Document:

Exhibit 4.1

 

Common Stock Purchase Warrant

 

BIOSANTE PHARMACEUTICALS, INC.

 

	
  Warrant
  Shares:

  	
  Initial
  Exercise Date: June       , 2010

  

 

THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received,
                          
or its assigns (the “Holder”) is entitled, upon the terms and subject to
the limitations on exercise and the conditions hereinafter set forth, at any
time on or after the date hereof (the “Initial Exercise Date”) and on or
prior to the close of business on the five year anniversary of the Initial
Exercise Date (the “Termination Date”) but not thereafter, to subscribe
for and purchase from BioSante Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), up to
             shares
(the “Warrant Shares”) of Common Stock.

 

Section 1.                                            Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth
in that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated June 20, 2010, among
the Company and the purchasers signatory thereto.

 

Section 2.                                            Exercise.

 

a)                                      Exercise of Warrant.  Exercise of the purchase rights represented
by this Warrant may be made, in whole or in part, at any time or times on or
after the Initial Exercise Date and on or before the Termination Date by
delivery to the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the address of
the Holder appearing on the books of the Company) of a duly executed facsimile
copy of the Notice of Exercise Form annexed hereto. Within three (3) Trading
Days following the date of exercise as aforesaid, the Holder shall deliver the
aggregate Exercise Price for the shares specified in the applicable Notice of
Exercise by wire transfer or cashier’s check drawn on a United States bank
unless the cashless exercise procedure specified in Section 2(c) below
is specified in the applicable Notice of Exercise. Notwithstanding anything
herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full,
in which case, the Holder shall surrender this Warrant to the Company for
cancellation within three (3) Trading Days of the date the final Notice of
Exercise is delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased.  The
Holder and the Company shall maintain records showing the number of Warrant Shares
purchased and the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise within 1 Business Day of receipt of such
notice.  The 

 

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Holder and any assignee, by acceptance of this Warrant, acknowledge and
agree that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the
amount stated on the face hereof.

 

b)                                     Exercise
Price.  The exercise price per share
of the Common Stock under this Warrant shall be $2.45, subject to adjustment
hereunder (the “Exercise Price”).

 

c)                                      Cashless Exercise.  If at the time of exercise hereof there is no
effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder
(it being understood that the Company is under no obligation to file, have
declared effective or maintain the effectiveness of such a registration
statement or current prospectus and shall have no liability to the Holder in
the event that there is no effective registration statement or current
prospectus) and all of the Warrant Shares are not then registered for resale by
Holder into the market at market prices from time to time on an effective
registration statement for use on a continuous basis (or the prospectus
contained therein is not available for use), then this Warrant may also be
exercised, in whole or in part, at such time by means of a “cashless exercise”
in which the Holder shall be entitled to receive a certificate for the number
of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where::

 

(A) = the VWAP on the Trading Day immediately
preceding the date on which Holder elects to exercise this Warrant by means of
a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B) = the Exercise Price of this Warrant, as
adjusted hereunder; and

 

(X) = the number of Warrant Shares that would
be issuable upon exercise of this Warrant in accordance with the terms of this
Warrant if such exercise were by means of a cash exercise rather than a
cashless exercise.

 

“VWAP” means, for any date, the price
determined by the first of the following clauses that applies: (a) if the
Common Stock is then listed or quoted on a Trading Market, the daily volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time), (b)  if the
Common Stock is not then listed or quoted for trading on a Trading Market and
if prices for the Common Stock are then reported in the “Pink Sheets” published
by Pink OTC Markets, Inc. (or a similar organization or agency succeeding
to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported, or (c) in all other cases, the fair market
value of a share of Common Stock as determined by an independent appraiser
selected in good faith by the Company and reasonably acceptable to the Holders
of a majority in interest of the Securities then outstanding, the fees and expenses
of which shall be paid by the Company.

 

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d)                                     Mechanics of Exercise.

 

i.                  Delivery of Certificates
Upon Exercise. 
Certificates for shares purchased hereunder shall be transmitted by the
Transfer Agent to the Holder by crediting the account of the Holder’s prime
broker with The Depository Trust Company through its Deposit or Withdrawal at
Custodian system (“DWAC”) if the Company is then a participant in such
system and either (A) there is an effective registration statement
permitting the issuance of the Warrant Shares to or resale of the Warrant
Shares by Holder or (B) this Warrant is being exercised via cashless
exercise, and otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise by the date that is three (3) Trading
Days after the latest of (A) the delivery to the Company of the Notice of
Exercise, (B) surrender of this Warrant (if required) and (C) payment
of the aggregate Exercise Price as set forth above (including by cashless
exercise, if permitted) (such date, the “Warrant Share Delivery Date”).   This Warrant shall be deemed to have been
exercised on the first date on which all of the foregoing have been delivered
to the Company.  The Warrant Shares shall
be deemed to have been issued, and Holder or any other person so designated to
be named therein shall be deemed to have become a holder of record of such
shares for all purposes, as of the date the Warrant has been exercised, with
payment to the Company of the Exercise Price (or by cashless exercise, if
permitted) and all taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vi) prior to the issuance of such shares, having been
paid.

 

ii.               Delivery of New Warrants
Upon Exercise.  If this Warrant
shall have been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time of delivery
of the certificate or certificates representing Warrant Shares, deliver to
Holder a new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.

 

iii.            Rescission Rights.  If the Company fails to cause the Transfer
Agent to transmit to the Holder a certificate or the certificates representing
the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.           Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to
the Holder, if the Company fails to cause the Transfer Agent to transmit to the
Holder a certificate or the certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) or the Holder’s brokerage firm 

 

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otherwise purchases, shares of Common Stock to deliver in satisfaction
of a sale by the Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay
in cash to the Holder the amount, if any, by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the
number of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (2) the price at which the
sell order giving rise to such purchase obligation was executed, and (B) at
the option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored (in
which case such exercise shall be deemed rescinded) or deliver to the Holder
the number of shares of Common Stock that would have been issued had the
Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder
purchases Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000, under
clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant
as required pursuant to the terms hereof.

 

v.              No Fractional Shares or
Scrip.  No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.  As to any fraction of a share
which the Holder would otherwise be entitled to purchase upon such exercise,
the Company shall, at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round up to the next whole share.

 

vi.           Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event
certificates for Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be accompanied
by the Assignment Form 

 

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attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse
it for any transfer tax incidental thereto.

 

vii.                                Closing of
Books.  The Company will not close its
stockholder books or records in any manner which prevents the timely exercise
of this Warrant, pursuant to the terms hereof.

 

e)                                      Holder’s Exercise
Limitations.  The Company
shall not effect any exercise of this Warrant, and a Holder shall not have the
right to exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons acting as a group
together with the Holder or any of the Holder’s Affiliates), would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). 
For purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (i) exercise of the
remaining, nonexercised portion of this Warrant beneficially owned by the
Holder or any of its Affiliates and (ii) exercise or conversion of the
unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other 
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially owned by the
Holder or any of its Affiliates.  Except as set forth in the preceding
sentence, for purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being acknowledged by
the Holder that the Company is not representing to the Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act
and the Holder is solely responsible for any schedules required to be filed in
accordance therewith.   To the extent
that the limitation contained in this Section 2(e) applies, the determination
of whether this Warrant is exercisable (in relation to other securities owned
by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the Holder, and the
submission of a Notice of Exercise shall be deemed to be the Holder’s
determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial
Ownership Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination and shall have no liability for
exercises of the Warrant that are in noncompliance with the Beneficial
Ownership Limitation.   In addition, a
determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder.  For
purposes of this Section 2(e), in determining the number of outstanding
shares of Common Stock, a Holder may rely on the number of outstanding shares
of Common Stock as reflected in (A) the Company’s most recent periodic or
annual report filed with the Commission, as the case may be, (B) a more
recent public announcement by the Company or (C) a more recent written
notice by the Company or 

 

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the Transfer Agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of a Holder, the Company
shall within two Trading Days confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder or its Affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation”
shall be 4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock
issuable upon exercise of this Warrant. 
The Holder, upon not less than 61 days’ prior notice to the Company, may
increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e),
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of this Warrant
held by the Holder and the provisions of this Section 2(e) shall
continue to apply.  Any such increase or
decrease will not be effective until the 61st day after such notice is delivered to the
Company.  The provisions of this
paragraph shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(e) to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with
the intended Beneficial Ownership Limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.

