Document:

Exhibit 10.1

 

AMENDMENT

 

This Amendment (“Amendment”)
is entered into and effective as of February 15, 2006 by and between
Robert R. Buck (“Executive”) and Beacon Sales Acquisition, Inc.
d/b/a Beacon Sales Company, a Delaware corporation (the “Company”).

 

R
E  C  I  T  A  L  S:

 

A.            The Company and Executive are parties to that certain
Employment Agreement dated as of October 20, 2003, as amended on July 30,
2004 (the “Employment Agreement”).

 

B.            The parties hereto desire to amend the Employment
Agreement, on the terms set forth herein.

 

A
G  R  E  E  M  E  N  T  S:

 

The parties hereto agree
as follows:

 

1      Employment
Term.  The Initial Term of the
Employment Agreement is hereby extended until November 30, 2007.

 

2      Compensation.  Section 3(b) of the Employment
Agreement is hereby amended to insert the following after the first sentence of
Section 3(b):

 

“For the Company’s fiscal year 2006, the Company shall pay
to Executive a Base Salary for all services rendered by Executive under this
Agreement of $500,000 per year (prorated for any partial year).”

 

3      The
parties hereby ratify and confirm, in all respects, the Employment Agreement,
as amended by this Amendment.

 

IN WITNESS
WHEREOF, the parties hereto have executed this Amendment as of the date first
written above.

 

 

	
   

  	
  BEACON SALES
  ACQUISITION, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Andrew
  R. Logie

  	
   

  
	
   

  	
   

  	
  Andrew R. Logie,
  Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Robert R. Buck

  	
   

  
	
   

  	
  Robert R. BuckExhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”)
is dated as of February 17, 2006, among BioSphere Medical, Inc., a
Delaware corporation (the “Company”), and
the investors identified on the signature pages hereto (each, an “Investor” and collectively, the “Investors”).

 

WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as
defined below) and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Investor, and each Investor, severally and not jointly,
desires to purchase from the Company certain securities of the Company, as more
fully described in this Agreement.

 

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

 

ARTICLE 1.

DEFINITIONS

 

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

 

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

 

“Affiliate” means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144.

 

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

 

“Buy-In” has the meaning set forth in Section 4.1(c).

 

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

 

“Closing” means the
closing of the purchase and sale of the Shares pursuant to Article 2.

 

 

“Closing Date” means
the Business Day on which all of the conditions set forth in Sections 5.1 and
5.2 hereof are satisfied, or such other date as the parties may agree.

 

“Commission” means
the Securities and Exchange Commission.

 

“Common Stock” means
the common stock of the Company, par value $0.01 per share, and any securities
into which such common stock may hereafter be reclassified.

 

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

 

“Company Counsel”
means Wilmer Cutler Pickering Hale and Dorr LLP.

 

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

 

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

 

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

 

“Exchange Act” means
the Securities Exchange Act of 1934, as amended.

 

“GAAP” means U.S.
generally accepted accounting principles.

 

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

 

“Investment Amount”
means, with respect to each Investor, the Investment Amount indicated on such
Investor’s signature page to this Agreement.

 

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

 

“Investor Party” has
the meaning set forth in Section 4.7.

 

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

 

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

 

2

 

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

 

“Per Share Purchase Price”
equals $7.00.

 

“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.

 

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

 

“Registration Rights Agreement”
means the Registration Rights Agreement, dated as of the date of this
Agreement, among the Company and the Investors, in the form of Exhibit A
hereto.

 

“Registration Statement”
means the registration statement meeting the requirements set forth in the
Registration Rights Agreement and covering the resale by the Investors of the
Shares.

 

“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.

 

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

 

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

 

“Share Delivery Date” has the meaning
set forth in Section 4.1(c).

 

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

 

“Short Sales”
include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act and all types of direct
and indirect stock pledges, forward sale contracts, options, puts, calls, swaps
and similar arrangements (including on a total return basis), and sales and
other transactions through non-US broker dealers or foreign regulated brokers.

 

“Subsidiary” means
any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation
S-X promulgated by the Commission under the Exchange Act.

 

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

 

3

 

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

 

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

 

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

 

ARTICLE 2.

