Exhibit 10.45


    

       

      SERIES
A
        PREFERRED STOCK PURCHASE
        AGREEMENT

       

       

      by
        and among

       

       

      OCUSENSE,
        INC., a Delaware corporation

       

       

      and

       

       

      OCCULOGIX,
        INC., a Delaware corporation

       

       

      Dated
        as of November 30, 2006

       

       

      


       

      


       


      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      
                                                                                                                                                                                                                  
Page


      1.PURCHASE
        AND SALE OF STOCK
        ............................................................................................................................................................................................................................
        1

       

      1.1Sale
        and
        Issuance of Series A Preferred
        Stock............................................................................................................................................................................................1

      1.2Filing
        of
        Certificate of
        Incorporation.............................................................................................................................................................................................................1

      1.3Payment
        of Purchase
        Price..............................................................................................................................................................................................................................1

      1.4Closing;
        Note Repayment; Milestones; Additional
        Financing.................................................................................................................................................................2

      1.5Warrant..............................................................................................................................................................................................................................................................4

       

       

      2.REPRESENTATIONS
        AND WARRANTIES OF THE
        COMPANY............................................................................................................................................................................5

       

      2.1Organization,
        Good Standing and
        Qualification..........................................................................................................................................................................................5

      2.2Capitalization
        and Voting
        Rights...................................................................................................................................................................................................................6

      2.3Subsidiaries.......................................................................................................................................................................................................................................................7

      2.4Authorization....................................................................................................................................................................................................................................................7

      2.5Governmental
        Consents..................................................................................................................................................................................................................................8

      2.6Litigation............................................................................................................................................................................................................................................................8

      2.7Title
        to
        Property and
        Assets...........................................................................................................................................................................................................................8

      2.8Liabilities............................................................................................................................................................................................................................................................9

      2.9Financial
        Statements........................................................................................................................................................................................................................................9

      2.10Material
        Contracts..........................................................................................................................................................................................................................................9

      2.11Registration
        or First Offer
        Rights.................................................................................................................................................................................................................9

      2.12Proprietary
        Rights.........................................................................................................................................................................................................................................10

      2.13No
        Conflict of
        Interest.................................................................................................................................................................................................................................12

      2.14Tax
        Returns....................................................................................................................................................................................................................................................12

      2.15Permits;
        Compliance with
        Laws..................................................................................................................................................................................................................12

      2.16Compliance
        with Charter Documents; No
        Conflict..................................................................................................................................................................................13

      2.17Employees......................................................................................................................................................................................................................................................13

      2.18Assignment
        of Inventions and Non-Disclosure
        Agreements...............................................................................................................................................................13

      2.19Environmental
        and Safety
        Laws.................................................................................................................................................................................................................13

      2.20Real
        Property.................................................................................................................................................................................................................................................14

      2.21Development
        and Marketing
        Rights.........................................................................................................................................................................................................14

      2.22Disclosure......................................................................................................................................................................................................................................................14

      2.23Brokers
        or Finders, Other
        Offers................................................................................................................................................................................................................14

      2.24Minute
        Books................................................................................................................................................................................................................................................14

       

       

      3.REPRESENTATIONS,
        WARRANTIES AND COVENANTS OF THE PURCHASER TO THE
        COMPANY......................................................................................................14

       

      3.1Authorization..................................................................................................................................................................................................................................................14

      3.2Purchase
        Entirely for Own
        Account............................................................................................................................................................................................................15

      3.3Speculative
        Nature of
        Investment................................................................................................................................................................................................................15

      3.4Disclosure
        of
        Information..............................................................................................................................................................................................................................15

      3.5Investment
        Experience...................................................................................................................................................................................................................................15

      3.6Restricted
        Securities.......................................................................................................................................................................................................................................15

      3.7Further
        Limitations on
        Disposition..............................................................................................................................................................................................................15

      3.8Legends............................................................................................................................................................................................................................................................16

       

       

      4.CONDITIONS
        OF THE PURCHASER’S OBLIGATIONS AT
        CLOSING.................................................................................................................................................................
        16

       

      4.1Representations
        and
        Warranties..................................................................................................................................................................................................................17

      4.2Performance......................................................................................................................................................................................................................................................17

      4.3Compliance
        Certificate....................................................................................................................................................................................................................................17

      4.4Qualifications...................................................................................................................................................................................................................................................17

      4.5Investor
        Rights
        Agreement...........................................................................................................................................................................................................................17

      4.6Voting
        Agreement...........................................................................................................................................................................................................................................17

      4.7Legal
        Opinion...................................................................................................................................................................................................................................................17

      4.8Certificate
        of
        Incorporation............................................................................................................................................................................................................................17

      4.9Board
        of
        Directors...........................................................................................................................................................................................................................................17

      4.10Secretary’s
        Certificate...................................................................................................................................................................................................................................17

      4.11Stockholder
        Consent to
        Transactions.......................................................................................................................................................................................................18

      4.12Financing........................................................................................................................................................................................................................................................18

      4.13Warrant...........................................................................................................................................................................................................................................................18

      4.14Brokers
        or
        Finders.........................................................................................................................................................................................................................................18

      4.15Other
        Deliveries.............................................................................................................................................................................................................................................18

       

       

      5.CONDITIONS
        OF THE COMPANY’S OBLIGATIONS AT
        CLOSING.....................................................................................................................................................................18

       

      5.1Representations
        and
        Warranties..................................................................................................................................................................................................................18

      5.2Qualifications..................................................................................................................................................................................................................................................18

      5.3Investor
        Rights
        Agreement..........................................................................................................................................................................................................................18

      5.4Voting
        Agreement..........................................................................................................................................................................................................................................18

      5.5Certificate
        of
        Incorporation...........................................................................................................................................................................................................................18

      5.6Note..................................................................................................................................................................................................................................................................18

      5.7Other
        Deliveries..............................................................................................................................................................................................................................................18

       

       

      6.CONDITIONS
        OF THE PURCHASER’S OBLIGATIONS AT THE ADDITIONAL
        CLOSING.............................................................................................................................19

       

      6.1Representations
        and
        Warranties..................................................................................................................................................................................................................19

      6.2Performance.....................................................................................................................................................................................................................................................19

      6.3Compliance
        Certificate...................................................................................................................................................................................................................................19

      6.4Qualifications..................................................................................................................................................................................................................................................19

      6.5Material
        Adverse
        Effect.................................................................................................................................................................................................................................19

      6.6Other
        Deliveries..............................................................................................................................................................................................................................................20

       

       

      7.CONDITIONS
        OF THE COMPANY’S OBLIGATIONS AT THE ADDITIONAL
        CLOSING................................................................................................................................20

       

      7.1Representations
        and
        Warranties..................................................................................................................................................................................................................20

      7.2Qualifications..................................................................................................................................................................................................................................................20

      7.3Other
        Deliveries..............................................................................................................................................................................................................................................20

       

       

      8.ADDITIONAL
        AGREEMENTS OF THE COMPANY AND THE
        PURCHASER....................................................................................................................................................20

       

      8.1Use
        of
        Proceeds..............................................................................................................................................................................................................................................20

      8.2Insurance
        Indemnity......................................................................................................................................................................................................................................20

      8.3Sales
        and
        Marketing
        Agreement..................................................................................................................................................................................................................21

      8.4Right
        of
        First Offer
        Waivers..........................................................................................................................................................................................................................21

       

       

      9.MISCELLANEOUS...........................................................................................................................................................................................................................................................21

       

      9.1Term...................................................................................................................................................................................................................................................................21

      9.2Successors
        and
        Assigns...............................................................................................................................................................................................................................22

      9.3Governing
        Law................................................................................................................................................................................................................................................22

      9.4Counterparts....................................................................................................................................................................................................................................................22

      9.5Titles
        and
        Subtitles.........................................................................................................................................................................................................................................22

      9.6Notices.............................................................................................................................................................................................................................................................22

      9.7Finder’s
        Fee.....................................................................................................................................................................................................................................................23

      9.8Costs
        and
        Expenses.......................................................................................................................................................................................................................................24

      9.9Amendment
        and
        Waivers.............................................................................................................................................................................................................................24

      9.10Severability....................................................................................................................................................................................................................................................24

      9.11Entire
        Agreement..........................................................................................................................................................................................................................................24

      9.12Survival
        of
        Warranties.................................................................................................................................................................................................................................24

      9.13California
        Corporate Securities
        Law..........................................................................................................................................................................................................24

      


       


      
        
          
            
              	 	
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      OCUSENSE,
        INC.

       

       

      SERIES
        A PREFERRED STOCK PURCHASE AGREEMENT

       

      THIS
        SERIES A PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”)
        is
        made and entered into as of November 30, 2006, by and among OcuSense, Inc.,
        a
        Delaware corporation (the “Company”),
        and
        OccuLogix, Inc., a Delaware corporation (the “Purchaser”).

       

      WHEREAS,
        the
        Purchaser desires to purchase from the Company an aggregate of 1,744,223
        shares
        (the “Shares”)
        of the
        Company’s Series A Preferred Stock, par value $0.001 per share (the
“Series A
        Preferred”),
        and
        the Company desires to issue and sell to the Purchaser the Shares, on the
        terms
        and subject to the conditions specified herein.

       

      WHEREAS,
        all
        parties hereto acknowledge and agree that they will benefit from the issuance
        of
        the Shares in the manner described herein.

       

      WHEREAS,
        the
        Purchaser has agreed to purchase from the Company shares of the Company’s Series
        B Preferred Stock, par value $0.001 per share (the “Series
        B Preferred”),
        upon
        receipt by the Company of the 510K Clearance (as defined below) and the CLIA
        Waiver (as defined below).

       

      NOW,
        THEREFORE,
        in
        consideration of the promises and mutual covenants contained herein, and
        for
        other valid consideration, the value and sufficiency of which is hereby
        acknowledged, the parties hereto hereby agree as follows:

       

      1.  Purchase
        and Sale of Stock.

       

      1.1  Sale
        and Issuance of Series A Preferred Stock.
        On and
        subject to the terms and conditions of this Agreement, the Purchaser agrees
        to
        purchase, and the Company agrees to sell and issue to the Purchaser, the
        Shares
        at an aggregate purchase price of up to $8,000,000 (the “Purchase
        Price”),
        payable in accordance with Section 1.3 and subject to adjustment in
        accordance with the terms hereof.

       

      1.2  Filing
        of Certificate of Incorporation.
        The
        Company shall, prior to the Closing (defined below), adopt and file with
        the
        Secretary of State of the State of Delaware a Third Amended and Restated
        Certificate of Incorporation so as to authorize the Series A Preferred and
        the Series B Preferred substantially in the form attached hereto as
        Exhibit A (the “Certificate
        of Incorporation”).

