Securities Purchase Agreement



 EXHIBIT 10.1 
 SECURITIES PURCHASE AGREEMENT 
 This Securities Purchase Agreement (this
“Agreement”) is dated as of February 12, 2009, between Pro-Pharmaceuticals, Inc., a Nevada corporation (the “Company”), and 10X Fund, L.P., a Delaware limited partnership (the “Purchaser”).

 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”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires 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 each Purchaser agree as follows: 
 ARTICLE I. 
 DEFINITIONS 
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1: 
 “Action” shall have the meaning ascribed to such term in Section 3.1(j). 
 “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 405 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same
investment manager as the Purchaser will be deemed to be an Affiliate of the Purchaser. 
 “Articles of
Amendment” means the Articles of Amendment setting forth the designations, rights and preferences of Series B-1 Preferred and Series B-2 Preferred in the form attached hereto as Exhibit B. 
 “Board of Directors” means the board of directors of the Company. 
 “Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United
States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. 
 “Initial Closing” means the initial closing of the purchase and sale of the Securities pursuant to Section 2.1. 
 “Closing Date” means the Trading Day when all of the Transaction Documents have been executed and delivered by the
applicable parties thereto, and all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities have been satisfied or waived. 
  

 1 








 “Commission” means the Securities and Exchange Commission. 

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities
into which such securities may hereafter be reclassified or changed into. 
 “Common Stock Equivalents” means
any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. 
 “Company Counsel” means Greenberg Traurig, LLP, with offices located at One International Place, Boston, Massachusetts 02110. 
 “Conversion Shares” means the shares of Common Stock issuable upon conversion of the Series B-1 Preferred and/or Series B-2 Preferred. 
 “Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith. 
 “Dividend Shares” means the shares of Common Stock issuable in satisfaction of dividends payable on the Series B-1
Preferred and/or Series B-2 Preferred. 
 “Effective Date” means the date that the initial Registration
Statement filed by the Company pursuant to the Registration Rights Agreement is first declared effective by the Commission. 
 “Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r). 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 
 “Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers, directors or other permitted grantees of the Company pursuant to any stock or option plan
duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange
of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been
amended since the date of this Agreement to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities, and (c) securities issued pursuant to acquisitions or strategic transactions
approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a 

  

 2 








 
Person which is, itself or through its subsidiaries, an operating company in a business compatible with the business objectives of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in
securities. 
 “Final Purchase Date” means the Business Day immediately subsequent to the date that is one
hundred twenty (120) days from the Closing Date; provided, however, the Final Purchase Date shall be automatically extended for an additional sixty (60) days if the aggregate amount of capital contributions credited by the Purchaser by the
date that is ninety (90) days from the Initial Closing Date is greater than or equal to $2,500,000. 
 “ILG” means Investment Law Group of Gillett Mottern & Walker LP with offices located at 1230 Peachtree Street, NE, Suite 2445, Atlanta, Georgia 30309. 
 “Initial Subscription Amount” means One Million Eight Hundred Thousand Dollars ($1,800,000.00) in United States dollars,
in immediately available funds. 
 “Initial Closing” means the closing of the purchase and sale of the
Initial Closing Securities pursuant to Section 2.1(a). 
 “Initial Closing Date” means the Trading Day
on which the Initial Closing takes place. 
 “Initial Closing Securities” means the Series B-1 Preferred and
Warrants purchased by the Purchaser for the Initial Subscription Amount pursuant to Section 2.1(a) herein. 
 “GAAP” shall have the meaning ascribed to such term in Section 3.1(h). 
 “Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa). 
 “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o). 
 “Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c). 
 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. 
 “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). 
 “Material Permits” shall have the meaning ascribed to such term in Section 3.1(m). 
 “Maximum Subscription Amount” shall mean $6,000,000. 
 “Origination
Fee” means an origination fee payable by the Company to the Purchaser in the amount of three percent (3%) of the total Initial Subscription Amount and any Subsequent Subscription Amount that shall be deducted and paid from the Initial
Subscription Amount or any Subsequent Subscription Amounts, respectively. 
  

 3 








 “Participation Maximum” shall have the meaning ascribed to such term in
Section 4.12. 
 “Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 
 “Pre-Notice” shall have the meaning ascribed to such term in Section 4.12. 
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal
investigation or partial proceeding, such as a deposition), whether commenced or threatened. 
 “Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8. 
 “Purchaser Expenses”
shall mean all expenses incurred by the Purchaser in connection with the negotiation and execution of the transaction documents, including travel and communications expenses, and fees of lawyers, accountants and other professionals. 
 “Registration Rights Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the
Purchaser, in the form of Exhibit A attached hereto. 
 “Registration Statement” means a registration
statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchaser of the Conversion Shares, the Dividend Shares and the Warrant Shares. 
 “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). 
 “Rights Offering” means a registered offering of up to $20,000,000 of Common Stock by the Company to its Common
Stockholders. 
 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule 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” shall have the meaning ascribed to such term in Section 3.1(h). 
 “Securities” means, collectively, the Series B-1 Preferred, the Series B-2 Preferred, the Warrants, the Warrant Shares,
the Conversion Shares and the Dividend Shares. 
 “Securities Act” means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder. 
  

