exv10w1






Exhibit 10.1









April 29, 2010




STRICTLY CONFIDENTIAL




Mr. Brian M. Culley

Chief Executive Officer

Adventrx Pharmaceuticals Inc.

6725 Mesa Ridge Road

Suite 100

San Diego, CA 92121



Dear Mr. Culley:




     This letter (this “Agreement”) constitutes the agreement between Adventrx Pharmaceuticals Inc.
(the “Company”) and Rodman & Renshaw, LLC (“Rodman” or the “Placement Agent”) that Rodman shall
serve as the exclusive placement agent (the “Services”) for the Company, on a “best efforts” basis,
in connection with the proposed offer and placement (the “Offering”) by the Company of
approximately $50.0 million of securities of the Company (the “Securities”), including but not
limited to, convertible preferred securities and warrants. The terms of the Offering and the
Securities shall be mutually agreed upon by the Company and the investors and nothing herein
implies that Rodman would have the power or authority to bind the Company or an obligation for the
Company to issue any Securities or complete the Offering. The Company expressly acknowledges and
agrees that Rodman’s obligations hereunder are on a reasonable best efforts basis only and that the
execution of this Agreement does not constitute a commitment by Rodman to purchase the Securities
and does not ensure the successful placement of the Securities or any portion thereof or the
success of Rodman with respect to securing any other financing on behalf of the Company. As the
Offering will consist of registered securities, the provisions of Annex A will apply in addition to
the provisions set forth herein.



     A. Fees. In connection with the Services described above, the Company shall pay to
Rodman a cash placement fee (the “Placement Agent’s Fee”) equal to 8% of the aggregate purchase
price paid by each purchaser of Securities that are placed in the Offering; provided,
however, that in the event that the Company enters into an advisory agreement, reasonably
acceptable to Rodman, with Caris & Company (“Caris”), 13.125% of the Placement Agent’s Fee shall be
paid to Caris by the Company at the Closing (which amount shall reduce the Placement Agent’s Fee by
13.125%). The Placement Agent’s Fee shall be paid at the closing of the Offering (the “Closing”)
from the gross proceeds of the Securities sold.



     B. Term and Termination of Engagement. The term (the “Term”) of Rodman’s engagement
will begin on the date hereof and end on the earlier of the consummation of the Offering or two
business days after the receipt by either party hereto of written notice of termination; provided
that no such notice may be given by the Company for a period of 30 days after the date hereof.
Notwithstanding anything to the contrary contained herein, the provisions concerning
confidentiality, indemnification and contribution contained herein and the Company’s obligations
contained in Section H hereof will survive any expiration or termination of this Agreement,
and the Company’s obligation to pay fees actually earned and payable and to
reimburse expenses actually incurred and reimbursable pursuant to Section A hereof, if any, will survive any expiration or termination of this
Agreement, as permitted by FINRA Rule 5110(f)(2)(d). Upon any expiration or termination of this
Agreement, the Company’s



Rodman & Renshaw, LLC o 1251 Avenue of the Americas, 20th Floor, New York, NY 10020

Tel: 212 356 0500 o Fax: 212 581 5690 o www.rodm.com o Member: FINRA, SIPC






 









 







obligation to reimburse Rodman for out of pocket accountable expenses
actually incurred by Rodman and reimbursable upon closing of the Offering pursuant to Section A, if
any, or otherwise due under Section A hereof, will survive any expiration or termination of this
Agreement, as permitted by FINRA Rule 5110(f)(2)(d).




     C. [Intentionally Omitted]



     D. Use of Information. The Company will furnish Rodman such written information as
Rodman reasonably requests in connection with the performance of its services hereunder. The
Company understands, acknowledges and agrees that, in performing its services hereunder, Rodman
will use and rely entirely upon such information as well as publicly available information
regarding the Company and other potential parties to an Offering and that Rodman does not assume
responsibility for independent verification of the accuracy or completeness of any information,
whether publicly available or otherwise furnished to it, concerning the Company or otherwise
relevant to an Offering, including, without limitation, any financial information, forecasts or
projections considered by Rodman in connection with the provision of its services.



     E. Confidentiality. In the event of the consummation or public announcement of any
Offering, Rodman shall have the right to disclose its participation in such Offering, including,
without limitation, the placement at its cost of “tombstone” advertisements in financial and other
newspapers and journals. Rodman agrees not to use any confidential information concerning the
Company provided to Rodman by the Company for any purposes other than those contemplated under this
Agreement.



     F. Securities Matters. The Company shall be responsible for any and all compliance
with the securities laws applicable to it, including Regulation D and the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506 promulgated thereunder, and unless otherwise agreed
in writing, all state securities (“blue sky”) laws. Rodman agrees to cooperate with counsel to the
Company in that regard.



     G. Company Acknowledgement. The Company acknowledges that the Offering of convertible
Securities may create significant risks, including the risk that the Company may have insufficient
cash resources and/or registered shares to timely meet its payment and conversion obligations. The
Company further acknowledges that, depending on the number and price of new shares issued, such
transaction may result in substantial dilution which could adversely affect the market price of the
Company’s shares.



