Document:

EXHIBIT 10.1

PURCHASE AGREEMENT

     THIS PURCHASE AGREEMENT (the “Agreement”) is made as of April 5, 2006, by and between Delta Financial Corporation (the “Company”), a corporation organized under the laws of the
State of Delaware, with its principal offices at 1000 Woodbury Road, Suite 200, Woodbury, New York 11797 and the purchaser whose name and address is set forth on the signature page hereof (the “Purchaser”).

     IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the Purchaser agree as follows:

               SECTION 1. Sale of the Shares. Subject to the terms and conditions of this Agreement, the Company has
authorized the issuance and sale of up to 2,500,000 shares (the “Shares”) of its common stock, par value $0.01 per share (the “Common Stock”). 

               SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as defined in Section 3), the Company
will, subject to the terms of this Agreement, issue and sell to the Purchaser, and the Purchaser will buy from the Company, upon the terms and conditions hereinafter set forth, the number of Shares at the purchase price shown below:

	 

		 
		
Price Per 
		 
		 

	
	
Number of Shares to Be 
		 
		
Share In 
		 
		
Aggregate 
	
	
Purchased 
		 
		
Dollars 
		 
		
Price 
	
	 

		 
		
$     8.25 
		 
		
	  $

		 

 

     The Company proposes to enter into this same form of purchase agreement with certain other investors (the “Other Purchasers”) and expects to complete sales of the shares of Common Stock to
them. The Purchaser and the Other Purchasers are hereinafter sometimes collectively referred to as the “Purchasers,” and this Agreement and the purchase agreements executed by the Other Purchasers are hereinafter sometimes collectively
referred to as the “Agreements.” The term “Placement Agents” JMP Securities LLC, which is acting as lead placement agent, and Roth Capital Partners, LLC and SunTrust Capital Markets, Inc., which are acting as co-placement agents,
in connection with the transactions contemplated by this Agreement. 

               SECTION 3. Delivery of the Shares at the Closing. The completion of the purchase and sale of the Shares (the
“Closing”) shall occur at the offices of Morrison & Foerster LLP, 1290 Avenue of the Americas, New York, New York 10104 as soon as practicable and as agreed to by the parties hereto, within three business days following the execution
of the Agreements, or on such later date or at such different location as the Company and the Placement Agents shall agree in writing, but in any event not prior to the date that the conditions for Closing set forth below have been satisfied or
waived by the appropriate party (the “Closing Date”). The Purchaser shall be notified by facsimile transmission or otherwise of the time of the Closing. 

     At the Closing, the Company shall deliver to the Purchaser one or more stock certificates registered in the name of the Purchaser, or in such nominee name(s) as designated by the Purchaser in writing,
representing the number of Shares set forth in Section 2 above and bearing an appropriate legend, as described in Section 5.7 below, referring to the fact that the Shares were sold in reliance upon the exemption from registration under the
Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(2) thereof. The name(s) in which the stock certificates are to be registered are set forth in the Stock Certificate Questionnaire attached hereto as part of
Appendix I. 

     The Company’s obligation to complete the purchase and sale of the Shares and deliver such stock certificate(s) to the Purchaser at the Closing shall be subject to the following conditions, any
one or more of which may be waived by the Company: (a) receipt by the Company of same-day funds in the full amount of the purchase price for the Shares being purchased hereunder; (b) completion of the purchases and sales under the Agreements with
the Other Purchasers; and (c) the accuracy in all material respects of the representations and warranties made by the Purchasers (as if such representations and warranties were made on the Closing Date) and the fulfillment in all material respects
of those undertakings of the Purchasers to be fulfilled prior to the Closing. The Purchaser’s obligation to accept delivery of such stock certificate(s) and to pay for the Shares evidenced thereby shall be subject to the following conditions,
any one or more of which may be waived by the Purchaser: (a) each of the representations and warranties of the Company made herein shall be accurate as of the Closing Date; (b) the delivery to the Purchaser by counsel to the Company of a favorable
legal opinion in substantially the form attached hereto as Exhibit A hereto; (c) the fulfillment in all material respects of those undertakings of the Company to be fulfilled prior to
Closing; and (d) the receipt by the Placement Agents of letters from KPMG LLP, independent public or certified public accountants for the Company, dated the date hereof and the Closing Date, each addressed to the Placement Agents, in form and
substance satisfactory to the Placement Agents.

               SECTION 4. Representations, Warranties and Covenants of the Company. The Company hereby represents and
warrants to, and covenants with, the Purchaser as follows:

     4.1 Purchase Agreement. The Company has full legal right, corporate power and authority to enter into this
Agreement and to perform the transactions contemplated hereby. This Agreement has been duly authorized, executed, and delivered by, and is a valid and binding agreement of, the Company, enforceable in accordance with its terms, except as (i) rights
to indemnification hereunder may be limited by applicable law, and (ii) the enforcement hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to or affecting the rights and remedies of
creditors or by general equitable principles. 

     4.2 Authorization of the Shares. The Shares have been duly authorized and, when issued, delivered and paid for
in the manner set forth in this Agreement, will be validly issued, fully paid and nonassessable and free and clear of all pledges, liens, restrictions and encumbrances (other than restrictions on transfer under state and/or federal securities laws),
and will conform in all material respects to the description thereof set forth in the Private Placement Memorandum (defined below). No preemptive rights or other similar rights to subscribe for or purchase any shares of common stock of the Company
exist with respect to the issuance and sale 

- 2 -

of the Shares by the Company pursuant to this Agreement. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares to be sold by the
Company as contemplated herein.

     4.3 Offering Materials. The Company has not distributed and will not distribute prior to the Closing Date any
offering material, including, without limitation, any “free writing prospectus” (as defined in Rule 405 promulgated under the Securities Act), in connection with the offering and sale of the Shares other than the private placement
memorandum dated March 27, 2006 (the “Private Placement Memorandum”) or any amendment or supplement thereto. Neither the Company nor any person acting on its behalf has in the past or will hereafter take any action independent of the
Placement Agents to sell, offer for sale or solicit offers to buy any securities of the Company that would result in the initial sale of the Shares, as contemplated by this Agreement, not being exempt from the registration requirements of Section 5
of the Securities Act.

     4.4 No Other Registration Rights. No holder of any security of the Company has any right (which has not been
waived or has not expired by reason of lapse of time following notification of the Company’s intent to file the registration statement to be filed by it pursuant to Section 7.1 (the “Registration Statement”)) to require the Company to
register the sale of any security owned by such stockholder under the Securities Act in or in preference to the Registration Statement.

     4.5 No Material Adverse Change. Subsequent to the respective dates as of which information is given in the
Private Placement Memorandum: (i) there has been no Material Adverse Change (as defined below), or any development that could reasonably be expected to result in a Material Adverse Change; (ii) the Company and its subsidiaries, considered as one
entity, have not incurred any material liability or obligation, indirect, direct, or contingent, nor entered into any material transaction or agreement other than in the ordinary course of its business; (iii) there has been no dividend or
distribution of any kind declared, paid or made by the Company or, except for dividends paid to the Company or its other subsidiaries, any of its subsidiaries on any class of capital stock, or repurchase or redemption by the Company or any of its
subsidiaries of any class of capital stock; and (iv) the Company and its subsidiaries have not sustained any material loss or interference with their businesses or properties from fire, flood, windstorm, accident or other calamity not covered by
insurance. For purposes of this Agreement, the term “Material Adverse Change” means any material adverse change in the condition, financial or otherwise, or in the earnings, business or results of operations, whether or not arising from transactions in
the ordinary course of business, of the Company and its subsidiaries, considered as one entity or on the transactions contemplated hereby or by the agreements and instruments to be entered into in connection herewith, or on the authority or ability
of the Company to perform its obligations under this Agreement. 

     4.6 Accountants. The firm of KMPG LLP, which has expressed its opinion with respect to the consolidated
financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, which is attached as an exhibit to, and made a part of the Private Placement Memorandum, and that will be incorporated by reference
in the Registration Statement and the Prospectus (as defined in Section 7.3 hereof) that forms a part thereof, is a registered independent public accountant as required by the Securities Act and the 

- 3 -

rules and regulations promulgated thereunder (the “Rules and Regulations”) and by the rules of the Public Accounting Oversight Board. 

     4.7 Preparation of the Financial Statements. The consolidated financial statements of the Company and the
related notes contained in its filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), present fairly the consolidated financial position of the Company and its subsidiaries as of and at the dates indicated and
the results of their operations, cash flows and changes in stockholders’ equity for the periods therein specified. Such consolidated financial statements (including the related notes) have been prepared in conformity with generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included
in the Company’s Exchange Act Reports (as defined below).

     4.8 Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company and its
subsidiaries has been duly incorporated or formed and is validly existing as a corporation, limited liability company, or trust, as applicable, in good standing under the laws of the jurisdiction of its incorporation or formation and has corporate
power and authority to own, lease and operate its properties and to conduct its business as described in its filings with the Securities and Exchange Commission (the “Commission”) and, in the case of the Company, to enter into and perform
its obligations under this Agreement. Each of the Company and its subsidiaries is duly qualified as a foreign corporation, limited liability company or trust, as applicable, to transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Change. All of the issued and outstanding capital stock or limited liability company interests of each subsidiary that has been organized as a corporation or a limited liability company has been duly
authorized and validly issued, is fully paid and non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim. 

     4.9 Subsidiaries of the Company. The Company does not own or control, directly or indirectly, any corporation,
limited liability company, trust, association or other entity other than the subsidiaries listed in Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2005 and the subsidiaries listed on Exhibit B hereto (the “List of the Additional Subsidiaries”). 

     4.10 No Prohibition on Subsidiaries from Paying Dividends or Making Other Distributions. No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary’s
capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of the Company, except as disclosed in
or contemplated by the Private Placement Memorandum.

- 4 -

     4.11 Capitalization and Other Capital Stock Matters. The authorized, issued, and outstanding capital stock of
the Company is as set forth in the balance sheets set forth in the Exchange Act Reports (other than for subsequent issuances, if any, pursuant to employee benefit plans described in the Exchange Act Reports or upon exercise of outstanding options or
warrants described in the Exchange Act Reports). The Common Stock conforms in all material respects to the description thereof contained in the Company’s most recent Form 8-A filed under the Exchange Act and in the Exchange Act Reports. All of
the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and non-assessable and have been issued in compliance with federal and state securities laws. None of the outstanding shares of Common
Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options, warrants, preemptive rights, rights of
first refusal or other rights to purchase, or equity or debt securities convertible into, exchangeable or exercisable for, any capital stock of the Company or any of its subsidiaries other than those accurately described in the Exchange Act Reports.
The description of the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the Exchange Act Reports, accurately and fairly presents the information required
to be shown with respect to such plans, arrangements, options and rights.

     4.12 Lock-Up Agreements. Each director and executive officer of the Company has agreed to sign an agreement
(the “Lock-Up Agreement”) substantially in the form attached hereto as Exhibit C (the “Form of Lock-up Agreement”). The Company has provided to counsel for the Placement
Agents true, accurate, and complete copies of all of the Lock-up Agreements presently in effect or effected thereby. The Company hereby represents and warrants that it will not release any of its executive officers, directors, or other stockholders
from any Lock-up Agreements currently existing or hereafter effected without the prior written consent of JMP Securities LLC.

     4.13 Agreement Not to Offer or Sell Additional Securities. During the period of ninety (90) days following the
date of the Private Placement Memorandum (the “Lock-Up Period”), the Company will not, without the prior written consent of the Purchasers continuing to hold any Shares acquired hereunder (which consent may be withheld in its sole
discretion), (a) consent to the disposition of any shares held by a stockholder or option holder which is a director or executive officer of the Company before the expiration of the Lock-up Period, or (b) sell, offer, contract, or grant, directly or
indirectly, any option to sell, pledge, transfer, or establish an open “put equivalent position” within the meaning of Rule 16a-1(h) under the Exchange Act, otherwise dispose of, transfer, or enter into any transaction which is designed
to, or could be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise by the Company or any affiliate of the Company or any person in privity with the Company or
any affiliate of the Company), or otherwise dispose of any Securities (as defined in Exhibit D attached hereto) or any securities that relates to or derives any significant part of its value
from the Common Stock; provided, however, that the Company may issue (i) shares of restricted stock or options to purchase its
Common Stock pursuant to any stock option plan, stock bonus, or other stock plan or arrangement approved by the Board of Directors of the Company and described in the Private Placement Memorandum, or (ii) Common Stock upon the exercise of such
options described in clause (i), but only if such shares, options, or shares issued upon exercise of such options, cannot be sold, offered, disposed 

- 5 -

of or otherwise transferred during the Lock-up Period without the prior written consent of the Purchasers continuing to hold any Shares acquired hereunder (which consent may be withheld in its sole discretion).