 4 








 “Series B Directors” means those directors elected by the holders of the
Series B-1 Preferred and Series B-2 Preferred to serve on the Board of Directors from time to time. 
 “Series B-1
Preferred” means shares of the Company’s Series B-1 Convertible Preferred Stock, $0.01 par value. 
 “Series B-2 Preferred” means shares of the Company’s Series B-2 Convertible Preferred Stock, $0.01 par value. 
 “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares
of Common Stock). 
 “Subsequent Closing” means the closing of the purchase and sale of the Subsequent
Closing Securities pursuant to Section 2.1(b). 
 “Subsequent Closing Date” means the Trading Day on
which each Subsequent Closing takes place. 
 “Subsequent Closing Notice” means a notice from an escrow agent
(which may include counsel for the Purchaser) stating that funds of the Purchaser are being held in escrow for the purchase of Subsequent Closing Securities, which funds will be released to the Company in a Subsequent Closing when the Company has
satisfied the conditions described in Section 2.3(b) herein. 
 “Subsequent Closing Securities” means
the Series B-2 Preferred and Warrants purchased by the Purchaser for a Subsequent Subscription Amount pursuant to Section 2.1(b) herein. 
 “Subsequent Subscription Amount” means the amount of money specified in any Subsequent Closing Notice, provided that the sum of the Initial Subscription Amount and all Subsequent Subscription Amounts
may not exceed the Maximum Subscription Amount. 
 “Subsequent Financing” shall have the meaning ascribed to
such term in Section 4.12. 
 “Subsequent Financing Notice” shall have the meaning ascribed to such term
in Section 4.12. 
 “Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a), and shall, where applicable, include any subsidiary of the Company formed or acquired after the date hereof. 
 “Trading Day” means a day on which the New York Stock Exchange is open for trading. 
 “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE Alternext US, the Nasdaq Capital Market, the Nasdaq Global Market, the
Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board, or “Pink Sheets.” 
  

 5 








 “Transaction Documents” means this Agreement, the Warrants, the
Registration Rights Agreement, the Articles of Amendment and any other documents or agreements executed in connection with the transactions contemplated hereunder. 
 “Transfer Agent” means Continental Stock Transfer and Trust
Company, the current transfer agent of the Company, with a mailing address of 17 Battery Place, 8th floor, New York, New York 10004-1123 and a
facsimile number of (212) 616-7616, and any successor transfer agent of the Company. 
 “VWAP” means,
for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market (other than the OTC Bulletin Board), the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:00 p.m.
(New York City time); (b) if the Common Stock is then listed on the OTC Bulletin Board, the average of the high and low price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board; or (c) if the Common
Stock is not then quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so reported. 
 “Warrants” means,
collectively, the Class A-1 Warrants, the Class A-2 Warrants and the Class B Warrants, each delivered to the Purchaser at the Closing in accordance with Section 2.2(a) hereof, in the forms of Exhibit C attached hereto.

 “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants. 
 ARTICLE II. 
 PURCHASE AND SALE 
 2.1 Initial Closing and Subsequent Closing. 
 (a) On the Initial Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to
sell, and the Purchaser agrees to purchase, (i) 900,000 shares of Series B-1 Preferred, (ii) one Class A-1 Warrant exercisable to purchase two Warrant Shares for each share of Series B-1 Preferred purchased, (iii) one
Class A-2 Warrants exercisable to purchase two Warrant Shares for each share of Series B-1 Preferred purchased, and (iv) one Class B Warrant exercisable to purchase eight Warrant Shares for each share of Series B-1 Preferred purchased. At
the Initial Closing, Purchaser shall deliver the Initial Subscription Amount (less the Origination Fee and the Purchaser Expenses) to the 

  

