Blueprint





 







Exhibit 10.1

 



SECURITIES PURCHASE AGREEMENT

 


This
SECURITIES PURCHASE
AGREEMENT (this “Agreement”), dated as of November 9, 2017, is
by and among CorMedix Inc., a Delaware corporation with offices
located at 400 Connell Drive, 5th Floor, Berkeley Heights, NJ
07922 (the “Company”), and each of the investors listed
on the Schedule of Buyers attached hereto (individually, a
“Buyer” and collectively, the “Buyers”).

 



RECITALS

 


A.           The
Company and each Buyer desire to enter into this transaction to
purchase the Preferred Shares (as defined below) in a transaction
exempt from registration under Section 4(a)(2) of the Securities
Act of 1933, as amended (the “1933 Act”).

 


B.           The
Company has authorized a new series of convertible Preferred Stock
of the Company designated as Series F Preferred Stock, $0.001 par
value, the terms of which are set forth in the certificate of
designation for such Series F Preferred Stock (the “Certificate of
Designations”) in
the form attached hereto as Exhibit
A (together with any shares of preferred stock issued in
replacement thereof in accordance with the terms thereof, the
“Series F Preferred
Stock”), in
accordance with the terms of the Certificate of
Designations.

 


C.           Each
Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, such aggregate
number of shares of Series F Preferred Stock set forth opposite
such Buyer’s name in
column (3) on the Schedule of Buyers (which aggregate amount for
all Buyers shall not exceed 5,000 Preferred Shares and shall
collectively be referred to herein as the “Preferred
Shares”).

 


D.           The
Preferred Shares are also referred to herein as the “Securities”.

 



AGREEMENT

 


NOW,
THEREFORE, in consideration of the premises and the mutual
covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Buyer hereby agree as
follows:

 




1. 

PURCHASE
AND SALE OF PREFERRED SHARES.





 


(a)           Purchase
of Preferred Shares. Subject to the satisfaction (or waiver)
of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but
not jointly, agrees to purchase from the Company on the Closing
Date (as defined below) such aggregate number of Preferred Shares
as is set forth opposite such Buyer’s name in column (3) on the Schedule
of Buyers.

 


(b)           Closing.
Any closing (each, a “Closing”) of the purchase of the Preferred
Shares by the Buyers shall occur at the offices of Wyrick Robbins
Yates & Ponton, LLP, 4101 Lake Boone Trail, Suite 300, Raleigh,
North Carolina 27607. The date and time of a Closing (a
“Closing Date”) shall be 10:00 a.m., New York
time, on the first (1st) Business Day on which the conditions to
the Closing set forth in Sections 6 and 7 below are satisfied or
waived (or such other date as is mutually agreed to by the Company
and each Buyer). As used herein “Business Day” means any day other than a
Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by law to remain closed.
For so long as fewer than 5,000 Preferred Shares have been sold
hereunder, the Company may, from time to time, sell additional
Preferred Shares hereunder.

 


 




 








 






 

 


(c)           Purchase
Price. The aggregate purchase price for the Preferred Shares
to be purchased by each Buyer (the “Purchase
Price”) shall be
the amount set forth opposite such Buyer’s name in column (4) on the Schedule
of Buyers. The per share purchase price for each Preferred Share
shall be $1,000.

 


(d)           Form
of Payment; Deliveries. On the Closing Date, (i) each Buyer
shall pay its respective Purchase Price (less, in the case of any
Buyer, the amounts withheld pursuant to Section 4(g)) to the
Company for the Preferred Shares to be issued and sold to such
Buyer at the Closing, by wire transfer of immediately available
funds in accordance with instructions previously provided by the
Company and (ii) the Company shall deliver to each Buyer
certificates representing such aggregate number of Preferred
Shares, as is set forth opposite such Buyer’s name in column (3) of the Schedule
of Buyers, duly executed on behalf of the Company and registered in
the name of such Buyer or its designee.

 




2. 

BUYER’S
REPRESENTATIONS AND WARRANTIES.





 


Each
Buyer, severally and not jointly, represents and warrants to the
Company with respect to only itself that, as of the date hereof and
as of the Closing Date:

 


(a)           Organization;
Authority. Such Buyer is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and
otherwise to carry out its obligations hereunder and
thereunder.

 


(b)           Validity;
Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and
constitutes the legal, valid and binding obligation of such Buyer
enforceable against such Buyer in accordance with its terms, except
as such enforceability may be limited by general principles of
equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable
creditors’ rights and
remedies.

 


(c)           No
Conflicts. The execution, delivery and performance by such
Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby will not (i) contravene the
organizational documents of such Buyer, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which such Buyer is a
party or (iii) contravene any law, rule, regulation, order,
judgment or decree (including federal and state securities laws)
applicable to such Buyer, except, in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of such
Buyer to perform its obligations hereunder.

 


 




 

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(d)           No
public sale or distribution. Such Buyer is (i) acquiring the
Securities and (ii) upon conversion of the Preferred Shares will
acquire shares of the capital stock of the Company issuable upon
conversion thereof (“Conversion Shares”), for its own
account and not with a view towards, or for resale in connection
with, the public sale or distribution thereof in contravention of
the 1933 Act; provided,
however, that
by making the representations herein, such Buyer does not agree to
hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to registration under the 1933 Act or
an available exemption from such registration requirements. For
purposes of this Agreement, “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any
government or any department or agency thereof.

 


(e)           Accredited
investor status. Such Buyer is an “accredited investor” as that term is defined in Rule
501(a) of Regulation D under the 1933 Act.

 


(f)           Reliance
on exemptions. Such Buyer understands that the Securities
have not been registered under the 1933 Act or any applicable state
securities laws and are being offered and sold to it in reliance on
the exemptions from registration under the 1933 Act provided by
Section 4(a)(2) of the 1933 Act and Rule 506(b) of Regulation D
under the 1933 Act and pursuant to similar exemption from any
applicable state securities laws and that the Company is relying in
part upon the truth and accuracy of, and such Buyer’s compliance with, the
representations, warranties, agreements, acknowledgments and
understandings of such Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of such
Buyer to acquire the Securities.

 


(g)           Transfer
or resale. Such Buyer understands that: (i) the Securities
may not be offered for sale, sold, assigned or transferred (a
“Transfer”), directly or indirectly, unless (a)
subsequently registered under the 1933 Act, (b) such Transfer is to
the Company, or (c) such Transfer is pursuant to a transaction that
does not require registration under the 1933 Act or any applicable
state securities laws; (ii) any Transfer of the Securities made in
reliance on Rule 144 under the 1933 Act may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is
not available, any resale of the Securities under circumstances in
which the seller (or the Person) through whom the Transfer is made
may be deemed to be an underwriter (as that term is defined in the
1933 Act) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of
any exemption thereunder. Notwithstanding the foregoing, the
Securities may be pledged in connection with a bona fide margin
account or other loan or financing arrangement secured by the
Securities and such pledge of securities shall not be deemed to be
a Transfer hereunder, and no Buyer effecting a pledge of Securities
shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this
Agreement or any other Transaction Document, including, without
limitation, this Section 2(g).

 


 




 

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(h)           Legends.
Such Buyer understands that the certificates or other instruments
representing the Securities and, until the earlier of (i) six (6)
months after the date on which such Buyer purchased Preferred
Shares from the Company and (ii) such time as the resale of the
Conversion Shares have been registered under the 1933 Act, the
stock certificates representing the Conversion Shares, except as
set forth below, shall bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against
transfer of such stock certificates):

 



THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE
SECURITIES MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY, (B) IF THE
SECURITIES HAVE BEEN REGISTERED IN COMPLIANCE WITH THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, (C) IN COMPLIANCE WITH THE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT IN ACCORDANCE WITH RULE 144 OR RULE 144A THEREUNDER, IF
AVAILABLE, AND IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES
LAWS PROVIDED THAT THE HOLDER HAS FURNISHED TO THE COMPANY
REASONABLE ASSURANCES, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (D) IN A
TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES
ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE
OFFER AND SALE OF SECURITIES. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

 




3. 

REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.





 


The
Company represents and warrants to each of the Buyers that, as of
the date hereof and as of the Closing Date (except for
representations and warranties that speak as of a specific date
which shall be true and correct as of such specified
date):

 


 




 

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(a)           Organization
and Qualification. Each of the Company and each of its
Subsidiaries are entities duly organized and validly existing and
in good standing under the laws of the jurisdiction in which they
are formed, and have the requisite power and authority to own their
properties and to conduct their business as now being conducted and
as presently proposed to be conducted. Each of the Company and each
of its Subsidiaries is duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it
makes such qualification necessary, except to the extent that the
failure to be so qualified or be in good standing would not have a
Material Adverse Effect. As used in this Agreement, “Material Adverse
Effect” means any
material adverse effect on (i) the business, properties, assets,
liabilities, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole, (ii) the transactions contemplated
hereby or in any of the other Transaction Documents or (iii) the
authority or ability of the Company or any of its Subsidiaries to
perform any of their respective obligations under any of the
Transaction Documents (as defined below). Other than the Persons
(as defined below) set forth on Schedule 3(a) of the Disclosure
Letter, the Company has no Subsidiaries. “Subsidiaries” means any Person in which the
Company, directly or indirectly, (A) owns any of the outstanding
capital stock or holds any equity or similar interest of such
Person or (B) controls or operates all or any part of the business,
operations or administration of such Person, and each of the
foregoing, is individually referred to herein as a “Subsidiary”.

 


(b)           Authorization;
Enforcement; Validity. The Company has the requisite power
and authority to enter into and perform its obligations under this
Agreement and the other Transaction Documents and to issue the
Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Preferred Shares, the reservation
for issuance and issuance of the Conversion Shares issuable upon
conversion of the Preferred Shares) have been duly authorized by
the Company’s board of
directors and (other than the filing with the SEC and any other
filings as may be required by any state securities agencies) no
further filing, consent or authorization is required by the
Company, its board of directors or its stockholders or other
governing body. This Agreement has been, and the other Transaction
Documents to be delivered on or prior to the Closing will be prior
to the Closing, duly executed and delivered by the Company, and
each constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its
respective terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable
creditors’ rights and
remedies and except as rights to indemnification and to
contribution may be limited by federal or state securities law. The
Certificate of Designations in the form attached hereto as
Exhibit
A has been filed with the Secretary of State of the State of
Delaware and is in full force and effect, enforceable against the
Company in accordance with its terms and has not been amended.
“Transaction
Documents” means,
collectively, this Agreement, the Certificate of Designations and
each of the other agreements and instruments entered into or
delivered by any of the parties hereto in connection with the
transactions contemplated hereby and thereby, as may be amended
from time to time.

 


(c)           Issuance
of Securities. The issuance of the Preferred Shares are duly
authorized and, upon issuance and payment in accordance with the
terms of the Transaction Documents shall be validly issued, fully
paid and non-assessable and free from all preemptive or similar
rights, mortgages, defects, claims, liens, pledges, charges, taxes,
rights of first refusal, encumbrances, security interests and other
encumbrances (collectively “Liens”) with respect to the issuance
thereof. The Company has reserved from its duly authorized capital
stock as of the Closing Date, not less than 125% of the maximum
number of Conversion Shares. Upon issuance the Conversion Shares
will be validly issued, fully paid and nonassessable and free from
all Liens with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of the Company’s
common stock, par value $0.001 per share (“Common Stock”).

 


 




 

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(d)           No
Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby
(including, without limitation, the Preferred Shares, the
Conversion Shares and the reservation for issuance of the
Conversion Shares) will not (i) result in a violation of the
Certificate of Incorporation (as defined below) (including, without
limitation, any certificate of designation contained therein),
Bylaws (as defined below), certificate of formation, memorandum of
association, articles of association, bylaws or other
organizational documents of the Company or any of its Subsidiaries,
or any capital stock or other securities of the Company or any of
its Subsidiaries, (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a
default) in any respect under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party, or (iii) result in a violation of any
law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and
regulations and the rules and regulations of the NYSE American (the
“Principal
Market”), with a
reasonable prospect of delisting or suspension occurring after
giving effect to all applicable notice, appeal, compliance and
hearing periods, and including all applicable foreign, federal and
state laws, rules and regulations) applicable to the Company or any
of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected, except in
the case of (ii) and (iii) for any such conflict, default or
violation that would not reasonably be expected to have a Material
Adverse Effect.