     4.14 Stock Exchange Listing. The Common Stock (including the Shares) is registered pursuant to Section 12(b)
of the Exchange Act, and is listed on the American Stock Exchange (the “AMEX”), and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from the AMEX nor has the Company received any notification that the Commission or the AMEX is contemplating terminating such registration or listing.

     4.15 Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any of its subsidiaries is in violation or default of any provision of its charter, by-laws or other organizational documents or is in breach of or default (or,
with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries is subject, including, without limitation, any agreements pertaining to, relating to or arising in connection with,
any of the securitization transactions of the Company or any of its subsidiaries (each, an “Existing Instrument”), except for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change. The Company
and its subsidiaries are in compliance with all statutes, laws, rules, regulations, judgments, orders and decrees of all courts, regulatory bodies, administrative agencies, governmental bodies, arbitrators or other authorities having jurisdiction
over the Company or such subsidiaries or any of their respective properties, as applicable, including, without limitation, the provisions of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley Act”), and the rules and regulations
of the National Association of Securities Dealers, Inc. (“NASD”) and the AMEX, including the corporate governance requirements thereof, except where such non-compliance would not, individually or in the aggregate, result in a Material
Adverse Change.

     4.16 No Conflicts. The Company’s execution, delivery, and performance of this Agreement and consummation
of the transactions contemplated hereby (i) will not result in any violation of the provisions of the charter or by-laws of the Company or any subsidiary, (ii) will not conflict with or constitute a breach of, or Default under, or result in the
creation or imposition of any lien, charge, or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches,
Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, result in a Material Adverse Change, and (iii) will not result in any violation of any statute, law, rule, regulation, judgment, order or decree of any court,
regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or such subsidiary or any of its properties, as applicable. No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental or regulatory authority or agency, is required for the Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby, except
such as may be required under the state securities or Blue Sky laws or the by-laws and rules of the NASD. 

- 6 -

     4.17 No Material Actions or Proceedings. Except as disclosed in or contemplated by the Private Placement
Memorandum, there is no legal or governmental action, suit or proceeding pending or, to the knowledge of the Company, there are no inquiries or investigations, nor are there any legal or governmental actions, suits or proceedings threatened (i)
against or affecting the Company or any of its subsidiaries, (ii) which has as the subject thereof any officer or director of, or property owned or leased by, the Company or any of its subsidiaries or (iii) relating to environmental or
discrimination matters, which in the case of clauses (i), (ii) or (iii) could reasonably be expected to result in a Material Adverse Change or adversely affect the consummation of the transactions contemplated hereby. Neither the Company nor any of
its subsidiaries is a party to or subject to the provisions of any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental body that might be expected to result in a Material Adverse Change,
including, without limitation, any state licensure or banking commission. 

     4.18 Labor Matters. No material labor dispute with the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company, is threatened or imminent. The Company is not aware of any existing or imminent labor disturbance by the employees of any of its third-party contractors, that might be expected to result in a Material
Adverse Change. 

     4.19 Intellectual Property Rights. The Company and its subsidiaries own or possess sufficient trademarks,
trade names, patent rights, patents, know-how, collaborative research agreements, inventions, servicemarks, copyrights, licenses, approvals, trade secrets and other similar rights (collectively, “Intellectual Property Rights”) necessary to
conduct their businesses as now conducted, as proposed to be conducted, as described in or contemplated by the Private Placement Memorandum, and any respective amendments or supplements thereto. The expiration of any of such Intellectual Property
Rights would not be reasonably expected to result in a Material Adverse Change. Neither the Company nor any of its subsidiaries has received any notice of, and has no knowledge of, any infringement of or conflict with asserted rights of the Company
by others with respect to any Intellectual Property Rights, other than with respect to any infringement that would not reasonably be expected to result in a Material Adverse Change. There is no claim being made against the Company or any of its
subsidiaries regarding any kind of Intellectual Property Right. The Company and its subsidiaries do not, in the conduct of their business as now or proposed to be conducted as described in the Private Placement Memorandum, infringe or conflict with
any right or patent of any third party, or any discovery, invention, product, or process which is the subject of a patent application filed by any third party, known to the Company or any of its subsidiaries, which such infringement or conflict is
reasonably likely to result in a Material Adverse Change. 

     4.20 All Necessary Permits, etc. The Company and each subsidiary possess such
valid and current certificates, authorizations, licenses or permits issued by the appropriate state, federal, or foreign regulatory agencies or bodies necessary to conduct their respective businesses, including, without limitation, all certificates,
authorizations, licenses or permits required for the making of loans and lending operations, and (i) any such certificate, authorization, license or permit is not subject to any qualifications or limitations which would prohibit the Company or any
of its subsidiaries from conducting their respective businesses, (ii) all applicable fees have been paid for any such certificate, authorization, license or permit, except for such fees which if not paid would not in any way prevent or prohibit the
Company or any of its subsidiaries from 

- 7 -

conducting their respective businesses in accordance with all applicable laws, (iii) no fines or penalties are outstanding for any failure to timely obtain, or any non-compliance with any such certificate, authorization, license
or permit, except for such fines or penalties that would not reasonably be likely to result in a Material Adverse Change, and (iv) neither the Company nor any subsidiary has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization, license or permit, which revocation, modification or non-compliance, individually or in the aggregate, would result in a Material Adverse Change.

     4.21 Title to Properties. The Company and each of its subsidiaries has good and marketable title to all the
properties and assets reflected as owned in the financial statements included in the Private Placement Memorandum, in each case free and clear of any security interests, mortgages, liens, encumbrances, equities, claims and other defects of any kind,
except as described in the Private Placement Memorandum. The real property, improvements, equipment and personal property held under lease by the Company or any subsidiary are held under valid and enforceable leases, with such exceptions as are not
material and do not materially interfere with the use made or proposed to be made of such real property, improvements, equipment or personal property by the Company or such subsidiary. 

     4.22 Tax Law Compliance. The Company and its subsidiaries have filed all necessary federal, state and foreign
income and franchise tax returns or have duly requested extensions thereof and have paid all taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine, or penalty levied against any of them, except for
any such tax, assessment, fine or penalty that is being contested in good faith and by appropriate proceedings and for which adequate reserves have been provided. The Company and its subsidiaries have made adequate charges, accruals and reserves in
the applicable financial statements in respect of all federal, state and foreign income and franchise taxes for all periods as to which the tax liability of the Company and its subsidiaries have not been finally determined. The Company has no
knowledge of any tax deficiency that has been or might be asserted or threatened against the Company. 

     4.23 Transfer Taxes. On the Closing Date, all stock transfer taxes or other similar fees or charges (other
than income taxes) under federal law or the laws of any state, or any political subdivisions thereof, that are required to be paid in connection with the sale and transfer of the Shares to be sold to the Purchaser hereunder will have been, fully
paid or provided for by the Company and all laws imposing such taxes will have been fully complied with.

     4.24 Company Not an “Investment Company”. The Company is not, and
after receipt of payment for the Shares giving effect to the transactions contemplated hereby will not be, an “investment company,” or an entity “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.

     4.25 Insurance. Each of the Company and its subsidiaries are insured by recognized, financially sound and
reputable institutions with policies in such amounts and with such deductibles and covering such risks as are generally deemed adequate and customary for their businesses and otherwise reasonably prudent including, but not limited to, policies
covering real 

- 8 -

and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, acts of vandalism, earthquakes, general liability and Directors’ and Officers’ liability, all of which
insurance is in full force and effect. The Company and each of its subsidiaries expect they will be able, and will use their best efforts, (i) to renew its existing insurance coverage as and when such policies expire, or (ii) to obtain comparable
coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not result in a Material Adverse Change. Neither of the Company nor any subsidiary has been rejected from
obtaining any type of insurance coverage which it has sought or for which it has applied.

     4.26 No Price Stabilization or Manipulation. The Company has not taken and will not take, directly or
indirectly, any action which was designed to, or that might be expected to cause or result in, stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Shares.

     4.27 Non-Public Information. The Company has not disclosed to the Purchasers, whether in the Private Placement
Memorandum or otherwise, information that would constitute material non-public information as of the Closing Date, other than the proposed transactions contemplated hereby.

     4.28 Use of Purchaser Name. Except as may be required by applicable law or regulation, the Company shall not
use the Purchasers’ names or the name of any of their affiliates in any advertisement, announcement, press release or other similar public communication unless it has received the prior written consent of the Purchaser for the specific use
contemplated or as otherwise required by applicable law or regulation. 

     4.29 Related Party Transactions. There are no business relationships or related-party transactions involving
the Company or any subsidiary or any other person required to be described in the Exchange Act Reports which have not been described as required. 

     4.30 Exchange Act and Sarbanes-Oxley Act Compliance. Since December 31, 2005, the Company has filed all
Exchange Act Reports required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act. The Exchange Act Reports, at the time they were or hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the Exchange Act and the Sarbanes-Oxley Act and did not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 

     4.31 Contracts. Except as disclosed in the Company’s Exchange Act Reports, the Company and its
subsidiaries have no material contracts. Any contracts described in the Company’s Exchange Act Reports that are material to the Company and its subsidiaries, taken as a whole, are in full force and effect on the date hereof. 

     4.32 Company’s Accounting System. The Company and each of its subsidiaries maintain a system of
accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization, (ii)

- 9 -

transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 

     4.33 No Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any employee or agent of the Company or any subsidiary acting on behalf of the Company or any of its subsidiaries, has made any contribution or other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any law or of the character required to be disclosed in the Company’s Exchange Act Reports. 

     4.34 Compliance with Environmental Laws. Except as would not, individually or in the aggregate, result in a
Material Adverse Change, (i) the Company and its subsidiaries are in compliance with all federal, state, local or foreign law or regulation relating to pollution or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, the “Materials of Environmental Concern”), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environment Concern (collectively, the “Environmental Laws”), which includes, but is not limited to, compliance with any permits or other governmental authorizations required for the
operation of the business of the Company or its subsidiaries under applicable Environmental Laws, or compliance with the terms and conditions thereof, and neither the Company nor any of its subsidiaries has received any written communication,
whether from a governmental authority, citizens group, employee or otherwise, that alleges that the Company or any of its subsidiaries is in violation of any Environmental Law; (ii) there is no claim, action or cause of action filed with a court or
governmental authority, no investigation with respect to which the Company has received written notice, and no written notice by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental responses costs,
natural resources damages, property damages, personal injuries, attorneys’ fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location
owned, leased or operated by the Company or any of its subsidiaries, now or in the past (collectively, the “Environmental Claims”), pending or threatened against the Company or any of its subsidiaries or any person or entity whose
liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by operation of law; and (iii) there are no past or present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that would reasonably be expected to result in a violation of any Environmental Law or form the basis of a
potential Environmental Claim against the Company or any of its subsidiaries or against any person or entity whose liability for any Environmental Claim the Company or any of its subsidiaries has retained or assumed either contractually or by
operation of law. The Company is not currently aware that it will be required to make future material capital expenditures to comply with Environmental Laws. 

- 10 -

     4.35 ERISA Compliance. The Company and its subsidiaries and any “employee benefit plan” (as defined
under the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (collectively, “ERISA”)) established or maintained by the Company, its subsidiaries, or their “ERISA
Affiliates” (as hereinafter defined) are in compliance in all material respects with ERISA. “ERISA Affiliate” means, with respect to the Company or a subsidiary, any member of any group of organizations described in Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986, as amended, and the regulations and published interpretations thereunder (collectively, the “Code”) of which the Company or such subsidiary is a member. No “reportable event”
(as defined under ERISA) has occurred or is expected to occur with respect to any “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates. No “employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates, if such “employee benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined under ERISA). None
of the Company, its subsidiaries or any of their ERISA Affiliates has incurred or expects to incur any material liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any “employee benefit plan” or (ii)
Sections 412, 4971, 4975 or 4980B of the Code. Each “employee benefit plan” established or maintained by the Company, its subsidiaries or any of their ERISA Affiliates that is intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and nothing has occurred, whether by action or failure to act, which would reasonably be expected to cause the loss of such qualification.

