Document:

exv10w54

 

Exhibit 10.54

BROKER’S NAME:                                                             

BROKER-DEALER’S NAME:                                                             

IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING. 

SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.

SUBSCRIPTION AGREEMENT

and

LETTER OF INVESTMENT INTENT

Cytocore, Inc.

414 North Orleans Street, Suite 502

Chicago, Illinois 60610

Gentlemen:

     The undersigned (the “Subscriber”) hereby tenders this subscription for the purchase of
securities (the “Securities”) of Cytocore, Inc. (the “Company”), consisting of units (“Units”). The
Units are offered by the Company (the “Offering”) through Bathgate Capital Partners, LLC (the
“Finder”). The Units and the terms of the Offering are described in the Purchase Agreement
delivered contemporaneously with this Subscription Agreement (the “Purchase Agreement”). Subscriber
understands that a subscription for the Securities may be rejected for any reason and that, in the
event that this subscription is rejected, the funds delivered herewith will be promptly returned,
without interest thereon or deduction therefrom. By execution below, the Subscriber acknowledges
that the Company is relying upon the accuracy and completeness of the representations contained
herein in complying with their obligations under applicable securities laws.

ARTICLE 1 — SUBSCRIPTION AND DESCRIPTION OF SECURITIES

1.1 Subscription for Units

     The Subscriber hereby confirms its subscription for and offers to purchase the Securities from
the Company, on and subject to the terms and conditions set out in this Subscription Agreement, and
hereby tenders the full Subscription Amount in cash or check payable to “Cytocore, Inc. Escrow
Account” in the amount subscribed for. Investors may also wire funds to the escrow account as set
forth below:

	 	 	 	 	 	 	 
	 

	 	Receiving Bank Name:
	 	Front Range Bank
	 	 
	 

	 	 	 	7600 S. Alton Way, Building B	 	 
	 

	 	 	 	Centennial, CO 80112	 	 
	 

	 	ABA Routing Number:
	 	107006428 	 	 
	 

	 	Account Number:
	 	0310000401 	 	 
	 

	 	Name of Account:
	 	Cytocore, Inc. Escrow Account	 	 

	 	 	 
	 
	 	 
	$
 

	 	  
	 
	 	 
	Amount of Subscription
	 	 

 

 

1.2 Acceptance and Rejection of Subscription by the Company

     The Subscriber acknowledges and agrees that the Company reserves the right, in its absolute
discretion, to reject this subscription, in whole or in part, at any time prior to the Closing as
that term is defined in the Purchase Agreement. If this subscription is rejected in whole, any
checks or other forms of payment delivered to the Company representing the Subscription Amount will
be promptly returned to the Subscriber without interest and without deduction. If this subscription
is accepted only in part, a check representing any refund of the Subscription Amount for that
portion of the subscription for the Securities which is not accepted, will be promptly delivered to
the Subscriber without interest and without deduction.

ARTICLE 2 — ACKNOWLEDGEMENTS, COVENANTS, REPRESENTATIONS AND

WARRANTIES OF THE SUBSCRIBER

     The Subscriber, on its own behalf and, if applicable and if fully disclosed to the Company and
to the Finder, on behalf of others for whom it is acting hereunder, hereby represents and warrants
to, and covenants with, the Company as follows and acknowledges that the Company is relying on such
representations and warranties in connection with the transactions contemplated herein:

	 	(a)	 	The Subscriber certifies that it is resident in the jurisdiction set out on the
signature page of this Subscription Agreement. Such address was not created and is not
used solely for the purpose of acquiring the Securities and the Subscriber was solicited
to purchase in such jurisdiction.
	 
	 	(b)	 	If the Subscriber is not a person in the United States or a U.S. Person (as
defined in Rule 902(k) of Regulation S under the U.S. Securities Act of 1933, as amended
(the “US Securities Act”) or not purchasing the Securities on behalf of a person in the
United States or a U.S. Person:

	 	(i)	 	neither the Subscriber nor any disclosed principal is a U.S.
Person nor subscribing for the Securities for the account of a U.S. Person or
for resale in the United States and the Subscriber confirms that the Securities
have not been offered to the Subscriber in the United States and that this
Subscription Agreement has not been signed in the United States;
	 
	 	(ii)	 	the Subscriber acknowledges that the Securities have not been
registered under the U.S. Securities Act and may not be offered or sold in the
United States or to a U.S. Person unless the securities are registered under the
U.S. Securities Act and all applicable state securities laws or an exemption
from such registration requirements is available, and further agrees that
hedging transactions involving such securities may not be conducted unless in
compliance with the U.S. Securities Act;
	 
	 	(iii)	 	the Subscriber and if applicable, the disclosed principal for
whom the Subscriber is acting, understands that the Company is the seller of the
Securities and underlying securities and that, for purposes of Regulation S, a
“distributor” is any underwriter, dealer or other person who participates,
pursuant to a contractual arrangement in the distribution of securities sold in
reliance on

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Regulation S and that an “affiliate” is any partner, officer, director or any person
directly or indirectly controlling, controlled by or under common control with any
person in question. Except as otherwise permitted by Regulation S, the Subscriber
and if applicable, the disclosed principal for whom the Subscriber is acting, agrees
that it will not, during a one year distribution compliance period, act as a
distributor, either directly or through any affiliate, or sell, transfer,
hypothecate or otherwise convey the Securities or underlying securities other than
to a non-U.S. Person;

	 	(iv)	 	the Subscriber and if applicable, the disclosed principal for whom the
Subscriber is acting, acknowledges and understands that in the event the Securities are
offered, sold or otherwise transferred by the Subscriber or if applicable, the
disclosed principal for whom the Subscriber is acting, to a non-U.S Person prior to the
expiration of a one year distribution compliance period, the purchaser or transferee
must agree not to resell such securities except in accordance with the provisions of
Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an
available exemption from registration; and must further agree not to engage in hedging
transactions with regard to such securities unless in compliance with the U.S.
Securities Act; and
	 
	 	(v)	 	neither the Subscriber nor any disclosed principal will offer, sell or
otherwise dispose of the Securities in the United States or to a U.S. Person unless (A)
the Company has consented to such offer, sale or disposition and such offer, sale or
disposition is made in accordance with an exemption from the registration requirements
under the U.S. Securities Act and the securities laws of all applicable states of the
United States or (B) the SEC has declared effective a registration statement in respect
of such securities.

	 	(c)	 	If the Subscriber is a person in the United States or a U.S. person, or is purchasing the
Securities on behalf of a person in the United States or a U.S. person, the Subscriber or each
beneficial purchaser as to which the Subscriber exercises sole investment discretion for whom
it is purchasing:

	 	(i)	 	is acquiring the Securities to be held for investment only and not with a
view to resale, distribution or other disposition of the Securities and without any
present intention of selling, offering to sell or otherwise disposing of or
distributing such securities, or any portion thereof, in any transaction other than a
transaction complying with the registration requirements of the U.S. Securities Act
and applicable state securities laws, or pursuant to an exemption therefrom;
	 
	 	(ii)	 	is aware that the Securities have not been registered under the U.S.
Securities Act and the sale contemplated hereby is being made in reliance on a private
placement exemption to Accredited Investors (as defined in Rule 501 of the U.S.
Securities Act);
	 
	 	(iii)	 	the Subscriber is an Accredited Investor within the meaning of Rule 501 of
Regulation D of the U.S. Securities Act (see categories of “Accredited Investor” on
Exhibit A to this Agreement and initial your category); or each beneficial purchaser as
to which the Subscriber exercises sole investment discretion for

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whom it is purchasing and each disclosed principal for whom the Subscriber may be
acting is an Accredited Investor;

	 	(iv)	 	if the undersigned is the Subscriber, he or she is making the above statement
based on personal knowledge of his or her financial situation and has reviewed personal
financial documentation with an accountant, financial advisor or other financial
professional, if necessary, to determine that the above statement is true; or (b) if
the undersigned is other than the Subscriber, he or she is making the above statement
based on a review, if necessary, of the financial statements of the Subscriber for the
most recently completed financial year and any interim financial statements prepared
since the end of such financial year and has undertaken such other review and due
diligence necessary to determine and certify that the Subscriber is an “Accredited
Investor” as that term is defined in Rule 501(a) of the U.S. Securities Act;
	 
	 	(v)	 	is not purchasing the Securities as a result of any “general solicitation or
general advertising” (as such term is defined in Rule 502(c) of the U.S. Securities
Act), including any advertisement, article, notice or other communication published in
any newspaper, magazine, or similar media or broadcast over television or radio, or any
seminar or meeting where the attendees have been invited by general solicitation or
general advertising;
	 
	 	(vi)	 	understands that if it decides to offer, sell, pledge or otherwise transfer the
Securities, and, prior to a Registration Statement under the U.S. Securities Act
becoming effective, the Securities may be offered, sold or otherwise transferred only:
(A) to the Company; (B) in compliance with Rule 904 under Regulation S, (C) in
accordance with Rule 144 or Rule 144A under the U.S. Securities Act, if available, and
in compliance with applicable local laws and regulations, or (D) in a transaction that
does not otherwise require registration under the U.S. Securities Act or any applicable
state securities laws if an opinion of counsel, of recognized standing reasonably
satisfactory to the Company has been provided to the Company to that effect; and
	 
	 	(vii)	 	consents to the Company making a notation on its records or giving
instructions to any transfer agent of the Company in order to implement the
restrictions on transfers set forth and described herein, and the Subscriber
understands and acknowledges that the Company may instruct the registrar and transfer
agent of the Company not to record a transfer without first being notified by the
Company that it is satisfied that such transfer is exempt from or not subject to
registration under the U.S. Securities Act.