 6 








 
Company, and the Company shall deliver to the Purchaser the Series B-1 Preferred, the Class A-1 Warrant, the Class A-2 Warrant and the Class B
Warrant due in respect of the Initial Subscription Amount, and the Company and Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Initial Closing. Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of ILG or such other location as the parties shall mutually agree. 
 (b) At one or more Subsequent Closing Dates until the Final Purchase Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchaser agrees to purchase, (i) one share of Series B-2
Preferred for every two dollars invested by the Purchaser in the Subsequent Closing, (ii) one Class A-1 Warrant exercisable to purchase two Warrant Shares for each share of Series B-2 Preferred purchased in the Subsequent Closing,
(iii) one Class A-2 Warrant exercisable to purchase two Warrant Shares for each share of Series B-2 Preferred purchased in the Subsequent Closing, and (iv) one Class B Warrant exercisable to purchase eight Warrant Shares for each
share of Series B-2 Preferred purchased in the Subsequent Closing. At each Subsequent Closing, Purchaser shall deliver the Subsequent Subscription Amount (less the Origination Fee and the Purchaser Expenses) to the Company, and the Company shall
deliver to the Purchaser the Series B-2 Preferred, the Class A-1 Warrant, the Class A-2 Warrant and the Class B Warrant due in respect of the Subsequent Subscription Amount, and the Company and Purchaser shall deliver the other items set
forth in Section 2.2 deliverable at the Subsequent Closing. Each Subsequent Closing will be held at the offices of ILG at a time mutually agreed by the parties within two (2) Trading Days after the satisfaction by the Company of all
conditions of the Company required by Section 2.3(b) herein. 
 2.2 Deliveries. 
 (a) On or prior to the Initial Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:

 (i) this Agreement duly executed by the Company; 
 (ii) the Articles of Amendment which have been executed in a form acceptable for filing with the Secretary of State of the State of
Nevada; 
 (iii) a legal opinion of Company Counsel, substantially in the form of Exhibit D attached hereto;

 (iv) a certificate evidencing the number of shares of Series B-1 Preferred described in Section 2.1(a) herein,
registered in the name of Purchaser; 
 (v) the Warrants exercisable to purchase the number of Warrant Shares described in
Section 2.1(a) herein, registered in the name of the Purchaser; and 
 (vi) the Registration Rights Agreement duly
executed by the Company; 
 (vii) agreements with Medi-Pharmaceuticals, Inc. and David Platt acceptable to the Purchaser, in
the Purchaser’s sole discretion. 
  

 7 








 (b) On or prior to the Initial Closing Date, the Purchaser shall deliver or cause to be
delivered to the Company the following: 
 (i) this Agreement duly executed by the Purchaser; 
 (ii) the Initial Subscription Amount (less the Origination Fee and the Purchaser Expenses) by wire transfer to the Company; and

 (iii) the Registration Rights Agreement duly executed by the Purchaser. 
 (c) On or prior to each Subsequent Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 (i) certificate from an officer of the Company that all conditions and obligations under this Agreement have been satisfied
and the each of its representations and warranties remain true and accurate in all material respects as of the Subsequent Closing Date and shall be deemed to be given as of such date; 
 (ii) a certificate evidencing the number of shares of Series B-2 Preferred to be purchased at the Subsequent Closing, registered in the
name of Purchaser; and 
 (iii) Warrants exercisable to purchase the number of Warrant Shares described in
Section 2.1(b) herein, registered in the name of the Purchaser. 
 (d) On or prior to each Subsequent Closing
Date, the Purchaser shall deliver or cause to be delivered to the Company the applicable Subsequent Subscription Amount (less the Origination Fee and the Purchaser Expenses). 
 2.3 Closing Conditions. 
 (a) The obligations of the Company hereunder in connection with the Initial Closing and any Subsequent Closing are subject to the following conditions being met: 
 (i) the accuracy in all material respects on the Initial Closing Date and each Subsequent Closing Date of the representations and
warranties of the Purchaser contained herein; 
 (ii) all obligations, covenants and agreements of the Purchaser required to
be performed at or prior to the Initial Closing Date and/or a Subsequent Closing Date shall have been performed as of such date; and 
 (iii) the delivery by the Purchaser of the items set forth in Sections 2.2(b) and 2.2(d) of this Agreement in connection with the Initial Closing and any Subsequent Closing, respectively. 
 (b) The obligations of the Purchaser hereunder in connection with the Initial Closing and any Subsequent Closing are subject to the
following conditions being met: 
 (i) the accuracy in all material respects on the Initial Closing Date and any Subsequent
Closing Date of the representations and warranties of the Company contained herein; 
  

 8 








 (ii) all obligations, covenants and agreements of the Company and its officers and
directors required to be performed at or prior to the Initial Closing Date and/or a Subsequent Closing Date, including without limitation, each action set forth in Sections 4.20 hereof, shall have been performed; 
 (iii) the delivery by the Company of the items set forth in Sections 2.2(a) and 2.2(c) of this Agreement in connection with the Initial
Closing and a Subsequent Closing, respectively; 
 (iv) there shall have been no Material Adverse Effect with respect to the
Company since the date hereof. 
 ARTICLE III. 
 REPRESENTATIONS AND WARRANTIES 
 3.1 Representations and Warranties of the Company. Except as set
forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties to the Purchaser: 
 (a) Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all
of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries,
then all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded. 
 (b)
Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity
in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be
expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as 

