Exhibit 10.1

SUNESIS PHARMACEUTICALS, INC.

$20,000,000 of Common Stock

(par value $0.0001 per share)

Controlled Equity OfferingSM

Sales Agreement

August 11, 2011

CANTOR FITZGERALD & CO.

499 Park Avenue

New York, NY 10022

Ladies and Gentlemen:

SUNESIS PHARMACEUTICALS, INC., a Delaware corporation (the “Company”), confirms
its agreement (this “Agreement”) with Cantor Fitzgerald & Co. (“CF&Co”), as
follows:

1. Issuance and Sale of Shares. The Company agrees that, from time to time
during the term of this Agreement, on the terms and subject to the conditions
set forth herein, it may issue and sell through CF&Co, acting as agent and/or
principal, shares (the “Placement Shares”) of the Company’s common stock par
value $0.0001 per share (the “Common Stock”) up to an aggregate offering price
of $20,000,000, subject to Section 6(e) hereof (the “Maximum Amount”).
Notwithstanding anything to the contrary contained herein, the parties hereto
agree that compliance with the limitation set forth in this Section 1 on the
number of Placement Shares issued and sold under this Agreement shall be the
sole responsibility of the Company, and CF&Co shall have no obligation in
connection with such compliance, provided that CF&Co strictly follows the
trading instructions provided pursuant to any Placement Notice. The issuance and
sale of Placement Shares through CF&Co will be effected pursuant to the
Registration Statements (as defined below) filed by the Company and declared
effective by the Securities and Exchange Commission (the “Commission”), although
nothing in this Agreement shall be construed as requiring the Company to use the
Registration Statements (as defined below) to issue Common Stock.

The Company has filed, in accordance with the provisions of the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder
(collectively, the “Securities Act”), with the Commission Registration
Statements on Form S-3 (Nos. 333-164025 and 333-166366), each including a base
prospectus, relating to certain securities, including the Placement Shares to be
issued from time to time by the Company, and which incorporate by reference
documents that the Company has filed or will file in accordance with the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (collectively, the “Exchange Act”). The
Company has prepared a prospectus supplement to the base prospectuses included
as part of such registration statements specifically relating to the Placement
Shares (the “Prospectus Supplement”). The Company will furnish to

 

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CF&Co, for use by CF&Co, copies of the prospectuses included as part of such
registration statements, as supplemented by the Prospectus Supplement, relating
to the Placement Shares. Except where the context otherwise requires, such
registration statements, as amended when each became effective, including all
documents filed as part thereof or incorporated by reference therein, and
including any information contained in a Prospectus (as defined below)
subsequently filed with the Commission pursuant to Rule 424(b) under the
Securities Act or deemed to be a part of such registration statements pursuant
to Rule 430B or 462(b) of the Securities Act, as well as any comparable
successor registration statement filed by the Company for the sale of shares of
its Common Stock, including the Placement Shares, collectively are herein called
the “Registration Statements.” The base prospectuses, including all documents
incorporated therein by reference, included in the Registration Statements, as
each may be supplemented by the Prospectus Supplement, in the form in which such
prospectuses and/or Prospectus Supplement have most recently been filed by the
Company with the Commission pursuant to Rule 424(b) under the Securities Act,
together with the then issued Issuer Free Writing Prospectus(es), is herein
called the “Prospectus.” Any reference herein to the Registration Statements,
the Prospectus or any amendment or supplement thereto shall be deemed to refer
to and include the documents incorporated by reference therein, and any
reference herein to the terms “amend,” “amendment” or “supplement” with respect
to the Registration Statements or the Prospectus shall be deemed to refer to and
include the filing after the execution hereof of any document with the
Commission deemed to be incorporated by reference therein (the “Incorporated
Documents”). For purposes of this Agreement, all references to the Registration
Statements, the Prospectus or to any amendment or supplement thereto shall be
deemed to include any copy filed with the Commission pursuant to either the
Electronic Data Gathering Analysis and Retrieval System or Interactive Data
Electronic Applications (collectively “IDEA”).

2. Placements. Each time that the Company wishes to issue and sell the Placement
Shares hereunder (each, a “Placement”), it will notify CF&Co by email notice (or
other method mutually agreed to in writing by the parties) (a “Placement
Notice”) containing the parameters in accordance with which it desires the
Placement Shares to be sold, which shall at a minimum include the number of
Placement Shares to be issued, the time period during which sales are requested
to be made, any limitation on the number of Placement Shares that may be sold in
any one Trading Day (as defined in Section 3) and any minimum price below which
sales may not be made, a form of which containing such minimum sales parameters
necessary is attached hereto as Schedule 1. The Placement Notice shall originate
from any of the individuals from the Company set forth on Schedule 2 (with a
copy to each of the other individuals from the Company listed on such schedule),
and shall be addressed to each of the individuals from CF&Co set forth on
Schedule 2, as such Schedule 2 may be amended from time to time. The Placement
Notice shall be effective upon receipt by CF&Co unless and until (i) in
accordance with the notice requirements set forth in Section 4, CF&Co declines
to accept the terms contained therein for any reason, in its sole discretion,
(ii) the entire amount of the Placement Shares, either under this Agreement or
pursuant to a Placement Notice, have been sold, (iii) in accordance with the
notice requirements set forth in Section 4, the Company suspends or terminates
the Placement Notice, (iv) the Company issues a subsequent Placement Notice with
parameters superseding those on the earlier dated Placement Notice, (v) CF&Co
declines to continue to make sales under an existing Placement Notice, for any
reason, in its sole discretion, or (vi) this Agreement has been terminated under
the provisions of Section 11. The amount of any discount, commission or other
compensation to be paid by the Company to CF&Co in

 

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connection with the sale of the Placement Shares shall be calculated in
accordance with the terms set forth in Schedule 3. It is expressly acknowledged
and agreed that neither the Company nor CF&Co will have any obligation
whatsoever with respect to a Placement Notice or any Placement Shares unless and
until the Company delivers a Placement Notice to CF&Co and CF&Co does not
decline such Placement Notice pursuant to the terms set forth above, and then
only upon the terms specified therein and herein.

3. Sale of Placement Shares by CF&Co. Subject to the terms and conditions herein
set forth, upon the Company’s issuance of a Placement Notice, and unless the
sale of the Placement Shares described therein has been declined, suspended, or
otherwise terminated in accordance with the terms of this Agreement, CF&Co, for
the period specified in the Placement Notice, will use its commercially
reasonable efforts consistent with its customary trading and sales practices and
applicable state and federal laws, rules and regulations and the rules of the
NASDAQ Capital Market (the “Exchange”), to sell such Placement Shares up to the
amount specified, and otherwise in accordance with the terms of such Placement
Notice. CF&Co will provide written confirmation to the Company (including by
email correspondence) no later than the opening of the Trading Day (as defined
below) next following the Trading Day on which it has made sales of Placement
Shares hereunder setting forth the number of Placement Shares sold on such day,
the compensation payable by the Company to CF&Co pursuant to Section 2 with
respect to such sales, and the Net Proceeds (as defined below) payable to the
Company, with an itemization of deductions made by CF&Co (as set forth in
Section 5(a)) from gross proceeds for the Placement Shares that it receives from
such sales. CF&Co may sell Placement Shares by any method permitted by law
deemed to be an “at the market” offering as defined in Rule 415 of the
Securities Act, including without limitation sales made directly on the
Exchange, on any other existing trading market for the Common Stock or to or
through a market maker. With the prior express written consent of the Company,
which may be provided in its Placement Notice, CF&Co may also sell Placement
Shares in privately negotiated transactions. During the term of this Agreement
and notwithstanding anything to the contrary herein, CF&Co agrees that in no
event will it or any CF&Co Affiliate engage in any market making, bidding,
stabilization or other trading activity with regard to the Common Stock if such
activity would be prohibited under Regulation M or other anti-manipulation rules
under the Securities Act. For the purposes hereof, “Trading Day” means any day
on which shares of the Common Stock are purchased and sold on the principal
market on which the Common Stock is listed or quoted.

4. Suspension of Sales. The Company or CF&Co may, upon notice to the other party
in writing (including by email correspondence to each of the individuals of the
other party set forth on Schedule 2, if receipt of such correspondence is
actually acknowledged by any of the individuals to whom the notice is sent,
other than via auto-reply) or by telephone (confirmed immediately by verifiable
facsimile transmission or email correspondence to each of the individuals of the
other party set forth on Schedule 2), suspend any sale of Placement Shares;
provided, however, that such suspension shall not affect or impair either
party’s obligations with respect to any Placement Shares sold hereunder prior to
the receipt of such notice. Each of the Parties agrees that no such notice under
this Section 4 shall be effective against the other unless it is made to one of
the individuals named on Schedule 2 hereto, as such schedule may be amended from
time to time.

5. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, CF&Co that as of each Applicable Time (as defined
in Section 19(a)):

 

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(a) Compliance with Registration Requirements. The Registration Statements have
been filed with the Commission under the Securities Act and declared effective
by the Commission under the Securities Act. The Company has complied with all
requests of the Commission for additional or supplemental information. No stop
order suspending the effectiveness of the Registration Statements are in effect
and no proceedings for such purpose have been instituted or are pending or, to
the Company’s knowledge, are contemplated or threatened by the Commission. The
Company satisfied all applicable requirements for the use of Form S-3 under the
Securities Act when the Registration Statements were filed. The Commission has
not issued an order preventing or suspending the use of the base prospectus, any
Free Writing Prospectus (as defined below) or the Prospectus relating to the
proposed offering of the Placement Shares and no proceedings for such purpose
have been instituted or are pending or, to the Company’s knowledge, are
contemplated or threatened by the Commission. The Prospectus delivered to CF&Co
for use in connection with the offering of Placement Shares was, at the time of
such delivery, identical to the electronically transmitted copies thereof filed
with the Commission pursuant to IDEA, except to the extent permitted by
Regulation S-T. At the respective times each part of the Registration Statements
and each amendment thereto became effective or was deemed effective, as the case
may be, the Registration Statements complied and will comply in all material
respects with the Securities Act and did not and will 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 not misleading. The
immediately preceding sentence does not apply to statements in or omissions from
the Registration Statements or any amendments or supplements thereto based upon
and in conformity with written information furnished to the Company by CF&Co
specifically for use therein.