 

Section 3.                                            Certain Adjustments.

 

a)                                      Stock Dividends and Splits. If the
Company, at any time while this Warrant is outstanding: (i) pays a stock
dividend or otherwise makes a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii) combines
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then in
each case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise
of this Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 3(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision,
combination or re-classification.

 

b)                                     [RESERVED]

 

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c)                                      Subsequent Rights Offerings.  If the Company, at any time while the Warrant
is outstanding, shall issue rights, options or warrants to all holders of
Common Stock (and not to the Holder) entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the VWAP on the record
date mentioned below, then, the Exercise Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for subscription
or purchase, and of which the numerator shall be the number of shares of the
Common Stock outstanding on the date of issuance of such rights, options or
warrants plus the number of shares which the aggregate offering price of the
total number of shares so offered (assuming receipt by the Company in full of
all consideration payable upon exercise of such rights, options or warrants)
would purchase at such VWAP.  Such
adjustment shall be made whenever such rights, options or warrants are issued,
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such rights, options or
warrants.

 

d)                                     Pro Rata Distributions.  If the Company, at any time while this
Warrant is outstanding, shall distribute to all holders of Common Stock (and
not to the Holder) evidences of its indebtedness or assets (including cash and
cash dividends) or rights or warrants to subscribe for or purchase any security
other than the Common Stock, then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP
determined as of the record date mentioned above, and of which the numerator
shall be such VWAP on such record date less the then per share fair market
value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common
Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be
described in a statement provided to the Holder of the portion of assets or
evidences of indebtedness so distributed or such subscription rights applicable
to one share of Common Stock.  Such
adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.

 

e)                                      Fundamental Transaction. If, at any
time while this Warrant is outstanding, (i) the Company, directly or
indirectly, in one or more related transactions effects any merger or
consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other
securities, cash or property and has been accepted by the holders of 50% or
more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property or (v) the Company,
directly or indirectly, in one or more related transactions consummates a stock

 

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or share purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or scheme of
arrangement) with another Person or group of Persons whereby such other Person
or group acquires more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other business
combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive,
for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the
option of the Holder (without regard to any limitation in Section 2(e) on
the exercise of this Warrant), the number of shares
of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and any additional consideration (the “Alternate
Consideration”) receivable as a result of
such Fundamental Transaction by a holder of the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to such
Fundamental Transaction (without regard to any limitation in Section 2(e) on
the exercise of this Warrant).  For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration.  If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction.  The Company
shall cause any successor entity in a Fundamental Transaction in which the
Company is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this Section 3(e) pursuant
to written agreements in form and substance reasonably satisfactory to the
Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the Holder, deliver to the
Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance
to this Warrant which is exercisable for a corresponding number of shares of
capital stock of such Successor Entity (or its parent entity) equivalent to the
shares of Common Stock acquirable and receivable upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant) prior to
such Fundamental Transaction, and with an exercise price which applies the
exercise price hereunder to such shares of capital stock (but taking into
account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for the purpose
of protecting the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction), and which is reasonably
satisfactory in form and substance to the Holder. Upon the occurrence of any
such Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental 

 

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Transaction, the provisions of this Warrant and the other Transaction
Documents referring to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and shall assume
all of the obligations of the Company under this Warrant and the other
Transaction Documents with the same effect as if such Successor Entity had been
named as the Company herein.

 

f)                                        Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of
a given date shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.

 

g)                                     Notice to Holder.

 

i.                  Adjustment to Exercise Price. Whenever the
Exercise Price is adjusted pursuant to any provision of this Section 3,
the Company shall promptly mail to the Holder a notice setting forth the
Exercise Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment.

 

ii.               Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the
Common Stock rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of any
stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company
shall cause to be mailed to the Holder at its last address as it shall appear
upon the Warrant Register of the Company, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock of record to
be entitled to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, 

 

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sale, transfer or share exchange; provided that the failure to mail
such notice or any defect therein or in the mailing thereof shall not affect
the validity of the corporate action required to be specified in such
notice.  To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously disclose such information in compliance with applicable
securities laws.  The Holder shall remain
entitled to exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such notice except as
may otherwise be expressly set forth herein.

 

Section 4.                                            Transfer of Warrant.

 

a)                                      Transferability.  Subject to compliance with applicable
securities laws, this Warrant and all rights hereunder (including, without
limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its
designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder or its
agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer.  Upon such
surrender and, if required, such payment, the Company shall execute and deliver
a new Warrant or Warrants in the name of the assignee or assignees, as
applicable, and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled.  The Warrant, if
properly assigned in accordance herewith, may be exercised by a new holder for
the purchase of Warrant Shares without having a new Warrant issued.

 

b)                                     New Warrants. This Warrant
may be divided or combined with other Warrants upon presentation hereof at the
aforesaid office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney.  Subject
to compliance with Section 4(a), as to any transfer which may be involved
in such division or combination, the Company shall execute and deliver a new
Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice. All Warrants issued on transfers or
exchanges shall be dated the initial issuance date set forth on the first page of
this Warrant and shall be identical with this Warrant except as to the number
of Warrant Shares issuable pursuant thereto and the warrant number.

 

c)                                      Warrant Register. The Company
shall register this Warrant, upon records to be maintained by the Company for
that purpose (the “Warrant Register”), in the name of the record Holder
hereof from time to time.  The Company
may deem and treat the registered Holder of this Warrant as the absolute owner
hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.

 

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Section 5.                                            Miscellaneous.

 

a)                                      No Rights as Stockholder
Until Exercise.  This
Warrant does not entitle the Holder to any voting rights, dividends or other
rights as a stockholder of the Company prior to the exercise hereof as set
forth in Section 2(d)(i).

 

b)                                     Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and cancellation
of such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

 

c)                                      Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
not be a Business Day, then, such action may be taken or such right may be
exercised on the next succeeding Business Day.

 

d)                                     Authorized Shares.

 

The Company covenants that, during the period the
Warrant is outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Warrant Shares upon the exercise of the
purchase rights under this Warrant.  The
Company will take all such reasonable action as may be necessary to assure that
such Warrant Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading Market upon
which the Common Stock may be listed. 
The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges created
by the Company in respect of the issue thereof (other than taxes in respect of
any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to
by the Holder, the Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of 

 

11

 

the
terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth in this
Warrant against impairment.  Without
limiting the generality of the foregoing, the Company will (i) not
increase the par value of any Warrant Shares above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (ii) take
all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon
the exercise of this Warrant and (iii) use commercially reasonable efforts
to obtain all such authorizations, exemptions or consents from any public
regulatory body having jurisdiction thereof, as may be, necessary to enable the
Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an
adjustment in the number of Warrant Shares for which this Warrant is
exercisable or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.

 

e)                                      Jurisdiction. All questions
concerning the construction, validity, enforcement and interpretation of this
Warrant shall be determined in accordance with the provisions of the Purchase
Agreement.

 

f)                                        Restrictions.  The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered, and the
Holder does not utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.