	 	(d)	 	If the Subscriber or any disclosed principal is not a person described in paragraphs 2(b) or
2(c) above, the subscription for the Securities by the Subscriber does not contravene any of
the applicable securities legislation in the jurisdiction in which the Subscriber resides and
does not give rise to any obligation of the Company to prepare and file a prospectus or
similar document or to register the Securities or to be registered with, or to file any report
or notice with, any governmental or regulatory authority. There is no undisclosed principal
for the Subscriber.

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	 	(e)	 	The execution and delivery of this Subscription Agreement, the performance and compliance
with the terms hereof, the subscription for the Securities and the completion of the
transactions described herein by the Subscriber will not result in any material breach of, or
be in conflict with, or constitute a material default under, or create a state of facts that,
after notice or lapse of time, or both, would constitute a material default under any term or
provision of the constituent documents, by-laws or resolutions of the Subscriber, the
securities laws or any other laws applicable to the Subscriber, any agreement to which the
Subscriber is a party, or any judgment, decree, order, statute, rule or regulation applicable
to the Subscriber.
	 
	 	(f)	 	The Subscriber is subscribing for the Securities as principal for its own account and not for
the benefit of any other person (within the meaning of applicable securities laws) except as
fully disclosed to the Company and to the Finder. If it is subscribing as agent for a
disclosed principal, it has disclosed the name of the disclosed principal on the face page of
this Subscription Agreement and acknowledges that the Company may be required by law to
disclose to certain regulatory authorities the identity of each disclosed principal for whom
the Subscriber is acting.
	 
	 	(g)	 	In the case of a subscription for the Securities by the Subscriber acting as trustee or agent
for a fully managed account or as agent for a disclosed principal, the Subscriber is duly
authorized to execute and deliver this Subscription Agreement and all other necessary
documentation in connection with such subscription on behalf of the fully managed account or
disclosed principal, as applicable and this Subscription Agreement has been duly authorized,
executed and delivered by or on behalf of and constitutes a legal, valid and binding agreement
of, the fully managed account or disclosed principal, as applicable.
	 
	 	(h)	 	In the case of a subscription for the Securities by the Subscriber acting as principal or
agent, this Subscription Agreement has been duly authorized, executed and delivered by, and
constitutes a legal, valid and binding agreement of, the Subscriber. This Subscription
Agreement is enforceable in accordance with its terms against the Subscriber.
	 
	 	(i)	 	If the Subscriber is:

	 	(i)	 	a corporation, company or similar entity, the Subscriber is duly incorporated
or organized and is validly subsisting under the laws of its jurisdiction and has all
requisite legal and corporate power and authority to execute and deliver this
Subscription Agreement, to subscribe for the Securities as contemplated herein and to
carry out and perform its obligations under the terms of this Subscription Agreement;
	 
	 	(ii)	 	a partnership, syndicate or other form of unincorporated organization, the
Subscriber has the necessary legal capacity and authority to execute and deliver this
Subscription Agreement and to observe and perform its covenants and obligations
hereunder and has obtained all necessary approvals in respect thereof; or

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	 	(iii)	 	an individual, the Subscriber is of the full age of majority and is legally
competent to execute this Subscription Agreement and to observe and perform his or
her covenants and obligations hereunder.

	 	(j)	 	The Subscriber is not, with respect to the Company or any of its affiliates, a “control
person” as defined under the U.S. Securities Act and the purchase of the Securities hereunder
and the exercise or deemed exercise of the Securities will not result in the Subscriber
becoming a control person.
	 
	 	(k)	 	The Subscriber acknowledges that the Company and the Finder have each advised the Subscriber
to consult its own legal, financial, tax, investment, and other advisors with respect to

	 	(i)	 	the advisability of the Subscriber, as principal or agent, investing in the
Securities pursuant to the terms of this Subscription Agreement;
	 
	 	(ii)	 	the adequacy of the Purchase Agreement and the SEC Filings (as defined below)
for the purposes of the Subscriber;
	 
	 	(iii)	 	trading in the Securities and resale restrictions imposed by the securities
laws of the United States and in the jurisdiction in which the Subscriber resides, as
well as other applicable securities laws,

and the Subscriber has completed such consultation with such advisors to the extent that the
Subscriber believed necessary or appropriate in the circumstances. The Subscriber
acknowledges that (except as specifically set forth in the Purchase Agreement) no
representation has been made respecting the applicable hold periods imposed by the securities
laws or other resale restrictions applicable to such securities that restrict the ability of
the Subscriber (or others for whom it is contracting hereunder) to resell such securities,
that the Subscriber (or others for whom it is contracting hereunder) is solely responsible to
find out what these restrictions are and the Subscriber is solely responsible (and neither
the Company nor the Agent are in any way responsible) for compliance with applicable resale
restrictions and the Subscriber is aware that it (or beneficial persons for whom it is
contracting hereunder) may not be able to resell such securities except in accordance with
limited exemptions under the securities laws and other applicable securities laws.

	 	(l)	 	No person has made any written or oral representations:

	 	(i)	 	that any person will resell or repurchase the Securities;
	 
	 	(ii)	 	that any person will refund the Subscription Amount;
	 
	 	(iii)	 	as to the future price or value of the Securities; or
	 
	 	(iv)	 	that are inconsistent with the information contained in this Subscription
Agreement, the SEC Filings, or the Purchase Agreement.

	 	(m)	 	The Subscriber is aware that the purchase of the Securities involves a high degree of risk
and the Subscriber has such knowledge and experience that it is capable of evaluating the
merits and risks of an investment in the Securities, fully understands the

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restrictions on resale of the Securities, and is capable of bearing the economic risk of the
investment.

	 	(n)	 	The funds representing the Subscription Amount that will be advanced by the Subscriber to the
Company hereunder, as applicable, will not represent proceeds of crime for the purposes of
United States anti-terrorist legislation and the Subscriber acknowledges that the Company may
in the future be required by law to disclose the Subscriber’s name and other information
relating to this Subscription Agreement and the Subscriber’s subscription hereunder pursuant
to such legislation. To the best of its knowledge (a) none of the Subscription Amount to be
provided by the Subscriber (i) has been or will be derived from or related to any activity
that is deemed criminal under the law of the United States of America, or any other
jurisdiction, or (ii) is being tendered on behalf of a person or entity who has not been
identified to the Subscriber, and (b) it shall promptly notify the Company if the Subscriber
discovers that any of such representations ceases to be true, and to provide the Company with
appropriate information in connection therewith.
	 
	 	(o)	 	The Subscriber understands that

	 	(i)	 	No securities commission, agency, governmental authority, regulatory body,
stock exchange or other regulatory body or similar regulatory authority has reviewed or
passed on the merits of the Securities.
	 
	 	(ii)	 	The Securities shall be subject to statutory resale restrictions under the
securities laws of the jurisdiction in which the Subscriber resides and under other
applicable securities laws, and the Subscriber covenants that it will not resell the
Securities except in compliance with such laws and the Subscriber acknowledges that it
is solely responsible (and in no way is the Company responsible) for such compliance.
	 
	 	(iii)	 	The certificates representing the Securities and all certificates issued in
substitution or exchange thereof, will bear a legend substantially in the following
form:
	 
	 	 	 	THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES MAY BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) OUTSIDE THE UNITED STATES
IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (B) IN
COMPLIANCE WITH RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS, (C) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND
THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO CYTOCORE, INC. AN OPINION
OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO
CYTOCORE, INC.

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	 	 	 	HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE U.S. SECURITIES ACT.

	 	(iv)	 	The Company is relying on the representations, warranties and covenants
contained herein to determine the Subscriber’s eligibility to subscribe for the
Securities under applicable securities laws and the Subscriber agrees to indemnify the
Company and each of its directors, officers and agents against all losses, claims,
costs, expenses, damages or liabilities that any of them may suffer or incur as a
result of or arising from reliance thereon. The Subscriber undertakes to immediately
notify the Company of any change in any statement or other information relating to the
Subscriber set forth in such applicable Schedules which takes place prior to the
Closing.
	 
	 	(v)	 	The Subscriber is responsible for obtaining such legal, tax, investment, and
other advice as it considers appropriate in connection with the execution, delivery and
performance of this Subscription Agreement and the transactions contemplated under this
Subscription Agreement.
	 
	 	(vi)	 	THERE ARE SIGNIFICANT AND SUBSTANTIAL RISKS ASSOCIATED WITH THE PURCHASE OF THE
SECURITIES AND THE SUBSCRIBER MAY LOSE HIS, HER OR ITS ENTIRE INVESTMENT.

