Document:

Exhibit 4.1

 

NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR APPLICABLE STATE SECURITIES LAWS. 
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT. 
NO REPRESENTATION IS MADE BY THE ISSUER AS TO THE AVAILABILITY OF THE
EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALES OF THESE
SECURITIES.

 

HELICOS BIOSCIENCES CORPORATION

 

WARRANT TO PURCHASE COMMON STOCK

 

	
   

  	
   

  	
   

  
	
  Warrant
  No.

  	
   

  	
  Original Issue Date:
  September       , 2009

  

 

Helicos BioSciences Corporation, a Delaware
corporation (the “Company”), hereby certifies that,
for value received,                       
or its permitted registered assigns (the “Holder”), is
entitled to purchase from the Company up to a total of                   
shares of common stock, $0.001 par value per share (the “Common Stock”),
of the Company (each such share, a “Warrant
Share” and all such shares, the “Warrant
Shares”) at an exercise price equal to $2.61 per share (as adjusted
from time to time as provided in Section 9 herein, the “Exercise Price”), at any time and from
time to time on or after the six month anniversary of the date hereof (the “Trigger Date”) and through and including
5:30 P.M., New York City time, on March       ,
2015 (the “Expiration Date”), and
subject to the following terms and conditions:

 

This Warrant (this “Warrant”) is one of a series of similar warrants issued
pursuant to that certain Securities Purchase Agreement, dated September 15,
2009, by and among the Company and the Purchasers identified therein (the “Purchase Agreement”).  All such warrants are referred to herein,
collectively, as the “Warrants.”

 

1.                                       Definitions. In addition to the terms defined
elsewhere in this Warrant, capitalized terms that are not otherwise defined
herein have the meanings given to such terms in the Purchase Agreement.

 

2.                                       Registration of Warrants. 
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 (which shall include
the initial Holder or, as the case may be, any registered assignee to which
this Warrant is permissibly assigned hereunder) 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.

 

 

3.                                       Registration of Transfers. Subject to the restrictions on transfer
set forth in Section 4.1 of the Purchase Agreement and compliance with all
applicable securities laws, the Company shall register the transfer of all or
any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached as Schedule 2 hereto
duly completed and signed, to the Company’s transfer agent or to the Company at
its address specified in the Purchase Agreement and (x) delivery, at the
request of the Company, of an opinion of counsel reasonably satisfactory to the
Company to the effect that the transfer of such portion of this Warrant may be
made pursuant to an available exemption from the registration requirements of
the Securities Act and all applicable state securities or blue sky laws and (y) delivery
by the transferee of a written statement to the Company certifying that the
transferee is an “accredited investor” as defined in Rule 501(a) under
the Securities Act, to the Company at its address specified in the Purchase
Agreement. Upon any such registration or transfer, a new warrant to purchase
Common Stock in substantially the form of this Warrant (any such new warrant, a
“New Warrant”) evidencing the
portion of this Warrant so transferred shall be issued to the transferee, and a
New Warrant evidencing the remaining portion of this Warrant not so
transferred, if any, shall be issued to the transferring Holder.  Any New Warrant issued pursuant to a partial
exercise of this Warrant or as a result of a transfer of this Warrant shall be
deemed to have the Original Issue Date of September       ,
2009 which is the date that this Warrant was initially issued to such Holder or
its predecessor.  The acceptance of the
New Warrant by the transferee thereof shall be deemed the acceptance by such
transferee of all of the rights and obligations in respect of the New Warrant
that the Holder has in respect of this Warrant. The Company shall prepare,
issue and deliver at its own expense any New Warrant under this Section 3.

 

4.                                       Exercise and Duration of Warrants.

 

(a)                                  All or any part of this Warrant shall be
exercisable by the registered Holder in any manner permitted by Section 10
of this Warrant at any time and from time to time on or after the Trigger Date
and through and including 5:30 P.M. New York City time, on the Expiration
Date. At 5:30 P.M., New York City time, on the Expiration Date, the
portion of this Warrant not exercised prior thereto shall be and become void
and of no value and this Warrant shall be terminated and no longer outstanding.

 

(b)                                 The Holder may exercise this Warrant by
delivering to the Company (i) an exercise notice, in the form attached as Schedule
1 hereto (the “Exercise Notice”),
completed and duly signed,  and (ii) payment
of the Exercise Price for the number of Warrant Shares as to which this Warrant
is being exercised (which may take the form of a “cashless exercise” if so
indicated in the Exercise Notice and if a “cashless exercise” may occur at such
time pursuant to Section 10 below), and the date on which the last of such
items is delivered to the Company (as determined in accordance with the notice
provisions hereof) is an “Exercise Date.”  The Holder shall not be required to deliver
the original Warrant in order to effect an exercise hereunder.  Execution and delivery of the Exercise Notice
shall have the same effect as cancellation of the original Warrant and issuance
of a New Warrant evidencing the right to purchase the remaining number of
Warrant Shares.

 

2

 

5.                                  Delivery of Warrant Shares.

 

(a)                                  Upon exercise of this Warrant, the
Company shall promptly (but in no event later than three Trading Days after the
Exercise Date) issue or cause to be issued and cause to be delivered to or upon
the written order of the Holder and in such name or names as the Holder may
designate (provided that, if the Registration Statement is not effective and
the Holder directs the Company to deliver a certificate for the Warrant Shares
in a name other than that of the Holder or an Affiliate of the Holder, it shall
deliver to the Company on the Exercise Date an opinion of counsel reasonably
satisfactory to the Company to the effect that the issuance of such Warrant
Shares in such other name may be made pursuant to an available exemption from
the registration requirements of the Securities Act and all applicable state
securities or blue sky laws), (i) a certificate for the Warrant Shares
issuable upon such exercise, free of restrictive legends, or (ii) an
electronic delivery of the Warrant Shares to the Holder’s account at the
Depository Trust Company (“DTC”)
or a similar organization, unless in the case of clause (i) and (ii) a
registration statement covering the resale of the Warrant Shares and naming the
Holder as a selling stockholder thereunder is not then effective or the Warrant
Shares are not freely transferable without volume and manner of sale
restrictions pursuant to Rule 144 under the Securities Act, in which case
such Holder shall receive a certificate for the Warrant Shares issuable upon
such exercise with appropriate restrictive legends.  The Holder, or any Person permissibly so
designated by the Holder to receive Warrant Shares, shall be deemed to have
become the holder of record of such Warrant Shares as of the Exercise
Date.  If the Warrant Shares are to be
issued free of all restrictive legends, the Company shall, upon the written
request of the Holder, use its reasonable best efforts to deliver, or cause to
be delivered, Warrant Shares hereunder electronically through DTC or another
established clearing corporation performing similar functions, if available;
provided, that, the Company may, but will not be required to, change its
transfer agent if its current transfer agent cannot deliver Warrant Shares
electronically through such a clearing corporation.

 

(b)                                 In addition to any other rights available
to the Holder, if by the close of the third Trading Day after delivery of an
Exercise Notice and the payment of the aggregate exercise price in any manner
permitted by Section 10 of this Warrant, the Company fails to deliver to
the Holder a certificate representing the required number of Warrant Shares in
the manner required pursuant to Section 5(a), and if after such third
Trading Day and prior to the receipt of such Warrant Shares, the Holder or the
Holder’s brokerage firm purchases (in an open market transaction or otherwise)
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, within three (3) Trading Days after the Holder’s request and in the
Holder’s sole discretion, either (1) pay in cash to the Holder an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such Warrant Shares) shall
terminate or (2) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Warrant Shares and pay cash to
the Holder in an amount equal to the excess (if any) of Holder’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased in the Buy-In over the product of (A) the number of shares of
Common Stock purchased in the Buy-In, times (B) the closing bid price of a
share of Common Stock on the Exercise Date.

 

(c)                                  To the extent permitted by law, the
Company’s obligations to issue and deliver Warrant Shares in accordance with
and subject to the terms hereof (including the limitations set forth in Section 11
below) are absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with respect to any
provision hereof, the 

 

3

 

recovery of any judgment against any Person or
any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or any
other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person, and irrespective of any
other circumstance that might otherwise limit such obligation of the Company to
the Holder in connection with the issuance of Warrant Shares. Nothing herein
shall limit the 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.

 

6.                                       Charges, Taxes and Expenses. Issuance and delivery of certificates
for shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the registration of any certificates for Warrant Shares or the
Warrants in a name other than that of the Holder or an Affiliate thereof. The
Holder shall be responsible for all other tax liability that may arise as a
result of holding or transferring this Warrant or receiving Warrant Shares upon
exercise hereof.

 

7.                                       Replacement of Warrant. 
If this Warrant is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Warrant, a New
Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction (in such case) and, in each case, a
customary and reasonable indemnity or surety bond, if requested by the Company.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a New Warrant is requested
as a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company’s
obligation to issue the New Warrant.

 

8.                                       Reservation of Warrant Shares. The Company represents, warrants,
covenants and agrees that it will at all times reserve and keep available out
of the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares that are
issuable and deliverable upon the exercise of this entire Warrant, free from
preemptive rights or any other contingent purchase rights of persons other than
the Holder (taking into account the adjustments and restrictions of Section 9).
The Company covenants that all Warrant Shares so issuable and deliverable
shall, upon issuance and the payment of the applicable Exercise Price in
accordance with the terms hereof, be duly and validly authorized, issued and
fully paid and nonassessable. The Company, without requiring any action to be
taken or expense to be incurred by Holder, will take all such action as may be
reasonably necessary to assure that such shares of Common Stock may be issued
as provided herein without violation of any applicable law or regulation, or of
any requirements of any securities exchange or automated quotation system upon
which the Common Stock may be listed.

 

9.                                       Certain Adjustments. The Exercise Price and number of
Warrant Shares issuable upon exercise of this Warrant are subject to adjustment
from time to time as set forth in this Section 9.

 

4

 

(a)                                  Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise
makes a distribution on any class of capital stock that is payable in shares of
Common Stock, (ii) subdivides its outstanding shares of Common Stock into
a larger number of shares, (iii) combines its outstanding shares of Common
Stock into a smaller number of shares or (iv) issues by reclassification
of shares of Common Stock any shares of capital stock of the Company, then in
each such case the Exercise Price shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately before such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii), (iii) or (iv) of this paragraph
shall become effective immediately after the effective date of such subdivision
or combination or reclassification.

 

(b)                                 Pro Rata Distributions. 
If the Company, at any time while this Warrant is outstanding,
distributes to all holders of Common Stock for no consideration (i) evidences
of its indebtedness, (ii) any security (other than a distribution of
Common Stock covered by the preceding paragraph) or (iii) rights, options
or warrants to subscribe for or purchase any security, or (iv) any other
asset (including cash or cash dividends) (in each case, “Distributed Property”), then, upon any
exercise of this Warrant that occurs after the record date fixed for
determination of stockholders entitled to receive such distribution, the Holder
shall be entitled to receive, in addition to the Warrant Shares otherwise issuable
upon such exercise (if applicable), the Distributed Property that such Holder
would have been entitled to receive in respect of such number of Warrant Shares
had the Holder been the record holder of such Warrant Shares immediately prior
to such record date without regard to any limitation on exercise contained
therein.

 

(c)                                  Fundamental
Transactions. If, at any time while this Warrant is
outstanding  (i) the Company effects
any merger or consolidation of the Company with or into another Person, in which
the Company is not the survivor or the stockholders of the Company immediately
prior to such merger or consolidation do not own, directly or indirectly, at
least 50.1% of the voting securities of the surviving entity, (ii) the
Company effects any sale, lease, assignment, transfer, conveyance or other
distribution of all or substantially all of its assets is acquired by a third
party, in each case,  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 at least a majority of the holders of Common Stock
are permitted to tender or exchange their shares for other securities, cash or
property, (iv) the Company, directly or indirectly, in one or more related
transactions, effects any reorganization, recapitalization or reclassification
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 (other than as a result of a subdivision or combination of
shares of Common Stock covered by Section 9(a) above), or (v) the
Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another person whereby such other person 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) (in any
such case, a “Fundamental Transaction”),
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would

 

5

 

have
been entitled to receive upon the occurrence of such Fundamental Transaction if
it had been, immediately prior to such Fundamental Transaction, the holder of
the number of Warrant Shares then issuable upon exercise in full of this
Warrant without regard to any limitations on exercise contained herein (the “Alternate Consideration”).  The Company shall not effect any such
Fundamental Transaction unless prior to or simultaneously with the consummation
thereof, any successor to the Company, surviving entity or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation
or Person shall assume the obligation to deliver to the Holder, such Alternate
Consideration as, in accordance with the foregoing provisions, the Holder may be
entitled to receive, and the other obligations under this Warrant.  The provisions of this paragraph (c) shall
similarly apply to subsequent transactions analogous of a Fundamental
Transaction type.  Notwithstanding the
foregoing, in the event of a Change of Control other than one in which a
successor entity that is a publicly traded corporation whose stock is quoted or
listed for trading on an Eligible Market assumes this Warrant such that the
Warrant shall be exercisable for the publicly traded common stock of such
successor entity, at the option of the Holder exercisable at any time
concurrently with or within 90 days after such Change of Control, the Company
(or the successor entity) shall purchase this Warrant from the Holder by paying
to the Holder, within five Trading Days after such request (or, if later, on
the effective date of the Change of Control), cash in an amount equal to the
Black Scholes Value of the remaining unexercised portion of this Warrant on the
date of the consummation of such Change of Control.  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 9(c) pursuant
to written agreements prior to such Fundamental Transaction and shall, at the
option of the holder of this Warrant, 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). 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 Transaction, the provisions of this Warrant
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 with the same effect as if such
Successor Entity had been named as the Company herein.

