
long as any other shares of Common Stock shall be so listed, such listing.

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 Dispositions and Confidentiality After The Date Hereof. Each Purchaser
shall not, and shall cause its Trading Affiliates not to, prior to the
effectiveness of the Registration Statement: (a) sell, offer to sell, solicit
offers to buy, dispose of, loan, pledge or grant any right with respect to
(collectively, a “Disposition”) the Securities; or (b) engage in any hedging or
other transaction which is designed or could reasonably be expected to lead to
or result in a Disposition of the Securities by such Purchaser or an Affiliate,
except, in each case, for Dispositions pursuant to an available exemption from,
or in a

 

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transaction not subject to, the registration requirements of the Securities Act,
and in compliance with any applicable state and federal securities laws. In
addition, the Purchaser agrees that for so long as it owns any Common Stock, it
will not enter into any short sale of Shares executed at a time when the
Purchaser has no equivalent offsetting long position in the Common Stock. For
purposes of determining whether the Purchaser has an equivalent offsetting long
position in the Common Stock, shares that the Purchaser is entitled to receive
within sixty (60) days (whether pursuant to contract or upon conversion or
exercise of convertible securities) will be included as if held long by the
Purchaser. Such Purchaser covenants that neither it nor any Person acting on its
behalf or pursuant to any understanding with it will engage in any transactions
in the Company’s securities (including, without limitation, any Short Sales
involving the Company’s securities) during the period from the date hereof until
the earlier of such time as (i) the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.7 or (ii) this Agreement
is terminated in full pursuant to Section 6.17. 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 Division of Corporation Financing
Compliance and Disclosure Interpretation 239.10 regarding short selling.

4.13 Future Registration Statements. Except for a registration statement on Form
S-8 relating to the Company’s stock option plan, during the one hundred eighty
days (180) days following the Closing Date, the Company shall not file a
registration statement with the SEC to register for resale the shares of common
stock received by its stockholders in the Reverse Merger Transaction.

ARTICLE 5

CONDITIONS PRECEDENT TO CLOSING

5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase
Securities at the Closing. The obligation of each Purchaser listed on Annex A
hereto 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
(except for those representations and warranties which are qualified as to
materiality, in which case such representations and warranties shall be true and
correct in all respects) as of the date when made and as of the Closing Date, as
though made on and as of such date, except for such representations and
warranties that speak as of a specific date.

(b) Performance. The Company shall have performed, satisfied and complied in all
material respects with 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.

 

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(d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary for
consummation of the purchase and sale of the Securities at the Closing
(including all Required Approvals), all of which shall be and remain so long as
necessary in full force and effect.

(e) No Suspensions of Trading in Common Stock. The Common Stock shall not have
been suspended, as of the Closing Date, by the Commission.

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

(g) 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) and (b) in the
form attached hereto as Exhibit F.

(h) Lock-Up Agreements. The officers and directors of the Company and certain
stockholders of the Company shall have delivered lock-up agreements in the form
attached hereto as Exhibit H.

(i) Completion of the Reverse Merger Transaction. The Reverse Merger Transaction
shall have been completed.

(j) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.17 herein.

5.2 Conditions Precedent to the Obligations of the Company to sell Securities at
the Closing. The Company’s obligation to sell and issue the Securities to each
Purchaser listed on Annex A hereto 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
such Purchaser 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. Such Purchaser 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 such
Purchaser at or prior to the Closing Date.

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

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

 

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(e) Completion of the Reverse Merger Transaction. The Reverse Merger Transaction
shall have been completed.

(f) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.17 herein.

ARTICLE 6

MISCELLANEOUS

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

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

6.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender receives
a machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section 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:    Lipocine Inc.    675 Arapeen Drive    Suite 202    Salt
Lake City, Utah 84108    Telephone No.: (801) 994-7383    Facsimile No.: (801)
994-7388    Attention: Robert Merrell With a copy to:    Cooley LLP    3175
Hanover Street    Palo Alto, California 94304-1130    Telephone No.: (650)
843-5000    Facsimile No.: (650) 849-7400    Attention: John T. McKenna

 

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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 the Purchasers holding or having the
right to acquire 66 2/3% of the Shares purchased at Closing 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.