     H. Indemnity.



          1. In connection with the Company’s engagement of Rodman as placement agent, the Company
hereby agrees to indemnify and hold harmless Rodman and its affiliates, and the respective
controlling persons, directors, officers, shareholders, agents and employees of any of the
foregoing (collectively the “Indemnified Persons”), from and against any and all claims, actions,
suits, proceedings (including those of shareholders), damages, liabilities and expenses incurred by
any of them (including the reasonable fees and expenses of counsel), as incurred, (collectively a
“Claim”), that are (A) related to or arise out of (i) any actions taken or omitted to be taken
(including any untrue statements made or any statements omitted to be made) by the Company, or (ii) any actions taken or omitted to be
taken by any Indemnified Person in connection with the Company’s engagement of Rodman, or (B)
otherwise relate to or arise out of Rodman’s activities on the Company’s behalf under Rodman’s
engagement, and the Company shall reimburse any Indemnified Person for all expenses (including the
reasonable fees and expenses of counsel) as incurred by such Indemnified Person in connection with
investigating, preparing or defending any such claim, action, suit or proceeding, whether or not in
connection with pending or threatened litigation in which any Indemnified Person is a party. The
Company will not, however, be






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responsible for any Claim, that is finally judicially determined to
have resulted from the gross negligence or willful misconduct of any person seeking indemnification
for such Claim. The Company further agrees that no Indemnified Person shall have any liability to
the Company for or in connection with the Company’s engagement of Rodman except for any Claim
incurred by the Company as a result of such Indemnified Person’s gross negligence or willful
misconduct.




          2. The Company further agrees that it will not, without the prior written consent of Rodman,
settle, compromise or consent to the entry of any judgment in any pending or threatened Claim in
respect of which indemnification may be sought hereunder (whether or not any Indemnified Person is
an actual or potential party to such Claim), unless such settlement, compromise or consent includes
an unconditional, irrevocable release of each Indemnified Person from any and all liability arising
out of such Claim.




          3. Promptly upon receipt by an Indemnified Person of notice of any complaint or the assertion
or institution of any Claim with respect to which indemnification is being sought hereunder, such
Indemnified Person shall notify the Company in writing of such complaint or of such assertion or
institution but failure to so notify the Company shall not relieve the Company from any obligation
it may have hereunder, except and only to the extent such failure results in the forfeiture by the
Company of substantial rights and defenses. If the Company so elects or is requested by such
Indemnified Person, the Company will assume the defense of such Claim, including the employment of
counsel reasonably satisfactory to such Indemnified Person and the payment of the fees and expenses
of such counsel. In the event, however, that legal counsel to such Indemnified Person reasonably
determines that having common counsel would present such counsel with a conflict of interest or if
the defendant in, or target of, any such Claim, includes an Indemnified Person and the Company, and
legal counsel to such Indemnified Person reasonably concludes that there may be legal defenses
available to it or other Indemnified Persons different from or in addition to those available to
the Company, then such Indemnified Person may employ its own separate counsel to represent or
defend him, her or it in any such Claim and the Company shall pay the reasonable fees and expenses
of such counsel. Notwithstanding anything herein to the contrary, if the Company fails timely or
diligently to defend, contest, or otherwise protect against any Claim, the relevant Indemnified
Party shall have the right, but not the obligation, to defend, contest, compromise, settle, assert
crossclaims, or counterclaims or otherwise protect against the same, and shall be fully indemnified
by the Company therefor, including without limitation, for the reasonable fees and expenses of its
counsel and all amounts paid as a result of such Claim or the compromise or settlement thereof. In
addition, with respect to any Claim in which the Company assumes the defense, the Indemnified
Person shall have the right to participate in such Claim and to retain his, her or its own counsel
therefor at his, her or its own expense.




          4. The Company agrees that if any indemnity sought by an Indemnified Person hereunder is held
by a court to be unavailable for any reason then (whether or not Rodman is the Indemnified Person),
the Company and Rodman shall contribute to the Claim for which such indemnity is held unavailable
in such proportion as is appropriate to reflect the relative benefits to the Company, on the one
hand, and Rodman on the other, in connection with Rodman’s engagement referred to above, subject to
the limitation that in no event shall the amount of Rodman’s contribution to such Claim exceed the
amount of fees actually received by Rodman from the Company pursuant to Rodman’s engagement.
The Company hereby agrees that the relative benefits to the Company, on the one hand, and
Rodman on the other, with respect to Rodman’s engagement shall be deemed to be in the same
proportion as (a) the total value paid or proposed to be paid or received by the Company pursuant
to the Offering (whether or not consummated) for which Rodman is engaged to render services bears
to (b) the fee paid or proposed to be paid to Rodman in connection with such engagement.




