exv10w1



 





Exhibit 10.1




SECURITIES PURCHASE AGREEMENT



THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 2, 2007, by and among Iomai
Corporation, a Delaware corporation with headquarters located at 20 Firstfield Road, Suite 250,
Gaithersburg, Maryland 20878 (the “Company”), and the investors listed on the Schedule of Investors
attached hereto as Exhibit A (individually, an “Investor” and collectively, the “Investors”).




BACKGROUND




     A. The Company and each Investor are executing and delivering this Agreement in reliance upon
the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission (the “SEC”) under the Securities Act.



     B. Each Investor, severally and not jointly, wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement, the aggregate number of units (the
“Units”) set forth opposite such Investor’s name on Exhibit A hereto, each such Unit
consisting of (i) one share (a “Common Share,” collectively, the “Common Shares”) of the Common
Stock, par value $.01 per share, of the Company (the “Common Stock”), (ii) one warrant (a
“Five-Year Warrant,” collectively, the “Five-Year Warrants”) to purchase 0.35 shares of Common
Stock, in substantially the form attached hereto as Exhibit G-1, and (iii) one warrant (a
“Four-Month Warrant,” collectively, the “Four-Month Warrants”), to purchase 0.35 shares of Common
Stock, in substantially the form attached hereto as Exhibit G-2, for a purchase price of
$5.0675 per Unit (the “Purchase Price”). The Five-Year Warrants and Four-Month Warrants are
collectively referred to herein as the “Warrants,” and shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants are referred to herein as the “Warrant Shares.”



     C. The Units, the Common Shares, the Warrants and the Warrant Shares issued pursuant to this
Agreement are collectively referred to herein as the “Securities.”



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



ARTICLE I

DEFINITIONS




     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated:



     “Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144 under the Securities Act.



 









 





     “Agent” has the meaning set forth in Section 3.1(l).



     “Agreement” has the meaning set forth in the Preamble.



     “Best Efforts” means the efforts that a prudent person desirous of achieving a result would
use in similar circumstances to ensure that such result is achieved as expeditiously as practical;
provided, however, that an obligation to use Best Efforts under this Agreement does not require the
Company to dispose of or make any change to its business, expend any material funds or incur any
other material burden.



     “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed.



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



     “Closing Date” means the date and time of the Closing and shall be on such date and time as is
mutually agreed to by the Company and each Investor.



     “Closing Price” means, for any date, the closing price per share of the Common Stock for such
date (or the nearest preceding date) on the primary Eligible Market or exchange or quotation system
on which the Common Stock is then listed or quoted.



     “Company” has the meaning set forth in the Preamble.



     “Company Counsel” means Ropes & Gray, LLP, counsel to the Company.



     “Common Shares” means an aggregate of 6,291,828 shares of Common Stock, which are being issued
and sold by the Company to the Investors at the Closing.



     “Common Stock” means the common stock of the Company, par value $0.01 per share.



     “Contingent Obligation” has the meaning set forth in Section 3.1(aa).



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



     “Effective Date” means the date that the Registration Statement is first declared effective by
the SEC.



     “Effectiveness Period” has the meaning set forth in Section 6.1(b).



     “8-K Filing” has the meaning set forth in Section 4.5.



     “Eligible Market” means any of the New York Stock Exchange, the American Stock Exchange, The
Nasdaq Global Market, The Nasdaq Global Select Market or The Nasdaq Capital Market.



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



 









 





     “Event” has the meaning set forth in Section 6.1(d).



     “Event Payments” has the meaning set forth in Section 6.1(d).



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



     “Excluded Events” has the meaning set forth in Section 6.1(d)(ii).



     “Excluded Investors” means Cowen and Company, LLC and its Affiliates.



     “Filing Date” means thirty (30) days after the Closing Date.



     “Five-Year Warrants” has the meaning set forth in the Preamble.



     “Four-Month Warrants” has the meaning set forth in the Preamble.



     “GAAP” has the meaning set forth in Section 3.1(g).



     “Hazardous Materials” has the meaning set forth in Section 3.1(dd).



     “Indebtedness” has the meaning set forth in Section 3.1(aa).



     “Indemnified Party” has the meaning set forth in Section 6.4(c).



     “Indemnifying Party” has the meaning set forth in Section 6.4(c).



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



     “Intellectual Property Rights” has the meaning set forth in Section 3.1(t).



     “Investor” has the meaning set forth in the Preamble. 




     “Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal
or other restriction.



     “Losses” means any and all losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation and reasonable attorneys’ fees.



     “Material Adverse Effect” means (i) a material adverse effect on the results of operations,
prospects, assets, business or financial condition of the Company and the Subsidiaries, taken as a
whole on a consolidated basis, or (ii) materially and adversely impair the Company’s ability to
perform its obligations under any of the Transaction Documents, provided, that none of the
following alone shall be deemed, in and of itself, to constitute a Material Adverse Effect: (i) a
change in the market price or trading volume of the Common Stock or (ii) changes in general
economic conditions or changes affecting the industry in which the Company operates generally (as
opposed to Company-specific changes) so long as such changes do not have a materially
disproportionate effect on the Company and its Subsidiaries taken as a whole.



 









 





     “Material Permits” has the meaning set forth in Section 3.1(v).



     “Person” means any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, or joint stock company.



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



     “Prospectus” means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the Registration Statement,
and all other amendments and supplements to the Prospectus including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.



     “Purchase Price” has the meaning set forth in the Preamble.



     “Registrable Securities” means the Common Shares and the Warrant Shares issued or issuable
pursuant to the Transaction Documents, together with any securities issued or issuable upon any
stock split, dividend or other distribution, recapitalization or similar event with respect to the
foregoing.



     “Registration Statement” means each registration statement required to be filed under Article
VI, including (in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by reference in such
registration statement.



     “Regulation D” has the meaning set forth in the Preamble.



     “Related Person” has the meaning set forth in Section 4.6.



     “Required Effectiveness Date” means the date which is the earliest of (i) if the Registration
Statement does not become subject to review by the SEC, (a) ninety (90) days after the Closing Date
or (b) five (5) Trading Days after the Company receives notification from the SEC that the
Registration Statement will not become subject to review and the Company fails to request to
accelerate the effectiveness of the Registration Statement, or (ii) if the Registration Statement
becomes subject to review by the SEC, one hundred and twenty (120) days after the Closing Date.



     “Rule 144,” “Rule 144(k),” “Rule 415,” and “Rule 424” means Rule 144, Rule 144(k), Rule 415
and Rule 424, respectively, promulgated by the SEC pursuant to the Securities Act, as such Rules
may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC
having substantially the same effect as such Rule.



 









 





     “SEC” has the meaning set forth in the Preamble.



     “SEC Reports” has the meaning set forth in Section 3.1(g).



     “Securities” has the meaning set forth in the Preamble.



     “Securities Act” has the meaning set forth in the Preamble.



     “Shares” means shares of the Company’s Common Stock.



     “Short Sales” has the meaning set forth in Section 3.2(h).



     “Subsidiary” means any direct or indirect subsidiary of the Company.



     “Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on
its primary Trading Market, (b) if the Common Stock is not then listed or quoted and traded on any
Eligible Market, then a day on which trading occurs on the The Nasdaq Global Market (or any
successor thereto), or (c) if trading ceases to occur on the The Nasdaq Global Market (or any
successor thereto), any Business Day.



     “Trading Market” means The Nasdaq Global Market or any other Eligible Market, or any national
securities exchange, market or trading or quotation facility on which the Common Stock is then
listed or quoted.



     “Transaction Documents” means this Agreement, the schedules and exhibits attached hereto, the
Warrants and the Transfer Agent Instructions.



     “Transfer Agent” means American Stock Transfer & Trust Company, or any successor transfer
agent for the Company.



     “Transfer Agent Instructions” means, with respect to the Company, the Irrevocable Transfer
Agent Instructions, in the form of Exhibit E, executed by the Company and delivered to and
acknowledged in writing by the Transfer Agent.



     “Warrants” has the meaning set forth in the Preamble.



     “Warrant Shares” has the meaning set forth in the Preamble.



ARTICLE II

PURCHASE AND SALE




     2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the
Closing the Company shall issue and sell to each Investor, and each Investor shall, severally and
not jointly, purchase from the Company, such number of Units for the price set forth opposite such
Investor’s name on Exhibit A hereto under the heading “Purchase Price”. The date and time
of the Closing shall be 11:00 a.m., New York City Time, on the Closing Date. The Closing shall
take place at the offices of the Company’s Counsel.



 









 





     2.2 Closing Deliveries.




     (a) At the Closing, the Company shall deliver or cause to be delivered to each Investor
the following:



          (i) one or more stock certificates (or copies thereof provided by the Transfer Agent or a copy
of an irrevocable instruction letter from the Company to the Transfer Agent to issue such stock
certificates), free and clear of all restrictive and other legends (except as expressly provided in
Section 4.1(b) hereof), evidencing such number of Common Shares set forth opposite such
Investor’s name on Exhibit A hereto under the heading “Common Shares,” registered in the
name of such Investor;




          (ii) a Five-Year Warrant, issued in the name of such Investor, pursuant to which such Investor
shall have the right to acquire such number of Warrant Shares set forth opposite such Investor’s
name on Exhibit A hereto under the heading “Five-Year Warrant Shares”;




          (iii) a Four-Month Warrant, issued in the name of such Investor, pursuant to which such
Investor shall have the right to acquire such number of Warrant Shares set forth opposite such
Investor’s name on Exhibit A hereto under the heading “Four-Month Warrant Shares”;




          (iv) a legal opinion of Company Counsel, in the form of Exhibit C, executed by such
counsel and delivered to the Investors;




          (v) duly executed Transfer Agent Instructions acknowledged by the Transfer Agent; and




          (vi) evidence of filing with each applicable Trading Market of an additional shares listing
application covering all of the Registrable Securities.