	 	(p)	 	The Company has made available to the Subscriber through the EDGAR system, true and complete
copies of the Company’s most recent Annual Report on Form 10-K for the fiscal year ended
December 31, 2006 (the “10-K”), and all other reports filed by the Company pursuant to the
Securities and Exchange Act of 1934 (the “1934 Act”) since the filing of the 10-K and prior to
the date hereof (collectively, the “SEC Filings”). The Subscriber, in consultation with its
legal, financial, tax, investment, and other advisors as the Subscriber has determined to be
appropriate, has reviewed the SEC Filings. The Subscriber’s decision to purchase the
Securities was based solely on the representations in this Subscription Agreement and the
Purchase Agreement, and no person or entity has made any representations or warranties except
as set forth herein or in the Purchase Agreement. The Subscriber has made such further inquiry
of the Company, its assets, business, operations, forecasts, management, and industry, as the
Subscriber, in consultation with its advisors, has determined to be appropriate in the
circumstances. Notwithstanding such inquiry, the Subscriber has made its decision to make any
investment herein solely based on this Subscription Agreement and the Purchase Agreement and
the information in the SEC Filings. Following such inquiry as the Subscriber has determined to
be appropriate, the Subscriber is not aware of any statement in this Subscription Agreement,
the SEC Filings, or the Purchase Agreement that is inaccurate or incomplete in any material
respect.
	 
	 	(q)	 	This Subscription Agreement requires the Subscriber to provide certain personal information
to the Company. The Company is collecting such information for the purposes of completing the
offering, which includes, without limitation, determining the Subscriber’s eligibility to
purchase the Securities under the securities laws, preparing and registering certificates
representing Securities to be issued to the Subscriber and completing filings required by any
stock exchange or securities regulatory authority.

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The Company may disclose the Subscriber’s personal information to: (a) stock exchanges
or securities regulatory authorities and (b) any of the other parties involved in the
offering, including legal counsel and may be included in record books in connection
with the offering. By executing this Subscription Agreement, the Subscriber is deemed
to be consenting to the foregoing collection, use and disclosure of the Subscriber’s
personal information. The Subscriber also consents to the filing of copies or
originals of this Subscription Agreement as may be required to be filed with any stock
exchange or securities regulatory authority in connection with the transactions
contemplated hereby. The Subscriber represents and warrants that it has the authority
to provide the consents and acknowledgements set out in this paragraph on behalf of
each disclosed principal.

	 	(r)	 	I hereby acknowledge that Bathgate Capital Partners LLC has acted as a Finder on
this offering. I acknowledge that the Finder has performed very limited due diligence on
the Company. I acknowledge that the Finder will receive the compensation described
below. The Finder has had access to the same information on the Company as the Investors
participating in the Offering have had.

ARTICLE 3 — COMPENSATION OF THE FINDER

3.1 The Finder

     The Finder, who will offer the Units as the Company’s agent, is:

Bathgate Capital Partners LLC 

5350 South Roslyn Street, Suite 400

Greenwood Village, Colorado 80111

(303) 694-0862

3.2 Finder Commission

     The Company will pay the Finder a commission of 7% of the gross proceeds of the offering,
which amount will be reduced to 4% for investments received by persons referred to the Finder by
the Company. The Company will also sell the Finder warrants to purchase shares of Common Stock, as
described below. The Finder may allow other registered broker-dealers to participate in the
offering; and will re-allow a portion of the compensation to such participating broker-dealers.

3.3 Finder’s Warrants

     The Company will sell to the Finder and its designees, for an aggregate purchase price of
$100, warrants to purchase shares of Common Stock (“Finder’s Warrants”). For each five Units sold
it will sell the Finder warrants to purchase one common share, exercisable at $2.25 per share. The
Finder’s Warrants will be exercisable for a three-year period commencing on the date they are
issued. The Finder’s Warrants will contain a “cashless exercise” provision, piggy-back registration
rights, and anti-dilution provisions. The shares into which the Finder’s Warrants are exercisable
are subject to the provisions of the Registration Rights Agreement.

3.4 Indemnification

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     The Company has agreed to indemnify, defend and hold harmless the Finder and participating
dealers, their agents, officers and managers, and each person who controls the Finder and
participating dealers within the meaning of either Section 15 of the U.S. Securities Act or Section
20 of the Securities Exchange Act of 1934, as amended, from and against any and all losses, claims,
damages, liabilities or expenses, joint or several (including reasonable legal and other expenses
incurred by each such person in connection with defending or investigating any such claim or
liability, whether or not resulting in any liability to such person) incurred under the U.S.
Securities Act, or state securities laws or the rules or regulations thereunder, or at common law
or otherwise based upon any untrue statement or alleged untrue statement of a material fact
contained in this Memorandum or any amendment hereto and any application or other document filed in
connection with the offering, or the failure to comply with the securities registration
requirements of the U.S. Securities Act or any applicable state law.

ARTICLE 4 — SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

     The representations, warranties and covenants of the Subscriber contained in this Subscription
Agreement shall survive the Closing and, notwithstanding such Closing or any investigation made by
or on behalf of the Company with respect thereto and notwithstanding any subsequent disposition by
the Subscriber of any of the Securities.

ARTICLE 5 — MISCELLANEOUS

5.1 FINRA Questionnaire

     If the Subscriber is a member of FINRA, a person associated with a member of FINRA, or an
affiliate of a member, please fill out the FINRA Questionnaire that is attached to this agreement
as Appendix B. For a definition of those terms, please refer to the Questionnaire.

5.2 Further Assurances

     Each of the parties hereto upon the request of each of the other parties hereto, whether
before or after the Closing, shall do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged and delivered all such further acts, deeds, documents, assignments,
transfers, conveyances, powers of attorney and assurances as may reasonably be necessary or
desirable to complete the transactions contemplated herein.

5.3 Costs and Expenses

     All costs and expenses (including, without limitation, the fees and disbursements of
legal counsel) incurred in connection with this Subscription Agreement and the transactions
herein contemplated shall be paid and borne by the party incurring such costs and expenses.

5.4 Governing Law; Venue

     The parties agree that this Agreement, and any disputes arising hereunder, will be governed by
and construed in accordance with the laws of the state of Illinois, without giving effect to any
conflict of laws principle to the contrary. The parties agree that venue for any dispute arising
under this Agreement will lie exclusively in the state or federal courts located in Chicago,
Illinois, and the parties irrevocably waive any right to raise forum non conveniens or any other
argument that Illinois is not the proper venue.

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5.5 Entire Agreement

     This Subscription Agreement, the Purchase Agreement, the Registration Rights Agreement, and
the Warrant, constitute the entire agreement between the parties with respect to the transactions
contemplated herein and cancel and supersede any prior understandings, agreements, negotiations and
discussions between the parties. There are no representations, warranties, terms, conditions,
undertakings or collateral agreements or understandings, express or implied, between the parties
hereto other than those expressly set forth in the Purchase Agreement or in any such agreement,
certificate, affidavit, statutory declaration or other document as aforesaid. This Subscription
Agreement may not be amended or modified in any respect except by written instrument executed by
each of the parties hereto.

5.6 Counterparts

     This Subscription Agreement may be executed in two or more counterparts, each of which shall
be deemed to be an original and all of which together shall constitute one and the same
Subscription Agreement. Counterparts may be delivered either in original or faxed form and the
parties adopt any signature received by a receiving fax machine as original signatures of the
parties.

5.7 Assignment

     This Subscription Agreement may not be assigned by either party except with the prior written
consent of the other parties hereto.

5.8 Enurement

     This Subscription Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, successors (including any successor by reason of the
amalgamation or merger of any party), administrators and permitted assigns.

5.9 Language

     It is the express wish of the Subscriber that the Subscription Agreement and any related
documentation be drawn up in English.

5.10 Acceptance

     The Subscriber acknowledges and agrees that this Subscription Agreement and the Subscriber’s
offer to purchase the Securities as described herein is not effective against the Company until and
unless accepted by the Company.

5.11 Manner in Which Title is To Be Held.

Place an “X” in one space below:

                             (a) Individual Ownership

                             (b) Community Property

                             (c) Joint Tenant with Right of Survivorship (both parties must sign)

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                             (d) Partnership

                             (e) Tenants in Common

                             (f) Corporation

                             (g) Trust

                             (h) Limited Liability Company:

                             (i) Other (Describe)

 

 

SIGNATURES ON NEXT PAGE

12

 

SIGNATURES

The Subscriber hereby represents he has read this entire Subscription Agreement.

Dated:                                                             

 

Please print above the exact name(s) in which the Securities are to be held.

