EX-10.1 SECURITIES PURCHASE AGREEMENT



 





Exhibit 10.1




SECURITIES PURCHASE AGREEMENT




     This Securities Purchase Agreement (this “Agreement”) is dated as of April 10, 2007, by and
among Tutogen Medical, Inc., a Florida corporation (the “Company”), and each purchaser identified
on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”).



RECITALS




          A. Each of the Company and the Purchasers is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section 4(2) of the Securities
Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as
promulgated by the United States Securities and Exchange Commission under the Securities Act.




          B. Each Purchaser, severally and not jointly, wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement, that aggregate number of shares of
common stock, par value $0.01 per share (the “Common Stock”), of the Company, set forth below such
Purchaser’s name on the signature page of this Agreement, at the price of $7.38 per share (which
aggregate amount for all Purchasers together shall be 1,626,012 shares of Common Stock and shall be
collectively referred to herein as the “Shares”).




          C. The Company has engaged Roth Capital Partners LLC as its placement agent (the “Placement
Agent”) for the offering of the Shares on a “best efforts” basis.




          D. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, in the form attached hereto as
Exhibit A (the “Registration Rights Agreement”), pursuant to which, among other things, the
Company will agree to provide certain registration rights with respect to the Shares under the
Securities Act and applicable state securities laws.




     NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and the Purchasers hereby 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 shall have the meanings indicated in this
Section 1.1:



          “Action” means any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or, to the Company’s
Knowledge, threatened in writing against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or administrative
agency, regulatory authority (federal, state, county, local or foreign), stock market, stock
exchange or trading facility.




 









 





          “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under common control with such
Person, as such terms are used in and construed under Rule 144. With respect to a Purchaser, any
investment fund or managed account that is managed on a discretionary basis by the same investment
manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.




          “Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City
are open for the general transaction of business.




          “Closing” means the closing of the purchase and sale of the Shares pursuant to this Agreement.




          “Closing Date” means the Trading Day when all of the Transaction Documents have been executed
and delivered by the applicable parties thereto, and all of the conditions set forth in Sections
2.1 and 2.2 hereof are satisfied, or such other date as the parties may agree.




          “Commission” means the United States Securities and Exchange Commission.




          “Common Stock” has the meaning set forth in the Recitals, and also includes any securities
into which the Common Stock may hereafter be reclassified or changed into.




          “Company Counsel” means Williams Schifino Mangione & Steady P.A.




          “Company Deliverables” has the meaning set forth in Section 2.2(a).




          “Control” (including the terms “controlling”, “controlled by” or “under common control with”)
means the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.




          “Disclosure Materials” has the meaning set forth in Section 3.1(h).




          “DTC” has the meaning set forth in Section 4.1(c).




          “Effective Date” means the date on which the initial Registration Statement required by
Section 2(a) of the Registration Rights Agreement is first declared effective by the Commission.




          “Environmental Laws” has the meaning set forth in Section 3.1(l).




          “Escrow Amount” has the meaning set forth in Section 7.1(a).




          “Evaluation Date” has the meaning set forth in Section 3.1(v).




          “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.




          “FDA” has the meaning set forth in Section 3.1(ii).




          “FDCA” has the meaning set forth in Section 3.1(ii).




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          “GAAP” means U.S. generally accepted accounting principles, as applied by the Company.




          “Indemnified Party” has the meaning set forth in Section 4.4.




          “Indemnifying Party” has the meaning set forth in Section 4.4.




          “Intellectual Property” has the meaning set forth in Section 3.1(r).




          “Irrevocable Transfer Agent Instructions” has the meaning set forth in Section 4.1(e).




          “Knowledge” means with respect to any statement made to the knowledge of a party, that the
statement is based upon the actual knowledge, after due inquiry, of the officers of such party
having responsibility for the matter or matters that are the subject of the statement.




          “Lien” means any lien, charge, claim, encumbrance, security interest, right of first refusal,
preemptive right or other restrictions of any kind.




          “Losses” has the meaning set forth in Section 4.4.




          “Material Adverse Effect” means any of (i) a material and adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the
results of operations, assets, business, prospects or financial condition of the Company and its
Subsidiaries, taken as a whole, or (iii) any material adverse impairment to the Company’s ability
to perform in any material respect on a timely basis its obligations under any Transaction
Document.




          “Material Permits” has the meaning set forth in Section 3.1(p).




          “New York Courts” means the state and federal courts sitting in the City of New York, Borough
of Manhattan.




          “Outside Date” means April 30, 2007.




          “Person” means an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity not specifically
listed herein.




          “Pharmaceutical Product” has the meaning set forth in Section 3.1(ii).




          “Placement Agent Counsel” means Lowenstein Sandler PC.




          “Press Release” has the meaning set forth in Section 4.3.




          “Principal Trading Market” means the Trading Market on which the Common Stock is primarily
listed on and quoted for trading, which, as of the Closing Date means the American Stock Exchange
(“AMEX”).




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          “Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.




          “Purchaser Deliverables” has the meaning set forth in Section 2.2(b).




          “Purchaser Party” has the meaning set forth in Section 4.4.




          “Registration Rights Agreement” has the meaning set forth in the Recitals.




          “Registration Statement” means a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale by the Purchasers of the Registrable
Securities (as defined in the Registration Rights Agreement).




          “Required Approvals” has the meaning set forth in Section 3.1(e).




          “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” has the meaning set forth in Section 3.1(h).




          “Securities Act” means the Securities Act of 1933, as amended.




          “Shares” has the meaning set forth in the Recitals.




          “Short Sales” include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and all
types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short
sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and
similar arrangements (including on a total return basis), and sales and other transactions through
non-US broker dealers or foreign regulated brokers.




          “Subscription Amount” means with respect to each Purchaser, the aggregate amount to be paid
for the Shares purchased hereunder as indicated on such Purchaser’s signature page to this
Agreement next to the heading “Aggregate Purchase Price (Subscription Amount).”




          “Subsidiary” means any “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X
promulgated by the Commission under the Exchange Act and any other entity required to be disclosed
in the SEC Reports pursuant to Item 601(b)(21) of Regulation S-K.




          “Suspension” has the meaning set forth in Section 4.1(d).




          “Trading Affiliate” has the meaning set forth in Section 3.2(h).




          “Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its
primary Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not
listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or
(iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock
is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated




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(or any similar organization or agency succeeding to its functions of reporting prices); provided,
that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii)
hereof, then Trading Day shall mean a Business Day.




          “Trading Market” means whichever of the New York Stock Exchange, AMEX, the NASDAQ Global
Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, or the OTC Bulletin Board on
which the Common Stock is listed or quoted for trading on the date in question.




          “Transaction Documents” means this Agreement, the schedules and exhibits attached hereto, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions and any other documents
or agreements executed in connection with the transactions contemplated hereunder.




          “Transfer Agent” means Computershare Investor Services, or any successor transfer agent for
the Company.




ARTICLE II.

PURCHASE AND SALE




     2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the
Closing, the Company shall issue and sell to each Purchaser, and each Purchaser shall, severally
and not jointly, purchase from the Company, such number of shares of Common Stock, as indicated
below such Purchaser’s name on the signature page of this Agreement, for an aggregate purchase
price for such Purchaser as indicated below such Purchaser’s name on the signature page of this
Agreement. Upon confirmation that the other conditions to closing specified herein have been
satisfied or duly waived by the Purchasers, the Company shall deliver to Company Counsel, in trust,
a certificate or certificates, registered in such name or names as the Purchasers may designate,
representing the Shares, with instructions that such certificates are to be held for release to the
Purchasers only upon payment in full of the Subscription Amount to the Company by all the
Purchasers in accordance with Section 7. Unless otherwise agreed to by the Company and any
Purchaser, upon the receipt by Company Counsel of the certificates, each Purchaser shall promptly,
but no more than one Business Day thereafter, cause a wire transfer in same day funds to be sent in
accordance with Section 7, in an amount representing the purchase price for such Purchaser as
indicated below such Purchaser’s name on the signature page of this Agreement. On the date (the
“Closing Date”) the Company receives the aggregate Subscription Amounts in accordance with Section
7, the certificates evidencing the Shares shall be released to the Purchasers. The Closing of the
purchase and sale of the Shares shall take place at the offices of Lowenstein Sandler PC, 1251
Avenue of the Americas, New York, New York on the Closing Date or at such other locations or
remotely by facsimile transmission or other electronic means as the parties may mutually agree.



     2.2 Closing Deliveries. (a) On or prior to the Closing, the Company shall issue,
deliver or cause to be delivered to each Purchaser the following (the “Company Deliverables”):



          (i) This Agreement, duly executed by the Company;




          (ii) One or more stock certificates, containing the legends provided in Section 4.1(b),
evidencing a number of Shares indicated below such Purchaser’s name on the signature page of this
Agreement, registered in the name of such Purchaser;




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          (iii) a legal opinion of Company Counsel, in the form attached hereto as Exhibit C,
executed by such counsel and addressed to the Purchasers and the Placement Agent;




          (iv) the Registration Rights Agreement, duly executed by the Company;




          (v) duly executed Irrevocable Transfer Agent Instructions acknowledged in writing by the
Transfer Agent;




          (vi) a certificate of the Secretary of the Company, dated as of the Closing Date, certifying
the resolutions adopted by the Board of Directors of the Company approving the transactions
contemplated by this Agreement and the other Transaction Documents and the issuance of the Shares,
certifying the current versions of the certificate or articles of incorporation, as amended and
by-laws of the Company and certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company;




          (vii) the Compliance Certificate referred to in Section 5.1(h);




          (viii) a certificate evidencing the formation and good standing of the Company in such
entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within ten (10) days of the Closing Date;




          (ix) a certificate evidencing the Company’s qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the
Company is qualified to do business as a foreign corporation, as of a date within ten (10) days of
the Closing Date; and




          (x) a certified copy of the Certificate of Incorporation, as certified by the Secretary of
State of the State (or comparable office) of such entity’s jurisdiction of formation, as of a date
within ten (10) days of the Closing Date.




