Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase
Agreement (this “Agreement”) is dated as of August 13, 2009, between
BioSante Pharmaceuticals, 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.

 

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

 

1

 

“Common
Stock” means the common stock of the Company, par value $0.0001 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 Oppenheimer Wolff & Donnelly LLP, with offices located
at Plaza VII, Suite 3300, 45 South Seventh Street, Minneapolis, Minnesota
55402.

 

“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 current or former employees, officers, directors or
independent contractors of the Company pursuant to any stock-based compensation
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, (c) securities issued
pursuant to stock splits, stock dividends or distributions, recapitalizations
and similar events affecting the Common Stock; (d) shares of Common Stock or
warrants to vendors of the Company approved by a majority of the non-employee
members of the Board of Directors; (e) securities issued pursuant to mergers,
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company; and (f) securities issued after the
completion of any merger, acquisition or strategic transaction approved by a
majority of the disinterested directors of the Company upon the exercise or
exchange of or conversion of any securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
effectiveness of such merger, acquisition or strategic transaction.

 

“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).

 

2

 

“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, other than restrictions imposed by
securities laws.

 

“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).

 

“Per
Share Purchase Price” equals $2.00, 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 base prospectus filed with 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 or at 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.
333-159606 which registers the sale of the Shares, the Warrants and the Warrant
Shares to the Purchasers.

 

“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 

 

3

 

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, the New York Stock Exchange or the OTC Bulletin Board (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.

 

“Transfer
Agent” means Computershare Investor Services, the current transfer agent of
the Company, with a mailing address of 350 Indiana Street, Suite 750, Golden CO
80401 and a facsimile number of 312.601.2312, and any successor transfer agent
of the Company.

 

4

 

“Warrants”
means, collectively, the Common Stock purchase warrants delivered to the
Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall have a term of exercise equal that commences immediately and
ends on August 12, 2014, in the form of Exhibit A attached hereto.

 

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

 

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

 

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 $13,400,000
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 WS 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, in the form to be mutually agreed upon by the
parties;

 

(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;

 

(iv)          a
Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to 40% of such
Purchaser’s Shares, with an exercise price equal to $2.50,
subject to adjustment therein (such Warrant certificate may be delivered within
three Trading Days of the Closing Date); and

 

5

 

(v)           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 when made and
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 in all
material respects; and

 

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

 

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

 

(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 in all material
respects;

 

(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; and

 

(v)           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 

 

6

 

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 warranty made herein to the extent of such
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).  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.

 

(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, would not result in: (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document with respect
to the Company, (ii) a material adverse effect on the results of operations,
assets, business 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 its obligations under any
Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”)
and no 

 

7

 

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.

 

(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 would not have 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 

 

8

 

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 and FINRA
(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 in all material respects with the
requirements of the Securities Act, which Registration Statement became
effective on June 9, 2009 (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 to the actual knowledge of the Company, 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.

 

(g)           Capitalization.  The authorized capitalization of the Company
is as set forth on Schedule 3.1(f). 
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 stock options under
the Company’s stock-based compensation 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 disclosed in the SEC Reports or Schedule
3.1(f) or as a result of the purchase and sale of the Securities, there are
no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or 

 

9

 

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 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 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 all material respects 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 is required
for the issuance and sale of the Securities. 
Except as disclosed in any SEC Report, including any exhibit thereto,
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.

 

(h)           SEC Reports; Financial Statements.  The Company has complied in all material
respects with requirements to file all reports, schedules, forms, statements
and other documents required to be filed by the Company under 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, 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 is not an issuer currently 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, 

 

10

 

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 would result in a Material Adverse Effect, (ii) the Company has not
incurred any material 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 required to be
disclosed in filings made with the Commission, (iii) the Company has not
materially 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-based compensation 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 in the SEC Reports or on Schedule
3.1(i), no event, liability or development has occurred with respect to the
Company or its Subsidiaries or their respective business, properties,
operations 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 prior to the date that
this representation is made.