     5. The Company’s indemnity, reimbursement and contribution obligations under this Agreement
(a) shall be in addition to, and shall in no way limit or otherwise adversely affect any rights



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that any Indemnified Party may have at law or at equity and (b) shall be effective whether or not
the Company is at fault in any way.




     I. Limitation of Engagement to the Company. The Company acknowledges that Rodman has
been retained only by the Company, that Rodman is providing services hereunder as an independent
contractor (and not in any fiduciary or agency capacity) and that the Company’s engagement of
Rodman is not deemed to be on behalf of, and is not intended to confer rights upon, any
shareholder, owner or partner of the Company or any other person not a party hereto as against
Rodman or any of its affiliates, or any of its or their respective officers, directors, controlling
persons (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), employees or agents. Unless otherwise
expressly agreed in writing by Rodman, no one other than the Company is authorized to rely upon
this Agreement or any other statements or conduct of Rodman, and no one other than the Company is
intended to be a beneficiary of this Agreement. The Company acknowledges that any recommendation
or advice, written or oral, given by Rodman to the Company in connection with Rodman’s engagement
is intended solely for the benefit and use of the Company’s management and directors in considering
a possible Offering, and any such recommendation or advice is not on behalf of, and shall not
confer any rights or remedies upon, any other person or be used or relied upon for any other
purpose. Rodman shall not have the authority to make any commitment binding on the Company. The
Company, in its sole discretion, shall have the right to reject any investor introduced to it by
Rodman. The Company agrees that it will perform and comply with the covenants and other
obligations set forth in the purchase agreement (the “Purchase Agreement”) and related transaction
documents between the Company and the investors in the Offering (collectively with the Purchase
Agreement, the “Transaction Documents”).



     J. Limitation of Rodman’s Liability to the Company. Rodman and the Company further
agree that neither Rodman nor any of its affiliates or any of its their respective officers,
directors, controlling persons (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act), employees or agents shall have any liability to the Company, its security
holders or creditors, or any person asserting claims on behalf of or in the right of the Company
(whether direct or indirect, in contract, tort, for an act of negligence or otherwise) for any
losses, fees, damages, liabilities, costs, expenses or equitable relief arising out of or relating
to this Agreement or the Services rendered hereunder, except for losses, fees, damages,
liabilities, costs or expenses that arise out of or are based on any action of or failure to act by
Rodman and that are finally judicially determined to have resulted solely from the gross negligence
or willful misconduct of Rodman.



     K. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be fully performed
therein. Any disputes that arise under this Agreement, even after the termination of this
Agreement, will be heard only in the state or federal courts located in the City of New York, State
of New York. The parties hereto expressly agree to submit themselves to the jurisdiction of the
foregoing courts in the City of New York, State of New York. The parties hereto expressly waive any
rights they may have to contest the jurisdiction, venue or authority of any court sitting in the
City and State of New York. In the event of the bringing of any action, or suit by a party hereto
against the other party hereto, arising out of or relating to
this Agreement, the party in whose favor the final judgment or award shall be entered shall be
entitled to have and recover from the other party the costs and expenses incurred in connection
therewith, including its reasonable attorneys’ fees. Any rights to trial by jury with respect to
any such action, proceeding or suit are hereby waived by Rodman and the Company.



     L. Notices. All notices hereunder will be in writing and sent by certified mail, hand
delivery, overnight delivery or fax, if sent to Rodman, to Rodman & Renshaw, LLC, at the address
set forth on the first page hereof, fax number (646) 841-1640, Attention: General Counsel, and if
sent to the Company, to the address set forth on the first page hereof, fax number (858) 552-0876,
Attention: Chief



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Executive Officer. Notices sent by certified mail shall be deemed received five
days thereafter, notices sent by hand delivery or overnight delivery shall be deemed received on
the date of the relevant written record of receipt, and notices delivered by fax shall be deemed
received as of the date and time printed thereon by the fax machine.




     M. Miscellaneous. This Agreement shall not be modified or amended except in writing
signed by Rodman and the Company. This Agreement shall be binding upon and inure to the benefit of
both Rodman and the Company and their respective assigns, successors, and legal representatives.
This Agreement constitutes the entire agreement of Rodman and the Company with respect to this
Offering and supersedes any prior agreements with respect to the subject matter hereof, and the May
22, 2009 engagement agreement between the parties shall continue in accordance with its terms other
than with respect to this Offering. If any provision of this Agreement is determined to be invalid
or unenforceable in any respect, such determination will not affect such provision in any other
respect, and the remainder of the Agreement shall remain in full force and effect. This Agreement
may be executed in counterparts (including facsimile counterparts), each of which shall be deemed
an original but all of which together shall constitute one and the same instrument.



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     In acknowledgment that the foregoing correctly sets forth the understanding reached by Rodman
and the Company, please sign in the space provided below, whereupon this letter shall constitute a
binding Agreement as of the date indicated above.