 

g)                                     Nonwaiver and Expenses.  No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder’s rights, powers or remedies.  Without limiting any other provision of this
Warrant or the Purchase Agreement, if the Company willfully and knowingly fails
to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall be
sufficient to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate proceedings, incurred
by Holder in collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies hereunder.

 

h)                                     Notices.  Any notice, request or other document
required or permitted to be given or delivered to the Holder by the Company
shall be delivered in accordance with the notice provisions of the Purchase
Agreement.

 

i)                                         Limitation of
Liability.  No
provision hereof, in the absence of any affirmative action by Holder to
exercise this Warrant to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, shall give rise to any liability of 

 

12

 

Holder for the purchase price of any Common Stock or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.

 

j)                                         Remedies.  The Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.

 

k)                                      Successors and Assigns.  Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended
to be for the benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant Shares.

 

l)                                         Amendment.  This Warrant may be modified or amended or
the provisions hereof waived with the written consent of the Company and
Holders holding Warrants at least equal to 67% of the Warrant Shares issuable
upon exercise of all then outstanding Warrants issued under the Purchase
Agreement

 

m)                                   Severability.  Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Warrant.

 

n)                                     Headings.  The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

 

********************

 

(Signature Page Follows)

 

13

 

IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated.

 

 

	
   

  	
  BIOSANTE
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

14

 

NOTICE OF EXERCISE

 

TO:  BIOSANTE
PHARMACEUTICALS, INC.

 

(1)          The undersigned
hereby elects to purchase
                
Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

 

(2)          Payment shall
take the form of (check applicable box):

 

o in lawful
money of the United States; or

 

o [if permitted]
the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3)          Please issue a
certificate or certificates representing said Warrant Shares in the name of the
undersigned or in such other name as is specified below:

 

 

The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

 

 

 

[SIGNATURE
OF HOLDER]

 

	
  Name
  of Investing Entity:

  	
   

  
	
  Signature
  of Authorized Signatory of Investing Entity:

  	
   

  
	
  Name
  of Authorized Signatory:

  	
   

  
	
  Title
  of Authorized Signatory:

  	
   

  
	
  Date:

  	
   

  
						

 

 

ASSIGNMENT FORM

 

(To assign the foregoing
warrant, execute

this form and supply required information. 

Do not use this form to exercise the warrant.)

 

FOR
VALUE RECEIVED, [        ] all of or
[              ]
shares of the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

 

 

whose address is

 

.

 

 

Dated: 
                            ,

 

	
   

  	
  Holder’s
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Holder’s
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  Guaranteed:

  	
   

  	
   

  
					

 

 

NOTE:  The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank or trust company.  Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as of June 20,
2010, between BioSante Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each, including
its successors and assigns, a “Purchaser” and collectively the “Purchasers”).

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
an effective registration statement under the Securities Act of 1933, as
amended (the “Securities Act”), the Company desires to issue and sell to
each Purchaser, and each Purchaser, severally and not jointly, desires to
purchase from the Company, securities of the Company as more fully described in
this Agreement.

 

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

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.  In addition to the terms defined elsewhere in
this Agreement, for all purposes of this Agreement, the following terms have
the meanings set forth in this Section 1.1:

 

“Acquiring Person” shall have the
meaning ascribed to such term in Section 4.5.

 

“Action” shall have the meaning
ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person as such terms are used
in and construed under Rule 405 under the Securities Act.

 

“Board of Directors” means the board
of directors of the Company.

 

“Business Day” means any day except
any Saturday, any Sunday, any day which is a federal legal holiday in the
United States or any day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to close.

 

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

 

“Closing Date” means the Trading Day
on which all of the Transaction Documents have been executed and delivered by
the applicable parties thereto, and all conditions precedent to (i) the
Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities, in each case, have been 

 

1

 

satisfied or waived, but in no event later than the third Trading Day
following the date hereof.

 

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

 

“Common Stock” means the common stock
of the Company, par value $0.0001 per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any
securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including, without limitation, any
debt, preferred stock, rights, options, warrants or other instrument that is at
any time convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.

 

“Company Counsel”
means Oppenheimer Wolff & Donnelly LLP, with offices located at Plaza VII, Suite
3300, 45 South Seventh Street, Minneapolis, Minnesota 55402.

 

“Disclosure Schedules” means the
Disclosure Schedules of the Company delivered concurrently herewith.

 

“Evaluation Date” shall have the
meaning ascribed to such term in Section 3.1(r).

 

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

 

“Exempt Issuance” means the issuance of (a) shares of Common
Stock or options to current or former employees, officers, directors or
independent contractors of the Company pursuant to any stock-based compensation
plan duly adopted for such purpose, by a majority of the non-employee members
of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided
that such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, (c) securities issued
pursuant to stock splits, stock dividends or distributions, recapitalizations
and similar events affecting the Common Stock; (d) shares of Common Stock or
warrants to vendors of the Company approved by a majority of the non-employee
members of the Board of Directors; (e) securities issued pursuant to mergers,
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company; and (f) securities issued after the
completion of any merger, acquisition or strategic transaction approved by a
majority of the disinterested directors of the Company upon the exercise or
exchange of or conversion of any securities exercisable or exchangeable for or
convertible into shares of Common 

 

2

 

Stock issued and outstanding on the date of effectiveness of such
merger, acquisition or strategic transaction.

 

“FDA” shall have the meaning ascribed to such term in Section 3.1(gg).

 

“FDCA” shall have the meaning ascribed
to such term in Section 3.1(gg).

 

“GAAP” shall have the meaning ascribed
to such term in Section 3.1(h).

 

“Indebtedness” shall have the meaning
ascribed to such term in Section 3.1(z).

 

“Intellectual Property Rights” shall
have the meaning ascribed to such term in Section 3.1(o).

 

“Liens” means a lien, charge, security
interest, encumbrance, right of first refusal, preemptive right or other
restriction, other than restrictions imposed by securities laws.

 

“Material Adverse Effect” shall have
the meaning assigned to such term in Section 3.1(b).

 

“Material Permits” shall have the
meaning ascribed to such term in Section 3.1(m).

 

“Per Share Purchase Price” equals
$2.1025, subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the Common
Stock that occur after the date of this Agreement.

 

“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or
an agency or subdivision thereof) or other entity of any kind.

 

“Pharmaceutical Product” shall have
the meaning ascribed to such term in Section 3.1(gg).

 

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

 

“Prospectus” means the base prospectus
filed with the Registration Statement.

 

“Prospectus Supplement” means the
supplement to the Prospectus complying with Rule 424(b) of the Securities Act
that is filed with the Commission and delivered by the Company to each
Purchaser prior to or at the Closing.

 

“Purchaser Party” shall have the
meaning ascribed to such term in Section 4.8.

 

“Registration Statement” means the
effective registration statement with Commission file No. 333-166859 which
registers the sale of the Shares, the Warrants and the Warrant Shares to the
Purchasers.

 

3

 

“Required Approvals” shall have the
meaning ascribed to such term 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
or interpreted from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such Rule.

 

“Rule 424” means Rule 424 promulgated
by the Commission pursuant to the Securities Act, as such Rule may be amended
or interpreted from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such Rule.

 

“SEC Reports” shall
have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Shares, the
Warrants and the Warrant Shares.

 

“Securities Act” means the Securities
Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Shares” means the shares of Common
Stock issued or issuable to each Purchaser pursuant to this Agreement.

 

“Short Sales” means all “short sales”
as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not
be deemed to include the location and/or reservation of borrowable shares of
Common Stock).

 

“Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Shares and
Warrants purchased hereunder as specified below such Purchaser’s name on the
signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.

 

“Subsidiary” means any subsidiary of
the Company as set forth on Schedule 3.1(a), and shall, where
applicable, also include any direct or indirect subsidiary of the Company
formed or acquired after the date hereof.