 

(j)            Litigation.  Except as disclosed in the SEC Reports or on Schedule
3.1(j), 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)
would, if there were an unfavorable decision, have a Material Adverse
Effect.  Except as disclosed in the SEC
Reports or on Schedule 3.1(j), neither the Company nor any Subsidiary,
nor to the Company’s actual knowledge, director or officer thereof, is or
during the past 12 months 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 to
the Company’s knowledge, any current director or officer of the Company during
the past 12 months.   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
actual knowledge of the Company, is imminent with respect to any of the
employees of the Company, which would have 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 

 

11

 

officer, to the
knowledge of the Company, is, 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 would not, individually or in the aggregate, result in 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
would not result in a Material Adverse Effect.

 

(m)          Regulatory Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not 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 do not own
any real property. The Company and the Subsidiaries have 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 created under license or collaboration agreements relating to
the Company’s products or Intellectual Property Rights and 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 with the provisions thereof, except where such non-compliance
would not result in a Material Adverse Effect.

 

12

 

(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 would not result
in 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 actual
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 which would result in a Material Adverse Effect.  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 would
not, individually or in the aggregate, result in a Material Adverse Effect.

 

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

 

(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-based compensation 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) 

 

13

 

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 from
the Company in connection with the transactions contemplated by the Transaction
Documents.

 

(t)            Investment Company. The
Company is not, and immediately after receipt of payment for the Securities,
will not be an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

(u)           Registration Rights.  Except as described in the SEC Reports or as
provided in agreements filed as exhibits to the SEC Reports, no Person has any
right to cause the Company to effect the registration under the Securities Act
of any securities of the Company, which rights are currently not satisfied.

 

(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 material
listing or maintenance requirements of such Trading Market.

 

14

 

(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 solely 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 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.

 

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

 

(z)            Solvency.  Except as described in the SEC Reports, 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 

 

15

 

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 except where such default would not result in a Material Adverse
Effect.

 

(aa)         Tax
Status.  Except for matters that
would not, individually or in the aggregate, 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 actual 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 actual 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 is a registered public accounting firm as required by the
Exchange Act who the Company expects will express its opinion with respect to
the financial statements to be included in the Company’s next Annual Report on Form
10-K for the year ending December 31, 2009.

 

(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 

 

16

 

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.

 

(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, 

 

17

 

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.

 

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) 

 

18

 

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)           Understandings
or Arrangements.  Such Purchaser is
acquiring the Securities as principal for its own account and has no direct or
indirect arrangement or understandings with any other persons to distribute or
regarding the distribution of such Securities (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.

 

(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). The Purchasers acknowledge that they
have read the Prospectus, the Prospectus Supplement, the Registration Statement
and the SEC Reports. The Purchasers have not received any written documents
that would constitute an offer to sell, or the solicitation of an 

 

19

 

offer to buy the Securities or that would constitute a
prospectus under the Securities Act, other than the Prospectus and the
Prospectus Supplement. 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.

 

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.

 

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 

 

20

 

regulations
of any Trading Market such that it would require stockholder approval prior to
the closing of such other transaction unless stockholder approval is obtained
before the closing of such subsequent transaction.

 

4.4       Securities Laws Disclosure; Publicity.  The Company shall, by 9:00 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.  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).

 

4.5       Stockholder Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving 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 in the Prospectus
Supplement, the Company shall use the net proceeds from the sale of the
Securities hereunder for working capital purposes.

 

21

 

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,
stockholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, stockholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling 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 due to a claim
by a third party 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. The Company will have the exclusive right to settle any
claim or proceeding, provided that the Company will not settle any such claim,
action or proceeding without the prior written consent of the Purchaser Party,
which will not be unreasonably withheld or delayed; provided, however, that
such consent shall not be required if the settlement includes a full and
unconditional release satisfactory to the Purchaser Party from all liability
arising or that may arise out of such claim or proceeding and does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any Purchaser Party.

 

22

 

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

 

4.11               [RESERVED]

 

4.12               Subsequent Equity Sales.  From the date hereof until 30 days after the
Closing Date, the Company shall not issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents. Notwithstanding the foregoing, this Section 4.12
shall not apply in respect of an Exempt Issuance.

 

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.

 

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 

 

23

 

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.

 

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 August 19, 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.