       

      1.3  Payment
        of Purchase Price.
        The
        payment of the Purchase Price shall be made as follows:

       

      (a)  at
        the
        Closing (as defined below), $2.0 million by wire transfer of immediately
        available funds to an account designated by the Company to the Purchaser
        prior
        to the Closing (the “Closing
        Cash Payment”);

       

      (b)  at
        the
        Closing (as defined below), a promissory note of the Purchaser in the form
        of
        the note attached hereto as Exhibit B (the “Note”);

       

      
        
          
          

        

        
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      (c)  provided
        that the First Milestone (as defined below) is achieved, and within the time
        period specified in Section 1.4(c)(i), $2.0 million by wire transfer
        of immediately available funds to an account designated by the Company to
        the
        Purchaser concurrently with, or following, delivery of the First Milestone
        Achievement Certification (as defined below); and

       

      (d)  provided
        that the Second Milestone (as defined below) is achieved, and within the
        time
        period specified in Section 1.4(c)(ii), $2.0 million by wire transfer
        of immediately available funds to an account designated by the Company to
        the
        Purchaser concurrently with, or following, delivery of the Second Milestone
        Achievement Certification (as defined below).

       

      1.4  Closing;
        Note Repayment; Milestones; Additional Financing.

       

      (a)  The
        closing (the “Closing”)
        of the
        purchase and sale of the Shares set forth in Section 1.1 above shall take
        place at the offices of Torys LLP (“Torys”),
        237
        Park Avenue, 20th Floor, New York, NY 10017, on the fifth Business Day (as
        defined below) following the date on which the conditions to close set forth
        in
        Sections 4 and 5 hereof have been satisfied or waived by the party entitled
        to
        waive such conditions or at such other time and place as the Company and
        the
        Purchaser mutually agree upon orally or in writing. For purposes of this
        Agreement, “Business
        Day”
shall
        mean any day which is not a Saturday or a Sunday, or a day on which banking
        institutions located in New York, New York are required or permitted to be
        closed. At the Closing, (i) the Company will deliver to the Purchaser the
        certificates, instruments and documents referred to in Section 4 below,
        (ii) the Purchaser will deliver to the Company the certificates,
        instruments and documents referred to in Section 5 below and (iii) the
        Company shall deliver to the Purchaser a share certificate registered in
        the
        Purchaser’s name representing the Shares, against payment of the portion of the
        Purchase Price that is due at the Closing pursuant to
        Section 1.3.

       

      (b)  The
        Note
        shall be payable to the order of the Company and be dated as of the date
        of the
        Closing, with a stated principal amount equal to $2.0 million. The Note
        shall mature on January 3, 2007 (the “Note
        Payment Date”).
        Within three Business Days prior to the Note Payment Date, the Company shall
        deliver to the Purchaser (i) a written notice (the “Note
        Payment Notice”),
        signed by the Chief Executive Officer of the Company, requesting payment
        of the
        principal amount of the Note and designating the account to which a wire
        transfer of immediately available funds representing such payment should
        be made
        and certifying that no Material Adverse Effect (as defined below) has occurred
        during the period commencing on the date of the Closing and ending on the
        Note
        Payment Date which has not been cured or which will not be cured on or prior
        to
        the Note Payment Date, and (ii) the original copy of the Note. Provided
        that there shall not have occurred a Material Adverse Effect that is continuing
        on the Note Payment Date, on the Note Payment Date, the principal amount
        of the
        Note shall be paid in full by wire transfer of immediately available funds
        to
        the account designated by the Company to the Purchaser in the Note Payment
        Notice (the “Note
        Payment”)
        and
        the Note shall be cancelled and terminated immediately thereafter. It is
        understood and agreed that, in the event of an occurrence of a Material Adverse
        Effect that is continuing on the Note Payment Date, the Purchaser shall not
        be
        required to make the Note Payment, the Note shall be cancelled and terminated
        as
        of the Note Payment Date and the Purchase Price, for all purposes, shall
        be
        (i) the Closing Cash Payment plus (ii) the $2.0 million payment
        pursuant to Section 1.3(c)(i), if it is paid, plus (iii) the
        $2.0 million payment pursuant to Section 1.3(c)(ii), if it is
        paid.

       

      
        
          
          

        

        
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      (c)  At
        any
        time prior to May 1, 2009, (i) upon written certification (the
“First
        Milestone Achievement Certification”)
        by the
        Company to the Purchaser, which certification shall be by an authorized officer
        of the Company to the effect that the Company has achieved the First Milestone
        (as defined below), then within fifteen (15) days of receipt of the First
        Milestone Achievement Certification, the Purchaser shall pay the Company
        an
        additional amount of $2.0 million for the achievement of such First Milestone
        and (ii) following the achievement of the Second Milestone (as defined
        below) and upon written certification (the “Second
        Milestone Achievement Certification”)
        by the
        Company to the Purchaser, which certification shall be by an authorized officer
        of the Company to the effect that the Company has achieved the Second Milestone,
        then within fifteen (15) days of receipt of the Second Milestone Achievement
        Certification, the Purchaser shall pay the Company an additional amount of
        $2.0
        million for the achievement of such Second Milestone. For greater certainty,
        if
        the First Milestone and the Second Milestone are not achieved prior to
        May 1, 2009, then the Purchaser shall never become obligated to make the
        payments of $2.0 million contemplated in each of (i) and (ii) of this
        Section 1.4(c), and the Purchase Price, for all purposes, shall be (A) the
        Closing Cash Payment plus (B) the amount of the Note Payment, if it is paid
        (and
        merely the Closing Cash Payment if the Note Payment is not made). In addition,
        for greater certainty, if the First Milestone is achieved but the Second
        Milestone is not achieved, then the Purchase Price, for all purposes, shall
        be
        the aggregate of (x) the Closing Cash Payment, (y) the amount of the Note
        Payment, if it is paid, plus (z) the $2.0 million payment pursuant to (i)
        of
        this Section 1.4(c) (and the aggregate of the Closing Cash Payment and the
        $2.0
        million payment pursuant to (i) of this Section 1.4(c) if the Note Payment
        is
        not made), and, if the Note Payment is made and both the First Milestone
        and the
        Second Milestone are achieved prior to May 1, 2009, then the Purchase Price,
        for
        all purposes, shall be $8,000,000. For purposes hereof, “First
        Milestone”
means
        the achievement of the successful production and testing of Osmolarity
        Alpha/Alpha Units as further described on Schedule 1.4(c)(i) hereto; and
“Second
        Milestone”
means
        the achievement of the successful production and testing of (A) Osmolarity
        Beta/Beta Units and (B) IgE Alpha lab cards as further described on
        Schedule 1.4(c)(ii) hereto.

       

      (d)  Subject
        to the fulfillment or waiver of the conditions set forth in Sections 6 and
        7
        hereof and all other conditions as may be agreed to by the Purchaser and
        the
        Company: (i) following receipt by the Company from the U.S. Food and Drug
        Administration (the “FDA”)
        of
        510K clearance to market the Company’s Osmolarity test (the “510K
        Clearance”),
        as
        further described on Schedule 1.4(d) hereto, the Purchaser shall purchase,
        and
        the Company shall issue to the Purchaser, for an aggregate purchase price
        of
        $3,000,000, such number of shares of the Series B Preferred which, upon their
        conversion to shares of the common stock, par value $.001 per share of the
        Company (the “Common
        Stock”),
        shall
        constitute 10% of the issued and outstanding capital stock of the Company,
        on a
        fully diluted basis and calculated as of the time immediately preceding the
        closing of such purchase and sale (the “First
        Series B Closing”);
        and
        (ii) following receipt by the Company from the FDA of all relevant approvals
        under the Clinical Laboratory Improvement Amendments (the “CLIA
        Waiver”;
        together with the 510K Clearance and any other necessary approval, consent
        or
        waiver of the FDA, collectively the “FDA
        Approvals”),
        as
        further described on Schedule 1.4(d) hereto, the Purchaser shall purchase,
        and
        the Company shall issue to the Purchaser, for an aggregate purchase price
        of
        $3,000,000, such number of shares of the Series B Preferred which, upon their
        conversion to shares of the Common Stock, shall constitute 10% of the issued
        and
        outstanding capital stock of the Company, on a fully diluted basis and
        calculated as of the time immediately preceding the closing of such purchase
        and
        sale (the “Second
        Series B Closing”).
        The
        shares of the Series B Preferred to be purchased pursuant to this Section
        1.4(d)
        are hereinafter referred to as the “Additional
        Shares”,
        and
        the First Series B Closing and the Second Series B Closing are referred to
        hereinafter, collectively, as the “Additional
        Closings”.
        The
        First Series B Closing shall take place within fifteen (15) days of receipt
        by
        the Purchaser of a certification signed by an authorized officer to the Company
        confirming receipt by the Company of the 510K Clearance, and the Second Series
        B
        Closing shall take place within fifteen (15) days of receipt by the Purchaser
        of
        a certification signed by an authorized officer of the Company confirming
        receipt by the Company of the CLIA Waiver. The Additional Closings shall
        take
        place at the offices of Torys on the dates and at the times as mutually agreed,
        orally or in writing, by and among the Company and the Purchaser. At the
        Additional Closings, (A) the Company will deliver to the Purchaser the
        certificates, instruments and documents referred to in Section 6 below and
        any other certificates, instruments, documents or other deliverable items
        as may
        be agreed to by the Purchaser and the Company, (B) the Purchaser will
        deliver to the Company the certificates, instruments and documents referred
        to
        in Section 7 below and any other certificates, instruments, documents or
        other deliverable items as may be agreed to by the Purchaser and the Company
        and
        (C) the Company shall deliver to the Purchaser a share certificate
        registered in the Purchaser’s name representing the Additional Shares that the
        Purchaser is to receive from the Company at the Additional Closings, against
        payment of the purchase price therefor by wire transfer, to an account
        designated by the Company to the Purchaser prior to such Additional Closings
        or
        other reasonable means acceptable to the Company.

