Exhibit 10.1

SUBSCRIPTION AGREEMENT

This Subscription Agreement (this “Agreement”) is dated as of April 18, 2011
(the “Effective Date”), between ARCA biopharma, Inc., a Delaware corporation
(the “Company”), and the purchaser identified on the signature page hereto
(including its successors and assigns, the “Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act”), the Company has authorized the sale and
issuance to certain investors of up to an aggregate of 1,680,672 units (the
“Units”), with each Unit consisting of: (1) one share of the Company’s common
stock (the “Common Stock”) par value $0.001 per share (each a “Share, and,
collectively, the “Shares”) and (2) one warrant (each a “Warrant” and,
collectively, the “Warrants”) to purchase 1,176,471 shares of Common Stock,
substantially in the form attached hereto as Exhibit A, for a purchase price of
$1.785 per Unit.

WHEREAS, the Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, Units as more fully described in
this Agreement.

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 Purchaser agree
as follows:

ARTICLE I.

DEFINITIONS

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

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

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

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

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

“Closing” means the closing of the purchase and sale of the Shares and Warrants
pursuant to Section 2.1.

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchaser’s obligations to pay the Subscription
Amount

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and (ii) the Company’s obligations to deliver the Shares and Warrants, in each
case, have been satisfied or waived, but in no event later than the third
Trading Day following the Effective Date.

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

“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

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

“Company Counsel” means Cooley LLP.

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

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers or directors of, or consultants to, the Company pursuant to
any stock or option plan duly adopted by the Board of Directors for such
purpose, including, but not limited to, the Company’s Amended and Restated 2004
Equity Incentive Plan and the Company’s Non-Employee Director Stock Option Plan
(b) securities upon the exercise or exchange of or conversion of any Securities
issued hereunder and/or other securities issued and outstanding on the Effective
Date that are exercisable or exchangeable for or convertible into shares of
Common Stock, provided that such securities have not been amended since the
Effective Date to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such securities, and
(c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided
that any such issuance shall only be to a Person (or to the equityholders of a
Person) which is, itself or through its subsidiaries, an operating company or an
asset in a business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.

“BN” means Buchalter Nemer, a professional corporation, counsel to the Placement
Agent.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

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“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

“Material Permits” shall have the meaning ascribed to such term in
Section 3.1(m).

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind, including without limitation, any Trading Market.

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

“Prospectus” means the prospectus filed with the Registration Statement, as
supplemented by the Prospectus Supplement.

“Prospectus Supplement” means the final prospectus supplement relating to the
offer and sale of the Shares, Warrants (and upon exercise of any Warrant, the
Warrant Shares) complying with Rule 424(b) of the Securities Act that is
delivered by the Company to the Purchaser immediately prior to execution this
Agreement and filed with the Commission.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

“Registration Statement” means the effective registration statement with
Commission file No. 333-172686 which registers the sale of the Shares, the
Warrants and the Warrant Shares to the Purchaser.

“Required Approvals” shall have the meaning ascribed to such term in
Section 3.1(e).

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

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended

 

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or interpreted from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

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

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act.

“Subscription Amount” means the aggregate amount to be paid for Shares and
Warrants purchased hereunder as specified below the Purchaser’s name on the
signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.

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

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

“Transaction Documents” means this Agreement and the Warrants.

“Transfer Agent” means Computershare Trust Company, N.A., the current transfer
agent of the Company, with a mailing address of PO Box 43070, Providence, RI
02940-3070, and any successor transfer agent of the Company.

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

ARTICLE II.

PURCHASE AND SALE

2.1 Closing. Upon the terms and subject to the conditions set forth herein, the
Company agrees to sell, and the Purchaser agrees to purchase, on the Closing
Date, the number of Units set forth on the signature page hereto. The Purchaser
shall deliver to the

 

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Company, via wire transfer of immediately available funds equal to the
Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by the Purchaser and the Company shall deliver to the Purchaser its
respective Shares and a Warrant as determined pursuant to Section 2.2(a), and
the Company and the Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of BN or such other location as the parties shall mutually agree.

2.2 Deliveries.

(a) On or prior to the Closing Date, the Company shall deliver or cause to be
delivered to the Purchaser the following:

(i) this Agreement duly executed and delivered by the Company;

(ii) a copy of the irrevocable instructions to the Company’s transfer agent,
duly executed and delivered by the Company, instructing the transfer agent to
deliver via the Depository Trust Company Deposit Withdrawal Agent Commission
System (“DWAC”) Shares set forth on the signature page hereto, registered in the
name of the Purchaser (which Shares shall be delivered at Closing;

(iii) a Warrant, duly executed by the Company, registered in the name of the
Purchaser to purchase up to the number of Warrant Shares set forth on the
signature page hereto, with an exercise price equal to $2.52, subject to
adjustment therein (such Warrant certificate may be delivered within three
Trading Days of the Closing Date);

(iv) the final Prospectus Supplement (which shall be delivered immediately prior
to the execution of this Agreement and may be delivered in accordance with Rule
172 under the Securities Act); and

(v) the opinion of Company’s Counsel, dated as of the Closing Date, in the form
previously provided to the Company.

(b) On or prior to the Closing Date, the Purchaser shall deliver or cause to be
delivered to the Company the following:

(i) this Agreement duly executed by the Purchaser; and

(ii) the Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company; and

2.3 Closing Conditions.

(a) The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met:

(i) all obligations, covenants and agreements of the Purchaser under this
Agreement required to be performed at or prior to the Closing Date shall have
been performed; and

 

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(ii) the delivery by the Purchaser of the items set forth in Section 2.2(b) of
this Agreement.

(b) The respective obligations of the Purchaser hereunder in connection with the
Closing are subject to the following conditions being met:

(i) all obligations, covenants and agreements of the Company under this
Agreement required to be performed at or prior to the Closing Date shall have
been performed; and

(ii) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement.

2.4 Subscription Agreements; Purchasers. The Company proposes to enter into
subscription agreements in substantially the form of this Agreement
(collectively with this Agreement, the “Subscription Agreements”) with certain
other investors (collectively with the Purchaser, the “Purchasers”) and expects
to complete sales of Units to them.

