Securities Purchase Agreement dated as of July 17,2003



 EXHIBIT 10.1 
  
 EXECUTION COPY 
  
 SECURITIES PURCHASE AGREEMENT 
  
 This Securities Purchase Agreement (this “Agreement”) is dated as of July 17, 2003 by and between Hi-Tech Pharmacal Co., 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 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: 
  
 “8-K
Filing” has the meaning set forth in Section 4.5.  
  
 “Additional Investment Rights” means the Company Additional Investment Rights issued and sold by the Company under this Agreement in the form of Exhibit A. 
  
 “Advice” has the meaning set forth in
Section 6.5. 
  
 “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. 
  
 “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed. 
  
 “Closing” means the closing of the purchase and sale of the Shares and the Additional
Investment Rights pursuant to Section 2.1. 
  
 “Closing Date” means the date of the closing. 
  
 “Company Counsel” means Tashlik, Kreutzer, Goldwyn & Crandell P.C., counsel to the Company. 
  
 “Company Securities” means the Company Shares and the Underlying Shares. 







 “Company Shares” means an aggregate of 860,000 shares of Common Stock,
which are being issued and sold by the Company to the Purchasers at the Closing. 
  
 “Commission” means the Securities and Exchange Commission. 
  
 “Common Stock” means the common stock of the Company, par value $0.01 per share.

  
 “Common Stock Equivalents”
means, collectively, Options and Convertible Securities. 
  
 “Convertible Securities” means any stock or securities (other than Options) convertible into or exercisable or exchangeable for Common Stock. 
  
 “Disclosure Materials” has the meaning set
forth in Section 3.1. 
  
 “Effective Date” means the date that the Registration Statement is first declared effective by the Commission. 
  
 “Effectiveness Period” has the meaning set forth in Section 6.1. 
  
 “Eligible Market” means any of 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 August 16, 2003.

  
 “Indemnified Party” has the
meaning set forth in Section 6.4. 
  
 “Indemnifying Party” has the meaning set forth in Section 6.4. 
  
 “Intellectual Property Rights” has the meaning set forth in Section 3.1. 
  
 “Lien” means any lien, charge, claim,
security interest, encumbrance, right of first refusal or other restriction. 
  
 “Lead Purchaser” means Mainfield Enterprises, Inc. 
  
 “Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without
limitation, costs of preparation and reasonable attorneys’ fees. 
  
 “LP Counsel” means Proskauer Rose LLP, counsel to the Lead Purchaser, or any other counsel selected by the Lead Purchaser. 
  
 “Material Adverse Effect” has the meaning set forth in Section 3.1. 
  
 “Material Permits” has the meaning set forth
in Section 3.1. 
  

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 “Options” means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities, including without limitation all Additional Investment Rights. 
  
 “Per Unit Purchase Price” means $29.21. 
  
 “Person” means any 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 any court or other federal, state, local or other governmental authority or other entity of any kind.

  
 “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. 
  
 “Prospectus” means the prospectus included in the Registration Statement (including,
without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including post effective amendments,
and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 
  
 “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. 
  
 “Related Person” has the meaning set forth in Section 4.7. 
  
 “Required Effectiveness Date” means October
15, 2003. 
  
 “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. 
  
 “SEC Reports” has the meaning set forth in Section 3.1. 
  
 “Shares” means shares of the Company’s
Common Stock. 
  

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 “Short Sale” has the meaning set forth in Section 3.2.

  
 “Subsidiary” means any Person
in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest. 
  
 “Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market,
(b) if the Common Stock is not then listed or quoted and traded on any Eligible Market, then a day on which trading occurs on the NASDAQ National Market (or any successor thereto), or (c) if trading ceases to occur on the NASDAQ National Market (or
any successor thereto), any Business Day. 
  
 “Trading Market” means the Nasdaq National Market or any other Eligible Market, or any national securities exchange, market or trading or quotation facility on which the Common Stock is then listed or quoted. 
  
 “Transaction Documents” means this
Agreement, the Additional Investment Rights and the Transfer Agent Instructions and any other document or agreements executed in connection with the transactions contemplated hereunder. 
  
 “Transfer Agent” means Continental Stock Transfer and Trust Company. 
  
 “Transfer Agent Instructions” means, with
respect to the Company, the Irrevocable Transfer Agent Instructions, in the form of Exhibit B, executed by the Company and delivered to and acknowledged in writing by the Transfer Agent. 
  
 “Underlying Shares” means the shares of
Common Stock issuable upon exercise of the Additional Investment Rights. 
  
 “Unit” means one Share and an Additional Investment Right to acquire 0.3 of a share of Common Stock. 
  
  
 ARTICLE II 
 PURCHASE AND SALE 
  
 2.1    Closing.    Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Purchaser, and each Purchaser
shall, severally and not jointly, purchase from the Company, such number of Units set forth opposite such Purchaser’s name on Schedule A hereto at the Per Unit Purchase Price. The Closing shall take place at the offices of Proskauer Rose
LLP immediately following the execution hereof, or at such other location or time as the parties may agree. 
  
 2.2    Closing Deliveries. 
  
 (a)    At 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 such 
  

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 number of Shares equal to the number Units set forth opposite such Purchaser’s name on Schedule
A hereto, registered in the name of such Purchaser; 
  
 (ii)    an Additional Investment Right, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire such number of Underlying Shares set forth opposite such Purchaser’s
name on Schedule A hereto, on the terms set forth therein; 
  
 (iii)    a legal opinion of Company Counsel, in the form of Exhibit C, executed by such counsel and delivered to the Purchasers; and 
  
 (iv)    duly executed Transfer Agent
Instructions in the form of Exhibit B acknowledged by the Company’s transfer agent. 
  
