(as defined below), the number of Common Shares as is set forth opposite such Buyer’s name incolumn (3) on the Schedule of Buyers along with a Warrant to initially acquire up to that number ofWarrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers.     (b) Closing. The closing (the “**Closing**”) of the purchase of the Common Shares and theWarrants by the Buyers shall occur at the offices of Brown Rudnick LLP. The date and timeof the Closing (the “**Closing Date**”) shall be 10:00 a.m., New York time, on the first(1st) Business Day on which the conditions to the Closing set forth in Sections 6 and 7below are satisfied or waived (or such later date as is mutually agreed to by the Company and eachBuyer). As used herein “**Business Day**” means any day other than a Saturday, Sunday or other day onwhich commercial banks in New York, New York are authorized or required by law to remain closed.     (c) Purchase Price. The aggregate purchase price for the Common Shares and the Warrants tobe purchased by each Buyer (the “**Purchase Price**”) shall be the amount set forth opposite suchBuyer’s name in column (5) on the Schedule of Buyers.     (d) Form of Payment. On the Closing Date, (i) each Buyer shall pay its respectivePurchase Price to the Company for the Common Shares and the Warrants to be issued and sold to suchBuyer at the Closing, by wire transfer of immediately available funds in accordance with theCompany’s written wire instructions and (ii) the Company shall deliver to each Buyer (A) a copy ofthe irrevocable instructions to the Company’s transfer agent instructing the transfer agent todeliver the Common Shares as is set forth opposite such Buyer’s name in column (3) of the Scheduleof Buyers and (B) a Warrant pursuant to which such Buyer shall have the right to initially acquireup to the number of Warrant Shares as is set forth opposite such Buyer’s name in column (4) of theSchedule of Buyers, in all cases, duly executed on behalf of the Company and registered in the nameof such Buyer or its designee (such Warrant certificate shall be delivered within three (3) TradingDays (as defined in the Warrant) of the Closing Date).**2.** **BUYER’S REPRESENTATIONS AND WARRANTIES.**     Each Buyer, severally and not jointly, represents and warrants to the Company with respect toonly itself that, as of the date hereof and as of the Closing Date:     (a) Organization; Authority. Such Buyer is an entity duly organized, validly existingand in good standing under the laws of the jurisdiction of its organization with the requisitepower and authority to enter into and to consummate the transactions contemplated by theTransaction Documents (as defined below) to which it is a party and otherwise to carry out itsobligations hereunder and thereunder.     (b) No Public Sale or Distribution. Such Buyer (i) is acquiring its Common Shares andWarrants, and (ii) upon exercise of its Warrants, will acquire the Warrant Shares issuable uponexercise thereof, in each case, for its own account and not with a view towards, or for resale inconnection with, the public sale or distribution thereof in violation of applicable securitieslaws, except pursuant to sales registered or exempted under the 1933 Act; provided, however, bymaking the representations herein, such Buyer does not agree, or make any
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representation or warranty, to hold any of the Securities for any minimum or other specificterm and reserves the right to dispose of the Securities at any time in accordance with or pursuantto a registration statement or an exemption under the 1933 Act. Such Buyer is acquiring theSecurities hereunder in the ordinary course of its business. Such Buyer does not presently have anyagreement or understanding, directly or indirectly, with any Person (as defined below) todistribute any of the Securities in violation of applicable securities laws.     (c) Accredited Investor Status. Such Buyer is either (i) an “accredited investor” asthat term is defined in Rule 501(a) of Regulation D or (ii) a “qualified institutional investor” asdefined in Rule 144A of the 1933 Act.     (d) Reliance on Exemptions. Such Buyer understands that the Securities are beingoffered and sold to it in reliance on specific exemptions from the registration requirements ofUnited States federal and state securities laws and that the Company is relying in part upon thetruth and accuracy of, and such Buyer’s compliance with, the representations, warranties,agreements, acknowledgments and understandings of such Buyer set forth herein in order to determinethe availability of such exemptions and the eligibility of such Buyer to acquire the Securities.     (e) Information. Such Buyer and its advisors, if any, have been furnished with allmaterials relating to the business, finances and operations of the Company and materials relatingto the offer and sale of the Securities which have been requested by such Buyer. Such Buyer and itsadvisors, if any, have been afforded the opportunity to ask questions of the Company. Neither suchinquiries nor any other due diligence investigations conducted by such Buyer or its advisors, ifany, or its representatives shall modify, amend or affect such Buyer’s right to rely on theCompany’s representations and warranties contained herein or any representations and warrantiescontained in any other Transaction Document (as defined below) or any other document or instrumentexecuted and/or delivered in connection with this Agreement or the consummation of the transactioncontemplated hereby. Such Buyer understands that its investment in the Securities involves a highdegree of risk. Such Buyer has sought such accounting, legal and tax advice as it has considerednecessary to make an informed investment decision with respect to its acquisition of theSecurities. Such Buyer is not relying, and has not relied, upon any statement, advice (whetheraccounting, tax, financial, legal or other), representation or warranty made by the Company or anyof its affiliates or representatives except for (A) the SEC Documents (as defined below), and (B)the representations and warranties made by the Company in this Agreement.     (f) No Governmental Review. Such Buyer understands that no United States federal orstate agency or any other government or governmental agency has passed on or made anyrecommendation or endorsement of the Securities or the fairness or suitability of the investment inthe Securities nor have such authorities passed upon or endorsed the merits of the offering of theSecurities.     (g) Transfer or Resale. Such Buyer understands that except as provided in theRegistration Rights Agreement and Section 4(h) hereof: (i) the Securities have not been and are notbeing registered under the 1933 Act or any state securities laws, and may not be offered for sale,sold, assigned or transferred unless (A) subsequently registered thereunder, (B) such Buyer
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shall have delivered to the Company (if requested by the Company) an opinion of counsel tosuch Buyer, in a form reasonably acceptable to the Company, to the effect that such Securities tobe sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption fromsuch registration, or (C) such Buyer provides the Company with reasonable assurance that suchSecurities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated underthe 1933 Act (or a successor rule thereto) (collectively, “**Rule 144**”); (ii) any sale of theSecurities made in reliance on Rule 144 may be made only in accordance with the terms of Rule 144,and further, if Rule 144 is not applicable, any resale of the Securities under circumstances inwhich the seller (or the Person (as defined below) through whom the sale is made) may be deemed tobe an underwriter (as that term is defined in the 1933 Act) may require compliance with some otherexemption under the 1933 Act or the rules and regulations of the SEC promulgated thereunder; and(iii) neither the Company nor any other Person is under any obligation to register the Securitiesunder the 1933 Act or any state securities laws or to comply with the terms and conditions of anyexemption thereunder.     (h) Validity; Enforcement. This Agreement and the Registration Rights Agreement havebeen duly and validly authorized, executed and delivered on behalf of such Buyer and constitute thelegal, valid and binding obligations of such Buyer enforceable against such Buyer in accordancewith their respective terms, except as such enforceability may be limited by general principles ofequity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and othersimilar laws relating to, or affecting generally, the enforcement of applicable creditors’ rightsand remedies.     (i) No Conflicts. The execution, delivery and performance by such Buyer of thisAgreement and the Registration Rights Agreement and the consummation by such Buyer of thetransactions contemplated hereby and thereby will not (i) result in a violation of theorganizational documents of such Buyer, (ii) conflict with, or constitute a default (or an eventwhich with notice or lapse of time or both would become a default) under, or give to others anyrights of termination, amendment, acceleration or cancellation of, any agreement, indenture orinstrument to which such Buyer is a party, or (iii) result in a violation of any law, rule,regulation, order, judgment or decree (including federal and state securities laws) applicable tosuch Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,rights or violations which would not, individually or in the aggregate, reasonably be expected tohave a material adverse effect on the ability of such Buyer to perform its obligations hereunder.     (j) Residency. Such Buyer is a resident of that jurisdiction specified below itsaddress on the Schedule of Buyers.     (k) Certain Trading Activities; Confidentiality. Other than consummating thetransactions contemplated hereunder, such Buyer has not directly or indirectly, nor has any Personacting on behalf of or pursuant to any understanding with such Buyer, engaged in any transactionsin the securities of the Company (including, without limitation, any Short Sales (as defined below)involving the Company’s securities) during the period commencing as of the time that such Buyer wasfirst contacted by the Company or the Placement Agent (as defined below) regarding the specificinvestment in the Company contemplated by this Agreement and ending immediately prior to theexecution of this Agreement by such Buyer. Notwithstanding the foregoing, in the case of a Buyerthat is a multi-managed investment vehicle whereby
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separate portfolio managers manage separate portions of such Buyer’s assets and the portfoliomanagers have no direct knowledge of the investment decisions made by the portfolio managersmanaging other portions of such Buyer’s assets, the representation set forth above shall only applywith respect to the portion of assets managed by the portfolio manager that made the investmentdecision to purchase the Securities covered by this Agreement. Other than to other Persons partyto this Agreement and its advisors, such Buyer has maintained the confidentiality of alldisclosures made to it in connection with this transaction (including the existence and terms ofthis transaction). “**Short Sales**” means all “short sales” as defined in Rule 200 promulgated underRegulation SHO under the 1934 Act (as defined below) (but shall not be deemed to include thelocation and/or reservation of borrowable shares of Common Stock). Such Buyer covenants thatneither it nor any Person acting on its behalf or pursuant to any understanding with it will engagein any transactions in the securities of the Company (including Short Sales) prior to the time thatthe transactions contemplated by this Agreement are publicly disclosed. Notwithstanding theforegoing, for avoidance of doubt, nothing contained herein shall constitute a representation orwarranty, or preclude any actions, with respect to the identification of the availability of, orsecuring of, available shares to borrow in order to effect Short Sales or similar transactions inthe future. Such Buyer (other than Bai Feng) does not as of the date hereof, and will notimmediately following the Closing, own 10% or more of the Company’s issued and outstanding sharesof Common Stock (calculated based on the assumption that all Convertible Securities (as definedbelow) owned by such Buyer, whether or not presently exercisable or convertible, have been fullyexercised or converted (as the case may be) but taking into account any limitations on exercise orconversion (including “blockers”) contained therein).     (l) No International Sales. Such Buyer acknowledges, represents and agrees that noaction has been or will be taken in any jurisdiction outside the United States by the Company thatwould permit an offering of the Securities, or possession or distribution of offering materials inconnection with the issue of the Securities in any jurisdiction outside the United States whereaction for that purpose is required. Each Buyer outside the United States will comply with allapplicable laws and regulations in each foreign jurisdiction in which it purchases, offers, sellsor delivers Securities or has in its possession or distributes any offering material, in all casesat its own expense.     (m) Experience of Such Buyer. Such Buyer, either alone or together with itsrepresentatives, has such knowledge, sophistication and experience in business and financialmatters so as to be capable of evaluating the merits and risks of the prospective investment in theSecurities, and has so evaluated the merits and risks of such investment. Such Buyer is able tobear the economic risk of an investment in the Securities and, at the present time, is able toafford a complete loss of such investment. Such Buyer, in connection with its decision to purchasethe number of Commons Shares and Warrants set forth opposite such Buyer’s name on columns 3 and 4of the Schedule of Buyers, relied only upon any or all of the following: the Company’s regularreports on Forms 10-K, 10-Q and 8-K as filed by the Company with the SEC, and other informationprovided to the Buyer and the representations and warranties of the Company contained herein.     (n) No Investment Advice. Such Buyer understands that nothing in this Agreement orany other materials presented to the Buyer in connection with the purchase and sale of theSecurities constitutes legal, tax or investment advice. Such Buyer has consulted such legal, tax