 

For
the benefit of both the Company and the Holder, attached as Exhibit A
to this Warrant is an example of the Black Scholes Value calculation using
assumed numbers.

 

As
used herein, the following capitalized terms shall have the meanings set forth
below:

 

“Black Scholes Value” means the value of this Warrant based
on the Black and Scholes Option Pricing Model obtained from the “OV” function
on Bloomberg L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Change of Control
for pricing purposes and reflecting: (i) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Change of 

 

6

 

Control
and the Expiration Date, (ii) an expected volatility equal to one hundred
percent (100%), (iii) the underlying price per share used in such
calculation shall be the sum of the price per share to be received in cash, if
any, plus the value of any non-cash consideration to be received, if any, by
the holders of Common Stock upon the consummation of the applicable Change of
Control and (iv) a remaining option time equal to the time between the
date of the public announcement of the applicable Change of Control and the
Expiration Date.

 

“Change of Control” means any Fundamental Transaction other
than (i) any reorganization, recapitalization or reclassification of the
Common Stock in which holders of the Company’s voting power immediately prior
to such reorganization, recapitalization or reclassification continue after
such reorganization, recapitalization or reclassification to hold the
investment power (which includes the direct ownership of and power to dispose
of such securities) and voting power with respect to publicly traded securities
and, directly have the voting power of the surviving entity or entities necessary
to elect a majority of the members of the board of directors (or their
equivalent if other than a corporation) of such entity or entities, or (ii) pursuant
to a migratory merger effected solely for the purpose of changing the
jurisdiction of incorporation of the Company.

 

“Eligible Market” means the New York Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market, or the NYSE Amex.

 

(d)                                 Number of Warrant Shares. Simultaneously with any adjustment to
the Exercise Price pursuant to paragraph (a) of this Section 9, the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the increased or decreased
number of Warrant Shares shall be the same as the aggregate Exercise Price in
effect immediately prior to such adjustment.

 

(e)                                  Subsequent Equity Sales.

 

(i)                                     If the Company
shall at any time issue shares of Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, at a price per share
less than the Exercise Price in effect immediately prior to the time of such
issuance (if the holder of the Common Stock or Common Stock Equivalent so
issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights issued in connection with such
issuance, be entitled to receive shares of Common Stock at a price less than
the Exercise Price, such issuance shall be deemed to have occurred for less
than the Exercise Price), then, the Exercise Price shall be reduced to equal
such lower price, but the number of Warrant Shares which the Holder may acquire
under this Warrant will not be affected thereby. Such adjustment shall be made
whenever such Common Stock or Common Stock Equivalents are issued. The Company
shall notify the Holder in writing, no later than the Trading Day following the
issuance of any Common Stock or Common Stock Equivalent subject to this
Section, indicating therein the applicable issuance price, or the applicable
reset price, exchange price, conversion price and other pricing terms.

 

As used in this Warrant, the term “Common Stock Equivalents”
means any securities of the Company or any Subsidiary 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 exchangeable for, or
otherwise

 

7

 

entitles
the holder thereof to receive, Common Stock or other securities that entitle
the holder to receive, directly or indirectly, Common Stock.

 

(ii)                                  For purposes of this paragraph (e), the
following paragraphs (e)(ii)(l) to (e)(ii)(7) shall also be
applicable:

 

(1)                                  Issuance of Rights or Options. In case at any time the Company shall
in any manner grant (directly and not by assumption in a merger or otherwise)
any warrants or other rights to subscribe for or to purchase, or any options
for the purchase of, Common Stock or any stock or security convertible into or
exchangeable for Common Stock (such warrants, rights or options being called “Options” and such convertible or
exchangeable stock or securities being called “Convertible
Securities”), whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the sum (which sum shall constitute the
applicable consideration) of (x) the total amount, if any, received or
receivable by the Company as consideration for the granting of such Options,
plus (y) the aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus (z), in the case of such
Options that relate to Convertible Securities, the aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by (ii) the
total maximum number of shares of Common Stock issuable upon the exercise of
such Options or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such Options) shall be less than the
Exercise Price in effect immediately prior to the time of the granting of such
Options, then the total number of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the total amount of
such Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of granting
of such Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding for purposes of adjusting the Exercise Price.
Except as otherwise provided in paragraph (e)(ii)(3), no adjustment of the
Exercise Price shall be made upon the actual issue of such Common Stock or of
such Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities.

 

(2)                                  Issuance of Convertible Securities. In case the Company shall in any manner
issue (directly and not by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert any
such Convertible Securities are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange
(determined by dividing (i) the sum (which sum shall constitute the
applicable consideration) of (x) the total amount received or receivable
by the Company as consideration for the issue or sale of such Convertible
Securities, plus (y) the aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange thereof, by (ii) the
total number of shares of Common Stock issuable upon the conversion or exchange
of all such Convertible Securities) shall be less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then the total
maximum number of shares of Common Stock issuable upon conversion or exchange
of all such Convertible Securities shall be deemed to have been issued for such
price per share as of the date of the issue or sale of such Convertible
Securities and thereafter shall be deemed to be outstanding for purposes of
adjusting the Exercise Price, provided that (a) except as otherwise
provided in paragraph (e)(ii)(3), no adjustment of the Exercise Price shall be
made upon the actual issuance of such Common Stock upon conversion or exchange
of such Convertible Securities and (b) no further adjustment of the
Exercise Price shall be made by reason of the issue

 

8

 

or sale of Convertible Securities upon
exercise of any Options to purchase any such Convertible Securities for which
adjustments of the Exercise Price have been made pursuant to the other
provisions of paragraph (e). No adjustment pursuant to this Section 9
shall be made if such adjustment would result in an increase of the Exercise
Price then in effect.

 

(3)                                  Change in Option Price or Conversion Rate. Upon the happening of any of the
following events, namely, if the purchase price provided for in any Option
referred to in paragraph (e)(ii)(l) of this Section 9, the
additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in paragraphs (e)(ii)(l) or
(e)(ii)(2), or the rate at which Convertible Securities referred to in
paragraphs (e)(ii)(l) or (e)(ii)(2) are convertible into or
exchangeable for Common Stock shall change at any time (including, but not
limited to, changes under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such event shall
forthwith be reduced to the Exercise Price that would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate,
as the case may be, at the time initially granted, issued or sold.

 

(4)                                  Stock Dividends.  Subject to the provisions of this paragraph
(e), in case the Company shall declare a dividend or make any other
distribution upon any stock of the Company (other than the Common Stock)
payable in Common Stock, Options or Convertible Securities, then any Common
Stock, Options or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been issued or
sold without consideration.

 

(5)                                  Consideration for Stock. 
In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for cash, the consideration received therefor shall be
deemed to be the gross amount received by the Company therefor. In case any
shares of Common Stock, Options or Convertible Securities shall be issued or
sold for a consideration other than cash, the amount of the consideration other
than cash received by the Company shall be deemed to be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company. In case any Options shall be issued in connection with the issue and
sale of other securities of the Company, together comprising one integral
transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued for such
consideration as determined in good faith by the Board of Directors of the
Company. If Common Stock, Options or Convertible Securities shall be issued or sold
by the Company and, in connection therewith, other Options or Convertible
Securities (the “Additional Rights”)
are issued, then the consideration received or deemed to be received by the
Company shall be reduced by the fair market value of the Additional Rights (as
determined using the Black Scholes Option Pricing Model or another method
mutually agreed to by the Company and the Holder). The Board of Directors of
the Company shall respond promptly, in writing, to an inquiry by the Holder as
to the fair market value of the Additional Rights. In the event that the Board
of Directors of the Company and the Holder are unable to agree upon the fair
market value of the Additional Rights, the Company and the Holder shall jointly
select an appraiser who is experienced in such matters. The decision of such
appraiser shall be final and conclusive, and the cost of such appraiser shall
be borne evenly by the Company and the Holder.

 

(6)                                  Record Date.  In case the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them (i) to
receive a dividend or other distribution payable in Common Stock, Options or
Convertible Securities or (ii) to subscribe for or purchase Common Stock,
Options or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been

 

9

 

issued or sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.

 

(7)                                  Treasury Shares.  The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company or any of its wholly-owned subsidiaries, and the
disposition of any such shares (other than the cancellation or retirement
thereof) shall be considered an issue or sale of Common Stock for the purpose
of this paragraph (e).

 

(iii)                               Notwithstanding
the foregoing, no adjustment will be made under this paragraph (e) in
respect of: (i) the issuance of securities upon the exercise or conversion
of any Common Stock or Common Stock Equivalents issued by the Company prior to
the date hereof provided that the terms of such Common Stock or Common Stock
Equivalents are not amended, modified or changed on or after the date hereof, (ii) the
grant of options, warrants, Common Stock or other Common Stock Equivalents (but
not including any amendments to such instruments) under any duly authorized
Company stock option, restricted stock plan or stock purchase plan whether now
existing or hereafter approved by the Company and its stockholders in the
future, and the issuance of Common Stock in respect thereof, (iii) the
issuance of securities in connection with a Strategic Transaction, or (iv) the
issuance of securities in a transaction described in Section 9(a) or
9(b) (collectively, “Excluded Issuances”).
For purposes of this paragraph, a “Strategic
Transaction” means a transaction or relationship in which (1) the
Company issues shares of Common Stock to a Person that the Board of Directors
of the Company determined in good faith is, itself or through its Subsidiaries,
an operating company in a business synergistic with the business of the Company
(or a shareholder thereof) and (2) the Company expects to receive benefits
in addition to the investment of funds, but shall not include (x) a
transaction in which the Company is issuing securities primarily for the
purpose of raising capital or to a Person whose primary business is investing
in securities or (y) issuances to lenders.

 

[(iv)                     Nasdaq Limitation. 
Notwithstanding any other provisions in this Section 9 to the
contrary, if a reduction in the Exercise Price pursuant to Section 9(e)(i) would
require the Company to obtain stockholder approval of the transactions
contemplated by the Purchase Agreement pursuant to Nasdaq Marketplace Rule 5635(d) and
such stockholder approval has not been obtained, (i) the Exercise Price
shall be reduced to the maximum extent that would not require stockholder
approval under such Rule, and (ii) the Company shall use its reasonable
best efforts to obtain such stockholder approval (including causing the Board
of Directors of the Company to recommend to the stockholders that they grant
such approval) as soon as reasonably practicable, including by calling a
special meeting of stockholders to vote on such Exercise Price adjustment.  If, despite the Company’s reasonable best
efforts, stockholder approval is not obtained at such special meeting, the
Company shall cause an additional special meeting to be held each calendar
quarter thereafter until such stockholder approval is obtained.]

 

[(iv)                     Nasdaq Limitation. 
Notwithstanding any other provisions in this Section 9 to the
contrary, in no event shall the Exercise Price be reduced below $2.49 per share
pursuant to Section 9(e)(i) until such time as the Company has
obtained stockholder approval for such Exercise Price adjustment.  If a reduction in the Exercise Price pursuant
to Section 9(e)(i) would require the Company to obtain stockholder
approval and such stockholder approval has not been obtained, the Company shall
use its commercially reasonable efforts to obtain such stockholder approval as
soon as reasonably practicable, including by calling a special meeting of
stockholders to vote on such Exercise Price adjustment.]

 

10

 

(f)            Calculations. All calculations under this Section 9
shall be rounded to the nearest cent or up to the next share, as applicable.