 (b)    At the Closing, each Purchaser shall deliver or cause to be delivered to the Company the purchase price set
forth opposite such Purchaser’s name on Schedule A hereto, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing to such Purchaser by the Company for such purpose. 

 
  
 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES 
  
 3.1    Representations and Warranties of the Company.    The Company hereby
represents and warrants to the Purchasers as follows: 
  
 (a)    Subsidiaries.    The Company has no direct or indirect Subsidiaries, except as set forth on Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the Company owns, directly or
indirectly, all of the capital stock or comparable equity interests of each Subsidiary free and clear of any Lien and all the issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are
fully paid, non-assessable and free of preemptive and similar rights. 
  
 (b)    Organization and Qualification.    Each of the Company and the Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as applicable), with the requisite 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 or bylaws. 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, prospects, business or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole on a consolidated basis, 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”). 
  

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 (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 to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of each of the Transaction Documents to which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the
Company and no further consent or action is required by the Company, its Board of Directors or its stockholders. Each of the Transaction Documents to which it is a party has been (or upon delivery will be) duly executed by the Company and is, or
when delivered in accordance with the terms hereof, will constitute, the valid and binding obligation of the Company enforceable against the Company in accordance with its terms. 
  
 (d)    No Conflicts.    The execution, delivery and
performance of the Transaction Documents to which it is a party by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the
Company’s or any Subsidiary’s certificate of incorporation or bylaws, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which
the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, except to the extent that such conflict, default or termination right could not reasonably be expected to have a
Material Adverse Effect, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including 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.

  
 (e)    Issuance of the
Company Securities.    The Company 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 applicable 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 upon exercise of the Additional Investment Rights. 
  
 (f)    Capitalization.    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) is as set forth in the “SEC Reports” as that term
is defined in Section 3.1(g) below, as of the date of each SEC Report and as of July 14, 2003 is as set forth in Schedule 3.1(f). 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 
  

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 obligations convertible into or exercisable or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. Except as set forth on Schedule 3.1(f), 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 Company Securities 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 exercise, conversion, exchange or reset price under such securities. To the knowledge of the Company, except as specifically disclosed in Schedule 3.1(f), 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 Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (the foregoing materials (together with any materials filed by the Company under the Exchange Act, whether or
not required) 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 the Lead Purchaser true, correct and complete copies of all SEC Reports filed within the 10 days
preceding the date hereof. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as
in effect at the time of filing. 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 to the fact that they may not contain footnotes required by GAAP. All material agreements to
which the Company is a party or to which the property or assets of the Company 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 or in Schedule 3.1(h), (i) there has been no event, occurrence or development that, individually or in 
  

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 the aggregate, has had or that could 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, except as disclosed in its SEC Reports, (iv) the
Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to existing Company stock-based plans. 
  
 (i)    Absence of Litigation.    Except as set forth in Schedule 3.1(i), 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 that could, individually or in the aggregate, have a Material Adverse Effect. Schedule 3.1(i) contains a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or
affecting the Company or any of its Subsidiaries that could individually or in the aggregate, have a Material Adverse Effect. 
  
 (j)    Compliance.    To the Company’s knowledge, 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 under), the Company has not received written notice of a
claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have
or result in a Material Adverse Effect. 
  
 (k)    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. 
  
 (l)    Certain Fees.    Except for the fees to Banc of America Securities LLC, 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 
  

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 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. 
  
 (m)    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 Company 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 by the
Company of the Company Securities as contemplated hereby or (ii) cause the offering of the Company 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 is not a United States real property holding corporation within the meaning of the Foreign Investment in Real Property Tax Act of 1980. 
  
 (n)    Form S-3 Eligibility.    The Company is eligible to
register its Common Stock for resale by the Purchasers using Form S-3 promulgated under the Securities Act. 
  
 (o)    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 in compliance with all listing and maintenance requirements of the Nasdaq Stock Market, Inc. applicable to the Company. 
  
 (p)    Registration Rights.    Except as described in Schedule 3.1(p), the Company has not
granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied.

  
 (q)    Application of
Takeover Protections.    There is no control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s charter
documents or the laws of its state of incorporation that is or could become applicable to any of the 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 Company Securities and the Purchasers’ ownership of the Company Securities. 
  
 (r)    Disclosure.    The Company confirms that neither it
nor, to its knowledge, any other Person acting on its behalf, has provided any of the Purchasers or their agents or counsel with any information that constitutes or might constitute material, nonpublic information. The Company understands and
confirms that each of the Purchasers will rely on the 
  

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 foregoing representations in effecting transactions in securities of the Company. All disclosure provided
to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company are true and correct and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with
respect to the Company or its business, properties, prospects, operations or financial condition, 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. 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. 

 
 (s)    Acknowledgment Regarding
Purchasers’ Purchase of Company 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 any other Purchaser (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 such Purchaser’s purchase of the
Company 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 or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could 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 violates or infringes 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)    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. 
  
 (v)    Regulatory Permits.    The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC 
  

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 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. 
  
 (w)    Transactions With Affiliates
and Employees.    Except as set forth in Schedule 3.1(w) and except as set forth in the 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 (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. 
  