     4.36 Reporting Company; Form S-3. The Company is not an “ineligible issuer” (as defined in Rule 405
promulgated under the Securities Act) and is eligible to register the Shares for resale by the Purchaser on a registration statement on Form S-3 under the Securities Act. There exist no facts or circumstances (including, without limitation, any
required approvals or waivers or any circumstances that may delay or prevent the obtaining of accountant’s consents) that reasonably could be expected to prohibit or delay the preparation and filing of a registration statement on Form S-3 that
will be available for the resale of the Shares by the Purchaser. 

     4.37 Commodity Exchange Act. The Company will not, and will not permit any of its subsidiaries to, invest in
futures contracts, options on futures contracts or options on commodities unless such entities are exempt from the registration requirements of the Commodity Exchange Act, as amended, and the rules and regulations promulgated thereunder (the
“Commodity Exchange Act”) or otherwise comply with the Commodity Exchange Act. 

     4.38 Taxable Mortgage Pool. Neither the Company, any of its subsidiaries nor any of their assets will be
treated as a taxable mortgage pool. 

     4.39 Investment and Risk-Adjusted Capital Guidelines. The Company is, and at all times has been, in compliance
with its investment and risk-adjusted capital guidelines to the extent applicable. 

     4.40 Off-Balance Sheet Arrangements. There is no transaction, arrangement or other relationship between the
Company and/or any of its subsidiaries and an unconsolidated or other off-balance sheet entity that is required to be disclosed by the Company in its Exchange Act Reports and is not so disclosed or that would otherwise be reasonably likely to result
in a 

- 11 -

Material Adverse Change. There are no such transactions, arrangements or other relationships with the Company or any of its subsidiaries that may create contingencies or liabilities that are not otherwise disclosed by the Company
in its Exchange Act Reports. 

     4.41 Offering. Subject to the accuracy of the Purchaser’s representations in Section 5 of this Agreement
and the Other Purchasers’ representations in Section 5 of their respective Agreements, the sale of the Shares in conformity with the terms of this Agreement constitute transactions exempt from the registration requirements of Section 5 of the
Securities Act and from the qualification or registration requirements of all applicable state securities laws. 

     4.42 No Integration. Neither the Company, nor any of its affiliates, nor, to the Company’s knowledge, 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 that would cause this offering of the Shares to be integrated with prior offerings by the Company
for purposes of the Securities Act or any applicable stockholder approval provisions nor will the Company or any of its subsidiaries take any action or steps that would cause the offering of the Shares to be integrated with other offerings.

     4.43 Committees. The members of the Audit Committee, Compensation Committee and Governance and Nominating
Committee of the Board of Directors of the Company are “independent directors” within the meaning of the listing standards and rules of the AMEX, and with respect to the Audit Committee, the Commission, (ii) all of the members of the Audit
Committee are financially literate within the meaning of the listing standards and rules of the AMEX and (iii) at least one member of the Audit Committee is an “audit committee financial expert,” within the meaning of Item 401(h) of
Regulation S-K. 

     4.44 Disclosure Controls and Procedures. The principal executive officer and principal financial officer are
responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and have (i) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under their supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the
period in which the Annual Report on Form 10-K for the year ended December 31, 2005 that is incorporated by reference in the Private Placement Memorandum was being prepared, (ii) evaluated the effectiveness of the Company’s disclosure controls
and procedures and presented in the Annual Report on Form 10-K for the year ended December 31, 2005 that is incorporated by reference in the Private Placement Memorandum their conclusions about the effectiveness of the disclosure controls and
procedures as of the end of the applicable period based on such evaluation and (iii) disclosed in the Annual Report on Form 10-K for the year ended December 31, 2005 that is incorporated by reference in the Private Placement Memorandum whether any
change in the Company’s internal control over financial reporting that occurred during the applicable period that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial
reporting. 

     4.45 No Fiduciary Duty. The Placement Agents and the Purchaser are acting as principals and not as an agent or
fiduciary of the Company and the Company’s engagement of JMP Securities LLC in connection with the offering of the Shares is as independent contractors 

- 12 -

and not in any other capacity. Furthermore, the Company agrees that it is solely responsible for independently making its own judgments in connection with the offering of the Shares (irrespective of whether any Placement Agent or
the Purchaser has advised or are currently advising the Company on related or other matters). 

     4.46 Additional Information. The information contained in the following documents (the materials identified in
clauses (a), (b), (c) and (d) below are referred to herein as the “Exchange Act Reports”), copies of which the Placement Agents have furnished to the Purchaser, or will furnish prior to the Closing, was or will be true and correct in all
material respects as of their respective final dates:

             (a) the Company’s Annual Report on Form 10-K for the year ended December 31, 2005; 

             (b) the Company’s Definitive Proxy Statement for Annual Meeting of Stockholders held on May 24, 2005; 

             (c) all other documents, if any, filed by the Company with the Commission since December 31, 2005 pursuant to the reporting requirements of the
Exchange Act; and 

             (d) the Private Placement Memorandum, including all addenda and exhibits thereto (other than the Purchase Agreement and the Appendices).

     4.47 Finder’s Fees. The Company has not incurred any liability for any finder’s fees or similar
payments in connection with the transactions contemplated by this Agreement. 

     4.48 Commission Comment Letters. There are no comments outstanding under any letters from the staff of the
Commission relating to the Company’s Commission filings.

     4.49 Certificate. At the Closing, the Company will deliver to Purchaser a certificate executed by the chief
executive officer and the chief financial or accounting officer of the Company (solely in their capacities as such), dated as of the Closing Date, in substantially the form attached hereto as Exhibit D hereto, to the effect that the representations, warranties and covenants of the Company set forth in this Section 4 are true, correct and complete in all material respects as of the date of this Agreement and as of the Closing Date and
that the Company has complied in all material respects with all the agreements and satisfied in all material respects all the conditions herein on its part to be performed or satisfied on or prior to such Closing Date.

     4.50 Legal Opinion. As a condition to the Purchaser’s obligation to purchase the Shares, at the Closing,
Morrison & Foerster LLP, counsel for the Company, shall have delivered its favorable opinion in the form attached as Exhibit A hereto.

               SECTION 5. Representations, Warranties and Covenants of the Purchaser. The Purchaser represents and warrants
to, and covenants with, the Company that:

     5.1 Experience. (i) the Purchaser is knowledgeable, sophisticated and experienced in making, and is qualified
to make, decisions with respect to investments in shares representing an investment decision of the type involved in the purchase of the Shares, including investments in 

- 13 -

securities issued by the Company and comparable entities, has reviewed the Private Placement Memorandum, and has requested, received, reviewed and considered all information it deems relevant in making an informed decision to
purchase the Shares; (ii) the Purchaser is acquiring the number of Shares set forth in Section 2 above in the ordinary course of its business and for its own account with no present intention of distributing any of such Shares or any arrangement or
understanding with any other persons regarding the distribution of such Shares (this representation and warranty not limiting the Purchaser’s right to sell pursuant to the Registration Statement or in compliance with the Securities Act and the
Rules and Regulations); (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) any of the Shares, nor will the
Purchaser engage in any short sale that results in a disposition of any of the Shares by the Purchaser, except in compliance with the Securities Act, the Exchange Act and the Rules and Regulations and any applicable state securities laws; (iv) the
Purchaser has completed or caused to be completed the Registration Statement Questionnaire attached hereto as part of Appendix I, for use in preparation of the Registration Statement, and
the answers thereto are true and correct as of the date hereof and will be true and correct as of the effective date of the Registration Statement, and the Purchaser will notify the Company promptly if any material change in any such information
provided in the Registration Statement Questionnaire occurs until such time as the Purchaser has sold all of its Shares; (v) the Purchaser has, in connection with its decision to purchase the number of Shares set forth in Section 2 above, relied
solely upon the Private Placement Memorandum and the documents included or incorporated by reference therein and the representations and warranties of the Company contained herein; (vi) the Purchaser has had an opportunity to discuss this investment
with representatives of the Company and ask questions of them; and (vii) the Purchaser is an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Securities Act. 

     5.2 Reliance on Exemptions. The Purchaser understands that the Shares are being offered and sold to it in
reliance upon specific exemptions from the registration requirements of the Securities Act, the Rules and Regulations and state securities laws and that the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with,
its representations, warranties, agreements, acknowledgments and understandings set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Shares. 

     5.3 Confidentiality. For the benefit of the Company, the Purchaser previously agreed orally with the Placement
Agents to keep confidential all information concerning this private placement. Subject to the following information becoming non-confidential through the Company or a person other than the Purchaser, in which case the confidentiality provisions
following shall not be applicable, the Purchaser understands that, except as set forth in the Company’s Exchange Act Reports, the information contained in the Private Placement Memorandum is strictly confidential and proprietary to the Company
and has been prepared from the Company’s publicly available documents and other information and is being submitted to the Purchaser solely for such Purchaser’s confidential use. The Purchaser agrees to use the information contained in the
Private Placement Memorandum for the sole purpose of evaluating a possible investment in the Shares and the Purchaser acknowledges that it is prohibited from reproducing or distributing the Private Placement Memorandum, this Agreement, or any other
offering materials or other information provided by the Company in connection with the 

- 14 -

Purchaser’s consideration of its investment in the Company, in whole or in part, or divulging or discussing any of their contents, except to its financial, investment or legal advisors in connection with its proposed
investment in the Shares. Further, the Purchaser understands that the existence and nature of all conversations and presentations, if any, regarding the Company and this offering must be kept strictly confidential. The Purchaser understands that the
federal securities laws impose restrictions on trading based on information regarding this offering. In addition, the Purchaser acknowledges that unauthorized disclosure of information regarding this offering may result in a violation of Regulation
FD. This obligation will terminate upon the filing by the Company of one or more press releases describing this offering. In addition to the above, the Purchaser shall maintain in confidence the receipt and content of any notice of a Suspension (as
defined in Section 5.9 below). The Company agrees that any notice of a Suspension shall not contain information that would constitute material non-public information, other than the existence of the Suspension. The foregoing agreements shall not
apply to any information that is or becomes publicly available through no fault of the Purchaser, or that the Purchaser is legally required to disclose; provided, however, that if the Purchaser is requested or ordered to disclose any such information pursuant to any court or other government order or any other applicable legal procedure, it shall provide the Company
with prompt notice of any such request or order in time sufficient to enable the Company to seek an appropriate protective order. 

     5.4 Investment Decision. The Purchaser understands that nothing in the Agreement or any other materials
presented to the Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The Purchaser acknowledges that it must rely on legal, tax and investment advisors of its own choosing in connection with
its purchase of the Shares. 

     5.5 Risk of Loss. The Purchaser understands that its investment in the Shares involves a significant degree of
risk, including a risk of total loss of the Purchaser’s investment, and the Purchaser has full cognizance of and understands all of the risk factors related to the Purchaser’s purchase of the Shares, including, but not limited to, those
set forth under the caption “Forward-Looking Statements and Risk Factors” in the Private Placement Memorandum and those set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2005, attached as an exhibit to the Private Placement Memorandum. The Purchaser understands that the market price of the Common Stock has been volatile and that no representation is being made as to the future value or trading
volume of the Common Stock. The Purchaser has the ability to bear the economic risks of an investment in the Shares.

     5.6 No Government Review. The Purchaser understands that no United States federal or state agency or any other
government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.

     5.7 Transfer or Resale. The Purchaser understands that, until such time as the Registration Statement has been
declared effective or the Shares may be sold pursuant to Rule 144 under the Securities Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Shares will bear a restrictive legend in
substantially the following form: 

- 15 -

	
      “THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
       “SECURITIES ACT”), OR THE SECURITIES LAWS OF
      ANY STATE OR OTHER JURISDICTION. THE SHARES

     MAY NOT BE OFFERED, SOLD OR OTHERWISE
        TRANSFERRED EXCEPT (1) PURSUANT TO AN
        EXEMPTION FROM REGISTRATION UNDER
        SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE THEREGISTRATION STATEMENT UNDER THE SECURITIESACT, IN EACH CASE IN ACCORDANCE WITH ALL
        APPLICABLE SECURITIES LAWS OF THE UNITED
        STATES AND OTHER JURISDICTIONS, AND IN THE
        CASE OF A TRANSACTION EXEMPT FROM
        REGISTRATION, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE
         LAWS. NOTWITHSTANDING THE FOREGOING, THE
         SHARES MAY BE PLEDGED IN CONNECTION WITH ABONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
         SHARES.”
        