 

“Trading Day” means a day on which the
principal Trading Market is open for trading.

 

“Trading Market” means any of the
following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the NYSE AMEX, the Nasdaq Capital Market,
the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transaction Documents” means this
Agreement, the Warrants and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

 

4

 

“Transfer Agent” means Computershare
Investor Services, the current transfer agent of the Company, with a mailing
address of 350 Indiana Street, Suite 750, Golden CO 80401 and a facsimile number
of 312.601.2312, and any successor transfer agent of the Company.

 

“Warrants” means,
collectively, the Common Stock purchase warrants delivered to the Purchasers at
the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be
exercisable immediately and have a term of exercise equal to 5 years, in the
form of Exhibit A attached hereto.

 

“Warrant Shares” means the shares of
Common Stock issuable upon exercise of the Warrants.

 

“WS” means Weinstein Smith LLP with
offices located at 420 Lexington Avenue, Suite 2620, New York, New York
10170-0002.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Closing.  On the Closing Date, upon the terms and
subject to the conditions set forth herein, substantially concurrent with the
execution and delivery of this Agreement by the parties hereto, the Company
agrees to sell, and each of the Purchasers, severally and not jointly, agrees
to purchase the number of Shares and Warrants specified below such Purchaser’s
name on the signature page to this Agreement. 
Each Purchaser shall deliver to the Company, via wire transfer or a
certified check of immediately available funds equal to such Purchaser’s
Subscription Amount as set forth on the signature page hereto executed by such
Purchaser and the Company shall deliver to each Purchaser its respective Shares
and a Warrant as determined pursuant to Section 2.2(a), and the Company and
each Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing.  Upon
satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3,
the Closing shall occur at such location as the parties shall mutually agree.

 

2.2           Deliveries.

 

(a)           On or prior to the Closing
Date, the Company shall deliver or cause to be delivered to each Purchaser the
following:

 

(i)            this Agreement duly executed
by the Company;

 

(ii)           a legal opinion of Company
Counsel, in the form to be mutually agreed upon by the parties;

 

(iii)          a copy of the irrevocable
instructions to the Company’s transfer agent instructing the transfer agent to
deliver via The Depository Trust Company Deposit or Withdrawal at Custodian
system (“DWAC”) Shares equal to such Purchaser’s Subscription Amount
divided by the Per Share Purchase Price, registered in the name of such
Purchaser;

 

5

 

(iv)          a Warrant registered in the
name of such Purchaser to purchase up to a number of shares of Common Stock
equal to 50% of such Purchaser’s Shares, with an exercise price equal to $2.45,
subject to adjustment therein (such Warrant certificate may be delivered within
three Trading Days of the Closing Date); and

 

(v)           the Prospectus and
Prospectus Supplement (which may be delivered in accordance with Rule 172 under
the Securities Act).

 

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

 

(i)            this Agreement duly executed
by such Purchaser; and

 

(ii)           such Purchaser’s
Subscription Amount by wire transfer to the account as specified in writing by
the Company.

 

2.3           Closing Conditions.

 

(a)           The obligations of the
Company hereunder in connection with the Closing are subject to the following
conditions being met:

 

(i)            the accuracy in all material
respects when made and on the Closing Date of the representations and warranties
of the Purchasers contained herein (unless as of a specific date therein in
which case they shall be accurate as of such date);

 

(ii)           all obligations, covenants
and agreements of each Purchaser required to be performed at or prior to the
Closing Date shall have been performed in all material respects; and

 

(iii)          the delivery by each
Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

(b)           The respective obligations
of the Purchasers hereunder in connection with the Closing are subject to the
following conditions being met:

 

(i)            the accuracy in all material
respects when made and on the Closing Date of the representations and
warranties of the Company contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date);

 

(ii)           all obligations, covenants
and agreements of the Company required to be performed at or prior to the
Closing Date shall have been performed in all material respects;

 

(iii)          the delivery by the Company
of the items set forth in Section 2.2(a) of this Agreement;

 

6

 

(iv)          there shall have been no
Material Adverse Effect with respect to the Company since the date hereof; and

 

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

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and
Warranties of the Company. 
Except as set forth in the Disclosure Schedules, which Disclosure
Schedules shall be deemed a part hereof and shall qualify any representation or
warranty made herein to the extent of such disclosure contained in the
corresponding section of the Disclosure Schedules, the Company hereby makes the
following representations and warranties to each Purchaser:

 

(a)           Subsidiaries.  All of the direct and indirect subsidiaries
of the Company are set forth on Schedule 3.1(a).  The Company owns, directly or indirectly, all
of the capital stock or other equity interests of each Subsidiary free and
clear of any Liens, and all of the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights to subscribe for or purchase
securities.  If the Company has no
subsidiaries, all other references to the Subsidiaries or any of them in the
Transaction Documents shall be disregarded.

 

(b)           Organization and
Qualification.  The Company
and each of the Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the
Company nor any Subsidiary is in violation nor default of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. 
Each of the Company and the Subsidiaries is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, would 

 

7

 

not result in: (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document with respect to the Company, (ii) a material adverse
effect on the results of operations, assets, business or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a
material adverse effect on the Company’s ability to perform in any material
respect its obligations under any Transaction Document (any of (i), (ii) or
(iii), a “Material Adverse Effect”) and no Proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification.

 

(c)           Authorization; Enforcement.  The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder.  The execution
and delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the Company’s
stockholders in connection therewith other than in connection with the Required
Approvals.  Each Transaction Document to
which it is a party has been (or upon delivery will have been) duly executed by
the Company and, when delivered in accordance with the terms hereof and
thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.

 

(d)           No Conflicts.  The execution, delivery and performance by
the Company of the Transaction Documents, the issuance and sale of the
Securities and the consummation by it of the transactions contemplated hereby
and thereby to which it is a party do not and will not (i) conflict with or
violate any provision of the Company’s or any Subsidiary’s certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of
any Lien upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal
and state securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the case of each
of clauses (ii) and (iii), such as would not have a Material Adverse Effect.

 

8

 

(e)           Filings, Consents and
Approvals.  The Company
is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than: (i) the filings required pursuant to Section
4.4 of this Agreement, (ii) the filing with the Commission of the Prospectus
Supplement, (iii) application(s) to each applicable Trading Market for the
listing of the Shares and Warrant Shares for trading thereon in the time and
manner required thereby and (iv) such filings as are required to be made under
applicable state securities laws and FINRA (collectively, the “Required
Approvals”).

 

(f)            Issuance of the Securities;
Registration.  The
Securities are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the
Company.  The Warrant Shares, when issued
in accordance with the terms of the Warrants, will be validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the Company.  The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement and the Warrants. The Company has prepared and filed
the Registration Statement in conformity in all material respects with the
requirements of the Securities Act, which Registration Statement became
effective on June 10, 2010 (the “Effective
Date”), including the Prospectus, and such amendments and
supplements thereto as may have been required to the date of this
Agreement.  The Registration Statement is
effective under the Securities Act and to the actual knowledge of the Company,
no stop order preventing or suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been issued
by the Commission and no proceedings for that purpose have been instituted or,
to the knowledge of the Company, are threatened by the Commission.  The Company, if required by the rules and
regulations of the Commission, proposes to file the Prospectus Supplement, with
the Commission pursuant to Rule 424(b). 
At the time the Registration Statement and any amendments thereto became
effective, at the date of this Agreement and at the Closing Date, the
Registration Statement and any amendments thereto conformed and will conform in
all material respects to the requirements of the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Prospectus and any amendments or supplements
thereto, at time the Prospectus or any amendment or supplement thereto was
issued and at the Closing Date, conformed and will conform in all material
respects to the requirements of the Securities Act and did not and will not
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.