 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 Shares and the Additional Investment Rights 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. 
  
 (b)    Investment Intent.    Such Purchaser is acquiring the Company Securities as
principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Company 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 Company 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. Nothing contained herein shall be deemed a representation or warranty by such Purchaser to hold Company 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 Company Securities. 
  
 (c)    Purchaser Status.    At the time such Purchaser was offered the Shares and the
Additional Investment Rights, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. 
  
 (d)    Experience of such Purchaser.    Such Purchaser, either alone or together with its
representatives has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Company Securities, and has so evaluated the merits and
risks of such 
  

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 investment. Such Purchaser is able to bear the economic risk of an investment in the Company Securities
and, at the present time, is able to afford a complete loss of such investment. The Purchaser understands that its investment in the Company 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 Company Securities and the merits and risks of investing in the Company Securities; (ii) access to information about the Company and its 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. 
  
 (f)    Certain Trading Limitations.    Each Purchaser agrees that beginning on the date
hereof until the earlier to occur of (a) 90 days from the Closing Date and (b) the effective date of the Registration Statement to be filed in connection with the sale of the Company Shares, it will not enter into any Short Sales. For purposes of
this Section 3.2(f), a “Short Sale” by a Purchaser means a sale of Common Stock that is marked as a short sale and that is executed at a time when such Purchaser has no equivalent offsetting long position in the Common Stock.
For purposes of determining whether a Purchaser has an equivalent offsetting long position in the Common Stock, all Common Stock and all Common Stock that would be issuable upon conversion or exercise in full of all Options then held by such
Purchaser (assuming that such Options were then fully convertible or exercisable, notwithstanding any provisions to the contrary, and giving effect to any conversion or exercise price adjustments scheduled to take effect in the future) shall be
deemed to be held long by such Purchaser. 
  
  
 ARTICLE IV 
 OTHER AGREEMENTS OF THE
PARTIES 
  
 4.1    Transfer
Restrictions. 
  
 (a)    Company 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 Company Securities other than pursuant to an effective registration statement or to the Company or pursuant to Rule 144(k), except as otherwise set forth
herein, the Company may require the transferor to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does
not require registration under the Securities Act. 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 (unless 
  

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 otherwise required by its transfer agent), any transfer of Company Securities by a Purchaser to an
Affiliate of such Purchaser, provided that the transferee agrees to be bound by all of the applicable provisions of the Transaction Documents, including the representations of the Purchaser, and certifies to the Company that it is an
“accredited investor” as defined in Rule 501(a) under the Securities Act. 
  
 (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 Company 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, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, THESE SECURITIES [AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THESE SECURITIES] MAY BE PLEDGED IN COMPLIANCE WITH APPLICABLE LAWS AND IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH SECURITIES. 
  
 Certificates evidencing Company Securities shall not be required to contain
such legend or any other legend (i) while a Registration Statement covering the resale of such Company Securities is effective under the Securities Act, or (ii) following any sale of such Company Securities pursuant to Rule 144, or (iii) if such
Company Securities are eligible for sale under Rule 144(k) or have been sold pursuant to an effective registration statement, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the Staff of the Commission). The Company shall cause its counsel to issue the legal opinion included in the Transfer Agent Instructions to the Company’s transfer agent on the Effective Date.
Following the Effective Date or at such earlier time as a legend is no longer required for certain Company 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 Company Securities and an opinion of counsel to the extent required by Section 4.1(a), deliver or cause to be delivered to such Purchaser a certificate representing such Company
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 Company 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. 
  

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 (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 Company Securities in connection with a bona fide margin agreement or other loan or financing arrangement secured by the Company Securities and, if required under the terms of
such agreement, loan or arrangement, such Purchaser may transfer pledged or secured Company Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of the pledgee,
secured party or pledgor shall be required in connection therewith (unless otherwise required by the Company’s transfer agent). Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will
execute and deliver such reasonable documentation as a pledgee or secured party of Company Securities may reasonably request in connection with a pledge or transfer of the Company Securities, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. 
  
 4.2    Furnishing of Information.    As long as any Purchaser owns Company
Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. 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 Company 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 Company
Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Company Securities may reasonably request to satisfy the provisions of Rule 144 applicable to the issuer of securities relating to
transactions for the sale of securities pursuant to Rule 144. 
  
 4.3    Integration.    The Company shall not, and shall use its best efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) in any transaction that would be integrated with the offer or sale of the Company Securities in a manner that would require the registration under the Securities Act of the sale
of the Company Securities to the Purchasers or that would be integrated with the offer or sale of the Company Securities for purposes of the rules and regulations of any Trading Market. 
  
 4.4    Reservation of Securities.    The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations 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 30 Trading Days after the Effective Date (the “Blockout Period”), the Company will not, directly or indirectly, offer, sell, grant any option to 
  

 14 








 purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other
disposition of) any of its 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 or exercisable for Common Stock or Common Stock Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a “Subsequent Placement”), except as set forth in Section 4.5(e). 
  
 (b)    [Reserved] 
  
 (c)    Following the Effective Date, the
Blockout Period set forth in Section 4.5(a) above shall be extended for the number of Trading Days during such period in which (i) trading in the Common Stock is suspended by any Trading Market, (ii) the Registration Statement is not effective, or
(iii) the prospectus included in the Registration Statement may not be used by the Purchasers for the resale of Registrable Securities thereunder. 
  