2.5 Placement Agent. The Purchaser acknowledges that the Company has agreed to
pay Roth Capital Partners, LLC (the “Placement Agent”) in respect of the sales
of the Units to the Purchaser.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby makes the
following representations and warranties to the Purchaser as of the Effective
Date:

(a) Subsidiaries. The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each of its direct and indirect subsidiaries
free and clear of any Liens, and all of the issued and outstanding shares of
capital stock of each such subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities, except as set forth on Schedule 3.1(a) hereto. The Company
or one of its subsidiaries has the unrestricted right to vote, and (subject to
limitations imposed by applicable law) to receive dividends and distributions
on, all capital securities of its subsidiaries as owned by the Company or such
Subsidiary. If the Company has no subsidiaries, all other references to
subsidiaries in the Transaction Documents shall be disregarded.

(b) Organization and Qualification. The Company and each of its subsidiaries is
an entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company nor any subsidiary is in violation nor default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Each of the Company and the
Subsidiaries is duly

 

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qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not have or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

(c) Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, the Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals. Each Transaction
Document to which it is a party has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms hereof
and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

(d) No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents, the issuance and sale of the Shares and Warrants and the
consummation by it of the transactions contemplated hereby and thereby to which
it is a party do not and will not (i) conflict with or violate any provision of
the Company’s or any subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, or (ii) result in the
creation of any Lien upon any of the properties or assets of the Company or any
subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of or conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, any agreement, credit facility, debt or
other instrument (evidencing a Company or subsidiary debt or otherwise) or other
understanding to which the Company or any subsidiary is a party or by which any
property or asset of the Company or any subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any Trading

 

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Market, court or governmental authority to which the Company or a subsidiary is
subject (including federal and state securities laws and regulations and the
regulations of any Trading Market), or by which any property or asset of the
Company or a subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not reasonably be expected to result in a
Material Adverse Effect.

(e) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.5 of this Agreement,
(ii) the filing with the Commission of the Prospectus Supplement,
(iii) application(s) to each applicable Trading Market for the listing of the
Shares and Warrant Shares for trading thereon in the time and manner required
thereby and (iv) such filings as are required to be made under applicable state
securities laws (collectively, the “Required Approvals”). All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain at or prior to the Closing have been obtained or effected on or prior
to the Closing Date, and neither the Company nor any of its subsidiaries are
aware of any facts or circumstances which might prevent the Company from
obtaining or effecting any of the registration, application or filings
contemplated by the Transaction Documents.

(f) Issuance of the Securities; Registration. The Shares and Warrants are duly
authorized and, when issued and paid for in accordance with the applicable
Transaction Documents (i) the Shares will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company and
(ii) the Warrants will be duly and validly issued, free and clear of all Liens
imposed by the Company. The Warrant Shares, when issued in accordance with the
terms of the Warrants, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common
Stock issuable pursuant to this Agreement and the Warrants. The Company has
prepared and filed the Registration Statement in conformity with the
requirements of the Securities Act, which became effective on April 4, 2011 (the
“Effective Date”), including the base prospectus contained therein at the time
of effectiveness (the “Base Prospectus”), and such amendments and supplements
thereto as may have been required to the Effective Date. The Registration
Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the Commission and no
proceedings for that purpose have been instituted or, to the knowledge of the
Company, are threatened by the Commission. The Company, if required by the rules
and regulations of the Commission, proposes to file the final Prospectus
Supplement, with the Commission pursuant to Rule 424(b). At the time the
Registration Statement and any amendments thereto became effective, at the
Effective Date and at the Closing Date, the Registration Statement and any
amendments thereto conformed and will conform in all material respects to the
requirements of the Securities Act and did not and will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading; and
the Prospectus and any amendments or supplements thereto, at time the Prospectus
or any amendment or supplement thereto was issued and at the Closing Date,
conformed and will conform in all material respects to the requirements of the
Securities Act and did not and will not contain an untrue statement of a

 

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material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Company meets all of the requirements for the use of Form
S-3 under the Securities Act for the offering and sale of the Securities
contemplated by this Agreement and the other Transaction Documents, and the
Commission has not notified the Company of any objection to the use of the form
of the Registration Statement pursuant to Rule 401(g)(1) under the Securities
Act. The Registration Statement meets the requirements set forth in Rule
415(a)(1)(x) under the Securities Act. At the earliest time after the filing of
the Registration Statement that the Company or another offering participant made
a bona fide offer (within the meaning of Rule 164(h)(2) under the Securities
Act) relating to any of the Securities, the Company was not and is not an
“Ineligible Issuer” (as defined in Rule 405 under the Securities Act). The
Company (i) has not distributed any offering material in connection with the
offer or sale of any of the Securities and (ii) until the Purchaser no longer
holds any of the Securities, shall not distribute any offering material in
connection with the offer or sale of any of the Securities to, or by, the
Purchaser (if required), in each case, other than the Registration Statement,
the Prospectus or the Prospectus Supplement. The Company has made or caused to
be made all filings required to be made with the Financial Industry Regulatory
Authority in connection with the offer and sale of the Securities hereunder.

(g) Capitalization. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to
the exercise of stock options under the Company’s stock option plans, the
issuance of shares of Common Stock to employees pursuant to the Company’s
employee stock purchase plans and pursuant to the conversion and/or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed
periodic report under the Exchange Act. No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.
Except as described in the Company’s SEC Reports, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents, other than as a result of the purchase and sale of the
Shares and Warrants or the exercise of the Warrants. The issuance and sale of
the Shares and Warrants, and the issuance of Warrant Shares upon exercise of the
Warrants, will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and
nonassessable. No further approval or authorization of any stockholder, the
Board of Directors or others is required for the issuance and sale of the
Securities. There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders that are not described in the SEC Reports.

(h) SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the Effective Date (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, together with the Prospectus and any Prospectus
Supplement, being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Exchange Act, as applicable, 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 the light of

 

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the circumstances under which they were made, not misleading. 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 United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except to the extent that
unaudited financial statements may not contain all footnotes required by GAAP,
and such statements fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries 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, immaterial,
year-end audit adjustments.

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report filed prior to the
Effective Date, (i) there has been no event, occurrence or development that has
had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any
request for confidential treatment of information. Except for the issuance of
the Shares and Warrants contemplated by this Agreement, no event, liability,
fact, circumstance, occurrence or development has occurred or exists or is
reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective business, prospects, properties, operations,
assets or financial condition that would be required to be disclosed by the
Company under applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed on or before the date that
this representation is made.