 

(g)           Capitalization.  The authorized capitalization of the Company
is as set forth on Schedule 3.1(f). 
The Company has not issued any capital stock since its most recently
filed report under the Exchange Act, other than pursuant to the exercise of
stock options under the Company’s stock-based compensation plans and pursuant
to the conversion and/or exercise of Common Stock Equivalents outstanding as of
the date of 

 

9

 

the most recently filed
report under the Exchange Act.  No Person
has any right of first refusal, preemptive right, right of participation, or
any similar right to participate in the transactions contemplated by the
Transaction Documents.  Except as
disclosed in the SEC Reports or Schedule 3.1(f) or as a result of the
purchase and sale of the Securities, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into
or exercisable or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company or any Subsidiary is bound
to issue additional shares of Common Stock or Common Stock Equivalents.  The issuance and sale of the Securities will
not obligate the Company to issue shares of Common Stock or other securities to
any Person (other than the Purchasers) and will not result in a right of any
holder of Company securities to adjust the exercise, conversion, exchange or
reset price under any of such securities. All of the outstanding shares of
capital stock of the Company are validly issued, fully paid and nonassessable,
have been issued in all material respects in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities.  No further approval
or authorization of any stockholder, the Board of Directors or others is
required for the issuance and sale of the Securities.  Except as disclosed in any SEC Report,
including any exhibit thereto, there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.

 

(h)           SEC Reports; Financial
Statements.  The Company
has complied in all material respects with requirements to file all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Company is not an issuer currently
subject to Rule 144(i) under the Securities Act. The financial statements of
the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements or the notes thereto
and 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

 

10

 

Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

(i)            Material Changes;
Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report filed prior to the date hereof, (i) there
has been no event, occurrence or development that has had or that would result
in a Material Adverse Effect, (ii) the Company has not incurred any material
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not materially altered its
method of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock-based
compensation plans.  The Company does not
have pending before the Commission any request for confidential treatment of
information.  Except for the issuance of
the Securities contemplated by this Agreement or as set forth in the SEC
Reports or on Schedule 3.1(i), no event, liability or development has
occurred with respect to the Company or its Subsidiaries or their respective
business, properties, operations or financial condition that would be required
to be disclosed by the Company under applicable securities laws at the time
this representation is made or deemed made that has not been publicly disclosed
prior to the date that this representation is made.

 

(j)            Litigation.  Except as disclosed in the SEC Reports or on Schedule
3.1(j), there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective
properties before or by any court, arbitrator, governmental or administrative
agency or regulatory authority (federal, state, county, local or foreign)
(collectively, an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) would, if there were an unfavorable decision, have a
Material Adverse Effect.  Except as
disclosed in the SEC Reports or on Schedule 3.1(j), neither the Company
nor any Subsidiary, nor to the Company’s actual knowledge, director or officer
thereof, is or during the past 12 months has been the subject of any Action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or to the Company’s knowledge, any current
director or officer of the Company during the past 12 months.   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.

 

11

 

(k)           Labor Relations.  No material labor dispute exists or, to the
actual knowledge of the Company, is imminent with respect to any of the
employees of the Company, which would have a Material Adverse Effect.  None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship
with the Company or such Subsidiary, and neither the Company nor any of its
Subsidiaries is a party to a collective bargaining agreement, and the Company
and its Subsidiaries believe that their relationships with their employees are
good.  No executive officer, to the
knowledge of the Company, is, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company or any
of its Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance would not, individually or in the aggregate, result in a Material
Adverse Effect.

 

(l)            Compliance.  Neither the Company nor any Subsidiary: (i) is
in default under or in violation of (and no event has occurred that has not
been waived that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any judgment, decree or order of any court, arbitrator or
governmental body or (iii) is or has been in violation of any statute, rule,
ordinance or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its
business and all such laws that affect the environment, except as would not,
individually or in the aggregate, result in a Material Adverse Effect.

 

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

 

(n)           Title to Assets.  The Company and the Subsidiaries do not own
any real property. The Company and the Subsidiaries have good and marketable
title in all personal property owned by them that is material to the business
of the Company and the Subsidiaries, in each case free and clear of all Liens,
except for Liens created under license or collaboration agreements relating to
the Company’s products or Intellectual Property Rights, Liens as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries and Liens for the payment of federal, state or other taxes, 

 

12

 

the payment of which is
neither delinquent nor subject to penalties. 
Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in compliance with the
provisions thereof, except where such non-compliance would not result in a
Material Adverse Effect.

 

(o)           Patents and Trademarks.  The Company and the Subsidiaries have, or
have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions,
copyrights, licenses and other intellectual property rights and similar rights
necessary or material for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have would not result
in a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Neither the Company nor any Subsidiary has
received a notice (written or otherwise) that any of the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person.  To the actual
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights which would result in a Material Adverse
Effect.  The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do
so would not, individually or in the aggregate, result in a Material Adverse
Effect.

 

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

 

(q)           Transactions With Affiliates
and Employees.  Except as
set forth in the SEC Reports, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner, in each case in excess of $120,000 other than for
(i) payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) other employee
benefits, including stock option agreements under any stock-based compensation
plan of the Company.

 

13

 

(r)            Sarbanes-Oxley; Internal
Accounting Controls.  The Company
is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it as of the Closing Date.  The Company and the Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have
evaluated the effectiveness of the Company’s disclosure controls and procedures
as of the end of the period covered by the Company’s most recently filed
periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no
changes in the Company’s internal control over financial reporting (as such
term is defined in the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

 

(s)           Certain Fees.  Except as set forth in the Prospectus
Supplement, no brokerage or finder’s fees or commissions are or will be payable
by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due from the
Company in connection with the transactions contemplated by the Transaction
Documents.

 

(t)            Investment Company. The Company
is not, and immediately after receipt of payment for the Securities, will not
be an “investment company” within the meaning of the Investment Company Act of
1940, as amended.

 

(u)           Registration Rights.  Except as described in the SEC Reports or as
provided in agreements filed as exhibits to the SEC Reports, no Person has any
right to cause the Company to effect the registration under the Securities Act
of any securities of the Company, which rights are currently not satisfied.

 

(v)           Listing and Maintenance
Requirements.  The Common
Stock is registered pursuant to Section 12(b) of the Exchange Act and listed on
the NASDAQ Global Market (the “NASDAQ Stock Market”), and the Company has taken
no action designed to, or 

 

14

 

which to its knowledge is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or the delisting of the Common Stock from the NASDAQ
Stock Market nor has the Company received any notification that the Commission
is contemplating terminating such registration. 
The Company has not, in the 12 months preceding the date hereof, received
notice from any Trading Market on which the Common Stock is or has been listed
or quoted to the effect that the Company is not in compliance with the material
listing or maintenance requirements of such Trading Market.

 

(w)          Application of Takeover Protections.  The Company and the Board of Directors have
taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
the Purchasers solely as a result of the Company’s issuance of the Securities
and the Purchasers’ ownership of the Securities.

 

(x)            Disclosure.  Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any information
that it believes constitutes or might constitute material, non-public
information which is not otherwise disclosed in the Prospectus Supplement.   The Company understands and confirms that
the Purchasers will rely on the foregoing representation in effecting
transactions in securities of the Company. 
All of the disclosure furnished by or on behalf of the Company to the
Purchasers regarding the Company, its business and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, is
true and correct and does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.

 

(y)           No Integrated Offering. Assuming the
accuracy of the Purchasers’ representations and warranties set forth in Section
3.2, neither the Company, nor any of its Affiliates, nor any Person acting on
its or their behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security, under circumstances
that would cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of any applicable stockholder approval
provisions of any Trading Market on which any of the securities of the Company
are listed or designated.