 (d)    From the end of the Blockout Period until the one year anniversary thereof, the Company will not, directly or
indirectly, effect any Subsequent Placement unless the Company shall have first complied with this Section 4.5(d), except as set forth in Section 4.5(e). 
  
 (i)    The Company shall deliver to each Purchaser a written notice (the “Offer”) of any proposed or
intended issuance or sale or exchange of the securities being offered (the “Offered Securities”) in a Subsequent Placement, which Offer shall (w) identify and describe the Offered Securities, (x) describe the price and other terms
upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be offered,
issued, sold or exchanged and (z) offer to issue and sell to or exchange with each Purchaser (A) a pro rata portion of 30% of the Offered Securities based on such Purchaser’s pro rata portion of the aggregate purchase price paid by the
Purchasers for all of the Company Shares purchased hereunder (the “Basic Amount”), and (B) with respect to each Purchaser that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the
Basic Amounts of other Purchasers as such Purchaser shall indicate it will purchase or acquire should the other Purchasers subscribe for less than their Basic Amounts (the “Undersubscription Amount”). 
  
 (ii)    To accept an Offer, in whole or
in part, a Purchaser must deliver a written notice to the Company prior to the end of the seven (7) Trading Day period of the Offer, setting forth the portion of the Purchaser’s Basic Amount that such Purchaser elects to purchase and, if such
Purchaser shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Purchaser elects to purchase (in either case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all
Purchasers are less than the total of all of the Basic Amounts, then each Purchaser who has set forth an Undersubcription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the
“Available Undersubscription Amount”), each 
  

 15 








 Purchaser who has subscribed for any Undersubscription Amount shall be entitled to purchase on that
portion of the Available Undersubscription Amount as the Basic Amount of such Purchaser bears to the total Basic Amounts of all Purchasers that have subscribed for Undersubscription Amounts, subject to rounding by the Board of Directors to the
extent its deems reasonably necessary. 
  
 (iii)    The Company shall have five (5) Trading Days from the expiration of the period set forth in Section 4.5(d)(ii) above to issue, sell or exchange all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the Purchasers (the “Refused Securities”), but only to the offerees described in the Offer (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and
interest rates) that are not more favorable to the acquiring person or persons or less favorable to the Company than those set forth in the Offer. 
  
 (iv)    In the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in
the manner and on the terms specified in Section 4.5(d)(iii) above), then each Purchaser may, at its sole option within 1 Trading Day after written notice thereof and in its sole discretion, reduce the number or amount of the Offered Securities
specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that the Purchaser elected to purchase pursuant to Section 4.5(d)(ii) above multiplied by a fraction, (i) the numerator of
which shall be the number or amount of Offered Securities the Company actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Purchasers pursuant to Section 4.5(d)(ii) above prior to such reduction) and
(ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Purchaser so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue,
sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Purchasers in accordance with Section 4.5(d)(i) above. 
  
 (v)    Upon the closing of the issuance,
sale or exchange of all or less than all of the Refused Securities, the Purchasers shall acquire from the Company, and the Company shall issue to the Purchasers, the number or amount of Offered Securities specified in the Notices of Acceptance, as
reduced pursuant to Section 4.5(d)(iv) above if the Purchasers have so elected, upon the terms and conditions specified in the Offer. The purchase by the Purchasers of any Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and the Purchasers of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Purchasers and their respective counsel. 
  
 (vi)    Any Offered Securities not
acquired by the Purchasers or other persons in accordance with Section 4.5(d)(iii) above may not be issued, sold or exchanged until they are again offered to the Purchasers under the procedures specified in this Agreement. 
  

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 (e)    The restrictions contained in paragraphs (a) and (d) of this Section 4.5 shall
not apply to (A) 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;
(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) 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 stock 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) the issuance of securities in connection with a bona fide 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 (E) any bona-fide underwritten public offering with an underwriter with proceeds to the Company in excess of $20 million. 
  
 4.6    Securities Laws Disclosure;
Publicity.    The Company shall, on the Closing Date, issue a press release reasonably acceptable to the Lead Purchaser disclosing all material terms of the transactions contemplated hereby. On or before 8:30 a.m., Eastern
Standard time, on the first Trading Day following the Closing Date, the Company shall file a Current Report on Form 8-K with the Commission (the “8-K Filing”) describing the terms of the transactions contemplated by the
Transaction Documents and including as exhibits to such Current Report on Form 8-K this Agreement and the form of Additional Investment Rights, in the form required by the Exchange Act. Thereafter, the Company shall timely file any filings and
notices required by the Commission or applicable law with respect to the transactions contemplated hereby and provide copies thereof to the Purchasers promptly after filing. Except with respect to the 8-K Filing (a copy of which will be provided to
the Purchasers for their review as early as practicable prior to its filing), the Company shall, at least two Trading Days prior to the filing or dissemination of any disclosure required by this paragraph, provide a copy thereof to the Purchasers
for their review. The Company and the Lead Purchaser 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 no 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. The Company shall not, and shall use its reasonable best efforts to cause
each of its officers, directors, employees and agents not to, provide any Purchaser with any material nonpublic information regarding the Company or any of its Subsidiaries from and after the filing of the 8-K Filing without the express written
consent of such Purchaser. In the event of a breach of the foregoing covenant by the Company or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the Transaction
Documents, a Purchaser shall have the right to make a 
  

 17 








 public disclosure, in the form of a press release or otherwise, of such material nonpublic information without the prior
approval by the Company or any of its or their respective officers, directors, employees or agents. No Purchaser shall have any liability to the Company or any of its or their respective officers, directors, employees, shareholders or agents for any
such disclosure. Subject to the foregoing, neither the Company nor any of the Purchasers shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of any Purchaser, to make any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith or (ii) as is required by
applicable law and regulations (provided that in the case of clause (i) the Lead Purchaser shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Each press release disseminated
during the 12 months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading. 
  