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 the
Transaction Documents and applicable law, provided such transferee shall agree
in writing to be bound, with respect to the transferred Securities, by the terms
and conditions of this Agreement that apply to the “Purchasers”.

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

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,

 

25.

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any claim that it is not personally subject to the jurisdiction of any such New
York Court, or that such Proceeding has been commenced in an improper or
inconvenient forum. Each party hereto hereby irrevocably waives personal service
of process and consents to process being served in any such Proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

6.9 Survival. The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities for a period of one (1) year from
the Closing Date. The agreements and covenants contained herein shall survive
for the applicable statute of limitations.

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

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

 

26.

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

6.15 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.

6.16 Independent Nature of the 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.

6.17 Termination. This Agreement may be terminated and the sale and purchase of
the Shares abandoned at any time prior to the Closing by either the Company or
any Purchaser listed on Annex A hereto (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 6.17 shall not be
available to any Person whose

 

27.

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

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 6.17 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.

6.18 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
owed to such Purchaser by the Company under a Transaction Document and the
Company does not timely perform its related obligations within the periods
therein provided, then, prior to the performance by the Company of the Company’s
related obligation, 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.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

 

28.

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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.

 

LIPOCINE INC. By:  

/s/ Mahesh V. Patel, Ph.D.

  Mahesh V. Patel, Ph.D.   President and Chief Executive Officer

 

1.

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

OMNIBUS SIGNATURE PAGE TO PURCHASE AGREEMENT AND REGISTRATION

RIGHTS AGREEMENT OF LIPOCINE INC.

IN WITNESS WHEREOF, the undersigned Purchaser hereby executes, delivers, joins
in and agrees to be bound by (i) (A) the Securities Purchase Agreement by and
between Lipocine Inc. and the Purchasers (as defined therein) to which this
Omnibus Signature Page is attached as an Purchaser thereunder and (B) the
Registration Rights Agreement, attached to the Securities Purchase Agreement, by
and among the Company and the Purchaser, which, together with all counterparts
of such agreements and signature pages of other parties to such agreements,
shall constitute one and the same document in accordance with the terms of such
agreements, and (ii) elects to purchase for the number of Shares set forth
below.

 

NAME OF PURCHASER:  

 

 

By:  

 

Name:  

 

Title:  

 

 

Aggregate Purchase Price (Subscription Amount): $                      

 

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.:  

 

 

2.

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ANNEX A: Schedule of Purchasers

EXHIBITS:

 

A:    Form of Registration Rights Agreement B-1:    Accredited Investor
Questionnaire B-2:    Stock Certificate Questionnaire C:    Form of Opinion of
Company Counsel D:    Irrevocable Transfer Agent Instructions E:    Form of
Secretary’s Certificate F:    Form of Officer’s Certificate G:    Purchaser’s
Certificate of Subsequent Sale H:    Form of Lock-Up Agreement

 

3.

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ANNEX A

SCHEDULE OF PURCHASERS

 

Purchasers

   Number
of Shares
Purchased      Purchase Price  

Visium Balanced Master Fund, Ltd.

     1,206,000       $ 7,236,000.00   

Janus Global Life Sciences Fund, a Series of Janus Investment Fund

     833,333       $ 4,999,998.00   

Cormorant Global Healthcare Master Fund, LP

     666,666       $ 3,999,996.00   

Sabby Healthcare Volatility Master Fund, Ltd.

     500,000       $ 3,000,000.00   

Baker Brothers Life Sciences, L.P.

     436,555       $ 2,619,330.00   

Armistice Capital Master Fund Ltd.

     333,334       $ 2,000,004.00   

1798 Fundamental Strategies Master Fund Ltd.

     333,333       $ 1,999,998.00   

Broadfin Healthcare Master Fund, Ltd.