 

(z)            Solvency.  Except as described in the SEC Reports, based
on the consolidated financial condition of the Company as of the Closing Date,
after giving effect to the receipt by the Company of the proceeds from the sale
of the Securities hereunder, (i) the fair saleable value of the Company’s
assets exceeds the amount that 

 

15

 

will be required to be paid
on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business as
now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company, and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the
proceeds the Company would receive, were it to liquidate all of its assets,
after taking into account all anticipated uses of the cash, would be sufficient
to pay all amounts on or in respect of its liabilities when such amounts are
required to be paid.  The Company does
not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in respect
of its debt).  The Company has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date.  Schedule 3.1(z) sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the Company
or any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this
Agreement, “Indebtedness” means (x) any liabilities for borrowed money or
amounts owed in excess of $50,000 (other than trade accounts payable incurred
in the ordinary course of business), (y) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the
same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business; and (z) the present value of any lease payments in excess of $50,000
due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is in
default with respect to any Indebtedness except where such default would not
result in a Material Adverse Effect.

 

(aa)         Tax Status.  Except for matters that would not,
individually or in the aggregate, result in a Material Adverse Effect, the
Company and each Subsidiary has filed all necessary federal, state and foreign
income and franchise tax returns and has paid or accrued all taxes shown as due
thereon, and the Company has no actual knowledge of a tax deficiency which has
been asserted or threatened against the Company or any Subsidiary.

 

(bb)         Foreign Corrupt Practices.  Neither the Company, nor to the actual
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign
or domestic political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its
behalf of which the Company is aware) which is in violation of law, or (iv) violated
in any material respect any provision of the Foreign Corrupt Practices Act of
1977, as amended.

 

16

 

(cc)         Accountants.  The Company’s accounting firm is set forth on
Schedule 3.1(cc) of the Disclosure Schedules.  To the knowledge and belief of the Company,
such accounting firm is a registered public accounting firm as required by the
Exchange Act who the Company expects will express its opinion with respect to
the financial statements to be included in the Company’s next Annual Report on Form
10-K for the year ending December 31, 2010.

 

(dd)         Acknowledgment Regarding Purchasers’
Purchase of Securities.  The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated 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 Securities.  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.

 

(ee)         Acknowledgement Regarding Purchaser’s
Trading Activity.  Anything in
this Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(e) and 4.14 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers have been asked by the Company to
agree, nor has any Purchaser agreed, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) any Purchaser, and counter-parties in “derivative”
transactions to which any such Purchaser is a party, directly or indirectly,
presently may have a “short” position in the Common Stock, and (iv) each
Purchaser shall not be deemed to have any affiliation with or control over any
arm’s length counter-party in any “derivative” transaction.  The Company further understands and
acknowledges that (y) one or more Purchasers may engage in hedging activities
at various times during the period that the Securities are outstanding,
including, without limitation, during the periods that the value of the Warrant
Shares deliverable with respect to Securities are being determined, and (z) such
hedging activities (if any) could reduce the value of the existing stockholders’
equity interests in the Company at and after the time that the hedging
activities are being conducted.  The Company acknowledges that such
aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents.

 

(ff)           Regulation M Compliance.  The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the
price of any security of the 

 

17

 

Company to facilitate the
sale or resale of any of the Securities, (ii) sold, bid for, purchased, or,
paid any compensation for soliciting purchases of, any of the Securities, or (iii)
paid or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of
clauses (ii) and (iii), compensation paid to the Company’s placement agent in
connection with the placement of the Securities.

 

(gg)         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 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.

 

3.2   Representations and
Warranties of the Purchasers.  Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows (unless as of a specific date therein):

 

18

 

(a)           Organization; Authority.  Such Purchaser is either an individual or an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with full right, corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and
performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate, partnership,
limited liability company or similar action, as applicable, on the part of such
Purchaser.  Each Transaction Document to
which it is a party has been duly executed by such Purchaser, and when
delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be limited by applicable law.

 

(b)           Understandings or
Arrangements.  Such
Purchaser is acquiring the Securities as principal for its own account and has
no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities (this
representation and warranty not limiting such Purchaser’s right to sell the
Securities pursuant to the Registration Statement or otherwise in compliance
with applicable federal and state securities laws).  Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

 

(c)           Purchaser Status.  At the time such Purchaser was offered the
Securities, it was, and as of the date hereof it is, and on each date on which
it exercises any Warrants, it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act.  Such Purchaser
is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act.  Such Purchaser together
with all of its affiliates, after giving effect to the completion of the
transactions contemplated by this Agreement, will own or have the right to
acquire less than 20% of the outstanding shares of capital stock or voting
power of the Company.

 

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

 

(e)           Certain Transactions and
Confidentiality.  Other than
consummating the transactions contemplated hereunder, such Purchaser has not,
nor has any Person acting on behalf of or pursuant to any understanding with
such Purchaser, directly or indirectly executed any purchases or sales,
including Short Sales, of the securities of the Company during the period commencing
as of the time that such Purchaser first received a term sheet 

 

19

 

(written or oral) from the
Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior
to the execution hereof.  Notwithstanding
the foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above shall only apply
with respect to the portion of assets managed by the portfolio manager that
made the investment decision to purchase the Securities covered by this
Agreement.  Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). The Purchasers acknowledge that they
have read the Prospectus, the Prospectus Supplement, the Registration Statement
and the SEC Reports. The Purchasers have not received any written documents
that would constitute an offer to sell, or the solicitation of an offer to buy
the Securities or that would constitute a prospectus under the Securities Act,
other than the Prospectus and the Prospectus Supplement. Notwithstanding the
foregoing, for avoidance of doubt, nothing contained herein shall constitute a
representation or warranty, or preclude any actions, with respect to the
identification of the availability of, or securing of, available shares to
borrow in order to effect Short Sales or similar transactions in the future.

 

The
Company acknowledges and agrees that the representations contained in Section 3.2
shall not modify, amend or affect such Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated hereby.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1       Warrant Shares.  If all or any portion of a Warrant is
exercised at a time when there is an effective registration statement to cover
the issuance or resale of the Warrant Shares or if the Warrant is exercised via
cashless exercise, the Warrant Shares issued pursuant to any such exercise
shall be issued free of all legends.  If
at any time following the date hereof the Registration Statement (or any
subsequent registration statement registering the sale or resale of the Warrant
Shares) is not effective or is not otherwise available for the sale or resale
of the Warrant Shares, the Company shall immediately notify the holders of the
Warrants in writing that such registration statement is not then effective and
thereafter shall promptly notify such holders when the registration statement
is effective again and available for the sale or resale of the Warrant Shares
(it being understood and agreed that the foregoing shall not limit the ability
of the Company to issue, or any Purchaser to sell, any of the Warrant Shares in
compliance with applicable federal and state securities laws).  The Company shall use best efforts to keep a
registration statement (including the Registration Statement) registering the
issuance or resale of the Warrant Shares effective during the term of the
Warrants.

 

4.2       Furnishing of Information.  Until the earliest of the time that (i) no
Purchaser owns Securities or (ii) the Warrants have expired, the Company
covenants to timely file (or obtain

 

20

 

extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act even if the Company is not then
subject to the reporting requirements of the Exchange Act.  As long as any Purchaser owns Securities, if
the Company is not required to file reports pursuant to the Exchange Act, 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 Securities, including without limitation, under Rule 144.
The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, to the extent required from time
to time to enable such Person to sell such Securities without registration
under the Securities Act, including without limitation, within the requirements
of the exemption provided by Rule 144.

 

4.3       Integration.  The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market
such that it would require stockholder approval prior to the closing of such
other transaction unless stockholder approval is obtained before the closing of
such subsequent transaction.