PURCHASE AND SALE

 

2.1.                              Closing. Subject
to the terms and conditions set forth in this Agreement, at the Closing the
Company shall issue and sell to each Investor, and each Investor shall,
severally and not jointly, purchase from the Company, the Shares representing
such Investor’s Investment Amount. The Closing shall take place at the offices
of Bryan Cave LLP, 1290 Avenue of the Americas, New York, NY 10104 on the
Closing Date or at such other location or time as the parties may agree.

 

2.2.                              Closing Deliveries.
(a)  At the Closing, the Company shall deliver or cause to be delivered to
each Investor the following (the “Company Deliverables”):

 

(i)                                     a
certificate evidencing a number of Shares equal to such Investor’s Investment
Amount divided by the Per Share Purchase Price, registered in the name of such
Investor (the “Certificate”);

 

(ii)                                  the
legal opinion of Company Counsel, in agreed form, addressed to the Investors;
and

 

(iii)                               the
Registration Rights Agreement, duly executed by the Company.

 

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

 

(i)                                     promptly
after receipt of the Certificate, its Investment Amount, in United States
dollars and in immediately available funds, by wire transfer to an account
designated in writing by the Company for such purpose; and

 

(ii)                                  the
Registration Rights Agreement, duly executed by such Investor.

 

4

 

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES

 

3.1.                              Representations and
Warranties of the Company. The Company hereby makes the following
representations and warranties to each Investor:

 

(a)                                  Subsidiaries.
The Company has no direct or indirect Subsidiaries other than as specified in
the SEC Reports. The Company owns, directly or indirectly, all of the capital
stock of each Subsidiary free and clear of any and all Liens, and all the
issued and outstanding shares of capital stock of each Subsidiary are validly
issued, fully paid and non-assessable (where such concepts are legally
applicable) and free of preemptive and similar rights.

 

(b)                                 Organization
and Qualification. The Company and each Subsidiary are duly incorporated or
otherwise organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as applicable), with the
requisite power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation of any of the provisions of its respective
certificate or articles of incorporation, bylaws or other organizational or charter
documents. Each of the Company and its Subsidiaries is duly qualified to
conduct its respective businesses and is in good standing as a foreign
corporation or other entity (in each instance where such concepts are legally
applicable) 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
not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect.

 

(c)                                  Authorization;
Enforcement. The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution and delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no
further action is required by the Company in connection therewith. Each
Transaction Document has been (or upon delivery will have been) duly executed
by the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application.

 

(d)                                 No
Conflicts. Except as set forth on Schedule 3.1(d), the
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby do
not and will not (i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute
a default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with 

 

5

 

or without
notice, lapse of time or both) of, any agreement, credit facility, debt or
other instrument 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 (iii) result
in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound; except in the case of each of clauses (ii) and (iii),
such as would not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.

 

(e)                                  Filings,
Consents and Approvals. 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 filing with the Commission of the Registration Statement in
accordance with the requirements of the Registration Rights Agreement, (ii) filings
required by state securities laws, (iii) the filing of a Notice of Sale of
Securities on Form D with the Commission under Regulation D of the
Securities Act, (iv) the filings required in accordance with Section 4.5
and (v) those that have been made or obtained prior to the date of this
Agreement.

 

(f)                                    Issuance
of the Shares. The Shares have been duly authorized and, when issued and
paid for in accordance with the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens. The Company
has reserved from its duly authorized capital stock the shares of Common Stock
issuable pursuant to this Agreement in order to issue the Shares.

 

(g)                                 Capitalization.
Schedule 3.1(g) sets forth the number of shares and type of
all authorized, issued and outstanding capital stock of the Company, and all
shares of Common Stock reserved for issuance under the Company’s various option
and incentive plans. Except as set forth on Schedule 3.1(g) or
specified in the SEC Reports, no securities of the Company are entitled to
preemptive or similar rights, and 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 set
forth on Schedule 3.1(g) or specified in the SEC Reports,
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 exchangeable for, or giving any Person any
right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements, in each instance, by which the
Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable
into shares of Common Stock. The issue and sale of the Shares will not,
immediately or with the passage of time, obligate the Company to issue shares
of Common Stock or other securities to any Person (other than the Investors)
and will not result in a right of any holder of Company securities to adjust
the exercise, conversion, exchange or reset price under such securities.

