exv10w44



 



EXHIBIT 10.44


SECURITIES PURCHASE AGREEMENT



     This Securities Purchase Agreement (this “Agreement”) is dated as of June
18, 2003 among Introgen Therapeutics, Inc., a Delaware corporation (the
“Company”), and the purchasers identified on the signature pages hereto (each a
“Purchaser” and collectively the “Purchasers”).


     WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to issue and sell to the Purchasers, and
the Purchasers, severally and not jointly, desire to purchase from the Company,
securities of the Company as more fully described in this Agreement.


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


ARTICLE I

DEFINITIONS



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



		
	 	          “Affiliate” means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed
under Rule 144 under the Securities Act. With respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary
basis by the same investment manager as such Purchaser will be deemed to
be an Affiliate of such Purchaser.
	 
	 	          “Bankruptcy Event” means any of the following events: (a) the
Company or any Subsidiary commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction relating to the Company or any Subsidiary thereof; (b) there
is commenced against the Company or any Subsidiary any such case or
proceeding that is not dismissed within 60 days after commencement; (c)
the Company or any Subsidiary is adjudicated insolvent or bankrupt or any
order of relief or other order approving any such case or proceeding is
entered; (d) the Company or any Subsidiary suffers any appointment of any
custodian or the like for it or any substantial part of its property that
is not discharged or stayed within 60 days; (e) the Company or any
Subsidiary makes a general assignment for the benefit of creditors; (f)
the Company or any Subsidiary fails to pay, or states that it is unable
to pay or is unable to pay, its debts generally as they become due; (g)
the Company or any Subsidiary calls a meeting of its creditors with a
view to arranging a composition, adjustment or restructuring of its
debts; or (h) the Company or any Subsidiary, by any act or failure to
act, expressly indicates its consent to, approval of or acquiescence in
any of the foregoing or takes any corporate or other action for the
purpose of effecting any of the foregoing.



 






 







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




		
	 	          “Closing Date” means the date of the Closing.
	 
	 	          “Closing Price” means, for any date, the price determined by the
first of the following clauses that applies: (a) if the Common Stock is
then listed or quoted on an Eligible Market or any other national
securities exchange, the closing price per share of the Common Stock for
such date (or the nearest preceding date) on the primary Eligible Market
or exchange on which the Common Stock is then listed or quoted; (b) if
prices for the Common Stock are then quoted on the OTC Bulletin Board,
the closing bid price per share of the Common Stock for such date (or the
nearest preceding date) so quoted; (c) if prices for the Common Stock are
then reported in the “Pink Sheets” published by the National Quotation
Bureau Incorporated (or a similar organization or agency succeeding to
its functions of reporting prices), the most recent bid price per share
of the Common Stock so reported; or (d) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by Purchasers holding a majority of the
Securities.
	 
	 	          “Commission” means the Securities and Exchange Commission.
	 
	 	          “Common Stock” means the common stock of the Company, par value
$0.001 per share.
	 
	 	          “Company Counsel” means Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel to the Company.
	 
	 	          “Effective Date” means the date that the Registration Statement is
declared effective by the Commission.
	 
	 	          “Eligible Market” means the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
	 
	 	          “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
	 
	 	          “Filing Date” means the 30th calendar day following the Closing
Date.
	 
	 	          “Losses” means any and all losses, claims, damages, liabilities,
settlement costs and expenses, including without limitation costs of
preparation and reasonable attorneys’ fees.
	 
	 	          “Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.



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	 	          “Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened in
writing.
	 
	 	          “Prospectus” means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, or any amendment to the Registration Statement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference in such Prospectus.
	 
	 	          “Purchaser Counsel” means any counsel selected by Steelhead
Investments Ltd. hereunder.
	 
	 	          “Registrable Securities” means any Common Stock (including
Underlying Shares) issued or issuable pursuant to the Transaction
Documents, together with any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar event
with respect to the foregoing.
	 
	 	          “Registration Statement” means each registration statement required
to be filed under Article VI, including (in each case) the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
	 
	 	          “Required Effectiveness Date” means the 90th day following the
Closing Date.
	 
	 	          “Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and
Rule 424, respectively, promulgated by the Commission pursuant to the
Securities Act, as such Rules may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
	 
	 	          “Securities” means the Shares, the Warrants and the Underlying
Shares.
	 
	 	          “Shares” means an aggregate of up to 2,500,000 shares of Common
Stock, which are being purchased by the Purchasers pursuant to this
Agreement, and any additional shares of Common Stock that are issued
pursuant to Section 4.9 below.
	 
	 	          “Subsidiary” means any Person in which the Company directly or
indirectly owns at least 50% of the outstanding capital stock or holds an
equity or similar interest.



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	 	          “Trading Day” means (a) any day on which the Common Stock is listed
or quoted and traded on its primary Trading Market, or (b) if the Common
Stock is not then listed or quoted and traded on any Eligible Market,
then a day on which trading occurs on the New York Stock Exchange (or any
successor thereto).
	 
	 	          “Trading Market” means the Nasdaq National Market or any other
market or trading or quotation facility, or any national securities
exchange on which the Common Stock is then listed or quoted.
	 
	 	          “Transaction Documents” means this Agreement, the Warrants and any
other documents or agreements executed in connection with the
transactions contemplated hereunder.
	 
	 	          “Underlying Shares” means the shares of Common Stock issuable upon
exercise of the Warrants.
	 
	 	          “Warrant” means a Common Stock purchase warrant, in the form of
Exhibit A.



ARTICLE II

PURCHASE AND SALE



     2.1     Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to the Purchasers,
and the Purchasers shall, severally and not jointly, purchase from the Company,
the Shares and the Warrants for a purchase price per share of $5.75. The
Closing shall take place at the offices of Purchaser Counsel immediately
following the execution hereof, or at such other location or time as the
parties may agree.