     333,333       $ 1,999,998.00   

Del Mar Master Fund Ltd.

     333,333       $ 1,999,998.00   

Three Arch Opportunity Fund LP

     250,000       $ 1,500,000.00   

RTW Master Fund, Ltd.

     208,333       $ 1,249,998.00   

DAFNA Lifescience Select Ltd.

     159,500       $ 957,000.00   

Monashee Investment Management LLC

     150,000       $ 900,000.00   

2B LLC

     80,000       $ 480,000.00   

ProSight Fund, LP

     75,000       $ 450,000.00   

DAFNA Lifescience Ltd.

     71,000       $ 426,000.00   

The Entrust Group Inc. FBO Kevin Paul Beck IRA #50-01463

     58,333       $ 349,998.00   

Hartz Capital Investments LLC

     42,000       $ 252,000.00   

Russell P. Shipman

     41,667       $ 250,002.00   

Thomas Robert Malley

     41,667       $ 250,002.00   

Edward F. Keely

     41,666       $ 249,996.00   

667, L.P. (Account #1)

     31,042       $ 186,252.00   

Jay Silverman

     25,000       $ 150,000.00   

667, L.P. (Account #2)

     21,578       $ 129,468.00   

DAFNA Lifescience Market Neutral Ltd.

     19,500       $ 117,000.00   

Empery Asset Master, Ltd.

     17,000       $ 102,000.00   

Jon-Erik Borgen

     16,666       $ 99,996.00   

14159, L.P.

     10,825       $ 64,950.00      

 

 

    

 

 

 

Total

     6,336,664       $ 38,019,984.00      

 

 

    

 

 

 

 

4.

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EXHIBIT A

FORM OF REGISTRATION RIGHTS AGREEMENT

 

5.

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

INSTRUCTION SHEET

(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
pages. The Securities Purchase Agreement and the Registration Rights Agreement
(omnibus signature page) must be executed by an individual authorized to bind
the Purchaser.

 

  2. Exhibit B-1 – Accredited Investor Questionnaire:

Provide the information requested by the Accredited Investor Questionnaire

 

  3. Exhibit B-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 (omnibus signature page) to:

Vlad Ivanov

Ladenburg Thalmann & Co. Inc

520 Madison Avenue, 9th Floor

New York, NY 10022

Tel: (212) 409-2045

Fax: (718) 986-8496

Email: vivanov@ladenburg.com

 

B. Instructions regarding the transfer of funds for the purchase of the
Securities are contained in the Escrow Deposit Agreement with Signature Bank, a
New York State chartered bank, which instructions have been provided to the
purchasers.

 

6.

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

EXHIBIT B-1

ACCREDITED INVESTOR QUESTIONNAIRE

(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)

To: Lipocine 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
Lipocine 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:  

 

 

7.

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

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:  

(        )

   

 

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            

 

Social Security or Taxpayer Identification 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;

 

8.

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

            (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)    An
executive officer or director of 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 (for purposes of this
calculation, do not include your primary residence as an asset, and do not
include as a liability indebtedness that is secured by your primary residence
that is not in excess of the fair market value of your primary residence (except
that if the amount of such indebtedness outstanding at the time of sale of the
Securities exceeds the amount outstanding 60 days before such time, other than
as a result of the acquisition of the primary residence, the amount of such
excess shall be included as a liability);             (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)    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;         
   (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:

 

9.

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

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

 

A. FOR EXECUTION BY AN INDIVIDUAL:

 

Date  

 

    By:  

 

      Print Name:  

 

 

B. FOR EXECUTION BY AN ENTITY:

 

      Entity Name:  

 

Date  

 

    By  

 

      Print Name:  

 

      Title:  

 

 

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

 

      Entity Name:  

 

Date  

 

    By  

 

      Print Name:  

 

      Title:  

 

      Entity Name:  

 

Date  

 

    By  

 

      Print Name:  

 

      Title:  

 

 

10.

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

EXHIBIT B-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:

 

 

 

 

11.