	 	 	 	 	 
	 	Very truly yours,



RODMAN & RENSHAW, LLC

 	 
	 	By 	 /s/ John Borer
 	 
	 	 	Name: 	John Borer 	 
	 	 	Title:  	Sr. Managing Director 	 
	 



	 	 	 	 	 
	Accepted and Agreed:



ADVENTRX PHARMACEUTICALS INC.

 	 
	By 	 /s/ Brian M. Culley
 	 
	 	Brian M. Culley 	 
	 	Chief Executive Officer 	 



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Annex A




Additional Provisions With Respect to a Registered Offering


SECTION 1. [RESERVED]



SECTION 2. REGISTRATION STATEMENT.



The Company represents and warrants to, and agrees with, the Placement Agent that as of the date of
the Offering, as of the date of the Purchase Agreement and as of the closing date of the Offering
(the “Closing Date”):





     (A) The Company has filed with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (Registration File No. 333-165691) under the Securities Act of
1933, as amended (the “Securities Act”), which became effective on April 1, 2010, for the
registration under the Securities Act of the Securities. At the time of such filing, the Company
met the requirements of Form S-3 under the Securities Act. Such registration statement meets the
requirements set forth in Rule 415(a)(1)(x) under the Securities Act and complies with said Rule.
The Company will file with the Commission pursuant to Rule 424(b) under the Securities Act, and the
rules and regulations (the “Rules and Regulations”) of the Commission promulgated thereunder, a
supplement to the form of prospectus included in such registration statement relating to the
placement of the Securities and the plan of distribution thereof and has advised the Placement
Agent of all further information (financial and other) with respect to the Company required to be
set forth therein. Such registration statement, including the exhibits thereto, as amended at the
date of this Agreement, is hereinafter called the “Registration Statement”; such prospectus in the
form in which it appears in the Registration Statement is hereinafter called the “Base Prospectus”;
and the supplemented form of prospectus, in the form in which it will be filed with the Commission
pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is hereinafter called
the “Prospectus Supplement.” Any reference in this Agreement to the Registration Statement, the
Base Prospectus or the Prospectus Supplement shall be deemed to refer to and include the documents
incorporated by reference therein (the “Incorporated Documents”) pursuant to Item 12 of Form S-3
which were filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or
before the date of this Agreement, or the issue date of the Base Prospectus or the Prospectus
Supplement, as the case may be; and any reference in this Agreement to the terms “amend,”
“amendment” or “supplement” with respect to the Registration Statement, the Base Prospectus or the
Prospectus Supplement shall be deemed to refer to and include the filing of any document under the
Exchange Act after the date of this Agreement, or the issue date of the Base Prospectus or the
Prospectus Supplement, as the case may be, deemed to be incorporated therein by reference. All
references in this Agreement to financial statements and schedules and other information which is
“contained,” “included,” “described,” “referenced,” “set forth” or “stated” in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other references of like
import) shall be deemed to mean and include all such financial statements and schedules and other
information which is or is deemed to be incorporated by reference in the Registration Statement,
the Base Prospectus or the Prospectus Supplement, as the case may be. No stop order suspending the
effectiveness of the Registration Statement or the use of the Base Prospectus or the Prospectus
Supplement has been issued, and no proceeding for any such purpose is pending or has been initiated
or, to the Company’s knowledge, is threatened by the Commission. For purposes of this Agreement,
“free writing prospectus” has the meaning set forth in Rule 405 under the Securities Act and the
“Time of Sale Prospectus” means the preliminary prospectus, if any, together with the free writing
prospectuses, if any, used in connection with the Placement, including any documents incorporated
by reference therein.



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     (B) The Registration Statement (and any further documents to be filed with the Commission)
contains all exhibits and schedules as required by the Securities Act. Each of the Registration
Statement and any post-effective amendment thereto, at the time it became effective, complied in
all material respects with the Securities Act and the Exchange Act and the applicable Rules and
Regulations and did not and, as amended or supplemented, if applicable, will not, contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, each as of its respective date, comply in all
material respects with the Securities Act and the Exchange Act and the applicable Rules and
Regulations. Each of the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, as amended or supplemented, did not and will not contain as of the date thereof any
untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. The
Incorporated Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the applicable Rules and Regulations, and none
of such documents, when they were filed with the Commission, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the statements therein (with
respect to Incorporated Documents incorporated by reference in the Base Prospectus or Prospectus
Supplement), in light of the circumstances under which they were made not misleading; and any
further documents so filed and incorporated by reference in the Base Prospectus, the Time of Sale
Prospectus, if any, or Prospectus Supplement, when such documents are filed with the Commission,
will conform in all material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, as applicable, and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No post-effective amendment to the
Registration Statement reflecting any facts or events arising after the date thereof which
represent, individually or in the aggregate, a fundamental change in the information set forth
therein is required to be filed with the Commission. There are no documents required to be filed
with the Commission in connection with the transaction contemplated hereby that (x) have not been
filed as required pursuant to the Securities Act or (y) will not be filed within the requisite time
period. There are no contracts or other documents required to be described in the Base Prospectus,
the Time of Sale Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits or
schedules to the Registration Statement, which have not been described or filed as required.