 

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 

 

24

 

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 67% 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.

 

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, stockholders, 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 

 

25

 

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.

 

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).

 

26

 

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 and customary
and reasonable indemnity or security, if requested.  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.

 

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 WS. 
WS 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.

 

27

 

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)

 

28

 

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

 

 

	
  BIOSANTE
  PHARMACEUTICALS, INC.

  	
   

  	
  Address
  for Notice:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  Fax: (847) 478-9260

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

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

Oppenheimer Wolff &
Donnelly LLP

Plaza VII, Suite 3300

45 South Seventh Street

Minneapolis, Minnesota 55402

Facsimile: (612) 607-7100

Attention: Amy E. Culbert, Esq.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

29

 

[PURCHASER SIGNATURE PAGES TO BPAX 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:

  	
   

  	
   

  
								

 

[SIGNATURE PAGES CONTINUE]

 

30Exhibit 10.1

 

	
  LOAN NUMBER

  	
   

  	
  LOAN NAME

  	
   

  	
  ACCT. NUMBER

  	
   

  	
  NOTE DATE

  	
   

  	
  INITIALS

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4090817

  	
   

  	
  PROUROCARE MEDICAL, INC

  	
   

  	
   

  	
   

  	
  06/12/09

  	
   

  	
  KRH

  
	
  NOTE AMOUNT

  	
   

  	
  INDEX (w/Margin)

  	
   

  	
  RATE

  	
   

  	
  MATURITY DATE

  	
   

  	
  LOAN PURPOSE

  
	
  $100,000.00

  	
   

  	
  Wall Street Journal Prime
  plus

  	
   

  	
  6.000%

  	
   

  	
  03/28/10

  	
   

  	
  Commercial

  
	
   

  	
   

  	
  1.000%

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Creditor Use Only

 

PROMISSORY NOTE

(Commercial - Single Advance)

 

DATE AND PARTIES. The date of this Promissory Note (Note) is June 12,
2009. The parties and their addresses are:

 

LENDER:

CROWN BANK

6600 France Avenue South Ste
125

Edina, Minnesota 55435

Telephone:                (952)
285-5800

 

BORROWER:

PROUROCARE MEDICAL INC.

a Nevada Corporation

6440 FLYING CLOUD DRIVE #101

EDEN PRAIRIE, Minnesota 55344

 

PRO URO CARE, INC.

a Minnesota Corporation

6440 FLYING CLOUD DRIVE #101

EDEN PRAIRIE, Minnesota 55344

 

1. DEFINITIONS. As used in this
Note, the terms have the following meanings:

 

A.
Pronouns. The pronouns “I,” “me,” and “my” refer to each Borrower signing this
Note, individually and together. “You” and “Your” refer to the Lender.

B.
Note. Note refers to this document, and any extensions, renewals, modifications
and substitutions of this Note.

C.
Loan. Loan refers to this transaction generally, including obligations and
duties arising from the terms of all documents prepared or submitted for this transaction
such as applications, security agreements, disclosures or notes, and this Note,

D.
Loan Documents. Loan Documents refer to all the documents executed as a part of
or in connection with the Loan,

E.
Property. Property is any property, real, personal or intangible, that secures
my performance of the obligations of this Loan.

F.
Percent. Rates and rate change limitations are expressed as annualized
percentages.

 

2. PROMISE TO PAY. For value
received, I promise to pay you or your order, at your address, or at such other
location as you may designate, the principal sum of $100,000.00 (Principal)
plus interest from June 12, 2009 on the unpaid Principal balance until
this Note matures or this obligation is accelerated.

 

3. INTEREST. Interest will accrue
on the unpaid Principal balance of this Note at the rate of 6.000 percent (Interest
Rate) until June 13, 2009, after which time it may change as described in
the Variable Rate subsection,

 

A.
Interest After Default. If you declare a default under the terms of the Loan,
including for failure to pay in full at maturity, you may increase the Interest
Rate otherwise payable as described in this section. In such event, interest
will accrue on the unpaid Principal balance of this Note at a rate equal to the
rate in effect prior to default, plus 2.000 percent. until paid in full.