     2.2     Closing Deliveries.


          (a)     At (or in the case of clause (i) below, within three Trading Days
after) the Closing, the Company shall deliver or cause to be delivered to each
Purchaser the following:




		
	 	          (i)     one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in Section
4.1(b) hereof), evidencing the number of Shares indicated below such
Purchaser’s name on the signature page of this Agreement, registered in
the name of such Purchaser;
	 
	 	          (ii)     a Warrant, registered in the name of such Purchaser, pursuant
to which such Purchaser shall have the right to acquire the number of
shares of Common Stock indicated below such Purchaser’s name on the
signature page of this Agreement, on the terms set forth therein;
	 
	 	          (iii)     a legal opinion of Company Counsel, in the form of Exhibit B,
executed by such counsel and delivered to the Purchasers.



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          (b)     At the Closing, each Purchaser shall deliver or cause to be delivered
to the Company the purchase price indicated below such Purchaser’s name on the
signature page of this Agreement, in United States dollars and in immediately
available funds, by wire transfer to an account designated in writing by the
Company for such purpose.



ARTICLE III

REPRESENTATIONS AND WARRANTIES



     3.1     Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:


          (a)     Subsidiaries. The Company has no direct or indirect Subsidiaries
other than those listed in Schedule 3.1(a). Except as disclosed in Schedule
3.1(a), the Company owns, directly or indirectly, all of the capital stock of
each Subsidiary free and clear of any lien, charge, claim, security interest,
encumbrance, right of first refusal or other restriction (collectively,
“Liens”), and all the issued and outstanding shares of capital stock of each
Subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights. If the Company has no subsidiaries, then
references in the Transaction Documents to the Subsidiaries will be
disregarded.



          (b)     Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of
the Company and the Subsidiaries is duly qualified to do business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (i)
adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in a material adverse effect on the results of
operations, assets, business or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company’s ability
to perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”).



          (c)     Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of each
of the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each of
the Transaction Documents has been (or upon delivery will be) duly executed by
the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization

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or similar laws affecting creditors’ rights generally, to general principles
of equity and to limitations on the rights to indemnity and contribution that
exist by virtue of public policy.


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



          (e)     Issuance of the Securities. The Securities (including the Underlying
Shares) are duly authorized and, when issued and paid for in accordance with
the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens (except for restrictions under
federal and state securities laws) and shall not be subject to preemptive
rights or similar rights of stockholders. The Company has reserved from its
duly authorized capital stock the maximum number of shares of Common Stock
issuable pursuant to this Agreement and the Securities (including the
Underlying Shares).



          (f)     Capitalization. Except as set forth in Schedule 3.1(f), the number of
shares and type of all authorized, issued and outstanding capital stock,
options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock of
the Company) are set forth in the Company’s Annual Report on Form 10-K, as
filed with the SEC on March 31, 2003 (the “Annual Report”). All outstanding
shares of capital stock are duly authorized, validly issued, fully paid and
nonassessable and have been issued in compliance with all applicable securities
laws. Except as disclosed in Schedule 3.1(f), there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or securities or rights convertible or exchangeable into shares of Common
Stock. There are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
security holders), and the issue and sale of the Securities (including the
Underlying Shares) will not obligate the Company to issue shares of Common
Stock or other securities to any Person (other than the Purchasers) and will
not result in a right of any holder of Company securities to adjust the

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exercise, conversion, exchange or reset price under such securities. To
the knowledge of the Company, except as specifically disclosed in the Annual
Report, no Person or group of related Persons beneficially owns (as determined
pursuant to Rule 13d-3 under the Exchange Act), or has the right to acquire,
by agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the outstanding Common Stock, ignoring for such
purposes any limitation on the number of shares of Common Stock that may be
owned at any single time.


          (g)     SEC Reports; Financial Statements. The Company has filed all reports
required to be filed by it under the Securities Act and the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required
by law to file such reports) (the foregoing reports being collectively referred
to herein as the “SEC Reports” and, together with this Agreement and the
Schedules to this Agreement, the “Disclosure Materials”) on a timely basis or
has received a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension. The Company has
delivered to each Purchaser a copy of all SEC Reports filed within the 10 days
preceding the date hereof requested by each such Purchaser, if any. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments and the absence of footnotes. All material
agreements to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary are subject are included as
part of or specifically identified in the SEC Reports.



          (h)     Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there has been no event, occurrence or development that,
individually or in the aggregate, has had or that would reasonably be expected
to result in a Material Adverse Effect, (ii) the Company has not incurred any
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the identity of its auditors, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock, and (v) the Company has not issued

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any
equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option plans.


          (i)     Compliance. Neither the Company nor any Subsidiary (i) is in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal,
state and local laws relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters,
except in each case as would not, individually or in the aggregate, reasonably
be expected to have or result in a Material Adverse Effect.



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



          (k)     Certain Fees. Except for the fees described in Schedule 3.1(k), all
of which are payable to registered broker-dealers, no brokerage or finder’s
fees or commissions are or will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated by this
Agreement, and the Company has not taken any action that would cause any
Purchaser to be liable for any such fees or commissions.



          (l)     Private Placement. Neither the Company nor any Person acting on the
Company’s behalf has sold or offered to sell or solicited any offer to buy the
Securities by means of any form of general solicitation or advertising.
Neither the Company nor any of its Affiliates nor any person acting on the
Company’s behalf has, directly or indirectly, at any time within the past six
months, made any offer or sale of any security or solicitation of any offer to
buy any security under circumstances that would (i) eliminate the availability
of the exemption from registration under Regulation D under the Securities Act
in connection with the offer and sale of the Securities as contemplated hereby
or (ii) cause the offering of the Securities pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for purposes of
any applicable law, regulation or stockholder approval provisions, including
without limitation under the rules and regulations of any Trading Market. The
Company is not, and is not an Affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended. The Company

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is not a United States real property holding corporation within the meaning
of the Foreign Investment in Real Property Tax Act of 1980.


          (m)     Form S-3 Eligibility. The Company is eligible to register its Common
Stock for resale by the Purchasers under Form S-3 promulgated under the
Securities Act.



          (n)     Listing and Maintenance Requirements. The Company has not, in the two
years preceding the date hereof, received notice (written or oral) from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.