 

(h)                                 SEC
Reports; Financial Statements. The Company has filed all reports required
to be filed by it under the Securities Act and the Exchange Act, including
pursuant to 

 

6

 

Section 13(a) or
15(d) thereof, for the twelve months preceding the date hereof (or such
shorter period as the Company was required by law to file such reports) (the
foregoing materials being collectively referred to herein as the “SEC Reports” and, together with the
Schedules to this Agreement (if any), the “Disclosure
Materials”) on a timely basis or has timely filed a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. Except as set forth on Schedule 3.1(h),
as of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission
with respect thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved, except as may be otherwise specified in
such financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

(i)                                     Material
Changes. Since September 30, 2005, (i) there has been no event,
occurrence or development that has had or that would reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any
material liabilities (contingent or otherwise) other than (A) trade
payables, accrued expenses and other liabilities incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not altered its method of accounting or the identity of its
auditors, (iv) except as set forth on Schedule 3.1(i), the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company
has not issued any equity securities to any officer, director or Affiliate,
except pursuant to existing Company stock option plans. The Company does not
have pending before the Commission any request for confidential treatment of
information.

 

(j)                                     Litigation.
There is no Action which (i) adversely affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the Shares or
(ii) except as disclosed in the SEC Reports, would, if there were an
unfavorable decision, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
Subsidiary, nor, to the knowledge of the Company, any director or officer
thereof (in his or her capacity as such), is or has been the subject of any
Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, except as specifically
disclosed in the SEC Reports. There has not been, and to the knowledge of the
Company, there is not pending any investigation by the Commission involving the
Company or any current or former director or officer of the Company (in his or
her capacity as such). The Commission has not issued any stop order or other
order 

 

7

 

suspending the
effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.

 

(k)                                  Labor
Relations. No material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the Company.

 

(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 written
notice of a claim that it is in default under or that it is in violation of,
any indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether
or not such default or violation has been waived), (ii) is in violation of
any order of any court, arbitrator or governmental body, or (iii) is or
has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal,
state and local laws relating to taxes, environmental protection, occupational
health and safety, product quality and safety and employment and labor matters,
except in each case as would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The Company is
in compliance with all effective requirements of the Sarbanes-Oxley Act of 2002,
as amended, and the rules and regulations thereunder, that are applicable
to it, except where such noncompliance would not have or reasonably be expected
to result in a Material Adverse Effect.

 

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

 

(n)                                 Title
to Assets. Except as set forth on Schedule 3.1(n), the Company
and the Subsidiaries have good and valid title in fee simple to all real
property owned by them that is material to their respective businesses and good
and valid title in all personal property owned by them that is material to
their respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and the Subsidiaries. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries are
in compliance, except as would not, individually or in the aggregate, have or
reasonably be expected to 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, copyrights, licenses and other similar rights that
are necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure to so have
would, individually or in the aggregate, have or reasonably be expected to

 

8

 

result in a
Material Adverse Effect on the Company’s or the Subsidiaries’ current business
as described in the SEC Reports (collectively, the “Intellectual Property Rights”). Neither the Company nor any
Subsidiary has received a written notice that the Intellectual Property Rights
used by the Company or any Subsidiary violates or infringes upon the rights of
any Person. Except as set forth in the SEC Reports, to the knowledge of the
Company, all such Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual Property
Rights.

 

(p)                                 Insurance.
The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company and the
Subsidiaries are engaged. The Company has no reason to believe that it will not
be able to renew its and the Subsidiaries’ 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 on terms consistent with
market for the Company’s and such Subsidiaries’ respective lines of business.

 

(q)                                 Transactions
With Affiliates. Except as set forth in the SEC Reports, none of the
officers or directors of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as officers and
directors), that would be required to be disclosed pursuant to Item 404 of
Regulation S-K promulgated under the Securities Act.

 

(r)                                    Disclosure
and Accounting Controls. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those entities, particularly
during the period in which the Company’s Form 10-K or 10-Q, as the case may be,
is being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures in accordance with Item
307 of Regulation S-K under the Exchange Act for the Company’s most recently
ended fiscal quarter or fiscal year-end (such date, the “Evaluation Date”). The Company presented
in its most recently filed Form 10-K or Form 10-Q 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 has been no change in the Company’s internal control
over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) that has materially affected or is reasonably likely to
materially affect the Company’s internal control over financial reporting.

 

9

 

(s)                                  Solvency.
Based on the financial condition of the Company as of the Closing Date (and
assuming that the Closing shall have occurred), (i) the Company’s fair
saleable value of its assets exceeds the amount that will be required to be
paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature, and (ii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its debt when such amounts are required to be paid. The Company does
not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt).

