Exhibit 4.12





EXHIBIT 4.12


RAPTOR PHARMACEUTICALS
CORP.

SECURITIES PURCHASE AGREEMENT


This Securities Purchase
Agreement (this “Agreement”) is made as of
August 21, 2009 (the “Effective Date”), by and
among Raptor Pharmaceuticals
Corp., a Delaware corporation (the Company”),
and the individuals and entities identified on the signature pages hereto
(each, a “Purchaser” and, collectively, the
“Purchasers”).


Introduction


The Company and the
Purchasers are executing and delivering this Agreement in reliance upon the
exemption from securities registration afforded by Section 4(2) of the
Securities Act and Rule 506 promulgated thereunder.


The Purchasers
desire to purchase from the Company, and the Company desires to sell to the
Purchasers, upon the terms and conditions stated in this Agreement, up to a
maximum of $2.4 million of the Company’s common stock, par value
$0.001 per share (the “Common Stock”), and warrants
to purchase Common Stock of the Company.


The capitalized
terms used herein and not otherwise defined herein have the meanings given them
in Article 7.


In consideration of
the premises and the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchasers (severally and not jointly) hereby
agree as follows:


ARTICLE 1


Purchase and Sale of
Securities


Section 1.1
Purchase and Sale of Securities. At the Closing, upon the terms and
subject to the conditions herein, the Company will issue and sell to each
Purchaser, and each Purchaser will, severally and not jointly, purchase from
the Company the number of shares of Common Stock and the number of warrants to
purchase shares of Common Stock, pursuant to a Warrant substantially in the
form of Exhibit B
attached hereto, as set forth opposite such Purchaser’s name under the
heading “Shares” and “Warrants,” respectively, on Exhibit A attached hereto,
as the same may be amended from time to time after each Subsequent Closing or
otherwise, as appropriate. The purchase price for each Share and related
Warrant (together, a unit) will be $0.32, subject to change at the discretion
of those officers so authorized by the Company’s Board of Directors (the
“Purchase Price”). The Shares (as defined below) and
Warrants (as defined below) are being sold hereunder as units, each unit
consisting of one Share and a Warrant to purchase one-half of a share of Common
Stock.





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Section 1.2
Payment. Upon the Closing Date, each Purchaser shall deliver such
Purchaser’s aggregate Purchase Price set forth opposite its name on Exhibit A attached hereto,
by wire transfer of immediately available funds in accordance with wire
instructions provided to it by the Company at least two Business Days prior to
the Closing. At or promptly following the Closing, and after receiving the
aggregate Purchase Price set forth opposite each Purchaser’s name on
Exhibit A attached
hereto, by wire transfer of immediately available funds, the Company will
instruct its transfer agent to credit and deliver to each Purchaser
certificate(s) representing the number of Shares set forth on Exhibit A attached hereto
and will deliver Warrants to purchase the Warrant Shares (as defined below).


Section 1.3
Closing Date. The closing of the transactions contemplated by this
Agreement (the “Closing”) will take place at 5 p.m.
(Pacific Time) on the first Business Day after the satisfaction or waiver of
the conditions set forth in Article 5 (excluding conditions that, by their
nature, cannot be satisfied until the Closing), the actual time and date of the
Closing being referred to herein as the “Closing
Date”. The anticipated Closing Date is August 2009. The Closing
will be held at the offices of Paul, Hastings, Janofsky & Walker, LLP, 515
South Flower Street, Floor 25, Los Angeles, California 90071, or at such other
time and place as shall be agreed upon by the Company and the Majority
Purchasers.


Section 1.4
Subsequent Closings. After the Closing, additional Shares (which,
together with the Shares issued at the Closing, shall not exceed
7.5 million shares in the aggregate), and additional Warrants (which,
together with the Warrants issued at the Closing, shall not represent the right
to acquire more than 3.75 million shares of Warrant Shares in the
aggregate) may be issued at the discretion of the Company at one or more
subsequent closings (each a “Subsequent Closing”)
which are held on or before August 21, 2009. Each Subsequent Closing shall
be effective upon the date (a “Subsequent Closing
Date”) of the Company’s receipt from a Purchaser of a wire
transfer of funds in the amount of the Purchase Price for the Securities being
purchased by such Purchaser at such Subsequent Closing. Effective upon each
such Subsequent Closing, the applicable Purchaser shall also enter into and
become a party to this Agreement as if such Purchaser had executed such
agreement at the Closing. At the Closing, the Company shall prepare Exhibit A with respect to
the Purchasers purchasing the Shares and Warrants at the Closing. Promptly
after each Subsequent Closing, the Company shall amend Exhibit A as appropriate.
The shares of Common Stock, the warrants to purchase shares of Common Stock,
and the Common Stock underlying such warrants, that are sold pursuant to and in
accordance with Section 1.1 and this Section 1.4 are
referred to herein as the “Shares,” the
“Warrants,” and the
“Warrant Shares,” respectively, and are referred to
herein collectively as the “Securities.”


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ARTICLE 2


Representations and Warranties of the
Company


The Company hereby
represents and warrants to the Purchasers that, as of the date hereof, except
as set forth in the Public Filings or the corresponding section of the
disclosure schedules delivered to the Purchasers herewith:


Section 2.1
Organization and Qualification. The Company is duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
with corporate power and authority to conduct its business as currently
conducted as disclosed in the Public Filings. The Company is duly qualified to
do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not reasonably be expected to have a
Material Adverse Effect.


Section 2.2
Authorization; Enforcement. The Company has all requisite corporate
power and authority to enter into and to perform its obligations under the
Transaction Agreements, to consummate the transactions contemplated hereby and
thereby and to issue the Securities in accordance with the terms hereof. The
execution, delivery and performance of the Transaction Agreements by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including the issuance of the Securities) have been duly authorized by
the Company’s Board of Directors and no further consent or authorization
of the Company, its Board of Directors, or its stockholders is required. Each
Transaction Agreement has been duly executed by the Company and, assuming the
due authorization, execution and delivery of the Transaction Agreements by each
Purchaser a party thereto, constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity and except as rights to indemnity and
contribution may be limited by state, federal, or other securities laws or
public policy underlying such laws.


Section 2.3
Capitalization. As of June 18, 2009, the authorized capital stock
of the Company consisted of 100,000,000 shares of Common Stock and 10,000,000
shares of preferred stock, par value $0.001 per share, of which 60,430,047
shares of Common Stock were issued and outstanding and no shares of preferred
stock were issued and outstanding. All of the issued and outstanding shares of
Common Stock have been duly authorized, validly issued and are fully paid and
nonassessable. Options and warrants to purchase an aggregate of 17,501,503
shares of Common Stock were outstanding as of June 18, 2009. Except as
disclosed in or contemplated by the Public Filings, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations convertible
into, or any contracts or commitments to issue or sell, shares of its capital
stock or any such options, rights, convertible securities or obligations other
than options granted under the Company’s stock option plans.


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Section 2.4
Issuance of Securities. The Shares and the Warrant Shares have been duly
authorized and, upon issuance in accordance with the terms of this Agreement
(and in case of the Warrant Shares, the Warrants), will be validly issued,
fully paid and non-assessable and will not be subject to preemptive rights or
other similar rights of stockholders of the Company.


Section 2.5
No Conflicts; Government Consents and Permits.


(a) The
execution, delivery and performance of each Transaction Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby (including the issuance of the Securities) will not:
(i) conflict with or result in a violation of any provision of its
Certificate of Incorporation or Bylaws; (ii) violate or conflict with, or
result in a breach of any provision of, or constitute a default under, any
material agreement to which the Company is a party; or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree of any
governmental authority applicable to the Company, except for such conflicts,
breaches, defaults, and violations as would not reasonably be expected to have
a Material Adverse Effect.


(b) The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self regulatory agency in order for it to execute, deliver or
perform any of its obligations under this Agreement in accordance with the
terms hereof, or to issue and sell the Securities in accordance with the terms
hereof other than such as have been made or obtained or any filings required to
be made under federal, state or other securities laws.


(c) The
Company has all franchises, permits, licenses, and any similar authority
necessary for the conduct of its business as now being conducted by it, except
for such franchise, permit, license or similar authority, the lack of which
would not reasonably be expected to have a Material Adverse Effect. The Company
has not received any written notice of any proceeding relating to revocation or
modification of any such franchise, permit, license, or similar authority
except where such revocation or modification would not reasonably be expected
to have a Material Adverse Effect.


Section 2.6
Public Filings, Financial Statements.


(a) The
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the U.S. Securities and Exchange
Commission (the “SEC”) since January 1, 2009,
pursuant to the reporting requirements of the Exchange Act, except for those
filings not timely filed as would not reasonably be expected to have a Material
Adverse Effect.


(b) As of
their respective dates, the Public Filings complied as to form in all material
respects with the requirements of the Exchange Act or the Securities Act, as
the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the Public Filings, and none of the Public Filings, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances


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under which they were made, not
misleading. The Financial Statements have been prepared in accordance with
accounting principles generally accepted in the United States, consistently
applied, during the periods involved (except (i) as may be otherwise
indicated in the Financial Statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may not include
footnotes, may be condensed or summary statements or may conform to the
SEC’s rules and instructions for Reports on Form 10-Q or 10-QSB) and
fairly present in all material respects the consolidated financial position of
the Company as of the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal and recurring year-end audit adjustments).


Section 2.7
Absence of Litigation. As of the date hereof, there is no action, suit,
proceeding or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the Company’s
knowledge, threatened against the Company that if determined adversely to the
Company would reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, there is not pending, any investigation by the SEC
involving the Company or any current or former director or officer of the
Company. The Company has not received any stop order or other order suspending
the effectiveness of any registration statement filed by the Company under the
Exchange Act or Securities Act and, to the Company’s knowledge, the SEC
has not issued any such order.


Section 2.8
Intellectual Property Rights. To the Company’s knowledge, the
Company owns or possesses, or believes it can obtain on reasonable terms,
licenses or sufficient rights to use all patents, patent applications, patent
rights, inventions, know-how, trade secrets, trademarks, trademark
applications, service marks, service names, trade names and copyrights
necessary to enable it to conduct its business as conducted as of the date
hereof (the “Intellectual Property”). To the
Company’s knowledge, the Company has not infringed the intellectual
property rights of third parties and no third party, to the Company’s
knowledge, is infringing the Intellectual Property, in each case, which could
reasonably be expected to result in a Material Adverse Effect. Except as
disclosed in the Public Filings, there are no material options, licenses or
agreements relating to the Intellectual Property, nor is the Company bound by
or a party to any material options, licenses or agreements relating to the
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names,
trade names or copyrights of any other Person. As of the date hereof, there is
no material claim or action or proceeding pending or, to the Company’s
knowledge, threatened, that challenges the right of the Company with respect to
any Intellectual Property.


Section 2.9
Placement Agents. The Company has taken no action that would give rise
to any claim by any Person for brokerage commissions, placement agent’s
fees or similar payments relating to this Agreement or the transactions
contemplated hereby, except for dealings with the Placement Agents, whose
commissions and fees will be paid by the Company.


Section 2.10
No Material Adverse Change. Since January 1, 2008, except as
described in the Public Filings and except for cash expenditures in the
ordinary course of business, there has not been a material adverse change in
the business, financial condition, assets or results of operations of the
Company other than its continuing losses from operations. Since January 1,
2008: (i) there has not been any dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company on any class of
capital stock; and (ii) the Company has


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not sustained any material loss or
interference with the Company’s business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or
arbitrator or governmental or regulatory authority.


Section 2.11
Taxes. The Company has filed (or has obtained an extension of time
within which to file) all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown as due on such tax returns,
except where the failure to so file or the failure to so pay would not
reasonably be expected to have a Material Adverse Effect and except those taxes
being contested in good faith and for which adequate reserves have been
provided.


Section 2.12
No Manipulation of Stock. The Company has not taken, nor will it take,
directly or indirectly any action designed to stabilize or manipulate the price
of the Common Stock or any security of the Company to facilitate the sale or
resale of any of the Shares.


ARTICLE 3


Purchaser’s Representations and
Warranties


Each Purchaser
represents and warrants to the Company, severally and not jointly, with respect
to itself and its purchase hereunder, that:


Section 3.1
Investment Purpose. The Purchaser is purchasing the Securities for its
own account and not with a present view toward the public sale or distribution
thereof and has no intention of selling or distributing any of such Securities
or any arrangement or understanding with any other Persons regarding the sale
or distribution of such Securities except in accordance with the provisions of
Article 6 and except as would not result in a violation of the
Securities Act. The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Securities except
in accordance with the provisions of Article 6 or pursuant to and
in accordance with the Securities Act.


Section 3.2
Questionnaires. The Purchaser has completed the Accredited Purchaser
Qualification Questionnaire, in the form of Exhibit C attached hereto,
and has submitted such Accredited Purchaser Qualification Questionnaire to the
Company in connection with its purchase of the Securities. The Accredited
Purchaser Qualification Questionnaire was accurate and correct when delivered
and is accurate and correct as of the date hereof and the representations,
warranties and covenants contained herein and in the applicable schedules
attached hereto will be true and correct both as of the date of execution of
this Subscription Agreement and on the Closing Date. In addition to completing
and delivering the aforementioned, the Purchaser agrees to provide any
additional information that is requested by the Company in order to confirm
that such Purchaser has complied with any applicable securities laws to which
it is subject.


Section 3.3
Reliance on Exemptions. The Purchaser understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from the


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prospectus and registration
requirements of federal, state, and other securities laws, as applicable, and
that the Company is relying upon the truth and accuracy of, and the
Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Securities.


Section 3.4
Information. The Purchaser has been furnished with all relevant
materials relating to the business, finances and operations of the Company
necessary to make an investment decision, and materials relating to the offer
and sale of the Securities, that have been requested by the Purchaser,
including, without limitation, the Company’s Public Filings, and the
Purchaser has had the opportunity to review the Public Filings. The Purchaser
has been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such
Purchaser’s right to rely on the truth, accuracy and completeness of the
Public Filings and the Company’s representations and warranties contained
herein.


Section 3.5
Acknowledgement of Risk.


(a) The
Purchaser acknowledges and understands that its investment in the Securities
involves a significant degree of risk, including, without limitation:
(i) the Company remains a development stage business with limited
operating history and requires substantial funds in addition to the proceeds
from the sale of the Securities; (ii) an investment in the Company is
speculative, and only Purchasers who can afford the loss of their entire
investment should consider investing in the Company and the Securities;
(iii) the Purchaser may not be able to liquidate its investment;
(iv) transferability of the Securities is extremely limited; (v) in
the event of a disposition of the Securities, the Purchaser could sustain the
loss of its entire investment; and (vi) the Company has not paid any
dividends on its Common Stock since inception and does not anticipate the
payment of dividends in the foreseeable future. Such risks are more fully set
forth in the Public Filings;


(b) The
Purchaser is able to bear the economic risk of holding the Securities for an
indefinite period, and has knowledge and experience in financial and business
matters such that it is capable of evaluating the risks of the investment in
the Securities; and


(c) The
Purchaser has, in connection with the Purchaser’s decision to purchase
Securities, not relied upon any representations or other information (whether
oral or written) other than as set forth in the representations and warranties
of the Company contained herein, and the Purchaser has, with respect to all
matters relating to the Transaction Agreements and the offer and sale of the
Securities, relied solely upon the advice of such Purchaser’s own counsel
and has not relied upon or consulted any counsel to any placement agent or
counsel to the Company.


Section 3.6
Governmental Review. The Purchaser understands that no federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities or an investment therein.


Section 3.7
Transfer or Resale. The Purchaser understands that:


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(a) the
Securities have not been and are not being registered under the Securities Act
(other than as contemplated in Article 6), or any applicable
federal, state, or other securities laws and, consequently, the Purchaser may
have to bear the risk of owning the Securities for an indefinite period of time
because the Securities may not be transferred unless: (i) the resale of
the Securities is registered pursuant to an effective registration statement
under the Securities Act, as contemplated in Article 6;
(ii) the Purchaser has delivered to the Company an opinion of counsel (in
form, substance and scope reasonably satisfactory to the Company) to the effect
that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; or (iii) the Securities
are sold or transferred pursuant to Rule 144;


(b) any sale
of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and


(c) except as
set forth in Article 6, neither the Company nor any other Person is
under any obligation to register the resale of the Shares or the Warrant Shares
under the Securities Act, or any applicable federal, state or other securities
laws or to comply with the terms and conditions of any exemption thereunder.


Section 3.8
Legends. The Purchaser understands the certificates representing the
Securities will bear restrictive legends in the following forms (and a
stop-transfer order may be placed against transfer of the certificates for such
Securities):


“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE
SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE
LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE
EXTENT THAT SUCH OPINION IS REQUIRED PURSUANT TO THAT CERTAIN SECURITIES
PURCHASE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED.


“UNTIL THE
DISTRIBUTION DATE (AS DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW), THIS
CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN


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RIGHTS AS SET FORTH
IN A STOCKHOLDER RIGHTS AGREEMENT, DATED AS OF DECEMBER 5, 2008 (AS SUCH MAY BE
AMENDED FROM TIME TO TIME, THE “RIGHTS AGREEMENT”), BETWEEN RAPTOR
PHARMACEUTICALS CORP. (THE “COMPANY”) AND NEVADA AGENCY & TRUST
COMPANY, AS RIGHTS AGENT, THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
THE COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH RIGHTS MAY BE EVIDENCED BY SEPARATE CERTIFICATES AND MAY NO LONGER BE
EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL OR ARRANGE FOR THE MAILING
OF A COPY OF THE RIGHTS AGREEMENT TO THE HOLDER OF THIS CERTIFICATE WITHOUT
CHARGE AFTER THE RECEIPT OF A WRITTEN REQUEST THEREFOR. AS DESCRIBED IN THE
RIGHTS AGREEMENT, RIGHTS ISSUED TO ANY PERSON WHO BECOMES AN “ACQUIRING
PERSON” OR ITS “AFFILIATES” OR “ASSOCIATES” (AS
DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN RELATED PERSONS, WHETHER CURRENTLY
HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, SHALL BECOME
NULL AND VOID.”


Notwithstanding
anything herein to the contrary, the Purchaser understands the certificates
representing the Securities will bear any other restrictive legends (and a
stop-transfer order may be placed against transfer of the certificates for such
Securities with respect thereof) that the Company deems necessary or that are
otherwise required pursuant to applicable securities laws.


Section 3.9
Authorization; Enforcement. The Purchaser has the requisite power and
authority to enter into the Transaction Agreements and to consummate the
transactions contemplated hereby and thereby. The Purchaser has taken all
necessary action to authorize the execution, delivery and performance of the
Transaction Agreements. Each Transaction Agreement has been duly executed by
the Purchaser and, assuming the due authorization, execution and delivery of
the Transaction Agreements by the Company, constitutes a legal, valid and
binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ and contracting parties’ rights generally and
except as enforceability may be subject to general principles of equity and
except as rights to indemnity and contribution may be limited by federal, state
or other securities laws or public policy underlying such laws.


Section 3.10
Residency. The Purchaser certifies that it is a resident of the
jurisdiction set forth immediately below such Purchaser’s name on the
signature pages hereto.


Section 3.11
No Net Short Position. Between the time the Purchaser learned about the
Offering (or was first contacted regarding an investment in the Company) and
the first public announcement of the Offering by the Company, neither the
Purchaser nor any Person acting on its behalf or pursuant to any understanding
with it, has engaged, nor has, nor will, the


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Purchaser, directly or indirectly,
cause any Person to (but shall cause such Persons not to) engage in any short
sales or similar transactions with respect to the Common Stock. Additionally,
the Purchaser understands and acknowledges, severally and not jointly with any
other Purchaser, that the SEC currently takes the position that coverage of
short sales of the Common Stock “against the box” prior to the date
such shares are registered is a violation of Section 5 of the Securities
Act, as set forth in Item 65, Section 5 under Section A, of the
Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.


Section 3.12
Acknowledgements Regarding Placement Agents.


(a) The
Purchaser acknowledges that the Placement Agents are acting as the
non-exclusive placement agents on a “best efforts” basis for the
Securities being offered hereby and will be compensated by the Company for
acting in such capacity. The Purchaser represents that (i) (x) the
Purchaser was contacted regarding the sale of the Securities by one of the
Placement Agents (or an authorized agent or representative thereof) or
(y) the Purchaser contacted the Company directly or the Company contacted
the Purchaser directly regarding the sale of the Securities and (ii) no
Securities were offered or sold to it by means of any form of general
solicitation or general advertising.


(b) The
Purchaser acknowledges that (i) the Company and each Placement Agent have
entered into a Placement Agency Agreement under which each Placement Agent will
introduce to the Company accredited investors, (ii) in consideration for
such services, the Company will pay each Placement Agent a placement fee equal
to 7% of the gross proceeds of Securities sold to investors introduced by such
Placement Agent in the Offering and the Company will issue to each Placement
Agent a warrant to purchase a number of shares of Common Stock equal to 7% of
the number of units issued to investors (inclusive of the Shares and Warrant
Shares) introduced by such Placement Agent in the Offering, (iii) Limetree
Capital, one of the Placement Agents, is an affiliate of the Company,
(iv) the Company will pay to each Placement Agent expenses incurred by it
in connection with the Offering that are pre-approved by the Company, and (v)
Erich Sager, a partner of Limetree Capital, is a member of our Board of
Directors and a stockholder of the Company.


Section 3.13
Anti-Money Laundering Laws. The Purchaser represents and warrants to,
and covenants with, the Company that: (i) the Purchaser is in compliance
with Executive Order 13224 and the regulations administered by the U.S.
Department of the Treasury (“Treasury”) Office of
Foreign Assets Control; (ii) the Purchaser, its parents, subsidiaries,
affiliated companies, officers, directors and partners, and to the
Purchaser’s knowledge, its shareholders, owners, employees, and agents,
are not on the List of Specially Designated Nationals and Blocked Persons
(“SDN List”) maintained by Treasury and have not been
designated by Treasury as a financial institution of primary money laundering
concern; (iii) to the Purchaser’s knowledge after reasonable
investigation, all of the funds to be used to acquire the Securities are
derived from legitimate sources and are not the product of illegal activities;
(iv) the Purchaser is in compliance with all other applicable anti-money
laundering laws and regulations and has implemented, if applicable, an
anti-money laundering compliance program in accordance


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with the requirements of the Bank
Secrecy Act, as amended by the USA PATRIOT Act, Pub. L. 107-56; (v) none
of the funds being used to purchase the Securities are to the Purchaser’s
knowledge proceeds obtained or derived directly or indirectly as a result of
illegal activities; and (vi) to the best of its knowledge (A) none of
the funds to be provided by the Purchaser are being tendered on behalf of a
person or entity who has not been identified to the Purchaser, and (B) it
shall promptly notify the Company if the Purchaser discovers that any of such
representations cease to be true, and to provide the Company with appropriate
information in connection therewith.


ARTICLE 4


Covenants


Section 4.1
Expenses. The Company and each Purchaser shall be severally and not
jointly liable for, and each shall pay, its own expenses incurred in connection
with the negotiation, preparation, execution and delivery of this Agreement,
including, without limitation, attorneys’ and consultants’ fees and
expenses.


Section 4.2
Publicity. No Purchaser shall originate any press release or other
public announcement, written or oral, relating to this Agreement, or to
performance hereunder or the existence of any arrangement among the parties
hereto without the prior approval of the Company, except to the extent that
such press release or announcement is required by applicable law. The
Purchasers acknowledge that the Company will be required to file a copy of this
Agreement, and the other agreements and instruments contemplated hereby, with
the SEC and to describe these transactions in its public filings and public
announcements.


Section 4.3
Sales by Purchasers. Each Purchaser will sell any Securities held by it
in compliance with the requirements for an exemption from the prospectus
requirement and registration under the Securities Act, any applicable federal,
state or other securities laws and the rules and regulations promulgated
thereunder. No Purchaser will make any sale, transfer or other disposition of
the Securities in violation of federal, state or other securities laws.


Section 4.4
Reservation of Common Stock. The Company shall reserve and keep
available at all times during which the Warrants are exercisable, free of
preemptive rights, a sufficient number of shares of Common Stock for the
purpose of enabling the Company to issue Warrant Shares pursuant to this
Agreement.


Section 4.5
Reports. If required by applicable securities legislation, regulations,
rules, instruments, policies or orders or by any securities commission or other
regulatory authority, the Purchaser will execute, deliver and file such
reports, undertakings and other documents with respect to the issue of the
Securities as may be required.


ARTICLE 5


Conditions to Closing


Section 5.1
Conditions to Obligations of the Company. The Company’s obligation
to complete the sale and issuance of the Securities and deliver such stock
certificate(s)


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representing the Shares and Warrants
to each Purchaser is subject to the fulfillment, or waiver by the Company, as
of the Closing Date (or, if applicable, the Subsequent Closing Date) of the
following conditions:


(a) Receipt
of Funds. The Company shall have received immediately available funds in
the full amount of the purchase price for the Shares and Warrants being
purchased hereunder as set forth opposite such Purchaser’s name on Exhibit A attached hereto.


(b) Minimum
Aggregate Investment. The Company shall have received at the Closing at
least $2.24 million of aggregate proceeds from the sale of the Shares and
Warrants hereunder.


(c) Representations and Warranties. The
representations and warranties made by each Purchaser in Article 3 shall
be true and correct in all material respects as of the Closing Date or, if
applicable, the Subsequent Closing Date (except for representations and
warranties that speak as of a specific date, which shall be true and correct in
all material respects as of such date).


(d) Covenants. All covenants, agreements and
conditions contained in this Agreement to be performed by the Purchasers on or
prior to the Closing Date (or, if applicable, the Subsequent Closing Date)
shall have been performed or complied with in all material respects.


(e) Qualifications. The Company shall have obtained
all necessary permits and qualifications, including all blue sky permits and
qualifications, or secured exemptions therefrom, required by any state for the
offer and sale of the Securities.


(f) Absence
of Litigation. No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted or be pending before any court,
arbitrator, governmental body, agency or official.


(g) No
Governmental Prohibition. The sale of the Securities by the Company shall
not be prohibited by any law or governmental order or regulation.


(h) No Stop
Order. No stop order or suspension of trading shall have been imposed by
the SEC or any other governmental or regulatory body with respect to public
trading in the Common Stock after the date of the Agreement.


Section 5.2
Conditions to Purchasers’ Obligations at the Closing. Each
Purchaser’s obligation to complete the purchase of the Shares and
Warrants is subject to the fulfillment, or waiver by the Majority Purchasers,
as of the Closing Date of the following conditions:


(a) Representations and Warranties. The
representations and warranties made by the Company in Article 2 shall be
true and correct in all material respects as of the Closing Date or, if
applicable, the Subsequent Closing Date (except for representations and
warranties


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that speak as of a specific date,
which shall be true and correct in all material respects as of such date).


(b) Covenants. All covenants, agreements and
conditions contained in this Agreement to be performed by the Company on or
prior to the Closing Date (or, if applicable, the Subsequent Closing Date)
shall have been performed or complied with in all material respects.


(c) Qualifications. The Company shall have obtained
all necessary permits and qualifications, including all blue sky permits and
qualifications, or secured exemptions therefrom, required by any state for the
offer and sale of the Securities.


(d) Transfer Agent Instructions. The Company shall
have delivered to its transfer agent irrevocable instructions to issue to such
Purchaser or in such nominee name(s) as designated by such Purchaser in writing
certificates representing such number of Shares set forth opposite such
Purchaser’s name on Exhibit A attached hereto.


(e) Absence
of Litigation. No proceeding challenging this Agreement or the transactions
contemplated hereby, or seeking to prohibit, alter, prevent or materially delay
the Closing, shall have been instituted or be pending before any court,
arbitrator, governmental body, agency or official.


(f) No
Governmental Prohibition. The sale of the Securities by the Company shall
not be prohibited by any law or governmental order or regulation.


(g) No Stop
Order. No stop order or suspension of trading shall have been imposed by
the SEC or any other governmental or regulatory body with respect to public
trading in the Common Stock after the date of the Agreement.


ARTICLE 6


Registration Rights


Section 6.1
Required Registration.


(a) Subject to
Section 6.1(b), the Company shall no later than 75 days after
the Closing Date, subject to receipt of necessary information from the
Purchasers, prepare and file with the SEC a registration statement covering the
resale of all of the Registrable Securities (the “Registration
Statement”).


(b) Notwithstanding anything herein to the contrary, in
the event that the Company, in its sole discretion, decides to limit the amount
of shares of Common Stock that may be included in the Registration Statement
(such number of shares of Common Stock which the Company decides to include in
the Registration Statement, the “Allowable Maximum”),
the number of Registrable Securities sought to be included in the Registration
Statement shall be cutback and removed from the Registration Statement until
the aggregate number of such Registrable Securities to be included in the
Registration Statement equals the Allowable Maximum. Such cutbacks will be in
the following order:


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(i) first
there shall be excluded any securities of the Company included or to be
included in the Registration Statement, whether pursuant to piggyback or demand
registration rights or otherwise requested to be included, other than the
Registrable Securities, the shares of Common Stock to be issued to the
Placement Agents (the “Placement Agents Shares”), and
the shares of Common Stock underlying the warrant(s) to be issued to the
Placement Agents (the “Placement Agents Warrant
Shares”); next



(ii) the Placement Agents Warrant Shares shall be excluded; next


(iii) the Placement Agents Shares shall be excluded; next


(iv) the Warrant Shares shall be excluded; and next



(v) the Shares
shall be excluded, until the Allowable Maximum is not exceeded.


Except as
specified in the preceding sentence, any required cutbacks within each of
Sections 6.1(b)(iv) and 6.1(b)(v) shall be applied to such
Holders pro rata in accordance with the number of Warrant Shares or Shares,
respectively, then-held by such Holders and sought to be included in such
Registration Statement.


Section 6.2
Registration Expenses and Selling Expenses. All Registration Expenses
incurred in connection with any registration, qualification, exemption or
compliance pursuant to Section 6.1 shall be borne by the Company.
All Selling Expenses incurred in connection with any registrations under this
Agreement shall be borne by the Holders of the securities so registered pro
rata on the basis of the number of shares so registered and all Selling
Expenses relating to the sale of securities registered or by or on behalf of
any Holder shall be borne by such Holders.


Section 6.3
Registration Period Covenants. At its expense, during the period that
the Company keeps the Registration Statement effective, in its discretion (the
“Registration Period”), the Company shall:


(a) advise the
Holders:


(i) within
five Business Days of when the Registration Statement or any amendment thereto
has been filed with the SEC and within five Business Days of receiving notice
or obtaining knowledge of the effectiveness of the Registration Statement or
any post-effective amendment thereto;


(ii) within
five Business Days of any request by the SEC for amendments or supplements to
the Registration Statement or the prospectus included therein or for additional
information;


(iii) within
five Business Days of receiving notice or obtaining knowledge of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for such purpose; and


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(iv) within
five Business Days of the occurrence of any event that requires the making of
any changes in the Registration Statement or the prospectus so that, as of such
date, the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the statements
therein (in the case of the prospectus, in light of the circumstances under
which they were made) not misleading;


(b) use its
commercially reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement as soon as
reasonably practicable;


(c) promptly
deliver to each such Holder, without charge, as many copies of the prospectus
included in such Registration Statement and any amendment or supplement thereto
as such Holder may reasonably request in writing; and the Company consents to
the use, consistent with the provisions hereof, of the prospectus or any
amendment or supplement thereto by each of the selling Holders of Registrable
Securities in connection with the offering and sale of the Registrable
Securities covered by the prospectus or any amendment or supplement thereto;


(d) if a
Holder so requests in writing, deliver to each Holder, without charge,
(i) one copy of the following documents, other than those documents
available via the Electronic Data Gathering, Analysis, and Retrieval (EDGAR)
system: (A) its annual report to its stockholders, if any (which annual
report shall contain financial statements audited in accordance with generally
accepted accounting principles in the United States of America by a firm of
certified public accountants of recognized standing); (B) if not included
in substance in its annual report to stockholders, its annual report on Form
10-K (or similar form); (C) its definitive proxy statement (or similar
form) with respect to its most recent annual meeting of stockholders;
(D) each of its quarterly reports to its stockholders, and, if not
included in substance in its quarterly reports to stockholders, its quarterly
report on Form 10-Q (or similar form); and (E) a copy of the full
Registration Statement (the foregoing, in each case, excluding exhibits); and
(ii) if explicitly requested, all exhibits excluded by the parenthetical
to the immediately preceding clause (E);


(e) prior to
any public offering of Registrable Securities pursuant to the Registration
Statement, promptly take such actions as may be necessary to register or
qualify or obtain an exemption for offer and sale under the securities or blue
sky laws of such United States jurisdictions as any such Holders reasonably
request in writing, provided that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified, consent to
general service of process in any such jurisdiction, or subject itself to any
material tax in any such jurisdiction where it is not so then subject; and


(f) upon the
occurrence of any event contemplated by Section 6.3(a)(iv) above,
except for such times as the Company is permitted hereunder to suspend the use
of the prospectus forming part of the Registration Statement, the Company shall
use its commercially reasonable efforts to as soon as reasonably practicable
prepare a post-effective amendment to the Registration Statement or a
supplement to the related prospectus, or file any other required document so
that, as thereafter delivered to purchasers of the Registrable Securities
included therein, the prospectus will not include any untrue statement of a
material fact or omit to state


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any material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.


Section 6.4
Certain Limitations. The Holders shall have no right to take any action
to restrain, enjoin or otherwise delay any registration pursuant to
Section 6.1 as a result of any controversy that may arise with
respect to the interpretation or implementation of this Agreement.


Section 6.5
Indemnity.


(a) To the
extent permitted by law, the Company shall indemnify each Holder and each
person controlling such Holder within the meaning of Section 15 of the
Securities Act, with respect to which the Registration Statement that has been
effected pursuant to this Agreement, against all claims, losses, damages and
liabilities (or action in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened (subject to
Section 6.5(c)), arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in the Registration
Statement, prospectus, any amendment or supplement thereof, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
light of the circumstances in which they were made, or any violation by the
Company of any rule or regulation promulgated by the Securities Act applicable
to the Company and relating to any action or inaction required of the Company
in connection with any such registration, qualification or compliance, and will
reimburse each Holder and each person controlling such Holder, for reasonable
legal and other out-of-pocket expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action as
incurred; provided that the Company will not be liable in any such case
to the extent that any untrue statement or omission or allegation thereof is
made in reliance upon and in conformity with written information furnished to
the Company by or on behalf of such Holder for use in preparation of the
Registration Statement, prospectus, amendment or supplement; provided
further that the Company will not be liable in any such case where the
claim, loss, damage or liability arises out of or is related to the failure of
such Holder to comply with the covenants and agreements contained in this
Agreement respecting sales of Registrable Securities, and except that the
foregoing indemnity agreement is subject to the condition that, insofar as it
relates to any such untrue statement or alleged untrue statement or omission or
alleged omission made in the preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the SEC at the time the Registration
Statement becomes effective or in the amended prospectus filed with the SEC
pursuant to Rule 424(b) or in the prospectus subject to completion under
Rule 434 of the Securities Act, which together meet the requirements of
Section 10(a) of the Securities Act (the “Final
Prospectus”), such indemnity shall not inure to the benefit of
any such Holder or any such controlling person, if a copy of the Final
Prospectus furnished by the Company to the Holder for delivery was not
furnished to the person or entity asserting the loss, liability, claim or
damage at or prior to the time such furnishing is required by the Securities
Act and the Final Prospectus would have cured the defect giving rise to such
loss, liability, claim or damage.


(b) Each
Holder will severally, and not jointly, indemnify the Company, each of its
directors and officers, and each person who controls the Company within the
meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in


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respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened
(subject to Section 6.5(c) below), arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
the Registration Statement, prospectus, or any amendment or supplement thereof,
incident to any such registration, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, and will reimburse the Company, such
directors and officers, and each person controlling the Company for reasonable
legal and other out-of-pocket expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action as
incurred, in each case to the extent, but only to the extent, that such untrue
statement or omission or allegation thereof is made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Holder for use in preparation of the Registration Statement, prospectus,
amendment or supplement. Notwithstanding the foregoing, a Holder’s
aggregate liability pursuant to this subsection (b) shall be limited to
the net amount received by the Holder from the sale of the Registrable
Securities giving rise to such claims, losses, damages and liabilities (and
actions in respect thereof).


(c) Each party
entitled to indemnification under this Section 6.5 (the
“Indemnified Party”) shall give notice to the party
required to provide indemnification (the “Indemnifying
Party”) promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall permit
the Indemnifying Party (at its expense) to assume the defense of any such claim
or any litigation resulting therefrom; provided that the Indemnified
Party may participate in such defense at such Indemnified Party’s
expense; provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Agreement, unless such failure is materially prejudicial
to the Indemnifying Party in defending such claim or litigation. An
Indemnifying Party shall not be liable for any settlement of an action or claim
effected without its written consent (which consent will not be unreasonably
withheld, conditioned or delayed). No Indemnifying Party, in its defense of any
such claim or litigation, shall, except with the consent (such consent not to
be unreasonably withheld, conditioned or delayed) of the Indemnified Party
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.


(d) If the
indemnification provided for in this Section 6.5 is held by a court
of competent jurisdiction to be unavailable to an Indemnified Party or is
insufficient to hold such Indemnified Party harmless with respect to any loss,
liability, claim, damage or expense referred to therein, then the Indemnifying
Party shall contribute to the amount paid or payable by such Indemnified Party
as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions which resulted in such loss, liability, claim,
damage or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.


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Notwithstanding the foregoing, a
Holder’s aggregate liability pursuant to this subsection (d) shall
be limited to the net amount received by the Holder from the sale of
Registrable Securities giving rise to such loss, liability, claim, damage or
expense (or actions in respect thereof).


Section 6.6
Additional Covenants and Agreements of the Holders.


(a) Each
Holder agrees that, upon receipt of any notice from the Company of the
happening of any event requiring the preparation of a supplement or amendment
to a prospectus relating to Registrable Securities so that, as thereafter
delivered to the Holders, such prospectus shall not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, each Holder
will immediately discontinue disposition of Registrable Securities pursuant to
the Registration Statement and prospectus contemplated by this Agreement until
its receipt of copies of the supplemented or amended prospectus from the
Company and, if so directed by the Company, each Holder shall deliver to the
Company all copies, other than permanent file copies then in such
Holder’s possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.


(b) Each
Holder shall suspend, upon request of the Company, any disposition of
Registrable Securities pursuant to the Registration Statement and prospectus
contemplated by Section 6.1 during no more than two periods of no
more than 45 calendar days each during any 12-month period to the extent that
the Board of Directors of the Company determines in good faith that the Company
may be required to disclose any material corporate development which disclosure
may have a Material Adverse Effect on the Company.


(c) As a
condition to the inclusion of its Registrable Securities, each Holder shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may request in writing,
including completing one or more registration statement questionnaires in the
form(s) provided by the Company or as shall be required in connection with any
registration referred to in this Article 6, duly executed by the
Holder, in each case within three Business Days after such information is
requested by the Company. The Holder covenants that upon the Company’s
request, such Holder will promptly notify the Company of any changes in such
information or other information, under signature of the Holder, as the Company
may request in connection with any registration referred to in this
Article 6.


(d) Each
Holder hereby covenants with the Company: (i) not to make any sale of the
Registrable Securities without effectively causing the prospectus delivery
requirements under the Securities Act to be satisfied; and (ii) if such
Registrable Securities are to be sold by any method or in any transaction other
than on a national securities exchange or in the over-the-counter market, in
privately negotiated transactions, or in a combination of such methods, to
notify the Company at least five Business Days prior to the date on which the
Holder first offers to sell any such Registrable Securities.


(e) Each
Holder acknowledges and agrees that the Registrable Securities sold pursuant to
the Registration Statement are not transferable on the books of the Company
unless the stock certificate submitted to the transfer agent evidencing such
Registrable Securities is


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accompanied by a certificate
reasonably satisfactory to the Company to the effect that: (i) the
Registrable Securities have been sold in accordance with such Registration
Statement; and (ii) the requirement of delivering a current prospectus has
been satisfied, together with any other documentation required by the transfer
agent.


(f) Each
Holder agrees not to take any action with respect to any distribution deemed to
be made pursuant to such Registration Statement which would constitute a
violation of Regulation M under the Exchange Act or any other applicable
rule, regulation or law.


(g) At the end
of the Registration Period, the Holders shall discontinue sales of shares
pursuant to the Registration Statement upon receipt of notice from the Company
of its intention to remove from registration the shares covered by the
Registration Statement which remain unsold, and such Holders shall notify the
Company of the number of shares registered which remain unsold immediately, but
in any event no later than three Business Days, following receipt of such
notice from the Company.


Section 6.7
Additional Covenants and Agreements of the Company. With a view to
making available to the Holders the benefits of certain rules and regulations
of the SEC which at any time permit the sale of the Registrable Securities to
the public without registration, so long as the Holders own Registrable
Securities, the Company shall use its commercially reasonable efforts to:


(a) make and
keep public information available, as those terms are understood and defined in
Rule 144 under the Securities Act, at all times;


(b) file with
the SEC in a timely manner all reports and other documents required of the
Company under the Exchange Act; and


(c) so long as
a Holder owns any Registrable Securities, furnish to such Holder, upon any
reasonable request, a written statement by the Company as to its compliance
with Rule 144 under the Securities Act, and of the Exchange Act, a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company as such Holder may reasonably request in
writing in availing itself of any rule or regulation of the SEC allowing a
Holder to sell any such securities without registration.


Section 6.8
Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities granted to the Holders by the Company under
Section 6.1 may not be assigned or transferred to any other Person
under any circumstances.


ARTICLE 7


Definitions


Section 7.1
Definitions. The following capitalized terms have the following meanings
in this Agreement:


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“Affiliate” means, with respect to
any Person, any other Person controlling, controlled by or under direct or
indirect common control with such Person (for the purposes of this definition
“control,” when used with respect to any specified
Person, shall mean the power to direct the management and policies of such
person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms “controlling”
and “controlled” shall have meanings
correlative to the foregoing).


“Business Day” means a day Monday
through Friday on which banks are generally open for business in Novato,
California.


“Closing” has the meaning set forth
in Section 1.3.


“Closing Date” has the meaning set
forth in Section 1.3.


“Exchange Act” means the Securities
Exchange Act of 1934, as amended.


“Filing
Date” has the meaning set forth in Section 6.1.


“Final
Prospectus” has the meaning set forth in Section 6.6(a).


“Financial Statements” means the
financial statements of the Company included in the Public Filings.


“Holder” means any person holding
Registrable Securities.


“Indemnified Party” has the meaning
set forth in Section 6.5(c).


“Indemnifying Party” has the meaning
set forth in Section 6.5(c).


“Intellectual Property” has the
meaning set forth in Section 2.8.


“Majority Purchasers” means, as of
the Closing Date or a Subsequent Closing Date, the Purchasers who have
purchased prior to such date or are then purchasing as of such date a majority
of the Shares, as set forth on Exhibit A attached hereto.


“Material Adverse Effect” means a
material adverse effect on the business, operations, assets, financial
condition, market capitalization or results of operations of the Company and
its subsidiaries, taken as a whole.


“Offering” means the private
placement of the Securities contemplated by this Agreement.


“Person” means any person,
individual, corporation, limited liability company, partnership, trust or other
nongovernmental entity or any governmental agency, court, authority or other
body (whether foreign, federal, state, local or otherwise).


“Placement Agents” means,
collectively, Limetree Capital and any other firm serving as a placement agent
in connection with this Offering.


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“Placement Agents Shares has the meaning
set forth in Section 6.1(b)(i).


“Placement Agents Warrant Shares” has
the meaning set forth in Section 6.1(b)(i).


“Public
Filings” means the Company’s Annual Report filed with the
SEC on Form 10-K/A on December 23, 2008 for the fiscal year ended
August 31, 2008, and Quarterly Report filed with the SEC on Form 10-Q on
April 13, 2009 for the quarterly period ended February 28, 2009.


“Purchasers” mean the Purchasers
whose names are set forth on the signature pages of this Agreement, and their
permitted transferees.


“Purchase Price” has the meaning set
forth in Section 1.1.


“register,” “registered”
and “registration” refer to the registration
effected by preparing and filing a registration statement in compliance with
the Securities Act, and the declaration or ordering of the effectiveness of
such registration statement.


“Registrable Securities” means
(i) the Shares and (ii) the Warrant Shares; provided, however,
that securities shall only be treated as Registrable Securities if and only for
so long as they (A) have not been disposed of pursuant to a registration
statement declared effective by the SEC; or (B) have not been sold in a
transaction exempt from the registration and prospectus delivery requirements
of the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale.


“Registration Expenses” means all
expenses incurred by the Company in complying with Section 6.1,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and expenses of counsel for the Company,
blue sky fees and expenses and the expense of any special audits incident to or
required by any such registration (but excluding any Selling Expenses and the
costs and fees of legal counsel for any Holder).


“Registration Period” has the meaning
set forth in Section 6.3(a).


“Registration Statement” has the
meaning set forth in Section 6.1.


“Rule 144” means Rule 144
promulgated under the Securities Act, or any successor rule.


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


“Securities” has the meaning set
forth in Section 1.4.


“Securities Act” means the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute.


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“Selling Expenses” means all selling
commissions and underwriting discounts applicable to the sale of Registrable
Securities and all fees and expenses of legal counsel for any Holder.


“Shares” has the meaning set forth in
Section 1.1.


“Subsequent Closing” has the meaning
set forth in Section 1.4.


“Subsequent Closing Date” has the
meaning set forth in Section 1.4.


“Warrant Shares” has the meaning set
forth in Section 1.1.


“Warrants” has the meaning set forth
in Section 1.1.


“Transaction Agreements” means,
collectively, this Agreement and the Warrants.


Section 7.2
Certain Interpretations. Except where expressly stated otherwise in this
Agreement, the following rules of interpretation apply to this Agreement: (i)
“or” is not exclusive and
“include”, “includes” and
“including” are not limiting; (ii) definitions
contained in this Agreement are applicable to the singular as well as the
plural forms of such terms; (iii) references to an agreement or instrument
mean such agreement or instrument as from time to time amended, modified or
supplemented; (iv) references to a Person are also to its successors and
permitted assigns; (v) references to an
“Article”, “Section”,
“Exhibit”, or “Schedules”
refer to an Article of, a Section of, an Exhibit to, or a Schedule to,
this Agreement, respectively; and (vi) words importing the masculine
gender include the feminine or neuter and, in each case, vice versa.


ARTICLE 8


Governing Law;
Miscellaneous


Section 8.1
Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement will
be governed by and interpreted in accordance with the laws of the State of
Delaware without regard to the principles of conflict of laws. Each of the
parties hereto irrevocably submits and consents to the exclusive jurisdiction
of the courts of the State of California located in Marin County and the United
States District Court for the Northern District of California for the purpose
of any suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT
TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.


Section 8.2
Rights of Purchasers Inter Se. Each Purchaser shall have the absolute
right to exercise or refrain from exercising any right or rights which such
Purchaser may


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have by reason of this Agreement or
any of the Securities, including, without limitation, the right to consent to
the waiver of any obligation of the Company under this Agreement and to enter
into an agreement with the Company for the purpose of modifying this Agreement
or any agreement effecting any such modification, and such Purchaser shall not
incur any liability to any other Purchaser or Purchasers with respect to
exercising or refraining from exercising any such right or rights.


Section 8.3
Exculpation Among Purchasers. Each Purchaser acknowledges that it is not
relying upon any other Purchaser, or any officer, director, employee, agent,
partner, member or affiliate of any such other Purchaser, in making its
investment or decision to invest in the Company or in monitoring such
investment. Each Purchaser agrees that no Purchaser nor any Affiliate or
controlling person, officer, director, stockholder, partner, member, agent or
employee of any Purchaser shall be liable for any action heretofore or
hereafter taken or omitted to be taken by any of them relating to or in
connection with the Company or the Securities, or both. Without limiting the
generality of the foregoing, no Purchaser (nor any of its Affiliates, officers,
directors, stockholders, partners, members, agents or employees) shall have any
obligation, liability or responsibility whatsoever for the accuracy,
completeness or fairness of any or all information about the Company or its
properties, business or financial and other affairs, acquired by such Purchaser
from the Company or its officers, directors, employees, agents,
representatives, counsel or auditors, and in turn provided to another
Purchaser, nor shall any such Purchaser (or such other Person) have any
obligation or responsibility whatsoever to provide any such information to any
other Purchaser (or such other Person) or to continue to provide any such
information if any information is provided.


Section 8.4
Counterparts; Signatures by Facsimile. This Agreement may be executed in
two or more counterparts, all of which are considered one and the same
agreement and will become effective when counterparts have been signed by each
party and delivered to the other parties. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission
of a copy of this Agreement bearing the signature of the party so delivering
this Agreement.


Section 8.5
Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.


Section 8.6
Severability. If any immaterial provision of this Agreement is invalid
or unenforceable under any applicable statute or rule of law, then such
provision will be deemed modified in order to conform with such statute or rule
of law. Any provision hereof that may prove invalid or unenforceable under any
law will not affect the validity or enforceability of any other provision
hereof.


Section 8.7
Entire Agreement; Amendments.


(a) This
Agreement (including all schedules and exhibits hereto), each other Transaction
Agreement, and any confidentiality agreement entered into between the Company
and a Purchaser (which confidentiality agreement shall continue to be in full
force and effect) constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set


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forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof. No
provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the Company and the Majority Purchasers. Any
amendment or waiver effected in accordance with this Section 8.7
shall be binding upon each holder of any Securities purchased under this
Agreement at the time outstanding (including securities into which such
Securities are convertible and for which such Securities are exercisable), each
future holder of all such Securities, and the Company.


(b) Upon the
effectuation of each such waiver, or amendment, the Company shall promptly give
written notice thereof to the Purchasers who have not previously consented
thereto in writing.


(c) Each
Purchaser acknowledges that by operation of this Section 8.7 the
Majority Purchasers have the right and power to diminish or eliminate certain
rights of such Purchaser under this Agreement.


Section 8.8
Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified; (b) when sent by confirmed email or facsimile if
sent during normal business hours of the recipient; if not, then on the next
business day; (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (d) one
business day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. The
addresses for such communications are:


If to the Company:


Raptor
Pharmaceuticals Corp. 

9 Commercial Boulevard, Suite 200 

Novato,
CA 94949 

Attn: Christopher Starr, Ph.D., CEO 

Fax: 415-382-1368


Email: cstarr@raptorpharma.com


With copies to
(which copies shall not constitute notice to the Company):


Paul, Hastings,
Janofsky & Walker, LLP 

515 South Flower Street, 25th Floor 

Los
Angeles, CA 90071-2228 

Attn: Siobhan McBreen Burke 

Fax: 213-627-0705


Email: siobhanburke@paulhastings.com


If to a Purchaser:
To the address set forth immediately below such Purchaser’s name on the
signature pages hereto. Each party will provide ten days’ advance written
notice to the other parties of any change in its address.


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Section 8.9
Successors and Assigns. This Agreement is binding upon and inures to the
benefit of the parties and their successors and permitted assigns. No Purchaser
may assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Company.


Section 8.10
Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto, their respective successors and permitted assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.


Section 8.11
Further Assurances. Each party will do and perform, or cause to be done
and performed, all such further acts and things, and will execute and deliver
all other agreements, certificates, instruments and documents, as another party
may reasonably request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated hereby.


Section 8.12
No Strict Construction. The language used in this Agreement is deemed to
be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.


Section 8.13
Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.


[Signature Pages Follow]


 


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COMPANY:


Raptor Pharmaceuticals Corp. 


By: /s/
Kim R.
Tsuchimoto                                           

Name:
Kim R. Tsuchimoto

Its: Chief Financial Officer




PURCHASERS:


Rune Kjeken 


By: /s/
Rune
Kjeken                                                      


Name: Rune Kjeken


VP Bank (Switzerland) Ltd. 


By: /s/
Daniel Lacher /s/ Andre
Roth                       

Name:
Daniel
Lacher            Andre
Roth

Its: Vice
President            Vice
President




Charles B. Scoville, Jr. Trust,


Daniel B. Scholefield
& Thomas J. Scoville, 

Trustees 


By: /s/
Daniel B.
Scholefield                                        


Name: Daniel B. Scholefield 

Its: Trustee


Aran Asset Management SA. 


By: /s/
Michael C.
Thalmann                                        


Name: Michael C. Thalmann 

Its: Chairman / CEO





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