 

(g)           Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly
notify the Holders of the applicable adjustment, compute such adjustment, in
good faith, in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment, including a statement of the
adjusted Exercise Price and adjusted number or type of Warrant Shares or other
securities issuable upon exercise of this Warrant (as applicable), describing
the transactions giving rise to such adjustments and showing in detail the
facts upon which such adjustment is based. Upon written request, the Company
will promptly deliver a copy of each such certificate to the Holder and to the
Company’s transfer agent.

 

(h)           Notice of Corporate Events. If, while this Warrant is outstanding,
the Company (i) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock, including, without
limitation, any granting of rights or warrants to subscribe for or purchase any
capital stock of the Company or any subsidiary, (ii) authorizes or approves,
enters into any agreement contemplating or solicits stockholder approval for
any Fundamental Transaction or (iii) authorizes the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then, except if such
notice and the contents thereof shall be deemed to constitute material
non-public information, the Company shall deliver to the Holder a notice of
such transaction at least ten (10) business days prior to the applicable
record or effective date on which a Person would need to hold Common Stock in
order to participate in or vote with respect to such transaction and the
Company will take all reasonable steps to give Holder the practical opportunity
to exercise this Warrant prior to such time; provided,
however, that the failure to deliver such notice or any defect
therein shall not affect the validity of the corporate action required to be
described in such notice. To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any of its subsidiaries, the Company shall
simultaneously file such notice with the Commission (as defined in the Purchase
Agreement) pursuant to a Current Report on Form 8-K.

 

10.           Payment of Exercise Price. The Holder shall pay the Exercise Price
in immediately available funds; provided,
however, that if, on any Exercise Date there is not an effective
Registration Statement registering, or no current prospectus available for, the
resale of the Warrant Shares by the Holder, then the Holder may, in its sole
discretion, satisfy its obligation to pay the Exercise Price through a “cashless
exercise”, in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:

 

X
= Y [(A-B)/A]

 

where:

 

X
= the number of Warrant Shares to be issued to the Holder.

 

Y
= the total number of Warrant Shares with respect to which this Warrant is
being exercised.

 

A = the average of the Closing Sale Prices of
the shares of Common Stock (as reported by Bloomberg Financial Markets) for the
five (5) consecutive Trading Days ending on the date immediately preceding
the Exercise Date.

 

11

 

B
= the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.

 

For
purposes of this Warrant, “Closing Sale Price”
means, for any security as of any date, the last trade price for such security
on the principal securities exchange or trading market for such security, as
reported by Bloomberg Financial Markets, or, if such exchange or trading market
begins to operate on an extended hours basis and does not designate the last
trade price, then the last trade price of such security prior to 4:00 P.M.,
New York City time, as reported by Bloomberg Financial Markets, or if the
foregoing do not apply, the last trade price of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg Financial Markets, or, if no last trade price is reported
for such security by Bloomberg Financial Markets, the average of the bid
prices, or the ask prices, respectively, of any market makers for such security
as reported in the “pink sheets” by Pink Sheets LLC.  If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to
agree upon the fair market value of such security, then the Board of Directors
of the Company shall use its good faith judgment to determine the fair market
value.  The Board of Directors’
determination shall be binding upon all parties absent demonstrable error.  All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination
or other similar transaction during the applicable calculation period.

 

Notwithstanding
anything herein to the contrary, on the Expiration Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this Section 10.

 

[11.        [Reserved.]]

 

[11.        Limitations on Exercise.

 

(a)           Notwithstanding anything to the contrary
contained herein, the number of Warrant Shares that may be acquired by the
Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall
be limited to the extent necessary to ensure that, following such exercise (or
other issuance), the total number of shares of Common Stock then beneficially
owned by the Holder and its affiliates and any other persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act, does not exceed 4.99% of the total
number of issued and outstanding shares of Common Stock (including for such
purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership 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 11(a), 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 Securities and Exchange Commission (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 its 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 Company’s
obligation to issue shares of Common Stock in excess of the limitation referred
to in this Section shall be suspended (and, except as provided below,
shall not terminate or expire notwithstanding 

 

12

 

any contrary provisions hereof) until such time,
if any, as such shares of Common Stock may be issued in compliance with such
limitation; provided that if, as of 5:30 P.M., New York City time, on the
Expiration Date, the Company has not received written notice that the shares of
Common Stock may be issued in compliance with such limitation, the Company’s
obligation to issue such shares shall terminate.  This provision shall not restrict the number
of shares of Common Stock which a Holder may receive or beneficially own in
order to determine the amount of securities or other consideration that such
Holder may receive in the event of a Fundamental Transaction as contemplated in
Section 9 of this Warrant.  By
written notice to the Company, the Holder may waive the provisions of this Section but
any such waiver will not be effective until the 61st day after such notice is
delivered to the Company, nor will any such waiver affect any other Holder.

 

(b)           Notwithstanding anything to the contrary
contained herein, the number of Warrant Shares that may be acquired by the
Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall
be limited to the extent necessary to ensure that, following such exercise (or
other issuance), the total number of shares of Common Stock then beneficially
owned by such Holder and its affiliates and any other persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Exchange Act, does not exceed 9.99% of the total
number of issued and outstanding shares of Common Stock (including for such
purpose the shares of Common Stock issuable upon such exercise). For such
purposes, beneficial ownership shall be determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated thereunder. The
Company’s obligation to issue shares of Common Stock in excess of the
limitation referred to in this Section shall be suspended (and, except as
provided below, shall not terminate or expire notwithstanding any contrary
provisions hereof) until such time, if any, as such shares of Common Stock may
be issued in compliance with such limitation; provided that if, as of 5:30 P.M.,
New York City time, on the Expiration Date, the Company has not received
written notice that the shares of Common Stock may be issued in compliance with
such limitation, the Company’s obligation to issue such shares shall
terminate.  This provision shall not
restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a Fundamental
Transaction as contemplated in Section 9 of this Warrant.  This restriction may not be waived.]

 

12.           No Fractional Shares. No fractional Warrant Shares will be
issued in connection with any exercise of this Warrant.  In lieu of any fractional shares that would,
otherwise be issuable, the number of Warrant Shares to be issued shall be rounded
down to the next whole number and the Company shall pay the Holder in cash the
fair market value (based on the Closing Sale Price) for any such fractional
shares.

 

13.           Notices. Any and all notices or other communications or
deliveries hereunder (including, without limitation, any Exercise Notice) shall
be in writing and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in the Purchase Agreement prior to
5:30 P.M., New York City time, on a Trading Day, (ii) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in the Purchase
Agreement on a day that is not a Trading Day or later than 5:30 P.M., New
York City time, on any Trading Day, (iii) the Trading Day following the
date of mailing, if sent by nationally recognized overnight courier service
specifying next business day delivery, or (iv) upon actual receipt by the
party to whom such notice is required to be given, if by hand delivery. The
address and facsimile number of a party for such notices or communications
shall be as set forth in the Purchase Agreement unless changed by such party by
two (2) Trading Days’ prior notice to the other party in accordance with
this Section 13.

 

13

 

14.           Warrant Agent. The Company shall serve as warrant
agent under this Warrant. Upon thirty (30) days’ notice to the Holder, the
Company may appoint a new warrant agent. Any corporation into which the Company
or any new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or shareholders services business
shall be a successor warrant agent under this Warrant without any further act.
Any such successor warrant agent shall promptly cause notice of its succession
as warrant agent to be mailed (by first class mail, postage prepaid) to the
Holder at the Holder’s last address as shown on the Warrant Register.

 

15.           Registration Rights. The Holder of this Warrant is entitled
to the benefit of certain registration rights with respect to the Warrant
Shares issuable upon the exercise of this Warrant pursuant to that certain
Registration Rights Agreement, dated September 15, 2009, and the
registration rights with respect to the Warrant Shares issuable upon the
exercise of this Warrant by any subsequent Holder may only be assigned in
accordance with the terms and provisions of the Registration Rights Agreement.

 

16.           Miscellaneous.

 

(a)           No
Rights as a Stockholder.     Unless
otherwise permitted in this Warrant, the Holder, solely in such Person’s
capacity as a holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person’s capacity as the Holder of this
Warrant, any of the rights of a stockholder of the Company or any right to
vote, give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, amalgamation,
conveyance or otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall
be construed as imposing any liabilities on the Holder to purchase any
securities (upon exercise of this Warrant or otherwise) or as a stockholder of
the Company, whether such liabilities are asserted by the Company or by
creditors of the Company.

 

(b)           Authorized
Shares. (i) 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, 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).

 

(ii)           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 

 

14

 

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 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 (a) 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, (b) 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 (c) 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.

 

(iii)          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.

 

(c)           Successors
and Assigns.   Subject to the restrictions on transfer set forth in this
Warrant and in Section 4.1 of the Purchase Agreement, and compliance with
applicable securities laws, this Warrant may be assigned by the Holder. This
Warrant may not be assigned by the Company without the written consent of the
Holder except to a successor in the event of a Fundamental Transaction. This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder, or their successors and assigns.

 

(d)           Amendment
and Waiver.  Except as otherwise provided herein, the
provisions of the Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the Holder.

 

(e)           Acceptance.  Receipt of this
Warrant by the Holder shall constitute acceptance of and agreement to all of
the terms and conditions contained herein.

 

(f)            Governing
Law; Jurisdiction.      ALL
QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF. 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. 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 

 

15

 

MAIL
OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS
IN EFFECT FOR NOTICES TO IT UNDER THE PURCHASE 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 HEREBY WAIVES ALL
RIGHTS TO A TRIAL BY JURY.

 

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

 

(h)           Severability.          In case any one or more of the provisions
of this Warrant shall be invalid or unenforceable in any respect, the validity
and enforceability of the remaining terms and provisions of this Warrant shall
not in any way be affected or impaired thereby, and the parties will attempt in
good faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.

 

(i)            Remedies.    The
Company stipulates that the remedies at law of the Holder of this Warrant in
the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate and that, to the fullest extent permitted by law, such
terms may be specifically enforced by a decree for the specific performance of
any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

 

16

 

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

 

 

	
   

  	
  HELICOS BIOSCIENCES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXHIBIT
A

 

EXAMPLE OF
BLACK SCHOLES VALUE CALCULATION

 

 

SCHEDULE
1

 

FORM OF
EXERCISE NOTICE

 

(To be executed
by the Holder to purchase shares of Common Stock under the foregoing Warrant)

 

Ladies and Gentlemen:

 

(1)           The undersigned is the Holder of Warrant No.                     
(the “Warrant”) issued by Helicos BioSciences Corporation, a Delaware
corporation (the “Company”).  Capitalized
terms used herein and not otherwise defined herein have the respective meanings
set forth in the Warrant.

 

(2)           The undersigned hereby exercises its
right to purchase                     
Warrant Shares pursuant to the Warrant.

 

(3)           The Holder intends that payment of the
Exercise Price shall be made as (check one):

 

€              Cash Exercise

 

€              “Cashless Exercise” under Section 10

 

(4)           If the Holder has elected a Cash
Exercise, the Holder shall pay the sum of $              
in immediately available funds to the Company in accordance with the terms of
the Warrant.

 

(5)           Pursuant to this Exercise Notice, the
Company shall deliver to the Holder Warrant Shares determined in accordance
with the terms of the Warrant.

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Name of Holder:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
								

 

 

SCHEDULE
2

 

FORM OF
ASSIGNMENT

 

[To be
completed and signed only upon transfer of Warrant]

 

FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto                             
(the “Transferee”) the right represented by the within Warrant to purchase                 
shares of Common Stock of                           
(the “Company”) to which the within Warrant relates and appoints                             
attorney to transfer said right on the books of the Company with full power of
substitution in the premises. In connection therewith, the undersigned represents,
warrants, covenants and agrees to and with the Company that:

 

(a)           the offer and sale of the Warrant contemplated hereby
is being made in compliance with Section 4(1) of the United States
Securities Act of 1933, as amended (the “Securities Act”) or another valid
exemption from the registration requirements of Section 5 of the
Securities Act and in compliance with all applicable securities laws of the
states of the United States;

 

(b)           the undersigned has not offered to sell the Warrant by
any form of general solicitation or general advertising, including, but not
limited to, any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio, and any seminar or meeting whose attendees have been invited by any
general solicitation or general advertising;

 

(c)           the undersigned has read the Transferee’s investment
letter included herewith, and to its actual knowledge, the statements made
therein are true and correct; and

 

(d)           the undersigned understands that the Company may
condition the transfer of the Warrant contemplated hereby upon the delivery to
the Company by the undersigned or the Transferee, as the case may be, of a
written opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect
that such transfer may be made without registration under the Securities Act
and under applicable securities laws of the states of the United States.

