Exhibit 10.35

 

Execution Copy

 

COMMON STOCK PURCHASE AGREEMENT

 

Dated September 25, 2009

 

by and between

 

AFFYMAX, INC.

 

and

 

AZIMUTH OPPORTUNITY LTD.

 

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TABLE OF CONTENTS

 

 

Page

 

 

Article I PURCHASE AND SALE OF COMMON STOCK

1

Section 1.1

Purchase and Sale of Stock

1

Section 1.2

Effective Date; Settlement Dates

1

Section 1.3

The Shares

2

Section 1.4

Current Report; Prospectus Supplement

2

 

 

 

Article II FIXED REQUEST TERMS; OPTIONAL AMOUNT

2

Section 2.1

Fixed Request Notice

3

Section 2.2

Fixed Requests

3

Section 2.3

Share Calculation

4

Section 2.4

Limitation of Fixed Requests

4

Section 2.5

Reduction of Commitment

5

Section 2.6

Below Threshold Price

5

Section 2.7

Settlement

5

Section 2.8

Reduction of Pricing Period

5

Section 2.9

Optional Amount

7

Section 2.10

Calculation of Optional Amount Shares

7

Section 2.11

Exercise of Optional Amount

7

Section 2.12

Aggregate Limit

8

 

 

 

Article III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

9

Section 3.1

Organization and Standing of the Investor

9

Section 3.2

Authorization and Power

9

Section 3.3

No Conflicts

9

Section 3.4

Information

10

 

 

 

Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

10

Section 4.1

Organization, Good Standing and Power

10

Section 4.2

Authorization, Enforcement

10

Section 4.3

Capitalization

11

Section 4.4

Issuance of Shares

11

Section 4.5

No Conflicts

12

Section 4.6

Commission Documents, Financial Statements

12

Section 4.7

Subsidiaries

14

Section 4.8

No Material Adverse Effect

14

Section 4.9

Indebtedness

14

Section 4.10

Title To Assets

14

Section 4.11

Actions Pending

14

Section 4.12

Compliance With Law

15

 

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Section 4.13

Certain Fees

15

Section 4.14

Operation of Business

16

Section 4.15

Environmental Compliance

18

Section 4.16

Material Agreements

18

Section 4.17

Transactions With Affiliates

19

Section 4.18

Securities Act

19

Section 4.19

Employees

21

Section 4.20

Use of Proceeds

21

Section 4.21

Investment Company Act Status

21

Section 4.22

ERISA

21

Section 4.23

Taxes

22

Section 4.24

Insurance

22

Section 4.25

Acknowledgement Regarding Investor’s Purchase of Shares

22

 

 

 

Article V COVENANTS

22

Section 5.1

Securities Compliance; FINRA Filing

22

Section 5.2

Registration and Listing

23

Section 5.3

Compliance with Laws

24

Section 5.4

Keeping of Records and Books of Account; Foreign Corrupt Practices Act

24

Section 5.5

Limitations on Holdings and Issuances

25

Section 5.6

Other Agreements and Other Financings

25

Section 5.7

Stop Orders

27

Section 5.8

Amendments to the Registration Statement; Prospectus Supplements; Free Writing
Prospectuses

27

Section 5.9

Prospectus Delivery

28

Section 5.10

Selling Restrictions

29

Section 5.11

Effective Registration Statement

30

Section 5.12

Non-Public Information

30

Section 5.13

Broker/Dealer

30

Section 5.14

Disclosure Schedule

30

 

 

 

Article VI OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES

31

Section 6.1

Opinion of Counsel and Certificate

31

Section 6.2

Conditions Precedent to the Obligation of the Company

31

Section 6.3

Conditions Precedent to the Obligation of the Investor

32

 

 

 

Article VII TERMINATION

35

Section 7.1

Term, Termination by Mutual Consent

35

Section 7.2

Other Termination

36

Section 7.3

Effect of Termination

37

 

 

 

Article VIII INDEMNIFICATION

37

Section 8.1

General Indemnity.

37

Section 8.2

Indemnification Procedures

39

 

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Article IX MISCELLANEOUS

40

Section 9.1

Fees and Expenses.

40

Section 9.2

Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial

41

Section 9.3

Entire Agreement; Amendment

42

Section 9.4

Notices

42

Section 9.5

Waivers

43

Section 9.6

Headings

43

Section 9.7

Successors and Assigns

43

Section 9.8

Governing Law

43

Section 9.9

Survival

43

Section 9.10

Counterparts

43

Section 9.11

Publicity

44

Section 9.12

Severability

44

Section 9.13

Further Assurances

44

 

 

 

Annex A.

Definitions

 

 

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COMMON STOCK PURCHASE AGREEMENT

 

This COMMON STOCK PURCHASE AGREEMENT, made and entered into on this 25th day of
September, 2009 (this “Agreement”), by and between Azimuth Opportunity Ltd., an
international business company incorporated under the laws of the British Virgin
Islands (the “Investor”), and Affymax, Inc., a corporation organized and
existing under the laws of the State of Delaware (the “Company”). Capitalized
terms used but not defined herein shall have the meanings ascribed to such terms
in Annex A hereto.

 

RECITALS

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company may issue and sell to the Investor and the
Investor shall thereupon purchase from the Company up to $60,000,000 of newly
issued shares of the Company’s common stock, $0.001 par value (“Common Stock”),
subject, in all cases, to the Trading Market Limit; and

 

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;

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

 

ARTICLE I
PURCHASE AND SALE OF COMMON STOCK

 

Section 1.1                                   Purchase and Sale of Stock.  Upon
the terms and subject to the conditions of this Agreement, during the Investment
Period the Company in its discretion may issue and sell to the Investor up to
$60,000,000 (the “Total Commitment”) of duly authorized, validly issued, fully
paid and non-assessable shares of Common Stock (subject in all cases to the
Trading Market Limit, the “Aggregate Limit”), by (i) the delivery to the
Investor of not more than 36 separate Fixed Request Notices (unless the Investor
and the Company mutually agree that a different number of Fixed Request Notices
may be delivered) as provided in Article II hereof and (ii) the exercise by the
Investor of Optional Amounts, which the Company may in its discretion grant to
the Investor and which may be exercised by the Investor, in whole or in part, as
provided in Article II hereof.  The aggregate of all Fixed Request Amounts and
Optional Amount Dollar Amounts shall not exceed the Aggregate Limit.

 

Section 1.2                                   Effective Date; Settlement Dates. 
This Agreement shall become effective and binding upon delivery of counterpart
signature pages of this Agreement executed by each of the parties hereto, and by
delivery of an opinion of counsel and a certificate of the Company as provided
in Section 6.1 hereof, to the offices of Greenberg Traurig, LLP, 200 Park
Avenue, New York, New York 10166, at 4:00 p.m., New York time, on the Effective
Date.  In consideration of and in express reliance upon the representations,
warranties and covenants, and otherwise upon the terms and subject to the
conditions, of this Agreement, from and after the Effective Date and during the
Investment Period (i) the Company shall issue and sell to the

 

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Investor, and the Investor agrees to purchase from the Company, the Shares in
respect of each Fixed Request and (ii) the Investor may in its discretion elect
to purchase Shares in respect of each Optional Amount.  The issuance and sale of
Shares to the Investor pursuant to any Fixed Request or Optional Amount shall
occur on the applicable Settlement Date in accordance with Sections 2.7 and 2.9
(or on such Trading Day in accordance with Section 2.8, as applicable), provided
in each case that all of the conditions precedent thereto set forth in
Article VI theretofore shall have been fulfilled or (to the extent permitted by
applicable law) waived.

 

Section 1.3                                   The Shares.  The Company has or
will have duly authorized and reserved for issuance, and covenants to continue
to so reserve once reserved for issuance, free of all preemptive and other
similar rights, at all times during the Investment Period, the requisite
aggregate number of authorized but unissued shares of its Common Stock to timely
effect the issuance, sale and delivery in full to the Investor of all Shares to
be issued in respect of all Fixed Requests and Optional Amounts under this
Agreement, in any case prior to the issuance to the Investor of such Shares.

 

Section 1.4                                   Current Report; Prospectus
Supplement.  As soon as practicable, but in any event not later than 5:30 p.m.
(New York time) on the first Trading Day immediately following the Effective
Date, the Company shall file with the Commission a report on Form 8-K relating
to the transactions contemplated by, and describing the material terms and
conditions of, this Agreement and disclosing all information relating to the
transactions contemplated hereby required to be disclosed in the Registration
Statement and the Base Prospectus (but which permissibly has been omitted
therefrom in accordance with the Securities Act), including, without limitation,
information required to be disclosed in the section captioned “Plan of
Distribution” in the Base Prospectus (the “Current Report”).  The Current Report
shall include a copy of this Agreement as an exhibit.  To the extent applicable,
the Current Report shall be incorporated by reference in the Registration
Statement in accordance with the provisions of Rule 430B under the Securities
Act.  The Company heretofore has provided the Investor a reasonable opportunity
to comment on a draft of such Current Report and has given due consideration to
such comments.  The Company shall file a final Base Prospectus pursuant to
Rule 424(b) under the Securities Act on or prior to the second Trading Day
immediately following the Effective Date.  Pursuant to Section 5.9 and subject
to the provisions of Section 5.8, on the first Trading Day immediately following
the last Trading Day of each Pricing Period, the Company shall file with the
Commission a Prospectus Supplement pursuant to Rule 424(b) under the Securities
Act disclosing the number of Shares to be issued and sold to the Investor
thereunder, the total purchase price therefor and the net proceeds to be
received by the Company therefrom and, to the extent required by the Securities
Act, identifying the Current Report.

 

ARTICLE II
FIXED REQUEST TERMS; OPTIONAL AMOUNT

 

Subject to the satisfaction of the conditions set forth in this Agreement, the
parties agree (unless otherwise mutually agreed upon by the parties in writing)
as follows:

 

2

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Section 2.1                                   Fixed Request Notice.  The Company
may, from time to time in its sole discretion, no later than 9:30 a.m. (New York
time) on the first Trading Day of the Pricing Period, provide to the Investor a
Fixed Request notice, substantially in the form attached hereto as Exhibit A
(the “Fixed Request Notice”), which Fixed Request Notice shall become effective
at 9:30 a.m. (New York time) on the first Trading Day of the Pricing Period
specified in the Fixed Request Notice; provided; however, that if the Company
delivers the Fixed Request Notice to the Investor later than 9:30 a.m. (New York
time) on a Trading Day, then the first Trading Day of such Pricing Period shall
not be the Trading Day on which the Investor received such Fixed Request Notice,
but shall be the Trading Day thereafter. The Fixed Request Notice shall specify
the Fixed Amount Requested, establish the Threshold Price for such Fixed
Request, designate the first and last Trading Day of the Pricing Period and
specify the Optional Amount, if any, that the Company elects to grant to the
Investor during the Pricing Period and the applicable Threshold Price for such
Optional Amount (the “Optional Amount Threshold Price”). The Threshold Price and
the Optional Amount Threshold Price established by the Company in a Fixed
Request Notice may be the same or different, in the Company’s sole discretion. 
Upon the terms and subject to the conditions of this Agreement, the Investor is
obligated to accept each Fixed Request Notice prepared and delivered in
accordance with the provisions of this Agreement.

 

Section 2.2                                   Fixed Requests.  From time to time
during the Investment Period, the Company may in its sole discretion deliver to
the Investor a Fixed Request Notice for a specified Fixed Amount Requested, and
the applicable discount price (the “Discount Price”) shall be determined, in
accordance with the price and share amount parameters as set forth below or such
other parameters mutually agreed upon by the Investor and the Company, and upon
the terms and subject to the conditions of this Agreement, the Investor shall
purchase from the Company the Shares subject to such Fixed Request Notice;
provided, however, that (i) if an ex-dividend date is established by the Trading
Market in respect of the Common Stock on or between the first Trading Day of the
applicable Pricing Period and the applicable Settlement Date, the Discount Price
shall be reduced by the per share dividend amount and (ii) the Company may not
deliver any single Fixed Request Notice for a Fixed Amount Requested in excess
of the lesser of (a) the amount in the applicable Fixed Amount Requested column
below and (b) 2.5% of the Market Capitalization:

 

Threshold Price

 

Fixed Amount Requested

 

Discount Price

 

 

 

 

 

Equal to or greater than $36.00

 

Not to exceed $5,250,000

 

96.25% of the VWAP

 

 

 

 

 

Equal to or greater than $34.00 and less than $36.00

 

Not to exceed $5,000,000

 

96.20% of the VWAP

 

 

 

 

 

Equal to or greater than $32.00 and less than $34.00

 

Not to exceed $4,750,000

 

96.15% of the VWAP

 

 

 

 

 

Equal to or greater than $30.00 and less than $32.00

 

Not to exceed $4,500,000

 

96.10% of the VWAP

 

 

 

 

 

Equal to or greater than $28.00 and less than $30.00

 

Not to exceed $4,250,000

 

96.05% of the VWAP

 

 

 

 

 

Equal to or greater than $26.00 and less than $28.00

 

Not to exceed $4,000,000

 

96.00% of the VWAP

 

3

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Equal to or greater than $24.00 and less than $26.00

 

Not to exceed $3,750,000

 

95.80% of the VWAP

 

 

 

 

 

Equal to or greater than $22.00 and less than $24.00

 

Not to exceed $3,500,000

 

95.60% of the VWAP

 

 

 

 

 

Equal to or greater than $20.00 and less than $22.00

 

Not to exceed $3,250,000

 

95.40% of the VWAP

 

 

 

 

 

Equal to or greater than $18.00 and less than $20.00

 

Not to exceed $3,000,000

 

95.20% of the VWAP

 

 

 

 

 

Equal to or greater than $16.00 and less than $18.00

 

Not to exceed $2,750,000

 

95.00% of the VWAP

 

 

 

 

 

Equal to or greater than $14.00 and less than $16.00

 

Not to exceed $2,500,000

 

94.75% of the VWAP

 

 

 

 

 

Equal to or greater than $12.00 and less than $14.00

 

Not to exceed $2,250,000

 

94.50% of the VWAP

 

 

 

 

 

Equal to or greater than $10.00 and less than $12.00

 

Not to exceed $2,000,000

 

94.38% of the VWAP

 

 

 

 

 

Equal to or greater than $8.00 and less than $10.00

 

Not to exceed $1,750,000

 

94.25% of the VWAP

 

Anything to the contrary in this Agreement notwithstanding, at no time shall the
Investor be required to purchase more than $5,250,000 worth of Common Stock in
respect of any Pricing Period (not including Common Stock subject to any
Optional Amount).  The date on which the Company delivers any Fixed Request
Notice in accordance with this Section 2.2 hereinafter shall be referred to as a
“Fixed Request Exercise Date”.

 

Section 2.3                                   Share Calculation. With respect to
the Trading Days during the applicable Pricing Period for which the VWAP equals
or exceeds the Threshold Price, the number of Shares to be issued by the Company
to the Investor pursuant to a Fixed Request shall equal the aggregate sum of
each quotient (calculated for each Trading Day during the applicable Pricing
Period for which the VWAP equals or exceeds the Threshold Price) determined
pursuant to the following equation (rounded to the nearest whole Share):

 

N = (A x B)/C, where:

 

N = the number of Shares to be issued by the Company to the Investor in respect
of a Trading Day during the applicable Pricing Period for which the VWAP equals
or exceeds the Threshold Price,

 

A = 0.10 (the “Multiplier”),

 

B = the total Fixed Amount Requested, and

 

C = the applicable Discount Price.

 

Section 2.4                                   Limitation of Fixed Requests.  The
Company shall not make more than one Fixed Request in each Pricing Period.  Not
less than five Trading Days shall elapse between the end of one Pricing Period
and the commencement of any other Pricing Period during the

 

4

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Investment Period.  There shall be permitted a maximum of 36 Fixed Requests
during the Investment Period.  Each Fixed Request automatically shall expire
immediately following the last Trading Day of each Pricing Period.

 

Section 2.5                                   Reduction of Commitment.  On the
last Trading Day of each Pricing Period, the Investor’s Total Commitment under
this Agreement automatically (and without the need for any amendment to this
Agreement) shall be reduced, on a dollar-for-dollar basis, by the total amount
of the Fixed Request Amount and the Optional Amount Dollar Amount, if any, for
such Pricing Period paid to the Company at the Settlement Date.