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EXHIBIT C

FORM OF OPINION OF COMPANY COUNSEL

To be separately provided.

 

12.

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

EXHIBIT D

Form of Irrevocable Transfer Agent Instructions

As of July 26, 2013

Globex Transfer, LLC

Transfer Agent and Registrar

780 Deltona Boulevard, Suite 202

Attn: Michael Turner

Ladies and Gentlemen:

Reference is made to that certain Securities Purchase Agreement, dated as of
July 26, 2013 (the “Agreement”), by and among Lipocine Inc., a Delaware
corporation (the “Company”), and the purchasers named on the signature pages
thereto (collectively, and including permitted transferees, the “Holders”),
pursuant to which the Company is issuing to the Holders shares (the “Shares”) of
Common Stock of the Company, par value $0.0001 per share (the “Common Stock”),
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), subject to any stop transfer
instructions that we may issue to you from time to time, if any, to issue
certificates representing shares of Common Stock upon transfer or resale of the
Shares.

You acknowledge and agree that so long as you have received (a) written
confirmation from the Company’s legal counsel that a registration statement
covering resales of the Shares has been declared effective by the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as
amended (the “Securities Act”), a copy of such registration statement and a
completed and signed Purchaser’s Certificate of Subsequent Sale with respect to
a sale pursuant to such effective registration statement, (b) written
confirmation from the Company’s legal counsel that the Shares are eligible for
sale in conformity with Rule 144 under the Securities Act (“Rule 144”) and
customary documentation from a Holder’s broker with respect to a sale pursuant
to Rule 144 or (c) written confirmation from the Company’s legal counsel that
the Shares are eligible for sale without restriction in conformity with Rule
144, then, unless otherwise required by law, within five (5) business days of
your receipt of a notice of sale and documentation required pursuant to clause
(a) or (b) above, as applicable, or a request from a Holder for the issuance of
an unlegended certificate in the event that the Shares are eligible for sale
without restriction in conformity with Rule 144 under the Securities Act, you
shall issue the certificates representing the Shares, as the case may be,
registered in the names of the purchaser of such Shares or the Holder, as the
case may be, and such certificates shall not bear any legend restricting
transfer of the Shares thereby and should not be subject to any stop-transfer
restriction.

In the event that you have not received the documentation required pursuant to
clause (a) or (b) of the immediately preceding paragraph or such Shares are not
eligible for sale without restriction in conformity with Rule 144 under the
Securities Act, then the certificates for such Shares shall bear the following
legend:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED

 

13.

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

OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

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, LIPOCINE INC. By:  

 

Name:  

 

Title:  

 

 

Acknowledged and Agreed: GLOBEX TRANSFER LLC By:  

 

Name:  

 

Title:  

 

Date:  

July     , 2013

 

14.

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EXHIBIT E

FORM OF SECRETARY’S CERTIFICATE

The undersigned hereby certifies that he is the duly elected, qualified and
acting Secretary of Lipocine Inc., a Delaware corporation (the “Company”), and
that as such he is authorized to execute and deliver this certificate in the
name and on behalf of the Company and in connection with the Securities Purchase
Agreement, dated as of July 26, 2013, by and among the Company and the
Purchasers party thereto (the “Securities Purchase Agreement”), and further
certifies in his official capacity, in the name and on behalf of the Company,
the items set forth below. Capitalized terms used but not otherwise defined
herein shall have the meaning set forth in the Securities Purchase Agreement.

1. Attached hereto as Exhibit A is a true, correct and complete copy of the
resolutions duly adopted by the Board of Directors of the Company at a meeting
of the Board of Directors held on July 24, 2013. Such resolutions have not in
any way been amended, modified, revoked or rescinded, have been in full force
and effect since their adoption to and including the date hereof and are now in
full force and effect.

2. Attached hereto as Exhibit B is a true, correct and complete copy of the
Certificate of Incorporation of the Company, together with any and all
amendments thereto currently in effect, and no action has been taken to further
amend, modify or repeal such Certificate of Incorporation, the same being in
full force and effect in the attached form as of the date hereof.