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature
  must conform in all respects to name of holder as specified on the face of
  the Warrant)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address
  of Transferee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  In
  the presence of:Exhibit 10.1

 

EXECUTION COPY

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is
dated as of September 15, 2009, by and among Helicos BioSciences
Corporation, a Delaware corporation (the “Company”),
and the several purchasers identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser”
and collectively, the “Purchasers”).

 

RECITALS

 

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

 

B.            Each Purchaser, severally
and not jointly, wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) that aggregate number
of shares of common stock, par value $0.001 per share (the “Common Stock”), of the Company, set forth
below such Purchaser’s name on the signature page of this Agreement (which
aggregate amount for all Purchasers together shall be 4,311,280 shares of
Common Stock and shall be collectively referred to herein as the “Shares”) and (ii) warrants, in substantially the form attached hereto as Exhibit A
(the “Warrants”), to acquire up
to that number of additional shares of Common Stock equal to fifty percent
(50%) (or sixty-six and two-tenths percent (66.2%) for the Inside Investors) of
the number of Shares purchased by such Purchaser (rounded up to the nearest
whole share) (the shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants collectively are referred to herein as the “Warrant Shares”).

 

C.            The Shares, the Warrants and the Warrant Shares collectively are referred
to herein as the “Securities”.

 

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

 

ARTICLE I

DEFINITIONS

 

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

 

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

 

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

 

 

investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser.

 

“Agreement” shall have the meaning ascribed to such term in
the Preamble.

 

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

 

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

 

“Closing Date” means the Trading Day when all of the
Transaction Documents have been executed and delivered by the applicable
parties thereto, and all of the conditions set forth in Sections 2.1, 2.2, 5.1
and 5.2 hereof are satisfied, or such other date as the parties may agree.

 

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

 

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

 

“Common Stock Equivalents”
means any securities of the Company or any Subsidiary 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 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 Goodwin Procter LLP.

 

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

 

“Company’s Knowledge” means with respect to any statement
made to the knowledge of the Company, that the statement is based upon the
actual knowledge of the executive officers of the Company having responsibility
for the matter or matters that are the subject of the statement.

 

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

 

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

 

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

 

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

 

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

 

“Indemnified Person” has the meaning set forth in Section 4.7(b).

 

“Inside
Investors” means (i) each of Atlas Venture, Flagship Ventures,
Highland Capital Partners and Versant Ventures and their affiliated investment
funds that are Purchasers hereunder (collectively, the “VC Investors”)
and (ii) each of the executive officers and directors of the Company that
are Purchasers hereunder.

 

2

 

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

 

“Lien” means any lien, charge, claim, encumbrance, security
interest, right of first refusal, preemptive right 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, business, prospects or
financial condition of the Company and the Subsidiaries, or (iii) any
adverse impairment to the Company’s ability to perform in any material respect
on a timely basis its obligations under any Transaction Document.

 

“Material Contract” means
any contract of the Company that was filed or required to be filed as an
exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.

 

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

 

“Outside Date” means the fifteenth day following the date of
this Agreement; provided that if such day is not a Business Day, the first day
following such day that is a Business Day.

 

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

 

“Press
Release” has the meaning set forth in Section 4.6.

 

“Principal Trading Market” means the Trading Market on which
the Common Stock is primarily listed on and quoted for trading, which, as of
the date of this Agreement and the Closing Date, shall be the NASDAQ Global
Market.

 

“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.

 

“Purchase Price” means $2.24 per unit (or $2.57275 per unit
for the Inside Investors).

 

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

 

“Purchaser Party” has the meaning set forth in Section 4.7(a).

 

“Registration
Rights Agreement” means the registration rights agreement dated the
date hereof and attached hereto as Exhibit D.

 

“Registration Statement” means a registration statement
covering the resale by the Purchasers of the Shares and Warrant Shares.

 

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

 

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

 

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

 

“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(v).

 

3

 

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

 

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

 

“Subsidiary” means any entity in which the Company, directly
or indirectly, owns sufficient capital stock or holds a sufficient equity or
similar interest such that it is consolidated with the Company in the financial
statements of the Company.

 

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

 

“Trading Day” means (i) a day on which the Common Stock
is listed or quoted and traded on its Principal Trading Market (other than the
OTC Bulletin Board), or (ii) if the Common Stock is not listed on a
Trading Market (other than the OTC Bulletin Board), a day on which the Common
Stock is traded in the over-the-counter market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is not quoted on any Trading Market, a
day on which the Common Stock is quoted in the over-the-counter market as
reported in the “pink sheets” by Pink Sheets LLC (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 Global Select Market, the
NASDAQ Global Market, the NASDAQ Capital Market or the OTC Bulletin Board on
which the Common Stock is listed or quoted for trading on the date in question.

 

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

 

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

 

ARTICLE II

PURCHASE AND SALE

 

2.1           Closing.

 

(a)           Amount.  Subject to the terms and conditions set forth
in this Agreement, at the Closing the Company shall issue and sell to each
Purchaser, and each Purchaser shall, severally and not jointly, purchase from
the Company, such number of Shares equal to the quotient resulting from
dividing (i) the Subscription Amount for such Purchaser by (ii) the
Purchase Price, rounded up to the nearest whole Share.  In addition, each Purchaser shall receive a
Warrant to purchase a number of Warrant Shares equal to fifty percent (50%) (or sixty-six and two-tenths percent (66.2%) for the
Inside Investors) of the number of Shares, rounded up to the nearest
whole Warrant Share, purchased by such Purchaser, as indicated below such
Purchaser’s name on the signature page to this Agreement. The Warrants
shall have an exercise price equal to $2.61 per Warrant Share, subject to
applicable adjustments.

 

(b)           Closing.  The Closing of the purchase and sale of the
Shares and Warrants shall take place at the offices of Goodwin Procter LLP,
Exchange Place, 53 State Street, Boston, Massachusetts, on the 

 

4

 

Closing Date or at such other locations or
remotely by facsimile transmission or other electronic means as the parties may
mutually agree.

 

(c)           Form of Payment.  Except as may otherwise be agreed to among
the Company and one or more of the Purchasers, on or prior to the Business Day
immediately prior to the Closing Date, each Purchaser shall wire its
Subscription Amount, in United States dollars and in immediately available
funds, to a non-interest bearing escrow account established by the Company as
set forth on Exhibit C hereto. 
On the Closing Date, the Company shall irrevocably instruct the Transfer
Agent to deliver to each Purchaser one or more stock certificates, free and
clear of all restrictive and other legends (except as expressly provided in Section 4.1(b) hereof),
evidencing the number of Shares such Purchaser is purchasing as is set forth on such Purchaser’s signature page to
this Agreement next to the heading “Number of Shares to be Acquired”,
within three (3) Business Days after the Closing.

 

2.2           Closing
Deliveries.

 

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

 

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

 

(ii)           facsimile
copies of one or more stock certificates, free and clear of all restrictive and
other legends (except as provided in Section 4.1(b) hereof),
evidencing the Shares subscribed for by Purchaser hereunder, registered in the
name of such Purchaser as set forth on the Stock Certificate Questionnaire
included as Exhibit B-2 hereto (the “Stock Certificates”), with the original Stock Certificates
sent to the Purchasers within three (3) Business Days of Closing;

 

(iii)          a Warrant, executed by the Company and registered in the name of such
Purchaser as set forth on the Stock Certificate Questionnaire included as Exhibit B-2
hereto, pursuant to which such Purchaser shall have the right to acquire such
number of Warrant Shares equal to fifty percent (50%) (or sixty-six and
two-tenths percent (66.2%) for the Inside Investors) of the number of Shares
issuable to such Purchaser, rounded up to the nearest whole share, on the terms
set forth therein;

 

(iv)          a legal opinion
of Company Counsel, dated as of the Closing Date, executed by such counsel and
addressed to the Purchasers;

 

(v)           a certificate of
the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the
resolutions adopted by the Board of Directors of the Company or a duly
authorized committee thereof approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the
Securities, (b) certifying the current versions of the certificate or
articles of incorporation, as amended, and by-laws of the Company and (c) certifying
as to the signatures and authority of persons signing the Transaction Documents
and related documents on behalf of the Company;

 

(vi)          the Compliance
Certificate referred to in Section 5.1(g);

 

(vii)         a certificate
evidencing the formation and good standing of the Company in its jurisdiction
of formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within five (5) Business Days of the Closing
Date;

 

(viii)        a certificate
evidencing the Company’s qualification as a foreign corporation and good
standing issued by the Commonwealth of Massachusetts, as of a date within ten (10) Business
Days of the Closing Date;

 

5

 

(ix)           a certified copy of the Certificate of
Incorporation, as certified by the Secretary of State of the State of Delaware,
as of a date within ten (10) Business Days of the Closing Date; and

 

(x)            a fully executed Registration Rights
Agreement.

 

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

 

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

 

(ii)           its
Subscription Amount, in United States dollars and in immediately available
funds, in the amount set forth as the “Purchase Price” indicated below such
Purchaser’s name on the applicable signature page hereto under the heading
“Aggregate Purchase Price (Subscription Amount)” by wire transfer to the escrow
account set forth on Exhibit C attached hereto; and

 

(iii)          a fully
completed and duly executed Accredited Investor Questionnaire, reasonably
satisfactory to the Company, and Stock Certificate Questionnaire in the forms
attached hereto as Exhibits B-1 and B-2 , respectively.

 

ARTICLE III

REPRESENTATIONS AND
WARRANTIES

 

3.1           Representations
and Warranties of the Company.  The Company hereby represents and warrants as
of the date hereof and the Closing Date (except for the representations and
warranties that speak as of a specific date, which shall be made as of such
date), to each of the Purchasers that the following representations and
warranties are true and complete, except as set forth in the Schedules
delivered herewith or disclosed in the SEC Reports.  The Schedules shall be arranged in sections
corresponding to the lettered subsections contained in this Section 3.1,
and the disclosures in any subsection of the schedules shall qualify other
subsections in this Section 3.1 to the extent it is reasonably apparent
from a reading of the disclosure that such disclosure is applicable to such
other subsections.

 

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

 

(b)           Organization and
Qualification.  The Company
and each of its Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization (as applicable), with the
requisite corporate power and authority to own or lease and use its properties
and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in
violation of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  The Company and each of its Subsidiaries is
duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case
may be, would not have a Material Adverse Effect.

 

(c)           Authorization; Enforcement;
Validity.  The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the 

 

6

 

Transaction Documents to which it is a party and otherwise to carry out
its obligations hereunder and thereunder.  The Company’s execution and delivery of each
of the Transaction Documents to which it is a party and the consummation by it
of the transactions contemplated hereby and thereby (including, but not limited
to, the sale and delivery of the Shares and the Warrants and the reservation
for issuance and the  subsequent issuance
of the Warrant Shares upon exercise of the Warrants) have been duly authorized
by all necessary corporate action on the part of the Company, and no further
corporate action is required by the Company, its Board of Directors or its stockholders
in connection therewith other than in connection with the Required
Approvals.  Each of the Transaction
Documents to which it is a party has been (or upon delivery will have been)
duly executed by the Company and is, or when delivered in accordance with the
terms hereof, will constitute the legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except (i) 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, (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
to which it is a party and the consummation by the Company of the transactions
contemplated hereby or thereby (including, without limitation, the issuance of
the Shares and Warrants and the reservation for issuance and issuance of the
Warrant Shares) do not and will not (i) conflict with or violate
any provisions of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or otherwise result in a violation of the organizational
documents of the Company, (ii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would result in a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
Material Contract, 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 is subject (including federal and state securities laws
and regulations and the rules and regulations, assuming the correctness of
the representations and warranties made by the Purchasers herein, of any
self-regulatory organization to which the Company or its securities are
subject, including all applicable Trading Markets), or by which any property or
asset of the Company is bound or affected, except in the case of clauses (ii) and
(iii) such as would not, individually or in the aggregate, have a Material
Adverse Effect.