     (b) At the Closing, each Investor shall deliver or cause to be delivered to the Company
the purchase price set forth opposite such Investor’s name on Exhibit A hereto under
the heading “Purchase Price” in United States dollars and in immediately available funds, by
wire transfer to an account designated in writing to such Investor by the Company for such
purpose.



ARTICLE III

REPRESENTATIONS AND WARRANTIES




     3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants to the Investors on and as of the date hereof as follows (which representations and
warranties shall be deemed to apply, where appropriate, to each Subsidiary of the Company), except
as disclosed in the SEC Reports:




     (a) Subsidiaries. The Company has no Subsidiaries other than those listed in
Schedule 3.1(a) hereto. Except as disclosed in Schedule 3.1(a) hereto, the
Company owns, directly or indirectly, all of the capital stock or comparable equity interests
of each Subsidiary free and clear of any Lien and all the issued and outstanding shares of
capital stock or



 









 






comparable equity interest of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.




     (b) Organization and Qualification. Each of the Company and the Subsidiaries is
an entity duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite legal
authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of
its respective certificate or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified to do business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as the case may
be, would not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.




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




     (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents to which it is a party by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not, and will not, (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or by which any property
or asset of the Company or any Subsidiary is bound, or affected, except to the extent that
such conflict, default, termination, amendment, acceleration or cancellation right would not
reasonably be expected to have a Material Adverse Effect, or (iii) result in a violation of
any law, rule, regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject (including,
assuming



 









 






the accuracy of the representations and warranties of the Investors set forth in Section
3.2 hereof, federal and state securities laws and regulations and the rules and regulations of
any self-regulatory organization to which the Company or its securities are subject, including
all applicable Trading Markets), or by which any property or asset of the Company or a
Subsidiary is bound or affected, except to the extent that such violation would not reasonably
be expected to have a Material Adverse Effect.




     (e) The Securities. The Securities are duly authorized and, when issued and paid
for in accordance with the Transaction Documents, will be duly and validly issued, fully paid
and nonassessable, free and clear of all Liens and will not be subject to preemptive or
similar rights of stockholders (other than those imposed by the Investors). The Company has
reserved from its duly authorized capital stock the maximum number of shares of Common Stock
issuable upon exercise of the Warrants. Assuming the accuracy of Section 3.2 of this
Agreement, the offer, issuance and sale of the Shares, the Warrants and the Warrant Shares to
the Investors pursuant to the Agreement, and in the case of the Warrant Shares, pursuant to
the Warrants, are exempt from the registration requirements of the Securities Act.




     (f) Capitalization. The aggregate number of shares and type of all authorized,
issued and outstanding classes of capital stock, options and other securities of the Company
(whether or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) is set forth in
Schedule 3.1(f) hereto. All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and
have been issued in compliance in all material respects with all applicable securities laws.
Except as disclosed in Schedule 3.1(f) hereto, the Company did not have outstanding at
February 26, 2007 any other options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or entered into any agreement giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or securities or
rights convertible or exchangeable into shares of Common Stock. Except as set forth on
Schedule 3.1(f) hereto, and except for customary adjustments as a result of stock
dividends, stock splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement providing
rights to security holders) and the issuance and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other than the
Investors) and will not result in a right of any holder of securities to adjust the exercise,
conversion, exchange or reset price under such securities. To the knowledge of the Company,
except as disclosed in the SEC Reports and any Schedules filed with the SEC pursuant to Rule
13d-1 of the Exchange Act by reporting persons or in Schedule 3.1(f) hereto, no Person
or group of related Persons beneficially owns (as determined pursuant to Rule 13d-3 under the
Exchange Act), or has the right to acquire, by agreement with or by obligation binding upon
the Company, beneficial ownership of in excess of five percent (5%) of the outstanding Common
Stock.




     (g) SEC Reports; Financial Statements. Except as set forth on Schedule
3.1(g), the Company has filed all reports required to be filed by it under Exchange Act
Sections 13(a) or 15(d), for the 12 months preceding the date hereof on a
timely basis or has received a valid



 









 






extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension and has filed all reports required to be filed by it under
Exchange Act Sections 13(a) or 15(d), since February 1, 2006. Such reports required to be
filed by the Company under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, together with any materials filed or furnished by the Company under the Exchange Act,
whether or not any such reports were required being collectively referred to herein as the
“SEC Reports” and, together with this Agreement and the Schedules to this Agreement, the
“Disclosure Materials”. As of their respective dates, the SEC Reports filed by the Company
complied in all material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed by the
Company, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply as to form in all material
respects with applicable accounting requirements and the rules and regulations of the SEC with
respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on
a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified
in such financial statements, the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP or may be condensed or summary statements, and
fairly present in all material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and the results of operations
and cash flows for the periods then ended, subject, in the case of unaudited statements, to
normal, year-end audit adjustments. All material agreements to which the Company or any
Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are
subject are included as part of or identified in the SEC Reports, to the extent such
agreements are required to be included or identified pursuant to the rules and regulations of
the SEC.




     (h) Since the date of the latest audited financial statements included within the SEC
Reports, except as disclosed in the SEC Reports or in Schedule 3.1(h) hereto, (i)
there has been no event, occurrence or development that, individually or in the aggregate, has
had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the
Company has not incurred any liabilities other than (A) trade payables, accrued expenses and
other liabilities incurred in the ordinary course of business consistent with past practice
(B) liabilities not required to be reflected in the Company’s financial statements pursuant to
GAAP or required to be disclosed in filings made with the SEC and (C) other liabilities that
would not, individually or in the aggregate, have a Material Adverse Effect, (iii) the Company
has not altered its method of accounting or the changed its auditors, except as disclosed in
its SEC Reports, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders, in their capacities as such, or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital stock (except
for repurchases by the Company of shares of capital stock held by employees, officers,
directors, or consultants pursuant to an option of the Company to repurchase such shares upon
the termination of employment or services), and (v) the Company has not issued any equity
securities to any officer, director or Affiliate, except pursuant to existing Company
stock-based plans. The Company has not taken any steps to seek protection pursuant to any
bankruptcy law nor does



 









 






the Company believe that
its creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. The Company is not as
of the date hereof, and after giving effect to the transactions contemplated hereby to occur
at the applicable Closing, will not be Insolvent (as defined below). For purposes of this
Section 3.1(h), “Insolvent” means (i) the present fair saleable value of the Company’s assets
is less than the amount required to pay the Company’s total Indebtedness (as defined in
Section 3.1(aa)), (ii) the Company is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and matured or (iii)
the Company has unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted.




     (i) Absence of Litigation. Except as disclosed in the SEC Reports, there is no
Proceeding, or, to the Company’s knowledge, inquiry or investigation, before or by any court,
public board, government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of its
Subsidiaries that would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.




     (j) Compliance. Except as described in Schedule 3.1(j), neither the
Company nor any Subsidiary, except in each case as would not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse Effect, (i) is in
default under or in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received written notice of a claim
that it is in default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii) is or has been
in violation of any statute, rule or regulation of any governmental authority.




     (k) Title to Assets. The Company and the Subsidiaries have title to all real
property owned by them that is material to the business of the Company and the Subsidiaries
and title in all personal property owned by them that is material to the business of the
Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens that
do not, individually or in the aggregate, have or result in a Material Adverse Effect. Any
real property and facilities held under lease by the Company and the Subsidiaries are held by
them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries
are in material compliance.




     (l) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor
any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form
of general solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Securities. The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’ commission (other
than for persons engaged by any Investor or its investment advisor) relating to or arising out
of the



 









 






issuance of the Securities pursuant to this Agreement. The Company shall pay, and hold
each Investor harmless against, any liability, loss or expense (including, without limitation,
reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any such
claim for fees arising out of the issuance of the Securities pursuant to this Agreement. The
Company acknowledges that it has engaged Cowen and Company, LLC as its exclusive placement
agent (the “Agent”) in connection with the sale of the Securities.




     (m) Private Placement. Neither the Company nor any of its Affiliates nor, any
Person acting on the Company’s behalf has, directly or indirectly, at any time within the past
six months, made any offer or sale of any security or solicitation of any offer to buy any
security under circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D in connection with the offer and sale by the Company of the
Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the
Transaction Documents to be integrated with prior offerings by the Company for purposes of any
applicable law, regulation or stockholder approval provisions, including, without limitation,
under the rules and regulations of any Trading Market. The Company is not required to be
registered as, and is not an Affiliate of, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company is not required to be registered as,
a United States real property holding corporation within the meaning of the Foreign Investment
in Real Property Tax Act of 1980.




     (n) Form S-3 Eligibility. The Company is eligible to register the Common Shares
and the Warrant Shares for resale by the Investors using Form S-3 promulgated under the
Securities Act.




     (o) Listing and Maintenance Requirements. The Company has not, in the twelve
(12) months preceding the date hereof, received notice (written or oral) from any Trading
Market on which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading
Market. The Company is in compliance with all such listing and maintenance requirements.




     (p) Registration Rights. Except as described in Schedule 3.1(p), the
Company has not granted or agreed to grant to any Person any rights (including “piggy-back”
registration rights) to have any securities of the Company registered with the SEC or any
other governmental authority that have not been satisfied or waived.