 

(t)                                    Certain
Fees. Except as described in Schedule 3.1(t), no brokerage or
finder’s fees or commissions are or will be payable by the Company to any
broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other Person with respect to the transactions contemplated by
this Agreement. The Investors shall have no obligation with respect to any fees
or with respect to any claims (other than such fees or commissions owed by an
Investor pursuant to written agreements executed by such Investor which fees or
commissions shall be the sole responsibility of such Investor) made by or on
behalf of other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by this
Agreement.

 

(u)                                 Certain
Registration Matters. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Shares by
the Company to the Investors under the Transaction Documents. The Company is
eligible to register its Common Stock for resale by the Investors under Form S-3
promulgated under the Securities Act. Except as set forth on Schedule 3.1(u),
the Company has not granted or agreed to grant to any Person any rights
(including “piggy-back” registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority that
have not been satisfied.

 

(v)                                 Listing
and Maintenance Requirements. The Company has not, in the two years
preceding the date hereof, received written notice from any Trading Market to
the effect that the Company is not in compliance with the listing or maintenance
requirements thereof. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with the listing
and maintenance requirements for continued listing of the Common Stock on the
Trading Market on which the Common Stock is currently listed or quoted. The
issuance and sale of the Shares under the Transaction Documents does not
contravene the rules and regulations of the Trading Market on which the
Common Stock is currently listed or quoted, and no approval of the shareholders
of the Company thereunder is required for the Company to issue and deliver to
the Investors the Shares contemplated by Transaction Documents.

 

(w)                               Investment
Company. The Company is not, and is not an Affiliate of, and immediately
following the Closing will not have become, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

 

10

 

(x)                                   Application
of Takeover Protections. The Company has 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 Investors as a result
of the Investors and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation the
Company’s issuance of the Shares and the Investors’ ownership of the Shares.

 

(y)                                 No
Additional Agreements. The Company does not have any agreement or
understanding with any Investor with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.

 

(z)                                   Disclosure.
The Company confirms that neither it nor any Person acting on its behalf has
provided any Investor or its respective agents or counsel with any information
that the Company believes constitutes material, non-public information, except
insofar as the existence and terms of the proposed transactions contemplated
hereunder may constitute such information. The Company understands and
confirms that the Investors will rely on the foregoing sentence in effecting
transactions in securities of the Company. All disclosure provided to the
Investors regarding the Company, its business and the transactions contemplated
hereby, furnished by or on behalf of the Company (including the Company’s
representations and warranties set forth in this Agreement) are true and
correct and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.

 

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

 

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

 

11

 

(b)                                 Investment
Intent. Such Investor is acquiring the Shares being purchased by it
hereunder as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Shares or any part thereof,
without prejudice, however, to such Investor’s right at all times to sell or
otherwise dispose of all or any part of such Shares in compliance with
applicable federal and state securities laws. Subject to the immediately
preceding sentence, nothing contained herein shall be deemed a representation
or warranty by such Investor to hold such Shares for any period of time. Such
Investor is acquiring such Shares hereunder in the ordinary course of its
business. Such Investor does not have any agreement or understanding, directly
or indirectly, with any Person to distribute any of such Shares.

 

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

 

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

 

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

 

(f)                                    Certain
Trading Activities. Such Investor has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such
Investor, engaged in any transactions in the securities of the Company
(including, without limitations, any Short Sales involving the Company’s
securities) since the time that such Investor was first contacted by the
Company or Roth Capital Partners, LLC regarding an investment in the Company. Such
Investor covenants that neither it nor any Person acting on its behalf or
pursuant to any understanding with it will engage in any transactions in the
securities of the Company (including Short Sales) prior to the time that the
transactions contemplated by this Agreement are publicly disclosed.

 

12

 

(g)                                 Independent
Investment Decision. Such Investor has independently evaluated the merits
of its decision to purchase the Shares pursuant to the Transaction Documents,
and such Investor confirms that it has not relied on the advice of any other
Investor’s business and/or legal counsel in making such decision. Such Investor
has not relied on the business or legal advice of Roth Capital Partners, LLC or
any of its agents, counsel or Affiliates in making its investment decision
hereunder, and confirms that none of such Persons has made any representations
or warranties to such Investor in connection with the transactions contemplated
by the Transaction Documents.