3. Attached hereto as Exhibit C is a true, correct and complete copy of the
Bylaws of the Company and any and all amendments thereto currently in effect,
and no action has been taken to further amend, modify or repeal such Bylaws, the
same being in full force and effect in the attached form as of the date hereof.

4. Each person listed below has been duly elected or appointed to the
position(s) indicated opposite his name and is duly authorized to sign the
Securities Purchase Agreement and each of the Transaction Documents on behalf of
the Company, and the signature appearing opposite such person’s name below is
such person’s genuine signature.

 

Name

 

Position

 

Signature

Mahesh V. Patel, Ph.D.   President and Chief Executive Officer  

 

Robert K. Merrell   Vice President, Finance  

 

 

15.

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

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this 30th
day of July, 2013.

 

 

Gordhan Patel, R. Ph. Secretary

I, Mahesh V. Patel, Ph.D., President and Chief Executive Officer, hereby certify
that Gordhan Patel, R. Ph. is the duly elected, qualified and acting Secretary
of the Company and that the signature set forth above is his true signature.

 

 

Mahesh V. Patel, Ph.D. President and Chief Executive Officer

 

16.

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

EXHIBIT A

RESOLUTIONS

 

17.

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

EXHIBIT B

CERTIFICATE OF INCORPORATION

 

18.

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

EXHIBIT C

BYLAWS

 

19.

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

EXHIBIT F

FORM OF OFFICER’S CERTIFICATE

The undersigned President and Chief Executive Officer of Lipocine Inc., a
Delaware corporation (the “Company”), pursuant to Section 5.1(g) of the
Securities Purchase Agreement, dated as of July 30, 2013, by and among the
Company and the Purchasers signatory thereto (the “Agreement”), hereby
represents, warrants and certifies to such investors as follows (capitalized
terms used but not otherwise defined herein shall have the meaning set forth in
the Agreement):

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

2. The Company has 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.

IN WITNESS WHEREOF, the undersigned has executed this certificate this 30th day
of July, 2013.

 

 

Mahesh V. Patel, Ph.D. President and Chief Executive Officer

 

20.

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EXHIBIT G

PURCHASER’S CERTIFICATE OF SUBSEQUENT SALE

 

To:   

Sale Kwon

Cooley LLP

3175 Hanover Street

Palo Alto, California 94304-1130

     

Tel: (650) 843-5981

Fax: (650) 849-7400

Email: skwon@cooley.com

  

The undersigned, the selling securityholder or an officer of, or other duly
authorized person, hereby certifies that                      represents that it
has sold                  shares of the Common Stock of Lipocine Inc. and that
such shares were sold on                      either (i) in accordance with the
registration statement on Form S-1 with file number                     , in
which case the selling securityholder certifies that such selling securityholder
has delivered a current prospectus in connection with such sale, provided,
however, that if Rule 172 under the Securities Act of 1933, as amended, is then
in effect, such selling securityholder has confirmed that a current prospectus
is deemed to be delivered in connection with such sale, or (ii) in accordance
with Rule 144 under the Securities Act of 1933 ( “Rule 144”), in which case the
selling securityholder certifies that it has complied with the requirements of
Rule 144. Print or type:

 

Name of individual representing selling securityholder (if an institution):    

 

Title of individual representing selling securityholder (if an institution):    

 

Signature by:    

 

Selling securityholder or individual representative:     By:  

 

    Name:  

 

    Title:  

 

 

21.

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EXHIBIT H

FORM OF LOCK-UP AGREEMENT

LOCK-UP AGREEMENT

June 30, 2013

Ladenburg Thalmann & Co.

520 Madison Avenue

New York, New York 10022

Ladies & Gentlemen:

The undersigned is an owner of record or beneficially of certain shares of
common stock, par value $0.01 per share, of Lipocine, Inc. (the “Company” and
the “Shares”) or securities convertible into or exchangeable or exercisable for
Shares. The Company proposes to carry out a private offering of Shares (the
“Offering”) for which Ladenburg Thalmann & Co. Inc. will act as placement agent
(the “Placement Agent”). The undersigned recognizes that the Offering will be of
benefit to the undersigned and will benefit the Company by, among other things,
raising additional capital for its operations. The undersigned acknowledges that
the Company and the Placement Agent are relying on the representations and
agreements of the undersigned contained in this letter agreement in carrying out
the Offering.