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



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



          (q)     Disclosure. The Company confirms that neither it nor any other Person
acting on its behalf has provided any of the Purchasers or their agents or
counsel with any information that constitutes material, nonpublic information.
The Company understands and confirms that each of the Purchasers will rely on
the foregoing representations in effecting transactions in securities of the
Company. 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, prospects, operations or financial conditions, which, under
applicable law, rule or regulation, requires public disclosure or announcement
by the Company, but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company’s reports filed under the Exchange
Act are being incorporated into an effective registration statement filed by
the Company under the Securities Act). The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3.2.



          (r)     Absence of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of
the Company, threatened against or affecting the Company or any of its
Subsidiaries, which action, suit, claim, proceeding, inquiry or investigation
is required to

9






 



be disclosed in the Company’s securities filings with the Commission and
which has not been so disclosed.


          (s)     Acknowledgment Regarding Purchasers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm’s length purchaser with respect to this Agreement and
the transactions contemplated hereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to each Purchaser
that the Company’s decision to enter into this Agreement has been based solely
on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.



          (t)     Patents and Trademarks. The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other
similar rights that are necessary for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so have
would reasonably be expected to have a Material Adverse Effect (collectively,
the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violate or infringe upon the rights of any Person. To
the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights.



          (u)     Going Concern. The Company and the Subsidiaries have no knowledge
(upon receipt of the proceeds of this transaction) that the Company will
receive a “going concern” opinion from the Company’s independent public
accountants in the Company’s Annual Report.



          (v)     Insurance. The Company and the Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor any
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.



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



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          (x)     Transactions With Affiliates and Employees. Except as set forth in
SEC Reports filed at least ten days prior to the date hereof, none of the
officers or directors of the Company and, to the knowledge of the Company, none
of the employees of the Company is presently
a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or
partner.



          (y)     Solvency. Based on the financial condition of the Company as of the
Closing Date, (i) the Company’s fair saleable value of its assets exceeds the
amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities)
as they mature; (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).



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



     3.2     Representations and Warranties of the Purchasers. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants
to the Company as follows:


          (a)     Organization; Authority. Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The purchase by such Purchaser of the Securities hereunder has been duly
authorized by all necessary action on the part of such Purchaser. This
Agreement has been duly executed and delivered by such Purchaser and
constitutes the valid and binding obligation of such Purchaser, enforceable
against it in accordance with its terms.



11






 





          (b)     Investment Intent. Such Purchaser is acquiring the Securities as
principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof,
without prejudice, however, to such Purchaser’s right, subject to the
provisions of this Agreement, at all times to sell or otherwise dispose of all
or any part of such Securities pursuant to an effective registration statement
under the Securities Act or under an
exemption from such registration and in compliance with applicable federal
and state securities laws. Such Purchaser understands and agrees that: (i) the
offer and sale of the Securities have not been registered under the Securities
Act by reason of the exemption from the registration provisions of the
Securities Act provided by Section 4(2) thereof and Rule 506 promulgated
thereunder, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Purchaser’s
representations, warranties and covenants as expressed herein; (ii) the Company
is relying on such Purchaser’s representations, warranties and covenants in
offering and selling the Securities hereunder; and (iii) the Securities may not
be transferred by such Purchaser except pursuant to an effective registration
statement under the Securities Act or an available exemption from such
registration and in compliance with all applicable federal and state securities
laws. Subject to compliance with the foregoing, nothing contained herein shall
be deemed a representation or warranty by such Purchaser to hold Securities for
any period of time. Such Purchaser does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.



          (c)     Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises any Warrants, it will be an “accredited investor” as defined in Rule
501(a) under the Securities Act.



          (d)     Experience of such Purchaser. Such Purchaser has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the investment in the Securities,
and has so evaluated the merits and risks of such investment. Such Purchaser
is able to bear the economic risk of an investment in the Securities and, at
the present time, is able to afford a complete loss of such investment. The
Purchaser understands that its investment in the Securities involves a high
degree of risk.



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




12










 



and disclosure of such information or use of such
information by such Purchaser or anyone receiving such information from such
Purchaser in connection with the purchase, sale or trade of the Company’s
securities, or any hedging, derivative or similar transactions or activities
involving the Company’s securities, may be a violation of securities laws.


          (f)     Residency. Such Purchaser is domiciled in the jurisdiction set forth
immediately below such Purchaser’s name on the signature page hereof and
intends that the securities or blue sky laws of such jurisdiction only govern
the offer and sale of Securities hereunder.



ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES



     4.1     Transfer Restrictions.


          (a)     Securities may only be disposed of pursuant to an effective
registration statement under the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the
transferor shall provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act or applicable state securities laws.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with its transfer agent, without any
such legal opinion, any transfer of Securities by a Purchaser to an Affiliate
of such Purchaser, provided that (i) the transferee certifies to the Company
that it is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and (ii) that no value has been transferred by the transferee to
transferor in connection with such transfer.



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




	 	 	[NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY [NOT] BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
NOTWITHSTANDING THE FOREGOING, THESE SECURITIES [AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THESE SECURITIES] MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY SUCH SECURITIES.



13






 






Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act, or (ii) following any
sale of such Securities pursuant to Rule 144, or (iii) if such Securities are
eligible for sale under Rule 144(k), or (iv) if such legend is not required
under applicable requirements of the Securities Act. Following the Effective
Date or at such earlier time as a legend is no longer required for certain
Securities, the Company will, no later than three Trading Days following the
delivery by a Purchaser to the Company or the Company’s transfer agent of a
legended certificate representing such Securities, deliver or cause to be
delivered to such Purchaser a certificate representing such Securities that is
free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this Section.
For so long as any Purchaser owns Securities, the Company will not effect or
publicly announce its intention to effect any exchange, recapitalization or
other transaction that effectively requires or rewards physical delivery of
certificates evidencing the Common Stock without prior notice to the Purchaser.


          (c)     The Company acknowledges and agrees that a Purchaser may from time to
time pledge or grant a security interest in some or all of the Securities in
connection with a bona fide margin agreement or other loan or financing
arrangement secured by the Securities and, if required under the terms of such
agreement, loan or arrangement, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. At the appropriate Purchaser’s
expense, the Company will execute and deliver such reasonable documentation as
a pledgee or secured party of Securities may reasonably request in connection
with a pledge or transfer of the Securities, including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of selling stockholders in the Prospectus.