 

(e)           Filings, Consents and
Approvals.  Neither the
Company nor any of its Subsidiaries is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents (including, without limitation, the issuance
of the Securities), other than (i) the filing with the Commission
of one or more Registration Statements, (ii) filings required by
applicable state securities laws, (iii) the filing of a Notice of Sale of
Securities on Form D with the Commission under Regulation D of the
Securities Act, (iv) the filing of any requisite notices and/or
application(s) to the Principal Trading Market for the issuance and sale
of the Common Stock and the Warrants and the listing of the Common Stock for
trading or quotation, as the case may be, thereon in the time and manner
required thereby, (v) the filings required in accordance with Section 4.6
of this Agreement and (vi) those that have been made or obtained prior to
the date of this Agreement (collectively, the “Required
Approvals”).

 

(f)            Issuance of the Securities.  The Shares have been duly authorized and,
when issued and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable and
free and clear of all Liens, other than restrictions on transfer provided for
in the Transaction Documents or imposed by applicable securities laws, and
shall not be subject to preemptive or similar rights.  The Warrants have been duly authorized and,
when issued and paid for in accordance with 

 

7

 

the terms of the Transaction Documents, will be duly and validly
issued, free and clear of all Liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by applicable
securities laws, and shall not be subject to preemptive or similar rights of
stockholders. The Warrant Shares issuable upon exercise of the Warrants have
been duly authorized and, when issued and paid for in accordance with the terms
of the Transaction Documents and the Warrants will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens, other than
restrictions on transfer provided for in the Transaction Documents or imposed
by applicable securities laws, and shall not be subject to preemptive or
similar rights of stockholders.  Assuming
the accuracy of the representations and warranties of the Purchasers in this
Agreement, the Shares and the Warrant Shares will be issued in compliance with
all applicable federal and state securities laws.  As of the Closing Date, the Company shall
have reserved from its duly authorized capital stock the number of shares of
Common Stock issuable upon exercise of the Warrants (without taking into
account any limitations on the exercise of the Warrants set forth in the
Warrants).  The Company shall, so long as
any of the Warrants are outstanding, take all action necessary to reserve and
keep available out of its authorized and unissued capital stock, solely for the
purpose of effecting the exercise of the Warrants, 100% of the number of shares
of Common Stock issuable upon exercise of the Warrants (without taking into
account any limitations on the exercise of the Warrants set forth in the Warrants).

 

(g)           Capitalization.  The number of shares and type of all
authorized, issued and outstanding capital stock, options and other securities
of the Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) has been set forth in
the SEC Reports and, except as otherwise provided in Schedule 3.1(g) hereto,
has changed since the date of such SEC Reports only due to stock grants or
other equity awards or stock option and warrant exercises that do not,
individually or in the aggregate, have a material effect on the issued and
outstanding capital stock, options and other securities.  All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and
non-assessable, have been issued in compliance in all material respects with
all applicable federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to
subscribe for or purchase any capital stock of the Company.  The Company has no liabilities or obligations
required to be disclosed in the SEC Reports but not so disclosed in the SEC
Reports, other than those incurred in the ordinary course of the Company’s
business and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect.  The issuance
and sale of the Shares and Warrants 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.

 

(h)           SEC Reports; Disclosure
Materials.  The Company
has filed all reports, schedules, forms, statements and other documents
required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the twelve months 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” and
together with this Agreement and the Schedules to this Agreement, the “Disclosure Materials”), on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension.  As of their respective filing dates, or to
the extent corrected by a subsequent restatement or subsequent filings, 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.  The Company has never been an issuer subject
to Rule 144(i) under the Securities Act.

 

(i)            Financial Statements.  The financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission
with respect thereto as in effect at the time of filing (or to the extent
corrected by a subsequent restatement). 
Such financial statements have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all 

 

8

 

footnotes required by GAAP, and fairly present in all material respects
the financial position of the Company and its consolidated subsidiaries taken
as a whole as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments.

 

(j)            Tax Matters.  Except as otherwise provided in Schedule
3.1(j) hereto, the Company (i) has prepared and filed all
foreign, federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has paid all
taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith, with respect to which
adequate reserves have been set aside on the books of the Company and (iii) has
set aside on its books provisions reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns, reports or
declarations apply, except, in the case of clauses (i) and (ii) above,
where the failure to so pay or file any such tax, assessment, charge or return
would not have a Material Adverse Effect.

 

(k)           Material Changes.  Since the date of the latest financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports, (i) there have been no events, occurrences or
developments that have had or would reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect, and (ii) there
has not been any material change or amendment to, or any waiver of any material
right by the Company under, any Material Contract.

 

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

 

(m)          Litigation.  To the Company’s Knowledge, there is no
Action which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii) except
as specifically disclosed in the SEC Reports, is reasonably likely to have a
Material Adverse Effect, individually or in the aggregate, if there were an
unfavorable decision.  The Commission has
not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any of its Subsidiaries under
the Exchange Act or the Securities Act.

 

(n)           Employment Matters.  No material labor dispute exists or, to the
Company’s Knowledge, is imminent with respect to any of the employees of the
Company which would have a Material Adverse Effect.  To the Company’s Knowledge, it is 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, have a Material Adverse Effect.

 

(o)           Compliance.  Neither the Company nor any of its
Subsidiaries (i) is in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company or any of its Subsidiaries under), nor
has the Company or any of its Subsidiaries received written notice of a claim
that it is in default under or that it is in violation of, any Material
Contract (whether or not such default or violation has been waived), (ii) is
in violation of any order of which the Company has been made aware in writing
of any court, arbitrator or governmental body having jurisdiction over the
Company or its properties or assets, or (iii) is in violation of, or in
receipt of written 

 

9

 

notice that it is in violation of, any
statute, rule or regulation of any governmental authority applicable to
the Company, except in each case as would not, individually or in the
aggregate, have a Material Adverse Effect.

 

(p)           Regulatory Permits.  The Company possesses or has applied for all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct its
business as currently conducted and as described in the SEC Reports, except
where the failure to possess such permits, individually or in the aggregate,
has not and would not have, individually or in the aggregate, a Material
Adverse Effect (“Material Permits”),
and (i) neither the Company nor any of its Subsidiaries has received any
notice in writing of proceedings relating to the revocation or material adverse
modification of any such Material Permits and (ii) the Company is unaware
of any facts or circumstances that would give rise to the revocation or
material adverse modification of any Material Permits.

 

(q)           Title to Assets.  The Company and its Subsidiaries do not own
any real property. The Company and its Subsidiaries have good and marketable
title to all tangible personal property owned by them which is material to the
business of the Company and its Subsidiaries, taken as a whole, in each case
free and clear of all Liens except such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made
of such property by the Company and any of its Subsidiaries or as otherwise set
forth in the SEC Reports.  Except as set
forth on Schedule 3.1(q), any real property and facilities held under
lease by the Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.

 

(r)            Patents and Trademarks.  Except as otherwise provided in Schedule
3.1(r) hereto, the Company and its Subsidiaries own, possess, license
or have other rights to use all foreign and domestic patents, patent
applications, trade and service marks, trade and service mark registrations,
trade names, copyrights, inventions, trade secrets, technology, Internet domain
names, know-how and other intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of their
respective businesses as now conducted, as described in the SEC Reports (the “Company Intellectual Property”).  Except as set forth in the SEC Reports or as
otherwise provided in Schedule 3.1(r) hereto, (a) to the
Company’s Knowledge, there are no rights of third parties to any such Company
Intellectual Property; (b) to the Company’s Knowledge, there is no pending
or threatened action, suit, proceeding or claim by others challenging the
Company’s and its Subsidiaries’ rights in or to any such Company Intellectual
Property; and (c) to the Company’s Knowledge, there is no pending or
threatened action, suit, proceeding or claim by others that the Company and/or
any Subsidiary infringes or otherwise violates any Intellectual Property of
others, except, in the case of clauses (a), (b) or (c) above, to the
extent such rights, violations or infringements would not have, either
individually or in the aggregate, a Material Adverse Effect.

 

(s)           Internal Accounting
Controls; Disclosure Controls.  Except as has not had or would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect, the Company (i) has established and maintained disclosure controls
and procedures and internal control over financial reporting (as such terms are
defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under
the Exchange Act) as required by Rule 13a-15 under the Exchange Act, and (ii) has
disclosed based on its most recent evaluations, to its outside auditors and the
Audit Committee of the Board of Directors of the Company (A) all
significant deficiencies and material weaknesses in the design or operation of
internal controls over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) that are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial data, and (B) any
fraud, whether or not material, that involves management or other employees who
have a significant role in the Company’s internal controls over financial
reporting.

 

(t)            Sarbanes-Oxley.  The Company is in compliance in all material
respects with all of the provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it, except where such noncompliance would not have, individually
or in the aggregate, a Material Adverse Effect.

 

10

 

(u)           Certain Fees.  Except as identified in Schedule 3.1(u) hereto,
no person or entity will have, as a result of the transactions contemplated by
this Agreement, any valid right, interest or claim against or upon the Company
or a Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company.  The Company shall indemnify,
pay, and hold each Purchaser harmless against, any liability, loss or expense
(including, without limitation, attorneys’ fees and out-of-pocket expenses)
arising in connection with any such right, interest or claim.

 

(v)           Private Placement.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 of this Agreement
and the accuracy of the information disclosed in the Accredited Investor
Questionnaires, no registration under the Securities Act is required for the
offer and sale of the Shares and Warrants by the Company to the Purchasers
under the Transaction Documents.

 

(w)          Registration Rights.  Other than as set forth in Schedule 3.1(w) and
other than each of the Purchasers, no Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the
Company other than those securities which are currently registered on an
effective registration statement on file with the Commission.

 

(x)           No Integrated Offering.  Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, none of the
Company, its Subsidiaries nor, to the Company’s Knowledge, any of its
Affiliates or any Person acting on its behalf has, directly or indirectly, at
any time within the past six months, made any offers or sales of any Company
security or solicited any offers to buy any security under circumstances that
would (i) eliminate the availability of the exemption from registration
under Regulation D under the Securities Act in connection with the offer
and sale by the Company of the Shares and Warrants as contemplated hereby or (ii) cause
the offering of the Shares and Warrants pursuant to the Transaction Documents
to be integrated with prior offerings by the Company for purposes of any
applicable law, regulation or stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market on which
any of the securities of the Company are listed or designated.

 

(y)           Listing and Maintenance
Requirements.  The Company’s
Common Stock is registered pursuant to Section 12(b) of the Exchange
Act, and the Company has taken no action designed to terminate the registration
of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such
registration.  The Company has not, in
the 12 months preceding the date hereof, received written notice from any
Trading Market on which the Common Stock is listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance requirements
of such Trading Market.  The Company is
in compliance in all material respects with the listing and maintenance
requirements for continued trading of the Common Stock on the Principal Trading
Market.

 

(z)            Disclosure.  To the Company’s Knowledge, no event or circumstance
has occurred or information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, operations or financial
conditions, which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed (assuming for this purpose that the Company’s
reports filed under the Exchange Act are being incorporated into an effective
registration statement filed by the Company under the Securities Act), except
for the announcement of this Agreement and related transactions and as may be
disclosed on the Form 8-K filed pursuant to Section 4.6.   Any written materials 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, are true and correct in all material respects and do not
contain any untrue statements of a material fact or omit to state any material
facts necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.  The Company 

 

11

 

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.

 

(aa)         No General Solicitation.  The Company did not offer the Securities as a
general solicitation in the form of an advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general advertisement.

 

(bb)         Use of Form S-3.  The Company meets the registration and
transaction requirements for use of Form S-3 for the registration of the
Shares and the Warrant Shares for resale by the Purchasers.

 

(cc)         Insurance.  The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as the Company believes are prudent and customary in
the businesses in which the Company and the Subsidiaries are engaged,
including, but not limited to, directors and officers insurance coverage.  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.

 

(dd)         Transactions With Affiliates
and Employees.  Except as
set forth in the SEC Reports and except for the issuance of Securities pursuant
to this Agreement, 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 option plan of the
Company.

 

(ee)         Investment Company. The Company
is not, and is not an Affiliate of, and immediately after receipt of payment
for the Securities, will not be or be an Affiliate of, an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.

 

(ff)           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 shareholder approval
provisions of any Trading Market on which any of the securities of the Company
are listed or designated.

 

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

 

12

 

(hh)         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.

 

(ii)           Acknowledgement Regarding
Purchaser’s Trading Activity.  Anything in this Agreement or elsewhere
herein to the contrary notwithstanding (except for Sections 3.2(h) and
4.15 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.

 

(jj)           Regulation M Compliance.  The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result in the stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
any of the Securities, (ii) sold, bid for, purchased, or, paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of
clauses (ii) and (iii), compensation paid to the Company’s placement agent
in connection with the placement of the Securities.