       

      
        
          
          

        

        
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      1.5  Warrant.
        At the
        Closing and for no additional consideration, the Company shall issue to the
        Purchaser a warrant (the “Warrant”),
        evidenced by a warrant certificate in the form of Exhibit G attached hereto,
        to
        purchase, at each of the four vesting dates set forth in such Warrant and
        further described below, the number of whole shares of the Series A Preferred
        which, upon conversion will equal five percent (5%) of the issued and
        outstanding Common Stock of the Company (the “Warrant
        Shares”),
        on a
        fully diluted basis and calculated as of each such vesting date, at an exercise
        price of $.001 per Warrant Share. The Warrant will vest as follows:

       

      (a)  in
        the
        event the Company fails to receive the 510K Clearance on or before May 1,
        2009 (the “First
        Approval Deadline”)
        or
        fails to have developed successfully a functionally effective alpha prototype
        of
        the Company’s IgE lab card (the “IgE
        Development Milestone”)
        on or
        prior to May 1, 2009, as further described on Schedule 1.5 hereto, then the
        Purchaser shall have the right to exercise the Warrant (as defined below)
        with
        respect to the number of shares of the Series A Preferred that shall have
        vested as of the First Approval Deadline, as further set forth in the Warrant,
        being the number of shares of the Series A Preferred, which upon
        conversion, will equal five percent (5%) of the issued and outstanding Common
        Stock of the Company, on a fully diluted basis and calculated as of the First
        Approval Deadline;

       

      (b)  in
        the
        event the Company fails to receive both the 510K Clearance and the CLIA Waiver
        on or before November 1, 2009 (the “Second
        Approval Deadline”)
        or
        fails to achieve the IgE Development Milestone on or prior to the Second
        Approval Deadline, then the Purchaser shall have the right to exercise the
        Warrant with respect to the number of additional shares of the Series A
        Preferred that shall have vested as of the Second Approval Deadline, as further
        set forth in the Warrant, being the number of additional shares of the
        Series A Preferred, which upon conversion, will equal an additional five
        percent (5%) of the issued and outstanding Common Stock of the Company, on
        a
        fully diluted basis and calculated as of the Second Approval
        Deadline;

       

      
        
          
          

        

        
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      (c)  in
        the
        event the Company fails to receive both the 510K Clearance and the CLIA Waiver
        on or before May 1, 2010 (the “Third
        Approval Deadline”)
        or
        fails to achieve the IgE Development Milestone on or prior to the Third Approval
        Deadline, then the Purchaser shall have the right to exercise the Warrant
        with
        respect to the number of additional shares of the Series A Preferred that
        shall have vested as of the Third Approval Deadline, as further set forth
        in the
        Warrant, being the number of additional shares of the Series A Preferred,
        which upon conversion, will equal an additional five percent (5%) of the
        issued
        and outstanding Common Stock of the Company, on a fully diluted basis and
        calculated as of the Third Approval Deadline; and

       

      (d)  in
        the
        event the Company fails to receive both the 510K Clearance and the CLIA Waiver
        on or before November 1, 2010 (the “Fourth
        Approval Deadline”)
        or
        fails to achieve the IgE Development Milestone on or prior to the Fourth
        Approval Deadline, then the Purchaser shall have the right to exercise the
        Warrant with respect to the number of additional shares of the Series A
        Preferred that shall have vested as of the Fourth Approval Deadline, as further
        set forth in the Warrant, being the number of additional shares of the
        Series A Preferred, which upon conversion, will equal an additional five
        percent (5%) of the issued and outstanding Common Stock of the Company, on
        a
        fully diluted basis and calculated as of the Fourth Approval
        Deadline.

       

      For
        purposes of this Agreement, the First Approval Deadline, the Second Approval
        Deadline, the Third Approval Deadline and the Fourth Approval Deadline are
        sometimes each referred to herein as an “Approval
        Deadline”
and,
        collectively, the “Approval
        Deadlines”).

       

      2.  Representations
        and Warranties of the Company.
        Except
        as set forth on the Disclosure
        Schedules
        attached
        as Exhibit C hereto (the “Disclosure
        Schedules”),
        specifically identifying the relevant subsection hereof, the Company represents
        and warrants to the Purchaser that the statements contained in this
        Section 2 are complete and accurate as of the date of this Agreement. As
        used in this Section 2, the term “Knowledge”
shall
        mean the actual knowledge of Eric Donsky and Benjamin Sullivan, after reasonable
        inquiry. The Purchaser shall be entitled to rely on the statements contained
        in
        this Section 2 regardless of any due diligence or other investigation of
        the subject matter thereof that may be, or may have been, conducted by or
        on
        behalf of the Purchaser.

       

      2.1  Organization,
        Good Standing and Qualification.
        The
        Company is a corporation duly organized, validly existing and in good standing
        under the laws of the State of Delaware and has the corporate power to own
        its
        property and to carry on its business as now being conducted and as currently
        contemplated to be conducted. The Company has the power to execute and deliver
        this Agreement, the Warrant, the Rights Agreement (defined below) and the
        Voting
        Agreement (defined below) (collectively, the “Transaction
        Documents”);
        to
        issue and sell the Shares, the Additional Shares, the Warrant, the Warrant
        Shares and the shares of Common Stock issuable upon conversion of the Shares
        and
        the Additional Shares (the “Conversion
        Shares”),
        and
        to carry out the provisions of the Transaction Documents and to perform its
        obligations thereunder. The Company is duly qualified and authorized as a
        foreign corporation to do business and is in good standing in California
        and in
        every other jurisdiction in which the nature of the business conducted or
        property owned by it makes such qualification necessary, except where the
        failure to so qualify would not have a material adverse effect on the business,
        assets, properties, operations, prospects or financial condition of the Company
        (as such business is currently being conducted or currently contemplated
        to be
        conducted), as determined from the perspective of a reasonable person in
        the
        Purchaser’s position (a “Material
        Adverse Effect”).
        True
        and accurate copies of the Company’s Certificate of Incorporation and Bylaws,
        each as amended and in effect at the Closing, have been made available to
        the
        Purchaser.

       

      
        
          
          

        

        
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      2.2  Capitalization
        and Voting Rights.
        Immediately prior to the Closing, the authorized capital stock of the Company
        consists of:

       

      (a)  Preferred
        Stock consisting of 3,350,000 shares of Preferred Stock, par value $0.001
        per
        share, 2,600,000 of which have been designated Series A Preferred, none of
        which are outstanding prior to the Closing and all of which have been reserved
        for issuance pursuant to this Agreement and 750,000 of which have been
        designated Series B Preferred, none of which are outstanding prior to the
        Closing and all of which have been reserved for issuance pursuant to this
        Agreement. The Shares, the Additional Shares the Warrant, the Warrant Shares
        and
        the Conversion Shares, when issued in compliance with the provisions of this
        Agreement, will be duly authorized, validly issued, fully paid and nonassessable
        and will be free of any liens or encumbrances or other restrictions on transfer
        caused or created by the Company, except for restrictions on transfer under
        the
        Transaction Documents and under applicable state and federal securities laws,
        and will have the rights, preferences and privileges described in the
        Certificate of Incorporation. The Conversion Shares have been duly and validly
        reserved and, upon issuance in accordance with the terms of the Certificate
        of
        Incorporation, will be duly and validly issued, fully paid and nonassessable
        and
        free of restrictions on transfer caused or created by the Company other than
        restrictions on transfer set forth under the Transaction Documents and under
        applicable state and federal securities laws.

       

      (b)  Common
        Stock consisting of 10,000,000 shares of Common Stock, of which 1,222,979
        shares
        are issued and outstanding upon the Closing. All outstanding securities of
        the
        Company have been duly and validly authorized and issued, are fully paid
        and
        nonassessable and were issued in accordance with the registration or
        qualification provisions of the Securities Act of 1933, as amended (the
“Securities
        Act”),
        and
        any relevant state securities laws, or pursuant to valid exemptions therefrom.
        The Company has reserved 367,311 shares of Common Stock for issuance to
        advisors, employees, directors and consultants of the Company under compensatory
        arrangements that have been approved by the Board of Directors of the Company
        (the “Option
        Agreements”).
        There
        are options for an aggregate of 347,857 shares of Common Stock outstanding,
        and
        immediately following the Closing options for 19,454 shares of Common Stock
        remain available for future grant. 

       

      (c)  Except
        for currently outstanding options to purchase 347,857 shares of Common Stock
        pursuant to the Option Agreements, except for currently outstanding warrants
        to
        purchase 77,000 shares of Common Stock, except for rights to purchase capital
        stock of the Company as provided herein and in the Warrant, and except as
        set
        forth in that certain Preferred Stock Investor Rights Agreement substantially
        in
        the form attached hereto as Exhibit D (the “Rights
        Agreement”)
        and
        Schedule 2.2(c), there are no outstanding options, warrants, rights
        (including conversion, preemptive rights, rights of first refusal or other
        similar rights) or proxy or stockholder agreements of any kind for the purchase
        or acquisition from the Company of any shares of its capital stock or other
        securities convertible into shares of equity securities of the Company. Except
        for the Rights Agreement, the Company is not a party or subject to any agreement
        or understanding, and no stockholder or option holder of the Company is a
        party
        to any agreement or understanding with respect to the voting or transfer
        of any
        security of the Company, the voting of a director or any other aspect of
        the
        Company’s affairs.

       

      
        
          
          

        

        
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      (d)  Except
        as
        set forth on Schedule 2.2(d), no stock plan or stock purchase, stock option
        or other agreement or understanding between the Company and any holder of
        any
        securities or rights exercisable or convertible for securities provides for,
        and
        no person is otherwise entitled to, (i) acceleration of vesting (or lapse
        of repurchase rights) or other changes in the vesting (or lapse of repurchase
        rights) provisions as the result of the occurrence of a change in control
        (including by way of merger, reorganization, sale of assets or other similar
        transaction) of the Company or a termination of services to the Company,
        or both
        or (ii) vesting (or lapse of repurchase rights) at a rate greater than 25%
        at the end of the first year following such issuance or grant or the
        commencement of services to the Company, and the remaining 75% in equal monthly
        installments over the next three (3) years. 

       

      (e)  Immediately
        following the Closing, the capital stock of the Company (including options
        and
        other rights to acquire capital stock of the Company) shall be as set forth
        on
        Schedule 2.2(e).

       

      2.3  Subsidiaries.
        The
        Company does not currently own or control, directly or indirectly, any interest
        in any other corporation, partnership, limited liability company, association
        or
        other business entity. The Company is not a participant in any joint venture,
        partnership or similar arrangement. Since its inception, the Company has
        not
        consolidated or merged with, acquired all or substantially all of the assets
        of,
        or acquired the stock of or any interest in any corporation, partnership,
        association or other business entity.