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and investment advisors as it, in its sole discretion, has deemed necessary or appropriate inconnection with its purchase of the Securities.**3.** **REPRESENTATIONS AND WARRANTIES OF THE COMPANY.**     The Company hereby represents and warrants to each of the Buyers that:     (a) Organization and Qualification; Subsidiaries. The Company is duly incorporatedand validly existing and in good standing under the laws of the State of Delaware, and has therequisite power and authorization to own its properties and to carry on its business as describedin the Company’s SEC Documents. The Company is duly qualified as a foreign entity to do businessand is in good standing in every jurisdiction in which its ownership of property or the nature ofthe business conducted by it makes such qualification necessary, except to the extent that thefailure to be so qualified or be in good standing would not have a Material Adverse Effect. As usedin this Agreement, “**Material Adverse Effect**” means any material adverse effect on (i) the business,properties, assets, liabilities, operations (including results thereof), or condition (financial orotherwise) of the Company, (ii) the transactions contemplated hereby or in any of the otherTransaction Documents or (iii) the authority or ability of the Company to perform any of itsobligations under any of the Transaction Documents, provided, however, that none of the followingshall constitute, or shall be considered in determining whether there has occurred, and no event,circumstance, change or effect resulting from or arising out of any of the following shallconstitute, a Material Adverse Effect: (A) the announcement of the execution of this Agreement; (B)changes in the national or world economy or financial markets as a whole or changes in generaleconomic conditions that affect the industries in which the Company conducts its business, so longas such changes or conditions do not adversely affect the Company in a materially disproportionatemanner relative to other similarly situated participants in the industries or markets in which theyoperate; (C) any change in applicable law, rule or regulation or GAAP or interpretation thereofafter the date hereof, so long as such changes do not adversely affect the Company, in a materiallydisproportionate manner relative to other similarly situated participants in the industries ormarkets in which they operate; (D) the failure, in and of itself, of the Company to meet anypublished or internally prepared estimates of revenues, earnings or other financial projections,performance measures or operating statistics; provided, however, that the facts and circumstancesunderlying any such failure may, except as may be provided in subsections (A), (B), (C), (E), and(F) of this definition, be considered in determining whether a Material Adverse Effect hasoccurred; (E) a decline in the price, or a change in the trading volume, of the Company CommonStock on the Principal Market (as defined below); and (F) compliance with the terms of, and takingany action required by, this Agreement. The Company has no significant subsidiaries (as such termis defined in Rule 1-02(w) of Regulation S-X promulgated by the Commission) and does not own anybeneficial interest, directly or indirectly, in any corporation, partnership, joint venture orother business entity.     (b) Authorization; Enforcement; Validity. The Company has the requisite corporatepower and authority to enter into and perform its obligations under this Agreement and the otherTransaction Documents and to issue the Securities in accordance with the terms hereof and thereof.The execution and delivery of this Agreement and the other Transaction Documents by the Company andthe consummation by the Company of the transactions contemplated hereby and thereby (including,without limitation, the issuance of the Common Shares, the issuance of
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the Warrants and the reservation for issuance and issuance of the Warrant Shares issuable uponexercise of the Warrants) have been duly authorized by the Company’s board of directors and (otherthan the filing with the SEC of one or more Registration Statements in accordance with therequirements of the Registration Rights Agreement, a Form D with the SEC and any other filings asmay be required by any state securities agencies) no further filing, consent or authorization oraction is required by the Company, its board of directors or its stockholders or other governingbody other than Required Approvals (as defined below). This Agreement has been, and the otherTransaction Documents will be prior to the Closing, duly executed and delivered by the Company, andeach constitutes the legal, valid and binding obligations of the Company, enforceable against theCompany in accordance with its respective terms, except as such enforceability may be limited bygeneral principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,liquidation or similar laws relating to, or affecting generally, the enforcement of applicablecreditors’ rights and remedies as limited by laws relating to the availability of specificperformance, injunctive relief or other equitable remedies and except as rights to indemnificationand to contribution may be limited by federal or state securities law. “**Transaction Documents**”means, collectively, this Agreement, the Warrants, the Registration Rights Agreement, theIrrevocable Transfer Agent Instructions (as defined below) and each of the other agreements andinstruments entered into or delivered by any of the parties hereto in connection with thetransactions contemplated hereby and thereby, as may be amended from time to time.     (c) Issuance of Securities. The issuance of the Common Shares and the Warrants areduly authorized and, upon issuance in accordance with the terms of the Transaction Documents, willbe validly issued, fully paid and non-assessable and free from all preemptive or similar rights,taxes, liens, charges and other encumbrances with respect to the issue thereof. As of the Closing,the Company shall have reserved from its duly authorized capital stock not less than the maximumnumber of shares of Common Stock issuable upon exercise of the Warrants (without taking intoaccount any limitations on the exercise of the Warrants set forth therein). The issuance of theWarrant Shares is duly authorized, and upon exercise in accordance with the Warrants, the WarrantShares, when issued, will be validly issued, fully paid and non-assessable and free from allpreemptive or similar rights, taxes, liens, charges and other encumbrances with respect to theissue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, theoffer and issuance by the Company of the Securities is exempt from registration under the 1933 Act.     (d) No Conflicts. Except as disclosed in the SEC Documents, the execution, deliveryand performance of the Transaction Documents by the Company and the consummation by the Company ofthe transactions contemplated hereby and thereby (including, without limitation, the issuance ofthe Common Shares, the Warrants and Warrant Shares and the reservation for issuance of the WarrantShares) will not (i) result in a violation of the Certificate of Incorporation (as defined below)(including, without limitation, any certificates of designation contained therein) or otherorganizational documents of the Company, any capital stock of the Company, or Bylaws, (ii) conflictwith, or constitute a default (or an event which with notice or lapse of time or both would becomea default) under, or give to others any rights of termination, amendment, acceleration orcancellation (with or without notice, lapse of time or both) of, any material agreement, indentureor instrument to which the Company is a party, or (iii) subject to
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Required Approvals, result in a violation of any law, rule, regulation, order, judgment ordecree (including, without limitation, federal and state securities laws and regulations and therules and regulations of the OTC Bulletin Board (the “**Principal Market**”)) applicable to the Companyor by which any property or asset of the Company is bound or affected except, in the case of clause(ii) or (iii) above, to the extent such violations that could not reasonably be expected to have aMaterial Adverse Effect.     (e) Consents. Except as disclosed in the SEC Documents, the Company is not requiredto obtain any consent from, authorization or order of, or make any filing or registration with(other than the filing with the SEC of one or more Registration Statements in accordance with therequirements of the Registration Rights Agreement, a Form D with the SEC and any other filings asmay be required by any state securities agencies (collectively, the “**Required Approvals**”)), anycourt, governmental agency or any regulatory or self-regulatory agency or any other Person in orderfor it to execute, deliver or perform any of its obligations under, or contemplated, by theTransaction Documents, in each case, in accordance with the terms hereof or thereof. All consents,authorizations, orders, filings and registrations which the Company is required to obtain at orprior to the Closing have been obtained or effected on or prior to the Closing Date, and theCompany is not aware of any facts or circumstances which might prevent the Company from obtainingor effecting any of the registration, application or filings contemplated by the TransactionDocuments. The Company is not in violation of the requirements of the Principal Market and has noknowledge of any facts or circumstances which could reasonably lead to delisting or suspension ofthe Common Stock in the foreseeable future.     (f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledgesand agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser withrespect to the Transaction Documents and the transactions contemplated hereby and thereby and thatno Buyer (other than Bai Feng) is (i) an officer or director of the Company, (ii) an “affiliate”(as defined in Rule 144) of the Company or (iii) to its knowledge, a “beneficial owner” of morethan 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the SecuritiesExchange Act of 1934, as amended (the “**1934 Act**”)). The Company further acknowledges that no Buyeris acting as a financial advisor or fiduciary of the Company (or in any similar capacity) withrespect to the Transaction Documents and the transactions contemplated hereby and thereby, and anyadvice given by a Buyer or any of its representatives or agents in connection with the TransactionDocuments and the transactions contemplated hereby and thereby is merely incidental to such Buyer’spurchase of the Securities. The Company further represents to each Buyer that the Company’sdecision to enter into the Transaction Documents has been based solely on the independentevaluation by the Company and its representatives.     (g) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any ofits affiliates, nor any Person acting on its or their behalf, has engaged in any form of generalsolicitation or general advertising (within the meaning of Regulation D) in connection with theoffer or sale of the Securities. The Company shall be responsible for the payment of any placementagent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons engaged byany Buyer or its investment advisor) relating to or arising out of the transactions contemplatedhereby. Other than Roth Capital Partners, LLC (the “**Placement Agent**”), the Company has not engagedany placement agent or other agent in connection with the offer or