(j) Litigation. (i) There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”); (ii) neither the Company nor any
subsidiary, nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty and (iii) there has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the Commission involving the Company or any current or
former director or officer of the Company, which, in any case of clauses (i),
(ii) or (iii), (A) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (B)
could, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect.

 

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(k) Labor Relations. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company
that could reasonably be expected to result in a Material Adverse Effect. None
of the Company’s or its Subsidiaries’ employees is a member of a union that
relates to such employee’s relationship with the Company or such subsidiary, and
neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement, and the Company and its Subsidiaries believe that their
relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant in favor of any third party,
and the continued employment of each such executive officer does not subject the
Company or any of its Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and its Subsidiaries are in compliance with all
U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(l) Compliance. Neither the Company nor any subsidiary: (i) is in default under
or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company
or any subsidiary under), nor has the Company or any subsidiary received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) is in violation of any
judgment, decree or order of any court, arbitrator or governmental body or
(iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign,
federal, state and local laws applicable to its business and all such laws that
affect the environment, except in each case as could not reasonably be expected
to result in a Material Adverse Effect.

(m) Regulatory Permits. Except as set forth in the SEC Reports, the Company and
the Subsidiaries possess all certificates, authorizations and permits issued by
the appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC
Reports, except where the failure to possess such permits could not reasonably
be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit.

 

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(n) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable
title to all personal property owned by them that is material to the business of
the Company and the Subsidiaries, in each case free and clear of all Liens,
except for Liens as do not materially affect the value of such property and do
not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases with which the Company and the Subsidiaries are in compliance
with such exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and facilities by the
Company and its Subsidiaries.

(o) Patents and Trademarks. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights necessary or
material for use in connection with their respective businesses as described in
the SEC Reports and which the failure to so have could reasonably be expected to
have a Material Adverse Effect (collectively, the “Intellectual Property
Rights”). Neither the Company nor any subsidiary has received a notice (written
or otherwise) that any of the Intellectual Property Rights used by the Company
or any subsidiary violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where the failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(p) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and
officers insurance coverage at least equal to the aggregate Subscription Amount.
Neither the Company nor any subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.

(q) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge
of the Company, none of the employees of the Company is presently a party to any
transaction with the Company or any subsidiary (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or

 

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personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $120,000 other than for (i) payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements under any stock
option plan of the Company.

(r) Sarbanes-Oxley. The Company is in material compliance with all provisions of
the Sarbanes-Oxley Act of 2002 that are applicable to it as of the Closing Date.

(s) Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage
or finder’s fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by
the Transaction Documents. The Purchaser shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other Persons
for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by the Transaction Documents.

(t) Investment Company. The Company is not, and immediately after receipt of
payment for the Shares and Warrants, will not be an “investment company” within
the meaning of the Investment Company Act of 1940, as amended.

(u) Registration Rights. Except as set forth in the SEC Reports, no Person has
any right to cause the Company to effect the registration under the Securities
Act of any securities of the Company as a result of the transactions
contemplated by this Agreement.

(v) Listing and Maintenance Requirements. The 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, or that to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. Except as set forth in the SEC
Reports, the Company has not, in the 12 months preceding the Effective Date,
received notice from any Trading Market on which the Common Stock is or has been
listed or quoted to the effect that the Company is not in compliance with the
listing or maintenance requirements of such Trading Market. The Company is in
compliance with all such listing and maintenance requirements.

(w) Application of Takeover Protections. The Company and the Board of Directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
the Purchaser as a result of the Purchaser and the Company fulfilling their
obligations or exercising their rights under the

 

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Transaction Documents, including without limitation as a result of the Company’s
issuance of the Shares and Warrants and the Purchaser’s ownership of the Shares
and Warrants.

(x) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided the
Purchaser or its agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchaser will rely on the foregoing
representation in effecting transactions in securities of the Company. The
Company acknowledges and agrees that the Purchaser does not make or has not made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 3.2 hereof.

(y) Tax Status. Except for matters that would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each subsidiary has timely filed all necessary federal,
state and foreign income and franchise tax returns and has timely paid or
accrued all taxes shown as due thereon, and the Company has no knowledge of a
tax deficiency which has been asserted or threatened against the Company or any
subsidiary.

(z) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, 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.

(aa) Accountants. The Company’s independent registered public accounting firm is
identified in the Prospectus and such accounting firm is a registered public
accounting firm as required by the Exchange Act.

(bb) Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company
acknowledges and agrees that the Purchaser is acting solely in the capacity of
an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated thereby. The Company further acknowledges that the
Purchaser is not 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 the Purchaser or any
of its respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchaser’s purchase of the Securities. The Company further represents to the
Purchaser that the Company’s decision to enter into this Agreement and

 

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the other Transaction Documents has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its
representatives.

(cc) Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(e) and 4.14 hereof), it is understood and acknowledged by the
Company that: (i) the Purchaser has not been asked by the Company to agree, nor
has the Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term;
(ii) past or future open market or other transactions by the Purchaser,
specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) the Purchaser, and counter-parties in
“derivative” transactions to which the Purchaser is a party, directly or
indirectly, presently may have a “short” position in the Common Stock, and
(iv) the Purchaser shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (y) the Purchaser may engage in
hedging activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of
the Warrant Shares deliverable with respect to Securities are being determined,
and (z) such hedging activities (if any) could reduce the value of the existing
stockholders’ equity interests in the Company at and after the time that the
hedging activities are being conducted. The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.

(dd) Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Placement Agent in connection with the placement of the
Securities.

(ee) No Integrated Offering. None of the Company, its subsidiaries or any of
their affiliates, nor any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to require approval of stockholders of the Company under any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated for quotation.

3.2 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants as of the Effective Date and as of the Closing Date to
the Company as follows (unless as of a specific date therein):

(a) Organization; Authority. The Purchaser is either an individual or an entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with full right, corporate or partnership power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and performance by the
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate, partnership, limited liability company or

 

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similar action, as applicable, on the part of the Purchaser. Each Transaction
Document to which it is a party has been duly executed by the Purchaser, and
when delivered by the Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of the Purchaser,
enforceable against it in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

(b) The Purchaser (i) is knowledgeable, sophisticated and experienced in making,
and is qualified to make decisions with respect to, investments in shares
presenting an investment decision like that involved in the purchase of the
Units, including investments in securities issued by the Company and investments
in comparable companies and (ii) in connection with its decision to purchase the
number of Shares and Warrants set forth on the Purchaser’s signature page
hereto, has received and is relying only upon the Base Prospectus, as
supplemented by the Prospectus Supplement, and the documents incorporated by
reference therein and additional information regarding the transactions
contemplated by this Agreement, which may include price information whether
transmitted through the Prospectus Supplement, orally or in any other form
permitted by the Securities Act.