INDIVIDUAL

	 	 	 	 	 	 	 
	 	 	 	 	Address to Which Correspondence
	 	 	 	 	Should be Directed
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Signature (Individual)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	Signature (All record holders should sign)	 	 	 	City, State and Zip Code
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Name(s) Typed or Printed	 	 	 	Tax Identification or Social Security Number
	 
	 	 	 	 	 	 
	 

	 	 
	 	(                    )
	 	 
	 

	 	 	 	 	 	 
	Name(s) Typed or Printed	 	 	 	Telephone Number
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	Date of Birth	 	 	 	State of Residence (if different from above)

COPY OF DRIVER’S LICENSE OR PASSAPORT REQUIRED IF NON-BCP CUSTOMER

Customer Identification Program Notice: To help the government fight the funding of terrorism and
money laundering activities, federal law requires financial institutions to obtain, verify, and
record information that identifies each client. This means that we will require you to provide the
following information: name, date of birth, address, identification number, and a piece of
documentary identification. If you are an individual and do not have an account with Bathgate
Capital Partners please include a copy of your driver’s license or passport. If you are an entity,
please provide a copy of your articles of incorporation, trust document, or other identifying
document. If you are unable to produce the information required, we may not be able to complete
your investment transaction.

13

 

CORPORATION, PARTNERSHIP, TRUST, OR OTHER ENTITY

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Address to Which Correspondence Should be Directed
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Name of Entity	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 
	 	 
	 	 	 	 
	 	 	 	 	 	 	 
	 	 	*Signature	 	 	 	City, State and Zip Code
	 
	 	 	 	 	 	 	 	 
	Its:

	 	 
	 	 
	 	 
	 	 
	 	 	 	 	 	 	 
	 	 	Title	 	 	 	Tax Identification or Social Security Number
	 
	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	(                 )
	 	 
	 

	 	 
	 	 	 	 	 	 
	Name Typed or Printed	 	 	 	 	 	Telephone Number
	 
	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 

 

			
	*	 	If Securities are being subscribed for by an entity, the Certificate of Signatory must also be
completed.

CERTIFICATE OF SIGNATORY

To be completed if Securities are being subscribed for by an entity.

     I,                                                              , am the
                                                                                 of
                                                                                                     (the “Entity”).

     I certify that I am empowered and duly authorized by the Entity to execute and carry out the
terms of the Subscription Agreement and Letter of Investment Intent and to purchase and hold the
Securities, and certify that the Subscription Agreement and Letter of Investment Intent has been
duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of
the Entity.

     IN WITNESS WHEREOF, I have hereto set may hand this                day of                  , 2008.

                                                                                

Signature

14

 

COPY OF DRIVER’S LICENSE OR PASSAPORT REQUIRED IF NON-BCP CUSTOMER

Customer Identification Program Notice: To help the government fight the funding of terrorism and
money laundering activities, federal law requires financial institutions to obtain, verify, and
record information that identifies each client. This means that we will require you to provide the
following information: name, date of birth, address, identification number, and a piece of
documentary identification. If you are an individual and do not have an account with Bathgate
Capital Partners (“BCP”), please include a copy of your driver’s license or passport. If you are an
entity, please provide a copy of your articles of incorporation, trust document, or other
identifying document. If you are unable to produce the information required, we may not be able to
complete your investment transaction.

15

 

ACCEPTANCE BY THE COMPANY

     The Company hereby accepts the subscription for Securities as set forth on the face page of
this Subscription Agreement on the terms and conditions contained in the Subscription Agreement
this ___day of                     , 2008.

	 	 	 	 	 
	 	CYTOCORE, INC.

 	 
	 	By:  	 	 
	 	 	 	 
	 	 	 	 

16

 

	 	 	 	 	 

APPENDIX A

CATEGORIES OF ACCREDITED INVESTOR

INITIAL YOUR CATEGORY 

	 	 	 	 	 
	Category I

	 	___
	 	The Subscriber is an individual (not a partnership, Company, etc.) whose individual
net worth, or joint net worth with the Subscriber’s spouse, presently exceeds $1,000,000.
	 
	 	 	 	 
	 

	 	 	 	Explanation. In calculation of net worth the Subscriber may include equity in
personal property and real estate, including the Subscriber’s principal
residence, cash, short-term investments, stocks and securities. Equity in
personal property and real estate should be based on the fair market value of
such property less debt secured by such property.
	 
	 	 	 	 
	Category II

	 	 	 	The Subscriber is an individual (not a partnership, Company, etc.) who had an
individual net income in excess of $200,000 in each of the last two years, or joint income with his/her
spouse in excess of $300,000 in each of the last two years, and has a reasonable expectation of reaching
the same income level in the current year
	 
	 	 	 	 
	Category III

	 	 	 	The Subscriber is an executive officer or director of Cytocore, Inc.
	 
	 	 	 	 
	Category IV

	 	 	 	The Subscriber is a bank; savings and loan; insurance company; registered broker
or dealer; registered investment company; registered business development company; licensed small
business investment company (“SBIC”); or employee benefit plan within the meaning of Title I of ERISA
whose plan fiduciary is either a bank, savings and loan, insurance company or registered investment
advisor or whose total assets exceed $5,000,000; or a self-directed employee benefit plan with
investment decisions made solely by persons that are accredited investors.
	 
	 	 	 	 
	Category V

	 	 	 	The Subscriber is a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940
	 
	 	 	 	 
	Category VII

	 	 	 	The Subscriber is an entity with total assets in
excess of $5,000,000 which was not
formed for the purpose of investing in the Securities and which is a Company; a partnership;
a business
trust; or a tax-exempt organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended.
	 
	 	 	 	 
	Category VII

	 	 	 	The Subscriber is a trustee for a trust that is revocable by the grantor at any time
(including an IRA) and the grantor qualifies under either Category I or Category II above. A copy
of the declaration of trust or trust agreement and a representation as to the net worth or income
of the grantor is enclosed.
	 
	 	 	 	 
	Category VIII

	 	 	 	The Subscriber is an entity all the equity owners of which are “accredited
investors” within one or more of the above categories, other than Category IV or Category V.
	 
	 	 	 	 
	Category IX

	 	 	 	The Subscriber is a trust with total assets in excess of $5,000,000, not formed for

17

 

	 	 	 	 	 
	 

	 	 	 	the specific purpose of acquiring the Securities, whose purchase is directed by a person who has
such knowledge and experience in financial and business matters that he is capable of evaluating
the merits and risks of the prospective investment.

18

 

APPENDIX B

FINRA QUESTIONNAIRE

     Are you a member of FINRA,1 a person associated with a member2
of FINRA, or an affiliate of a member?

Yes o     No o

If “Yes,” please list any members of FINRA with whom you are associated or affiliated.

	 	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	 

     If you are a Company, are any of your officers, directors or 5% shareholders a member
of FINRA, a person associated with a member of FINRA, or an affiliate of a member?

Yes o     No o

If “Yes,” please list the name of the respective officer, director, or 5% shareholder
and any members of FINRA with whom they are associated or affiliated.

	 	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	 
	 

	 	 
	 	 

 

			
	1	 	FINRA defines a “member” as being either any broker or dealer admitted to membership in FINRA
or any officer or partner of such a member, or the executive representative of such a member
or the substitute for such representative.
	 
	2	 	FINRA defines a “person associated with a member” as being every sole proprietor, general or
limited partner, officer, director or branch manager or such member, or any natural person
occupying a similar status or performing similar functions, or any natural person engaged in
the investment banking or securities business who is directly or indirectly controlling or
controlled by such member (for example, any employee), whether or not any such person is
registered or exempt from registration without FINRA. Thus, “person associated with a member”
includes a sole proprietor, general or limited partner, officer, director or branch manager or
an organization of any

19

 

			
	 	 	kind (whether a Company, partnership or other business entity) which itself is a “member” or a
“person associated with a member.” In addition, an organization of any kind is a “person associated
with a member” if its sole proprietor or anyone of its general or limited partners, officers,
director or branch managers is a “member” or “person associated with a member.”

20

 

APPENDIX C

BCP DISCLOSURES

SHORT FORM PRIVACY NOTICE FOR BATHGATE CAPITAL PARTNERS

DATE OF NOTICE: January 1, 2008

THIS IS A “SHORT FORM” PRIVACY NOTICE FOR “CONSUMERS” ONLY.

This Privacy Notice is being provided to you the consumer under a newly-adopted Federal privacy law
and regulations designed to protect you from unauthorized use of your Private Information by
Non-Affiliated Third Parties. If you have provided the Private Information to us as a consumer we
are required to notify you only if we intend to disclose your information to a Non-Affiliated Third
Party.

UNDER FEDERAL LAW YOU ARE ENTITLED TO RECEIVE MORE DETAILED INFORMATION FROM US SHOULD YOU SO
DESIRE AND TO “OPT OUT” OF OUR DISCLOSURE OF PRIVATE INFORMATION TO THIRD PARTIES.

TO OBTAIN THIS INFORMATION, PLEASE EITHER:

	 	•	 	TELEPHONE US AT THE FOLLOWING TOLL FREE NUMBER: 800-833-0862
	 
	 	•	 	CONTACT US THROUGH E-MAIL AT: abauer@bathgatepartners.com
	 
	 	•	 	MAIL A COPY OF THIS NOTICE AS FOLLOWS:

     “PLEASE SEND ME FURTHER INFORMATION”

Andrea Bauer

Bathgate Capital Partners LLC

5350 S. Roslyn St. Suite 400

Greenwood Village, CO 80111

BATHGATE CAPITAL PARTNERS BUSINESS CONTINUITY PLANNING

Bathgate Capital Partners LLC has developed a Business Continuity Plan on how we will respond to
events that significantly disrupt our business. Since the timing and impact of disasters and
disruptions is unpredictable, we will have to be flexible in responding to actual events as they
occur. With that in mind, we are providing you with this information on our business continuity
plan.

