Document:

Exhibit
10.1

    

     

    
      SECURITIES
PURCHASE AGREEMENT

    

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of May 10, 2009, between Hemispherx Biopharma, Inc., a Delaware corporation
(the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

     

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

     

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

     

    ARTICLE
I.

    DEFINITIONS

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      
        
           

        

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

     

    “Common Stock” means
the common stock of the Company, par value $0.001 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed.

     

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

     

    “Company Counsel”
means Silverman Sclar Shin & Byrne PLLC, with offices located at 381 Park
Avenue South, 16th floor,
New York, NY 10016.

     

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

     

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

     

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

    

    “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or option plan duly
adopted for such purpose, by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise or
exchange of or conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement, provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise price, exchange price
or conversion price of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, which acquisitions or strategic
transactions can have a Variable Rate Transaction component,  provided
that any such issuance shall only be to a Person (or to the equityholders of a
Person) which is, itself or through its subsidiaries, an operating company or an
asset in a business synergistic with the business of the Company and shall
provide to the Company additional benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities.

     

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

     

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

    

    
      
        
           

        

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

     

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

     

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

     

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

     

    “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

     

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

     

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

     

    “NYSE Amex Approval”
means the approval by the NYSE AMEX of the Company’s additional listing
applications with regard to the issuance of the Securities.

     

     “Per Share Purchase
Price” equals $1.10, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement.

     

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

     

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

     

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

     

    “Prospectus” means the
final prospectus filed for the Registration Statement.

     

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

     

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

     

    “Registration
Statement” means the effective registration statement with Commission
file No. 333-151696 which registers the sale of the Shares, the Warrants and the
Warrant Shares by the Purchasers.

    

    
      
        
           

        

        
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    “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      
        
           

        

        
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    “Transfer Agent” means
Continental Stock Transfer & Trust Co., the current transfer agent of the
Company, with a mailing address of 17 Battery Place, New York,  NY
10004 and a facsimile number of (212) 509-5150, and any successor transfer agent
of the Company.

     

    “Variable Rate
Transaction” shall have the meaning ascribed to such term in Section
4.12(b).

     

    “Warrants” means,
collectively, the Series I and Series II Common Stock (individually “Series I Warrants”
and “Series II
Warrants”) purchase warrants delivered to the Purchasers at the Closing
in accordance with Section 2.2(a) hereof, which, as to the Series I Warrants,
shall be exercisable after the six month anniversary of the date hereof and have
a term of exercise equal to five years and as to the Series II Warrants, shall
be exercisable immediately and have a term of exercise equal to 45 days, each in
the form of Exhibit
A attached hereto.

     

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

     

    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1           Closing.  On the Closing Date, upon
the terms and subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the parties
hereto, the Company agrees to sell, and the Purchasers, severally and not
jointly,  agree to purchase, up to an aggregate of $15,000,000 of Shares and Warrants.  Each
Purchaser shall deliver to the Company, via wire transfer or a certified
check of immediately available funds equal to
such
Purchaser’s Subscription
Amount as set forth on the
signature page hereto executed by such Purchaser and the Company shall deliver to each
Purchaser its respective Shares and a Warrant as determined pursuant to Section
2.2(a), and the Company and each Purchaser shall deliver the other items set
forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of
the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of FWS or such other location as the parties shall
mutually agree.

     

    2.2           Deliveries.

     

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

     

    (i)           this
Agreement duly executed by the Company;

     

    (ii)          a
legal opinion of Company Counsel, substantially in the form of Exhibit B attached
hereto;

     

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

    

    
      
        
           

        

        
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    (iv)        a
Series I Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 45% of such Purchaser’s Shares, with
an exercise price equal to $1.65, subject to adjustment therein (such Warrant
certificate may be delivered within three Trading Days of the Closing
Date);

     

    (v)         a
Series II Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to such Purchaser’s pro-rata share of
3,000,000 million (based on such Purchaser’s Subscription Amount as compared to
the aggregate Subscription Amounts), with an exercise price equal to $1.10,
subject to adjustment therein (such Warrant certificate may be delivered within
three Trading Days of the Closing Date); and

     

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

     

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

     

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

     

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

     

    2.3           Closing
Conditions.

     

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

     

    (i)          the
accuracy in all material respects on the Closing Date of the representations and
warranties of the Purchasers contained herein (unless as of a specific date
therein);

     

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

     

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

     

    (iv)        The
NYSE Amex Approval.

     

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

    

    
      
        
           

        

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

     

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

     

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

     

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

     

    (v)          The
NYSE Amex Approval; and

     

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

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

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

     

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

    

    
      
        
           

        

        
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    (b)           Organization and
Qualification.  The Company and each of the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently
conducted.  Neither the Company nor any Subsidiary is in violation nor
default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter
documents.  Each of the Company and the Subsidiaries is duly qualified
to conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in: (i) a material adverse effect on
the legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

     

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

    

    
      
        
           

        

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

     

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

     

    (f)           Issuance of the Securities;
Registration.  The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company.  The Warrant Shares, when issued in
accordance with the terms of the Warrants, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the
Company.  The Company has reserved from its duly authorized capital
stock the maximum number of shares of Common Stock issuable pursuant to this
Agreement and the Warrants. The Company has prepared and filed the Registration
Statement in conformity with the requirements of the Securities Act, which
became effective on June 27, 2008 (the “Effective Date”),
including the Prospectus, and such amendments and supplements thereto as may
have been required to the date of this Agreement.  The Registration
Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or
preventing the use of the Prospectus has been issued by the Commission and no
proceedings for that purpose have been instituted or, to the knowledge of the
Company, are threatened by the Commission.  The Company, if required
by the rules and regulations of the Commission, proposes to file the Prospectus
Supplement, with the Commission pursuant to Rule 424(b).  At the time
the Registration Statement and any amendments thereto became effective, at the
date of this Agreement and at the Closing Date, the Registration Statement and
any amendments thereto conformed and will conform in all material respects to
the requirements of the Securities Act and did not and will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
and the Prospectus and any amendments or supplements thereto, at time the
Prospectus or any amendment or supplement thereto was issued and at the Closing
Date, conformed and will conform in all material respects to the requirements of
the Securities Act and did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

    

    
      
        
           

        

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

    

    
      
        
           

        

        
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    (h)           SEC Reports; Financial
Statements.  The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by the Company under
the Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, together with the Prospectus and the
Prospectus Supplement, being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Company has never been an issuer subject to Rule 144(i) under
the Securities Act. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing.  Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated Subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

     

    (i)           Material Changes;
Undisclosed Events, Liabilities or Developments.  Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report filed prior to the
date hereof, (i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company’s financial statements pursuant to GAAP
or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans.  The Company does not have pending before the Commission
any request for confidential treatment of information.  Except for the
issuance of the Securities contemplated by this Agreement or as set forth on
Schedule
3.1(i), no event, liability, fact, circumstance, occurrence or
development has occurred or exists or is reasonably expected to occur or exist
with respect to the Company or its Subsidiaries or their respective business,
prospects, properties, operations, assets or financial condition that would be
required to be disclosed by the Company under applicable securities laws at the
time this representation is made or deemed made that has not been publicly
disclosed at least 1 Trading Day prior to the date that this representation is
made.

    

    
      
        
           

        

        
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    (j)           Litigation.  There
is no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were an
unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect.  Neither the Company nor any Subsidiary, nor any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty.  There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company.  The Commission has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company or any Subsidiary under the Exchange Act or the
Securities Act.

     

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

     

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

    

    
      
        
           

        

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

     

    (n)           Title to
Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance.

     

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

     

    (p)           Insurance.  Except
as set forth on Schedule 3.1(p), the
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage at least equal to the aggregate Subscription Amount.  Neither
the Company nor any Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.

    

    
      
        
           

        

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

     

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

     

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

    

    
      
        
           

        

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

     

    (u)           Registration
Rights.  No Person has any right to cause the Company to effect
the registration under the Securities Act of any securities of the
Company.

     

    (v)           Listing and Maintenance
Requirements.  The Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to its knowledge is likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act nor has
the Company received any notification that the Commission is contemplating
terminating such registration.  The Company has not, in the 12 months
preceding the date hereof, received notice from any Trading Market on which the
Common Stock is or has been listed or quoted to the effect that the Company is
not in compliance with the listing or maintenance requirements of such Trading
Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all such listing and
maintenance requirements.

     

    (w)           Application of Takeover
Protections.  The Company and the Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

     

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

    

    
      
        
           

        

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

     

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

     

    
      
        
           

        

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

     

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

     

    (cc)           Accountants.  The
Company’s accounting firm is set forth on Schedule 3.1(cc) of
the Disclosure Schedules.  To the knowledge and belief of the Company,
such accounting firm (i) is a registered public accounting firm as required by
the Exchange Act and (ii) shall express its opinion with respect to the
financial statements to be included in the Company’s Annual Report for the year
ended December 31, 2008.

     

    (dd)           
Acknowledgment
Regarding Purchasers’ Purchase of Securities.  The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby.  The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Securities.  The
Company further represents to each Purchaser that the Company’s decision to
enter into this Agreement and the other Transaction Documents has been based
solely on the independent evaluation of the transactions contemplated hereby by
the Company and its representatives.

     

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

    

    
      
        
           

        

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

     

    (gg)           FDA.  As to
each product subject to the jurisdiction of the U.S. Food and Drug
Administration (“FDA”) under the
Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder
(“FDCA”) that
is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed
by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical
Product”), such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company in compliance
with all applicable requirements under FDCA and similar laws, rules and
regulations relating to registration, investigational use, premarket clearance,
licensure, or application approval, good manufacturing practices, good
laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse
Effect.  There is no pending, completed or, to the Company's
knowledge, threatened, action (including any lawsuit, arbitration, or legal or
administrative or regulatory proceeding, charge, complaint, or investigation)
against the Company or any of its Subsidiaries, and none of the Company or any
of its Subsidiaries has received any notice, warning letter or other
communication from the FDA or any other governmental entity, which (i) contests
the premarket clearance, licensure, registration, or approval of, the uses of,
the distribution of, the manufacturing or packaging of, the testing of, the sale
of, or the labeling and promotion of any Pharmaceutical Product, (ii) withdraws
its approval of, requests the recall, suspension, or seizure of, or withdraws or
orders the withdrawal of advertising or sales promotional materials relating to,
any Pharmaceutical Product, (iii) imposes a clinical hold on any clinical
investigation by the Company or any of its Subsidiaries, (iv) enjoins production
at any facility of the Company or any of its Subsidiaries, (v) enters or
proposes to enter into a consent decree of permanent injunction with the Company
or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which,
either individually or in the aggregate, would have a Material Adverse
Effect.  The properties, business and operations of the Company have
been and are being conducted in all material respects in accordance with all
applicable laws, rules and regulations of the FDA.  The Company has not
been informed by the FDA that the FDA will prohibit the marketing, sale, license
or use in the United States of any product proposed to be developed, produced or
marketed by the Company nor has the FDA expressed any concern as to approving or
clearing for marketing any product being developed or proposed to be developed
by the Company.