(c) The Purchaser understands that nothing in this Agreement, the Prospectus or
any other materials presented to the Purchaser in connection with the purchase
and sale of the Units constitutes legal, tax or investment advice. The Purchaser
has consulted such legal, tax and investment advisors and made such
investigation as it, in its sole discretion, has deemed necessary or appropriate
in connection with its purchase of Units. The Purchaser also understands that
there is no established public trading market for the Warrants being offered
pursuant to this Agreement, and that the Company does not expect such a market
to develop. In addition, the Company does not intend to apply for listing the
Warrants on any securities exchange. Without an active market, the liquidity of
the Warrants will be limited.

(d) Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, the Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with the Purchaser,
directly or indirectly executed any purchases or sales, including Short
Sales, of the securities of the Company during the period commencing as of the
time that the Purchaser was first contacted by the Company or the Placement
Agent, as applicable, regarding the specific investment in the Company
contemplated by this Agreement and ending immediately prior to the execution
hereof. Notwithstanding the foregoing, in the case the Purchaser is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of the Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of the Purchaser’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement. Other than to other Persons party to this Agreement
or the other Transaction Documents, the Purchaser has maintained the
confidentiality of the existence and terms of this transaction.

 

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The Company acknowledges and agrees that the representations contained in
Section 3.2, including, without limitation, section 3.2 (b), shall not modify,
amend or affect the Purchaser’s right to rely on the Company’s representations
and warranties contained in this Agreement or any representations and warranties
contained in any other Transaction Document or any other document or instrument
executed and/or delivered in connection with this Agreement or the consummation
of the transaction contemplated hereby.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Warrant Shares. If all or any portion of a Warrant is exercised at a time
when there is an effective registration statement to cover the issuance of the
Warrant Shares, the Warrant Shares issued pursuant to any such exercise shall be
issued free of all legends. If at any time following the Effective Date the
Registration Statement (or any subsequent registration statement registering the
issuance of the Warrant Shares) is not effective or is not otherwise available
for the issuance of the Warrant Shares, the Company shall immediately notify the
holders of the Warrants in writing that such registration statement is not then
effective and thereafter shall promptly notify such holders when the
registration statement is effective again and available for the issuance of the
Warrant Shares (it being understood and agreed that the foregoing shall not
limit the ability of the Company to issue, or the Purchaser to sell, any of the
Warrant Shares in compliance with applicable federal and state securities laws).
The Company shall use its best efforts to keep a registration statement
(including the Registration Statement) registering the issuance of the Warrant
Shares effective during the term of the Warrants. Upon a cashless exercise of a
Warrant, Warrant Shares issued pursuant to any exercise shall be issued free of
all legends.

4.2 Prospectus Supplement and Blue Sky. Immediately prior to execution of this
Agreement, the Company shall have delivered, and as soon as practicable after
execution of this Agreement the Company shall file, the Prospectus Supplement
with respect to the Securities as required under, and in conformity with, the
Securities Act, including Rule 424(b) thereunder. If required, 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 Purchaser 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 Purchaser on or prior to the
Closing Date. Without limiting any other obligation of the Company under this
Agreement, the Company shall timely make all filings and reports relating to the
offer and sale of the Securities required under all applicable securities laws
(including, without limitation, all applicable federal securities laws and all
applicable “Blue Sky” laws), and the Company shall comply with all applicable
federal, state and local laws, statutes, rules, regulations and the like
relating to the offering and sale of the Securities to the Purchaser.

4.3 Furnishing of Information. Until the date on which no Warrants are
outstanding, the Company shall timely file all reports required to be filed with
the Commission pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would no longer require
or otherwise permit such termination.

4.4 Integration. The Company shall not 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 would be integrated with the offer or sale of the
Securities for purposes of the rules

 

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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.

4.5 Securities Laws Disclosure; Publicity. The Company shall by 8:30 a.m. (New
York City time) on the Effective Date, (i) issue a press release disclosing the
material terms of the transactions contemplated hereby and (ii) file a Current
Report on Form 8-K disclosing the material terms of the transaction and
including the Transaction Documents as exhibits thereto. From and after the
issuance of such press release, the Company shall have publicly disclosed all
material, non-public information delivered to the Purchaser by the Company or
any of its subsidiaries, or any of their respective officers, directors,
employees or agents (including, without limitation, the Placement Agent) in
connection with the transactions contemplated by the Transaction Documents. The
Company and the Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor the Purchaser shall issue any such press release nor otherwise
make any such public statement without the prior consent of the Company, with
respect to any press release of the Purchaser, or without the prior consent of
the Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld or delayed, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of the Purchaser or any of its Affiliates, or include the name of the Purchaser
or any of its Affiliates in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of the Purchaser,
except (a) as required by federal securities law in connection with the filing
of final Transaction Documents (including signature pages thereto) with the
Commission and (b) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall provide the Purchaser with
prior notice of such disclosure permitted under this clause (b).

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

4.7 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto the Purchaser shall have executed a written agreement with the
Company regarding the confidentiality and use of such information. The Company
understands and confirms that the Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the Company.

 

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4.8 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Securities solely for general working capital purposes as described in the
Prospectus and Prospectus Supplement(s).

4.9 Indemnification of Purchaser. Subject to the provisions of this Section 4.9,
the Company will indemnify and hold the 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 the Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any material breach of any representation or
warranty made by the Company in any of the Transaction Documents, (b) any
material breach of any covenant, agreement or obligation of the Company
contained in any of the Transaction Documents or (c) any action, suit or claim
instituted against the Purchaser in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company or other third party,
in each case who is not an Affiliate of the Purchaser, resulting from or
relating to any of the transactions contemplated by the Transaction Documents
(except to the extent, and only to the extent, such action is based upon a
material breach of the Purchaser’s representations, warranties or covenants
under the Transaction Documents, a material breach of any agreements or
understandings the Purchaser may have with any such stockholder or material
violations by the Purchaser of state or federal securities laws, or any conduct
by the Purchaser which constitutes fraud, gross negligence, willful misconduct
or malfeasance). If any action shall be brought against any Purchaser Party in
respect of which indemnity is required pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
counsel, a material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one
such separate counsel for all Purchaser Parties of all Purchasers. The Company
will not be liable to any Purchaser Party under this Agreement (y) for any
settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (z) 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. The Company shall not, without
the prior written consent of the Purchaser Party, consent to entry of any
judgment or enter into any settlement or other compromise which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Purchaser Party of a release from all liability in respect to such action or
litigation, and such settlement shall not include any admission as to fault on
the part of the Purchaser Party.