(b) Delivery of Offering Materials. The Company has delivered to CF&Co, or made
available through IDEA, one complete copy of each Registration Statement and of
each consent of experts filed as a part thereof, and conformed copies of each
Registration Statement (without exhibits), and the Prospectus, as amended or
supplemented, in such quantities and at such places as CF&Co has reasonably
requested.

(c) Prospectus. Neither the Prospectus nor any amendments or supplements
thereto, at the time the Prospectus or any such amendment or supplement was
issued, as of the date hereof and at each Applicable Time, as the case may be,
included or will include an untrue statement of a material fact or omitted or
will omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing sentence does not apply to statements in or omissions
from the Prospectus or any amendments or supplements thereto based upon and in
conformity with written information furnished to the Company by CF&Co
specifically for use therein.

(d) Financial Information. The financial statements of the Company, together
with the related schedules and notes thereto, set forth or included or
incorporated by reference in the Registration Statements and the Prospectus
fairly present, in all material respects, the financial condition of the Company
as of and at the dates indicated and the results of operations, changes in
financial position, stockholders’ equity and cash flows for the periods therein
specified. Such financial statements, schedules, and notes are in conformity
with generally accepted accounting principles as consistently applied in the
United States throughout the

 

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periods involved (except as otherwise stated therein). Any selected financial
data included or incorporated by reference in the Registration Statements and
the Prospectus present fairly the information shown therein and, to the extent
based upon or derived from the financial statements, have been compiled on a
basis consistent with the financial statements presented therein. Any pro forma
financial statements of the Company, and the related notes thereto, included or
incorporated by reference in the Registration Statements and the Prospectus
present fairly the information shown therein, have been prepared in accordance
with the Commission’s rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the basis described therein, and
the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and
circumstances referred to therein. The Company does not have any material
liabilities or obligations, direct or contingent (including any off-balance
sheet obligations), not disclosed in the Registration Statements and the
Prospectus. No other financial statements are required to be set forth or to be
incorporated by reference in the Registration Statements or the Prospectus under
the Securities Act.

(e) Incorporated Documents. Each document incorporated or deemed to be
incorporated by reference in the Registration Statements or the Prospectus
heretofore filed, at the time it was or hereafter is filed with the Commission,
conformed and will conform when filed in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder; no such document when it was filed (or, if an amendment with respect
to any such document was filed, when such amendment was filed), contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein not
misleading; and no such document, when it is filed, will contain an untrue
statement of a material fact or will omit to state a material fact required to
be stated therein or necessary in order to make the statements therein not
misleading.

(f) Distribution of Materials; Free Writing Prospectuses. The Company is not an
“ineligible issuer” in connection with the offering pursuant to Rules 164, 405
and 433 under the Securities Act. The Company has not, directly or indirectly,
distributed and will not distribute any prospectus or other offering material in
connection with the offering and sale of the Placement Shares other than the
Prospectus and other materials, if any, permitted under the Securities Act to be
distributed. Each Issuer Free Writing Prospectus (as defined below in
Section 19(b)) relating to the Placement Shares that (i) was required to be
filed with the Commission by the Company or (ii) is exempt from filing pursuant
to Rule 433(d)(5)(i), in each case in the form filed or required to be filed
with the Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g), as of its issue date and as of each
Applicable Time (as defined below in Section 19(a)), did not, does not and will
not include any information that conflicted, conflicts or will conflict with the
information contained in the Registration Statements or the Prospectus,
including any incorporated document deemed to be a part thereof that has not
been superseded or modified. The foregoing sentence does not apply to statements
in or omissions from any Issuer Free Writing Prospectus based upon and in
conformity with written information furnished to the Company by CF&Co
specifically for use therein. The Company has satisfied or will satisfy the
conditions in Rule 433 so as not to be required to file with the Commission any
electronic road show.

 

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(g) Organization. The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of Delaware with
the corporate power and authority necessary to own, hold, lease and/or operate
its assets and properties and to conduct the business in which it is engaged as
described in the Registration Statements and Prospectus; and the Company is duly
qualified as a foreign entity to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure, individually or in the aggregate, to be so qualified and be in good
standing would not have a material adverse effect on (i) the consolidated
business, operations, assets, properties, financial condition, reputation,
prospects, or results of operations of the Company and any subsidiaries which
may be incorporated or formed from time to time (the “Subsidiaries”) taken as a
whole, (ii) the transactions contemplated hereby, or (iii) the ability of the
Company to perform its obligation under this Agreement (collectively, a
“Material Adverse Effect”). The Company has full corporate power and authority
necessary to enter into and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. Except as disclosed in the
Registration Statements and the Prospectus, the Company is in compliance with
the laws, orders, rules, regulations and directives applicable to it, except for
any noncompliance that, individually, or in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.

(h) Subsidiaries. The Company has no “significant subsidiaries” (as such term is
defined in Rule 1-02 of Regulation S-X promulgated under the Securities Act).
Except as disclosed in the Registration Statements and the Prospectus, the
Company does not own, directly or indirectly, any shares of stock or any other
equity interests or long-term debt securities of any corporation, firm,
partnership, joint venture, association or other entity.

(i) No Violation or Default. Except as disclosed in the Registration Statements
and the Prospectus, neither the Company nor any of its Subsidiaries is (i) in
violation of any provision of its charter or bylaws or similar organizational
documents, (ii) in default in any respect, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant, or condition of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which it is a
party or by which it is bound or to which any of its property or assets is
subject, (iii) in violation in any respect of any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company, its Subsidiaries or any of its properties, as
applicable (including, without limitation, those administered by the Food and
Drug Administration of the U.S. Department of Health and Human Services (the
“FDA”) or by any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA), or
(iv) in violation of any rule or regulation of any self-regulating organization
or other non-governmental regulatory authority (including, without limitation,
the rules and regulations of the Exchange) except, with respect to clauses (ii),
(iii), and (iv), any violations or defaults which, singularly or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect. The execution, delivery and performance of this Agreement, the issuance
and sale of the Placement Shares and the consummation of the transactions
contemplated hereby will not conflict with, or result in any breach of or
constitute a default

 

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under (nor constitute any event which with notice, lapse of time or both would
result in any breach of, or constitute a default under), (i) any provision of
the charter, bylaws or organizational documents, as the case may be, of the
Company or any of its Subsidiaries, (ii) any provision of any contract, license,
repurchase agreement, management agreement, indenture, mortgage, deed of trust,
bank loan or credit agreement, note, lease or other evidence of indebtedness, or
any lease, contract or other agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries, or any of their respective assets or properties may be bound or
affected, except for any breach or default that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect,
(iii) any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its Subsidiaries,
or (iv) any rule or regulation of any self-regulating organization or other
non-governmental regulatory authority (including, without limitation, the rules
and regulations of the Exchange), except for any breach or default that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.

(j) Capitalization. As of December 31, 2010, the Company had an authorized,
issued and outstanding capitalization as set forth on its balance sheet included
in the Company’s Annual Report on Form 10-K for the year ended December 31,
2010. All of the issued and outstanding shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable, have been issued in compliance with all federal and state
securities laws and were not issued in violation of any preemptive right, resale
right, right of first refusal or similar right.

(k) Authorization; Enforceability. This Agreement has been duly authorized,
executed and delivered by the Company and is a legal, valid and binding
agreement of the Company enforceable in accordance with its terms, except to the
extent that (i) enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights generally
and by general equitable principles and (ii) the indemnification and
contribution provisions of Section 9 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof.

(l) Capital Stock and Placement Shares in Proper Form. The capital stock of the
Company, including the Placement Shares, conforms in all material respects to
the description thereof contained in the Registration Statements and the
Prospectus. The holders of the Placement Shares will not be subject to personal
liability under the Delaware General Corporation Law by reason of being such
holders.

(m) Authorization of Placement Shares. The Placement Shares, or class of shares
which the Placement Shares are part of, when issued and delivered pursuant to
the terms approved by the Board of Directors or a duly designated committee
thereof, against payment therefor as provided herein, will be duly and validly
authorized and issued and fully paid and non-assessable, free and clear of any
pledge, lien, encumbrance, security interest or other claim, including any
statutory or contractual preemptive rights, resale rights, rights of first
refusal or other similar rights, and will be registered pursuant to Section 12
of the Exchange Act.

 

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(n) Consents and Permits. (1) Except as disclosed in the Registration Statements
and the Prospectus, the Company and its Subsidiaries have made all filings,
applications and submissions required by, and possesses all approvals, licenses,
certificates, certifications, clearances, consents, exemptions, marks,
notifications, orders, permits and other authorizations issued by, the
appropriate federal, state or foreign regulatory authorities (including, without
limitation, the FDA, and any other foreign, federal, state or local government
or regulatory authorities performing functions similar to those performed by the
FDA) necessary for the ownership or lease of their respective properties or to
conduct its businesses as described in the Registration Statements and the
Prospectus (collectively, “Permits”), except for such Permits the failure of
which to possess, obtain or make the same would not reasonably be expected to
have a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any written notice of proceedings relating to the
limitation, revocation, cancellation, suspension, modification or non-renewal of
any such Permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse Effect,
and has any reason to believe that any such license, certificate, permit or
authorization will not be renewed in the ordinary course. (2) No approval,
authorization, consent or order of or filing with any national, state or local
governmental or regulatory commission, board, body, authority or agency is
required in connection with the issuance and sale of the Placement Shares or the
consummation by the Company of the transactions contemplated hereby (including,
without limitation, the Exchange, or approval of the stockholders of the Company
(including as may be required pursuant to Rule 5635 of the NASDAQ Marketplace
Rules)), other than (i) registration of the Placement Shares under the
Securities Act, (ii) any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Placement Shares are being
offered by CF&Co, (iii) filing of any reports under the Exchange Act, or
(iv) such approvals as may be required by the Conduct Rules of the Financial
Industry Regulatory Authority, Inc. (“FINRA”).