    

    
      
        
           

        

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

     

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

     

    (b)           Own
Account.  Such
Purchaser is acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or any part
thereof in violation of the Securities Act or any applicable state securities
law, has no present intention of distributing any of such Securities in
violation of the Securities Act or any applicable state securities law and has
no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in violation of the
Securities Act or any applicable state securities law (this representation and
warranty not limiting such Purchaser’s right to sell the Securities pursuant to
the Registration Statement or otherwise in compliance with applicable federal
and state securities laws).  Such Purchaser is acquiring the
Securities hereunder in the ordinary course of its business.

     

    (c)           Purchaser
Status.  At the
time such Purchaser was offered the Securities, it was, and as of the date
hereof it is, and on each date on which it exercises any Warrants, it will be
either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities
Act.  Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.

     

    
      
        
           

        

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

     

    (e)           Certain
Transactions and Confidentiality.  Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser,
directly or indirectly executed any purchases or sales, including Short
Sales, of the securities of the Company during the period commencing as of
the time that such Purchaser first received a term sheet (written or oral) as of
the Company or any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and ending immediately
prior to the execution hereof.  Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement.  Other than to
other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.

     

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

     

    
      
        
        

      

      
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    ARTICLE
IV.

    OTHER
AGREEMENTS OF THE PARTIES

    

    4.1           Warrant
Shares.  If all or any portion of a Warrant is
exercised at a time when there is an effective registration statement to cover
the issuance or resale of the Warrant Shares or if the Warrant is exercised via
cashless exercise, the Warrant Shares issued pursuant to any such exercise shall
be issued free of all legends.  If at any time following the date
hereof the Registration Statement (or any subsequent registration statement
registering the sale or
resale of the Warrant
Shares) is not effective or is not otherwise available for the sale or resale of
the Warrant Shares, the Company shall immediately notify the holders of the
Warrants in writing that such registration statement is not then effective and
thereafter shall promptly notify such holders when the registration statement is
effective again and available for the sale or resale of the Warrant
Shares (it being understood
and agreed that the foregoing shall not limit the ability of the Company to
issue, or any Purchaser to sell, any of the Warrant Shares in compliance with
applicable federal and state securities laws).  The Company shall use best
efforts to keep a registration statement (including the Registration Statement)
registering the issuance or resale of the Warrant Shares effective during the
term of the Warrants. Upon a cashless exercise of a Warrant, the holding period for
purposes of Rule 144 shall tack back to the original date of issuance of such
Warrant.

     

    4.2           Furnishing
of Information.  Until the earliest of the
time that (i) no Purchaser owns Securities or (ii) the Warrants have expired,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act even if the
Company is not then subject to the reporting requirements of the Exchange
Act.  As long as any Purchaser owns Securities, if the Company is not
required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the
Securities, including
without limitation, under
Rule 144. The Company further covenants that it will take such further action as
any holder of Securities may reasonably request, to the extent required from
time to time to enable such Person to sell such Securities without registration
under the Securities Act,
including without limitation, within the requirements of the exemption
provided by Rule 144.

     

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

     

    4.4           Securities
Laws Disclosure; Publicity.  The Company shall, by 8:30
a.m. (New York City time) on the Trading Day immediately following the date
hereof, issue a press release disclosing the material terms of the transactions
contemplated hereby, and including the Transaction Documents as exhibits
thereto.  From and after the issuance of such press release, the
Company shall have publicly disclosed all material, non-public information
delivered to any of the Purchasers by the Company or any of its subsidiaries, or
any of their respective officers, directors, employees or agents in connection
with the transactions contemplated by the Transaction Documents.  The
Company and each Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release nor otherwise
make any such public statement without the prior consent of the Company, with
respect to any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld or delayed, except if such disclosure is
required by law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or
communication.  Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser, or include the name of any
Purchaser in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except (a) as
required by federal securities law in connection with the filing of final
Transaction Documents (including signature pages thereto) with the Commission
and (b) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under this clause (b).

    

    
      
        
           

        

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

     

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

     

    4.7           Use of
Proceeds.  Except
as set forth on Schedule
4.7 attached hereto, the
Company shall use the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds for: (a) the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables in the ordinary course of the Company’s business and prior practices),
(b) the redemption of any Common Stock or Common Stock Equivalents
or (c) the settlement of
any outstanding litigation.

    

    
      
        
           

        

        
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    4.8           Indemnification
of Purchasers.   Subject to the
provisions of this Section 4.8, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a
lack of such title or any other title), each Person who controls such
Purchaser (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, shareholders, agents, members, partners or employees
(and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding a lack of such title or any other title) of such
controlling persons (each,
a “Purchaser
Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs
and expenses, including all judgments, amounts paid in settlements, court costs
and reasonable attorneys’ fees and costs of investigation that any such
Purchaser Party may suffer or incur as a result of or relating to (a) any breach
of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or (b) any
action instituted against a Purchaser in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser may have with any
such stockholder or any violations by such Purchaser of state or federal
securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance).  If any action shall
be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party.  Any Purchaser Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Purchaser
Party except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the
position of such Purchaser Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate
counsel.  The Company will not be liable to any Purchaser Party under
this Agreement (y) for any settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be unreasonably withheld or
delayed; or (z) to the extent, but only to the extent that a loss, claim, damage
or liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such Purchaser
Party in this Agreement or in the other Transaction
Documents.

     

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

     

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

     

    
      
        
        

      

      
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    4.11         RESERVED.

     

    4.12         Subsequent
Equity Sales.

     

    (a)           From
the date hereof until 90 days after the Closing Date, neither the Company nor
any Subsidiary shall issue, enter into any agreement to issue or announce the
issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents; provided, however, that the 90
day period set forth in this Section 4.12 shall be extended for the number of
Trading Days during such period in which (i) trading in the Common Stock is
suspended by any Trading Market, or (ii) the Registration Statement is not
effective or the prospectus included in the Registration Statement may not be
used by the Purchasers for the resale of the Shares and Warrant
Shares.  Additionally, from the date hereof until 30 days after the
Closing Date, the Company shall not draw down on its existing Common Stock
Purchase Agreement with Fusion Capital Fund II, LLC.

     

    (b)           From
the date hereof until such time as the later of six months after the Closing
Date or the date that no Purchaser holds any of the Securities, the Company
shall be prohibited from effecting or entering into an agreement to effect any
issuance by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents for cash consideration (or a combination of units hereof)
involving a Variable Rate Transaction.  “Variable Rate
Transaction” means a transaction in which the Company (i) issues or sells
any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion price, exercise price or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations
for the shares of Common Stock at any time after the initial issuance of such
debt or equity securities, or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock or (ii) enters into any agreement, including, but
not limited to, an equity line of credit, whereby the Company may sell
securities at a future determined price.  Any Purchaser shall be
entitled to obtain injunctive relief against the Company to preclude any such
issuance, which remedy shall be in addition to any right to collect
damages.

     

    (c)           Notwithstanding
the foregoing, this Section 4.12 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance
unless it is a component of acquisitions or strategic transactions that are
Exempt Issuances.

     

    4.13           Equal
Treatment of Purchasers.  No consideration (including
any modification of any Transaction Document) shall be offered or paid to any
Person to amend or consent to a waiver or modification of any provision of any
of the Transaction Documents unless the same consideration is also offered to
all of the parties to the Transaction Documents.  For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and is intended for
the Company to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.

    

    
      
        
           

        

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

     

    4.15         Delivery of
Warrants After Closing; Buy-In in Respect of the Share.  The Company shall deliver,
or cause to be delivered, the respective Warrant certificates purchased by each
Purchaser to such Purchaser within 3 Trading Days of the Closing
Date. In addition to any other rights available to the a
Purchaser, if the Company
fails to cause the Transfer Agent to transmit to such Purchaser it Shares within 3
Trading Days of the date required under this Agreement, and if after such date the
Purchaser is required by its broker to purchase (in
an open market transaction or otherwise) or the Purchaser’s brokerage firm otherwise purchases,
shares of Common Stock to deliver in satisfaction of a sale by the Purchaser of the Shares which the Purchaser was entitled to receive hereunder
(a “Buy-In”), then the Company shall (A) pay in
cash to the Purchaser the amount, if any, by which (x) the
Purchaser’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of Shares that the
Company was required to deliver to the Purchaser times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) deliver to
the Purchaser the number of shares of Common Stock
that would have been issued had the Company timely complied with its obligations
hereunder.  Nothing herein shall limit a Purchaser’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing shares of Common
Stock as required pursuant to the terms hereof.

    

    
      
        
           

        

        
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    4.16         Capital
Changes.  Until
the one year anniversary of the Closing Date, the Company shall not undertake a
reverse or forward stock split or reclassification of the Common Stock without
the prior written consent of the Purchasers holding a majority in interest of
the Shares.

     

    4.17         Liquidated
Damages for Failure to Comply.  If the Company shall fail
to materially observe or perform any other covenant or
agreement contained in the Transaction Documents (each, an “Event” and the date on which such Event
occurs, the “Event
Date”), then, in addition
to any other rights the Purchasers may have hereunder or under applicable law,
on each such Event Date and on each monthly anniversary of each such Event Date
(if the applicable Event shall not have been cured by such date) until the
applicable Event is cured, the Company shall pay to each Purchaser, in cash, as
liquidated damages and not as a penalty, an amount equal to 1.5% of the
Subscription Amount of the Shares then held by such Purchaser, subject to a
maximum aggregate amount of 10% of the original Subscription Amount of such
Purchaser; provided, that if any other provision of any Transaction Document
separately provides for liquidated damages for any particular breach of a
covenant therein, then if the Company actually pays such liquidated damages
required under such other Transaction Document, then no further liquidated
damages shall be payable pursuant to this provision.  Nothing herein shall limit a
Purchaser’s right to pursue any remedies available to it hereunder, at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief.  The exercise of any such rights shall not prohibit
a Purchaser from seeking to enforce damages pursuant to any other Section hereof
or under applicable law. If the Company fails to pay any partial liquidated
damages pursuant to this Section in full within seven days after the date
payable, the Company will pay interest thereon at a rate of 18% per annum (or
such lesser maximum amount that is permitted to be paid by applicable law) to
the Purchaser, accruing daily from the date such partial liquidated damages are
due until such amounts, plus all such interest thereon, are paid in full. The
partial liquidated damages pursuant to the terms hereof shall apply on a daily
pro rata basis for any portion of a month prior to the cure of an
Event.