 4.7    Use of Proceeds.    The Company shall use the net proceeds from the sale of the Company Securities hereunder for acquisitions, research and development and general
corporate purposes. 
  
 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 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, the Prospectus or any other matter covered by the indemnity in Article VI hereof), the Company will indemnify and hold harmless such Purchaser or Related Person for its reasonable legal and other expenses (including the
reasonable costs of any investigation, preparation and travel) and for any Losses incurred in connection therewith, if and as such expenses or Losses are actually incurred, excluding only Losses that result directly from such Purchaser’s or
Related Person’s gross negligence or willful misconduct or as a result of any material breach by such Purchaser of any of the representations, warranties or covenants made by such Purchaser in this Agreement or any other Transaction Document.
In addition, the Company shall indemnify and hold harmless each Purchaser and Related Person from and against any and all Losses, if and as actually 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 shall be in addition to any liability that the Company may otherwise have 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 incurred by the Company or result from the gross
negligence or willful misconduct of the applicable Purchaser or Related Person in 
  

 18 








 connection with such transactions or as a result of any material breach by such Purchaser of any of the representations,
warranties or covenants made by such 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) actually incurred. Without limiting the
generality of the foregoing, the Company specifically agrees to reimburse the Purchasers on demand for all actually incurred costs of enforcing the indemnification obligations in this paragraph. 
  
 4.9    Restrictions on
Purchasers.    Each Purchaser agrees that for a period of 18 months from the date of this Agreement, such Purchaser shall not (i) own, on any particular Trading Day, more than 20% or more of the total number of issued and
outstanding Shares of the Company; (ii) initiate or participate with a “group” within the meaning of Section 13(d)(3) of the Exchange Act (a) any tender or exchange offer, merger or other business combination involving the Company or any
of its Subsidiaries; (b) any recapitalization, restructuring, liquidation, dissolution or other extraordinary transaction with respect to the Company or any of its Subsidiaries; or (c) any “solicitation” of “proxies” (as such
terms are used in the proxy rules of the Commission) or consents to vote any voting securities of the Company; or (iii) act alone or participate with a “group” within the meaning of Section 13(d)(3) of the Exchange Act, to seek to control
the Board of Directors of the Company. Notwithstanding anything to the contrary in this Section 4.9, (i) the restrictions set forth in this Section 4.9 shall not apply to transactions, events or actions recommended by the Board of Directors of the
Company and (ii) no Purchaser shall be restricted or prevented from voting its Shares freely with other holders of Common Stock in any of the transactions, events or actions described in this Section 4.9. 
  
  
 ARTICLE V 
 CONDITIONS 
  
 5.1    Conditions Precedent to the Obligations of the Purchasers.    The obligation of each Purchaser to
acquire Company Securities at the Closing is subject to the satisfaction 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 Company Securities at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions: 
  

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 (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 possible, 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 may consent) and shall contain (except if otherwise directed by the Purchasers) the “Plan of Distribution” attached
hereto as Exhibit D. 
  
 (b)    Subject to the receipt by the Company of the legal name of each Purchaser and the number of Company Securities beneficially owned by each such Purchaser, the Company shall use commercially reasonable efforts to
cause the Registration Statement to be declared effective by the Commission as promptly as possible after the filing thereof, but in any event on or prior to the Required Effectiveness Date, and shall use its commercially reasonable efforts to keep
the Registration Statement continuously effective under the Securities Act until the date that all Registrable Securities covered by such Registration Statement have been sold or can be sold publicly under Rule 144(k) (the “Effectiveness
Period”). 
  
 (c)    The Company shall notify each Purchaser in writing 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 partial relief for the damages suffered therefrom by the Purchasers (which remedy shall not be exclusive of any other remedies available
under this Agreement, at law or in equity), the Company shall pay to each Purchaser an amount in cash, as liquidated damages and not as a penalty, equal to 0.25% of the aggregate purchase price paid by such Purchaser hereunder for the first month,
0.5% for the second month and 1% for each month thereafter. The payments to which a Purchaser shall be entitled pursuant to this Section 6.1(d) are referred to herein as “Event Payments”. Any Event Payments payable pursuant to the
terms hereof shall apply on a pro-rata basis for any portion of a month prior to the cure of an Event. In the event the Company fails to make Event Payments in a timely manner, 
  

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 such Event Payments shall bear interest at the rate of 1% per month (prorated for partial months) until
paid in full. 
  