  

 9 








 
a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification. 
 (c) Authorization; Enforcement. The Company has all requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the
Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the
Company’s stockholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 
 (d) No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will
not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect. 
 (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or 

  

 10 








 
other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) filings required
pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Registration Statement and (iii) application(s), if required, to each applicable Trading Market for the listing of the Securities for trading
thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 (f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Conversion
Shares, Warrant Shares and Dividend Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to the Preferred Stock and the Warrants. 
 (g) Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall
also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange
Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the
conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right
to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities and as set forth on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under
any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the
Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the
Company’s stockholders. 
  

 11 








 (h) SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such
shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, 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. Except as set forth on Schedule 3.1(h) attached hereto, 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. Except as set forth on Schedule
3.1(h) attached hereto, such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company
and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. 

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (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 option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties,
operations or financial condition, that would be required to 

  

 12 








 
be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at
least 1 Trading Day prior to the date that this representation is made. 
 (j) Litigation. Except as disclosed in the
SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or
by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 
 (k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which could reasonably be expected to result in a Material Adverse Effect.
None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment
of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. 
 (l) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it
is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has
been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or 

  

 13 








 
regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such
laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect. 
 (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to
conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the
Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. 
 (n) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance. 
 (o) Patents and Trademarks. Except as set forth in the SEC Reports, the Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights 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 notice (written or otherwise) that any of 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. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (p) 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,
including, but not limited to, directors and officers insurance coverage in the amount set forth on Schedule 3.1(p) attached hereto. 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. 
  

 14 








 (q) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $60,000 other than
for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of
the Company. 
 (r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in material compliance with all
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate
action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure
that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The
Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such
date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over financial reporting. 
 (s) Certain
Fees. Any brokerage or finder’s fees or commissions payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the
Transaction Documents are as set forth on Schedule 3.1(s) attached hereto. The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in
this Section that may be due in connection with the transactions contemplated by the Transaction Documents. 
  

 15 








 (t) Private Placement. Assuming the accuracy of the Purchaser’s
representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the Trading Market. 
 (u) Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act of 1940, as amended. 
 (v) Registration Rights. Except as set forth on Schedule 3.1(v) attached hereto, other than the Purchaser, no Person has any right to cause the Company to effect the registration under the Securities Act
of any securities of the Company that has not already been satisfied. 
 (w) Listing and Maintenance Requirements. The
Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. 
 (x) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or
could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of
the Securities and the Purchaser’s ownership of the Securities. 
 (y) Disclosure. All disclosure furnished by or
on behalf of the Company to the Purchaser regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company
during the twelve months preceding the date of this Agreement taken as a whole do not 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 were made and when 

  

 16 








 
made, not misleading. The Company acknowledges and agrees that the Purchaser does not make nor has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof. 
 (z) No Integrated
Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act
which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 (aa) Indebtedness. Schedule 3.1(aa) sets forth as of the date thereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (a) any liabilities for borrowed money or amounts owed in
excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness. 
 (bb) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency
which has been asserted or threatened against the Company or any Subsidiary. 
 (cc) No General Solicitation. Neither
the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has agreed to sell the Securities only after being approached by Purchaser
and subsequently offered for sale only to the Purchaser within the meaning of Rule 501 under the Securities Act. 
 (dd)
Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended. 
  

 17 








 (ee) Accountants. The Company’s accounting firm is set forth on Schedule
3.1(ee) of the Disclosure Schedule. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the
financial statements to be included in the Company’s Annual Report on Form 10-K for the year ending December 31, 2008. 
 (ff) No Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. 
 (gg) Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser is
acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company further represents to the Purchaser that the Company’s decision to enter into this Agreement
and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 
 (hh) Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the Company (i) that the Purchaser has not been asked by the Company to agree, nor has the Purchaser agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) that past or future open market or other transactions
by the Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the
Company’s publicly-traded securities; (iii) that the Purchaser, and counter-parties in “derivative” transactions to which the Purchaser is a party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iv) that the Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that
(a) the Purchaser may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect to
Securities are being determined and (b) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The
Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents. 
  