     4.2     Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to use its best efforts to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. Upon the request of any Purchaser, the Company shall deliver
to such Purchaser a written certification of a duly authorized officer as to
whether it has complied with the preceding sentence. As long as any Purchaser
owns Securities, if the Company is not required to file reports pursuant to
such laws, it will prepare and furnish to the Purchasers and make publicly
available in accordance with paragraph (c) of Rule 144 such information as is
required for the Purchasers to sell the Securities under Rule 144.


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


14






 


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


     4.5     Subsequent Placements.


               (a)     From the date hereof until the Effective Date, the Company will not,
directly or indirectly, offer, sell, grant any option to purchase, or otherwise
dispose of (or announce any offer, sale, grant or any option to purchase or
other disposition of) any of its or the Subsidiaries’ equity or equity
equivalent securities, including without limitation any debt, preferred stock
or other instrument or security that is, at any time during its life and under
any circumstances, convertible into or exchangeable for Common Stock (any such
offer, sale, grant, disposition or announcement being referred to as a
“Subsequent Placement”), unless (i) the Company delivers to each of the
Purchasers a written notice (the “Subsequent Placement Notice”) of its
intention to effect such Subsequent Placement, which Subsequent Placement
Notice shall describe in reasonable detail the proposed terms of such
Subsequent Placement, the amount of proceeds intended to be raised thereunder,
the Person with whom such Subsequent Placement is proposed to be effected, and
attached to which shall be a term sheet or similar document relating thereto
and (ii) such Purchaser shall not have notified the Company by 6:30 p.m. (New
York City time) on the second Trading Day after its receipt of the Subsequent
Placement Notice of its willingness to provide (or to cause its designee to
provide), subject to completion of mutually acceptable documentation, all or
part of such financing to the Company on the same terms set forth in the
Subsequent Placement Notice. If the Purchasers shall fail to so notify the
Company of their willingness to participate in the full Subsequent Placement,
the Company may effect the remaining portion of such Subsequent Placement on
the terms and to the Persons set forth in the Subsequent Placement Notice;
provided that the Company must provide the Purchasers with a second Subsequent
Placement Notice, and the Purchasers will again have the right of first refusal
set forth above in this paragraph (a), if the Subsequent Placement subject to
the initial Subsequent Placement Notice is not consummated for any reason on
the terms set forth in such Subsequent Placement Notice within 30 Trading Days
after the date of the initial Subsequent Placement Notice with the Persons
identified in the Subsequent Placement Notice. If the Purchasers indicate a
willingness to provide financing in excess of the amount set forth in the
Subsequent Placement Notice, then each Purchaser will be entitled to provide
financing pursuant to such Subsequent Placement Notice up to an amount equal to
such Purchaser’s pro rata portion of the aggregate purchase price paid for the
Securities under this Agreement, but the Company shall not be required to
accept financing from the Purchasers in an amount in excess of the amount set
forth in the Subsequent Placement Notice.



               (b)     The restrictions contained in paragraph (a) of this Section shall not
apply to (i) any issuance of Common Stock or grant of options to employees,
officers, directors of or consultants or advisors to the Company, in each case,
pursuant to a stock-based plan duly approved by the Company’s board of
directors, (ii) upon exercise, conversion or exchange of any Common Stock
Equivalents (as defined herein) referenced in Section 3.1(f) or Schedule 3.1(f)
(provided that




15






 





such exercise or conversion occurs in accordance with the terms
thereof, without amendment or modification), (iii) the issuance of securities
pursuant to the Company’s bona fide acquisition of another corporation, or all
or a portion of its assets, by merger, purchase of assets or other corporate
reorganization in each case, as approved by the Company’s board of directors
and not for the principal purpose of raising cash, (iv) the issuance of
securities to banks or equipment lessors, provided such issuance is approved by
the Company’s board of directors and is not for the principal purpose of
raising equity capital, (v) the issuance of securities in connection with a
sponsored research, collaboration, technology license, OEM, marketing, joint
venture or development agreement or strategic partnership or similar agreement
approved by the Company’s board of directors, a primary purpose of which is not
to raise equity capital, or (vi) the issuance of Common Stock pursuant to
Section 4.9 hereof.


     4.6     Securities Laws Disclosure; Publicity. The Company shall, immediately
following the Closing on the Closing Date, issue a press release reasonably
acceptable to the Purchasers disclosing all material terms of the transactions
contemplated hereby. On or before 8:30 a.m., Eastern time, the second Trading
Day following the Closing Date, the Company shall file a Current Report on Form
8-K with the Commission describing the terms of the transactions contemplated
by the Transaction Documents and including, to the extent required under the
Exchange Act, as exhibits to such Current Report on Form 8-K this Agreement and
the form of Warrants, in the form required by the Exchange Act. Thereafter,
the Company shall use its best efforts to timely file any filings and notices
required by the Commission or applicable law with respect to the transactions
contemplated hereby. The Company and the Purchasers shall consult with each
other in issuing any press releases or otherwise making public statements or
filings and other communications with the Commission or any regulatory agency
or Trading Market with respect to the transactions contemplated hereby, and
neither party shall issue any such press release or otherwise make any such
public statement, filing or other communication without the prior consent of
the other, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice
of such public statement, filing or other communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser,
or include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except to the extent such disclosure (but not any disclosure as to
the controlling Persons thereof) is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure. Neither the Company nor any Person acting on its
behalf will provide any Purchaser with material, nonpublic information about
the Company unless such Purchaser consents to receive such information in
writing in advance.


     4.7     Use of Proceeds. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables and accrued expenses in the ordinary course of the Company’s business
and prior practices), to redeem any Company equity or equity-equivalent
securities or to settle any outstanding litigation.