     (b) On or prior to the Closing, each Purchaser shall deliver or cause to be delivered to the
Company the following (the “Purchaser Deliverables”):



          (i) This Agreement, duly executed by such Purchaser;




          (ii) Its Subscription Amount, in United States dollars and in immediately available funds, in
the amount set forth as the “Purchase Price” indicated below such Purchaser’s name on the
applicable signature page hereto by wire transfer to an account designated in writing by the
Company for such purpose, as set forth on Exhibit E attached hereto;




          (iii) the Registration Rights Agreement, duly executed by such Purchaser;




          (iv) a fully completed and duly executed Selling Securityholder Notice and Questionnaire in
the form attached as Annex B to the Registration Rights Agreement; and




          (v) a fully completed and duly executed Accredited Investor Questionnaire and Stock
Certificate Questionnaire in the forms attached hereto as Exhibits B-1 and B-2
respectively.




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ARTICLE III.

REPRESENTATIONS AND WARRANTIES




     3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants to the Purchasers and to the Placement Agent that, except as set forth in the Schedules
delivered herewith:



          (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than those
listed in Schedule 3.1(a) hereto. Except as disclosed in Schedule 3.1(a) hereto,
the Company owns, directly or indirectly, all of the capital stock or comparable equity interests
of each of its Subsidiaries free and clear of any and all Liens, and all the issued and outstanding
shares of capital stock or comparable equity interest of each such Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities.




          (b) Organization and Qualification. The Company and each of its 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 or lease and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any of its Subsidiaries is in violation of any of
the provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. Each of the Company and its 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 have, individually or in the aggregate,
resulted in 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; Validity. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions contemplated by each of the
Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery by the Company of each of the Transaction Documents to
which it is a party and the consummation by it of the transactions contemplated hereby and thereby
(including, but not limited to, the sale and delivery of the Shares) have been duly authorized by
all necessary corporate action on the part of the Company and no further corporate action is
required by the Company, its Board of Directors or its stockholders in connection therewith other
than in connection with the Required Approvals. Each of the Transaction Documents to which it is a
party has been (or upon delivery will have been) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application. Except as set forth on
Schedule 3.1(c) hereto, there are no shareholder agreements, voting agreements, or other
similar arrangements with respect to the Company’s capital stock to which the Company is a party or, to the Company’s Knowledge, between or among any of
the Company’s shareholders.




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          (d) No Conflicts. The execution, delivery and performance of the Transaction
Documents to which it is a party by the Company and the consummation by the Company of the
transactions contemplated hereby or thereby (including, without limitation, the issuance of the
Shares) do not and will not (i) conflict with or violate any provision of the Company’s or any of
its Subsidiaries’ certificate or articles of incorporation, bylaws or other organizational or
charter documents, (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any of its Subsidiaries 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 of its
Subsidiaries is a party or by which any property or assets of the Company or any of its
Subsidiaries 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 any of its Subsidiaries
is subject (including federal and state securities laws and regulations and the rules and
regulations, assuming the correctness of the representations and warranties made by the Purchasers
herein, of any self-regulatory organization to which the Company or its securities are subject,
including all applicable Trading Markets), or by which any property or assets of the Company or any
of its Subsidiaries is bound or affected, except in the case of clauses (ii) and (iii) such as
would not, individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect.




          (e) Filings, Consents and Approvals. Neither the Company nor any Subsidiary is
required to obtain any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents (including the issuance of the Shares), other than (i) the filing with
the Commission of one or more Registration Statements in accordance with the requirements of the
Registration Rights Agreement, (ii) filings required by applicable state securities laws, (iii) the
filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the
Securities Act, (iv) the filing of any requisite notices and/or application(s) to the Principal
Trading Market for the issuance and sale of the Common Stock and the listing of the Common Stock
for trading or quotation, as the case may be, thereon in the time and manner required thereby, (v)
the filings required in accordance with Section 4.3 and (vi) those that have been made or obtained
prior to the date of this Agreement (collectively, the “Required Approvals”).




          (f) Issuance of the Shares. The Shares have been duly authorized and, when issued and
paid for in accordance with the terms of the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by applicable securities laws.
Assuming the accuracy of the representations and warranties of the Purchasers in this Agreement,
the Shares will be issued in compliance with all applicable federal and state securities laws.




          (g) Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock, options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock of the Company) is
specified in Schedule 3.1(g) hereto. All of the outstanding shares of capital stock of the
Company are duly authorized, validly issued, fully paid and non-assessable, have been issued in
compliance in all material respects with all applicable federal and state securities laws, and none
of such




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outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe
for, or purchase, any capital stock of the Company. Except as specified in Schedule 3.1(g)
hereto, there are no outstanding options, warrants or scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of the Company’s capital stock, or contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Company, or options, securities or rights convertible or
exchangeable into shares of capital stock of the Company. Except for customary adjustments as a
result of stock dividends, stock splits, combination of shares, reorganizations, recapitalizations,
reclassifications or other similar events, or as disclosed in Schedule 3.1(g) hereto or in
any Schedule 13D or Schedule 13G or Company report on file with the Commission, there are no
anti-dilution or price adjustment provisions contained in any security issued by the Company (or in
any agreement providing rights to security holders) and the issuance and sale of the Shares will
not, immediately or with the passage of time, obligate the Company to issue shares of Common Stock
or other securities to any Person (other than the Purchasers) and will not, result in a right of
any holder of securities to adjust the exercise, conversion, exchange or reset price under such
securities.




          (h) SEC Reports. The Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, since January 1, 2006 (the foregoing materials, including the exhibits
thereto and documents incorporated by reference therein, being collectively referred to herein as
the “SEC Reports” and together with this Agreement and the Schedules to this Agreement (if any),
the “Disclosure Materials”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of the
date hereof, the Company is not aware of any event occurring on or prior to the Closing Date (other
than the transactions contemplated by the Transaction Documents) that requires the filing of a Form
8-K after the Closing. As of their respective dates, or to the extent corrected by a subsequent
restatement, the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were made, not
misleading.




          (i) Financial Statements. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing (or to the
extent corrected by a subsequent restatement). Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved, 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 taken as
a whole 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, year-end audit
adjustments. All material agreements to which the Company or any of its Subsidiaries is a party or
to which the property or assets of the Company or any of its Subsidiaries are subject are included
as part of or specifically identified in the SEC Reports.




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          (j) Tax Matters. Each of the Company and its Subsidiaries (i) has accurately and
timely prepared and filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and
other governmental assessments and charges that are material in amount, shown or determined to be
due on such returns, reports and declarations, except those being contested in good faith, with
respect to which adequate reserves have been set aside on the books of the Company and (iii) has
set aside on its books provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply, except, in the case
of clauses (i) and (ii) above, where the failure to so pay or file any such tax, assessment, charge
or return would not result in a Material Adverse Effect. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction.




          (k) Material Changes. Since December 31, 2006, except as specifically disclosed in
the SEC Reports or as set forth in Schedule 3.1(k) hereto, (i) there have been no events,
occurrences or developments that have had or that could reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect, (ii) the Company has not incurred
any material liabilities other than (A) trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not altered its method of
accounting or the manner in which it keeps its accounting books and records, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to its shareholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
(other than in connection with repurchases of unvested stock issued to employees of the Company),
(v) the Company has not issued any equity securities to any officer, director or Affiliate, except
Common Stock issued in the ordinary course as dividends on outstanding preferred stock and pursuant
to existing Company stock option or stock purchase plans or executive and director corporate
arrangements disclosed in the SEC Reports and (vi) there has not been any material change or
amendment to, or any waiver of any material right under, any contract under which the Company, any
subsidiary thereof, or any of their assets is bound or subject.




          (l) Environmental Matters. To the Company’s Knowledge, neither the Company nor any of
its Subsidiaries (i) is in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) owns or operates any real property contaminated with any substance that is in
violation of any Environmental Laws, (iii) is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and (iv) is subject to any claim relating to any Environmental
Laws; which violation, contamination, liability or claim has had or could reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to
the Company’s Knowledge, threatened investigation that might lead to such a claim.




          (m) Litigation. Except as set forth in Schedule 3.1(m), there is no Action
which (i) adversely affects or challenges the legality, validity or enforceability of any of the
Transaction Documents or the Shares or (ii) except as specifically disclosed in the SEC Reports,
could, if there were an unfavorable decision, individually or in the aggregate, result in a
judgment against the Company or any Subsidiary in excess of $100,000 and for which no insurance is available.
Neither the Company nor any Subsidiary, nor, to the Company’s Knowledge, any current director or officer




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thereof (in his or her capacity thereof), is or has been since December 31, 2003, 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 Company’s Knowledge, there is
not pending or contemplated, any investigation by the Commission involving the Company or, to the
Company’s Knowledge any current or former director or officer of the Company (in his or her
capacity as such). 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.




          (n) Employment Matters. 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, 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 in
good standing. No executive officer, to the Knowledge of the Company, is, or is now expected to
be, in violation of any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other contract or agreement
or any restrictive covenant, and the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal,
state, local and foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.




          (o) Compliance. Except as set forth in Schedule 3.1(o), neither the Company
nor any of its Subsidiaries (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 of its Subsidiaries under), nor has the Company or any of its Subsidiaries
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 having
jurisdiction over the Company or its properties or assets, or (iii) is or has been in violation of,
or in receipt of notice that it is in violation of, any statute, rule or regulation of any
governmental authority applicable to the Company, including the Principal Trading Market, except in
each case as could not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect.




          (p) Regulatory Permits. The Company and its 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, individually or in the aggregate, has not and
could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such Material Permits.




          (q) Title to Assets. Except for property that is specifically the subject of, and
covered by, other representations and warranties as to ownership or title contained herein, and




11









 




except as set forth in Schedule 3.1(q), the Company and its Subsidiaries have good and
marketable title in all personal property owned by them that is material to their respective
businesses, 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 its 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 its Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in
material compliance. Neither the Company nor any of its Subsidiaries own any real property.