 18 








 (ii) Regulation M Compliance. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the
Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities. 
 (jj) FDA. As to each product subject to the jurisdiction of the U.S. Food and Drug Administration (“FDA”) under
the Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by the Company or any of its Subsidiaries (each such
product, a “Pharmaceutical Product”), such Pharmaceutical Product is being manufactured, packaged, labeled, tested, distributed, sold and/or marketed by the Company in compliance with all applicable requirements under FDCA and
similar laws, rules and regulations relating to registration, investigational use, premarket clearance, licensure, or application approval, good manufacturing practices, good laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the failure to be in compliance would not have a Material Adverse Effect. There is no pending, completed or, to the Company’s knowledge, threatened, action (including any
lawsuit, arbitration, or legal or administrative or regulatory proceeding, charge, complaint, or investigation) against the Company or any of its Subsidiaries, and none of the Company or any of its Subsidiaries has received any notice, warning
letter or other written communication from the FDA or any other governmental entity, which (i) contests the premarket clearance, licensure, registration, or approval of, the uses of, the distribution of, the manufacturing or packaging of, the
testing of, the sale of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws its approval of, requests the recall, suspension, or seizure of, or withdraws or orders the withdrawal of advertising or sales promotional
materials relating to, any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries, (iv) enjoins production at any facility of the Company or any of its Subsidiaries,
(v) enters or proposes to enter into a consent decree of permanent injunction with the Company or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or regulations by the Company or any of its Subsidiaries,
and which, either individually or in the aggregate, would have a Material Adverse Effect. The properties, business and operations of the Company have been and are being conducted in all material respects in accordance with all applicable laws, rules
and regulations of the FDA. The Company has not been informed by the FDA that the FDA will prohibit the marketing, sale, license or use in the United States of any product proposed to be developed, produced or marketed by the Company nor has the FDA
expressed any concern as to approving or clearing for marketing any product being developed or proposed to be developed by the Company. 
  

 19 








 3.2 Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants
as of the date hereof and as of the Closing Date to the Company as follows: 
 (a) Organization; Authority. The
Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, 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 execution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the
Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of the Purchaser. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser
in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 
 (b) Own Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as
principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such
Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this
representation and warranty not limiting the Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws) in violation of the Securities Act or any
applicable state securities law. The Purchaser is acquiring the Securities hereunder in the ordinary course of its business. 
 (c) Purchaser Status. At the time the Purchaser was offered the Securities, it and each investors in the Purchaser was, and at the date hereof it is, and on each date on which it exercises any Warrants, it will be either: (i) an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. The Purchaser is
not required to be registered as a broker-dealer under Section 15 of the Exchange Act. 
 (d) Experience of The
Purchaser. The 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 Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

  

 20 








 (e) General Solicitation. The Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or
general advertisement. 
 (f) Short Sales Prior To The Date Hereof. Other than consummating the transactions
contemplated hereunder, the Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the securities of the
Company during the period commencing from the time that the Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated
hereunder until the date hereof (“Discussion Time”). 
 ARTICLE IV. 
 OTHER AGREEMENTS OF THE PARTIES 
 4.1 Transfer Restrictions. 
 (a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Purchaser under this
Agreement and the Registration Rights Agreement. 
 (b) The Purchaser agrees to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following form: 
 THIS SECURITY HAS 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 ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A 

  

 21 








 
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES. 
 The Company acknowledges and agrees that the
Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as
defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, the Purchaser may transfer pledged or secured
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 legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.
Further, no notice shall be required of such pledge. At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge
or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. 
 (c)
Certificates evidencing the Securities shall not contain any legend (including the legend set forth in Section 4.1(b)), (i) while a registration statement (including the Registration Statement) covering the resale of such Security is
effective under the Securities Act, or (ii) following any sale of such Security pursuant to Rule 144, or (iii) if such Securities are eligible for sale under Rule 144(b)(1), 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 a legal opinion to the Transfer Agent promptly after the Effective Date if
required by the Transfer Agent to effect the removal of the legend hereunder. If all or any portion of a Preferred Shares or Warrants are converted or exercised at a time when there is an effective registration statement to cover the resale of the
Conversion Shares or Warrant Shares, as applicable, such Conversion Shares or Warrant Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this
Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Conversion Shares, Dividend Shares or Warrant Shares, as the case may be, issued
with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to the Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company
may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section. Certificates for Securities subject to legend removal hereunder shall be transmitted by the
Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by the Purchaser. 
  

 22 








 (d) In addition to the Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Conversion Shares, Dividend Shares or Warrant Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Transfer
Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the
tenth Trading Day following the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit the Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates
representing any Securities as required by the Transaction Documents, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive
relief. 
 (e) The Purchaser agrees that the Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of
distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

 4.2 Furnishing of Information. Until the earliest of the time that (i) the Purchaser owns no Securities, or (ii) all of
the Securities can be resold pursuant to Rule 144(b)(1) under the Securities Act, 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 even if the Company is not then subject to the reporting requirements of the Exchange Act. As long as the Purchaser owns Securities, if the Company is not required to file reports pursuant
to the Exchange Act, it will prepare and furnish to the Purchaser and make publicly available in accordance with Rule 144(c)(2) such information as is required for the Purchaser to sell the Securities under Rule 144. The Company further covenants
that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of
the exemption provided by Rule 144. 
 4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the
sale of the Securities to the Purchaser or that would be integrated with the offer or sale of the Securities to the Purchaser for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to
the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 
 4.4
Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City time) no later than the Trading Day four days after the date hereof, issue a Current Report on Form 8-K, disclosing the material terms of the transactions
contemplated hereby, and filing 