     (C) The Company is eligible to use free writing prospectuses in connection with the Placement
pursuant to Rules 164 and 433 under the Securities Act. Any free writing prospectus that the
Company is required to file pursuant to Rule 433(d) under the Securities Act has been, or will be,
filed with the Commission in accordance with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. Each free writing prospectus that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities Act or
that was prepared by or behalf of or used by the Company complies or will comply in all material
respects with the requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder. The Company will not, without the prior consent of the Placement Agent,
prepare, use or refer to, any free writing prospectus.



     (D) The Company has delivered, or will as promptly as practicable deliver, to the Placement
Agent complete conformed copies of the Registration Statement and of each consent and certificate
of experts, as applicable, filed as a part thereof, and conformed copies of the Registration
Statement (without exhibits), the Base Prospectus, the Time of Sale Prospectus, if any, and the
Prospectus Supplement, as amended or supplemented, in such quantities and at such places as the
Placement Agent reasonably requests. Neither the Company nor any of its directors and officers has
distributed and none of them will distribute, prior to the Closing Date, any offering material in
connection with the offering
and sale of the Securities other than the Base Prospectus, the Time of Sale Prospectus, if
any, the Prospectus



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Supplement, the Registration Statement, copies of the documents incorporated by
reference therein and any other materials permitted by the Securities Act.



SECTION 3. REPRESENTATIONS AND WARRANTIES. Except as disclosed in the SEC Reports
(as defined below) or the Registration Statement, the Base Prospectus or the Prospectus Supplement,
the Company hereby makes the representations and warranties set forth below to the Placement Agent
as of the date of the Offering, as of the date of the Purchase Agreement and as of the Closing
Date.




     (A) Organization and Qualification. All of the direct and indirect subsidiaries
(individually, a “Subsidiary”) of the Company are set forth on Exhibit 21.1 to the
Company’s Annual Report on Form 10-K. filed with the Commission on March 18, 2010. The Company
owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary
free and clear of any “Liens” (which for purposes of this Agreement shall mean a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right or other
restriction), and all the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good standing, as the
case may be, could not reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a material adverse change in
the results of operations, assets, business, prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole, from that set forth or incorporated by reference in
the Base Prospectus or the Prospectus Supplement, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no
“Proceeding” (which for purposes of this Agreement shall mean any action, claim, suit,
investigation or proceeding (including, without limitation, an investigation or partial proceeding,
such as a deposition), whether commenced or threatened) has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.



     (B) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction
Documents and otherwise to carry out its obligations thereunder. The execution and delivery of
each of the Transaction Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company, its board of directors or its stockholders in
connection therewith other than in connection with the “Required Approvals” (as defined in
subsection 3(D) below). Each Transaction Document has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.



     (C) No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Securities and the consummation by the
Company of the other



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transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets of the Company or
any Subsidiary, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility,
debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and regulations), or by which
any property or asset of the Company or a Subsidiary is bound or affected; except in the case of
each of clauses (ii) and (iii), such as could not reasonably be expected to result in a Material
Adverse Effect.




     (D) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other
“Person” (defined as an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any kind, including, without
limitation, any Trading Market) in connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) the filings required by the Purchase
Agreement, (ii) the filing with the Commission of the Prospectus Supplement, (iii) the filling of
application(s) to and approval by the NYSE Amex LLC for the listing of the Common Stock underlying
the Securities for trading thereon in the time and manner required thereby, (iv) the filing with
the Secretary of State of the State of Delaware of the Certificate of Designation with respect to
the Securities, as applicable, and (v) such filings as are required to be made under applicable
state securities laws and the rules and regulations of the Financial Industry Regulatory Authority
(FINRA) (collectively, the “Required Approvals”).



     (E) Issuance of the Securities; Registration. The Securities are duly authorized and,
when issued and paid for in accordance with the applicable Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction Documents. The Company has
reserved from its duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to the Transaction Documents on the date the Purchase Agreement is signed and as
of the Closing Date. The issuance by the Company of the Securities has been registered under the
Securities Act and all of the Securities are freely transferable and tradable by the purchasers
thereof without restriction (other than any restrictions arising solely from an act or omission of
such a purchaser). The Securities are being issued pursuant to the Registration Statement and the
issuance of the Securities has been registered by the Company under the Securities Act. The
Registration Statement is effective and available for the issuance of the Securities thereunder and
the Company has not received any notice that the Commission has issued or intends to issue a
stop-order with respect to the Registration Statement or that the Commission otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened in writing to do so. The “Plan of Distribution” section
under the Registration Statement permits the issuance and sale of the Securities as contemplated by
the Purchase Agreement. Upon receipt of the Securities, such purchasers will have good and
marketable title to such Securities and the Common Stock underlying the Securities will be freely
tradable on the “Trading Market” (which, for purposes of this Agreement shall mean means
the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital
Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin
Board).