       

      2.4  Authorization.
        All
        corporate action on the part of the Company and its respective officers,
        directors and stockholders necessary for the authorization, execution and
        delivery of the Transaction Documents; the performance of all obligations
        of the
        Company hereunder and thereunder; and the authorization, issuance (or
        reservation for issuance), sale and delivery of the Shares being sold hereunder,
        the Additional Shares, the Warrant, the Warrant Shares and the Conversion
        Shares, either have been taken or will be taken prior to the Closing or the
        Additional Closings, as the case may be, and the Transaction Documents
        constitute valid and legally binding obligations of the Company, enforceable
        in
        accordance with their respective terms, except (i) as limited by
        bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
        and
        similar laws affecting creditors’ rights and remedies generally, and subject to
        general principles of equity (regardless of whether enforcement is sought
        in a
        proceeding at law or in equity), (ii) as limited by laws relating to the
        availability of specific performance, injunctive relief or other equitable
        remedies (regardless of whether enforcement is sought in a proceeding at
        law or
        in equity) and (iii) as the enforceability of Section 1.9 of the
        Rights Agreement may be limited by public policy. Subject in part to the
        truth
        and accuracy of the Purchaser’s representations set forth in Section 3 of
        this Agreement and subject to timely filing of notices or other filings required
        under applicable state and federal securities laws that the Company agrees
        to
        make within the required time periods, the offer, sale and issuance of the
        Shares, the Additional Shares, the Warrant, the Warrant Shares and the
        Conversion Shares as contemplated by this Agreement are exempt from the
        registration and qualification requirements of any applicable state and federal
        securities laws (pursuant to Regulation D under the Securities Act),
        including Section 5 of the Securities Act and the qualification
        requirements of Section 25110 of the California Securities
        Law.

       

      
        
          
          

        

        
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      2.5  Governmental
        Consents.
        No
        consent, approval, order or authorization of, or registration, qualification,
        designation, declaration or filing with, any federal, state or local
        governmental authority on the part of the Company is required in connection
        with
        the consummation of the transactions contemplated by the Transaction Documents
        or in connection with the performance by the Company of any of its obligations
        hereunder or thereunder, including, but not limited to, the valid offer,
        issue,
        sale or delivery of the Shares, the Additional Shares, the Warrant, the Warrant
        Shares and the Conversion Shares, except for (i) the filing of the
        Certificate of Incorporation with the Secretary of State of the State of
        Delaware and (ii) filings pursuant to applicable state and federal
        securities laws and the respective rules thereunder that the Company agrees
        to
        make within the required time periods.

       

      2.6  Litigation.
        Except
        as set forth on Schedule 2.6, there is no action, suit, proceeding or
        investigation pending or, to the Company’s Knowledge, currently threatened
        against the Company, or any of its properties or assets, including any
        (i) that is reasonably likely to impair the right or ability of the Company
        to carry on its business as now conducted or as currently contemplated to
        be
        conducted, or (ii) that is reasonably likely to question the validity of
        the Transaction Documents or the Company’s ability to consummate the
        transactions contemplated hereby or thereby, and (iii) nothing has come to
        the attention of the Company that causes it to believe that there is any
        reasonable basis for any of the foregoing. The Company is not a party to,
        or to
        the Company’s knowledge, named in or subject to any order, writ, injunction,
        judgment or decree of any court, government agency or instrumentality. The
        foregoing includes, but is not limited to, actions pending, or to the Company’s
        knowledge, threatened against the Company, involving the prior employment
        of any
        of the Company’s employees or consultants or the use by any of them in
        connection with the Company’s business(es), of any information or techniques
        allegedly proprietary to any of their former employers or parties for whom
        they
        acted as consultants.

       

      2.7  Title
        to Property and Assets.
        Except
        as set forth on Schedule 2.7, the Company has good, valid and marketable
        title to its properties and assets, free and clear of all mortgages, liens,
        loans, charges and encumbrances. The assets of the Company constitute all
        of the
        assets used in the operations of, and necessary to operate, the business
        as
        presently conducted and as currently contemplated to be conducted, and such
        assets are currently, as a whole, in normal operating condition and repair,
        normal wear and tear excepted, and have been maintained and serviced in
        accordance with the prudent conduct of business. With respect to the property
        and assets leased by the Company, the Company is in substantial compliance
        with
        the applicable leases, and such leases are valid and enforceable and are
        in full
        force and effect, and except as set forth on Schedule 2.7, to the Company’s
        Knowledge, the Company holds a valid leasehold interest in the leased property
        and assets free of any liens, claims or encumbrances.

       

      
        
          
          

        

        
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      2.8  Liabilities.
        Other
        than as set forth in Schedule 2.8, the Company has no debts, commitments or
        obligations, except for ordinary business expenses that do not exceed $25,000
        individually or $50,000 in the aggregate.

       

      2.9  Financial
        Statements.
        As at
        October 31, 2006: (i) the current assets of the Company were between $100,000
        and $175,000, and the current liabilities of the Company were between $1,300,000
        and $1,600,000; and (ii) the long-term assets of the Company were between
        $1,100,000 and $1,300,000, and the long-term liabilities of the Company were
        between $200,000 and $500,000. The terms “assets” and “liabilities”, as they are
        used in this Section 2.9, shall be understood in the same manner that they
        are
        understood under generally accepted accounting principles of the United States,
        consistently applied. Except as set forth on Schedule 2.9, since October
        31,
        2006, there has not occurred any event or circumstance that has caused the
        current or long-term assets or liabilities of the Company to be materially
        different on the date hereof, or any event or circumstance that would reasonably
        cause the Company to believe that they are materially different on the date
        hereof, or that otherwise would make the statements contained in this Section
        2.9 misleading in light of the circumstances under which they are made.


       

      2.10  Material
        Contracts.
        Schedule 2.10 contains a true, correct and complete list and description of
        all of the contractual obligations to which the Company is a party or by
        which
        it is bound that involve (i) obligations (contingent or otherwise) of the
        Company in an amount exceeding $25,000 or payments to the Company in an amount
        exceeding $50,000; (ii) the license, by or from the Company, of any patent,
        copyright, trade secret or any other proprietary right material to the Company’s
        business; (iii) provisions materially restricting the development,
        manufacture or distribution of the Company’s products or services, (iv) any
        obligation material to the business of the Company that cannot be terminated,
        without interest or other penalty, upon thirty (30) days’ notice; or
        (v) any other obligation or agreement that is otherwise material to the
        Company’s business, financial condition, assets, properties, prospects or
        results of operations (collectively, the “Material
        Contracts”).
        Each
        Material Contract is a valid and binding agreement of the Company, enforceable
        against the Company in accordance with its terms (subject to applicable
        bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
        and
        similar laws affecting creditors’ rights and remedies generally, and subject, as
        to enforceability, to general principles of equity, including principles
        of
        commercial reasonableness, good faith and fair dealing (regardless of whether
        enforcement is sought in a proceeding at law or in equity)). The Company
        has
        fulfilled all obligations required pursuant to each Material Contract to
        have
        been performed by it. Except as set forth on Schedule 2.10, the Company is
        not in default or breach, nor to its knowledge is any third party in default
        or
        breach, under or with respect to any Material Contract.

       

      2.11  Registration
        or First Offer Rights.
        Except
        as set forth in the Rights Agreement, the Company is not under any contractual
        obligation and has not granted (i) any rights to register any of its
        currently outstanding securities or any of its securities that hereafter
        may be
        issued or (ii) any right of first offer to any person.

       

      
        
          
          

        

        
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      2.12  Proprietary
        Rights.

       

      (a)  Schedule
        2.12 sets out an accurate and complete list and description of: (a) all pending
        applications and registrations for Company Proprietary Information (as defined
        below) and (b) all written agreements for Licensed Proprietary Information
        (as
        defined below) (excluding licenses for commercially available software).
        “Proprietary
        Information”
means
        any and all proprietary information and intellectual property rights including
        any and all software (including object code and source code), trade secrets,
        know-how, inventions, designs, processes, compositions, formulae, technical
        data, patents, copyrights, industrial designs, trademarks, trade names and
        domain names, including all applications and registrations and all common
        law
        rights therefor and all goodwill associated therewith. “Company
        Proprietary Information”
means
        Proprietary Information that has been developed by or for, or is being developed
        by or for, the Company or that is being used or is proposed to be used by
        the
        Company, other than Licensed Proprietary Information. “Licensed
        Proprietary Information”
means
        Proprietary Information owned by persons other than the Company and which
        the
        Company uses or intends to use.

       

      (b)  Other
        than to the extent that any person may have usurped Company Proprietary
        Information in violation of any agreement with the Company or otherwise
        illegally or improperly, and of which the Company has no Knowledge, the Company
        is the sole legal and beneficial owner of, has good and marketable title
        to, and
        owns all right, title and interest in, all Company Proprietary Information
        free
        and clear of all charges, covenants, conditions, options to purchase and
        restrictions or other adverse claims or interests of any kind or nature and
        has
        the right to transfer all right, title and interest in the Company Proprietary
        Information. Other than to the extent that any person may have usurped Company
        Proprietary Information in violation of any agreement with the Company or
        otherwise illegally or improperly, and of which the Company has no Knowledge,
        none of the Company Proprietary Information is owned by or registered in
        the
        name of any person other than the Company, including, without limitation,
        any
        current or former owner, shareholder, partner, director, executive, officer,
        employee or contractor, nor does any such person have any interest therein
        or
        right thereto, including any license or the right to any royalty or other
        payments. No consent of any person is necessary to make, use, reproduce,
        license, sell, modify, update, enhance or otherwise exploit any Company
        Proprietary Information. The Company has not received any notice or claim
        (whether written, oral or otherwise) challenging the Company’s ownership of any
        of the Company Proprietary Information or suggesting that any other person
        has
        any claim of legal or beneficial ownership or other claim or interest with
        respect thereto, nor is there a reasonable basis for any claim that any person
        other than the Company has any claim of legal or beneficial ownership or
        other
        claim or interest in any of the Company Proprietary Information.