Contacting Us — If after a significant business disruption you cannot contact us as you usually
do at 303-694-0862, please go to our web site at www.bathgatepartners.com.

Our Business Continuity Plan — We plan to quickly recover and resume business operations after a
significant business disruption and respond by safeguarding our employees and property, making a
financial and operational assessment, protecting the firm’s books and records, and allowing our
customers to transact business. In short, our business continuity plan is designed to permit our
firm to resume operations as quickly as possible, given the scope and severity of the significant
business disruption. Our business continuity plan addresses: data back up and recovery; all
mission critical systems; financial and operational assessments; alternative communications with
customers, employees, and regulators; alternate physical location of employees; critical supplier,
contractor, bank and counter-party impact; regulatory reporting; and assuring our customers prompt
access to their funds and securities if we are unable to continue our business.

Varying Disruptions — Significant business disruptions can vary in their scope, such as only our
firm, a single building housing our firm, the business district where our firm is located, the city
where we are located, or the whole region. Within each of these areas, the severity of the
disruption can also vary from minimal to severe. In a disruption to only our firm or a building
housing our firm, we will

21

 

transfer our operations to a local site when needed and expect to recover and resume business
within an hour. In a disruption affecting our business district, city, or region, we will transfer
our operations to a site outside of the affected area, and recover and resume business within a few
hours. In either situation, we plan to continue in business, transfer operations to our clearing
firm if necessary, and notify you through our web site [www.bathgatepartners.com] or a
telephone recording from our main line, [303-694-0862] how to contact us. If the significant
business disruption is so severe that it prevents us from remaining in business, we will assure our
customer’s prompt access to their funds and securities.

For more information — If you have questions about our business continuity planning, you
can contact us at (303) 694-0862 or send inquiries to our main office: 5350 S. Roslyn St.
Suite 400 Greenwood Village, CO 80111.

22exv10w55

 

Exhibit 10.55

PURCHASE AGREEMENT

     THIS PURCHASE AGREEMENT (“Agreement”) is made as of the      day of           ,
2008, by and between Cytocore, Inc., a Delaware corporation (the “Company”), and the
Investor set forth on the signature page affixed hereto (an “Investor”).

Recitals

     A. The Company and the Investor are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by the provisions of Regulation D
(“Regulation D”), as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under
the Securities Act of 1933, as amended (the “Securities Act”); and

     B. The Investor wishes to purchase from the Company, and the Company wishes to sell and issue
to the Investors, upon the terms and conditions stated in this Agreement and the attached Summary
of Terms dated January 24, 2008, Units, each Unit comprising (i) 2 shares (the “Shares”) of the
Company’s Common Stock, par value $0.00 1 per share (together with any Securities into which such
shares may be reclassified the “Common Stock”), and (ii) one warrant to purchase one share of
Common Stock (subject to adjustment) at an exercise price of $2.00 per share (subject to
adjustment) in the form attached hereto as Exhibit A (the “Warrants”). The number of Units
the Investor is purchasing from the Company is set forth on the Subscription Agreement executed by
the Investor and delivered with this Agreement (the “Subscription Agreement”). The purchase price
of the Units is $4.00 per Unit.

     C. Contemporaneous with the sale of the Units, the parties hereto will execute and deliver a
Registration Rights Agreement, in the form attached hereto as Exhibit B (the “Registration
Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder,
and applicable state securities laws. Among other things, the Registration Rights Agreement
provides (i) that the Company shall file a registration statement under the Securities Act (the
“Registration Statement”) registering the shares into which the Warrants are exercisable as soon as
possible after the Final Closing, but in no case later than 120 days after the Final Closing; (ii)
the Company will use it best efforts to cause the Registration Statement to be declared effective
as soon as possible after it is filed; and (iii) if the Company fails to file the Registration
Statement within that time frame, or if it does not use its reasonable best efforts to have the
Registration Statement declared effective as soon as possible after it is filed, it will issue each
warrant holder Additional Warrants equivalent to two Additional Warrants for each four Warrants
owned by the Holder. The Additional Warrants will be substantially similar to the Warrants, will be
exercisable for three years at an exercise price of the lower of the market price of the Common
Stock on the date the Registration Statement should have been filed (or should have been declared
effective) or $2.00 per share.

     D. This Agreement is one of several purchase agreements containing the same terms
entered into by the Company and investors (the Investor executing this Agreement and
investors

 

 

executing other Agreements are referred to herein as the “Investors”), pursuant to the offering
(the “Offering”) by the Company of the Units through Bathgate Capital Partners, LLC (the
“Finder”).

     In consideration of the mutual promises made herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

     1. Definitions. In addition to those terms defined above and elsewhere in this
Agreement, for the purposes of this Agreement, the following terms shall have the
meanings set forth below:

          “Affiliate” means, with respect to any Person, any other Person which directly or
indirectly through one or more intermediaries Controls, is controlled by, or is under common
control with, such Person.

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

          “Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

          “Confidential Information” means trade secrets, confidential information and
know-how (including but not limited to ideas, formulae, compositions, processes, procedures and
techniques, research and development information, computer program code, performance
specifications, support documentation, drawings, specifications, designs, business and
marketing plans, and customer and supplier lists and related information).

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

          “Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise), business, or
prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the
Company to perform its obligations under the Transaction Documents.

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

          “Purchase Price” means $4.00 per Unit.

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

-2-

 

          “SEC Filings” has the meaning set forth in Section 6.6.

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

          “Subsidiary” of any Person means another Person, an amount of the voting Securities,
other voting ownership or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or indirectly by such
first Person.

          “Transaction Documents” means this Agreement, the Warrants, the Subscription
Agreement, and the Registration Rights Agreement.

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

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

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

     2. Purchase and Sale of the Units. Subject to the terms and conditions of
this Agreement, on the Closing Date (as defined below), each of the Investors shall purchase, and
the Company shall sell and issue to each Investor, the Units in the respective amounts set forth
opposite the Investor’s name on the signature page of the Subscription Agreements in exchange for
the Purchase Price.

     3. Escrow Account. The proceeds from the sale of at least the first 250,000
Units ($1,000,000) in the Offering shall be promptly deposited in an escrow account (“Escrow
Account”) entitled “Cytocore, Inc. Escrow Account” with Front Range Bank (the “Escrow Agent”)
pursuant to an agreement between the Escrow Agent, the Finder, and the Company. The proceeds from
any sale of Units after the First Closing (hereinafter defined) may continue to be deposited to the
Escrow Account.

     4. Subscription Acceptance. The acceptance of subscriptions for Units tendered by
Investors will be conditional upon (i) the tendering of Subscriptions and receipt of payment
for such Subscriptions for at least 250,000 Units (“Minimum Subscriptions”) by February 29, 2008
(which date may be extended by the Company and the Finder) to March 31, 2008)(the “Escrow Date”)
and (ii) the receipt, on the First Closing Date, of the net proceeds from subscribers for the
Minimum Subscriptions (“Minimum Payments”) less the Finder’s Fees due the Finder as described
below. If subscriptions are received for more than 1,750,000 Units, the Company may (i) accept one
subscription over another (ii) accept subscriptions for up to an additional 125,000 Units, and/or
(iii) allocate available Units among subscribers as it deems appropriate. If the Minimum
Subscriptions and/or Minimum Payments are not received by the Escrow Date, all proceeds will be
returned to Investors, without deduction and without interest.

-3-

 

     5. Payment. Payment for Units sold shall be made by the Escrow Agent to the
Company at such place and at such time and date as may be fixed by agreement between the Company
and the Finder, which in no case shall be later than five (5) business days after the Escrow Date.
The delivery of the Units against payment therefore is defined as the “Closing” and the time and
date thereof are defined as the “Closing Date.” The first Closing will be held when the Minimum
Payments are received (“First Closing”). It is anticipated that there may be additional Closings as
additional funds are received, and the final Closing will be referred to as the “Final Closing.”
The Final Closing could also be the First Closing in the event that no Units are sold after the
First Closing. As soon as practicable after each Closing Date, the Company shall deliver by mail to
each Investor a certificate for the Shares and Warrants that have been purchased and which contains
a legend conforming to the requirements of Rule 502(d)(3) under the Act.

     6. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investor that, except as set forth in the SEC Filings:

          6.1 Organization, Good Standing and Qualification. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power and authority to
carry on its business as now conducted and to own its properties. Each of the Company and its
Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of property makes such
qualification or leasing necessary unless the failure to so qualify has not and could not
reasonably be expected to have a Material Adverse Effect. The Company’s Subsidiaries are listed in
the SEC Filings.

          6.2 Authorization. The Company has full power and authority and, except for the
filing of such securities filings relating to the offer, sale and issuance of the Securities
with the relevant authorities, has taken all requisite action on the part of the Company, its
officers, directors and stockholders necessary for (i) the authorization, execution and delivery of
the Transaction Documents, (ii) the authorization of the performance of all obligations of the
Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for
issuance) and delivery of the Securities. The Transaction Documents constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws
of general applicability, relating to or affecting creditors’ rights generally.