(o) No Preferential Rights. Except as set forth in the Registration Statements
and the Prospectus, (i) no person, as such term is defined in Rule 1-02 of
Regulation S-X promulgated under the Securities Act (each, a “Person”), has the
right, contractual or otherwise, to cause the Company to issue or sell to such
Person any shares of Common Stock or shares of any other capital stock or other
securities of the Company, (ii) no Person has any preemptive rights, resale
rights, rights of first refusal, or any other rights (whether pursuant to a
“poison pill” provision or otherwise) to purchase any shares of Common Stock or
shares of any other capital stock or other securities of the Company,
(iii) except as disclosed to CF&Co or its agents in connection with the
transactions contemplated hereby, no Person has the right to act as an
underwriter or as a financial advisor to the Company in connection with the
offer and sale of the Placement Shares, and (iv) no Person has the right,
contractual or otherwise, to require the Company to register under the
Securities Act any shares of Common Stock or shares of any other capital stock
or other securities of the Company, or to include any such shares or other
securities in the Registration Statements or the offering contemplated thereby,
whether as a result of the filing or effectiveness of the Registration
Statements or the sale of the Placement Shares as contemplated thereby or
otherwise.

(p) Independent Public Accountant. Ernst & Young, LLP, whose report on the
financial statements of the Company is filed with the Commission as part of the
Registration

 

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Statements and the Prospectus, are and, during the periods covered by their
report, were (i) an independent public accounting firm within the meaning of the
Securities Act, (ii) a registered public accounting firm (as defined in
Section 2(a)(12) of the Sarbanes-Oxley Act), and (iii) not in violation of the
auditor independence requirements of the Sarbanes-Oxley Act.

(q) Enforceability of Agreements. Except as disclosed in the Registration
Statements and the Prospectus, all agreements between the Company and third
parties expressly referenced in the Prospectus are legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms, except to the extent that (i) enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and by general equitable principles and (ii) the
indemnification provisions of certain agreements may be limited be federal or
state securities laws or public policy considerations in respect thereof and
except for any other potentially unenforceable term that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

(r) No Litigation. Except as disclosed in the Registration Statements and the
Prospectus, there are no actions, suits, claims, investigations, inquiries or
proceedings pending or, to the Company’s knowledge, threatened, to which either
the Company or, to the Company’s knowledge, its Subsidiaries, nor any of their
respective officers or directors, is a party or of which any of their respective
properties or other assets is subject at law or in equity, or before or by any
federal, state, local or foreign governmental or regulatory commission, board,
body, authority or agency, or before any self-regulating organization or other
non-governmental regulatory authority (including, without limitation, the
Exchange), which if resolved adversely to the Company or any Subsidiary would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(s) Regulatory Filings. Except as disclosed in the Registration Statements and
the Prospectus, neither the Company nor any of its Subsidiaries has failed to
file with the applicable regulatory authorities (including, without limitation,
the FDA or any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA) any
required filing, declaration, listing, registration, report or submission,
except for such failures that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect; except as disclosed in
the Registration Statements and the Prospectus, all such filings, declarations,
listings, registrations, reports or submissions were in compliance with
applicable laws when filed and no deficiencies have been asserted by any
applicable regulatory authority with respect to any such filings, declarations,
listings, registrations, reports or submissions, except for any deficiencies
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.

(t) Certain Market Activities. Neither the Company nor, to the Company’s
knowledge, any of its Subsidiaries, nor, to the Company’s knowledge, any of
their respective directors, officers or controlling persons has taken, directly
or indirectly, any action designed, or that has constituted or might reasonably
be expected to cause or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Placement Shares.

 

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(u) Broker/Dealer Relationships. Neither the Company nor any of its Subsidiaries
or any related entities (i) is required to register as a “broker” or “dealer” in
accordance with the provisions of the Exchange Act or (ii) directly or
indirectly through one or more intermediaries, controls or is a “person
associated with a FINRA member” or “associated person of a FINRA member” (within
the meaning of Article I of the Bylaws of the NASD).

(v) No Reliance. The Company has not relied upon CF&Co or legal counsel for
CF&Co for any legal, tax or accounting advice in connection with the offering
and sale of the Placement Shares.

(w) Taxes. Except as disclosed in the Registration Statements and the
Prospectus, the Company and, to the Company’s knowledge, any of its Subsidiaries
has filed on a timely basis (taking into account all applicable extensions) all
necessary federal, state, local and foreign income and franchise tax returns, if
any such returns were required to be filed, through the date hereof and have
paid all taxes shown as due thereon except for any failure to file or pay which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. No tax deficiency has been asserted against the Company
or, to the Company’s knowledge, any of its Subsidiaries, nor does the Company
know of any tax deficiency that is likely to be asserted against any such entity
that, if determined adversely to any such entity, could reasonably be expected
to have a Material Adverse Effect. All tax liabilities, if any, are adequately
provided for on the books of the Company and, to the Company’s knowledge, any of
its Subsidiaries, except for such tax liabilities that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.

(x) Intellectual Property. Except as disclosed in the Registration Statements
and the Prospectus, the Company and its Subsidiaries own, possess, license or
have other rights to use all foreign and domestic patents, patent applications,
trade and service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology, Internet domain
names, know-how and other intellectual property (collectively, the “Intellectual
Property”), necessary for the conduct of their respective businesses as now
conducted except to the extent that the failure to own, possess, license or
otherwise hold adequate rights to use such Intellectual Property would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
disclosed in the Registration Statements and the Prospectus, (a) there are no
rights of third parties to any such Intellectual Property owned by the Company
and its Subsidiaries; (b) to the Company’s knowledge, there is no infringement
by third parties of any such Intellectual Property; (c) to the Company’s
knowledge, there is no pending or threatened action, suit, proceeding or claim
by others challenging the Company’s and its Subsidiaries’ rights in or to any
such Intellectual Property, and the Company is unaware of any facts which could
form a reasonable basis for any such action, suit, proceeding or claim; (d) to
the Company’s knowledge, there is no pending or threatened action, suit,
proceeding or claim by others challenging the validity or scope of any such
Intellectual Property; (e) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the Company and its
Subsidiaries infringe or otherwise violate any patent, trademark, copyright,
trade secret or other proprietary rights of others; (f) to the Company’s
knowledge, there is no third-party U.S. patent or published U.S. patent
application which contains claims for which an Interference Proceeding (as
defined in 35 U.S.C. § 135) has been commenced against any patent or patent
application described in the

 

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Prospectus as being owned by or licensed to the Company; and (g) the Company and
its Subsidiaries have complied with the terms of each agreement pursuant to
which Intellectual Property has been licensed to the Company or such Subsidiary,
and all such agreements are in full force and effect, except, in the case of any
of clauses (a)-(g) above, for any such infringement by third parties or any such
pending or threatened suit, action, proceeding or claim as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

(y) Clinical Studies. The clinical, pre-clinical and other studies and tests
conducted by or on behalf of or sponsored by the Company and its Subsidiaries
were and, if still pending, are being conducted in accordance in all material
respects with all statutes, laws, rules and regulations, as applicable
(including, without limitation, those administered by the FDA or by any foreign,
federal, state or local governmental or regulatory authority performing
functions similar to those performed by the FDA). Except as set forth in the
Registration Statements and Prospectus, neither the Company nor any of its
Subsidiaries has received any notices or other correspondence from the FDA or
any other foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA with respect to any
ongoing clinical or pre-clinical studies or tests requiring the termination or
suspension of such studies or tests.

(z) Compliance Program. Except as disclosed in the Registration Statements and
the Prospectus, the Company has established and administers a compliance program
applicable to the Company, to assist the Company and the directors, officers and
employees of the Company in complying with applicable regulatory guidelines
(including, without limitation, those administered by the FDA and any other
foreign, federal, state or local governmental or regulatory authority performing
functions similar to those performed by the FDA); except where such
noncompliance would not reasonably be expected to have a Material Adverse
Effect.

(aa) Environmental Laws. Except as disclosed in the Registration Statements and
the Prospectus, the Company and its Subsidiaries: (i) are in compliance with any
and all applicable federal, state, local and foreign laws, rules, regulations,
decisions and orders relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, “Environmental Laws”); (ii) have received and are in
compliance with all permits, licenses and other approvals required of them under
applicable Environmental Laws to conduct their respective businesses as
described in the Registration Statements and the Prospectus; and (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except, in the case of any of clauses (i),
(ii) or (iii) above, for any such failure to comply or failure to receive
required permits, licenses, or other approvals or any such liability as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(bb) Accounting Controls. Except as disclosed in the Registration Statements and
the Prospectus, the Company and its Subsidiaries maintain a system of internal
accounting controls as defined in Rule 13a-15f and 15d-15f of the Exchange Act.

 

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(cc) Disclosure Controls. Except as disclosed in the Registration Statements and
the Prospectus, the Company has established and maintains disclosure controls
and procedures as defined in Rule 13a-15e and 15d-15e of the Exchange Act.

(dd) Sarbanes-Oxley Act. Except as disclosed in the Registration Statements and
the Prospectus, the Company, its Subsidiaries and the Company’s directors and
officers are each in compliance in all material respects with all applicable
effective provisions of the Sarbanes-Oxley Act and the rules and regulations of
the Commission and the Exchange promulgated thereunder.

(ee) Finder’s Fees. Neither the Company nor any of its Subsidiaries has incurred
any liability for any finder’s fees or similar payments in connection with the
transactions herein contemplated, except as may otherwise exist with respect to
CF&Co pursuant to this Agreement.