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sale of the Securities.     (i) Dilutive Effect. The Company acknowledges that its obligation to issue the WarrantShares upon exercise of the Warrants in accordance with this Agreement and the Warrants is absoluteand unconditional, regardless of the dilutive effect that such issuance may have on the ownershipinterests of other stockholders of the Company.     (j) Application of Takeover Protections; Rights Agreement. The Company and its boardof directors have taken all necessary action, if any, in order to render inapplicable any controlshare acquisition, interested stockholder, business combination, poison pill (including, withoutlimitation, any distribution under a rights agreement) or other similar anti-takeover provisionunder the Certificate of Incorporation, Bylaws or other organizational documents or the laws of thejurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer asa result of the transactions contemplated by this Agreement, including, without limitation, theCompany’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company andits board of directors have taken all necessary action, if any, in order to render inapplicable anystockholder rights plan or similar arrangement relating to accumulations of beneficial ownership ofshares of Common Stock or a change in control of the Company.     (k) SEC Documents; Financial Statements. During the two (2) years prior to the datehereof, the Company has timely filed all reports, schedules, forms, statements and other documentsrequired to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (allof the foregoing filed prior to the date hereof and all exhibits included therein and financialstatements, notes and schedules thereto and documents incorporated by reference therein beinghereinafter referred to as the “**SEC Documents**”). As of their respective dates, the SEC Documentscomplied in all material respects with the requirements of the 1934 Act and the rules andregulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SECDocuments, at the time they were filed with the SEC, contained any untrue statement of a materialfact or omitted to state a material fact required to be stated therein or necessary in order tomake the statements therein, in the light of the circumstances under which they were made, notmisleading. As of their respective dates, except as disclosed in the SEC Documents, the financialstatements of the Company included in the SEC Documents complied as to form in all materialrespects with applicable accounting requirements and the published rules and regulations of the SECwith respect thereto as in effect as of the time of filing. Except as disclosed in the SECDocuments, such financial statements have been prepared in accordance with generally acceptedaccounting principles (“**GAAP**”), consistently applied, during the periods involved (except (i) asmay be otherwise indicated in such financial statements or the notes thereto, or (ii) in the caseof unaudited interim statements, to the extent they may exclude footnotes or may be condensed orsummary statements) and fairly present in all material respects the financial position of theCompany as of the dates thereof and the results of its operations and cash flows for the periodsthen ended (subject, in the case of unaudited statements, to normal year-end audit adjustmentswhich will not be material, either individually or in the aggregate). No other information providedby or on behalf of the Company to any of the Buyers which is not included in the SEC Documents(including, without limitation, information referred to in Section 2(e) of this Agreement) containsany untrue statement of a material fact or omits to state any
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material fact necessary in order to make the statements therein not misleading, in the lightof the circumstance under which they are or were made.     (l) Absence of Certain Changes; Solvency. Except as disclosed in the SEC Documents,since the date of the Company’s most recent audited financial statements contained in a Form 10-K,there has been no material adverse change and no material adverse development in the business,assets, liabilities, properties, operations (including results thereof), condition (financial orotherwise) or prospects of the Company. Except as disclosed in the SEC Documents, since the dateof the Company’s most recent audited financial statements contained in a Form 10-K, the Company hasnot (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate,outside of the ordinary course of business or (iii) made any material capital expenditures,individually or in the aggregate. Except as disclosed in the SEC Documents, the Company has nottaken 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 anyknowledge or reason to believe that any of their respective creditors intend to initiateinvoluntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably leada creditor to do so. Except as disclosed in the SEC Documents, the Company does not intend toincur debts beyond its ability to pay such debts as they mature (taking into account the timing andamounts of cash to be payable on or in respect of its debt). Except as disclosed in the SECDocuments, the Company has no knowledge of any facts or circumstances which lead it to believe thatit will file for reorganization or liquidation under the bankruptcy or reorganization laws of anyjurisdiction within one year from the Closing Date.     (m) No Undisclosed Events, Liabilities, Developments or Circumstances. Except asdisclosed in the SEC Documents, no event, liability, development or circumstance has occurred orexists, or is to the Company’s knowledge, reasonably expected to occur or exist, with respect tothe Company or any of their respective businesses, properties, liabilities, prospects, operations(including results thereof) or condition (financial or otherwise) that (i) would be required to bedisclosed by the Company under applicable securities laws on a registration statement on Form S-1filed with the SEC relating to an issuance and sale by the Company of its Common Stock and whichhas not been publicly announced, (ii) could have a material adverse effect on any Buyer’sinvestment hereunder or (iii) could have a Material Adverse Effect.     (n) Conduct of Business; Regulatory Permits. The Company is not in violation of anyterm of or in default under its Certificate of Incorporation, any certificate of designation,preferences or rights of any other outstanding series of preferred stock of the Company or Bylaws.Except as disclosed in the SEC Documents, the Company is not in violation of any judgment, decreeor order or any statute, ordinance, rule or regulation applicable to the Company, and the Companywill not conduct its business in violation of any of the foregoing, except in all cases forpossible violations which could not, individually or in the aggregate, have a Material AdverseEffect. Without limiting the generality of the foregoing, the Company is not in violation of any ofthe rules, regulations or requirements of the Principal Market and has no knowledge of any facts orcircumstances that could reasonably lead to delisting or suspension of the Common Stock by thePrincipal Market in the foreseeable future. Since June 9, 2009, (i) the Common Stock has beenlisted or designated for quotation on the Principal Market, (ii) trading in the Common Stock hasnot been suspended by the SEC or the Principal Market and (iii) the
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Company has received no communication, written or oral, from the SEC or the Principal Marketregarding the suspension or delisting of the Common Stock from the Principal Market. The Companypossess all certificates, authorizations and permits issued by the appropriate regulatoryauthorities necessary to conduct its respective businesses, except where the failure to possesssuch certificates, authorizations or permits would not have, individually or in the aggregate, aMaterial Adverse Effect, and the Company has not received any notice of proceedings relating to therevocation or modification of any such certificate, authorization or permit.     (o) Foreign Corrupt Practices. Neither the Company nor, to the knowledge of theCompany, any director, officer, any agent, employee or other Person acting on behalf of the Companyhas, in the course of its actions for, or on behalf of, the Company (i) used any corporate fundsfor any unlawful contribution, gift, entertainment or other unlawful expenses relating to politicalactivity; (ii) made any direct or indirect unlawful payment to any foreign or domestic governmentofficial or employee from corporate funds; (iii) violated or is in violation of any provision ofthe U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe,rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domesticgovernment official or employee.     (p) Sarbanes-Oxley Act. Except as disclosed in the SEC Documents, the Company is inmaterial compliance with all applicable requirements of the Sarbanes-Oxley Act of 2002 that areeffective as of the date hereof, and all applicable rules and regulations promulgated by the SECthereunder that are effective as of the date hereof.     (q) Transactions With Affiliates. Except as disclosed in the SEC Documents or as setforth on Schedule 3(p), none of the officers, directors or to the knowledge of the Company,employees of the Company is presently a party to any transaction with the Company (other than forordinary course services as employees, officers or directors), including any contract, agreement orother arrangement providing for the furnishing of services to or by, providing for rental of realor personal property to or from, or otherwise requiring payments to or from any such officer,director or employee or, to the knowledge of the Company, any corporation, partnership, trust orother Person in which any such officer, director, or employee has a substantial interest or is anemployee, officer, director, trustee or partner.     (r) Capitalization. Except as disclosed in the SEC Documents, the Company has notissued any capital stock since its most recently filed periodic report under the 1934 Act, otherthan pursuant to the exercise of employee stock options under the Company’s stock option plans, theissuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchaseplans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as ofthe date of the most recently filed periodic report under the 1934 Act. Except as disclosed in theSEC Documents or as set forth in Schedule 3(q)(i), no Person has any right of firstrefusal, preemptive right, right of participation, or any similar right to participate in thetransactions contemplated by the Transaction Documents. Except as disclosed in the SEC Documentsor as set forth in Schedule 3(q)(ii), as a result of the purchase and sale of theSecurities, there are no outstanding options, warrants, scrip rights to subscribe to, calls orcommitments of any character whatsoever relating to, or securities, rights or obligationsconvertible into or exercisable or exchangeable for, or giving any Person any right to subscribefor or acquire, any shares of Common Stock, or contracts, commitments, understandings or
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arrangements by which the Company is or may become bound to issue additional shares of CommonStock or Common Stock Equivalents. Except as disclosed in the SEC Documents or as set forth inSchedule 3(q)(iii), the issuance and sale of the Securities will not obligate the Companyto issue shares of Common Stock or other securities to any Person (other than the Buyers) and willnot result in a right of any holder of Company securities to adjust the exercise, conversion,exchange or reset price under any of such securities. All of the outstanding shares of capitalstock of the Company are validly issued, fully paid and nonassessable, have been issued incompliance with all federal and state securities laws, and none of such outstanding shares wasissued in violation of any preemptive rights or similar rights to subscribe for or purchasesecurities. No further approval or authorization of any stockholder, the Board of Directors orothers is required for the issuance and sale of the Securities. There are no stockholdersagreements, voting agreements or other similar agreements with respect to the Company’s capitalstock to which the Company is a party or, to the knowledge of the Company, between or among any ofthe Company’s stockholders. “**Common Stock Equivalents**” means any securities of the Company whichwould entitle the holder thereof to acquire at any time Common Stock, including, withoutlimitation, any debt, preferred stock, rights, options, warrants or other instrument that is at anytime convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereofto receive, Common Stock.     (s) Indebtedness and Other Contracts. Except as disclosed in the SEC Documents, theCompany (i) has no outstanding Indebtedness (as defined below), (ii) is not a party to anycontract, agreement or instrument, the violation of which, or default under which, by the otherparty(ies) to such contract, agreement or instrument could reasonably be expected to result in aMaterial Adverse Effect, (iii) is not in violation of any term of or in default under any contract,agreement or instrument relating to any Indebtedness, except where such violations and defaultswould not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) is not aparty to any contract, agreement or instrument relating to any Indebtedness, the performance ofwhich, in the judgment of the Company’s officers, has or is expected to have a Material AdverseEffect. For purposes of this Agreement: (x) “**Indebtedness**” of any Person means, without duplication(A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as thedeferred purchase price of property or services (including, without limitation, “capital leases” inaccordance with generally accepted accounting principles) (other than trade payables entered intoin the ordinary course of business), (C) all reimbursement or payment obligations with respect toletters of credit, surety bonds and other similar instruments, (D) all obligations evidenced bynotes, bonds, debentures or similar instruments, including obligations so evidenced incurred inconnection with the acquisition of property, assets or businesses, (E) all indebtedness created orarising under any conditional sale or other title retention agreement, or incurred as financing, ineither case with respect to any property or assets acquired with the proceeds of such indebtedness(even though the rights and remedies of the seller or bank under such agreement in the event ofdefault are limited to repossession or sale of such property), (F) all monetary obligations underany leasing or similar arrangement which, in connection with generally accepted accountingprinciples, consistently applied for the periods covered thereby, is classified as a capital lease,(G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which theholder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) anymortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property orassets (including accounts and contract rights) owned by any Person, even though the Person whichowns such assets or property has not assumed or