     4.8     Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling person, employee or agent of a
Purchaser or any of its Affiliates (a “Related


16






 


Person”) becomes involved in any
capacity in any Proceeding brought by or against any Person in connection with
or as a result of the transactions contemplated by the Transaction Documents
other than relating to the Registration Statement, Prospectus or other matter
contemplated by Article VI hereof, the Company will indemnify and hold harmless
such Purchaser or Related Person for its reasonable legal and other expenses
(including the costs of any investigation, preparation and travel) and for any
Losses incurred in connection therewith, as such expenses or Losses are
incurred, excluding only Losses to the extent that they result directly from
such Purchaser’s or Related Person’s gross negligence or willful misconduct.
In addition, the Company shall indemnify and hold harmless each Purchaser and
Related Person from and against any and all Losses, as incurred, arising out of
or relating to any breach by the Company of any of the representations,
warranties or covenants made by the Company in this Agreement or any other
Transaction Document, or any allegation by a third party that, if true, would
constitute such a breach. The conduct of any Proceedings for which
indemnification is available under this paragraph shall be governed by Section
6.4(c) below. The indemnification obligations of the Company under this
paragraph and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a
result of the transactions contemplated by the Transaction Documents, except to
the extent that any losses, claims, damages, liabilities or expenses incurred
by the Company arise out of or result directly from the bad faith, gross
negligence or willful misconduct of the applicable Purchaser or Related Person
in connection with such transactions or arise out of or relate to any breach by
a Purchaser of any of the representations, warranties or covenants made by a
Purchaser in this Agreement or any other Transaction Document. If the Company
breaches its obligations under any Transaction Document, then, in addition to
any other liabilities the Company may have under any Transaction Document or
applicable law, the Company shall pay or reimburse the Purchasers on demand for
all costs of collection and enforcement (including reasonable attorneys fees and expenses). Without
limiting the generality of the foregoing, the Company specifically agrees to
reimburse the Purchasers on demand for all costs of enforcing the
indemnification obligations in this paragraph.


     4.9     Additional Issuance of Shares.



		
	 	       (a)     For purposes of this Section 4.9, the following definitions shall
apply:




		
	 	                   (i)     “Common Stock Equivalents” shall mean, collectively, shares of
Common Stock and Convertible Securities.




		
	 	                   (ii)     “Convertible Securities” shall mean any evidence of
indebtedness, shares, options, warrants or other securities directly or
indirectly convertible into or exercisable or exchangeable for shares of
Common Stock.




		
	 	                   (iii)     “Eligible Shares” shall mean, for each Purchaser, at the time
of an issuance of Common Stock Equivalents, the sum of (x) the lesser of
(A) the number of shares of Common Stock then held by such Purchaser
(other than shares of Common Stock acquired by such Purchaser upon
exercise of a Warrant or issued to such Purchaser pursuant to this



17






 







		
	 	     Section 4.9) and (B) the number of shares of Common Stock purchased by
such Purchaser hereunder and (y) the number of shares of Common Stock
acquired by such Purchaser upon exercise of a Warrant or issued to such
Purchaser pursuant to this Section 4.9.




		
	 	                   (iv)     “Excluded Stock” shall mean any shares of Common Stock issued
or issuable (A) to employees, officers, directors of or consultants or
advisors to the Company, in each case, pursuant to a stock-based plan
duly approved by the Company’s board of directors, (B) upon exercise,
conversion or exchange of any Common Stock Equivalents described in
Schedule 3.1(f) (provided that such exercise or conversion occurs in
accordance with the terms thereof, without amendment or modification),
(C) pursuant to the Company’s bona fide acquisition of another
corporation, or all or a portion of its assets, by merger, purchase of
assets or other corporate reorganization in each case, as approved by the
Company’s board of directors and not for the principal purpose of raising
cash, (D) to banks or equipment lessors, provided such issuance is
approved by the Company’s board of directors and is not for the principal
purpose of raising equity capital, (E) in connection with a sponsored
research, collaboration, technology license, OEM, marketing, joint
venture or development agreement or strategic partnership or similar
agreement approved by the Company’s board of directors, a primary purpose
of which is not to raise equity capital, or (F) pursuant to this Section
4.9.




		
	 	                   (v)     “Reference Price” shall initially be the Purchase Price and, at
any time after additional shares of Common Stock are issued to a
Purchaser pursuant to this Section 4.9, shall be equal to the lowest
Issuance Price (as defined below).



          (b)         In the event that after the date hereof and prior to the Effective
Date the Company issues or agrees to issue any Common Stock Equivalents, other
than shares of Excluded Stock, for a net consideration to the Company per share
less than the Reference Price (the “Issuance Price”), each Purchaser shall be
entitled to receive such number of additional shares of Common Stock (upon
payment to the Company of an amount per share equal to the par value of such
additional shares of Common Stock), equal to the amount obtained by subtracting
(A) the number of Eligible Shares then held by such Purchaser from (B) the
quotient obtained by dividing the aggregate purchase price paid by such
Purchaser for such Purchaser’s Eligible Shares divided by the Issuance Price.



          (c)         For purposes of any issuances of additional shares of Common Stock to
a Purchaser under Section 4.9(b) above, the following provisions shall be
applicable:




	
	                        (i)     In connection with any issuance of any Common Stock Equivalents, (x)
the maximum number of shares of Common Stock potentially issuable at any time
upon conversion, exercise or exchange of such Common Stock Equivalents (the
“Deemed Number”) shall be deemed to be outstanding upon issuance of such Common
Stock Equivalents, and (y) the price per share applicable to such Common Stock
Equivalents shall be deemed to equal the minimum dollar value of consideration
payable to the Company to purchase such Common Stock Equivalents and to
convert, exercise or exchange them into Common Stock, divided by the Deemed
Number.



18






 







	
	                          (ii)     In the case of the issuance of Common Stock Equivalents for cash, the
amount of the consideration received by the Company shall be deemed to be the
aggregate amount of cash received by the Company for such Common Stock
Equivalents.
	 
	                          (iii)     In the case of the issuance of Common Stock Equivalents for a
consideration in whole or in part other than cash, including securities
acquired in exchange therefor (other than securities by their terms so
exchangeable), the consideration other than cash shall be deemed to be the fair
market value thereof as determined in good faith by the Board of Directors of
the Company, irrespective of any accounting treatment.