(ff) Labor Disputes. Except as disclosed in the Registration Statements and the
Prospectus, the Company nor any of its Subsidiaries is engaged in any unfair
labor practice; except for matters which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (i) there
is no (A) unfair labor practice complaint pending or, to the Company’s
knowledge, threatened against the Company or its Subsidiaries before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending or, to the
Company’s knowledge, threatened, (B) strike, labor dispute, slowdown or stoppage
pending or, to the Company’s knowledge, threatened against the Company or any of
its Subsidiaries and (C) union representation dispute currently existing
concerning the employees of the Company or any of its Subsidiaries, and (ii) to
the Company’s knowledge, (A) no union organizing activities are currently taking
place concerning the employees of the Company or any of its Subsidiaries, and
(B) there has been no violation of any federal, state, local, or foreign law
relating to discrimination in the hiring, promotion or pay of employees or any
applicable wage or hour laws concerning the employees of the Company.

(gg) Investment Company Act. Except as disclosed in the Registration Statements
and the Prospectus, neither the Company nor any of its Subsidiaries, after
giving effect to the offering and sale of the Placement Shares, will be
(i) required to register as an “investment company” or an entity “controlled” by
an “investment company,” as such terms are defined in the Investment Company Act
of 1940, as amended (the “Investment Company Act”), or (ii) a “business
development company” (as defined in Section 2(a)(48) of the Investment Company
Act).

(hh) Casualty. Except as disclosed in the Registration Statements and the
Prospectus, neither the Company nor, to the Company’s knowledge, any of its
Subsidiaries has sustained any loss or interference with its respective business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, in each case that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

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(ii) Underwriter Agreements. Except as disclosed in the Registration Statements
and the Prospectus, the Company is not a party to any agreement with an agent or
underwriter for any other “at-the-market” or continuous equity transaction.

(jj) ERISA. Except as disclosed in the Registration Statements and the
Prospectus, the Company and its Subsidiaries are in compliance with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (“ERISA”), except for any noncompliance that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
Except as disclosed in the Registration Statements and the Prospectus, no
“reportable event” (as defined in section 4043 of ERISA) for which the Pension
Benefit Guaranty Corporation has not waived the notice requirement has occurred
in the past three years with respect to any “pension plan” (as defined in ERISA)
for which the Company and its Subsidiaries would reasonably expect to have any
liability. Except as disclosed in the Registration Statements and the
Prospectus, the Company and its Subsidiaries have not incurred and do not
reasonably expect to incur liability under (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan” or (ii) Sections 412 or
4971 of the Code. Except as disclosed in the Registration Statements and the
Prospectus, each “pension plan” for which the Company or its Subsidiaries would
have any liability that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination or opinion letter to that effect
and, to the Company’s knowledge, no event has occurred since the date of such
letter that could reasonably be expected to result in the loss of such
qualification.

(kk) CF&Co Purchases. The Company acknowledges and agrees that CF&Co has
informed the Company that CF&Co may, to the extent permitted under the
Securities Act and the Exchange Act, purchase and sell shares of Common Stock
for its own account while this Agreement is in effect, provided, that (i) no
such purchase or sales shall take place while a Placement Notice is in effect
(except to the extent CF&Co may engage in sales of Placement Shares purchased or
deemed purchased from the Company as a “riskless principal” or in a similar
capacity) and (ii) the Company shall not be deemed to have authorized or
consented to any such purchases or sales by CF&Co.

(ll) No Improper Practices. Except as disclosed in the Registration Statements
and the Prospectus, (i) neither the Company nor, to the Company’s knowledge, its
Subsidiaries, nor to the Company’s knowledge, any of their respective executive
officers has, in the past five years, made any unlawful contributions to any
candidate for any political office (or failed fully to disclose any contribution
in violation of law) or made any contribution or other payment to any official
of, or candidate for, any federal, state, municipal, or foreign office or other
person charged with similar public or quasi-public duty in violation of any law
or of the character required to be disclosed in the Prospectus; (ii) no
relationship, direct or indirect, exists between or among the Company or, to the
Company’s knowledge, any Subsidiary or any affiliate of any of them, on the one
hand, and the directors, officers and stockholders of the Company or, to the
Company’s knowledge, any Subsidiary, on the other hand, that is required by the
Securities Act to be described in the Registration Statements and the Prospectus
that is not so described; (iii) no relationship, direct or indirect, exists
between or among the Company or any Subsidiary or any affiliate of them, on the
one hand, and the directors, officers,

 

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stockholders or directors of the Company or, to the Company’s knowledge, any
Subsidiary, on the other hand, that is required by the rules of the FINRA to be
described in the Registration Statements and the Prospectus that is not so
described; (iv) except as described in the Prospectus, there are no material
outstanding loans or advances or material guarantees of indebtedness by the
Company or, to the Company’s knowledge, any Subsidiary to or for the benefit of
any of their respective officers or directors or any of the members of the
families of any of them; (v) the Company has not offered, or caused any
placement agent to offer, Common Stock to any person with the intent to
influence unlawfully (A) a customer or supplier of the Company or any Subsidiary
to alter the customer’s or supplier’s level or type of business with the Company
or any Subsidiary or (B) a trade journalist or publication to write or publish
favorable information about the Company or any Subsidiary or any of their
respective products or services, and, (vi) neither the Company nor any
Subsidiary nor, to the Company’s knowledge, any employee or agent of the Company
or any Subsidiary has made any payment of funds of the Company or any Subsidiary
or received or retained any funds in violation of any law, rule or regulation
(including, without limitation, the Foreign Corrupt Practices Act of 1977),
which payment, receipt or retention of funds is of a character required to be
disclosed in the Registration Statements or the Prospectus.

(mm) Title to Property. Except as disclosed in the Registration Statements and
the Prospectus, the Company and its Subsidiaries have good and marketable title
to all property (real and personal) described in the Registration Statements and
the Prospectus as being owned by any of them, free and clear of all material
liens, claims, security interests or other encumbrances, except to the extent
such material liens, claims, security interests or other encumbrances are
disclosed in the Registration Statements and the Prospectus; all the property
described in the Registration Statements and the Prospectus as being held under
lease by the Company or any Subsidiary is held thereby under valid, subsisting
and enforceable leases.

(nn) Insurance. Except as disclosed in the Registration Statements and the
Prospectus, the Company and its Subsidiaries maintain insurance covering their
respective properties, operations, personnel and businesses as the Company
reasonably deems adequate; such insurance insures against such losses and risks
to an extent which the Company reasonably believes is adequate and in accordance
with customary industry practice to protect the Company and its Subsidiaries and
their respective businesses; all such insurance is fully in force on the date
hereof and will be fully in force at the time of purchase; neither the Company
nor its Subsidiaries has reason to believe that it will not be able to renew any
such insurance as and when such insurance expires.

(oo) Data Reliable and Accurate. All statistical or market-related data included
or incorporated by reference in the Registration Statements and the Prospectus
are based on or derived from sources that the Company believes to be reliable
and accurate, and the Company has obtained the written consent to the use of
such data from such sources to the extent required.

(pp) NASDAQ: Registration. The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act and is listed on the Exchange, and the Company
has taken no action designed to terminate the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the Exchange, nor
except as disclosed in the Registration Statements and the Prospectus, has the
Company received any notification that the

 

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Commission or FINRA is contemplating terminating such registration or listing.
Except as disclosed in the Registration Statements and the Prospectus, the
Company has complied in all material respects with the applicable requirements
of the Exchange for maintenance of inclusion of the Common Stock thereon. The
Company has filed a Notification of Listing of Additional Shares with the
Exchange with respect to the Placement Shares.

(qq) The operations of the Company and its Subsidiaries are and have been
conducted at all times in material compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all applicable jurisdictions, the rules and regulations thereunder and any
related or similar applicable rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its Subsidiaries with respect to the Money Laundering Laws is pending
or, to the knowledge of the Company, threatened.

Any certificate signed by an officer of the Company and delivered to CF&Co or to
counsel for CF&Co pursuant to or in connection with this Agreement shall be
deemed to be a representation and warranty by the Company, as applicable, to
CF&Co as to the matters set forth therein.

6. Sale and Delivery; Settlement.

(a) Sale of Placement Shares. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, upon
CF&Co’s acceptance of the terms of a Placement Notice, and unless the sale of
the Placement Shares described therein has been declined, suspended, or
otherwise terminated in accordance with the terms of this Agreement, CF&Co, for
the period specified in the Placement Notice, will use its commercially
reasonable efforts consistent with its normal trading and sales practices and
applicable laws to sell such Placement Shares up to the amount specified, and
otherwise in accordance with the terms of such Placement Notice. The Company
acknowledges and agrees that (i) there can be no assurance that CF&Co will be
successful in selling Placement Shares, (ii) CF&Co will incur no liability or
obligation to the Company or any other person or entity if it does not sell
Placement Shares for any reason other than a failure by CF&Co to use its
commercially reasonable efforts consistent with its normal trading and sales
practices and applicable law and regulations to sell such Placement Shares as
required under this Agreement and (iii) CF&Co shall be under no obligation to
purchase Placement Shares on a principal basis pursuant to this Agreement,
except as otherwise agreed by CF&Co and the Company.

(b) Settlement of Placement Shares. Unless otherwise specified in the applicable
Placement Notice, settlement for sales of Placement Shares will occur on the
third (3rd) Business Day (or such earlier day as is industry practice for
regular-way trading) following the date on which such sales are made (each, a
“Settlement Date” and the first such settlement date, the “First Delivery
Date”). The amount of proceeds to be delivered to the Company on a Settlement
Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be
equal to the aggregate sales price received by CF&Co at which such Placement
Shares were sold, after deduction for (i) CF&Co’s commission, discount or other
compensation for such

 

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sales payable by the Company pursuant to Section 2 hereof, and (ii) any
transaction fees imposed by any governmental or self-regulatory organization in
respect of such sales.