B.
Maximum Interest Amount. Any amount assessed or collected as interest under the
terms of this Note will be limited to the maximum lawful amount of interest
allowed by state or federal law, whichever is greater. Amounts collected in
excess of the maximum lawful amount will be applied first to the unpaid
Principal balance. Any remainder will be refunded to me.

C.
Statutory Authority. The amount assessed or collected on this Note is
authorized by the Minnesota usury laws under Minn. Stat. t 47.59.

D.
Accrual. Interest accrues using an Actual/36D days counting method.

E.
Variable Rate. The Interest Rate may change during the term of this
transaction,

 

(1) Index.
Beginning with the first Change Date, the Interest Rate will be based on the
following index: the base rate on corporate loans posted by at least 75% of the
30 largest U.S. banks known as the Wall Street Journal U.S. Prime Rate.

The
Current Index is the most recent index figure available on each Change Date.
You do not guaranty by selecting this Index, or the margin, that the Interest
Rate on this Note will be the same rate you charge on any other loans or class
of loans you make to me or other borrowers, If this Index is no longer
available, you will substitute a similar index. You will give me notice of your
choice.

(2) Change
Date. Each date on which the Interest Rate may change is called a Change Date.
The Interest Rate may change March 1, 2009 and daily thereafter.

(3) Calculation
Of Change. On each Change Date you will calculate the Interest Rate, which will
be the Current Index plus 1.000 percent. The result of this calculation will be
rounded up to the nearest .001 percent. Subject to any limitations, this will
be the Interest Rate until the next Change Date. The new Interest Rate will
become effective on each Change Date. The Interest Rate and other charges on
this Note will never exceed the highest rate or charge allowed by law for this
Note.

(4) Limitations,
The Interest Rate changes are subject to the following limitations:

(a) Lifetime.
The Interest Rate will never be less than 6.000 percent.

(5) Effect
Of Variable Rate. A change in the Interest Rate will have the following effect
on the payments: The amount of scheduled payments and the amount of the final
payment will change.

 

4. REMEDIAL CHARGES. In addition to
interest or other finance charges, I agree that I will pay these additional
fees based on my method and pattern of payment. Additional remedial charges may
be described elsewhere in this Note.

 

A.
Late Charge. If a payment is more than 10 days late, I will be charged 5.000
percent of the Unpaid Portion of Payment, I will pay this late charge promptly
but only once for each late payment. This amount may then increase so as to
always be the highest amount allowed by law under Minnesota Statutes 47.59.

 

5. PAYMENT. I agree to pay this
Note in installments of accrued interest beginning June 28, 2009, and then
on the 28th day of each month thereafter, I agree to pay the entire unpaid
Principal and any accrued but unpaid interest on March 28, 2010.

 

Payments will be rounded up to the
nearest $01. With the final payment I also agree to pay any additional fees or
charges owing and the amount of any advances you have made to others on my
behalf. Payments scheduled to be paid on the 29th, 30th or 31st day of a month
that contains no such day will, instead, be made on the last day of such month.

 

Each payment I make on this Note
will be applied first to interest that is due then to principal that is due,
and finally to any charges that I owe other than principal and interest. If you
and I agree to a different application of payments, we will describe our
agreement on this Note. You may change how payments are applied in your sole
discretion without notice to me. The actual amount of my final payment will
depend on my payment record.

 

6. PREPAYMENT. I may prepay this
Loan in full or in part at any time.  Any
partial prepayment will not excuse any later scheduled payments until I pay in
full.

 

7. LOAN PURPOSE. The purpose of
this Loan is BRIDGE FINANCING.

 

8. ADDITIONAL TERMS.  THE BORROWER IS REQUIRED TO SUBMIT A TAX
RETURN ON AN ANNUAL BASIS.

 

GUARANTOR IS REQUIRED TO SUBMIT A
PERSONAL FINANCIAL STATEMENT AND TAX RETURN ON AN ANNUAL BASIS.

 

9. SECURITY.  This loan is secured by separate instruments
prepared together with this Note as follows:

 

 

	
  Document Name

  	
   

  	
  Parties to Document

  
	
  Security Agreement. PROUROCARE
  MEDICAL INC.