 

(kk)         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 as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including without limitation as a result of the Company’s
issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(ll)           Indebtedness.  The SEC Reports set forth as of the dates
specified therein all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement, “Indebtedness”
means (a) any liabilities for borrowed money or amounts owed in excess of
$50,000 (other than trade accounts payable incurred in the ordinary course of
business) and (b) all guaranties, endorsements and other 

 

13

 

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. Neither the Company
nor any Subsidiary is in material default with respect to any Indebtedness.

 

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

 

(a)           Organization; Authority.  Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder.  The execution, delivery and
performance by such Purchaser of the transactions contemplated by this
Agreement have been duly authorized by all necessary corporate or, if such
Purchaser is not a corporation, such partnership, limited liability company or
other applicable like action, on the part of such Purchaser.  This Agreement 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 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.

 

(b)           No Conflicts.  The execution, delivery and performance by
such Purchaser of this Agreement and the consummation by such Purchaser of the
transactions contemplated hereby will not (i) result in a violation of the
organizational documents of such Purchaser, (ii) conflict with, or
constitute a default (or an event which 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 of, any agreement, indenture or
instrument to which such Purchaser is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to such Purchaser, except in the
case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of such
Purchaser to perform its obligations hereunder.

 

(c)           Investment Intent.  Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities and, upon exercise of the Warrants, will
acquire the Warrant Shares issuable upon exercise thereof as principal for its
own account and not with a view to, or for distributing or reselling such
Securities or any part thereof in violation of the Securities Act or any
applicable state securities laws, provided,
however, that by making the representations herein, such Purchaser
does not agree to hold any of the Securities for any minimum period of time and
reserves the right, subject to the provisions of this Agreement, at all times
to sell or otherwise dispose of all or any part of such Securities or Warrant
Shares pursuant to an effective registration statement under the Securities Act
or under an exemption from such registration and in compliance with applicable
federal and state securities laws.  Such
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business. Such Purchaser does not presently have any agreement, plan or
understanding, directly or indirectly, with any Person to distribute or effect
any distribution of any of the Securities (or any securities which are derivatives
thereof) to or through any person or entity; such Purchaser is not a registered
broker-dealer under Section 15 of the Exchange Act or an entity engaged in
a business that would require it to be so registered as a broker-dealer.

 

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

 

14

 

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

 

(f)            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.

 

(g)           Access to Information.  Such Purchaser acknowledges that it has had
the opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and
conditions of the offering of the Securities and the merits and risks of
investing in the Securities; (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 Purchaser or its representatives or counsel shall modify, amend
or affect such Purchaser’s right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company’s representations and
warranties contained in the Transaction Documents.  Such Purchaser has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
decision with respect to its acquisition of the Securities.

 

(h)           Certain Trading Activities.  Other than with respect to the transactions
contemplated herein, since the time that such Purchaser was first contacted by
the Company or any other Person regarding the transactions contemplated hereby,
neither the Purchaser nor any Affiliate of such Purchaser which (x) had
knowledge of the transactions contemplated hereby, (y) has or shares
discretion relating to such Purchaser’s investments or trading or information
concerning such Purchaser’s investments, including in respect of the Shares and
Warrants, and (z) is subject to such Purchaser’s review or input
concerning such Affiliate’s investments or trading (collectively, “Trading Affiliates”),
has directly or indirectly, nor has any Person acting on behalf of or pursuant
to any understanding with such Purchaser or Trading Affiliate, effected or
agreed to effect any purchases or sales of the securities of the Company
(including, without limitation, any Short Sales involving the Company’s
securities).  Notwithstanding the
foregoing, in the case of a Purchaser and/or Trading Affiliate that is,
individually or collectively, a multi-managed investment bank or vehicle
whereby separate portfolio managers manage separate portions of such Purchaser’s
or Trading Affiliate’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 or Trading Affiliate’s assets, the
representation set forth above shall apply only with respect to the portion of
assets managed by the portfolio manager that have knowledge about the financing
transaction contemplated by this Agreement.

 

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

 

(j)            Independent Investment
Decision.  Such
Purchaser has independently evaluated the merits of its decision to purchase
Shares and Warrants pursuant to the Transaction Documents, and such Purchaser
confirms that it has not relied on the advice of any other Purchaser’s business
and/or legal counsel in making such decision. 
Such Purchaser understands that nothing in this Agreement or any other
materials presented by or on behalf of the Company to the Purchaser in
connection with the purchase of the Shares and 

 

15

 

Warrants constitutes legal,
tax or investment advice.  Such Purchaser
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of the Shares and Warrants.

 

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

 

(l)            No Governmental Review.  Such Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Securities or
the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(m)          Regulation M.  Such Purchaser is aware that the
anti-manipulation rules of Regulation M under the Exchange Act may
apply to sales of Common Stock and other activities with respect to the Common
Stock by the Purchasers.

 

(n)           Residency.  Such Purchaser’s residence (if an individual)
or office in which its investment decision with respect to the Shares and
Warrants was made (if an entity) are located at the address immediately below
such Purchaser’s name on its signature page hereto.

 

The Company and each of the
Purchasers acknowledge and agree that no party to this Agreement has made or
makes any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Article III
and the Transaction Documents.  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           Transfer Restrictions.

 

(a)           Compliance with Laws.  Notwithstanding any other provision of this Article IV,
each Purchaser covenants that the Securities may be disposed of only pursuant
to an effective registration statement under, and in compliance with the
requirements of, the Securities Act, or pursuant to an available exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act, and in compliance with any applicable state, federal or foreign
securities laws.  In connection with any
transfer of the Securities other than (i) pursuant to an effective
registration statement, (ii) to the Company, or (iii) pursuant to Rule 144
(provided that the Purchaser provides the Company with reasonable assurances
(in the form of seller and broker representation letters) that the securities
may be sold pursuant to such rule), the Company may require the transferor
thereof to provide to the Company and the Transfer Agent, at the transferor’s
expense, an opinion of counsel selected by the transferor and reasonably
acceptable to the Company and the Transfer Agent, the form and substance of
which opinion shall be reasonably satisfactory to the Company and the Transfer
Agent, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act.  As a condition of transfer (other than
pursuant to clauses (i), (ii) or (iii) of the preceding sentence),
any such transferee shall agree in writing to be bound by the terms of 

 

16

 

this Agreement and shall
have the rights of a Purchaser under this Agreement with respect to such
transferred Securities.

 

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

 

[NEITHER THESE SECURITIES
NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN
REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR
(B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER
AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.  NO REPRESENTATION IS MADE BY THE ISSUER AS TO
THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
FOR RESALES OF THESE SECURITIES.

 

(c)           Removal of Legends.  The restrictive legend set forth in Section 4.1(b) above
shall be removed and the Transfer Agent or the Company, as the case may be,
shall issue a certificate without such restrictive legend or any other
restrictive legend to the holder of the applicable Securities upon which it is
stamped or issue to such holder by electronic delivery at the applicable
balance account at the Depository Trust Company (“DTC”), if (i) such Securities are registered for resale
under the Securities Act (provided that, if the Purchaser is selling pursuant
to the effective registration statement registering the Securities for resale,
the Purchaser agrees to only sell such Securities during such time that such
registration statement is effective and not withdrawn or suspended, and only as
permitted by such registration statement), (ii) such Securities are sold
or transferred pursuant to Rule 144 (if the transferor is not an Affiliate
of the Company), or (iii) such Securities are eligible for sale under Rule 144,
without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such securities and
without volume or manner-of-sale restrictions. 
Certificates for Securities subject to legend removal hereunder may be
transmitted by the Transfer Agent to the Purchasers by crediting the account of
the Purchaser’s prime broker with DTC as directed by such Purchaser.  Any Transfer Agent fees associated with the
removal of such legend shall be borne by the Company.

 

(d)           Acknowledgement.  Each Purchaser hereunder acknowledges its
primary responsibilities under the Securities Act and accordingly will not sell
or otherwise transfer the Shares, the Warrants or the Warrant Shares or any
interest therein without complying with the requirements of the Securities
Act.  Except as otherwise provided below,
while any Registration Statement remains effective, each Purchaser hereunder
may sell the Shares and Warrant Shares in accordance with the plan of
distribution contained in such Registration Statement and if it does so it will
comply therewith and with the related prospectus delivery requirements unless
an exemption therefrom is available. 
Each Purchaser, severally and not jointly with the other Purchasers,
agrees that if it is notified by the Company in writing at any time that the
Registration Statement registering the resale of the Shares or the Warrant
Shares is not effective or that the prospectus included in such Registration
Statement no longer complies with the requirements of Section 10 of the
Securities Act, the Purchaser will refrain from selling such Shares and Warrant
Shares until 

 

17

 

such time as the Purchaser
is notified by the Company that such Registration Statement is effective or
such prospectus is compliant with Section 10 of the Securities Act, unless
such Purchaser is able to, and does, sell such Shares or Warrant Shares
pursuant to an available exemption from the registration requirements of Section 5
of the Securities Act.  Both the Company
and its Transfer Agent, and their respective directors, officers, employees and
agents, may rely on this Section 4.1(d).

 

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

 

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

 

4.3           Furnishing of Information.  In order to enable the Purchasers to sell the
Securities under Rule 144 of the Securities Act, for a period of one year
from the Closing, the Company shall use its commercially reasonable efforts to
maintain the registration of the Shares and Warrant Shares under Section 12(b) or
12(g) of the Exchange Act and 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.  During such one year
period, if the Company is not required to file reports pursuant to such laws,
it will prepare and furnish to the Purchasers and make publicly available in
accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Securities under Rule 144.

 

4.4           Form D and Blue Sky.  The Company agrees to timely file a Form D
with respect to the Securities as required under Regulation D.  The Company, on or before the Closing Date,
shall take such action as the Company shall reasonably determine is necessary
in order to obtain an exemption for or to qualify the Securities for sale to
the Purchasers at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States (or to obtain
an exemption from such qualification). 
The Company shall make all filings and reports relating to the offer and
sale of the Securities required under applicable securities or “Blue Sky” laws
of the states of the United States following the Closing Date.

 

18

 

4.5           No Integration.  The Company shall not, and shall use its
commercially reasonable efforts to ensure that no Affiliate of the Company
shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act)
that will be integrated with the offer or sale of the Securities in a manner
that would require the registration under the Securities Act of the sale of the
Securities to the Purchasers, or that will 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.

 

4.6           Securities Laws Disclosure;
Publicity.  By 9:00 a.m.,
New York City time, on the Trading Day immediately following the execution of
this Agreement, the Company shall issue a press release (“Press Release”) disclosing all material
terms of the transactions contemplated hereby. 
On or before 9:00 a.m., New York City time, on the fourth Trading
Day immediately following the execution of this Agreement, the Company will
file a Current Report on Form 8-K with the Commission describing the terms
of the Transaction Documents (and including as exhibits to such Current Report
on Form 8-K the material Transaction Documents (including, without
limitation, this Agreement)). 
Notwithstanding the foregoing, the Company shall not publicly disclose
the name of any Purchaser or an Affiliate of any Purchaser, or include the name
of any Purchaser or an Affiliate of any Purchaser in any press release or
filing with the Commission (other than the Registration Statement) or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection
with (A) any Registration Statement and (B) the filing of final
Transaction Documents (which may include conformed signatures, but not
originals) with the Commission and (ii) to the extent such disclosure is
required by law, request of the Staff of the Commission or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
written notice of such disclosure permitted under this subclause (ii).  From
and after the issuance of the Press Release, no Purchaser shall be in
possession of any material, non-public information received from the Company,
any Subsidiary or any of their respective officers, directors, employees or
agents, that is not disclosed in the Press Release unless a Purchaser shall
have executed a written agreement regarding the confidentiality and use of such
information 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 this Section 4.6,
such Purchaser will maintain the confidentiality of all disclosures made to it
in connection with this transaction (including the existence and terms of this
transaction).

 

4.7           Indemnification.

 

(a)           Indemnification of
Purchasers.  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
person (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 as a result of
any breach of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents. 
The Company will not be liable to any Purchaser Party under this Agreement 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.