4.10 Reservation of Common Stock. As of the Effective Date, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants (without
regard to any limitations on the exercise of the Warrants set forth therein).

4.11 Listing of Common Stock. The Company hereby agrees to use best efforts to
maintain the listing or quotation of the Common Stock on the Trading Market on
which it is currently listed, and the Company shall promptly secure the listing
of all of the Shares and the Warrant Shares on such Trading Market (but in no
event later than the Closing Date). The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will
then include in such application all of the Shares and Warrant Shares, and will
take such other action as is necessary to cause all of the Shares and the
Warrant Shares to be listed or quoted on such other Trading Market as promptly
as possible. The Company will then take all action reasonably necessary to
continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market.

4.12 Company Lock-Up.

(a) From the Effective Date until 90 days after the Closing Date, neither the
Company nor any Subsidiary shall issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents.

        (b) From the Effective Date until the third anniversary of the Closing
Date, the Company shall be prohibited from effecting or entering into an
agreement to effect any issuance by the Company or any of its Subsidiaries of
Common Stock or Common Stock Equivalents for cash consideration (or a
combination of units hereof) involving a Variable Rate Transaction. “Variable
Rate Transaction” means a transaction in which the Company (i) issues or sells
any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion price, exercise price or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations
for the shares of Common Stock at any time after the initial issuance of such
debt or equity securities, or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock (but not including any routine anti-dilution
protections in any warrant or convertible security) or (ii) enters into any
agreement (including, without limitation, an “equity line of credit” or an “at
the market offering”) whereby the Company or any Subsidiary may sell securities
at a future determined price (other than standard and customary “preemptive” or
“participation” rights); provided that, notwithstanding the foregoing, the
Company may effect either of the following transactions without restriction
hereunder (each a “Permitted ATM”): (A) after the six month anniversary of the
Closing Date, the Company may conduct an “at the market offering” (as defined in
Rule 415(a)(4) promulgated under the Securities Act) so long as no shares of
Common Stock are sold in such offering for less than $3.50 per share (as
adjusted for stock splits, stock combinations and other similar transactions
occurring after the date of this Agreement) and (B) after the one-year
anniversary of the Closing Date, the Company may conduct an “at the market
offering” (as defined in Rule 415(a)(4) promulgated under the Securities Act) so
long as no shares of Common Stock are sold in such offering for price per share
that is less than the Exercise Price (as defined in the Warrant) (as adjusted
for stock splits, stock combinations and other similar transactions occurring
after the date of this Agreement). The Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect damages.

(c) Notwithstanding the foregoing, Sections 4.12(a) and (b) shall not apply in
respect of an Exempt Issuance and no Variable Rate Transaction shall be an
Exempt Issuance.

 

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4.13 Participation Right. From the date hereof through the one year anniversary
of the Closing Date, neither the Company nor any of its Subsidiaries shall,
directly or indirectly, issue, offer, sell, grant any option or right to
purchase, or otherwise dispose of (or announce any issuance, offer, 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 Common Stock Equivalent, any debt (other pursuant to
agreements involving credit extended by a bank or comparable financial
institution), any preferred stock or any purchase rights) (any such issuance,
offer, sale, grant, disposition or announcement is referred to as a “Subsequent
Placement”) unless the Company shall have first complied with this Section 4.13.
The Company acknowledges and agrees that the right set forth in this Section
4.13 is a right granted by the Company, separately, to the Purchaser.

(a) At least one (1) Trading Day prior to the execution and delivery of the
documentation relating to any proposed or intended Subsequent Placement (other
than the Subsequent Placements described in Section 00 below), the Company shall
deliver to the Purchaser a written notice of its proposal or intention to effect
a Subsequent Placement (each such notice, a “Pre-Notice”), which Pre-Notice
shall not contain any information (including, without limitation, material,
non-public information) other than: (i) a statement that the Company proposes or
intends to effect a Subsequent Placement and (ii) a statement informing the
Purchaser that it is entitled to receive a Subsequent Placement Notice (as
defined below) with respect to such Subsequent Placement upon its written
request. Upon the written request of the Purchaser within one (1) Trading Day
after the Company’s delivery to the Purchaser of such Pre-Notice, and only upon
a timely written request by the Purchaser, the Company shall promptly, but no
later than eight hours after delivery of such request, deliver to the Purchaser
an irrevocable written notice (the “Subsequent Placement Notice”) of any
proposed or intended issuance or sale or exchange of the securities being
offered (the “New Securities”) in a Subsequent Placement, which Subsequent
Placement Notice shall (w) identify and describe the New Securities, (x)
describe the price and other terms upon which they are to be issued, sold or
exchanged, and the number or amount of the New Securities to be issued, sold or
exchanged, (y) identify the Persons (if known) to which or with which the New
Securities are to be offered, issued, sold or exchanged and (z) offer to issue
and sell to or exchange with the Purchaser the percentage of the New Securities
equal to the product of (A) 50% (or 25% solely if such Subsequent Placement is a
Firm Commitment Offering (as defined below)) (as applicable) multiplied by (B)
the quotient of (X) the Purchaser’s Subscription Amount divided by (Y) the
aggregate purchase prices of the Purchaser under this Agreement and the other
Purchasers under the other Subscription Agreements (the “Purchaser’s Amount”).
The Purchaser shall deliver a written notice to the Company within twelve hours
after delivery of the Subsequent Placement Notice setting forth the amount of
the Purchaser’s Amount that the Purchaser elects to purchase in such Subsequent
Placement (a “Participation Notice”). If the Purchaser fails to timely respond
to a Pre-Notice or to timely deliver a Participation Notice, then the Purchaser
shall have no right to participate in such Subsequent Placement and will be
deemed to have waived all rights to participate in such Subsequent Placement.