      	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 
	 

     5.8 Residency. The Purchaser’s principal executive offices are in the jurisdiction set forth immediately
below the Purchaser’s name on the signature pages hereto.

     5.9 Public Sale or Distribution. The Purchaser covenants with the Company not to make any sale of the Shares
under the Registration Statement without complying with the provisions of this Agreement and without effectively causing the prospectus delivery requirement under the Securities Act to be satisfied (whether physically or through compliance with Rule
172 under the Securities Act or any similar rule). The Purchaser acknowledges that there may occasionally be times when the Company must suspend the use of the Prospectus (a “Suspension”) until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the Commission, or until such time as the Company has filed an appropriate report with the Commission pursuant to the Exchange Act. Without the Company’s prior written consent,
which consent shall not be unreasonably withheld or delayed, the Purchaser shall not use any written materials to offer the Shares for resale other than the Prospectus provided by the Company, and shall not create or disseminate any “free
writing prospectus” (as defined in the Rules and Regulations) relating to the Shares. The Purchaser covenants that it will not sell any Shares pursuant to said Prospectus during the period commencing at the time when the Company gives the
Purchaser written notice of the Suspension of the use of said Prospectus and ending at the time when the Company gives the Purchaser written notice that the Purchaser may thereafter effect sales pursuant to said Prospectus.
Notwithstanding the foregoing, the Company agrees that no suspension shall be for a period of 

- 16 -

longer than 20 consecutive days, and no suspension shall be for a period longer than 60 days in the aggregate in any 365-day period.

     5.10 Organization; Validity; Enforcements. The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and capacity to enter into this Agreement and to consummate the transactions contemplated hereby and has taken all necessary action to authorize the execution, delivery and
performance of this Agreement, (ii) the making and performance of this Agreement by the Purchaser and the consummation of the transactions herein contemplated will not violate any provision of the organizational documents of the Purchaser or
conflict with, result in the breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under any material agreement, mortgage, deed of trust, lease, franchise, license, indenture, permit or
other instrument to which the Purchaser is a party, or any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental agency or body applicable to the
Purchaser, (iii) no consent, approval, authorization or other order of any court, regulatory body, administrative agency or other governmental agency or body is required on the part of the Purchaser for the execution and delivery of this Agreement
or the consummation of the transactions contemplated by this Agreement, (iv) upon the execution and delivery of this Agreement, this Agreement shall constitute a legal, valid and binding obligation of the Purchaser, enforceable in accordance with
its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except to the extent enforcement of the indemnification provisions set forth in Section 7.3 of this Agreement
may be limited by federal or state securities laws or the public policy underlying such laws, and (v) to the Purchaser’s knowledge there is not in effect any order enjoining or restraining the Purchaser from entering into or engaging in any of
the transactions contemplated by this Agreement, except (solely in the case of clauses (ii), (iii), (iv) and (v) of the paragraph) for such violations and defaults as would not reasonably be expected to have a material adverse effect on the
transactions contemplated by this Agreement. 

               SECTION 6. Survival of Agreements, Representations and Warranties. Notwithstanding any investigation made by
any party to this Agreement or by the Placement Agents, all covenants and agreements made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Shares being purchased and the payment therefor. All representations and warranties made by the Company and the Purchaser herein and in the certificates for the Shares delivered pursuant hereto shall survive for a
period of one year following the later of the execution of this Agreement, the delivery to the Purchaser of the Shares being purchased and the payment therefor.

               SECTION 7. Registration of the Shares; Compliance with the Securities Act.

     7.1 Registration Procedures and Expenses. The Company shall:

- 17 -

               (a) as soon as practicable, but in no event later than ten (10) business days following the Closing Date, prepare and file with the Commission
the Registration Statement on Form S-3 relating to the resale of the Shares by the Purchaser and the Other Purchasers from time to time on AMEX or the facilities of any national securities exchange on which the Common Stock is then traded or in
privately-negotiated transactions; 

               (b) provide a draft copy of the Registration Statement to the Purchaser for its review and comment prior to filing the Registration Statement
with the Commission; 

               (c) notify the Purchaser promptly upon being informed whether the staff or the Commission intends to review or not review the Registration
Statement; 

               (d) file a request for acceleration of the Registration Statement with the Commission within three (3)
business days after the date the Company receives notice from the staff of the Commission that the Commission does not intend to review the Registration Statement or has completed such review; 

               (e) use its best efforts, subject to receipt of necessary information from the Purchasers, to cause the Commission to declare the Registration
Statement effective as soon as reasonably practicable and in any event within sixty (60) days after the Closing Date (the “Effectiveness Target Date”); 

               (f) promptly prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep the Registration Statement effective until the earlier of (i) two years after the effective date of the Registration Statement, (ii) such time as all of the Shares have been sold pursuant to the
Registration Statement or (iii) the date on which all of the Shares may be resold by the Purchasers without registration by reason of Rule 144(k) under the Securities Act or any other rule of similar effect; 

               (g) so long as the Registration Statement is effective covering the resale of the Shares owned by the Purchaser, furnish to the Purchaser with
respect to the Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such number of copies of prospectuses and such other documents as the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Purchaser;

               (h) file documents required of the Company for normal Blue Sky clearance in states specified in writing by the Purchaser; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which
it is not now so qualified or has not so consented;

               (i) bear all expenses in connection with the procedures in paragraphs (a) through (h) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement, other than fees and expenses, if any, of counsel or other advisers to the Purchaser or the Other Purchasers or underwriting discounts, brokerage fees and commissions incurred by the Purchaser or the Other
Purchasers, if any, in connection with the offering of the Shares pursuant to the Registration Statement; 

- 18 -

               (j) file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof to the Purchaser promptly after
filing; 

               (k) issue a press release or a Current Report on Form 8-K as may be required by the Exchange Act describing the transactions contemplated by
this Agreement on or prior to the Closing Date; and 

               (l) make available, while the Registration Statement is effective and available for resale, its Chief Executive Officer, Chief Financial
Officer or other appropriate representatives for questions regarding information which the Purchaser may reasonably request in order to fulfill any due diligence obligation on its part. 

     If the Commission does not declare the Registration Statement effective by the Effectiveness Target Date, the Company shall become obligated to pay to the Purchaser an amount in cash, as liquidated
damages and not as a penalty, equivalent to 1% of the aggregate purchase price paid by the Purchaser for any Shares then held by the Purchaser or its affiliates for each full month that effectiveness is delayed beyond the Effectiveness Target Date
(pro-rated on a daily basis for partial months). The Company shall pay in full any liquidated damages pursuant to this Section 7.1 within 30 days after the date on which the Company becomes obligated to pay such damages. Notwithstanding the
foregoing provisions, in no event shall the Company be obligated to pay liquidated damages in an aggregate amount that exceeds 10% of the purchase price paid by the Purchaser for its Shares pursuant to this Agreement.

     The Company understands that the Purchaser disclaims being an underwriter of the Shares, but the Purchaser being deemed an underwriter shall not relieve the Company of any obligations it has
hereunder. A draft of the proposed form of the Registration Statement is included in the Private Placement Memorandum and a questionnaire related thereto to be completed by the Purchaser is attached hereto as Appendix
I. 

     7.2 Transfer of Shares After Registration. The Purchaser agrees that it will not effect any disposition of the
Shares or its right to purchase the Shares that would constitute a sale within the meaning of the Securities Act or pursuant to any applicable state securities laws, except as contemplated in the Registration Statement referred to in Section 7.1 or
as otherwise permitted by law, and that it will promptly notify the Company of any changes in the information set forth in the Registration Statement regarding the Purchaser or its plan of distribution (other than changes in the number of Shares
held by the Purchaser). The Company will pay all transfer agent fees in connection with the removal of restrictive legends from certificates representing the Shares.
      7.3 Indemnification. For the purpose of this Section 7.3:

                         (i) the term “Purchaser/Affiliate” shall mean any affiliates of the Purchaser, including a transferee who is an affiliate of the
Purchaser, and any person who controls the Purchaser or any affiliate of the Purchaser within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act; and 

- 19 -

                         (ii) the term “Registration Statement” shall include any preliminary prospectus, final prospectus, exhibit, supplement or amendment
included in or relating to, and any document incorporated by reference in, the Registration Statement referred to in Section 7.1.

               (a) The Company agrees to indemnify and hold harmless the Purchaser and each Purchaser/Affiliate against any losses, claims, damages,
liabilities or expenses, joint or several, to which the Purchaser or Purchaser/Affiliate may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise
(including in settlement of any litigation, if such settlement is effected with the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed), insofar as such losses, claims, damages, liabilities or expenses
(or actions in respect thereof as contemplated below) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, including the Prospectus, financial statements and
schedules, and all other documents filed as a part thereof, as amended at the time of effectiveness of the Registration Statement, including any information deemed to be a part thereof as of the time of effectiveness pursuant to Rules 430A, 430B or
430C of the Rules and Regulations of the Securities Act, or the Prospectus, in the form first filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations of the Securities Act, or filed as part of the Registration Statement at the
time of effectiveness if no Rule 424(b) filing is required (the “Prospectus”) or any subsequent amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state in any of them a material fact
required to be stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in light of the
circumstances under which they were made, or arise out of or are based in whole or in part on any inaccuracy in the representations or warranties of the Company contained in this Agreement, or in any writing delivered pursuant to this Agreement, or
any failure of the Company to perform its obligations hereunder or under law, and will promptly reimburse the Purchaser and each Purchaser/Affiliate for any legal and other expenses as such expenses are reasonably incurred by the Purchaser or such
Purchaser/Affiliate in connection with investigating, defending or preparing to defend, settling, compromising or paying any such loss, claim, damage, liability, expense or action; provided,
however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in the Registration Statement, the Prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information furnished to the Company by or on behalf
of the Purchaser expressly for use therein, (ii) the failure of such Purchaser to comply with the covenants and agreements contained in Sections 5.9 or 7.2 hereof respecting the sale of the Shares, (iii) the inaccuracy of any representation or
warranty made by such Purchaser herein, or (iv) any statement or omission in any Prospectus that is corrected in any subsequent Prospectus that was delivered to the Purchaser prior to the pertinent sale or sales by the Purchaser. 

               (b) Each Purchaser will severally, but not jointly, indemnify and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any losses, claims, damages, liabilities or expenses to which the
Company, each of its directors, each of its officers who 

- 20 -

signed the Registration Statement or controlling person may become subject, under the Securities Act, the Exchange Act, or any other federal or state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, but only if such settlement is effected with the prior written consent of such Purchaser) insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof as contemplated below) arise out
of or are based upon (i) any failure to comply with the covenants and agreements contained in Sections 5.9 or 7.2 hereof respecting the sale of the Shares, (ii) the inaccuracy of any representation or warranty made by such Purchaser herein, or (iii)
any untrue or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements in the Registration Statement or any amendment or supplement thereto not misleading or in the Prospectus or any amendment or supplement thereto not misleading in light
of the circumstances under which they were made, in each case to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Registration Statement, the Prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Purchaser expressly for use therein, and will reimburse the Company, each of its directors, each of its officers who signed the
Registration Statement or controlling person of the Company for any legal and other expense reasonably incurred by the Company, each of its directors, each of its officers who signed the Registration Statement or controlling person in connection
with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action. Notwithstanding anything herein contained to the contrary, in no event shall the aggregate indemnification obligations of any
Purchaser under this Section 7.3 exceed the net proceeds from the offering of Shares received by such Purchaser. 

               (c) Promptly after receipt by an indemnified party under this Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under this Section 7.3, promptly notify the indemnifying party in writing thereof; but the omission to notify the indemnifying party will not relieve
it from any liability that it may have to any indemnified party for contribution or otherwise under the indemnity agreement contained in this Section 7.3 to the extent it is not prejudiced as a result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or intends to seek indemnity from an indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with all other
indemnifying parties similarly notified, to assume the defense thereof with counsel reasonably satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party, based upon the advice of such indemnified party’s counsel, shall
have reasonably concluded that there may be a conflict of interest between the positions of the indemnifying party and the indemnified party in conducting the defense of any such action or that there may be legal defenses available to it and/or
other indemnified parties that are different from or additional to those available to the indemnifying party, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate
in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election to assume the defense of such action and approval by the indemnified party of
counsel, 

- 21 -

the indemnifying party will not be liable to such indemnified party under this Section 7.3 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the assumption of legal defenses in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the
expenses of more than one separate counsel, reasonably satisfactory to such indemnifying party, representing all of the indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of action, in each of which cases the reasonable fees and expenses of counsel shall be at the expense of the indemnifying
party. The indemnifying party shall not be liable for any settlement of any action without its written consent; provided that such consent shall not be unreasonably withheld or delayed. 