 

(b)           Conduct of Indemnification
Proceedings.  Promptly after receipt by any Person (the “Indemnified Person”) of notice of any
demand, claim or circumstances which would or might give rise to a 

 

19

 

claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 4.7(a), such Indemnified Person shall promptly
notify the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided, however , that the failure of
any Indemnified Person to so notify the Company shall not relieve the Company
of its obligations hereunder except to the extent that the Company is actually
and materially and adversely prejudiced by such failure to notify.  In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Person
unless: (i) the Company and the Indemnified Person shall have mutually
agreed to the retention of such counsel; (ii) the Company shall have
failed promptly to assume the defense of such proceeding and to employ counsel
reasonably satisfactory to such Indemnified Person in such proceeding; or (iii) in
the reasonable judgment of counsel to such Indemnified Person, representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. 
The Company shall not be liable for any settlement of any proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned unless the Company fails to defend any
proceeding or fails to promptly respond to a settlement offer.  Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, delayed
or conditioned, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.

 

4.8           Listing of Common Stock.  The Company hereby agrees to use best efforts
to maintain the listing or quotation of the Common Stock on the principal
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 then take all action reasonably necessary to continue the listing and
trading of its Common Stock on a Trading Market and will comply in all respects
with the Company’s reporting, filing and other obligations under the bylaws or rules of
the Trading Market.

 

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

 

4.10         Short Sales After The Date
Hereof.  Such Purchaser shall not,
and shall cause its Trading Affiliates not to, engage, directly or indirectly,
in any transactions in the Company’s securities (including, without limitation,
any Short Sales involving the Company’s securities) during the period from the
date hereof until the earlier of such time as (i) the transactions contemplated
by this Agreement are first required to be publicly announced as described in Section 4.6
or (ii) this Agreement is terminated in full pursuant to Section 6.17.  Each Purchaser severally and not jointly with
the other Purchasers covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as
described in Section 4.6, such Purchaser will maintain the confidentiality
of the existence and terms of this Agreement and the transactions contemplated
hereby.  Notwithstanding the foregoing,
no Purchaser makes any representation, warranty or covenant hereby that it will
not engage in Short Sales in the securities of the Company after the time that
the transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.6. 
Notwithstanding the foregoing, in the event that a Purchaser 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 apply only with respect to the portion of assets managed by the
portfolio manager that have knowledge 

 

20

 

about the financing transaction contemplated by this Agreement.  Each Purchaser understands and acknowledges,
severally and not jointly with any other Purchaser, that the Commission
currently takes the position that covering a short position established prior
to effectiveness of a resale registration statement with shares included in
such registration statement would be a violation of Section 5 of the
Securities Act, as set forth in Item 65, Section 5 under Section A,
of the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.

 

4.11         Reservation of Common Stock.  The Company shall, so long as any of the
Warrants are outstanding, take all action necessary to at all times have
authorized and unissued capital stock, and reserved solely for the purpose of
effecting the exercise of the Warrants from and after the Closing Date, the
number of shares of Common Stock issuable upon exercise of the Warrants
(without taking into account any limitations on exercise of the Warrants set
forth in the Warrants).

 

4.12         Disclosure of Material
Information.  From and
after the issuance of the Press Release, no Purchaser shall be in possession of
any material, non public information received from the Company, any Subsidiary
or any of their respective officers, directors, employees or agents, that is
not disclosed in the Press Release unless a Purchaser shall have executed a
written agreement regarding the confidentiality and use of such information.  The Company and its Subsidiaries covenant and
agree that neither it nor any other person acting on its or their behalf has
provided or, from and after the filing of the Press Release, will provide any
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information (other than with respect
to the transactions contemplated by this Agreement), unless prior thereto such
Purchaser shall have executed a specific written agreement regarding the
confidentiality and use of such information. 
The parties agree that any confidentiality and nondisclosure agreements
entered into prior to the Closing Date shall not be deemed to be a valid
consent to receive any material non-public information that shall be disclosed
to any Purchaser subsequent to the Closing Date.  The Company understands and confirms that
each Purchaser shall be relying on the foregoing covenants in effecting
transactions in securities of the Company. The Company shall not disclose the
identity of any Purchaser in any filing with the SEC except as required by the rules and
regulations of the SEC thereunder.  In
the event of a breach of the foregoing covenant by the Company, any of its
subsidiaries, or any of its or their respective officers, directors, employees
and agents, in addition to any other remedy provided herein or in the
Transaction Documents, a Purchaser may notify the Company, and the Company
shall make public disclosure of such material nonpublic information within two (2) Trading
Days of such notification. 
Notwithstanding anything to the contrary set forth herein, this Section 4.12
shall not prohibit the Company from notifying the Purchasers in connection with
such Purchasers’ rights set forth in Section 4.13 herein.

 

4.13         Limited Participation Right.  Until one (1) year from the Closing
Date, such Purchaser shall have the right, but not the obligation, to purchase
up to an amount equal to its Participation Percentage (as defined below) of any
sale by the Company of any of its securities other than in connection with a
Strategic Transaction (as defined below). 
The Company shall provide at least two (2) Business Days’ prior
notice of such transaction to such Purchaser and shall give such Purchaser the
right to participate in such transaction. 
For purposes of this Section 4.13, the term “Participation
Percentage” shall mean such Purchaser’s pro rata portion of the
aggregate Shares purchased hereunder. 
For purposes of this Section 4.13, the term “Strategic
Transaction” shall mean securities issued by the Company pursuant to
a strategic transaction including, without limitation, an acquisition, joint
venture, alliance, collaboration or investment transaction, provided that any
such issuance is to a person which is, itself or through its subsidiaries or
affiliates, an operating company and in which the Company receives strategic
benefits that are in addition to the investment of funds.

 

4.14         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 such plan or arrangement, by virtue of receiving

 

21

 

Securities
under the Transaction Documents or under any other agreement between the
Company and the Purchasers.

 

4.15         Subsequent Equity Sales.  From the date hereof until 30 days after the
Closing Date, neither the Company nor any Subsidiary shall issue shares of
Common Stock or Common Stock Equivalents other than in connection with an
Exempt Issuance.   For purposes of this Section 4.15,
an “Exempt Issuance” means the issuance of (a) shares
of Common Stock or options to employees, officers or directors of the Company
pursuant to any stock or option plan in effect on the date of this Agreement,
and (b) securities upon the exercise or exchange of or conversion of any
Securities issued hereunder and/or other securities (including options and
warrants) exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise, exchange or
conversion price of such securities.

 

ARTICLE V

CONDITIONS PRECEDENT TO CLOSING

 

5.1           Conditions Precedent to the
Obligations of the Purchasers to Purchase Shares and Warrants.  The obligation of each Purchaser to acquire
Shares and Warrants at the Closing is subject to the fulfillment to such
Purchaser’s satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by such Purchaser (as to
itself only):

 

(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 Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.

 

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

 

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

 

(d)           Consents.  The Company shall have obtained in a timely
fashion any and all consents, permits, approvals, registrations and waivers
necessary for consummation of the purchase and sale of the Shares and Warrants
at the Closing, all of which shall be and remain so long as necessary in full
force and effect.

 

(e)           No Suspensions of Trading in
Common Stock; Listing .  The
Common Stock (i) shall be designated for quotation or listed on the
Principal Trading Market and (ii) shall not have been suspended, as of the
Closing Date, by the Commission or the Principal Trading Market from trading on
the Principal Trading Market nor shall suspension by the Commission or the
Principal Trading Market have been threatened, as of the Closing Date, either (A) in
writing by the Commission or the Principal Trading Market or (B) by
falling below the minimum listing maintenance requirements of the Principal
Trading Market.

 

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

 

(g)           Compliance Certificate .  The Company shall have delivered to each
Purchaser a certificate, dated as of the Closing Date and signed by its Chief Executive
Officer or its Chief Financial 

 

22

 

Officer, dated as of the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1(a) and (b).

 

(h)           Termination .  This Agreement shall not have been terminated
as to such Purchaser in accordance with Section 6.17 herein.

 

(i)            Market Events.  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 the Company’s
Principal 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, the financial markets of the United States which, in each
case, in the reasonable judgment of each Purchaser, makes it impracticable or
inadvisable to purchase the Securities at the Closing.

 

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

 

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

 

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

 

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

 

(d)           Consents.  The Company shall have obtained in a timely
fashion any and all consents, permits, approvals, registrations and waivers
necessary for consummation of the purchase and sale of the Shares and Warrants,
all of which shall be and remain so long as necessary in full force and effect.

 

(e)           Purchasers Deliverables.  Such Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b).

 

(f)            Termination.  This Agreement shall not have been terminated
as to such Purchaser in accordance with Section 6.17 herein.

 

23

 

ARTICLE VI

MISCELLANEOUS

 

6.1           Fees and Expenses.  At the Closing, the Company shall reimburse
the VC Investors for the legal fees of one counsel representing all of the
Insider Investors in an amount not to exceed $15,000 in the aggregate in
connection with the transactions contemplated by the Transaction
Documents.  Other than the VC Investors’
legal fees provided above, the Company and the Purchasers shall each pay the
fees and expenses of their respective advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement.  The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in
connection with the sale and issuance of the Securities to the Purchasers.

 

6.2           Entire Agreement.  The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.  At or
after the Closing, and without further consideration, the Company and the
Purchasers will execute and deliver to the other such further documents as may
be reasonably requested in order to give practical effect to the intention of
the parties under the Transaction Documents.

 

6.3           Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a) the
date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of
successful transmission) at the facsimile number specified in this Section prior
to 5:00 p.m., New York City time, on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section on
a day that is not a Trading Day or later than 5:00 p.m., New York City
time, on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service with
next day delivery specified, or (d) upon actual receipt by the party to
whom such notice is required to be given. 
The address for such notices and communications shall be as follows:

 

If to the Company:               Helicos
BioSciences Corporation

One Kendall Square

Building 700

Cambridge, Massachusetts 02139

Telephone No.:  (617) 264-1800

Facsimile No.:  (617) 264-1700

Attention:  General Counsel

 

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

 

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, Massachusetts 02109

Telephone No.:  (617) 570-1000

Facsimile No.:  (617) 523-1231

Attention:      Stuart M. Cable, Esq.

James A. Matarese, Esq.

 

If to a Purchaser:                                                      To the address
set forth under such Purchaser’s name on the signature page hereof;

 

24

 

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

 

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

 

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

 

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

 

6.7           No Third-Party Beneficiaries.  This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.

 

6.8           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof.  Each party agrees that all Proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement and any other Transaction Documents (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the applicable courts located in the
State of New York.  Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the applicable
courts located in the State of New York for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such courts located in the State of New York, or that such
Proceeding has been commenced in an improper or inconvenient forum.  Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner
permitted by law.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF 

 

25

 

OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

6.9           Survival.  Subject to applicable statute of limitations,
the representations, warranties, agreements and covenants contained herein
shall survive the Closing and the delivery of the Shares and Warrants, except
that the representations and warranties contained herein shall terminate upon
the five-year anniversary of the Closing Date.

 

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

 

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

 

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

 

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

 

6.14         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.

 

26

 

6.15         Adjustments in Common Stock
Numbers and Prices.  In the
event of any stock split, subdivision, dividend or distribution payable in
shares of Common Stock (or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly shares of Common
Stock), combination or other similar recapitalization or event occurring after
the date hereof and prior to the Closing, each reference in any Transaction
Document to a number of shares or a price per share shall be deemed to be
amended to appropriately account for such event.

 

6.16         Independent Nature of
Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any
Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under any Transaction
Document.  The decision of each Purchaser
to purchase Securities pursuant to the Transaction Documents has been made by
such Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any Subsidiary which
may have been made or given by any other Purchaser or by any agent or employee
of any other Purchaser, and no Purchaser and any of its agents or employees
shall have any liability to any other Purchaser (or any other Person) relating
to or arising from any such information, materials, statement or opinions.  Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by the Transaction Documents.  Each Purchaser acknowledges that no other
Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Securities or
enforcing its rights under the Transaction Documents.  Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.  Each Purchaser has had the opportunity to
obtain its own separate legal counsel in its 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 Purchaser.

 

6.17         Termination.  This Agreement may be terminated and the sale
and purchase of the Shares and Warrants abandoned at any time prior to the
Closing by either the Company or any Purchaser (with respect to itself only)
upon written notice to the other, if the Closing has not been consummated on or
prior to 5:00 p.m., New York City time, on the Outside Date; provided, however , that the right to
terminate this Agreement under this Section 6.17 shall not be available to
any Person whose failure to comply with its obligations under this Agreement
has been the cause of or resulted in the failure of the Closing to occur on or
before such time.  Nothing in this Section 6.17
shall be deemed to release any party from any liability for any breach by such
party of the terms and provisions of this Agreement or the other Transaction
Documents or to impair the right of any party to compel specific performance by
any other party of its obligations under this Agreement or the other
Transaction Documents.  In the event of a
termination pursuant to this Section, the Company shall promptly notify all
non-terminating Purchasers.  Upon a
termination in accordance with this Section, the Company and the terminating
Purchaser(s) shall not have any further obligation or liability (including
arising from such termination) to the other, and no Purchaser will have any
liability to any other Purchaser under the Transaction Documents as a result
therefrom.