          (r) Patents and Trademarks. The Company and its Subsidiaries own, possess, license or
have other rights to use all foreign and domestic patents, patent applications, trade and service
marks, trade and service mark registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, Internet domain names, know-how and other intellectual property (collectively,
the “Intellectual Property”) necessary for the conduct of their respective businesses as now
conducted or as proposed to be conducted. Except as set forth in the SEC Reports, and except where
such violations or infringements would not reasonably be expected to result, either individually or
in the aggregate, in a Material Adverse Effect, (a) there are no rights of third parties to any
such Intellectual Property; (b) to the Company’s Knowledge, there is no infringement by third
parties of any such Intellectual Property; (c) there is no pending or, to the Company’s Knowledge,
threatened action, suit, proceeding or claim by others challenging the Company’s and its
Subsidiaries’ rights in or to any such Intellectual Property, and the Company is unaware of any
facts which would form a reasonable basis for any such claim; (d) there is no pending or, to the
Company’s Knowledge, threatened action, suit, proceeding or claim by others challenging the
validity or scope of any such Intellectual Property; and (e) there is no pending or, to the
Company’s Knowledge, threatened action, suit, proceeding or claim by others that the Company and/or
any of its Subsidiaries infringe or otherwise violate any patent, trademark, copyright, trade
secret or other proprietary rights of others, and the Company is unaware of any other fact which
would form a reasonable basis for any such claim.




          (s) Insurance. The Company and its 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 and location in which the Company and its Subsidiaries are engaged.
Neither the Company nor any of its Subsidiaries has any knowledge that it will be unable to renew
its existing insurance coverage for the Company and its Subsidiaries 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.




          (t) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports made on or prior to the date hereof, none of the officers or directors of the Company and,
to the Company’s Knowledge, none of the employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries or to a presently contemplated transaction
(other than for services as employees, officers and directors) that would be required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.




          (u) Internal Accounting Controls. The Company and its 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




12









 




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.




          (v) Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all material
respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as
of the Closing Date. 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 material information relating to the Company is made known to the
certifying officers by others within those entities. The Company’s certifying officers have
evaluated the effectiveness of its controls and procedures as of a date within 90 days prior to the
filing of the 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 such date there
have been no significant changes in the Company’s internal controls (as such term is defined in
Item 307(b) of Regulation S-K) or, to the Company’s Knowledge, in other factors that could
significantly affect the Company’s internal controls.




          (w) Certain Fees. No person or entity will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or upon the Company or a
Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company, other than to the Placement Agent with
respect to the offer and sale of the Shares (which placement agent fees are being paid by the
Company). The Company shall pay, and hold each Purchaser harmless against, any liability, loss or
expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in
connection with any such right, interest or claim.




          (x) Private Placement. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, except as set forth in Schedule 3.1(x) no registration
under the Securities Act is required for the offer and sale of the Shares by the Company to the
Purchasers under the Transaction Documents. As of the date of this Agreement, except as set forth
in Schedule 3.1(x), there are no outstanding registration rights held by any holder of the
Company’s securities.




          (y) No Directed Selling Efforts or General Solicitation. Neither the Company, nor any
of its Affiliates, nor any Person acting on its or their behalf has conducted any “general
solicitation” or “general advertising” (as those terms are used in Regulation D) in connection with
the offer or sale of any of the Shares.




          (z) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2, neither the Company, its Subsidiaries nor any of their
Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, at any time
within the past six months made any offers or sales of any Company security or solicited any offers
to buy any security, under circumstances that would (i) eliminate the availability of the exemption
from registration under Regulation D under the Securities Act in connection with the offer and sale
by the Company of the Shares as contemplated hereby or (ii) cause the offering of the Shares
pursuant to the Transaction Documents to be integrated with prior offerings by the Company for
purposes of any applicable law, regulation or shareholder approval provisions, including,




13









 




without limitation, under the rules and regulations of the Principal Trading Market on which any of
the securities of the Company are listed or designated.




          (aa) Exchange Act. The Company’s Common Stock is registered pursuant to Section 12(g)
of the Exchange Act, and the Company has taken no action designed to terminate 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.




          (bb) Investment Company. Neither the Company nor any of its Subsidiaries is required
to be registered as, and is not an Affiliate of, and immediately following the Closing will not be
required to register as, an “investment company” within the meaning of the Investment Company Act
of 1940, as amended.




          (cc) Questionable Payments. Neither the Company nor any of its Subsidiaries, nor, to
the Company’s Knowledge, any directors, officers, employees, agents or other Persons acting on
behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on
behalf of, the Company: (i) directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to foreign or domestic
political activity; (ii) made any direct or indirect unlawful payments to any foreign or domestic
governmental officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds; (iii) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic government official or
employee.




          (dd) Application of Takeover Protections. Except as set forth in Schedule
3.1(dd), the Company and its Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s charter documents or the laws of its state of incorporation that is or could
reasonably be expected to become applicable to any of the Purchasers as a result of the Purchasers
and the Company fulfilling their obligations or exercising their rights under the Transaction
Documents, including without limitation the Company’s issuance of the Shares and the Purchasers’
ownership of the Shares.




          (ee) Disclosure. All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, furnished prior to the date of this Agreement by
the Company or authorized by the Company and furnished by the Placement Agent on behalf of the
Company (including the Company’s representations and warranties set forth in this Agreement) are
true and correct in all material respects and do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. No event or circumstance
has occurred or information exists with respect to the Company nor any of its Subsidiaries or its
or their business, properties, operations or financial conditions, which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company but which has not
been so publicly announced or disclosed, except for the announcement of this Agreement and related
transactions.




          (ff) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance sheet entity that




14









 




is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or
that otherwise would be reasonably likely to have a Material Adverse Effect.




          (gg) Acknowledgment Regarding Purchasers’ Purchase of Shares. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor
or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Shares.
The Company further represents to each 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) Regulation M Compliance. The Company has not, and to the Company’s 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 Shares, (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the securities of the Company 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 Shares.




          (ii) 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 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




15









 




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.




          (jj) Foreign Sales. The Company has received approval for the marketing of its
products in each of the foreign countries in which it conducts business. In addition, to the
Company’s Knowledge, the Company is in compliance with all applicable requirements under laws,
rules and regulations of such countries 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 communication
from the regulatory authority of any 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 such foreign authorities.




     3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof and as of the
Closing Date to the Company and the Placement Agent as follows:



          (a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution, delivery and performance by such Purchaser of
the transactions contemplated by this Agreement have been duly authorized by all necessary
corporate or, if such Purchaser is not a corporation, such partnership, limited liability company
or other applicable like action, on the part of such Purchaser. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or




16









 




similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies
or by other equitable principles of general application.




          (b) Investment Intent. Such Purchaser understands that the Shares are “restricted
securities” and have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Shares, as principal for its own account and not with a view
to, or for distributing or reselling such Shares or any part thereof in violation of the Securities
Act or any applicable state securities laws, without prejudice, however, to such Purchaser’s right,
subject to the provisions of this Agreement and the Registration Rights Agreement, at all times to
sell or otherwise dispose of all or any part of such Shares pursuant to an effective registration
statement under the Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities laws. Such Purchaser is acquiring the Shares
hereunder in the ordinary course of its business. Such Purchaser does not presently have any
agreement, plan or understanding, directly or indirectly, with any Person to distribute or effect
any distribution of any of the Shares (or any securities which are derivatives thereof) to or
through any person or entity.




          (c) Purchaser Status. At the time such Purchaser was offered the Shares, it was, and
at the date hereof it is an “accredited investor” as defined in Rule 501(a) under the Securities
Act. Such Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act.




          (d) General Solicitation. Such Purchaser is not purchasing the Shares as a result of
any advertisement, article, notice or other communication regarding the Shares published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general advertisement.




          (e) Experience of Such Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Shares and, at the present time, is able to afford a
complete loss of such investment.




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




17









 





          (g) Residency. Such Purchaser has, if an entity, its principal place of business or,
if an individual, its primary residence in the jurisdiction set forth immediately below such
Purchaser’s name on the signature pages hereto.




          (h) Certain Trading Activities. Other than with respect to the transactions
contemplated herein, since the earlier to occur of (i) the time that such Purchaser was first
contacted by the Company, the Placement Agent or any other Person regarding this investment in the
Company and (ii) the fifth (5th) day prior to the date of this Agreement, neither the
Purchaser nor any Affiliate of such Purchaser which (x) had knowledge of the transactions
contemplated hereby, (y) has or shares discretion relating to such Purchaser’s investments or
trading or information concerning such Purchaser’s investments, including in respect of the Shares,
and (z) is subject to such Purchaser’s review or input concerning such Affiliate’s investments or
trading (collectively, “Trading Affiliates”) has directly or indirectly, nor has any Person acting
on behalf of or pursuant to any understanding with such Purchaser or Trading Affiliate, effected or
agreed to effect any transactions in the securities of the Company (including, without limitation,
any Short Sales involving the Company’s securities). Notwithstanding the foregoing, no Purchaser
makes any 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 4.3.




          (i) Brokers and Finders. No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or upon the Company, or
any Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of the Purchaser.




          (j) Independent Investment Decision. Such Purchaser has independently evaluated the
merits of its decision to purchase Shares pursuant to the Transaction Documents, and such Purchaser
confirms that it has not relied on the advice of any other Purchaser’s business and/or legal
counsel in making such decision. Such Purchaser understands that nothing in this Agreement or any
other materials presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Shares constitutes legal, tax or investment advice. Such Purchaser has consulted
such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares. Such Purchaser understands that the
Placement Agent has acted solely as the agent of the Company in this placement of the Shares and
such Purchaser has not relied on the business or legal advice of the Placement Agent or any of its
agents, counsel or Affiliates (including, without limitation, the Placement Agent’s legal counsel)
in making its investment decision hereunder, and confirms that none of such Persons has made any
representations or warranties to such Purchaser in connection with the transactions contemplated by
the Transaction Documents.




          (k) Reliance on Exemptions. Such Purchaser understands that the Shares being offered
and sold to it in reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire the Shares.




          (l) No Governmental Review. Such Purchaser understands that no United States federal
or state agency or any other government or governmental agency has passed on or




18









 




made any recommendation or endorsement of the Shares or the fairness or suitability of the
investment in the Shares nor have such authorities passed upon or endorsed the merits of the
offering of the Shares.



The Company acknowledges and agrees that no Purchaser has made or makes any representations or
warranties with respect to the transactions contemplated hereby other than those specifically set
forth in this Section 3.2.




ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES




     4.1 (a) Compliance with Laws. Notwithstanding any other provision of this Article IV,
each Purchaser covenants that the Shares may only be disposed of pursuant to an effective
registration statement under, and in compliance with the requirements of, the Securities Act, or
pursuant to an available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state and federal
securities laws. In connection with any transfer of the Shares other than (i) pursuant to an
effective registration statement, (ii) to the Company, (iii) to an Affiliate of a Purchaser, (iv)
pursuant to Rule 144 or (v) in connection with a bona fide pledge as contemplated in Section
4.1(b), except as otherwise provided herein, 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 Shares
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 a Purchaser under this
Agreement and the Registration Rights Agreement.