  	
   

  	
  PROUROCARE MEDICAL INC.

  

 

10.
DEFAULT. I will be in default if any of the following occur:

 

A. Payments. I fail to make a payment in full when due.

B. Insolvency or Bankruptcy. The death, dissolution or insolvency of,
appointment of a receiver by or on behalf of, application of any debtor relief
law, the assignment for the benefit of creditors by or on behalf of, the
voluntary or involuntary termination of existence by, or the commencement of
any proceeding under any present or future federal or state insolvency,
bankruptcy, reorganization, composition or debtor relief law by or against me
or any co-signer, endorser, surety or guarantor of this Agreement or any other
obligations I have with you.

C.  Business
Termination. I merge, dissolve, reorganize, end my business or existence, or a
partner or majority owner dies or is declared legally incompetent.

D. New Organizations.  Without
your written consent, I organize, merge into, or consolidate with an entity;
acquire all or substantially all of the assets of another; materially change
the legal structure, management, ownership or financial condition; or effect or
enter into a domestication, conversion or interest exchange.

E. Failure to Perform. I fail to perform any condition or to keep any
promise or covenant of this Agreement.

F. Other Documents. A default occurs under the terms of any other Loan
Document.

G. Other Agreements. I am in default on any other debt or agreement I
have with you.

H. Misrepresentation. I make any verbal or written statement or provide
any financial information that is untrue, inaccurate, or conceals a material
fact at the time it is made or provided.

I. Judgment. I fail to satisfy or appeal any judgment against me.

J. Forfeiture. The Property is used in a manner or for a purpose that
threatens confiscation by a legal authority,

K. Name Change. I change my name or assume an additional name without
notifying you before making such a change,

L. Property Transfer. I transfer all or a substantial part of my money
or property.

M. Property Value. You determine in good faith that the value of the
Property has declined or is impaired.

N. Material Change. Without first notifying you, there is a material
change in my business, including ownership, management, and financial
conditions.

O. Insecurity. You determine in good faith that a material adverse
change has occurred in my financial condition from the conditions set forth in
my most recent financial statement before the date of this Agreement or that
the prospect for payment or performance of the Loan is impaired for any reason.

 

11. DUE ON SALE OR ENCUMBRANCE. You
may, at your option, declare the entire balance of this Note to be immediately
due and payable upon the creation of, or
contract for the creation of, any lien, encumbrance, transfer or sale of all or
any part of the Property. This right is subject to the restrictions imposed by
federal law 112 C.F.R. 5911, as applicable. However, if I am in default under
this Agreement, I may not sell the inventory portion of the Property even in
the ordinary course of business,

 

12. WAIVERS AND CONSENT. To
the extent not prohibited by law, I waive protest, presentment for payment,
demand, notice of acceleration, notice of intent to accelerate and notice of
dishonor.

 

A.
Additional Waivers By Borrower. In addition, I, and any party to this Note and
Loan, to the extent permitted by law, consent to certain actions you may take,
and generally waive defenses that may be available based on these actions or
based on the status of a party to this Note.

 

(1) You
may renew or extend payments on this Note, regardless of the number of such
renewals or extensions.

(2) You
may release any Borrower, endorser, guarantor, surety, accommodation maker or
any other co-signer.

(3) you
may release, substitute or impair any Property securing this Note.

(4) You,
or any institution participating in this Note, may invoke your right of
set-off.

(5) You
may enter into any sales, repurchases or participations of this Note to any
person in any amounts and I waive notice of such sales, repurchases or
participations.

(6) I
agree that any of us signing this Note as a Borrower is authorized to modify
the terms of this Note or any instrument securing, guarantying or relating to
this Note.

(7) I
agree that you may inform any party who guarantees this Loan of any Loan
accommodations, renewals, extensions, modifications, substitutions or future
advances.

 

B.
No Waiver By Lender. Your course of dealing, or your forbearance from, or delay
in, the exercise of any of your rights, remedies, privileges or right to insist
upon my strict performance of any provisions contained in this Note, or any
other Loan Document, shall not be construed as a waiver by you, unless any such
waiver is in writing and is signed by you.