  

 23 








 
the Transaction Documents as exhibits thereto. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect
to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, 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 or 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 the Purchaser, except (i) as required by federal securities law in connection with (A) any registration statement contemplated by
the Registration Rights Agreement and (B) the filing of final Transaction Documents (including signature pages thereto) with the Commission and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which
case the Company shall provide the Purchaser with prior notice of such disclosure permitted under this clause (ii). 
 4.5 Shareholder
Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser. 
 4.6
[Intentionally omitted] 
 4.7 Use of Proceeds. Except as set forth on Schedule 4.7 attached hereto, the Company shall use the
net proceeds from the sale of the Securities hereunder for working capital purposes and shall not, without the consent of a majority of the Series B Directors, use such proceeds for (a) the satisfaction of any portion of the Company’s debt
(other than payment of trade payables in the ordinary course of the Company’s business and prior practices and other than the Company’s indebtedness to George Maricostas), (b) the redemption of any Common Stock or Common Stock
Equivalents, or (c) the settlement of any outstanding litigation. 
 4.8 Indemnification of Purchaser. Subject to the provisions
of this Section 4.8, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser
Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”) that any the Purchaser Party may suffer or incur as a result of or relating to (a) any 

  

 24 








 
breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or
(b) any action instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of the Purchaser, with respect to any of the transactions contemplated by
the Transaction Documents (unless such action is based upon a breach of the Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such
stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser
Party in respect of which indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing
reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the
Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or
(iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of the Purchaser Party, in which case the Company shall be
responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents. In no event shall the indemnification obligations of the Company hereunder exceed the total amount of
the Initial Subscription Amount plus the Subsequent Subscription Amount less the Origination Fee. All Losses due hereunder shall be net of any amounts actually recovered by the Purchaser Parties under insurance policies with respect to such Losses.
The Company shall not be liable hereunder for any consequential, punitive, indirect, exemplary damages or any damages measured by lost profits or a multiple of earnings. 
 4.9 Reservation of Common Stock and Preferred Stock. 
 (a) As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue the Conversion Shares, Dividend
Shares and Warrant Shares required by the Transaction Documents. 
 (b) As of the date hereof, the Company has reserved and
the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Series B-1 Preferred and Series B-2 Preferred for the purpose of enabling the Company to issue such shares pursuant to
this Agreement. 
 4.10 Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the
listing of the Common Stock on a Trading Market. The 

  

 25 








 
Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of the
Preferred Shares and Warrant Shares, and will take such other action as is necessary to cause all of the Preferred Shares and Warrant Shares to be listed on such other Trading Market as promptly as possible. The Company will take all action
reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. The
Purchaser agrees to furnish such information as may be reasonably required by the Trading Market in connection with the application for listing the Conversion Shares, Dividend Shares and Warrant Shares. 
 4.11 [Intentionally Deleted]. 
 4.12
Participation in Future Financing. 
 (a) From the date hereof until the date that is the later of (i) the 12 month
anniversary of the Effective Date and (ii) the date that the Purchaser no longer holds any Securities, upon any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration (a
“Subsequent Financing”), the Purchaser, subject to Section 4.12(g), shall have the right to participate in the Subsequent Financing up to an amount equal to the lesser of (x) 100% of the Subsequent Financing or (y) the
aggregate amount of the Initial Subscription Amount and the sum of all Subsequent Subscription Amounts (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. 
 (b) At least ten (10) calendar days prior to the closing of the Subsequent Financing, the Company shall deliver a written notice of
its intention to effect a Subsequent Financing to the Purchaser (“Pre-Notice”), which Pre-Notice shall ask the Purchaser if it wants to review the details of such financing (such additional notice, a “Subsequent Financing
Notice”). Upon the request of the Purchaser, and only upon a request by the Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than 1 Trading Day after such request, deliver a Subsequent Financing Notice to
the Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder, the Person or Persons through or with whom such Subsequent
Financing is proposed to be effected, and attached to which shall be a term sheet or similar document relating thereto. 
 (c) If the Purchaser desires to participate in such Subsequent Financing, it must
provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the 5th calendar day after the Purchasers received the
Pre-Notice that the Purchaser is willing to participate in the Subsequent Financing, the amount of the Purchaser’s participation, and that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the
Subsequent Financing Notice. If the Company receives no notice from the Purchaser as of such 5th calendar day, then the Purchaser shall be deemed to
have notified the Company that it does not elect to participate. 
 (d)
If by 5:30 p.m. (New York City time) on the 5th calendar day after the Purchasers has received the Pre-Notice, notification by the Purchasers of its
willingness to participate 