          (b) Legends. Certificates evidencing the Shares shall bear any legend as required by
the “blue sky” laws of any state and a restrictive legend in substantially the following form,
until such time as they are not required under Section 4.1(c):





THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (B) 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 OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY OR (II) UNLESS SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.



19









 





          The Company acknowledges and agrees that a Purchaser may from time to time pledge, and/or
grant a security interest in some or all of the legended Shares, in connection with applicable
securities laws, pursuant to a bona fide margin agreement in compliance with a bona fide margin
loan. Such a pledge would not be subject to approval or consent of the Company and no legal
opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion shall be required in connection with a subsequent transfer
or foreclosure following default by the Purchaser transferee of the pledge. No notice shall be
required of such pledge but Purchaser’s transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure. Each Purchaser acknowledges that the Company shall not be
responsible for any pledges relating to, or the grant of any security interest in, any of the
Shares or for any agreement, understanding or arrangement between any Purchaser and its pledgee or
secured party. The Company’s indemnification obligations pursuant to this Agreement shall not
extend to any Proceeding or Losses arising out of or related to this Section 4.1(b). At the
appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation
as a pledgee or secured party of Shares may reasonably request in connection with a pledge or
transfer of the Shares including the preparation and filing of any required prospectus supplement
under Rule 423(b)(3) of the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of selling shareholders thereunder. Each Purchaser acknowledges and
agrees that, except as otherwise provided in Section 4.1(c), any Shares subject to a pledge or
security interest as contemplated by this Section 4.1(b) shall continue to bear the legend set
forth in this Section 4.1(b) and be subject to the restrictions on transfer set forth in Section
4.1(a).




          (c) Removal of Legends. The legend set forth in Section 4.1(b) above shall be removed
and the Company shall issue a certificate without such legend to the holder of the Shares upon
which it is stamped or issue to such holder by electronic delivery at the applicable balance
account at the Depository Trust Company (“DTC”), if (i) such Shares are registered for resale
pursuant to an effective registration statement under the Securities Act; (ii) such Shares are sold
or transferred pursuant to Rule 144 (assuming the transferor is not an Affiliate of the Company),
or (iii) such Shares are eligible for sale under Rule 144(k). The Company shall cause its counsel
to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the
Company’s transfer agent on the Effective Date. Any fees (with respect to the Transfer Agent,
counsel to the Company or otherwise) associated with the issuance of such opinion or the removal of
such legend shall be borne by the Company. Following the Effective Date, or at such time as a
legend is no longer required for certain Shares, the Company will no later than three (3) Trading
Days following the delivery by a Purchaser to the Company or the Transfer Agent (with notice to the
Company) of a legended certificate representing such Shares (endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer) and an opinion of counsel to the extent required by Section 4.1(a), deliver or cause to
be delivered to such Purchaser a certificate representing such 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 4.1.




          (d) Acknowledgement. Each Purchaser hereby covenants with the Company not to make any
sale of the Shares under the Registration Statement without complying with the provisions of this
Agreement and without effectively causing the prospectus delivery requirement under the Securities
Act to be satisfied, and such Purchaser acknowledges and agrees that the
Shares are not transferable on the books of the Company in connection with any sale under the
Registration Statement unless the certificate submitted to the transfer agent evidencing the Shares is




20









 




accompanied by a separate Purchaser’s Certificate of Subsequent Sale delivered by the Purchaser:
(i) in the form of Exhibit F hereto, (ii) executed by an officer of, or other authorized
person designated by, the Purchaser, and (iii) to the effect that (A) the Shares have been sold in
accordance with the Registration Statement, the Securities Act and any applicable state securities
or blue sky laws and (B) the requirement of delivering a current prospectus has been satisfied.
The Purchaser will notify the Company promptly after each sale of Shares. The Purchaser
acknowledges that there may occasionally be times when the Company must suspend the use of the
Prospectus forming a part of the Registration Statement (a “Suspension”) until such time as an
amendment to the Registration Statement has been filed by the Company and declared effective by the
Commission, or until such time as the Company has filed an appropriate report with the Commission
pursuant to the Exchange Act. The Purchaser hereby covenants that it will not sell any of the
Shares pursuant to said Prospectus during the period commencing at the time at which the Company
gives the Purchaser written notice of the Suspension of the use of said Prospectus and ending at
the time the Company gives the Purchaser written notice that the Purchaser may thereafter effect
sales pursuant to said Prospectus.




          (e) Irrevocable Transfer Agent Instructions. The Company shall issue irrevocable
instructions to the Transfer Agent, and any subsequent transfer agent, to issue certificates or
credit shares to the applicable balance accounts at DTC, registered in the name of each Purchaser
or its respective nominee(s), for the Shares in such amounts as specified from time to time by each
Purchaser to the Company in the form of Exhibit D attached hereto (the “Irrevocable
Transfer Agent Instructions”). The Company warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 4.1(e) will be given by the Company to its
transfer agent in connection with this Agreement, and that the Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent provided in this
Agreement and the other Transaction Documents. The Company acknowledges that a breach by it of its
obligations under this Section 4.1(e) will cause irreparable harm to a Purchaser. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations under this Section
4.1(e) will be inadequate and agrees, in the event of a breach or threatened breach by the Company
of the provisions of this Section 4.1(e), that a Purchaser shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of showing economic loss and without any
bond or other security being required.




          (f) Buy-In. If the Company shall fail for any reason or for no reason to issue to a
Purchaser unlegended certificates within three (3) Business Days of receipt of documents necessary
for the removal of the legend set forth above (the “Deadline Date”), then, in addition to all other
remedies available to such Purchaser, if on or after the Business Day immediately following such
three (3) Business Day period, such Purchaser or Purchaser’s broker, acting on behalf of such
Purchaser, purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the holder of shares of Common Stock that such Purchaser anticipated
receiving from the Company without any restrictive legend (a “Buy-In”), then the Company shall,
within three (3) Business Days after such Purchaser’s request and in such Purchaser’s sole
discretion, either (i) pay cash to the Purchaser in an amount equal to such Purchaser’s total
purchase price (including brokerage commissions, if any) for the shares of Common Stock so
purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate
(and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation
to deliver to such Purchaser a certificate or certificates representing such shares of Common Stock
and pay cash to the Purchaser in an amount equal to the excess (if any) of the




21









 




Buy-In Price over the product of (a) such number of shares of Common Stock, times (b) the closing
bid price on the Deadline Date.




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



     4.3 Securities Laws Disclosure; Publicity. By 9:00 a.m. New York City time on the
first Business Day after the execution of this Agreement (the “Public Disclosure Date”), the
Company shall issue a press release (the “Press Release”) disclosing the material terms of the
transactions contemplated hereby. In addition, by the close of business on the Public Disclosure
Date, the Company will file a Current Report on Form 8-K with the Commission describing the terms
of the Transaction Documents (and including as exhibits to such Current Report on Form 8-K the
material Transaction Documents (including, without limitation, this Agreement and the Registration
Rights Agreement)). Without any such Purchaser’s prior consent, the Company agrees not to disclose
in the Press Release the names, addresses or any other information about a Purchaser, except as
required by law and to satisfy its obligations under the Registration Rights Agreement.



     4.4 Indemnification. In addition to the indemnity provided in the Registration Rights
Agreement, the Company will indemnify and hold the Purchasers and their directors, officers,
shareholders, partners, members, managers, employees and agents (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 such Purchaser Party
may suffer or incur as a result of or relating to (a) any misrepresentation, breach or inaccuracy
of any representation, warranty, covenant or agreement made by the Company in any Transaction
Document or (b) the failure of the Company to comply with any law, rule or regulation applicable to
the transactions contemplated in the Transaction Documents. In addition to the indemnity contained
herein, the Company will reimburse each Purchaser Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred. If and to the extent that such
indemnification is unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of such losses permissible under applicable law.



          (a) Conduct of Indemnification Proceedings.




               (i) If any Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from
whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall
have the right to assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all reasonable fees and expenses incurred
in connection with defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally determined by a



22









 




court of competent jurisdiction (which determination is not subject to appeal or further review)
that such failure shall have proximately and materially adversely prejudiced the Indemnifying
Party.




               (ii) An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate (but not control) in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties
to any such Proceeding (including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent such Indemnified
Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party), provided, that the
Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of
attorneys at any time for all Indemnified Parties. The Indemnifying Party shall not be liable for
any settlement of any such Proceeding effected without its written consent, which consent shall not
be unreasonably withheld, delayed or conditioned. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending Proceeding in
respect of which any Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the subject matter of such
Proceeding.



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



          (b) Contribution.




               (i) If a claim for indemnification under Section 4.4 is unavailable to an Indemnified Party
(by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as
a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions
that resulted in such Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among
other things, whether any action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken or made by, or
relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include, subject to the limitations set forth in Section 4.4(c), any reasonable
attorneys’ or other reasonable fees or expenses incurred by such party in connection



23









 




with any Proceeding to the extent such party would have been indemnified for such fees or expenses
if the indemnification provided for in this Section was available to such party in accordance with
its terms.




               (ii) The parties hereto agree that it would not be just and equitable if contribution pursuant
to this Section 4.4(b) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 4.4(d), no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by which the net
proceeds actually received by such Holder from the sale of the Registrable Securities subject to
the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.



               (iii) The indemnity and contribution agreements contained in this Section 4.4 are in addition
to any liability that the Indemnifying Parties may have to the Indemnified Parties and are not in
diminution or limitation of the indemnification provisions under the Purchase Agreement.



     4.5 Acknowledgment of Dilution. The Company acknowledges that the issuance of the
Shares may result in dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges that its obligations
under the Transaction Documents, including without limitation its obligation to issue the Shares
pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right
of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any
claim the Company may have against any Purchaser and regardless of the dilutive effect that such
issuance may have on the ownership of the other shareholders of the Company.



     4.6 Reporting Status. During the two year period from and after the Closing, the
Company shall not terminate its status as an issuer required to file reports under the Exchange Act
even if the Exchange Act or the rules and regulations thereunder would otherwise permit such
termination.