 

4.4       Securities Laws Disclosure; Publicity.  The Company shall, by 9:00 a.m. (New
York City time) on the Trading Day immediately following the date hereof, issue
a press release disclosing the material terms of the transactions contemplated
hereby.  From and after the issuance of
such press release, the Company shall have publicly disclosed all material,
non-public information delivered to any of the Purchasers by the Company or any
of its subsidiaries, or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction
Documents.  The Company and each
Purchaser shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby, and neither the Company
nor any Purchaser shall issue any such press release nor otherwise make any
such public statement without the prior consent of the Company, with respect to
any press release of any Purchaser, or without the prior consent of each
Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld or delayed, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or communication.  Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Purchaser, or include the name of
any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except (a) as
required by federal securities law in connection with the filing of final
Transaction Documents (including signature pages thereto) with the
Commission and (b) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the
Purchasers with prior notice of such disclosure permitted under this clause
(b).

 

4.5       Stockholder Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the
provisions of any 

 

21

 

such plan or arrangement, by virtue of receiving
Securities under the Transaction Documents or under any other agreement between
the Company and the Purchasers.

 

4.6       Non-Public Information. 
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company covenants
and agrees that neither it, nor any other Person acting on its behalf will provide
any Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior thereto such
Purchaser shall have entered into a written agreement with the Company
regarding the confidentiality and use of such information.  The Company understands and confirms that
each Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.

 

4.7       Use of Proceeds. 
Except as set forth in the Prospectus Supplement, the Company shall use
the net proceeds from the sale of the Securities hereunder for working capital
purposes.

 

4.8       Indemnification of Purchasers.   Subject to the provisions of this Section 4.8,
the Company will indemnify and hold each Purchaser and its directors, officers,
stockholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who controls
such Purchaser (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers,
stockholders, agents, members, partners or employees (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling
persons (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses, including
all judgments, amounts paid in settlements, court costs and reasonable
attorneys’ fees and costs of investigation that any such Purchaser Party may
suffer or incur due to a claim by a third party as a result of or relating to (a) any
breach of any of the representations, warranties, covenants or agreements made
by the Company in this Agreement or in the other Transaction Documents or (b) any
action instituted against a Purchaser in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an
Affiliate of such Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of such Purchaser’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser may
have with any such stockholder or any violations by such Purchaser of state or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such
Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company
has failed after a reasonable period of time to assume such defense and to
employ counsel or (iii) in such action there is, in the reasonable opinion
of counsel, a material conflict on any material issue between the position of
the Company and the position of such Purchaser Party, in which case the Company
shall be responsible for the reasonable fees and 

 

22

 

expenses of no more than one such separate
counsel.  The Company will not be liable
to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but
only to the extent that a loss, claim, damage or liability is attributable to
any Purchaser Party’s breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in
the other Transaction Documents. The Company will have the exclusive right to
settle any claim or proceeding, provided that the Company will not settle any
such claim, action or proceeding without the prior written consent of the
Purchaser Party, which will not be unreasonably withheld or delayed; provided,
however, that such consent shall not be required if the settlement includes a
full and unconditional release satisfactory to the Purchaser Party from all
liability arising or that may arise out of such claim or proceeding and does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any Purchaser Party.

 

4.9       Reservation of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of shares
of Common Stock for the purpose of enabling the Company to issue Shares
pursuant to this Agreement and Warrant Shares pursuant to any exercise of the
Warrants.

 

4.10     Listing of Common Stock. The Company hereby agrees to use
reasonable best efforts to maintain the listing or quotation of the Common
Stock on the Trading Market on which it is currently listed, and concurrently
with the Closing, the Company shall apply to list or quote all of the Shares
and Warrant Shares on such Trading Market and promptly secure the listing of
all of the Shares and Warrant Shares on such Trading Market. The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, it will then include in such application all of the Shares
and Warrant Shares, and will take such other action as is necessary to cause
all of the Shares and Warrant Shares to be listed or quoted on such other
Trading Market as promptly as possible. 
The Company will use its reasonable best efforts to continue the listing
and trading of its Common Stock on a Trading Market and will comply in all
material respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market.

 

4.11     [RESERVED]

 

4.12     Subsequent Equity Sales. 
From the date hereof until 90 days after the Closing Date, the Company
shall not issue, enter into any agreement to issue or announce the issuance or
proposed issuance of any shares of Common Stock or Common Stock Equivalents,
including, without limitation, any drawdowns on the Company’s existing equity
line of credit. Notwithstanding the foregoing, this Section 4.12 shall not
apply in respect of an Exempt Issuance.

 

4.13     Equal Treatment of Purchasers.  No consideration (including any modification
of any Transaction Document) shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration is also offered to all of the parties
to the Transaction Documents.  For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company 

 

23

 

and negotiated separately by each Purchaser, and is
intended for the Company to treat the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

 

4.14     Certain Transactions and Confidentiality. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that neither it
nor any Affiliate acting on its behalf or pursuant to any understanding with it
will execute any purchases or sales, including Short Sales of any of the
Company’s securities during the period commencing with the execution of this
Agreement and ending at such time that the transactions contemplated by this
Agreement are first publicly announced pursuant to the initial press release as
described in Section 4.4.  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 pursuant
to the initial press release as described in Section 4.4, such Purchaser
will maintain the confidentiality of the existence and terms of this
transaction and the information included in the Disclosure Schedules. 
Notwithstanding the foregoing and notwithstanding anything contained in this
Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no
Purchaser makes any representation, warranty or covenant hereby that it will
not engage in effecting transactions in any securities of the Company after the
time that the transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in Section 4.4,
(ii) no Purchaser shall be restricted or prohibited from effecting any
transactions in any securities of the Company in accordance with applicable
securities laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.4 and (iii) no Purchaser shall have
any duty of confidentiality to the Company or its Subsidiaries after the
issuance of the initial press release as described in Section 4.4. 
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement.

 

ARTICLE V.

MISCELLANEOUS

 

5.1       Termination.  This Agreement
may be terminated by any Purchaser, as to such Purchaser’s obligations
hereunder only and without any effect whatsoever on the obligations between the
Company and the other Purchasers, by written notice to the other parties, if
the Closing has not been consummated on or before June 25, 2010; provided,
however, that no such termination will affect the right of any party to
sue for any breach by the other party (or parties).

 

5.2       Fees and Expenses. 
Except as expressly set forth in the Transaction Documents to the
contrary, each party shall pay the fees and expenses of its advisers, counsel,
accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and
performance of this Agreement.  The
Company shall pay all Transfer Agent fees, stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the
Purchasers.

 

24

 

5.3       Entire Agreement. 
The Transaction Documents, together with the exhibits and schedules
thereto, the Prospectus and the Prospectus Supplement, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules.

 

5.4       Notices.  Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of: (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day
that is not a Trading Day or later than 5:30 p.m. (New York City time) on
any Trading Day, (c) the second (2nd) Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier
service or (d) upon actual receipt by the party to whom such notice is
required to be given.  The address for
such notices and communications shall be as set forth on the signature pages attached
hereto.

 

5.5       Amendments; Waivers. 
No provision of this Agreement may be waived, modified, supplemented or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Purchasers holding at least 67% in interest of the Shares
then outstanding or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

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

 

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

 

5.8       No Third-Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 4.8.

 

5.9       Governing Law. 
All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the 

 

25

 

principles of conflicts of law thereof.  Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective affiliates, directors,
officers, stockholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for
such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.  If
either party shall commence an action or proceeding to enforce any provisions
of the Transaction Documents, then, in addition to the obligations of the
Company under Section 4.8, the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.

 

5.10     Survival.  The
representations and warranties contained herein shall survive the Closing and
the delivery of the Securities.