     

    ARTICLE
V.

    MISCELLANEOUS

     

    5.1           Termination.  This Agreement may be terminated
by any Purchaser, as to such Purchaser’s obligations hereunder only and without
any effect whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing has not been
consummated on or before May       
*       
, 2009; provided, however, that no such termination will affect
the right of any party to sue for any breach by the other party (or
parties).

     

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

    

    
      
        
           

        

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

     

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

     

    5.5           Amendments;
Waivers.  No
provision of this Agreement may be waived, modified, supplemented or amended
except in a written instrument signed, in the case of an amendment, by the
Company and the Purchasers holding at least 66% in interest of the Shares then
outstanding or, in the case of a waiver, by the party against whom enforcement
of any such waived provision is sought.  No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right.

     

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

     

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

     

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

    

    
      
        
           

        

        
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    5.9           Governing
Law.  All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.  Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.  If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then, in
addition to the obligations of the Company under Section 4.8, the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.

     

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

     

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

     

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

    

    
      
        
           

        

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

     

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

     

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

     

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

    

    
      
        
           

        

        
          29

          
            

          

        

        
           

        

      

    

    

    5.17         Independent
Nature of Purchasers’ Obligations and Rights.  The obligations of each
Purchaser under any Transaction Document are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document.  Nothing contained herein or
in any other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser shall be entitled to
independently protect and enforce its rights including, without limitation, the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.  Each Purchaser
has been represented by its own separate legal counsel in their review and
negotiation of the Transaction Documents.  For reasons of
administrative convenience only, each Purchaser and its respective counsel have
chosen to communicate with the Company through FWS.  FWS does not
represent any of the Purchasers and only represents Rodman & Renshaw, LLC,
the placement agent. The Company has elected to provide all Purchasers with the
same terms and Transaction Documents for the convenience of the Company and not
because it was required or requested to do so by any of the
Purchasers.

     

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

     

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

     

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

     

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

     

    (Signature
Pages Follow)

    

    
      
        
           

        

        
          30

          
            

          

        

        
           

        

      

    

    

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

     

    

    
      
        
          
            
              
                
                  	
                          HEMISPHERX
      BIOPHARMA, INC.

                        	 	
                          Address for Notice:

                        
	 	 	  
      
	
                          By:

                        	 
      	 	
                          Fax:

                        
	 
      	
                          Name:

                        	 	 
      
	 
      	
                          Title:

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

                        	 	 
      

                

              

            

          

        

      

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

    

    
      
        
           

        

        
          31

          
            

          

        

        
           

        

      

    

    

    [PURCHASER
SIGNATURE PAGES TO HEB SECURITIES PURCHASE AGREEMENT]

    

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

     

    Name of
Purchaser: ________________________________________________________

     

    Signature of Authorized Signatory of
Purchaser: _________________________________

     

    Name of
Authorized Signatory:
_______________________________________________

     

    Title of
Authorized Signatory:
________________________________________________

     

    Email
Address of Authorized
Signatory:_________________________________________

     

    Facsimile
Number of Authorized Signatory:
__________________________________________

     

    Address
for Notice of Purchaser:

     

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

     

    Subscription
Amount: $_________________

    

    Shares:
_________________

    

    Warrant
Shares: __________________

    

    EIN
Number:  [PROVIDE
THIS UNDER SEPARATE COVER]

    

    

    [SIGNATURE
PAGES CONTINUE]

    

    
      
        
           

        

        
          32EX-4.1 Share Sales and Purchase Agreement

Table of Contents

Exhibit 4.1

DATED 18 December 2007

PT Sigma Citra Harmoni

and

Trozenin Management Plc

as
THE VENDORS

PT Multimedia Nusantara

as THE PURCHASER

 

AGREEMENT FOR THE

SALE AND PURCHASE OF SHARES

 

 

CONTENTS

	 	 	 	 	 	 	 
	Number	 	Clause Headings	 	Page
	 
	 	 	 	 	 	 
	1.

	 	DEFINITIONS AND INTERPRETATION
	 	 	1	 
	2.

	 	SALE OF SALE SHARES
	 	 	6	 
	3.

	 	PURCHASE PRICE
	 	 	7	 
	4.

	 	CONDITIONS	 	 	7	 
	5.

	 	COMPLETION
	 	 	10	 
	6.

	 	RESTRICTION ON VENDORS	 	 	12	 
	7.

	 	WARRANTIES	 	 	13	 
	8.

	 	COVENANT IN RESPECT OF TAX	 	 	16	 
	9.

	 	THE PURCHASER’S REMEDIES	 	 	19	 
	10.

	 	RESTRICTION ON ANNOUNCEMENTS
	 	 	19	 
	11.

	 	PRE-COMPLETION OBLIGATIONS	 	 	19	 
	12.
	 	CONFIDENTIALITY OF INFORMATION RECEIVED
	 	 	21	 
	13.

	 	COSTS
	 	 	22	 
	14.

	 	GENERAL
	 	 	22	 
	15.
	 	NOTICES	 	 	23	 
	16.

	 	GOVERNING LAW AND ARBITRATION	 	 	24	 

SCHEDULE 1 Details of the Company

SCHEDULE 2 The Subsidiaries

SCHEDULE 3 The Properties

SCHEDULE 4 Warranties

SCHEDULE 5 Disclosure Letter

SCHEDULE 6 Software

SCHEDULE 7 Key Individuals

i

Table of Contents

AGREEMENT FOR THE SALE AND PURCHASE OF SHARES

THIS
AGREEMENT is made on 18 December 2007

BETWEEN:

	(1)	 	PT Sigma Citra Harmoni, a company incorporated under Indonesian law whose
registered office is at Sigma Inno Office, Menara DEA, 8th Floor, Kawasan Mega
Kuningan, Jalan Mega Kuningan Barat IX, Kavling E4.3 No. 1, Jakarta 12950, in this
matter represented by Mr. Otto Toto Sugiri, its President
Director (“SCH”).
	 
	(2)	 	Trozenin Management Plc, a company incorporated under Malaysian law whose
principal place of business is at Tiara Labuan, Jalan Tanjung Ratu 87000, FT
Labuan, East Malaysia, in this matter represented by Mr. Eko A.I. Basyuni, its proxy
(“Trozenin”).
	 
	 	 	SCH and Trozenin shall individually be referred to as a “Vendor” and collectively the
“Vendors”.
	 
	(3)	 	PT Multimedia Nusantara, company incorporated under Indonesian law whose
registered office is at Century Tower, 11th Floor, Jl. H.R. Rasuna Said, Kav.
X-2, No.
4, Jakarta 12950, in this matter represented by Alex J. Sinaga, its President Director
(the “Purchaser”).

RECITALS:

	(A)	 	The Vendors are the registered holders and owners of 48,800,983 shares
representing 90.79% of the total issued shares in the capital of PT
Sigma Cipta Caraka (the “Company”). Particulars of the Company are set out in Schedule 1.
	 
	(B)	 	The Vendors wish to sell and the Purchaser wishes to purchase 43,001,348 shares
representing 80% of the total issued shares in the capital of the
Company (the “Sale Shares”) on the terms and conditions set out in this Agreement.

THE PARTIES AGREE as follows:

	1.	 	DEFINITIONS AND INTERPRETATION
	 
	1.1	 	In this Agreement, including the Recitals, except to the extent that the context otherwise
requires, the following words and expressions shall have the following meanings:
	 
	 	 	“Accounting Date” means 31 March 2007;
	 
	 	 	“Accounts” means the audited consolidated financial statements of the Company and of each
of the Subsidiaries for the accounting period which ended on the Accounting Date (each
such financial statement comprising a balance sheet, statement of income, statement of
changes in equity, statement of cash flows, notes and directors’ and auditors’ report) and
the consolidated statements of income and

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Table of Contents

	 	 	consolidated balance sheet of the Company and the Subsidiaries as at and for the period
ending on the Accounting Date as audited by Purwantono, Sarwoko & Sandjaja (a member of
Ernst & Young Global);
	 
	 	 	“Agreed US$-Rp Exchange Rate” means the conversion rate based on the US$-Rp middle rate
issued by Bank Indonesia on the day being five (5) Business Days before the Completion
Date;
	 
	 	 	“Authorisation” includes any consent, registration, filing, agreement, notarisation,
certificate, licence, approval, permit, authority or exemption from, by or with a
Governmental Agency;
	 
	 	 	“BKPM” means the Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal);
	 
	 	 	“Business Day” means any day, other than a Saturday or a Sunday, on which banks are open
for business in Jakarta;
	 
	 	 	“Commissioners” means the persons listed as commissioners of the Company in Schedule 1;
	 
	 	 	“Company” means PT Sigma Cipta Caraka details of which are set out in Schedule 1;
	 
	 	 	“Company Law” means the Law of the Republic of Indonesia No. 40 of 2007 on Limited
Liability Companies;
	 
	 	 	“Completion” means completion of the sale and purchase of the Sale Shares as specified in
Clause 5;
	 
	 	 	“Completion Date” means the date being five (5) Business Days after the Conditions have
been satisfied or waived in accordance with Clause 4 (or such later date as the Parties
may agree in writing);
	 
	 	 	“Conditions” means the conditions specified in Clause 4.1;
	 
	 	 	“Directors” means the persons listed as directors of the Company in Schedule 1;
	 
	 	 	“Disclosure Letter” means the disclosure letter from the Vendors to the Purchaser as set
out in Schedule 5;
	 