     4.7 Form D and Blue Sky. The Company agrees to file a Form D with respect to the
Shares as required under Regulation D and to provide a copy thereof to each Purchaser promptly
after such filing. The Company, on or before the Closing Date, shall take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify
the Shares for sale to the Purchasers at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from
such qualification), and shall provide evidence of any such action so taken to the Purchasers on or
prior to the Closing Date. The Company shall make all filings and reports relating to the offer
and sale of the Shares required under applicable securities or “Blue Sky” laws of the states of the
United States following the Closing Date.



     4.8 No Integration. The Company shall not, and shall use its best efforts to ensure
that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities Act): (i) within 90
days of the



24









 




Closing Date; (ii) that will be integrated with the offer or sale of the Shares in a manner that
would require the registration under the Securities Act of the sale of the Shares to the
Purchasers; or (iii) that will be integrated with the offer or sale of the Shares 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.




     4.9 Subsequent Registrations. Other than pursuant to the Registration Statement,
prior to the 90th day following the Effective Date, the Company shall not file any
registration statement (other than on Form S-8 or, in connection with an acquisition, on Form S-4)
with the Commission with respect to any securities of the Company, provided that this Section shall
not prohibit the Company from filing an amendment to any registration statement filed prior to the
date hereof.



     4.10 Listing of Shares. Promptly following the date hereof, the Company shall take
all necessary action to cause the Shares to be listed upon the Principal Trading Market, if any,
upon which shares of Common Stock are then listed (subject to official notice of issuance) and
shall maintain, so long as any other shares of Common Stock shall be so listed, such listing.
Further, if the Company applies to have its Common Stock or other securities listed on any other
Trading Market it shall include in such application the Shares and will take such other action as
is necessary to cause the Shares to be listed on such other Trading Market as promptly as
practicable.



     4.11 Use of Proceeds. The Company intends to use the net proceeds from the sale of
the Shares hereunder for working capital needs and general corporate purposes.



     4.12 Transactions and Confidentiality After The Date Hereof. Each Purchaser
understands and acknowledges, severally and not jointly with any other Purchaser, that the
Commission currently takes the position that covering a short position established prior to
effectiveness of a resale registration statement with shares included in such registration
statement would be a violation of Section 5 of the Securities Act, as set forth in Item 65, Section
5 under Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company as described in
Section 4.3, such Purchaser will maintain the confidentiality of all disclosures made to it in
connection with this transaction (including the existence and terms of this transaction).



     4.13 Furnishing of Information. As long as any Purchaser owns the Shares, 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. As long as any Purchaser owns Shares if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) such information as is required for the Purchasers to sell the Shares
under Rule 144. The Company further covenants that it will take such further action as any holder
of Shares may reasonably request, all to the extent required from time to time to enable such
Person to sell the Shares without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144.



25









 





ARTICLE V.

CONDITIONS PRECEDENT TO CLOSING




     5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase Shares. The
obligation of the Purchasers to acquire Shares at the Closing is subject to the fulfillment, to
such Purchasers’ satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by a majority of the Purchasers:



          (a) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct in all material respects (except to the extent that any
such representation or warranty is already qualified by materiality, in which case it shall be true
and correct in all respects) as of the date when made and as of the Closing Date, as though made on
and as of such date;




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




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




          (d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate for consummation
of the purchase and sale of the Shares, including, without limitation, the approval of AMEX, all of
which shall be, and remain so long as necessary, in full force and effect;




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




          (f) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock
shall not have been suspended by the Commission or any Trading Market (except for any suspensions
of trading of not more than one Trading Day solely to permit dissemination of material information
regarding the Company) at any time since the date of execution of this Agreement;




          (g) Company Deliverables. The Company shall have delivered the Company Deliverables
in accordance with Section 2.2(a);




          (h) Compliance Certificate. The Company shall have delivered to each Purchaser a
certificate, dated as of the Closing Date and signed by its Chief Executive Officer or its Chief
Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in Sections 5.1(a), (b), (c), (d) and (f); and




          (i) Termination. This Agreement shall not have been terminated as to such Purchaser in
accordance with Section 6.16 herein.




26









 





     5.2 Conditions Precedent to the Obligations of the Company to Sell Shares. The
Company’s obligation to sell and issue the Shares at the Closing is subject to the fulfillment to
the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of
which may be waived by the Company:



          (a) Representations and Warranties. The representations and warranties made by the
Purchasers in Section 3.2 hereof shall be true and correct in all material respects as of
the date when made, and as of the Closing Date as though made on and as of such date;




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




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




          (d) Purchasers Deliverables. Each Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b); and




          (e) Termination. This Agreement shall not have been terminated as to such Purchaser in
accordance with Section 6.16 herein.




ARTICLE VI.

MISCELLANEOUS




     6.1 Fees and Expenses. At Closing, the Company shall reimburse the Placement Agent
for the reasonable fees and expenses in connection with the transactions contemplated by this
Agreement, which the Company agrees shall include the fees and expenses of counsel to the Placement
Agent (which fees shall include, without limitation, the fees and expenses associated with the
negotiation, preparation and execution and delivery of this Agreement and the other Transaction
Documents and any amendments, modifications or waivers thereto), in an amount not to exceed $25,000
(inclusive of any amount advanced to the Placement Agent prior to the date hereof). The Company
and the Purchasers shall each pay the fees and expenses of their respective advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such party in connection
with the negotiation, preparation, execution, delivery and performance of this Agreement. The
Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in
connection with the sale and issuance of the Shares to the Purchasers. Each party acknowledges that
Placement Agent Counsel has rendered legal advice to the Placement Agent and not to such party in
connection with the transactions contemplated hereby, and that such party has relied for such
matters on the advice of its own respective counsel.



     6.2 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, understandings, discussions and representations,
oral or written, with respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules. At or after the Closing, and without further
consideration, the Company and the Purchasers will execute and deliver to the other such further
documents as may be



27









 




reasonably requested in order to give practical effect to the intention of the parties under the
Transaction Documents.




     6.3 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 (provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section prior to 5:00 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in this Section on a day
that is not a Trading Day or later than 5:00 p.m. (New York City time) on any Trading Day, (c) the
Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier
service with next day delivery specified, 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
follows:



	 	 	 	 	 
	 

	 	If to the Company:
	 	Tutogen Medical, Inc.
	 

	 	 	 	13709 Progress Blvd., Box 19
	 

	 	 	 	Alachua, FL 32615
	 

	 	 	 	Telephone No.: (386) 462-0402
	 

	 	 	 	Facsimile No.: (386) 462-7260
	 

	 	 	 	Attention: L. Robert Johnston Jr.
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Williams Schifino Mangione & Steady, P.A.
	 

	 	 	 	One Tampa City Center
	 

	 	 	 	Suite 3200
	 

	 	 	 	201 North Franklin Street
	 

	 	 	 	Tampa, FL 33602
	 

	 	 	 	Telephone No.: (813) 221-2626
	 

	 	 	 	Facsimile No.: (813) 221-7335
	 

	 	 	 	Attention: William J. Schifino Sr.
	 
	 	 	 	 
	 

	 	If to a Purchaser:
	 	To the address set forth under such Purchaser’s name on the signature page
hereof; or such other address as may be designated in writing hereafter, in the same manner, by
such Person.






     6.4 Amendments; Waivers; No Additional Consideration. No provision of this Agreement
may be waived or amended except in a written instrument signed, in the case of an amendment, by the
Company and each of the Purchasers or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement
hereof, nor shall any delay or omission of either party to exercise any right hereunder in any
manner impair the exercise of any such right. No consideration shall be offered or paid to any
Purchaser to amend or consent to a waiver or modification of any provision of any Transaction
Document unless the same consideration is also offered to all Purchasers who then hold Shares.



     6.5 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The



28









 




language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party. This
Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions
of this Agreement or any of the Transaction Documents.




     6.6 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted assigns. This
Agreement, or any rights or obligations hereunder, may not be assigned by the Company without the
prior written consent of the Purchasers. Any Purchaser may assign its rights hereunder in whole or
in part to any Person to whom such Purchaser assigns or transfers any Shares in compliance with
this agreement and applicable law, provided such transferee shall have agreed in writing to be
bound, with respect to the transferred Shares, by the terms and conditions of this Agreement that
apply to the “Purchasers.”



     6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except (i) each Purchaser Party is
an intended third party beneficiary of Section 4.4, and (ii) Placement Agent is an intended third
party beneficiary of Article III hereof, and each Purchaser Party or the Placement Agent, as the
case may be, may enforce the provisions of such Sections directly against the parties with
obligations thereunder.



     6.8 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all 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, employees or agents) shall be
commenced exclusively in the New York Courts. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts 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 Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. If either party shall commence a Proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its reasonable attorney’s fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such Proceeding.



29









 





     6.9 Survival. Subject to applicable statute of limitations, the representations and
warranties, agreements and covenants contained herein shall survive the Closing and the delivery of
the Shares.



     6.10 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 signature page were
an original thereof.



     6.11 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.



     6.12 Replacement of Shares. If any certificate or instrument evidencing any Shares is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company
and the Transfer Agent of such loss, theft or destruction and the execution by the holder thereof
of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and the Transfer Agent for any losses in connection therewith or, if required
by the Transfer Agent, a bond in such form and amount as is reasonably required by the Transfer
Agent. The applicants for a new certificate or instrument under such circumstances shall also pay
any reasonable third-party costs associated with the issuance of such replacement Shares. If a
replacement certificate or instrument evidencing any Shares is requested due to a mutilation
thereof, the Company may require delivery of such mutilated certificate or instrument as a
condition precedent to any issuance of a replacement.



     6.13 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a 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.



     6.14 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or other securities or
rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock), combination or other similar recapitalization or event occurring after the date




30









 




hereof, and before the Closing Date, each reference in any Transaction Document to a
number of shares or a price per share shall be amended to appropriately account for such event.