     (F) Capitalization. The capitalization of the Company is as set forth in the Base
Prospectus and Prospectus Supplement. The Company has not issued any capital stock since its most
recently filed periodic



10









 




report under the Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock option plans, the issuance of shares of Common
Stock to employees pursuant to the Company’s employee stock purchase plan and pursuant to the
conversion or exercise of securities exercisable, exchangeable or convertible into Common Stock
(“Common Stock Equivalents”). No Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions contemplated by the
Transaction Documents. Except (i) as a result of the purchase and sale of the Securities, (ii)
pursuant to the Company’s stock option plans, (iii) pursuant to agreements or instruments
(including that certain Rights Agreement, dated July 27, 2005, as amended (the “Rights
Agreement”)) filed as exhibits to SEC Reports incorporated by reference into the Prospectus
Supplement, there are no outstanding options, warrants, script rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will
not obligate the Company to issue shares of Common Stock or other securities to any Person (other
than the purchasers a party to the Purchase Agreement) and will not result in a right of any holder
of Company securities to adjust the exercise, conversion, exchange or reset price under such
securities. All of the outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and state securities laws,
and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. Except for the Required Approvals, no further
approval or authorization of any stockholder, the Board of Directors of the Company or others is
required for the issuance and sale of the Securities. Other than the Rights Agreement, there are
no stockholders agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.




     (G) SEC Reports; Financial Statements. The Company has complied in all material
respects with requirements to file all reports, schedules, forms, statements and other documents
required to be filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period
as the Company was required by law to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension of such
time of filing and has filed any such SEC Reports prior to the expiration of any such extension.
As of their respective dates, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing or as amended
or corrected in a subsequent SEC Report. Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified in such
financial statements or the notes thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.



     (H) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date
of the latest audited financial statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has been no event,
occurrence or development



11









 




that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent
with past practice and (B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii)
the Company has not altered its method of accounting, (iv) except in connection with the conversion
of the Company’s 5% Series B Convertible Preferred Stock, 5% Series C Convertible Preferred Stock,
4.25660% Series D Convertible Preferred Stock and 3.73344597664961% Series E Convertible Preferred
Stock, the Company has not declared or made any dividend or distribution of cash or other property
to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock and (v) the Company has not issued any equity securities to any officer,
director or “Affiliate” (defined as any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 under the Securities Act), except pursuant to
existing Company stock option plans. The Company does not have pending before the Commission any
request for confidential treatment of information. Except for the issuance of the Securities
contemplated by the Purchase Agreement, no event, liability or development has occurred or exists
with respect to the Company or its Subsidiaries or their respective business, properties,
operations or financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is deemed made that has not been
publicly disclosed at least 1 Trading Day prior to the date that this representation is deemed
made.




     (I) Litigation. There is no action, suit, inquiry, notice of violation, Proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii)
could, if there were an unfavorable decision, reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of the Company, any
director or officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of breach of fiduciary
duty. There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company or any Subsidiary
under the Exchange Act or the Securities Act. None of the Company’s or its Subsidiaries’ employees
is a member of a union that relates to such employee’s relationship with the Company, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their employees are good. No
executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of
any material term of any employment contract, confidentiality, disclosure or proprietary
information agreement or non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive officer does not subject
the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except
where the failure to be in compliance could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.



     (J) Labor Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect.



     (K) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time
or both, would result



12









 




in a default by the Company or any Subsidiary under), nor has the Company or
any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a
party or by which it or any of its properties is bound (whether or not such default or violation
has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body,
or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not reasonably be expected to result in
a Material Adverse Effect.




     (L) Regulatory Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the SEC Reports, the
Registration Statement, the Base Prospectus and the Prospectus Supplement, except where the failure
to possess such permits could not reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material Permit. For clarity, the
Company has not received the approval of any regulatory agency to market any of its product
candidates.



     (M) Title to Assets. The Company and the Subsidiaries have good and marketable title
in fee simple to all real property owned by them that is material to the business of the Company
and the Subsidiaries and good and marketable title in all personal property owned by them that is
material to the business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property by the Company and
the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases
of which the Company and the Subsidiaries are in compliance, except where such non-compliance would
not reasonably be expected to have a Material Adverse Effect.



     (N) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to
use, all patents, patent applications, trademarks, trademark applications, service marks, trade
names, trade secrets, inventions, copyrights, licenses and other similar intellectual property
rights necessary or material for use in connection with their respective businesses as described in
the SEC Reports, the Registration Statement, the Base Prospectus and the Prospectus Supplement and
which the failure to so have could reasonably be expected to have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary
has received, since the date of the latest audited financial statements included within the SEC
Reports, a notice (written or otherwise) that the Intellectual Property Rights violate or infringe
upon the rights of any Person, except as would not have a Material Adverse Effect. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable (other than patent
and trademark applications) and there is no existing infringement by another Person of any of the
Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security
measures to protect the
secrecy, confidentiality and value of all of their intellectual properties, except where
failure to do so could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.