	 	 	“Employee Waivers” means waivers, in a form and substance satisfactory to the Purchaser,
from each of the Specified Employees waiving all demands, rights to and entitlements under
the Labor Law and regulations, any company regulations or any collective labor agreement
with the Company which may arise as a result of the consummation of the transactions
contemplated by this Agreement;
	 
	 	 	“Encumbrance” means any mortgage, charge (fixed or floating), pledge, lien, Option, right
to acquire, assignment by way of security or trust arrangement for the purpose of
providing security or other security interest of any kind (including any retention
arrangement), right of pre-emption, any third party rights, or any agreement to create any
of the foregoing;

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	 	 	“Governmental Agency” includes any government, BKPM and any minister, department, office,
commission, delegate, instrumentality, agency, board, authority or other organ of government,
whether statutory or otherwise;
	 
	 	 	“Group” means the group of companies comprising the Company and its Subsidiaries. The expression
“member of the Group” shall be construed accordingly;
	 
	 	 	“IFC” means International Finance Corporation, the holder of 4,950,701 shares representing 9.21%
of the total issued shares in the capital of the Company;
	 
	 	 	“Indonesia” means the Republic of Indonesia;
	 
	 	 	“Intellectual Property” means includes patents, knowhow, trade secrets, copyrightable work and
other confidential information, registered designs, copyrights, design rights, topography rights,
trade marks, service marks, business names, registrations of and applications to register any of
the aforesaid items, rights in the nature of any of the aforesaid items in any country, rights in
the nature of unfair competition rights and rights to sue for passing off;
	 
	 	 	“IPO” means the Initial Public Offering of the shares of the Company on the Indonesia Stock
Exchange;
	 
	 	 	“Jamsostek” means the employees’ social security scheme as governed by Law No. 3 of 1992 regarding
the Jaminan Sosial Tenaga Kerja;
	 
	 	 	“Key Individuals” means the individuals whose names are mentioned in Schedule 7;
	 
	 	 	“Labor Law” means Law No. 13 of 2003 on Labor;
	 
	 	 	“Leases” means all the leases, sub-leases, tenancy agreements, sub-tenancy agreements, licences or
other documents (including any options for extension relating thereto) granted or agreed to be
granted to any member of the Group] or pursuant to which any member of the Group holds or occupies
any property, details of which are set out in Schedule 3;
	 
	 	 	“Leased Properties” means the properties short particulars of which are set out in Part 2 of
Schedule 3;
	 
	 	 	“Management Accounts” means the unaudited consolidated balance sheet of the Company and the
Subsidiaries as at 30 November 2007 and the unaudited consolidated profit and loss account of the
Company and of each of the Subsidiaries for the period commencing from the day immediately
following the Accounting Date and ending on 30 November 2007 copies of which are annexed to the
Disclosure Letter;
	 
	 	 	“MOLHR” means the Ministry of Law and Human Rights of the Republic of Indonesia;

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Table of Contents

“Moral Rights” means the rights of an author of a copyright literary, dramatic, musical or artistic
work or other intellectual works or a director of a copyright film (“Work”) to be identified as the
author or director (as the case may be) of the Work, not to have the Work subjected to derogatory
treatment and not to have a Work falsely attributed to him as the author or director (as the case
may be), and rights in the nature of the aforesaid rights in any country;

“Non Compete Agreement” means the agreement setting out the restrictions applicable to each of the
Key Individuals containing the terms and conditions the same as those provided under Clause 6 of
this Agreement;

“Option” means with respect to any person, any option, warrant or other security or contract that
gives the holder the right to purchase or otherwise receive or be issued any shares of capital
stock of such person or any security of any kind convertible into or exchangeable or exercisable
for any shares of capital stock of such person;

“Owned Properties” means the properties, short particulars of which are set out in Part 1 of
Schedule 3;

“Parties” means the named parties to this Agreement;

“Post Completion Agreement” has the meaning as ascribed to it in Clause 4.1 (m);

“Properties” means the Owned Properties and the Leased Properties;

“Purchase Price” means the total Purchase Price for the Sale Shares being the aggregate of the
sums specified in Clause 3;

“Put Option Agreement” means Put Option Agreement dated 27 April 2001 made by and between the
Company, PT Sigma Citra Harmoni, Caatoosee A.G and IFC;

“Put Option Price” means the higher of (i) the value of the Company as determined by an
independent appraisal agreed by SCH and the Purchaser or (ii) the price determined by using the
following formula:

å Shares x 100% x Purchase Price per share x (1 +l)^t

where:

å
Shares = the Put Option Shares;

l = Reference Interest Rate, defined as the average historical Rupiah Indonesian
government bond yield maturing in 1 year, as stated in Bloomberg terminal (page CURV 132)
for the period t.

The Reference Interest Rate will be fixed at the end of business day Jakarta time at the
Exercise Date;

t = time in years between the Completion Date and Exercise Date; and

Exercise Date= the date of exercise of the put option.

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“Restricted Business” has the meaning as ascribed to it in Clause 6.1(a);

“Sale Shares” means the 43,001,348 shares representing 80% of the total issued shares in the
capital of the Company;

“Shareholders” means the existing shareholders of the Company;

“Shareholders Agreement” means the Amended and Restated Shareholders Agreement of the
Company dated 27 April 2001 including its amendment, alteration, and addendum made by and
between PT Sigma Citra Harmoni, PT Sigma Ratana Harmoni, Trozenin Management Plc, Caatoosee
AG IFC and the Company.

“Specified Employees” means the Directors, Commissioners and certain employees of the
Company holding Levels 1, 2 and 3 positions as further identified and agreed by the
Parties;

“Subsidiaries” means the subsidiaries of the Company which are listed in Schedule 2;

“Tax” includes all forms of taxation, estate duties, deductions, withholdings, duties,
imposts, levies, fees, charges, social security contributions and rates imposed, levied,
collected, withheld or assessed by any local, municipal, regional, urban, governmental,
state, federal or other body in Indonesia or elsewhere and any interest, additional
taxation, penalty, surcharge or fine in connection therewith;

“Tax Restitution Payment” means the actual amount of tax restitution that any member of the
Group receives from the tax office in relation to the objection(s) or appeal(s) that the
relevant company has on the date of this Agreement submitted to the tax office or tax
court;

“Vendors’ Accounts” means a US$ denominated bank account and a Rupiah denominated bank
account designated by Trozenin and SCH respectively and informed in writing to the
Purchaser at the latest five (5) Business Days prior to Completion;

“Warranties” means the representations, warranties and undertakings contained or referred
to in Clause 7 and Schedule 4;

“Rp.” Means Indonesian Rupiah;

“US$” means United States Dollars.

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Table of Contents

	1.2	 	Any references, express or implied, to statutes or statutory provisions shall be
construed as references to those statutes or provisions as respectively amended or
re-enacted or as their application is modified from time to time by other provisions
(whether before or after the date hereof) and shall include any statutes or provisions
of which they are re-enactments (whether with or without modification) and any
orders, regulations, instruments or other subordinate legislation under the relevant
statute or statutory provision. References to Sections of consolidating legislation
shall, wherever necessary or appropriate in the context, be construed as including
references to the Sections of the previous legislation from which the consolidating
legislation has been prepared.
	 
	1.3	 	References in this Agreement to Clauses and Schedules are to clauses in and
schedules to this Agreement (unless the context otherwise requires). The Recitals
and Schedules to this Agreement shall be deemed to form part of this Agreement.
	 
	1.4	 	Headings are inserted for convenience only and shall not affect the construction of
this Agreement.
	 
	1.5	 	The expression “the Vendors” includes their respective personal representatives
and the expression “the Purchaser” includes its successors and assigns.
	 
	1.6	 	References to “persons” shall include bodies corporate, unincorporated
associations and partnerships (whether or not having separate legal personality).
	 
	1.7	 	References to writing shall include any methods of reproducing words in a legible
and non-transitory form.
	 
	1.8	 	The masculine gender shall include the feminine and neuter and the singular
number shall include the plural and vice versa.
	 
	1.9	 	All warranties, representations, indemnities, covenants, agreements and obligations
given or entered into by more than one person are given or entered
into jointly and severally.
	 
	1.10	 	A document expressed to be “in the approved terms” means a document the terms
of which have been approved by or on behalf of the Parties and a copy of which
has been signed for the purposes of identification by or on behalf of those Parties or
will need to be approved by the Parties prior to Completion.

	2.	 	SALE OF SALE SHARES
	 
	2.1	 	This Agreement and the Parties’ rights and obligations set out under this Agreement is
conditional upon each Party (i) obtaining its relevant corporate approvals for it to enter
into this Agreement and perform its obligations hereunder and (ii) providing copies of such
corporate approvals to the other Party.

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	2.2	 	Subject to the terms of this Agreement, each of the Vendors shall sell a certain
number of their shares set opposite their names below or any other number of shares
agreed by the Parties provided that the total number of shares sold is 43,001,348
constituting 80% of the total issued and paid up shares of the Company and the
Purchaser shall purchase such shares, free from any Encumbrances and together with all
rights now or hereafter attaching to them, including all rights to any dividend or
other distribution declared, made or paid after the date of this Agreement (for the
avoidance of doubt, including any dividend or other distribution declared out of the
Company’s profits made in the fiscal years prior to that ended on the Accounting Date).

	 	 	 	 	 	 	 	 	 
	Name	 	Shares	 	Percentage
	PT Sigma Citra Harmoni
	 	 	15,457,855	 	 	 	28.758	%
	Trozenin Management Plc
	 	 	27,543,493	 	 	 	51.242	%
	TOTAL
	 	 	43,001,348	 	 	 	80.000	%

	3.	 	PURCHASE PRICE
	 
	3.1	 	The total purchase price payable for the Sale Shares (and all rights and title to and
interest in the Sale Shares) shall be US$35,200,000 (thirty five million two
hundred thousand United States Dollars). Payment to Trozenin shall be made in
U5$. Payment to SCH shall be made in Rupiah at the Agreed US$-Rp Exchange
Rate.
	 
	3.2	 	The Purchase Price shall be payable upon the fulfilment of all conditions as
stipulated in Clause 4 and Clause 5.
	 
	3.3	 	Each Party shall be liable for their respective tax obligations pursuant to the
prevailing tax regulations. The Purchaser is entitled to withhold a portion of the
Purchase Price (in accordance to the applicable tax rate) otherwise payable to
Trozenin and shall remit the withheld amount to the relevant Indonesian tax
office.