                    (d) If the indemnification provided for in this Section 7.3 is required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs (a), (b) or (c) of this Section 7.3 in respect to any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein (i) in such proportion as is appropriate to reflect the relative benefits received by the
Company and the Purchaser from the placement of the Shares contemplated by this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but the relative fault of the Company and the Purchaser in connection with the statements or omissions or inaccuracies in the representations and warranties in this Agreement that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and each Purchaser on the other shall be deemed to be in the same proportion as
the amount paid by such Purchaser to the Company pursuant to this Agreement for the Shares purchased by such Purchaser that were sold pursuant to the Registration Statement bears to the difference (the “Difference”) between the amount such
Purchaser paid for the Shares that were sold pursuant to the Registration Statement and the amount received by such Purchaser from such sale. The relative fault of the Company on the one hand and each Purchaser on the other shall be determined by
reference to, among other things, whether the untrue or alleged statement of a material fact or the omission or alleged omission to state a material fact or the inaccurate or the alleged inaccurate representation and/or warranty relates to
information supplied by the Company or by such Purchaser and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in paragraph (c) of this Section 7.3, any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim. The provisions set forth in paragraph (c) of this Section 7.3 with respect to the notice of the threat or commencement of any threat or action shall apply if a claim for contribution is
to be made under this paragraph (d); provided, however, that no additional notice shall be
required with respect to any threat or action for which notice has been given under paragraph (c) for purposes of indemnification. The Company and the Purchaser agree that it would not be just and equitable if 

- 22 -

contribution pursuant to this Section 7.3 were determined solely by pro rata allocation (even if all of the
Purchasers were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph. Notwithstanding the provisions of this Section 7.3, no Purchaser
shall be required to contribute any amount in excess of the amount by which the Difference exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The
Purchasers’ obligations to contribute pursuant to this Section 7.3 are several and not joint.

     7.4 Termination of Conditions and Obligations. The conditions precedent imposed by Section 5 or this Section
7.2 upon the transferability of the Shares shall cease and terminate as to any particular number of the Shares upon the earlier of (i) the passage of two years from the effective date of the Registration Statement covering such Shares and (ii) at
such time as an opinion of counsel satisfactory in form and substance to the Company shall have been rendered to the effect that such conditions are not necessary in order to comply with the Securities Act.

     7.5 Information Available. So long as the Registration Statement is effective covering the resale of Shares
owned by the Purchaser, the Company will furnish to the Purchaser: 

                    (a) other than any such reports or communications filed with the Commission pursuant to the Commission’s EDGAR system, as soon as
practicable after available (but in the case of the Annual Report to the Stockholders, within 150 days after the end of each fiscal year of the Company), one copy of (i) its Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with GAAP by a national independent registered public accounting firm), (ii) if not included in substance in the Annual Report to Stockholders, upon the request of Purchaser, its Annual Report on Form 10-K, (iii)
upon request of Purchaser, its quarterly reports on Form 10-Q, and (iv) a full copy of the particular Registration Statement covering the Shares (the foregoing, in each case, excluding exhibits); and 

                    (b) upon the reasonable request of the Purchaser, a reasonable number of copies of the Prospectuses, and any supplements thereto, to supply to
any other party requiring such Prospectuses. 

     The Company, upon the reasonable request of the Purchaser and with prior notice, will be available to the Purchaser or a representative thereof at the Company’s headquarters to discuss
information relevant for disclosure in the Registration Statement covering the Shares and will otherwise cooperate with any Purchaser conducting an investigation for the purpose of reducing or eliminating such Purchaser’s exposure to liability
under the Securities Act, including the reasonable production of information at the Company’s headquarters, subject to appropriate confidentiality limitations.

               SECTION 8. Broker’s Fee. The Purchaser acknowledges that the Company intends to pay to the Placement
Agents a fee in respect of the sale of the Shares to the Purchaser. Each of the parties hereto hereby represents that, on the basis of any actions and agreements by 

- 23 -

it, there are no other brokers or finders entitled to compensation in connection with the sale of the Shares to the Purchaser. The Purchaser and the Company hereby agree that the Purchaser shall not be responsible for such fee.

               SECTION 9. Notices. All notices, requests, consents and other communications required or permitted hereunder
shall be in writing, shall be mailed by first-class registered or certified airmail, e-mail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and shall be deemed given when so mailed and shall be delivered as
addressed as follows:

	
      (a)      	
	
if to the Company, to:	
	 
	 	
Delta Financial Corporation 

1000 Woodbury Road, Suite 2000 

Woodbury, New York 11797

Attention: Marc E. Miller, Esq.

Facsimile: (516) 364-9450	
	 
	 	
with a copy to:	
	 
	 	
Morrison & Foerster LLP

1290 Avenue of the Americas

New York, New York 10104

Attention: James R. Tanenbaum, Esq.

Facsimile: (212) 468-7900	
	 
	 	or to such other person at such other place as the Company shall designate to the Purchaser in writing. 
	 	 
	 	 
	(b)      
	 if to the Placement Agents, to:
	 	 
	 	JMP Securities LLC 

    600 Montgomery Street, Suite 1100

    San Francisco, California 94111

    Attention: Gerald L. Tuttle, Jr. 

    Facsimile: (415) 835-8920 
	 	 
	 	with a copy to: 
	 	 
	 	O’Melveny & Myers LLP, Suite 2600

    Embarcadero Center West 

    San Francisco, California 94111
	 	 
	 

 

- 24 -

	 	
Attention: Peter T. Healy, Esq. Facsimile: (415) 984-8701	
	 
	
      (c)      	
	
if to the Purchaser, at its address as set forth at the end of this Agreement, or at such other address or addresses as may have been furnished to the Company in writing.	
	 

               SECTION 10. Changes. This Agreement may not be modified or amended except pursuant to an instrument in writing
signed by the Company and the Purchaser. No provision hereunder may be waived other than in a written instrument executed by a waiving party. 

               SECTION 11. Headings. The headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this Agreement.

               SECTION 12. Severability. In case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

               SECTION 13. Governing Law; Venue. This Agreement is to be construed in accordance with and governed by the
federal law of the United States of America and the internal laws of the State of New York without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of
New York to the rights and duties of the parties. Each of the Company and the Purchaser submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York State court sitting in New
York County for purposes of all legal proceedings arising out of or relating to this Agreement and the transactions contemplated hereby.

               SECTION 14. Counterparts. This Agreement may be executed (including, without limitation, by facsimile
signature or by delivery by portable document format (“PDF”)) in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and delivered (including by facsimile) to the other parties.

               SECTION 15. Entire Agreement. This Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement. 

- 25 -

               SECTION 16. Fees and Expenses. Except as set forth herein, each of the Company and the Purchaser shall pay its
respective fees and expenses related to the transactions contemplated by this Agreement.

               SECTION 17. Assignment. This Agreement is made solely for the benefit of and is binding upon the Purchaser and
the Company and to the extent provided in Section 7.3, any person controlling the Company or the Purchaser, the officers and directors of the Company, and their respective executors, administrators, successors and assigns, and subject to the
provisions of Section 7.3, no other person shall acquire or have any right under or by virtue of this Agreement. The term “successors and assigns” shall not include any subsequent purchaser, as such purchaser, of the Shares sold to the
Purchaser pursuant to this Agreement. 

[Remainder of Page Left Intentionally Blank]
 

- 26 -

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written. 

	 	 	 
	 	 	 
	 	 	DELTA FINANCIAL CORPORATION
	 	 	By:  	 
	 	 	 	

	 	 	 	Name:
	 	 	 	Title:
	 	 	 
	Print or Type:	 	 
	 	 	 
	 	 	 
	 	 	

	 

		 
		
Name of Purchaser 
	
	 

		 
		
(Individual or Institution) 
	
			 
			 
	
		
		

	
	 

		 
		
Jurisdiction of Purchaser’s Executive Offices 
	
	
		
		 
	
	 

	
	 	 	 
	 	 	

	 

		 
		
Name of Individual representing 
	
	 

		 
		
Purchaser (if an Institution) 
	
	
		
		 
	
	 

	
	 	 	 
	 	 	

	 

		 
		
Title of Individual representing 
	
	 

		 
		
Purchaser (if an Institution) 
	
	
      Signature by: 
      
	 
		 

	
	 	 	 
	 	 	 
	 	 	       	Individual Purchaser or Individual
	 

		 
		
  		 representing Purchaser: 
			 
			 
	
		
		 
		

	 	 	 
	 

		 
		
       
		Address:	 
	 	 	 	 	

	 	 	 	 
	 

		 
		
       
		Telephone:
	 	 	 	 	

	 	 	 	 
	 

		 
		
      
		Facsimile: 
	 	 	 	 	

	 

		 
		
  		 E-mail:SUBSCRIPTION AGREEMENT

 

 

	
            TO:  
 	
            SYNTHEMED, INC.
 

 

	
            AND TO:
 	
            CLUBB CAPITAL LIMITED
 

 

	
            RE:
 	
            SUBSCRIPTION FOR SHARES
 

 

 

	
            1.
 	
            Subscription
 

The undersigned (the “Purchaser”) hereby subscribes for on and subject to the terms and conditions set forth herein, from SyntheMed, Inc., a Delaware corporation (the “Corporation”), the number of shares of common stock, par value of $0.001 per share (“Common Stock), set forth on the signature page hereof (the “Purchased Shares”).  The Purchased Shares are being sold to the Purchaser in consideration for $0.40 (US) per share (the “Subscription Price”), and as part of an offering (the “Offering”) of up to 12,500,000 shares of Common Stock (the “Shares”).  If the maximum number of Shares offered is sold, the Corporation will receive gross proceeds of $5,000,000 (US). There is no minimum number of Shares being offered, and the Corporation reserves the right to accept subscriptions as and when received. Clubb Capital
Limited (the “Agent”) is serving as a placement agent for the Offering pursuant to an agency agreement to be entered into with the Corporation (the “Agency Agreement”).

The Offering is being made to investors resident in the U.S., Europe, Canada and elsewhere pursuant to exemptions from local registration, prospectus or similar requirements.  The Offering is being made to US investors in reliance upon the exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(2) thereof and/or Regulation D promulgated thereunder and to overseas investors in reliance upon Regulation S promulgated under the Securities Act. 

 

	
            2.
 	
            Use of Proceeds
 

The proceeds of the Offering will be used by the Corporation to fund the Repel-CVTM pivotal clinical trial and other product development costs and for working capital and general corporate purposes.

	
            3.
 	
            Documents to be provided by Purchaser
 

The Purchaser must complete, sign and return two executed copies of: (i) this Subscription Agreement, (ii) the Investor Rights Agreement, a copy of which is included with this Subscription Agreement, and (iii) in the case of Purchasers resident in Ontario and Quebec, an accredited investor subscriber certificate as set out in Schedule “A” hereto, and the Subscription Price must be paid in U.S. dollars by wire transfer to the following account:

 

 

Bank of America NT & SA

New York, NY 10048-1191

Swiftcode: BOFAUS3N

ABA No. 026009593

 

For Further Credit to:

Canadian Imperial Bank of Commerce

Main Branch, Commerce Court West

Toronto, Ontario M5L 1A2

Transit No. 00002

Final Beneficiary: Blake Cassels & Graydon LLP, in Trust

Account No. 000020244414

Reference: JACK – 65283/14

 

or in such other manner as may be specified by the Agent.  At each Closing (as defined below), the Subscription Price will be released to the Corporation by Blake, Cassels & Graydon LLP on instructions from the Agent. In either case, such deliveries hereinafter referred to as the “Purchaser’s Closing Deliveries.”

	
            4.
 	
            Closing and Delivery of Share Certificates
 

Delivery and sale of the Purchased Shares will be completed (the “Closing”) at the offices of the Corporation (or such other place or places as the Corporation and the Agent may agree) at 10:00 a.m. (Eastern Standard Time) (the “Closing Time”) on such date or dates as the Corporation and the Agent may agree (the “Closing Date”). The Final Closing (as defined below) is expected to occur on or about February 15, 2006. As used herein, “Final Closing” means the date on which the full amount of the Offering is sold or the earlier termination of the Offering period as determined by mutual agreement of the Corporation and the Agent.