     (O) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary for companies of similar size as the Company in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and officers insurance
coverage. To the knowledge of the Company, such insurance contracts and policies are accurate and
complete. Neither the Company nor any Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its business without a
significant increase in cost.



13









 





     (P) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, the Registration Statement, the Base Prospectus or the Prospectus Supplement, none of the
officers or directors of the Company and, to the knowledge of the Company, none of the employees of
the Company is presently a party to any transaction with the Company or any Subsidiary (other than
for services as employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any officer, director, or
any such employee has a substantial interest or is an officer, director, trustee or partner, in
each case in excess of $120,000, other than (i) for payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) for
other employee benefits, including stock option agreements under any stock option plan of the
Company.



     (Q) Sarbanes-Oxley. Except as disclosed in the SEC Reports, the Registration
Statement, the Base Prospectus or the Prospectus Supplement, the Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the date the
Purchase Agreement is signed and of the Closing Date.



     (R) Certain Fees. Except as otherwise provided in this Agreement, no brokerage or
finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor
or consultant, finder, placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents. The investors in the Offering shall have
no obligation with respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in connection with the
transactions contemplated by the Transaction Documents.



     (S) Trading Market Rules. The issuance and sale of the Securities under the Purchase
Agreement does not contravene the rules and regulations of the Trading Market.



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



     (U) Registration Rights. No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.



     (V) Listing and Maintenance Requirements. The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the registration of the Common
Stock under the
Exchange Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. Except as disclosed in the SEC Reports, the
Registration Statement, the Base Prospectus or the Prospectus Supplement, the Company has not, in
the 12 months preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market.



     (W) Application of Takeover Protections. Except as set forth in the Registration
Statement, the Base Prospectus or the Prospectus Supplement, the Company and its Board of Directors
have taken all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s Certificate of
Incorporation (or similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the purchasers in the Offering as a result such purchasers



14









 




and the Company fulfilling their obligations or exercising their rights under the Transaction Documents,
including without limitation as a result of the Company’s issuance of the Securities and such
purchasers’ ownership of the Securities.




     (X) Solvency. Based on the financial condition of the Company as of the Closing Date
after giving effect to the receipt by the Company of the proceeds from the sale of the Securities
pursuant to the Purchase Agreement, (i) the Company’s fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature and (ii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to liquidate all of
its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay
all amounts on or in respect of its debt when such amounts are required to be paid. Within one
year of the Closing Date, the Company does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be payable on or in
respect of its debt). The SEC Reports set forth as of the dates thereof all outstanding secured
and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” shall mean
(a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than accrued
liabilities and trade accounts payable incurred in the ordinary course of business), (b) all
guaranties, endorsements and other contingent obligations in respect of indebtedness of others,
whether or not the same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the present value of any lease
payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.
Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.



     (Y) Tax Status. Except for matters that would not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and
has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax
deficiency which has been asserted or threatened against the Company or any Subsidiary.



     (Z) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the
Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly,
used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the
Company is aware) which is in violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended.



     (AA) Accountants. The Company’s accountants are J.H. Cohn LLP. To the knowledge of
the Company, such accountants, who the Company expects will express their opinion with respect to
the financial statements to be included in the Company’s next Annual Report on Form 10-K, which
opinion may include a “going concern” qualification,” are a registered public accounting firm as
required by the Securities Act.



     (BB) Regulation M Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in
the stabilization or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation
for soliciting purchases of, any of the Securities or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of the Company, other than, in
the case of clauses (ii) and (iii), compensation paid to the Placement Agent in connection with the
placement of the Securities.



15









 





     (CC) Approvals. The issuance and listing on the NYSE Amex of the Common Stock
underlying the Securities requires no further approvals, including but not limited to, the approval
of shareholders, other than the filling of application(s) to and approval by the NYSE Amex for the
listing of the Common Stock underlying the Securities for trading thereon in the time and manner
required thereby.



     (DD) FINRA Affiliations. There are no affiliations with any FINRA member firm
among the Company’s officers, directors or, to the knowledge of the Company, any five percent (5%)
or greater stockholder of the Company, except as set forth in the Registration Statement, the Base
Prospectus or the Prospectus Supplement.


SECTION 4. CLOSING. The obligations of the Placement Agent and the purchasers in
the Offering, and the closing of the sale of the Securities pursuant to the Purchase Agreement are
subject to the accuracy, when made and on the Closing Date, of the representations and warranties
on the part of the Company and its Subsidiaries contained herein, to the accuracy of the statements
of the Company and its Subsidiaries made in any certificates pursuant to the provisions hereof, to
the performance by the Company and its Subsidiaries of their obligations hereunder, and to each of
the following additional terms and conditions:




     (A) No stop order suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or threatened by the
Commission, and any request for additional information on the part of the Commission (to be
included in the Registration Statement, the Base Prospectus or the Prospectus Supplement or
otherwise) shall have been complied with to the reasonable satisfaction of the Placement Agent.