(c) Delivery of Placement Shares. On or before each Settlement Date, the Company
will, or will cause its transfer agent to, electronically transfer the Placement
Shares being sold by crediting CF&Co’s or its designee’s account (provided CF&Co
shall have given the Company written notice of such designee at least one
Business Day prior to the Settlement Date) at The Depository Trust Company
through its Deposit and Withdrawal at Custodian System or by such other means of
delivery as may be mutually agreed upon by the parties hereto which in all cases
shall be freely tradable, transferable, registered shares in good deliverable
form. On each Settlement Date, CF&Co will deliver the related Net Proceeds in
same-day funds to an account designated by the Company on, or prior to, the
Settlement Date. The Company agrees that if the Company, or its transfer agent
(if applicable), defaults in its obligation to deliver Placement Shares on a
Settlement Date, the Company will, in addition to and in no way limiting the
rights and obligations set forth in Section 9 (Indemnification and
Contribution), (i) hold CF&Co harmless against any loss, claim, damage, or
expense (including reasonable legal fees and expenses), as incurred, arising out
of or in connection with such default by the Company and (ii) pay to CF&Co any
commission, discount, or other compensation to which it would otherwise have
been entitled absent such default; provided, however, that the Company shall not
be obligated to so indemnify and reimburse CF&Co if the Placement Shares are not
timely delivered due to (i) a suspension or material limitation in trading in
securities generally on the Exchange; (ii) a general moratorium on commercial
banking activities declared by either federal or New York State authorities or a
material disruption in commercial banking or securities settlement or clearance
services in the United States; (iii) an outbreak or escalation of hostilities or
acts of terrorism involving the United States or a declaration by the United
States of a national emergency or war; or (iv) any other calamity or crisis or
any change in financial, political or economic conditions in the United States
or elsewhere.

(d) Denominations; Registration. Certificates for the Placement Shares, if any,
shall be in such denominations and registered in such names as CF&Co may request
in writing at least one full business day before the Settlement Date. The
certificates for the Placement Shares, if any, will be made available for
examination and packaging by CF&Co in The City of New York not later than noon
(New York time) on the business day prior to the Settlement Date.

(e) Limitations on Offering Size. Under no circumstances shall the Company cause
or request the offer or sale of any Placement Shares if, after giving effect to
the sale of such Placement Shares, the aggregate gross sales proceeds sold
pursuant to this Agreement would exceed the lesser of (A) together with all
sales of Placement Shares under this Agreement, the Maximum Amount, (B) the
amount available for offer and sale under the currently effective Registration
Statements and (C) the amount authorized from time to time to be issued and sold
under this Agreement by the Company’s board of directors, a duly authorized
committee thereof or a duly authorized executive committee, and notified to
CF&Co in writing; provided, however, that in no event shall the Company issue or
sell through CF&Co such number of Shares that would cause the Company to not
satisfy the eligibility requirements for use of Form S-3. Under no circumstances
shall the Company cause or request the offer or sale of any Placement Shares at
a price lower than the minimum price authorized from time to time by the

 

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Company’s board of directors, duly authorized committee thereof or a duly
authorized executive committee, and notified to CF&Co in writing. Further, under
no circumstances shall the aggregate offering amount of Placement Shares sold
pursuant to this Agreement, including any separate underwriting or similar
agreement covering principal transactions described in Section 1 of this
Agreement, exceed the Maximum Amount.

(f) The Company agrees that any offer to sell, any solicitation of an offer to
buy, or any sales of Placement Shares shall only be effected by or through CF&Co
on any single given day; provided, however, that (1) the foregoing limitation
shall not apply to (i) the exercise of any option, warrant, right or any
conversion privilege set forth in the instrument governing such security or
(ii) sales solely to employees or security holders of the Company or its
Subsidiaries, or to a trustee or other person acquiring such securities for the
accounts of such persons, and (2) such limitation shall not apply on any day
during which no sales are made pursuant to this Agreement.

7. Covenants of the Company. The Company covenants and agrees with CF&Co that:

(a) Registration Statement Amendments; Payment of Fees. After the date of this
Agreement and during any period in which a Prospectus relating to any Placement
Shares is required to be delivered by CF&Co under the Securities Act with
respect to a pending sale of the Placement Shares (including in circumstances
where such requirement may be satisfied pursuant to Rule 172 under the
Securities Act), the Company will notify CF&Co promptly of the time when any
subsequent amendment to the Registration Statements, other than documents
incorporated by reference, has been filed with the Commission and/or has become
effective or any subsequent supplement to the Prospectus has been filed and any
request by the Commission for any amendment or supplement to the Registration
Statements or Prospectus or for additional information.

(b) Notice of Commission Stop Orders. During any period in which a Prospectus
relating to any Placement Shares is required to be delivered by CF&Co under the
Securities Act with respect to a pending sale of Placement Shares, the Company
will advise CF&Co, promptly after it receives notice or obtains knowledge
thereof, of the issuance or threatened issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statements or any other
order preventing or suspending the use of the Prospectus, of the suspension of
the qualification of the Placement Shares for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for any such
purpose or any examination pursuant to Section 8(e) of the Securities Act, or if
the Company becomes the subject of a proceeding under Section 8A of the
Securities Act in connection with the offering of the Placement Shares; and the
Company will promptly use its commercially reasonable efforts to prevent the
issuance of any stop or other order or to obtain its withdrawal if such a stop
or other order should be issued.

(c) Delivery of Prospectus; Subsequent Changes. During any period in which a
Prospectus relating to the Placement Shares is required to be delivered by CF&Co
under the Securities Act with respect to a pending sale of the Placement Shares
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172 under the Securities Act), the Company will comply with all
requirements imposed upon it by the Securities Act, as from time to time in
force, and to file on or before their respective due dates

 

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all reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14,
15(d) or any other provision of or under the Exchange Act. If during such period
any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is
necessary to amend or supplement the Registration Statements or Prospectus to
comply with the Securities Act, the Company will promptly notify CF&Co to
suspend the offering of Placement Shares during such period and the Company will
promptly amend or supplement the Registration Statements or Prospectus (at the
expense of the Company) so as to correct such statement or omission or effect
such compliance.

(d) Listing of Placement Shares. During any period in which the Prospectus
relating to the Placement Shares is required to be delivered by CF&Co under the
Securities Act with respect to a pending sale of the Placement Shares (including
in circumstances where such requirement may be satisfied pursuant to Rule 172
under the Securities Act), the Company will use its commercially reasonable
efforts to cause the Placement Shares to be listed on the Exchange.

(e) Delivery of Registration Statements and Prospectus. The Company will furnish
to CF&Co and its counsel (at the expense of the Company) copies of the
Registration Statements, the Prospectus (including all documents incorporated by
reference therein) and all amendments and supplements to the Registration
Statements or Prospectus that are filed with the Commission during any period in
which a Prospectus relating to the Placement Shares is required to be delivered
under the Securities Act. The copies of the Registration Statements and the
Prospectus and any supplements or amendments thereto furnished to CF&Co will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to IDEA, except to the extent permitted by Regulation S-T.
Notwithstanding the foregoing, the Company will not be required to furnish any
document (other than the Prospectus) to CF&Co to the extent such document is
available on IDEA.

(f) Earnings Statement. The Company will make generally available to its
security holders as soon as practicable, but in any event not later than 15
months after the end of the Company’s current fiscal quarter, an earnings
statement covering a 12-month period that satisfies the provisions of
Section 11(a) and Rule 158 of the Securities Act. “Earnings statement” and “make
generally available” will have the meanings contained in Rule 158 under the
Securities Act.

(g) Expenses. The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, in accordance with
the provisions of Section 11 hereunder, will pay all expenses incident to the
performance of the Company’s obligations hereunder, which the parties
acknowledge include expenses relating to: (i) the preparation, printing and
filing of the Registration Statements and each amendment and supplement thereto,
of each Prospectus and of each amendment and supplement thereto, and of this
Agreement, (ii) the preparation, issuance and delivery of the Placement Shares,
(iii) the printing and delivery to CF&Co of copies of the Prospectus and any
amendments and supplements thereto, (iv) the fees and expenses incurred in
connection with the listing or qualification of the Placement Shares for trading
on the Exchange, and (v) the filing fees and expenses, if any, of the Commission
and FINRA.

 

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(h) Use of Proceeds. The Company will use the Net Proceeds as described in the
Prospectus in the section entitled “Use of Proceeds.”

(i) Notice of Other Sales. During either the pendency of any Placement Notice
given hereunder, or any period in which the Prospectus relating to the Placement
Shares is required to be delivered by CF&Co, the Company shall provide CF&Co
notice as promptly as reasonably possible before it offers to sell, contracts to
sell, sells, grants any option to sell or otherwise disposes of any shares of
Common Stock (other than Placement Shares offered pursuant to the provisions of
this Agreement) or securities convertible into or exchangeable for Common Stock,
warrants or any rights to purchase or acquire Common Stock; provided, that such
notice shall not be required in connection with the (i) issuance, grant or sale
of Common Stock, options to purchase shares of Common Stock or Common Stock
issuable upon the exercise of options or other equity awards pursuant to any
employee or director stock option or benefits plan or stock ownership plan or
issuances permitted by FINRA, (ii) the issuance or sale of Common Stock pursuant
to any dividend reinvestment plan that the Company may adopt from time to time
or (iii) the issuance of Common Stock upon the exercise of any currently
outstanding warrants, options or other rights in effect or outstanding and
disclosed in filings by the Company available on EDGAR.

(j) Change of Circumstances. The Company will, at any time during the pendency
of a Placement Notice, advise CF&Co promptly after it shall have received notice
or obtained knowledge thereof, of any information or fact that would alter or
affect in any material respect any opinion, certificate, letter or other
document required to be provided to CF&Co pursuant to this Agreement.

(k) Due Diligence Cooperation. The Company will cooperate with any reasonable
due diligence review conducted by CF&Co or its agents in connection with the
transactions contemplated hereby, including, without limitation, providing
information and making available documents and senior corporate officers, during
regular business hours and at the Company’s principal offices, as CF&Co may
reasonably request.