                 (d)     Notwithstanding anything to the contrary contained in this Section
4.9, the number of shares of Common Stock that shall be issued to a Purchaser
pursuant hereto shall be limited to the extent necessary to insure that,
following such issuance, the total number of shares of Common Stock then
beneficially owned by such Purchaser and its Affiliates and any other Persons
whose beneficial ownership of Common Stock would be aggregated with the
Purchaser’s for purposes of Sections 13(d) and 16 of the Exchange Act, does not
exceed 9.999% (the “Maximum Percentage”) of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon exercise of all Warrants and other Convertible
Securities held by such Purchaser and its Affiliates and any other Persons
whose beneficial ownership of Common Stock would be so aggregated). For such
purposes, beneficial ownership shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
The Company shall, instead of issuing shares of Common Stock in excess of the
limitation referred to in this Section 4.9(d), pay to such Purchaser an amount
in cash equal to the fair market value of the number of shares of Common Stock in excess of such limitation; provided, however,
that the Purchaser may, at its option, elect to waive the requirement to
deliver such cash and the Company’s obligation to issue shares in excess of the
foregoing limitation shall be suspended until such time, if any, as such shares
of Common Stock may be issued in compliance with such limitation.
Additionally, by written notice to the Company, the Purchaser may waive the
provisions of this Section or increase or decrease the Maximum Percentage to
any other percentage specified in such notice, but (i) any such waiver or
increase will not be effective until the 61st day after such notice is
delivered to the Company, and (ii) any such waiver or increase or decrease will
apply only to the Purchaser and not to any other Purchaser.



                 (e)     All shares to be issued pursuant to this Section 4.9, upon issuance,
shall be duly authorized, validly issued, fully paid and non-assessable and
free of any Liens or preemptive or similar rights. Upon the issuance of any
shares of Common Stock pursuant to this Section 4.9, such shares shall be
“Shares” and “Registrable Securities” for all purposes hereunder. Without
limiting the generality of the foregoing, the Purchasers shall have all of the
rights provided in Article VI below with respect to such additional Shares,
mutatis mutandis.



     4.10     Shareholders Rights Plan. In the event that a shareholders rights
plan is adopted by the Company, no claim will be made or enforced by the
Company or any other Person that any Purchaser is an “Acquiring Person” under
any such plan or in any way could be deemed to trigger the provisions of such
plan by virtue of receiving Securities under the Transaction Documents.


19






 


ARTICLE V

CONDITIONS



     5.1     Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction by the Company (or waiver by such Purchaser), at or before the
Closing, of each of the following conditions:


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



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



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


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



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



ARTICLE VI

REGISTRATION RIGHTS



     6.1     Shelf Registration


               (a)     As promptly as reasonably practicable, and in any event on or prior to
the Filing Date, the Company shall prepare and file with the Commission a
“Shelf” Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form S-3 (except if the Company is
not then eligible to register for resale the Registrable Securities on Form
S-3, in which case such registration shall be on another appropriate form in
accordance herewith as the Purchasers holding a majority in interest of the
Registrable Securities may consent) and shall contain (except if otherwise
directed by the Purchasers) the “Plan of Distribution” attached hereto as
Exhibit C.



               (b)     The Company shall use its reasonable best efforts to cause the
Registration Statement to be declared effective by the Commission as promptly
as possible after the filing thereof,




20






 





but in any event prior to the Required
Effectiveness Date, and shall use its best efforts to keep the Registration
Statement continuously effective under the Securities Act until the second
anniversary of the Effective Date or such earlier date when all Registrable
Securities covered by such Registration Statement have been sold (the
“Effectiveness Period”).


          (c)     The Company shall notify each Purchaser promptly (and in any event
within one business day) after receiving notification from the Commission that
the Registration Statement has been declared effective.



          (d)     Upon the occurrence of any Event (as defined below) and on every
monthly anniversary thereof until the applicable Event is cured, as relief for
the damages suffered therefrom by the Purchasers, the Company shall pay to each
Purchaser an amount in cash, as liquidated damages and not as a penalty, equal
to 1.0%, upon the occurrence of the Event, and 1.0%, upon each monthly
anniversary thereafter, of the aggregate purchase price paid by such Purchaser
hereunder. The liquidated damages payable pursuant to the terms hereof shall
apply on a pro-rata basis for any portion of a month prior to the cure of an
Event. In the event the Company fails to make a liquidated damages payment in
a timely manner, such payment until paid in full shall bear interest at the
rate of 1.5% per month or such lesser maximum rate that is permitted to be paid
by applicable law. For such purposes, each of the following shall constitute
an “Event”:




		
	 	            (i)     the Registration Statement is not filed on or prior to the
Filing Date or is not declared effective on or prior to the Required
Effectiveness Date;
	 
	 	or
	 
	 	            (ii)     the Company fails to have available a sufficient number of
authorized but unissued and otherwise unreserved shares of Common Stock
available to issue Underlying Shares upon any exercise of the Warrants or
to satisfy its obligations under Section 4.9 above or, at any time
following the Effective Date, any Shares or Underlying Shares are not
listed on an Eligible Market.



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


               (a)     Not less than three Trading Days prior to the filing of a Registration
Statement or any related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated or deemed to be incorporated
therein by reference), (i) furnish to the Purchasers and Purchaser Counsel
copies of all such documents proposed to be filed, which documents (other than
those incorporated or deemed to be incorporated by reference) will be subject
to the review of such Purchasers and Purchaser Counsel, and (ii) cause its
officers and directors, counsel and independent certified public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act. The Company shall not file a Registration Statement or any
such Prospectus or any amendments or supplements thereto to which Purchasers
holding a majority of the Registrable Securities shall reasonably object.




21






 





          (b)     (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement continuously effective as to the applicable Registrable Securities
for the Effectiveness Period; (ii) cause the related Prospectus to be amended
or supplemented by any required Prospectus supplement, and as so supplemented
or amended to be filed pursuant to Rule 424; and (iii) respond as promptly as
reasonably possible, and in any event within ten days, to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as reasonably possible provide the Purchasers true and
complete copies of all correspondence from and to the Commission relating to
the Registration Statement.