 

Section 2.6                                   Below Threshold Price.  If the
VWAP on any Trading Day in a Pricing Period is lower than the Threshold Price,
then for each such Trading Day the Fixed Amount Requested shall be reduced, on a
dollar-for-dollar basis, by an amount equal to the product of (x) the Multiplier
and (y) the total Fixed Amount Requested, and no Shares shall be purchased or
sold with respect to such Trading Day, except as provided below.  If trading in
the Common Stock on NASDAQ (or any other U.S. national securities exchange on
which the Common Stock is then listed) is suspended for any reason for more than
three hours on any Trading Day, the Investor may at its option deem the price of
the Common Stock to be lower than the Threshold Price for such Trading Day and,
for each such Trading Day, the total amount of the Fixed Amount Requested shall
be reduced as provided in the immediately preceding sentence, and no Shares
shall be purchased or sold with respect to such Trading Day, except as provided
below.  For each Trading Day during a Pricing Period on which the VWAP is lower
(or is deemed to be lower as provided in the immediately preceding sentence)
than the Threshold Price, the Investor may in its sole discretion elect to
purchase such U.S. dollar amount of Shares equal to the amount by which the
Fixed Amount Requested has been reduced in accordance with this Section 2.6, at
the Threshold Price multiplied by the applicable percentage determined in
accordance with the price and share amount parameters set forth in Section 2.2. 
The Investor shall inform the Company via facsimile transmission not later than
8:00 p.m. (New York time) on the last Trading Day of such Pricing Period as to
the number of Shares, if any, the Investor elects to purchase as provided in
this Section 2.6.

 

Section 2.7                                   Settlement.  The payment for,
against simultaneous delivery of, Shares in respect of each Fixed Request shall
be settled on the second Trading Day next following the last Trading Day of each
Pricing Period, or on such earlier date as the parties may mutually agree (the
“Settlement Date”).  On each Settlement Date, the Company shall deliver the
Shares purchased by the Investor to the Investor or its designees via DTC’s
Deposit Withdrawal Agent Commission (DWAC) system, against simultaneous payment
therefor to the Company’s designated account by wire transfer of immediately
available funds, provided that if the Shares are received by the Investor later
than 1:00 p.m. (New York time), payment therefor shall be made with next day
funds.  As set forth in Section 9.1(ii), a failure by the Company to deliver
such Shares shall result in the payment of liquidated damages by the Company to
the Investor.

 

Section 2.8                                   Reduction of Pricing Period.  If
during a Pricing Period the Company elects to reduce the number of Trading Days
in such Pricing Period (and thereby amend its previously delivered Fixed Request
Notice), the Company shall so notify the Investor before

 

5

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9:00 a.m. (New York time) on any Trading Day during a Pricing Period (a
“Reduction Notice”) and the last Trading Day of such Pricing Period shall be the
Trading Day immediately preceding the Trading Day on which the Investor received
such Reduction Notice; provided, however, that if the Company delivers the
Reduction Notice later than 9:00 a.m. (New York time) on a Trading Day during a
Pricing Period, then the last Trading Day of such Pricing Period instead shall
be the Trading Day on which the Investor received such Reduction Notice.

 

Upon receipt of a Reduction Notice, the Investor (i) shall purchase the Shares
in respect of each Trading Day in such reduced Pricing Period for which the VWAP
equals or exceeds the Threshold Price in accordance with Section 2.3 hereof;
(ii) may elect to purchase the Shares in respect of any Trading Day in such
reduced Pricing Period for which the VWAP is (or is deemed to be) lower than the
Threshold Price in accordance with Section 2.6 hereof; and (iii) may elect to
exercise all or any portion of an Optional Amount on any Trading Day during such
reduced Pricing Period in accordance with Sections 2.10 and 2.11 hereof.

 

In addition, upon receipt of a Reduction Notice, the Investor may elect to
purchase such U.S. dollar amount of additional Shares equal to the product
determined pursuant to the following equation:

 

D = (A/B) x (B – C), where:

 

D = the U.S. dollar amount of additional Shares to be purchased,

 

A = the Fixed Amount Requested,

 

B = 10 or, for purposes of this Section 2.8, such lesser number of Trading Days
as the parties may mutually agree to, and

 

C = the number of Trading Days in the reduced Pricing Period,

 

at a per Share price equal to (x) the Fixed Amount Requested attributable to the
reduced Pricing Period divided by (y) the number of Shares to be purchased
during such reduced Pricing Period pursuant to clauses (i) and (ii) (as
applicable) of the immediately preceding paragraph.

 

The Investor may also elect to exercise any portion of the applicable Optional
Amount which was unexercised during the reduced Pricing Period by issuing an
Optional Amount Notice to the Company not later than 10:00 a.m. (New York time)
on the first Trading Day next following the last Trading Day of the reduced
Pricing Period. The number of Shares to be issued upon exercise of such Optional
Amount shall be calculated pursuant to the equation set forth in Section 2.10
hereof, except that “C” shall equal the greater of (i) the VWAP for the Common
Stock on the last Trading Day of the reduced Pricing Period or (ii) the Optional
Amount Threshold Price.

 

6

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The payment for, against simultaneous delivery of, Shares to be purchased and
sold in accordance with this Section 2.8 shall be settled on the second Trading
Day next following the Trading Day on which the Investor receives a Reduction
Notice.

 

Section 2.9                                   Optional Amount.  With respect to
any Pricing Period, the Company may in its sole discretion grant to the Investor
the right to exercise, from time to time during the Pricing Period (but not more
than once on any Trading Day), all or any portion of an Optional Amount.  The
maximum Optional Amount Dollar Amount and the Optional Amount Threshold Price
shall be set forth in the Fixed Request Notice.  If an ex-dividend date is
established by the Trading Market in respect of the Common Stock on or between
the first Trading Day of the applicable Pricing Period and the applicable
Settlement Date, the applicable exercise price in respect of the Optional Amount
shall be reduced by the per share dividend amount.  Each daily Optional Amount
exercise shall be aggregated during the Pricing Period and settled on the next
Settlement Date.  The Optional Amount Threshold Price designated by the Company
in its Fixed Request Notice shall apply to each Optional Amount exercised during
the applicable Pricing Period.

 

Section 2.10                            Calculation of Optional Amount Shares. 
The number of shares of Common Stock to be issued in connection with the
exercise of an Optional Amount shall be the quotient determined pursuant to the
following equation (rounded to the nearest whole Share):

 

O = A/(B x C), where:

 

O = the number of shares of Common Stock to be issued in connection with such
Optional Amount exercise,

 

A = the Optional Amount Dollar Amount with respect to which the Investor has
delivered an Optional Amount Notice,

 

B = the applicable percentage determined in accordance with the price and shares
amount parameters set forth in Section 2.2 (with the Optional Amount Threshold
Price serving as the Threshold Price for such purposes), and

 

C = the greater of (i) the VWAP for the Common Stock on the day the Investor
delivers the Optional Amount Notice or (ii) the Optional Amount Threshold Price.

 

Section 2.11                            Exercise of Optional Amount.  If granted
by the Company to the Investor with respect to a Pricing Period, all or any
portion of the Optional Amount may be exercised by the Investor on any Trading
Day during the Pricing Period, subject to the limitations set forth in
Section 2.9.  As a condition to each exercise of an Optional Amount pursuant to
this Section 2.11, the Investor shall issue an Optional Amount Notice to the
Company no later than 8:00 p.m. (New York time) on the day of such Optional
Amount exercise.  If the Investor does not exercise an Optional Amount in full
by 8:00 p.m. (New York time) on the last Trading Day of the applicable Pricing
Period, such unexercised portion of the Investor’s Optional Amount with respect
to that Pricing Period automatically shall lapse and terminate.

 

7

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Section 2.12                            Aggregate Limit.  Notwithstanding
anything to the contrary contained in this Agreement, in no event may the
Company issue a Fixed Request Notice or grant an Optional Amount to the extent
that the sale of Shares pursuant thereto and pursuant to all prior Fixed Request
Notices and Optional Amounts issued hereunder, and as liquidated damages
pursuant to Section 9.1(ii), would cause the Company to sell or the Investor to
purchase Shares which in the aggregate are in excess of the Aggregate Limit.  If
the Company issues a Fixed Request Notice or Optional Amount that otherwise
would permit the Investor to purchase shares of Common Stock which would cause
the aggregate purchases by Investor hereunder to exceed the Aggregate Limit,
such Fixed Request Notice or Optional Amount shall be void ab initio to the
extent of the amount by which the dollar value of shares or number of shares, as
the case may be, of Common Stock otherwise issuable pursuant to such Fixed
Request Notice or Optional Amount together with the dollar value of shares or
number of shares, as the case may be, of all other Common Stock purchased by the
Investor pursuant hereto, or issued as liquidated damages pursuant to
Section 9.1(ii), would exceed the Aggregate Limit.  The Company hereby
represents, warrants and covenants that neither it nor any of its Subsidiaries
(i) has effected any transaction or series of transactions, (ii) is a party to
any pending transaction or series of transactions or (iii) shall enter into any
contract, agreement, agreement-in-principle, arrangement or understanding with
respect to, or shall effect, any Other Financing which, in any of such cases,
may be aggregated with the transactions contemplated by this Agreement for
purposes of determining whether approval of the Company’s stockholders is
required under any bylaw, listed securities maintenance standards or other
rules of the Trading Market; provided, however, that the Company shall be
permitted to take any action referred to in clause (iii) above if (a) the
Company has timely provided the Investor with an Integration Notice as provided
in Section 5.6(ii) hereof and (b) unless the Investor has previously terminated
this Agreement pursuant to Section 7.2, the Company obtains the requisite
stockholder approval prior to the closing of such Other Financing.

 

At the Company’s sole discretion, and effective automatically upon delivery of
notice by the Company to the Investor, this Agreement may be amended by the
Company from time to time to reduce the Aggregate Limit by a specified dollar
amount and/or number of shares of Common Stock as shall be determined by the
Company in its sole discretion; provided, however, that any such amendment of
this Agreement (and any such purported amendment) shall be void and of no force
and effect if the effect thereof would restrict, materially delay, conflict with
or impair the ability or right of the Company to perform its obligations under
this Agreement, including, without limitation, the obligation of the Company to
deliver Shares to the Investor in respect of a Fixed Request or Optional Amount
on the applicable Settlement Date.  In the event the Company shall have elected
to reduce the Aggregate Limit as provided in the immediately preceding sentence,
at the Company’s sole discretion, and effective automatically upon delivery of
notice by the Company to the Investor, the Company may subsequently amend this
Agreement to increase the Aggregate Limit up to $60,000,000; provided, however,
that in no event shall the Company be entitled to issue Fixed Requests and grant
Optional Amounts during the remainder of the Investment Period for an aggregate
amount greater than the amount obtained by subtracting (x) the aggregate of all
Fixed Request Amounts and Optional Amount Dollar Amounts (including any amounts
paid as liquidated damages pursuant to Section 9.1(ii) 

 

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hereunder) covered by all Fixed Requests and Optional Amounts theretofore issued
or granted by the Company in respect of which a settlement has occurred pursuant
to Section 2.7 from (y) $60,000,000, subject in all cases to the Trading Market
Limit.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

 

The Investor hereby makes the following representations and warranties to the
Company:

 

Section 3.1                                   Organization and Standing of the
Investor.  The Investor is an international business company duly organized,
validly existing and in good standing under the laws of the British Virgin
Islands.

 

Section 3.2                                   Authorization and Power.  The
Investor has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and to purchase the Shares in
accordance with the terms hereof.  The execution, delivery and performance of
this Agreement by the Investor and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action,
and no further consent or authorization of the Investor, its Board of Directors
or stockholders is required.  This Agreement has been duly executed and
delivered by the Investor.  This Agreement constitutes a valid and binding
obligation of the Investor enforceable against it in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership, or similar laws relating to, or affecting generally the
enforcement of, creditor’s rights and remedies or by other equitable principles
of general application.

 

Section 3.3                                   No Conflicts.  The execution,
delivery and performance by the Investor of this Agreement and the consummation
by the Investor of the transactions contemplated herein do not and shall not
(i) result in a violation of such Investor’s charter documents, bylaws or other
applicable organizational instruments, (ii) conflict with, constitute a default
(or an event which, with notice or lapse of time or both, would become a
default) under, or give rise to any rights of termination, amendment,
acceleration or cancellation of, any material agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Investor is a party or is bound, (iii) create or impose any lien,
charge or encumbrance on any property of the Investor under any agreement or any
commitment to which the Investor is party or under which the Investor is bound
or under which any of its properties or assets are bound, or (iv) result in a
violation of any federal, state, local or foreign statute, rule, or regulation,
or any order, judgment or decree of any court or governmental agency applicable
to the Investor or by which any of its properties or assets are bound or
affected, except, in the case of clauses (ii), (iii) and (iv), for such
conflicts, defaults, terminations, amendments, acceleration, cancellations and
violations as would not, individually or in the aggregate, prohibit or otherwise
interfere with the ability of the Investor to enter into and perform its
obligations under this Agreement in any material respect.  The Investor is not
required under federal, state, local or foreign law, rule or regulation to
obtain any consent, authorization or order of, or make any filing or
registration

 

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with, any court or governmental agency in order for it to execute, deliver or
perform any of its obligations under this Agreement or to purchase the Shares in
accordance with the terms hereof.

 

Section 3.4                                   Information.  All materials
relating to the business, financial condition, management and operations of the
Company and materials relating to the offer and sale of the Shares which have
been requested by the Investor have been furnished or otherwise made available
to the Investor or its advisors (subject to Section 5.12 of this Agreement). 
The Investor and its advisors have been afforded the opportunity to ask
questions of representatives of the Company.  The Investor has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Shares.  The
Investor understands that it (and not the Company) shall be responsible for its
own tax liabilities that may arise as a result of this investment or the
transactions contemplated by this Agreement.

 

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the disclosure schedule delivered by the Company to the
Investor (which is hereby incorporated by reference in, and constitutes an
integral part of, this Agreement) (the “Disclosure Schedule”), the Company
hereby makes the following representations and warranties to the Investor:

 

Section 4.1                                   Organization, Good Standing and
Power.  The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its properties and
assets and to conduct its business as it is now being conducted.  The Company
and each Subsidiary is duly qualified as a foreign corporation to do business
and is in good standing in every jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except for any jurisdiction in which the failure to be so qualified would not
have a Material Adverse Effect.

 

Section 4.2                                   Authorization, Enforcement.  The
Company has the requisite corporate power and authority to enter into and
perform this Agreement and to issue and sell the Shares in accordance with the
terms hereof.  Except for approvals of the Company’s Board of Directors or a
committee thereof as may be required in connection with any issuance and sale of
Shares to the Investor hereunder (which approvals shall be obtained prior to the
delivery of any Fixed Request Notice), the execution, delivery and performance
by the Company of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no further consent or authorization of the Company or its
Board of Directors or stockholders is required.  This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the

 

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enforcement of, creditor’s rights and remedies or by other equitable principles
of general application.

 

Section 4.3            Capitalization.  The authorized capital stock of the
Company and the shares thereof issued and outstanding are as set forth in the
Commission Documents as of the dates reflected therein.  All of the outstanding
shares of Common Stock have been duly authorized and validly issued, and are
fully paid and nonassessable.  Except as set forth in the Commission Documents,
as of the Effective Date, no shares of Common Stock were entitled to preemptive
rights or registration rights and there were no outstanding options, warrants,
scrip, rights to subscribe to, call or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for, any
shares of capital stock of the Company, other than those issued or granted in
the ordinary course of business pursuant to the Company’s equity incentive
plans.  Except as set forth in the Commission Documents, there were no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into or exchangeable for
any shares of capital stock of the Company, other than those issued or granted
in the ordinary course of business pursuant to the Company’s equity incentive
plans.  Except for customary transfer restrictions contained in agreements
entered into by the Company to sell restricted securities or as set forth in the
Commission Documents, as of the Effective Date, the Company was not a party to,
and it had no knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of the Company.  Except as set forth in the
Commission Documents, the offer and sale of all capital stock, convertible or
exchangeable securities, rights, warrants or options of the Company issued prior
to the Effective Date complied with all applicable federal and state securities
laws, and no stockholder has any right of rescission or damages or any “put” or
similar right with respect thereto that would have a Material Adverse Effect. 
The Company has furnished or made available to the Investor via the Commission’s
Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”) true and
correct copies of the Company’s Certificate of Incorporation as in effect on the
Effective Date (the “Charter”), and the Company’s Bylaws as in effect on the
Effective Date (the “Bylaws”), and true and correct copies (redacted as
appropriate) of all executed resolutions of the Company’s Board of Directors
(and committees thereof) relating to the capital stock of the Company (and
transactions in respect thereof) since December 31, 2006 (except with respect to
issuances of shares of capital stock of the Company to directors, consultants, 
or employees of the Company as fees or compensation that were duly approved by
the Company’s Board of Directors or a committee thereof or other subcommittee
established and authorized by the Board to issue shares or other equity
securities under the Company’s equity incentive plans).