(l) Required Filings Relating to Placement of Placement Shares. The Company
agrees that on such dates as the Securities Act shall require, the Company will
(i) file a prospectus supplement with the Commission under the applicable
paragraph of Rule 424(b) under the Securities Act (each and every filing date
under Rule 424(b), a “Filing Date”), which prospectus supplement will set forth,
within the relevant period, the amount of Placement Shares sold through CF&Co,
the Net Proceeds to the Company and the compensation payable by the Company to
CF&Co with respect to such Placement Shares, and (ii) deliver such number of
copies of each such prospectus supplement to each exchange or market on which
such sales were effected as may be required by the rules or regulations of such
exchange or market.

(m) Representation Dates; Certificate. Three Trading Days prior to the First
Delivery Date and each time the Company:

 

  (i)

files the Prospectus relating to the Placement Shares or amends or supplements
(other than a prospectus supplement relating solely to an offering of securities
other than the Placement Shares) the Registration

 

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  Statements or the Prospectus relating to the Placement Shares by means of a
post-effective amendment, sticker, or supplement but not by means of
incorporation of documents by reference into the Registration Statements or the
Prospectus relating to the Placement Shares;

 

  (ii) files an annual report on Form 10-K under the Exchange Act (including any
Form 10-K/A containing amended financial information or a material amendment to
the previously filed Form 10-K);

 

  (iii) files its quarterly reports on Form 10-Q under the Exchange Act; or

 

  (iv) files a current report on Form 8-K containing amended financial
information (other than information “furnished” pursuant to Items 2.02 or 7.01
of Form 8-K) under the Exchange Act (each date of filing of one or more of the
documents referred to in clauses (i) through (iv) shall be a “Representation
Date”),

the Company shall furnish CF&Co with a certificate, in the form attached hereto
as Exhibit 7(m) within three (3) Trading Days of any Representation Date. The
requirement to provide a certificate under this Section 7(m) shall be waived for
any Representation Date occurring at a time at which no Placement Notice is
pending, which waiver shall continue until the earlier to occur of the date the
Company delivers a Placement Notice hereunder (which for such calendar quarter
shall be considered a Representation Date) and the next occurring Representation
Date; provided, however, that such waiver shall not apply for any Representation
Date on which the Company files its annual report on Form 10-K. Notwithstanding
the foregoing, if the Company subsequently decides to sell Placement Shares
following a Representation Date when the Company relied on such waiver and did
not provide CF&Co with a certificate under this Section 7(m), then before the
Company delivers the Placement Notice or CF&Co sells any Placement Shares, the
Company shall provide CF&Co with a certificate, in the form attached hereto as
Exhibit 7(m), dated the date of the Placement Notice.

(n) Legal Opinion. On or before the date of the first Placement Notice is given
hereunder, the Company shall cause to be furnished to CF&Co a written opinion
dated as of the date of such Placement Notice of Cooley LLP (the “Company
Counsel”), in a form reasonably acceptable to CF&Co and its counsel. Within
three (3) Trading Days of each subsequent Representation Date with respect to
which the Company is obligated to deliver a certificate in the form attached
hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall
cause to be furnished to CF&Co a written opinion of Company Counsel in a form
reasonably acceptable to CF&Co and its counsel.

(o) Comfort Letter. Three Trading Days prior to the First Delivery Date and
within three (3) Trading Days of each Representation Date with respect to which
the Company is obligated to deliver a certificate in the form attached hereto as
Exhibit 7(m) for which no waiver is applicable, the Company shall cause its
independent accountants (and any other independent accountants whose report is
included in the Registration Statements or the Prospectus), to furnish CF&Co
letters (the “Comfort Letters”) in form and substance satisfactory to CF&Co,
(i) confirming that they are an independent registered public

 

20

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accounting firm within the meaning of the Securities Act, the Exchange Act, and
the PCAOB, (ii) stating, as of such date, the conclusions and findings of such
firm with respect to the financial information and other matters ordinarily
covered by accountants’ “comfort letters” to underwriters in connection with
registered public offerings (the first such letter, the “Initial Comfort
Letter”) and (iii) updating the Initial Comfort Letter with any information that
would have been included in the Initial Comfort Letter had it been given on such
date and modified as necessary to relate to the Registration Statements and the
Prospectus, as amended and supplemented to the date of such letter.

(p) Market Activities. The Company will not, directly or indirectly (i) take any
action designed to cause or result in, or that constitutes or might reasonably
be expected to constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Placement Shares
or (ii) sell, bid for, or purchase the Placement Shares to be issued and sold
pursuant to this Agreement, or pay anyone any compensation for soliciting
purchases of the Placement Shares to be issued and sold pursuant to this
Agreement other than CF&Co.

(q) Filings with the Exchange. The Company will timely file with the Exchange
all material documents and notices required by the Exchange of companies that
have or will issue securities that are traded on the Exchange.

(r) Securities Act and Exchange Act. The Company will use its commercially
reasonable efforts to comply with all requirements imposed upon it by the
Securities Act and the Exchange Act as from time to time in force, so far as
necessary to permit the continuance of sales of, or dealings in, the Placement
Shares as contemplated by the provisions hereof and the Prospectus.

(s) No Offer to Sell. Other than a free writing prospectus (as defined in Rule
405 under the Securities Act) approved in advance in writing by the Company and
CF&Co in its capacity as principal or agent hereunder, neither CF&Co nor the
Company (including its agents and representatives, other than CF&Co in its
capacity as such) will, directly or indirectly, make, use, prepare, authorize,
approve or refer to any free writing prospectus relating to the Placement Shares
to be sold by CF&Co as principal or agent hereunder.

(t) Transfer Agent. The Company shall maintain, at its expense, a registrar and
transfer agent for the Common Stock.

(u) Disclosure of Sales. The Company will disclose in its quarterly reports on
Form 10-Q and in its annual report on Form 10-K the number of Placement Shares
sold through CF&Co during the relevant quarter.

(v) Market Stabilization. The Company will not, and will use its commercially
reasonable efforts to cause its officers, trustees and affiliates not to,
(i) take, directly or indirectly, any action designed to stabilize or manipulate
the price of any security of the Company, or which may cause or result in, or
which might in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, to
facilitate the sale or resale of any of the Placement Shares, (ii) sell, bid
for, purchase or pay anyone any compensation for soliciting purchases of the
Placement Shares

 

21

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during the pendency of any Placement Notice or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company during the pendency of any Placement Notice; provided,
however, that upon consent of CF&Co the Company may bid for and purchase Common
Stock in accordance with Rule 10b-18 under the Exchange Act.

(w) Available Shares. The Company will ensure that there are at all times
sufficient shares of Common Stock to provide for the issuance, free of any
preemptive rights, out its authorized but unissued shares of Common Stock, of
the Maximum Amount.

8. Conditions to CF&Co’s Obligations. The obligations of CF&Co hereunder with
respect to a Placement Notice will be subject to the continuing accuracy and
completeness of the representations and warranties made by the Company herein,
to the due performance by the Company of its obligations hereunder, to the
completion by CF&Co of a due diligence review satisfactory to CF&Co in its
reasonable judgment, and to the continuing satisfaction (or waiver by CF&Co in
its sole discretion) of the following additional conditions:

(a) Registration Statements Effective. The Registration Statements shall have
become effective and together shall be available for the sale of all Placement
Shares contemplated to be issued by any Placement Notice.

(b) No Material Notices. None of the following events shall have occurred and be
continuing: (i) receipt by the Company of any request for additional information
from the Commission or any other federal or state governmental authority during
the period of effectiveness of the Registration Statements, the response to
which would require any post-effective amendments or supplements to the
Registration Statements or the Prospectus; (ii) the issuance by the Commission
or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statements or the initiation of
any proceedings for that purpose; (iii) receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Placement Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose; (iv) the
occurrence of any event that makes any material statement made in the
Registration Statements or the Prospectus untrue in any material respect or that
requires the making of any changes in the Registration Statements, related
Prospectus or documents so that, in the case of the Registration Statements, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and, that in the case of the Prospectus, it
will not contain any materially untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

(c) Material Changes. Except as contemplated in the Prospectus, or disclosed in
the Company’s reports filed with the Commission, there shall not have been any
material adverse change, on a consolidated basis, in the authorized capital
stock of the Company or any Material Adverse Effect, or any development that
could reasonably be expected to cause a Material Adverse Effect, the effect of
which, in the reasonable judgment of CF&Co (without relieving the Company of any
obligation or liability it may otherwise have), is so material as

 

22

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to make it impracticable or inadvisable to proceed with the offering of the
Placement Shares on the terms and in the manner contemplated in the Prospectus.

(d) Legal Opinion. CF&Co shall have received the opinion of Company Counsel
required to be delivered pursuant to Section 7(n) on or before the date on which
such delivery of such opinion is required pursuant to Section 7(n).

(e) Comfort Letter. CF&Co shall have received the Comfort Letter required to be
delivered pursuant to Section 7(o) on or before the date on which such delivery
of such opinion is required pursuant to Section 7(o).

(f) Representation Certificate. CF&Co shall have received the certificate
required to be delivered pursuant to Section 7(m) on or before the date on which
delivery of such certificate is required pursuant to Section 7(m).

(g) No Exchange Suspension or FINRA Objection. Trading in the Common Stock shall
not have been suspended on the Exchange. FINRA shall not have objected to the
fairness or reasonableness of the terms or arrangements under this Agreement.

(h) Other Materials. On each date on which the Company is required to deliver a
certificate pursuant to Section 7(m), the Company shall use its commercially
reasonable efforts to furnish to CF&Co such appropriate further information,
certificates and documents as CF&Co may reasonably request. All such opinions,
certificates, letters and other documents will be in compliance with the
provisions hereof. The Company will furnish CF&Co with such conformed copies of
such opinions, certificates, letters and other documents as CF&Co shall
reasonably request.

(i) Securities Act Filings Made. All filings with the Commission required by
Rule 424 under the Securities Act to have been filed prior to the issuance of
any Placement Notice hereunder shall have been made within the applicable time
period prescribed for such filing by Rule 424.

(j) Approval for Listing. The Placement Shares shall either have been
(i) approved for listing on the Exchange, subject only to notice of issuance, or
(ii) the Company shall have filed an application for listing of the Placement
Shares on the Exchange at, or prior to, the issuance of any Placement Notice.