     (B) The Placement Agent shall not have discovered and disclosed to the Company on or prior to
the Closing Date that the Registration Statement, the Base Prospectus or the Prospectus Supplement
or any amendment or supplement thereto contains an untrue statement of a fact which, in the opinion
of counsel for the Placement Agent, is material or omits to state any fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary to make the
statements therein not misleading.



     (C) All corporate proceedings and other legal matters incident to the authorization, form,
execution, delivery and validity of each of the Purchase Agreement, the Securities, the
Registration Statement, the Base Prospectus and the Prospectus Supplement and all other legal
matters relating to the
Purchase Agreement and the transactions contemplated thereby shall be reasonably satisfactory
in all material respects to counsel for the Placement Agent, and the Company shall have furnished
to such counsel all documents and information that they may reasonably request to enable them to
pass upon such matters.



     (D) The Placement Agent shall have received from outside counsel to the Company such counsel’s
written opinion, addressed to the Placement Agent and the purchasers in the Offering dated as of
the Closing Date, in form and substance reasonably satisfactory to the Placement Agent, which
opinion shall include a “10b-5” representation from such counsel.



     (E) Neither the Company nor any of its Subsidiaries shall have sustained since the date of the
latest audited financial statements included or incorporated by reference in the Base Prospectus,
any loss or interference with its business from fire, explosion, flood, terrorist act or other
calamity, whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in or contemplated by the Base Prospectus and
(ii) since such date, other than in connection with the conversion or exercise of securities
outstanding as of such date and a reverse stock split, which was effective as of April 23, 2010,
there shall not have been any change in the capital stock or long-term debt of the Company or any
of its Subsidiaries or any change, or any development involving



16









 




a prospective change, in or
affecting the business, general affairs, management, financial position, stockholders’ equity,
results of operations or prospects of the Company and its Subsidiaries, otherwise than as set forth
in or contemplated by the Base Prospectus, the effect of which, in any such case described in
clause (i) or (ii), is, in the judgment of the Placement Agent, so material and adverse as to make
it impracticable or inadvisable to proceed with the sale or delivery of the Securities on the terms
and in the manner contemplated by the Base Prospectus, the Time of Sale Prospectus, if any, and the
Prospectus Supplement.




     (F) The Common Stock is registered under the Exchange Act and, as of the Closing Date, the
Common Stock underlying the Securities shall be listed and admitted and authorized for trading on
the NYSE Amex, and, upon request, satisfactory evidence of such actions shall have been provided to
the Placement Agent. The Company shall have taken no action designed to, or likely to have the
effect of terminating the registration of the Common Stock under the Exchange Act or delisting or
suspending from trading the Common Stock from the NYSE Amex, nor has the Company received any
information suggesting that the Commission or the NYSE Amex is contemplating terminating such
registration or listing.



     (G) Subsequent to the execution and delivery of the Purchase Agreement, there shall not have
occurred any of the following: (i) trading in securities generally on the New York Stock Exchange,
the Nasdaq National Market or the NYSE Amex or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter market, shall have been
suspended or minimum or maximum prices or maximum ranges for prices shall have been established on
any such exchange or such market by the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities or a material disruption has occurred in commercial
banking or securities settlement or clearance services in the United States, (iii) the United
States shall have become engaged in hostilities in which it is not currently engaged, the subject
of an act of terrorism, there shall have been an escalation in hostilities involving the United
States, or there shall have been a declaration of a national emergency or war by the United States,
or (iv) there shall have occurred any other calamity or crisis or any change in general economic,
political or financial conditions in the United States or elsewhere, if the effect of any such
event in clause (iii) or (iv) makes it, in the sole judgment of the Placement Agent, impracticable
or inadvisable to proceed with the sale or delivery of the Securities on the terms and in the
manner contemplated by the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement.



     (H) No action shall have been taken and no statute, rule, regulation or order shall have been
enacted, adopted or issued by any governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities or materially and adversely affect or potentially
and adversely affect the business or operations of the Company; and no injunction, restraining
order or order of any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance or sale of the Securities
or materially and adversely affect or potentially and adversely affect the business or operations
of the Company.



     (I) The Company shall have prepared and filed with the Commission a Current Report on Form 8-K
with respect to the Offering, including as an exhibit thereto this Agreement.



     (J) The Company shall have entered into a Purchase Agreement with each of the purchasers in
the Offering and such agreements shall be in full force and effect and shall contain
representations and warranties of the Company as agreed between the Company and such purchasers.



     (K) FINRA shall have raised no objection to the fairness and reasonableness of the terms and
arrangements of this Agreement. In addition, the Company shall, if requested by the Placement
Agent,



17









 




make or authorize Placement Agent’s counsel to make on the Company’s behalf, an Issuer
Filing with FINRA pursuant to FINRA Rule 5110 with respect to the Registration Statement and pay
all filing fees required in connection therewith.




     (L) Prior to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, certificates and documents as the Placement Agent may reasonably request.



     All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Placement Agent.



18