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become liable for the payment of such indebtedness, and (H) all Contingent Obligations inrespect of indebtedness or obligations of others of the kinds referred to in clauses (A) through(G) above; (y) “**Contingent Obligation**” means, as to any Person, any direct or indirect liability,contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or otherobligation of another Person if the primary purpose or intent of the Person incurring suchliability, or the primary effect thereof, is to provide assurance to the obligee of such liabilitythat such liability will be paid or discharged, or that any agreements relating thereto will becomplied with, or that the holders of such liability will be protected (in whole or in part)against loss with respect thereto; and (z) “**Person**” means an individual, a limited liabilitycompany, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,any other entity and a government or any department or agency thereof.     (t) Absence of Litigation. Except as disclosed in the SEC Documents, there is noaction, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,public board, government agency, self-regulatory organization or body pending or, to the knowledgeof the Company, threatened against or affecting the Company, the Common Stock or any of theCompany’s officers or directors which is outside of the ordinary course of business or individuallyor in the aggregate would have or reasonably expect to result in a Material Adverse Effect. Therehas not been, and to the knowledge of the Company, there is not pending or contemplated, anyinvestigation by the SEC involving the Company or any current director or officer of the Company.The SEC has not issued any stop order or other order suspending the effectiveness of anyregistration statement filed by the Company under the 1933 Act or the 1934 Act.     (u) Insurance. The Company is insured by insurers of recognized financialresponsibility against such losses and risks and in such amounts as management of the Companybelieves to be prudent and customary in the businesses in which the Company are engaged. TheCompany has not been refused any insurance coverage sought or applied for, and the Company has noreason to believe that it will be unable to renew its existing insurance coverage as and when suchcoverage expires or to obtain similar coverage from similar insurers as may be necessary tocontinue its business at a cost that would not have a Material Adverse Effect.     (v) Employee Relations. The Company is not a party to any collective bargainingagreement or employs any member of a union. The Company believes that its relations with itsemployees are good. No executive officer (as defined in Rule 501(f) promulgated under the 1933Act) or other key employee of the Company has notified the Company that such officer intends toleave the Company or otherwise terminate such officer’s employment with the Company. No executiveofficer or other key employee of the Company is, or is now expected to be, in violation of anymaterial term of any employment contract, confidentiality, disclosure or proprietary informationagreement, non-competition agreement, or any other contract or agreement or any restrictivecovenant, and the continued employment of each such executive officer or other key employee (as thecase may be) does not subject the Company to any liability with respect to any of the foregoingmatters. The Company is in compliance with all federal, state and local laws and regulationsrespecting labor, employment and employment practices and benefits, terms and conditions ofemployment and wages and hours, except where failure to be in compliance would not, eitherindividually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
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     (w) Title. Except as disclosed in the SEC Documents or as set forth on Schedule3(v), the Company has good and marketable title in fee simple to all real property, and havegood and marketable title to all personal property, owned by it which is material to the businessof the Company free and clear of all liens, charges, security interests, encumbrances, rights offirst refusal, preemptive rights or other restrictions (“**Liens**”), encumbrances and defects exceptsuch as do not materially affect the value of such property and do not interfere with the use madeand proposed to be made of such property by the Company. Any real property and facilities heldunder lease by the Company are held by it under valid, subsisting and enforceable leases with suchexceptions as are not material and do not interfere with the use made and proposed to be made ofsuch property and buildings by the Company.     (x) Intellectual Property Rights. The Company has or has adequate rights or licensesto use all trademarks, trade names, service marks, service mark registrations, service names,patents, patent rights, copyrights, original works, inventions, licenses, approvals, governmentalauthorizations, trade secrets and other intellectual property rights and all applications andregistrations therefor (“**Intellectual Property Rights**”) necessary to conduct its business asdescribed in the SEC Documents. None of the Company’s Intellectual Property Rights have expired,terminated or been abandoned, or are expected to expire, terminate or be abandoned, within threeyears from the date of this Agreement, except as set forth in the SEC Documents or except wheresuch expiration, termination or abandonment would not, either individually or in the aggregate,reasonably be expected to result in a Material Adverse Effect. The Company has not received anotice (written or otherwise) that any of the Intellectual Property Rights used by the Companyviolates or infringes upon the rights of any Person. To the knowledge of the Company, all suchIntellectual Property Rights are enforceable. The Company has taken reasonable security measuresto protect the secrecy, confidentiality and value of all of their intellectual properties, exceptwhere failure to do so could not, individually or in the aggregate, reasonably be expected to havea Material Adverse Effect.     (y) Environmental Laws. The Company (i) is in material compliance with allEnvironmental Laws (as defined below), (ii) has received all permits, licenses or other approvalsrequired of it under applicable Environmental Laws to conduct its business and (iii) is incompliance with all terms and conditions of any such permit, license or approval where, in each ofthe foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected tohave, individually or in the aggregate, a Material Adverse Effect. The term “**Environmental Laws**”means all federal, state, local or foreign laws relating to pollution or protection of human healthor the environment (including, without limitation, ambient air, surface water, groundwater, landsurface or subsurface strata), including, without limitation, laws relating to emissions,discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic orhazardous substances or wastes (collectively, “**Hazardous Materials**”) into the environment, orotherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal,transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees,demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders,permits, plans or regulations issued, entered, promulgated or approved thereunder.     (z) 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 has filed allnecessary federal, state and foreign income and franchise tax returns and has paid or accrued all
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taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which hasbeen asserted or threatened against the Company. The Company is not operated in such a manner asto qualify as a passive foreign investment company, as defined in Section 1297 of the U.S. InternalRevenue Code of 1986, as amended.     (aa) Internal Accounting and Disclosure Controls. Except as disclosed in the SECDocuments, the Company maintains internal control over financial reporting (as such term is definedin Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with GAAP, including that (i) transactions are executed in accordance withmanagement’s general or specific authorizations, (ii) transactions are recorded as necessary topermit preparation of financial statements in conformity with GAAP and to maintain asset andliability accountability, (iii) access to assets or incurrence of liabilities is permitted only inaccordance with management’s general or specific authorization and (iv) the recorded accountabilityfor assets and liabilities is compared with the existing assets and liabilities at reasonableintervals and appropriate action is taken with respect to any difference. Except as disclosed inthe SEC Documents, the Company maintains disclosure controls and procedures (as such term isdefined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring that informationrequired to be disclosed by the Company in the reports that it files or submits under the 1934 Actis recorded, processed, summarized and reported, within the time periods specified in the rules andforms of the SEC, including, without limitation, controls and procedures designed to ensure thatinformation required to be disclosed by the Company in the reports that it files or submits underthe 1934 Act is accumulated and communicated to the Company’s management, including its principalexecutive officer or officers and its principal financial officer or officers, as appropriate, toallow timely decisions regarding required disclosure. The Company presented in its most recentlyfiled periodic report under the 1934 Act the conclusions of the certifying officers about theeffectiveness of the disclosure controls and procedures based on their evaluations as of the end ofthe period covered by the Company’s most recently filed periodic report under the 1934 Act (the“**Evaluation Date**”). Since the Evaluation Date, there have been no changes in the Company’sinternal control over financial reporting (as such term is defined in the 1934 Act) that hasmaterially affected, or is reasonably likely to materially affect, the Company’s internal controlover financial reporting.     (bb) Off Balance Sheet Arrangements. There is no transaction, arrangement, or otherrelationship between the Company and an unconsolidated or other off balance sheet entity that isrequired to be disclosed by the Company in its 1934 Act filings and is not so disclosed or thatotherwise could be reasonably likely to have a Material Adverse Effect.     (cc) Investment Company Status. The Company is not, and upon consummation of the saleof the Securities will not be, an “investment company,” as such term is defined in the InvestmentCompany Act of 1940, as amended.     (dd) Acknowledgement Regarding Buyers’ Trading Activity. It is understood andacknowledged by the Company that (i) except as set forth in Section 2(k), none of the Buyers havebeen asked by the Company to agree, nor has any Buyer agreed with the Company, to desist fromeffecting any transactions in or with respect to (including, without limitation, purchasing orselling, long and/or short) any securities of the Company, or “derivative” securities
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based on securities issued by the Company or to hold any of the Securities for any specifiedterm; (ii) past or future open market or other transactions by any Buyer, specifically including,without limitation, Short Sales or “derivative” transactions, before or after the closing of thisor future private placement transactions, may negatively impact the market price of the Company’spublicly-traded securities; (iii) any Buyer, and counterparties in “derivative” transactions towhich any such Buyer is a party, directly or indirectly, presently may have a “short” position inthe Common Stock which was established prior to such Buyer’s knowledge of the transactionscontemplated by the Transaction Documents; and (iv) each Buyer shall not be deemed to have anyaffiliation with or control over any arm’s length counterparty in any “derivative” transaction. TheCompany further understands and acknowledges that, subject to Section 2(k), (a) one or more Buyersmay engage in hedging and/or trading activities at various times during the period that theSecurities are outstanding, including, without limitation, during the periods that the value and/ornumber of the Warrant Shares deliverable with respect to the Securities are being determined and(b) such hedging and/or trading activities, if any, can reduce the value of the existingstockholders’ equity interest in the Company both at and after the time the hedging and/or tradingactivities are being conducted. The Company acknowledges that such aforementioned hedging and/ortrading activities do not constitute a breach of this Agreement or any other Transaction Documentor any of the documents executed in connection herewith or therewith.     (ee) Manipulation of Price. The Company has not, and, to the knowledge of the Company,no Person acting on its behalf has, directly or indirectly, (i) taken any action designed to causeor to result in the stabilization or manipulation of the price of any security of the Company tofacilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid anycompensation for soliciting purchases of, any of the Securities (other than the Placement Agent),or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchaseany other securities of the Company.     (ff) U.S. Real Property Holding Corporation. The Company is not nor has ever been, aU.S. real property holding corporation within the meaning of Section 897 of the Internal RevenueCode of 1986, as amended, and the Company shall so certify upon any Buyer’s request.     (gg) Transfer Taxes. On the Closing Date, all stock transfer or other taxes (otherthan income or similar taxes) which are required to be paid in connection with the issuance, saleand transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fullypaid or provided for by the Company, and all laws imposing such taxes will be or will have beencomplied with.     (hh) Bank Holding Company Act. The Company is not subject to the Bank Holding CompanyAct of 1956, as amended (the “**BHCA**”) and to regulation by the Board of Governors of the FederalReserve System (the “**Federal Reserve**”). Neither the Company nor any of its affiliates owns orcontrols, directly or indirectly, five percent (5%) or more of the outstanding shares of any classof voting securities or twenty-five percent (25%) or more of the total equity of a bank or anyequity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Companynor any of its affiliates exercises a controlling influence over the management or policies of abank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
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     (ii) Shell Company Status. The Company is not, and has never been, an issueridentified in, or subject to, Rule 144(i).     (jj) Public Utility Holding Act. The Company is not a “holding company,” or an“affiliate” of a “holding company,” as such terms are defined in the Public Utility Holding Act of2005.     (kk) Federal Power Act. The Company is not subject to regulation as a “publicutility” under the Federal Power Act, as amended.     (ll) FDA. Except as disclosed in the SEC Documents, as to each product subject to thejurisdiction of the U.S. Food and Drug Administration (“**FDA**”) under the Federal Food, Drug andCosmetic Act, as amended, and the regulations thereunder (“**FDCA**”) that is manufactured, packaged,labeled, tested, distributed, sold, and/or marketed by the Company (each such product, a“**Pharmaceutical Product**”), such Pharmaceutical Product is being manufactured, packaged, labeled,tested, distributed, sold and/or marketed by the Company in compliance with all applicablerequirements under FDCA and similar laws, rules and regulations relating to registration,investigational use, premarket clearance, licensure, or application approval, good manufacturingpractices, good laboratory practices, good clinical practices, product listing, quotas, labeling,advertising, record keeping and filing of reports, except where the failure to be in compliancewould not have a Material Adverse Effect. Except as disclosed in the SEC Documents, there is nopending, completed or, to the Company’s knowledge, threatened, action (including any lawsuit,arbitration, or legal or administrative or regulatory proceeding, charge, complaint, orinvestigation) against the Company, and the Company has not received any notice, warning letter orother communication from the FDA or any other governmental entity, which (i) contests the premarketclearance, licensure, registration, or approval of, the uses of, the distribution of, themanufacturing or packaging of, the testing of, the sale of, or the labeling and promotion of anyPharmaceutical Product, (ii) withdraws its approval of, requests the recall, suspension, or seizureof, or withdraws or orders the withdrawal of advertising or sales promotional materials relatingto, any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by theCompany, (iv) enjoins production at any facility of the Company, (v) enters or proposes to enterinto a consent decree of permanent injunction with the Company, or (vi) otherwise alleges anyviolation of any laws, rules or regulations by the Company, and which, either individually or inthe aggregate, would have a Material Adverse Effect. Except as disclosed in the SEC Documents, theproperties, business and operations of the Company have been and are being conducted in allmaterial respects in accordance with all applicable laws, rules and regulations of the FDA.Except as disclosed in the SEC Documents, the Company has not been informed by the FDA that the FDAwill prohibit the marketing, sale, license or use in the United States of any product proposed tobe developed, produced or marketed by the Company nor has the FDA to the Company’s knowledgeexpressed any concern as to approving or clearing for marketing any product being developed orproposed to be developed by the Company.     (mm) Money Laundering. The Company is in compliance with, and has not previouslyviolated, the USA Patriot Act of 2001 and any other applicable U.S. and non-U.S. anti-moneylaundering laws and regulations, including, but not limited to, the laws, regulations and ExecutiveOrders and sanctions programs administered by the U.S. Office of Foreign Assets
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Control, including, but not limited, to (i) Executive Order 13224 of September 23, 2001entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten toCommit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31CFR, Subtitle B, Chapter V.     (nn) Management. Except as disclosed in the SEC Documents, during the past five yearperiod, no current officer or director has been the subject of:     (i) a petition under bankruptcy laws or any other insolvency or moratorium law or theappointment by a court of a receiver, fiscal agent or similar officer for such Person, orany partnership in which such person was a general partner at, or any corporation orbusiness association of which such person was an executive officer at;     (ii) a conviction in a criminal proceeding or a named subject of a pending criminalproceeding (excluding traffic violations that do not relate to driving while intoxicated ordriving under the influence);     (iii) any order, judgment or decree, not subsequently reversed, suspended or vacated,of any court of competent jurisdiction, permanently or temporarily enjoining any such personfrom, or otherwise limiting, the following activities:          (1) Acting as a futures commission merchant, introducing broker, commoditytrading advisor, commodity pool operator, floor broker, leverage transactionmerchant, any other person regulated by the United States Commodity Futures TradingCommission or an associated person of any of the foregoing, or as an investmentadviser, underwriter, broker or dealer in securities, or as an affiliated person,director or employee of any investment company, bank, savings and loan associationor insurance company, or engaging in or continuing any conduct or practice inconnection with such activity;          (2) Engaging in any type of business practice; or          (3) Engaging in any activity in connection with the purchase or sale of anysecurity or commodity or in connection with any violation of securities laws orcommodities laws;     (iv) any order, judgment or decree, not subsequently reversed, suspended or vacated, ofany authority barring, suspending or otherwise limiting for more than 60 days the right ofany such person to engage in any activity described in the preceding sub paragraph, or to beassociated with persons engaged in any such activity;     (v) a finding by a court of competent jurisdiction in a civil action or by the SEC orother authority to have violated any securities law, regulation or decree and the judgmentin such civil action or finding by the SEC or any other authority has not been subsequentlyreversed, suspended or vacated; or     (vi) a finding by a court of competent jurisdiction in a civil action or by theCommodity Futures Trading Commission to have violated any federal commodities law,
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and the judgment in such civil action or finding has not been subsequently reversed,suspended or vacated.     (oo) No Additional Agreements. The Company does not have any agreement orunderstanding with any Buyer with respect to the transactions contemplated by the TransactionDocuments other than as specified in the Transaction Documents.     (pp) Disclosure. The Company confirms that neither it nor any other Person acting onits behalf has provided any of the Buyers or their agents or counsel with any information thatconstitutes or could reasonably be expected to constitute material, non-public informationconcerning the Company, other than the existence of the transactions contemplated by this Agreementand the other Transaction Documents. The Company understands and confirms that each of the Buyerswill rely on the foregoing representations in effecting transactions in securities of the Company.All disclosure provided to the Buyers regarding the Company, its business and the transactionscontemplated hereby, including the schedules to this Agreement, furnished by or on behalf of theCompany is true and correct and does not contain any untrue statement of a material fact or omit tostate any material fact necessary in order to make the statements made therein, in the light of thecircumstances under which they were made, not misleading. Each press release issued by the Companyduring the twelve (12) months preceding the date of this Agreement did not at the time of releasecontain any untrue statement of a material fact or omit to state a material fact required to bestated therein or necessary in order to make the statements therein, in the light of thecircumstances under which they are made, not misleading. No event or circumstance has occurred orinformation exists with respect to the Company or its business, properties, liabilities, prospects,operations (including results thereof) or conditions (financial or otherwise), which, underapplicable law, rule or regulation, requires public disclosure at or before the date hereof orannouncement by the Company but which has not been so publicly disclosed. The Company acknowledgesand agrees that no Buyer makes or has made any representations or warranties with respect to thetransactions contemplated hereby other than those specifically set forth in Section 2.**4.** **COVENANTS.**     (a) Best Efforts. Each Buyer shall use its reasonable best efforts to timely satisfyeach of the conditions to be satisfied by it as provided in Section 6 of this Agreement. TheCompany shall use its reasonable best efforts to timely satisfy each of the conditions to besatisfied by it as provided in Section 7 of this Agreement.     (b) Form D and Blue Sky. The Company shall file a Form D with respect to theSecurities as required under Regulation D. The Company shall, on or before the Closing Date, takesuch action as the Company shall reasonably determine is necessary in order to obtain an exemptionfor, or to, qualify the Securities for sale to the Buyers at the Closing pursuant to this Agreementunder applicable securities or “Blue Sky” laws of the states of the United States (or to obtain anexemption from such qualification) if so required by such applicable state laws. Without limitingany other obligation of the Company under this Agreement, the Company shall timely make all filingsand reports relating to the offer and sale of the Securities required under all applicablesecurities laws (including, without limitation, all applicable federal securities laws and allapplicable “Blue Sky” laws), and the Company shall comply with all applicable federal,
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state and local laws, statutes, rules, regulations and the like relating to the offering andsale of the Securities to the Buyers.     (c) Reporting Status. Until the date on which the Buyers shall have sold all of theRegistrable Securities (the “**Reporting Period**”), the Company shall timely file all reports requiredto be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its statusas an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules andregulations thereunder would no longer require or otherwise permit such termination.     (d) Use of Proceeds. The Company shall use the proceeds from the sale of theSecurities solely as set forth on Schedule 4(d), and, without limitation of the foregoing,except as set forth on Schedule 4(d), none of such proceeds shall be used, directly orindirectly, for (i) the satisfaction of any debt of the Company (other than payment of tradepayables incurred after the date hereof in the ordinary course of business of the Company andconsistent with prior practices), (ii) the redemption of any securities of the Company or (iii) thesettlement of any outstanding litigation.     (e) Financial Information. The Company agrees to send the following to each Investor(as defined in the Registration Rights Agreement) during the Reporting Period (i) unless thefollowing are filed with the SEC through EDGAR and are available to the public through the EDGARsystem, within one (1) Business Day after the filing thereof with the SEC, a copy of its AnnualReports on Form 10-K and Quarterly Reports on Form 10-Q, any interim reports or any consolidatedbalance sheets, income statements, stockholders’ equity statements and/or cash flow statements forany period other than annual, any Current Reports on Form 8-K and any registration statements(other than on Form S-8) or amendments filed pursuant to the 1933 Act and (ii) copies of anynotices and other information made available or given to the stockholders of the Company generally,contemporaneously with the making available or giving thereof to the stockholders. Notwithstandingthe foregoing, nothing in this Section 4(e) shall require the Company to disclose to any Investorany redacted part of any filing in which the Company has requested confidential treatment by theSEC.     (f) Listing. The Company shall promptly secure the listing or designation forquotation (as the case may be) of all of the Registrable Securities upon each national securitiesexchange and automated quotation system, if any, upon which the Common Stock is then listed ordesignated for quotation (as the case may be) (subject to official notice of issuance) (but in noevent later than the Closing Date) and shall maintain such listing or designation for quotation (asthe case may be) of all Registrable Securities from time to time issuable under the terms of theTransaction Documents on such national securities exchange or automated quotation system. TheCompany further agrees, if the Company applies to have the Common Stock traded on any othernational securities exchange or automated quotation system, it will then include in suchapplication all of the Registrable Securities, and will take such other action as is necessary tocause all of the Registrable Securities to be listed or quoted on such other exchange as promptlyas possible. The Company shall maintain the Common Stock’s designation for quotation (as the casemay be) on the Principal Market, or, if applicable, listing on The NYSE Amex, The New York StockExchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market(as the case may be) (each, an “**Eligible Market**”), and shall take all action reasonably necessaryto continue the listing and trading of its Common Stock on an
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Eligible Market and will comply in all respects with the Company’s reporting, filing, andother obligations under the bylaws or rules of such Eligible Market. The Company shall not takeany action which could be reasonably expected to result in the delisting or suspension of theCommon Stock on an Eligible Market. The Company shall pay all fees and expenses in connection withsatisfying its obligations under this Section 4(d).     (g) Fees. The Company shall be responsible for the payment of any placement agent’sfees, financial advisory fees, or broker’s commissions (other than for Persons engaged by anyBuyer) relating to or arising out of the transactions contemplated hereby (including, withoutlimitation, any fees payable to the Placement Agent, who is the Company’s sole placement agent inconnection with the transactions contemplated by this Agreement). The Company shall pay, and holdeach Buyer harmless against, any liability, loss or expense (including, without limitation,reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any claimrelating to any such payment. Except as otherwise set forth in the Transaction Documents, eachparty to this Agreement shall bear its own expenses in connection with the sale of the Securitiesto the Buyers.     (h) Pledge of Securities. Notwithstanding anything to the contrary contained in thisAgreement, the Company acknowledges and agrees that the Securities may be pledged by a Buyer inconnection with a bona fide margin agreement or other loan or financing arrangement that is securedby the Securities. The pledge of Securities shall not be deemed to be a transfer, sale orassignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall berequired to provide the Company with any notice thereof or otherwise make any delivery to theCompany pursuant to this Agreement or any other Transaction Document. The Company hereby agrees toexecute and deliver such documentation as a pledgee of the Securities may reasonably request inconnection with a pledge of the Securities to such pledgee by a Buyer.     (i) Disclosure of Transactions and Other Material Information. The Company shall, onor before 9:30 a.m., New York time, (but in no event prior to 9:15 a.m., New York time) on the dateof this Agreement, issue a press release (the “**Press Release**”) reasonably acceptable to the Buyersdisclosing all the material terms of the transactions contemplated by the Transaction Documents. Onor before 9:30 a.m., New York time, (but in no event prior to 9:15 a.m., New York time) on the dateof this Agreement, the Company shall file a Current Report on Form 8-K describing all the materialterms of the transactions contemplated by the Transaction Documents in the form required by the1934 Act and attaching all the material Transaction Documents (including, without limitation, thisAgreement, the form of Warrants and the form of the Registration Rights Agreement) (including allattachments, the “**8-K Filing**”). From and after the issuance of the Press Release, the Companyshall have disclosed all material, non-public information (if any) delivered to any of the Buyersby the Company, or any of its officers, directors, employees or agents in connection with thetransactions contemplated by the Transaction Documents. The Company shall not, and the Companyshall cause each of its officers, directors, employees and agents, not to, provide any Buyer withany material, non-public information regarding the Company from and after the issuance of the PressRelease without the express prior written consent of such Buyer. Neither the Company nor any Buyershall issue any press releases or any other public statements with respect to the transactionscontemplated hereby; provided, however, the Company shall be entitled, without the prior approvalof any Buyer, to make any press release or other public disclosure with respect to such
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transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewithand (ii) as is required by applicable law and regulations (provided that in the case of clause (i)each Buyer shall be consulted by the Company in connection with any such press release or otherpublic disclosure prior to its release). Other than in the Securities Purchase Agreement attachedto the 8-K Filing, without the prior written consent of the applicable Buyer, the Company shall not(and shall cause each of affiliates to not) disclose the name of such Buyer in any filing,announcement, release or otherwise.     (j) Additional Issuance of Securities. The Company agrees that for the periodcommencing on the date hereof and ending on the date immediately following the earlier to occur of(i) the thirtieth (30th) Trading Day after the earlier of (x) the Applicable Date (as definedbelow) and (y) the first date on which Rule 144 is available for the sale of any Securities and(ii) the three (3) month anniversary of the Closing Date (the “**Restricted Period**”), the Companyshall not directly or indirectly issue, offer, sell, grant any option or right to purchase, orotherwise dispose of (or announce any issuance, offer, sale, grant of any option or right topurchase or other disposition of) any equity security or any equity-linked security (including,without limitation, any “equity security” (as that term is defined under Rule 405 promulgated underthe 1933 Act), any Convertible Securities or any preferred stock) (any such issuance, offer, sale,grant, disposition or announcement (whether occurring during the Restricted Period or at any timethereafter) is referred to as a “**Subsequent Placement**”), unless each purchaser (each a “**SubsequentPurchaser**”) of securities in such Subsequent Placement (including, without limitation, anysecurities issuable upon conversion, exercise or exchange thereof) (collectively, the “**SubsequentPlacement Securities**”) irrevocably agrees that during the Restricted Period it will not, directlyor indirectly, sell, offer to sell, contract or agree to sell, or grant any option to purchase anySubsequent Placement Securities pursuant to an effective registration statement or usableprospectus or in reliance on the Section 4(1) exemption under the 1933 Act (the foregoingrestrictions are referred to as the “**Subsequent Transfer Restrictions**”). For the avoidance ofdoubt, Subsequent Transfer Restrictions shall not include (A) any sale, offer to sell, contract oragreement to sell any of the Subsequent Placement Securities directly or indirectly to any Personin a private sale transaction in reliance on the 4(11/2) exemption under the 1933 Act, or (B) anysales, transfers, grants or gifts of any Subsequent Placement Securities to (i) any spouse orlineal descendants, heirs, executors, administrators, testamentary trustees, legatees orbeneficiaries of such Subsequent Purchaser; (ii) any trust, charitable trust, or any corporation,limited liability company, partnership or other entity, the stockholders, members, general orlimited partners or owners of which include only such Subsequent Purchaser or its affiliates, or(iii) any affiliate of such Subsequent Purchaser (collectively, a “**Permitted Transferee**”), so longas each such Permitted Transferee, prior to acquisition of any Subsequent Placement Securities,agrees in writing with the Company to be bound by the Subsequent Transfer Restrictions with respectto all Subsequent Placement Securities such Permitted Transferee acquires. Notwithstanding theforegoing, this Section 4(j) shall not apply to the issuance of: (A) shares of Common Stock orstandard options to purchase Common Stock to directors, officers, consultants or employees of theCompany in their capacity as such pursuant to an Approved Share Plan (as defined below), (B) sharesof Common Stock issued upon the conversion or exercise of Convertible Securities (other thanstandard options to purchase Common Stock issued pursuant to an Approved Share Plan that arecovered by clause (A) above) issued prior to the date hereof, provided, that, none of the terms orconditions of any such Convertible Securities (other than standard options to purchase Common Stockissued pursuant to an Approved Share Plan that are covered by clause
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(A) above) are otherwise materially changed (except pursuant to the terms thereof) in anymanner that adversely affects any of the Buyers, (C) the Warrant Shares, (D) any securities issuedin the Concurrent Offering or any securities issued upon the exercise or conversion of anysecurities issued in connection therewith, including but not limited to any securities issued inconnection with the Waiver Agreement, dated as of the date hereof, between the Company and theholders of the MHR Securities (as defined in the Warrants), (E) any equity security, any equitylinked security, any Convertible Securities, or any preferred stock issued or issuable inconnection with bona fide, arm’s length bank financings, corporate partnering or intellectualproperty licensing transactions, equipment leases or acquisitions of all or any portion of abusiness or its assets whether by merger, stock or asset purchase or any other bona fide strategictransaction (each a “**Strategic Transaction**”) on terms approved by the Company’s board of directors,provided that (x) the primary purpose of such issuance is not to raise capital, (y) the purchasersor acquirers of the securities in such issuance does not include an entity whose primary businessis investing in securities and (z) the number or amount of securities issued to any Person by theCompany shall not be disproportionate to such Person’s actual participation in such StrategicTransaction or ownership of such assets or securities to be acquired by the Company in suchStrategic Transaction, as applicable, (F) any equity security, equity linked security, anyConvertible Securities or preferred stock issued by the Company to all holders of Common Stock orany other class of Company capital stock, pro rata (including without limitation, in connectionwith a recapitalization, stock split, reverse stock split or rights offering), including any equitysecurity, equity linked security, Convertible Security or preferred stock issuable upon exercise orconversion of such Convertible Securities, and (G) any equity security, any equity linked security,any Convertible Securities, or any preferred stock to the holders of the Company’s equitysecurities or any equity-linked securities, any Convertible Securities or any preferred stock inconnection with the waiver of any of such holder’s anti-dilution rights in connection with anySubsequent Placement, provided that the consideration being provided to such holder for such waiveris on terms approved by the Company’s board of directors as advised by independent member(s) of theBoard (each of the foregoing in clauses (A) through (G), collectively the “**Excluded Securities**”).“**Approved Share Plan**” means any employee benefit plan which has been approved by the board ofdirectors of the Company prior to or subsequent to the date hereof pursuant to which shares ofCommon Stock and standard options to purchase Common Stock may be issued to any employee, officer,consultant or director for services provided to the Company in their capacity as such. “**ConvertibleSecurities**” means any capital stock or other security of the Company that is at any time and underany circumstances directly or indirectly convertible into, exercisable or exchangeable for, orwhich otherwise entitles the holder thereof to acquire, any capital stock or other security of theCompany (including, without limitation, Common Stock). “**Applicable Date**” means the first date onwhich the resale by the Buyers of all Registrable Securities is covered by one or more effectiveRegistration Statements (as defined in the Registration Rights Agreement) (and each prospectuscontained therein is available for use on such date).     (k) Reservation of Shares. So long as any of the Warrants remain outstanding, theCompany shall take all action necessary to at all times have authorized, and reserved for thepurpose of issuance, no less than the maximum number of shares of Common Stock issuable uponexercise of all the Warrants (without regard to any limitations on the exercise of the Warrants setforth therein).
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     (l) Conduct of Business. The business of the Company shall not be conducted inviolation of any law, ordinance or regulation of any governmental entity, except where suchviolations would not result, either individually or in the aggregate, in a Material Adverse Effect.     (m) Passive Foreign Investment Company. The Company shall conduct its business insuch a manner as will ensure that the Company will not be deemed to constitute a passive foreigninvestment company within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, asamended.     (n) Closing Documents. Within a reasonable time after the Closing Date, the Companyagrees to deliver, or cause to be delivered, to each Buyer and [insert placement agent counsel]executed copies of the Transaction Documents, Securities and other document required to bedelivered to any party pursuant to Section 7 hereof.     (o) Delivery of Warrants After Closing. The Company shall deliver, or cause to bedelivered, the respective Warrants purchased by each Buyer to such Buyer within three (3) TradingDays of the Closing Date.     (p) Shareholder Rights Plan. No claim will be made or enforced by the Company or, withthe consent of the Company, any other Person, that any Buyer is an “Acquiring Person” under anycontrol share acquisition, business combination, poison pill (including any distribution under arights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted bythe Company, or that any Buyer could be deemed to trigger the provisions of any such plan orarrangement, by virtue of receiving Securities under the Transaction Documents.**5.** **REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.**     (a) Register. The Company shall maintain at its principal executive offices (or suchother office or agency of the Company as it may designate by notice to each holder of Securities),a register for the Warrants in which the Company shall record the name and address of the Person inwhose name the Warrants have been issued (including the name and address of each transferee), thenumber of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Companyshall keep the register open and available for inspection during business hours, upon reasonablerequest of any Buyer or its legal representatives.     (b) Transfer Agent Instructions. The Company shall issue irrevocable instructions toits transfer agent and any subsequent transfer agent in a form acceptable to each of the Buyers(the “**Irrevocable Transfer Agent Instructions**”) to issue certificates or credit shares to theapplicable balance accounts at The Depository Trust Company (“**DTC**”), registered in the name of eachBuyer or its respective nominee(s), for the Common Shares and the Warrant Shares in such amounts asspecified from time to time by each Buyer to the Company upon delivery of the Common Shares or theexercise of the Warrants (as the case may be). The Company represents and warrants that noinstruction other than the Irrevocable Transfer Agent Instructions referred to in this Section5(b), and stop transfer instructions to give effect to Section 2(g) hereof, will be given by theCompany to its transfer agent with respect to the Securities, and that the Securities shallotherwise be freely transferable on the books and records of the Company, as applicable, to theextent provided in this Agreement and the other Transaction Documents. If a Buyer effects a
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sale, assignment or transfer of the Securities in accordance with Section 2(g), the Companyshall permit the transfer and shall promptly instruct its transfer agent to issue one or morecertificates or credit shares to the applicable balance accounts at DTC in such name and in suchdenominations as specified by such Buyer to effect such sale, transfer or assignment. In the eventthat such sale, assignment or transfer involves Common Shares or Warrant Shares sold, assigned ortransferred pursuant to an effective registration statement or in compliance with Rule 144, thetransfer agent shall issue such shares to such Buyer, assignee or transferee (as the case may be)without any restrictive legend in accordance with Section 5(d) below. The Company acknowledges thata breach by it of its obligations hereunder will cause irreparable harm to each Buyer. Accordingly,the Company acknowledges that the remedy at law for a breach of its obligations under this Section5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company ofthe provisions of this Section 5(b), that each Buyer shall be entitled, in addition to all otheravailable remedies, to an order and/or injunction restraining any breach and requiring immediateissuance and transfer, without the necessity of showing economic loss and without any bond or othersecurity being required. The Company shall cause its counsel to issue such legal opinions as may berequested from time to time in order to enable the sale of the Securities pursuant to the termshereof Any fees (with respect to the transfer agent, counsel to the Company or otherwise)associated with the issuance of such opinion or the removal of any legends on any of the Securitiesshall be borne by the Company.     (c) Legends. Each Buyer understands that the Securities have been issued (or will beissued in the case of the Warrant Shares) pursuant to an exemption from registration orqualification under the 1933 Act and applicable state securities laws, and except as set forthbelow, the Securities shall bear any legend as required by the “blue sky” laws of any state and arestrictive legend in substantially the following form (and a stop-transfer order may be placedagainst transfer of such stock certificates):[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NORTHE SECURITIES INTO WHICH THESE SECURITIES ARE [EXERCISABLE] HAVE BEEN][THESECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THEABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IFREQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THATREGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BESOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THEFOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGINACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
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     (d) Removal of Legends. Certificates evidencing Securities shall not be required tocontain the legend set forth in Section 5(c) above or any other legend (i) while a registrationstatement (including a Registration Statement) covering the resale of such Securities is effectiveunder the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming thetransferor is not an affiliate of the Company), (iii) if such Securities are eligible to be sold,assigned or transferred under Rule 144 (provided that a Buyer provides the Company with reasonableassurances that such Securities are eligible for sale, assignment or transfer under Rule 144 whichshall not include an opinion of counsel), (iv) in connection with a sale, assignment or othertransfer (other than under Rule 144), provided that such Buyer provides the Company with an opinionof counsel to such Buyer, in a generally acceptable form, to the effect that such sale, assignmentor transfer of the Securities may be made without registration under the applicable requirements ofthe 1933 Act or (v) if such legend is not required under applicable requirements of the 1933 Act(including, without limitation, controlling judicial interpretations and pronouncements issued bythe SEC). If a legend is not required pursuant to the foregoing, the Company shall no later thanthree (3) Trading Days following the delivery by a Buyer to the Company or the transfer agent (withnotice to the Company) of a legended certificate representing such Securities (endorsed or withstock powers attached, signatures guaranteed, and otherwise in form necessary to affect thereissuance and/or transfer, if applicable), together with any other deliveries from such Buyer asmay be required above in this Section 5(d), as directed by such Buyer, either: (A) provided thatthe Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer Programand such Securities are Common Shares or Warrant Shares, credit the aggregate number of shares ofCommon Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balanceaccount with DTC through its Deposit/Withdrawal at Custodian system or (B) if the Company’stransfer agent is not participating in the DTC Fast Automated Securities Transfer Program, issueand deliver (via reputable overnight courier) to such Buyer, a certificate representing suchSecurities that is free from all restrictive and other legends, registered in the name of suchBuyer or its designee (the date by which such credit is so required to be made to the balanceaccount of such Buyer’s or such Buyer’s nominee with DTC or such certificate is required to bedelivered to such Buyer pursuant to the foregoing is referred to herein as the “**Required DeliveryDate**”).     (e) Failure to Timely Deliver; Buy-In. If the Company fails to (i) issue and deliver(or cause to be delivered) to a Buyer by the Required Delivery Date a certificate representing theSecurities so delivered to the Company by such Buyer that is free from all restrictive and otherlegends or (ii) credit the balance account of such Buyer’s or such Buyer’s nominee with DTC forsuch number of shares of Common Shares or Warrant Shares so delivered to the Company, and if on orafter the Required Delivery Date such Buyer purchases (in an open market transaction or otherwise)shares of Common Stock to deliver in satisfaction of a sale by such Buyer of shares of Common Stockthat such Buyer anticipated receiving from the Company without any restrictive legend, then, inaddition to all other remedies available to such Buyer, the Company shall, within three (3) TradingDays after such Buyer’s request and in such Buyer’s sole discretion, either (i) pay cash to suchBuyer in an amount equal to such Buyer’s total purchase price (including brokerage commissions, ifany) for the shares of Common Stock so purchased (the “**Buy-In Price**”), at which point the Company’sobligation to deliver such certificate or credit such Buyer’s balance account shall terminate andsuch shares shall be cancelled, or (ii) promptly honor its obligation to deliver to such Buyer acertificate or certificates or credit such Buyer’s DTC account representing such number of sharesof Common Stock that would have been issued
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if the Company timely complied with its obligations hereunder and pay cash to such Buyer in anamount equal to the excess (if any) of the Buy-In Price over the product of (A) such number ofshares of Common Shares or Warrant Shares (as the case may be) that the Company was required todeliver to such Buyer by the Required Delivery Date times (B) the Closing Sale Price of the CommonStock on the Trading Day immediately preceding the Required Delivery Date.**6.** **CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.**     (a) The obligation of the Company hereunder to issue and sell the Common Shares and therelated Warrants to each Buyer at the Closing is subject to the satisfaction, at or before theClosing Date, of each of the following conditions, provided that these conditions are for theCompany’s sole benefit and may be waived by the Company at any time in its sole discretion byproviding each Buyer with prior written notice thereof:     (i) Such Buyer shall have executed each of the other Transaction Documents to which itis a party and delivered the same to the Company.     (ii) Such Buyer and each other Buyer shall have delivered to the Company the PurchasePrice for the Common Shares and the related Warrants being purchased by such Buyer at theClosing by wire transfer of immediately available funds pursuant to the wire instructionsprovided by the Company.     (iii) The representations and warranties of such Buyer shall be true and correct in allmaterial respects (except for those representations and warranties that are qualified bymateriality or Material Adverse Effect, which shall be true and correct in all respects) asof the date when made and as of the Closing Date as though originally made at that time(except for representations and warranties that speak as of a specific date, which shall betrue and correct as of such date), and such Buyer shall have performed, satisfied andcomplied in all material respects with the covenants, agreements and conditions required bythis Agreement to be performed, satisfied or complied with by such Buyer at or prior to theClosing Date.**7.** **CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.**     (a) The obligation of each Buyer hereunder to purchase the Common Shares and the relatedWarrants at the Closing is subject to the satisfaction, at or before the Closing Date, of each ofthe following conditions, provided that these conditions are for each Buyer’s sole benefit and maybe waived by such Buyer at any time in its sole discretion by providing the Company with priorwritten notice thereof:     (i) The Company shall have duly executed and delivered to such Buyer (A) each of theother Transaction Documents and (B) a copy of the irrevocable instructions to the Company’stransfer agent instructing the transfer agent to deliver the Common Shares (in the number asis set forth across from such Buyer’s name in column (3) of the Schedule of Buyers) and therelated Warrants (for the number of Warrant Shares as is set forth across from such Buyer’sname in column (4) of the Schedule of Buyers) (such Warrant certificate may be deliveredwithin three (3) Trading Days of the Closing Date) being purchased by such Buyer at theClosing pursuant to this Agreement.