 


(e)           Consents.
Neither the Company nor any Subsidiary is required to obtain any
consent from, authorization or order of, or make any filing or
registration with (other than the filing with the SEC, Principal
Market and any other filings as may be required by any state
securities agencies), any Governmental Entity (as defined below) or
any regulatory or self-regulatory agency or any other Person in
order for it to execute, deliver or perform any of its respective
obligations under or contemplated by the Transaction Documents, in
each case, in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which
the Company or any Subsidiary is required to obtain pursuant to the
preceding sentence have been or will be obtained or effected on or
prior to the Closing Date, and neither the Company nor any of its
Subsidiaries are aware of any facts or circumstances which might
prevent the Company or any of its Subsidiaries from obtaining or
effecting any of the registration, application or filings
contemplated by the Transaction Documents. Except as disclosed in
the SEC Documents (as defined below), the Company is not in
violation of the requirements of the Principal Market and has no
knowledge of any facts or circumstances which could reasonably lead
to delisting or suspension of the Common Stock in the foreseeable
future. “Governmental
Entity” means any
nation, state, county, city, town, village, district, or other
political jurisdiction of any nature, federal, state, local,
municipal, foreign, or other government, governmental or
quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and
any court or other tribunal), multi-national organization or body;
or body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing
authority or power of any nature or instrumentality of any of the
foregoing, including any entity or enterprise owned or controlled
by a government or a public international organization or any of
the foregoing.

 


 




 

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(f)           Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s
length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is
(i) an officer or director of the Company or any of its
Subsidiaries, (ii) to its knowledge, an “affiliate” (as defined in Rule 144 promulgated
under the 1933 Act (or a successor rule thereto) (collectively,
“Rule 144”)) of the Company or any of its
Subsidiaries or (iii) to its knowledge a “beneficial
owner” of more than 10% of the shares of Common Stock (as
defined for purposes of Rule 13d-3 of the Securities Exchange Act
of 1934, as amended (the “1934 Act”), taking account of
any limitations on exercise or conversion (including
“blockers”) contained in securities and instruments
beneficially owned by such Person, without conceding that such
Person is a 10% stockholder for purposes of federal securities
laws). The Company further acknowledges that no Buyer is acting as
a financial advisor or fiduciary of the Company or any of its
Subsidiaries (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated hereby and
thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction
Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities. The
Company further represents to each Buyer that the
Company’s decision to
enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its
representatives.

 


(g)           Placement
Agent’s Fees. None of the Company or its Subsidiaries
has, and no manager, governor, director, officer or employee of any
of them has, employed any broker or finder, or incurred or will
incur any broker’s, finder’s or similar fees,
commissions or expenses, in each case in connection with the
transactions contemplated by this Agreement or any other
Transaction Document, for which the any Buyer or its designees will
be liable.

 


(h)           No
Integrated Offering. None of the Company, its Subsidiaries
or any of their affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to
require approval of stockholders of the Company for purposes of the
1933 Act or under any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the
securities of the Company are listed or designated for quotation.
None of the Company, its Subsidiaries, their affiliates nor any
Person acting on their behalf will take any action or steps that
would cause the offering of any of the Securities to be integrated
with other offerings of securities of the Company.

 


(i)           Application
of Takeover Protections; Rights Agreement. The Company and
its board of directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition,
interested stockholder, business combination, poison pill
(including, without limitation, any distribution under a rights
agreement), stockholder rights plan or other similar anti-takeover
provision under the Certificate of Incorporation, Bylaws or other
organizational documents or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to
any Buyer as a result of the transactions contemplated by this
Agreement, including, without limitation, the Company’s issuance of the Securities and any
Buyer’s ownership of the
Securities. The Company and its board of directors have taken all
necessary action, if any, in order to render inapplicable any
stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of shares of Common Stock or
a change in control of the Company or any of its
Subsidiaries.

 


 




 

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(j)           SEC
Documents; Financial Statements. During the two years prior
to the date hereof, the Company has timely filed all reports,
schedules, forms, proxy statements, statements and other documents
required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to
the date hereof and all exhibits and appendices included therein
and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as
the “SEC
Documents”). The
Company has delivered or has made available to the Buyers or their
respective representatives true, correct and complete copies of
each of the SEC Documents not available on the EDGAR system. As of
their respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements
(including, without limitation, any notes or any letter of the
independent accountants of the Company with respect thereto) of the
Company included in the SEC Documents (the “Financial
Statements”)
complied in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto as in effect as of the time of filing. Such
Financial Statements have been prepared in accordance with U.S.
generally accepted accounting principles (“GAAP”), consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such
Financial Statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which
will not be material, either individually or in the aggregate). The
reserves, if any, established by the Company or the lack of
reserves, if applicable, are reasonable based upon facts and
circumstances known by the Company on the date hereof and there are
no loss contingencies that are required to be accrued by the
Statement of Financial Accounting Standard No. 5 of the Financial
Accounting Standards Board which are not provided for by the
Company in its Financial Statements or otherwise. No other
information provided by or on behalf of the Company to any of the
Buyers which is not included in the SEC Documents (including,
without limitation, information in the disclosure schedules to this
Agreement) contains any untrue statement of a material fact or
omits to state any material fact necessary in order to make the
statements therein not misleading, in the light of the circumstance
under which they are or were made. The Company is not currently
contemplating to amend or restate any of the Financial Statements
nor is the Company currently aware of facts or circumstances which
would require the Company to amend or restate any of the Financial
Statements, in each case, in order for any of the Financials
Statements to be in compliance with GAAP and the rules and
regulations of the SEC. The Company has not been informed by its
independent accountants that they recommend that the Company amend
or restate any of the Financial Statements or that there is any
need for the Company to amend or restate any of the Financial
Statements.

 


(k)           Absence
of Certain Changes. Since the date of the
Company’s most recent
audited financial statements contained in a Form 10-K and any
subsequent unaudited financial statements contained in Form 10-Q,
there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties,
operations (including results thereof), condition (financial or
otherwise) or prospects of the Company or any of its Subsidiaries.
Since the date of the Company’s most recent audited financial
statements contained in a Form 10-K, neither the Company nor any of
its Subsidiaries has (i) declared or paid any dividends, (ii) sold
any assets, individually or in the aggregate, outside of the
ordinary course of business or (iii) made any material capital
expenditures, individually or in the aggregate. Neither the Company
nor any of its Subsidiaries has taken any steps to seek protection
pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, receivership, liquidation or winding up, nor does
the Company or any Subsidiary have any knowledge or reason to
believe that any of their respective creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any
fact which would reasonably lead a creditor to do so. The Company
and its Subsidiaries, individually and on a consolidated basis, are
not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing, will not
be Insolvent (as defined below). For purposes of this Section 3(k),
“Insolvent” means, (i) with respect to the
Company and its Subsidiaries, on a consolidated basis, (A) the
present fair saleable value of the Company’s and its Subsidiaries’ assets is less than the amount
required to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined
below), (B) the Company and its Subsidiaries are unable to pay
their debts and liabilities, subordinated, contingent or otherwise,
as such debts and liabilities become absolute and matured or (C)
the Company and its Subsidiaries intend to incur or believe that
they will incur debts that would be beyond their ability to pay as
such debts mature; and (ii) with respect to the Company and each
Subsidiary, individually, (A) the present fair saleable value of
the Company’s or such
Subsidiary’s (as the case
may be) assets is less than the amount required to pay its
respective total Indebtedness, (B) the Company or such Subsidiary
(as the case may be) is unable to pay its respective debts and
liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured or (C) the Company or
such Subsidiary (as the case may be) intends to incur or believes
that it will incur debts that would be beyond its respective
ability to pay as such debts mature. Neither the Company nor any of
its Subsidiaries has engaged in any business or in any transaction,
and is not about to engage in any business or in any transaction,
for which the Company’s
or such Subsidiary’s
remaining assets constitute unreasonably small
capital.

 


(l)           No
Undisclosed Events, Liabilities, Developments or
Circumstances. Other than the transactions contemplated by
this Agreement or as disclosed in the SEC Documents, no event,
liability, development or circumstance has occurred or exists, or
is reasonably expected to exist or occur with respect to the
Company, any of its Subsidiaries or any of their respective
businesses, properties, liabilities, prospects, operations
(including results thereof) or condition (financial or otherwise),
that (i) would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1
filed with the SEC relating to an issuance and sale by the Company
of its Common Stock and which has not been publicly announced, (ii)
could have a material adverse effect on any Buyer’s investment hereunder or (iii)
could have a Material Adverse Effect.

 


 




 

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(m)           Conduct
of Business; Regulatory Permits. Neither the Company nor any
of its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation, any certificate of
designation, preferences or rights of any other outstanding series
of preferred stock of the Company or any of its Subsidiaries or
Bylaws (as defined below) or their organizational charter,
certificate of formation, memorandum of association, articles of
association, Certificate of Incorporation or certificate of
incorporation or bylaws, respectively. Neither the Company nor any
of its Subsidiaries is in violation of any judgment, decree or
order or any statute, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries, and neither the Company nor
any of its Subsidiaries will conduct its business in violation of
any of the foregoing, except in all cases for possible violations
which could not, individually or in the aggregate, have a Material
Adverse Effect. Without limiting the generality of the foregoing,
the Company is not in violation of any of the rules, regulations or
requirements of the Principal Market and has no knowledge of any
facts or circumstances that could reasonably lead to delisting or
suspension of the Common Stock by the Principal Market in the
foreseeable future. During the two years prior to the date hereof,
(i) the Common Stock has been listed or designated for quotation on
the Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) the Company
has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the
Common Stock from the Principal Market. The Company and each of its
Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate regulatory authorities necessary to
conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not
have, individually or in the aggregate, a Material Adverse Effect,
and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit. There is no
agreement, commitment, judgment, injunction, order or decree
binding upon the Company or any of its Subsidiaries or to which the
Company or any of its Subsidiaries is a party which has or would
reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company or any of
its Subsidiaries, any acquisition of property by the Company or any
of its Subsidiaries or the conduct of business by the Company or
any of its Subsidiaries as currently conducted other than such
effects, individually or in the aggregate, which have not had and
would not reasonably be expected to have a Material Adverse Effect
on the Company or any of its Subsidiaries.

 


(n)           Foreign
Corrupt Practices. None of the Company, its Subsidiaries or
any director, officer, agent, employee, nor any other Person acting
for or on behalf of the foregoing (individually and collectively, a
“Company
Affiliate”) have
violated the U.S. Foreign Corrupt Practices Act (the “FCPA”) or any other applicable
anti-bribery or anti-corruption laws, nor has any Company Affiliate
offered, paid, promised to pay, or authorized the payment of any
money, or offered, given, promised to give, or authorized the
giving of anything of value, to any officer, employee or any other
Person acting in an official capacity for any Governmental Entity
to any political party or official thereof or to any candidate for
political office (individually and collectively, a “Government
Official”) or to
any Person under circumstances where such Company Affiliate knew or
was aware of a high probability that all or a portion of such money
or thing of value would be offered, given or promised, directly or
indirectly, to any Government Official, for the purpose
of:

 


(i)           (A)
influencing any act or decision of such Government Official in
his/her official capacity, (B) inducing such Government Official to
do or omit to do any act in violation of his/her lawful duty, (C)
securing any improper advantage, or (D) inducing such Government
Official to influence or affect any act or decision of any
Governmental Entity, or

 


(ii)           assisting
the Company or its Subsidiaries in obtaining or retaining business
for or with, or directing business to, the Company or its
Subsidiaries.

 


(o)           Sarbanes-Oxley
Act. The Company and each Subsidiary is in compliance with
any and all applicable requirements of the Sarbanes-Oxley Act of
2002, as amended, and any and all applicable rules and regulations
promulgated by the SEC thereunder, except where the failure to
comply could not have, individually or in the aggregate, a Material
Adverse Effect.

 


 




 

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(p)           Transactions
With Affiliates. None of the officers, directors, employees
or affiliates of the Company or any of its Subsidiaries is
presently a party to any transaction with the Company or any of its
Subsidiaries (other than for ordinary course services as employees,
officers or 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 such officer, director,
employee or affiliate or, to the knowledge of the Company or any of
its Subsidiaries, any corporation, partnership, trust or other
Person in which any such officer, director, or employee has a
substantial interest or is an employee, officer, director, trustee,
affiliate or partner.