 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; provided, however, that for the purposes of the
Event Payment under this Section 6.1(d) only, the Company shall have an additional 30 days to cure the failure to declare the Registration Statement effective on or prior to the Required Effectiveness Date before such Event Payment is due to the
Purchasers under this Section 6.1(d); 
  
 (ii)    after the Effective Date, a Purchaser is not permitted to sell Registrable Securities under the Registration Statement (or a subsequent Registration Statement filed in replacement thereof) for any reason for
seven or more consecutive Trading Days or more than 20 Trading Days in any twelve-month period; 
  
 (iii)    the Common Stock is not listed or quoted, or is suspended from trading, on an Eligible Market for a period of
three consecutive Trading Days; 
  
 (iv)    the Company fails for any reason to deliver a certificate evidencing any Securities to a Purchaser within five Trading Days after delivery of such certificate is required pursuant to any Transaction Document or
the exercise rights of the Purchasers pursuant to the Transaction Documents are otherwise suspended for any reason; or 
  
 (v)    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 Additional Investment Rights or, at any time following the Effective Date, any Shares or Underlying Shares are not listed on an Eligible Market. 
  
 (e)    Notwithstanding anything in this
Agreement to the contrary, the Company may, by written notice to the Purchasers, suspend sales under a Registration Statement after the Effective Date thereof and/or require that the Purchasers immediately cease the sale of shares of Common Stock
pursuant thereto and/or defer the filing of any subsequent Registration Statement if the Company is engaged in a material merger, acquisition or sale and the Board of Directors determines in good faith, by appropriate resolutions, that, as a result
of such sales activity it would be materially detrimental to the Company (other than relating solely to the price of the Common Stock). Upon receipt of such notice, each Purchaser shall immediately discontinue any sales of Registrable Securities
pursuant to such registration until such Purchaser has received copies of a supplemented or amended Prospectus or until such Purchaser is advised in writing by the Company that the then-current Prospectus may be used and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. In no event, however, shall this right be exercised to suspend sales beyond the period during which (in the good faith determination of
the Company’s Board of Directors) the failure to require such suspension would be materially detrimental to the Company. Furthermore, in no event may the Company exercise its rights hereunder for a period of more 
  

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 than 7 consecutive Trading Days or more than 20 Trading Days in any twelve month period. Immediately
after the end of any suspension period under this Section 6.1(e), the Company shall take all necessary actions (including filing any required supplemental prospectus) to restore the effectiveness of the applicable Registration Statement and
the ability of the Purchasers to publicly resell their Registrable Securities pursuant to such effective Registration Statement. 
  
 (f) The Company shall not, prior to the Effective Date of the Registration Statement, 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 a registration statement on Form S-8 covering shares issuable under the Company’s Amended and
Restated Stock Option Plan and 1994 Directors Stock Option Plan. 
  
 (g) It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 6.1 that each Purchaser shall furnish to the Company the legal name of such Purchaser, the number of
Company Securities beneficially owned by such Purchaser for the purposes of completing the Registration Statement and any additional information relating to such Purchaser that is required by the Commission. 
  
 6.2    Registration
Procedures.    In connection with the Company’s registration obligations hereunder, the Company shall: 
  
 (a)    Not less than two 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), the Company shall (i) furnish to the Lead Purchaser and LP Counsel copies of all such documents proposed to be
filed, 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 LP 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 within
two Trading Days of receipt. 
  
 (b)
(i)    Subject to Section 6.1(d), 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 and prepare and file with the Commission such additional Registration Statements in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible, and in any event within twelve 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 Lead
Purchaser true and complete copies of all correspondence from and to the Commission relating to the Registration Statement; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement during the applicable period in accordance with the intended methods of disposition by the 
  

 22 








 Purchasers thereof set forth in the Registration Statement as so amended or in such Prospectus as so
supplemented. 
  
 (c)    Notify the Lead Purchaser of Registrable Securities to be sold and LP 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 any Registration Statement; (ii) the Commission comments in writing on any Registration Statement (in which case the
Company shall deliver to the Lead Purchaser a copy of such comments and of all written responses thereto); (iii) any Registration Statement or any post-effective amendment is declared effective; (iv) 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; (v) the Commission issues any stop order suspending the effectiveness of any Registration
Statement or initiates any Proceedings for that purpose; (vi) the Company receives notice of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat
of any Proceeding for such purpose; or (vii) the financial statements included in any Registration Statement become ineligible for inclusion therein or 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 the light of the circumstances under which they were made, not misleading. 
  
 (d)    Use commercially reasonable efforts to avoid the issuance of or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as
soon as possible. 
  
 (e)    If requested by a Purchaser, furnish to such Purchaser and LP Counsel, without charge, at least one conformed copy of each Registration Statement and each amendment thereto, including financial statements and
schedules and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission. 
  
 (f)    Promptly deliver to each Purchaser
and LP 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. 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 to the extent permitted
by federal and state securities laws and regulations. 
  
 (g) (i)    In the time and manner required by each Trading Market, prepare and file with such Trading Market an additional shares listing application covering all of the Registrable Securities; (ii) take all steps
necessary to cause such Registrable Securities to be approved for listing on each Trading Market as soon as possible thereafter; (iii) provide to the 
  

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 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 LP 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; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise subject. 
  
 (i)    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 this Agreement under law, of all restrictive legends, and to enable such Registrable Securities
to be in such denominations and registered in such names as any such Purchasers may request. 
  
 (j)    Upon the occurrence of any event described in Section 6.2(c)(vii), as promptly as reasonably possible,
prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading. 
  
 (k)    Cooperate with any due diligence investigation undertaken by the Purchasers in connection with the sale of
Registrable Securities, including, without limitation, by making available at reasonable times and upon reasonable advance notice any documents and information; provided that the Company will not deliver or make available to any Purchaser material,
nonpublic information unless such Purchaser specifically requests in advance to receive material, nonpublic information in writing. 
  