 

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

 

5.12     Severability.  If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.

 

5.13     Rescission and Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction 

 

26

 

Documents, whenever any Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does
not timely perform its related obligations within the periods therein provided,
then such Purchaser may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice, demand or
election in whole or in part without prejudice to its future actions and
rights; provided, however, that in the case of a rescission of an
exercise of a Warrant, the applicable Purchaser shall be required to return any
shares of Common Stock subject to any such rescinded exercise notice
concurrently with the return to such Purchaser of the aggregate exercise price
paid to the Company for such shares and the restoration of such Purchaser’s
right to acquire such shares pursuant to such Purchaser’s Warrant (including,
issuance of a replacement warrant certificate evidencing such restored right).

 

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

 

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

 

5.16     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.

 

5.17     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 or non-performance of the obligations of any other Purchaser under
any Transaction Document.  Nothing
contained herein or in any other 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

 

27

 

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
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.  Each Purchaser has been
represented by its own separate legal counsel in their review and negotiation
of the Transaction Documents.  The
Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by any of the Purchasers.  For reasons of administrative convenience
only, each Purchaser and its respective counsel have chosen to communicate with
the Company through WS.  WS does not
represent any of the Purchasers and only represents Rodman & Renshaw,
LLC, the placement agent.

 

5.18     Liquidated Damages. 
The Company’s obligations to pay any partial liquidated damages or other
amounts owing under the Transaction Documents is a continuing obligation of the
Company and shall not terminate until all unpaid partial liquidated damages and
other amounts have been paid notwithstanding the fact that the instrument or
security pursuant to which such partial liquidated damages or other amounts are
due and payable shall have been canceled.

 

5.19     Saturdays, Sundays, Holidays, etc.  If
the last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Business Day, then such action
may be taken or such right may be exercised on the next succeeding Business
Day.

 

5.20     Construction. The parties agree that
each of them and/or their respective counsel has reviewed and had an
opportunity to revise the Transaction Documents and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of the Transaction
Documents or any amendments hereto. In addition, each and every reference to
share prices and shares of Common Stock in any Transaction Document shall be
subject to adjustment for reverse and forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock that
occur after the date of this Agreement.

 

5.21     WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES
FOREVER TRIAL BY JURY.

 

(Signature Pages Follow)

 

28

 

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.

 

 

	
  BIOSANTE
  PHARMACEUTICALS, INC.

  	
  Address
  for Notice:

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:
  

  	
   

  	
   

  	
  Fax: (847) 478-9260

  
	
   

  	
  Name:
  

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
  With
  a copy to (which shall not constitute notice):

  	
   

  
				

 

Oppenheimer Wolff & Donnelly LLP

Plaza VII, Suite 3300

45 South Seventh Street

Minneapolis, Minnesota 55402

Facsimile: (612) 607-7100

Attention:
Amy E. Culbert, Esq.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

29

 

[PURCHASER SIGNATURE PAGES TO BPAX SECURITIES PURCHASE AGREEMENT]

 

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

 

	
  Name
  of Purchaser:

  	
   

  
	
   

  
	
  Signature
  of Authorized Signatory of Purchaser:

  	
   

  
	
   

  
	
  Name
  of Authorized Signatory:

  	
   

  
	
   

  
	
  Title
  of Authorized Signatory:

  	
   

  
	
   

  
	
  Email
  Address of Authorized Signatory:

  	
   

  
	
   

  
	
  Facsimile
  Number of Authorized Signatory:

  	
   

  
							

 

Address
for Notice to Purchaser:

 

 

Address
for Delivery of Securities to Purchaser (if not same as address for notice):

 

 

Subscription
Amount: $

 

Shares:

 

Warrant
Shares:

 

[SIGNATURE PAGES CONTINUE]

 

30

 

BIOSANTE DISCLOSURE SCHEDULE

 

TO SECURITIES PURCHASE AGREEMENT

 

This BioSante Disclosure Schedule has been prepared and
delivered in accordance with the Securities Purchase Agreement (the “Agreement”),
by and among BioSante Pharmaceuticals, Inc., a Delaware corporation (“BioSante”),
and each purchaser identified on the signature page thereto.  Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Agreement pursuant to which this BioSante Disclosure Schedule is being
delivered.

 

Schedule 3.1(a)

 

Subsidiaries

 

BioSante does not have any subsidiaries.

 

Schedule 3.1(g)

 

Capitalization

 

BioSante’s capitalization table is attached as Appendix
3.1(g).

 

In September 2000, BioSante sub-licensed the
marketing rights to its portfolio of female hormone therapy products in Canada
to Paladin Labs Inc. In exchange for the sub-license, Paladin agreed to make an
initial investment in BioSante, make future milestone payments and pay
royalties on sales of the products in Canada. 
The milestone payments have been and will continue to be in the form of
a series of equity investments by Paladin in BioSante common stock at a 10
percent premium to the market price of our stock at the time the equity
investment is made.  If all milestones
are achieved, BioSante would be required to issue up to $310,000 in common
stock at the 10 percent premium purchase price.

 

Schedule 3.1(u)

 

Registration Rights

 

In December 2008, BioSante entered into a committed
equity financing facility, or CEFF, with Kingsbridge, as amended in March 2010.  The CEFF entitles BioSante to sell and
obligates Kingsbridge to purchase, from time to time over a period of two
years, up to the lesser of (1) an aggregate of $25 million in or (2) 5,405,840
shares of BioSante common stock for cash consideration, subject to certain
conditions and restrictions.  Kingsbridge
will not be obligated to purchase shares under the CEFF unless certain
conditions are met, which include continued effectiveness of the registration statement
registering the resale of shares of BioSante common stock issued or issuable to
Kingsbridge.

 

1

 

Schedule 3.1(v)

 

Listing and Maintenance
Requirements

 

Due to the timing of the anticipated execution of
purchase agreements with investors, BioSante will not comply with the
requirement to file a Notice of Listing of Additional Shares notification with
NASDAQ at least 15 days prior to the anticipated issuance of Securities.  This would be the third time in 12 months
that BioSante will not have complied with such requirement.

 

Schedule 3.1(y)

 

No Integrated Offering

 

BioSante completed a registered direct offering of
10,404,626 shares of common stock and warrants to purchase 5,202,313 shares of
common stock in March 2010, which could be integrated with the offering of
the Securities for purposes of the stockholder approval provisions of the
NASDAQ Stock Market but since the current proposed offering will not be sold at
a discount within the meaning of interpretations of the NASDAQ Stock Market, it
is anticipated that the current offering will not trigger the stockholder
approval provisions of the NASDAQ Stock Market.

 

Schedule 3.1(z)

 

Solvency

 

In connection with the completion of the merger of Cell
Genesys, Inc. into BioSante, on October 14, 2009, BioSante entered
into supplemental indentures to the indentures governing Cell Genesys’s 3.125%
convertible senior notes due 2011 and 2013, respectively, with U.S. Bank
National Association, as trustee. Under the terms of the indentures, as
supplemented by the supplemental indentures, the obligations of Cell Genesys
under the notes were assumed by BioSante and the notes became unsecured senior
indebtedness of BioSante bearing interest at the rate of 3.125% per annum.  Interest on the notes is payable semi-annually
in arrears on May 1 and November 1 of each year.  The maturity date of the 3.125% convertible
senior notes due 2011 is November 1, 2011. 
The maturity date of the 3.125% convertible senior notes due 2013 is May 1,
2013.  At maturity, BioSante will be
required to repay the outstanding principal of the convertible notes and any
accrued and unpaid interest thereon.  As
of March 31, 2010, the aggregate outstanding principal amount of the
3.125% convertible senior notes due 2011 was $1.2 million and the aggregate
outstanding principal amount of the 3.125% convertible senior notes due 2013
was $20.8 million

 

Schedule 3.1(cc)

 

Accountants

 

BioSante’s independent registered public accounting firm
is Deloitte & Touche LLP.

 

2

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