	4.	 	CONDITIONS AND PRE-COMPLETION MATTERS
	 
	4.1	 	The sale and purchase of the Sale Shares is conditional upon:

	 	(a)	 	the Warranties remaining true and accurate and not misleading at
Completion as if repeated at Completion and at all times between the date of this Agreement and Completion;
	 
	 	(b)	 	the shareholders of the Company have convened a general meeting of shareholders or executed a circular shareholders resolution which approves
(i) the transfer of the Sale Shares from the Vendors to the Purchaser, (ii) the
amendment to the Company’s Articles of Association which, to the extent
possible, reflects the positions agreed in the Post Completion Agreement
and (iii) the changes to the composition of the Company’s Board of
Directors and Board of Commissioners, as evidenced by minutes of
meeting of the Company shareholders or a signed circular shareholders
resolution in the form and substance satisfactory to the Purchaser;

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	 	(c)	 	each of the Vendors having complied fully with the obligations specified in
Clauses 11.1 and 11.2 and otherwise having performed in all material
respects all of the covenants and agreements required to be performed by it
under this Agreement;
	 
	 	(d)	 	approvals from BKPM in relation to (i) the transfer of Sale Shares from the
Vendors to the Purchaser, (ii) changes to the composition of the Company’s
Board of Directors and Board of Commissioners, in the form and substance
satisfactory to the Purchaser and (iii) conversion of the Company into a non
PMA/PMDN company;
	 
	 	(e)	 	an approval from and/or and receipt of report by the MOLHR in relation to
the amendment to the Company’s Articles of Association as evidenced by
an approval letter and/or a letter acknowledging receipt of the report issued
by the MOLHR;
	 
	 	(f)	 	a written consent from PT Orix Indonesia Finance as the lessor pursuant to
the lease agreements (i) No. E0511J2454 dated 7 December 2005 as
amended by Agreement No. ORIF/OLD/SK/315/IX/2005 undated, (ii) No.
E0509J2359 dated 27 September 2005 as amended by Addendum
Agreement No. ORIF/OLD/SK/077/IX/2005 undated, (iii) No.
E0602J2526 dated 22 February 2006 as amended by Additional
Agreement dated 22 February 2006, and any other similar agreements
between the Company and PT Orix Indonesia Finance, in respect of the
change of the controlling shareholder in the Company due to the transfer of
Sale Shares from the Vendors to the Purchaser;
	 
	 	(g)	 	a written consent from Bank Ekonomi Raharja in respect of the change of
the controlling shareholder in the Company due to the transfer of Sale
Shares from the Vendors to the Purchaser;
	 
	 	(h)	 	an express consent from the Company for the Purchaser to make an announcement in a newspaper
in respect of the proposed transfer of Sale Shares from the Vendors to the Purchaser in
accordance with Article 127 of the Company Law and complete settlement of any objections
filed by any creditors to the Company in the form and substance satisfactory to the
Purchaser;
	 
	 	(i)	 	announcements to the employees of the Company and the Purchaser in accordance with Article
127 of the Company Law;
	 
	 	(j)	 	a written consent from PT Bank HS 1906, in accordance with the License Agreement of ATM
Management System No. 579.5.HS1906 dated 2 September 2004, in respect of the change of the
controlling shareholder in the Company due to the transfer of Sale Shares from the Vendors to
the Purchaser;

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	 	(k)	 	a written notification from the Company to PT Bank Bumiputera Indonesia Tbk, in
accordance with the Infinium Human Resources Utilization Service Agreement No. 033.14.BBPI
dated 1 August 2001 (as amended), in respect of the change of the controlling shareholder
in the Company due to the transfer of Sale Shares from the Vendors to the Purchaser;
	 
	 	(I)	 	if required pursuant to applicable law or the Articles of Association (or similar document)
of each of the Vendors, the Vendors shall have delivered to the Purchaser a duly executed
copy of any relevant corporate resolutions of each of the Vendors approving the sale and
purchase of the Sale Shares to the Purchaser;
	 
	 	(m)	 	the Parties agreeing the final form of an agreement to be entered into by the Parties at the
Completion (the “Post Completion Agreement”) in respect of the following:

	 	(i)	 	Each of the Purchaser and SCH shall make its reasonable endeavour to
support the Company in achieving the IPO in 24 months as of the Completion Date,
subject to the market conditions and absence of any unfavourable externalities.
	 
	 	(ii)	 	A minority shareholder holding no less than 20% of the total issued shares
in the Company shall have the right to nominate one (1) Director in the Company’s
Board of Directors and one (1) Commissioner in the Company’s Board of Commissioners.
	 
	 	(iii)	 	SCH shall have the right to require (by serving a notice to) the
Purchaser (or its designee) to purchase all (but not some) of SCH’s shares in the
Company (the “Put Option Shares”) at the Put Option Price, such right exercisable
during a period commencing from the date being 24 month after the Completion Date
until the IPO (if it occurs later). For the avoidance of doubt, if the IPO occurs
within 24 month after the Completion Date, SCH shall have no such put option right.
Subject to the obtainment of the relevant third parties’ (including Governmental
Agency’s) consents, the sale and purchase of the Put Option Shares shall be
completed within ninety (90) days after receipt by the Purchaser of the notice from
SCH.
	 
	 	(iv)	 	SCH shall have a proportional tag-along right in respect of any sale by
the Purchaser of any of its shares in the Company to a third party prior to the IPO.
	 
	 	(v)	 	Until the Company has reached the IPO, each of SCH and the Purchaser shall
have the right of first refusal in the event of any sale of shares in the Company
that the other Party holds.
	 
	 	(vi)	 	The Post Completion Agreement shall terminate and cease to have any effect
once the Company has reached the IPO.

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	 	(n)	 	the Purchaser shall have received a legal opinion dated the Completion Date
from Trozenin’s Malaysian legal counsel (which shall be a reputable firm) in regard
to valid existence, due execution and due authorisation in the form and substance
satisfactory to the Purchaser; and
	 
	 	(o)	 	no statute, regulation or decision which would prohibit, restrict or
materially delay the sale and purchase of the Sale Shares or the operation of any
member of the Group after Completion having been proposed, enacted or taken by any
Governmental Agency.

	4.2	 	The Purchaser may waive all or any of such conditions at any time by notice in
writing to the Vendors.
	 
	4.3	 	The Vendors shall use their best endeavours to procure the fulfilment of the
Conditions which relate to and are directly or indirectly within the control of the
Vendors on or before the date specified in Clause 4.4.
	 
	4.4	 	In the event that any of the Conditions is not fulfilled (or waived
pursuant to Clause 4.2) on or prior to 30 June 2008 then the Purchaser shall not be bound to proceed
with the purchase of the Sale Shares and this Agreement shall cease to be of any
effect except Clauses 1, 10, 12, 13, 14.1 to 14.5, 15 and 16 which shall remain in
force and save in respect of claims arising out of any antecedent breach of this
Agreement.
	 
	4.5	 	The Vendors shall use its best efforts to obtain or to procure that the Company
obtains by five (5) Business Days prior to the Completion Date:

	 	(a)	 	duly signed Non Compete Agreements; and
	 
	 	(b)	 	duly signed Employee Waivers. For the avoidance of doubt, in the event
that any Specified Employee ceases to be employed by the Company
prior to Completion, that shall not be a failure to satisfy any conditions
hereunder.

	5.	 	COMPLETION

	5.1	 	Subject to the provisions of Clause 4, Completion shall take place on the
Completion Date at the offices of the Company when all (but not some only) of the
events described in this Clause 5 shall occur.
	 
	5.2	 	At Completion, contemporaneously with instruction by the Purchase to its bank to
commence the wire transfer of the full amount of the Purchase Price to the
Vendors’ Accounts as stated in Clause 5.4, the Parties shall execute (i) the Deeds
Transfer of Shares in the approved terms in Indonesian language in notarial
deeds by which ownership and title to the Sale Shares are transferred from the
Vendors to the Purchaser and (ii) the Post Completion Agreement.
	 
	5.3	 	Concurrently with the execution of the Deeds of Transfer of Shares, the Vendors
shall:

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	 	(a)	 	deliver to the Purchaser:

	 	(i)	 	share certificates for the Sale Shares and/or other
evidence of ownership of the Sale Shares;
	 
	 	(ii)	 	share certificates for the shares in the Subsidiaries
held by the Company and/or such other evidence of ownership by the Company
of such shares;
	 
	 	(iii)	 	such waivers or consents as the Purchaser may require to
enable the Purchaser or its nominees to be registered as holders of any of
the Sale Shares
	 
	 	(iv)	 	the title deeds, Leases and all other relevant deeds,
documents and correspondence relating to the Properties;

	 	(b)	 	cause a meeting of the Shareholders to be held or a circular shareholders
resolution to be executed at which the Shareholders shall pass resolutions
in the approved terms (inter alia) to:-

	 	(i)	 	approve the transfer of the Sale Shares and the
registration of the Purchaser as a shareholder of the Company in the
Company’s shareholders registry book and shall cause and procure the Board
of Director of the Company to register the Purchaser as shareholder in such
shareholders registry book;
	 
	 	(ii)	 	cause such persons as the Purchaser may nominate to be
validly appointed as commissioners and directors of the Company;
	 
	 	(iii)	 	change the Company’s and each of the Subsidiaries’ fiscal
year to become that ending on 31 December.

	5.4	 	At the date of Completion, the Purchaser shall pay the Purchase Price by wire
transfer to Vendors’ Accounts whose receipt in good funds in such account shall be
an absolute discharge of the Purchaser’s obligation to pay the Purchase Price and
the Purchaser shall not be concerned to see to the distribution of the moneys so
paid.
	 
	5.5	 	Without prejudice to any other remedies available to the Purchaser, if in any
respect the provisions of Clause 5 are not complied with by any of the Vendors on
the Completion Date the Purchaser may:

	 	(a)	 	defer Completion to a date not more than 28 days after the Completion
Date (and so that the provisions of this Clause 5.4 shall apply to
Completion as so deferred); or
	 
	 	(b)	 	proceed to Completion so far as practicable (without prejudice to its rights
under this Agreement); or
	 
	 	(c)	 	rescind this Agreement.