       

      (c)  There
        has
        been no public disclosure, sale, offer for sale or other use of any Company
        Proprietary Information or, to the Knowledge of the Company, of any Licensed
        Proprietary Information by an officer or key employee of the Company or by
        a
        consultant of the Company who, notwithstanding his or her legal status as
        a
        consultant of the Company, fulfills or has fulfilled the role of a key employee
        or principal of the Company (each, a “Key
        Consultant”),
        anywhere in the world that may affect the validity of all available intellectual
        property rights in such Company Proprietary Information or Licensed Proprietary
        Information. To the Company’s Knowledge, there has been no such public
        disclosure, sale, offer for sale or other use of any Company Proprietary
        Information or any Licensed Proprietary Information by a Key
        Consultant.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      (d)  The
        Company has taken all reasonably appropriate security measures to protect
        the
        secrecy, confidentiality and value of all software source code, trade secrets,
        know-how, inventions, designs, processes, compositions, formulae, technical
        data, and any other secret or confidential information in its possession
        or
        control. All technical information developed by the Company or for the Company
        by a Key Consultant, that is material to its business and that is not the
        subject of a patent or pending patent application, has been maintained
        confidential. To the Company’s Knowledge, all technical information developed
        for the Company by a person who is not a Key Consultant, that is material
        to the
        Company’s business and that is not subject of a patent or pending patent
        application, has been maintained confidential. Except as set forth on
        Schedule 2.10 and for agreements with its own employees or consultants,
        substantially in the form referenced in Section 2.18 of this Agreement,
        there are no outstanding options, licenses or other similar agreements relating
        to the Company Proprietary Information or Licensed Proprietary Information,
        nor
        is the Company bound by or a party to any options, licenses or agreements
        of any
        kind with respect to the Proprietary Information of any other person or entity.
        To the Knowledge of the Company, none of its employees is obligated under
        any
        contract (including licenses, covenants or commitments of any nature) or
        other
        agreement or is subject to any judgment, decree or order of any court or
        administrative agency that conflicts with the Company’s business as currently
        conducted. Neither the execution nor delivery of this Agreement nor the carrying
        on of the Company’s business as currently conducted by the employees of the
        Company will conflict with, or result in a breach of, the terms, conditions
        or
        provisions of, or constitute a default under, any material contract, covenant
        or
        instrument under which any of such employees is now obligated. None of the
        Company’s current officers, key employees or consultants, and, to the Company’s
        Knowledge, none of the Company’s former officers, key employees or consultants,
        has improperly used or is making improper use of any confidential information
        or
        trade secrets of others, including those of any former employer of such officer,
        key employee or consultant, or those of any party for whom such officer,
        key
        employee or consultant acted as a consultant. To the Knowledge of the Company,
        the conduct of its business as currently conducted, or as currently contemplated
        to be conducted, has not infringed, violated, misappropriated or otherwise
        conflicted with any Proprietary Information of any person. The Company is
        not a
        party to any action or proceeding, nor, to the best of the Company’s Knowledge,
        has any action or proceeding been threatened that alleges that any conduct
        of
        the Company’s business as currently conducted, or as currently contemplated to
        be conducted, has infringed, violated, misappropriated or otherwise conflicted
        with any Proprietary Information of any person.

       

      (e)  To
        the
        best of the Company’s Knowledge, no person has infringed or misappropriated, or
        is infringing or misappropriating, any Company Proprietary Information or
        any
        Licensed Proprietary Information.

       

      (f)  The
        Company has lawfully acquired the right(s) to use the Licensed Proprietary
        Information in the manner in which it has been used and is currently being
        used
        by the Company and in the manner currently contemplated to be used in the
        future. All agreements in respect of Licensed Proprietary Information are
        in
        full force and effect, and (i) the Company is not in default of any of its
        obligations thereunder and (ii) the Company does not have any written notice
        or
        any reasonable belief that any licensor is in default of any of its obligations
        thereunder. Neither the entering into nor the performance of this Agreement
        breaches any duty or obligation owed to any person (including, without
        limitation, any licensor).

       

      
        
          
          

        

        
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      2.13  No
        Conflict of Interest.

       

      (a)  There
        are
        no agreements, understandings or proposed transactions between the Company
        on
        the one hand, and any of its officers or directors on the other
        hand.

       

      (b)  Except
        as
        set out on Schedule 2.13(b), the Company is not indebted, directly or
        indirectly, to any of its officers or directors, or to the respective spouses
        or
        children of any of its officers or directors, in any amount whatsoever other
        than in connection with expenses or advances of expenses, if any, incurred
        in
        the ordinary course of business. None of the Company’s officers or directors, or
        any members of any of their immediate families, is, directly or indirectly,
        indebted to the Company. No member of the immediate family of any officer
        or
        director of the Company is directly or indirectly interested in any Material
        Contract.

       

      (c)  None
        of
        the officers, directors or key employees of the Company is obligated under
        any
        contract (including licenses, covenants or commitments of any nature) or
        other
        agreement, or subject to any judgment, decree or order of any court of
        administrative agency, that would conflict with his or her best efforts to
        promote the interests of the Company or that would conflict with the business
        of
        the Company as presently, or currently contemplated to be,
        conducted.

       

      2.14  Tax
        Returns.
        All tax
        returns, declarations, statements, reports, schedules, forms and information
        returns (“Returns”)
        required by all U.S. federal, state and local and foreign jurisdictions (in
        each
        case, including all political subdivisions thereof) relating to all U.S.
        federal, state and local and foreign taxes and other assessments of a similar
        nature (whether imposed directly or through withholding), including any
        interest, additions to tax or penalties applicable thereto (“Taxes”),
        if
        any, required to be filed by the Company prior to the First Closing have
        been
        (or will be) timely filed, and such Returns are (or will be) true, complete
        and
        correct in all material respects. The Company has paid all Taxes shown to
        be due
        on such Returns. The Company has never had any Tax deficiency proposed or
        assessed against it, nor has it executed any waiver of any statute of
        limitations on the assessment or collection of any Tax or governmental charge.
        Neither the Company’s federal income tax returns nor its state income or
        franchise tax or sales or use tax returns has ever been audited by any
        governmental authorities.

       

      2.15  Permits;
        Compliance with Laws.
        The
        Company has obtained and maintained in good standing all of its licenses,
        permits, franchises, consents, registrations, certificates, orders, approvals,
        authorizations and any similar authority (“Permits”)
        required to be obtained by it under federal, state and local laws and
        regulations (collectively, “Laws”),
        and
        such Permits are the only Permits required by the Company to conduct its
        business as currently conducted or currently contemplated to be conducted.
        Except as set forth on Schedule 2.15, the Company is in compliance with
        such Laws in all material respects, and there is no pending or, to the Company’s
        knowledge, threatened action or proceeding against the Company under any
        of such
        Laws. The execution and delivery of this Agreement and the consummation of
        the
        transactions contemplated hereby will not result in the termination of any
        such
        Permit.

       

      
        
          
          

        

        
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      2.16  Compliance
        with Charter Documents; No Conflict.
        The
        Company is not in breach or violation of any term of its Charter Documents
        (as
        defined below). Except as set forth on Schedule 2.16, the execution,
        delivery and performance of and compliance with the Transaction Documents
        and
        the consummation of the transactions contemplated hereby or thereby (a) do
        not conflict with, and shall not result in a breach or violation of, the
        terms,
        conditions or provisions of or constitute a default (or an event that, with
        the
        giving of notice or passage of time, or both, could result in a default)
        under:
        (i) the Charter Documents, (ii) any statute, law, rule or regulation,
        (iii) any state or federal order, judgment or decree, or (iv) any
        indenture, mortgage, deed of trust, lease or other agreement or instrument
        to
        which the Company or any of its properties or assets is subject, and (b) to
        the Company’s Knowledge, will not result in the creation or imposition of any
        lien, charge or encumbrance upon any of the assets of the Company pursuant
        to
        the terms of any of the foregoing. For purposes of this Agreement, “Charter
        Documents”
shall
        mean (i) the certificate of incorporation of the Company, as filed with the
        Secretary of State of the State of Delaware, together with all amendments,
        restatements, certificates and designations filed with respect thereto from
        time
        to time, (including, for greater certainty, the Certificate of Incorporation)
        and (ii) the bylaws of the Company.

       

      2.17  Employees.

       

      (a)  There
        is
        no strike, labor dispute or union organization activities pending with respect
        to or, to the Company’s knowledge, threatened against the Company. The Company
        is not a party to any collective bargaining agreements covering any of its
        employees. None of the Company’s employees belong to any union or collective
        bargaining unit.

       

      (b)  Except
        as
        set forth on Schedule 2.17(b), the Company is not party to or bound by any
        currently effective employment contract, deferred compensation agreement,
        bonus
        plan, incentive plan, profit sharing plan, retirement agreement, severance
        or
        other employee compensation agreement. The Company is not aware that any
        officer
        or key employee intends to terminate his or her employment with the Company,
        nor
        does the Company have a present intention to terminate the employment of
        any of
        the foregoing.

       

      2.18  Assignment
        of Inventions and Non-Disclosure Agreements.
        Except
        as set forth on Schedule 2.18, each current and former employee and officer
        of the Company and each consultant retained by the Company has executed the
        Company’s standard form Assignment of Inventions and Non-Disclosure Agreement,
        substantially in the form attached hereto as Exhibit E, and no such person
        has set forth any inventions or other items as exclusions thereto that are
        related to the Company’s business or otherwise material to the
        Company.

       

      2.19  Environmental
        and Safety Laws.
        To its
        Knowledge, Company is not in violation of any statute, law or regulation
        applicable to it relating to the environment or occupational health and safety
        (collectively, the “Environmental
        Laws”),
        and
        no material expenditures are or will be required in order to comply with
        any
        Environmental Law. No Hazardous Materials (as defined below) are used or
        have
        been used, stored, or disposed of by the Company or, to the Company’s knowledge,
        by any other person or entity on any property owned, leased or used by the
        Company. For the purposes of the preceding sentence, “Hazardous
        Materials”
shall
        mean (a) materials which are listed or otherwise defined as “hazardous” or
“toxic” under any applicable local, state, federal and/or foreign laws and
        regulations that govern the existence and/or remedy of contamination on
        property, the protection of the environment from contamination, the control
        of
        hazardous wastes or other activities involving hazardous substances, including
        building materials, or (b) any petroleum products or nuclear
        materials.

       

      
        
          
          

        

        
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      2.20  Real
        Property.
        The
        Company does not own any real property. Schedule 2.20 sets forth all real
        property leased by the Company, and the Company is in compliance with the
        applicable leases and holds a valid leasehold in such real property interest
        free of any liens, claims and encumbrances.

       

      2.21  Development
        and Marketing Rights.
        Except
        as set forth on Schedule 2.21, the Company has not granted rights to
        develop, produce, assemble, license, distribute, market or sell its products
        or
        services, whether now existing or in development, to any other person and
        is not
        bound by any agreement that affects the Company’s exclusive right to develop,
        produce, assemble, license, distribute, market or sell its products and
        services, now existing or in development.

       

      2.22  Disclosure.
        The
        Company has provided the Purchaser with all the information that the Purchaser
        has requested for deciding whether to purchase the Shares and to enter into
        the
        Transaction Documents. No representation or warranty of the Company contained
        in
        this Agreement and the Exhibits attached hereto and in any certificate furnished
        or to be furnished to the Purchaser at the Closing contains any untrue statement
        of a material fact or omits to state a material fact necessary in order to
        make
        the statements contained herein or therein not misleading in light of the
        circumstances under which they were made.