 

(h)                                 Limited Ownership.                                         The
purchase by such Investor of the Shares issuable to it at the Closing will not
result in such Investor (individually or together with any other Person with
whom such Investor has identified, or will have identified, itself as part of
a “group” in a public filing made with the Commission involving the Company’s
securities) acquiring, or obtaining the right to acquire, in excess of 19.999%
of the outstanding shares of Common Stock or the voting power of the Company on
a post transaction basis that assumes that the Closing shall have occurred. Such
Investor does not presently intend to, alone or together with others, make a
public filing with the Commission to disclose that it has (or that it together
with such other Persons have) acquired, or obtained the right to acquire, as a
result of the Closing (when added to any other securities of the Company that
it or they then own or have the right to acquire), in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company on a post
transaction basis that assumes that the Closing shall have occurred.

 

(i)                                     Investment
Experience. Such Investor acknowledges that it can bear the economic risk
and complete loss of its investment in the Shares and it has such knowledge and
experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment contemplated hereby. Such Investor has
significant experience in making private investments, similar to the purchase
of the Shares hereunder. Such Investor understands that its investment in the
Shares involves a high degree of risk.

 

(j)                                     Reliance
on Exemptions. Such Investor understands that (i) the Shares are being
offered and sold in reliance upon specific exemptions from the registration
requirements of the U.S. federal and state securities laws and (ii) the
Company is relying upon the truth and accuracy of, and such Investor’s
compliance with, the representations, warranties, agreements, acknowledgements
and understandings of such Investor set forth herein in order to determine the
availability of such exemptions and the eligibility of such Investor to acquire
Shares. Such Investor understands that no U.S. federal or state agency or any
other government or governmental agency has passed upon the validity of or made
any recommendation or endorsement of the Shares.

 

(k)                                  Restricted
Securities. Such Investor understands that the Shares are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act only in certain limited
circumstances.

 

13

 

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

 

ARTICLE 4.

OTHER AGREEMENTS OF THE PARTIES

 

4.1.                              (a)                                  Shares may only
be disposed of in compliance with state and federal securities laws. In
connection with any transfer of the Shares other than pursuant to an effective
registration statement, to the Company, to an Affiliate of an Investor or in
connection with a bona fide pledge as contemplated in Section 4.1(b), the
Company may require the transferor thereof to provide to the Company an
opinion of counsel reasonably satisfactory to the Company, to the effect that
such transfer does not require registration of such transferred Shares under
the Securities Act.

 

(b)                                 Certificates
evidencing the Shares will contain the following legend, until such time as
they are not required under Section 4.1(c):

 

THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

 

The Company acknowledges and agrees that an Investor may from time
to time pledge, and/or grant a security interest in some or all of the Shares
pursuant to a bona fide margin agreement in connection with a bona fide margin
account and, if required under the terms of such agreement or account, such
Investor may transfer pledged or secured Shares to the pledgees or secured
parties. Such a pledge or transfer would not be subject to approval or consent
of the Company and no legal opinion of legal counsel to the pledgee, secured
party or pledgor shall be required in connection with the pledge, but such
legal opinion may be required in connection with a subsequent transfer
following default by the Investor transferor of the pledge. No notice shall be
required of such pledge. At the appropriate Investor’s expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party 

 

14

 

of Shares may reasonably request in
connection with a pledge or transfer of the Shares including the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) of
the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder. Each Investor
acknowledges and agrees that, except as otherwise provided in Section 4.1(c),
any Shares subject to a pledge or security interest as contemplated by this Section 4.1(b) shall
continue to bear the legend set forth in this Section 4.1(b) and be
subject to the restrictions on transfer set forth in Section 4.1(a).

 