 

Section 4.4            Issuance of Shares.  The Shares to be issued under this
Agreement have been or will be duly authorized by all necessary corporate action
and, when paid for or issued in accordance with the terms hereof, the Shares
shall be validly issued and outstanding, fully paid and nonassessable, and, when
the Shares have been issued to the Investor, the Investor shall be entitled to
all rights accorded to a holder and beneficial owner of Common Stock.

 

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Section 4.5            No Conflicts.  The execution, delivery and performance by
the Company of this Agreement and the consummation by the Company of the
transactions contemplated herein do not and shall not (i) result in a violation
of any provision of the Company’s Charter or Bylaws, (ii) conflict with,
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company or any of its Significant Subsidiaries is a
party or is bound (including, without limitation, any listing agreement with the
Trading Market), (iii) create or impose a lien, charge or encumbrance on any
property of the Company or any of its Significant Subsidiaries under any
agreement or any commitment to which the Company or any of its Significant
Subsidiaries is a party or under which the Company or any of its Significant
Subsidiaries is bound or under which any of their respective properties or
assets are bound, or (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree applicable to the
Company or any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries are bound or affected, except, in the case of
clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations,
amendments, acceleration, cancellations, liens, charges, encumbrances and
violations as would not, individually or in the aggregate, have a Material
Adverse Effect.  The Company is not required under federal, state, local or
foreign law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement, or to issue and sell the Shares to the Investor in accordance with
the terms hereof (other than any filings which may be required to be made by the
Company with the Commission, the Financial Industry Regulatory Authority (the
“FINRA”) or the Trading Market subsequent to the Effective Date, including but
not limited to a Prospectus Supplement under Sections 1.4 and 5.9 of this
Agreement, the FINRA Filing under Section 5.1 of this Agreement and any
registration statement, prospectus or prospectus supplement which has been or
may be filed pursuant to this Agreement).

 

Section 4.6            Commission Documents, Financial Statements.  (a)  The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act and, except as disclosed in the Commission Documents, as of the Effective
Date the Company had timely filed (giving effect to permissible extensions in
accordance with Rule 12b-25 under the Exchange Act) all Commission Documents. 
The Company has delivered or made available to the Investor via EDGAR or
otherwise true and complete copies of the Commission Documents filed with the
Commission prior to the Effective Date (including, without limitation, the 2008
Form 10-K) and has delivered or made available to the Investor via EDGAR or
otherwise true and complete copies of all of the Commission Documents heretofore
incorporated by reference in the Registration Statement and the Prospectus.  The
Company has not provided to the Investor any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by the
Company but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement.  As of its filing date, each
Commission Document filed with the Commission and incorporated by reference in
the Registration Statement and the Prospectus (including, without limitation,
the 2008 Form 10-K) complied in all material respects

 

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with the requirements of the Securities Act or the Exchange Act, as applicable,
and other federal, state and local laws, rules and regulations applicable to it,
and, as of its filing date (or, if amended or superseded by a filing prior to
the Effective Date, on the date of such amended or superseded filing), such
Commission Document did 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.  Each Commission Document to be filed with the
Commission after the Effective Date and incorporated by reference in the
Registration Statement, the Prospectus and any Prospectus Supplement required to
be filed pursuant to Sections 1.4 and 5.9 hereof during the Investment Period
(including, without limitation, the Current Report), when such document becomes
effective or is filed with the Commission, as the case may be, shall comply in
all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and other federal, state and local laws, rules and
regulations applicable to it, and shall 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.

 

(b)           The financial statements, together with the related notes and
schedules, of the Company included in the Commission Documents comply as to form
in all material respects with all applicable accounting requirements and the
published rules and regulations of the Commission and all other applicable
rules and regulations with respect thereto as may be subject to any applicable
out of period adjustments disclosed in the Commission Documents.  Such financial
statements, together with the related notes and schedules, have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements and are
subject to normal year-end audit adjustments), and fairly present in all
material respects the financial condition of the Company and its consolidated
Subsidiaries as of 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).

 

(c)           The Company has timely filed with the Commission and made
available to the Investor via EDGAR or otherwise all certifications and
statements required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or
(y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002
(“SOXA”)) with respect to all relevant Commission Documents.  The Company is in
compliance in all material respects with the provisions of SOXA applicable to it
as of the date hereof.  The Company maintains disclosure controls and procedures
required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and
procedures are effective to ensure that all material information concerning the
Company and its Subsidiaries is made known on a timely basis to the individuals
responsible for the timely and accurate preparation of the Company’s Commission
filings and other public disclosure documents.  As used in this Section 4.6(c),
the term “file” shall be broadly construed to include any manner in which a
document or information is furnished, supplied or otherwise made available to
the Commission.

 

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(d)           Ernst & Young LLP and PricewaterhouseCoopers LLP, who each have
expressed their opinions on the audited financial statements and related
schedules included or incorporated by reference in the Registration Statement
and the Base Prospectus are, with respect to the Company, independent public
accountants as required by the Securities Act and is an independent registered
public accounting firm within the meaning of SOXA as required by the rules of
the Public Company Accounting Oversight Board.

 

Section 4.7            Subsidiaries.  The 2008 Form 10-K sets forth each
Subsidiary of the Company as of the Effective Date, showing its jurisdiction of
incorporation or organization and the percentage of the Company’s ownership of
the outstanding capital stock or other ownership interests of such Subsidiary,
and the Company does not have any other Subsidiaries as of the Effective Date.

 

Section 4.8            No Material Adverse Effect.  Since December 31, 2008, the
Company has not experienced or suffered any Material Adverse Effect, and there
exists no current state of facts, condition or event which would have a Material
Adverse Effect, except (i) as disclosed in any Commission Documents filed since
December 31, 2008 or (ii) continued losses from operations.

 

Section 4.9            Indebtedness.  The Company’s Quarterly Report on
Form 10-Q for its fiscal quarter ended June 30, 2009 sets forth, as of June 30,
2009, all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments through
such date. For the purposes of this Agreement, “Indebtedness” shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $10,000,000 (other
than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements, indemnities and other contingent obligations
in respect of Indebtedness of others in excess of $10,000,000, whether or not
the same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $10,000,000 due under
leases required to be capitalized in accordance with GAAP.  There is no existing
or continuing default or event of default in respect of any Indebtedness of the
Company or any of its Subsidiaries.

 

Section 4.10         Title To Assets.  Each of the Company and its Subsidiaries
has good and marketable title to all of their respective real and personal
property reflected in the Commission Documents, free of mortgages, pledges,
charges, liens, security interests or other encumbrances, except for those
indicated in the Commission Documents or those that would not have a Material
Adverse Effect.  To the Company’s knowledge, all real property leases of the
Company are valid and subsisting and in full force and effect in all material
respects.

 

Section 4.11         Actions Pending.  There is no action, suit, claim,
investigation or proceeding pending, or to the knowledge of the Company
threatened, against the Company or any Subsidiary which questions the validity
of this Agreement or the transactions contemplated hereby or any action taken or
to be taken pursuant hereto or thereto.  Except as set forth in the

 

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Commission Documents, there is no action, suit, claim, investigation or
proceeding pending, or to the knowledge of the Company threatened, against or
involving the Company, any Subsidiary or any of their respective properties or
assets, or involving any officers or directors of the Company or any of its
Subsidiaries, including, without limitation, any securities class action lawsuit
or stockholder derivative lawsuit, in each case which, if determined adversely
to the Company, its Subsidiary or any officer or director of the Company or its
Subsidiaries, would have a Material Adverse Effect. With respect to each of
those certain claims, disputes, investigations, arbitrations, actions or
proceedings under the caption “Item 1. Legal Proceedings” in Part II of the
Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended June 30,
2009, there has been no event or change required to be disclosed in a filing
under the Exchange Act that has not been so disclosed.

 

Section 4.12         Compliance With Law.  The business of the Company and the
Subsidiaries has been and is presently being conducted in compliance with all
applicable federal, state, local and foreign governmental laws, rules,
regulations and ordinances, except as set forth in the Commission Documents and
except for such non-compliance which, individually or in the aggregate, would
not have a Material Adverse Effect.

 

Section 4.13         Certain Fees.  Except for the placement fee payable by the
Company to Reedland Capital Partners, an Institutional Division of Financial
West Group, Member FINRA/SIPC (“Reedland”), which shall be set forth in a
separate engagement letter between the Company and Reedland (a true and complete
fully executed copy of which has heretofore been provided to the Investor), no
brokers, finders or financial advisory fees or commissions shall be payable by
the Company or any Subsidiary (or any of their respective affiliates) with
respect to the transactions contemplated by this Agreement. Except as set forth
in this Section 4.13 or as disclosed in Section 4.13 of the Disclosure Schedule
or in the Registration Statement, the Prospectus or the Current Report, there
are no contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company, the Investor
or the Broker-Dealer for a brokerage commission, finder’s fee or other like
payment in connection with the transactions contemplated by this Agreement or,
to the Company’s knowledge, any arrangements, agreements, understandings,
payments or issuance with respect to the Company or any of its officers,
directors, stockholders, partners, employees, Subsidiaries or affiliates that
may affect the FINRA’s determination of the amount of compensation to be
received by any FINRA member (including, without limitation, those FINRA members
set forth on Schedule 4.13 of the Disclosure Schedule) or person associated with
any FINRA member in connection with the transactions contemplated by this
Agreement.  Except as set forth in this Section 4.13 or as disclosed in
Section 4.13 of the Disclosure Schedule or in the Registration Statement, the
Prospectus or the Current Report, no “items of value” (within the meaning of
Rule 2710 of the NASD Conduct Rules) have been received, and no arrangements
have been entered into for the future receipt of any items of value, from the
Company or any of its officers, directors, stockholders, partners, employees,
Subsidiaries or affiliates by any FINRA member (including, without limitation,
those FINRA members set forth on Schedule 4.13 of the Disclosure Schedule) or
person associated with any FINRA member, during the period commencing 180 days
immediately preceding the Effective Date and ending on the date this

 

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Agreement is terminated in accordance with Article VII, that may affect the
FINRA’s determination of the amount of compensation to be received by any FINRA
member or person associated with any FINRA member in connection with the
transactions contemplated by this Agreement.

 

Section 4.14         Operation of Business.  (a)  The Company or one or more of
its Subsidiaries possesses such permits, licenses, approvals, consents and other
authorizations (including licenses, accreditation and other similar
documentation or approvals of any local health departments) (collectively,
“Governmental Licenses”) issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies, including, without limitation, the United
States Food and Drug Administration (“FDA”), necessary to conduct the business
now operated by it, except where the failure to possess such Governmental
Licenses, individually or in the aggregate, would not have a Material Adverse
Effect or as otherwise disclosed in the Commission Documents.  The Company and
its Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses and all applicable FDA rules and regulations, guidelines
and policies, and all applicable rules and regulations, guidelines and policies
of any governmental authority exercising authority comparable to that of the FDA
(including any non-governmental authority whose approval or authorization is
required under foreign law comparable to that administered by the FDA), except
where the failure to so comply, individually or in the aggregate, would not have
a Material Adverse Effect or as otherwise disclosed in the Commission
Documents..  All of the Governmental Licenses are valid and in full force and
effect, except where the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect, individually or in
the aggregate, would not have a Material Adverse Effect or as otherwise
disclosed in the Commission Documents..  As to each product that is subject to
FDA regulation or similar legal provisions in any foreign jurisdiction that is
developed, manufactured, tested, packaged, labeled, marketed, sold, distributed
and/or commercialized by the Company or any of its Subsidiaries, each such
product is being developed, manufactured, tested, packaged, labeled, marketed,
sold, distributed and/or commercialized in compliance with all applicable
requirements of the FDA (and any non-governmental authority whose approval or
authorization is required under foreign law comparable to that administered by
the FDA), including, but not limited to, those relating to investigational use,
investigational device exemption, premarket notification, premarket approval,
good clinical practices, good manufacturing practices, record keeping, filing of
reports, and patient privacy and medical record security, except where such
non-compliance, individually or in the aggregate, would not have a Material
Adverse Effect or as otherwise disclosed in the Commission Documents..  As to
each product or product candidate of the Company or any of its Subsidiaries
subject to FDA regulation or similar legal provision in any foreign
jurisdiction, all manufacturing facilities of the Company and its Subsidiaries
are operated in compliance with the FDA’s Quality System Regulation requirements
at 21 C.F.R. Part 820, as applicable, except where such non-compliance,
individually or in the aggregate, would not have a Material Adverse Effect. 
Except as set forth in the Commission Documents or the Registration Statement,
neither the Company nor any of its Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such Governmental
Licenses or relating to a potential violation of, failure to comply with, or
request to produce additional information under, any FDA rules 

 

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and regulations, guidelines or policies which, if the subject of any unfavorable
decision, ruling or finding, individually or in the aggregate, would have a
Material Adverse Effect.  Except as set forth in the Commission Documents or the
Registration Statement, neither the Company nor any of its Subsidiaries has
received any correspondence, notice or request from the FDA, including, without
limitation, notice that any one or more products or product candidates of the
Company or any of its Subsidiaries failed to receive approval from the FDA for
use for any one or more indications.  This Section 4.14 does not relate to
environmental matters, such items being the subject of Section 4.15.

 

(b)           The Company or one or more of its Subsidiaries owns or possesses
adequate rights to use patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names, trade dress, logos, copyrights and other
intellectual property, including, without limitation, all of the intellectual
property described in the Commission Documents as being owned or licensed by the
Company (collectively, “Intellectual Property”), necessary to carry on the
business now operated by it, except where the failure to own, license or have
such rights would not, individually or in the aggregate, have a Material Adverse
Effect.  Except as set forth in the Commission Documents, there are no actions,
suits or judicial proceedings pending, or to the Company’s knowledge threatened,
relating to patents or proprietary information to which the Company or any of
its Subsidiaries is a party or of which any property of the Company or any of
its Subsidiaries is subject, and neither the Company nor any of its Subsidiaries
has received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which could render any Intellectual Property invalid
or inadequate to protect the interest of the Company and its Subsidiaries
therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would have a Material Adverse Effect.

 

(c)           To the Company’s knowledge, all pre-clinical and clinical trials
conducted, supervised or monitored by, or on behalf of, the Company or any of
its Subsidiaries have been conducted in compliance with all applicable federal,
state, local and foreign laws, and the regulations and requirements of any
applicable governmental entity, including, but not limited to, FDA good clinical
practice and good laboratory practice requirements (or the foreign equivalent
requirements) except as set forth in the Commission Documents or as would not
likely result in a Material Adverse Effect. Except as set forth in the
Commission Documents or as would not likely result in a Material Adverse Effect,
neither the Company nor any of its Subsidiaries has received any notices or
correspondence from the FDA or any other governmental agency requiring the
termination, suspension, delay or modification of any pre-clinical or clinical
trials conducted by, or on behalf of, the Company or any of its Subsidiaries or
in which the Company or any of its Subsidiaries has participated that are
described in the Registration Statement or the Commission Documents, if any, or
the results of which are referred to in the Registration Statement or the
Commission Documents. To the Company’s knowledge, all pre-clinical and clinical
trials previously conducted by, or on behalf of, the Company or any

 

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of its Subsidiaries while conducted by or on behalf of the Company or any of its
Subsidiaries, were conducted in compliance with all applicable federal, state,
local and foreign laws, and the regulations and requirements of any applicable
governmental entity, including, but not limited to, FDA good clinical practice
and good laboratory practice requirements (or the foreign equivalent
requirements) except as set forth in the Commission Documents or as would not
likely result in a Material Adverse Effect .

 

Section 4.15         Environmental Compliance.  Except as disclosed in the
Commission Documents, the Company and each of its Subsidiaries have obtained all
material approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations of all governmental authorities, or from
any other person, that are required under any Environmental Laws, except for any
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations the failure of which to obtain does not or would
not have a Material Adverse Effect.  “Environmental Laws” shall mean all
applicable laws relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature.  Except for such instances as would not, individually or in
the aggregate, have a Material Adverse Effect, to the Company’s knowledge, there
are no past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or would reasonably be expected to violate any Environmental Law
after the Effective Date or that would reasonably be expected to give rise to
any environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.