       

      2.23  Brokers
        or Finders, Other Offers.
        The
        Company has not incurred, and will not incur, directly or indirectly, as
        a
        result of any action taken by the Company any liability for brokerage or
        finders’ fees or agents’ commissions or any similar charges in connection with
        this Agreement or the transactions contemplated hereunder.

       

      2.24  Minute
        Books.
        The
        minute books of the Company provided to the Purchaser contain minutes of
        all
        meetings of directors (and committees thereof) and stockholders and all actions
        by written consent without a meeting by the directors and stockholders since
        the
        date of the Company’s inception, and accurately reflect all actions by the
        directors and stockholders with respect to all transactions referred to in
        such
        minutes in all material respects.

       

      3.  Representations,
        Warranties and Covenants of the Purchaser to the Company.
        The
        Purchaser hereby represents and warrants to the Company that, as of the date
        of
        this Agreement, the statements contained in this Section 3 are true and
        correct and hereby acknowledges and agrees that the Company shall be entitled
        to
        rely on such statements regardless of any due diligence or other investigation
        of the subject matter thereof that may be, or may have been, conducted by
        or on
        behalf of the Company:

       

      3.1  Authorization.
        The
        Purchaser has full power and authority to enter into the Transaction Documents.
        All action on the part of the Purchaser, its officers, directors and
        stockholders necessary for the authorization, execution and delivery of the
        Transaction Documents has been taken or will be taken prior to the Closing.
        Each
        such agreement constitutes a valid and legally binding obligation of the
        Purchaser, enforceable in accordance with its terms except (i) as limited
        by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
        moratorium and other laws of general application affecting enforcement of
        creditors’ rights generally, and subject to general principles of equity
        (regardless of whether enforcement is sought in a proceeding at law or in
        equity); and (ii) as limited by laws relating to the availability of
        specific performance, injunctive relief or other equitable remedies (regardless
        of whether enforcement is sought in a proceeding at law or in equity) and
        (iii) as the enforceability of Section 1.9 of the Rights Agreement may
        be limited by public policy.

       

      
        
          
          

        

        
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      3.2  Purchase
        Entirely for Own Account.
        The
        Purchaser is purchasing the Shares for its own account, for investment purposes
        and not with a view to the resale or distribution of any part thereof. The
        Purchaser will not, directly or indirectly, offer, transfer, sell, assign,
        pledge, hypothecate or otherwise dispose of any of the Shares or the Conversion
        Shares (collectively, the “Securities”),
        except in compliance with the Securities Act. By executing this Agreement,
        the
        Purchaser further represents that the Purchaser does not have any contract,
        undertaking, agreement or arrangement with any person to sell or transfer
        to
        such person or to any third person any of the Securities.

       

      3.3  Speculative
        Nature of Investment.
        The
        Purchaser acknowledges that its investment in the Company is highly speculative
        and entails a substantial degree of risk and that the Purchaser may lose
        the
        entire amount of such investment.

       

      3.4  Disclosure
        of Information.
        The
        Purchaser further represents that it has had an opportunity to ask questions
        and
        receive answers from the Company regarding the terms and conditions of the
        offering of the Securities and the business, properties and financial condition
        of the Company and to obtain additional information necessary to verify the
        accuracy of any information furnished to the Purchaser. The foregoing, however,
        does not limit or modify the representations and warranties of the Company
        in
        Section 2 of this Agreement or derogate, in any way, from the right of the
        Purchaser to rely thereon.

       

      3.5  Investment
        Experience.
        The
        Purchaser represents that it is an “accredited investor” as defined in
        Regulation D promulgated under the Securities Act. The Purchaser acknowledges
        that it is able to fend for itself, can bear the economic risk of its investment
        (including a total loss of such investment) and has such knowledge and
        experience in financial or business matters that it is capable of evaluating
        the
        merits and risks of the investment in the Securities and that it has not
        been
        organized solely for the purpose of acquiring the Securities.

       

      3.6  Restricted
        Securities.
        The
        Purchaser understands that the Securities it is purchasing are characterized
        as
“restricted securities” under the 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. In addition, the Purchaser represents that it is familiar
        with
        Rule 144 of the Securities Act (“Rule
        144”)
        as
        currently in effect and understands the resale limitations imposed thereby
        and
        by the Securities Act. The Purchaser understands that no public market currently
        exists for the Series A Preferred or Common Stock and that there are no
        assurances that any such market will be created.

       

      3.7  Further
        Limitations on Disposition.
        Without
        in any way limiting the above, the Purchaser further agrees not to make any
        disposition of all or any portion of the Securities, unless and until
        (i) such disposition will not require registration of such Securities under
        the Securities Act, (ii) the transferee has agreed in writing for the
        benefit of the Company to be bound by this Section 3.7 and Section 6
        of this Agreement, and (iii) if reasonably requested by the Company, the
        Purchaser shall have furnished the Company with an opinion of counsel,
        reasonably satisfactory to the Company, that such disposition will not require
        registration of such Securities under the Securities Act; provided, however,
        that this Section 3.7 shall be inapplicable if:

       

      
        
          
          

        

        
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      (a)  there
        is
        then in effect a Registration Statement under the Securities Act covering
        the
        proposed disposition of Securities and such disposition is made in accordance
        with such Registration Statement; or

       

      (b)  the
        Securities are sold by the Purchaser pursuant to, and in accordance with
        all of
        the requirements then applicable under, Rule 144. 

       

      3.8  Legends.
        It is
        understood that the certificate(s) evidencing the Securities shall bear the
        legends substantially in the form set forth below, in addition to any legend
        required by the Rights Agreement:

       

      THE
        SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
        AND
        HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
        “SECURITIES ACT”). SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
        ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
        COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS
        EXEMPT
        FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES
        ACT
        OR UNLESS SOLD PURSUANT TO RULE 144 OF THE SECURITIES ACT.

       

      THE
        SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO OTHER RESTRICTIVE
        PROVISIONS AS SET FORTH IN THE COMPANY’S PREFERRED STOCK INVESTOR RIGHTS
        AGREEMENT AND VOTING AGREEMENT, AS SUCH AGREEMENTS MAY BE AMENDED FROM TIME
        TO
        TIME IN ACCORDANCE WITH THEIR RESPECTIVE TERMS. COPIES OF SUCH AGREEMENTS
        MAY BE
        OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL
        PLACE OF BUSINESS. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF IT, AGREES
        TO BE BOUND BY THE PROVISIONS OF SUCH AGREEMENTS.

       

      4.  Conditions
        of the Purchaser’s Obligations at Closing.
        The
        obligation of the Purchaser to purchase the Shares at the Closing is subject
        to
        the fulfillment at or before the Closing, of each of the following
        conditions.

       

      
        
          
          

        

        
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      4.1  Representations
        and Warranties.
        The
        representations and warranties made by the Company in Section 2 hereof
        shall be true and correct in all respects on the date of the Closing, with
        the
        same effect as though such representations and warranties had been on and
        as of
        the date of the Closing.

       

      4.2  Performance.
        The
        Company shall have performed or observed in all respects all obligations,
        covenants and conditions herein required to be performed or observed by it
        on or
        prior to the date of the Closing.

       

      4.3  Compliance
        Certificate.
        An
        authorized officer of the Company shall deliver to the Purchaser, at the
        Closing, a certificate certifying that the conditions specified in
        Sections 4.1, 4.2, 4.4, 4.8 and 4.9 have been fulfilled, and certifying
        that since October 31, 2006 there has not occurred a Material Adverse
        Effect.

       

      4.4  Qualifications.
        All
        authorizations, approvals or permits, if any, of any governmental authority
        or
        regulatory body of the United States or of any state that are required in
        connection with the lawful issuance and sale of the Shares, the Additional
        Shares, the Warrant, the Warrant Shares and the Conversion Shares pursuant
        to
        this Agreement, shall have been duly obtained by the Company and be effective
        as
        of the Closing, except for post-closing filings required under applicable
        federal and state securities laws.

       

      4.5  Investor
        Rights Agreement.
        The
        Company, the Purchaser and the stockholders named therein shall have entered
        into the Rights Agreement.

       

      4.6  Voting
        Agreement.
        The
        Company, the Purchaser and the stockholders named therein shall have entered
        into a voting agreement in the form of the voting agreement attached hereto
        as
Exhibit H
        (the
“Voting
        Agreement”).

       

      4.7  Legal
        Opinion.
        Wilson,
        Sonsini, Goodrich & Rosati, P.C., counsel to the Company, shall have
        delivered to the Purchaser an opinion substantially in the form attached
        hereto
        as Exhibit F.

       

      4.8  Certificate
        of Incorporation.
        The
        Certificate of Incorporation shall have been accepted for filing with and
        certified by the Secretary of State of the State of Delaware.

       

      4.9  Board
        of Directors.
        The
        Company shall have taken all necessary corporate action such that, immediately
        after the Closing, the Board of Directors of the Company shall consist of
        Eric
        Donsky, Donald Rindell, Michael Lemp, Elias Vamvakas, and Thomas
        Reeves.

       

      4.10  Secretary’s
        Certificate.
        The
        Company’s Secretary shall deliver to the Purchaser at the Closing a certificate
        having attached thereto (i) the Company’s Certificate of Incorporation as
        in effect at the time of the Closing, (ii) the Company’s Bylaws as in
        effect at the time of the Closing, (iii) resolutions approved by the
        Company’s Board of Directors authorizing the transactions contemplated hereby,
        (iv) resolutions approved by the Company’s stockholders authorizing the
        filing of the Certificate of Incorporation and (v) good standing
        certificates with respect to the Company from the applicable authorities
        in
        Delaware and California.

       

      
        
          
          

        

        
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      4.11  Stockholder
        Consent to Transactions.
        The
        requisite stockholders of the Company shall have approved, or executed written
        consents approving, the transactions contemplated hereby and by the other
        Transaction Documents.

       

      4.12  Financing.
        The
        Purchaser shall have obtained sufficient financing to effect the transactions
        contemplated by this Agreement, which financing shall be on terms and conditions
        satisfactory to the Purchaser in its sole discretion.

       

      4.13  Warrant.
        The
        Company shall have issued the Warrant.

       

      4.14  Brokers
        or Finders.
        The
        Company shall not have engaged any brokers, finders or agents in connection
        with
        the transactions contemplated by this Agreement.

       

      4.15  Other
        Deliveries.
        The
        Purchaser shall have received from the Company such additional documents,
        certificates, instruments or writings, in form and substance satisfactory
        to the
        Purchaser and its counsel, as the Purchaser shall have reasonably requested
        in
        connection with the transactions contemplated hereby.