(c)                                  Certificates
evidencing Shares shall not contain any legend (including the legend set forth
in Section 4.1(b)): (i) following a sale or transfer of such Shares
pursuant to an effective registration statement (including the Registration
Statement), or (ii) following a sale or transfer of such Shares pursuant
to Rule 144 (assuming the transferor is not an Affiliate of the Company),
or (iii) while such Shares are eligible for sale under Rule 144(k). If
an Investor shall make a sale or transfer of Shares either (x) pursuant to Rule 144
or (y) pursuant to a registration statement (and shall have complied with its
prospectus delivery requirements for such sale or transfer under federal
securities laws) and in each case shall have delivered to the Company or the
Company’s transfer agent the certificate representing Shares containing a
restrictive legend which are the subject of such sale or transfer and a
representation letter in customary form (the date of such sale or transfer
and Share delivery being the “Share Delivery
Date”) and (1) the Company shall fail to deliver or cause to be
delivered to such Investor a certificate representing such Shares that is free
from all restrictive or other legends by the third Trading Day following the
Share Delivery Date and (2) following such third Trading Day after the Share
Delivery Date and prior to the time such Shares are received free from
restrictive legends, the Investor, or any third party on behalf of such
Investor, purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Investor of such
Shares (a “Buy-In”), then the
Company shall pay in cash to the Investor (for costs incurred either directly
by such Investor or on behalf of a third party) the amount by which the total
purchase price paid for Common Stock as a result of the Buy-In (including
brokerage commissions, if any) exceed the proceeds received by such Investor as
a result of the sale to which such Buy-In relates. The Investor shall provide
the Company written notice indicating the amounts payable to the Investor in
respect of the Buy-In.

 

4.2.                              Furnishing of
Information. As long as the Company is subject to the reporting
requirements of the Exchange Act, the Company covenants to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. As long as any Investor owns Shares that are not
eligible for resale under Rule 144(k), and the Company is not required to
file reports pursuant to the Exchange Act, the Company will prepare and furnish
to the Investors and make publicly available in accordance with Rule 144(c) such
information as is required for the Investors to sell the Shares under Rule 144.
The Company further covenants that it will take such further action as any
holder of Shares may reasonably request, all to the extent required from
time to time to enable such Person to sell the Shares without registration
under the Securities Act within the limitation of the exemptions provided by Rule 144.

 

4.3.                              Integration. The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of the Company shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate 

 

15

 

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 Shares
in a manner that would require the registration under the Securities Act of the
sale of the Shares to the Investors, or that would be integrated with the offer
or sale of the Shares for purposes of the rules and regulations of any
Trading Market in a manner that would require stockholder approval of the sale
of the Shares to the Investors.

 

4.4.                              Subsequent
Registrations. Other than pursuant to the Registration Statement, prior to
the Effective Date, the Company may not file any registration statement
(other than on Form S-8)  with the
Commission with respect to any securities of the Company.

 

4.5.                              Securities Laws
Disclosure; Publicity. By 9:00 a.m. (New York time) on the Trading Day
following the execution of this Agreement, and by 9:00 a.m. (New York
time) on the Trading Day following the Closing Date, the Company shall issue
press releases disclosing the transactions contemplated hereby and the Closing.
On the Trading Day following the execution of this Agreement the Company will
file a Current Report on Form 8-K disclosing the material terms of the
Transaction Documents (and attach as exhibits thereto the Transaction
Documents), and on the Trading Day following the Closing Date the Company will
file an additional Current Report on Form 8-K to disclose the Closing. In
addition, the Company will make such other filings and notices in the manner
and time required by the Commission and the Trading Market on which the Common
Stock is listed. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Investor, or include the name of any Investor in any
filing with the Commission (other than the Registration Statement, any
prospectus relating to the Registration Statement and any exhibits to filings
made in respect of this transaction in accordance with periodic filing
requirements under the Exchange Act) or any regulatory agency or Trading
Market, without the prior written consent of such Investor, except to the
extent such disclosure is required by law or Trading Market regulations.

 

4.6.                              Limitation on Issuance
of Future Priced Securities. During the six months following the Closing
Date, the Company shall not issue any “Future Priced Securities” as such term
is described by NASD IM-4350-1.

 

4.7.                              Indemnification of
Investors. In addition to the indemnity provided in the Registration Rights
Agreement, the Company will indemnify and hold the Investors and their
directors, officers, shareholders, partners, employees and agents (each, an “Investor Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation (collectively, “Losses”) that any such Investor Party may suffer or
incur as a result of or relating to any misrepresentation, breach or inaccuracy
of any representation, warranty, covenant or agreement made by the Company in
any Transaction Document. In addition to the indemnity contained herein, the
Company will reimburse each Investor Party for its reasonable legal and other
expenses (including the cost of any investigation, preparation and travel in
connection therewith) incurred in connection therewith. Except as otherwise set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 4.7 shall be the same as those set forth in
Section 5 of the Registration Rights Agreement.