     (q) Application of Takeover Protections. Except as described in Schedule
3.1(q), there is no control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s charter documents or the laws of its state of incorporation that is or
could become applicable to any of the Investors as a result of the Investors and the Company
fulfilling their obligations or exercising their rights under the Transaction Documents,
including, without limitation, as a result of the Company’s issuance of the Securities and the
Investors’ ownership of the Securities.



 









 






     (r) Disclosure. The Company confirms that neither it nor any officers, directors
or Affiliates, has provided any of the Investors (other than Excluded Investors) or their
agents or counsel with any information that constitutes material, nonpublic information (other
than the existence and terms of the issuance of Securities, as contemplated by this
Agreement). The Company understands and confirms that each of the Investors will rely on the
foregoing representations in effecting transactions in securities of the Company (other than
Excluded Investors). All disclosure provided by the Company to the Investors regarding the
Company, its business and the transactions contemplated hereby, including the Schedules to
this Agreement, furnished by or on the behalf of the Company are true and correct in all
material respects and do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. To the Company’s knowledge, except
for the transactions contemplated by this Agreement, no event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, operations or financial condition, which, under applicable law, rule or
regulation, required public disclosure or announcement by the Company prior to the date hereof
but which has not been so publicly announced or disclosed. The Company acknowledges and
agrees that no Investor (other than Excluded Investors) makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than those set forth
in the Transaction Documents.




     (s) Acknowledgment Regarding Investors’ Purchase of Securities. Based upon the
assumption that the transactions contemplated by this Agreement are consummated in all
material respects in conformity with the Transaction Documents, the Company acknowledges and
agrees that each of the Investors (other than Excluded Investors) is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. The Company further acknowledges that no
Investor (other than Excluded Investors) is acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Investor (other than Excluded Investors) or
any of their respective representatives or agents in connection with the Transaction Documents
and the transactions contemplated hereby and thereby is merely incidental to the Investors’
purchase of the Securities. The Company further represents to each Investor that the
Company’s decision to enter into this Agreement has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its representatives.




     (t) Patents and Trademarks. To the Company’s knowledge, the Company and its
Subsidiaries own, or possess adequate rights or licenses to use, all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and other
intellectual property rights (“Intellectual Property Rights”) necessary to conduct their
respective businesses now conducted. Except as disclosed in the SEC Reports, none of the
Company’s Intellectual Property Rights have expired or terminated, or are expected to expire
or terminate, within three years from the date of this Agreement. The Company does not have
any knowledge of any infringement by the Company or its Subsidiaries of Intellectual Property
Rights of others. Except as disclosed in the SEC Reports, there is no claim, action or



 









 






proceeding being made or brought, or to the knowledge of the Company, being threatened,
against the Company or its Subsidiaries regarding its Intellectual Property Rights.




     (u) Insurance. The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as, in
the judgement of the Company’s management, are prudent and customary in the businesses and
location in which the Company and the Subsidiaries are engaged.




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




     (w) Transactions With Affiliates and Employees. Except as set forth or
incorporated by reference in the SEC Reports, none of the officers, directors or employees of
the Company is presently a party to any transaction that would be required to be reported
pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.




     (x) Internal Accounting Controls. The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any
differences.




     (y) Sarbanes-Oxley Act. The Company is in compliance in all material respects
with applicable requirements of the Sarbanes-Oxley Act of 2002 and applicable rules and
regulations promulgated by the SEC thereunder, except where such noncompliance would not have,
individually or in the aggregate, a Material Adverse Effect.




     (z) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries
nor, to the knowledge of the Company, any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions
for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity, (ii) made any
direct or indirect unlawful payment to any foreign or domestic government official or employee
from corporate funds, (iii) violated or is in violation of any provision of the 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 domestic government
official or employee.



 









 






     (aa) Indebtedness. Except as disclosed in Schedule 3.1(aa), neither the Company
nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is
in violation of any term of or in default under any contract, agreement or instrument relating
to any Indebtedness, except where such violations and defaults would not result, individually
or in the aggregate, in a Material Adverse Effect, or (iii) is a party to any contract,
agreement or instrument relating to any Indebtedness, the performance of which, in the
judgment of the Company’s officers, is reasonably expected to have a Material Adverse Effect.
Schedule 3.1(aa) provides a detailed description of the material terms of any such outstanding
Indebtedness not disclosed in or as an exhibit to an SEC Report. 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 the deferred purchase
price of property or services (other than trade payables entered into in the ordinary course
of business), (C) all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (E) all indebtedness created or
arising under any conditional sale or other title retention agreement, or incurred as
financing, in either 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 of default are limited to repossession or sale of such property), (F)
all monetary obligations under any leasing or similar arrangement which, in connection with
generally accepted accounting principles, 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 the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including accounts and
contract rights) owned by any Person, even though the Person which owns such assets or
property has not assumed or become liable for the payment of such indebtedness, and (H) all
Contingent Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above, provided that for the indebtedness referred to
in clauses (A) through (H), the indebtedness is in each case in excess of $5 million; (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 other
obligation of another Person if the primary purpose or intent of the Person incurring such
liability, or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements relating
thereto will be complied 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 liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency thereof.




     (bb) Employee Relations. Neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or employs any member of a union. The Company
believes that its relations with its employees are as disclosed in the SEC Reports. The
Company is not aware that any executive officer intends to terminate their employment



 









 






with the Company, nor does the Company have a present intention to terminate the
employment of any executive officer.




     (cc) Labor Matters. The Company and its Subsidiaries are in compliance in all
material respects with all federal, state, local and foreign laws and regulations respecting
labor, employment and employment practices and benefits, terms and conditions of employment
and wages and hours, except where failure to be in compliance would not, either individually
or in the aggregate, reasonably be expected to result in a Material Adverse Effect.




     (dd) Environmental Laws. The Company and its Subsidiaries (i) are in compliance
in all material respects with any and all Environmental Laws (as hereinafter defined), (ii)
have received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in compliance in all
material respects with all terms and conditions of any such permit, license or approval where,
in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply would be
reasonably expected to have, 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 health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata), including,
without limitation, laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively,
“Hazardous Materials”) into the environment, or otherwise 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.




     (ee) Subsidiary Rights. Except as set forth in Schedule 3.1(ee), the Company or
one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations
imposed by applicable law) to receive dividends and distributions on, all capital securities
of its Subsidiaries as owned by the Company or such Subsidiary.




     (ff) Tax Status. The Company and each of its Subsidiaries (i) has made or filed
all foreign, federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, to the extent the final deadlines for
which were on or before the date hereof, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith and (iii) has
set aside on its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.




     (gg) Investment Company. The Company is not now, and after the sale of the
Securities under the Transaction Documents and the application of net proceeds from the sale
of the Securities described in Section 4.6 herein will not be, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.



 









 





     3.2 Representations, Warranties and Covenants of the Investors. Each Investor hereby,
as to itself only and for no other Investor, represents, warrants and covenants to the Company as
follows:




     (a) Organization; Authority. Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate, partnership or other power and authority to enter into and to consummate
the transactions contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Investor of the Securities
hereunder has been duly authorized by all necessary corporate, partnership or other action on
the part of such Investor. This Agreement has been duly executed and delivered by such
Investor and constitutes the valid and binding obligation of such Investor, enforceable
against it in accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors rights generally, and (ii) the effect of rules of law
governing the availability of specific performance and other equitable remedies.




     (b) No Public Sale or Distribution. Such Investor is (i) acquiring the Common
Shares and the Warrants and (ii) upon exercise of the Warrants will acquire the Warrant Shares
issuable upon exercise thereof, in the ordinary course of business for its own account and not
with a view towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered under the Securities Act or under an exemption
from such registration and in compliance with applicable federal and state securities laws,
and such Investor does not have a present arrangement to effect any distribution of the
Securities to or through any person or entity; provided, however, that by
making the representations herein, such Investor does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at
any time in accordance with or pursuant to a registration statement or an exemption under the
Securities Act. Each Investor has completed or caused to be completed the Registration
Statement Questionnaire attached hereto as Exhibit B-2 for use in preparation of the
Registration Statement, and the responses provided therein shall be true and correct in all
material respects as of the Closing Date and, unless such Registration Statement Questionnaire
has been otherwise amended and/or supplemented, will be true and correct as of the effective
date of the Registration Statement




     (c) Investor Status. At the time such Investor was offered the Securities, it
was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under
the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the
Securities Act. Such Investor is not a registered broker dealer registered under Section
15(a) of the Exchange Act, or a member of the NASD, Inc. or an entity engaged in the business
of being a broker dealer. Except as otherwise disclosed in writing to the Company on
Exhibit B-2 (attached hereto) on or prior to the date of this Agreement, such Investor
is not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act,
or a member of the NASD, Inc. or an entity engaged in the business of being a broker dealer.




     (d) Experience of Such Investor. Such Investor, either alone or together with
its representatives, has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in



 









 






the Securities, and has so evaluated the merits and risks of such investment. Such
Investor understands that it must bear the economic risk of this investment in the Securities
indefinitely, and is able to bear such risk and is able to afford a complete loss of such
investment.




     (e) Access to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it
has deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Securities and the merits and risks
of investing in the Securities; (ii) access to information (other than material non-public
information) about the Company and the Subsidiaries and their respective financial condition,
results of operations, business, properties, management and prospects sufficient to enable it
to evaluate its investment; and (iii) the opportunity to obtain such additional information
that the Company possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the investment. Neither
such inquiries nor any other investigation conducted by or on behalf of such Investor or its
representatives or counsel shall modify, amend or affect such Investor’s right to rely on the
truth, accuracy and completeness of the Disclosure Materials and the Company’s representations
and warranties contained in the Transaction Documents. Such Investor acknowledges receipt of
copies of the SEC Reports.