 (l)    Comply with all applicable rules and regulations of the Commission. 
  
 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 Article VI of this Agreement by the Company, including without limitation (a) all
registration and filing fees and expenses, including without limitation those related to filings with the 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 
  

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 expenses, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market. 
  
 6.4    Indemnification 
  
 (a)    Indemnification by the Company.    The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless each Purchaser, the officers, directors, partners, members, agents and employees of each Purchaser, 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 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 in any
preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement
thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon
information regarding such Purchaser furnished in writing to the Company by or on behalf of such Purchaser expressly for use therein, or to the extent that such information relates to such Purchaser or such Purchaser’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved in writing by such Purchaser expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or
(iii) in the case of an occurrence of an event of the type specified in Section 6.2(c)(v)-(vii), such Purchaser uses 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, 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, agents and
employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of any 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 any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information
furnished in writing by or on behalf of such Purchaser to the Company specifically for inclusion in such Registration Statement or such Prospectus or to the 
  

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 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 to the extent that such information relates to such Purchaser or such Purchaser’s proposed method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Purchaser expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (ii) in the case of an occurrence of an event of the type specified in
Section 6.2(c)(v)-(vii), such Purchaser uses 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 proximately and 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). It being understood, however, that the Indemnifying Party shall not, in connection with any one
such Proceeding be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed by a majority of the Indemnified Parties; provided, however, that in the case a
single firm of attorneys would be inappropriate due to actual or potential differing interests or conflicts between such Indemnified Parties and any other party represented by such counsel in such Proceeding or otherwise, then the Indemnifying Party
shall be liable for the fees and expenses of one additional firm of attorneys with respect to such Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably 
  

 26 








 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 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 (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party
to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder). 
  
 (d)  Contribution.    If a claim for indemnification under Section 6.4(a) or
(b) is unavailable to an Indemnified Party (by reasons other than the specified exclusions to indemnification), 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. 
  
 The indemnity and contribution
agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 
  

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 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)(v), (vi) or (vii), such Purchaser will discontinue disposition of such Registrable Securities 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(j), 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.    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 from and after the date hereof through the effective date of such Registration Statement 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 ten 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 the Lead 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 to Mainfield Enterprises, Inc. an aggregate of $30,000 for their legal fees and expenses incurred in connection with its due diligence and the preparation and negotiation of
the Transaction Documents. In lieu of the foregoing payment, Mainfield Enterprises, Inc. may retain such amount at the Closing or require the Company to pay such amount directly to LP 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 
  

 28 








 party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall
pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of the Company Securities. 
  
 7.3    Entire Agreement.    The Transaction Documents, together with the Exhibits and Schedules thereto,
contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company will execute and deliver to the Purchasers such further documents as may be reasonably requested in order to give practical effect to the
intention of the parties under the Transaction Documents. Notwithstanding anything to the contrary herein, Company Securities may be assigned to any Person in connection with a bona fide margin account or other loan or financing arrangement secured
by such Company Securities. 
  
 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 deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses and facsimile numbers for such notices and communications are
those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person. 
  
 7.5    Amendments; Waivers.    No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment, by the Company and each of the Purchasers 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. 
  

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 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 all Company Securities held by it, provided such transferee agrees in writing to be bound, with respect to the transferred Company Securities, by the
provisions hereof that apply to the “Purchasers.” Notwithstanding anything to the contrary herein, Company Securities may be assigned to any Person in connection with a bona fide margin account or other loan or financing arrangement
secured by such Company Securities. 
  
 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 4.7 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 Trial.    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 NEW YORK. THE COMPANY AND PURCHASERS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY PURCHASER HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN
(INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY PURCHASER, ANY CLAIM THAT IT IS NOT PERSONALLY
SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND PURCHASERS HEREBY WAIVE 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 and/or exercise of the Company Securities, as applicable. 
  

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 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 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 Company 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 comply with all applicable regulations and reasonable procedures and pay any reasonable third-party costs associated with the issuance of such replacement Company Securities. 
  
 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 agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be
adequate. 
  
 7.16    Payment Set
Aside.    To the extent that the Company makes a payment or payments to any Purchaser hereunder or pursuant to the Additional Investment Rights 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 
  

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

 32 








 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. 
  
  

	 	  	HI-TECH PHARMACAL CO., INC.
		
	 	  	BY:    /S/    DAVID S. SELTZER
	 	  	

	 	  	Name:  David Seltzer
	 	  	Title:    President and CEO
		
	 	  	Address for Notice:
		
	 	  	Hi-Tech Pharmacal Co., Inc.
	 	  	369 Bayview Avenue
	 	  	Amityville, New York 11701
	 	  	Facsimile No.: (631) 789-
	 	  	Telephone No.: (631) 789-8228
	 	  	Attn: Chief Financial Officer
		
	 With a copy
to:                
	  	Tashlik, Kreutzer, Goldwyn & Crandell P.C.
	 	  	40 Cuttermill Road
	 	  	Great Neck, New York 11021
	 	  	Facsimile No.: (516) 829-6509
	 	  	Telephone No.: (516) 466-8005
	 	  	Attn: Martin M. Goldwyn, Esq.









	 	  	MAINFIELD ENTERPRISES, INC.
		