  

 26 








 
in the Subsequent Financing (or to cause its designees to participate) is less than the total amount of the Subsequent Financing, then the Company may effect
the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice. 
 (e) [Intentionally Deleted]. 
 (f) The Company must provide the Purchaser with a second Subsequent Financing Notice,
and the Purchaser will again have the right of participation set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such
Subsequent Financing Notice within 60 Trading Days after the date of the initial Subsequent Financing Notice. (g) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of (i) an Exempt Issuance or (ii) an
underwritten public offering of Common Stock. 
 4.13 Subsequent Equity Sales. Unless approved in writing by a majority of the Series
B Directors, or if there are no Series B Directors by the Purchaser if the Purchaser still holds Securities, from the date hereof until such time as the Purchaser does not hold any of the Securities, the Company shall be prohibited from effecting or
entering into an agreement to effect any Subsequent Financing involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company issues or sells (i) any debt or equity securities that
are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the
initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement,
including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect damages. 
 4.14 Short Sales and Confidentiality After The Date Hereof. The
Purchaser covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any Short Sales during the period commencing at the Discussion Time and ending at the time that the transactions
contemplated by this Agreement are first publicly announced as described in Section 4.4. The Purchaser covenants that between the date of execution of this Agreement and the date the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in Section 4.4, the Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Disclosure Schedules. Notwithstanding the foregoing, the
Purchaser makes no representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced as described in
Section 4.4. Notwithstanding the foregoing, in the case where Purchaser is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfolio managers have no direct
knowledge of the investment 

  

 27 








 
decisions made by the portfolio managers managing other portions of the Purchaser’s assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. 
 4.15 [Intentionally Deleted] 
 4.16 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to
qualify the Securities for, sale to the Purchaser at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

 4.17 Capital Changes. Until the one year anniversary of the Effective Date, the Company shall not undertake a reverse or forward
stock split or reclassification of the Common Stock without the prior written consent of the Purchaser. 
 4.18 [Intentionally Deleted].

 4.19 [Intentionally Deleted]. 
 4.20 Board of Directors. 
 (a) On the Initial Closing Date, four (4) members of the Company’s Board
of Directors shall resign, and the remaining members of the Board of Directors shall appoint Dr. Gil Amelio, Jim Czirr, Dr. Rod Martin and Dr. Peter Traber to fill the vacant board seats; provided that if one of the nominees is unable
or unwilling to serve, then Bobby Greenberg shall be appointed instead. 
 (b) On the Initial Closing Date, the Nominating and
Corporate Governance Committee of the Company’s Board of Directors shall be constituted with the following members of the Company’s Board of Directors: Dr. Gil Amelio, Dr. Rod Martin and Dr. Mildred Christian, which members
shall serve until the Company’s annual meeting of shareholders for 2010; provided, however, that if at the time of the Closing any of those named are unable to serve, that person shall be replaced by Jim Czirr. 
 (c) On the Initial Closing Date, the Compensation Committee of the Company’s Board of Directors shall be constituted with the
following members of the Company’s Board of Directors: Dr. Mildred Christian, Dr. Rod Martin and Bobby Greenberg, which members shall serve until the Company’s annual meeting of shareholders for 2010; provided, however, that if
at the time of the Closing any of those named are unable to serve, that person shall be replaced by Dr. Gil Amelio. 
 (d) On the Initial Closing Date, the Board of Directors shall designate Jim Czirr as its Chairman, who shall serve in that capacity until the Company’s annual meeting of shareholders for 2010. 
  

 28 








 (e) The Company shall take all reasonably necessary or desirable actions within its
control to ensure that the Board of Directors shall designate Dr. Theodore Zucconi as the Company’s Chief Executive Officer and President. 
 (f) After the Class B Directors have been duly elected and qualified as directors,
each member of the Board of Directors will receive either shares of Common Stock or Common Stock Equivalents that will each be subject to a vesting schedule. With respect to Common Stock or Common Stock Equivalents, a reverse vesting schedule shall
apply so that any unvested shares of Common Stock or Common Stock Equivalents issued to a director shall be cancelled and forfeited upon resignation. The vesting schedule for the Common Stock or Common Stock Equivalents issued to directors shall be
as follows: One-half shall vest after one full year of service, and one-eighth (1/8th) shall vest after the completion of each additional full
quarter of service after the first year, so that all shares will have vested at the end of two full years of service. Notwithstanding the operation of the foregoing vesting schedule: (i) any director removed for any reason other than
malfeasance shall receive a pro rated portion of such Common Stock or Common Stock Equivalents (without regard to the foregoing vesting schedule) based on time served and (ii) upon the death of serving director, all such Common Stock or Common
Stock Equivalents shall be deemed immediately vested in full and made available to such deceased director’s surviving spouse, other heirs or estate. It is intended that such Common Stock or Common Stock Equivalents shall generally be paid in
Common Stock, however, the Company will make efforts to accommodate requests to receive such compensation in Common Stock Equivalents. 
 (g) All members of the Company’s Board of Directors immediately prior to the election and qualification of the Class B Directors that do not continue to serve on the Board of Directors after such date shall
receive one-half (1/2) of the number of shares of Common Stock or Common Stock Equivalents granted to the new and continuing members of the Company’s Board of Directors. All such Common Stock or Common Stock Equivalents shall be
immediately vested. 
  