Certificates representing the Purchased Shares will be delivered at Closing against delivery by the Purchaser of the requisite funds by wire transfer.  To avoid the need to relegend the Shares following effectiveness of the planned resale registration  contemplated by the Investor Rights Agreement, the Purchaser agrees that delivery of the Share certificates may be made to counsel for the Agent, who will, upon effectiveness of the registration of the resale of the Shares, deliver the Share certificates in accordance with instructions received from the Purchaser.  Notwithstanding the foregoing, the Purchaser may at any time request physical delivery of a certificate for Purchased Shares, provided that any such certificate delivered prior to effectiveness of the resale registration statement will bear a restrictive legend as set out in Section
5(g) below.  Moreover, if the resale registration statement is not declared effective within 90 days of the date of the Final Closing (or 120 days if reviewed by the Securities and Exchange Commission (the “SEC”)), counsel for the Agent may, at the Agent’s option and in accordance with the Agent’s instructions, cause the Share certificates in its possession to be endorsed with such restrictive legend and delivered to the respective Purchasers.  The Purchaser, on its own behalf or on behalf of others for whom it is contracting hereunder, hereby appoints the Agent, with full power of substitution, as its true and lawful attorney and 

 

agent with the full power and authority in its place and stead to swear, execute, file and record any document necessary to give effect to the delivery and sale of the Purchased Shares, to terminate this subscription on its behalf in the event that any condition precedent to the Offering has not been satisfied, to execute a receipt for the Purchased Shares and all other documentation, and to modify or waive any conditions or grant any waivers on its behalf in connection with this Subscription Agreement and the transactions contemplated hereby.

 

	
            5.
 	
            Certain Matters Relating to the Offering
 

The Purchaser, on its own behalf (or on behalf of others for whom it is contracting hereunder) acknowledges and agrees that:

 

	
            (a)
 	
            it (or others for whom it is contracting hereunder) has not been provided with a prospectus or an offering memorandum or any similar document in connection with its purchase of Shares;
 

 
 

	
            (b)
 	
            its decision to execute this Subscription Agreement and the Investor Rights Agreement and to subscribe for the Purchased Shares (on its own behalf or on behalf of others for whom it is contracting hereunder) has not been based upon any verbal or written representations as to fact or otherwise made by or on behalf of the Agent or the Corporation and that the Purchaser’s decision (or the decision of others for whom the Purchaser is contracting hereunder) is based entirely upon publicly available information concerning the Corporation (any such information having been delivered to the Purchaser without independent investigation or verification by the Agent);
 

 
 

	
            (c)
 	
            the Agent and its directors, officers, employees, agents and representatives assume no responsibility or liability of any nature whatsoever for the accuracy or adequacy of any such publicly available information or as to whether all information concerning the Corporation required to be disclosed by it has been generally disclosed;
 

 
 

	
            (d)
 	
            as at the Closing Date, the Shares have not been registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), with the result that the Purchased Shares are “restricted securities” within the meaning of Regulation S and Rule 144 promulgated under the Securities Act and unless and until a resale registration statement is filed by the Corporation in accordance with the Investor Rights Agreement and declared effective by the SEC, may not be offered or sold within the United States or to or for the account or benefit of a U.S. Person (as defined in Rule 902(o) of Regulation S promulgated under the Securities Act) except pursuant to an exemption from the registration requirements of the Securities Act;
 

 
 

	
            (e)
 	
            the Shares have not been receipted under a prospectus pursuant to provincial securities laws of Canada (the “Canadian Provincial Laws”) and may only be offered, sold, pledged or otherwise transferred in accordance with applicable Canadian Provincial Laws or any other applicable securities laws;
 

 
 

	
            (f)
 	
            the Purchaser (or others for whom the Purchaser is contracting hereunder) has been advised to consult its own legal advisors with respect to any applicable resale restrictions and the Purchaser (or others for whom the Purchaser is contracting 
 

 

 

hereunder) is solely responsible (and neither the Corporation nor the Agent is in any way responsible) for compliance with applicable resale restrictions;

 

	
            (g)
 	
            the Purchaser understands that if certificates for Purchased Shares are delivered to the Purchaser prior to effectiveness of a resale registration statement, each such certificate representing the Purchased Shares shall bear a legend in substantially the following form (in addition to any legend required under applicable state securities laws):
 

 

“THE SECURITIES REPRESENTED HEREBY WERE ORIGINALLY ISSUED WITHOUT REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION ONLY (A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE 1933 ACT OR (C) PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS, PROVIDED IN SUCH LATTER CASE THAT THE HOLDER UPON REQUEST PRIOR TO SUCH SALE FURNISHES TO THE CORPORATION AN OPINION OF COUNSEL OF RECOGNIZED STANDING TO THAT EFFECT REASONABLY SATISFACTORY TO THE CORPORATION.  HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT.”

 

	
            (h)
 	
            the Purchaser understands that if certificates for Purchased Shares are delivered to the Purchaser following effectiveness of a resale registration statement, each such certificate representing the Purchased Shares shall bear the legend referred to in Section 5(g) above, together with a legend substantially in the following form:
 

 

“THE COMPANY COMMITTED ON THE DATE OF ISSUE OF THESE SHARES TO FILE A REGISTRATION STATEMENT UNDER THE 1933 ACT COVERING RESALE OF THESE SHARES.  AS AT THE DATE OF DELIVERY OF THESE SHARES TO THE REGISTERED HOLDER, SUCH REGISTRATION STATEMENT HAS BEEN FILED WITH AND DECLARED EFFECTIVE BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.  ANY OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THESE SECURITIES PURSUANT TO SUCH REGISTRATION STATEMENT MAY ONLY BE MADE UPON SATISFACTION OF THE REQUIREMENT TO DELIVER A CURRENT PROSPECTUS.”

 

 

	
            6.
 	
            Representations, Warranties and Covenants of the Corporation
 

The Corporation represents, warrants and covenants to the Agent, the Purchaser (and to any others on whose behalf the Purchaser is contracting hereunder) as of the date hereof and as of the Closing Date, which representations, warranties and covenants shall survive any investigation made by the Agent, the Purchaser or such others for a period of two years after the Closing, that:

 

	
            (a)
 	
            the Corporation is a validly existing corporation in good standing under the laws of the jurisdiction in which it is incorporated, and the Corporation has no subsidiaries;
 

 
 

	
            (b)
 	
            the Corporation is duly qualified and authorized to do business in the jurisdiction(s) in which it carries on business or to own property where required under the laws of the jurisdiction(s) in which any such property is located;
 

 
 

	
            (c)
 	
            the Corporation is current with all material filings required to be made under the laws of any jurisdiction in which it carries on any material business, and the Corporation has all necessary licenses, leases, permits, authorizations and other approvals necessary to permit it to conduct its business as currently conducted, except where the failure to have any such license, lease, permit, authorization or approval would not have a material adverse effect on the Corporation and its business;
 

 
 

	
            (d)
 	
            the audited financial statements of the Corporation as at and for the year ended December 31, 2005 present fairly, in all material respects, the financial position of the Corporation as at that date, and the results of its operations and the changes in its financial position for the 12-month period then ended in accordance with generally accepted accounting principles,  and there has been no material adverse change in the business, affairs or financial or other condition of the Corporation or any of its subsidiaries, except as disclosed in the notes to the financial statements for the 12-month period then ended;
 

 
 

	
            (e)
 	
            the Corporation has all requisite power and authority to carry out its obligations under this Subscription Agreement and the Investor Rights Agreement including but not limited to its covenant to file with the U.S. Securities and Registration Commission, within 60 days after the Final Closing, a registration statement on Form SB-2 covering the resale of the Shares, subject to the terms and conditions of the Investor Rights Agreement;
 

 
 

	
            (f)
 	
            this Subscription Agreement has been, and the Investor Rights Agreement will be on the Closing Date, duly authorized, executed and delivered by the Corporation and constitute or on the Closing Date will constitute, legal, valid and binding obligations of the Corporation enforceable in accordance with their terms except that: (i) the enforcement hereof or thereof may be limited by bankruptcy, insolvency, reorganization and other laws affecting the enforcement of creditors’ rights generally, (ii) rights of indemnity thereunder may be limited under applicable law, and (iii) equitable remedies, including without limitation specific performance and injunctive relief, may be granted only in the discretion of a court of competent jurisdiction;
 

 

 

 

 

	
            (g)
 	
            the Shares are or on the Closing Date will be duly and validly authorized and, when issued and delivered against payment therefor, will be duly and validly issued, fully paid and non-assessable shares in the capital stock of the Corporation;
 

 
 

	
            (h)
 	
            the authorized capital of the Corporation consists of 100,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value of $0.01 per share.  Of the preferred stock, 500,000 shares have been designated as Series A Convertible Preferred Stock, 1,116,500 shares have been designated as Series B Convertible Preferred Stock and 663,000 shares have been designated as Series C Convertible Preferred Stock.  As of  March 28, 2006 there were 66,696,447 shares of Common Stock and no shares of preferred stock outstanding.  In addition, the Corporation has (i) outstanding a convertible note held by Dimotech, Ltd. (the “Convertible Note”) in the principal amount of $40,000 which is convertible, at the holder’s option, into Common Stock at a price of $1.00 per share or into any series of preferred shares at the
price paid by the purchasers thereof; provided, however, that if any such preferred shares are convertible into Common Stock, the holder would be entitled to receive no more than the number of preferred shares which, at the then existing conversion rate, would convert into 40,000 shares of Common Stock, (ii) outstanding a convertible note held by Polymer Technology Group, Inc. in the principal amount of $70,000 which is convertible, at the holder’s option, into Common Stock at a price of $1.00 per share and (iii) available for issuance pursuant to options which have been granted under its 2000 Stock Option Plan, 2001 Stock Option Plan and other agreements, an aggregate of  approximately 12,001,000 shares of Common Stock;  
 

 
 

	
            (i)
 	
            the Corporation is not, and at the Closing Date will not be: (i) in breach or violation of any of the terms or provisions of, or in default under, this Agreement, any other Subscription Agreement for the purchase of Shares, the Agency Agreement, any indenture, mortgage, deed of trust or loan agreement, (except as disclosed in the Corporation’s SEC filings), other agreement (written or oral) or instrument to which it is a party or by which it is bound or to which any of its property or assets is subject, which breach or violation or the consequences thereof would result in a material adverse change to it or its business; or (ii) in violation of the provisions of its articles, by-laws, resolutions or any statute or any other rule or regulation of any court or governmental agency or body having jurisdiction over it or
any of its properties which violation or the consequences thereof would result in a material adverse change to it or its business;
 

 
 

	
            (j)
 	
            the issue and sale of the Purchased Shares and the performance and consummation of the transactions contemplated herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement (written or oral) or instrument to which the Corporation or any subsidiary is bound or to which any of the property or assets of the Corporation or any subsidiary is subject, which breach or violation or the consequences thereof would result in a material adverse change to the Corporation or its business, nor will any such action conflict with or result in any violation of the provisions of the articles, by-laws or resolutions of the Corporation or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Corporation or any subsidiary or any of its properties which violation or the consequences thereof would result in a material adverse change to the Corporation or its business;
 

 

 

 

	
            (k)
 	
            the Corporation has established on its books reserves which are adequate for the payment of all taxes not yet due and payable; there are no liens or other liabilities for taxes on the assets of the Corporation except for taxes not yet due; there are no audits of any of the tax returns of the Corporation which are known by the Corporation’s management to be pending and there are no claims which have been or may be asserted relating to any such tax returns which, if determined adversely, would result in the assertion by any government or agency of any deficiency having a material adverse effect on the properties, business or assets of the Corporation;
 

 
 

	
            (l)
 	
            the Corporation has good and valid title to its properties, leaseholds and assets, including without limitation the properties, leaseholds and assets reflected in the balance sheet as of December 31, 2005 referred to in Section 6(d) above, except properties, leaseholds and assets disposed of since such date at fair market value in the ordinary course of business, and has good title to all its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance, charge, rights of first refusal or options to purchase, whether or not relating to extensions of credit or the borrowing of money, other than as disclosed in such balance sheet except as incurred in the ordinary course of business since the date of such balance sheet, and except in any event (i) for a security interest in the Corporation’s tangible
assets to secure payment of the Convertible Note, and (ii) where the failure to hold good title or the existence of a mortgage, pledge, lien, lease, encumbrance, charge, right of first refusal or option to purchase would not have a material adverse effect on the Corporation or its business; there exists no condition which interferes with the economic value or use of such properties and assets and all tangible assets are in good working condition and repair (subject to ordinary wear and tear) except where the existence of any such condition would not have a material adverse effect on the Corporation or its business;
 