       

      5.  Conditions
        of the Company’s Obligations at Closing.
        The
        obligations of the Company to sell and issue the Shares at the Closing are
        subject to the fulfillment at or before the Closing of each of the following
        conditions:

       

      5.1  Representations
        and Warranties.
        The
        representations and warranties made by the Purchaser in Section 3 hereof
        shall be true and correct in all respects on the date of the Closing, with
        the
        same effect as though such representations and warranties had been made on
        and
        as of the date of the Closing.

       

      5.2  Qualifications.
        All
        authorizations, approvals or permits, if any, of any governmental authority
        or
        regulatory body of the United States or of any state that are required in
        connection with the lawful issuance and sale of the Shares, the Additional
        Shares, the Warrant, the Warrant Shares and the Conversion Shares pursuant
        to
        this Agreement shall be duly obtained and effective as of the Closing, except
        for post-closing filings required under applicable federal and state securities
        laws.

       

      5.3  Investor
        Rights Agreement.
        The
        Company, the Purchaser and the stockholders of the Company named therein
        shall
        have entered into the Rights Agreement.

       

      5.4  Voting
        Agreement.
        The
        Company, the Purchaser and the stockholders named therein shall have entered
        into the Voting Agreement.

       

      5.5  Certificate
        of Incorporation.
        The
        Certificate of Incorporation shall have been accepted for filing with and
        certified by the Secretary of State of the State of Delaware.

       

      5.6  Note.
        The
        Purchaser shall have issued the Note to the Company.

       

      5.7  Other
        Deliveries.
        The
        Company shall have received from the Purchaser such additional documents,
        certificates, instruments or writings, in form and substance satisfactory
        to the
        Company and its counsel, as the Company shall have reasonably requested in
        connection with the transactions contemplated hereby.

       

      
        
          
          

        

        
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      6.  Conditions
        of the Purchaser’s Obligations at the Additional Closing.
        The
        obligations of the Purchaser to purchase the Additional Shares at each of
        the
        Additional Closings are subject to the fulfillment at or before each of the
        Additional Closings of each of the following conditions.

       

      6.1  Representations
        and Warranties.
        The
        Company shall make representations and warranties, reasonably satisfactory
        to
        the Purchaser, on and as of the date of each Additional Closing.

       

      6.2  Performance.
        The
        Company shall have performed or observed in all respects all obligations,
        covenants and conditions herein required to be performed or observed by it
        on or
        prior to the date of the Additional Closing.

       

      6.3  Compliance
        Certificate.
        An
        authorized officer of the Company shall deliver to the Purchaser, at the
        Additional Closing, a certificate certifying that the conditions specified
        in
        Sections 6.1 and 6.5 have been fulfilled and that the 510K Clearance and
        the CLIA Waiver have been received by the Company in accordance with the
        terms
        set forth in Section 1.4(d) hereof.

       

      6.4  Qualifications.
        All
        authorizations, approvals or permits, if any, of any governmental authority
        or
        regulatory body of the United States or of any state that are required in
        connection with the lawful issuance and sale of the Shares, the Additional
        Shares, the Warrant, the Warrant Shares and the Conversion Shares pursuant
        to
        this Agreement shall have been duly obtained by the Company and be effective
        as
        of the Additional Closing, except for post-closing filings required under
        applicable federal and state securities laws.

       

      6.5  Material
        Adverse Effect.
        No
        Additional Closing Material Adverse Effect (defined below) with respect to
        the
        matters set forth in Sections 2.1 (Organization, Good Standing and
        Qualification), 2.2 (Capitalization and Voting Rights), 2.4 (Authorization),
        2.5
        (Governmental Consents), 2.6 (Litigation), 2.7 (Title to Property and Assets),
        2.12 (Proprietary Rights), 2.15 (Permits; Compliance with Laws) and
        2.16 (Compliance with Certificate of Incorporation and Bylaws; No Conflict)
        shall have occurred since the date hereof and be continuing. For purposes
        of
        this Section 6.4, “Additional Closing Material Adverse Effect” means a
        material adverse effect on the business, assets, properties, operations,
        prospects or financial condition of the Company (as such business is currently
        being conducted or contemplated to be conducted), as determined from the
        perspective of a reasonable person in the Purchaser’s position; provided,
        however, that none of the following shall be deemed, either alone or in
        combination, to constitute an Additional Closing Material Adverse Effect,
        nor
        shall any of the following be taken into account in determining whether there
        has been an Additional Closing Material Adverse Effect: any change or effect
        resulting from or arising out of (a) the performance by the Company of its
        obligations under this Agreement or the Sales and Marketing Agreement (as
        defined below); (b) applicable legal or accounting requirements;
        (c) general economic conditions in any country where the Company conducts
        business (which changes in each case do not disproportionately affect the
        Company in any material respect); (d) general conditions in any industry in
        which the Company conducts business (which changes in each case do not
        disproportionately affect the Company in any material respect); or (e) any
        natural disaster or any acts of terrorism, sabotage, military action or war
        (whether or not declared) or any escalation or worsening thereof.

       

      
        
          
          

        

        
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      6.6  Other
        Deliveries.
        The
        Purchaser shall have received from the Company such additional documents,
        certificates, instruments or writings, in form and substance satisfactory
        to the
        Purchaser and its counsel, as the Purchaser shall have reasonably requested
        in
        connection with the transactions contemplated hereby.

       

      7.  Conditions
        of the Company’s Obligations at the Additional Closing.
        The
        obligations of the Company to sell and issue the Additional Shares at each
        of
        the Additional Closings are subject to the fulfillment at or before each
        of the
        Additional Closings of each of the following conditions:

       

      7.1  Representations
        and Warranties.
        The
        Purchaser shall make representations and warranties, reasonably satisfactory
        to
        the Company, on and as of the date of each Additional Closing.

       

      7.2  Qualifications.
        All
        authorizations, approvals or permits, if any, of any governmental authority
        or
        regulatory body of the United States or of any state that are required in
        connection with the lawful issuance and sale, pursuant to this Agreement,
        of the
        Additional Shares and the Conversion Shares issuable upon the conversion
        of the
        Additional Shares shall have been duly obtained and effective as of the
        Additional Closing, except for post-closing filings required under applicable
        federal and state securities laws.

       

      7.3  Other
        Deliveries.
        The
        Company shall have received from the Purchaser such additional documents,
        certificates, instruments or writings, in form and substance satisfactory
        to the
        Company and its counsel, as the Company shall have reasonably requested in
        connection with the transactions contemplated hereby.

       

      8.  Additional
        Agreements of the Company and the Purchaser.

       

      8.1  Use
        of
        Proceeds.
        The
        Company shall use the proceeds it receives from the sale of the Shares to
        the
        Purchaser solely to finance its current working capital requirements and
        to
        repay the long-term debt obligations set forth on Schedule 8.1, and no
        portion of such proceeds shall be used for any other purpose, including without
        limitation, to pay or make any dividend or other capital distribution to
any
        equity holder.

       

      8.2  Insurance
        Indemnity.

       

      (a)  The
        Company acknowledges and agrees that it has not purchased and does not carry
        any
        insurance coverage with respect to the Company’s business operations, activities
        and properties of any sort or at any amount that would normally be purchased
        by
        a company or entity of similar size or engaged in similar
        activities.

       

      (b)  The
        Company further acknowledges and agrees that the Purchaser’s investment in the
        Company pursuant to this Agreement could be substantially impaired and its
        value
        substantially reduced in the event the Company suffers a claim, loss, damage,
        settlement, fine, penalty, cost or expense of any nature (“Insurable
        Losses”)
        or is
        required to make any payment with respect to any such Insurable Losses for
        which
        the Company would have been able to recover all or a portion of such Insurable
        Losses from the proceeds of insurance but for the Company’s failure to obtain
        business liability, property, errors and omissions or other similar or
        comparable insurance coverage of any sort prior to the date of the First
        Closing.

       

      
        
          
          

        

        
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      (c)  The
        Company hereby agrees that in the event of, and to the extent that, the Company
        incurs or suffers any Insurable Losses, or is required to make any payment
        with
        respect to any such Insurable Losses, the Company shall promptly (but in
        no
        event more than thirty (30) days after any such payment) issue to the Purchaser
        a number of shares of the Series A Preferred, the fair market value of which,
        as
        determined in good faith by the Board of Directors of the Company, shall
        equal
        50% of the payment made by the Company in respect of such Insurable Losses.
        The
        Purchaser shall not be entitled to be issued any shares of the Series A
        Preferred pursuant to this Section 8.2(c) in respect of Insurable Losses
        unless
        and until such time as the aggregate amount of Insurable Losses suffered
        by the
        Company equals or exceeds $100,000, at which time, the Purchaser shall be
        entitled to compensation in accordance with the terms of this Section 8.2(c)
        in
        respect of all of the Insurable Losses suffered by the Company to that
        time.

       

      8.3  Sales
        and Marketing Agreement.
        The
        Company and the Purchaser hereby agree to use commercially reasonable efforts
        to
        enter into a Sales and Marketing Agreement by and between the Company and
        the
        Purchaser within one hundred eighty (180) days of the Closing, providing
        for the
        provision by the Purchaser, on an exclusive worldwide basis, of all sales,
        marketing and distribution services for or in connection with, or otherwise
        relating to, all of the Company’s ophthalmic products and services (subject to
        the Company’s currently existing agreements with third parties relating to such
        subject matter) and providing for such other terms and conditions that may
        be
        mutually agreed upon by the parties in their reasonable discretion contained
        in
        the definitive agreement executed in connection therewith. 

       

      8.4  Right
        of First Offer Waivers.
        The
        Company hereby agrees that it shall use commercially reasonable efforts to
        obtain waivers from each of the stockholders of the Company set forth on
        Schedule
        8.4
        regarding the respective right of first offer granted to such stockholders;
        provided
        further,
        that in
        the event the Company, following the consummation of the transactions
        contemplated by this Agreement and the issuance of the warrants to purchase
        Common Stock and the shares of Series A Preferred Stock to be issued to certain
        noteholders of the Company in connection herewith, issues any equity securities
        of the Company pursuant to any such right of first offer as a result of the
        consummation of the transactions contemplated hereby, the Company shall
        promptly, and in any event no later than two (2) Business Days following
        any
        such issuance, issue for no additional consideration to the Purchaser that
        number of shares of Series A Preferred Stock such that the Purchaser shall
        have
        the same percentage ownership of the Company on a fully-diluted basis as
        it
        shall have immediately following the consummation of the transactions
        contemplated hereby and the issuance of the warrants to purchase Common Stock
        and the shares of Series A Preferred Stock to be issued in connection
        herewith.