 

Section 4.16         Material Agreements.  Except as set forth in the Commission
Documents, neither the Company nor any Subsidiary of the Company is a party to
any written or oral contract, instrument, agreement commitment, obligation, plan
or arrangement, a copy of which would be required to be filed with the
Commission as an exhibit to an annual report on Form 10-K (collectively,
“Material Agreements”). Except as set forth in the Commission Documents, the
Company and each of its Subsidiaries have performed in all material respects all
the obligations required to be performed by them under the Material Agreements,
have received no notice of default or an event of default by the Company or any
of its Subsidiaries thereunder and are not aware of any basis for the assertion
thereof, and neither the Company or any of its Subsidiaries nor, to the
knowledge of the Company, any other contracting party thereto are in default
under any Material Agreement now in effect, the result of which would have a
Material Adverse Effect. Except as set forth in the Commission Documents, each
of the Material

 

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Agreements is in full force and effect, and constitutes a legal, valid and
binding obligation enforceable in accordance with its terms against the Company
and/or any of its Subsidiaries and, to the knowledge of the Company, each other
contracting party thereto, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.

 

Section 4.17         Transactions With Affiliates.  Except as set forth in the
Commission Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts, service arrangements or other continuing
transactions exceeding $120,000 between (a) the Company or any Subsidiary, on
the one hand, and (b) any person or entity who would be covered by Item
404(a) of Regulation S-K, on the other hand.  Except as disclosed in the
Commission Documents, there are no outstanding amounts payable to or receivable
from, or advances by the Company or any of its Subsidiaries to, and neither the
Company nor any of its Subsidiaries is otherwise a creditor of or debtor to, any
beneficial owner of more than 5% of the outstanding shares of Common Stock, or
any director, employee or affiliate of the Company or any of its Subsidiaries,
other than (i) reimbursement for reasonable expenses incurred on behalf of the
Company or any of its Subsidiaries or (ii) as part of the normal and customary
terms of such persons’ employment or service as a director with the Company or
any of its Subsidiaries.

 

Section 4.18         Securities Act.  The Company has complied with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Shares hereunder.

 

(i)            The Company has prepared and filed with the Commission in
accordance with the provisions of the Securities Act the Registration Statement,
including a base prospectus relating to the Shares.  The Registration Statement
was declared effective by order of the Commission on May 2, 2008.  As of the
date hereof, no stop order suspending the effectiveness of the Registration
Statement has been issued by the Commission or is continuing in effect under the
Securities Act and no proceedings therefor are pending before or, to the
Company’s knowledge, threatened by the Commission.  No order preventing or
suspending the use of the Prospectus or any Permitted Free Writing Prospectus
has been issued by the Commission.

 

(ii)           The Company satisfies all of the requirements for the use of
Form S-3 under the Securities Act for the offering and sale of the Securities
contemplated by this Agreement and the Warrants (without reliance on General
Instruction I.B.6. of Form S-3). The Commission has not notified the Company of
any objection to the use of the form of the Registration Statement pursuant to
Rule 401(g)(1) under the Securities Act. The Registration Statement complied in
all material respects on the date on which it was declared effective by the
Commission, and will comply in all material respects at each deemed effective
date with respect to the Investor pursuant to Rule 430B(f)(2) of the Securities
Act, with the requirements of the Securities Act, and the Registration Statement
(including the documents incorporated by reference therein) did not on the date
it was declared effective by the Commission, and shall not at each deemed
effective date with respect to the Investor pursuant to Rule 430B(f)(2) of the
Securities Act, contain an untrue statement of a material fact or omit to state
a material fact

 

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required to be stated therein or necessary to make the statements therein not
misleading; provided that this representation and warranty does not apply to
statements in or omissions from the Registration Statement made in reliance upon
and in conformity with information relating to the Investor furnished to the
Company in writing by or on behalf of the Investor expressly for use therein.
The Registration Statement, as of the Effective Date, meets the requirements set
forth in Rule 415(a)(1)(x) under the Securities Act. The Base Prospectus
complied in all material respects on its date and on the Effective Date, and
will comply in all material respects on each applicable Fixed Request Exercise
Date and, when taken together with the applicable Prospectus Supplement and any
applicable Permitted Free Writing Prospectus, on each applicable Settlement
Date, with the requirements of the Securities Act and did not on its date and on
the Effective Date and shall not on each applicable Fixed Request Exercise Date
and, when taken together with the applicable Prospectus Supplement and any
applicable Permitted Free Writing Prospectus, on each applicable Settlement Date
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that this representation and warranty does not apply to statements in
or omissions from the Base Prospectus made in reliance upon and in conformity
with information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein.

 

(iii)          Each Prospectus Supplement required to be filed pursuant to
Sections 1.4 and 5.9 hereof, when taken together with the Base Prospectus and
any applicable Permitted Free Writing Prospectus, on its date and on the
applicable Settlement Date, shall comply in all material respects with the
provisions of the Securities Act and shall not on its date and on the applicable
Settlement Date contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are made,
not misleading, except that this representation and warranty does not apply to
statements in or omissions from any Prospectus Supplement made in reliance upon
and in conformity with information relating to the Investor furnished to the
Company in writing by or on behalf of the Investor expressly for use therein.

 

(iv)          At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide
offer (within the meaning of Rule 164(h)(2) under the Securities Act) relating
to the Shares, the Company was not and is not an Ineligible Issuer (as defined
in Rule 405 under the Securities Act).  Each Permitted Free Writing Prospectus
(a) shall conform in all material respects to the requirements of the Securities
Act on the date of its first use, (b) when considered together with the
Prospectus on each applicable Fixed Request Exercise Date and on each applicable
Settlement Date, shall not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they are
made, not misleading, and (c) shall not include any information that conflicts
with the information contained in the Registration Statement, including any
document incorporated by reference therein and any Prospectus Supplement deemed
to be a part thereof that has not been superseded or modified.  The immediately
preceding sentence does not apply to statements in or omissions from any
Permitted Free Writing Prospectus made in reliance upon and in conformity

 

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with information relating to the Investor furnished to the Company in writing by
or on behalf of the Investor expressly for use therein.

 

(v)           Prior to the Effective Date, the Company has not distributed any
offering material in connection with the offering and sale of the Shares.  From
and after the Effective Date and prior to the completion of the distribution of
the Shares, the Company shall not distribute any offering material in connection
with the offering and sale of the Shares, other than the Registration Statement,
the Base Prospectus as supplemented by any Prospectus Supplement or a Permitted
Free Writing Prospectus.

 

Section 4.19         Employees.  As of the Effective Date, neither the Company
nor any Subsidiary of the Company has any collective bargaining arrangements or
agreements covering any of its employees, except as set forth in the Commission
Documents.  As of the Effective Date, except as disclosed in the Registration
Statement or the Commission Documents, no officer, consultant or key employee of
the Company or any Subsidiary whose termination, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, has
terminated or, to the knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company or any
Subsidiary.

 

Section 4.20         Use of Proceeds.  The proceeds from the sale of the Shares
shall be used by the Company and its Subsidiaries as set forth in the Base
Prospectus and any Prospectus Supplement filed pursuant to Sections 1.4 and 5.9.

 

Section 4.21         Investment Company Act Status.  The Company is not, and as
a result of the consummation of the transactions contemplated by this Agreement
and the application of the proceeds from the sale of the Shares as set forth in
the Base Prospectus and any Prospectus Supplement shall not be, an “investment
company” or a company “controlled” by an “investment company,” within the
meaning of the Investment Company Act of 1940, as amended.

 

Section 4.22         ERISA.  No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company or any of
its Subsidiaries which has had or would have a Material Adverse Effect.  No
“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of
the Code) or “accumulated funding deficiency” (as defined in Section 203 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred
with respect to any Plan which has had or would have a Material Adverse Effect,
and the execution and delivery of this Agreement and the issuance and sale of
the Shares hereunder shall not result in any of the foregoing events.  Each Plan
is in compliance in all material respects with applicable law, including ERISA
and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any Plan; and each Plan for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualifications.  As
used in this Section 4.22, the term “Plan” shall mean an “employee pension
benefit plan” (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or

 

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any Subsidiary or by any trade or business, whether or not incorporated, which,
together with the Company or any Subsidiary, is under common control, as
described in Section 414(b) or (c) of the Code.

 

Section 4.23         Taxes.  The Company (i) has filed all necessary federal,
state and foreign income and franchise tax returns or has duly requested
extensions thereof, except for those the failure of which to file would not have
a Material Adverse Effect, (ii) has paid all federal, state, local and foreign
taxes due and payable for which it is liable, except to the extent that any such
taxes are being contested in good faith and by appropriate proceedings, except
for such taxes the failure of which to pay would not have a Material Adverse
Effect, and (iii) does not have any tax deficiency or claims outstanding or
assessed or, to the Company’s knowledge, proposed against it which would have a
Material Adverse Effect.

 

Section 4.24         Insurance.  The Company carries, or is covered by,
insurance in such amounts and covering such risks as the Company deems is
adequate for the conduct of its and its Subsidiaries’ businesses and the value
of their respective properties and as is customary for companies engaged in
similar businesses in similar industries.

 

Section 4.25         Acknowledgement Regarding Investor’s Purchase of Shares. 
The Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm’s length purchaser with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder, and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Investor’s purchase of the
Shares.

 

ARTICLE V
COVENANTS

 

The Company covenants with the Investor, and the Investor covenants with the
Company, as follows, which covenants of one party are for the benefit of the
other party, during the Investment Period:

 

Section 5.1            Securities Compliance; FINRA Filing.

 

(i)            The Company shall notify the Commission and the Trading Market,
as applicable, in accordance with their respective rules and regulations, of the
transactions contemplated by this Agreement, and shall take all necessary
action, undertake all proceedings and obtain all registrations, permits,
consents and approvals for the legal and valid issuance of the Shares to the
Investor in accordance with the terms of this Agreement.

 

(ii)           As promptly as practicable, the Company shall (with the
Investor’s assistance) prepare and, no later than 24 hours after the Effective
Date, file with the FINRA’s Corporate Financing Department via CobraDesk all
documents and information required to be

 

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filed with the FINRA pursuant to NASD Conduct Rule 2710 of the FINRA with regard
to the transactions contemplated by this Agreement (the “FINRA Filing”).  In
connection therewith, on the Effective Date, the Company shall pay to the FINRA
by wire transfer of immediately available funds the applicable filing fee with
respect to the FINRA Filing, and the Company shall be solely responsible for
payment of such fee.  The parties hereby agree to provide each other all
requisite information and otherwise to assist each other in a timely fashion in
order for the Company to complete the preparation and submission of the FINRA
Filing in accordance with this Section 5.1(ii) and to promptly respond to any
inquiries or requests from FINRA or its staff.  Each party hereto shall
(A) promptly notify the other party of any communication to that party or its
affiliates from the FINRA, including, without limitation, any request from the
FINRA or its staff for amendments or supplements to or additional information in
respect of the FINRA Filing and permit the other party to review in advance any
proposed written communication to the FINRA and (B) furnish the other party with
copies of all written correspondence, filings and communications between them
and their affiliates and their respective representatives and advisors, on the
one hand, and the FINRA or members of its staff, on the other hand, with respect
to this Agreement or the transactions contemplated hereby.  Each of the parties
hereto agrees to use its commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other party in doing, all things necessary, proper or advisable to
obtain as promptly as practicable (but in no event later than 60 days after the
Effective Date) written confirmation from the FINRA to the effect that the
FINRA’s Corporate Financing Department has determined not to raise any objection
with respect to the fairness and reasonableness of the terms of this Agreement
or the transactions contemplated hereby; provided, however, that the Investor
shall have no responsibility for the compliance or non-compliance of any
Broker-Dealer with NASD Rule 2710 and shall not be required to (x) disclose to
the FINRA or to any other governmental agency, person or entity any business,
financial or other information that the Investor deems, in its sole and absolute
discretion, to be proprietary, confidential or otherwise sensitive information,
(y) amend, modify or change any of the terms or conditions of this Agreement or
(z) otherwise take any other action, including, without limitation, modifying
the Discount Price thresholds referred to in Section 2.2 or the amount of fees
and commissions to be paid to the Broker-Dealer in connection with the
transactions contemplated by this Agreement, in each case, in such a manner that
would, in the Investor’s sole and absolute discretion, render the terms and
conditions of this Agreement and the transactions contemplated hereby to be no
longer advisable to the Investor.  Notwithstanding anything to the contrary
contained in this Agreement, the Company shall not be permitted to deliver any
Fixed Request Notice to the Investor, and the Investor shall not be obligated to
purchase any Shares pursuant to a Fixed Request Notice, unless and until the
parties hereto shall have received written confirmation from the FINRA to the
effect that the FINRA’s Corporate Financing Department has determined not to
raise any objection with respect to the fairness and reasonableness of the terms
of this Agreement or the transactions contemplated hereby.

 

Section 5.2            Registration and Listing.  The Company shall take all
action necessary to cause the Common Stock to continue to be registered as a
class of securities under Sections 12(b) or 12(g) of the Exchange Act, shall
comply with its reporting and filing obligations under the Exchange Act, and
shall not take any action or file any document (whether or not permitted by

 

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the Securities Act) to terminate or suspend such registration or to terminate or
suspend its reporting and filing obligations under the Exchange Act or
Securities Act, except as permitted herein. The Company shall take all action
necessary to continue the listing and trading of its Common Stock and the
listing of the Shares purchased by Investor hereunder on the Trading Market, and
shall comply with the Company’s reporting, filing and other obligations under
the bylaws, listed securities maintenance standards and other rules of the
Trading Market.

 

Section 5.3            Compliance with Laws.

 

(i)            The Company shall comply, and cause each Subsidiary to comply,
(a) with all laws, rules, regulations and orders applicable to the business and
operations of the Company and its Subsidiaries except as would not have a
Material Adverse Effect and (b) with all applicable provisions of the Securities
Act, the Exchange Act, the rules and regulations of the FINRA and the listing
standards of the Trading Market.  Without limiting the generality of the
foregoing, neither the Company nor any of its officers, directors or affiliates
has taken or will take, directly or indirectly, any action designed or intended
to stabilize or manipulate the price of any security of the Company, or which
caused or resulted in, or which would in the future reasonably be expected to
cause or result in, stabilization or manipulation of the price of any security
of the Company.

 

(ii)           The Investor shall comply with all laws, rules, regulations and
orders applicable to the performance by it of its obligations under this
Agreement and its investment in the Shares, except as would not, individually or
in the aggregate, prohibit or otherwise interfere with the ability of the
Investor to enter into and perform its obligations under this Agreement in any
material respect. Without limiting the foregoing, the Investor shall comply with
all applicable provisions of the Securities Act and the Exchange Act.

 

Section 5.4            Keeping of Records and Books of Account; Foreign Corrupt
Practices Act.

 

(i)            The Company shall keep and cause each Subsidiary to keep adequate
records and books of account, in which complete entries shall be made in
accordance with GAAP consistently applied, reflecting all financial transactions
of the Company and its Subsidiaries, and in which, for each fiscal year, all
proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be made.  The
Company shall maintain a system of internal accounting controls that (a) pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company;
(b) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (c) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s
assets that would likely have a material effect on the Company’s financial
statements.

 

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(ii)           Neither the Company, nor any of its Subsidiaries, nor to the
knowledge of the Company, any of their respective directors, officers, agents,
employees or any other persons acting on their behalf shall, in connection with
the operation of the Company’s and its Subsidiaries’ respective businesses,
(a) use any corporate funds for unlawful contributions, payments, gifts or
entertainment or to make any unlawful expenditures relating to political
activity to government officials, candidates or members of political parties or
organizations, (b) pay, accept or receive any unlawful contributions, payments,
expenditures or gifts, or (c) violate or operate in noncompliance with any
export restrictions, anti-boycott regulations, embargo regulations or other
applicable domestic or foreign laws and regulations, except for such violations
or noncompliant operations that would not likely result in a Material Adverse
Effect.

 

(iii)          Subject to the requirements of Section 5.12 of this Agreement,
from time to time from and after the period beginning with the third Trading Day
immediately preceding each Fixed Request Exercise Date through and including the
applicable Settlement Date, the Company shall make available for inspection and
review by the Investor, customary documentation allowing the Investor and/or its
appointed counsel or advisors to conduct due diligence.

 

Section 5.5            Limitations on Holdings and Issuances.  The Company shall
not be obligated to issue and the Investor shall not be obligated to purchase
any shares of Common Stock which, when aggregated with all other shares of
Common Stock then owned beneficially by the Investor, would result in the
beneficial ownership by the Investor of more than 9.9% of the then issued and
outstanding shares of Common Stock.

 

Section 5.6            Other Agreements and Other Financings.

 

(i)            The Company shall not enter into, announce or recommend to its
stockholders any agreement, plan, arrangement or transaction in or of which the
terms thereof would restrict, materially delay, conflict with or impair the
ability or right of the Company or any Subsidiary to perform its obligations
under this Agreement, including, without limitation, the obligation of the
Company to deliver Shares to the Investor in respect of a Fixed Request or
Optional Amount on the applicable Settlement Date.