          6.3 Capitalization. The capitalization of the Company is described in the SEC
Filings. All of the issued and outstanding shares of the Company’s capital stock have been
duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights
and were issued in full compliance with applicable state and federal securities law and any rights
of third parties. All of the issued and outstanding shares of capital stock of each Subsidiary have
been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive
rights, were issued in full compliance with applicable state and federal securities law and any
rights of third parties and are owned by the Company, beneficially and of record, subject to no
lien, encumbrance or other adverse claim. No Person is entitled to pre-emptive or similar statutory
or contractual rights with respect to any securities of the Company. Except as described in the SEC
Filings, there are no outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of

-4-

 

any character under which the Company or any of its Subsidiaries is or may be obligated to issue
any equity securities of any kind and except as contemplated by this Agreement, and neither the
Company nor any of its Subsidiaries is currently in negotiations for the issuance of any equity
securities of any kind. Except as described in the SEC Filings and except for the Registration
Rights Agreement, there are no voting agreements, buy-sell agreements, option or right of first
purchase agreements or other agreements of any kind among the Company and any of the
securityholders of the Company relating to the Securities of the Company held by them. Except as
described in the SEC Filings and except as provided in the Registration Rights Agreement, no Person
has the right to require the Company to register any securities of the Company under the 1933 Act,
whether on a demand basis or in connection with the registration of securities of the Company for
its own account or for the account of any other Person.

     The issuance and sale of the Securities hereunder will not obligate the Company to issue
shares of Common Stock or other securities to any other Person (other than the Investors and the
Finder) and will not result in the adjustment of the exercise, conversion, exchange or reset
price of any outstanding security.

     Except as described in the SEC Filings, the Company does not have outstanding stockholder
purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right
to purchase any equity interest in the Company upon the occurrence of certain events.

          6.4 Valid Issuance. The Securities have been duly and validly authorized and,
when issued and paid for pursuant to this Agreement, will be validly issued, fully paid and
nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those
created by the Investors), except for restrictions on transfer set forth in the Transaction
Documents or imposed by applicable securities laws. The Warrants have been duly and validly
authorized, and when issued will be valid and enforceable under their terms. Upon the due exercise
of the Warrants, the Warrant Shares will be validly issued, fully paid and non-assessable free and
clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the
Transaction Documents or imposed by applicable securities laws and except for those created by the
Investors. The Company has reserved a sufficient number of shares of Common Stock for issuance upon
the exercise of the Warrants, free and clear of all encumbrances and restrictions, except for
restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities
laws and except for those created by the Investors.

          6.5 Consents. The execution, delivery and performance by the Company of the
Transaction Documents and the offer, issuance and sale of the Securities require no consent
of, action by or in respect of, or filing with, any Person, governmental body, agency, or official
other than filings that have been made pursuant to applicable state securities laws and post-sale
filings pursuant to applicable state and federal securities laws, which the Company undertakes to
file within the applicable time periods. Subject to the accuracy of the representations and
warranties of each Investor set forth in Subscription Agreements, the Company has taken all action
necessary to exempt (i) the issuance and sale of the Securities, (ii) the issuance of the Warrant
Shares upon due exercise of the Warrants, and (iii) the other transactions contemplated by the
Transaction Documents from the provisions of any stockholder rights plan or other “poison pill”
arrangement, any anti-takeover, business combination or control share law or statute binding on the
Company or to which the

-5-

 

Company or any of its assets and properties may be subject and any provision of the Company’s
Certificate of Incorporation or By-laws that is or could reasonably be expected to become
applicable to the Investors as a result of the transactions contemplated hereby, including without
limitation, the issuance of the Securities and the ownership, disposition or voting of the
Securities by the Investors or the exercise of any right granted to the Investors pursuant to this
Agreement or the other Transaction Documents.

          6.6 Delivery of SEC Filings; Business. The Company has made available to the
Investors through the EDGAR system, true and complete copies of the Company’s most recent
Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (the “10-K”), and all other
reports filed by the Company pursuant to the 1934 Act since the filing of the 10-K and prior to the
date hereof (collectively, the “SEC Filings”). The SEC Filings are the only filings required of the
Company pursuant to the 1934 Act for such period. The Company and its Subsidiaries are engaged in
all material respects only in the business described in the SEC Filings and the SEC Filings contain
a complete and accurate description in all material respects of the business of the Company and its
Subsidiaries, taken as a whole.

          6.7 Use of Proceeds. The net proceeds of the sale of the Units hereunder shall be
used by the Company for working capital and general corporate purposes.

          6.8 No Material Adverse Change. Since September 30, 2007, except as identified
and described in the SEC Filings, there has not been:

               (i) any change in the consolidated assets, liabilities, financial condition or operating
results of the Company from that reflected in the financial statements included in the Company’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, except for changes in the
ordinary course of business which have not had and could not reasonably be expected to have a
Material Adverse Effect, individually or in the aggregate;

               (ii) any declaration or payment of any dividend, or any authorization or payment of any
distribution, on any of the capital stock of the Company, or any redemption or repurchase of any
securities of the Company;

               (iii) any material damage, destruction or loss, whether or not covered by insurance to any
assets or properties of the Company or its Subsidiaries;

               (iv) any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a
material right or of a material debt owed to it;

               (v) any satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company or a Subsidiary, except in the ordinary course of business and which is
not material to the assets, properties, financial condition, operating results or business of the
Company and its Subsidiaries taken as a whole (as such business is presently conducted and as it
is proposed to be conducted);

               (vi) any change or amendment to the Company’s Certificate of Incorporation or Bylaws, or
material change to any material contract or arrangement by which the

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Company or any Subsidiary is bound or to which any of their respective assets or properties
is subject;

               (vii) any material labor difficulties or labor union organizing activities with respect to
employees of the Company or any Subsidiary;

               (viii) any material transaction entered into by the Company or a Subsidiary other than in the
ordinary course of business;

               (ix) the loss of the services of any key employee, or material change in the composition or
duties of the senior management of the Company or any Subsidiary;

               (x) the loss or threatened loss of any customer which has had or could reasonably be
expected to have a Material Adverse Effect; or

               (xi) any other event or condition of any character that has had or could
reasonably be expected to have a Material Adverse Effect.

          6.9
SEC Filings. At the time of filing thereof, the SEC Filings complied as to
form in all material respects with the requirements of the 1934 Act and did not contain any
untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in the light of the circumstances under which they were made,
not misleading.

          6.10 No Conflict, Breach, Violation or Default. The execution, delivery and
performance of the Transaction Documents by the Company and the issuance and sale of the
Securities will not conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under (i) the Company’s Certificate of Incorporation or the
Company’s Bylaws, both as in effect on the date hereof (true and complete copies of which have been
made available to the Investors through the EDGAR system), or (ii)(a) any statute, rule, regulation
or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction
over the Company, any Subsidiary or any of their respective assets or properties, or (b) any
agreement or instrument to which the Company or any Subsidiary is a party or by which the Company
or a Subsidiary is bound or to which any of their respective assets or properties is subject.

          6.11 Tax Matters. Except as described in the SEC Filings: the Company and each
Subsidiary has timely prepared and filed all tax returns required to have been filed by the
Company or such Subsidiary with all appropriate governmental agencies and timely paid all taxes
shown thereon or otherwise owed by it; the charges, accruals and reserves on the books of the
Company in respect of taxes for all fiscal periods are adequate in all material respects, and there
are no material unpaid assessments against the Company or any Subsidiary nor, to the Company’s
Knowledge, any basis for the assessment of any additional taxes, penalties or interest for any
fiscal period or audits by any federal, state or local taxing authority except for any assessment
which is not material to the Company and its Subsidiaries, taken as a whole; all taxes and other
assessments and levies that the Company or any Subsidiary is required to withhold or to collect for
payment have been duly withheld and collected and paid to the proper governmental entity or third
party when due; and there

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are no tax liens or claims pending or, to the Company’s Knowledge, threatened against the Company
or any Subsidiary or any of their respective assets or property. There are no outstanding tax
sharing agreements or other such arrangements between the Company and any Subsidiary or other
corporation or entity.

          6.12 Title to Properties. Except as disclosed in the SEC Filings, the Company and each
Subsidiary has good and marketable title to all real properties and all other properties and assets
owned by it, in each case free from liens, encumbrances and defects that would materially affect
the value thereof or materially interfere with the use made or currently planned to be made thereof
by them; and except as disclosed in the SEC Filings, the Company and each Subsidiary holds any
leased real or personal property under valid and enforceable leases with no exceptions that would
materially interfere with the use made or currently planned to be made thereof by them.

          6.13 Certificates, Authorities and Permits. The Company and each Subsidiary possess
adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or such Subsidiary,
could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

          6.14 Labor Matters.

               (a) The Company is not a party to or bound by any collective bargaining agreements or other
agreements with labor organizations. The Company has not violated in any material respect any
laws, regulations, orders or contract terms, affecting the collective bargaining rights of
employees, labor organizations or any laws, regulations or orders affecting employment
discrimination, equal opportunity employment, or employees’ health, safety, welfare, wages and
hours.

