Document:

Exhibit 10.69

The Yucaipa
Companies

9130 West Sunset Blvd.

Los Angeles, CA  90069

May 14, 2007

Source Interlink
Companies, Inc.

27500 Riverview Center Blvd.,

Bonita Springs, Florida  34134

Dear Sirs:

We are pleased to
support Source Interlink Companies, Inc. (the “Company”) in its efforts to
acquire the PRIMEDIA Enthusiast Business. 
The Company entered into (i) a Purchase Agreement with Consumer Source,
Inc. dated May 13, 2007 (the “Purchase Agreement”), (ii) a financing
commitment from Citigroup Markets, Inc. for an aggregate of $1.645 billion of
financing in connection with the transaction, and (iii) a stand-by equity
commitment letter dated May 13, 2007 (the “Letter Agreement”) providing
for up to $100 million of funding (the “Equity Commitment”) by The Yucaipa
Companies, LLC or one or more of its affiliates (“Yucaipa”).

This letter of
intent is in furtherance of our goal to work together with the Company and the
independent directors with respect to the terms of securities to support the
Equity Commitment.  This letter of intent
is not intended to modify, amend or affect in any manner the agreements,
obligations and rights of the parties under the Equity Commitment.  Capitalized terms used herein and not
otherwise defined have the meanings ascribed to them in the Purchase Agreement.

Equity Commitment

As outlined
specifically in the Letter Agreement, the Equity Commitment may be triggered
upon the occurrence of three conditions precedent that are identified in
Section 1 of the Letter Agreement.  Those
conditions precedent obligate the Company to sell and for Yucaipa to purchase
securities issued by the Company having terms established by the independent
directors of the Company.

Yucaipa is willing
to fund this Equity Commitment on the terms outlined in Attachment A
hereto.  As indicated in Attachment A, we
expect the investment in the Company will involve the purchase of a combination
of newly issued common stock and subordinated debt or preferred equity.  Proceeds from this investment will only be
used by the Company in connection with completing a closing under the Purchase
Agreement.

Notwithstanding
the foregoing or anything else in this letter or its attachments, the Company
shall use its commercially reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable to arrange and obtain the Financing or (if necessary) the Alternative
Financing as required by 

 1
 

Section 5.04(d) of the Purchase Agreement and also in
an amount that, and on terms and conditions that, do not require Yucaipa to
fund or pay any portion of the Equity Commitment.

Conditions

We would expect
that, prior to the required funding under the Equity Commitment, the Company
will (i) obtain the approval of the independent directors of the Company
regarding the terms of the issuance of any securities to us and (ii) negotiate
definitive agreements with customary terms for an investment of this type.

We understand that
the independent directors will negotiate with us in good faith consistent with
the satisfaction of the committee members’ fiduciary duties, which may require
the independent directors to obtain third party opinions or evaluations.

Alternative Arrangements

Nothing set forth
in this letter is intended to limit the Company in seeking other sources of
stand-by equity support, including in connection with Alternative
Financing.  The Company may, or at the
request of Yucaipa at any time the Company shall, use its commercially reasonable
efforts to seek and obtain equity stand-by support from a third party in an
amount of up to $100 million for use in connection with the closing of the
Purchase Agreement.

Indemnity

In connection with
the negotiation of the Purchase Agreement and the Letter Agreement, Seller has
requested that it be made a third party beneficiary of the Letter
Agreement.  In connection therewith, you
agree to indemnify and hold harmless us and our affiliates, members, directors,
officers, employees and representatives from any damages, losses or other
liabilities resulting from your failure to issue the securities to us in
accordance with the terms of the Letter Agreement.

Confidentiality

The Company and
Yucaipa agree to keep this letter of intent confidential and not to make any
public disclosure of the existence or terms of this letter, unless such
disclosure is required by applicable law.

 2
 

Miscellaneous

The obligations of
the Company herein shall not be assigned (by operation of law or otherwise)
without the prior written consent of Yucaipa. 
This agreement may not be amended without the prior written consent of
Yucaipa and the Company.  No person or
entity shall be a third-party beneficiary or have any rights under this
agreement other than the signatories hereto.

This agreement
shall be governed by, and construed and enforced in accordance with the laws of
the State of New York.

	
  

  	
   

  	
  THE YUCAIPA COMPANIES, LLC

  
	
   

  	
   

  	
  /s/ Robert P. Bermingham

  
	
   

  	
   

  	
  Name: Robert P. Bermingham

  
	
   

  	
   

  	
  Its: Vice President

  

 

Acknowledged:

SOURCE INTERLINK
COMPANIES, INC.

	
  By:

  	
   

  	
  /s/ Douglas J. Bates

  	
   

  
	
  Name:

  	
   

  	
  Douglas J. Bates

  	
   

  
	
  Title:

  	
   

  	
  General Counsel

  	
   

  

 

 3

Attachment A

Summary of Terms

	
  1. Issuer

  	
   

  	
  Source Interlink Companies, Inc. (the “Company”).

  
	
  2. Investor

  	
   

  	
  The Yucaipa Companies,
  LLC or one or more of its affiliates (“Yucaipa”).

  
	
  3. Amount

  	
   

  	
  The amount needed to
  consummate the Financing or Alternative Financing, but in no event, greater
  than $100 million (the “Financing Shortfall”), in accordance with the terms
  of the Letter Agreement entered into on May 13, 2007. Capitalized terms used
  herein and not otherwise defined have the meanings ascribed to them in the
  Purchase Agreement.

  
	
  4. Securities

  	
   

  	
  (i) first, the number
  of shares of common stock of the Company (the “Company Common Stock”)
  equal to the Financing Shortfall divided by the average of the 30-day
  trailing trading price prior to the funding date (the “Issued Stock”);
  provided, however, that the number of shares issued to Yucaipa at the time
  the Financing or Alternative Financing closes shall be limited to the maximum
  number that would not require a vote of the stockholders of the Company under
  law or the rules of the Nasdaq Stock market; and (ii) second, if the Company
  Common Stock can not be issued in respect of the total Financing Shortfall
  because of the maximum contained in clause (i), then Yucaipa may elect to
  receive, either or a combination of (a) an eight-year junior subordinated
  note with an interest rate of 7%, payable-in-kind (the “Company Notes”),
  if consented to by the Company’s lenders, or (b) a preferred security with a
  dividend rate of 7%, payable-in-kind (the “Company Preferred”), for
  the balance of the Financing Shortfall. The Company Notes and Company
  Preferred will both be convertible at the option of Yucaipa to Company Common
  Stock at the price used in clause (i) above, subject to the receipt of any
  required stockholder approval obtained after the issuance of such Company
  Notes or Company Preferred. If requested by Yucaipa after the closing of the
  Financing or the Alternative Financing, the Company shall use its
  commercially reasonable efforts to obtain any required vote or approval of
  the stockholders of the Company necessary to permit the conversion of the Company
  Notes and Company Preferred.