 

(ii)           The Company shall notify the Investor, within 48 hours, if it
enters into any agreement, plan, arrangement or transaction with a third party,
the principal purpose of which is to obtain during a Pricing Period an Other
Financing not constituting an Acceptable Financing (an “Other Financing
Notice”); provided, however, that the Company shall notify the Investor promptly
(but in no event later than 24 hours) (an “Integration Notice”) if it enters
into any agreement, plan, arrangement or transaction with a third party, the
principal purpose of which is to obtain at any time during the Investment Period
an Other Financing that may be aggregated with the transactions contemplated by
this Agreement for purposes of determining whether approval of the Company’s
stockholders is required under any bylaw, listed securities maintenance
standards or other rules of the Trading Market and, if required under applicable
law, including, without limitation, Regulation FD promulgated by the Commission,
or under the applicable rules and regulations of the Trading Market, the Company
shall simultaneously

 

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publicly disclose such information in accordance with Regulation FD and the
applicable rules and regulations of the Trading Market. For purposes of this
Section 5.6(ii), any press release issued by, or Commission Document filed by,
the Company shall constitute sufficient notice, provided that it is issued or
filed, as the case may be, within the time requirements set forth in the first
sentence of this Section 5.6(ii) for an Other Financing Notice or an Integration
Notice, as applicable. For greater certainty, the entry by the Company into any
agreement, plan, arrangement or transaction with a third party to obtain an
Other Financing (or any other financing) outside of a Pricing Period shall not
trigger any requirement for the Company to deliver an Other Financing Notice (it
being acknowledged and agreed that nothing contained in this
Section 5.6(ii) shall limit or modify in any respect the Company’s obligations
in Section 7.2). During any Pricing Period in which the Company is required to
provide an Other Financing Notice pursuant to the first sentence of this
Section 5.6(ii), the Investor shall (i) have the option to purchase the Shares
subject to the Fixed Request at (x) the price therefor in accordance with the
terms of this Agreement or (y) the third party’s per share purchase price in
connection with the Other Financing, net of such third party’s discounts,
Warrant Value and fees, or (ii) the Investor may elect to not purchase any
Shares subject to the Fixed Request for that Pricing Period. An “Other
Financing” shall mean (x) the issuance of Common Stock for a purchase price less
than, or the issuance of securities convertible into or exchangeable for Common
Stock at an exercise or conversion price (as the case may be) less than, the
then Current Market Price of the Common Stock (in each case, after all fees,
discounts, Warrant Value and commissions associated with the transaction) (a
“Below Market Offering”); (y) the implementation by the Company of any mechanism
in respect of any securities convertible into or exchangeable for Common Stock
for the reset of the purchase price of the Common Stock to below the then
Current Market Price of the Common Stock (including, without limitation, any
antidilution or similar adjustment provisions in respect of any Company
securities, but specifically excluding customary adjustments for stock splits,
stock dividends, stock combinations and similar events); or (z) the issuance of
options, warrants or similar rights of subscription, in each case above not
constituting an Acceptable Financing. “Acceptable Financing” shall mean the
issuance by the Company of: (1) shares of Common Stock or securities convertible
into or exchangeable for Common Stock other than in connection with a Below
Market Offering; (2) shares of Common Stock or securities convertible into or
exchangeable for Common Stock in connection with awards under the Company’s
benefit and equity plans and arrangements or pursuant to consulting or other
vendor agreements and the issuance of shares of Common Stock upon the
conversion, exercise or exchange thereof; (3) shares of Common Stock issuable
upon the conversion or exchange of equity awards or exercisable, convertible or
exchangeable securities outstanding as of the Effective Date; (4) shares of
Common Stock or securities convertible into or exchangeable for Common Stock or
similar rights to subscribe for the purchase of shares of Common Stock in
connection with technology sharing, licensing, research and joint development
agreements (or amendments thereto) with third parties, and the issuance of
shares of Common Stock upon the conversion, exercise or exchange thereof; and
(5) shares of Common Stock and/or warrants or similar rights to subscribe for
the purchase of shares of Common Stock issued in connection with equipment
financings and/or real property leasing arrangements and the issuance of shares
of Common Stock upon the exercise thereof.

 

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Section 5.7            Stop Orders.  The Company shall advise the Investor
promptly (but in no event later than 24 hours) and shall confirm such advice in
writing: (i) of the Company’s receipt of notice of any request by the Commission
for amendment of or a supplement to the Registration Statement, the Prospectus,
any Permitted Free Writing Prospectus or for any additional information; (ii) of
the Company’s receipt of notice of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or prohibiting
or suspending the use of the Prospectus or any Prospectus Supplement, or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or contemplated initiation of any proceeding for
such purpose; and (iii) of the Company becoming aware of the happening of any
event, which makes any statement of a material fact made in the Registration
Statement, the Prospectus or any Permitted Free Writing Prospectus untrue or
which requires the making of any additions to or changes to the statements then
made in the Registration Statement, the Prospectus or any Permitted Free Writing
Prospectus in order to state a material fact required by the Securities Act to
be stated therein or necessary in order to make the statements then made therein
(in the case of the Prospectus, in light of the circumstances under which they
were made) not misleading, or of the necessity to amend the Registration
Statement or supplement the Prospectus or any Permitted Free Writing Prospectus
to comply with the Securities Act or any other law. The Company shall not be
required to disclose to the Investor the substance or specific reasons of any of
the events set forth in clauses (i) through (iii) of the immediately preceding
sentence, but rather, shall only be required to disclose that the event has
occurred.  The Company shall not issue any Fixed Request during the continuation
of any of the foregoing events. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement or
prohibiting or suspending the use of the Prospectus or any Prospectus
Supplement, the Company shall use commercially reasonable efforts to obtain the
withdrawal of such order at the earliest possible time. The Company shall also
advise the Investor promptly (but in no event later than 24 hours) and shall
confirm such advice in writing of the Company becoming aware of the happening of
any event, which makes any statement made in the FINRA Filing untrue or which
requires the making of any additions to or changes to the statements then made
in the FINRA Filing in order to comply with NASD Conduct Rule 2710 of the FINRA.

 

Section 5.8            Amendments to the Registration Statement; Prospectus
Supplements; Free Writing Prospectuses

 

(i)            Except as provided in this Agreement and other than periodic
reports required to be filed pursuant to the Exchange Act, the Company shall not
file with the Commission any amendment to the Registration Statement that
relates to the Investor, the Agreement or the transactions contemplated hereby
or file with the Commission any Prospectus Supplement that relates to the
Investor, this Agreement or the transactions contemplated hereby with respect to
which (a) the Investor shall not previously have been advised, (b) the Company
shall not have given due consideration to any comments thereon received from the
Investor or its counsel, or (c) the Investor shall reasonably object after being
so advised, unless it is necessary to amend the Registration Statement or make
any supplement to the Prospectus to comply with the Securities Act or any other
applicable law or regulation, in which case the Company shall

 

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immediately so inform the Investor, the Investor shall be provided with a
reasonable opportunity to review and comment upon any disclosure relating to the
Investor and the Company shall expeditiously furnish to the Investor an
electronic copy thereof. In addition, for so long as, in the reasonable opinion
of counsel for the Investor, the Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required to be delivered
in connection with any purchase of Shares by the Investor, the Company shall not
file any Prospectus Supplement with respect to the Shares without delivering or
making available a copy of such Prospectus Supplement, together with the Base
Prospectus, to the Investor promptly.

 

(ii)           The Company agrees that, unless it obtains the prior written
consent of the Investor, it has not made and will not make an offer relating to
the Shares that would constitute an Issuer Free Writing Prospectus or that would
otherwise constitute a Free Writing Prospectus required to be filed by the
Company or the Investor with the Commission or retained by the Company or the
Investor under Rule 433 under the Securities Act.  The Investor agrees that,
unless it obtains the prior written consent of the Company, it has not made and
will not make an offer relating to the Shares that would constitute a Free
Writing Prospectus required to be filed by the Company with the Commission or
retained by the Company under Rule 433 under the Securities Act.  Any such
Issuer Free Writing Prospectus or other Free Writing Prospectus consented to by
the Investor or the Company is referred to in this Agreement as a “Permitted
Free Writing Prospectus.”  The Company agrees that (x) it has treated and will
treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer
Free Writing Prospectus and (y) it has complied and will comply, as the case may
be, with the requirements of Rules 164 and 433 under the Securities Act
applicable to any Permitted Free Writing Prospectus, including in respect of
timely filing with the Commission, legending and record keeping.

 

Section 5.9            Prospectus Delivery.  The Company shall file with the
Commission a Prospectus Supplement pursuant to Rule 424(b) under the Securities
Act on the first Trading Day immediately following the last Trading Day of each
Pricing Period.  The Company shall provide the Investor a reasonable opportunity
to comment on a draft of each such Prospectus Supplement and any Issuer Free
Writing Prospectus, shall give due consideration to all such comments and,
subject to the provisions of Section 5.8 hereof, shall deliver or make available
to the Investor, without charge, an electronic copy of each form of Prospectus
Supplement, together with the Base Prospectus, and any Permitted Free Writing
Prospectus on each applicable Settlement Date.  The Company consents to the use
of the Prospectus (and of any Prospectus Supplement thereto) in accordance with
the provisions of the Securities Act and with the securities or “blue sky” laws
of the jurisdictions in which the Shares may be sold by the Investor, in
connection with the offering and sale of the Shares and for such period of time
thereafter as the Prospectus (or in lieu thereof, the notice referred to in
Rule 173(a) under the Securities Act) is required by the Securities Act to be
delivered in connection with sales of the Shares. If during such period of time
any event shall occur that in the judgment of the Company and its counsel is
required to be set forth in the Registration Statement or the Prospectus or any
Permitted Free Writing Prospectus or should be set forth therein in order to
make the statements made therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, or if it is necessary
to amend the Registration Statement or supplement or amend the

 

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Prospectus or any Permitted Free Writing Prospectus to comply with the
Securities Act or any other applicable law or regulation, the Company shall
forthwith prepare and, subject to Section 5.8 above, file with the Commission an
appropriate amendment to the Registration Statement or Prospectus Supplement to
the Prospectus (or supplement to the Permitted Free Writing Prospectus) and
shall expeditiously furnish or make available to the Investor an electronic copy
thereof.

 

Section 5.10         Selling Restrictions.

 

(i)            The Investor covenants that from and after the date hereof
through and including the 90th day next following the termination of this
Agreement (the “Restricted Period”), neither the Investor nor any of its
affiliates (within the meaning of the Exchange Act) nor any entity managed or
controlled by the Investor shall, directly or indirectly, sell any securities of
the Company, except the Shares that it owns or has the right to purchase as
provided in a Fixed Request Notice.  During the Restricted Period, neither the
Investor or any of its affiliates nor any entity managed or controlled by the
Investor shall sell any shares of Common Stock of the Company it does not “own”
or have the unconditional right to receive under the terms of this Agreement
(within the meaning of Rule 200 of Regulation SHO promulgated by the Commission
under the Exchange Act), including Shares in any account of the Investor or in
any account directly or indirectly managed or controlled by the Investor or any
of its affiliates or any entity managed or controlled by the Investor.  Without
limiting the generality of the foregoing, prior to and during the Restricted
Period, neither the Investor nor any of its affiliates nor any entity managed or
controlled by the Investor or any of its affiliates shall enter into a short
position with respect to shares of Common Stock of the Company, including in any
account of the Investor’s or in any account directly or indirectly managed or
controlled by the Investor or any of its affiliates or any entity managed or
controlled by the Investor, except that the Investor may sell Shares that it is
obligated to purchase under a pending Fixed Request Notice but has not yet taken
possession of so long as the Investor (or the Broker-Dealer, as applicable)
covers any such sales with the Shares purchased pursuant to such Fixed Request
Notice; provided, however, that the Investor (or the Broker-Dealer, as
applicable) shall not be required to cover any such sales with the Shares
purchased pursuant to such Fixed Request Notice if (a) the Fixed Request is
terminated by mutual agreement of the Company and the Investor and, as a result
of such termination, no Shares are delivered to the Investor under this
Agreement or (b) the Company otherwise fails to deliver such Shares to the
Investor on the applicable Settlement Date upon the terms and subject to the
provisions of this Agreement.  Prior to and during the Restricted Period, the
Investor shall not grant any option to purchase or acquire any right to dispose
or otherwise dispose for value of any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for, or warrants to purchase,
any shares of Common Stock, or enter into any swap, hedge or other agreement
that transfers, in whole or in part, the economic risk of ownership of the
Common Stock, except for such sales expressly permitted by this Section 5.10(i).

 

(ii)           In addition to the foregoing, in connection with any sale of the
Company’s securities (including any sale permitted by paragraph (i) above), the
Investor shall comply in all

 

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respects with all applicable laws, rules, regulations and orders, including,
without limitation, the requirements of the Securities Act and the Exchange Act.

 

Section 5.11         Effective Registration Statement.  During the Investment
Period, the Company shall use its best efforts to maintain the continuous
effectiveness of the Registration Statement under the Securities Act.

 

Section 5.12         Non-Public Information.  Neither the Company nor any of its
directors, officers or agents shall disclose any material non-public information
about the Company to the Investor, unless a timely public announcement thereof
is made by the Company in the manner contemplated by Regulation FD.

 

Section 5.13         Broker/Dealer.  The Investor covenants that it shall use
one or more broker-dealers to effectuate all sales, if any, of the Shares that
it may purchase from the Company pursuant to this Agreement which (or whom)
shall be unaffiliated with the Investor and not then currently engaged or used
by the Company (collectively, the “Broker-Dealer”).  The Investor shall provide
the Company with all information regarding the Broker-Dealer reasonably
requested by the Company.  The Investor shall be solely responsible for all fees
and commissions of any Broker-Dealer.

 

Section 5.14         Disclosure Schedule.

 

(i)            During the Investment Period, the Company shall from time to time
update the Disclosure Schedule as may be required to satisfy the condition set
forth in Section 6.3(i).  For purposes of this Section 5.14, any disclosure made
in a schedule to the Compliance Certificate substantially in the form attached
hereto as Exhibit D shall be deemed to be an update of the Disclosure Schedule. 
Notwithstanding anything in this Agreement to the contrary, no update to the
Disclosure Schedule pursuant to this Section 5.14 shall cure any breach of a
representation or warranty of the Company contained in this Agreement and shall
not affect any of the Investor’s rights or remedies with respect thereto.

 

(ii)           Notwithstanding anything to the contrary contained in the
Disclosure Schedules or in this Agreement, the information and disclosure
contained in any Schedule of the Disclosure Schedules shall be deemed to be
disclosed and incorporated by reference in any other Schedule of the Disclosure
Schedules as though fully set forth in such Schedule for which applicability of
such information and disclosure is readily apparent on its face.  The fact that
any item of information is disclosed in the Disclosure Schedules shall not be
construed to mean that such information is required to be disclosed by this
Agreement.  Except as expressly set forth in this Agreement, such information
and the thresholds (whether based on quantity, qualitative characterization,
dollar amounts or otherwise) set forth herein shall not be used as a basis for
interpreting the terms “material” or “Material Adverse Effect” or other similar
terms in this Agreement.

 

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ARTICLE VI
OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES

 

Section 6.1            Opinion of Counsel and Certificate.  Simultaneously with
the execution and delivery of this Agreement, the Investor has received (i) an
opinion of outside counsel to the Company, dated the Effective Date, in the form
mutually agreed to by the parties hereto, and (ii) a certificate from the
Company, dated the Effective Date, in the form of Exhibit C hereto.

 

Section 6.2                                   Conditions Precedent to the
Obligation of the Company.  The obligation hereunder of the Company to issue and
sell the Shares to the Investor under any Fixed Request or Optional Amount is
subject to the satisfaction or (to the extent permitted by applicable law)
waiver of each of the conditions set forth below. These conditions are for the
Company’s sole benefit and (to the extent permitted by applicable law) may be
waived by the Company at any time in its sole discretion.

 

(i)                                     Accuracy of the Investor’s
Representations and Warranties.  The representations and warranties of the
Investor contained in this Agreement (i) that are not qualified by “materiality”
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects as of the applicable Fixed Request
Exercise Date and the applicable Settlement Date with the same force and effect
as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct in all material respects as of such other
date and (ii) that are qualified by “materiality” shall have been true and
correct when made and shall be true and correct as of the applicable Fixed
Request Exercise Date and the applicable Settlement Date with the same force and
effect as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of such other date.