     6.15 Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser
to purchase Shares pursuant to the Transaction Documents has been made by such Purchaser
independently of any other Purchaser and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or any Subsidiary which
may have been made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser and any of its agents or employees shall have any liability to any
other Purchaser (or any other Person) relating to or arising from any such information, materials,
statement or opinions. Nothing contained herein or in any Transaction Document, and no action
taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by the Transaction Documents. Each Purchaser acknowledges that no
other Purchaser has acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Shares or enforcing its rights under the Transaction Documents.
Each Purchaser shall be entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other Transaction Documents, and
it shall not be necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the Purchasers has been
provided with the same Transaction Documents for the purpose of closing a transaction with multiple
Purchasers and not because it was required or requested to do so by any Purchaser. The Company’s
obligations to each Purchaser under this Agreement are identical to its obligations to each other
Purchaser other than such differences resulting solely from the number of Shares purchased by such
Purchaser, but regardless of whether such obligations are memorialized herein or in another
agreement between the Company and a Purchaser.



     6.16 Termination. This Agreement may be terminated and the sale and purchase of the
Shares abandoned at any time prior to the Closing by either the Company or any Purchaser (with
respect to itself only) upon written notice to the other, if the Closing has not been consummated
on or prior to 5:00 p.m. (New York City time) on the Outside Date; provided, however, that the
right to terminate this Agreement under this Section 6.16 shall not be available to any Person
whose failure to comply with its obligations under this Agreement has been the cause of or resulted
in the failure of the Closing to occur on or before such time. Nothing in this Section 6.16 shall
be deemed to release any party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this Agreement or the
other Transaction Documents. In the event of a termination pursuant to this Section, the Company
shall promptly notify all non-terminating Purchasers. Upon a termination in accordance with this
Section, the Company and the terminating Purchaser(s) shall not have any further obligation or
liability (including arising from such termination) to the other and no Purchaser will have any
liability to any other Purchaser under the Transaction Documents as a result therefrom.



31









 





ARTICLE VII.

ESCROW




     7.1. Escrow Arrangement.



            (a) Simultaneously with the execution and delivery of this Agreement by a Purchaser, such
Purchaser shall promptly cause a wire transfer of immediately available funds (U.S. dollars) in an
amount representing the “Aggregate Purchase Price” on such Purchaser’s signature page affixed
hereto and opposite such Purchaser’s name thereon, to be paid to a non-interest bearing escrow
account of Placement Agent Counsel, set forth on Exhibit E affixed hereto (the aggregate
amounts received being held in escrow by Placement Agent Counsel are referred to herein as the
“Escrow Amount”). Placement Agent Counsel shall hold the Escrow Amount in escrow in accordance
with Section 7.1(b).



            (b) Placement Agent Counsel shall continue to hold the Escrow Amount in escrow in accordance
with and subject to this Agreement, from the date of its receipt of the funds constituting the
Escrow Amount until the soonest of:



                 (i) the Outside Date, in which case, if Placement Agent Counsel then holds any portion of the
Escrow Amount, then: (A) Placement Agent Counsel shall return the portion of the Escrow Amount
received from each Purchaser which it then holds, to each such Purchaser, in accordance with
written wire transfer instructions received from such Purchaser; and (B) if Placement Agent Counsel
has not received written wire transfer instructions from any Purchaser before the Outside Date,
then Placement Agent Counsel may, in its sole and absolute discretion, either (x) deposit that
portion of the Escrow Amount to be returned to such Purchaser in a court of competent jurisdiction
on written notice to such Purchaser, and Placement Agent Counsel shall thereafter have no further
liability with respect to such deposited funds, or (y) continue to hold such portion of the Escrow
Amount pending receipt of written wire transfer instructions from such Purchaser or an order from a
court of competent jurisdiction; OR



                 (ii) in the case of the Closing, receipt of written instructions from both the Company and the
Placement Agent that the Closing, pursuant to Section 2.1 herein, shall have been consummated, in
which case, Placement Agent Counsel shall release the Escrow Amount as per the joint instructions
received from the Company and Placement Agent.



     7.2. Duties; Responsibilities. The Company and the Purchasers acknowledge and agree
for the benefit of Placement Agent Counsel (which shall be deemed to be a third party beneficiary
of this Section 7) as follows:



            (a) Placement Agent Counsel: (i) is not responsible for the performance by the Company, the
Purchasers or Placement Agent of this Agreement or any of the Transaction Documents or for
determining or compelling compliance therewith; (ii) is only responsible for (A) holding the Escrow
Amount in escrow pending receipt of written instructions from the Company and the Placement Agent
directing the release of the Escrow Amount, and (B) disbursing the Escrow Amount in accordance with
the written instructions from the Company and the Placement Agent, each of the responsibilities of
Placement Agent Counsel in clause (A) and (B) is ministerial in nature, and no implied duties or
obligations of any kind shall be read into this Agreement against or on the part of Placement Agent
Counsel (collectively, the “Placement Agent Counsel Duties”); (iii) shall not be obligated to take
any legal or other action hereunder which might in its judgment



32









 




involve or cause it to incur any expense or liability unless it shall have been furnished with
indemnification acceptable to it, in its sole discretion; (iv) may rely on and shall be protected
in acting or refraining from acting upon any written notice, instruction (including, without
limitation, wire transfer instructions, whether incorporated herein or provided in a separate
written instruction), instrument, statement, certificate, request or other document furnished to it
hereunder and believed by it to be genuine and to have been signed or presented by the proper
Person, and shall have no responsibility for making inquiry as to, or for determining, the
genuineness, accuracy or validity thereof, or of the authority of the Person signing or presenting
the same; and (v) may consult counsel satisfactory to it, and the opinion or advice of such counsel
in any instance shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in accordance with the opinion or
advice of such counsel. Documents and written materials referred to in this Section 7.2(a)
include, without limitation, e-mail and other electronic transmissions capable of being printed,
whether or not they are in fact printed; and any such e-mail or other electronic transmission may
be deemed and treated by Placement Agent Counsel as having been signed or presented by a Person if
it bears, as sender, the Person’s e-mail address.




            (b) Placement Agent Counsel shall not be liable to anyone for any action taken or omitted to
be taken by it hereunder, except in the case of Placement Agent Counsel’s gross negligence or
willful misconduct in breach of the Placement Agent Counsel Duties. IN NO EVENT SHALL PLACEMENT
AGENT COUNSEL BE LIABLE FOR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGE OR LOSS (INCLUDING
BUT NOT LIMITED TO LOST PROFITS) WHATSOEVER, EVEN IF PLACEMENT AGENT COUNSEL HAS BEEN INFORMED OF
THE LIKELIHOOD OF SUCH LOSS OR DAMAGE AND REGARDLESS OF THE FORM OF ACTION.



            (c) The Company and the Purchasers hereby indemnify and hold harmless Placement Agent Counsel
from and against any and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees and expenses, which Placement Agent Counsel may suffer or incur
by reason of any action, claim or proceeding brought against Placement Agent Counsel arising out of
or relating to the performance of the Placement Agent Counsel Duties, unless such action, claim or
proceeding is exclusively the result of the willful misconduct, bad faith or gross negligence of
Placement Agent Counsel.



            (d) Placement Agent Counsel shall have the right at any time to resign for any reason and be
discharged of its duties as escrow agent hereunder (including without limitation the Placement
Agent Counsel Duties) by giving written notice of its resignation to the Company and the Placement
Agent at least ten (10) calendar days prior to the specified effective date of such resignation.
All obligations of the Placement Agent Counsel hereunder shall cease and terminate on the effective
date of its resignation and its sole responsibility thereafter shall be to hold the Escrow Amount,
for a period of ten (10) calendar days following the effective date of resignation, at which time,




      (i) if a successor escrow agent shall have been appointed and have accepted such
appointment in a writing to both the Company and the Placement Agent, then upon
written notice thereof given to each of the Purchasers, the Placement Agent Counsel
shall deliver the Escrow Amount to the successor escrow agent, and upon such
delivery, Placement Agent Counsel shall have no further liability or obligation; or



33









 






      (ii) if a successor escrow agent shall not have been appointed, for any reason
whatsoever, Placement Agent Counsel shall at its option in its sole discretion,
either (A) deliver the Escrow Amount to a court of competent jurisdiction selected by
Placement Agent Counsel and give written notice thereof to the Company and the
Purchasers, or (B) continue to hold Escrow Amount in escrow pending written direction
from the Company and the Placement Agent in form and formality satisfactory to
Placement Agent Counsel.



            (e) In the event that the Placement Agent Counsel shall be uncertain as to its duties or
rights hereunder or shall receive instructions with respect to the Escrow Amount or any portion
thereunder which, in its sole discretion, are in conflict either with other instructions received
by it or with any provision of this Agreement, Placement Agent Counsel shall have the absolute
right to suspend all further performance under this Agreement (except for the safekeeping of such
Escrow Amount) until such uncertainty or conflicting instructions have been resolved to the
Placement Agent Counsel’s sole satisfaction by final judgment of a court of competent jurisdiction,
joint written instructions from the Company and all of the Purchasers, or otherwise. In the event
that any controversy arises between the Company and one or more of the Purchasers or any other
party with respect to this Agreement or the Escrow Amount, the Placement Agent Counsel shall not be
required to determine the proper resolution of such controversy or the proper disposition of the
Escrow Amount, and shall have the absolute right, in its sole discretion, to deposit the Escrow
Amount with the clerk of a court selected by the Placement Agent Counsel and file a suit in
interpleader in that court and obtain an order from that court requiring all parties involved to
litigate in that court their respective claims arising out of or in connection with the Escrow
Amount. Upon the deposit by the Placement Agent Counsel of the Escrow Amount with the clerk of
such court in accordance with this provision, the Placement Agent Counsel shall thereupon be
relieved of all further obligations and released from all liability hereunder.



            (f) The provisions of this Section 7 shall survive any termination of this Agreement.



34









 





     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.



	 	 	 	 	 
	 	TUTOGEN MEDICAL, INC.