 


(q)           Equity
Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 160,000,000 shares of
Common Stock, of which, 67,025,419 were issued and outstanding on
October 31, 2017, and 10,282,545 shares are reserved for issuance
pursuant to securities (other than the Warrants) exercisable or
exchangeable for, or convertible into, shares of Common Stock and
(ii) 2,000,000 shares of preferred stock, of which 761,429
 shares of non-voting
convertible Series A Preferred Stock are authorized and none of
which are issued and outstanding, 454,546 shares of non-voting
convertible Series B Preferred Stock are authorized and none of
which are issued and outstanding, 150,000 shares of non-voting
convertible Series C-1 Preferred Stock are authorized and none of
which are issued and outstanding, 150,000 shares of non-voting
convertible Series C-2 Preferred Stock are authorized and none of
which are issued and outstanding, 200,000 shares of non-voting
convertible Series C-3 Preferred Stock are authorized and 104,000
shares of which are issued and outstanding, (viii) 73,962 shares of
non-voting convertible Series D Preferred Stock are authorized and
73,962 shares of which are issued and outstanding, (ix) 89,623
shares of non-voting convertible Series E Preferred Stock are
authorized and 89,623 shares  of which are issued and
outstanding, on October 31, 2017, and (x) 5,000 shares of Series F
Convertible Stock are authorized and no shares of which have been
issued or are outstanding.  No shares of Common Stock or
Preferred Stock are held in treasury.    All of such
outstanding shares are duly authorized and have been, or upon
issuance will be, validly issued and are fully paid and
nonassessable.  An aggregate of 2,959,934 shares of the
Company’s issued and outstanding Common Stock on the date
hereof are as of the date hereof owned by Persons who are
“affiliates” (as defined in Rule 405 of the 1933 Act
and calculated based on the assumption that only officers,
directors and holders of at least 10% of the Company’s issued
and outstanding Common Stock are “affiliates” without
conceding that any such Persons are “affiliates” for
purposes of federal securities laws) of the Company or any of its
Subsidiaries.  To the Company’s knowledge, as of the
date hereof, no Person owns 10% or more of the Company’s
issued and outstanding shares of Common Stock (calculated based on
the assumption that all Convertible Securities, whether or not
presently exercisable or convertible, have been fully
exercised or converted (as the case may be) taking
account of any limitations on exercise or conversion (including
“blockers”) contained therein without conceding that
such identified Person is a 10% stockholder for purposes of federal
securities laws). Except as disclosed in Schedule 3(q) of the Disclosure
Letter: (i) none of the Company’s or any Subsidiary’s
capital stock is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company or any Subsidiary; (ii) there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or
any of its Subsidiaries is or may become bound to issue additional
capital stock of the Company or any of its Subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any capital
stock of the Company or any of its Subsidiaries; (iii) there are no
outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing
Indebtedness of the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries is or may become bound; (iv)
there are no financing statements securing obligations in any
amounts filed in connection with the Company or any of its
Subsidiaries; (v) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to
register the sale of any of their securities under the 1933 Act;
(vi) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or
similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (vii) there are no securities
or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Securities; (viii) neither
the Company nor any Subsidiary has any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan
or agreement; and (ix) neither the Company nor any of its
Subsidiaries have any liabilities or obligations required to be
disclosed in the SEC Documents which are not so disclosed in the
SEC Documents, other than those incurred in the ordinary course of
the Company’s or its Subsidiaries’ respective
businesses and which, individually or in the aggregate, do not or
could not have a Material Adverse Effect.  The Company has
furnished to each Buyer true, correct and complete copies of the
Company’s Certificate of Incorporation, as amended and as in
effect on the date hereof (the “Certificate of Incorporation”),
and the Company’s bylaws, as amended and as in effect on the
date hereof (the “Bylaws”), and the terms of all
securities convertible into, or exercisable or exchangeable for,
shares of Common Stock and the material rights of the holders
thereof in respect thereto that have not been disclosed in the SEC
Documents.

 


 




 

10








 






 

 


(r)           Indebtedness
and Other Contracts. Neither the Company nor any of its
Subsidiaries, (i) except as set forth in the SEC Documents, has any
outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing
Indebtedness of the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries is or may become bound, (ii)
is a party to any contract, agreement or instrument, the violation
of which, or default under which, by the other party(ies) to such
contract, agreement or instrument could reasonably be expected to
result in a Material Adverse Effect, (iii) has any financing
statements securing obligations in any amounts filed in connection
with the Company or any of its Subsidiaries; (iv) is in violation
of any term of, or in default under, any contract, agreement or
instrument relating to any Indebtedness, except where such
violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (v) is a party to any
contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s officers, has or is expected to
have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries have any liabilities or obligations required to be
disclosed in the SEC Documents which are not so disclosed in the
SEC Documents, other than those incurred in the ordinary course of
the Company’s or its
Subsidiaries’ respective
businesses and which, individually or in the aggregate, do not or
could not have a Material Adverse Effect. For purposes of this
Agreement: (x) “Indebtedness” of any Person means, without
duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase
price of property or services (including, without limitation,
“capital
leases” in accordance
with GAAP) (other than trade payables entered into in the ordinary
course of business consistent with past practice), (C) all
reimbursement or payment obligations with respect to letters of
credit, surety bonds and other similar instruments, (D) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in
either case with respect to any property or assets acquired with
the proceeds of such indebtedness (even though the rights and
remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property), (F)
all monetary obligations under any leasing or similar arrangement
which, in connection with GAAP, consistently applied for the
periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or
in any property or assets (including accounts and contract rights)
owned by any Person, even though the Person which owns such assets
or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations (as defined
below) in respect of indebtedness or obligations of others of the
kinds referred to in clauses (A) through (G) above; and (y)
“Contingent
Obligation” means,
as to any Person, any direct or indirect liability, contingent or
otherwise, of that Person with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the primary
purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of
such liability that such liability will be paid or discharged, or
that any agreements relating thereto will be complied with, or that
the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; and (z) “Person” means an individual, a limited
liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and any
Governmental Entity or any department or agency
thereof.

 


(s)           Litigation.
There is no action, suit, arbitration, proceeding, inquiry or
investigation before or by the Principal Market, any court, public
board, other Governmental Entity, self-regulatory organization or
body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the
Common Stock or any of the Company’s or its Subsidiaries’ officers or directors, whether of a
civil or criminal nature or otherwise, in their capacities as such,
except as set forth in Schedule 3(s)
of the Disclosure Letter. No
director, officer or employee of the Company or any of its
subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in
reasonable anticipation of litigation. Without limitation of the
foregoing, there has not been, and to the knowledge of the Company,
there is not pending or contemplated, any investigation by the SEC
involving the Company, any of its Subsidiaries or any current or
former director or officer of the Company or any of its
Subsidiaries. The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by
the Company under the 1933 Act or the 1934. After reasonable
inquiry of its employees, the Company is not aware of any fact
which might result in or form the basis for any such action, suit,
arbitration, investigation, inquiry or other proceeding. Neither
the Company nor any of its Subsidiaries is subject to any order,
writ, judgment, injunction, decree, determination or award of any
Governmental Entity.

 


(t)           Insurance.
The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged. Neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will be unable to renew its existing
insurance coverage as and when such coverage expires or to obtain
substantially similar coverage from substantially similar insurers
as may be necessary to continue its business at a cost that would
not have a Material Adverse Effect.

 


(u)           Employee
Relations. Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement or employs any
member of a union. No executive officer (as defined in Rule 501(f)
promulgated under the 1933 Act) or other key employee of the
Company or any of its Subsidiaries has notified the Company or any
such Subsidiary that such officer intends to leave the Company or
any such Subsidiary or otherwise terminate such officer’s employment with the Company or any
such Subsidiary. No executive officer or other key employee of the
Company or any of its Subsidiaries is, or is now expected to be, in
violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or
any restrictive covenant, and the continued employment of each such
executive officer or other key employee (as the case may be) 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 federal, state, local and
foreign laws and regulations respecting labor, employment and
employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse
Effect.

 


 




 

11








 






 

 


(v)           Title.

 


(i)           Real
Property. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property and have good
and marketable title to all personal property owned by them which
is material to the business of the Company and its Subsidiaries, in
each case, free and clear of all Liens except such as do not
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company and any of its Subsidiaries. Any real property and
facilities held under lease by the Company or any of its
Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do
not interfere with the use made and proposed to be made of such
property and buildings by the Company or any of its
Subsidiaries.

 


(ii)           Fixtures
and Equipment. Each of the Company and its Subsidiaries (as
applicable) has good title to, or a valid leasehold interest in,
the tangible personal property, equipment, improvements, fixtures,
and other personal property and appurtenances that are used by the
Company or its Subsidiary in connection with the conduct of its
business (the “Fixtures and
Equipment”). The
Fixtures and Equipment are structurally sound, are in good
operating condition and repair, are adequate for the uses to which
they are being put, are not in need of maintenance or repairs
except for ordinary, routine maintenance and repairs and are
sufficient for the conduct of the Company’s and/or its
Subsidiaries’ businesses
(as applicable) in the manner as conducted prior to the Closing.
Except as described in the SEC Documents, each of the Company and
its Subsidiaries owns all of its Fixtures and Equipment free and
clear of all Liens except for (i) any Lien for taxes not yet due or
delinquent or being contested in good faith by appropriate
proceedings for which adequate reserves have been established in
accordance with GAAP, (ii) any statutory Lien arising in the
ordinary course of business by operation of law with respect to a
liability that is not yet due or delinquent, (iii) any Lien created
by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens,
arising in the ordinary course of business with respect to a
liability that is not yet due or delinquent or that are being
contested in good faith by appropriate proceedings, (iv) Liens (A)
upon or in any equipment acquired or held by the Company or any of
its Subsidiaries to secure the purchase price of such equipment or
Indebtedness incurred solely for the purpose of financing the
acquisition or lease of such equipment, or (B) existing on such
equipment at the time of its acquisition, provided that the Lien is
confined solely to the property so acquired and improvements
thereon, and the proceeds of such equipment, (v) Liens in favor of
customs and revenue authorities arising as a matter of law to
secure payments of custom duties in connection with the importation
of goods, (vi) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases,
statutory obligations, indemnity, performance, surety and appeal
bonds, purchase agreements and other obligations of like nature
arising in the ordinary course of business, (vii) any interest,
Lien or title of a licensor, sublicensor, lessor or sublessor under
any license or lease agreement in the property being leased or
licensed as permitted hereunder, (viii) rights of setoff or
banker’s liens upon
deposits of cash in favor of banks or other depository
institutions, but not securing any Indebtedness for money borrower,
and (xi) zoning laws and other land use restrictions that do not
impair the present or anticipated use of the property subject
thereto.

 


(w)           Potential
Products; FDA; EMEA.

 


(i)           Except
as described in the SEC Documents, the Company possesses all
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to
conduct its business as currently conducted, including without
limitation all such certificates, authorizations and permits
required by the United States Food and Drug Administration (the
“FDA”) or any other federal, state or
foreign agencies or bodies engaged in the regulation of
pharmaceuticals or biohazardous materials, except where the failure
to so possess such certificates, authorizations and permits,
individually or in the aggregate, would not result in a Material
Adverse Effect. Except as described in the SEC Documents, the
Company has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization
or permit which, individually or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.

 


 




 

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(ii)           Except
to the extent disclosed in the SEC Documents, the Company has not
received any written notices or statements from the FDA, the
European Medicines Agency (the “EMEA”) or any other governmental agency,
and otherwise has no knowledge or reason to believe, that (i) any
drug candidate of the Company described in the SEC Documents (each
a “Potential
Product”) may or
will be rejected or determined to be non-approvable; (ii) a delay
in time for review and/or approval of a marketing authorization
application or marketing approval application in any jurisdiction
for any Potential Product is or may be required, requested or being
implemented; (iii) one or more clinical studies for any Potential
Product shall or may be requested or required in addition to the
clinical studies submitted to the FDA prior to the date hereof as a
precondition to or condition of issuance or maintenance of a
marketing approval for any Potential Product; (iv) any license,
approval, permit or authorization to conduct any clinical trial of
or market any product or Potential Product of the Company has been,
will be or may be suspended, revoked, modified or limited, except
in the cases of clauses (i), (ii), (iii) and (iv) where such
rejections, determinations, delays, requests, suspensions,
revocations, modifications or limitations might not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect.