 

13. REMEDIES. After I default,
you may at your option do any one or more of the following.

 

A. Acceleration. You may make all or any part of the amount owing by the
terms of the Loan immediately due.

B. Sources. You may use any and all remedies you have under state or
federal law or in any Loan Document.

C. Insurance Benefits. You may make a claim for any and all insurance
benefits or refunds that may be available on my default.

D. Payments Made On My Behalf. Amounts advanced on my behalf will be
immediately due and may be added to the balance owing under the terms of the Loan,
and accrue interest at the highest post-maturity interest rate.

E. Set-Off. You may use the right of set-off. This means you may set-off
any amount due and payable under the terms of the Loan against any right I have
to receive money from you.

 

My right to receive money from you includes any deposit or share account
balance I have with you; any money owed to me on an item presented to you or in
your possession for collection or exchange; and any repurchase agreement or
other non-deposit obligation. “Any amount due and payable under the terms of
the Loan” means the total amount to which you are entitled to demand payment
under the terms of the Loan at the time you set-off.

 

Subject to any other written contract, if my right to receive money from
you is also owned by someone who has not agreed to pay the Loan, your right of
set- off will apply to my interest in the obligation and to any other amounts I
could withdraw on my sole request or endorsement.

 

Your right of set-off does not apply to an account or other obligation
where my rights arise only in a representative capacity. It also does not apply
to any Individual Retirement Account or other tax-deferred retirement account.

 

You will not be liable for the dishonor of any check when the dishonor
occurs because you set-off against any of my accounts. I agree to hold you
harmless from any such claims arising as a result of your exercise of your
right of set-off.

 

F. Waiver. Except as otherwise required by law, by choosing any one or
more of these remedies you do not give up your right to use any other remedy.
You do not waive a default if you choose not to use a remedy. By electing not
to use any remedy, you do not waive your right to later consider the event a
default and to use any remedies if the default continues or occurs again,

 

14.
COLLECTION EXPENSES AND ATTORNEYS’ FEES. On or after Default, to the extent
permitted by law, I agree to pay all expenses of collection, enforcement or
protection of your rights and remedies under this Agreement or any other Loan
Document, Expenses include, but are not limited to, attorneys’ fees, court
costs and other legal expenses. If not paid immediately, these expenses will
bear interest from the date of payment until paid in full at the highest
interest in effect as provided in the terms of this Loan. All fees and expenses
will be secured by the Property I have granted to you, if any. In addition, to
the extent permitted by the United States Bankruptcy Code, I agree to pay the
reasonable attorneys’ fees incurred by you to protect your rights and interests
in connection with any bankruptcy proceedings initiated by or against me.

 

15. COMMISSIONS. I understand and
agree that you or your affiliate will earn commissions or fees on any insurance
products, and may earn such fees on other services that I buy through you or
your affiliate.

 

16.
WARRANTIES AND REPRESENTATIONS. I make to you the following warranties and
representations which will continue as long as this Loan is in effect:

 

A. Power. I am duly organized, and validly existing and in good standing
in all jurisdictions in which I operate. I have the power and authority to
enter into this transaction and to carry on my business or activity as it is
now being conducted and, as applicable, am qualified to do so in each jurisdiction
in which I operate.

B. Authority. The execution, delivery and performance of this Loan and
the obligation evidenced by the Note are within my powers, have been duly
authorized, have received all necessary governmental approval, will not violate
any provision of law, or order of court or governmental agency, and will not
violate any agreement to which I am a party or to which I am or any of my
property is subject.

C. Business Name. Other than previously disclosed in writing to you I
have not changed my name or principal place of business within the last 10
years and have not used any other trade or fictitious name. Without your prior
written consent, I do not and will not use any other name and will preserve my
existing name, trade names and franchises.

 

17. INSURANCE. I agree to
obtain the insurance described in this Loan Agreement.

 

 

A. Property
Insurance. I will insure or retain insurance coverage on the Property and abide
by the insurance requirements of any security instrument securing the Loan.