 

16

 

4.8.                              Non-Public Information.
The Company covenants and agrees that neither it nor any other Person acting on
its behalf will provide any Investor or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto such Investor shall have executed a written
agreement regarding the confidentiality and use of such information. The
Company understands and confirms that each Investor shall be relying on the
foregoing representations in effecting transactions in securities of the
Company.

 

4.9.                              Listing of Securities.
The Company agrees, (a) if the Company applies to have the Common Stock
traded on any other Trading Market, it will include in such application the
Shares, and will take such other action as is necessary or desirable to cause
the Shares to be listed on such other Trading Market as promptly as possible,
and (b) it will take all action reasonably necessary to continue the
listing and trading of its Common Stock on a Trading Market and will comply in
all material respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market.

 

4.10.                        Use of Proceeds. The
Company will use the net proceeds from the sale of the Shares hereunder for
working capital purposes and not for the satisfaction of any portion of the
Company’s debt (other than payment of trade payables and accrued expenses in
the ordinary course of the Company’s business and consistent with prior
practices), or to redeem any Common Stock or Common Stock Equivalents.

 

ARTICLE 5.

CONDITIONS PRECEDENT TO CLOSING

 

5.1.                              Conditions Precedent
to the Obligations of the Investors to Purchase Shares. The obligation of
each Investor to acquire Shares at the Closing is subject to the satisfaction
or waiver by such Investor, at or before the Closing, of each of the following
conditions:

 

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

 

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

 

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

 

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

 

(e)                                  No
Suspensions of Trading in Common Stock; Listing. Trading in the Common
Stock shall not have been suspended by the Commission or any Trading Market 

 

17

 

(except for
any suspensions of trading of not more than one Trading Day solely to permit
dissemination of material information regarding the Company) at any time since
the date of execution of this Agreement, and the Common Stock shall have been
at all times since such date listed for trading on a Trading Market;

 

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

 

(g)                                 Nasdaq Listing.
If applicable, the Nasdaq Stock Market shall have waived application of the 15
day prior notice contained in NASD Marketplace Rule 4310(c)(17)(D) or
such timeframe shall have expired without objection; and

 

(h)                                 Termination.
This Agreement shall not have been terminated as to such Investor in accordance
with Section 6.5.

 

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

 

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

 

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

 

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

 

(d)                                 Investors
Deliverables. Each Investor shall have delivered its Investors Deliverables
in accordance with Section 2.2(b);

 

(e)                                  Nasdaq Listing.
If applicable, the Nasdaq Stock Market shall have waived application of the 15
day prior notice contained in NASD Marketplace Rule 4310(c)(17)(D) or
such timeframe shall have expired without objection; and

 

(f)                                    Termination.
This Agreement shall not have been terminated as to such Investor in accordance
with Section 6.5.

 

18

 

ARTICLE 6.

MISCELLANEOUS

 

6.1.                              Fees and Expenses.
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 the Transaction Documents. The Company shall pay all stamp and
other taxes and duties levied in connection with the issuance of the Shares.

 

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

 

6.3.                              Notices. Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Trading
Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the
Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices
and communications shall be as follows:

 

	
   

  	
  If to the Company:

  	
  BioSphere Medical, Inc.

  
	
   

  	
   

  	
  1050 Hingham St.

  
	
   

  	
   

  	
  Rockland, Massachusetts 02370

  
	
   

  	
   

  	
  Attn: Chief Executive Officer

  
	
   

  	
   

  	
  Facsimile: (781) 681-5093

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
  Wilmer Cutler Pickering Hale and Dorr LLP

  
	
   

  	
   

  	
  60 State Street

  
	
   

  	
   

  	
  Boston, Massachusetts 02109

  
	
   

  	
   

  	
  Attn: Susan W. Murley, Esq.

  
	
   

  	
   

  	
  Facsimile: (617) 526-5000

  
	
   

  	
   

  	
   

  
	
   

  	
  If to an Investor:

  	
  To the address set forth under such
  Investor’s name on the signature pages hereof;

  

 

or such other address as may be designated in writing hereafter,
in the same manner, by such Person.

 

6.4.                              Amendments; Waivers;
No Additional Consideration. No provision of this Agreement may be
waived or amended except in a written instrument signed by the Company 

 

19

 

and the Investors holding a majority of the Shares. No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Investor to amend or consent to a
waiver or modification of any provision of any Transaction Document unless the
same consideration is also offered to all Investors who then hold Shares.