  

 

 4
 

 

	
  5. Rights Offering

  	
   

  	
  The Company shall have the right to raise equity or
  undertake a rights offering of Company Common Stock to all of its stockholders
  (an “Equity Event”) and use the proceeds from the Equity Event first,
  to repay the outstanding amounts under the Company Notes or Company
  Preferred, and second, to repurchase the Issued Stock, if consented to by the
  Company’s lenders. If the Company opts to undertake the Equity Event in order
  to repay the Company Notes or Company Preferred or to repurchase the Issued
  Stock, it shall notify Yucaipa of its intention on the date of the funding of
  the Financing Shortfall, and Yucaipa shall not dispose of, sell or transfer
  the Issued Stock, Company Notes or Company Preferred during the pendency of
  the Equity Event. The rights offering would be open to all stockholders, with
  the intention that the stockholders would have the ability to purchase stock
  and in connection therewith, the Company would repay the notes and/or
  repurchase a corresponding amount of stock from Yucaipa.

  
	
  6. Registration Rights

  	
   

  	
  Yucaipa to be granted
  unlimited demand registration rights with a minimum dollar size and piggyback
  registration rights with respect to the Issued Stock and the Company Common
  Stock, if any, issued to it in a rights offering. If the Company elects to
  proceed with an Equity Event, then Yucaipa shall not exercise any demand or
  piggyback registration rights during the pendency of the Equity Event.

  

 

 5Exhibit 4.1

SECURITIES
PURCHASE AGREEMENT

This Securities Purchase
Agreement (this “Agreement”) is dated as of May 14, 2007, among
INOVIO BIOMEDICAL CORPORATION, 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”);
and

WHEREAS, the Company
desires to issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company shares of Common Stock on the
Closing Date;

WHEREAS, the offer and
sale of the shares of Common Stock hereunder have been registered by the
Company in the Registration Statement, which has been declared effective by
order of the Commission under the Securities Act; and

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 agrees 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 indicated in this Section 1.1:

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

“AMEX” means the American Stock Exchange.

“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 144.

“business day” means any day except Saturday,
Sunday and any day that shall be a legal holiday or a day on which banking
institutions in the State of California generally are authorized or required by
law or other government actions to close.

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

“Closing
Date” means the second business day after all conditions to Closing in
Section 2.2 hereof have been satisfied or waived, or such later date as is
mutually acceptable to the parties, provided, however, that
the Closing Date shall not be prior to May 22, 2007. For purposes of
clarification, it is the parties’ intent that all other conditions to Closing
shall have been satisfied or waived, and the Closing shall occur, no later than
the second business day after AMEX shall have notified the Company that the
Shares have been approved for listing on AMEX.

 

“Closing Escrow Agreement” shall have the
meaning ascribed to such term in Section 2.1.

“Closing Price” means the average of the
closing price per share of the Company’s Common Stock as reported on the AMEX
for each of the seven (7) consecutive Trading Days immediately preceding the
day this Agreement is executed, or if executed after 4:30 p.m. EDT on a Trading
Day then for each of the seven (7) consecutive Trading Days preceding and
inclusive of that day.

“Commission” means the Securities and Exchange
Commission.

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

“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 exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock.

“Company Counsel” means Kirkpatrick &
Lockhart Preston Gates Ellis LLP.

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

“Exchange Act” means the Securities Exchange
Act of 1934, as amended.

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

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

“Material Adverse Effect” shall mean (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or financial condition of the Company
and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document; provided, that none of the
following alone shall be deemed, in and of itself, to constitute a Material
Adverse Effect: (i) a change in the market price or trading volume of the
Common Stock or (ii) changes in general economic conditions or changes
affecting the industry in which the Company operates generally (as opposed to
Company-specific changes) so long as such changes do not have a disproportionate
effect on the Company and its Subsidiaries taken as a whole.

 2
 

 

“Per Share Purchase Price” means $3.52  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 and prior to the
Closing Date.

“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.

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

“Prospectus Supplement” means the prospectus
supplement to be filed with the Commission pursuant to Rule 424 under the
Securities Act relating to the offer and sale of the Shares as listed in the
form of prospectus included in the Registration Statement.

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

“Registration Statement” means the registration
statement filed with the Commission on
Form S-3 (File No. 333-134084) under the Securities Act and the rules and
regulations of the Commission thereunder, declared effective as of May 25,
2006, and such amendments to such registration statement as have been filed as
of the date of this Agreement, the exhibits and any schedules thereto, the
documents incorporated by reference therein and the documents and information
otherwise deemed to be a part thereof or included therein, including the Prospectus
Supplement and any post-effective amendment.

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

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

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

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

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

“Singapore Representative” shall mean Broadven
Pte Ltd.

 3
 

 

“Subscription Amount” means, as to each
Purchaser, the amount set forth below such Purchaser’s signature block on the
signature page hereto, in United States dollars and in immediately available
funds.

“Subscription Amounts” means the total of each
Subscription Amount from all Purchasers.

“Subsidiary” means any entity more than 50% of
the voting interest of which is held (directly or indirectly) by the Company
and/or one or more Subsidiaries of the Company.

“Trading Day” means a day on which the Common
Stock is traded on a Trading Market.

“Trading Market” means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the American Stock Exchange, the New York Stock Exchange, the
Nasdaq Global Market or the Nasdaq Capital Market.

“Transaction Documents” means this Agreement,
the Closing Escrow Agreement dated of even date herewith and any other
documents or agreements executed in connection with the transaction
contemplated hereunder.

ARTICLE II.

PURCHASE AND SALE

2.1           Closing.  On the Closing Date, each Purchaser shall purchase
from the Company, severally and not jointly with the other Purchasers, and the
Company shall issue and sell to each Purchaser, the number of Shares set forth
on Schedule 2.1 under the caption “Shares of Common Stock Purchased”
with respect to such Purchaser. The aggregate number of Shares sold hereunder
shall be up to 4,595,094.  Prior to the
Closing, the Subscription Amount payable by each Purchaser in the Closing,
together with all other closing deliverables available, shall be placed in
escrow pending the Closing pursuant to a closing escrow agreement among the
Company, the Singapore Representative, the Purchasers and Fenwick & West
LLP (the latter serving as the “Escrow Agent”), which agreement shall be
in the form attached hereto as Exhibit A (the “Closing Escrow Agreement”).
Upon satisfaction of the conditions to the obligations of the Purchasers set
forth in Section 2.2(a) and the conditions to the obligations of the Company
set forth in Section 2.2(b), the Closing shall occur at the Los Angeles offices
of Company Counsel or such other location as the parties shall mutually agree
on the Closing Date.

2.2           Closing
Conditions; Deliveries.

(a)           The obligations of each Purchaser to
purchase the Shares to pay the Subscription Amount therefore are subject to the
satisfaction or waiver by the Singapore Representative of each of the following
conditions:

 4
 

 

(i)            All representations and warranties
of the Company contained herein shall remain true and correct as of the Closing
Date and all covenants of the Company shall have been performed if due prior to
such date.