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	6.	 	RESTRICTION ON VENDORS

	6.1	 	Each of the Vendors undertakes with the Purchaser that, except with the consent in
writing of the Purchaser and subject to the provisions of Clause 6.3:

	 	(a)	 	(i) for the period of three years after Completion or (ii) from the
Completion
to one year after the IPO (whichever is the earlier), it will not within
Indonesia either on its own account or in conjunction with or on behalf of
any person, firm or company carry on or be engaged, concerned or
interested, directly or indirectly, in carrying on any business carried on by
any member of the Group (the “Restricted Business”) (other than as a
holder of not more than 5 per cent of the issued shares or debentures of
any company listed on a recognised stock exchange);
	 
	 	(b)	 	(i) for the period of three years after Completion or (ii) from the
Completion
to one year after the IPO (whichever is the earlier), it will not either on its
own account or in conjunction with or on behalf of any other person, firm
or company solicit or entice away from any member of the Group the
custom of any person, firm, company or organisation who shall at any time
have been a customer, identified prospective customer, representative,
agent, or correspondent of any member of the Group or in the habit of
dealing with any member of the Group or enter into any contract for sale
and purchase or accept business from any such person, firm, company or
organisation in the Restricted Business;
	 
	 	(c)	 	(i) for the period of three years after Completion or (ii) from the
Completion
to one year after the IPO (whichever is the earlier), it will not either on its
own account or in conjunction with or on behalf of any other person, firm
or company employ, solicit, entice away or attempt to employ, solicit or
entice away from any member of the Group any person who at the date of
this Agreement is or within the year preceding such employment,
solicitation, enticement or attempt shall have been an officer, manager,
consultant or employee of any member of the Group whether or not such
person would commit a breach of contract by reason of leaving such
employment;
	 
	 	(d)	 	it will not at any time hereafter make use of or disclose or divulge to any
person (other than to officers or employees of the Company or any of the
Subsidiaries who is required to know the same) any information (other than
any information properly available to the public or disclosed or divulged
pursuant to an order of a court of competent jurisdiction) relating to any
member of the Group, the identity of its customers and suppliers, its
products, finance, contractual arrangements, business or methods of
business and shall use its best endeavours to prevent the publication or
disclosure of any such information;

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	 	(e)	 	if, in connection with the business or affairs of any member of the Group, it
shall have obtained trade secrets or other confidential information
belonging to any third party under an agreement purporting to bind any
member of the Group which contained restrictions on disclosure it will not
without the previous written consent of the Purchaser at any time infringe
or take any action which would or might result in an infringement of such
restrictions;
	 
	 	(f)	 	it will not at any time hereafter in relation to any trade, business or
company use a name or trade mark including the word or symbol or logo
of “Sigma” and shall use its best endeavours to procure that no such name
or trade mark shall be used by any firm or company which he controls.

	6.2	 	Each of the Vendors will procure that its subsidiaries, holding company and any
other affiliated companies will observe the restrictions contained in the foregoing
provisions of this Clause 6 and will make reasonable endeavour to ensure that its
and their respective employees will observe the restrictions contained in Clause
6.1(d).
	 
	6.3	 	While the restrictions contained in this Clause are considered by the parties to be
reasonable in all the circumstances, it is recognised that restrictions of the nature in
question may fail for technical reasons. Accordingly it is agreed that if any of such
restrictions shall be adjudged to be void as going beyond what is reasonable in all
the circumstances for the protection of the interests of the Purchaser but would be
valid if part of its wording were deleted or the stipulated periods reduced or the
range of activities or area dealt with thereby reduced in scope the said restriction
shall apply with such modifications as may be necessary to make it valid and
effective.
	 
	6.4	 	The restrictions contained in Clauses 6.1 and 6.2 above shall be without prejudice
to performance by and shall not limit the restrictions on the Commissioners and the
Directors in their performance for the Company.

	7.	 	WARRANTIES

	7.1	 	Each of the Vendors jointly and severally represents, warrants and undertakes to
and with the Purchaser that each of the statements set out in Schedule 4 is now and
will at Completion be true and accurate.
	 
	7.2	 	The Warranties (other than Warranties 4.1, 4.2, 4.3, the entire 15 and the entire 16
in respect of which no qualification is accepted) are given subject to matters fully
and fairly disclosed in the Disclosure Letter.
	 
	7.3	 	Each of the Vendors acknowledges that the Purchaser has entered into this
Agreement in reliance upon the Warranties and has been induced by them to enter
into this Agreement.
	 
	7.4	 	Without restricting the rights of the Purchaser or otherwise affecting the ability of
the Purchaser to claim damages on any other basis available to it, in the event that
(i) any of the Warranties is broken or (as the case may be) proves to be untrue or
misleading, and/or (ii) any breach by any of the Vendors of any of their respective 

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	 	 	agreements, obligations or covenants under this Agreement, the Vendors shall, on demand,
pay to the Purchaser or, at the Purchaser’s direction, the Company:

	 	(a)	 	the amount necessary to put the Company and each of the Subsidiaries into
the position which would have existed if the Warranties had not been
broken or (as the case may be) had been true and not misleading; and
	 
	 	(b)	 	all losses, costs and expenses incurred by the Purchaser, the Company and
each member of the Group in connection with or as a result of such breach
and any costs (including reasonable legal costs), expenses which any of
them may incur either before or after the commencement of any action in
connection with (i) any legal proceedings in which the Purchaser claims
that any of the Warranties has been broken or is untrue or misleading and
in which judgement is given for the Purchaser or (ii) the enforcement of
any settlement of, or judgement in respect of, such claim.

	7.5	 	Each of the Warranties shall be separate and independent and, save as expressly
provided to the contrary, shall not be limited by reference to or inference from any
other Warranty or any other term of this Agreement, nor by anything in the
Disclosure Letter which is not expressly referenced to the Warranty concerned.
	 
	7.6	 	Where any statement in the Warranties or any confirmation or certificate given by
any of the Vendors hereunder or pursuant hereto is qualified by the expression “so
far as the Vendors are aware” or “to the best of the
Vendor’s knowledge and belief” or any similar expression, that statement shall be deemed to include an additional
statement that it has been made after due and careful enquiry.
	 
	7.7	 	Each of the Vendors agrees with the Purchaser (for itself and on behalf of the
Company and each of the Subsidiaries) to waive any rights which it may have in
respect of any gross misrepresentation or gross inaccuracy in, or gross omission
from, any information or advice supplied or given by the Company or its
Subsidiaries or its or their officers, employees or advisers in connection with the
giving of the Warranties and the preparation of the Disclosure Letter.
	 
	7.8	 	Each of the Vendors agrees to disclose promptly to the Purchaser in writing
immediately upon becoming aware of the same, any matter, event or circumstance
(including any omission to act) which may arise or become known to it after the
date of this Agreement and before Completion which:

	 	(a)	 	constitutes a material breach of or is materially inconsistent with any of
the Warranties; or
	 
	 	(b)	 	has an adverse effect on the financial position or prospects of the Company
or any Subsidiary.

	7.9	 	The Vendors shall give to the Purchaser both before and after Completion all such
reasonable information and documentation relating to the Company and the
Subsidiaries as the Purchaser shall reasonably require to enable it to satisfy itself as
to the accuracy and due observance of the Warranties.

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	7.10	 	The liabilities of the Vendors under the Warranties:-

	 	(a)	 	shall save in relation to paragraphs 4.1, 4.2, 4.3, the entire Section 15
and
the entire Section 16 of Schedule 4 (the “Enduring Warranties”), cease after
(i) one (1) year following the IPO or (ii) three (3) years following the
Completion Date (whichever is the earlier) except in respect of matters
which have been the subject of a written claim made before such date by
the Purchaser to any of the Vendors;
	 
	 	(b)	 	shall in relation to the Enduring Warranties cease after five (5) years as
of
the Completion Date except in respect of matters which have been the
subject of a written claim made before such date by the Purchaser to any
of the Vendors;
	 
	 	(c)	 	shall be limited to a maximum aggregate amount equal to the total
Purchase Price;

PROVIDED ALWAYS that if in any case the relevant claim or claims has arisen by reason of:

	 	(i)	 	fraud or wilful concealment or dishonesty or deliberate non disclosure on
the part of any of the Vendors or on the part of any officer or representative of any
member of the Group or of the Vendors; or
	 
	 	(ii)	 	the Vendors, the Company or any Subsidiary not having good title to any
asset (including any shares or stock of any company) of which it is now warranted to
be the owner; or
	 
	 	(iii)	 	any of the Vendors or any signatory on their respective behalf’s being
claimed not to have had legal authority or capacity to enter into this Agreement or
any agreement ancillary thereto;

then in any such case none of the limitations whether as to amount or time set forth in
this Clause 7.10 shall apply.

	7.11	 	No claims for breach of warranties under this Agreement shall be made against
the Vendors unless the losses relating thereto for which they would, but for this
Clause 7.11, be liable exceeds five hundred United States Dollars (US$500,000)
or its equivalent Rupiah amount based on the prevailing middle rate issued by
Bank Indonesia on the day the claim is made, provided that the claim in each
event exceeds this threshold, the entire amount of such losses shall become due
and payable.
	 
	7.12	 	The amount that the Purchaser shall be entitled to recover from the Vendors
under a qualified claim for breach of warranties (save for the Enduring
Warranties) shall be deducted by the Tax Restitution Payment that the Company
has received before or on the date when the claim is made by the Purchaser. For
the avoidance of doubt, no such deduction shall be made in respect of any
claims by the Purchaser for any breach of the Enduring Warranties. In the event
that the Tax Restitution Payment is received by the Company after a claim by the
Purchaser to the Vendors is paid by the Vendors, the Purchaser shall refund to

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	 	 	the Vendors an amount equal to the Tax Restitution Payment so received by the Company
provided that such refund shall not exceed the claim payment previously received by the
Purchaser from the Vendors.
	 
	7.13	 	SCH covenants and agrees with the Purchaser that it will, upon requested by the Purchaser at
any time following the Completion, vote affirmatively in a general shareholders meeting of the
Company, provide a written consent or cause the adoption of circular shareholders resolution
in respect of change of the Company’s fiscal year to become that ending 31 December.