(k) Termination of Agreement. If any condition specified in this Section 8 shall
not have been fulfilled when and as required to be fulfilled, this Agreement may
be terminated by CF&Co by notice to the Company. Notice of such cancellation
shall be given in writing and addressed to each of the individuals of the
Company set forth on Schedule 2.

(l) No Termination Event. There shall not have occurred any event or condition
that would permit CF&Co to terminate this Agreement pursuant to Section 11.

9. Indemnification and Contribution.

(a) Company Indemnification. The Company agrees to indemnify and hold harmless
CF&Co, the directors, officers, partners, employees and agents of CF&Co and each
person, if

 

23

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any, who (i) controls CF&Co within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under
common control with CF&Co (a “CF&Co Affiliate”) from and against any and all
losses, claims, liabilities, expenses and damages (including, but not limited
to, any and all reasonable investigative, legal and other expenses incurred in
connection with, and any and all amounts paid in settlement (in accordance with
Section 9(c)) of, any action, suit or proceeding between any of the indemnified
parties and any indemnifying parties or between any indemnified party and any
third party, or otherwise, or any claim asserted), as and when incurred, to
which CF&Co, or any such person, may become subject under the Securities Act,
the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based, directly or indirectly, on any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statements or the Prospectus, or any amendments thereto (including
the information deemed to be a part of each Registration Statement at the time
of effectiveness and at any subsequent time pursuant to Rules 430A and 430B, if
applicable) or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this indemnity agreement shall not apply to
the extent that such loss, claim, liability, expense or damage arises from or is
caused directly or indirectly by an untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information furnished in writing to the Company by or on behalf of CF&Co
expressly for inclusion in the Registration Statements or Prospectus. This
indemnity agreement will be in addition to any liability that the Company might
otherwise have.

(b) CF&Co Indemnification. CF&Co agrees to indemnify and hold harmless the
Company and its directors and each officer of the Company who signed the
Registration Statements, and each person, if any, who (i) controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act or (ii) is controlled by or is under common control with the
Company (a “Company Affiliate”) against any and all losses, liabilities, claims,
damages and expenses to which the Company, or any such person, may become
subject under the Securities Act, the Exchange Act or other federal or state
statutory law or regulation, at common law or otherwise, as and when incurred,
but only insofar as such loss, liability, claim, damage or expense arises from
or is caused directly or indirectly by an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information furnished in writing to the Company by or on behalf of CF&Co
expressly for inclusion in the Registration Statements or Prospectus.

(c) Procedure. Any party that proposes to assert the right to be indemnified
under this Section 9 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 9, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve the indemnifying party from (i) any liability that it might have to any
indemnified party otherwise than under this Section 9 and (ii) any liability
that it may have to any indemnified party under the foregoing provision of this
Section 9 unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against any indemnified party and it notifies

 

24

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the indemnifying party of its commencement, the indemnifying party will be
entitled to participate in and, to the extent that it elects by delivering
written notice to the indemnified party promptly after receiving notice of the
commencement of the action from the indemnified party, jointly with any other
indemnifying party similarly notified, to assume the defense of the action, with
counsel reasonably satisfactory to the indemnified party, and after notice from
the indemnifying party to the indemnified party of its election to assume the
defense, the indemnifying party will not be liable to the indemnified party for
any legal or other expenses except as provided below. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on the written advice of counsel) that
there may be legal defenses available to it or other indemnified parties that
are different from or in addition to those available to the indemnifying party,
(3) a conflict or potential conflict exists (based on the written advice of
counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have the right
to direct the defense of such action on behalf of the indemnified party) or
(4) the indemnifying party has not in fact employed counsel to assume the
defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or
parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such indemnified party or parties. All such
fees, disbursements and other charges will be reimbursed by the indemnifying
party promptly as they are incurred. An indemnifying party will not, in any
event, be liable for any settlement of any action or claim effected without its
written consent. No indemnifying party shall, without the prior written consent
of each indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated by this Section 9 (whether or not any indemnified party
is a party thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding.

(d) Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 9 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company or CF&Co, the Company and
CF&Co will contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claim asserted, but after deducting any contribution
received by the Company from persons other than CF&Co, if any), to which the
Company and CF&Co may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company, on the one hand, and
CF&Co, on the other. The relative benefits received by the Company on the one
hand and CF&Co on the other hand shall be deemed to be in the same proportion as
the total net proceeds from the sale of the Placement Shares (before deducting
expenses) received by the Company bear to the total compensation received

 

25

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by CF&Co from the sale of Placement Shares on behalf of the Company. If, but
only if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company, on the one hand,
and CF&Co, on the other, with respect to the statements or omission that
resulted in such loss, claim, liability, expense or damage, or action in respect
thereof, as well as any other relevant equitable considerations with respect to
such offering. Such relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company, on the one hand, or CF&Co, on the other, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and CF&Co agree
that it would not be just and equitable if contributions pursuant to this
Section 9(d) were to be determined by pro rata allocation or by any other method
of allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, liability, expense, or damage, or action in respect
thereof, referred to above in this Section 9(d) shall be deemed to include, for
the purpose of this Section 9(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim to the extent consistent with Section 9(c) hereof.
Notwithstanding the foregoing provisions of this Section 9(d), CF&Co shall not
be required to contribute any amount in excess of the commissions received by it
under this Agreement and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9(d), any person who controls a
party to this Agreement within the meaning of the Securities Act, and any
officers, directors, partners, employees or agents of CF&Co, will have the same
rights to contribution as that party, and each trustee of the Company and each
officer of the Company who signed the Registration Statements will have the same
rights to contribution as the Company, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for
contribution may be made under this Section 9(d), will notify any such party or
parties from whom contribution may be sought, but the omission to so notify will
not relieve that party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 9(d) except to the
extent that the failure to so notify such other party materially prejudiced the
substantive rights or defenses of the party from whom contribution is sought.
Except for a settlement entered into pursuant to the last sentence of
Section 9(c) hereof, no party will be liable for contribution with respect to
any action or claim settled without its written consent if such consent is
required pursuant to Section 9(c) hereof.

10. Representations and Agreements to Survive Delivery. All representations and
warranties of the Company herein or in certificates delivered pursuant hereto
shall survive, as of their respective dates, regardless of (i) any investigation
made by or on behalf of CF&Co, any controlling persons, or the Company (or any
of their respective officers, directors or controlling persons), (ii) delivery
and acceptance of the Placement Shares and payment therefor or (iii) any
termination of this Agreement.

 

26

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11. Termination.

(a) Termination; General. CF&Co may terminate this Agreement, by notice to the
Company, as hereinafter specified at any time (1) if there has been, since the
time of execution of this Agreement or since the date as of which information is
given in the Prospectus, any change, or any development or event involving a
prospective change, which individually or in the aggregate, in the sole judgment
of CF&Co has or could have a Material Adverse Effect and makes it impractical or
inadvisable to market the Placement Shares or to enforce contracts for the sale
of the Placement Shares, (2) if there has occurred any material adverse change
in the financial markets in the United States or the international financial
markets, any outbreak of hostilities or escalation thereof or other calamity or
crisis or any change or development involving a prospective change in national
or international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of CF&Co, impracticable
or inadvisable to market the Placement Shares or to enforce contracts for the
sale of the Placement Shares, (3) if trading in the Placement Shares has been
suspended or limited by the Commission or the Exchange, or if trading generally
on the Exchange has been suspended or limited, or minimum prices for trading
have been fixed on the Exchange, (4) if any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter market
shall have occurred and be continuing, (5) if a major disruption of securities
settlements or clearance services in the United States shall have occurred and
be continuing, or (6) if a banking moratorium has been declared by either U.S.
Federal or New York authorities.

(b) Termination by the Company. The Company shall have the right to terminate
this Agreement in its sole discretion at any time after the date of this
Agreement.

(c) Termination by CF&Co. CF&Co shall have the right, by giving ten (10) days
notice as hereinafter specified to terminate this Agreement in its sole
discretion at any time after the date of this Agreement.

(d) Automatic Termination. Unless earlier terminated pursuant to this
Section 11, this Agreement shall automatically terminate upon the issuance and
sale of the Maximum Amount of Placement Shares through CF&Co pursuant to this
Agreement.

(e) Continued Force and Effect. This Agreement shall remain in full force and
effect unless terminated pursuant to Sections 8(k), 11(a), (b), (c), or
(d) above or otherwise by mutual agreement of the parties.

(f) Effectiveness of Termination. Any termination of this Agreement shall be
effective on the date specified in such notice of termination; provided,
however, that such termination shall not be effective until the close of
business on the date specified in such notice by CF&Co or the Company, as the
case may be. If such termination shall occur prior to the Settlement Date for
any sale of Placement Shares, such Placement Shares shall settle in accordance
with the provisions of this Agreement.

(g) Liabilities. If this Agreement is terminated pursuant to Section 8(k) or
this Section 11, such termination shall be without liability of any party to any
other party except as provided in Section 7(g) hereof, and except that, in the
case of any termination of this

 

27

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Agreement, Section 9, Section 16 and Section 17 hereof, and the obligation
herein to pay any discount, commission or other compensation accrued but unpaid,
shall survive such termination and remain in full force and effect.