               (b) (i) There are no labor disputes existing, or to the Company’s Knowledge, threatened,
involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other
disruptions of or by the Company’s employees, (ii) there are no unfair labor practices or petitions
for election pending or, to the Company’s Knowledge, threatened before the National Labor Relations
Board or any other federal, state or local labor commission relating to the Company’s employees,
(iii) no demand for recognition or certification heretofore made by any labor organization or group
of employees is pending with respect to the Company and (iv) to the Company’s Knowledge, the
Company enjoys good labor and employee relations with its employees and labor organizations.

               (c) The Company is in compliance in all material respects with all applicable laws respecting employment (including laws relating to classification of employees
and independent contractors) and employment practices, terms and conditions of employment, wages
and hours, and immigration and naturalization. There no claims are pending against the Company
before the Equal Employment Opportunity Commission or any other administrative body or in any court
asserting any violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination Act

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of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or
ordinance barring discrimination in employment.

               (d) Except as disclosed in the SEC Filings, the Company is not a party to, or bound by, any
employment or other contract or agreement that contains any severance, termination pay or change
of control liability or obligation, including, without limitation, any “excess parachute payment,”
as defined in Section 2806(b) of the Internal Revenue Code.

               (e) Each of the Company’s employees is a Person who is either a United States citizen or a
permanent resident entitled to work in the United States. To the Company’s Knowledge, the Company
has no liability for the improper classification by the Company of such employees as independent
contractors or leased employees prior to the Closing.

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

          6.16 Litigation. Except as disclosed in the SEC Filings, there are no pending actions,
suits or proceedings against or affecting the Company, its Subsidiaries or any of its or their
properties; and to the Company’s Knowledge, no such actions, suits or proceedings are threatened or
contemplated.

          6.17 Financial Statements. The financial statements included in each SEC Filing
present fairly, in all material respects, the consolidated financial position of the Company as of
the dates shown and its consolidated results of operations and cash flows for the periods shown,
and such financial statements have been prepared in conformity with United States generally
accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted
by Form 10-Q under the 1934 Act). Except as set forth in the financial statements of the Company
included in the SEC Filings filed prior to the date hereof, neither the Company nor any of its
Subsidiaries has incurred any liabilities, contingent or otherwise, except those incurred in the
ordinary course of business, consistent (as to amount and nature) with past practices since the
date of such financial statements, none of which, individually or in the aggregate, have had or
could reasonably be expected to have a Material Adverse Effect.

          6.18 Insurance Coverage. The Company and each Subsidiary maintains in full force and
effect insurance coverage that is customary for comparably situated companies for the business
being conducted and properties owned or leased by the Company and each Subsidiary, and

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the Company reasonably believes such insurance coverage to be adequate against all
liabilities, claims and risks against which it is customary for comparably situated companies
to insure.

          6.19 Brokers and Finders. Except for the Finder, no Person will have, as a result of
the transactions contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company, any Subsidiary or an Investor for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf
of the Company.

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

          6.21 No Integrated Offering. Neither the Company nor any of its Affiliates, nor any
Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any
Company security or solicited any offers to buy any security, under circumstances that would
adversely affect reliance by the Company on Section 4(2) for the exemption from registration for
the transactions contemplated hereby or would require registration of the Securities under the 1933
Act.

          6.22 Private Placement. The offer and sale of the Securities to the Investors as
contemplated hereby is exempt from the registration requirements of the 1933 Act.

          6.23 Questionable Payments. Neither the Company nor any of its Subsidiaries nor, to
the Company’s Knowledge, any of their respective current or former stockholders, directors,
officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has
on behalf of the Company or any Subsidiary or in connection with their respective businesses: (a)
used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity; (b) made any direct or indirect unlawful payments to any
governmental officials or employees from corporate funds; (c) established or maintained any
unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious
entries on the books and records of the Company or any Subsidiary; or (e) made any unlawful bribe,
rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

          6.24 Transactions with Affiliates. Except as disclosed in the SEC Filings, none of
the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of
the Company is presently a party to any transaction with the Company or any Subsidiary (other than
as holders of stock options and/or warrants, and for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the Company’s
Knowledge, any entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.

          6.25 Internal Controls. Except as described in the SEC Filings: the Company is in
material compliance with the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to
the Company; the Company and the Subsidiaries maintain a system of internal accounting controls

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sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences; and, the Company has established disclosure controls and procedures (as defined in
1934 Act Rules 13a-14 and 15d-14) for the Company and designed such disclosure controls and
procedures to ensure that material information relating to the Company, including the Subsidiaries,
is made known to the certifying officers by others within those entities, particularly during the
period in which the Company’s most recently filed period report under the 1934 Act, as the case may
be, is being prepared. The Company maintains and will continue to maintain a standard system of
accounting established and administered in accordance with GAAP and the applicable requirements of
the 1934 Act.

          6.26 Disclosures. Neither the Company nor any Person acting on its behalf has
provided the Investors or their agents or counsel with any information that constitutes or
might constitute material, non-public information. The written materials delivered to the
Investors in connection with the transactions contemplated by the Transaction Documents do not
contain any untrue statement of a material fact or omit to state a material fact necessary in
order to make the statements contained therein, in light of the circumstances under which they
were made, not misleading.

     7. Representations and Warranties of the Investors. The Investor hereby
represents and warrants to the Company that representations and warranties it has made in the
Subscription Agreement are accurate. Those representations are incorporated by reference herein.

     8. Conditions to Closing.

          8.1 Conditions to the Investor’ Obligations. The obligation of the Investor to
purchase the Units at the Closing is subject to the fulfillment to such Investor’s
satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be
waived by such Investor (as to itself only):

               (a) The representations and warranties made by the Company in Section 6
hereof qualified as to materiality shall be true and correct at all times prior to and on the
Closing Date, except to the extent any such representation or warranty expressly speaks as of an
earlier date, in which case such representation or warranty shall be true and correct as of such
earlier date, and, the representations and warranties made by the Company in Section 6 hereof not
qualified as to materiality shall be true and correct in all material respects at all times prior
to and on the Closing Date, except to the extent any such representation or warranty expressly
speaks as of an earlier date, in which case such representation or warranty shall be true and
correct in all material respects as of such earlier date. The Company shall have performed in all
material respects all obligations and conditions herein required to be performed or observed by it
on or prior to the Closing Date.

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               (b) The Company shall have obtained any and all consents, permits, approvals, registrations
and waivers necessary or appropriate for consummation of the purchase and sale of the Shares and
the Warrants and the consummation of the other transactions contemplated by the Transaction
Documents to be consummated on or prior to the Closing Date, all of which shall be in full force
and effect.

               (c) The Company shall have executed and delivered the Registration Rights Agreement.

               (d) No judgment, writ, order, injunction, award or decree of or by any court, or judge,
justice or magistrate, including any bankruptcy court or judge, or any order of or by any
governmental authority, shall have been issued, and no action or proceeding shall have been
instituted by any governmental authority, enjoining or preventing the consummation of the
transactions contemplated hereby or in the other Transaction Documents.

               (e) The Company shall have delivered a Certificate, executed on behalf of the Company by its
Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying to
the fulfillment of the conditions specified in subsections (a), (b), (d), (e) and (g) of this
Section 8.1.

               (f) The Company shall have delivered a Certificate, executed on behalf of the Company by its
Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board of
Directors of the Company approving the transactions contemplated by this Agreement and the other
Transaction Documents, and the issuance of the Securities, certifying the current versions of the
Certificate of Incorporation and Bylaws of the Company and certifying as to the signatures and
authority of Persons signing the Transaction Documents and related documents on behalf of the
Company.

               (g) No stop order or suspension of trading shall have been imposed by the SEC or any other
governmental or regulatory body with respect to public trading in the Common Stock.

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

               (a) The representations and warranties made by the Investors in the Subscription Agreements
shall be true and correct in all material respects when made, and shall be true and correct in all
material respects on the Closing Date with the same force and effect as if they had been made on
and as of said date. The Investors shall have performed in all material respects all obligations
and conditions herein required to be performed or observed by them on or prior to the Closing Date.

               (b) The Investors shall have executed and delivered the Registration Rights Agreement.

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               (c) The Investors shall have delivered the Purchase Price to the Company.

          8.3 Termination of Obligations to Effect Closing; Effects. The obligations of the
Company, on the one hand, and the Investors, on the other hand, to effect the Closing shall
terminate as follows:

               (i) Upon the mutual written consent of the Company and the Investors;

               (ii) By the Company if any of the conditions set forth in Section 8.2 shall have become
incapable of fulfillment, and shall not have been waived by the Company; or

               (iii) By an Investor (with respect to itself only) if any of the conditions set
forth in Section 6.1 shall have become incapable of fulfillment, and shall not have been
waived by the Investor;

provided, however, that, except in the case of clause (i) above, the party seeking to terminate
its obligation to effect the Closing shall not then be in breach of any of its representations,
warranties, covenants or agreements contained in this Agreement or the other Transaction
Documents if such breach has resulted in the circumstances giving rise to such party’s seeking
to terminate its obligation to effect the Closing.