 

6.5.                              Termination. This
Agreement may be terminated prior to Closing by written agreement of the
Investors and the Company.

 

6.6.                              Construction. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction Documents.

 

6.7.                              Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the parties
and their successors and permitted assigns. The Company may not assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Investors. Any Investor may assign any or all of its rights
under this Agreement to any Person to whom such Investor assigns or transfers
any Shares, provided such transferee agrees in writing to be bound, with
respect to the transferred Shares, by the provisions hereof that apply to the “Investors.”  The preceding sentence shall not apply to (a) any
Shares that have been registered under the Securities Act pursuant to an
effective registration statement filed thereunder and disposed of in accordance
with such registration statement, or (b) any Shares that have been
publicly sold pursuant to Rule 144.

 

6.8.                              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 4.7 (as to each Investor Party).

 

6.9.                              Governing Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party hereto hereby irrevocably
submits to the jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to the
enforcement of the any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any such New York Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service 

 

20

 

of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Each party hereto hereby irrevocably waives, to
the fullest extent permitted by applicable law, any and all right to trial by
jury in any legal proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby. If either party shall commence a
Proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such Proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

 

6.10.                        Survival. The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Shares.

 

6.11.                        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 or other
electronic transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or other
electronic signature page were an original thereof.

 

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

 

6.13.                        Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) the Transaction Documents, whenever any
Investor 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 Investor 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.

 

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

 

21

 

a replacement certificate or instrument evidencing any Shares is
requested due to a mutilation thereof, the Company may require delivery of
such mutilated certificate or instrument as a condition precedent to any
issuance of a replacement.

 

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

 

6.16.                        Payment Set Aside. To
the extent that the Company makes a payment or payments to any Investor
pursuant to any Transaction Document or an Investor enforces or exercises its
rights thereunder, and such payment or payments or the proceeds of such
enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged
by or are required to be refunded, repaid or otherwise restored to the Company,
a trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such enforcement or
setoff had not occurred.

 

6.17.                        Independent Nature of
Investors’ Obligations and Rights. The obligations of each Investor under
any Transaction Document are several and not joint with the obligations of any
other Investor, and no Investor shall be responsible in any way for the
performance of the obligations of any other Investor under any Transaction
Document. The decision of each Investor to purchase Shares pursuant to the
Transaction Documents has been made by such Investor independently of any other
Investor. Nothing contained herein or in any Transaction Document, and no
action taken by any Investor pursuant thereto, shall be deemed to constitute
the Investors as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Investors 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 Investor
acknowledges that no other Investor has acted as agent for such Investor in
connection with making its investment hereunder and that no Investor will be
acting as agent of such Investor in connection with monitoring its investment
in the Shares or enforcing its rights under the Transaction Documents. Each
Investor 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
Investor to be joined as an additional party in any proceeding for such purpose.
The Company acknowledges that each of the Investors has been provided with the
same Transaction Documents for the purpose of closing a transaction with
multiple Investors and not because it was required or requested to do so by any
Investor.

 

6.18.                        Limitation of Liability.
Notwithstanding anything herein to the contrary, the Company acknowledges and
agrees that the liability of an Investor arising directly or indirectly, 

 

22

 

under any Transaction Document of any and every nature whatsoever shall
be satisfied solely out of the assets of such Investor, and that no trustee,
officer, other investment vehicle or any other Affiliate of such Investor or
any investor, shareholder or holder of shares of beneficial interest of such a
Investor shall be personally liable for any liabilities of such Investor.

 

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LEFT BLANK

SIGNATURE PAGES FOLLOW]

 

23

 

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.

 

	
   

  	
  BIOSPHERE
  MEDICAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

[REMAINDER OF PAGE INTENTIONALLY
LEFT BLANK

SIGNATURE PAGES FOR INVESTORS FOLLOW]

 

24

 

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.

 

	
   

  	
  NAME OF
  INVESTOR

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Investment Amount: $

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tax ID No.:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADDRESS FOR NOTICE

  
	
   

  	
   

  
	
   

  	
  c/o:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Street:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  City/State/Zip:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tel:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DELIVERY INSTRUCTIONS

  
	
   

  	
  (if
  different from above)

  
	
   

  	
   

  
	
   

  	
  c/o:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Street:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  City/State/Zip:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Tel:

  	
   

  	
   

  
															

 

25

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