In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, and will cause any spouse or immediate family member of
the spouse or the undersigned living in the undersigned’s household not to,
without the prior written consent of the Placement Agent (which consent may be
withheld in its sole discretion), (i) directly or indirectly, sell, offer,
contract or grant any option to sell (including without limitation any short
sale), pledge, transfer, establish an open “put equivalent position” within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), or otherwise dispose of any Shares, options or warrants to
acquire Shares, or securities exchangeable or exercisable for or convertible
into Shares currently or hereafter owned either of record or beneficially (as
defined in Rule 13d-3 under the Exchange Act) by the undersigned (or such spouse
or family member), (ii) enter into any swap, hedge or other agreement or
arrangement that transfers, in whole or in part, the economic risk of ownership
of any Shares or securities exchangeable or exercisable for or convertible into
Shares, (iii) engage in any short selling of any Shares or securities
exchangeable or exercisable for or convertible into Shares, or (iv) or publicly
announce an intention to do any of the foregoing, for a period commencing on the
date hereof and continuing through the close of trading on the date 180 days
after the date of the closing of the Offering (the “Lock-up Period”); provided,
that the foregoing restrictions shall not apply (a) to the transfer of any or
all of the Shares owned by the undersigned, either during the undersigned’s
lifetime or on death, by gift, will or intestate succession to the immediate
family of the undersigned or to a trust the beneficiaries of which are
exclusively the undersigned and/or a member or members of the undersigned’s
immediate family; provided, however, that in any such case, it shall be a
condition to such transfer that the transferee executes and delivers to the
Company an agreement stating that the transferee is receiving and holding the
Shares subject to the provisions of this letter agreement, and there shall be no
further transfer of such Shares, except in accordance with this letter agreement
or (b) the exercise of stock options or warrants, provided further, that the
Shares received upon such exercise shall be subject to the terms of this
agreement. For the purposes of this paragraph, “immediate family” shall mean the
spouse, domestic partner, lineal descendant (including adopted children),
father, mother, brother or sister of the transferor.

 

22.

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The foregoing restrictions shall not apply to the transfer of any or all the
Shares owned by the undersigned in connection with any merger or plan of
reorganization that is approved by the Board of Directors of the Company. The
undersigned expressly agrees that the foregoing restrictions shall in the event
of any merger or plan of reorganization that is approved by the Board of
Directors of the Company subsequently apply to any securities received by the
undersigned in any such merger or plan of reorganization in exchange for Shares
or other securities convertible into or exchangeable or exercisable for Shares.

The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the
transfer of Shares or securities convertible into or exchangeable or exercisable
for Shares held by the undersigned except in compliance with the foregoing
restrictions.

In addition, during the Lock-Up Period, the undersigned hereby waives any and
all notice requirements and rights with respect to registration of securities
pursuant to any agreement, understanding or otherwise setting forth the terms of
any security of the Company held by the undersigned, including any registration
rights agreement to which the undersigned and the Company may be party.

This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned. However, it is understood that, if (i) the Company notifies the
Placement Agent in writing that it does not intend to proceed with the Offering,
or (ii) if the purchase agreements relating to the Offering (other than the
provisions thereof which survive termination) shall terminate or be terminated
for any reason prior to payment for and delivery of the Shares to be sold
thereunder, this letter agreement shall immediately be terminated and the
undersigned shall automatically be released from all of the obligations under
this letter agreement.

 

Very truly yours,

 

(Name of Stockholder – Please Print)

 

(Signature)

 

(Name of Signatory if Stockholder is an entity—Please Print)

 

(Title of Signatory if Stockholder is an entity—Please Print)

 

23.