 
 

	
            (m)
 	
            the Corporation owns, or has applied for registration of, all patents, trade marks, service marks, trade names, and copyrights necessary for the conduct of its business, except where the failure to so own or apply for registration would not have a material adverse effect on the Corporation or its business; to the best of the knowledge, information and belief of the Corporation, none of the past or present activities of the Corporation or the products, services or assets of the Corporation infringe or constitute an unauthorized use of any proprietary rights of others, and the Corporation has not received any notice of infringement of, or conflict with, asserted rights of others with respect to any patent, trade mark, service mark, trade name, or copyright that, individually or in the aggregate, if the subject of an unfavorable
decision, ruling, or finding, would result in a material adverse change to the Corporation or its business;
 

 
 

	
            (n)
 	
            the Corporation has taken reasonable measures to protect and preserve the confidentiality of all trade secrets and other non-patented proprietary information of the Corporation, including without limitation the procurement of proprietary invention assignments and non-disclosure and non-competition agreements from employees, consultants, subcontractors, customers and other persons who have access to such information;
 

 
 

	
            (o)
 	
            the Corporation has filed all necessary federal, state and municipal property, income and franchise tax returns and has paid all taxes shown as due thereon or otherwise owed by it to any taxing authority except those contested in good faith and for which appropriate amounts have been reserved in accordance with generally accepted 
 

 

 

accounting principles; there is no tax deficiency which has been, or to the best of the knowledge, information and belief of the Corporation might be, asserted against the Corporation which would materially affect the business or operations of the Corporation; the Corporation has paid all applicable federal and state payroll and withholding taxes;

 

	
            (p)
 	
            there is no collective bargaining or other union agreement to which the Corporation is a party or by which it is bound, or which is currently being negotiated; the Corporation does not sponsor, maintain or contribute to any pension, retirement, profit sharing, incentive compensation, bonus or other employee benefit plan, including without limitation any employee benefit plan covered by Title 4 of the Employee Retirement Income Security Act of 1974 (“ERISA”) or any “multi-employer plan” as defined in Section 4001(a)(3) of ERISA, or any other employee benefit plan; to the best of the knowledge, information and belief of the Corporation, (i) no employee of the Corporation is a party to or bound by any agreement, contract or commitment, or subject to any
restrictions, particularly but without limitation in connection with any previous employment of any such person, which would result in a material adverse change to the Corporation or its business, and (ii) no senior officer has any present intention of terminating his employment with the Corporation, and the Corporation has no present intention of terminating any such employment; and
 

 
 

	
            (q)
 	
            there is no adverse claim, action, proceeding or investigation pending or, to the knowledge, information and belief of the Corporation, threatened, which questions the validity of the issue or sale of the Shares or the validity of any action taken or to be taken by the Corporation in connection with this Subscription Agreement or the Investor Rights Agreement or which would result in any material adverse change in the financial condition, results of operations, business or prospects of the Corporation.
 

 

	
            7.
 	
            Representations, Warranties and Covenants of the Purchaser
 

The Purchaser hereby represents, warrants and covenants to the Agent and the Corporation (which representations, warranties and covenants shall survive the Closing) that:

 

	
            (a)
 	
            in the case of the subscription by the Purchaser for Shares as principal for its own account and not for the benefit of any other person, the Purchaser is purchasing the Purchased Shares as principal for its own account, and not for the benefit of any other person or company, and this Subscription Agreement and the Investor Rights Agreement have been authorized, executed and delivered by, and constitute legal, valid and binding agreements of the undersigned;
 

 
 

	
            (b)
 	
            in the case of the subscription by the Purchaser for Shares as agent for a disclosed principal, each beneficial purchaser of the Purchased Shares for whom the Purchaser is acting is purchasing as principal for its own account and not for the benefit of any other person and the Purchaser is an agent with due and proper authority to execute this Subscription Agreement, the Investor Rights Agreement and all other documentation in connection with the purchase of the Purchased Shares on behalf of the beneficial purchaser and this Subscription Agreement and the Investor Rights Agreement have been duly authorized, executed and delivered by or on behalf of, and constitute legal, valid and binding agreements of, the disclosed principal;
 

 

 

 

	
            (c)
 	
            in the case of the subscription by the Purchaser of Shares as trustee or as agent for a principal which is undisclosed or identified by account number only, this Subscription Agreement and the Investor Rights Agreement have been duly authorized, executed and delivered by, and constitute legal, valid and binding agreements of, the undersigned acting in such capacity;
 

 
 

	
            (d)
 	
            if the Purchaser is a corporation, the Purchaser is a valid and subsisting corporation, has the necessary corporate capacity and authority to execute and deliver this Subscription Agreement and the Investor Rights Agreement and to observe and perform its covenants and obligations hereunder and thereunder and has taken all necessary corporate action in respect thereof or, if the Purchaser is a partnership, syndicate or other form of unincorporated organization, the Purchaser has the necessary legal capacity and authority to execute and deliver this Subscription Agreement and the Investor Rights Agreement and to observe and perform its covenants and obligations hereunder and thereunder and has obtained all necessary approval in respect thereof and, in either case, upon execution by the Corporation, this Subscription Agreement and
the Investor Rights Agreement constitute legal, valid and binding contracts of the Purchaser enforceable against the Purchaser in accordance with their respective terms;
 

 
 

	
            (e)
 	
            if the Purchaser is an individual, the Purchaser has attained the age of majority and is legally competent to execute this Subscription Agreement and the Investor Rights Agreement and to take all actions required pursuant hereto and thereto;
 

 
 

	
            (f)
 	
            If the Purchaser is a US Person within the meaning of Rule 902(o) of Regulation S promulgated under the Securities ("US Person"), the Purchaser (1) has read carefully the definition of "Accredited Investor" contained in Schedule 1 attached hereto and (2) meets the standards of an "Accredited Investor" set forth under Rule 501(a) of Regulation D under the Act and has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of an investment in the Corporation’s securities. The Purchaser will promptly notify the Corporation in the event that prior to the issuance of any securities to the Purchaser the foregoing representation ceases to be accurate.
 

 
 

	
            (g)
 	
            If the Purchaser is not a US Person, the Purchaser makes the representations and warranties set forth on Schedule 2 hereto. 
 

 

 

	
            (h)
 	
            if required by applicable securities legislation, policy or order of a securities regulatory authority or other regulatory authority, the Purchaser will execute, deliver, file and otherwise assist the Corporation in filing such reports and other documents with respect to the issue of the Purchased Shares as may be reasonably required;
 

 
 

	
            (i)
 	
            in the case of a purchase of Shares by a resident of Ontario or Quebec, the Purchaser is an accredited investor, as defined in National Instrument 45-106 – Prospectus and Registration Exemptions, and has completed, executed and delivered as principal or, if the Purchaser is contracting hereunder as agent or trustee for one or more beneficial purchasers, on behalf of each such beneficial purchaser, an accredited investor subscriber certificate as set out in Schedule “A” to this Subscription Agreement;
 

 

 

 

	
            (j)
 	
            the Purchaser has had access to the Corporation’s public filings with the SEC and has had an opportunity to ask questions of the Corporation’s management;
 

 
 

	
            (k)
 	
            the Purchaser is capable of assessing the proposed investment as a result of the Purchaser’s financial or investment experience or as a result of advice received from a registered person other than the Corporation or an affiliate thereof, and is able to bear the economic loss of its investment.  The Purchaser recognizes that its purchase of Purchased Shares involves a high degree of risk in that: (i) the Corporation has incurred losses since inception; at December 31, 2005, the Corporation had an accumulated deficit of approximately $44,249,000; and the Corporation requires substantial funds in addition to the proceeds of this Offering to continue its plan of operations; (ii) an investment in the Corporation is highly speculative and only investors who can afford the loss of their entire investment should consider
investing in the Corporation and the Purchased Shares; (iii) the Purchaser may not be able to liquidate the Purchaser’s investment; and (iv) transferability of the securities comprising the Purchased Shares is extremely limited. Furthermore, the proceeds of this Offering are projected to last only a limited period of time. The Purchaser has read the Risk Factors section of the Corporation’s Annual Report on Form 10-KSB for the year ended December 31, 2005;
 

 
 

	
            (l)
 	
            the address of the Purchaser (or others for whom the Purchaser is contracting hereunder) furnished by the Purchaser on the Purchaser’s signature page of this Subscription Agreement is such person’s principal residence if such person is an individual or its principal business address if it is a corporation or other entity; and
 

 
 

	
            (m)
 	
            the Purchaser (or others for whom the Purchaser is contracting hereunder) agrees that it will not disclose the terms of the Offering or any information it may have acquired from the Corporation in the course of executing this Subscription Agreement which the Corporation has identified as material non-public information, except to the extent (i) that such terms or other information becomes generally available to the public other than by disclosure in violation of this Subscription Agreement, (ii) that such information was properly within the Purchaser’s possession prior to being furnished by the Corporation, (iii) that such information becomes available to the Purchaser on a non-confidential basis, such as through disclosure by third parties who have the right to disclose the information, and (iv) that
disclosure of such information is compelled by judicial process, provided that in the event of compulsion by judicial process the Purchaser will inform the Corporation promptly upon its receipt of notice of judicial process compelling such disclosure.
 

 

	
            8.
 	
            Reliance Upon Representations, Warranties and Covenants
 

The Purchaser acknowledges that the representations, warranties and covenants contained in this Subscription Agreement are made with the intent that they may be relied upon by the Agent and by the Corporation to, among other things, determine the Purchaser’s eligibility or (if applicable) the eligibility of others on whose behalf it is contracting hereunder to subscribe for the Purchased Shares.  The Purchaser further agrees that by accepting the Purchased Shares, the Purchaser shall be representing and warranting that the foregoing representations and warranties are true as at the Closing Time with the same force and effect as if they had been made by the Purchaser at the Closing Time and that they shall survive the purchase by the Purchaser of the 

 

Purchased Shares and shall continue in full force and effect notwithstanding any subsequent disposition by it of any Purchased Shares.

	
            9.
 	
            Agent’s Commission, Fees and Expenses  
 

The Purchaser understands that on the Closing Date, the Agent will receive from the Corporation a commission equal to 10% of the gross proceeds raised by the Agent (payable at the election of the Agent in cash or Shares (at the issue price thereof) or a combination thereof) and broker warrants (the “Broker Warrants”) to purchase, at an exercise price of $0.60 (US) per share, that number of shares of Common Stock equal to 10% of the number of Purchased Shares issued in respect of proceeds raised by the Agent, as more particularly described and subject to the exclusions contained in the Agency Agreement.  The Purchaser further understands that the Agent has retained or will retain a broker/dealer or broker/dealers registered in the relevant US state jurisdictions for the solicitation and sale of Purchased Shares to US investors, and that the Agent may share a portion of its fee
with such other registered broker/dealer(s); it being understood that the Agent has agreed not to retain any fee in respect of Purchased Shares sold to US investors to the extent prohibited by applicable state law. No other fee or commission is payable by the Corporation in connection with the sale of the Purchased Shares.  However, the Corporation will also pay on the Closing Date those expenses of the Agent in connection with the Offering as are set out in the Agency Agreement, including reasonable legal fees and expenses of the Agent’s counsel as stipulated in the Agency Agreement.

	
            10.
 	
            Costs
 

The Purchaser acknowledges and agrees that all costs and expenses incurred by the Purchaser (including any fees and disbursements of any counsel retained by the Purchaser) relating to the purchase of the Purchased Shares shall be borne by the Purchaser.

	
            11.
 	