 

(ii)                                  Registration Statement.  The Registration
Statement is effective and neither the Company nor the Investor shall have
received notice that the Commission has issued or intends to issue a stop order
with respect to the Registration Statement.  The Company shall have a maximum
dollar amount certain of Shares registered under the Registration Statement
which are in an amount (A) as of the Effective Date, not less than the Total
Commitment and (B) as of the applicable Fixed Request Exercise Date, not less
than the maximum dollar amount worth of Shares issuable pursuant to the
applicable Fixed Request Notice and applicable Optional Amount, if any.  The
Current Report shall have been filed with the Commission, as required pursuant
to Section 1.4, and all Prospectus Supplements shall have been filed with the
Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the
sale of the Shares prior to each Settlement Date, as applicable.  Any other
material required to be filed by the Company or any other offering participant
pursuant to Rule 433(d) under the Securities Act shall have been filed with the
Commission within the applicable time periods prescribed for such filings by
Rule 433 under the Securities Act.

 

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(iii)                               Performance by the Investor.  The Investor
shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Investor at or prior to the applicable Fixed
Request Exercise Date and the applicable Settlement Date.

 

(iv)                              No Injunction.  No statute, regulation, order,
decree, writ, ruling or injunction shall have been enacted, entered,
promulgated, threatened or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of or which would
materially modify or delay any of the transactions contemplated by this
Agreement.

 

(v)                                 No Suspension, Etc.  Trading in the Common
Stock shall not have been suspended by the Commission or the Trading Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the applicable Fixed
Request Exercise Date and applicable Settlement Date), and, at any time prior to
the applicable Fixed Request Exercise Date and applicable Settlement Date, none
of the events described in clauses (i), (ii) and (iii) or the last sentence of
Section 5.7 shall have occurred, trading in securities generally as reported on
the Trading Market shall not have been suspended or limited, nor shall a banking
moratorium have been declared either by the United States or New York State
authorities, nor shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity or crisis of such
magnitude in its effect on, or any material adverse change in, any financial,
credit or securities market which, in each case, in the reasonable judgment of
the Company, makes it impracticable or inadvisable to issue the Shares.

 

(vi)                              No Proceedings or Litigation.  No action, suit
or proceeding before any arbitrator or any court or governmental authority shall
have been commenced or threatened, and no inquiry or investigation by any
governmental authority shall have been commenced or threatened, against the
Company or any Subsidiary, or any of the officers, directors or affiliates of
the Company or any Subsidiary, seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.

 

(vii)                           Aggregate Limit.  The issuance and sale of the
Shares issuable pursuant to such Fixed Request Notice or Optional Amount shall
not violate Sections 2.2, 2.12 and 5.5 hereof.

 

(viii)                        No Unresolved FINRA Objection.   There shall not
exist any unresolved objection raised by the FINRA’s Corporate Financing
Department with respect to the fairness and reasonableness of the terms of this
Agreement or the transactions contemplated hereby, and the parties hereto shall
have obtained written confirmation thereof from the FINRA.

 

Section 6.3                                   Conditions Precedent to the
Obligation of the Investor.  The obligation hereunder of the Investor to accept
a Fixed Request Notice or Optional Amount grant and to acquire and pay for the
Shares is subject to the satisfaction or (to the extent permitted by applicable
law) waiver, at or before each Fixed Request Exercise Date and each Settlement
Date, of each of the conditions set forth below. These conditions are for the
Investor’s sole benefit and

 

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(to the extent permitted by applicable law) may be waived by the Investor at any
time in its sole discretion.

 

(i)                                     Accuracy of the Company’s
Representations and Warranties.  The representations and warranties of the
Company contained in this Agreement (i) that are not qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as of
the applicable Fixed Request Exercise Date and the applicable Settlement Date
with the same force and effect as if made on such dates, except to the extent
such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (ii) that are qualified by “materiality” or
“Material Adverse Effect” shall have been true and correct when made and shall
be true and correct as of the applicable Fixed Request Exercise Date and the
applicable Settlement Date with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date.

 

(ii)                                  Registration Statement. The Registration
Statement is effective and neither the Company nor the Investor shall have
received notice that the Commission has issued or intends to issue a stop order
with respect to the Registration Statement. The Company shall have a maximum
dollar amount certain of Shares registered under the Registration Statement
which are in an amount (A) as of the Effective Date, not less than the Total
Commitment and (B) as of the applicable Fixed Request Exercise Date, not less
than the maximum dollar amount worth of Shares issuable pursuant to the
applicable Fixed Request Notice and applicable Optional Amount, if any. The
Current Report shall have been filed with the Commission, as required pursuant
to Section 1.4, and all Prospectus Supplements shall have been filed with the
Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the
sale of the Shares prior to each Settlement Date, as applicable, and an
electronic copy of each such Prospectus Supplement together with the Base
Prospectus shall have been delivered or made available to the Investor in
accordance with Section 5.9 hereof.  Any other material required to be filed by
the Company or any other offering participant pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable
time periods prescribed for such filings by Rule 433 under the Securities Act.

 

(iii)                               No Suspension.  Trading in the Common Stock
shall not have been suspended by the Commission or the Trading Market (except
for any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to the applicable Fixed Request
Exercise Date and applicable Settlement Date), and, at any time prior to the
applicable Fixed Request Exercise Date and applicable Settlement Date, none of
the events described in clauses (i), (ii) and (iii) or the last sentence of
Section 5.7 shall have occurred, trading in securities generally as reported on
the Trading Market shall not have been suspended or limited, nor shall a banking
moratorium have been declared either by the United States or New York State
authorities, nor shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity or crisis of such
magnitude in its effect on,

 

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or any material adverse change in, any financial, credit or securities market
which, in each case, in the reasonable judgment of the Investor, makes it
impracticable or inadvisable to purchase the Shares.

 

(iv)                              Performance of the Company.  The Company shall
have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the Company at or prior to the applicable Fixed
Request Exercise Date and the applicable Settlement Date and shall have
delivered to the Investor on the applicable Settlement Date the Compliance
Certificate substantially in the form attached hereto as Exhibit D.

 

(v)                                 No Injunction. No statute, rule, regulation,
order, decree, writ, ruling or injunction shall have been enacted, entered,
promulgated, threatened or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of or which would
materially modify or delay any of the transactions contemplated by this
Agreement.

 

(vi)                              No Proceedings or Litigation.  No action, suit
or proceeding before any arbitrator or any court or governmental authority shall
have been commenced or threatened, and no inquiry or investigation by any
governmental authority shall have been commenced or threatened, against the
Company or any Subsidiary, or any of the officers, directors or affiliates of
the Company or any Subsidiary, seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.

 

(vii)                           Aggregate Limit.  The issuance and sale of the
Shares issuable pursuant to such Fixed Request Notice or Optional Amount shall
not violate Sections 2.2, 2.12 and 5.5 hereof.

 

(viii)                        Shares Authorized.  The Shares issuable pursuant
to such Fixed Request Notice or Optional Amount shall have been duly authorized
by all necessary corporate action of the Company.

 

(ix)                                Notification of Listing of Shares.  If
required, the Company shall have submitted to the Trading Market a notification
form of listing of additional shares related to the Shares issuable pursuant to
such Fixed Request or Optional Amount in accordance with the bylaws, listed
securities maintenance standards and other rules of the Trading Market.

 

(x)                                   Opinions of Counsel; Bring-Down. 
Subsequent to the filing of the Current Report pursuant to Section 1.4 and prior
to the first Fixed Request Exercise Date, the Investor shall have received an
opinion from outside counsel to the Company in the form mutually agreed to by
the parties hereto and an opinion from in-house counsel to the Company in the
form mutually agreed to by the parties hereto.  On each Settlement Date, the
Investor shall have received an opinion “bring down” from outside counsel to the
Company in the form mutually agreed to by the parties hereto and an opinion
“bring down” from in-house counsel to the Company in the form mutually agreed to
by the parties hereto.

 

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(xi)                                No Unresolved FINRA Objection.   There shall
not exist any unresolved objection raised by the FINRA’s Corporate Financing
Department with respect to the fairness and reasonableness of the terms of this
Agreement or the transactions contemplated hereby, and the parties hereto shall
have obtained written confirmation thereof from the FINRA.

 

(xii)                             Payment of Investor’s Counsel Fees; Due
Diligence Expenses.  On the Effective Date, the Company shall have paid by wire
transfer of immediately available funds to an account designated by the
Investor’s counsel, the fees and expenses of the Investor’s counsel in
accordance with clause (B) of the proviso to the first sentence of
Section 9.1(i) of this Agreement.  On the 30th day of the third month in each
calendar quarter during the Investment Period, the Company shall have paid by
wire transfer of immediately available funds to an account designated by the
Investor, the due diligence expenses incurred by the Investor in accordance with
the provisions of the second sentence of Section 9.1(i) of this Agreement.

 

ARTICLE VII
TERMINATION

 

Section 7.1                                   Term, Termination by Mutual
Consent.  Unless earlier terminated as provided hereunder, this Agreement shall
terminate automatically on the earliest of (i) the first day of the month next
following the 24-month anniversary of the Effective Date (the “Investment
Period”), (ii) the date that the entire dollar amount of Common Stock registered
under the Registration Statement have been issued and sold and (iii) the date
the Investor shall have purchased the Total Commitment of shares of Common Stock
(subject in all cases to the Trading Market Limit). Subject to Section 7.3, this
Agreement may be terminated at any time (A) by the mutual written consent of the
parties, effective as of the date of such mutual written consent unless
otherwise provided in such written consent, it being hereby acknowledged and
agreed that the Investor may not consent to such termination during a Pricing
Period or prior to a Settlement Date in the event the Investor has instructed
the Broker-Dealer to effect an open-market sale of Shares which are subject to a
pending Fixed Request Notice but which have not yet been physically delivered by
the Company (and/or credited by book-entry) to the Investor in accordance with
the terms and subject to the conditions of this Agreement, or (B) by either the
Company or the Investor effective upon written notice to the other party under
Section 9.4, if the FINRA’s Corporate Financing Department has raised any
objection with respect to the fairness and reasonableness of the terms of the
transactions contemplated by this Agreement, or has otherwise failed to confirm
in writing that it has determined not to raise any such objection, and such
objection shall not have been resolved, or such confirmation of no objection
shall not have been obtained, prior to (1) the 60th day immediately following
the Effective Date, in the case of an objection raised or confirmation failure
occurring prior to the first Fixed Request Exercise Date, or (2) prior to the
60th day immediately following the receipt by the Company or the Investor of
notice of such objection, in the case of an objection raised after the first
Fixed Request Exercise Date; provided, however, that (x) the party seeking to
terminate this Agreement pursuant to this clause (B) of Section 7.1 shall have
used its commercially reasonable efforts to resolve such objection and/or to
obtain such confirmation of no objection in accordance with and subject to the
provisions of Section 5.1(ii) of this Agreement and (y) the right to

 

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terminate this Agreement pursuant to this clause (B) of Section 7.1 shall not be
available to any party whose action or failure to act has been a principal cause
of, or has resulted in, such objection or confirmation failure and such action
or failure to act constitutes a breach of this Agreement. Subject to
Section 7.3, the Company may terminate this Agreement effective upon three
Trading Days’ prior written notice to the Investor delivered in accordance with
Section 9.4; provided, however, that (i) such termination shall not occur during
a Pricing Period or, subsequent to the issuance of a Fixed Request Notice, prior
to the Settlement Date related to such Fixed Request Notice and (ii) prior to
issuing any press release, or making any public statement or announcement, with
respect to such termination, the Company shall consult with the Investor and
shall obtain the Investor’s consent to the form and substance of such press
release or other disclosure, which consent shall not be unreasonably delayed or
withheld.

 

Section 7.2                                   Other Termination.  If (i) the
Company provides the Investor with an Other Financing Notice (other than in
respect of an underwritten public offering of Company securities, a registered
direct public offering of Company securities, a “bought deal” of Company
securities to an underwriter or underwriters, a private investment in public
equity (PIPE) of Company securities or any other similar financing, in each case
including Below Market Offerings, provided that in each case the price per share
of such securities is fixed concurrently with the execution of definitive
agreements relating to such transaction) or an Integration Notice, in each case
pursuant to Section 5.6(ii) of this Agreement, or (ii) the Company otherwise
enters into any agreement, plan, arrangement or transaction with a third party,
the principal purpose of which is to obtain outside a Pricing Period, but
otherwise during the Investment Period, an Other Financing not constituting an
Acceptable Financing (other than in respect of an underwritten public offering
of Company securities, a registered direct public offering of Company
securities, a “bought deal” of Company securities to an underwriter or
underwriters, a private investment in public equity (PIPE) of Company securities
or any other similar financing, in each case including Below Market Offerings,
provided that in each case the price per share of such securities is fixed
concurrently with the execution of definitive agreements relating to such
transaction), in which case referred to in this clause (ii) the Company shall so
notify the Investor within 48 hours thereof, then in all such cases referred to
in clauses (i) and (ii) hereof the Investor shall have the right to terminate
this Agreement within the subsequent 30-day period (the “Event Period”),
effective upon one Trading Day’s prior written notice delivered to the Company
in accordance with Section 9.4 at any time during the Event Period.  The Company
shall promptly (but in no event later than 48  hours) notify the Investor (and,
if required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and regulations of
the Trading Market, the Company shall publicly disclose such information in
accordance with Regulation FD and the applicable rules and regulations of the
Trading Market), and the Investor shall have the right to terminate this
Agreement within the subsequent 30-day period at any time after receipt of such
notification, if: (a) any condition, occurrence, state of facts or event
constituting a Material Adverse Effect has occurred; (b) a Material Change in
Ownership has occurred or the Company enters into a definitive agreement
providing for a Material Change in Ownership; or (c) a default or event of
default has occurred and is continuing under the terms of any agreement,
contract, note or other instrument to which the Company or any of its
Subsidiaries is a party with respect to any indebtedness for borrowed money

 

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representing more than 10% of the Company’s consolidated assets, in any such
case, upon one Trading Day’s prior written notice delivered to the Company in
accordance with Section 9.4 hereof.

 

Section 7.3                                   Effect of Termination.  In the
event of termination by the Company or the Investor pursuant to Section 7.1 or
7.2, as applicable, written notice thereof shall forthwith be given to the other
party as provided in Section 9.4 and the transactions contemplated by this
Agreement shall be terminated without further action by either party. If this
Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement
shall become void and of no further force and effect, except that the provisions
of Article VIII (Indemnification), Section 9.1 (Fees and Expenses), Section 9.2
(Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial),
Section 9.4 (Notices), Section 9.8 (Governing Law), Section 9.9 (Survival),
Section 9.12 (Severability) and this Article VII (Termination) shall remain in
full force and effect notwithstanding such termination. Nothing in this
Section 7.3 shall be deemed to release the Company or the Investor from any
liability for any breach under this Agreement, or to impair the rights of the
Company and the Investor to compel specific performance by the other party of
its obligations under this Agreement.

 

ARTICLE VIII
INDEMNIFICATION

 

Section 8.1                                   General Indemnity.

 

(i)                                     Indemnification by the Company.  The
Company shall indemnify and hold harmless the Investor, the Broker-Dealer, each
affiliate, employee, representative and advisor of and to the Investor and the
Broker-Dealer, and each person, if any, who controls the Investor or the
Broker-Dealer within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act from and against all losses, claims, damages,
liabilities and expenses (including reasonable costs of defense and
investigation and all attorneys’ fees) to which the Investor, the Broker-Dealer
and each such other person may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arise out of or are based upon (a) any violation of
United States federal or state securities laws in connection with the
transactions contemplated by this Agreement by the Company or any of its
Subsidiaries, affiliates, officers, directors or employees, (b) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Registration Statement or any amendment
thereto or any omission or alleged omission to state therein, or in any document
incorporated by reference therein, a material fact required to be stated therein
or necessary to make the statements therein not misleading, or (c) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Prospectus, any Issuer Free Writing
Prospectus, or in any amendment thereof or supplement thereto, or in any “issuer
information” (as defined in Rule 433 under the Securities Act) of the Company,
which “issuer information” is required to be, or is, filed with the Commission
or otherwise contained in any Free Writing Prospectus, or any amendment or
supplement thereto, or any omission or alleged omission to state therein, or in
any document incorporated by reference therein, a material fact required to be
stated therein or necessary to

 

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make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that (A) the Company shall not be
liable under this Section 8.1(i) to the extent that a court of competent
jurisdiction shall have determined by a final judgment (from which no further
appeals are available) that such loss, claim, damage, liability or expense
resulting directly and solely from any such acts or failures to act, undertaken
or omitted to be taken by the Investor, any Broker-Dealer or such person through
its bad faith or willful misconduct, (B) the foregoing indemnity shall not apply
to any loss, claim, damage, liability or expense to the extent, but only to the
extent, arising out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the Investor or
any Broker-Dealer expressly for use in the Current Report or any Prospectus
Supplement or Permitted Free Writing Prospectus, or any amendment thereof or
supplement thereto, and (C) with respect to the Prospectus, the foregoing
indemnity shall not inure to the benefit of the Investor or any such person from
whom the person asserting any loss, claim, damage, liability or expense
purchased Common Stock, if copies of all Prospectus Supplements required to be
filed pursuant to Section 1.4 and 5.9, together with the Base Prospectus, were
timely delivered or made available to the Investor pursuant hereto and a copy of
the Base Prospectus, together with a Prospectus Supplement (as applicable), was
not sent or given by or on behalf of the Investor or any such person to such
person, if required by law to have been delivered, at or prior to the written
confirmation of the sale of the Common Stock to such person, and if delivery of
the Base Prospectus, together with a Prospectus Supplement (as applicable),
would have cured the defect giving rise to such loss, claim, damage, liability
or expense.

 

The Company shall reimburse the Investor, the Broker-Dealer and each such
controlling person promptly upon demand (with accompanying presentation of
documentary evidence) for all legal and other costs and expenses reasonably
incurred by the Investor, the Broker-Dealer or such indemnified persons in
investigating, defending against, or preparing to defend against any such claim,
action, suit or proceeding with respect to which it is entitled to
indemnification.

 

(ii)                                  Indemnification by the Investor. The
Investor shall indemnify and hold harmless the Company, each of its directors
and officers, and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of defense and investigation and all attorneys fees)
to which the Company and each such other person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Current Report or any Prospectus Supplement or Permitted Free
Writing Prospectus, or in any amendment thereof or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case, to the
extent, but only to the extent, the untrue statement, alleged untrue statement,
omission or alleged omission was made in reliance upon, and in conformity with,
written information furnished by the Investor to the Company expressly for
inclusion in the Current Report or such Prospectus

 

38

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Supplement or Permitted Free Writing Prospectus, or any amendment thereof or
supplement thereto.

 

Subject to Section 8.2, the Investor shall reimburse the Company and each such
director, officer or controlling person promptly upon demand for all legal and
other costs and expenses reasonably incurred by the Company or such indemnified
persons in investigating, defending against, or preparing to defend against any
such claim, action, suit or proceeding with respect to which it is entitled to
indemnification.

 

Section 8.2                                   Indemnification Procedures. 
Promptly after a person receives notice of a claim or the commencement of an
action for which the person intends to seek indemnification under Section 8.1,
the person will notify the indemnifying party in writing of the claim or
commencement of the action, suit or proceeding; provided, however, that failure
to notify the indemnifying party will not relieve the indemnifying party from
liability under Section 8.1, except to the extent it has been materially
prejudiced by the failure to give notice.  The indemnifying party will be
entitled to participate in the defense of any claim, action, suit or proceeding
as to which indemnification is being sought, and if the indemnifying party
acknowledges in writing the obligation to indemnify the party against whom the
claim or action is brought, the indemnifying party may (but will not be required
to) assume the defense against the claim, action, suit or proceeding with
counsel satisfactory to it.  After an indemnifying party notifies an indemnified
party that the indemnifying party wishes to assume the defense of a claim,
action, suit or proceeding, the indemnifying party will not be liable for any
legal or other expenses incurred by the indemnified party in connection with the
defense against the claim, action, suit or proceeding except that if, in the
opinion of counsel to the indemnifying party, one or more of the indemnified
parties should be separately represented in connection with a claim, action,
suit or proceeding, the indemnifying party will pay the reasonable fees and
expenses of one separate counsel for the indemnified parties.  Each indemnified
party, as a condition to receiving indemnification as provided in Section 8.1,
will cooperate in all reasonable respects with the indemnifying party in the
defense of any action or claim as to which indemnification is sought.  No
indemnifying party will be liable for any settlement of any action effected
without its prior written consent.  Notwithstanding the foregoing sentence, if
at any time an indemnified party that is entitled to reimbursement pursuant to
this Article VII shall have requested (by written notice provided in accordance
with Section 9.4) an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated hereby effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received written notice of the terms of such
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.  No
indemnifying party will, without the prior written consent of the indemnified
party, effect any settlement of a pending or threatened action with respect to
which an indemnified party is, or is informed that it may be, made a party and
for which it would be entitled to indemnification, unless the settlement
includes

 

39

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an unconditional release of the indemnified party from all liability and claims
which are the subject matter of the pending or threatened action.

 

If for any reason the indemnification provided for in this Agreement is not
available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability referred to in Section 8.1 as to which such
indemnified party is entitled to indemnification thereunder, each indemnifying
party shall, in lieu of indemnifying the indemnified party, contribute to the
amount paid or payable by the indemnified party as a result of such loss or
liability, (i) in the proportion which is appropriate to reflect the relative
benefits received by the indemnifying party, on the one hand, and by the
indemnified party, on the other hand, from the sale of Shares which is the
subject of the claim, action, suit or proceeding which resulted in the loss or
liability or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above, but also the relative fault
of the indemnifying party, on the one hand, and the indemnified party, on the
other hand, with respect to the statements or omissions which are the subject of
the claim, action, suit or proceeding that resulted in the loss or liability, as
well as any other relevant equitable considerations.

 

The remedies provided for in Section 8.1 and this Section 8.2 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any Indemnified Person at law or in equity.

 

ARTICLE IX
MISCELLANEOUS

 

Section 9.1                                   Fees and Expenses.

 

(i)                                     Each party shall bear its own fees and
expenses related to the transactions contemplated by this Agreement; provided,
however, that the Company shall pay, on the Effective Date, by wire transfer of
immediately available funds (A) to the FINRA, the applicable filing fee with
respect to the FINRA Filing and (B) to an account designated by the Investor’s
counsel, promptly following the receipt of an invoice therefor, all reasonable
attorneys’ fees and expenses (exclusive of disbursements and out-of-pocket
expenses) incurred by the Investor, up to $35,000, in connection with the
preparation, negotiation, execution and delivery of this Agreement, legal due
diligence of the Company and review of the Registration Statement, the Base
Prospectus, the Current Report, any Permitted Free Writing Prospectus and all
other related transaction documentation. In addition, the Company shall pay, on
the 30th day of the third month in each calendar quarter during the Investment
Period, promptly following the receipt of an invoice therefor, up to $12,500,
representing the due diligence expenses incurred by the Investor during the
Investment Period and expenses relating to the Investor’s review of Prospectus
Supplements, Permitted Free Writing Prospectuses, opinion “bring downs” and all
other related documents to be delivered by the Company and its counsel in
connection with a Fixed Request Exercise Date and the applicable Settlement
Date. The Company shall pay all U.S. federal, state and local stamp and other
similar transfer and other taxes and duties levied in connection with issuance
of the Shares pursuant hereto.

 

40

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(ii)                                  If the Company issues a Fixed Request
Notice and fails to deliver the Shares to the Investor on the applicable
Settlement Date and such failure continues for 10 Trading Days, the Company
shall pay the Investor, in cash (or, at the option of the Investor, in shares of
Common Stock which have not been registered under the Securities Act valued at
the applicable Discount Price of the Shares failed to be delivered; provided
that the issuance thereof by the Company would not violate the Securities Act or
any applicable U.S. state securities laws), as liquidated damages for such
failure and not as a penalty, an amount equal to 2.0% of the payment required to
be paid by the Investor on such Settlement Date (i.e., the sum of the Fixed
Amount Requested and the Optional Amount Dollar Amount) for the initial 30 days
following such Settlement Date until the Shares have been delivered, and an
additional 2.0% for each additional 30-day period thereafter until the Shares
have been delivered, which amount shall be prorated for such periods less than
30 days (subject in all cases to the Trading Market Limit).

 

Section 9.2                                   Specific Enforcement, Consent to
Jurisdiction, Waiver of Jury Trial.

 

(i)                                     The Company and the Investor acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that either
party shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement by the other party and to enforce
specifically the terms and provisions hereof this being in addition to any other
remedy to which either party may be entitled by law or equity.

 

(ii)                                  Each of the Company and the Investor
(a) hereby irrevocably submits to the jurisdiction of the United States District
Court and other courts of the United States sitting in the State of Delaware for
the purposes of any suit, action or proceeding arising out of or relating to
this Agreement, and (b) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Investor consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 9.2 shall affect or limit any right to serve
process in any other manner permitted by law.

 

(iii)                               Each of the Company and the Investor hereby
waives to the fullest extent permitted by applicable law, any right it may have
to a trial by jury in respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the transactions
contemplated hereby or disputes relating hereto. Each of the Company and the
Investor (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it and the other parties hereto have been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 9.2.

 

41

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Section 9.3                                   Entire Agreement; Amendment.  This
Agreement, together with the exhibits referred to herein and the Disclosure
Schedule, represents the entire agreement of the parties with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by either party relative to subject matter hereof not expressly
set forth herein. No provision of this Agreement may be amended other than by a
written instrument signed by both parties hereto.  The Disclosure Schedule and
all exhibits to this Agreement are hereby incorporated by reference in, and made
a part of, this Agreement as if set forth in full herein.

 

Section 9.4                                   Notices.  Any notice, demand,
request, waiver or other communication required or permitted to be given
hereunder shall be in writing and shall be effective (a) upon hand delivery or
facsimile (with facsimile machine confirmation of delivery received) at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The address for such communications shall be:

 

If to the Company:                                             Affymax, Inc.
4001 Miranda Avenue
Palo Alto, California 94304
Telephone Number: (650) 812-8700
Fax: (650) 812-8932
Attention: Steven Love, VP Finance
cc:  Grace U. Shin, General Counsel

 

With copies to:                                                             
Cooley Godward Kronish LLP
Five Palo Alto Square
3000 El Camino Real

Palo Alto, California 94306-2155
Telephone Number: (650) 843-5000
Fax: (650) 849-7400
Attention:  Glen Sato, Esq.

 

If to the Investor:                                                   Azimuth
Opportunity Ltd.
c/o Folio Administrators Limited
Folio House
P.O. Box 800
Road Town, Tortola VG1110
British Virgin Islands
Telephone Number: (284) 494-7065 Ext. 250
Fax:  (284) 494-8356/7422
Attention: Tamara Singh

 

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With copies to:                                                             
Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, NY 10166
Telephone Number: (212) 801-9200
Fax:  (212) 801-6400
Attention: Anthony J. Marsico, Esq.

 

Either party hereto may from time to time change its address for notices by
giving at least 10 days advance written notice of such changed address to the
other party hereto.

 

Section 9.5                                   Waivers.  No waiver by either
party 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 other provisions, condition or requirement hereof nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right accruing to it thereafter. No provision of
this Agreement may be waived other than in a written instrument signed by the
party against whom enforcement of such waiver is sought.

 

Section 9.6                                   Headings.  The article, section
and subsection headings in this Agreement are for convenience only and shall not
constitute a part of this Agreement for any other purpose and shall not be
deemed to limit or affect any of the provisions hereof.

 

Section 9.7                                   Successors and Assigns.  The
Investor may not assign this Agreement to any person without the prior consent
of the Company, in the Company’s sole discretion. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
assigns. The assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.

 

Section 9.8                                   Governing Law.  This Agreement
shall be governed by and construed in accordance with the internal procedural
and substantive laws of the State of Delaware, without giving effect to the
choice of law provisions of such state that would cause the application of the
laws of any other jurisdiction.

 

Section 9.9                                   Survival.  The representations,
warranties, covenants and agreements of the Company and the Investor contained
in this Agreement shall survive the execution and delivery hereof until the
termination of this Agreement; provided, however, that the provisions of
Article VII (Termination), Article VIII (Indemnification), Section 9.1 (Fees and
Expenses), Section 9.2 (Specific Enforcement, Consent to Jurisdiction, Waiver of
Jury Trial), Section 9.4 (Notices), Section 9.8 (Governing Law), Section 9.9
(Survival) and Section 9.12 (Severability) shall remain in full force and effect
notwithstanding such termination.

 

Section 9.10                            Counterparts.  This Agreement may be
executed in counterparts, all of which taken together shall constitute one and
the same original and binding instrument and shall

 

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become effective when all counterparts have been signed by each party and
delivered to the other parties hereto, it being understood that all parties
hereto need not sign the same counterpart. In the event any signature is
delivered by facsimile, digital or electronic transmission, such transmission
shall constitute delivery of the manually executed original and the party using
such means of delivery shall thereafter cause four additional executed signature
pages to be physically delivered to the other parties within five days of the
execution and delivery hereof.  Failure to provide or delay in the delivery of
such additional executed signature pages shall not adversely affect the efficacy
of the original delivery.

 

Section 9.11                            Publicity.  On or after the Effective
Date, the Company may issue a press release or otherwise make a public statement
or announcement with respect to this Agreement or the transactions contemplated
hereby or the existence of this Agreement (including, without limitation, by
filing a copy of this Agreement with the Commission); provided, however, that
prior to issuing any such press release, or making any such public statement or
announcement, the Company shall consult with the Investor on the form and
substance of such press release or other disclosure.

 

Section 9.12                            Severability.  The provisions of this
Agreement are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of
the provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, and this Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of such provision, had
never been contained herein, so that such provisions would be valid, legal and
enforceable to the maximum extent possible.

 

Section 9.13                            Further Assurances.  From and after the
date of this Agreement, upon the request of the Investor or the Company, each of
the Company and the Investor shall execute and deliver such instrument,
documents and other writings as may be reasonably necessary or desirable to
confirm and carry out and to effectuate fully the intent and purposes of this
Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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

 

 

 

AFFYMAX, INC.:

 

 

 

 

 

By:

/s/ Paul Cleveland

 

 

Name: Paul Cleveland

 

 

Title: Chief Financial Officer

 

 

 

AZIMUTH OPPORTUNITY LTD.:

 

 

 

 

 

By:

/s/ Peter Poole

 

 

Name: Peter Poole

 

 

Title: Director

 

45

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ANNEX A TO THE

COMMON STOCK PURCHASE AGREEMENT

DEFINITIONS

 

(a)                                  “Acceptable Financing” shall have the
meaning assigned to such term in Section 5.6(ii) hereof.

 

(b)                                 “Aggregate Limit” shall have the meaning
assigned to such term in Section 1.1 hereof.

 

(c)                                  “Base Prospectus” shall mean the Company’s
prospectus, dated September 25, 2009, a preliminary form of which is included in
the Registration Statement, including the documents incorporated by reference
therein.

 

(d)                                 “Below Market Offering” shall have the
meaning assigned to such term in Section 5.6(ii) hereof.

 

(e)                                  “Broker-Dealer” shall have the meaning
assigned to such term in Section 5.13 hereof.

 

(f)                                    “Bylaws” shall have the meaning assigned
to such term in Section 4.3 hereof.

 

(g)                                 “Charter” shall have the meaning assigned to
such term in Section 4.3 hereof.

 

(h)                                 “Code” shall mean the Internal Revenue Code
of 1986, as amended.

 

(i)                                     “Commission” shall mean the Securities
and Exchange Commission or any successor entity.

 

(j)                                     “Commission Documents” shall mean
(1) all reports, schedules, registrations, forms, statements, information and
other documents filed by the Company with the Commission pursuant to the
reporting requirements of the Exchange Act, including all material filed
pursuant to Section 13(a) or 15(d) of the Exchange Act, which have been filed by
the Company since December 31, 2008 and which hereafter shall be filed by the
Company during the Investment Period, including, without limitation, the Current
Report and the Form 10-K filed by the Company for its fiscal year ended
December 31, 2008 (the “2008 Form 10-K”), (2) the Registration Statement, as the
same may be amended from time to time, the Prospectus and each Prospectus
Supplement, and each Permitted Free Writing Prospectus and (3) all information
contained in such filings and all documents and disclosures that have been and
heretofore shall be incorporated by reference therein.

 

(k)                                  “Common Stock” shall have the meaning
assigned to such term in the Recitals.

 

(l)                                     “Current Market Price” means, with
respect to any particular measurement date, the closing price of a share of
Common Stock as reported on the Trading Market for the Trading Day immediately
preceding such measurement date.

 

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(m)                               “Current Report” shall have the meaning
assigned to such term in Section 1.4 hereof.

 

(n)                                 “Discount Price” shall have the meaning
assigned to such term in Section 2.2 hereof.

 

(o)                                 “EDGAR” shall have the meaning assigned to
such term in Section 4.3 hereof.

 

(p)                                 “Effective Date” shall mean the date of this
Agreement.

 

(q)                                 “Environmental Laws” shall have the meaning
assigned to such term in Section 4.15 hereof.

 

(r)                                    “ERISA” shall mean the Employee
Retirement Income Security Act of 1974, as amended.

 

(s)                                  “Event Period” shall have the meaning
assigned to such term in Section 7.2 hereof.

 

(t)                                    “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder.