     (f) No Governmental Review. Such Investor understands that no United States
federal or state agency or any other government or governmental agency has passed on or made
any recommendation or endorsement of the Securities or the fairness or suitability of the
investment in the Securities nor have such authorities passed upon or endorsed the merits of
the offering of the Securities.




     (g) No Conflicts. The execution, delivery and performance by such Investor of
this Agreement and the consummation by such Investor of the transactions contemplated hereby
will not (i) result in a violation of the organizational documents of such Investor, (ii)
conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which such Investor
is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such Investor, except in
the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise
affect the ability of such Investor to consummate the transactions contemplated hereby.




     (h) Prohibited Transactions. No Investor, directly or indirectly, and no
Person acting on behalf of or pursuant to any understanding with any Investor, has engaged
in any purchases or sales of any securities, including any derivatives, of the Company
(including, without limitation, any Short Sales involving any of the Company’s securities)
(a “Transaction”) since the time that such Investor was first contacted by the Company,
the Agent or any other Person regarding the sale of Securities as contemplated under the
Transaction Documents. Such Investor covenants that neither it nor any Person acting on
its behalf or pursuant to any understanding with such Investor will engage, directly or
indirectly, in any Transactions prior to the time the transactions contemplated by this



 









 






Agreement are publicly disclosed. “Short Sales” include, without limitation, all
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange
Act and all types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, short sales, swaps, derivatives and similar arrangements (including on a
total return basis), and sales and other transactions through non-U.S. broker-dealers or
foreign regulated brokers.




     (i) Restricted Securities. The Investors understand that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws inasmuch as
they are being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations such securities may be resold without
registration under the Securities Act only in certain limited circumstances.




     (j) Legends. It is understood that, except as provided in Section 4.1(b) of
this Agreement, certificates evidencing such Securities may bear the legend set forth in
Section 4.1(b)




     (k)
No Legal, Tax or Investment Advice. Such Investor understands that nothing in this Agreement or any other materials presented by
or on behalf of the Company to the Investor in connection with the purchase of the Securities
constitutes legal, tax or investment advice. Such Investor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Securities. Such Investor understands that the Agent has acted
solely as the agent of the Company in this placement of the Securities, and that the Agent makes no
representation or warranty with regard to the merits of this transaction or as to the accuracy of
any information such Investor may have received in connection therewith. Such Investor
acknowledges that he has not relied on any information or advice furnished by or on behalf of the
Agent.





ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES




     4.1 Transfer Restrictions.




     (a) The Investors covenant that the Securities will only be disposed of pursuant to an
effective registration statement under, and in compliance with the requirements of, the
Securities Act or pursuant to an available exemption from the registration requirements of the
Securities Act, and in compliance with any applicable state securities laws. In connection
with any transfer of Securities other than pursuant to an effective registration statement or
to the Company, or pursuant to Rule 144(k), the Company may require the transferor to provide
to the Company an opinion of counsel selected by the transferor, the form and substance of
which opinion shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act. Notwithstanding the
foregoing, the Company hereby consents to and agrees to register on the books of the Company
and with its Transfer Agent, without any such legal opinion, except to the extent that the
Transfer Agent requests such legal opinion, any transfer of Securities by an Investor to an
Affiliate of such Investor,
provided that the transferee certifies to the Company that it is an “accredited investor”
as



 









 






defined in Rule 501(a) under the Securities Act and provided that such Affiliate does not
request any removal of any existing legends on any certificate evidencing the Securities.




     (b) The Investors agree to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing any of the Securities:




THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.


Certificates evidencing Securities shall not be required to contain such legend or any other
legend (i) while a registration statement (including the Registration Statement) covering the
resale of the Securities is effective under the Securities Act, (ii) following any sale of such
Securities pursuant to Rule 144 if the holder provides the Company with a legal opinion (and
the documents upon which the legal opinion is based) reasonable acceptance to the Company to
the effect that the Securities can be sold under Rule 144, (iii) if the holder provides the
Company with a legal opinion (and the documents upon which the legal opinion is based)
reasonably acceptable to the Company to the effect that the Securities are eligible for sale
under Rule 144(k), or (iv) if the holder provides the Company with a legal opinion (and the
documents upon which the legal opinion is based) reasonably acceptable to the Company to the
effect that the legend is not required under applicable requirements of the Securities Act
(including controlling judicial interpretations and pronouncements issued by the Staff of the
SEC). Subject to receipt of the undertaking referred to above, the Company shall use its Best
Efforts to cause its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Transfer Agent on the Effective Date. Following the Effective Date or at
such earlier time as a legend is no longer required for certain Securities, the Company will no
later than three Trading Days following the delivery by an Investor to the Company or the
Transfer Agent of (i) a legended certificate representing such Securities, and (ii) an opinion
of counsel to the extent required by Section 4.1(a), deliver or cause to be delivered
to such Investor a certificate representing such Securities that is free from the legend
referred to above. The Company may not make any notation on its records or give instructions
to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section.




     If within three (3) Trading Days after the Company’s receipt of a legended certificate and
the other documents as specified in clauses (i) and (ii) of the paragraph immediately above,
the Company shall fail to issue and deliver to such Investor a certificate representing such
Securities that is free from the legend referred to above, and if on or after such third
Trading Day the Investor purchases (in an open market transaction) shares of Common Stock to deliver in



 









 






satisfaction of a sale by the Investor of shares of Common Stock that the Investor anticipated
receiving from the Company without any restrictive legend (the “Covering Shares”), then the
Company shall, within three (3) Trading Days after the Investor’s request, pay cash to the
Investor in an amount equal to the excess (if any) of the Investor’s total purchase price
(including reasonable brokerage commissions, if any) for the Covering Shares, over the product
of (A) the number of Covering Shares, times (B) the closing sale price on the date of delivery
of such certificate.




     (c) The Company will not object to and shall permit (except as prohibited by law) an
Investor to pledge or grant a security interest in some or all of the Securities in connection
with a bona fide margin agreement or other loan or financing arrangement secured by the
Securities, and if required under the terms of such agreement, loan or arrangement, the
Company will not object to and shall permit (except as prohibited by law) such Investor to
transfer pledged or secured Securities to the pledges or secured parties. Except as required
by law, such a pledge or transfer would not be subject to approval of the Company, no legal
opinion of the pledgee, secured party or pledgor shall be required in connection therewith,
and no notice shall be required of such pledge. Each Investor acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any security interest
in, any of the Securities or for any agreement, understanding or arrangement between any
Investor and its pledgee or secured party. At the appropriate Investor’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the Securities,
including the preparation and filing of any required prospectus supplement under Rule
424(b)(3) of the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder. Provided that the Company is
in compliance with the terms of this Section 4.1(c), the Company’s indemnification obligations
pursuant to Section 6.4 shall not extend to any Proceeding or Losses arising out of or related
to this Section 4.1(c).



     4.2 Furnishing of Information. During the time the Registration Statement is required
to be effective, the Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the
date hereof pursuant to the Exchange Act.



     4.3 Integration. The Company shall not, and shall use its commercially reasonably
efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the Investors or that would
be integrated with the offer or sale of the Securities for purposes of the rules and regulations of
any Trading Market.



     4.4 Reservation of Securities. The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount
as may be required to fulfill its obligations to issue Shares under the Transaction Documents. In
the event that at any time the then authorized shares of Common Stock are insufficient for the
Company to satisfy its obligations to issue such Shares under the Transaction Documents, the



 









 






Company shall promptly take such actions as may be required to increase the number of
authorized shares.



     4.5 Securities Laws Disclosure; Publicity. The Company shall, on or before 8:30 a.m.,
New York time, on the first Trading Day following execution of this Agreement, issue a press
release disclosing all material terms of the transactions contemplated hereby. On the Closing
Date, the Company shall file a Current Report on Form 8-K with the SEC (the “8-K Filing”)
describing the terms of the transactions contemplated by the Transaction Documents and including as
exhibits to such Current Report on Form 8-K the Transaction Documents (including the names, and
addresses of the Investors and the amount(s) of Securities respectively purchased) and the form of
Warrants, in the form required by the Exchange Act. Thereafter, the Company shall timely file any
filings and notices required by the SEC or applicable law with respect to the transactions
contemplated hereby. Except as herein provided, the Company shall not publicly disclose the name
of any Investor, or include the name of any Investor in any press release without the prior written
consent of such Investor, unless otherwise required by law. The Company shall not, and shall cause
each of its Subsidiaries and its and each of their respective officers, directors, employees and
agents not to, provide any Investor with any material nonpublic information regarding the Company
or any of its Subsidiaries from and after the issuance of the above referenced press release
without the express written consent of such Investor.



     4.6 Use of Proceeds. The Company intends to use the net proceeds from the sale of the
Securities for working capital and general corporate purposes. The Company also may use a portion
of the net proceeds, currently intended for general corporate purposes, to acquire or invest in
technologies, products, services or businesses that complement its business, although the Company
has no present commitments with respect to these types of transactions. Pending these uses, the
Company intends to invest the net proceeds from this offering in short-term, interest-bearing,
investment-grade securities, or as otherwise pursuant to the Company’s customary investment
policies.