	 	  	By:
	 	  	

	 	  	Name:  
	 	  	Title:    Authorized Signatory
		
	 	  	Address for Notice:
		
	 	  	Mainfield Enterprises, Inc.
	 	  	c/o Sage Capital Growth, Inc.
	 	  	660 Madison Avenue, 18th
Floor
	 	  	New York, New York 10021
	 	  	Attn: Eldad Gal
	 	  	Facsimile No.: (212) 651-9010
	 	  	Telephone No.: (212) 651-9000
		
	 With a copy
to:                
	  	Proskauer Rose LLP
	 	  	1585 Broadway
	 	  	New York, New York 10036-8299
	 	  	Facsimile No.: (212) 969-2900
	 	  	Telephone No.: (212) 969-3000
	 	  	Attn: Adam J. Kansler, Esq.









	 	  	EVERSPRING MASTER FUND LTD.
		
	 	  	By:
	 	  	

	 	  	Name:  
	 	  	Title:    Authorized Signatory
		
	 	  	Address for Notice:
		
	 	  	Everspring Master Fund Ltd.
	 	  	Bank of Bermuda (Cayman) Limited
	 	  	36C Bermuda House
	 	  	British American Centre
	 	  	Dr. Roy’s Drive
	 	  	George Town, Grand Cayman
	 	  	Cayman Islands, B.W.I.
	 	  	Attn: Ted Kaleem
	 	  	Telephone No.: (212) 350-5666
	 	  	Facsimile No.: (212) 350-5661









	 	  	SMITHFIELD FIDUCIARY LLC
		
	 	  	By:
	 	  	

	 	  	Name:  
	 	  	Title:    Authorized Signatory
		
	 	  	Address for Notice:
		
	 	  	Smithfield Fiduciary LLC
	 	  	c/o Highbridge Capital Management, LLC
	 	  	9 West 57th Street, 27th Floor
	 	  	New York, New York 10019
	 	  	Attn: Ari J. Storch / Adam J. Chill
	 	  	Facsimile No.: (212) 751-0755
	 	  	Telephone No.: (212) 287-4720









	 	  	SF CAPITAL PARTNERS LTD.
		
	 	  	By:
	 	  	

	 	  	Name:  
	 	  	Title:    Authorized Signatory
		
	 	  	Address for Notice:
		
	 	  	SF Capital Partners Ltd.
	 	  	3600 South Lake Drive
	 	  	St. Francis, WI 53235
	 	  	Telephone No.: 414-294-7016
	 	  	Facsimile No.: 414-294-4416









	 	  	CRANSHIRE CAPITAL, L.P.
		
	 	  	By:
	 	  	

	 	  	Name:  
	 	  	Title:    Authorized Signatory
		
	 	  	Address for Notice:
		
	 	  	Cranshire Capital, L.P.
	 	  	c/o Mitchell P. Kopin
	 	  	666 Dundee Road, Suite 1901
	 	  	Northbrook, IL 60062
	 	  	Attn: Mitchell P. Kopin
	 	  	Telephone No.: 847-562-9030
	 	  	Facsimile No.: 847-562-9031









	 	  	DEEPHAVEN SMALL CAP GROWTH FUND LLC
		
	 	  	By:
	 	  	

	 	  	Name:  
	 	  	Title:    Authorized Signatory
		
	 	  	Address for Notice:
		
	 	  	Deephaven Small Cap Growth Fund LLC
	 	  	130 Cheshire Lane, Suite 102
	 	  	Minnetonka, MN 55305
	 	  	Attn: Bruce Lieberman
	 	  	Telephone No.: 952-249-5543
	 	  	Facsimile No.:









	 	  	PORTSIDE GROWTH & OPPORTUNITY FUND
		
	 	  	By:
	 	  	

	 	  	Name:  
	 	  	Title:    Authorized Signatory
		
	 	  	Address for Notice:
		
	 	  	Portside Growth & Opportunity Fund
	 	  	c/o Ramius Capital Group, L.L.C.
	 	  	666 Third Avenue, 26th Floor
	 	  	New York, NY 10017
	 	  	Attn: Jeffrey Smith and Andrew Strober
	 	  	Telephone No.: (212) 845-7955
	 	  	Facsimile No.: (212) 845-7999








 Exhibits: 
  

	A	 	Form of Additional Investment Right 


	B	 	Company Transfer Agent Instructions 


	C	 	Opinion of Company Counsel 


	D	 	Plan of Distribution 

  







 Schedule A 
  

	 Purchaser

	  	Units

	  	 Underlying
 Shares

	  	 Company
 Purchase
 Price


	 MAINFIELD ENTERPRISES, INC.
	  	450,000	  	135,000	  	$	13,144,500
	 DEEPHAVEN SMALL CAP GROWTH FUND LLC
	  	100,000	  	30,000	  	$	2,921,000
	 SMITHFIELD FIDUCIARY LLC
	  	100,000	  	30,000	  	$	2,921,000
	 SF CAPITAL PARTNERS LTD.
	  	100,000	  	30,000	  	$	2,921,000
	 CRANSHIRE CAPITAL, L.P.
	  	55,000	  	16,500	  	$	1,606,550
	 PORTSIDE GROWTH & OPPORTUNITY FUND
	  	35,000	  	10,500	  	$	1,022,350
	 EVERSPRING MASTER FUND LTD.
	  	20,000	  	6,000	  	$	584,200
	 Total
	  	860,000	  	258,000	  	$	25,120,600