	8.	 	COVENANT IN RESPECT OF TAX
	 
	8.1	 	In this Clause unless the context otherwise requires:

	 	(a)	 	“event” includes (without limitation) any omission, event, action or
transaction whether or not the Company or any of the Subsidiaries is a
party thereto, the death of any person, a change in the residence of any
person for any Tax purpose, a failure to make sufficient dividend payments
to avoid an apportionment or deemed distribution of income and the
entering into and completion of this Agreement and references to the result
of events on or before the Completion Date shall include the combined
result of two or more events one or more of which shall have taken place
on or before the Completion Date;
	 
	 	(b)	 	“relief” includes (without limitation) any relief, allowance, credit, set
off, deduction or exemption for any Tax purpose;
	 
	 	(c)	 	reference to income or profits or gains earned, accrued or received shall
include income or profits or gains deemed to have been or treated as or
regarded as earned, accrued or received in accordance with the Indonesian
Accounting Standard (PSAK);
	 
	 	(d)	 	reference to any Tax liability shall include not only any liability to make
actual payments of or in respect of Tax but shall also include:

	 	(i)	 	the loss or reduction in the amount of, or the setting off
against income, profits or gains, or against any Tax liability for which no
sufficient provision has been made in preparing the Accounts of, any relief
which would (were it not for the said loss, reduction or setting off) have
been available to the Company or any of the Subsidiaries and which relief
has been taken into account in computing (and so eliminating or reducing)
any provision for deferred Tax which appears (or which but for such relief
would have appeared) in the Accounts;
	 
	 	(ii)	 	the loss or reduction in the amount of, or the setting off
against any Tax liability for which no sufficient provision has been made in
preparing the Accounts of, a right to repayment of Tax which has been
treated as an asset of the Company or any of the Subsidiaries in preparing
the Accounts; and

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	 	(iii)	 	the loss or reduction in the amount of, or the setting off against
income, profits or gains earned, accrued or received on or before
Completion, or against any Tax liability of, any relief which is not
available before Completion but which arises in respect of an event
occurring after Completion in circumstances where, but for such loss,
reduction or setting off, the Company or any of the Subsidiaries would
have had a Tax liability in respect of which the Purchaser would have
been able to make a claim under this Clause 8;

	 	 	 	and in such a case the amount of Tax which could otherwise be saved or relieved,
by the relief so lost, reduced or set off (calculated by reference to the rates
of Tax in force at the date of this Agreement) or the amount of repayment which
would otherwise have been obtained shall be treated as the amount of a Tax
liability which has arisen;
	 
	 	(e)	 	reference to the “Company” includes a reference to each of the
Subsidiaries;
	 
	 	(f)	 	reference to a payment in respect of Tax includes (without limitation) a
payment for the surrender or transfer of any other relief, a repayment of any
such payment and a payment by way of reimbursement, recharge,
indemnity or damages.

	8.2	 	Subject as hereinafter provided, each of the Vendors covenants with and
undertakes to pay to the Company, within seven days after the Vendors have been
notified by the Purchaser, a sum equal to the amount of:

	 	(a)	 	any Tax liability resulting from the ordinary course of business of the
Company or any of the Subsidiaries resulting from or by reference to any
income, profits or gains earned, accrued or received on or before the
Completion Date or any event on or before the Completion Date whether
alone or in conjunction with other circumstances and whether or not such
Tax is chargeable against or attributable to any other person; and
	 
	 	(b)	 	all reasonable costs and expenses which are incurred by the Purchaser or
any member of the Group in connection with any of the matters referred to
in this Clause 8 or in taking or defending any action under the covenants
contained in this Clause 8 (including, without prejudice to the generality of
the foregoing, all legal and other professional fees and disbursements).

	8.3	 	The covenants contained in Clause 8.2 do not apply to any liability:

	 	(a)	 	to the extent that provision or reserve for such amount has been made in
the Accounts or to the extent that payment or discharge of such liability
has been taken into account therein; and
	 
	 	(b)	 	in respect of which provision or reserve has been made in the Accounts
which is insufficient only by reason of any increase in rates of Tax made
after the Completion Date with retroactive effect.

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	8.4	 	If the Purchaser shall become aware of any assessment, notice, demand or other
document issued or action taken by or on behalf of any person, authority or body
from which it appears that the Company or any of the Subsidiaries has or may have
a liability in respect of which a claim could be made under this Clause, it shall give
written notice thereof to the Vendors and shall (if the Vendors shall indemnify and
secure the Purchaser and the Company and the Subsidiaries as applicable to the
Purchaser’s reasonable satisfaction against any liabilities, costs, damages or
expenses which may be incurred thereby) take such action and procure that the
Company and/or the relevant Subsidiary shall take such action as the Vendors may
reasonably request to dispute, resist or compromise the liability; provided that
neither the Company and/or the relevant Subsidiary nor the Purchaser shall in any
event be required to take any steps which would require any admission of guilt or
liability relating to matters connected with the claim in question or which would
affect the future conduct of the business of the Purchaser or the Company or any of
the Subsidiaries or any subsidiaries of the Purchaser or affect the rights or
reputations of any of them.
	 
	8.5	 	The liability of the Vendors under this Clause shall cease after (i) one (1) year
following the IPO or (ii) three (3) years following the Completion Date (whichever
is the earlier) except in respect of matters which have been the subject of a written
claim made within the said period by the Purchaser to any of the Vendors unless
the claim in question has arisen by reason of fraud, wilful concealment or
dishonesty on the part of any of the Vendors or, prior to the Completion Date, any
member of the Croup or any of its officers or deliberate non disclosure on the part
of any of the Vendors or, prior to the Completion Date, by any officer or
representative of any member of the Group in which event there shall be no
contractual limit on the time period within which such claim may be brought.
	 
	8.6	 	The due date for the making of payments by the Vendors under this Clause 8 shall
be:-

	 	(a)	 	where the payment relates to a liability of the Company or any of the
Subsidiaries to make an actual payment of or in respect of Tax, the date
which is seven days before the date on which such actual payment is due
to be made to the relevant authority;
	 
	 	(b)	 	where the payment relates to a matter falling within Clause 8.1(d)(i) or
8.1(d)(iii), the date falling seven days after the Vendors have been notified
by the Purchaser that the auditors for the time being of the Company or the
relevant Subsidiary have certified at the request of the Purchaser or the
Company or the relevant Subsidiary that the Vendors have a liability for a
determinable amount under Clause 8.2; and
	 
	 	(c)	 	where the payment relates to a matter falling within Clause 8.1(d)(ii) the
date on which the repayment of Tax would otherwise have been due to be
made; and
	 
	 	(d)	 	in the case of costs and expenses within Clause 8.2(b) the date on which
such costs and expenses are incurred.

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	8.7	 	The Vendors shall give all such assistance and provide such information as the
Purchaser shall reasonably request from time to time for the purpose of enabling the
Purchaser or any member of the Group to make returns and provide information as required
to any Tax authority and to negotiate any liability to Tax.

	9.	 	THE PURCHASER’S REMEDIES

	9.1	 	The Purchaser shall be entitled (without prejudice to all other rights and
remedies available to it) to terminate this Agreement if at any time on or before
Completion (a) any of the Vendors fails to comply with any of its material
obligations in this Agreement or (b) the Purchaser becomes aware of any fact,
matter or event which in its reasonable opinion constitutes a material breach of
any Warranty.
	 
	9.2	 	Without prejudice to Clause 9.1, the Purchaser shall be entitled to claim all
losses, damages, payments, awards, costs or expenses suffered or made by the
Purchaser as a result of any material breach of any representation, statement,
assurance, covenant, undertaking, indemnity, guarantee or commitment given
by or on behalf of the Vendors in connection with this Agreement other than the
Warranties.

	10.	 	RESTRICTION ON ANNOUNCEMENTS
	 
	 	 	Each of the Parties undertakes that prior to Completion it will not (save as required by
Article 127 of Company Law or any prevailing law or by any securities exchange or any
supervisory or regulatory body to whose rules any of the Parties is subject) make any
announcement in connection with this Agreement unless the other Parties shall have given
their respective consents to such announcement (which consents may not be unreasonably
withheld or delayed and may be given either generally or in a specific case or cases and
may be subject to conditions).

	11.	 	PRE-COMPLETION OBLIGATIONS

	11.1	 	The Vendors shall procure that the business of each member of the Group is operated until
Completion in the ordinary course and in the same manner as it was operated prior to the date
of this Agreement and that without a prior written consent from the Purchaser, no member of
the Group:

	 	(a)	 	makes or commits to any capital expenditure for more than Rp. 2 billion
or for longer than 12 months except those made for Surabaya Data
Center amounting to no more than Rp. 15 billion;
	 
	 	(b)	 	acquires, disposes of, or creates a security interest over any of its assets
other than in the ordinary course of business consistent with past practice, but in any case not to exceed Rp. 2 billion ;

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	 	(c)	 	distributes or return any capital to its shareholders or undertakes any
merger, consolidation, acquisition, recapitalization, liquidation or
dissolution;
	 
	 	(d)	 	pays any dividend to its shareholders or pays any management fee, or
other distribution;
	 
	 	(e)	 	issues any shares, Options or securities which are
convertible into shares;
	 
	 	(f)	 	materially changes the terms of employment (including remuneration
and/or any benefit plan) of any of the employees, or pays or provides any
bonus (in cash or in kind) to any employee;
	 
	 	(g)	 	alters its Articles of Association, provided that the Company may make
any alterations to its Articles of Association that are necessary to
complete the transactions contemplated by this Agreement;
	 
	 	(h)	 	makes any material changes to the accounting procedures or principles by reference to which
the Accounts are drawn up;
	 
	 	(i)	 	and/or the Vendors pass any shareholder resolutions in general meeting or by way of written
resolution of shareholders of any member of the Group, provided that the shareholders of the
Company may pass resolutions that are necessary to complete the transactions contemplated by
this Agreement;
	 
	 	(j)	 	discontinues or ceases to operate all or a material part of their respective business;
	 
	 	(k)	 	incurs any liabilities or borrows (other than by bank overdraft, bank guarantee or similar
facility within limits subsisting at the date of this Agreement) any money for more than Rp.
3 billion or agrees so to do;
	 
	 	(l)	 	discloses to any third party any confidential information relating to any member of the
Group including but not limited to the identity of its customers and suppliers, its products,
finance, contractual arrangements, business or methods of business;
	 
	 	(m)	 	enters into, amends or terminates any contract or commitment (other than those which are
immaterial or specifically referred to in this Agreement to be entered into, amended or
terminated) which relates to or affects a material part of the business or any materially
unusual or abnormal or onerous contract or commitment;
	 
	 	(n)	 	writes off or writes down any of its assets other than in the ordinary course of business,
consistent with past practice;

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	 	(o)	 	files any amended Tax return, makes any material Tax election, settle any Tax
claim or Tax assessment, consent to any extension or waiver of the limitation
period applicable to any Tax claim or Tax assessment, or take any other similar
action relating to the filing of any Tax return or the payment of any Tax, if such
amendment, agreement, settlement, consent or other action would have the effect of
increasing its tax liability for any period ending after Completion;
	 
	 	(p)	 	engages in any transaction outside the ordinary course of business
consistent with past practice or not on arm’s length basis with the Vendors or any
officer, director or commissioner or affiliates of the Vendors; and
	 
	 	(q)	 	enters into any contract or other agreement to do or engage in any of the
foregoing.