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     (ii) Such Buyer shall have received the opinion of Brown Rudnick LLP, theCompany’s counsel, dated as of the Closing Date, in the form acceptable to such Buyer.     (iii) The Company shall have delivered to such Buyer a copy of the Irrevocable TransferAgent Instructions, in the form acceptable to such Buyer, which instructions shall have beendelivered to and acknowledged in writing by the Company’s transfer agent.     (iv) The Company shall have delivered to such Buyer a certificate evidencing theformation and good standing of the Company issued by the Secretary of State of the State ofDelaware as of a date within ten (10) days of the Closing Date.     (v) The Company shall have delivered to such Buyer a certificate evidencing theCompany’s qualification as a foreign corporation and good standing issued by the Secretaryof State of the State of New Jersey and the Secretary of State of the State of New York, asof a date within ten (10) days of the Closing Date.     (vi) The Company shall have delivered to such Buyer a certificate, in the formacceptable to such Buyer, executed by the Secretary of the Company and dated as of theClosing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by theCompany’s board of directors in a form reasonably acceptable to such Buyer, (ii) theCertificate of Incorporation and (iii) the Bylaws, each as in effect at the Closing.     (vii) Each and every representation and warranty of the Company shall be true andcorrect in all material respects (except for those representations and warranties that arequalified by materiality or Material Adverse Effect, which shall be true and correct in allrespects) as of the date when made and as of the Closing Date as though originally made atthat time (except for representations and warranties that speak as of a specific date) andthe Company shall have performed, satisfied and complied in all material respects with thecovenants, agreements and conditions required to be performed, satisfied or complied with bythe Company at or prior to the Closing Date. Such Buyer shall have received a certificate,executed by the Chief Executive Officer of the Company, dated as of the Closing Date, to theforegoing effect and as to such other matters as may be reasonably requested by such Buyerin the form acceptable to such Buyer.     (viii) The Company shall have delivered to such Buyer a letter from the Company’stransfer agent certifying the number of shares of Common Stock outstanding on the ClosingDate immediately prior to the Closing.     (ix) The Common Stock (I) shall be designated for quotation or listed on the PrincipalMarket and (II) shall not have been suspended, as of the Closing Date, by the SEC or thePrincipal Market from trading on the Principal Market nor shall suspension by the SEC or thePrincipal Market have been threatened, as of the Closing Date, either (A) in writing by theSEC or the Principal Market or (B) by falling below the minimum maintenance requirements ofthe Principal Market.
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     (x) The Company shall have obtained all governmental, regulatory or third partyconsents and approvals, if any, necessary for the sale of the Securities, including withoutlimitation, those required by the Principal Market.     (xi) No statute, rule, regulation, executive order, decree, ruling or injunction shallhave been enacted, entered, promulgated or endorsed by any court or governmental authorityof competent jurisdiction that prohibits the consummation of any of the transactionscontemplated by the Transaction Documents.     (xii) Since the date of execution of this Agreement, no event or series of events shallhave occurred that reasonably would have or result in a Material Adverse Effect.     (xiii) Such Buyer shall have received a letter on the letterhead of the Company, dulyexecuted by an appropriate officer of the Company, setting forth the wire instructions ofthe Company.     (xiv) Such Buyer shall have received (A) a duly executed copy of the SecuritiesPurchase Agreement, by and between the Company and MHR Fund Management, LLC (“MHR”) and/orcertain of MHR’s affiliates (collectively, the “**MHR Purchasers**”), dated as of the datehereof (the “**MHR Agreement**”) with respect to anoffering of an aggregate of 4,300,438 sharesof Common Stock and related warrants (in the form of the Warrants) topurchase 3,010,307 shares of Common Stock for an aggregate purchaseprice of $0.872 (the “**MHR PurchasePrice**”), pursuant to the terms hereof, (B) evidence reasonably satisfactory to such Buyer ofthe closing of the transactions contemplated by the MHR Agreement shall have occurred, (C)evidence reasonably satisfactory to such Buyer that the Company shall have received the MHRPurchase Price from the MHR Purchasers by one or more wire transfers of U.S. dollars andimmediately available funds and (D) a duly executed copy of the Waiver Agreement (as definedin the MHR Agreement) (the foregoing transactions, collectively, the “**Concurrent Offering**”).     (xv) The Company shall have delivered to such Buyer such other documents, instrumentsor certificates relating to the transactions contemplated by this Agreement as such Buyer orits counsel may reasonably request.**8.** **TERMINATION.**     In the event that the Closing shall not have occurred with respect to a Buyer within five (5)Businessdays of the date hereof, then such Buyer shall have the right to terminate its obligations underthis Agreement with respect to itself at any time on or after the close of business on such datewithout liability of such Buyer to any other party; provided, however, (i) the right to terminatethis Agreement under this Section 8 shall not be available to such Buyer if the failure of thetransactions contemplated by this Agreement to have been consummated by such date is the result ofsuch Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of theCommon Shares and the Warrants shall be applicable only to such Buyer providing such writtennotice. Nothing contained in this Section 8 shall be deemed to release any party from any liabilityfor any breach by such party of the terms and provisions of this
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Agreement or the other Transaction Documents or to impair the right of any party to compelspecific performance by any other party of its obligations under this Agreement or the otherTransaction Documents.**9.** **MISCELLANEOUS.**     (a) Governing Law; Jurisdiction; Jury Trial. All questions concerning theconstruction, validity, enforcement and interpretation of this Agreement shall be governed by theinternal laws of the State of New York, without giving effect to any choice of law or conflict oflaw provision or rule (whether of the State of New York or any other jurisdictions) that wouldcause the application of the laws of any jurisdictions other than the State of New York. Each partyhereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting inThe City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or inconnection herewith or with any transaction contemplated hereby or discussed herein, and herebyirrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that itis not personally subject to the jurisdiction of any such court, that such suit, action orproceeding is brought in an inconvenient forum or that the venue of such suit, action or proceedingis improper. Each party hereby irrevocably waives personal service of process and consents toprocess being served in any such suit, action or proceeding by mailing a copy thereof to such partyat the address for such notices to it under this Agreement and agrees that such service shallconstitute good and sufficient service of process and notice thereof. Nothing contained hereinshall be deemed to limit in any way any right to serve process in any manner permitted by law. **EACHPARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIALFOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THISAGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY**.     (b) Counterparts. This Agreement may be executed in two or more identicalcounterparts, all of which shall be considered one and the same agreement and shall becomeeffective when counterparts have been signed by each party and delivered to the other party. In theevent that any signature is delivered by facsimile transmission or by an e-mail which contains aportable document format (.pdf) file of an executed signature page, such signature page shallcreate a valid and binding obligation of the party executing (or on whose behalf such signature isexecuted) with the same force and effect as if such signature page were an original thereof.     (c) Headings; Gender. The headings of this Agreement are for convenience of referenceand shall not form part of, or affect the interpretation of, this Agreement. Unless the contextclearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”and words of like import shall be construed broadly as if followed by the words “withoutlimitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to thisentire Agreement instead of just the provision in which they are found.     (d) Severability. If any provision of this Agreement is prohibited by law or otherwisedetermined to be invalid or unenforceable by a court of competent jurisdiction, the provision thatwould otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to
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the broadest extent that it would be valid and enforceable, and the invalidity orunenforceability of such provision shall not affect the validity of the remaining provisions ofthis Agreement so long as this Agreement as so modified continues to express, without materialchange, the original intentions of the parties as to the subject matter hereof and the prohibitednature, invalidity or unenforceability of the provision(s) in question does not substantiallyimpair the respective expectations or reciprocal obligations of the parties or the practicalrealization of the benefits that would otherwise be conferred upon the parties. The parties willendeavor in good faith negotiations to replace the prohibited, invalid or unenforceableprovision(s) with a valid provision(s), the effect of which comes as close as possible to that ofthe prohibited, invalid or unenforceable provision(s).     (e) Entire Agreement; Amendments. This Agreement, the other Transaction Documents andthe schedules and exhibits attached hereto and thereto and the instruments referenced herein andtherein supersede all other prior oral or written agreements between the Buyers, the Company, theiraffiliates and Persons acting on their behalf solely with respect to the matters contained hereinand therein, and this Agreement, the other Transaction Documents, the schedules and exhibitsattached hereto and thereto and the instruments referenced herein and therein contain the entireunderstanding of the parties solely with respect to the matters covered herein and therein;provided, however, nothing contained in this Agreement or any other Transaction Document shall (orshall be deemed to) (i) have any effect on any agreements any Buyer has entered into with theCompany prior to the date hereof with respect to any prior investment made by such Buyer in theCompany or (ii) waive, alter, modify or amend in any respect any obligations of the Company, or anyrights of or benefits to any Buyer or any other Person, in any agreement entered into prior to thedate hereof between or among the Company and any Buyer and all such agreements shall continue infull force and effect. Except as specifically set forth herein or therein, neither the Company norany Buyer makes any representation, warranty, covenant or undertaking with respect to such matters.For clarification purposes, the Recitals are part of this Agreement. No provision of this Agreementmay be amended or waived other than by an instrument in writing signed by the Company and theholders of at least 67% of the Common Shares initially issued hereunder on the Closing Date, andany amendment or to, or waiver of any provision of, this Agreement made in conformity with theprovisions of this Section 9(d) shall be binding on all Buyers and holders of Securities, asapplicable, provided that any party may give a waiver in writing as to itself. No such amendment orwaiver (unless given pursuant to the foregoing proviso in the case of a waiver) shall be effectiveto the extent that it applies to less than all of the Buyers and holders of Securities. Noconsideration shall be offered or paid to any Person to amend or consent to a waiver ormodification of any provision of this Agreement unless the same consideration also is offered toall of the parties to this Agreement, all holders of Common Shares or all holders of the Warrants(as the case may be). The Company has not, directly or indirectly, made any agreements with anyBuyers relating to the terms or conditions of the transactions contemplated by the TransactionDocuments except as set forth in the Transaction Documents. Without limiting the foregoing, theCompany confirms that, except as set forth in this Agreement, no Buyer has made any commitment orpromise or has any other obligation to provide any financing to the Company, or otherwise. As amaterial inducement for each Buyer to enter into this Agreement, the Company expressly acknowledgesand agrees that (i) no due diligence or other investigation conducted by a Buyer, any of itsadvisors or any of its representatives shall affect such Buyer’s right to rely on, or shall modifyor qualify in any manner or be an exception
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to any of, the Company’s representations and warranties contained in this Agreement or anyother Transaction Document and (ii) unless a provision of this Agreement or any other TransactionDocument is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothingcontained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modifyor qualify in any manner or be an exception to any of, the Company’s representations and warrantiescontained in this Agreement or any other Transaction Document.     (f) Notices. Any notices, consents, waivers or other communications required orpermitted to be given under the terms of this Agreement must be in writing and will be deemed tohave been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent byfacsimile or electronic mail (provided confirmation of transmission is mechanically orelectronically generated and kept on file by the sending party); or (iii) one (1) Business Dayafter deposit with an overnight courier service with next day delivery specified, in each case,properly addressed to the party to receive the same. The addresses and facsimile numbers for suchcommunications shall be:If to the Company:Emisphere Technologies, Inc.