 29 








 ARTICLE V. 
 MISCELLANEOUS 
 5.1 Termination. This Agreement may be terminated by Purchaser, as to the
Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchaser, by written notice to the other parties, if the Initial Closing has not been consummated on or before
February 13, 2009; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties). 
 5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse the Purchaser for its reasonable out-of-pocket costs and expenses incurred in connection with the transactions contemplated in the
Transaction Documents, including, without limitation, its legal fees and expenses and travel expenses. The Company shall pay all of its fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred 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 delivery of any Securities
to the Purchaser. 
 5.3 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. 
 5.4 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 set forth on the signature pages attached hereto prior to 5:30 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 set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 
 5.5
Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser, in the case of a waiver, by the party against whom enforcement
of any such waived provision 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 any party to exercise any right hereunder in any manner impair the exercise of any such right. 
  

 30 








 5.6 Headings. 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. 
 5.7 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 Purchaser (other than by
merger). The Purchaser may assign any or all of its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the “Purchaser.” 
 5.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns (including any beneficial owner of the Purchaser that is distributed any part of the Securities issued
hereunder) and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.8. 
 5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the
internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this
Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the
City of Wilmington. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Wilmington for the adjudication of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. 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 other manner permitted by law. If either party shall commence an
action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or proceeding. 
 5.10 Survival. The representations and warranties
contained herein shall survive the Closing and the delivery of the Series B-1 Preferred, Series B-2 Preferred and Warrants until the Final Purchase Date. 
  

 31 








 5.11 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 or by e-mail delivery of a “.pdf” format data file, 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 or “.pdf” signature page were an original thereof. 
 5.12
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and
restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 
 5.13 Replacement of
Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of
mutilation), 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. The applicant for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities. 
 5.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser 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 contained in the Transaction Documents and hereby agrees to waive and
not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. The parties expressly agree to waive any requirement that the other party post a bond as a prerequisite to obtaining
injunctive relief. 
 5.15 Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to
any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred. 
  

 32 








 5.16 [Intentionally Deleted]. 
 5.17 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled. 
 5.18 Saturdays, Sundays, Holidays, etc. If the
last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day. 

5.19 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.

 5.20 Waiver of Jury Trial. In any action, suit or proceeding in any jurisdiction brought by any party against any other party, the
parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and expressly waives forever trial by jury. 
 (Signature Pages Follow) 
  

 33 








 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. 
  

							
	PRO-PHARMACEUTICALS, INC.	  		  	Address for Notice:
				
	By:	  	 /s/ Anthony Squeglia
	  		  	Fax: 617.928.3450
	Name:	  	Anthony Squeglia	  		  	7 Wells Avenue
	Title:	  	Chief Financial Officer	  		  	Newton, MA 02459

 With a copy to (which shall not constitute notice): 
 Greenberg Traurig, LLP 
 One International Place 
 Boston, MA 02110 
 Attn: Jonathan Guest, Esq. 
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGE FOR PURCHASER FOLLOWS] 
  

 34 








 [PURCHASER SIGNATURE PAGES TO PRW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
  

									
	10X FUND, L.P., a Delaware limited partnership	  		  	Address for Notice:
		  		  		  		  	
		  		  		  		  	c/o 10X Capital Management, LLC
	By:	  	10X Capital Management, LLC, a Florida	  		  	1099 Forest Lake Terrace
		  	limited liability company, its General	  		  	Niceville, Florida 32578
		  	Partner	  		  	
					
		  	By:	  	 /s/ Rod D. Martin
	  		  	
		  	Name:	  	Rod D. Martin	  		  	
		  	Title:	  	Managing Member	  		  	

 With a copy to (which shall not constitute notice): 
 Robert J. Mottern, Esq. 
 Investment Law Group of 
 Gillett Mottern & Walker LLP 
 1230 Peachtree Street, NE 
 Suite 2445 
 Atlanta, Georgia 30309 
  

 35