	11.2	 	The Vendors shall not solicit, initiate or encourage the submission of any proposal to
acquire the Sale Shares or any rights pertaining to the Sale Shares (the “Acquisition
Proposal”), enter into any agreement with respect to any Acquisition Proposal, or cooperate
in any way with, or knowingly assist, participate in, facilitate or encourage any effort by
any person that is seeking to make, or has made, an Acquisition Proposal.
	 
	11.3.	 	As from the date of this Agreement, the Vendors shall give and shall procure that the
Purchaser and/or any persons authorised by it will for the purpose of satisfying itself as to
the accuracy of the Warranties be given such access during normal office hours to the
premises and all books, title deeds, records and accounts of the Company and the Subsidiaries
as the Purchaser may reasonably request and be permitted to take copies of any such books,
deeds, records and accounts and that the Commissioners, Directors and employees of the
Company and the Subsidiaries shall be instructed to give within reasonable time all such
information and explanations to any such persons as aforesaid as may be requested by it or
them, provided that before making such request, the Purchaser or any person appointed by it
shall provide the Vendors with a written request outlining the intention to inspect the
Company, the issues or matters which needs to be clarified, and the documents or information
which are required for that purpose.
	 
	11.4	 	The Purchaser undertakes that it will not prior to Completion, save as required by law (or
by any securities exchange or any supervisory or regulatory body to whose rules it is
subject), divulge any confidential information relating to the Company and the Subsidiaries
obtained by it pursuant to this Clause to any person other than its own officers, employees
or professional advisers.

	12.	 	CONFIDENTIALITY OF INFORMATION RECEIVED

	12.1	 	Each of the Parties undertakes that it shall treat as strictly confidential all information
received or obtained by it or its employees, agents or advisers as a result of entering into
or performing this Agreement including information relating to the provisions of this
Agreement, the negotiations leading up to this Agreement, the subject matter of this
Agreement or the business or affairs of the other Parties

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	 	 	and subject to the provisions of Clause 12.2 that it not at any time hereafter make use of
or disclose or divulge to any person any such information and shall use its best
endeavours to prevent the publication or disclosure of any such information.
	 
	12.2	 	The restrictions contained in Clause 12.1 shall not apply so as to prevent a Party from
making any disclosure required by law or by any securities exchange or supervisory or
regulatory or governmental body pursuant to rules to which the relevant Party is subject or
from making any disclosure to any professional adviser for the purposes of obtaining advice
(provided always that the provisions of this Clause 12 shall apply to and the Parties shall
procure that they apply to and are observed in relation to, the use or disclosure by such
professional adviser of the information provided to him) nor shall the restrictions apply in
respect of any information which comes into the public domain otherwise than by a breach of
this Clause 12 by the Party.

	13.	 	COSTS
	 
	13.1	 	Each Party to this Agreement shall pay its own costs of and incidental to this Agreement and
the sale and purchase envisaged under this Agreement.

	14.	 	GENERAL
	 
	14.1	 	This Agreement shall be binding upon and endure for the benefit of the estates,
personal representatives or successors of the Parties.
	 
	14.2	 	This Agreement (together with any documents referred to herein) constitutes the
whole agreement between the Parties and supersedes any previous agreements or
arrangements between them relating to the subject matter of this Agreement; it is
expressly declared that no variations of this Agreement shall be effective unless
made in writing signed by duly authorised representatives of the Parties.
	 
	14.3	 	Subject always to the provisions providing time limit specifically stated in this
Agreement and applicable statute of limitations, all of the provisions of this
Agreement shall remain in full force and effect notwithstanding Completion (except
insofar as they set out obligations which have been fully performed at Completion).
	 
	14.4	 	If any provision or part of a provision of this Agreement shall be, or be found by
any authority or court of competent jurisdiction to be, invalid or unenforceable,
such invalidity or unenforceability shall not affect the other provisions or parts of
such provisions of this Agreement, all of which shall remain in full force and effect.
	 
	14.5	 	If any liability of one or more but not all of the Vendors shall be or become illegal,
invalid or unenforceable in any respect, such circumstance shall not affect or
impair the liabilities of the other Vendors under this Agreement.
	 
	14.6	 	The Purchaser may release or compromise the liability of any of the Vendors
hereunder or grant to any Vendor time or other indulgence without
affecting the liability of any other Vendor hereunder.

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	14.7	 	No failure of the Purchaser to exercise, and no delay or forbearance in exercising,
any right or remedy in respect of any provision of this Agreement shall operate as a
waiver of such right or remedy.
	 
	14.8	 	This Agreement may be executed in one or more counterparts, and by the Parties
on separate counterparts, but shall not be effective until each party has executed at
least one counterpart and each such counterpart shall constitute an original of this
Agreement but all the counterparts shall together constitute one and the same
instrument.

	15.	 	NOTICES
	 
	15.1	 	Each notice, demand or other communication given or made under this Agreement
shall be in writing and delivered or sent to the relevant party at its address or fax
number set out below (or such other address or fax number as the addressee has by
five (5) days’ prior written notice specified to the other parties):
	 
	 	 	To the Vendors:
	 
	 	 	PT Sigma Citra Harmoni

Sigma Inno Office
 Menara DEA, 8th
Floor
 Kawasan Mega Kuningan
 Jalan
Mega Kuningan Barat IX
 Kavling E4.3
No. 1
 Jakarta 12950
	 
	 	 	Attention:           President Director

Fax Number:      + 62 21 5762155
	 
	 	 	Trozenin Management Plc

Tiara Labuan

Jalan Tanjung Ratu 87000

FT Labuan, East Malaysia
	 
	 	 	Attention:        Director

Fax Number:    + 6087417655
	 
	 	 	To the Purchaser:
	 
	 	 	PT Multimedia Nusantara

Century Tower, 11th Floor
 Jl. H.R.
Rasuna Said, Kav. X-2

No. 4, Jakarta 12950
	 
	 	 	Attention:        President Director / Director of Finance

Fax Number:    + 62 21 521 0124
	 
	15.2	 	Any notice, demand or other communication so addressed to the relevant party
shall be deemed to have been delivered (a) if given or made by letter, when

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	 	 	actually delivered to the relevant address and (b) if given or made by fax, when
despatched with a confirmed transmission report.

	16.	 	GOVERNING LAW AND ARBITRATION
	 
	16.1	 	This Agreement shall be governed by and construed in accordance with the laws of
Indonesia. The Parties waive the provisions of Article 1266 of the Indonesian Civil
Code to the extent that those provisions require a court order to terminate this
Agreement.

	16.2	(a)	 	The Parties agree that if any dispute arises out of or in connection with this
Agreement, including without limitation any question regarding its existence,
validity, termination of rights or obligations of any party, the Parties shall
attempt, for a period of thirty (30) days after the receipt by one Party of a
notice from the other Party of the existence of the dispute, to settle such
dispute in the first instance by mutual discussions between the Parties.

	 	(b)	 	Failing such an amicable settlement any and all disputes, conflicts or
controversies arising out of or in connection with this Agreement, or its
performance, shall be settled by arbitration to be held in Jakarta under
the Rules of Arbitration of the Indonesian National Board of Arbitration
(BANI) (the “Rules”).
	 
	 	(c)	 	Each of the Parties has the right to appoint one (1) arbitrator. The two (2)
arbitrators will in turn appoint the third arbitrator. Should either Party
fail to appoint its respective arbitrator within thirty (30) days as from the
date requested by the other Party, or should the two (2) arbitrators so
appointed fail to appoint the third arbitrator within thirty (30) days as
from the date of appointment of the second arbitrator then such
arbitrator(s) shall be appointed by the chairman of the BANI.
	 
	 	(d)	 	The Board of Arbitration appointed shall operate pursuant to the BANI
Rules. Where the BANI Rules and this Agreement are silent as to the
conduct of the arbitral proceedings, the arbitrators will decide as to how
the proceedings shall be conducted.
	 
	 	(e)	 	No Party shall be entitled to commence or maintain any action in a court of
law upon any matter which has been submitted to arbitration hereunder
until such matter shall have been determined as provided in this Clause
16.2 and then only for the enforcement of the arbitration award.

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	 	 	 	The decision of the board of arbitration in any matter within this Clause shall be final,
binding and incontestable and may be used as a basis for judgment thereon in Indonesia or
elsewhere. It shall include a determination as to which of the Parties shall pay the cost
and expenses of the arbitrators, the administrative costs of the arbitration, the legal
fees incurred by the parties, the cost and expenses of witnesses and all other costs and
expenses necessarily incurred in the opinion of the board of arbitration in order to
properly settle the dispute.

	 	(f)	 	The Parties expressly agree (i) that there shall be no appeal to any court from the decision
of the arbitrator, (ii) that the arbitrators need not be bound by strict rules of law in
making their decision, but may pronounce judgment based on ex aequo et bono principle and
(iii) that the mandate of the arbitrators duly constituted in this Agreement shall remain in
effect until a final arbitration award has been issued by the arbitrators.

[signature page will follow]

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The Vendors:

	 	 	 	 	 	 	 	 	 	 	 
	PT Sigma Citra Harmoni	 	 	 	Trozenin Management Plc	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	/s/ Otto Toto Sugiri	 	 	 	/s/ Eko Basyuni	 	 
	 	 	 	 	 	 	 
	Name:

	 	Otto Toto Sugiri
	 	 	 	Name:
	 	Eko Basyuni	 	 
	Title:

	 	PRESIDENT DIRECTOR
	 	 	 	Title:
	 	PROXY	 	 

The Purchaser:

	 	 	 	 	 
	PT Multimedia Nusantara

 	 
	/s/ Alex J. Sinaga
 	 
	Name:  	Alex J. Sinaga 	 
	Title:  	President Director 	 
	 

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