       

      9.  Miscellaneous.
        

       

      9.1  Term.
        

       

      (a)  This
        Agreement may be terminated at any time prior to the Closing (i) by mutual
        written consent of the Company and the Purchaser, (ii) by the Company or
        the
        Purchaser if a material breach of any provision of this Agreement has been
        committed by the other party, such that the conditions set forth in Sections
        4
        and 6 would not be met on or prior to December 15, 2006, and such breach
        has not been waived or cured within fifteen (15) days after delivery of written
        notification to the breaching party, (iii) by either party if the Closing
        has
        not occurred on or before December 15, 2006, or (iv) by the Purchaser in
        the event that any governmental authority shall have issued an order, decree,
        ruling or taken any other action restraining, enjoining or otherwise prohibiting
        the transactions contemplated by this Agreement. 

       

      
        
          
          

        

        
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      (b)  In
        the
        event of the termination of this Agreement pursuant to Section 9.1(a), this
        Agreement (other than Section 9.3, Section 9.7 and Section 9.8) shall forthwith
        become wholly void and of no further force and effect and there shall be
        no
        liability on the part of the Company or the Purchaser; provided, however
        that
        neither the Company nor the Purchaser shall be relieved from liability for
        any
        breach of any provision of this Agreement as set forth herein existing at
        the
        time of such termination.

       

      9.2  Successors
        and Assigns.
        Except
        as otherwise provided herein, the terms and conditions of this Agreement
        shall
        inure to the benefit of and be binding upon the respective successors and
        assigns of the parties (including, without limitation, transferees of any
        Securities). In the event that the Purchaser is a party to a merger, change
        of
        control or consolidation, the obligations and rights of the Purchaser hereunder
        shall be assumed by and assigned to the surviving corporation or its parent.
        Except as provided herein, no rights, obligations or liabilities hereunder
        will
        be assignable by any party without the prior written consent of the other
        party
        hereto. Nothing in this Agreement, express or implied, is intended to confer
        upon any party other than the parties hereto or their respective successors
        and
        assigns any rights, remedies, obligations or liabilities under or by reason
        of
        this Agreement, except as expressly provided in this Agreement.

       

      9.3  Governing
        Law.
        This
        Agreement and the transactions contemplated hereunder shall be governed by
        and
        construed under the laws of the State of Delaware without giving effect to
        the
        conflicts of law principles of that jurisdiction. The parties hereto agree
        to
        waive all rights they may otherwise have to trial by jury in connection with
        any
        action, suit or proceeding brought to enforce or defend any rights or remedies
        arising under or relating to this Agreement and the agreements and transactions
        contemplated hereby, whether grounded in tort, contract or
        otherwise.

       

      9.4  Counterparts.
        This
        Agreement may be executed in counterparts, each of which shall be deemed
        an
        original, but all of which together shall constitute one and the same
        instrument.

       

      9.5  Titles
        and Subtitles.
        The
        titles and subtitles used in this Agreement are used for convenience only
        and
        are not to be considered in construing or interpreting this
        Agreement.

       

      9.6  Notices.
        All
        notices, reports and other communications required or permitted hereunder
        shall
        be in writing, shall be effective when given, and shall in any event be deemed
        to be given upon the earlier of actual receipt, and: (i) three (3)
        days after deposit with the U.S. Postal Service or other applicable postal
        service, if delivered by first class mail, postage prepaid; (ii) upon
        delivery, if delivered by hand; (iii) one (1) business day after the
        business day of deposit with Federal Express or similar overnight courier,
        freight prepaid; or (iv) one (1) business day after the business day
        of facsimile transmission (with confirmation), if delivered by facsimile
        transmission. All notices delivered hereunder shall be addressed as follows:
        

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      If
        to the
        Purchaser:

       

      OccuLogix,
        Inc.

      2600
        Skymark Ave.

      Bldg.
        9,
        Ste 201

      Mississauga,
        ON L4W 5B2 

      Canada

      Attention:
        General Counsel

      Fax:
        (905) 602-7623

       

      with
        a
        copy to

       

      Torys
        LLP

      237
        Park
        Avenue

      New
        York,
        NY 10017

      United
        States of America

      Attention:
        Andrew J. Beck, Esq.

      Fax:
        (212) 682-0200

       

      If
        to the
        Company:

       

      OcuSense,
        Inc.

      12707
        High Bluff Drive, Suite 200

      San
        Diego, CA 92130

      United
        States of America

      Attention:
        Chief Executive Officer

      Fax:
        (858) 794-1493

       

      with
        a
        copy to

       

      Wilson,
        Sonsini, Goodrich & Rosati, P.C.

      12235
        El
        Camino Real, Suite 200

      San
        Diego, CA 92130-3002

      United
        States of America

      Attention:
        Martin J. Waters, Esq.

      Fax:
        (858) 350-2399

       

      or
        at
        such other address as a party may designate by ten (10) days’ advance written
        notice to the other party pursuant to the provisions above.

       

      9.7  Finder’s
        Fee.
        Each
        party represents that it neither is nor will be obligated for any finder’s or
        broker’s fee or commission in connection with the transactions contemplated by
        this Agreement, and each party agrees to indemnify and hold harmless the
        other
        party hereto from any liability for any commission or compensation in the
        nature
        of a finder’s or broker’s fee or commission (and the costs and expenses of
        defending against such liability or asserted liability) for which such party
        or
        any of its officers, partners, employees or representatives is
        responsible.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

      9.8  Costs
        and Expenses.
        The
        Company and the Purchaser shall pay for any and all of their own costs and
        expenses they incur in connection with the transactions contemplated by this
        Agreement and the other Transaction Documents provided, however in the event
        this Agreement is terminated by either party pursuant to Section 9.1(a)(ii),
        the
        breaching party shall reimburse the non-breaching party for all reasonable
        out-of-pocket expenses (including, without limitation, reasonable attorney’s
        fees and disbursements).

       

      9.9  Amendment
        and Waivers.
        Any
        term of this Agreement may be amended and the observance of any term of this
        Agreement may be waived (either generally or in a particular instance and
        either
        retroactively or prospectively) only with the written consent of the Company
        and
        the Purchaser. Any amendment or waiver effected in accordance with this
        paragraph shall be binding upon each holder of any Securities, each future
        holder of all such Securities and the Company.

       

      9.10  Severability.
        If one
        or more provisions of this Agreement are held to be unenforceable under
        applicable law, such provision shall be excluded from this Agreement and
        the
        balance of this Agreement shall be interpreted as if such provision were
        so
        excluded and shall be enforceable in accordance with its terms.

       

      9.11  Entire
        Agreement.
        This
        Agreement and the documents referred to herein constitute the entire agreement
        between the parties and supersede and render void every other prior written
        or
        oral understanding between the parties hereto. No party shall be liable or
        bound
        to the other party in any manner by any warranties, representations or covenants
        except as specifically set forth herein or therein.

       

      9.12  Survival
        of Warranties.
        The
        warranties, representations and covenants of the Company and the Purchaser
        contained in, or made pursuant to, this Agreement shall survive for a period
        of
        one (1) year following the later to occur of: (i) the date on which
        the Purchaser makes the payment of $2.0 million, contemplated in
        Section 1.4(c)(ii) hereof, in connection with the achievement of the Second
        Milestone, (ii) the date on which the Purchaser exercises the Warrant in
        full following the Fourth Approval Deadline and receives all of the Warrant
        Shares and (iii) the expiry of the Warrant; provided, however, that, if the
        Second Milestone is not achieved prior to May 1, 2009 giving rise to the
        consequence that the Purchaser shall never make the payment of $2.0 million
        contemplated in Section 1.4(c)(ii) hereof, then the warranties,
        representations and covenants of the Company and the Purchaser contained
        in, or
        made pursuant to, this Agreement shall survive for a period of one (1) year
        following the later to occur of the dates referred to in (ii) and (iii) of
        this
        Section 9.12.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

      9.13  California
        Corporate Securities Law.
        THE
        SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
        QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
        AND
        THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF
        THE
        CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE
        SALE
        OF SECURITIES IS EXEMPT FROM SUCH QUALIFICATION BY SECTION 25100, 25102 OR
        25105
        OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
        ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS
        THE
        SALE IS SO EXEMPT.

       


      
        
          -
            -

          
          

        

        
          25

          
            

          

        

        
          
          

        

      


      IN
        WITNESS HEREOF, the parties have executed this Agreement as of the date first
        written above.

       

      
        	
                 

                COMPANY:

                 

              	 	
                 

                                                                                                                           
                  OCUSENSE, INC.

                 

              
	
                By:

              	 /s/
                Eric Donsky
	 	
                Name: Eric
                  Donsky

              
	 	
                Title: Chief
                  Executive Officer

              
	 	 
	 	 	 	 
	
                 

                PURCHASER:

                 

              	 	
                 

                                                                                                                           
                  OCCULOGIX, INC.

                 

              
	
                By:

              	 /s/
                Elias Vamvakas
	 	
                Name: Elias
                  Vamvakas

              
	 	
                Title: Chief
                  Executive Officer

              
	 	 


      

      


       

      


       


      
        
          
          

          
          

        

        
          26

          
            

          

        

        
          
          

          
            


          

        

      



       

      EXHIBIT
        A

       

       

      


       

       

      THIRD
        AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

       

      


       


      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



       

      EXHIBIT
        B

       

       

      


       

       

      FORM
        OF PROMISSORY NOTE

       

      


       


      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



       

      EXHIBIT
        C

       

       

      


       

       

      COMPANY
        DISCLOSURE SCHEDULE

       

      


       


      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



       

      EXHIBIT
        D

       

       

      


       

       

      PREFERRED
        STOCK INVESTOR RIGHTS AGREEMENT

       

      


       


      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



       

      EXHIBIT
        E

       

       

      


       

       

      FORM
        OF ASSIGNMENT OF INVENTIONS

       

       

      AND
        NON-DISCLOSURE AGREEMENT

       

      


       


      
        
          
          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



       

      EXHIBIT
        F

       

       

      


       

       

      FORM
        OF LEGAL OPINION TO BE RENDERED BY

       

       

      WILSON,
        SONSINI, GOODRICH & ROSATI, P.C.

       

       

      


       


      
        
          
            
              	 	 	 


            

            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



       

      EXHIBIT
        G

       

       

      


       

       

      FORM
        OF WARRANT

       

      


       


      
        
          
            
              	 	 	 


            

            


          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
            


          

        

      



       

      EXHIBIT
        H

       

       

      


       

       

      VOTING
        AGREEMENT