 	 
	 	By:  	



/s/  Guy L. Mayer
 	 
	 	 	Name:  	Guy L. Mayer 	 
	 	 	Title:  	Chief Executive Officer 	 
	 



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]





35









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	NAME OF PURCHASER:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Visium Long Bias Offshore Fund, Ltd.
Visium Long Bias Fund, LP
Visium Balanced Offshore Fund, Ltd.
Visium Balanced Fund, LP
Atlas Master Fund, Ltd.*
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ Mark Gottlieb
	 

	 	 	 	 	 	 
	 	 	 	 	Name: Mark Gottlieb
Title: Chief Compliance Officer
	 
	 	 	 	 	 	 	 	 
	 

	 	 	*	By:
	 	/s/ Scott Schroeder
	 

	 	 	 	 	 	 
	 	 	 	 	Name: Scott Schroeder
Title: Authorized Signatory
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Purchase Price Per Share: $7.38
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Aggregate Purchase Price (Subscription Amount): $4,999,994
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Number of Shares to be acquired: 677,506
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Tax ID No.:	____________________
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Address for Notice:
	 	 	 	 	___________________________________
	 	 	 	 	___________________________________
	 	 	 	 	___________________________________
	 	 	 	 	Telephone No.:	 	_______________________
	 	 	 	 	Facsimile No.:	 	________________________
	 	 	 	 	Attention:	 	_______________________












Delivery Instructions:

(if different than above)




	 	 	 	 	 
	c/o
	 	 	 	 
	 

	 	 

	 	 






	 	 	 	 	 
	Street:
	 	 	 	 
	 

	 	 

	 	 






	 	 	 	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 

	 	 






	 	 	 	 	 
	Attention:
	 	 	 	 
	 

	 	 

	 	 






	 	 	 	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 

	 	 






36









 







	 	 	 	 	 	 	 	 	 
	 	 	 	 	NAME OF PURCHASER:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Deerfield Special Situations Fund International, Ltd.
Deerfield Special Situation Fund, LP
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ James E. Flynn
	 

	 	 	 	 	 	 
	 	 	 	 	Name: James E. Flynn
Title: President
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Purchase Price Per Share: $7.38
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Aggregate Purchase Price (Subscription Amount): $1,999,980
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Number of Shares to be acquired: 271,000
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Tax ID No.:	____________________
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Address for Notice:
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	___________________________________
	 	 	 	 	___________________________________
	 	 	 	 	___________________________________
	 	 	 	 	Telephone No.:	 	_______________________
	 	 	 	 	Facsimile No.:	 	________________________
	 	 	 	 	Attention:	 	_______________________





Delivery Instructions:

(if different than above)




c/o _____________________




Street: ____________________________




City/State/Zip: ______________________




Attention: __________________________



Telephone No.: __________________________




36-A









 





	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER:
	 
	 	 	 	 	 	 
	 	 	HealthCor, L.P.
HealthCor Offshore, Ltd.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven J. Musumeci
	 

	 	 	 	 
	 	 	Name: Steven J. Musumeci
Title: Chief Operating Officer
	 
	 	 	 	 	 	 
	 	 	Purchase Price Per Share: $7.38
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $4,999,994
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be acquired: 677,506
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:	____________________
	 
	 	 	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	 	 	________________________
	 	 	________________________
	 	 	________________________
	 	 	Telephone No.:	 	_______________________
	 	 	Facsimile No.:	 	________________________
	 	 	Attention:	 	_______________________





Delivery Instructions:

(if different than above)




c/o _____________________




Street: ____________________________




City/State/Zip: ______________________




Attention: __________________________




Telephone No.: ____________________________





36-B










 






	 	 	 
	EXHIBITS:	 	 
	 
	 	 
	A:

	 	Form of Registration Rights Agreement
	 
	 	 
	B-1:

	 	Accredited Investor Questionnaire
	 
	 	 
	B-2:

	 	Stock Certificate Questionnaire
	 
	 	 
	C:

	 	Form of Opinion of Company Counsel
	 
	 	 
	D:

	 	Irrevocable Transfer Agent Instructions
	 
	 	 
	E.

	 	Wire Instructions
	 
	 	 
	F:

	 	Certificate of Subsequent Sale






SCHEDULES:




3.1(a) Subsidiaries




3.1(c) Authorization; Enforcement; Validity




3.1(g) Capitalization




3.1(k) Material Changes




3.1(m) Litigation




3.1(o) Compliance




3.1(q) Title to Assets




3.1(x) Private Placement




3.1(dd) Application of Takeover Protections




37









 





EXHIBIT A




Form of Registration Rights Agreement




38









 





Instruction Sheet for Exhibits B and E




(to be
read in conjunction with the entire Securities Purchase Agreement and Registration Rights Agreement)



A. Complete the following items in the Securities Purchase Agreement and/or Registration Rights
Agreement:





	 	1.	 	Provide the information regarding the Purchaser requested on the signature
page. The Securities Purchase Agreement must be executed by an individual authorized to
bind the Purchaser.
	 
	 	2.	 	Exhibit B-1 – Accredited Investor Questionnaire:
	 
	 	 	 	Provide the information requested by Exhibit B-1-1 (the Certificate for
Corporations, Partnerships, Trusts, Foundations, Joint Purchasers (other than married
couples) and Other Entities) or Exhibit B-1-2 (the Certificate for
Individuals (including married couples)), as applicable.
	 
	 	3.	 	Exhibit B-2 – Stock Certificate Questionnaire:
	 
	 	 	 	Provide the information requested by the Stock Certificate Questionnaire.
	 
	 	4.	 	Annex B to the Registration Rights Agreement-Selling Securityholder Notice and
Questionnaire
	 
	 	 	 	Provide the information requested by the Selling Securityholder Notice and
Questionnaire
	 
	 	5.	 	Return the signed Securities Purchase Agreement and Registration Rights
Agreement to:




Russ Nudelman

Roth Capital Partners LLC

11100 Santa Monica Blvd

Ste. 550

Los Angeles, CA 90025

Tel: (310) 445-5872

Fax: (310) 445-5864

Email: rnudelman@rothcp.com





	B.	 	Instructions regarding the transfer of funds for the purchase of Shares is set forth on
Exhibit E to the Securities Purchase Agreement.




39









 











EXHIBIT B-1




Accredited Investor Questionnaire




Note to Purchasers:



For Corporations, Partnerships, Trusts, Foundations, Joint Purchasers (other than married couples)
and Other Entities, please provide the information requested by Exhibit B-1-1.



For Individuals (including married couples), please provide the information requested by
Exhibit B-1-2.




40









 





EXHIBIT B-1-1




Accredited Investor Questionnaire




Corporations, Partnerships, Trusts, Foundations,

Joint Purchasers (other than married couples) and Other Entities



If the Purchaser is a corporation, partnership, trust, pension plan, foundation, joint purchaser
(other than a married couple) or other entity, an authorized officer, partner, or trustee must
complete, date and sign this Certificate.




CERTIFICATE



The undersigned certifies that the representations and responses below are true and accurate:



(a) The Purchaser has been duly formed and is validly existing and has full power and authority to
invest in the Company. The person signing on behalf of the undersigned has the authority to execute
and deliver the Securities Purchase Agreement on behalf of the Purchaser and to take other actions
with respect thereto.



(b) Indicate the form of entity of the undersigned:




	 	 	 
	 

	 	___ Limited Partnership
	 

	 	___ General Partnership
	 

	 	___ Corporation
	 

	 	___ Revocable Trust (identify each grantor and indicate under what
circumstances the trust is revocable by the grantor:
	 
	 	 
	 

	 	(Continue on a separate piece of paper, if necessary.)
	 
	 	 
	 

	 	___ Other Type of Trust (indicate type of trust and, for trusts other
than pension trusts, name the grantors and beneficiaries:
	 
	 	 
	 

	 	(Continue on a separate piece of paper, if necessary.)
	 
	 	 
	 

	 	___Other form of organization (indicate form of organization (                      )).





(c) Indicate the approximate date the undersigned entity was formed:



(d) In order for the Company to offer and sell the Shares in conformance with state and federal
securities laws, the following information must be obtained regarding your investor status. Please
initial each category applicable to you as a Purchaser of Shares of the Company.




	 	 	 
	 

	 	___ (1) A bank as defined in Section 3(a)(2) of the Securities Act,
or any savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity;
	 
	 	 
	 

	 	___ (2) A broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934;






41









 






	 	 	 
	 

	 	___ (3) An insurance company as defined in Section 2(13) of the
Securities Act;
	 
	 	 
	 

	 	___ (4) An investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that Act;
	 
	 	 
	 

	 	___ (5) A Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;
	 
	 	 
	 

	 	___ (6) A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets in
excess of $5,000,000;
	 
	 	 
	 

	 	___ (7) An employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of such act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;
	 
	 	 
	 

	 	___ (8) A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
	 
	 	 
	 

	 	___ (9) An organization described in Section 501(c)(3) of the
Internal Revenue Code, a corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Shares,
with total assets in excess of $5,000,000;
	 
	 	 
	 

	 	___ (10) A trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Shares, whose purchase is
directed by a sophisticated person who has such knowledge and experience in
financial and business matters that such person is capable of evaluating the
merits and risks of investing in the Company;
	 
	 	 
	 

	 	___ (11) An entity in which all of the equity owners qualify under
any of the above subparagraphs. If the undersigned belongs to this investor
category only, list the equity owners of the undersigned, and the investor
category which each such equity owner satisfies:






Dated:                     , 2007




	 	 	 
	 

Name of Purchaser

	 	  
	 
	 	 
	 

Signature and title of authorized officer, partner or trustee

	 	 






42









 





EXHIBIT B-1-2




Individuals (including married couples)



If the Purchaser is an Individual (or married couple) the Purchaser must complete, date and sign
this Certificate.




CERTIFICATE



I certify that the representations and responses below are true and accurate:



(a) In order for the Company to offer and sell the Shares in conformance with state and federal
securities laws, the following information must be obtained regarding your investor status. Please
initial each category applicable to you as a Purchaser of Shares of the Company.




	 	 	 
	 

	 	___ (1) A natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of his purchase exceeds $1,000,000;
	 
	 	 
	 

	 	___ (2) A natural person who had an individual income in excess of $200,000 in each of the two
most recent years, or joint income with that person’s spouse in excess of $300,000, in each of
those years, and has a reasonable expectation of reaching the same income level in the current
year;
	 
	 	 
	 

	 	___ (3) An executive officer or director of the Company.






	 	 	 
	(b) Set forth in the space provided below the state(s), if any, in the U.S. in which you maintained
your residence during the past two years and the dates during which
you resided in each state: 
 




	
	 	 
	 
	 
	 	 
	 
	 	.