(ii)           There shall have been delivered into
escrow, pursuant to the Closing Escrow Agreement, Subscription Amounts in cash
of at least $13,500,000.

(iii)          On the Closing Date, the Company shall
deliver or cause to be delivered to each Purchaser the following (each document
to be reasonably satisfactory in form and substance to the Singapore
Representative and to counsel for the Singapore Representative):

(A)          this Agreement duly executed by the
Company;

(B)           a copy of, and written
acknowledgement of receipt by the Company’s transfer agent of, irrevocable
instructions duly signed by an authorized signatory of the Company addressed to
the Company’s transfer agent instructing the transfer agent to (i) deliver, on
an expedited basis and no later than the third Trading Day after the Closing
Date, one or more certificates evidencing the aggregate number of shares of
Common Stock duly authorized, issued, fully paid and non-assessable, or (ii)
instructing the Transfer Agent to issue electronic shares via the DWAC system
of the Depository Trust Company duly authorized, issued, fully paid and
non-assessable, if so requested by such Purchaser, in each case equal to such
Purchaser’s Subscription Amount divided by the Per Share Purchase Price,
registered in the name of such Purchaser;

(C)           the Closing Escrow Agreement duly
executed by the Company;

(D)          a legal opinion of Company Counsel,
covering the matters and in substantially the form attached hereto as Exhibit B;

(E)           A certificate of the Secretary of the
Company (the “Secretary’s Certificate”), in form and substance
satisfactory to the Singapore Representative, certifying in his capacity as an
officer of the Company as follows:

(1)           that attached to the
Secretary’s Certificate is a true and complete copy of the Certificate of
Incorporation of the Company, as amended to the Closing Date;

(2)           that attached to the
Secretary’s Certificate is a true and complete copy of the Bylaws of the
Company, as amended to the Closing Date;

(3)           that attached to the
Secretary’s Certificate are true and complete copies of the resolutions of the
Board of Directors of the

 5
 

 

Company (the “Board of Directors”) authorizing the execution,
delivery and performance of this Agreement and the other Transaction Documents,
instruments and certificates required to be executed by it in connection
herewith and approving the consummation of the transactions in the manner
contemplated hereby and by the other Transaction Documents including, but not
limited to, the authorization and issuance of the Shares; and

(4)           the names and true
signatures of the officers of the Company signing this Agreement and all other
documents executed on behalf of the Company to be delivered in connection with
this Agreement;

(F)           A certificate executed by the chief
executive officer of the Company stating that the representations and
warranties of the Company hereunder are true and correct as of the Closing Date
and that the Company has performed all obligations to be performed prior to
such date; and

(G)           A certificate of good standing of the
Company as of a recent date.

(iv)          AMEX shall have notified the Company
that the Shares have been approved for listing on AMEX.

(v)           The Company shall have timely filed
the Prospectus Supplement relating to the issuance and sale of the Shares to be
issued by the Company pursuant to this Agreement.

(vi)          The Company shall have reimbursed the
Singapore Representative for its expenses up to an amount of $30,000 as set
forth in Section 5.1, or the Singapore Representative shall have deducted such
expenses from its Subscription Amount at Closing.

(b)   The
obligations of the Company to issue and sell the Shares to each Purchaser
hereunder are subject to the satisfaction or waiver by the Company of each of
the following conditions:

(i)            All representations and warranties
of such Purchaser contained herein shall remain true and correct as of the
Closing Date and all covenants of such Purchaser shall have been performed if
due prior to such date.

(ii)           There shall have been delivered into
escrow, pursuant to the Closing Escrow Agreement, Subscription Amounts in cash
of at least $13,500,000.

(iii)          The Company shall have obtained
confirmation from AMEX of approval of its additional listing application
providing for listing of the Shares;

(iv)          On the Closing Date, such Purchasers
shall have delivered or caused to be delivered to the Company the following:

 6
 

 

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

(B)           such Purchaser’s Subscription Amount
by wire transfer to the Company pursuant to the Closing Escrow Agreement.

(v)           The Singapore Representative shall
have provided the Company its written request for reimbursement for fees and
expenses pursuant to Section 5.1 of this Agreement.

Notwithstanding
the foregoing, in the event that the conditions set forth in Sections
2.2(a)(iv) and 2.2(b)(iii) shall not be satisfied by the date 60 business days
after the date of this Agreement, none of the parties hereto shall be obligated
to consummate the transactions contemplated by this Agreement and any items
delivered pursuant to this Section 2.2 shall be returned by the Escrow Agent to
the appropriate party pursuant to the terms of the Closing Escrow Agreement.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1           Representations
and Warranties of the Company. 
Except as set forth in the Disclosure Schedules specified in the items
below, which Disclosure Schedules shall be deemed a part hereof, the Company
hereby makes the representations and warranties set forth below to each
Purchaser as of the date hereof and as of the Closing Date:

(a)   Subsidiaries.  All of the 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 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.

(b)   Organization
and Qualification.  Each of the
Company and 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 (as applicable), 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 or 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 a Material Adverse Effect and no Proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.

(c)   Authorization;
Enforcement.  The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder.  No
approval by the Company’s stockholders is required for the consummation of the
transaction contemplated by the Transaction Documents, including the issuance
and sale of the Shares, including, to the

 7
 

 

Company’s knowledge, under the rules and regulations of the Trading
Market on which the Shares are intended to be listed.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company in connection therewith other than in connection with the Required
Approvals (as defined in Section 3.1(e)) . 
Each Transaction Document has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with the terms hereof,
will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except (i) as limited by
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 of the Transaction Documents by the Company, the issuance and
sale of the Shares and the consummation by the Company of the other
transactions contemplated thereby 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 assuming
the accuracy of the representations and warranties of the Purchasers set forth
in Section 3.2 hereof, federal and state securities laws and regulations), or
by which any property or asset of the Company or a Subsidiary is bound or
affected, or (iv) conflict with or violate the terms of any agreement by which
the Company or any Subsidiary is bound or to which any property or asset of the
Company or any Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as would not result in a Material Adverse Effect.

(e)   Filings,
Consents and Approvals.  The Company
is not required to obtain any consent, waiver, authorization or order of, give
any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) filings required pursuant to Section 4.2
of this Agreement, (ii) the filing with the Commission of a prospectus
supplement and Form 8-K, and (iii) application(s) to AMEX for the listing of
the Shares for trading thereon in the time and manner required thereby
(collectively, the “Required Approvals”). The Company has filed, or will
file, a prospectus supplement with the Commission with respect to the offer and
sale of the Shares at or before the date such filing is required by Rule 424 of
the rules under the Securities Act of 1933, as

 8
 

 

amended, and has filed or will file an application with AMEX for the
listing of the Shares for trading thereon in the time and manner required by
the rules and listing requirements of AMEX.

(f)    Issuance
of the Shares.  The Shares are
authorized and, when issued and paid for in accordance with the Transaction
Documents, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company other than restrictions on transfer
provided for in the Transaction Documents. 
The Company has reserved from its duly authorized capital stock the
maximum number of shares of Common Stock issuable pursuant to this Agreement.

(g)   Capitalization.  The number of authorized and outstanding
shares of capital stock and Common Stock Equivalents of the Company, before
giving effect to  the Closing of the
transaction contemplated herein, is as described in the Company’s most recent
periodic report filed with the Commission. 
The Company has not issued any capital stock (including, without
limitation, any Common Stock Equivalents) since such filing other than pursuant
to the exercise of employee stock options under the Company’s stock option
plans, the issuance of shares of Common Stock to employees pursuant to the
Company’s omnibus incentive plan and pursuant to the conversion or exercise of
outstanding Common Stock Equivalents. 
All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable. Except as set forth in Schedule
3.1(g), 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. None of the stockholders of the Company possess any
preemptive rights in respect of the Shares. Neither the Company nor any of its
Affiliates or any other Person acting on behalf of the Company has repurchased
any of the Company’s outstanding Common Stock or Common Stock Equivalents since
December 31, 2006.

(h)   SEC
Reports; Financial Statements.  The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including, without limitation, pursuant to Section
13(a) or 15(d) thereof and including, without limitation, any registration
statements or prospectuses filed by the Company, during the thirty-six months
preceding the date hereof (or such shorter period as the Company was required
by law to file such material) (the foregoing materials, including the exhibits
thereto, 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 and the rules and regulations of the Commission
promulgated thereunder, 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 light of the circumstances under which they were made, not
misleading The SEC Reports, when taken as a whole, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.   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

 9
 

 

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 or may be condensed or summary statements, 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, year-end audit adjustments. There
are no pending internal investigations (including investigations by any
committee of the Board of Directors) relating to any accounting or internal
controls matters, including without limitation, stock option pricing and grant
procedures.

 

(i)    Material Changes. 
Since December 31, 2006, except as disclosed in the SEC Reports
filed since December 31, 2006 including exhibits thereto filed or incorporated
by reference therein (the “Recent Reports”), (i) there has been no
event, occurrence or development that has had or that could result in a
Material Adverse Effect, (ii) neither the Company nor any Subsidiary has
incurred any liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or required to be
disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, and (iv) the Company has not declared or made
any dividend or distribution of cash or other property to its stockholders.

(j)    Litigation.  Except
as set forth in 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”) other than (i)
Actions described in the Disclosure Schedules, and (ii) Actions which did not
exist, and were not known to the Company, as of the date of this Agreement and
which (i) adversely affect or challenge the legality, validity or enforceability
of any of the Transaction Documents or the Shares or (ii) if there were an
unfavorable decision, would result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor
any director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer
of the Company.  The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the
Securities Act.

(k)   Labor Relations. 
Neither the Company nor any Subsidiary is party to any collective
bargaining agreement or employs any member of a union.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which would 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

 10
 

 

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
order of any court, arbitrator or governmental body, or (iii) is or has been in
violation of any statute, rule or regulation of any governmental or regulatory
authority, including without limitation all foreign, federal, state and local
laws and all rules and regulations of any Trading Market, in each case,
applicable to its business or assets except in each case as would not have a
Material Adverse Effect.

(m)  Regulatory Requirements.  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 Recent 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.  All the Material Permits have been duly
issued or obtained and are in full force and effect, and the Company and its
Subsidiaries are in material compliance with the terms of all the Material
Permits. The Company and its Subsidiaries have not engaged in any activity
that, to their knowledge, would cause revocation or suspension of any such
Material Permits. The Company has no knowledge of any facts which could
reasonably be expected to cause the Company to believe that the Material
Permits will not be renewed by the appropriate governmental authorities in the
ordinary course. Neither the execution, delivery nor performance of this
Agreement shall adversely affect the status of any of the Material Permits.

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

(o)   Intellectual
Property.

(i)            The Company or a Subsidiary thereof
has the right to use or is the sole and exclusive owner of all right, title and
interest in and to all material foreign and domestic patents, patent rights,
trademarks, service marks, trade names, brands and copyrights (whether or not
registered and, if applicable, including pending applications for registration)
owned, used or controlled by the Company and its Subsidiaries (collectively,
the “Intellectual Property Rights”) and in and to each material
invention, software, trade secret, technology, product, composition, formula
and method of process used by the Company or its Subsidiaries (the Intellectual
Property Rights and such other items, the “Intellectual Property”), and,
to the Company’s knowledge, has the right to use the same, free and clear of
any claim or conflict with the rights of others;

 11
 

 

(ii)           no royalties or fees (license or
otherwise) are payable by the Company or its Subsidiaries to any Person by
reason of the ownership or use of any of the Intellectual Property except as
set forth on Schedule 3.1(o);

(iii)          there have been no claims made against
the Company or its Subsidiaries asserting the invalidity, abuse, misuse, or
unenforceability of any of the Intellectual Property, and, to its knowledge,
there are no reasonable grounds for any such claims;

(iv)          neither the Company nor its
Subsidiaries have made any claim of any violation or infringement by others of
its rights in the Intellectual Property, and to the best of the Company’s
knowledge, no reasonable grounds for such claims exist; and

(v)           neither the Company nor its
Subsidiaries have received notice that it is in conflict with or infringing
upon the asserted rights of others in connection with the Intellectual
Property.

(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 in the businesses in
which the Company and the Subsidiaries are engaged.  To the best
of Company’s knowledge, such insurance contracts and policies are accurate and
complete.  During the 12 months
prior to the date hereof, neither the Company nor any Subsidiary has received
any notice from any of its insurers that it will not be able to renew its
existing insurance coverage as and when such coverage expires.

(q)   Transactions
With Affiliates and Employees. 
Except as set forth in the Recent 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 and in
the aggregate in excess of $60,000, other than (i) for payment of salary or
consulting fees for services rendered, (ii) reimbursement for expenses incurred
on behalf of the Company and (iii) for other employee benefits, including stock
option or other stock incentive agreements under any stock option or incentive
plan of the Company.

(r)    Sarbanes-Oxley;
Internal Accounting Controls.  The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act
of 2002 which are applicable to it as of the Closing Date.  The Company
and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action is taken with

 12
 

 

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 material information relating to the
Company, including its subsidiaries, is made known to the certifying officers
by others within those entities, particularly during the period in which the
Company’s most recently filed periodic report under the Exchange Act, as the
case may be, is being prepared.  The
Company’s certifying officers have evaluated the effectiveness of the Company’s
controls and procedures as of the date prior to the filing date of the 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
significant changes in the Company’s internal controls (as such term is defined
in Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company’s
knowledge, in other factors that would significantly adversely affect the
Company’s internal controls.  As of the
date of this Agreement, the Company has not determined, nor has it been advised
in writing by its independent accounting firm, at any time after December 31,
2006 through the date of this Agreement, that there are any material weaknesses
in the Company’s internal controls.

(s)   Regulatory
Authorities.  Without limiting the
generality of the representations and warranties made in the paragraphs above
and below, the Company represents and warrants that (i) the Company and
each of its Subsidiaries is in material compliance with all applicable
provisions of the United States Federal Food, Drug, and Cosmetic Act and the
rules and regulations promulgated thereunder (the “FDC Act”) and
equivalent laws, rules and regulations in jurisdictions outside the United
States in which the Company or its Subsidiaries do business, (ii) its
products and those of each of its Subsidiaries that are in the Company’s
control are not adulterated or misbranded and are in lawful distribution, (iii)
all of the products marketed by and within the control of the Company comply in
all material respects with any conditions of approval and the terms of the
application by the Company to the appropriate Regulatory Authorities (as
defined below), (iv) to the knowledge of the Company and its Subsidiaries,
no Regulatory Authority has initiated legal action with respect to the
manufacturing of the Company’s products, such as seizures or required recalls,
and the Company uses best efforts to comply with applicable good manufacturing
practice regulations, (v) its products are labeled and promoted by the
Company and its representatives in substantial compliance with the applicable
terms of the marketing applications submitted by the Company to the Regulatory
Authorities and the provisions of the FDC Act and foreign equivalents,
(vi) all adverse events that were known to and required to be reported by
Company to the Regulatory Authorities have been reported to the Regulatory Authorities
in a timely manner, (vii) neither the Company nor any of its Subsidiaries
is, to their knowledge, employing or utilizing the services of any individual
who has been debarred under the FDC Act or foreign equivalents, (viii) all
stability studies required to be performed for products distributed by the
Company or any of its Subsidiaries have been completed or are ongoing in
material compliance with the applicable Regulatory Authority requirements,
(ix) any products exported by the Company or any of its Subsidiaries have
been exported in compliance with the FDC Act and (x) the Company and its
Subsidiaries are in compliance in all material respects with all applicable
provisions of the Controlled Substances Act. 
As used herein, “Regulatory Authority” means any governmental
authority in a country or

 13
 

 

region that regulates the manufacture or sale of Company’s products,
including, but not limited to, the United States Food and Drug Administration.

(t)    Certain
Fees.  Except as set forth in Section
5.1, 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 this Agreement.  Each
Purchaser shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Purchasers or other Persons for fees
of a type contemplated in this Section and in Section 5.1 that may be due from
the Company in connection with the transactions contemplated by this Agreement.

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

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

(w)  Form
S-3 Eligibility.  The Company is
eligible to register the offer and sale of the Shares to the Purchasers under
Form S-3 promulgated under the Securities Act. The offer and sale of the Shares
have been registered under, and are entitled to the benefits of, the
Registration Statement, and the Shares are not restricted securities pursuant
to the Securities Act.

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

(y)   No
Price Stabilization or Manipulation. 
Neither the Company nor any affiliate of the Company has taken and will
not take, directly or indirectly, any action which constitutes, was designed
to, or might be expected to cause or result in, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares.

(z)    Foreign
Corrupt Practices.  Neither the
Company, nor to the knowledge of the Company, any agent or other person acting
on behalf of the Company, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or domestic political activity, (ii) made any unlawful payment to

 14
 

 

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.

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

The Purchasers each
acknowledge and agree that the Company does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those set forth in this Agreement and in the other
Transaction Documents.

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

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

(b)   Investment
Intent.  Such Purchaser is acquiring
the Shares as principal for its own account for investment purposes only and
not with a view to or for distributing or reselling such Shares or any part
thereof, has no present intention of distributing any of such Shares and has no
arrangement or understanding with any other persons regarding the distribution
of such Shares (this representation and warranty not limiting such Purchaser’s
right to sell the Shares in compliance with the terms of the Shares and
applicable federal and state securities laws at any

 15
 

 

time).  Such Purchaser is
acquiring the Shares hereunder in the ordinary course of its business. Such
Purchaser does not have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Shares.

(c)   No
Short Positions.  Each Purchaser has
not entered, during the 30 days prior to the date of this Agreement, and shall
not enter, from the date of this Agreement through 48 hours after the Closing
Date, into any Short Sales.  For purposes
of this Section 3.2(c), a “Short Sale” by a Purchaser means a sale of
Common Stock that is marked as a short sale and that is executed at a time when
such Purchaser has no equivalent offsetting long position in the Common
Stock.  For purposes of determining
whether a Purchaser has an equivalent offsetting long position in the Common
Stock, all Common Stock and all Common Stock that would be issuable upon
conversion or exercise in full of all Common Stock Equivalents then held by
such Purchaser (assuming that such Common Stock Equivalents were then fully
convertible or exercisable, notwithstanding any provisions to the contrary, and
giving effect to any conversion or exercise price adjustments scheduled to take
effect in the future) shall be deemed to be held long by such Purchaser.

(d)   Receipt
of Registration Statement.  Such
Purchaser acknowledges that it has received the Company’s base prospectus dated
May 25, 2006 relating to the issuance and sale by the Company of the securities
described therein in one of more offerings up to a total dollar amount of
proceeds of $75,000,000, as filed in the Registration Statement.

The Company acknowledges
and agrees that each Purchaser does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those set forth in this Section 3.2.

ARTICLE
IV.

OTHER AGREEMENTS OF THE PARTIES

4.1   Transfer Restrictions. 
Subject to compliance with state and federal securities laws, the
Purchasers shall be entitled to assign and transfer, without any prior consent
and without restriction, any portion or all of the Shares and the rights
thereto.

4.2   Securities Laws Disclosure; Publicity.  The Company shall (i) not later than the
business day following the date of this Agreement and following the Closing
Date, issue a press release, and (ii) within four business days following the
Closing Date, file a Current Report on Form 8-K, in each case reasonably
acceptable to the Singapore Representative, disclosing the material terms of
the transactions contemplated hereby. 
The Company and the Singapore Representative shall consult with each
other in issuing any press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any
such press release or 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 the Singapore Representative, 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, following the
date of this Agreement and following the Closing Date the Company may file
Current Reports on Form 8-K

 16
 

 

with the SEC describing the terms of the
transactions contemplated by the Transaction Documents and the occurrence of
the execution of this Agreement and the Closing of the transactions
contemplated herein, respectively, and including as exhibits to such Forms 8-K
this Agreement (including the schedules hereto and the names and addresses of
the Purchasers) and the Closing Escrow Agreement, in the form required by the
Exchange Act and Regulation FD promulgated thereunder; further, each Purchaser acknowledges that
the Company may choose to delay filing of such exhibits until the filing of its
Quarterly Report on Form 10-Q for the quarter in which such documents are
executed, and that such exhibits to such Forms 8-K or 10-Q may be incorporated
by reference into subsequent filings of the Company with the Commission. Except
as herein provided or with the prior written consent of such Purchaser, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any press release, the non-Exhibit sections of any
filing with the Commission or any regulatory agency or Trading Market, except
to the extent such disclosure is required by law or Trading Market regulations.

4.3   Non-Public Information. 
The Company represents and warrants to each Purchaser that neither it
nor any other Person acting on its behalf has provided the Purchaser or its
agents or counsel with any information that constitutes material non-public
information.  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 constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information.  The Company understands and
confirms that each Purchaser shall be relying on the foregoing representation
and covenant in effecting transactions in securities of the Company. Nothing in
this Section 4.3 limits Purchasers’ rights with respect to the representations
and warranties set forth in Section 3.1.

4.4   Use of Proceeds.  The
Company shall use the net proceeds from the sale of the Shares for general
corporate purposes and working capital.

4.5   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, a sufficient number of shares of Common Stock for the
purpose of enabling the Company to issue the Shares pursuant to this Agreement.

4.6   Listing of Common Stock. 
The Company hereby agrees to use reasonable best efforts to maintain the
listing of the Common Stock on a Trading Market, and, to the extent that the
Common Stock is so listed, to use its best efforts to list all of the 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 include in such
application all of the Shares, and will take such other action as is necessary
to cause all of the Shares to be listed on such other Trading Market as
promptly as possible.  The Company will
take all action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Trading Market. The Company shall use its reasonable best efforts to file
an additional listing application with respect to the Shares with AMEX within
one business day of the date of this Agreement, and to obtain, as expeditiously
as practical, a confirmation from AMEX that the

 17
 

 

Company’s issuance of the Shares and the
pricing of the Shares does not require approval of the Company’s stockholders
and that the Shares have been approved for listing on AMEX.

4.7   Additional Covenants.

(a)           Except for transactions approved by a
majority of the disinterested members of the Board of Directors, neither the
Company nor any of its Subsidiaries shall enter into any transaction with any
(i) director, officer, employee or holder of more than 5% of the outstanding
capital stock of any class or series of capital stock of the Company or any of
its Subsidiaries, (ii) member of the family of any such person, or (iii)
corporation, partnership, trust or other entity in which any such person, or
member of the family of any such person, is a director, officer, trustee,
partner or holder of more than 5% of the outstanding capital stock thereof.

(b)           The Company shall timely prepare and
file such applications, consents to service of process (but not including a
general consent to service of process) and similar documents and take such
other steps and perform such further acts as shall be required by the
securities law requirements of each jurisdiction where a Purchaser resides, as
indicated on the signature pages hereto, with respect to the sale of the Shares
under this Agreement.

(c)           From the date of this Agreement until
the Closing Date, the Company (1) shall conduct its business in all material
respects in the ordinary course, consistent with its past practices, and (2)
shall not issue, sell, or agree to issue or sell, any Common Stock or Common
Stock Equivalents, other than (A) the grant of options or other stock incentive
awards to employees, consultants and directors pursuant to the Company’s equity
incentive plans, (B) the issuance of shares of Common Stock upon the exercise
or conversion of Common Stock Equivalents that are outstanding on the date
hereof, or (C) in payment of dividends upon its outstanding Preferred Stock.

ARTICLE
V.

MISCELLANEOUS

5.1   Fees and Expenses. 
Except as otherwise set forth in this Agreement, each party shall pay
the fees and expenses of its advisors, 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; provided, however,
upon Closing of the transactions contemplated herein, the Company shall
reimburse the Singapore Representatives for up to $30,000 for the fees and
expenses of its attorneys and advisors, including due diligence costs and the
negotiation, preparation and execution of the definitive transaction
documents.  Such fees and expenses shall
be reimbursed only if a Closing is completed for the transaction contemplated
in this Agreement; such fees and expenses may, at the election of the Company,
be paid out of the funds due from the Purchasers at the Closing.

5.2   Entire Agreement. 
The Transaction Documents, together with the exhibits and schedules
thereto, contain the entire understanding of the parties with respect to the
subject

 18
 

 

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.

5.3   Notices.  Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) one 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 prior to 2:00 p.m. (San Diego
time) on a Trading Day, (b) two Trading Days 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 2:00 p.m. (San Diego time) on any Trading Day, (c) the fourth
Trading Day following the date of shipment, if sent by internationally
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. The Company shall, concurrently with
providing any notice in the manner set forth in the preceding two sentences,
transmit a copy of such notice (which copy shall not, by itself, be deemed to
constitute notice hereunder)  by email to
such email address as is set forth on the signature pages attached hereto).

5.4   Amendments; Waivers. 
No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and
Purchasers holding a majority of the Shares or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof.

5.5   Construction.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied
against any party.

5.6   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.  Any Purchaser
may assign any or all of its rights under this Agreement to any Person to whom
such Purchaser assigns or transfers any Shares, to the extent of the transferability
of such Shares, provided such transferee agrees in writing to be bound, with
respect to the transferred Shares, by the provisions hereof that apply to the “Purchasers”.

5.6   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.

5.7   Further Assurances. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written 

 19
 

 

assurances as may be reasonably requested by
any other party to better evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and
purposes of this Agreement, and further agrees to take promptly, or cause to be
taken, all actions, and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable law to consummate and make
effective the transactions contemplated hereby, to obtain all necessary
waivers, consents and approvals, to effect all necessary registrations and
filings, and to remove any injunctions or other impediments or delays, legal or
otherwise, in order to consummate and make effective the transactions
contemplated by this Agreement for the purpose of securing to the parties
hereto the benefits contemplated by this Agreement.

5.8   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 California, without regard to
the principles of conflicts of law thereof. 
Each party hereby irrevocably submits to the non-exclusive jurisdiction
of the state and federal courts sitting in Los Angeles, California, 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 inconvenient venue for such
proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
(provided that for deliveries to addresses outside of the United States, such
copy shall be delivered to such address by internationally recognized overnight
courier) and agrees that such service shall constitute good and sufficient
service of process and notice thereof. 
Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  To the extent permitted by the law applicable
to the court in which claims hereunder may be adjudicated, each of the parties
hereby waives all rights to a trial by jury. If any party shall commence an
action or proceeding to enforce any provisions of the Transaction Documents,
then the prevailing party in such action or proceeding shall be reimbursed by
the non-prevailing party for its attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

5.9   Survival.  The
representations and warranties herein shall survive the Closing and delivery of
the Shares.

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

5.11 Severability.  If any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and

 20
 

 

provisions of this Agreement shall not in any
way be affected or impaired thereby and the parties will attempt to agree upon
a valid and enforceable provision that is a reasonable substitute therefor, and
upon so agreeing, shall incorporate such substitute provision in this
Agreement.

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

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

5.14 Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any
Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser under any Transaction
Document.  Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any way acting in concert or as a group with respect
to such obligations or the transactions contemplated by the Transaction
Document.  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. Each party hereto acknowledges that Fenwick & West LLP is legal
counsel to the Singapore Representative and certain non-U.S. Purchasers, and not
any other Purchaser. For reasons of administrative convenience only, the non-U.S.
Purchasers acknowledge and agree that they and their respective counsel have
chosen to communicate with the Company through the Singapore Representative.
Except as explicitly set forth in the Closing Escrow Agreement, no duties shall
be implied on the part of the Singapore Representative in connection with this
Agreement and the transactions contemplated hereby.

(Signature
Page Follows)

 21
 

 

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.

 

	
  INOVIO BIOMEDICAL
  CORPORATION

  	
   

  	
  Address for Notice:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Inovio Biomedical
  Corporation

  
	
   

  	
   

  	
  Attention: 

  	
  Peter Kies

  
	
  By:

  	
  /s/ Avtar Dhillon

  	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
  Name: 

  	
  Avtar Dhillon,
  MD

  	
   

  	
  11494 Sorrento Valley
  Road

  
	
  Title: 

  	
  President and
  Chief Executive Officer

  	
   

  	
  San Diego, California
  92121-1334

  
	
   

  	
   

  	
  Telephone: (858)
  597-6006

  
	
   

  	
   

  	
  Fax: (858) 597-0451

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Shoshannah D. Katz,
  Esq.

  
	
   

  	
   

  	
  Kirkpatrick &
  Lockhart Preston Gates Ellis LLP

  
	
   

  	
   

  	
  10100 Santa Monica
  Blvd. 7th Floor

  
	
   

  	
   

  	
  Los Angeles, CA 99067

  
							

 

REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

(Signature Pages for Purchasers
Follow)

 22

 

PURCHASER
SIGNATURE PAGES TO 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 Investing
Entity: ________________________________________________________

Signature of Authorized
Signatory of Investing Entity: /s/ by investors listed on attached Schedule 2.1
  

Name of Authorized
Signatory: _________________________________________________________

Title of
Authorized Signatory: __________________________________________________________

Email Address of
Authorized Entity:_____________________________________________________

Address for Notice of Investing Entity:

_________________________________

_________________________________

_________________________________

_________________________________

 

Address for Delivery of Securities for Investing Entity (if not same as
above):

_________________________________

_________________________________

_________________________________

_________________________________

 

Subscription Amount: $ ____________

Shares: ____________

 

[Omnibus Signature Page to Inovio Biomedical
Corporation Securities Purchase Agreement]

 

SCHEDULE 2.1

LIST OF PURCHASERS

	
  Name,
  Address, Fax Number

  and E-Mail Address of Purchaser

  	
   

  	
  Copies of Notices to

  	
   

  	
  Shares of Common

  Stock Purchased

  
	
  Iroquois Master Fund Ltd.

  641 Lexington Avenue 26th Floor

  New York, NY 10022 USA

  Attn: Joshua Silverman

  Fax: (212) 207-3452

  Email: jsilverman@icfund.com

  	
   

  	
   

  	
   

  	
  142,045

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Taliesin Capital Inc.

  255A Lakeshore Road East

  Oakville, Ontario L6J 1H9 Canada

  Attn: Eden Rahim President

  Fax: (905) 842-2985

  Email: erahim@taliesincorp.com

  	
   

  	
   

  	
   

  	
  27,200

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Castlerigg Master Investments Ltd.

  By: Sandell Asset Management Corp.

  40 West 57th Street 26th Floor

  New York, NY 10019 USA

  Attn: Timothy O’Brien

  Chief Financial Officer

  Fax: (212) 603-5710

  Email: chacioglu@sandellmgmt.com

  	
   

  	
  Schulte Roth & Zabel LLP

  919 Third Avenue

  New York, New York 10022

  Telephone: (212) 756-2000

  Facsimile: (212) 593-5955

  Attention: Eleazer N. Klein, Esq.

  

  and

  

  c/o Sandell Asset Management

  40 West 57th St 26th Floor

  New York, NY 10019

  Attention: Direct Investment Group and Compliance Group

  	
   

  	
  568,181

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MedInnova Partners Inc.

  181 Bay Street Suite 3740

  Toronto, Ontario M5J 2Z3 Canada

  Attn: Steven J. Hawkins

  Chief Executive Officer

  Fax: (416) 601-2434

  Email: shawkins@joufunds.com

  

  Delivery of Securities to:

  Attn: Diane Voselnak

  Jou Investment Mgmt. Inc.

  26 Wellngton Street E. Suite 608

  Toronto, Ontario M5E 1S2 Canada

  	
   

  	
   

  	
   

  	
  375,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 24
 

 

	
  Bristol Investment Fund Ltd.

  c/o Bristol Capital Advisors, LLC

  10990 Wilshire Boulevard, Suite 1410

  Los Angeles, California 90024 USA

  Attn: Paul Kessler

  Fax: (310) 696-0334

  Email: pkessler@bristolcompanies.net

  	
   

  	
   

  	
   

  	
  142,045

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cranshire Capital, L.P.

  c/o Downsview Capital, Inc.

  3100 Dundee Road, Suite 703

  Northbrook, IL 60062 USA

  Attn: Lawrence A. Prosser

  Fax: (847) 562-9031

  Email: lprosser@cranshirecapital.com

  	
   

  	
   

  	
   

  	
  71,023

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Asset Advant Limited

  No. 61 Alexandra Terrace

  #07-01 Harbour Link Singapore 119936

  Attention: Mr Kenny Lim Oon Cheng

  Fax: +(65) 6276 3736

  Email: Kenny@sinanju.com.sg

  	
   

  	
   

  	
   

  	
  994,300

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Progressive Rhythm Ltd

  15 Hoe Chiang Road

  #15-01 Tower Fifteen Singapore 089316

  Attention: Mr Lee Kian Soo

  Fax: +(65) 6742 5106

  Email: k.s.lee@ezraholdings.com

  	
   

  	
   

  	
   

  	
  994,300

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 25
 

 

	
  Dr Tiong Ik King

  11 Collyer Quay

  #15-01 The Arcade Singapore 049317

  Fax: +(65) 6224 1881

  Email: lilytoh@habacus.com.sg

  	
   

  	
   

  	
   

  	
  284,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Grand Peak Capital Pte Ltd

  80 Raffles Place

  #51-02 UOB Plaza 1 Singapore 048624

  Attention: Mr. Jonathan Tay

  Fax: +(65) 6536 8129

  Email: jtay@broadven.com

  	
   

  	
   

  	
   

  	
  852,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Capital Data Investments
  Limited

  80 Raffles Place

  #51-02 UOB Plaza 1 Singapore 048624

  Attention: Dr. Sunny Tan

  Fax: +(65) 6536 8129

  Email: sunny@broadven.com

  	
   

  	
   

  	
   

  	
  145,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Totals:

  	
   

  	
   

  	
   

  	
  4,595,094

  

 

 26
 

 

SCHEDULE 3.1

DISCLOSURE SCHEDULES

Inovio Biomedical Corporation

Subsidiaries - Schedule 3.1(a)

 

Inovio Biomedical Corporation
Subsidiaries – Schedule 3.1(a):

 

·                  Genetronics,
Inc. ( Wholly-owned subsidiary, incorporated in California)

·                  Inovio
AS (Wholly-owned subsidiary, incorporated in Norway)

·                  Inovio,
Inc. (Wholly-owned subsidiary of Inovio AS, incorporated in Delaware)

·                  Inovio
Asia Pte. Ltd. (Wholly-owned subsidiary, incorporated in Singapore)

 

 

Inovio Biomedical Corporation

Schedule 3.1(g)

 

Inovio Biomedical Corporation –
Schedule 3.1(g):

 

The Company is party to an Amended and Restated Stockholders Rights
Agreement dated June 20, 1997 with Computershare Trust Company of Canada, as
amended on March 25, 2003, which is available for review as Exhibit A to the
Company’s Definitive Proxy Statement filed on April 28, 2003.