          (c)     Notify the Purchasers of Registrable Securities to be sold under the
Registration Statement and Purchaser Counsel as promptly as reasonably
possible, and (if requested by any such Person) confirm such notice in writing
no later than one Trading Day thereafter, of any of the following events: (i)
the Commission notifies the Company whether there will be a “review” of the
Registration Statement; (ii) the Commission comments in writing on the
Registration Statement (in which case the Company shall deliver to each
Purchaser a copy of such comments); (iii) the Commission or any other Federal
or state governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests
additional information related thereto; (iv) the Commission issues any stop
order suspending the effectiveness of any Registration Statement or initiates
any Proceedings for that purpose; (v) the Company receives notice of any
suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or
threat of any Proceeding for such purpose; (vi) the financial statements
included in any Registration Statement become ineligible for inclusion therein
or the Company has actual knowledge that any statement made in any Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference is untrue in any material respect or any
revision to a Registration Statement, Prospectus or other document is required
so that it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; or (vii) any Registration Statement or any post-effective
amendment is declared effective.



          (d)     Use its best efforts to avoid the issuance of or, if issued, obtain
the withdrawal of (i) any order suspending the effectiveness of any
Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as reasonably practicable.



          (e)     Furnish to each Purchaser and Purchaser Counsel, without charge, at
least one conformed copy of each Registration Statement and each amendment
thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the receipt of the
request of such Purchaser or Purchaser’s Counsel for a copy of the filing of
such documents with the Commission.





22






 





          (f)     Promptly deliver to each Purchaser and Purchaser Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form
of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. Subject to the terms hereof, the Company hereby consents
to the use of such Prospectus and each amendment or supplement thereto by each
of the selling Purchasers in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.



          (g)     (i) In the time and manner required by each Trading Market, if at all,
prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all steps
reasonably necessary to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as possible thereafter; (iii) provide to
the Purchasers evidence of such listing; and (iv) maintain the listing of such
Registrable Securities on each such Trading Market or another Eligible Market.



          (h)     Prior to any public offering of Registrable Securities, use its best
efforts to register or qualify or cooperate with the selling Purchasers and
Purchaser Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Purchaser requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement.



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



          (j)     Comply with all applicable rules and regulations of the Commission.



          (k)     Cooperate with the Purchasers to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be delivered to
a transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Purchase Agreement consistent with
applicable laws, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
Purchasers may request.



          (l)     Cooperate with any due diligence investigation undertaken by the
Purchasers in connection with the sale of Registrable Securities, including
without limitation by making available any documents and information; provided
that the Company will not deliver or make






23






 





available to any Purchaser material,
nonpublic information unless such Purchaser specifically requests in writing in
advance to receive material, nonpublic information.


     6.3     Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company and up to $10,000 in the aggregate for
Purchaser Counsel for the Purchasers, and (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. Notwithstanding the foregoing,
each Purchaser shall pay all selling commissions, brokerage fees and stock
transfer taxes, if any, applicable to the Registrable Securities sold by such
Purchaser.


     6.4     Indemnification


               (a)     Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Purchaser,
the officers, directors, partners, members, agents, investment advisors and
employees of each of them, each Person who controls any such Purchaser (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, partners, members, agents and employees of
each such controlling Person, to the fullest extent permitted by applicable
law, from and against any and all Losses (as determined by a court of competent
jurisdiction in a final judgment not subject to appeal or review), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto, or arising out of
or relating to any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except to the extent,
but only to the extent, that (i) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based upon information regarding
such Purchaser furnished in writing to the Company by such Purchaser expressly
for use therein, or (ii) in the case of an occurrence of an event of the type
specified in Section 6.2(c)(iv)-(vi), the use by such Purchaser of an outdated
or defective Prospectus after the Company has notified such Purchaser in
writing that the Prospectus is outdated or defective and prior to the receipt
by such Purchaser of the Advice contemplated in Section 6.5. The Company shall
notify the Purchasers promptly of the institution or actual threat or assertion
of any Proceeding of which the Company is aware in connection with the
transactions contemplated by this Agreement.



                    (b)     Indemnification by Purchasers. Each Purchaser shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
partners, members, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from
and against all





24






 





Losses (as determined by a court of competent jurisdiction in a
final judgment not subject to appeal or review) arising solely out of or based
solely upon any untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto, or arising solely out of or based solely upon
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Purchaser to the
Company specifically for inclusion in such Registration Statement or such
Prospectus or to the extent that (i) such untrue statements or omissions are
based solely upon information regarding such Purchaser furnished in writing to
the Company by such Purchaser expressly for use therein, or (ii) in the case of
an occurrence of an event of the type specified in Section 6.2(c)(iv)-(vi), the
use by such Purchaser of an outdated or defective Prospectus after the Company
has notified such Purchaser in writing that the Prospectus is outdated or
defective and prior to the receipt by such Purchaser of the Advice contemplated
in Section 6.5. In no event shall the liability of any selling Purchaser
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Purchaser upon the sale of the Registrable Securities giving
rise to such indemnification obligation.


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



          An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless





25






 





such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.


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



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



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



     6.5     Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from
the Company of the occurrence of any event of the kind described in Sections
6.2(c)(iv), (v) or (vi), such Purchaser will discontinue disposition of such
Registrable Securities


26






 


under the Registration Statement until such Purchaser’s
receipt of the copies of the supplemented Prospectus and/or amended
Registration Statement contemplated by Section 6.2(i), or until it is advised
in writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.


     6.6     No Piggyback on Registrations. Except as and to the extent specified
in Schedule 3.1(o), neither the Company nor any of its security holders (other
than the Purchasers in such capacity pursuant hereto) may include securities of
the Company in the Registration Statement other than the Registrable
Securities, and the Company shall not after the date hereof enter into any
agreement providing any such right to any of its security holders.


     6.7     Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the
Company shall determine to prepare and file with the Commission a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued
solely in connection with any acquisition of any entity or business or equity
securities issuable in connection with stock option or other employee benefit
plans, then the Company shall send to each Purchaser written notice of such
determination and if, within fifteen days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered.


