Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of May 4,
2016, between Synergy Pharmaceuticals Inc., a Delaware corporation (the
“Company”), and  each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”).

 

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 desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to
purchase from the Company, securities of the Company 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 each Purchaser agrees
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:

 

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.4.

 

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

 

“Additional Registration Statement” shall mean any registration statement of the
Company filed or to be filed with the Commission under the rules and regulations
promulgated under the Securities Act, including the related prospectus,
amendments and supplements to such registration statement, and including pre-
and post-effective amendments, and all exhibits and all material incorporated by
reference in such registration statement.

 

“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 pursuant to
Section 2.1.

 

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

 

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

 

“Common Stock” means the common stock of the Company, par value $0.0001 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 Sichenzia Ross Friedman Ference LLP, with offices
located at 61 Broadway, 32nd Floor, New York, NY 10006.

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

 

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

 

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

 

“Insolvent” shall have the meaning ascribed to such term in Section 3.1(i)(ii).

 

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

 

“Irrevocable Transfer Agent Instructions” shall have the meaning ascribed to
such term in Section 2.2(a)(ii).

 

“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).

 

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“Per Share Purchase Price” equals $3.00, 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 date of this Agreement.

 

“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.

 

“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 final prospectus filed for the Registration Statement.

 

“Prospectus Supplement” means the supplement to the Prospectus complying with
Rule 424(b) of the Securities Act that is filed with the Commission and
delivered by the Company to each Purchaser at the Closing.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

 

“Registrable Shares” means the Shares sold and delivered to the Purchasers
pursuant to this  Agreement (as adjusted for stock splits, combinations,
recapitalizations, exchange or readjustment of such shares after the date
hereof) and any securities issued in respect of such Shares by reason of or in
connection with any exchange for or replacement of such shares or any stock
dividend, stock distribution, stock split, purchase in any rights offering or in
connection with any combination of shares, recapitalization, merger or
consolidation, or any other equity securities issued pursuant to any other pro
rata distribution with respect to the Company’s capital stock.

 

“Registration Expenses” shall mean all expenses incurred by the Company in
complying with Sections 4.12 and 4.13, including all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
incurred in connection with complying with state securities or “blue sky” laws,
fees of the Financial Industry Regulatory Authority, Inc., transfer taxes, fees
of transfer agents and registrars.

 

“Registration Statement” means the effective registration statement with
Commission file No. 333-205484 which registers the sale of the 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.

 

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“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended 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 Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Shares” means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

 

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

 

“Subsidiary” means any subsidiary of the Company, and shall, where applicable,
also include any direct or indirect subsidiary of the Company formed or acquired
after the date hereof.

 

“Termination Date” shall have the meaning ascribed to such term in Section 5.1.

 

“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 any other documents or
agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means Philadelphia Stock Transfer, Inc., the current transfer
agent of the Company, with a mailing address of 2320 Haverford Rd., Suite 230,
Ardmore, PA 19003, and any successor transfer agent of the Company.

 

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ARTICLE II.
PURCHASE AND SALE

 

2.1                               Closing.  On the Closing Date, upon the terms
and subject to the conditions set forth herein, substantially concurrent with
the execution and delivery of this Agreement by the parties hereto, the Company
agrees to sell, and each Purchaser, severally and not jointly, agrees to
purchase that number of Shares specified below such Purchaser’s name on the
signature pages of this Agreement and next to the heading “Shares”.  On the
Closing Date, each Purchaser shall deliver to the Company via wire transfer,
immediately available funds equal to its Subscription Amount as set forth on the
signature page hereto executed by each Purchaser and the Company shall deliver
to each Purchaser such number of Shares equal to such Purchaser’s Subscription
Amount divided by the Per Share Purchase Price, and the Company and each
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 Company Counsel
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 each Purchaser the following:

 

(i)                                     this Agreement and each of the other
Transaction Documents to which the Company is a party, each duly executed by the
Company;

 

(ii)                                  a copy of the duly executed irrevocable
instructions to the Transfer Agent (the “Irrevocable Transfer Agent
Instructions”), instructing the Transfer Agent to deliver at the Closing via the
Depository Trust Company Deposit Withdrawal Agent Commission System (“DWAC”)
such number of Shares equal to such Purchaser’s Subscription Amount divided by
the Per Share Purchase Price, registered in the name of the Purchaser as
specified on the signature pages of this Agreement and free of any restrictive
legend, which instructions shall have been delivered to and acknowledged in
writing by the Transfer Agent, including duly executed copies of the Notice of
Effectiveness and opinion of Company counsel in the forms set forth as exhibits
to the Irrevocable Transfer Agent Instructions;

 

(iii)                               a certificate, in a form reasonably
acceptable to such Purchaser, executed by the Secretary of the Company and dated
as of the Closing Date, as to (1) the resolutions consistent with
Section 3.1(c) as adopted by the Board of Directors, (2) the Certificate of
Incorporation of the Company, (3) the Bylaws of the Company as in effect at the
Closing and (4) the Company being in good standing (including attaching a
certificate of good standing dated not more than five Business Days prior to the
Closing issued by the Secretary of State of the State of Delaware);

 

(iv)                              a certificate, in a form reasonably acceptable
to such Purchaser, executed by the Chief Executive Officer of the Company, dated
as of the Closing

 

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Date, certifying the satisfaction of the conditions set forth in Sections
2.3(b)(i),  2.3(b)(ii) and 2.3(b)(iv);

 

(v)                                 a letter from the Company’s transfer agent
certifying the number of shares of Common Stock outstanding on the Closing Date
immediately prior to the Closing; and

 

(vi)                              the Prospectus and Prospectus Supplement
(which may be delivered in accordance with Rule 172 under the Securities Act).

 

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

 

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

 

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

 

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)                                     the accuracy in all material respects on
the Closing Date of the representations and warranties of each Purchaser
contained herein (unless as of a specific date therein, which shall be accurate
as of such date);

 

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

 

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

 

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

 

(i)                                     the accuracy in all material respects
when made and on the Closing Date of the representations and warranties of the
Company contained herein (unless as of a specific date therein, which shall be
accurate as of such date);

 

(ii)                                  all obligations, covenants and agreements
of the Company required to be performed at or prior to the Closing Date shall
have been performed, including without limitation the issuance of all Shares
prior to the Closing as required by the Transaction Documents;

 

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

 

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(iv)                              there shall have been no event, change or
development that has had, or would reasonably be expected to have, a Material
Adverse Effect with respect to the Company since the date hereof;

 

(v)                                 no statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority that prohibits
the consummation of any of the transactions contemplated by the Transaction
Documents, and no Proceedings shall be in progress or pending by any Person that
seeks to enjoin, prohibit or otherwise adversely affect any of the transactions
contemplated by the Transaction Documents;

 

(vi)                              the Shares shall be designated for listing or
quotation (as the case may be) on the Company’s principal Trading Market; and

 

(vii)                           from the date hereof to the Closing Date,
trading in the Common Stock shall not have been suspended by the Commission or
the Company’s principal Trading Market, and, at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg L.P. shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable or inadvisable to
purchase the Shares at the Closing.

 

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

 

3.1                               Representations and Warranties of the
Company.  Except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any representation
made herein to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, the Company hereby makes the following
representations and warranties to each Purchaser:

 

(a)                                 Subsidiaries.  All of the direct and
indirect Subsidiaries of the Company, and the place and form of organization of
each Subsidiary are as set forth in the SEC Reports.  The Company owns equity
interests of each Subsidiary as set forth in the Prospectus, free and clear of
any Liens, and all of the issued and outstanding shares of capital stock of each
Subsidiary are duly authorized, validly issued and are fully paid,
non-assessable and free of preemptive and similar rights of others to subscribe
for or purchase securities.  Except for the capital stock of, or other equity or
voting interests in, those Subsidiaries set forth in the SEC Reports, the
Company does not own, directly or indirectly, any capital stock of, or other
equity or voting interests in, any Person.

 

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(b)                                 Organization and Qualification.  The Company
and each of the 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.  Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
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 or corporate proceeding 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.  This Agreement has been duly and
validly executed and delivered by the Company and is a valid and binding
obligation of the Company, 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. Each Transaction Document other
than this Agreement to which the Company 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 this Agreement and the other Transaction Documents
to which it is a party, the issuance and sale of the Shares and the consummation
by it of the transactions

 

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contemplated hereby and thereby 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) conflict with, or constitute a default or breach (or an event that with
notice or lapse of time or both would become a default or breach) under, 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,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise), certificate, authorization, permit, license,
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 court or governmental authority to which the Company or
a Subsidiary is subject (including federal and state securities laws and
regulations), 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 have or reasonably be expected to result in a Material Adverse
Effect.

 

(e)                                  Filings, Consents and Approvals.  The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person,
including any Trading Market or any shareholder approval under the provisions of
the Company’s principal Trading Market, in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.3 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 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”).

 

(f)                                   Issuance of the Shares; Registration.  The
Shares are duly authorized and, when issued and paid for in accordance with the
applicable Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens and free of any restrictive
legend.  The Company has prepared and filed the Registration Statement in
conformity with the requirements of the Securities Act, which became effective
on July 14, 2015 (the “Effective Date”), including the Prospectus, and such
amendments and supplements thereto as may have been required to the date of this
Agreement.  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
Prospectus Supplement, with the Commission pursuant to Rule 424(b).  At the time
the Registration Statement and any amendments thereto became effective, at the
date of this Agreement and at the Closing Date, the Registration Statement and
any amendments thereto conformed and will

 

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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 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 issuance of the
Shares pursuant to this Agreement will be registered pursuant to the
Registration Statement and the Prospectus.

 

(g)                                  Capitalization.  The capitalization of the
Company (including the authorized capital stock of the Company, the issued and
outstanding shares of capital stock of the Company and the number of shares of
capital stock of the Company issuable upon the exercise or conversion, as
applicable, of any Common Stock Equivalents) is as set forth on Schedule
3.1(g).  Except as disclosed on Schedule 3.1(g), 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 employee stock options under the
Company’s stock option 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.  Except as disclosed on Schedule 3.1(g),
no Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents.  Except as a result of the purchase
and sale of the Shares and as disclosed in the 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 (or any other
securities of the Company which, whether after notice, lapse of time, or payment
of monies, are or would be convertible into or exchangeable or exercisable) for,
or giving any Person any right to subscribe for or acquire, or any phantom stock
or stock appreciation rights relating to, any shares of Common Stock or other
capital stock of the Company, 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 or other
capital stock of the Company.  The issuance and sale of the Shares will not
obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchaser). All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, and none of such outstanding shares was issued in violation of
any preemptive rights or similar rights to subscribe for or purchase
securities.  No further approval or authorization of any stockholder, the Board
of Directors or others is required for the issuance and sale of the Shares. 
Except as disclosed in the SEC Reports, there are no stockholders agreements,
voting agreements, “poison pill” or similar anti-takeover agreements or plans 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.

 

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(h)                                 SEC Reports; Financial Statements.  The
Company has filed or furnished, as applicable, all reports, schedules, forms,
statements and other documents required to be filed or furnished, as applicable,
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, together with the Prospectus and
the 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 Securities Act, the Exchange Act
and the Sarbanes-Oxley Act of 2002, and any rules and regulations promulgated
thereunder applicable to such SEC Report, 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 the circumstances under
which they were made, not misleading. No Subsidiary of the Company is required
to file or furnish any report, schedule, form, statement or other document with,
or make any other filing with, or furnish any other material to, the
Commission.  The financial statements of the Company included in or incorporated
by reference into 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 from, and are in accordance with the
books and records of the Company and its Subsidiaries and 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
that unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations, changes in stockholders’ equity 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.

 

(i)                                     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 date hereof, (1) there
has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (2) 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 by the
Company under applicable securities laws in filings made with the Commission,
(3) the Company has not altered its method of accounting or the identity of its
auditors, (4) 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, (5) the
Company has not issued any equity securities to

 

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any officer, director or Affiliate, except pursuant to existing Company stock
option plans, (6) the Company has not sold any assets outside of the ordinary
course of business or (7) the Company has not made any material capital
expenditures, individually or in the aggregate, outside of the ordinary course
of business.  The Company does not have pending before the Commission any
request for confidential treatment of information.  Except for the issuance of
the Shares 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, any of its Subsidiaries
or any of their respective business, prospects, properties, liabilities,
operations (including results thereof), assets or condition (financial or
otherwise) that (x) 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 at least 3 Trading Days prior to the
date that this representation is made, or (y) could reasonably be expected to
result in a Material Adverse Effect.

 

(ii)                                  The Company has not taken any steps to
seek protection pursuant to any law or statute relating to bankruptcy,
insolvency, reorganization, receivership, liquidation or winding up, nor does
the Company have any knowledge or reason to believe that any of its creditors
intend to initiate involuntary bankruptcy proceedings or any actual knowledge of
any fact which would reasonably lead a creditor to do so. The Company is not,
and after giving effect to the transactions contemplated by the Transaction
Documents to occur at the Closing will not be, Insolvent (as defined below).
“Insolvent” means, (x) the present fair saleable value of the Company’s assets
is less than the amount required to pay the Company’s total indebtedness,
(y) the Company is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured or (z) the Company intends to incur or believes that it will incur debts
that would be beyond its ability to pay as such debts mature. The Company has
not engaged in any business or in any transaction, and is not about to engage in
any business or in any transaction, for which the Company’s remaining assets
constitute unreasonably small capital.

 

(j)                                    Litigation.  There is no action, suit,
order, claim, litigation, inquiry, notice of violation, arbitration, mediation,
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”) (i) that have had or would reasonably be
expected to have a Material Adverse Effect or (ii) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Shares.  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.  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.  The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Securities Act.  Neither the
Company nor any of its Subsidiaries is subject to any order, writ, judgment or
decree of a court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) that has had or

 

12

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would reasonably be expected to have a Material Adverse Effect.  Except as has
not had and would not reasonably be expected to have a Material Adverse Effect,
there is no investigation or review pending (or, to the knowledge of the
Company, threatened) by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign) with
respect to the Company or any of its Subsidiaries.

 

(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, which could reasonably be expected to result in a
Material Adverse Effect.

 

(l)                                     Compliance.  Since January 1, 2015,
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 relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

(m)                             Regulatory Permits.  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.

 

(n)                                 Title to Assets.  The Company and the
Subsidiaries have good and marketable title in 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, 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 which is
material to the business of the Company and Subsidiaries are held by them under
valid, subsisting and enforceable leases with which the Company and the
Subsidiaries are in compliance.

 

(o)                                 Patents and Trademarks.  The Company and the
Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service

 

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marks, trade names, trade secrets, inventions, copyrights, licenses and other
intellectual property rights and similar rights, and all applications and
registrations therefor, necessary or material to conduct their respective
businesses as now conducted and as presently proposed to be conducted
(collectively, the “Intellectual Property Rights”).  None of, and neither the
Company nor any Subsidiary has received a notice (written or otherwise) that any
of, the Intellectual Property Rights has expired, terminated or been abandoned,
or is expected to expire or terminate or be abandoned, within three (3) years
from the date of this Agreement.  Neither the Company nor any Subsidiary has
received a written notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of any Person,
except as disclosed in the SEC Reports.  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.

 

(p)                                 Material Contracts.  For purposes of this
Agreement, “Material Contracts” means each outstanding contract or agreement to
which the Company or any of its Subsidiaries is a party, which is or would be
required to be filed by the Company as a “material contract” pursuant to Item
601(b)(4) or Item 601(b)(10) of Regulation S-K under the Securities Act.  Except
as has not had and would not reasonably be expected to have a Material Adverse
Effect, (i) each Material Contract is in full force and effect (except for those
contracts or agreements that have expired in accordance with their terms), is a
legal, valid and binding agreement of the Company or such Subsidiary, as the
case may be, and, to the knowledge of the Company, of each other party thereto,
enforceable against the Company or such Subsidiary, as the case may be, and, to
the knowledge of the Company, against the other party or parties thereto, in
each case, in accordance with its terms, except (x) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (y) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies and
(z) insofar as indemnification and contribution provisions may be limited by
applicable law, (ii) each of the Company and its Subsidiaries has performed or
is performing all obligations required to be performed by it under the Material
Contracts and is not (with or without notice or lapse of time or both) in breach
or default thereunder, and has not knowingly waived or failed to enforce any
rights or benefits thereunder (other than in the ordinary course of business
consistent with past practice), and, (iii) to the knowledge of the Company, no
other party to any of the Material Contracts is (with or without notice or lapse
of time or both) in breach in any material respect or default thereunder.

 

(q)                                 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.  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

 

14

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expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business without a significant increase in cost.

 

(r)                                    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 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 in the
ordinary course of business and (iii) other employee benefits, including stock
option agreements under any stock option plan of the Company.

 

(s)                                   Sarbanes-Oxley.  The Company is in
compliance with any and all applicable requirements of the Sarbanes-Oxley Act of
2002 that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are
effective as of the date hereof and as of the Closing Date.

 

(t)                                    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.

 

(u)                                 Investment Company. The Company is not, and
is not an Affiliate of, and immediately after receipt of payment for the Shares,
will not be or be an Affiliate of, an “investment company” within the meaning of
the Investment Company Act of 1940, as amended.  The Company shall conduct its
business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.

 

(v)                                 Listing and Maintenance Requirements.  The
Company has not, in the 12 months preceding the date hereof, 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, and has no
reason to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.

 

(w)                               Disclosure.  Except with respect to the
material terms and conditions of the transactions contemplated by the
Transaction Documents, the Company confirms that

 

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neither it nor any other Person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that it believes
constitutes or might constitute material, non-public information which is not
otherwise disclosed in the Prospectus Supplement.   The Company understands and
confirms that the Purchasers will rely on the foregoing representation in
effecting transactions in securities of the Company.  All of the disclosure
furnished by or on behalf of the Company to the Purchasers regarding the
Company, its business and the transactions contemplated hereby, including the
Disclosure Schedules to this Agreement, is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of this
Agreement taken as a whole do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made and when made, not misleading.  The Company acknowledges
and agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof.

 

(x)                                 No Integrated Offering. Assuming the
accuracy of the Purchasers’ representations and warranties set forth in
Section 3.2, neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Shares to be integrated with
prior offerings by the Company for purposes of any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

 

(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 (i) has made or
filed all United States federal and state income and all foreign income and
franchise tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply.  There are
no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim.

 

(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

 

16

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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.

 

(a)                                 Office of Foreign Asset Control.  Except as
has not had and would not reasonably be expected to have a Material Adverse
Effect, there is not, and has not been, any pending or, to the Company’s
knowledge, threatened, legal, administrative, arbitral or other material
proceeding, investigation (formal or informal), litigation, claim, suit or
action by any governmental entity against the Company or any of its
Subsidiaries, nor is there any judgment, order or decree imposed (or, to the
knowledge of the Company, threatened to be imposed) upon the Company or any of
its Subsidiaries by or before any governmental entity, in each case, in
connection with an alleged violation of laws relating to the import or export
(including deemed export) of data, goods or services to any foreign jurisdiction
against which the United States or the United Nations maintains sanctions or
export controls, including applicable regulations of the United States
Department of Commerce, the United States Department of State and the Office of
Foreign Asset Control of the United States Department of Treasury.

 

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

 

(bb)                          Acknowledgement Regarding Purchasers’ Trading
Activity.  Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Sections 3.2(d) and 4.11 hereof), it is understood
and acknowledged by the Company that: (i) none of the Purchasers has been asked
by the Company to agree, nor has any 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 Shares for
any specified term; (ii) past or future open market or other transactions by any
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) any Purchaser, and counter-parties in
“derivative” transactions to which such Purchaser is a party, directly or
indirectly, presently may have a “short” position in the Common Stock, and
(iv) each 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) each Purchaser may engage
in hedging activities at various times during the period that the Shares are
outstanding, and (z) such

 

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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.

 

(cc)                            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 Shares, (ii) sold, bid for, purchased, or, paid any
compensation for soliciting purchases of, any of the Shares, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company.

 

(dd)                          Internal Accounting and Disclosure Controls. 
Except as disclosed in the SEC Reports, the Company and each of its Subsidiaries
maintains internal control over financial reporting (as such term is defined in
Rule 13a-15(f) under the Exchange Act) that is effective and sufficient to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with GAAP, including that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset and liability accountability, (iii) access to assets
or incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. Except as disclosed in the SEC Reports, the Company maintains
disclosure controls and procedures (as such term is defined in
Rule 13a-15(e) under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the
Commission, including, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the Company’s management, including its principal executive officer or
officers and its principal financial officer or officers, as appropriate, to
allow timely decisions regarding required disclosure.

 

(ee)                            Off Balance Sheet Arrangements.  There is no
transaction, arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its Exchange Act filings and is not
so disclosed or that otherwise could reasonably be expected to result in a
Material Adverse Effect.

 

3.2                               Representations and Warranties of the
Purchasers.  Each Purchaser, for itself, hereby represents and warrants as of
the date hereof and as of the Closing Date to the Company as follows (unless as
of a specific date therein):

 

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(a)                                 Organization; Authority.  Such Purchaser is
an entity duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization with 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 such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate, partnership, limited
liability company or similar action, as applicable, on the part of such
Purchaser.  This Agreement has been duly and validly executed and delivered by
such Purchaser, and is a valid and binding obligation of such 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. Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and binding
obligation of such 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)                                 Purchaser Status.  At the time such
Purchaser was offered the Shares, it was, and as of the date hereof it is, an
“accredited investor” as defined in Rule 501(a) under the Securities Act.  Such
Purchaser is not required to be registered as a broker-dealer under Section 15
of the Exchange Act.

 

(c)                                  Experience of such Purchaser.  Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment
in the Shares, and has so evaluated the merits and risks of such investment. 
Such Purchaser is able to bear the economic risk of an investment in the Shares
and, at the present time, is able to afford a complete loss of such investment.

 

(d)                                 Certain Transactions and Confidentiality. 
Other than consummating the transactions contemplated hereunder, such Purchaser
has not, nor has any Person acting on behalf of or pursuant to any understanding
with such 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 such Purchaser first received a term sheet
(written or oral) as of the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof.  Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other

 

19

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portions of such Purchaser’s assets, the representation set forth above shall
only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Shares covered by this
Agreement.  Other than to other Persons party to this Agreement, such Purchaser
has maintained the confidentiality of all disclosures made to it in connection
with this transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with
respect to the identification of the availability of, or securing of, available
shares to borrow in order to effect Short Sales or similar transactions in the
future.

 

The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not modify, amend or affect such 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                               Furnishing of Information.  For a period of 2
years from the Closing Date, the Company covenants to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.

 

4.2                               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 Shares for purposes of the rules and
regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

 

4.3                               Securities Laws Disclosure; Publicity.  The
Company shall (a), issue a press release disclosing the material terms of the
transactions contemplated hereby upon the earlier of (i) filing of the
Prospectus Supplement and (ii)  within four (4) Trading Days immediately
following the date hereof and (b) file a Current Report on Form 8-K with the
Commission, including the Transaction Documents as exhibits thereto, within four
(4) Trading Days following the date hereof.  From and after the issuance of such
press release, the Company shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the Company or any
of its subsidiaries, or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction
Documents.  The Company and each Purchaser shall consult with each other in
issuing any other press releases with respect to the transactions contemplated
hereby, and neither the Company nor any 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 any Purchaser, or without
the prior consent of each 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

 

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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 any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such 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 such Purchaser with prior
notice of such disclosure permitted under this clause (b).

 

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

 

4.5                               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, after the date hereof, provide any
Purchaser or their respective agents or counsel with any information that the
Company believes constitutes material non-public information, and such Purchaser
agrees not to, and shall direct its agents and counsel not to, after the date
hereof request any material non-public information from the Company or any
Person acting on its behalf, unless prior thereto such Purchaser shall have
executed a written agreement with the Company regarding the confidentiality and
use of such information.  The Company understands and confirms that each
Purchaser shall be relying on the foregoing covenant in effecting transactions
in securities of the Company.

 

4.6                               Use of Proceeds.  Except as set forth on
Schedule 4.6 attached hereto, the Company shall use the net proceeds from the
sale of the Shares hereunder for commercialization activities for plecanatide,
further clinical development of plecanatide and dolcanatide and working capital
purposes and shall not use such proceeds for: (a)) the redemption of any Common
Stock or Common Stock Equivalents, or (b) the settlement of any outstanding
litigation.

 

4.7                               Indemnification of Purchasers.   Subject to
the provisions of this Section 4.7, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Purchaser (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title) of such
controlling persons (each, a “Purchaser Party”) harmless from any and all
actions, suits, claims, proceedings, losses, liabilities, obligations, taxes,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation (collectively, “Losses”) that any such Purchaser Party
may suffer or

 

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incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action instituted
against such Purchaser Party in any capacity, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of the
Purchaser Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser Party’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with
any such stockholder or any violations by such Purchaser Party of state or
federal securities laws or any conduct by such Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance).  If any action
shall be brought against any Purchaser Party in respect of which indemnity may
be sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing (provided that the failure of Purchaser Party to give
notice as provided herein shall not relieve the Company of its obligations under
this Section 4.7 unless and to the extent that the Company shall have been
actually prejudiced by the failure of such Purchaser Party to so notify he
Company), 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.  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 indemnification required by this Section 4.7 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or are incurred. The indemnity
agreements contained herein shall be in addition to (x) any cause of action or
similar right of any Purchaser Party against the Company or others, and (y) any
liabilities the Company may be subject to pursuant to law.  If the foregoing
indemnification provided for herein is determined to be unavailable for any
reason or is insufficient to hold Purchaser Party harmless in respect of any
Losses referred to herein, then, in lieu of indemnifying such Purchaser Party
hereunder, the Company shall contribute to the amount paid or payable by such
Purchaser Party as a result of such Losses (and expenses related thereto) (i) in
such proportion as is appropriate to reflect the relative fault of each of the
Company and the Purchaser and any other relevant and equitable considerations.

 

4.8                               Listing of Common Stock. The Company hereby
agrees to use best efforts to maintain the listing or quotation (as the case may
be) of the Common Stock on the Trading Market on which it is currently listed or
designated for quotation (as the case may be), and concurrently with or prior to
the Closing, the Company shall apply to list or quote all of the Shares on such
Trading Market and promptly, but in no event later than the Closing Date, secure
the listing or designation

 

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for quotation (as the case may be) of all of the Shares on such Trading Market.
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 will take such other action as is necessary to cause all of
the Shares to be listed or quoted on such other Trading Market as promptly as
possible.  The Company will then take all action 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.  The Company shall pay all fees and
expenses in connection with satisfying its obligations under this Section 4.8.

 

4.9                               Certain Transactions and Confidentiality. Each
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
pursuant to the initial press release as described in Section 4.3.  Each
Purchaser, severally and  not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company pursuant to the initial press release as described in
Section 4.3, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in the Disclosure
Schedules.  Notwithstanding the foregoing, and notwithstanding anything
contained in this Agreement to the contrary, the Company expressly acknowledges
and agrees that (i) no Purchaser makes any 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 pursuant to the initial press release as described
in Section 4.3, (ii) no Purchaser shall 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 pursuant to the
initial press release as described in Section 4.3 and (iii) no Purchaser shall
have any duty of confidentiality to the Company or its Subsidiaries after the
issuance of the initial press release as described in Section 4.3. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the 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 Shares covered by this
Agreement.

 

4.10                        Transfer Agent Instructions. The Company hereby
covenants and agrees that it will not give the Transfer Agent any instruction
with respect to the Shares other than the Irrevocable Transfer Agent
Instructions.

 

4.11                        Rule 144 Reporting.  With a view to making available
the benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Shares to the public without registration, while a
public market exists for the Shares, the Company will use its commercially
reasonable efforts to:

 

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(a)                                 make and keep public information available,
as those terms are understood and defined in Rule 144, at all times while Shares
are outstanding; and

 

(b)                                 file with the Commission in a timely manner
all reports and other documents required of the Company under the Securities Act
and the Exchange Act (at any time it is subject to such reporting requirements).

 

4.12                        Shelf Registration.

 

(a)                                 Subject to the limitations set forth in this
Section 4.12, the Company agrees to file with the Commission as soon as
reasonably practicable following a written request of a Purchaser (but in any
event within 30 days after such request) a shelf Additional Registration
Statement on Form S-1 or such other form under the Securities Act then available
to the Company providing for the resale of any Registrable Shares pursuant to
Rule 415 from time to time by the Holders (a “Shelf Registration Statement”). 
The Company shall use its reasonable best efforts to cause such Shelf
Registration Statement to be declared effective by the Commission as soon as
practicable after the initial filing thereof  (but in any event within 90 days),
except that if the Company is a “well known seasoned issuer” as defined in
Rule 405 under the Securities Act as of the date of filing the applicable
Additional Registration Statement, the Company shall file or amend an “automatic
shelf registration statement” as defined in Rule 405 under the Securities Act.  
Any Shelf Registration Statement shall provide for the resale from time to time,
and pursuant to any method or combination of methods legally available
(excluding a sale of Shares to an underwriter for reoffering to the public), by
the holders of any and all Registrable Shares. The Company shall use its
reasonable best efforts to keep any Shelf Registration Statement effective until
such time as there are no Registrable Shares remaining.

 

(b)                                 During (i) the period following receipt of
written notice from the Company that the Board of Directors has determined, in
good faith, that permitting continuing offers and sales of Registrable Shares
registered under a Shelf Registration Statement would (A) require the disclosure
of material non-public information concerning the Company that at the time is
not, in the good faith judgment of the Board of Directors, in the best interests
of the Company to disclose and is not otherwise required to be disclosed or
(B) otherwise materially interfere with financing plans, acquisition activities
or business activities of the Company (provided that (x) the Company may not
suspend use of the applicable Additional Registration Statement pursuant to this
clause (i) for a period of more than 60 days per notice and (y) the total number
of days that any such suspensions pursuant to this clause (i) may be in effect
in any 12-month period shall not exceed 120 days in the aggregate), (ii) during
the period following receipt of written notice from the Company that an
Additional Registration Statement, prospectus or prospectus supplement contains
or may contain an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading (excluding for purposes of this clause (ii) any event or
circumstances to which clause (i) could be applicable) or (iii) the suspension
of effectiveness of the Shelf Registration Statement by the Commission, each
holder of Registrable Shares shall discontinue its disposition thereof pursuant
to the

 

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applicable Shelf Registration Statement until such holder has received copies of
a supplemented or amended prospectus or prospectus supplement, or until such
holder is advised in writing by the Company that the use of the prospectus and,
if applicable, prospectus supplement may be resumed. If so directed by the
Company, in the case of a suspension pursuant to clause (ii), the each holder of
Registrable Shares shall deliver to the Company all copies, other than permanent
file copies then in their possession, of the prospectus and, if applicable,
prospectus supplement covering such Registrable Shares current at the time of
receipt of such suspension notice. The Company shall use reasonable best efforts
to cure any untrue statement of a material fact or material omission in order to
permit the resumption of dispositions at the earliest practicable date following
a suspension in accordance with clause (iii).

 

4.13                        Copies of Registration Statements.  The Company
will, if requested, prior to filing any Additional Registration Statement
pursuant to this Article IV or any amendment or supplement thereto, furnish to
the holders of Registrable Shares participating in the offering related to such
Additional Registration Statement, and thereafter furnish to such holders, such
number of copies of such Additional Registration Statement, amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein) and the prospectus included in such
Additional Registration Statement (including each preliminary prospectus) as
such holders may reasonably request in order to facilitate the sale of the
Registrable Shares by such holders.

 

4.14                        Expenses.  The Company shall pay all Registration
Expenses in connection with its obligations under Sections 4.12 and 4.13.

 

ARTICLE V.
MISCELLANEOUS

 

5.1                               Termination.  This Agreement may be terminated
by any Purchaser, as to such Purchaser’s obligations hereunder only and without
any effect whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing has not been
consummated on or before May 6, 2016 (the “Termination Date”); provided,
however, that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

 

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 Shares to the Purchasers.

 

5.3                               Entire Agreement.  The Transaction Documents,
together with the exhibits and schedules thereto, the Prospectus and the
Prospectus Supplement, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

 

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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.  No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and the
Purchasers of the Shares purchased hereunder or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought.  No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of 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 each Purchaser (other
than by merger).  Any Purchaser may assign any or all of its rights under this
Agreement to any Person to whom such Purchaser assigns or transfers any Shares,
provided that such transferee agrees in writing to be bound, with respect to the
transferred Shares, by the provisions of the Transaction Documents that apply to
the “Purchaser.”

 

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 4.7.

 

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

 

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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 4.7, 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.

 

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.

 

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 any Purchaser
exercises a right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights.

 

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5.14                        Replacement of Shares.  If any certificate or
instrument evidencing any Shares 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 Shares.

 

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 Purchasers and the Company will be entitled to specific performance
under the Transaction Documents.  The parties agree that monetary damages may
not be adequate compensation for any loss incurred by reason of any breach of
obligations 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 any Purchaser pursuant to any Transaction
Document or any 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                        Independent Nature of Purchasers’ Obligations and
Rights. The obligations of each Purchaser under any Transaction Document are
several and not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance or non-performance
of the obligations of any other Purchaser under any Transaction Document.
Nothing contained herein or in any other Transaction Document, and no action
taken by any Purchaser pursuant thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. The Company has elected to
provide all Purchasers with the same terms and Transaction Documents for the
convenience of the Company and not because it was required or requested to do so
by any of the Purchasers. It is expressly understood and agreed that each
provision contained in this Agreement and in each other Transaction Document is
between the Company and a Purchaser, solely, and not between the Company and the
Purchasers collectively and not between and among the Purchasers.

 

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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. 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 date of this Agreement.

 

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.

 

(Signature Pages Follow)

 

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

 

SYNERGY PHARMACEUTICALS INC.

 

Address for Notice:

 

 

 

 

 

420 Lexington Avenue, Suite 2012

 

 

New York, NY 10170

 

 

Attn: CEO

 

 

 

By:

 

 

Fax:

Name:

Gary Jacob

 

 

Title:

CEO

 

 

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

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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[PURCHASER SIGNATURE PAGE TO SYNERGY SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
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 and Contact Number for Notice of
Purchaser:                                 

 

 

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

 

Subscription Amount: $                                 

 

Shares:                                 

 

EIN Number (if applicable):                                 

 

Broker Name:                                 

 

Institutional ID:                                 

 

DTC Participant Number:                                 

 

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