(b) With respect to any Subsequent Placement that is an underwritten public
offering or “registered direct” offering of the Company’s securities, the
Company shall comply with the terms of Section 4.13(a) with the following
modifications: (i) the Company will not be required to deliver a Pre-Notice to
the Purchaser, (ii) the Company will deliver the Subsequent Placement Notice to
the Purchaser (without any request by Purchaser) within two hours following the
final pricing of the New Securities with respect to such Subsequent Placement,
(iii) the Subsequent Placement Notice will not be required to include the
identity of the proposed purchasers of the New Securities, (iv) the Purchaser
will only have the right to participate in such Subsequent Placement at the
closing of such Subsequent Placement, (v) the Purchaser will be required to
deliver its Participation Notice by 11:59 p.m. (New York time) on the day the
Purchaser receives such Subsequent Placement Notice if such Subsequent Placement
Notice was received by the Purchaser at or prior to 6:00 p.m. on such date of
receipt or by 8:30 a.m. on the Trading Day immediately following the date on
which the Purchaser receives such Subsequent Placement Notice if such Subsequent
Placement Notice was received by the Purchaser after 6:00 p.m. on such date of
receipt (as applicable) and (vi) if such Subsequent Placement is an underwritten
offering, the Purchaser will acquire the New Securities from the underwriter(s)
rather than from the Company.

(c) The Company shall have three (3) Trading Days from the delivery of the
applicable Subsequent Placement Notice (i) to offer, issue, sell or exchange all
or any part of such New Securities as to which a Participation Notice has not
been timely given by the Purchaser (the “Refused Securities”) (or with respect
to an underwritten offering, to offer, issue, sell or exchange all or any part
of such New Securities to the underwriters of such offering) pursuant to a
definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the
offerees described in the Subsequent Placement Notice (if so described therein)
(or in an underwritten offering to the underwriters thereof) and only upon terms
and conditions (including, without limitation, unit prices and interest rates)
that are not materially more favorable to the acquiring Person or Persons or
less favorable to the Company (or the underwriters, as applicable) than those
set forth in the Subsequent Placement Notice and (ii) to publicly announce (a)
the execution of such Subsequent Placement Agreement, and (b) either (x) the
consummation of the transactions contemplated by such Subsequent Placement
Agreement or (y) the termination of such Subsequent Placement Agreement, which
shall be filed with the Commission on a Current Report on Form 8-K with such
Subsequent Placement Agreement and any documents contemplated therein filed as
exhibits thereto.

        (d) In the event the Company shall propose to sell less than all the
Refused Securities in the applicable Subsequent Placement, then the Purchaser
may, at its sole option and in its sole discretion, reduce the number or amount
of the New Securities specified in its Participation Notice to an amount that
shall be not less than the number or amount of the New Securities that the
Purchaser elected to purchase pursuant to Section 4.13(a) or Section 4.13(b)
above (as applicable) multiplied by a fraction, (i) the numerator of which shall
be the number or amount of New Securities the Company actually proposes to
issue, sell or exchange (including New Securities to be issued or sold to
Purchasers pursuant to this Section 4.13 and Section 4.13 of the other
Subscription Agreements prior to such reduction) and (ii) the denominator of
which shall be the original amount of the New Securities. In the event that the
Purchaser so elects to reduce the number or amount of New Securities specified
in its Participation Notice, the Company may not issue, sell or exchange more
than the reduced number or amount of the New Securities unless and until such
securities have again been offered to the Purchaser in accordance with Section
4.13(a) above.

(e) Upon the closing of the issuance, sale or exchange of all or less than all
of the Refused Securities, the Purchaser shall acquire from the Company, and the
Company shall issue to the Purchaser, the number or amount of New Securities
specified in its Participation Notice (except that in an underwritten offering,
the New Securities will be acquired from the underwriter thereof). The purchase
by the Purchaser of any New Securities is subject in all cases to the
preparation, execution and delivery by the Company and the Purchaser of a
separate purchase agreement relating to such New Securities reasonably
satisfactory in form and substance to the Purchaser and its counsel. The Company
and the Purchaser agree that if the Purchaser elects to purchase any New
Securities, none of the transaction documents related thereto shall include any
term or provision whereby the Purchaser shall be required to agree to any
restrictions on trading as to any securities of the Company or be required to
consent to any amendment to or termination of, or grant any waiver or release or
the like under or in connection with, any agreement previously entered into with
the Company or any instrument received from the Company. Notwithstanding the
delivery of any Pre-Notice or Subsequent Placement Notice, (i) the Company shall
have the right to terminate or delay the applicable Subsequent Placement as it
may determine in its sole discretion and (ii) the final terms and conditions of
each Subsequent Placement are subject to the approval of the Company in its sole
discretion (and in any underwritten offering, by the underwriter as well) (it
being expressly understood and agreed by the Company that nothing contained in
this sentence shall modify, or otherwise relieve the Company from, any of the
Company’s obligations (including, without limitation, compliance therewith)
under this Section 4.13).

 

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(f) Any New Securities not acquired by the Purchaser or other Persons in
accordance with this Section 4.13 may not be issued, sold or exchanged until
they are again offered to the Purchaser under the procedures specified in this
Agreement.

(g) The Purchaser acknowledges and agrees that, upon its receipt of a Subsequent
Placement Notice, the Purchaser shall be deemed to be in receipt of material
non-public information regarding the Company with respect to such Subsequent
Placement and agrees to hold such information in confidence and not to disclose
such information to any other Person and not to effect any transactions in the
Common Stock (other than the purchase of the New Securities) during the period
commencing at the time the Purchaser receives such Subsequent Placement Notice
and ending at the time the Purchaser no longer is in possession of material,
non-public information as set forth below in this Section 4.13(g).
Notwithstanding anything to the contrary in this Section 4.13 and unless
otherwise agreed to by the Purchaser, the Company shall either confirm in
writing to the Purchaser that the transaction with respect to the Subsequent
Placement has been abandoned or shall publicly disclose its intention to issue
the New Securities, in either case, in such a manner such that the Purchaser
will not be in possession of any material, non-public information, by the third
(3rd) Trading Day following delivery of the Subsequent Placement Notice. If by
such third (3rd) Trading Day, no public disclosure regarding a transaction with
respect to the New Securities has been made, and no notice regarding the
abandonment of such transaction has been received by the Purchaser, such
transaction shall be deemed to have been abandoned and the Purchaser shall not
be in possession of any material, non-public information with respect to the
Company or any of its Subsidiaries. Should the Company decide to pursue such
transaction with respect to the New Securities, the Company shall provide the
Purchaser with additional notices in accordance with, and subject to, the terms
of this Section 4.13 and the Purchaser will again have the right of
participation set forth in this Section 4.13.