ARTICLE VII

MISCELLANEOUS



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


     7.2     Fees and Expenses. At the Closing, the Company shall pay the
Purchasers, in proportion to their respective purchase prices, an amount
actually incurred in connection with the preparation and negotiation of the
Transaction Documents, such amount not to exceed $50,000. In lieu of the
foregoing payment, the Purchasers may retain such amount at the Closing or
require the Company to pay such amount directly to Purchaser Counsel. Except
as expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all transfer agent fees, stamp taxes and
other taxes and duties levied in connection with the issuance of the
Securities.


27






 


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


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


     7.5     Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchasers holding or committed to hold a majority in
interest of the Securities or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of either party to exercise any right hereunder
in any manner impair the exercise of any such right. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Purchasers under
Article VI and that does not directly or indirectly affect the rights of other
Purchasers may be given by Purchasers holding at least a majority of the
Registrable Securities to which such waiver or consent relates.


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


     7.7     Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of the Purchasers. Any Purchaser
may assign its rights under this Agreement to any Person to whom such Purchaser
assigns or transfers any Securities, provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the “Purchasers.”


28






 


     7.8     No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third
party beneficiary of Section 4.8 and each Indemnified Party is an intended
third party beneficiary of Section 6.4 and (in each case) may enforce the
provisions of such Sections directly against the parties with obligations
thereunder.


     7.9     GOVERNING LAW; VENUE; WAIVER OF JURY TRAIL. THE CORPORATE LAWS OF THE
STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE
COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
STATE AND
FEDERAL COURTS SITTING IN THE CITY OF DALLAS, FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
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 IMPROPER. EACH PARTY HEREBY IRREVOCABLY
WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR
CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY
AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT
SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL
RIGHTS TO A TRIAL BY JURY.


     7.10     Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and the delivery, exercise and/or
conversion of the Securities, as applicable, for a period of two years, except
that the provisions of Article VI shall apply for the periods set forth
therein.


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


     7.12     Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree


29






 


upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.


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


     7.14     Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such replacement
certificate or instrument.


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





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


30






 


out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.


     7.17     Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser hereunder or pursuant to the other Transaction
Documents or any Purchaser enforces or exercises its 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 by a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, 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.


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



	 	 	 	 	 
	 	 	
INTROGEN THERAPEUTICS, INC.	 	 
	 	 	 	 	 
	 	 	
By:
	/s/ David G. Nance
	 	 	 	 	

	 	 	
Name: 

Title:
	David G. Nance 

Chief Executive Officer
	 	 	 	 	 
	 	 	
Address for Notice:	 	 
	 	 	 	 	 
	 	 	
301 Congress Avenue, Suite 1850 

Austin, Texas 78701 

Facsimile No.: (512) 708-9311 

Telephone No.: (512) 708-9310 

Attn: David G. Nance	 	 
	 	 	 	 	 
	With a copy to:	 	
Wilson Sonsini Goodrich & Rosati 

8911 Capital of Texas Highway North 

Westech 360, Suite 3350 

Austin, Texas 78759-8497 

Attn: Christopher J. Ozburn, Esq.	 	 



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SIGNATURE PAGE FOR PURCHASER FOLLOWS]



Securities Purchase Agreement


 






 






	 	 	 	 	 
	 	 	
STEELHEAD INVESTMENTS LTD.	 	 
	 
	 	 	
By:
	/s/ William E. Rose
	 	 	 	 	

	 	 	
Name:

Title:
	William E. Rose

Authorized Signatory
	 	 	 	 	 
	 	 	
Jurisdiction of domicile:
	Cayman Islands
	 	 	 	 	 
	 	 	
Purchase Price:
	 	 	$7,762,500
	 	 	 	 	 
	 	 	
Number of Shares to be acquired:
	 	 	1,350,000
	 	 	 	 	 
	 	 	
Underlying Shares subject to Warrant:
	 	 	270,000
	 	 	 	 	 
	 	 	
Address for Notice:	 	 
	 	 	 	 	 
	 	 	
c/o HBK Investments L.P.

300 Crescent Court, Suite 700

Dallas, Texas 75201

Facsimile No.: 214-758-1207

Telephone No.: 214-758-6107

Attn:  General Counsel	 	 



Securities Purchase Agreement





 






 






	 	 	 	 	 
	 	 	
CRANSHIRE CAPITAL, L.P.	 	 
	 	 	 	 	 
	 	 	
By:
	/s/ Mitchell P. Kopin
	 	 	 	 	

	 	 	
Name:

Title:
	Mitchell P. Kopin

President
	 	 	 	 	 
	 	 	
Jurisdiction of domicile:
	Illinois
	 	 	 	 	 
	 	 	
Purchase Price:
	 	$2,300,000
	 	 	 	 	 
	 	 	
Number of Shares to be acquired:
	 	400,000
	 	 	 	 	 
	 	 	
Underlying Shares subject to Warrant:
	80,000
	 	 	 	 	 
	 	 	
Address for Notice:	 	 
	 	 	 	 	 
	 	 	
666 Dundee Road, Suite 1901

Northbrook, IL 60062

Attn: Mitchell P. Kopin

Phone: 847-562-9030

Fax: 847-562-9031	 	 



Securities Purchase Agreement



 






 






	 	 	 	 	 
	 	 	
SMITHFIELD FIDUCIARY LLC	 	 
	 	 	 	 	 
	 	 	
By:
	/s/ Adam J. Chill
	 	 	 	 	

	 	 	
Name:

Title:
	Adam J. Chill

Authorized Signatory
	 	 	 	 	 
	 	 	
Jurisdiction of domicile:
	Cayman Islands
	 	 	 	 	 
	 	 	
Purchase Price:
	 	$1,437,500
	 	 	 	 	 
	 	 	
Number of Shares to be acquired:
	 	250,000
	 	 	 	 	 
	 	 	
Underlying Shares subject to Warrant:
	50,000
	 	 	 	 	 
	 	 	
Address for Notice:	 	 
	 	 	 	 	 
	 	 	
c/o Highbridge Capital Management, LLC

9 West 57th Street, 27th Floor

New York, New York 10019

Facsimile: (212) 751-0755

Facsimile: (212) 751-0755

Attn: Ari J. Storch / Adam J. Chill	 	 



Securities Purchase Agreement