     4.7 No Additional Issuances and Registrations. The Company agrees not to sell, offer
or agree to sell, any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock, or file or cause to be declared effective a registration statement
under the Securities Act relating to the offer and sale of any shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock, for a period of 30 days after the
Effective Date, except for (i) the registration of the Registrable Securities, (ii) issuances of
Common Stock upon the exercise of options or warrants disclosed as outstanding in the SEC Reports,
(iii) the issuance of equity incentives to employees, (iv) issuances of shares of Common Stock or
any securities convertible into or exercisable for Common Stock in connection with a strategic
licensing arrangement, corporate partnering transaction or similar collaboration; (v) agreements to
issue shares of Common Stock or any securities convertible into or exercisable for Common Stock,
and the issuance of shares of Common Stock, in connection with an acquisition, by merger or
consolidation with, or by purchase of all or a substantial portion of the assets of, or by any
other manner, of any business or corporation, partnership, association or other business
organization or division thereof; (vi) any registration of securities on Form S-4 or S-8 or similar
forms and (vii) any post-effective amendments to registration statements effective as of the
Effective Date.




 










 





ARTICLE V

CONDITIONS




     5.1 Conditions Precedent to the Obligations of the Investors. The obligation of each
Investor to acquire Securities at the Closing is subject to the satisfaction or waiver by such
Investor, at or before the Closing, of each of the following conditions:




          (a) Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all material respects (other than those
representations and warranties that are qualified by “material” or Material Adverse Effect
qualifiers, which shall be true and correct in all respects) as of the date when made and as
of the Closing as though made on and as of such date;




          (b) Performance. The Company and each other Investor shall have performed,
satisfied and complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing; and




          (c) Minimum and Maximum Proceeds. This Agreement shall cover a minimum of $20
million of gross proceeds and a maximum of $40 million of gross proceeds from the sale of the
Securities.



     5.2 Conditions Precedent to the Obligations of the Company. The obligation of the
Company to sell the Securities at the Closing is subject to the satisfaction or waiver by the
Company, at or before the Closing, of each of the following conditions:




          (a) Receipt of Payment. The Investors shall have delivered payment of the
purchase price to the Company for the Securities being issued hereunder.




          (b) Representations and Warranties. The representations and warranties of the
Investors contained herein shall be true and correct in all material respects as of the date
when made and as of the Closing Date as though made on and as of such date;




          (c) Performance. The Investors shall have performed, satisfied and complied in
all material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Investors at or prior
to the Closing; and




          (d) Delivery of Registration Statement Questionnaire. The Company shall have
received from each Investor a fully completed Registration Statement Questionnaire in the form
attached hereto as Exhibit B-2 at the Closing for the Company’s use in preparing the
Registration Statement pursuant to Article VI below.



 









 





ARTICLE VI

REGISTRATION RIGHTS




     6.1 Registration Statement.




          (a) On or prior to the Filing Date, the Company shall prepare and file with the SEC a
Registration Statement covering the resale of all Registrable Securities for an offering to be
made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form
S-3 (except if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another appropriate form
in accordance with the Securities Act and the Exchange Act) and shall contain (except if
otherwise directed by the Investors or requested by the SEC) the “Plan of Distribution” in
substantially the form attached hereto as Exhibit D.




          (b) The Company shall use its reasonable Best Efforts to cause the Registration Statement
to be declared effective by the SEC as promptly as practical after the filing thereof, but in
any event prior to the Required Effectiveness Date, and shall use its reasonable Best Efforts
to keep the Registration Statement continuously effective under the Securities Act until the
earlier of (i) the date that all Common Shares and Warrant Shares covered by such Registration
Statement have been sold or can be sold publicly under Rule 144(k) or (ii) the seventh
anniversary of the Closing Date (the “Effectiveness Period”); provided that, upon notification
by the SEC that a Registration Statement will not be reviewed or is no longer subject to
further review and comments, the Company shall request acceleration of such Registration
Statement within five (5) Trading Days after receipt of such notice and request that it
becomes effective on 4:00 p.m. New York City time on the Effective Dave and file a prospectus
supplement for any Registration Statement, whether or not required under Rule 424 (or
otherwise), by 9:00 a.m. New York City time the day after the Effective Date.




          (c) The Company shall notify the Investors in writing promptly (and in any event within
two (2) Trading Days) after receiving notification from the SEC that the Registration
Statement has been declared effective.




          (d) Should an Event (as defined below) occur, then upon the occurrence of such Event, and
on every monthly anniversary thereof until the applicable Event is cured, as relief for the
damages suffered therefrom by the Investors (the parties hereto agreeing that the liquidated
damages provided for in this Section 6.1(d) constitute a reasonable estimate of the damages
that may be incurred by the Investors by reason of the Event and that such liquidated damages
represent the exclusive monetary remedy for the Investors for damages suffered due to an
Event), the Company shall pay to each Investor an amount in cash, as liquidated damages and
not as a penalty, equal to one percent (1.0%) of (i) the number of Common Shares held by such
Investor as of the date of such Event, multiplied by (ii) the purchase price paid by such
Investor for such Common Shares then held. The payments to which an Investor shall be
entitled pursuant to this Section 6.1(d) are referred to herein as “Event Payments.”
Any Event Payments payable pursuant to the terms hereof shall apply on a pro rated basis for
any portion of a month prior to the cure of an Event. In the event the Company fails to make
Event Payments in a timely manner, such Event Payments shall bear interest at the rate of one
percent



 









 






(1.0%) per month (prorated for partial months) until paid in full. All pro rated
calculations made pursuant to this paragraph shall be based upon the actual number of days in
such pro rated month. Notwithstanding the foregoing provisions, in no event shall the Company
be obligated to pay such liquidated damages (a) to more than one Investor in respect of the
same Securities for the same period of time or (b) in an aggregate amount that exceeds 10% of
the purchase price paid by such Investor for its Securities pursuant to this Agreement, as set
forth opposite such Investor’s name on Exhibit A hereto under the heading “Purchase Price.”


For such purposes, each of the following shall constitute an “Event”:




                    (i) the Registration Statement is not filed on or prior to the Filing Date or is not declared
effective on or prior to the Required Effectiveness Date;



                    (ii) except (A) as provided for in Section 6.1(e), (B) if the Company is involved in a
“Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (C) in the event of a
merger or consolidation of the Company or a sale of more than fifty percent (50%) of the assets of
the Company in one or a series of related transactions, unless following such transaction or series
of transactions, the holders of the Company’s securities prior to the first such transaction
continue to hold at least fifty percent (50%) of the voting rights and equity interests of the
surviving entity or acquirer (clauses (B) and (C), collectively, the “Excluded Events”), after the
Effective Date, an Investor is not permitted to sell Registrable Securities under the Registration
Statement (or a subsequent Registration Statement filed in replacement thereof) for any reason
(other than the fault of such Investor) for five (5) or more Trading Days (whether or not
consecutive);



                    (iii) except as a result of the Excluded Events, the Common Stock is not listed or quoted, or
is suspended from trading, on an Eligible Market for a period of three (3) Trading Days (which need
not be consecutive Trading Days) during the Effectiveness Period; or



                    (iv) the exercise rights of the Investors pursuant to the Warrants are suspended.




          (e) Notwithstanding anything in this Agreement to the contrary, after sixty (60)
consecutive Trading Days of continuous effectiveness of the initial Registration Statement
filed and declared effective pursuant to this Agreement, the Company may, by written notice to
the Investors, suspend sales under a Registration Statement after the Effective Date thereof
and/or require that the Investors immediately cease the sale of shares of Common Stock
pursuant thereto and/or defer the filing of any subsequent Registration Statement if the Board
of Directors of the Company determines in good faith, by appropriate resolutions, that the
Company would, in the absence of such delay or suspension hereunder, be required under state
or federal securities laws to disclose any corporate development, a potentially significant
transaction or event involving the Company, or any negotiations, discussions, or proposals
directly relating thereto, in either case the disclosure of which would reasonably be expected
to have a negative effect upon the Company or its stockholders; provided further, that the
Company may suspend the use of any Prospectus to the extent necessary to file any
post-effective amendment to the Registration Statement in order (i) to amend the table of
selling stockholders within the Registration Statement to reflect transfers of the Securities
by Investors



 









 






to their Affiliates as permitted under Section 4.1(a) or (ii) to amend the Registration
Statement pursuant to the Company’s undertakings as set forth in the Registration Statement
and in Item 512 of Regulation S-K under the Securities Act. Upon receipt of such notice, each
Investor shall immediately discontinue any sales of Registrable Securities pursuant to such
registration until such Investor is advised in writing by the Company that the current
Prospectus or amended Prospectus, as applicable, may be used. In no event, however, shall
this right be exercised to suspend sales beyond the period during which (in the good faith
determination of the Company’s Board of Directors) the failure to require such suspension
would be materially detrimental to the Company. The Company’s rights under this Section
6(e) may be exercised for a period of no more than twenty (20) Trading Days at a time and
not more than three (3) times in any twelve (12) month period, without such suspension being
considered as part of an Event Payment determination. Immediately after the end of any
suspension period under this Section 6(e), the Company shall take all commercially
reasonable actions (including filing any required supplemental prospectus) to restore the
effectiveness of the applicable Registration Statement and the ability of the Investors to
publicly resell their Registrable Securities pursuant to such effective Registration
Statement.




          (f) The Company shall not, from the date hereof until the Effective Date of the
Registration Statement, prepare and file with the SEC a registration statement relating to an
offering for cash for its own account under the Securities Act of any of its equity
securities, other than any registration statement or post-effective amendment to a
registration statement (or supplement thereto) relating to the Company’s employee benefit
plans registered on Form S-8.