(h) The restrictions contained in this Section 4.13 shall not apply in
connection with any Exempt Issuance, issuance of shares of Common Stock in a
Permitted ATM or the issuance of securities pursuant to the other Subscription
Agreements. The Company shall not circumvent the provisions of this Section 4.13
of this Agreement or Section 4.13 of the other Subscription Agreements by
providing terms or conditions to one Purchaser that are not provided to all
Purchasers. “Firm Commitment Offering” means the issuance of shares of Common
Stock pursuant to a bona fide firm commitment underwritten public offering with
a nationally recognized underwriter that generates gross proceeds to the Company
in excess of $12,000,000 (but expressly excluding “at-the-market offerings” (as
defined in Rule 415(a)(4) under the Securities Act), “equity lines of credit”
and “confidentially marketed public offerings”).

4.14 Certain Transactions and Confidentiality. The Purchaser covenants that
neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any purchases or sales, including Short Sales
of any of the Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced by the Company (it
being understood and agreed that for all purposes of this Agreement, and without
implication that the contrary would otherwise be true, transactions, purchases
and sales shall not include the location and/or reservation of borrowable shares
of Common Stock). The Purchaser covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company, the Purchaser will maintain the confidentiality of the existence and
terms of this transaction. Notwithstanding the foregoing, and notwithstanding
anything contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) the Purchaser makes no representation, warranty
or covenant hereby that it will not engage in effecting transactions in any
securities of the Company after the time that the transactions contemplated by
this Agreement are first publicly announced by the Company, (ii) the Purchaser
shall not be restricted or prohibited from effecting any transactions in any
securities of the Company in accordance with applicable securities laws from and
after the time that the transactions contemplated by this Agreement are first
publicly announced by the Company and (iii) the Purchaser shall have no duty of
confidentiality to the Company or its Subsidiaries after the transactions
contemplated by this Agreement are first publicly announced by the
Company. Notwithstanding the foregoing, in the case the Purchaser is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of the Purchaser’s assets and the portfolio managers have no
actual knowledge of the investment decisions made by the portfolio managers
managing other portions of the Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement. Notwithstanding anything contained in this Agreement to the
contrary and without implication that the contrary would otherwise be true, the
Company expressly acknowledges and agrees that the Purchaser shall not have
(unless expressly agreed to by the Purchaser after the date hereof in a written
definitive and binding agreement executed by the Company and the Purchaser or as
expressly contemplated by the first sentence of Section 0), any duty of
confidentiality with respect to, or a duty not to trade on the basis of, any
information regarding the Company or any of its subsidiaries.

        4.15 Other Terms. The Company represents, warrants and covenants that
the Company has not entered into, and will not enter into, any agreement or
instrument with, or for the benefit of, any of the other Purchasers or any other
third party purchaser of securities of the Company substantially concurrent with
the Closing on terms or conditions which are more favorable to any such other
Purchaser or third party purchaser than the terms and conditions provided to, or
for the benefit of, the Purchaser (other than the Company agreed to pay to
Iroquois Master Fund Ltd. a non-accountable amount equal to $20,000 for various
costs and expenses, which may be withheld by Iroquois Master Fund Ltd. from its
subscription amount to be paid at Closing). To the extent the Company enters
into any agreement or instrument with, or for the benefit of, any of such other
Purchasers or any such third party purchaser that contains any terms or
conditions which are more favorable to any of such other Purchasers or any such
third party purchaser than the terms and conditions provided to, or for the
benefit of, the Purchaser, then the Purchaser, at its option, shall be entitled
to the benefit of such more favorable terms or conditions (as the case may be)
and this Agreement shall be automatically amended to reflect such more favorable
terms or conditions (as the case may be).

ARTICLE V.

MISCELLANEOUS

5.1 Termination. This Agreement may be terminated by the Purchaser, as to the
Purchaser’s obligations hereunder by written notice to the Company, if the
Closing has not been consummated on or before April 22, 2011; provided, however,
no such termination shall affect any obligation of the Company under this
Agreement to reimburse the Purchaser for the expenses described in Section 5.2.
Nothing contained in this Section 5.1 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.

5.2 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to 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
delivery of any Securities to the Purchaser. [The Company shall reimburse the
Purchaser or its designee(s) for all costs and expenses incurred by it or its
affiliates in connection with the transactions contemplated by the Transaction
Documents (including, without limitation, all legal fees and disbursements in
connection therewith, structuring, documentation and implementation of the
transactions contemplated by the Transaction Documents and due diligence and
regulatory filings in connection therewith) in a non-accountable amount equal to
$20,000, which amount shall be withheld by the Purchaser from its Subscription
Amount at the Closing or paid by the Company on demand by the Purchaser if the
Purchaser terminates its obligations under this Agreement in accordance with
Section 5.1 (as the case may be).]1

 

1 

To be deleted for all purchasers other than Iroquois Master Fund Ltd.

 

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5.3 Entire Agreement. This Agreement, the Transaction Documents, together with
the exhibits and schedules thereto, the Prospectus and the Prospectus
Supplement, contain the entire understanding of the parties solely with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, solely with respect to such subject matter,
which the parties acknowledge have been merged into such documents, exhibits and
schedules; provided, however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any effect on any
agreements the Purchaser has entered into with, or any instruments the Purchaser
has received from, the Company or any of its subsidiaries prior to the date
hereof with respect to any prior investment made by the Purchaser in the Company
or (ii) waive, alter, modify or amend in any respect any obligations of the
Company or any of its subsidiaries, or any rights of or benefits to the
Purchaser or any other Person, in any agreement entered into prior to the date
hereof between or among the Company and/or any of its subsidiaries and the
Purchaser, or any instruments the Purchaser received from the Company and/or any
of its subsidiaries prior to the date hereof, and all such agreements and
instruments shall continue in full force and effect. As a material inducement
for the Purchaser to enter into this Agreement, the Company expressly
acknowledges and agrees that (i) no due diligence or other investigation or
inquiry conducted by the Purchaser, any of its advisors or any of its
representatives shall affect the Purchaser’s right to rely on, or shall modify
or qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other
Transaction Document, and (ii) nothing contained in the Registration Statement,
the Prospectus or the Prospectus Supplement shall affect the Purchaser’s right
to rely on, or modify, qualify or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other
Transaction Document.

5.4 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 at the facsimile number set
forth on the signature pages attached hereto prior to 5:30 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 set forth on the signature pages attached hereto on a day that is not a
Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(c) the second (2nd)Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service 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 set forth on the signature pages attached
hereto.

5.5 Amendments; Waivers. Except as expressly contemplated by section 4.15, no
provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed by the Company and the Purchasers holding
a majority of the Shares. Any provision of the Subscription Agreements may be
amended and the provisions thereof waived by the Company and the Purchasers
holding a majority of the Shares. 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 any party to exercise any right hereunder in any manner
impair the exercise of any such right.

5.6 Headings. 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.

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchaser (other than by merger). The
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom the Purchaser assigns or transfers any Securities as long as such Person
agrees in writing prior to such transfer to be bound with respect to the
transferred Securities as a Purchaser hereunder, in which event such assignee
shall be deemed to be the Purchaser hereunder with respect to such assigned
rights.

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.9.

5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction

 

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Documents 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 legal 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, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan 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 suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or 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 other
manner permitted by law. If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then, in addition to the
obligations of the Company under Section 5.7, the prevailing party in such
action or proceeding shall be reimbursed by the other party for its reasonable
attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

5.10 Survival. The representations and warranties contained herein shall survive
the Closing and the delivery of the Shares and Warrants.

5.11 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 or “.pdf” signature page were an original thereof.

5.12 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

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5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever the Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then the
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; provided,
however, that in the case of a rescission of an exercise of a Warrant, the
Purchaser shall be required to return any shares of Common Stock subject to any
such rescinded exercise notice concurrently with the return to the Purchaser of
the aggregate exercise price paid to the Company for such shares and the
restoration of the Purchaser’s right to acquire such shares pursuant to the
Purchaser’s Warrant (including, issuance of a replacement warrant certificate
evidencing such restored right).

5.14 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 (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with the
issuance of such replacement Securities.

5.15 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchaser
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
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to the Purchaser pursuant to any Transaction Document or the 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.

5.17 Liquidated Damages. The Company’s obligations to pay any partial liquidated
damages or other amounts owing under the Transaction Documents is a continuing
obligation of the Company and shall not terminate until all unpaid partial
liquidated damages

 

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and other amounts have been paid notwithstanding the fact that the instrument or
security pursuant to which such partial liquidated damages or other amounts are
due and payable shall have been canceled.

5.18 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

5.19 Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto. No
specific representation or warranty shall limit the generality or applicability
of a more general representation or warranty. In addition, each and every
reference to share prices and shares of Common Stock in any Transaction Document
shall be subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common Stock
that occur after the Effective Date.

5.20 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

5.21 Independent Nature of Purchaser’s Obligations and Rights. The obligations
of the Purchaser under this Agreement and the other Transaction Documents are
several and not joint with the obligations of any other Purchaser, and the
Purchaser shall not be responsible in any way for the performance of the
obligations of any other Purchaser under any other Transaction Document. The
decision of the Purchaser to purchase Securities pursuant to this Agreement has
been made by the Purchaser independently of any other Purchaser. Nothing
contained herein or in any other Transaction Document, and no action taken by
the Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchaser and the other Purchasers as, and the Company acknowledges that the
Purchaser and the other Purchasers do not so constitute, a partnership, an
association, a joint venture or any other kind of group or entity, or create a
presumption that the Purchaser or any of the other Purchasers are in any way
acting in concert or as a group or entity with respect to such obligations or
the transactions contemplated by the Transaction Documents or any matters, and
the Company acknowledges that the Purchaser and the other Purchasers are not
acting in concert or as a group, and the Company shall not assert any such
claim, with respect to such obligations or the transactions contemplated by this
Agreement or any of the other the Transaction Documents. The Purchaser
acknowledges that no other Purchaser has acted as agent for the Purchaser in
connection with making its investment hereunder and that no other Purchaser will
be acting as agent of the Purchaser in connection with monitoring its investment
hereunder. The Purchaser shall be entitled to independently protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement or out of any 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 use the same form of agreement with respect to
the obligations of the Company contained herein was done solely for the
convenience of the Company and not because it was required or requested to do so
by the Purchaser or any other Purchaser. It is expressly understood and agreed
that each provision contained in this Agreement and in each other Transaction
Document is between the Company and the Purchaser, solely, and not between the
Company and the Purchasers collectively and not between and among Purchasers.
The Purchaser represents that it has been represented by its own separate legal
counsel in its review and negotiations of this Agreement and the Transaction
Documents.

(Signature Pages Follow)

 

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

 

ARCA BIOPHARMA, INC.       Address for Notice:

By:

 

 

     

Name:

     

Title:

   

With a copy to (which shall not constitute notice):

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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

 

Name of Purchaser:   

 

Signature of Authorized Signatory of Purchaser:   

 

Name of Authorized Signatory:   

 

Title of Authorized Signatory:   

 

Email Address of Authorized Signatory:   

 

Facsimile Number of Authorized Signatory:   

 

Address for Notice of Purchaser:   

 

Exact Name in which the Shares and Warrants Should be Registered:   

 

 

Relationship to Purchaser:  

 

Address for Delivery of Securities for Purchaser (if not same as address for notice):
  

 

     

 

     

 

     

 

Subscription Amount:  

 

  Units consisting of:

Shares:                                          
                                   

Warrant Shares:                                                               

Aggregate Purchase Price:                                                      

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

Notwithstanding anything contained in this Agreement to the contrary, by
checking this box (i) the obligations of the above-signed to purchase the
securities set forth in this Agreement to be purchased from the Company by the
above-signed, and the obligations of the Company to sell such securities to the
above-signed, shall be unconditional and all conditions to Closing shall be
disregarded, (ii) the Closing shall occur on the third (3rd) Trading Day
following the date of this Agreement and (iii) any condition to Closing
contemplated by this Agreement (but prior to being disregarded by clause (i)
above) that required delivery by the Company or the above-signed of any
agreement, instrument, certificate or the like or purchase price (as applicable)
shall no longer be a condition and shall instead be an unconditional obligation
of the Company or the above-signed (as applicable) to deliver such agreement,
instrument, certificate or the like or purchase price (as applicable) to such
other party on the Closing Date.

 

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