            Appointment of Agent
 

The Purchaser, on its own behalf and (if applicable) on behalf of others for whom the Purchaser is contracting hereunder, hereby:

 

	
            (a)
 	
            irrevocably authorizes the Agent to negotiate and settle the form of any agreement to be entered into in connection with this Subscription Agreement and to waive on its own behalf and on behalf of the purchasers of Shares, in whole or in part, or extend the time for compliance with, any of the closing conditions in such manner and on such terms and conditions as the Agent may determine, acting reasonably, without in any way affecting materially the Purchaser’s obligations or the obligations of such others hereunder; and
 

 
 

	
            (b)
 	
            acknowledges and agrees that the Agent and the Corporation may vary, amend, alter or waive, in whole or in part, one or more of the conditions set forth in the Agency Agreement in such manner and on such terms and conditions as they may determine, acting reasonably, without in any way affecting materially the Purchaser’s obligations or the obligations of such others hereunder.
 

 

 

 

	
            12.
 	
            Governing Law
 

This Subscription Agreement shall be governed by the laws of the State of New York without reference to its rules as to conflicts of laws. 

	
            13.
 	
            Survival
 

This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the Purchaser for a period of two years following the completion of the Offering by the Corporation, notwithstanding the completion of the subscription for the Purchased Shares by the Purchaser pursuant hereto, and any subsequent disposition by the Purchaser of any Purchased Shares. 

	
            14.
 	
            Assignment
 

This Subscription Agreement is not transferable or assignable by the parties hereto.

	
            15.
 	
            Counterparts
 

This Subscription Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same document.  The Corporation and the Agent shall be entitled to rely upon delivery by facsimile of an executed copy of this Subscription Agreement and acceptance by the Corporation of such facsimile copies will be legally effective to create a valid and binding agreement between the Purchaser and the Corporation in accordance with the terms hereof.

[Remainder of page intentionally left blank]

 

 

 

	
            16.
 	
            Subscription Particulars
 	
             

	
            The aggregate number of Shares subscribed for is   
 	
            .
 
				

The Shares are to be registered in the name of: 

 

	
            (if space is insufficient, attach a list)
 

The certificates representing the Shares are to be delivered to:

 

                         

at its office at:

 

                 

	
            Contact Name and Number:
 

 

If the Purchaser is signing as agent for a principal and not as agent for a fully managed account, the name and address of the beneficial purchaser is:

 

                 

	
            (if space is insufficient, attach a list)
 

 

	
            DATED at   
 	
            this   
 	
            day of   
 	
            , 2006.
 

 

 

	
            Name of Purchaser (please type or print)
 

 

	
            By:
 	
             

	
             
	
            (Signature of Authorized Representative)
 
			

 

 

	
            (Name of Person Signing)
 

 

	
            Office or Title
 

 

                       

Address of Purchaser

 

 

ACCEPTANCE

 

 

This Subscription Agreement is hereby accepted and agreed to by SyntheMed, Inc.

 

 

	
            DATED at Little Silver, New Jersey, the ____ day of _____________ 2006.
 

 

 

	
            SYNTHEMED, INC.
 

 

 

	
            By:
 	
             

	
             
	
            Authorized Signing Officer
 
			

 

 

SCHEDULE “A”

 

SUBSCRIBER CERTIFICATE FOR RESIDENTS OF ONTARIO AND QUéBEC

 

	
            TO:
 	
            SYNTHEMED, INC. (the "Issuer")
 	
             

	
            AND TO:
 	
            CLUBB CAPITAL LIMITED (the "Agent")
 

Reference is made to the subscription agreement between the Issuer and the undersigned (referred to herein as the "Purchaser") dated as of the date hereof (the "Subscription Agreement"). Upon execution of this Subscriber Certificate by the Purchaser, this Subscriber Certificate shall be incorporated into and form a part of the Subscription Agreement.  Terms not otherwise defined herein have the meanings attributed to them in the Subscription Agreement and in National Instrument 45-106 – Prospectus and Registration Exemptions ("NI 45-106")1. All monetary references in this Schedule “A” are in Canadian dollars.

In connection with the purchase of the Purchased Shares by the Purchaser, the Purchaser represents, warrants and covenants (on its own behalf or, if applicable, on behalf of those for whom the Purchaser is contracting under the Subscription Agreement) and certifies to the Issuer and to the Agent and acknowledges that the Issuer and the Agent are relying thereon that:

<R>

	
            A.                                                
 	
            the Purchaser or, if the Purchaser is contracting hereunder as agent or trustee for one or more beneficial purchasers, each beneficial purchaser, is purchasing the Purchased Shares as principal and the Purchaser or each such beneficial purchaser, as the case may be, is resident in the Province of Ontario or in the Province of Québec and is an "Accredited Investor" under NI 45-106 in the category checked below:
 
	
            [   ]
 	
            (a)                         a Canadian financial institution, or a Schedule III bank;
 
	
            [   ]
 	
            (b)                         the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada);
 
	
            [   ]
 	
            (c)                         a subsidiary of any person referred to in paragraphs (a) or (b), if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary;
 

</R>

 

 

 

 

_________________________

1        NI 45-106 defines the term (i) "financial assets" as cash, securities, or a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislations, (ii) "related liabilities" as liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or liabilities that are secured by financial assets, (iii) "fully managed account" as account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction, and (iv) "spouse" as an individual who (a) is married to another individual and is not living separate and apart within the meaning of the Divorce Act
(Canada), from the other individual, or (b) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender.  Terms used herein which are defined in National Instrument 14-101 – Definitions ("NI 14-101") have the meaning given to them in NI 14-101.  Reference should be made to NI 45-106 itself for its complete text, including other definitions, and to the Companion Policy to the NI 45-106 for matters of interpretation and application.

 

<R>

	
            [   ]
 	
            (d)                         a person registered under the securities legislation of a jurisdiction of Canada as an adviser or dealer, other than a person registered solely as a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador);
 
	
            [   ]
 	
            (e)                         an individual registered or formerly registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d);
 
	
            [   ]
 	
            (f)                          the Government of Canada or a jurisdiction of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada;
 
	
            [   ]
 	
            (g)                         a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec;
 
	
            [   ]
 	
            (h)                         any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government;
 
	
            [   ]
 	
            (i)                          a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada) or a pension commission or similar regulatory authority of a jurisdiction of Canada;
 
	
            [   ]
 	
            (j)                          an individual who, either alone or with a spouse, beneficially owns, directly or indirectly, financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000;
 
	
            [   ]
 	
            (k)                         an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year;
 
	
            [   ]
 	
            (l)                          an individual who, either alone or with a spouse, has net assets of at least $5,000,000;
 
	
            [   ]
 	
            (m)                        a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements;
 

</R>

 

 

 

<R>

	
            [   ]
 	
            (n)                         an investment fund that distributes or has distributed its securities only to: (i) a person that is or was an accredited investor at the time of the distribution, or (ii) a person that acquires or acquired securities as principal and at an acquisition cost of not less than $150,000 paid in cash at the time of the trade;
 
	
            [   ]
 	
            (o)                         an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt;
 
	
            [   ]
 	
            (p)                         a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be;
 
	
            [   ]
 	
            (q)                         a person acting on behalf of a fully managed account managed by that person, if that person (i) is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario, is purchasing a security that is not a security of an investment fund;
 
	
            [   ]
 	
            (r)                          a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded;
 
	
            [   ]
 	
            (s)                          an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function;
 
	
            [   ]
 	
            (t)                          a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors,
 
	
            [   ]
 	
            (u)                         an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; or
 
	
            [   ]
 	
            (v)                         a person that is recognized or designated by the securities regulatory authority or, except in Ontario and Québec, the regulator as (i) an accredited investor, or (ii) an exempt purchaser in Alberta or British Columbia after this Instrument comes into force.
 

</R>

 

 

 

 

	
            Dated:  _________________________, 2006.
 
	
             
	
             
 
	
             
	
            Print name of Purchaser
 
	
             
	
             
 	
             
 
	
             
	
            By:
 	
             
 
	
             
	
             
 	
            Signature
 
	
             
	
             
 	
             
 
	
             
	
             
 	
             
 
	
             
	
             
 	
            Print name of Signatory

(if different from Purchaser)
 
	
             
	
             
 	
             
 
	
             
	
             
 	
             
 
	
             
	
             
 	
            Title
 
			

 

 

 

 

 

 

 

 

 

 

 

 

Schedule 1

ACCREDITED INVESTOR

 

An "accredited investor" is defined as:

 

	
            1.
 	
            A bank as defined in Section 3(a)(2) of the Securities Act, or a 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; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; 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; a Small Business Investment Company licensed by the United States Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; 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; an employee benefit plan within the meaning of the Employee Retirement Income Preferred Stock Act of 1974 ("ERISA"), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of $5,000,000 or, is a self-directed plan, with the investment decisions made solely by persons that are accredited investors;
 

 
 

	
            2.
 	
            A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
 

 
 

	
            3.
 	
            An organization described in Section 501(c)(3) of the Internal Revenue Code, 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;
 

 
 

	
            4.
 	
            A director or executive officer of the Corporation;
 

 
 

	
            5.
 	
            A natural person whose individual net worth, or joint net worth with that person's spouse, at the time of such person's investment exceeds $1,000,000;
 

 
 

	
            6.
 	
            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 which has a reasonable expectation of reaching the same income level in the current year;
 

 
 

	
            7.
 	
            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 as described in Rule 506(b)(2)(ii) of Regulation D; or
 

 

 

 

	
            8.
 	
            An entity in which all of the equity owners are "accredited investors" under one or more of the foregoing categories.
 

 

 

 

Schedule 2

NON-US PERSON REPRESENTATIONS

 

Each Purchaser who is not a US Person represents and warrants to the Corporation that:

 

	
            1.
 	
            Purchaser is neither a U.S. Person (as defined in Rule 902(o) of Regulation S promulgated under the Securities Act) nor is Purchaser committing to purchase securities for the account of a U.S. Person or for resale in the United States and the undersigned confirms that the securities have not been offered to the Purchaser in the United States.
 

 
 

	
            2.
 	
            Purchaser:
 

 
 

	
             
 	
            (a)
 	
            is not a "distributor" of securities as such term is defined in Regulation S nor a dealer in securities, and
 

 
 

	
             
 	
            (b)
 	
            acknowledges that it has not engaged, and agrees that it will not engage during any period in which US securities laws prohibit such activity, in any hedging transactions with regard to the Corporation’s Common Stock.
 

 
 

	
            3.
 	
            The investment commitment by the Purchaser does not contravene any of the applicable securities legislation in the jurisdiction in which the Purchaser is resident and does not trigger (other than as agreed by the Corporation pursuant to the Investor Rights Agreement):
 

 
 

	
             
 	
            (a)
 	
            any obligation to prepare and file a prospectus or similar document, or any other report with respect to such purchase, and
 

 
 

	
             
 	
            (b)
 	
            any registration or other obligation on the part of Purchaser, the Corporation or the Agent.
 

 

 

 

 

Supplement to Subscription Agreement

 

March 3, 2006

____________________________

 

SyntheMed, Inc. 

_____________________________

 

This Supplement amends and supplements the Subscription Agreement (the “Subscription Agreement”), which has been provided by SyntheMed, Inc. (the “Company”) in connection with an offering by the Company of shares of common stock at a purchase price of $0.40 per share (the “Offering”).

 

Each of the items referred to below shall be deemed to modify the representations and warranties of the Company contained in, and other terms and conditions of, the Subscription Agreement and related transaction documents to the extent relevant. 

 

Each investor in the Offering is kindly requested to sign, date and return via facsimile (+44 20 7 349 3140) or email (joerg.gruber@attglobal.net) a copy of this Supplement to Clubb BioCapital Limited, placement agent for the Offering, which will acknowledge receipt of this Supplement and agreement by the investor to the revised Offering terms and disclosure as set forth herein. 

 

Increase in Offering Size

 

The Offering size has been increased from $5 million to $6.5 million.  If the Offering is fully subscribed, the Company will issue and sell 16,250,000 shares of common stock for gross proceeds of $6.5 million.  The Offering price remains unchanged at $.40 per share.

 

Annual Report on Form 10-KSB/Proxy Statement

 

The Company recently filed with the United States Securities and Exchange Commission  its Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005, and intends to file in the beginning of this month prior to closing of the Offering a proxy statement for its annual stockholder meeting scheduled to be held at the end of April.  These documents, which contain material information about the Company, its business, management and financial condition, may be viewed upon filing under the Company’s name at the SEC’s EDGAR Archives located on the internet at www.sec.gov.  

 

Acknowledged and Agreed:

 

____________________________________________________

[Print name of investor as it appears in the Subscription Agreement]

 

By: _______________________________

Print name:

Print title:

Date:______________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]