     6.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:




          (a) (i) Subject to Section 6.1(e), prepare and file with the SEC such amendments,
including post-effective amendments, to each Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep the Registration Statement continuously
effective, as to the applicable Registrable Securities for the Effectiveness Period and
prepare and file with the SEC such additional Registration Statements in order to register for
resale under the Securities Act all of the Registrable Securities during the Effectiveness
Period; (ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably practical, and in any event within 12 Trading Days
(except to the extent that the Company reasonably requires additional time to respond to
accounting comments), to any comments received from the SEC with respect to the Registration
Statement or any amendment thereto; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act applicable to the Company with respect
to the disposition of all Registrable Securities covered by the Registration Statement during
the applicable period in accordance with the intended methods of disposition by the Investors
thereof set forth in the Registration Statement as so amended or in such Prospectus as so
supplemented.



 









 






          (b) Notify the Investors as promptly as reasonably practical, and (if requested by the
Investors) confirm such notice in writing no later than two (2) Trading Days thereafter, of
any of the following events: (i) any Registration Statement or any post-effective amendment
is declared effective; (ii) the SEC issues any stop order suspending the effectiveness of any
Registration Statement or initiates any Proceedings for that purpose; (iii) the Company
receives notice of any suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or threat of any
Proceeding for such purpose; or (iv) the financial statements included in any Registration
Statement become ineligible for inclusion therein or any Registration Statement or Prospectus
or other document contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.




          (c) Use its reasonable Best Efforts to avoid the issuance of or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, as soon as possible.




          (d) If requested by an Investor, provide such Investor, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto, including financial
statements and schedules, and all exhibits to the extent requested by such Person (including
those previously furnished or incorporated by reference) promptly after the filing of such
documents with the SEC.




          (e) Promptly deliver to each Investor, without charge, as many copies of the Prospectus
or Prospectuses (including each form of prospectus) and each amendment or supplement thereto
as such Persons may reasonably request. The Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling Investors in
connection with the offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto to the extent permitted by federal and state
securities laws and regulations.




          (f) Prior to any public offering of Registrable Securities, use its reasonable Best
Efforts to register or qualify or cooperate with the selling Investors in connection with the
registration or qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Investor requests in writing, to keep each such
registration or qualification (or exemption therefrom) effective for so long as required, but
not to exceed the duration of the Effectiveness Period, and to do any and all other acts or
things reasonably necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by a Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject.



 









 






          (g) Cooperate with the Investors to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the extent permitted by this
Agreement and under law, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Investors may reasonably
request.




          (h) Upon the occurrence of any event described in Section 6.2(c)(vii), as
promptly as reasonably possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the Registration Statement nor
such Prospectus will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.




          (i) Comply with all rules and regulations of the SEC applicable to the Company in
connection with the registration of the Securities.




          (j) It shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities of any
particular Investor or to make any Event Payments set forth in Section 6.1(c) to such Investor
that such Investor furnish to the Company the information specified in Exhibits B-1,
B-2 and B-3 hereto and such other information regarding itself, the
Registrable Securities and other shares of Common Stock held by it and the intended method of
disposition of the Registrable Securities held by it (if different from the Plan of
Distribution set forth on Exhibit D hereto) as shall be reasonably required to effect the
registration of such Registrable Securities and shall complete and execute such documents in
connection with such registration as the Company may reasonably request.




          (k) The Company shall comply with all applicable rules and regulations of the SEC under
the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the
Securities Act, file any final Prospectus, including any supplement or amendment thereof, with
the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing
if, at any time during the Effectiveness Period, the Company does not satisfy the conditions
specified in Rule 172 and, as a result thereof, the Holders are required to make available a
Prospectus in connection with any disposition of Registrable Securities and take such other
actions as may be reasonably necessary to facilitate the registration of the Registrable
Securities hereunder.



     6.3 Registration Expenses. The Company shall pay all fees and expenses incident to
the performance of or compliance with Article VI of this Agreement by the Company, including
without limitation (a) all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, any Trading Market and in connection with applicable state
securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of
printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses
incurred by the



 









 






Company, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all
other Persons retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading
Market.



     6.4 Indemnification




          (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Investor, the officers,
directors, partners, members, agents and employees of each of them, each Person who controls
any such Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, partners, members, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law, from and against
any and all Losses, as incurred, arising out of or relating to any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any Prospectus or any
form of Company prospectus or in any amendment or supplement thereto or in any Company
preliminary prospectus, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, provided, however, that the Company
shall not be liable in any such case to the extent that such Loss arises out of, or is based
upon, an untrue statement or omission or alleged untrue statement or omission made in such
Registration Statement in reliance upon and in conformity with information furnished to the
Company by or on behalf of an Investor in writing expressly for use therein, or to the extent
that such information relates to such Investor or such Investor’s proposed method of
distribution of Registrable Securities and was reviewed and approved by such Investor for use
in the Registration Statement (it being understood that the information provided by the
Investor to the Company in Exhibits B-1, B-2 and B-3 and the Plan of
Distribution set forth on Exhibit D, as the same may be modified by such Investor and
other information provided by the Investor to the Company in or pursuant to the Transaction
Documents constitutes information reviewed and expressly approved by such Investor in writing
expressly for use in the Registration Statement), such Prospectus or such form of Prospectus
or in any amendment or supplement thereto; provided further, however, that the Company shall
not be liable to any Investor of Registrable Securities (or any partner, member, officer,
director or controlling person of such Investor) to the extent that any such Loss is caused by
an untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus if (i) (A) such untrue statement or omission is corrected in an
amendment or supplement to the prospectus and (B) having previously been furnished by or on
behalf of the Company with copies of the prospectus as so amended or supplemented or, if Rule
172 is then in effect, notified by the Company that such amended or supplemented prospectus
has been filed with the SEC, such Investor thereafter fails to deliver such prospectus as so
amended or supplemented, with or prior to, or, if Rule 172 is then in effect, such Investor
fails to confirm that the prospectus as so amended or supplemented was deemed to be delivered
prior to, the delivery of written confirmation of the sale of a Registrable Security to the
person asserting the claim from which such Loss resulted or (ii) such Investor sold
Registrable Securities in violation of such Investor’s covenant contained in Section 6.5.



 









 






          (b) Indemnification by Investors. Each Investor shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by applicable law, from
and against all Losses (as determined by a court of competent jurisdiction in a final judgment
not subject to appeal or review) arising out of any material breach of this Agreement by such
Investor or any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising out of or relating to any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, in each case, on the effective date
thereof, but only to the extent that such untrue statement or omission is contained in any
information so furnished by such Investor in writing to the Company specifically for inclusion
in such Registration Statement or such Prospectus or to the extent that (i) such untrue
statements or omissions are based solely upon information regarding such Investor furnished to
the Company by such Investor in writing expressly for use therein, or to the extent that such
information relates to such Investor or such Investor’s proposed method of distribution of
Registrable Securities and was reviewed and approved by such Investor for use in the
Registration Statement (it being understood that the information provided by the Investor to
the Company in Exhibits B-1, B-2 and B-3 and the Plan of Distribution
set forth on Exhibit D, as the same may be modified by such Investor and other
information provided by the Investor to the Company in or pursuant to the Transaction
Documents constitutes information reviewed and expressly approved by such Investor in writing
expressly for use in the Registration Statement), such Prospectus or such form of Prospectus
or in any amendment or supplement thereto. In no event shall the liability of any selling
Investor hereunder be greater in amount than the dollar amount of the net proceeds received by
such Investor upon the sale of the Registrable Securities giving rise to such indemnification
obligation.




          (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the
“Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof; provided, that
the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that such failure shall have adversely prejudiced the Indemnifying Party.



     An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding; or (iii) the named parties to any such Proceeding (including



 









 






any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and
such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not
have the right to assume the defense thereof and the reasonable fees and expenses of separate
counsel shall be at the expense of the Indemnifying Party). It being understood, however, that the
Indemnifying Party shall not, in connection with any one such Proceeding (including separate
Proceedings that have been or will be consolidated before a single judge) be liable for the fees
and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties,
which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding
in respect of which any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims that are the subject
matter of such Proceeding.



     All reasonable fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party,
as incurred, within twenty (20) Trading Days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party
to undertake to reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification hereunder).




          (d) Contribution. If a claim for indemnification under Section 6.4(a) or
(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute
to the amount paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken or made by,
or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth in Section
6.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been indemnified
for such fees or expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.



 









 





     The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 6.4(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(d), no
Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Investor from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such Investor has
otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who
was not guilty of such fraudulent misrepresentation.



     6.5 Dispositions. Each Investor agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell its Registrable
Securities in accordance with the Plan of Distribution set forth in the Prospectus. Each Investor
further agrees that, upon receipt of a notice from the Company of the occurrence of any event of
the kind described in Sections 6.2(c)(ii), (iii) or (iv), such Investor
will discontinue disposition of such Registrable Securities under the Registration Statement until
such Investor is advised in writing by the Company that the use of the Prospectus, or amended
Prospectus, as applicable, may be used. The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.



     6.6 No Piggyback on Registrations. Except as required pursuant to agreements listed
on Schedule 3.1(p), neither the Company nor any of its security holders (other than the Investors
in such capacity pursuant hereto) may include securities of the Company in the Registration
Statement other than the Registrable Securities.



     6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period
there is not an effective Registration Statement covering all of the Registrable Securities and
the Company shall determine to prepare and file with the SEC a registration statement relating
to an offering for its own account or the account of others under the Securities Act of any of
its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company shall send to
each Investor not then eligible to sell all of their Shares under Rule 144 in a three (3) month
period, written notice of such determination and if, within ten (10) days after receipt of such
notice, any such Investor shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such Investor requests to
be registered. Notwithstanding the foregoing, in the event that, in connection with any
underwritten public offering, the managing underwriter(s) thereof shall impose a limitation on
the number of shares of Common Stock which may be included in the Registration Statement
because, in such underwriter(s)’ judgment, marketing or other factors dictate such limitation
is necessary to facilitate public distribution, then the Company shall be obligated to include
in such Registration Statement only such limited portion of the Registrable Securities with
respect to which such Investor has requested inclusion hereunder as the underwriter shall
permit. If an offering in connection with which an Investor is entitled to registration under
this Section 6.7 is an underwritten offering, then each Investor



 









 






whose Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to the provisions of this
Agreement, on the same terms and conditions as other shares of Common Stock included in such
underwritten offering and shall enter into an underwriting agreement in a form and substance
reasonably satisfactory to the Company and the underwriter or underwriters. Upon the
effectiveness the registration statement for which piggy-back registration has been provided in
this Section 6.7, any Event Payments payable to an Investor whose Securities are
included in such registration statement shall terminate.



ARTICLE VII

MISCELLANEOUS




     7.1 Termination. This Agreement may be terminated by the Company or any Investor, by
written notice to the other parties, if the Closing has not been consummated by the third Business
Day following the date of this Agreement; provided that no such termination will affect the right
of any party to sue for any breach by the other party (or parties).



     7.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and
issuance of their applicable Securities. The Company shall pay the placement fee and reasonable
expenses of the Agent in connection with the sale and issuance of the Securities.



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



     7.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile or email at the facsimile number or email address specified in this Section prior to
6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile or email at the facsimile
number or email address specified in this Section on a day that is not a Trading Day or later than
6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of
deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the
party to whom such notice is required to be given. The addresses, facsimile numbers and email
addresses for such notices and communications are those set forth on the signature pages hereof, or
such other address or facsimile number as may be designated in writing hereafter, in the same
manner, by any such Person.



 









 





     7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the Company and the holders
of at least 80% of the Registrable Securities held on the date of such amendment or, in the case of
a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any
default with respect to any provision, condition or requirement of this Agreement shall be deemed
to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such right.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Investors under Article VI
may be given by Investors holding at least a majority of the Registrable Securities to which such
waiver or consent relates, and any such amendment shall be binding upon the Company and all holders
of Registrable Securities.



     7.6 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.



     7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the
Investors. Any Investor may assign its rights under this Agreement to any Person to whom such
Investor assigns or transfers any Securities, provided (i) such transferor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the
Company after such assignment, (ii) the Company is furnished with written notice of (x) the name
and address of such transferee or assignee and (y) the Registrable Securities with respect to which
such registration rights are being transferred or assigned, (iii) following such transfer or
assignment, the further disposition of such securities by the transferee or assignee is restricted
under the Securities Act and applicable state securities laws, (iv) such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the provisions hereof that
apply to the “Investors,” and (v) such transfer shall have been made in accordance with the
applicable requirements of this Agreement and with all laws applicable thereto.



     7.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except that each Indemnified Party
is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the
provisions of such Sections directly against the parties with obligations thereunder.



     7.9 Governing Law; Venue; Waiver of Jury Trial. THE CORPORATE LAWS OF THE STATE OF
DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
THE STATE AND



 









 






FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF
ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF
ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY
SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING
IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO
PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA
REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE
COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.



     7.10 Survival. The representations and warranties contained herein shall survive the
Closing.



     7.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or email attachment, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or email-attached signature page were an original
thereof.



     7.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.



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



 









 





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



     7.15 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or other securities or
rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock), combination or other similar recapitalization or event occurring after the date
hereof and prior to the Closing, each reference in any Transaction Document to a number of shares
or a price per share shall be amended to appropriately account for such event.



     7.16 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under any Transaction Document. The decision of each Investor to purchase
Securities pursuant to this Agreement has been made by such Investor independently of any other
Investor and independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or given by any other
Investor or by any agent or employee of any other Investor, and no Investor or any of its agents or
employees shall have any liability to any other Investor (or any other person) relating to or
arising from any such information, materials, statements or opinions. Nothing contained herein or
in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed
to constitute the Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the Transaction Document.
Each Investor acknowledges that no other Investor has acted as agent for such Investor in
connection with making its investment hereunder and that no other Investor will be acting as agent
of such Investor in connection with monitoring its investment hereunder. Each Investor shall be
entitled to independently protect and enforce its rights, including without limitation the rights
arising out of this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any proceeding for such
purpose.



[SIGNATURE PAGES TO FOLLOW]




 









 







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



	 	 	 	 	 
	 	 	IOMAI CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Stanley C. Erck
	 

	 	 	 	 
	 	 	Name: Stanley C. Erck
	 	 	Title: Chief Executive Officer
	 
	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 
	 

	 	 	 	Iomai Corporation
	 

	 	 	 	20 Firstfield Road, Suite 250
	 

	 	 	 	Gaithersburg, Maryland 20878
	 
	 	 	 	 
	 	 	Facsimile No.: (301) 556-4501
	 	 	Telephone No.: (301) 556-4500
	 	 	Attn: Russell P. Wilson
	 
	 	 	 	 
	 	 	With a copy to:
	 
	 	 	 	 
	 

	 	 	 	Paul Kinsella, Esq.
	 

	 	 	 	Ropes & Gray LLP
	 

	 	 	 	One International Place
	 

	 	 	 	Boston, Massachusetts 02110
	 
	 	 	 	 
	 	 	Facsimile: (617) 951-7050

	 	 	Telephone: (617) 951-7000






COMPANY SIGNATURE PAGE





 










 





Exhibit A




Schedule of Investors




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Five-Year	 	 	Four-Month	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Warrant	 	 	Warrant	 	 	 	 
	Investor	 	Units	 	 	Common Shares	 	 	Shares	 	 	Shares	 	 	Purchase Price	 
	New Enterprise Associates 10

	 	 	1,572,958	 	 	 	1,572,958	 	 	 	550,535	 	 	 	550,535	 	 	$	7,970,964.59	 
	Limited Partnership

1119 St. Paul Street

Baltimore, MD 21202

Attn: Louis Citron
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RA Capital Biotech Fund, LP

	 	 	988,554	 	 	 	988,554	 	 	 	345,994	 	 	 	345,994	 	 	$	5,009,497.49	 
	111 Huntington Ave., Suite 610

Boston, MA 02199

Attn: Peter Kolchinsky
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	RA Capital Biotech Fund II, LP

	 	 	15,462	 	 	 	15,462	 	 	 	5,412	 	 	 	5,412	 	 	$	78,353.69	 
	111 Huntington Ave., Suite 610

Boston, MA 02199

Attn: Peter Kolchinsky
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Visium Balanced Fund, LP

	 	 	105,047	 	 	 	105,047	 	 	 	36,766	 	 	 	36,766	 	 	$	532,325.67	 
	950 Third Avenue, 29th Floor

New York, NY 10022

Attn: Mark Gottlieb
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Visium Balanced Offshore Fund, Ltd.

950 Third Avenue, 29th Floor

New York, NY 10022

Attn: Mark Gottlieb
	 	 	167,120	 	 	 	167,120	 	 	 	58,492	 	 	 	58,492	 	 	$	846,880.60	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Visium Long Bias Fund, LP

950 Third Avenue, 29th Floor

New York, NY 10022

Attn: Mark Gottlieb
	 	 	47,315	 	 	 	47,315	 	 	 	16,560	 	 	 	16,560	 	 	$	239,768.76	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Visium Long Bias Offshore Fund, Ltd.

950 Third Avenue, 29th Floor

New York, NY 10022

Attn: Mark Gottlieb
	 	 	151,580	 	 	 	151,580	 	 	 	53,053	 	 	 	53,053	 	 	$	768,131.65	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Atlas Master Fund, Ltd.

c/o Balyasny Asset Management

135 E. 57th Street, 27th Floor

New York, NY 10022

Attn: Kirk Johansen
	 	 	28,938	 	 	 	28,938	 	 	 	10,129	 	 	 	10,129	 	 	$	146,643.32	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Five-Year	 	 	Four-Month	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Warrant	 	 	Warrant	 	 	 	 
	Investor	 	Units	 	 	Common Shares	 	 	Shares	 	 	Shares	 	 	Purchase Price	 
	Lagunitas Partners LP

c/o Gruber & McBaine Capital
Management

50 Osgood Place — PH

San Francisco, CA 94133

Attn: Christine Arroyo
	 	 	200,000	 	 	 	200,000	 	 	 	70,000	 	 	 	70,000	 	 	$	1,013,500.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gruber & McBaine International

c/o Gruber & McBaine Capital
Management

50 Osgood Place — PH

San Francisco, CA 94133

Attn: Christine Arroyo
	 	 	70,000	 	 	 	70,000	 	 	 	24,500	 	 	 	24,500	 	 	$	354,725.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TTEES Hamilton College

c/o Gruber & McBaine Capital
Management

50 Osgood Place — PH

San Francisco, CA 94133

Attn: Christine Arroyo
	 	 	25,000	 	 	 	25,000	 	 	 	8,750	 	 	 	8,750	 	 	$	126,687.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	The Wallace Foundation

c/o Gruber & McBaine Capital
Management

50 Osgood Place — PH

San Francisco, CA 94133

Attn: Christine Arroyo
	 	 	25,000	 	 	 	25,000	 	 	 	8,750	 	 	 	8,750	 	 	$	126,687.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jon D. & Linda W. Gruber Trust

c/o Gruber & McBaine Capital
Management

50 Osgood Place — PH

San Francisco, CA 94133

Attn: Christine Arroyo
	 	 	30,000	 	 	 	30,000	 	 	 	10,500	 	 	 	10,500	 	 	$	152,025.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lindsay Gruber Dunham

c/o Gruber & McBaine Capital
Management

50 Osgood Place — PH

San Francisco, CA 94133

Attn: Christine Arroyo
	 	 	5,000	 	 	 	5,000	 	 	 	1,750	 	 	 	1,750	 	 	$	25,337.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Jon D. Gruber TTEE FBO
Jonathan
Wyatt Gruber Trust

c/o Gruber & McBaine Capital
Management

50 Osgood Place — PH

San Francisco, CA 94133

Attn: Christine Arroyo
	 	 	5,000	 	 	 	5,000	 	 	 	1,750	 	 	 	1,750	 	 	$	25,337.50	 







 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Five-Year	 	 	Four-Month	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Warrant	 	 	Warrant	 	 	 	 
	Investor	 	Units	 	 	Common Shares	 	 	Shares	 	 	Shares	 	 	Purchase Price	 
	J. Patterson McBaine

c/o Gruber & McBaine Capital
Management

50 Osgood Place — PH

San Francisco, CA 94133

Attn: Christine Arroyo
	 	 	40,000	 	 	 	40,000	 	 	 	14,000	 	 	 	14,000	 	 	$	202,700.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	SF Capital Partners Ltd.

c/o Stark Offshore Management LLC

3600 South Lake Drive

St. Francis, WI 53235

Attn: Brian H. Davidson
	 	 	401,606	 	 	 	401,606	 	 	 	140,562	 	 	 	140,562	 	 	$	2,035,138.38	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fort Mason Master, LP

4 Embarcadero Center, Suite 2050

San Francisco, CA 94111

Attn: Marshall Jensen
	 	 	471,436	 	 	 	471,436	 	 	 	165,003	 	 	 	165,003	 	 	$	2,389,001.98	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fort Mason Partners, LP

4 Embarcadero Center, Suite 2050

San Francisco, CA 94111

Attn: Marshall Jensen
	 	 	30,572	 	 	 	30,572	 	 	 	10,700	 	 	 	10,700	 	 	$	154,923.61	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Highbridge International LLC

c/o Highbridge Capital Management,
LLC

9 West 57th St., 27th Floor

New York, NY 10019

Attn: Ari J. Storch/Adam J. Chill
	 	 	400,000	 	 	 	400,000	 	 	 	140,000	 	 	 	140,000	 	 	$	2,027,000.00	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Capital Ventures International

c/o Heights Capital Management

101 California Street, Suite 3250

San Francisco, CA 94111

Attn: Martin Kobinger
	 	 	416,867	 	 	 	416,867	 	 	 	145,903	 	 	 	145,903	 	 	$	2,112,473.41	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	UBS O’Connor LLC FBO O’Connor PIPES

Corporate Strategies Master Limited

c/o UBS O’Connor LLC

One N. Wacker Drive, 32nd Floor

Chicago, IL 60606

Attn: Brian Herward
	 	 	301,204	 	 	 	301,204	 	 	 	105,421	 	 	 	105,421	 	 	$	1,526,351.17	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cranshire Capital, L.P.

3100 Dundee Rd., Suite 703

Northbrook, IL 60062

Attn: M. Kopin
	 	 	200,803	 	 	 	200,803	 	 	 	70,281	 	 	 	70,281	 	 	$	1,017,569.19	 







 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Five-Year	 	 	Four-Month	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Warrant	 	 	Warrant	 	 	 	 
	Investor	 	Units	 	 	Common Shares	 	 	Shares	 	 	Shares	 	 	Purchase Price	 
	MPM Bioequities Master Fund LP

The John Hancock Tower

200 Clarendon Street, 54th Floor

Boston, MA 02116

Attn: Elsa Gelin
	 	 	197,803	 	 	 	197,803	 	 	 	69,231	 	 	 	69,231	 	 	$	1,002,366.70	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MPM Bioequities Investors Fund, LLC

The John Hancock Tower

200 Clarendon Street, 54th Floor

Boston, MA 02116

Attn: Elsa Gelin
	 	 	3,000	 	 	 	3,000	 	 	 	1,050	 	 	 	1,050	 	 	$	15,202.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Red Abbey Venture Partners, LP

2330 West Joppa Road, Suite 330

Lutherville, MD 21093

Attn: Matt Zuqa
	 	 	150,602	 	 	 	150,602	 	 	 	52,711	 	 	 	52,711	 	 	$	763,175.71	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Credit Suisse Securities (USA) LLC

11 Madison Avenue

New York, NY 10010

Attn: Eric Hough
	 	 	100,401	 	 	 	100,401	 	 	 	35,140	 	 	 	35,140	 	 	$	508,781.98	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Otago Partners, LLC

787 7th Avenue, 48th Floor

New York, NY 10019

Attn: Michael Chill
	 	 	50,200	 	 	 	50,200	 	 	 	17,570	 	 	 	17,570	 	 	$	254,388.50	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Hudson Bay Fund, LP

120 Broadway, 40th Floor

New York, NY 10271

Attn: Yoav Roth
	 	 	22,590	 	 	 	22,590	 	 	 	7,906	 	 	 	7,906	 	 	$	114,474.82	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Hudson Bay Overseas Fund, Ltd

120 Broadway, 40th Floor

New York, NY 10271

Attn: Yoav Roth
	 	 	27,610	 	 	 	27,610	 	 	 	9,664	 	 	 	9,664	 	 	$	139,913.68	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mallette Capital Biotech Fund, LP

800 Third Avenue, 9th Floor

New York, NY 10022

Attn: Quin Mallette
	 	 	40,160	 	 	 	40,160	 	 	 	14,056	 	 	 	14,056	 	 	$	203,510.80	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL
	 	 	6,291,828	 	 	 	6,291,828	 	 	 	2,202,139	 	 	 	2,202,139	 	 	$	31,883,838.20	 








 










 







Exhibit B




[INSTRUCTION SHEET FOR INVESTOR]




 









 







Exhibit B-1




[STOCK CERTIFICATE QUESTIONNAIRE]




 









 







Exhibit B-2




[REGISTRATION STATEMENT QUESTIONNAIRE]




 









 







Exhibit B-3




[CERTIFICATE FOR CORPORATE, PARTNERSHIP, LIMITED LIABILITY COMPANY,

TRUST, FOUNDATION AND JOINT INVESTORS]




 









 







Exhibit C




[OPINION OF COMPANY CORPORATE COUNSEL]




 









 







Exhibit D




PLAN OF DISTRIBUTION



The selling stockholders may, from time to time, sell any or all of their shares of common stock on
any stock exchange, market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use
any one or more of the following methods when selling shares:





	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	 
	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
	 
	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	 
	•	 	an exchange distribution in accordance with the rules of the applicable exchange;
	 
	•	 	privately negotiated transactions;
	 
	•	 	short sales;
	 
	•	 	through the writing or settlement of options or other hedging transactions, whether through an options exchange or
otherwise;
	 
	•	 	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price
per share;
	 
	•	 	a combination of any such methods of sale; and
	 
	•	 	any other method permitted pursuant to applicable law.





     The selling stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.



     Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the selling
stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions
and discounts to exceed what is customary in the types of transactions involved. Any profits on
the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be
underwriting discounts or commissions under the Securities Act. Discounts, concessions,
commissions and similar selling expenses, if any, attributable to the sale of shares will be borne
by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that



 









 






participates in transactions involving sales of the shares if liabilities are imposed on that
person under the Securities Act.



     The selling stockholders may from time to time pledge or grant a security interest in some or
all of the shares of common stock owned by them and, if they default in the performance of their
secured obligations, the pledgees or secured parties may offer and sell the shares of common stock
from time to time under this prospectus after we have filed a supplement to this prospectus under
Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or
amending the list of selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.



     The selling stockholders also may transfer the shares of common stock in other circumstances,
in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus and may sell the shares of common stock from time
to time under this prospectus after we have filed a supplement to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the
list of selling stockholders to include the pledgee, transferee or other successors in interest as
selling stockholders under this prospectus.



     The selling stockholders and any broker-dealers or agents that are involved in selling the
shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act
in connection with such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares of common stock purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act.



     We are required to pay all fees and expenses incident to the registration of the shares of
common stock. We have agreed to indemnify the selling stockholders against certain losses, claims,
damages and liabilities, including liabilities under the Securities Act.



     The selling stockholders have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding the sale of their
shares of common stock, nor is there an underwriter or coordinating broker acting in connection
with a proposed sale of shares of common stock by any selling stockholder. If we are notified by
any selling stockholder that any material arrangement has been entered into with a broker-dealer
for the sale of shares of common stock, if required, we will file a supplement to this prospectus.
If the selling stockholders use this prospectus for any sale of the shares of common stock, they
will be subject to the prospectus delivery requirements of the Securities Act.



     The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may
apply to sales of our common stock and activities of the selling stockholders.




 









 







Exhibit E




[COMPANY TRANSFER AGENT INSTRUCTIONS]





 









 







Exhibit G-1




[FORM OF FIVE-YEAR WARRANT]




 









 







Exhibit G-2




[FORM OF FOUR-MONTH WARRANT]