 

(u)                                 “FDA” shall have the meaning assigned to
such term in Section 4.14(a) hereof.

 

(v)                                 “FINRA” shall have the meaning assigned to
such term in Section [4.5] [4.18] hereof.

 

(w)                               “FINRA Filing” shall have the meaning assigned
to such term in Section 5.1 hereof.

 

(x)                                   “Fixed Amount Requested” shall mean the
amount of a Fixed Request requested by the Company in a Fixed Request Notice
delivered pursuant to Section 2.1 hereof.

 

(y)                                 “Fixed Request” means the transactions
contemplated under Sections 2.1 through 2.8 of this Agreement.

 

(z)                                   “Fixed Request Amount” means the actual
amount of proceeds received by the Company pursuant to a Fixed Request under
this Agreement.

 

(aa)                            “Fixed Request Exercise Date” shall have the
meaning assigned to such term in Section 2.2 hereof.

 

(bb)                          “Fixed Request Notice” shall have the meaning
assigned to such term in Section 2.1 hereof.

 

(cc)                            “Free Writing Prospectus” shall mean a “free
writing prospectus” as defined in Rule 405 promulgated under the Securities Act.

 

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(dd)                          “GAAP” shall mean generally accepted accounting
principles in the United States of America as applied by the Company.

 

(ee)                            “Governmental Licenses” shall have the meaning
assigned to such term in Section 4.14(a) hereof.

 

(ff)                                “Indebtedness” shall have the meaning
assigned to such term in Section 4.9 hereof.

 

(gg)                          “Integration Notice” shall have the meaning
assigned to such term in Section 5.6(ii) hereof.

 

(hh)                          “Intellectual Property” shall have the meaning
assigned to such term in Section 4.14(b) hereof.

 

(ii)                                  “Investment Period” shall have the meaning
assigned to such term in Section 7.1 hereof.

 

(jj)                                  “Issuer Free Writing Prospectus” shall
mean an “issuer free writing prospectus” as defined in Rule 433 promulgated
under the Securities Act.

 

(kk)                            “Market Capitalization” shall be calculated on
the Trading Day preceding the applicable Pricing Period and shall be the product
of (x) the number of shares of Common Stock outstanding and (y) the closing bid
price of the Common Stock, both as determined by Bloomberg Financial LP using
the DES and HP functions.

 

(ll)                                  “Material Adverse Effect” shall mean any
condition, occurrence, state of facts or event having, or insofar as reasonably
can be foreseen would likely have, any effect on the business, operations,
properties or condition (financial or otherwise) of the Company that is material
and adverse to the Company and its Subsidiaries, taken as a whole, and/or any
condition, occurrence, state of facts or event that would prohibit or otherwise
materially interfere with or delay the ability of the Company to perform any of
its obligations under this Agreement; provided, however, that none of the
following, individually or in the aggregate, shall be taken into account in
determining whether a Material Adverse Effect has occurred or insofar as
reasonably can be foreseen would likely occur: (i) changes in conditions in the
U.S. or global capital, credit or financial markets generally, including changes
in the availability of capital or currency exchange rates, provided such changes
shall not have affected the Company in a materially disproportionate manner as
compared to other similarly situated companies; (ii) changes generally affecting
the biotechnology or pharmaceutical industries, provided such changes shall not
have affected the Company in a materially disproportionate manner as compared to
other similarly situated companies; and (iii) any effect of the announcement of
this Agreement or the consummation of the transactions contemplated by this
Agreement on the Company’s relationships, contractual or otherwise, with
customers, suppliers, vendors, bank lenders, strategic venture partners or
employees.

 

(mm)                      “Material Agreements” shall have the meaning assigned
to such term in Section 4.16 hereof.

 

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(nn)                          “Material Change in Ownership” shall mean the
occurrence of any one or more of the following: (i) the acquisition by any
person, including any syndicate or group deemed to be a “person” under
Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or
indirectly, through a purchase, merger or other acquisition transaction or
series of transactions, of shares of capital stock or other securities of the
Company entitling such person to exercise, upon an event of default or default
or otherwise, 50% or more of the total voting power of all series and classes of
capital stock and other securities of the Company entitled to vote generally in
the election of directors, other than any such acquisition by the Company, any
Subsidiary of the Company or any employee benefit plan of the Company; (ii) any
consolidation or merger of the Company with or into any other person, any merger
of another person into the Company, or any conveyance, transfer, sale, lease or
other disposition of all or substantially all of the properties and assets of
the Company to another person, other than (a) any such transaction (x) that does
not result in any reclassification, conversion, exchange or cancellation of
outstanding shares of capital stock of the Company and (y) pursuant to which
holders of capital stock of the Company immediately prior to such transaction
have the entitlement to exercise, directly or indirectly, 50% or more of the
total voting power of all shares of capital stock of the Company entitled to
vote generally in the election of directors of the continuing or surviving
person immediately after such transaction or (b) any merger which is effected
solely to change the jurisdiction of incorporation of the Company and results in
a reclassification, conversion or exchange of outstanding shares of Common Stock
solely into shares of common stock of the surviving entity; (iii) during any
consecutive two-year period, individuals who at the beginning of that two-year
period constituted the Board of Directors (together with any new directors whose
election to the Board of Directors, or whose nomination for election by the
stockholders of the Company, was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose elections or nominations for election were previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office; or (iv) the Company is liquidated or dissolved or a
resolution is passed by the Company’s stockholders approving a plan of
liquidation or dissolution of the Company. Beneficial ownership shall be
determined in accordance with Rule 13d-3 promulgated by the SEC under the
Exchange Act. The term “person” shall include any syndicate or group which would
be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

 

(oo)                          “Multiplier” shall have the meaning assigned to
such term in Section 2.3 hereof.

 

(pp)                          “NASDAQ” means the NASDAQ Global Market or any
successor thereto.

 

(qq)                          “Optional Amount” means the transactions
contemplated under Sections 2.9 through 2.11 of this Agreement.

 

(rr)                                “Optional Amount Dollar Amount” shall mean
the actual amount of proceeds received by the Company pursuant to the exercise
of an Optional Amount under this Agreement.

 

(ss)                            “Optional Amount Notice” shall mean a notice
sent to the Company with regard to the Investor’s election to exercise all or
any portion of an Optional Amount, as provided in Section 2.11 hereof and
substantially in the form attached hereto as Exhibit B.

 

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(tt)                                “Optional Amount Threshold Price” shall have
the meaning assigned to such term in Section 2.1 hereof.

 

(uu)                          “Other Financing” shall have the meaning assigned
to such term in Section 5.6(ii) hereof.

 

(vv)                          “Other Financing Notice” shall have the meaning
assigned to such term in Section 5.6(ii) hereof.

 

(ww)                      “Permitted Free Writing Prospectus” shall have the
meaning assigned to such term in Section 5.8(ii) hereof.

 

(xx)                              “Plan” shall have the meaning assigned to such
term in Section 4.22 hereof.

 

(yy)                          “Pricing Period shall mean a period of 10
consecutive Trading Days commencing on the Pricing Period start date set forth
in the Fixed Request Notice pursuant to Section 2.1 hereof, or such other period
mutually agreed upon by the Investor and the Company.

 

(zz)                              “Prospectus” shall mean the Base Prospectus,
together with any final prospectus filed with the Commission pursuant to
Rule 424(b), as supplemented by any Prospectus Supplement, including the
documents incorporated by reference therein.

 

(aaa)                      “Prospectus Supplement” shall mean any prospectus
supplement to the Base Prospectus filed with the Commission pursuant to
Rule 424(b) under the Securities Act, including the documents incorporated by
reference therein.

 

(bbb)                   “Reduction Notice” shall have the meaning assigned to
such term in Section 2.8 hereof.

 

(ccc)                      “Registration Statement” shall mean the registration
statement on Form S-3, Commission File Number 333-149772, filed by the Company
with the Commission under the Securities Act for the registration of the Shares,
as such Registration Statement may be amended and supplemented from time to
time, including the documents incorporated by reference therein and the
information deemed to be a part thereof at the time of effectiveness pursuant to
Rule 430A or Rule 430B under the Securities Act.

 

(ddd)                   “Restricted Period” shall have the meaning assigned to
such term in Section 5.10 hereof.

 

(eee)                      “Securities Act” shall mean the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder.

 

(fff)                            “Settlement Date” shall have the meaning
assigned to such term in Section 2.7 hereof.

 

(ggg)                   “Shares” shall mean shares of Common Stock issuable to
the Investor upon exercise of a Fixed Request and shares of Common Stock
issuable to the Investor upon exercise of an Optional Amount.

 

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(hhh)                   “Significant Subsidiary” means any Subsidiary of the
Company that would constitute a Significant Subsidiary of the Company within the
meaning of Rule 1-02 of Regulation S-X of the Commission.

 

(iii)                               “SOXA” shall have the meaning assigned to
such term in Section 4.6(c) hereof.

 

(jjj)                               “Subsidiary” shall mean any corporation or
other entity of which at least a majority of the securities or other ownership
interest having ordinary voting power (absolutely or contingently) for the
election of directors or other persons performing similar functions are at the
time owned directly or indirectly by the Company and/or any of its other
Subsidiaries.

 

(kkk)                      “Threshold Price” is the lowest price (except to the
extent otherwise provided in Section 2.6) at which the Company may sell Shares
during the applicable Pricing Period as set forth in a Fixed Request Notice (not
taking into account the applicable percentage discount during such Pricing
Period determined in accordance with Section 2.2); provided, however, that at no
time shall the Threshold Price be lower than $8.00 per share unless the Company
and the Investor mutually shall agree.

 

(lll)                               “Total Commitment” shall have the meaning
assigned to such term in Section 1.1 hereof.

 

(mmm)             “Trading Day” shall mean a full trading day (beginning at
9:30 a.m., New York City time, and ending at 4:00 p.m., New York City time) on
the NASDAQ.

 

(nnn)                   “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 or the
NASDAQ.

 

(ooo)                   “Trading Market Limit” means that number of shares which
is one less than 20.0% of the issued and outstanding shares of the Company’s
Common Stock as of the Effective Date.

 

(ppp)                   “VWAP” shall mean the daily volume weighted average
price (based on a Trading Day from 9:30 a.m. to 4:00 p.m. (New York time)) of
the Company on the NASDAQ as reported by Bloomberg Financial L.P. using the AQR
function.

 

(qqq)                   “Warrant Value” shall mean the fair value of all
warrants, options and other similar rights issued to a third party in connection
with an Other Financing, determined by using a standard Black-Scholes
option-pricing model using an expected volatility percentage as shall be
mutually agreed by the Investor and the Company.  In the case of a dispute
relating to such expected volatility assumption, the Investor shall obtain
applicable volatility data from three investment banking firms of nationally
recognized reputation, and the parties hereto shall use the average thereof for
purposes of determining the expected volatility percentage in connection with
the Black-Scholes calculation referred to in the immediately preceding sentence.

 

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EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF FIXED REQUEST NOTICE

 

Reference is made to the Common Stock Purchase Agreement dated as of September
25, 2009, (the “Purchase Agreement”) between Affymax, Inc., a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
and Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands. Capitalized terms used and not
otherwise defined herein shall have the meanings given such terms in the
Purchase Agreement.

 

In accordance with and pursuant to Section 2.1 of the Purchase Agreement, the
Company hereby issues this Fixed Request Notice to exercise a Fixed Request for
the Fixed Request Amount indicated below.

 

 

Fixed Amount Requested:

 

 

 

 

 

 

 

Optional Amount Dollar Amount:

 

 

 

 

 

 

 

Pricing Period start date:

 

 

 

 

 

 

 

Pricing Period end date:

 

 

 

 

 

 

 

Settlement Date:

 

 

 

 

 

 

 

Fixed Request Threshold Price:

 

 

 

 

 

 

 

Optional Amount Threshold Price:

 

 

 

 

 

 

 

Dollar Amount of Common Stock Currently Unissued under the Registration
Statement;

 

 

 

 

 

 

 

Dollar Amount of Common Stock Currently Available under the Aggregate Limit:

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

 

By:

 

 

 

 

Name

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

Facsimile No.

 

AGREED AND ACCEPTED

 

By:

 

 

 

Name

 

Title:

 

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EXHIBIT B TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF OPTIONAL AMOUNT NOTICE

 

To:

Fax#:

 

Reference is made to the Common Stock Purchase Agreement dated as of September
25, 2009 (the “Purchase Agreement”) between Affymax, Inc., a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
and Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands (the “Investor”). Capitalized terms
used and not otherwise defined herein shall have the meanings given such terms
in the Purchase Agreement.

 

In accordance with and pursuant to Section 2.1 of the Purchase Agreement, the
Investor hereby issues this Optional Amount Notice to exercise an Optional
Amount for the Optional Amount Dollar Amount indicated below.

 

Optional Amount Dollar Amount Exercised

 

 

 

 

 

Number of Shares to be purchased

 

 

 

 

 

VWAP on the date hereof:

 

 

 

 

 

Discount Price:

 

 

 

 

 

Settlement Date:

 

 

 

 

 

Threshold Price:

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

 

By:

 

 

 

 

Name

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

Address:

 

 

 

Facsimile No.

 

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EXHIBIT C TO THE
COMMON STOCK PURCHASE AGREEMENT
CERTIFICATE OF THE COMPANY

 

CLOSING CERTIFICATE

 

            200 

 

The undersigned, the [                  ] of Affymax, Inc., a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
delivers this certificate in connection with the Common Stock Purchase
Agreement, dated as of September 25, 2009 (the “Agreement”), by and between the
Company and Azimuth Opportunity Ltd., an international business company
incorporated under the laws of the British Virgin Islands (the “Investor”), and
hereby certifies on the date hereof that (capitalized terms used herein without
definition have the meanings assigned to them in the Agreement):

 

1.             Attached hereto as Exhibit A is a true, complete and correct copy
of the Certificate of Incorporation of the Company as filed with the Secretary
of State of the State of Delaware. The Certificate of Incorporation of the
Company has not been further amended or restated, and no document with respect
to any amendment to the Certificate of Incorporation of the Company has been
filed in the office of the Secretary of State of the State of Delaware since the
date shown on the face of the state certification relating to the Company’s
Certificate of Incorporation, which is in full force and effect on the date
hereof, and no action has been taken by the Company in contemplation of any such
amendment or the dissolution, merger or consolidation of the Company.

 

2.             Attached hereto as Exhibit B is a true and complete copy of the
Bylaws of the Company, as amended and restated through, and as in full force and
effect on, the date hereof, and no proposal for any amendment, repeal or other
modification to the Bylaws of the Company has been taken or is currently pending
before the Board of Directors or stockholders of the Company.

 

3.             The Board of Directors of the Company has approved the
transactions contemplated by the Agreement; said approval has not been amended,
rescinded or modified and remains in full force and effect as of the date
hereof.

 

4.             Each person who, as an officer of the Company, or as
attorney-in-fact of an officer of the Company, signed (i) the Agreement and (ii)
any other document delivered prior hereto or on the date hereof in connection
with the transactions contemplated by the Agreement, was duly elected, qualified
and acting as such officer or duly appointed and acting as such
attorney-in-fact, and the signature of each such person appearing on any such
document is his genuine signature.

 

IN WITNESS WHEREOF, I have signed my name as of the date first above written.

 

 

 

 

By:

 

Title:

 

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EXHIBIT D TO THE
COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE

 

In connection with the issuance of shares of common stock of Affymax, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”), pursuant to the Fixed Request Notice, dated
[                          ], delivered by the Company to Azimuth Opportunity
Ltd. (the “Investor”) pursuant to Article II of the Common Stock Purchase
Agreement, dated September 25, 2009, by and between the Company and the Investor
(the “Agreement”), the undersigned hereby certifies as follows:

 

1.             The undersigned is the duly elected [                          ]
of the Company.

 

2.             Except as set forth in the attached Disclosure Schedule, the
representations and warranties of the Company set forth in Article IV of the
Agreement (i) that are not qualified by “materiality” or “Material Adverse
Effect” are true and correct in all material respects as of [insert Fixed
Request Exercise Date] and as of the date hereof with the same force and effect
as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties are true and correct in all material respects as of such other date
and (ii) that are qualified by “materiality” or “Material Adverse Effect” are
true and correct as of [insert Fixed Request Exercise Date] and as of the date
hereof with the same force and effect as if made on such dates, except to the
extent such representations and warranties are as of another date, in which
case, such representations and warranties are true and correct as of such other
date.

 

3.             The Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the Agreement
to be performed, satisfied or complied with by the Company at or prior to
[insert Fixed Request Exercise Date] and the date hereof.

 

Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Agreement.

 

The undersigned has executed this Certificate this [      ] day of
[                      ], 200[    ].

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

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