 


(iii)           Except
to the extent disclosed in the SEC Documents, to the
Company’s knowledge, the
preclinical and clinical testing, application for marketing
approval of, manufacture, distribution, promotion and sale of the
products and Potential Products of the Company is in compliance, in
all material respects, with all laws, rules and regulations
applicable to such activities, including without limitation
applicable good laboratory practices, good clinical practices and
good manufacturing practices, except for such non-compliance as
would not, individually or in the aggregate, have a Material
Adverse Effect. The descriptions of the results of such tests and
trials contained in the SEC Documents are complete and accurate in
all material respects such that there would be no untrue statement
of a material fact or omission of a material fact necessary to make
the statements in the SEC Documents, in light of the circumstances
under which they are made, not misleading. The Company is not aware
of any studies, tests or trials, the results of which reasonably
call into question the results of the tests and trials conducted by
or on behalf of the Company that are described or referred to in
the SEC Documents. Except to the extent disclosed in the SEC
Documents, the Company has not received notice of adverse finding,
warning letter or clinical hold notice from the FDA or any non-U.S.
counterpart of any of the foregoing, or any untitled letter or
other correspondence or notice from the FDA or any other
governmental authority or agency or any institutional or ethical
review board alleging or asserting noncompliance with any law, rule
or regulation applicable in any jurisdiction, except notices,
letters, and correspondences and non-U.S. counterparts thereof
alleging or asserting such noncompliance as would not, individually
or in the aggregate, have a Material Adverse Effect. Except to the
extent disclosed in the SEC Documents, the Company has not, either
voluntarily or involuntarily, initiated, conducted or issued, or
caused to be initiated, conducted or issued, any recall, field
correction, market withdrawal or replacement, safety alert,
warning, “dear
doctor” letter,
investigator notice, or other notice or action relating to an
alleged or potential lack of safety or efficacy of any product or
Potential Product of the Company, any alleged product defect of any
product or Potential Product of the Company, or any violation of
any material applicable law, rule, regulation or any clinical trial
or marketing license, approval, permit or authorization for any
product or potential product of the Company, and the Company is not
aware of any facts or information that would cause it to initiate
any such notice or action and has no knowledge or reason to believe
that the FDA, the EMEA or any other governmental agency or
authority or any institutional or ethical review board or other
non-governmental authority intends to impose, require, request or
suggest such notice or action.

 


 




 

13








 






 

 


(x)           Intellectual
Property Rights. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade
names, service marks, service mark registrations, service names,
original works of authorship, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade
secrets and other intellectual property rights and all applications
and registrations therefor (“Intellectual Property
Rights”) necessary
to conduct their respective businesses as now conducted and
presently proposed to be conducted. Each of the patents owned by
the Company or any of its Subsidiaries is listed on Schedule 3(x)(i) of the
Disclosure Letter. Except as set forth in Schedule 3(x)(ii) of the
Disclosure Letter, none of the Company’s Intellectual Property Rights have
expired or terminated or have been abandoned or are expected to
expire or terminate or are expected to be abandoned, within three
years from the date of this Agreement. The Company does not have
any knowledge of any infringement by the Company or its
Subsidiaries of Intellectual Property Rights of others. There is no
claim, action or proceeding being made or brought, or to the
knowledge of the Company or any of its Subsidiaries, being
threatened, against the Company or any of its Subsidiaries
regarding its Intellectual Property Rights. Neither the Company nor
any of its Subsidiaries is aware of any facts or circumstances
which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy,
confidentiality and value of all of their Intellectual Property
Rights.

 


(y)           Environmental
Laws. The Company and its Subsidiaries (A) are in compliance
with any and all Environmental Laws (as defined below), (B) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their respective
businesses and (C) are in compliance with all terms and conditions
of any such permit, license or approval where, in each of the
foregoing clauses (A), (B) and (C), the failure to so comply could
be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. The term “Environmental
Laws” means all
federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws relating
to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous
Materials”) into
the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.

 


(i)           No
Hazardous Materials:

 


(A)           have
been disposed of or otherwise released from any Real Property in
violation of any Environmental Laws, except where such violation
would not reasonably be expected to have a Material Adverse Effect;
or

 


(B)         
are present on, over, beneath, in or upon any Real Property or any
portion thereof in quantities that would constitute a material
violation of any Environmental Laws. No prior use by the Company or
any of its Subsidiaries of any Real Property has occurred that
violates any Environmental Laws, which violation would have a
Material Adverse Effect on the business of the Company or any of
its Subsidiaries.

 


(ii)           Neither
the Company nor any of its Subsidiaries knows of any other Person
who or entity which has stored, treated, recycled, disposed of or
otherwise located on any Real Property any Hazardous Materials,
including, without limitation, such substances as asbestos and
polychlorinated biphenyls.

 


 




 

14








 






 

 


(iii)           None
of the Real Property are on any federal or state “Superfund” list or Liability Information
System (“CERCLIS”) list or any state environmental
agency list of sites under consideration for CERCLIS, nor subject
to any environmental related Liens.

 


(z)           Subsidiary
Rights. The Company or one of its Subsidiaries has the
unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all
capital securities of its Subsidiaries as owned by the Company or
such Subsidiary.

 


(aa)         
Tax
Status. The Company and each of its Subsidiaries (i) has
timely made or filed all material foreign, federal and state income
and all other material tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has
timely paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due
on such returns, reports and declarations, except those being
contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company and its Subsidiaries
know of no basis for any such claim. The Company is not operated in
such a manner as to qualify as a passive foreign investment
company, as defined in Section 1297 of the U.S. Internal Revenue
Code of 1986, as amended (the “Code”). The net operating loss
carryforwards (“NOLs”) for United States federal income
tax purposes of the consolidated group of which the Company is the
common parent, if any, shall not be adversely effected by the
transactions contemplated hereby. The transactions contemplated
hereby do not constitute an “ownership change” within the meaning of Section 382
of the Code, thereby preserving the Company’s ability to utilize such
NOLs.

 


(bb)        
Internal
Accounting and Disclosure Controls. The Company and each of
its Subsidiaries maintains internal control over financial
reporting (as such term is defined in Rule 13a-15(f) under the 1934
Act) that is effective to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles, including that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain asset and liability accountability, (iii) access to
assets or incurrence of liabilities is permitted only in accordance
with management’s general
or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and
liabilities at reasonable intervals and appropriate action is taken
with respect to any difference. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e)
under the 1934 Act) that are effective in ensuring that information
required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is recorded, processed,
summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls
and procedures designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits
under the 1934 Act is accumulated and communicated to the
Company’s management,
including its principal executive officer or officers and its
principal financial officer or officers, as appropriate, to allow
timely decisions regarding required disclosure. During the two
years prior to the date hereof, except as disclosed in the SEC
Documents, neither the Company nor any of its Subsidiaries has
received any notice or correspondence from any accountant,
Governmental Entity or other Person relating to any potential
material weakness or significant deficiency in any part of the
internal controls over financial reporting of the Company or any of
its Subsidiaries.

 


 




 

15








 






 

 


(cc)           Off
Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off balance sheet
entity that is required to be disclosed by the Company in its 1934
Act filings and is not so disclosed or that otherwise could be
reasonably likely to have a Material Adverse Effect.

 


(dd)        
Investment
Company Status. The Company is not, and upon consummation of
the sale of the Securities will not be, an “investment company,” an affiliate of an “investment company,” a company controlled by an
“investment
company” or an
“affiliated
person” of, or
“promoter” or “principal underwriter” for, an “investment company” as such terms are defined in the
Investment Company Act of 1940, as amended.

 


(ee)         
Acknowledgement
Regarding Buyers’ Trading Activity. It is understood
and acknowledged by the Company that (i) following the public
disclosure of the transactions contemplated by the Transaction
Documents, in accordance with the terms thereof, none of the Buyers
have been asked by the Company or any of its Subsidiaries to agree,
nor has any Buyer agreed with the Company or any of its
Subsidiaries, to desist from effecting any transactions in or with
respect to (including, without limitation, purchasing or selling,
long and/or short) any securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold any of the Securities for any
specified term; (ii) any Buyer, and counterparties in “derivative” transactions to which any such
Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock which
was established prior to such Buyer’s knowledge of the transactions
contemplated by the Transaction Documents; and (iii) each Buyer
shall not be deemed to have any affiliation with or control over
any arm’s length
counterparty in any “derivative” transaction. The Company further
understands and acknowledges that following the public disclosure
of the transactions contemplated by the Transaction Documents
pursuant to the Press Release (as defined below) one or more Buyers
may engage in hedging and/or trading activities at various times
during the period that the Securities are outstanding, including,
without limitation, during the periods that the value and/or number
of the Conversion Shares deliverable with respect to the Preferred
Shares are being determined and such hedging and/or trading
activities, if any, can reduce the value of the existing
stockholders’ equity
interest in the Company both at and after the time the hedging
and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading
activities do not constitute a breach of this Agreement, the
Certificate of Designations or any other Transaction Document or
any of the documents executed in connection herewith or
therewith.

 


(ff)         
Manipulation of
Price. Neither the Company nor any of its Subsidiaries has,
and, to the knowledge of the Company, no Person acting on their
behalf has, directly or indirectly, (i) taken any action designed
to cause or to result in the stabilization or manipulation of the
price of any security of the Company or any of its Subsidiaries 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, (iii) paid or agreed to pay to
any Person any compensation for soliciting another to purchase any
other securities of the Company or any of its Subsidiaries or (iv)
paid or agreed to pay any Person for research services with respect
to any securities of the Company or any of its
Subsidiaries.

 


 




 

16








 






 

 


(gg)           U.S.
Real Property Holding Corporation. Neither the Company nor
any of its Subsidiaries is, or has ever been, and so long as any of
the Securities are held by any of the Buyers, shall become, a U.S.
real property holding corporation within the meaning of Section 897
of the Code, and the Company and each Subsidiary shall so certify
upon any Buyer’s
request.

 


(hh)          
Transfer
Taxes. On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be
paid in connection with the issuance, sale and transfer of the
Securities to be sold to each Buyer hereunder will be, or will have
been, fully paid or provided for by the Company, and all laws
imposing such taxes will be or will have been complied
with.

 


(ii)           Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as
amended (the “BHCA”)
and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal
Reserve”). Neither
the Company nor any of its Subsidiaries or affiliates owns or
controls, directly or indirectly, five percent (5%) or more of the
outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any entity
that is subject to the BHCA and to regulation by the Federal
Reserve. Neither the Company nor any of its Subsidiaries or
affiliates exercises a controlling influence over the management or
policies of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve.

 


(jj)            
Shell
Company Status. The Company is not, and has never been, an
issuer identified in, or subject to, Rule 144(i).

 


(kk)         
Illegal or
Unauthorized Payments; Political Contributions. Neither the
Company nor any of its Subsidiaries nor, to the Company’s knowledge (after reasonable
inquiry of its officers and directors), any of the officers,
directors, employees, agents or other representatives of the
Company or any of its Subsidiaries or any other business entity or
enterprise with which the Company or any Subsidiary is or has been
affiliated or associated, has, directly or indirectly, made or
authorized any payment, contribution or gift of money, property, or
services, whether or not in contravention of applicable law, (i) as
a kickback or bribe to any Person or (ii) to any political
organization, or the holder of or any aspirant to any elective or
appointive public office except for personal political
contributions not involving the direct or indirect use of funds of
the Company or any of its Subsidiaries.

 


(ll)           
Money
Laundering. The Company and its Subsidiaries are in
compliance with, and have not previously violated, the USA Patriot
Act of 2001 and all other applicable U.S. and non-U.S. anti-money
laundering laws and regulations, including, without limitation, the
laws, regulations and Executive Orders and sanctions programs
administered by the U.S. Office of Foreign Assets Control,
including, but not limited, to (i) Executive Order 13224 of
September 23, 2001 entitled, “Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism” (66
Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31
CFR, Subtitle B, Chapter V.

 


 




 

17








 






 

 


(mm)     Management.
Except as set forth in Schedule 3(mm)
of the Disclosure Letter, during the past five year period, no
current or former (but no representation is made for any former
director or officer after the date he or she ceased to be a
director or employee as the case may be) officer or director or, to
the knowledge of the Company, no current ten percent (10%) or
greater stockholder of the Company or any of its Subsidiaries has
been the subject of:

 


(i)           a
petition under bankruptcy laws or any other insolvency or
moratorium law or the appointment by a court of a receiver, fiscal
agent or similar officer for such Person, or any partnership in
which such Person was a general partner at or within two years
before the filing of such petition or such appointment, or any
corporation or business association of which such Person was an
executive officer at or within two years before the time of the
filing of such petition or such appointment;

 


(ii)         
a conviction in a criminal proceeding or a named subject of a
pending criminal proceeding (excluding traffic violations that do
not relate to driving while intoxicated or driving under the
influence);

 


(iii)       
any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any such Person from, or otherwise limiting,
the following activities:

 


(A)         
Acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
United States Commodity Futures Trading Commission (the
“CFTC”) or an associated person of any of
the foregoing, or as an investment adviser, underwriter, broker or
dealer in securities, or as an affiliated person, director or
employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;

 


(B)           Engaging
in any particular type of business practice; or

 


(C)           Engaging
in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of
securities laws or commodities laws;

 


(iv)        
any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any authority barring, suspending or otherwise
limiting for more than sixty (60) days the right of any such Person
to engage in any activity described in the preceding sub paragraph,
or to be associated with Persons engaged in any such
activity;

 


(v)        
a finding by a court of competent jurisdiction in a civil action or
by the SEC or other authority to have violated any securities law,
regulation or decree and the judgment in such civil action or
finding by the SEC or any other authority has not been subsequently
reversed, suspended or vacated; or (vi) a finding by a court of
competent jurisdiction in a civil action or by the CFTC to have
violated any federal commodities law, and the judgment in such
civil action or finding has not been subsequently reversed,
suspended or vacated.

 


 




 

18








 






 

 


(nn)         
Stock
Option Plans. Each stock option granted by the Company was
granted (i) in accordance with the terms of the applicable stock
option plan of the Company and (ii) with an exercise price at least
equal to the fair market value of the Common Stock on the date such
stock option would be considered granted under GAAP and applicable
law. No stock option granted under the Company’s stock option plan has been
backdated. The Company has not knowingly granted, and there is no
and has been no policy or practice of the Company to knowingly
grant, stock options prior to, or otherwise knowingly coordinate
the grant of stock options with, the release or other public
announcement of material information regarding the Company or its
Subsidiaries or their financial results or prospects.

 


(oo)         
No
Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or
reasonably anticipated by the Company to arise, between the Company
and the accountants and lawyers formerly or presently employed by
the Company and the Company is current with respect to any fees
owed to its accountants and lawyers which could affect the
Company’s ability to
perform any of its obligations under any of the Transaction
Documents. In addition, on or prior to the date hereof, the Company
had discussions with its accountants about its Financial Statements
previously filed with the SEC. Based on those discussions, the
Company has no reason to believe that it will need to restate any
such Financial Statements or any part thereof.

 


(pp)           No
Additional Agreements. The Company does not have any
agreement or understanding with any Buyer with respect to the
transactions contemplated by the Transaction Documents other than
as specified in the Transaction Documents.

 


(qq)          
Public
Utility Holding Act. None of the Company nor any of its
Subsidiaries is a “holding company,” or an “affiliate” of a “holding company,” as such terms are defined in the
Public Utility Holding Act of 2005.

 


(rr)           
Federal
Power Act. None of the Company nor any of its Subsidiaries
is subject to regulation as a “public utility” under the Federal Power Act, as
amended.

 


 




 

19








 






 

 


(ss)           
Disclosure. The
Company confirms that neither it nor any other Person acting on its
behalf has provided any of the Buyers or their agents or counsel
with any information that constitutes or could reasonably be
expected to constitute material, non-public information concerning
the Company or any of its Subsidiaries, other than the existence of
the transactions contemplated by this Agreement and the other
Transaction Documents. The Company understands and confirms that
each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure
provided to the Buyers regarding the Company and its Subsidiaries,
their businesses and the transactions contemplated hereby,
including the schedules to this Agreement, furnished by or on
behalf of the Company or any of its Subsidiaries is true and
correct and does not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances
under which they were made, not misleading. All of the written
information furnished after the date hereof by or on behalf of the
Company or any of its Subsidiaries to each Buyer pursuant to or in
connection with this Agreement and the other Transaction Documents,
taken as a whole, will be true and correct in all material respects
as of the date on which such information is so provided and will
not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading. Each press release issued by the Company
or any of its Subsidiaries during the twelve (12) months preceding
the date of this Agreement did not at the time of release contain
any untrue statement of a material fact or omit 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 are made, not misleading. No event or circumstance has
occurred or information exists with respect to the Company or any
of its Subsidiaries or its or their business, properties,
liabilities, prospects, operations (including results thereof) or
conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure at or before the
date hereof or announcement by the Company but which has not been
so publicly disclosed. All financial projections and forecasts that
have been prepared by or on behalf of the Company or any of its
Subsidiaries and made available to you have been prepared in good
faith based upon reasonable assumptions and represented, at the
time each such financial projection or forecast was delivered to
each Buyer, the Company’s
best estimate of future financial performance (it being recognized
that such financial projections or forecasts are not to be viewed
as facts and that the actual results during the period or periods
covered by any such financial projections or forecasts may differ
from the projected or forecasted results). The Company acknowledges
and agrees that no Buyer makes or has made any representations or
warranties with respect to the transactions contemplated hereby
other than those specifically set forth in Section
1(d).

 


(tt)          
Private Placement.
No registration under the 1933 Act is required for the offer and
sale of the Preferred Shares or the Conversion Shares, by the
Company to any Buyer as contemplated hereby.

 




4. 

COVENANTS.





 


(a)         
Best
Efforts. The Company shall use its best efforts to timely
satisfy each of the covenants hereunder and conditions to be
satisfied by it as provided in Section 7 of this
Agreement.

 


(b)        
Blue
Sky. The Company shall, on or before the Closing Date, take
such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for, or to, qualify the Preferred
Shares for sale to the Buyers at the Closing pursuant to this
Agreement under applicable securities or “Blue Sky” laws of the states of the United
States (or to obtain an exemption from such qualification), and
shall provide evidence of any such action so taken to the Buyers on
or prior to the Closing Date. Without limiting any other obligation
of the Company under this Agreement, the Company shall timely make
all filings and reports relating to the offer and sale of the
Preferred Shares required under all applicable securities laws
(including, without limitation, all applicable federal securities
laws and all applicable “Blue Sky” laws), and the Company shall comply
with all applicable foreign, federal, state and local laws,
statutes, rules, regulations and the like relating to the offering
and sale of the Preferred Shares to the Buyers.

 


 




 

20








 






 

 


(c)           Reporting
Status. Until the earlier of (x) the date on which the
Buyers shall have sold all of the Underlying Securities (as defined
below) or (y) the date no Securities are held by any Buyer (the
“Reporting
Period”), the
Company shall timely file all reports required to be filed with the
SEC pursuant to the 1934 Act, and the Company shall not terminate
its status as an issuer required to file reports under the 1934 Act
even if the 1934 Act or the rules and regulations thereunder would
no longer require or otherwise permit such termination.
“Underlying
Securities” means
the (i) the Conversion Shares, and (ii) any capital stock of the
Company issued or issuable with respect to the Conversion Shares,
the Certificate of Designations or the Preferred Shares,
respectively, including, without limitation, (1) as a result of any
stock split, stock dividend, recapitalization, exchange or similar
event or otherwise and (2) shares of capital stock of the Company
into which the shares of Common Stock are converted or exchanged
and shares of capital stock of a Successor Entity (as defined in
the Certificate of Designations) into which the shares of Common
Stock are converted or exchanged, in each case, without regard to
any limitations on conversion of the Preferred Shares.

 


(d)           Use
of Proceeds. The Company will use the proceeds from the sale
of the Securities for general corporate purposes.

 


(e)           Financial
Information. The Company agrees to send the following to
each holder of Preferred Shares (each, an “Investor”) during the Reporting Period (i)
unless the following are filed with the SEC through EDGAR and are
available to the public through the EDGAR system, within one (1)
Business Day after the filing thereof with the SEC, a copy of its
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, any
Current Reports on Form 8-K and any registration statements (other
than on Form S-8) or amendments filed pursuant to the 1933 Act,
(ii) unless the following are either filed with the SEC through
EDGAR or are otherwise widely disseminated via a recognized news
release service (such as PR Newswire), on the same day as the
release thereof, facsimile copies of all press releases issued by
the Company or any of its Subsidiaries and (iii) unless the
following are filed with the SEC through EDGAR or made permanently
available on the Company’s website, copies of any notices and
other information made available or given to the stockholders of
the Company generally, contemporaneously with the making available
or giving thereof to the stockholders.

 


(f)           Listing.
The Company shall promptly secure the listing or designation for
quotation (as the case may be) of all of the Underlying Securities
(as defined below) upon each national securities exchange and
automated quotation system, if any, upon which the Common Stock is
then listed or designated for quotation (as the case may be)
(subject to official notice of issuance) and shall maintain such
listing or designation for quotation (as the case may be) of all
Underlying Securities from time to time issuable under the terms of
the Transaction Documents on such national securities exchange or
automated quotation system. The Company shall maintain the Common
Stock’s listing or
authorization for quotation (as the case may be) on the Principal
Market, The New York Stock Exchange, the NYSE American, the Nasdaq
Global Market or the Nasdaq Global Select Market (each, an
“Eligible
Market”). Neither
the Company nor any of its Subsidiaries shall take any action which
could be reasonably expected to result in the delisting or
suspension of the Common Stock on an Eligible Market. The Company
shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(f).

 


 




 

21








 






 

 


(g)           Fees.
The Company shall reimburse the lead Buyer for all reasonable costs
and expenses incurred by it or its affiliates in connection with
the transactions contemplated by the Transaction Documents
(including, without limitation, as applicable, all reasonable legal
fees and disbursements of counsel to the lead Buyer, any other
reasonable fees and expenses in connection with the structuring,
documentation and implementation of the transactions contemplated
by the Transaction Documents and due diligence and regulatory
filings in connection therewith) (the “Expense Amount”)
and the Company shall pay such Expense Amount within 5 days
following written notice by the lead Buyer. The Company shall be
responsible for the payment of any placement agent’s fees, financial advisory fees,
transfer agent fees, Depository Trust Company (“DTC”) fees or broker’s commissions (other than for
Persons engaged by any Buyer) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold
each Buyer harmless against, any liability, loss or expense
(including, without limitation, reasonable attorneys’ fees and out-of-pocket expenses)
arising in connection with any claim relating to any such payment.
Except as otherwise set forth in the Transaction Documents, each
party to this Agreement shall bear its own expenses in connection
with the sale of the Securities to the Buyers.

 


(h)           Pledge
of Securities. Notwithstanding anything to the contrary
contained in this Agreement, the Company acknowledges and agrees
that the Securities may be pledged by an Investor in connection
with a bona fide margin agreement or other loan or financing
arrangement that is secured by the Securities. The pledge of
Securities shall not be deemed to be a transfer, sale or assignment
of the Securities hereunder, and no Investor effecting a pledge of
Securities shall be required to provide the Company with any notice
thereof or otherwise make any delivery to the Company pursuant to
this Agreement or any other Transaction Document. The Company
hereby agrees to execute and deliver such documentation as a
pledgee of the Securities may reasonably request in connection with
a pledge of the Securities to such pledgee by a Buyer.

 


(i)           Disclosure
of Transactions and Other Material Information.

 


(i)           Disclosure
of Transaction. The Company shall, on or before 9:30 a.m.,
New York time, on the first (1st)
Business Day after the date of this Agreement, issue a press
release (the “Press
Release”)
reasonably acceptable to the Buyers disclosing all the material
terms of the transactions contemplated by the Transaction
Documents. On or before 9:30 a.m., New York time, on the first
(1st)
Business Day after the date of this Agreement, the Company shall
file a Current Report on Form 8-K describing all the material terms
of the transactions contemplated by the Transaction Documents in
the form required by the 1934 Act and attaching all the material
Transaction Documents (including, without limitation, this
Agreement (and all schedules to this Agreement) and the form of
Certificate of Designations) (including all attachments, the
“8-K Filing”). From and after the filing of the
8-K Filing, the Company shall have disclosed all material,
non-public information (if any) provided to any of the Buyers by
the Company or any of its Subsidiaries or any of their respective
officers, directors, employees or agents prior to the date hereof.
In addition, effective upon the filing of the 8-K Filing, the
Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral,
between the Company, any of its Subsidiaries or any of their
respective officers, directors, affiliates, employees or agents, on
the one hand, and any of the Buyers or any of their affiliates, on
the other hand, shall terminate.

 


 




 

22








 






 

 


(ii)           Limitations
on Disclosure. The Company shall not, and the Company shall
cause each of its Subsidiaries and each of its and their respective
officers, directors, employees and agents not to, provide any Buyer
with any material, non-public information regarding the Company or
any of its Subsidiaries from and after the date hereof without the
express prior written consent of such Buyer (which may be granted
or withheld in such Buyer’s sole discretion). In the event of
a breach of any of the foregoing covenants or any of the covenants
or agreements contained in any other Transaction Document, by the
Company, any of its Subsidiaries, or any of its or their respective
officers, directors, employees and agents (as determined in the
reasonable good faith judgment of such Buyer), in addition to any
other remedy provided herein or in the Transaction Documents, such
Buyer shall have the right to make a public disclosure, in the form
of a press release, public advertisement or otherwise, of such
breach or such material, non-public information, as applicable,
without the prior approval by the Company, any of its Subsidiaries,
or any of its or their respective officers, directors, employees or
agents. No Buyer shall have any liability to the Company, any of
its Subsidiaries, or any of its or their respective officers,
directors, employees, affiliates, stockholders or agents, for any
such disclosure. To the extent that the Company delivers any
material, non-public information to a Buyer without such
Buyer’s consent, the
Company hereby covenants and agrees that such Buyer shall not have
any duty of confidentiality with respect to, or a duty not to trade
on the basis of, such material, non-public information. Subject to
the foregoing, neither the Company, its Subsidiaries nor any Buyer
shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however,
the Company shall be entitled, without the prior approval of any
Buyer, to make the Press Release and any press release or other
public disclosure with respect to such transactions (i) in
substantial conformity with the 8-K Filing and contemporaneously
therewith and (ii) as is required by applicable law and regulations
(provided that in the case of clause (i) each Buyer shall be
consulted by the Company in connection with any such press release
or other public disclosure prior to its release). Without the prior
written consent of the applicable Buyer (which may be granted or
withheld in such Buyer’s
sole discretion), except as required by applicable law or
regulation, the Company shall not (and shall cause each of its
Subsidiaries and affiliates to not) disclose the name of such Buyer
in any filing, announcement, release or otherwise. Notwithstanding
anything contained in this Agreement to the contrary and without
implication that the contrary would otherwise be true, the Company
expressly acknowledges and agrees that no Buyer shall have (unless
expressly agreed to by a particular Buyer after the date hereof in
a written definitive and binding agreement executed by the Company
and such particular Buyer (it being understood and agreed that no
Buyer may bind any other Buyer with respect thereto)), any duty of
confidentiality with respect to, or a duty not to trade on the
basis of, any material, non-public information regarding the
Company or any of its Subsidiaries.

 


(iii)           Other
Confidential Information. In addition to other remedies set
forth in this Section 4(i), and without limiting anything set forth
in any other Transaction Document, at any time after the Closing
Date if the Company, any of its Subsidiaries, or any of their
respective officers, directors, employees or agents, provides any
Buyer with material non-public information relating to the Company
or any of its Subsidiaries (each, the “Confidential
Information”), the
Company shall, as promptly as practicable, publicly disclose such
Confidential Information on a Current Report on Form 8-K or
otherwise (each, a “Disclosure”). From and after such Disclosure,
the Company shall have disclosed all Confidential Information
provided to such Buyer by the Company or any of its Subsidiaries or
any of their respective officers, directors, employees or agents in
connection with the transactions contemplated by the Transaction
Documents. In addition, effective upon such Disclosure, the Company
acknowledges and agrees that any and all confidentiality or similar
obligations under any agreement, whether written or oral, between
the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one
hand, and any of the Buyers or any of their affiliates, on the
other hand, shall terminate.

 


 




 

23








 






 

 


(j)           Conduct
of Business. The business of the Company and its
Subsidiaries shall not be conducted in violation of any law,
ordinance or regulation of any Governmental Entity, except where
such violations would not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse
Effect.

 


(k)           Passive
Foreign Investment Company. The Company shall conduct its
business, and shall cause its Subsidiaries to conduct their
respective businesses, in such a manner as will ensure that the
Company and each of its Subsidiaries will not be deemed to
constitute a passive foreign investment company within the meaning
of Section 1297 of the Code.

 


(l)           Corporate
Existence. So long as any Buyer beneficially owns any
Preferred Shares, the Company shall not be party to any Fundamental
Transaction (as defined in the Certificate of Designations) unless
the Company is in compliance with the applicable provisions
governing Fundamental Transactions set forth in the Certificate of
Designations.

 


(m)           Regulation
M. The Company will not take any action prohibited by
Regulation M under the 1934 Act, in connection with the
distribution of the Securities contemplated hereby.

 


(n)      
   Closing
Documents. On or prior to fourteen (14) calendar days after
the Closing Date, the Company agrees to deliver, or cause to be
delivered, to each Buyer and counsel to the lead Buyer a complete
closing set of the executed Transaction Documents, Securities and
any other document required to be delivered to any party pursuant
to Section 7 hereof or otherwise.

 




5. 

REGISTER.





 


(a)           Register.
The Company shall maintain at its principal executive offices (or
such other office or agency of the Company as it may designate by
notice to each holder of Securities), a register for the Preferred
Shares in which the Company shall record the name and address of
the Person in whose name the Preferred Shares have been issued
(including the name and address of each transferee), the number of
Preferred Shares held by such Person and the number of Conversion
Shares issuable upon conversion of the Preferred Shares held by
such Person. The Company shall keep the register open and available
at all times during business hours for inspection of any Buyer or
its legal representatives.

 


(b)           FAST
Compliance. While any Preferred Shares remain outstanding,
the Company shall maintain a transfer agent that participates in
the DTC Fast Automated Securities Transfer Program.

 




6. 

CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.





 


(a)        
The obligation of the Company hereunder to issue and sell the
Preferred Shares to each Buyer at
the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that
these conditions are for the Company’s sole benefit and may be waived by
the Company at any time in its sole discretion by providing each
Buyer with prior written notice thereof:

 


(i)           Such
Buyer shall have executed each of the other Transaction Documents
to which it is a party and delivered the same to the
Company.

 


 




 

24








 






 

 


(ii)           Such
Buyer and each other Buyer shall have delivered to the Company the
Purchase Price for the Preferred Shares being purchased by such
Buyer at the Closing by wire transfer of immediately available
funds in accordance with instructions previously provided by the
Company.

 


(iii)           The
representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of
the Closing Date as though originally made at that time (except for
representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date), and such
Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Closing Date.

 




7. 

CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE.





 


(a)           The
obligation of each Buyer hereunder to purchase its Preferred Shares
at the Closing is subject to the satisfaction, at or before the
Closing Date, of each of the following conditions, provided that
these conditions are for each Buyer’s sole benefit and may be waived by
such Buyer at any time in its sole discretion by providing the
Company with prior written notice thereof:

 


(i)           The
Company shall have duly executed and delivered to such Buyer each
of the Transaction Documents and the Company shall have duly
executed and delivered to such Buyer such aggregate number of
Preferred Shares set forth across from such Buyer’s name in column (3) of the Schedule
of Buyers being purchased by such Buyer at the Closing pursuant to
this Agreement.

 


(ii)           Such
Buyer shall have received the opinion of Wyrick Robbins Yates &
Ponton LLP, the Company’s
counsel, dated as of the Closing Date, in the form reasonably
acceptable to such Buyer.

 


(iii)         
The Company shall have delivered to such Buyer a certified copy of
the Certificate of Incorporation and the Certificate of
Designations as certified by the Delaware Secretary of State within
three (3) days of the Closing Date.

 


(iv)        
The Company shall have delivered to such Buyer a certificate, in
the form reasonably acceptable to such Buyer, executed by the
Secretary of the Company and dated as of the Closing Date, as to
(i) the resolutions consistent with Section 3(b) as adopted by the
Company’s board of
directors in a form reasonably acceptable to such Buyer, (ii) the
Certificate of Incorporation of the Company and (iii) the Bylaws of
the Company, each as in effect at the Closing.

 


(v)           All
of the representations and warranties made by the Company in this
Agreement that are qualified by materiality or Material Adverse
Effect shall be true and correct in all respects as of the date
hereof and as of such Closing Date as though made at and as of such
Closing Date (except to the extent such representations and
warranties expressly speak as of an earlier date, which shall be
true and correct in all respects as of such date) and all of the
representations and warranties made by the Company in this
Agreement that are not qualified by materiality or Material Adverse
Effect shall be true and correct in all material respects as of the
date hereof and as of such Closing Date as though made at and as of
such Closing Date (except to the extent such representations and
warranties expressly speak as of an earlier date, which shall be
true and correct in all material respects as of such date). Such
Buyer shall have received a certificate, duly certified by the
Chief Executive Officer of the Company, dated as of the Closing
Date, to the foregoing effect.

 


 




 

25








 






 

 


(vi)           The
Company shall have delivered to such Buyer a letter from the
Company’s transfer agent
certifying the number of shares of Common Stock outstanding on the
Business Day immediately prior to the Closing Date.

 


(vii)        
The Common Stock (A) shall be designated for quotation or listed
(as applicable) on the Principal Market and (B) shall not have been
suspended, as of the Closing Date, by the SEC or the Principal
Market from trading on the Principal Market nor, except as
disclosed in the SEC Documents, shall suspension by the SEC or the
Principal Market have been threatened (with a reasonable prospect
of delisting or suspension occurring after giving effect to all
applicable notice, appeal, compliance and hearing periods), as of
the Closing Date, either (I) in writing by the SEC or the Principal
Market or (II) by falling below the minimum maintenance
requirements of the Principal Market.

 


(viii)        
The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale
of the Securities, including without limitation, those required by
the Principal Market, if any.

 


(ix)           No
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by any court or Governmental Entity of competent
jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction
Documents.

 


(x)         
  Since the date of execution of this Agreement, no event or
series of events shall have occurred that reasonably would have or
result in a Material Adverse Effect.

 


(xi)        
From the date hereof to the Closing Date, (i) trading in the Common
Stock shall not have been suspended by the SEC or the Principal
Market (except for any suspension of trading of limited duration
agreed to by the Company, which suspension shall be terminated
prior to the Closing), and, (ii) at any time prior to the Closing
Date, trading in securities generally as reported by Bloomberg L.P.
shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported
by such service, or on the Principal Market, nor shall a banking
moratorium have been declared either by the United States or New
York State authorities nor shall there have occurred any material
outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the reasonable judgment of each Buyer, makes it
impracticable or inadvisable to purchase the Securities at the
Closing

 




8. 

TERMINATION.





 


In the
event that a Closing shall not have occurred with respect to a
Buyer within two (2) Business Days of the date hereof, then such
Buyer shall have the right to terminate its obligations under this
Agreement with respect to itself at any time on or after the close
of business on such date without liability of such Buyer to any
other party; provided, however, (i) the right to terminate this
Agreement under this Section 8 shall not be available to such Buyer
if the failure of the transactions contemplated by this Agreement
to have been consummated by such date is the result of such
Buyer’s breach of this
Agreement and (ii) the abandonment of the sale and purchase of the
Preferred Shares shall be applicable only to such Buyer providing
such written notice, provided further that no such termination
shall affect any obligation of the Company under this Agreement to
reimburse such Buyer for the expenses described in Section 4(g)
above. Nothing contained in this Section 8 shall be deemed to
release any party from any liability for any breach by such party
of the terms and provisions of this Agreement or the other
Transaction Documents or to impair the right of any party to compel
specific performance by any other party of its obligations under
this Agreement or the other Transaction Documents.

 


 




 

26








 






 

 




9. 

MISCELLANEOUS.





 


(a)           Governing
Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of
New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any
other jurisdictions) that would cause the application of the laws
of any jurisdictions other than the State of New York. The Company
hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough
of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or under any of the other Transaction Documents
or with any transaction contemplated hereby or thereby, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law.
Nothing contained herein shall be deemed or operate to preclude any
Buyer from bringing suit or taking other legal action against the
Company in any other jurisdiction to collect on the
Company’s obligations to
such Buyer or to enforce a judgment or other court ruling in favor
of such Buyer. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR
THEREBY.

 


(b)           Counterparts.
This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to the other party. In the event
that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page shall create a valid
and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if
such signature page were an original thereof.

 


(c)           Headings;
Gender. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the
interpretation of, this Agreement. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include
the masculine, feminine, neuter, singular and plural forms thereof.
The terms “including,” “includes,” “include” and words of like import shall be
construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to
this entire Agreement instead of just the provision in which they
are found.

 


(d)           Severability;
Maximum Payment Amounts. If any provision of this Agreement
is prohibited by law or otherwise determined to be invalid or
unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall
be deemed amended to apply to the broadest extent that it would be
valid and enforceable, and the invalidity or unenforceability of
such provision shall not affect the validity of the remaining
provisions of this Agreement so long as this Agreement as so
modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the
respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes
as close as possible to that of the prohibited, invalid or
unenforceable provision(s). Notwithstanding anything to the
contrary contained in this Agreement or any other Transaction
Document (and without implication that the following is required or
applicable), it is the intention of the parties that in no event
shall amounts and value paid by the Company and/or any of its
Subsidiaries (as the case may be), or payable to or received by any
of the Buyers, under the Transaction Documents (including without
limitation, any amounts that would be characterized as “interest” under applicable law) exceed
amounts permitted under any applicable law. Accordingly, if any
obligation to pay, payment made to any Buyer, or collection by any
Buyer pursuant the Transaction Documents is finally judicially
determined to be contrary to any such applicable law, such
obligation to pay, payment or collection shall be deemed to have
been made by mutual mistake of such Buyer, the Company and its
Subsidiaries and such amount shall be deemed to have been adjusted
with retroactive effect to the maximum amount or rate of interest,
as the case may be, as would not be so prohibited by the applicable
law. Such adjustment shall be effected, to the extent necessary, by
reducing or refunding, at the option of such Buyer, the amount of
interest or any other amounts which would constitute unlawful
amounts required to be paid or actually paid to such Buyer under
the Transaction Documents. For greater certainty, to the extent
that any interest, charges, fees, expenses or other amounts
required to be paid to or received by such Buyer under any of the
Transaction Documents or related thereto are held to be within the
meaning of “interest” or another applicable term to
otherwise be violative of applicable law, such amounts shall be
pro-rated over the period of time to which they
relate.

 


 




 

27








 






 

 


(e)           Entire
Agreement; Amendments. This Agreement, the other Transaction
Documents and the schedules and exhibits attached hereto and
thereto and the instruments referenced herein and therein supersede
all other prior oral or written agreements between the Buyers, the
Company, its Subsidiaries, their affiliates and Persons acting on
their behalf, including, without limitation, any transactions by
any Buyer with respect to Common Stock or the Securities, and the
other matters contained herein and therein, and this Agreement, the
other Transaction Documents, the schedules and exhibits attached
hereto and thereto and the instruments referenced herein and
therein contain the entire understanding of the parties solely with
respect to the matters covered herein and therein; provided,
however, nothing contained in this Agreement or any other
Transaction Document shall (or shall be deemed to) (i) have any
effect on any agreements any Buyer has entered into with, or any
instruments any Buyer has received from, the Company or any of its
Subsidiaries prior to the date hereof with respect to any prior
investment made by such Buyer in the Company or (ii) waive, alter,
modify or amend in any respect any obligations of the Company or
any of its Subsidiaries, or any rights of or benefits to any Buyer
or any other Person, in any agreement entered into prior to the
date hereof between or among the Company and/or any of its
Subsidiaries and any Buyer, or any instruments any Buyer received
from the Company and/or any of its Subsidiaries prior to the date
hereof, and all such agreements and instruments shall continue in
full force and effect. Except as specifically set forth herein or
therein, neither the Company nor any Buyer makes any
representation, warranty, covenant or undertaking with respect to
such matters. For clarification purposes, the Recitals are part of
this Agreement. No provision of this Agreement may be amended other
than by an instrument in writing signed by the Company and the
Required Holders, and any amendment to any provision of this
Agreement made in conformity with the provisions of this Section
9(e) shall be binding on all Buyers and holders of Securities, as
applicable; provided that no such amendment shall be effective to
the extent that it (A) applies to less than all of the holders of
the Securities then outstanding or (B) imposes any obligation or
liability on any Buyer without such Buyer’s prior written consent (which may
be granted or withheld in such Buyer’s sole discretion). No waiver shall
be effective unless it is in writing and signed by an authorized
representative of the waiving party, provided that the Required
Holders may waive any provision of this Agreement, and any waiver
of any provision of this Agreement made in conformity with the
provisions of this Section 9(e) shall be binding on all Buyers and
holders of Securities, as applicable, provided that no such waiver
shall be effective to the extent that it (1) applies to less than
all of the holders of the Securities then outstanding (unless a
party gives a waiver as to itself only) or (2) imposes any
obligation or liability on any Buyer without such Buyer’s prior written consent (which may
be granted or withheld in such Buyer’s sole discretion). No consideration
(other than reimbursement of legal fees) shall be offered or paid
to any Person to amend or consent to a waiver or modification of
any provision of any of the Transaction Documents unless the same
consideration also is offered to all of the parties to the
Transaction Documents or all holders of Preferred Shares (as the
case may be). From the date hereof and while any Preferred Shares
are outstanding, the Company shall not be permitted to receive any
consideration from a Buyer or a holder of Preferred Shares that is
not otherwise contemplated by the Transaction Documents in order
to, directly or indirectly, induce the Company or any Subsidiary
(i) to treat such Buyer or holder of Preferred Shares in a manner
that is more favorable than to other similarly situated Buyers or
holders of Preferred Shares, or (ii) to treat any Buyer(s) or
holder(s) of Preferred Shares in a manner that is less favorable
than the Buyer or holder of Preferred Shares that is paying such
consideration; provided, however, that the determination of whether
a Buyer has been treated more or less favorably than another Buyer
shall disregard any securities of the Company purchased or sold by
any Buyer. The Company has not, directly or indirectly, made any
agreements with any Buyers relating to the terms or conditions of
the transactions contemplated by the Transaction Documents except
as set forth in the Transaction Documents. Without limiting the
foregoing, the Company confirms that, except as set forth in this
Agreement or the other Transaction Documents, no Buyer has made any
commitment or promise or has any other obligation to provide any
financing to the Company, any Subsidiary or otherwise. As a
material inducement for each Buyer to enter into this Agreement,
the Company expressly acknowledges and agrees that (x) no due
diligence or other investigation or inquiry conducted by a Buyer,
any of its advisors or any of its representatives shall affect such
Buyer’s right to rely on,
or shall modify or qualify in any manner or be an exception to any
of, the Company’s
representations and warranties contained in this Agreement or any
other Transaction Document and (y) unless a provision of this
Agreement or any other Transaction Document is expressly preceded
by the phrase “except as
disclosed in the SEC Documents,” nothing contained in any of the SEC
Documents shall affect such Buyer’s right to rely on, or shall modify
or qualify in any manner or be an exception to any of, the
Company’s representations
and warranties contained in this Agreement or any other Transaction
Document. “Required
Holders” means (I)
prior to the Closing Date, Buyers entitled to purchase, in the
aggregate, at least a majority of the number of Preferred Shares at
the Closing and (II) on or after the Closing Date, holders of, in
the aggregate, at least a majority of the Underlying Securities as
of such time (excluding any Underlying Securities held by the
Company or any of its Subsidiaries as of such time) issued or
issuable hereunder or pursuant to the Certificate of Designations
or the (or the Buyers, with respect to any waiver or amendment of
Section 4(o)); provided, that such Buyers or holders of Underlying
Securities, as applicable, must include Elliott Associates, L.P.
and Elliott International, L.P. (together with their Affiliates,
“Elliott”) so
long as they collectively hold at least 20% of the Underlying
Securities (on an as-converted and as-exercised basis without
regard to any limitations on conversion or exercise thereof)
initially held by Elliott. “Disclosure Letter” shall mean that
certain letter from the Company to the Buyers, dated the date of
this Agreement.

 


(f)           Notices.
Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or
(iii) one (1) Business Day after deposit with an overnight courier
service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:

 


If to
the Company:


CorMedix
Inc.


400
Connell Drive, 5th Floor


Suite
5000


Berkeley Heights,
NJ 07922


Telephone: (908)
517-95000


Facsimile: (908)
429-4307


Attention: Chief
Executive Officer


 


With a
copy (for informational purposes only) to:


Wyrick
Robbins Yates & Ponton LLP


4101
Lake Boone Trail, Suite 300


Raleigh, NC
27607


Telephone: (919)
781-4000


Facsimile: (919)
781-4865


Attention:
Alexander M. Donaldson, Esq.


 


 




 

28








 






 

 


If to
the Transfer Agent:


VStock
Transfer, LLC


18
Lafayette Place


Woodmere, NY
11598


Telephone: (212)
828-8436


Facsimile: (646)
536-3179


Attention: Yoel
Goldfeder


 


If to a
Buyer, to its address and facsimile number set forth on the
Schedule of Buyers, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers, with a copy (for informational purposes
only) to its counsel identified therein or to such other address
and/or facsimile number and/or to the attention of such other
Person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of
such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the
sender’s facsimile
machine containing the time, date, recipient facsimile number and,
with respect to each facsimile transmission, an image of the first
page of such transmission or (C) provided by an overnight courier
service shall be rebuttable evidence of personal service, receipt
by facsimile or receipt from an overnight courier service in
accordance with clause (i), (ii) or (iii) above,
respectively.

 


(g)           Successors
and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and
assigns, including any purchasers of any of the Preferred Shares
(but excluding any purchasers of Underlying Securities, unless
pursuant to a written assignment by such Buyer). The Company shall
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Required Holders (as
defined below), including, without limitation, by way of a
Fundamental Transaction (as defined in the Certificate of
Designations) (unless the Company is in compliance with the
applicable provisions governing Fundamental Transactions set forth
in the Certificate of Designations). A Buyer may assign some or all
of its rights hereunder in connection with any transfer of any of
its Securities without the consent of the Company, in which event
such assignee shall be deemed to be a Buyer hereunder with respect
to such assigned rights.

 


(h)           No
Third Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, other than the
Indemnitees referred to in Section 9(k).

 


(i)       
    Survival. The
representations, warranties, agreements and covenants shall survive
the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants
hereunder.

 


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

 


 




 

29








 






 

 


(k)           Indemnification.

 


(i)           In
consideration of each Buyer’s execution and delivery of the
Transaction Documents to which it is a party and acquiring the
Securities thereunder and in addition to all of the
Company’s other
obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless each Buyer and each
holder of any Securities and all of their stockholders, partners,
members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with
the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith
(irrespective of whether any such Indemnitee is a party to the
action for which indemnification hereunder is sought), and
including reasonable attorneys’ fees and disbursements (the
“Indemnified
Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or
relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company or any Subsidiary in
any of the Transaction Documents, (ii) any breach of any covenant,
agreement or obligation of the Company or any Subsidiary contained
in any of the Transaction Documents, (iii) any untrue statement or
alleged untrue statement of a material fact contained, or
incorporated by reference, in a registration statement or any
amendment thereto or any omission or alleged omission to state
therein, or in any document incorporated by reference therein, a
material fact required to be stated therein or necessary to make
the statements therein not misleading, (iv) any untrue statement or
alleged untrue statement of a material fact contained, or
incorporated by reference, in any prospectus, any issuer free
writing prospectus, or in any amendment thereof or supplement
thereto, or in any “issuer information” (as defined in
Rule 433 under the 1933 Act) of the Company, which “issuer
information” is required to be, or is, filed with the SEC or
otherwise contained in any free writing prospectus, or any
amendment or supplement thereto, or any omission or alleged
omission to state therein, or in any document incorporated by
reference therein, a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, (v) any
violation of United States federal or state securities laws or the
rules and regulations of the Principal Market or any Eligible
Market in connection with the transactions contemplated by this
Agreement by the Company or any of its Subsidiaries, affiliates,
officers, directors or employees or (vi) any cause of action, suit,
proceeding or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action
brought on behalf of the Company or any Subsidiary) or which
otherwise involves such Indemnitee that arises out of or results
from (A) the execution, delivery, performance or enforcement of any
of the Transaction Documents, (B) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the
proceeds of the issuance of the Securities, (C) any disclosure
properly made by such Buyer pursuant to Section 4(i), or (D) the
status of such Buyer or holder of the Securities either as an
investor in the Company pursuant to the transactions contemplated
by the Transaction Documents or as a party to this Agreement
(including, without limitation, as a party in interest or otherwise
in any action or proceeding for injunctive or other equitable
relief), in each case, other than as a result of any
misrepresentation or breach of any representation or warranty made
by such Buyer or holder of the Securities. To the extent that the
foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law.

 


 




 

30








 






 

 


(ii)           Promptly
after receipt by an Indemnitee under this Section 9(k) of notice of
the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified
Liability, such Indemnitee shall, if a claim in respect thereof is
to be made against the Company under this Section 9(k), deliver to
the Company a written notice of the commencement thereof, and the
Company shall have the right to participate in, and, to the extent
the Company so desires, to assume control of the defense thereof
with counsel mutually satisfactory to the Company and the
Indemnitee; provided, however, that an Indemnitee shall have the
right to retain its own counsel with the fees and expenses of such
counsel to be paid by the Company if: (A) the Company has agreed in
writing to pay such fees and expenses; (B) the Company shall have
failed promptly to assume the defense of such Indemnified Liability
and to employ counsel reasonably satisfactory to such Indemnitee in
any such Indemnified Liability; or (C) the named parties to any
such Indemnified Liability (including any impleaded parties)
include both such Indemnitee and the Company, and such Indemnitee
shall have been advised by counsel that a conflict of interest is
likely to exist if the same counsel were to represent such
Indemnitee and the Company (in which case, if such Indemnitee
notifies the Company in writing that it elects to employ separate
counsel at the expense of the Company, then the Company shall not
have the right to assume the defense thereof and such counsel shall
be at the expense of the Company), provided further, that in the
case of clause (C) above the Company shall not be responsible for
the reasonable fees and expenses of more than one (1) separate
legal counsel for the Indemnitees. The Indemnitee shall reasonably
cooperate with the Company in connection with any negotiation or
defense of any such action or Indemnified Liability by the Company
and shall furnish to the Company all information reasonably
available to the Indemnitee which relates to such action or
Indemnified Liability. The Company shall keep the Indemnitee
reasonably apprised at all times as to the status of the defense or
any settlement negotiations with respect thereto. The Company shall
not be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that
the Company shall not unreasonably withhold, delay or condition its
consent. The Company shall not, without the prior written consent
of the Indemnitee, consent to entry of any judgment or enter into
any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability in respect to
such Indemnified Liability or litigation, and such settlement shall
not include any admission as to fault on the part of the
Indemnitee. Following indemnification as provided for hereunder,
the Company shall be subrogated to all rights of the Indemnitee
with respect to all third parties, firms or corporations relating
to the matter for which indemnification has been made. The failure
to deliver written notice to the Company within a reasonable time
of the commencement of any such action shall not relieve the
Company of any liability to the Indemnitee under this Section 9(k),
except to the extent that the Company is materially and adversely
prejudiced in its ability to defend such action.

 


(iii)           The
indemnification required by this Section 9(k) shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or
Indemnified Liabilities are incurred.

 


(iv)           The
indemnity agreement contained herein shall be in addition to (A)
any cause of action or similar right of the Indemnitee against the
Company or others, and (B) any liabilities the Company may be
subject to pursuant to the law.

 


 




 

31








 






 

 


(l)           Construction.
The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party.
No specific representation or warranty shall limit the generality
or applicability of a more general representation or warranty. Each
and every reference to share prices, shares of Common Stock and any
other numbers in this Agreement that relate to the Common Stock
shall be automatically adjusted for any stock splits, stock
dividends, stock combinations, recapitalizations or other similar
transactions that occur with respect to the Common Stock after the
date of this Agreement. Notwithstanding anything in this Agreement
to the contrary, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty against, or a
prohibition of, any actions with respect to the borrowing of,
arrangement to borrow, identification of the availability of,
and/or securing of, securities of the Company in order for such
Buyer (or its broker or other financial representative) to effect
short sales or similar transactions in the future.

 


(m)        
Remedies. Each
Buyer and in the event of assignment by Buyer of its rights and
obligations hereunder, each holder of Securities, shall have all
rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any
time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights
under any provision of this Agreement shall be entitled to enforce
such rights specifically (without posting a bond or other
security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights
granted by law. Furthermore, the Company recognizes that in the
event that it or any Subsidiary fails to perform, observe, or
discharge any or all of its or such Subsidiary’s (as the case may be) obligations
under the Transaction Documents, any remedy at law would inadequate
relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to specific performance and/or temporary,
preliminary and permanent injunctive or other equitable relief from
any court of competent jurisdiction in any such case without the
necessity of proving actual damages and without posting a bond or
other security. The remedies provided in this Agreement and the
other Transaction Documents shall be cumulative and in addition to
all other remedies available under this Agreement and the other
Transaction Documents, at law or in equity (including a decree of
specific performance and/or other injunctive relief).

 


(n)        
Withdrawal
Right. Notwithstanding anything to the contrary contained in
(and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand
or option under a Transaction Document and the Company or any
Subsidiary does not timely perform its related obligations within
the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written
notice to the Company or such Subsidiary (as the case may be), any
relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

 


 




 

32








 






 

 


(o)        
Payment
Set Aside; Currency. To the extent that the Company makes a
payment or payments to any Buyer hereunder or pursuant to any of
the other Transaction Documents or any of the Buyers enforce or
exercise their rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, foreign, state
or federal law, common law or equitable cause of action), then to
the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred. Unless otherwise
expressly indicated, all dollar amounts referred to in this
Agreement and the other Transaction Documents are in United States
Dollars (“U.S. Dollars”), and all amounts owing under this
Agreement and all other Transaction Documents shall be paid in U.S.
Dollars. All amounts denominated in other currencies (if any) shall
be converted into the U.S. Dollar equivalent amount in accordance
with the Exchange Rate on the date of calculation. “Exchange
Rate” means, in relation
to any amount of currency to be converted into U.S. Dollars
pursuant to this Agreement, the U.S. Dollar exchange rate as
published in the Wall Street Journal on the relevant date of
calculation.

 


(p)        
Judgment
Currency. If for the purpose of obtaining or enforcing
judgment against the Company in connection with this Agreement or
any other Transaction Document in any court in any jurisdiction it
becomes necessary to convert into any other currency (such other
currency being hereinafter in this Section 9(p) referred to as the
“Judgment
Currency”) an
amount due in U.S. Dollars under this Agreement, the conversion
shall be made at the Exchange Rate prevailing on the Business Day
immediately preceding:

 


(A)           the
date actual payment of the amount due, in the case of any
proceeding in the courts of New York or in the courts of any other
jurisdiction that will give effect to such conversion being made on
such date: or

 


(B)           the
date on which the foreign court determines, in the case of any
proceeding in the courts of any other jurisdiction (the date as of
which such conversion is made pursuant to this Section 9(p)(2)
being hereinafter referred to as the “Judgment Conversion
Date”).

 


(ii)           If
in the case of any proceeding in the court of any jurisdiction
referred to in Section 9(p)(1) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and
the date of actual payment of the amount due, the applicable party
shall pay such adjusted amount as may be necessary to ensure that
the amount paid in the Judgment Currency, when converted at the
Exchange Rate prevailing on the date of payment, will produce the
amount of U.S. Dollars which could have been purchased with the
amount of Judgment Currency stipulated in the judgment or judicial
order at the Exchange Rate prevailing on the Judgment Conversion
Date.

 


(iii)       
Any amount due from the Company under this provision shall be due
as a separate debt and shall not be affected by judgment being
obtained for any other amounts due under or in respect of this
Agreement or any other Transaction Document.

 


(q)           Independent
Nature of Buyers’ Obligations and Rights. The
obligations of each Buyer under the Transaction Documents are
several and not joint with the obligations of any other Buyer, and
no Buyer shall be responsible in any way for the performance of the
obligations of any other Buyer under any Transaction Document.
Nothing contained herein or in any other Transaction Document, and
no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Company acknowledges
that the Buyers do not so constitute, a partnership, an
association, a joint venture or any other kind of group or entity,
or create a presumption that the Buyers are in any way acting in
concert or as a group or entity, and the Company shall not assert
any such claim with respect to such obligations or the transactions
contemplated by the Transaction Documents or any matters, and the
Company acknowledges that the Buyers are not acting in concert or
as a group, and the Company shall not assert any such claim, with
respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Buyer acknowledges that no other Buyer
has acted as agent for such Buyer in connection with such Buyer
making its investment hereunder and that no other Buyer will be
acting as agent of such Buyer in connection with monitoring such
Buyer’s investment in the
Securities or enforcing its rights under the Transaction Documents.
The Company and each Buyer confirms that each Buyer has
independently participated with the Company and its Subsidiaries in
the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each Buyer shall be
entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this
Agreement or out of any other Transaction Documents, and it shall
not be necessary for any other Buyer to be joined as an additional
party in any proceeding for such purpose. The use of a single
agreement to effectuate the purchase and sale of the Securities
contemplated hereby was solely in the control of the Company, not
the action or decision of any Buyer, and was done solely for the
convenience of the Company and its Subsidiaries and not because it
was required or requested to do so by any Buyer. It is expressly
understood and agreed that each provision contained in this
Agreement and in each other Transaction Document is between the
Company, each Subsidiary and a Buyer, solely, and not between the
Company, its Subsidiaries and the Buyers collectively and not
between and among the Buyers.

 



[signature pages follow]

 




 

33








 






IN WITNESS WHEREOF, each
Buyer and the Company have caused their respective signature page
to this Agreement to be duly executed as of the date first written
above.

 

 


	

 

	



COMPANY:

 



CORMEDIX INC.






	

 


	

 

	

 

	

 

	

 


	
 

	
By:  

	
/s/ Khoso
Baluch

	

 


	

 

	

 

	
Name: Khoso
Baluch 

	

 


	

 

	

 

	

Title: Chief
Executive Officer 

	

 






 

 


	

 

	
BUYERS:

 



ELLIOTT
INTERNATIONAL, L.P.







	

 


	

 

	

 

	

 

	

 


	
 

	
By:	
Elliott
International Capital Advisors Inc., as
attorney-in-fact  

	

 


	
 

	
 

	
 

	

 


	
 

	
By:  

	
/s/
Elliot Greenberg

	

 


	

 

	

 

	
Name: Elliot
Greenberg 

	

 


	

 

	

 

	

Title:
Vice
President



	

 






 

 


	

 

	
ELLIOTT
ASSOCIATES, L.P. Name

	

 


	

 

	

 

	

 

	

 


	
 

	
 

	
Elliott
Capital Advisors, L.P., General Partner	

 


	
 

	
 

	
Braxton
Associates, Inc., General Partner	

 


	
 

	
 

	
 

	

 


	
 

	
By:  

	
/s/
Elliot
Greenberg

	

 


	

 

	

 

	
Name: Elliot
Greenbert 

	

 


	

 

	

 

	

Title: Vice
President 

	

 






 


 




 

 


[Signature
Page to Securities Purchase Agreement]








 






 



SCHEDULE OF BUYERS

 


	


(1)

	


(2)

	


(3)

	


(4)

	


(5)


	


Buyer

	


Address and Facsimile Number

	


Aggregate Number of Preferred Shares

	


Purchase Price

	


Legal Representative’s Address and Facsimile
Number


	

Elliott
International, L.P

	

c/o
Elliott Management Corporation


40 West
57th Street


New
York, NY 10019


Telephone:
(212) 974-6000


Facsimile:
(212) 478-2476


Attention:
Elliot Greenberg


 

 


 

	

1,360

	

$1,360,000

	
 


	

Elliott
Associates, L.P.

	

c/o
Elliott Management Corporation


40 West
57th Street


New
York, NY 10019


Telephone:
(212) 974-6000


Facsimile:
(212) 478-2476


Attention:
Elliot Greenberg

	

640

	

$640,000