Dated:                       , 2007




	 	 	 	 	 	 	 
	Name(s) of Purchaser	 	 	 	 	 	 
	 	 	   
	 
	 	 	 	 	 	 
	Signature
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	Signature
	 	 	 	 	 	 
	 	 	 





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EXHIBIT B-2




Stock Certificate Questionnaire




Pursuant to Section 2.2(b) of the Agreement, please provide us with the following information:




	 	 	 	 	 
	1.	 	The exact name that the Shares are to be registered in (this is the
name that will appear on the stock certificate(s)).
 You may use a
nominee name if appropriate:  
	 

	 	 	 	 
	 
	 	 	 	 
	2.	 	The relationship between the Purchaser of the Shares and the
Registered Holder listed in response to Item 1 above:  
	 

	 	 	 	 
	 
	 	 	 	 
	3.	 	The mailing address, telephone and telecopy number of the Registered
Holder listed in response to Item 1 above:  
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	4.	 	The Tax Identification Number of the Registered Holder listed in
response to Item 1 above:  
	 

	 	 	 	 





44









 






EXHIBIT C




Form of Opinion of Company Counsel





	1.	 	The Company is a corporation validly existing under, and by virtue of, the laws of the State
of Florida and is in good standing under such laws. The Company has requisite corporate power
to own and operate its properties and assets, and to carry on its business as presently
conducted. The Company is qualified to do business as a foreign corporation in the states of
                    ,                      and                     .
	 
	2.	 	The Company has all requisite legal and corporate power to execute and deliver the Agreement,
to sell and issue the Shares under the Agreement, and to carry out and perform its obligations
under the terms of the Agreement.
	 
	3.	 	The Shares have been duly authorized and when issued, delivered and paid for in accordance
with the terms of the Agreement, will be validly issued, fully paid and nonassessable.
	 
	4.	 	All corporate action on the part of the Company necessary for the authorization, execution
and delivery of the Agreement and the Registration Rights Agreement by the Company, the
authorization, sale, issuance and delivery of the Shares and the performance by the Company of
its obligations under such agreements has been taken. Such agreements have been duly and
validly executed and delivered by the Company and each of them constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with their respective
terms.
	 
	5.	 	The execution and delivery by the Company of the Agreement and the Registration Rights
Agreement, the performance by the Company of its obligations under the Agreement and the
Registration Rights Agreement, and the issuance of the Shares does not violate any provision
of the Certificate of Incorporation or Bylaws, or any provision of any applicable federal or
state law, rule or regulation known to us to be customarily applicable to transactions of this
nature. The execution and delivery by the Company of such agreements, the performance by the
Company of its obligations under such agreements, and the issuance of the Shares does not
materially violate, or constitute a material default under, any contract or agreement to which
the Company is a party or by which the Company is bound that is filed as an exhibit to the
Company’s Form 8-K filed with the Securities and Exchange Act or any filing thereafter with
the Securities and Exchange Commission pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.
	 
	6.	 	No consent, approval or authorization of or designation, declaration or filing with any
federal governmental authority on the part of the Company is required in connection with the
valid execution and delivery of the Agreement and the Registration Rights Agreement, the
offer, sale or issuance of the Shares or the consummation by the Company of any other
transaction contemplated by the Agreement except the filing of a Form D pursuant to Regulation
D under the Securities Act of 1933, as amended.
	 
	7.	 	Subject to and assuming the accuracy of the Company’s and the Purchasers’ representations in
Sections 3.1 and 3.2 of the Agreement, the offer, sale and issuance of the Shares in
conformity with the terms of the Agreement constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended.




45









 






	8.	 	The Common Stock has been registered under Section 12 of the Exchange Act and the rules and
regulations thereunder.




46









 











EXHIBIT D




Form of Irrevocable Transfer Agent Instructions




As of
                    ,                     




Computershare Investor Services




                                        




                                        




Attn:                                         




Ladies and Gentlemen:




     Reference is made to that certain Securities Purchase Agreement, dated as of April 10, 2007
(the “Agreement”), by and among Tutogen Medical, Inc., a Florida corporation (the “Company”), and
the purchasers named on the signature pages thereto (collectively, the “Holders”), pursuant to
which the Company is issuing to the Holders shares (the “Shares”) of Common Stock of the Company,
par value $0.01 per share (the “Common Stock”).



     This letter shall serve as our irrevocable authorization and direction to you (provided that
you are the transfer agent of the Company at such time and the conditions set forth in this letter
are satisfied) to issue shares of Common Stock upon transfer or resale of the Shares.



     You acknowledge and agree that so long as you have previously received (a) written
confirmation from the Company’s legal counsel that either (1) a registration statement covering
resales of the Shares has been declared effective by the Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “Securities Act”), or (2) the
Shares are eligible for sale in conformity with Rule 144 under the Securities Act (“Rule 144”) and
(b) if applicable, a copy of such registration statement, then, unless otherwise required by law,
within three (3) business days of your receipt of Shares, you shall issue the certificates
representing the Shares so sold to the Holders or their transferees, as the case may be, registered
in the names of such Holders or transferees, as the case may be, and such certificates shall not
bear any legend restricting transfer of the Shares thereby and should not be subject to any
stop-transfer restriction; provided, however, that if such Shares are not
registered for resale under the Securities Act or able to be sold under Rule 144, then the
certificates for such Shares shall bear the following legend:




THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) 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 OR BLUE SKY
LAWS AS



47









 







EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.



     A form of written confirmation (to be used in connection with any sale) from the Company’s
outside legal counsel that a registration statement covering resales of the Shares has been
declared effective by the Commission under the Securities Act is attached hereto as Annex
I.



     Please be advised that the Holders are relying upon this letter as an inducement to enter into
the Agreement and, accordingly, each Holder is a third party beneficiary to these instructions.



     Please execute this letter in the space indicated to acknowledge your agreement to act in
accordance with these instructions.



	 	 	 	 	 	 	 
	 	 	Very truly yours,  
	 
	 	 	 	 	 	 
	 	 	TUTOGEN MEDICAL, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 
	Acknowledged and Agreed:	 	 
	 
	 	 	 	 
	COMPUTERSHARE INVESTOR SERVICES	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 





Date: _________________, 2007





48









 








Annex I




Form of Notice of Effectiveness of Registration Statement




Computershare Investor Services




                                        




                                        

Attn:                                         




       Re: Tutogen Medical, Inc.




Ladies and Gentlemen:




     We are counsel to Tutogen Medical, Inc., a Florida corporation (the “Company”), and have
represented the Company in connection with that certain Securities Purchase Agreement, dated as of
April 10, 2007, entered into by and among the Company and the buyers named therein (collectively,
the “Purchasers”) pursuant to which the Company issued to the Purchasers shares (the “Shares”) of
the Company’s common stock, $0.01 par value per share (the “Common Stock”). Pursuant to that
certain Registration Rights Agreement of even date, the Company agreed to register the resale of
the Common Stock (the “Registrable Securities”) under the Securities Act of 1933, as amended (the
“Securities Act”). In connection with the Company’s obligations under the Registration Rights
Agreement, on                      , 2007, the Company filed a Registration Statement on
Form [S-3] (File No. 333-                    ) (the “Registration Statement”) with the
Securities and Exchange Commission (the “Commission”) relating to the Registrable Securities which
names each of the Purchasers as a selling shareholder thereunder.



     In connection with the foregoing, we advise you that a member of the Commission’s staff has
advised us by telephone that the Commission has entered an order declaring the Registration
Statement effective under the Securities Act at       [a.m.][p.m.] on                     , 2007, and we have
no knowledge, after telephonic inquiry of a member of the staff, that any stop order suspending its
effectiveness has been issued or that any proceedings for that purpose are pending before, or
threatened by, the Commission and the Registrable Securities are available for resale under the
Securities Act pursuant to the Registration Statement.



     This letter shall serve as our standing notice to you that the Common Stock may be freely
transferred by the Purchasers pursuant to the Registration Statement so long as the Holders certify
they will comply with the plan of distribution description in connection with sales or transfers of
the Common Stock set forth in the Registration Statement and with the prospectus delivery
requirements of the Securities Act, to the extent such delivery requirement are applicable. This
letter shall serve as our standing instructions with regard to this matter.



     We call your attention to the fact that we have the right to suspend your ability to use the
Registration Statement under the terms of the Registration Rights Agreement. We further call
your attention to the fact that other factors, both within and without our control, can impact



49









 




your ability to use the Registration Statement, and this letter is not a guaranty of continued
effectiveness of the Registration Statement. Please refer to the Registration Rights Agreement.




	 	 	 	 	 	 	 
	 	 	Very truly yours,  
	 
	 	 	 	 	 	 
	 	 	[NAME OF COMPANY COUNSEL]
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 





	 	 	 
	CC:

	 	Purchasers
	 

	 	Roth Capital Partners LLC






50









 





EXHIBIT E




Wire Instructions




PNC Bank New Jersey

Caldwell, NJ

ABA # 031207607

For credit to: Lowenstein Sandler PC Special Trust Account II

Account # 8025720166




51








 








EXHIBIT F




Certificate of Subsequent Sale




Computershare Investor Services




 






Attention:




PURCHASER’S CERTIFICATE OF SUBSEQUENT SALE





	 	 	 	 
	The undersigned, [an officer of, or other person duly authorized by]	 

	 	hereby certifies
	 	 

[fill in official name of individual or institution]

	 	 





that
he/she [said institution] is the Purchaser of the shares
evidenced by the attached certificate, and as such, sold such shares
on             




[date]





	 	 	 	 	 
	in accordance with the terms of the  Purchase
Agreement and in accordance with Registration Statement number

	 	 	 	
	 

	 	 	 	 
	[fill in the number of or otherwise identify Registration Statement]

	or otherwise in
accordance with the Securities Act of 1933, as amended, and, in the case of a transfer pursuant to the Registration
Statement, the requirement of delivering a current prospectus by the Company has been
complied with in connection with such sale.






Print or Type:




	 	 	 	 	 
	Name of Purchaser
	 	 	 	 
	(Individual or Institution):
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Name of Individual
	 	 	 	 
	representing
	 	 	 	 
	Purchaser (if an Institution)
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title of Individual
	 	 	 	 
	representing
	 	 	 	 
	Purchaser (if an Institution):
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Signature by:
	 	 	 	 
	Individual Purchaser or Individual
	 	 	 	 
	representing Purchaser:
	 	 	 	 
	 

	 	 	 	 






52