B. Insurance
Warranties. I agree to purchase any insurance coverages that are required, in
the amounts you require, as described in this or any other documents I sign for
the Loan. I will provide you with continuing proof of coverage. I will buy or
provide insurance from a firm licensed to do business in the State where the
Property is located. If I buy or provide the insurance from someone other than
you, the firm will be reasonably acceptable to you. I will have the insurance
company name you as loss payee on any insurance policy. You will apply the
insurance proceeds toward what l owe you on the outstanding balance. I agree
that if the insurance proceeds do not cover the amounts I still owe you, I will
pay the difference. I will keep the insurance until all debts secured by this
agreement are paid. If I want to buy the insurance from you, I have signed a
separate statement agreeing to this purchase.

 

18. APPLICABLE LAW. This Note is
governed by the laws of Minnesota, the United States of America, and to the
extent required, by the laws of the jurisdiction where the Property is located,
except to the extent such state laws are preempted by federal law. In the event
of a dispute, the exclusive forum, venue and place of jurisdiction will be in
Minnesota, unless otherwise required by law.

 

19. JOINT AND INDIVIDUAL LIABILITY
AND SUCCESSORS. My obligation to pay the Loan is independent of the obligation
of any other person who has also agreed to pay it. You may sue me alone, or
anyone else who is obligated on the Loan, or any number of us together, to
collect the Loan. Extending the Loan or new obligations under the Loan, will
not affect my duty under the Loan and I will still be obligated to pay the
Loan. This Note shall inure to the benefit of and be enforceable by you and
your successors and assigns and shall be binding upon and enforceable against
me and my personal representatives, successors, heirs and assigns.

 

20. AMENDMENT, INTEGRATION AND
SEVERABILITY. This Note may not be amended or modified by oral agreement. No
amendment or modification of this Note is effective unless made in writing and
executed by you and me. This Note and the other Loan Documents are the complete
and final expression of the agreement. If any provision of this Note is
unenforceable, then the unenforceable provision will be severed and the
remaining provisions will still be enforceable.  No present or future agreement securing any
other debt I owe you will secure the payment of this Loan if, as a result, this
Loan would become subject to Section 670 of the John Warner National
Defense Authorization Act for Fiscal Year 2007.

 

21. INTERPRETATION. Whenever used,
the singular includes the plural and the plural includes the singular. The
section headings are for convenience only and are not to be used to interpret
or define the terms of this Note.

 

22. NOTICE, FINANCIAL REPORTS AND
ADDITIONAL DOCUMENTS. Unless otherwise required by law, any notice will be
given by delivering it or mailing it by first class mail to the appropriate
party’s address listed in the DATE AND PARTIES section, or to any other address
designated in writing. Notice to one Borrower will be deemed to be notice to
all Borrowers. I will inform you in writing of any change in my name, address
or other application information. I agree to sign, deliver, and file any
additional documents or certifications that you may consider necessary to
perfect, continue, and preserve my obligations under this Loan and to confirm
your lien status on any Property. Time is of the essence.

 

23. CREDIT INFORMATION. I agree to
supply you with whatever information you reasonably request. You will make
requests for this information without undue frequency, and will give me
reasonable time in which to supply the information.

 

24. ERRORS AND OMISSIONS. I agree, if requested by you, to fully
cooperate in the correction, if necessary, in the reasonable discretion of you
of any and all loan closing documents so that all documents accurately describe
the loan between you and me. I agree to assume all costs including by way of
illustration and not limitation, actual expenses, legal fees and marketing
losses for failing to reasonably comply with your requests within thirty (30)
days.

 

25. SIGNATURES. By signing, I agree
to the terms contained in this Note. I also acknowledge receipt of a copy of
this Note.

 

	
  BORROWER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PROUROCARE MEDICAL INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
  /s/ RICHARD C. CARLSON

  	
   

  
	
   

  	
   

  	
  RICHARD C. CARLSON, CEO

  
	
   

  	
   

  	
   

  
	
   

  	
  PRO URO CARE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By 

  	
  /s/ RICHARD C. CARLSON

  	
   

  
	
   

  	
   

  	
  Authorized signer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00162-of-00352.parquet"}]]