     9. Covenants and Agreements of the Company.

          9.1 Reservation of Common Stock. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely for the
purpose of providing for the exercise of the Warrants, such number of shares of Common Stock as
shall from time to time equal the number of shares sufficient to permit the exercise of the
Warrants issued pursuant to this Agreement in accordance with their respective terms.

          9.2 No Conflicting Agreements. The Company will not take any action, enter into any
agreement or make any commitment that would conflict or interfere in any material respect with the
Company’s obligations to the Investors under the Transaction Documents.

          9.3 Listing of Underlying Shares and Related Matters. If the Company applies to
have its Common Stock or other securities traded on any stock exchange or market, it shall
include in such application the Shares and the Warrant Shares and will take such other action as is
necessary to cause such Common Stock to be so listed.

          9.4 Removal of Legends. Upon the earlier of (i) (A) the registration for resale
pursuant to the Registration Rights Agreement and (B) receipt of a written certification from
an Investor that Shares have been sold in accordance with the Plan of Distribution contained in the
Registration Statement and that such Investor has delivered or intends to deliver a current
prospectus in compliance with the prospectus delivery requirements of the 1933 Act or (ii) Rule
144(k) becoming available the Company shall, upon an Investor’s written request, promptly cause
certificates evidencing the Shares sold (in the case of clause (i)) or the Investor’s Securities
(in the case of clause (ii)) to be replaced with certificates which do not bear such restrictive
legends, and Warrant Shares subsequently issued upon due exercise of the Warrants shall not bear
such restrictive

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legends provided the provisions of either clause (i) or clause (ii) above, as applicable, are
satisfied with respect to such Warrant Shares.

     10. Survival and Indemnification.

          10.1 Survival. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing of the transactions contemplated by
this Agreement for one year after the Closing.

          10.2 Indemnification. The Company agrees to indemnify and hold harmless each Investor
and its Affiliates and their respective directors, officers, employees and agents from and against
any and all losses, claims, damages, liabilities and expenses (including without limitation
reasonable attorney fees and disbursements and other expenses incurred in connection with
investigating, preparing or defending any action, claim or proceeding, pending or threatened and
the costs of enforcement thereof) (collectively, “Losses”) to which such Person may become subject
as a result of any breach of representation, warranty, covenant or agreement made by or to be
performed on the part of the Company under the Transaction Documents, and will reimburse any such
Person for all such amounts as they are incurred by such Person.

          10.3 Conduct of Indemnification Proceedings. Promptly after receipt by any Person (the
“Indemnified Person”) of notice of any demand, claim or circumstances which would or might give
rise to a claim or the commencement of any action, proceeding or investigation in respect of which
indemnity may be sought pursuant to Section 10.2, such Indemnified Person shall promptly notify the
Company in writing and the Company shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the
Company shall not relieve the Company of its obligations hereunder except to the extent that the
Company is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified
Person shall have the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified
Person shall have mutually agreed to the retention of such counsel; or (ii) in the reasonable
judgment of counsel to such Indemnified Person representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between them. The Company
shall not be liable for any settlement of any proceeding effected without its written consent,
which consent shall not be unreasonably withheld, but if settled with such consent, or if there be
a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified
Person from and against any loss or liability (to the extent stated above) by reason of such
settlement or judgment. Without the prior written consent of the Indemnified Person, which consent
shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless such settlement
includes an unconditional release of such Indemnified Person from all liability arising out of such
proceeding.

     11. Miscellaneous.

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          11.1 Successors and Assigns. This Agreement may not be assigned by a party hereto
without the prior written consent of the Company or the Investor, as applicable, provided, however,
that (i) an Investor may assign its rights and delegate its duties hereunder in whole or in part to
an Affiliate or to a third party acquiring some or all of its Securities in a private transaction
without the prior written consent of the Company or the other Investors, after notice duly given by
such Investor to the Company provided, that no such assignment or obligation shall affect the
obligations of such Investor hereunder, and (ii) the Company may assign its rights and delegate its
duties hereunder to any surviving or successor corporation in connection with a merger or
consolidation of the Company with another corporation, or a sale, transfer or other disposition of
all or substantially all of the Company’s assets to another corporation, without the prior written
consent of the Investors. The provisions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.

          11.2 Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement may also be executed via facsimile, which
shall be deemed an original.

          11.3 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.

          11.4 Notices. Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given as hereinafter described
(i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii)
if given by telex or telecopier, then such notice shall be deemed given upon receipt of
confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed
given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such
notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally
recognized overnight air courier, then such notice shall be deemed given one Business Day after
delivery to such carrier. All notices shall be addressed to the party to be notified at the address
as follows, or at such other address as such party may designate by ten days’ advance written
notice to the other party:

     If to the Company:

Cytocore, Inc.

414 North Orleans Street, Suite 502

Chicago, Illinois 60610

Attention: Robert F. McCullough Jr., CEO, CFO

Fax: 312-222-9580

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     If to the Investors:

          to the addresses set forth on the signature pages hereto.

          11.5 Expenses. The parties hereto shall pay their own costs and expenses in connection
herewith. In the event that legal proceedings are commenced by any party to this Agreement against
another party to this Agreement in connection with this Agreement or the other Transaction
Documents, the party or parties which do not prevail in such proceedings shall severally, but not
jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable
out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

          11.6 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of the Company
and the Investors. Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such Securities, and the Company.

          11.7 Publicity. Except as set forth below, no public release or announcement
concerning the transactions contemplated hereby shall be issued by the Company or the Investors
without the prior consent of the Company (in the case of a release or announcement by the
Investors) or the Investors (in the case of a release or announcement by the Company) (which
consents shall not be unreasonably withheld), except as such release or announcement may be
required by law or the applicable rules or regulations of any securities exchange or securities
market, in which case the Company or the Investors, as the case may be, shall allow the Investors
or the Company, as applicable, to the extent reasonably practicable in the circumstances,
reasonable time to comment on such release or announcement in advance of such issuance. Promptly
following the Closing Date, the Company shall issue a press release disclosing the consummation of
the transactions contemplated by this Agreement and file a Current Report on Form 8-K attaching the
press release described in the foregoing sentence as well as copies of the Transaction Documents.
In addition, the Company will make such other filings and notices in the manner and time required
by the SEC. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any
Investor, or include the name of any Investor in any filing with the SEC (other than the
Registration Statement and any exhibits to filings made in respect of this transaction in
accordance with periodic filing requirements under the 1934 Act) or any regulatory agency, without
the prior written consent of such Investor, except to the extent such disclosure is required by law
or trading market regulations, in which case the Company shall provide the Investors with prior
notice of such disclosure.

          11.8 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof but
shall be interpreted as if it were written so as to be enforceable to the maximum extent
permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of law which renders
any provision hereof prohibited or unenforceable in any respect.

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          11.9 Entire Agreement. This Agreement, including the Exhibits, and the other
Transaction Documents constitute the entire agreement among the parties hereof with respect to
the subject matter hereof and thereof and supersede all prior agreements and understandings, both
oral and written, between the parties with respect to the subject matter hereof and thereof.

          11.10 Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be required to carry
out the transactions contemplated hereby and to evidence the fulfillment of the agreements
herein contained.

          11.11 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Agreement
shall be governed by, and construed in accordance with, the internal laws of the State of Illinois
without regard to the choice of law principles thereof. Each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of the State of Illinois located in Chicago and
the United States District Court for the Northern District of Illinois for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and the transactions
contemplated hereby. Service of process in connection with any such suit, action or proceeding may
be served on each party hereto by the same methods as are specified for the giving of notices under
this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES
HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT
AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

          11.12 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under any Transaction Document. The decision of each Investor to purchase
Securities pursuant to the Transaction Documents has been made by such Investor independently of
any other Investor. Nothing contained herein or in any Transaction Document, and no action taken by
any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other
Investor has acted as agent for such Investor in connection with making its investment hereunder
and that no Investor will be acting as agent of such Investor in connection with monitoring its
investment in the Securities or enforcing its rights under the Transaction Documents. Each Investor
shall be entitled to independently protect and enforce its rights, including, without limitation,
the rights arising out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Investor to be joined as an additional party in any proceeding for
such purpose. The Company acknowledges that each of the Investors has been provided with the same
Transaction Documents for the purpose of closing a transaction with multiple Investors and not
because it was required or requested to do so by any Investor.

-17-

 

[signature page follows]

-18-

 

     IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized
officers to execute this Agreement as of the date first above written.

	 	 	 	 	 	 
	The Company: 	 	CYTOCORE, INC.

 	 
	 	 	By:  	 	 
	 	 	 	Name:  	 	 
	 	 	 	Title:  	 	 
	 
	The Investor:

	Individuals: 	 	Entities:	 
	 	 	 	 
	Print Name 	 	 Print Name of Entity

 	 
	 	 	By:  	 	 
	Signature 	 	 	Signature	 
	 	 	 	Name:  	 	 
	 	 	 	Title:  	 	 
	 

-19-

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