 

 

Inovio Biomedical Corporation

 

Litigation
- Schedule 3.1(j)

 

Inovio Biomedical Corporation
Litigation - Section 3.1(j)

Section 3.1(j) is qualified by the following:

                In
2006, the Company
received correspondence from an attorney on behalf of a former consultant of
the Company, David Pryce, claiming that the Company (and/or the Company's
Norwegian subsidiary, Inovio AS), is/are obligated to Mr. Pryce for amounts
aggregating $500,000 for activities purportedly conducted by Mr. Pryce that he
and his attorneys claim "were instrumental" in connection with the
Company's acquisition of Inovio AS in January 2005. The Company disputes
Mr. Pyrce's assertions and believes the claims presented in the demand letter
are without merit.  

 

                In 2006, the
Company received a demand letter from an attorney on behalf of a former
employee who was laid off from employment as part of a reduction in
force.  The former employee now claims that during his employment with the
Company, he was subjected to discrimination based on his age and national
origin in that he was passed over for promotions and paid lower wages than similarly
qualified but younger, non-Indian employees, and claiming that the employee’s
termination from employment was unlawful discrimination based on age as well
as race, color, national origin and/or ancestry.  The former employee
demanded an unspecified amount of damages for emotional distress and
alleged punitive damages, plus attorney's fees and costs.  The Company adamantly denies all of the
former employee’s allegations and believes the claims presented in the demand
letter are without merit.  

 

 

Inovio Biomedical Corporation

Intellectual Property - Schedule 3.1(o)

 

Royalties and Fees Payable by Seller – Schedule
3.1(o):

 

Baylor – a 2% royalty is payable for licensed
patented products net sales and for all sub-licensee patented product receipts.

 

RMR – a royalty-bearing license to patented
technology is payable when a commercial product is being sold which has not yet
occurred.  When it occurs, payment is due
annually.  Royalty rate is 0.65% if the
annual net sales of such product once product sales commence and 6.5% of
sublicensing fees paid by a third party to Genetronics for a sublicense to any
licensed patent or group of patents.

 

Sphergen – Annual license maintenance fees of
65,000 Euros within 30 days of the first and second anniversary, and 90,000
Euros within 30 days of the third anniversary and every year thereafter.  Inovio shall also pay a royalty when a
commercial product is being sold which has not yet occurred.  Royalty rate is 6% of annual net sales or
sublicense income for products to be used in delivering substances directly to
tumor cells and 3% of annual net sales for products to be used in delivering
nucleic acids to other than tumor cells.

 

University of South Florida – a royalty-bearing
license to patented technology is payable when a commercial product is being
sold which has not yet occurred.  When it
occurs payment is due quarterly.  Royalty
rate is 3% net sales if sold by Inovio, 15% or all royalty received from sales
by sublicensees.  Products are those
products which rely on claims of US Patent No. 5,702,359 for FTO or its
continuation patents.  Term of the
Agreement is for life of agreement which is until one party or the other seeks
termination, or by default life of the patents.

 27

 

EXHIBIT A

FORM OF CLOSING ESCROW AGREEMENT

 28
 

 

EXHIBIT B

FORMS OF LEGAL OPINIONS FROM COMPANY COUNSEL

Opinions of counsel for
the Company to be delivered pursuant to Section 2.2(a)(iii)(D) of the
Agreement.  Capitalized terms herein
shall, unless the context indicates otherwise, have the same meanings as in the
Agreement.  Any reference in one section
hereof to another section or a schedule attached to the Agreement shall be
deemed to incorporate the matters addressed in such referenced section or
schedule.  To be provided with reference
to such assumptions and qualifications that are customary in opinion letters of
this kind:

1.             The Company is validly existing as a corporation under
the laws of the State of Delaware. Each of the Company’s Subsidiaries identified
on Schedule 3.1(a) to the Disclosure Schedules (other than Inovio AS and Inovio
Asia Pte. Ltd., as to which, we express no opinion) is validly existing as a
corporation under the laws of its jurisdiction of incorporation. The Company
and each of the Company’s Subsidiaries identified on Schedule 3.1(a) to the
Disclosure Schedules (other than Inovio AS and Inovio Asia Pte. Ltd., as to
which, we express no opinion) have the corporate power required to carry on
their business as described in the Recent Reports, as incorporated by reference
into the Prospectus.

2.             The Company has the corporate power to execute, deliver
and perform its obligations under each of the Transaction Documents and has
taken all corporate action necessary to authorize the execution, delivery and
performance by the Company of each Transaction Document.

3.             The execution and delivery of each of the Transaction
Documents and the performance of their respective terms by the Company do not
violate the Certificate of Incorporation, as amended, or Bylaws, as amended, of
the Company.  The execution and delivery
by the Company of the Agreement and the performance by the Company of its terms
does not violate the Covered Laws (to be identified in the opinion).

4.             The Agreement constitutes the legal, valid and binding
obligation of the Company, and is enforceable against the Company in accordance
with its terms.

5.             As of immediately prior to the Closing, the authorized
capital stock of the Company consisted of (i) [300,000,000] shares of Common
Stock and (ii) [10,000,000] shares of preferred stock, [1,000] of which have
been designated “Series A Cumulative Convertible Preferred Stock,” [1,000] of
which have been designated “Series B Cumulative Convertible Preferred Stock,”
[1,091] of which have been designated “Series C Cumulative Convertible
Preferred Stock” and [1,966,292] of which have been designated “Series D
Convertible Preferred Stock.”  The Shares
are duly authorized and, when issued and sold to the Purchasers in accordance
with the terms of the Purchase Agreement, the Shares will be validly issued,
fully paid and non-assessable.  To our
knowledge, without investigation other than our review of the Certificate and
reliance on the representations of the Company’s officers set forth in a
certificate delivered to us in connection herewith, such issuance will not
violate any preemptive rights, rights of first refusal, co-sale rights or
similar rights under the Company’s Certificate.

 29
 

 

6.             The Registration Statement has become effective under
the Securities Act.  Any required filing
of the Prospectus pursuant to Rule 424(b) has been made in accordance with Rule
424(b).  To our knowledge, without
investigation, no stop order suspending the effectiveness of the Registration
Statement has been issued under the Securities Act and no proceedings for that
purpose have been initiated or threatened by the Commission.

7.             The Registration Statement and the Prospectus, as of
their respective effective or issue dates (other than the financial statements
and related notes and schedules and other financial, accounting, and
statistical information included therein or omitted therefrom, as to which we
express no opinion), complied as to form in all material respects with the
requirements of the Securities Act and the regulations under the Securities
Act.

 

 30

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