 

27

 

6.18         Waiver of Conflicts.  Each party to this Agreement acknowledges
that Company Counsel, outside general counsel to the Company, may have in the
past performed and may now or in the future represent one or more Purchasers or
their affiliates in matters unrelated to the transactions contemplated by the
Transaction Documents, including representation of such Purchasers or their
affiliates in matters of a similar nature to the transactions contemplated by
the Transaction Documents.  The
applicable rules of professional conduct require that Company Counsel
inform the parties hereunder of this representation and obtain their
consent.  Company Counsel has served as
outside general counsel to the Company and has negotiated the terms of the
transactions contemplated by the Transaction Documents solely on behalf of the
Company.  The Company and each Purchaser
hereby (a) acknowledge that they have had an opportunity to ask for and
have obtained information relevant to such representation, including disclosure
of the reasonably foreseeable adverse consequences of such representation; (b) acknowledge
that with respect to the transactions contemplated by the Transaction
Documents, Company Counsel has represented solely the Company, and not any
Purchaser or any stockholder, director or employee of the Company or any
Purchaser; and (c) gives its informed consent to Company Counsel’s
representation of the Company in the transactions contemplated by the
Transaction Documents.

 

6.19         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.

 

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

 

6.21         Aggregation of Stock.  All Securities held or acquired by affiliated
Persons under common management or control shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement and
the Transaction Documents.

 

6.22         Limitation of Liability.  Notwithstanding anything herein to the
contrary, the Company acknowledges and agrees that the liability of a Purchaser
arising directly or indirectly under any of the Transaction Documents of any
and every nature whatsoever shall be satisfied solely out of the assets of such
Purchaser, and that no trustee, officer, other investment vehicle or any other
affiliate of such Purchaser  or any
investor, shareholder or holder of shares of beneficial interest of such a
Purchaser shall be personally liable for any liabilities of such Purchaser.

 

6.23         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.

 

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.

 

	
   

  	
  HELICOS BIOSCIENCES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
    By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

 

 

	
   

  	
  NAME OF PURCHASER:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Aggregate Purchase Price (Subscription Amount): $

  
	
   

  	
   

  
	
   

  	
  Number of Shares to be Acquired:

  
	
   

  	
   

  
	
   

  	
  Underlying Shares Subject to Warrant:

  
	
   

  	
  (        % of the number of
  Shares to be acquired)

  
	
   

  	
   

  
	
   

  	
  Tax ID No.:

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Telephone No.:

  
	
   

  	
   

  
	
   

  	
  Facsimile No.:

  
	
   

  	
   

  
	
   

  	
  E-mail Address:

  
	
   

  	
   

  
	
   

  	
  Attention:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Delivery Instructions:

  	
   

  
	
   

  	
   

  
	
  (if different than above)

  	
   

  
	
   

  	
   

  
	
  c/o

  	
   

  
	
   

  	
   

  
	
  Street:

  	
   

  
	
   

  	
   

  
	
  City/State/Zip:

  	
   

  
	
   

  	
   

  
	
  Attention:

  	
   

  
	
   

  	
   

  
	
  Telephone No.:

  	
   

  
				

 

 

 

EXHIBITS

 

	
  A:

  	
  Form of Warrant

  
	
  B-1:

  	
  Accredited Investor Questionnaire

  
	
  B-2:

  	
  Stock Certificate and Warrant Questionnaire

  
	
  C:

  	
  Wire Instructions

  
	
  D:

  	
  Form of
  Registration Rights Agreement

  

 

SCHEDULES

 

3.1(a) Subsidiaries

3.1(g) Capitalization

3.1(j) Tax Matters

3.1(q) Title to
Assets

3.1(r) Patents and
Trademarks

3.1(u) Certain Fees

3.1(w) Registration
Rights

 

 

EXHIBIT A

 

Form of Warrant

 

 

EXHIBIT B-1

 

ACCREDITED INVESTOR QUESTIONNAIRE

 

(ALL INFORMATION WILL BE TREATED
CONFIDENTIALLY)

 

To:          Helicos
BioSciences Corporation

 

This Investor Questionnaire (“Questionnaire”)
must be completed by each potential investor in connection with the offer and
sale of shares of common stock, par value $0.001 per share, and shares of
common stock that may be issued upon exercise of certain warrants
(collectively, the “Securities”), of Helicos BioSciences Corporation, a
Delaware corporation (the “Corporation”).  The Securities are being offered and sold by
the Corporation without registration under the Securities Act of 1933, as
amended (the “Act”), and the securities laws of certain states, in
reliance on the exemptions contained in Section 4(2) of the Act and
on Regulation D promulgated thereunder and in reliance on similar exemptions
under applicable state laws.  The Corporation
must determine that a potential investor meets certain suitability requirements
before offering or selling Securities to such investor.  The purpose of this Questionnaire is to
assure the Corporation that each investor will meet the applicable suitability
requirements.  The information supplied
by you will be used in determining whether you meet such criteria, and reliance
upon the private offering exemptions from registration is based in part on the
information herein supplied.

 

This Questionnaire does not constitute an offer to
sell or a solicitation of an offer to buy any security.  Your answers will be kept strictly
confidential.  However, by signing this
Questionnaire, you will be authorizing the Corporation to provide a completed
copy of this Questionnaire to such parties as the Corporation deems appropriate
in order to ensure that the offer and sale of the Securities will not result in
a violation of the Act or the securities laws of any state and that you
otherwise satisfy the suitability standards applicable to purchasers of the
Securities.  All potential investors must
answer all applicable questions and complete, date and sign this
Questionnaire.  Please print or type your
responses and attach additional sheets of paper if necessary to complete your
answers to any item.

 

PART A.                BACKGROUND INFORMATION

 

	
  Name
  of Beneficial Owner of the Securities:

  	
   

  
	
   

  
	
  Business
  Address:

  	
   

  
	
   

  	
   

  	
  (Number
  and Street)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (City)

  	
   

  	
  (State)

  	
   

  	
  (Zip
  Code)

  
	
   

  
	
  Telephone
  Number: (      )

  	
   

  
	
   

  
	
  If a corporation, partnership, limited liability company,
  trust or other entity:

  
	
   

  
	
  Type
  of entity:

  	
   

  
	
   

  
	
  State
  of formation:

  	
   

  	
   

  	
  Approximate
  Date of formation:

  	
   

  
	
   

  
	
  Were you formed for the
  purpose of investing in the securities being offered?

  
	
   

  
	
  Yes o          No o

  
													

 

 

	
  If an individual:

  
	
   

  
	
  Residence
  Address:

  	
   

  
	
   

  	
   

  	
  (Number
  and Street)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (City)

  	
   

  	
  (State)

  	
   

  	
  (Zip
  Code)

  
	
   

  
	
  Telephone
  Number: (      )

  	
   

  
	
   

  
	
  Age:

  	
   

  	
   

  	
  Citizenship:

  	
   

  	
   

  	
  Where
  registered to vote:

  	
   

  
	
   

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

  
	
   

  
	
  Are you a director or
  executive officer of the Corporation?

  
	
   

  
	
  Yes o          No o

  
	
   

  
	
  Social Security or
  Taxpayer Identification No.

  	
   

  
															

 

PART B.                ACCREDITED INVESTOR
QUESTIONNAIRE

 

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

 

	
  (1)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (3)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (4)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (5)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (6)

  	
   

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

  

 

 

	
  (7)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (8)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (9)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (10)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (11)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (12)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (13)

  	
   

  	
  An executive officer or director of the Company;

  
	
   

  	
   

  	
   

  
	
  (14)

  	
   

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

  

 

	
  A.

  	
  FOR
  EXECUTION BY AN INDIVIDUAL:

  
	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
  Print
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
  B.

  	
  FOR
  EXECUTION BY AN ENTITY:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Entity
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
							

 

 

	
  C.

  	
  ADDITIONAL
  SIGNATURES (if required by partnership, corporation or trust document):

  
	
   

  
	
   

  
	
   

  	
   

  	
  Entity
  Name:

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
  Print
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Entity
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
							

 

 

EXHIBIT B-2

 

Stock Certificate
Questionnaire

 

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

 

	
  1.

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

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

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  The
  Tax Identification Number (or, if an individual, the Social Security Number)
  of the Registered Holder listed in response to Item 1 above:

  	
   

  

 

 

EXHIBIT C

 

Wire Instructions

 

JPMorgan
Chase Bank

ABA
# 021000021

Account
No.:  806027405

Account Name: 
Helicos BioScience Corp. Subscription

 

 

EXHIBIT D

 

Form of Registration
Rights Agreement

 

 

Schedule
3.1(a)

 

Subsidiaries

 

	
  Name

  	
   

  	
  Jurisdiction of Organization

  
	
   

  	
   

  	
   

  
	
  Helicos BioSciences Securities Corporation

  	
   

  	
  Massachusetts

  

 

 

Schedule
3.1(g)

 

Capitalization

 

The Company recently
issued approximately 3.1 million shares pursuant to the exercise of outstanding
warrants issued in connection with the Company’s December 2008 private
placement transaction.

 

 

Schedule
3.1(j)

 

Tax
Matters

 

The Company filed it’s
Federal tax return on Form 1120 for calendar year 2008 on September 12,
2009 without a valid extension from the original filing due date of March 15,
2009 due to an inadvertent communication issue. 
The Company generated a loss for the period and no tax was due with the
return.  The Company believes that
potential penalties for this late filing will be immaterial.

 

 

Schedule
3.1(q)

 

Title
to Assets

 

The term of the lease for
the Company’s premises located at One Kendall Square, Building 700, Cambridge,
MA 02139 expired on August 31, 2009 and the Company and its landlord are
actively finalizing the documentation of a lease amendment which would extend
the term of the lease.

 

 

Schedule 3.1(r)

 

Patents and Trademarks

 

In August 2006, the Company filed with the
European Patent Office an opposition against European Patent No. EP 1 105
529 B1 (“the ‘529 Patent”).  On January 24,
2007, the patent owner sought to amend certain claims of the ‘529 Patent, and
on February 11, 2008 the European Patent Office issued a preliminary
non-binding opinion regarding various arguments made by the parties and set the
matter for oral hearing.  The Company
elected not to participate in the oral hearing, which occurred on October 16,
2008.  On November 4, 2008, the
European Patent Office issued a decision stating that the patent was maintained
as amended.  On January 13, 2009,
the Company filed a Notice of Appeal with the European Patent Office, and on March 12,
2009 the Company filed its reasoned Grounds of Appeal with the European Patent
Office including a request that the ‘529 Patent be revoked. The Company
believes that it has meritorious defenses should the patent claims be asserted
against it in Europe.  Nevertheless,
patent litigation is complex and the Company cannot guarantee that any case
involving the ‘529 Patent would be resolved in a manner favorable to the
Company.  If the owner of the ‘529 Patent
were to assert the patent against the Company in Europe, and the Company’s
defenses were unsuccessful, the patent could materially adversely affect the
Company’s ability to market and sell its products in Europe, which in turn
could have a material adverse effect on the Company’s business, operating
results, or financial conditions.

 

 

Schedule 3.1(w)

 

Registration Rights

 

The Company is obligated to file a new resale
registration statement to register the remaining 58,791,617 shares of common
stock, which includes the 25,652,333 shares issuable upon exercise of the
warrants, issued in connection with the December 2008 PIPE financing at
such time as the SEC permits and otherwise pursuant to the terms of the
registration rights agreement executed in connection with such financing.  Certain shares held by the Inside Investors
are subject to these registration rights.

 

In addition to the above, pursuant to the terms of
an Amended and Restated Investor Rights Agreement, dated March 1, 2006,
the Company is obligated to register approximately 13.5 million outstanding
shares held by the Inside Investors.  These
rights expire on May 24, 2012.

 

Pursuant to Section 2(g) of the
Registration Rights Agreement to be entered into in connection with the
Offering, the Inside Investors will agree to waive the registration rights set
forth above with respect to a new registration statement to be filed to
register for resale the shares issued in the Offering.

 

 

Schedule 3.1(u)

 

Certain Fees

 

The Company will be
obligated to pay certain fees to Thomas Weisel Partners LLC

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00163-of-00352.parquet"}]]