12. Notices. All notices or other communications required or permitted to be
given by any party to any other party pursuant to the terms of this Agreement
shall be in writing, unless otherwise specified in this Agreement, and if sent
to CF&Co, shall be delivered to Cantor Fitzgerald & Co., 499 Park Avenue, New
York, New York 10022, fax no. (212) 308-3730, Attention: Capital Markets/Jeff
Lumby, with copies to Stephen Merkel, General Counsel, at the same address, and
Reed Smith LLP, 599 Lexington Avenue, New York, New York 10022, fax no.
(212) 521-5450, Attention: Daniel I. Goldberg; or if sent to the Company, shall
be delivered to Sunesis Pharmaceuticals, Inc., 395 Oyster Point Boulevard, Suite
400, South San Francisco, CA 94080, fax no. (650) 266-3505, Attention: Chief
Financial Officer, with a copy to Cooley LLP, Five Palo Alto Square, 3000 El
Camino Real, Palo Alto, CA 94306, fax no. (650) 849-7400, Attention: Suzanne
Sawochka Hooper. Each party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a new
address for such purpose. Each such notice or other communication shall be
deemed given (i) when delivered personally or by verifiable facsimile
transmission (with an original to follow) on or before 4:30 p.m., New York City
time, on a Business Day or, if such day is not a Business Day, on the next
succeeding Business Day, (ii) on the next Business Day after timely delivery to
a nationally-recognized overnight courier and (iii) on the Business Day actually
received if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid). For purposes of this Agreement, “Business
Day” shall mean any day on which the Exchange and commercial banks in the City
of New York are open for business.

13. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company and CF&Co and their respective successors and the
affiliates, controlling persons, officers and directors referred to in Section 9
hereof. References to any of the parties contained in this Agreement shall be
deemed to include the successors and permitted assigns of such party. Nothing in
this Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Neither party may
assign its rights or obligations under this Agreement without the prior written
consent of the other party.

14. Adjustments for Stock Splits. The parties acknowledge and agree that all
share-related numbers contained in this Agreement shall be adjusted to take into
account any stock split, stock dividend or similar event effected with respect
to the Placement Shares.

15. Entire Agreement; Amendment; Severability. This Agreement (including all
schedules and exhibits attached hereto and placement notices issued pursuant
hereto) constitutes the entire agreement and supersedes all other prior and
contemporaneous agreements and undertakings, both written and oral, among the
parties hereto with regard to the subject matter hereof. Neither this Agreement
nor any term hereof may be amended except pursuant to a written instrument
executed by the Company and CF&Co. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable as written by a court of competent
jurisdiction, then such provision shall be given full force and effect to the
fullest possible extent that it is valid, legal and enforceable, and the

 

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remainder of the terms and provisions herein shall be construed as if such
invalid, illegal or unenforceable term or provision was not contained herein,
but only to the extent that giving effect to such provision and the remainder of
the terms and provisions hereof shall be in accordance with the intent of the
parties as reflected in this Agreement.

16. APPLICABLE LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS. EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH ANY TRANSACTION
CONTEMPLATED HEREBY, AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN
ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO
THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR
PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR
PROCEEDING BY MAILING A COPY THEREOF (CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT
UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL
BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW.

17. WAIVER OF JURY TRIAL. THE COMPANY AND CF&CO EACH HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

18. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Delivery of an executed Agreement by one
party to the other may be made by facsimile transmission.

19. Definitions. As used in this Agreement, the following terms have the
respective meanings set forth below:

(a) “Applicable Time” means the date of this Agreement, each Representation
Date, the date on which a Placement Notice is given, any date on which Placement
Shares are sold hereunder, or such other time as agreed to by the Company and
CF&Co.

(b) “Issuer Free Writing Prospectus” means any “issuer free writing prospectus,”
as defined in Rule 433, relating to the Placement Shares that (1) is required to
be filed with the Commission by the Company, (2) is a “road show” that is a
“written communication” within the meaning of Rule 433(d)(8)(i) whether or not
required to be filed with the Commission, or

 

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(3) is exempt from filing pursuant to Rule 433(d)(5)(i) because it contains a
description of the Placement Shares or of the offering that does not reflect the
final terms, and all free writing prospectuses that are listed in Exhibit G
hereto, in each case in the form filed or required to be filed with the
Commission or, if not required to be filed, in the form retained in the
Company’s records pursuant to Rule 433(g) under the Securities Act.

(c) “Rule 433” means Rule 433 of the Securities Act.

All references in this Agreement to financial statements and schedules and other
information that is “contained,” “included” or “stated” in the Registration
Statements or the Prospectus (and all other references of like import) shall be
deemed to mean and include all such financial statements and schedules and other
information that is incorporated by reference in the Registration Statements or
the Prospectus, as the case may be.

All references in this Agreement to the Registration Statements, the Prospectus
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to IDEA; all references in
this Agreement to any Issuer Free Writing Prospectus (other than any Issuer Free
Writing Prospectuses that, pursuant to Rule 433, are not required to be filed
with the Commission) shall be deemed to include the copy thereof filed with the
Commission pursuant to IDEA; and all references in this Agreement to
“supplements” to the Prospectus shall include, without limitation, any
supplements, “wrappers” or similar materials prepared in connection with any
offering, sale or private placement of any Placement Shares by CF&Co outside of
the United States.

20. Permitted Free Writing Prospectuses. The Company represents, warrants and
agrees that, unless it obtains the prior consent of CF&Co, and CF&Co represents,
warrants and agrees that, unless it obtains the prior consent of the Company, it
has not made and will not make any offer relating to the Placement Shares that
would constitute an Issuer Free Writing Prospectus, or that would otherwise
constitute a “free writing prospectus,” as defined in Rule 405, required to be
filed with the Commission. Any such free writing prospectus consented to by
CF&Co or by the Company, as the case may be, is hereinafter referred to as a
“Permitted Free Writing Prospectus.” The Company represents and warrants that it
has treated and agrees that it will treat each Permitted Free Writing Prospectus
as an “issuer free writing prospectus,” as defined in Rule 433, and has complied
and will comply with the requirements of Rule 433 applicable to any Permitted
Free Writing Prospectus, including timely filing with the Commission where
required, legending and record keeping. For the purposes of clarity, the parties
hereto agree that all free writing prospectuses, if any, listed in Exhibit G
hereto are Permitted Free Writing Prospectuses.

21. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:

(a) CF&Co has been retained solely to act as underwriter in connection with the
sale of the Placement Shares and that no fiduciary, advisory or agency
relationship between the Company and CF&Co has been created in respect of any of
the transactions contemplated by this Agreement, irrespective of whether CF&Co
has advised or is advising the Company on other matters;

(b) the Company is capable of evaluating and understanding and understands and
accepts the terms, risks and conditions of the transactions contemplated by this
Agreement;

 

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(c) the Company has been advised that CF&Co and its affiliates are engaged in a
broad range of transactions which may involve interests that differ from those
of the Company and that CF&Co has no obligation to disclose such interests and
transactions to the Company by virtue of any fiduciary, advisory or agency
relationship;

(d) CF&Co has not provided any legal, accounting, regulatory or tax advice with
respect to the transactions contemplated by this Agreement and it has consulted
its own legal, accounting, regulatory and tax advisors to the extent it has
deemed appropriate; and

(e) the Company waives, to the fullest extent permitted by law, any claims it
may have against CF&Co, for breach of fiduciary duty or alleged breach of
fiduciary duty and agrees that CF&Co shall have no liability (whether direct or
indirect) to the Company in respect to such fiduciary claim or to any person
asserting a fiduciary duty claim on behalf of or in right of the Company,
including shareholders, partners, employees or creditors of the Company.

[Remainder of Page Intentionally Blank]

 

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If the foregoing correctly sets forth the understanding between the Company and
CF&Co, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and CF&Co.

            Very truly yours,

 

SUNESIS PHARMACEUTICALS, INC. By:  

/s/ Eric H. Bjerkholt

Name:   Eric H. Bjerkholt Title:   Senior Vice President, Corporate Development
and Finance, and Chief Financial Officer

 

ACCEPTED as of the date first-above written: CANTOR FITZGERALD & CO. By:  

/s/ Jeffrey Lumby

Name:   Jeffrey Lumby Title:   Managing Director

[Signature page to Sales Agreement]

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SCHEDULE 1

FORM OF PLACEMENT NOTICE*

 

From:   [      ]    Cc:   [      ]    To:   [      ]   

Subject:        Controlled Equity Offering—Placement Notice

Gentlemen:

Pursuant to the terms and subject to the conditions contained in the Controlled
Equity OfferingSM Sales Agreement between Sunesis Pharmaceuticals, Inc. (the
“Company”) and Cantor Fitzgerald & Co. (“CF&Co”), dated August 11, 2011 (the
“Agreement”), I hereby request on behalf of the Company that CF&Co sell up to [
] shares of the Company’s Common Stock, par value $0.0001 per share, at a
minimum market price of $                 per share.

[The Company may include such other sales parameters at it deems appropriate.]

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SCHEDULE 2

CANTOR FITZGERALD & CO.

Jeff Lumby

Josh Feldman

Peter Dippolito

SUNESIS PHARMACEUTICALS, INC.

Daniel N. Swisher, Jr.

Eric H. Bjerkholt

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SCHEDULE 3

COMPENSATION

CF&Co shall be paid compensation of 3% of the gross proceeds from the sales of
the Placement Shares.

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Exhibit 7(m)

OFFICER CERTIFICATE

The undersigned, the duly qualified and elected
                                             , of SUNESIS PHARMACEUTICALS, INC.
(“Company”), a Delaware corporation, does hereby certify in such capacity and on
behalf of the Company, pursuant to Section 7(m) of the Sales Agreement, dated
August 11, 2011 (the “Sales Agreement”), between the Company and Cantor
Fitzgerald & Co., that to the best of the knowledge of the undersigned.

(i) The representations and warranties of the Company in Section 5 of the Sales
Agreement (A) to the extent such representations and warranties are subject to
qualifications and exceptions contained therein relation to materiality or
Material Adverse Effect, are true and correct on and as of the date hereof,
except for those representations and warranties that speak solely as of a
specific date and which were true and correct as of such date, with the same
force and effect as if expressly made on and as of the date hereof and (B) to
the extent such representations and warranties are not subject to any
qualifications or exceptions, are true and correct in all material respects as
of the date hereof as if made on and as of the date hereof except for those
representations and warranties that speak solely as of a specific date and which
were true and correct as of such date, with the same force and effect as if
expressly made on and as of the date hereof; and

(ii) The Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied pursuant to the Sales Agreement at or
prior to the date hereof.

 

By:

 

 

 

Name:

 

Title:

Date: