Exhibit 10.41

 

Execution Copy

 

 

 

SECURITIES PURCHASE AGREEMENT

 

 

BY AND BETWEEN

 

 

THE INVESTORS LISTED ON THE SIGNATURE PAGES HERETO

 

AND

 

ALLOS THERAPEUTICS, INC.

 

MARCH 2, 2005

 

 

 

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TABLE OF CONTENTS

 

SECTION 1.

INTERPRETATION OF THIS AGREEMENT

 

1.1.

Defined Terms

 

 

 

 

SECTION 2.

AUTHORIZATION OF SHARES; PURCHASE AND SALE OF SHARES

 

2.1.

Authorization of Shares

 

2.2.

Issuance of Shares

 

2.3.

Closing and Closing Date

 

 

 

 

SECTION 3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

3.1.

Corporate Organization

 

3.2.

Subsidiaries

 

3.3.

Capitalization

 

3.4.

Corporate Proceedings, etc.

 

3.5.

Consents and Approvals

 

3.6.

Absence of Defaults, Conflicts, etc.

 

3.7.

Reports and Financial Statements

 

3.8.

Absence of Certain Developments

 

3.9.

Compliance with Law

 

3.10.

Litigation

 

3.11.

Absence of Undisclosed Liabilities

 

3.12.

Employees

 

3.13.

Tax Matters

 

3.14.

Intellectual Property

 

3.15.

Title to Tangible Assets

 

3.16.

Condition of Properties

 

3.17.

Transactions with Related Parties

 

3.18.

Registration Statement and Prospectus

 

3.19.

Registration Rights

 

3.20.

Brokerage

 

3.21.

Illegal or Unauthorized Payments; Political Contributions

 

3.22.

Takeover Statute

 

3.23.

NASDAQ Compliance

 

3.24.

Reporting Status

 

3.25.

No Manipulation of Common Stock

 

3.26.

Accountants

 

3.27.

Internal Accounting Controls

 

3.28.

Environmental Matters

 

3.29.

FDA Approval

 

3.30.

Insurance

 

3.31.

Transfer Taxes

 

3.32.

Investment Company

 

 

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SECTION 4.

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

 

 

 

 

SECTION 5.

ADDITIONAL AGREEMENTS OF THE PARTIES

 

5.1.

Resale of Shares

 

5.2.

Covenants Pending Closing

 

5.3.

Further Assurances

 

5.4.

Investor Designees

 

5.5.

Subscription Right

 

5.6.

Consents and Approvals; Proxy Statement

 

5.7.

Use of Proceeds

 

5.8.

Takeover Statute

 

 

 

 

SECTION 6.

INVESTORS’ CLOSING CONDITIONS

 

6.1.

Representations and Warranties

 

6.2.

Compliance with Agreement

 

6.3.

Injunction

 

6.4.

Counsel’s Opinion

 

6.5.

Adverse Development

 

6.6.

Directors

 

6.7.

Registration Rights Agreement

 

6.8.

Standstill Agreement

 

6.9.

Rights Amendment

 

6.10.

Stop Orders

 

6.11.

Listing of the Common Stock

 

6.12

Nasdaq Interpretative Ruling

 

6.13

Filing of Certificate of Designations

 

6.14.

Officer’s Certificate

 

6.15.

Secretary’s Certificate

 

6.16.

Approval of Proceedings

 

 

 

 

SECTION 7.

COMPANY CLOSING CONDITIONS

 

7.1.

Representations and Warranties

 

7.2.

Compliance with Agreement

 

7.3.

Investors’ Certificates

 

7.4.

Injunction

 

7.5

Standstill Agreement

 

7.6

Rights Amendment

 

7.7

Nasdaq Interpretive Ruling

 

7.8

Filing of Certificate of Designations

 

7.9.

Approval of Proceedings

 

 

 

 

SECTION 8.

COVENANTS

 

8.1.

Inspection

 

8.2.

Confidentiality

 

8.3.

Lost, etc. Certificates Evidencing Shares; Exchange

 

8.4.

Securities Law Disclosure; Publicity

 

8.5.

HSR Act Filing

 

 

 

 

SECTION 9.

MISCELLANEOUS

 

9.1.

Notices

 

9.2.

Expenses and Taxes

 

9.3.

Reproduction of Documents

 

 

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9.4.

Termination and Survival

 

9.5.

Successors and Assigns

 

9.6.

Severability

 

9.7.

Governing Law

 

9.8.

Paragraph and Section Headings

 

9.9.

Limitation on Enforcement of Remedies

 

9.10.

Counterparts

 

9.11.

Entire Agreement; Amendment and Waiver

 

 

 

 

 

 

 

Exhibit A

Certificate of Designations

 

Exhibit B

Restated Certificate of Incorporation, as amended

 

Exhibit C

By-laws, as amended

 

Exhibit D

Opinion of Cooley Godward LLP

 

Exhibit E

Registration Rights Agreement

 

Exhibit F

Standstill Agreement

 

Exhibit G

Rights Amendment

 

 

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ALLOS THERAPEUTICS, INC.

 

SECURITIES PURCHASE AGREEMENT

 

Dated as of March 2, 2005

 

TO THE INVESTORS LISTED

ON THE SIGNATURE PAGES HERETO

 

Ladies and Gentlemen:

 

Allos Therapeutics, Inc., a Delaware corporation (the “Company”), hereby agrees
with each of the Investors (each an “Investor” and collectively the “Investors”)
listed on the signature pages to this Securities Purchase Agreement, dated as of
March 2, 2005 (this “Agreement”), as follows:

 

SECTION 1.                                INTERPRETATION OF THIS AGREEMENT

 

1.1.                              Defined Terms

 

As used in this Agreement, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:

 

Additional Shares:  shall have the meaning set forth in Section 2.5.

 

Affiliate:  shall mean any Person or entity, directly or indirectly,
controlling, controlled by or under common control with such Person or entity.

 

Agreement:  shall have the meaning set forth in the Introduction hereto.

 

Board:  shall have the meaning set forth in Section 3.3(c).

 

Business Day:  shall mean a day other than a Saturday, Sunday or other day on
which banks in the State of New York are required or authorized to close.

 

Certificate of Designations:  shall mean the Certificate of Designations,
Number, Voting Powers, Preferences and Rights of Series A Exchangeable Preferred
Stock of the Company, a copy of which is attached hereto as Exhibit B.

 

Closing:  shall have the meaning set forth in Section 2.3.

 

Closing Date:  shall have the meaning set forth in Section 2.3.

 

Code:  shall mean the Internal Revenue Code of 1986, as amended.

 

Common Stock: shall mean the common stock, par value $0.001 per share, of the
Company.

 

Company:  shall have the meaning set forth in the Introduction hereto.

 

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Company SEC Reports:  shall have the meaning set forth in Section 3.7.

 

Contract:  shall mean any material agreement, contract, commitment,
understanding, arrangement, restriction or other instrument to which the Company
is currently a party, and which is or was required to be filed as an exhibit to
any Company SEC Report.

 

DGCL:  shall mean the Delaware General Corporation Law.

 

Environmental Laws:  shall mean federal, state, local and foreign laws,
regulations, and codes, as well as orders, decrees, judgments or injunctions,
issued, promulgated, approved or entered thereunder relating to pollution,
protection of the environment or public health and safety.

 

Exchange:  shall mean the exchange of the Exchangeable Preferred Stock for
shares of Common Stock in accordance with the terms of the Certificate of
Designations.

 

Exchange Act:  shall mean the Securities Exchange Act of 1934, as amended.

 

Exchange Date Shares:  shall have the meaning set forth in Section 5.4(a).

 

Exchange Shares:  shall mean those shares of Common Stock to be issued upon
exchange of the Exchangeable Preferred Stock.

 

Exchangeable Preferred Stock:  shall have the meaning set forth in Section
2.1(a).

 

FDA:  shall mean the United States Food and Drug Administration.

 

Filed Company SEC Reports:  shall have the meaning set forth in Section 3.7.

 

GAAP:  shall have the meaning set forth in Section 3.7.

 

Governmental Authority:  shall mean the government of any nation, state, city,
locality or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.

 

HSR Act:  shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

 

Initial Closing:  shall have the meaning set forth in Section 2.3.

 

Initial Closing Date:  shall have the meaning set forth in Section 2.3

 

Intellectual Property:  shall mean all of the following, owned or used primarily
in the current or contemplated business of the Company: (i) registered and
unregistered trademarks and service marks, trade dress, product configurations,
trade names and other indications of origin, applications or registrations in
any jurisdiction pertaining to the foregoing and all goodwill associated
therewith; (ii) patentable and unpatentable inventions, discoveries,

 

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improvements, ideas, know-how, formula methodology, processes, compounds,
technology, software (including password unprotected interpretive code or source
code, object code, development documentation, programming tools, drawings,
specifications and data) and applications and patents in any jurisdiction
pertaining to the foregoing, including re-issues, continuations, divisions,
continuations-in-part, renewals or extensions; (iii) trade secrets, including
confidential information and the right in any jurisdiction to limit the use or
disclosure thereof; (iv) copyrights in writings, designs software, mask works or
other works, applications or registrations in any jurisdiction for the foregoing
and all moral rights related thereto; (v) database rights; (vi) Internet Web
sites, domain names and applications and registrations pertaining thereto and
all intellectual property used in connection with or contained in all versions
of the Company’s Web sites; (vii) rights under all agreements relating to the
foregoing; (viii) books and records pertaining to the foregoing; and (ix) claims
or causes of action arising out of or related to past, present or future
infringement or misappropriation of the foregoing.

 

Institutional Investors:  shall have the meaning set forth in Section 2.5.

 

Investor(s):  shall have the meaning set forth in the Introduction hereto.

 

Investor Designees:  shall have the meaning set forth in Section 5.4(a).

 

Majority Investors:  shall mean the Investors having commitments to purchase at
least 70% of the Shares at the Initial Closing.

 

Material Adverse Effect:  shall mean, collectively, a material adverse effect
on, or a material adverse change in, or group of such effects on or changes in
the business, properties, business prospects, assets, liabilities, operations or
condition (financial or otherwise) of the Company taken as a whole.

 

NASD:  shall mean National Association of Securities Dealers, Inc.

 

NASDAQ Stock Market:  shall have the meaning set forth in Section 3.23.

 

Organizational Documents:  shall have the meaning set forth in Section 3.1(a).

 

Owns, Own, Owned:  shall mean the aggregate beneficial ownership, within the
meaning of Rule 13d-3 under the Exchange Act, of an Investor and any of its
Affiliates.

 

Person:  shall mean an individual, partnership, joint-stock company,
corporation, limited liability company, trust or unincorporated organization,
and a government or agency or political subdivision thereof.

 

Preferred Stock:  shall mean the preferred stock, par value $0.001 per share, of
the Company.

 

Preferred Stock Purchase Price:  shall mean $22.10 per share.

 

Product:  shall have the meaning set forth in Section 3.29.

 

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Prospectus:  shall have the meaning set forth in Section 3.18.

 

Proposed Securities:  shall have the meaning set forth in Section 5.5(a)(1).

 

Proxy Statement:  shall have the meaning set forth in Section 5.6(b).

 

Registration Rights Agreement:  shall have the meaning set forth in Section 6.7.

 

Registration Statement:  shall have the meaning set forth in Section 3.18.

 

Rights Amendment:  shall have the meaning set forth in Section 6.9.

 

Sarbanes-Oxley Act:  shall mean the Sarbanes-Oxley Act of 2002.

 

SEC:  shall mean the Securities and Exchange Commission.

 

Securities Act:  shall mean the Securities Act of 1933, as amended.

 

Shares:  shall mean the shares of Exchangeable Preferred Stock to be purchased
by the Investors hereunder.

 

Standstill Agreement:  shall have the meaning set forth in Section 6.8.

 

Subsequent Closing:  shall have the meaning set forth in Section 2.3

 

Subsidiary:  shall mean an entity of which a Person owns, directly or
indirectly, more than 50% of the Voting Stock.

 

Stockholder Approval:  shall have the meaning set forth in Section 5.6(b).

 

Takeover Statute:  shall mean any corporate takeover provision under laws of the
State of Delaware or any other state or federal “fair price”, “moratorium”,
“control share acquisition” or other similar antitakeover statute or regulation.

 

Voting Stock:  shall mean securities of any class or classes of an entity, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).

 

WP:  shall mean Warburg Pincus Private Equity VIII, L.P., a Delaware limited
partnership.

 

SECTION 2.                                AUTHORIZATION OF SHARES; PURCHASE AND
SALE OF SHARES

 

2.1.                              Authorization of Shares

 

ON OR PRIOR TO THE INITIAL CLOSING, THE COMPANY SHALL HAVE AUTHORIZED THE SALE
AND ISSUANCE OF UP TO AN AGGREGATE OF TWO MILLION SEVEN HUNDRED FOURTEEN
THOUSAND NINE HUNDRED THIRTY-TWO (2,714,932) SHARES OF ITS SERIES A EXCHANGEABLE
PREFERRED STOCK, PAR VALUE $0.001 PER SHARE (THE “EXCHANGEABLE PREFERRED
STOCK”), ON THE TERMS AND CONDITIONS SET FORTH IN THIS

 

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AGREEMENT.  THE TERMS, LIMITATIONS AND RELATIVE RIGHTS AND PREFERENCES OF THE
EXCHANGEABLE PREFERRED STOCK SHALL BE AS SET FORTH IN THE CERTIFICATE OF
DESIGNATIONS.

 

2.2.                              Issuance of Shares

 

SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT, AND IN RELIANCE
UPON THE COMPANY’S AND THE INVESTORS’ REPRESENTATIONS SET FORTH BELOW, AT THE
INITIAL CLOSING, THE COMPANY SHALL SELL TO THE INVESTORS, AND THE INVESTORS
SHALL PURCHASE FROM THE COMPANY, THE NUMBER OF SHARES OF EXCHANGEABLE PREFERRED
STOCK SET FORTH OPPOSITE EACH INVESTOR’S RESPECTIVE NAME ON EXHIBIT A, AT A
PURCHASE PRICE EQUAL TO THE PREFERRED STOCK PURCHASE PRICE PER SHARE.

 

2.3.                              Closing and Closing Date

 

The closing of the transactions contemplated by Section 2.2 (the “Initial
Closing”) shall take place at 10:00 A.M., New York City time, on the first
Business Day following the date on which the last to be fulfilled or waived of
the conditions set forth in Sections 6 and 7 hereof shall have been fulfilled or
waived in accordance with this Agreement, or on such earlier date as may be
mutually agreed by the Company and the Majority Investors (the “Initial Closing
Date”), at the offices of Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New
York, New York 10019, or such other location as the Majority Investors and the
Company shall mutually select.  The subsequent closing(s) of the sale and
purchase of Shares as set forth in Section 2.5 below shall take place at such
time and place as the Company and the Investors participating therein shall
mutually agree (a “Subsequent Closing”) (the Initial Closing and any Subsequent
Closing shall collectively be referred to herein as a “Closing” and each such
date is referred to as a “Closing Date”).  The Company’s agreement with each
Investor is a separate agreement and the sales to each Investor are separate
sales.

 

2.4                                 Delivery

 

The sale and purchase of the Shares shall be effected on the applicable Closing
Date by the Company executing and delivering to each Investor, duly registered
in such Investor’s name, duly executed stock certificates evidencing the Shares
being purchased by it, against payment of the purchase price therefore by wire
transfer of immediately available funds to such account as the Company shall
designate in writing.

 

2.5                                 Subsequent Sales of Shares.  At any time on
or before March 8, 2005, the Company may sell up to the balance of the
authorized shares of Exchangeable Preferred Stock authorized for sale as set
forth in Section 2.1 above that are not sold to the Investors at the Initial
Closing (the “Additional Shares”) to not more than three (3) institutional
investors (the “Institutional Investors”) each Owning more than three percent
(3%) of the Common Stock outstanding on the date of this Agreement (as certified
by such Institutional Investors in writing).  All such sales shall be made on
the terms and conditions set forth in this Agreement, and (i) the
representations and warranties of the Company set forth in Section 3 hereof (and
the Disclosure Schedule) shall speak as of the Initial Closing and the Company
shall have no obligation to update any such disclosure, and (ii) the
representations and warranties of the Institutional Investors in Section 4
hereof shall speak as of such Subsequent Closing.  Not more than an aggregate of
four hundred fifty-two thousand four hundred eighty-nine (452,489) Additional

 

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Shares of Exchangeable Preferred Stock may be sold to the Institutional
Investors, and no Institutional Investor shall acquire more than the number of
shares of Exchangeable Preferred Stock that results in such Institutional
Investor Owning the same percentage of the Company’s outstanding Common Stock
(including, for purposes of this determination, all shares of Common Stock
issuable upon exchange of the Exchangeable Preferred Stock) immediately after
the Subsequent Closing (assuming, for purposes of this determination, the
issuance of all shares of Exchangeable Preferred Stock authorized for sale
pursuant to Section 2.1) as such Institutional Investor Owned on the date of
this Agreement (as certified by such Institutional Investor in writing).  The
signature pages to this Agreement may be amended by the Company without the
consent of the Investors to include any Institutional Investors upon the
execution by such Institutional Investors of a counterpart signature page
hereto.  Any Shares sold pursuant to this Section 2.5 shall be deemed to be
“Shares” for all purposes under this Agreement and any Institutional Investors
shall be deemed to be “Investors” for all purposes under this Agreement.

 

SECTION 3.                                REPRESENTATIONS AND WARRANTIES OF THE
COMPANY

 

Except as set forth in the Disclosure Schedule delivered by the Company to the
Investors at the Initial Closing or any Subsequent Closing, as the case may be,
the Company represents and warrants to the Investors as of the date of this
Agreement (or, if made as of a specified date, as of such date) that:

 

3.1.                              Corporate Organization

 

(A)                                  THE COMPANY IS A CORPORATION DULY
ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS OF THE STATE OF
DELAWARE.  ATTACHED HERETO AS EXHIBITS C AND D, RESPECTIVELY, ARE TRUE AND
COMPLETE COPIES OF THE RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS OF THE
COMPANY, AS AMENDED THROUGH THE DATE HEREOF (COLLECTIVELY, THE “ORGANIZATIONAL
DOCUMENTS”).

 

(B)                                 THE COMPANY HAS ALL REQUISITE CORPORATE
POWER AND AUTHORITY TO CARRY ON ITS BUSINESS AS NOW CONDUCTED.  THE COMPANY HAS
ALL REQUISITE POWER AND AUTHORITY TO EXECUTE AND DELIVER THIS AGREEMENT AND TO
PERFORM ITS OBLIGATIONS HEREUNDER.

 

(C)                                  THE COMPANY HAS FILED ALL NECESSARY
DOCUMENTS TO QUALIFY TO DO BUSINESS AS A FOREIGN CORPORATION IN EACH
JURISDICTION IN WHICH THE CONDUCT OF THE COMPANY’S BUSINESS OR THE NATURE OF THE
PROPERTY OWNED REQUIRES SUCH QUALIFICATION, EXCEPT WHERE THE FAILURE TO SO
QUALIFY WOULD NOT BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.

 

3.2.                              Subsidiaries

 

THE COMPANY HAS NO SUBSIDIARIES AND NO EQUITY INTERESTS OR INVESTMENTS IN ANY
PARTNERSHIP, TRUST OR OTHER ENTITY OR ORGANIZATION.

 

3.3.                              Capitalization

 

(A)                                  THE AUTHORIZED CAPITAL STOCK OF THE
COMPANY, IMMEDIATELY PRIOR TO THE INITIAL CLOSING, SHALL CONSIST OF (I)
75,000,000 SHARES OF COMMON STOCK AND (II) 10,000,000 SHARES OF PREFERRED STOCK,
OF WHICH 2,714,932 SHARES SHALL BE DESIGNATED AS EXCHANGEABLE

 

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PREFERRED STOCK AND 1,000,000 SHARES SHALL BE DESIGNATED AS SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK.  AS OF MARCH 2, 2005, THE ISSUED AND OUTSTANDING
SHARES OF CAPITAL STOCK OF THE COMPANY CONSISTED OF 31,175,783 SHARES OF COMMON
STOCK AND NO SHARES OF PREFERRED STOCK.

 

(B)                                 ALL THE OUTSTANDING SHARES OF CAPITAL STOCK
OF THE COMPANY HAVE BEEN DULY AND VALIDLY ISSUED AND ARE FULLY PAID AND
NON-ASSESSABLE, AND WERE ISSUED IN ACCORDANCE WITH THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND ANY RELEVANT STATE
SECURITIES LAWS OR PURSUANT TO VALID EXEMPTIONS THEREFROM.  AS OF THE INITIAL
CLOSING DATE, THE SHARES WILL BE DULY AUTHORIZED AND, UPON ISSUANCE, SALE AND
DELIVERY AS CONTEMPLATED BY THIS AGREEMENT, THE SHARES WILL BE VALIDLY ISSUED,
FULLY PAID AND NON-ASSESSABLE SECURITIES OF THE COMPANY.  UPON THEIR ISSUANCE IN
ACCORDANCE WITH THE TERMS OF THE EXCHANGEABLE PREFERRED STOCK, THE SHARES OF
COMMON STOCK ISSUABLE UPON EXCHANGE OF THE EXCHANGEABLE PREFERRED STOCK WILL BE
FREE AND CLEAR OF ANY AND ALL SECURITY INTERESTS, PLEDGES, LIENS, CHARGES,
CLAIMS, OPTIONS, RESTRICTIONS ON TRANSFER, PREEMPTIVE OR SIMILAR RIGHTS, PROXIES
AND VOTING OR OTHER AGREEMENTS, OR OTHER ENCUMBRANCES OF ANY NATURE WHATSOEVER,
EXCEPT FOR THOSE PROVIDED FOR HEREIN OR OTHERWISE CREATED OR IMPOSED UPON THE
INVESTORS AND OTHER THAN RESTRICTIONS ON TRANSFER IMPOSED BY FEDERAL OR STATE
SECURITIES LAWS, AND EXCEPT AS SET FORTH IN THE STANDSTILL AGREEMENT.

 

(C)                                  ON THE INITIAL CLOSING DATE, EXCEPT FOR THE
EXCHANGEABLE PREFERRED STOCK AND EXCEPT AS DISCLOSED IN THE FILED COMPANY SEC
REPORTS, THERE WILL BE NO SHARES OF COMMON STOCK OR ANY OTHER EQUITY SECURITY OF
THE COMPANY ISSUABLE UPON CONVERSION, EXCHANGE OR EXERCISE OF ANY OUTSTANDING
SECURITY OF THE COMPANY, NOR WILL THERE BE ANY RIGHTS, OPTIONS, CALLS OR
WARRANTS OUTSTANDING OR OTHER AGREEMENTS TO ACQUIRE SHARES OF COMMON STOCK NOR
WILL THE COMPANY BE CONTRACTUALLY OBLIGATED TO PURCHASE, REDEEM OR OTHERWISE
ACQUIRE ANY OF ITS OUTSTANDING SHARES.  EXCEPT TO THE EXTENT OTHERWISE PROVIDED
IN THIS AGREEMENT OR THE STANDSTILL AGREEMENT OR AS DISCLOSED IN THE FILED
COMPANY SEC REPORTS, (I) NO STOCKHOLDER OF THE COMPANY IS ENTITLED TO ANY
PREEMPTIVE OR SIMILAR RIGHTS TO SUBSCRIBE FOR SHARES OF CAPITAL STOCK OF THE
COMPANY AND NO STOCKHOLDER OF THE COMPANY HAS ANY RIGHTS, CONTRACTUAL OR
OTHERWISE, TO DESIGNATE MEMBERS OF THE COMPANY’S BOARD OF DIRECTORS (THE
“BOARD”), OTHER THAN IN ACCORDANCE WITH THE DGCL, AND (II) THERE ARE NO
STOCKHOLDER, VOTING OR OTHER AGREEMENTS RELATING TO THE RIGHTS AND OBLIGATIONS
OF THE COMPANY’S STOCKHOLDERS.

 

3.4.                              Corporate Proceedings, etc.

 

The Company has authorized the execution, delivery and performance of this
Agreement and each of the transactions and agreements contemplated hereby.  No
other corporate action is necessary to authorize such execution, delivery and
performance of this Agreement, and upon such execution and delivery, this
Agreement shall constitute the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors’ rights
and general principles of equity.  The Company has authorized the issuance and
delivery of the Shares in accordance with this Agreement and, subject to the
issuance of the Shares, the Company has reserved for issuance shares of Common
Stock initially issuable upon exchange of the Shares.

 

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3.5.                              Consents and Approvals

 

Except as set forth in Section 3.5 of the Disclosure Schedule or as otherwise
provided in this Agreement, the execution and delivery by the Company of this
Agreement, the issuance of any of the Shares, the performance by the Company of
its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby do not require the Company to obtain any
consent, approval, clearance or action of, or make any filing, submission or
registration with, or give any notice to, any governmental authority or judicial
authority.

 

3.6.                              Absence of Defaults, Conflicts, etc.

 

(A)                                  THE EXECUTION AND DELIVERY OF THIS
AGREEMENT BY THE COMPANY DOES NOT, AND THE FULFILLMENT OF THE TERMS HEREOF AND
THEREOF BY THE COMPANY, AND THE ISSUANCE, SALE AND DELIVERY OF THE SHARES WILL
NOT, (I) VIOLATE OR CONFLICT WITH THE ORGANIZATIONAL DOCUMENTS; (II) RESULT IN A
BREACH OF ANY OF THE TERMS, CONDITIONS OR PROVISIONS OF, OR CONSTITUTE A DEFAULT
(WITH OR WITHOUT THE GIVING OF NOTICE OR THE PASSAGE OF TIME (OR BOTH)) UNDER,
OR RESULT IN THE MODIFICATION OF, OR PERMIT THE ACCELERATION OF RIGHTS UNDER OR
TERMINATION OF, ANY CONTRACT OF THE COMPANY; (III) VIOLATE ANY LAW, ORDINANCE,
STANDARD, JUDGMENT, RULE OR REGULATION OF ANY COURT OR FEDERAL, STATE OR FOREIGN
REGULATORY BOARD OR BODY OR ADMINISTRATIVE AGENCY HAVING JURISDICTION OVER THE
COMPANY OR OVER ITS PROPERTIES OR BUSINESS; OR (IV) RESULT IN THE CREATION OR
IMPOSITION OF ANY LIEN, ENCUMBRANCE, CLAIM, SECURITY INTEREST OR RESTRICTION
WHATSOEVER UPON ANY OF THE MATERIAL PROPERTIES OR ASSETS OF THE COMPANY, EXCEPT,
IN THE CASES OF CLAUSES (II), (III) OR (IV), WHERE SUCH EVENT WOULD NOT BE
REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.

 

(B)                                 THE COMPANY IS NOT IN DEFAULT UNDER OR IN
VIOLATION OF (AND NO EVENT HAS OCCURRED AND NO CONDITION EXISTS WHICH, UPON
NOTICE OR THE PASSAGE OF TIME (OR BOTH), WOULD CONSTITUTE A DEFAULT UNDER) (I)
THE COMPANY’S ORGANIZATIONAL DOCUMENTS, (II) ANY CONTRACT OF THE COMPANY,
(III) ANY LICENSE, PERMIT OR AUTHORIZATION TO WHICH THE COMPANY IS A PARTY OR BY
WHICH IT MAY BE BOUND OR (IV) ANY ORDER, WRIT, INJUNCTION OR DECREE OF ANY COURT
OR ANY FEDERAL, STATE, MUNICIPAL OR OTHER DOMESTIC OR FOREIGN GOVERNMENTAL
DEPARTMENT, COMMISSION, BOARD, BUREAU, AGENCY OR INSTRUMENTALITY EXCEPT, IN THE
CASE OF CLAUSE (II), (III) OR (IV), FOR DEFAULTS OR VIOLATIONS WHICH WOULD NOT
BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.  EACH CONTRACT OF THE
COMPANY IS VALID, BINDING AND ENFORCEABLE AGAINST THE COMPANY AND, TO THE
COMPANY’S BEST KNOWLEDGE, THE OTHER PARTIES THERETO, IN ACCORDANCE WITH ITS
TERMS, AND IN FULL FORCE AND EFFECT ON THE DATE HEREOF.

 

3.7.                              Reports and Financial Statements

 

The Company has furnished or made available to the Investors, via its EDGAR
filings with the SEC, true and complete copies of the Company’s (i) Annual
Reports on Form 10-K for the fiscal years ended December 31, 2003, December 31,
2002, December 31, 2001, and December 31, 2000, as amended, as filed with the
SEC, (ii) proxy statements, as amended, related to all meetings of its
stockholders (whether annual or special) held since March 27, 2000, and (iii)
all other reports filed with or registration statements declared effective by
the SEC since March 27, 2000, except registration statements on Form S-8
relating to employee benefit plans, which are all the documents (other than
preliminary material) that the Company was required to file with the SEC since
that date (the documents referred to in clauses (i) through (iii), together

 

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with all accompanying exhibits and all information incorporated therein by
reference, being referred to herein collectively as the “Company SEC Reports”). 
The Company has timely made all filings and furnishings with the SEC required of
the Company pursuant to the Exchange Act during the 12 months preceding the date
of this Agreement.  As of their respective dates, the Company SEC Reports were
duly filed or furnished with the SEC and complied in all material respects with
the requirements of the Sarbanes-Oxley Act, the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations promulgated by the SEC
and NASDAQ Stock Market thereunder applicable to such Company SEC Reports. 
Except to the extent that information contained in any Company SEC Report filed
or furnished with the SEC and made publicly available prior to the date of this
Agreement (a “Filed Company SEC Report”) has been revised or superseded by a
later Filed Company SEC Report, as of their respective dates, none of the Filed
Company SEC Reports contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  The audited consolidated financial statements included in the
Filed Company SEC Reports comply in all material respects with applicable
accounting requirements of the Securities Act or the Exchange Act and with the
published rules and regulations of the SEC with respect thereto.  The financial
statements (including the schedules and notes thereto) included in the Company’s
SEC Reports (i) have been prepared in accordance with generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout the
periods indicated, except as disclosed therein, and (ii) present fairly, in all
material respects, the financial position of the Company as at the dates thereof
and the results of its operations and cash flow for the periods then ended,
except that the unaudited financial statements may not be in accordance with
GAAP because of the absence of footnotes normally contained therein and are
subject to normal year-end audit adjustments.

 

3.8.                              Absence of Certain Developments

 

Except as disclosed in the Filed Company SEC Reports, since December 31, 2003,
there has been no (i) change or event which is reasonably likely to have a
Material Adverse Effect, (ii) declaration, setting aside or payment of any
dividend or other distribution with respect to the capital stock of the Company,
(iii) issuance of capital stock (other than pursuant to (1) the exercise of
options, warrants, or convertible securities outstanding at such date or (2)
employee benefit plans) or options, warrants or rights to acquire capital stock
(other than the rights granted pursuant to employee benefit plans), (iv)
material loss, destruction or damage to any property of the Company, whether or
not insured, (v) acceleration of any indebtedness for borrowed money or the
refunding of any such indebtedness, (vi) labor trouble involving the Company or
any material change in its personnel or the terms and conditions of employment,
(vii) waiver of any valuable right in favor of the Company, (viii) loan or
extension of credit to any officer of the Company or to any employee of the
Company in an amount in excess of $25,000 or (ix) acquisition or disposition of
any material assets (or any contract or arrangement therefore) or any other
material transaction by the Company otherwise than for fair value in the
ordinary course of business.

 

3.9.                              Compliance with Law

 

(A)                                  THE COMPANY IS NOT IN VIOLATION OF ANY
LAWS, ORDINANCES, GOVERNMENTAL RULES OR REGULATIONS TO WHICH IT IS SUBJECT,
INCLUDING WITHOUT LIMITATION LAWS OR REGULATIONS

 

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RELATING TO THE ENVIRONMENT OR TO OCCUPATIONAL HEALTH AND SAFETY, EXCEPT FOR
VIOLATIONS THAT WOULD NOT BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE
EFFECT, AND NO MATERIAL EXPENDITURES ARE KNOWN TO BE OR EXPECTED TO BE REQUIRED
IN ORDER TO CAUSE ITS CURRENT OPERATIONS OR PROPERTIES TO COMPLY WITH ANY SUCH
LAWS, ORDINANCES, GOVERNMENTAL RULES OR REGULATIONS, EXCEPT SUCH EXPENDITURES AS
MAY BE REQUIRED IN ORDER FOR THE COMPANY TO COMPLY WITH SECTION 404 OF THE
SARBANES-OXLEY ACT.

 

(B)                                 THE COMPANY HAS ALL LICENSES, PERMITS,
FRANCHISES OR OTHER GOVERNMENTAL AUTHORIZATIONS NECESSARY TO THE OWNERSHIP OF
ITS PROPERTY OR TO THE CONDUCT OF ITS BUSINESS IN THE MANNER DESCRIBED IN THE
FILED COMPANY SEC REPORTS, WHICH IF VIOLATED OR NOT OBTAINED WOULD BE REASONABLY
LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.  THE COMPANY HAS NOT BEEN FINALLY
DENIED ANY APPLICATION FOR ANY SUCH LICENSES, PERMITS, FRANCHISES OR OTHER
GOVERNMENTAL AUTHORIZATIONS NECESSARY TO ITS BUSINESS.

 

(C)                                  THE COMPANY HAS NOT RECEIVED ANY WRITTEN
NOTICE FROM THE FDA OR ANY OTHER FEDERAL, STATE OR FOREIGN REGULATORY AGENCY
QUESTIONING THE MANUFACTURING PRACTICES OF ANY OF THE COMPANY’S CONTRACTORS AND
THE COMPANY IS NOT AWARE OF ANY INTENT TO DELIVER ANY SUCH WRITTEN NOTICE.

 

(D)                                 THE COMPANY IS IN MATERIAL COMPLIANCE WITH
AND IS TAKING ALL ACTION REQUIRED FOR THE COMPANY TO REMAIN IN MATERIAL
COMPLIANCE WITH ALL PROVISIONS OF THE SARBANES-OXLEY ACT AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER AND ALL PROVISIONS OF THE NASDAQ STOCK
MARKET, IN EACH CASE AS TO WHICH THE COMPANY IS REQUIRED TO BE IN COMPLIANCE.

 

3.10.                        Litigation

 

Except as disclosed in the Filed Company SEC Reports, there is no legal action,
suit, arbitration or other legal, administrative or other governmental
investigation, inquiry or proceeding (whether federal, state, local or foreign)
pending or, to the best of the Company’s knowledge, threatened against or
affecting the Company or any of its properties, assets or business which would
be reasonably likely to have a Material Adverse Effect.  The Company is not
subject to any order, writ, judgment, injunction, decree, determination or award
of any court or of any governmental agency or instrumentality (whether federal,
state, local or foreign).

 

3.11.                        Absence of Undisclosed Liabilities

 

Except as disclosed in the Filed Company SEC Reports, subsequent to the
respective dates as of which such information is given in the Filed Company SEC
Reports, the Company has not incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Company taken as a whole, and there has not
been any change in the capital stock, or material increase in the short-term or
long-term debt, of the Company taken as a whole.

 

3.12.                        Employees

 

(A)                                  THE COMPANY IS NOT ENGAGED IN ANY UNFAIR
LABOR PRACTICE OR DISCRIMINATORY EMPLOYMENT PRACTICE AND NO COMPLAINT OF ANY
SUCH PRACTICE AGAINST THE COMPANY HAS BEEN FILED OR, TO THE BEST OF THE
COMPANY’S KNOWLEDGE, THREATENED TO BE FILED WITH OR BY THE NATIONAL LABOR

 

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RELATIONS BOARD, THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION OR ANY OTHER
ADMINISTRATIVE AGENCY, FEDERAL OR STATE, THAT REGULATES LABOR OR EMPLOYMENT
PRACTICES, NOR IS ANY GRIEVANCE FILED OR, TO THE BEST OF THE COMPANY’S
KNOWLEDGE, THREATENED TO BE FILED, AGAINST THE COMPANY BY ANY EMPLOYEE PURSUANT
TO ANY COLLECTIVE BARGAINING OR OTHER EMPLOYMENT AGREEMENT TO WHICH THE COMPANY
IS A PARTY OR IS BOUND WHICH, IN ANY SUCH CASE, WOULD BE REASONABLY LIKELY TO
HAVE A MATERIAL ADVERSE EFFECT.  THE COMPANY IS IN COMPLIANCE WITH ALL
APPLICABLE FOREIGN, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS REGARDING
OCCUPATIONAL SAFETY AND HEALTH STANDARDS EXCEPT TO THE EXTENT THAT NONCOMPLIANCE
WOULD NOT BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT, AND HAS
RECEIVED NO COMPLAINTS FROM ANY FOREIGN, FEDERAL, STATE OR LOCAL AGENCY OR
REGULATORY BODY ALLEGING SUCH VIOLATIONS OF ANY SUCH LAWS AND REGULATIONS.

 

(B)                                 THE COMPANY IS NOT AWARE THAT ANY OFFICER OR
KEY EMPLOYEE, OR THAT ANY GROUP OF KEY EMPLOYEES, INTENDS TO TERMINATE THEIR
EMPLOYMENT WITH THE COMPANY, NOR DOES THE COMPANY HAVE A PRESENT INTENTION TO
TERMINATE THE EMPLOYMENT OF ANY OF THE FOREGOING.

 

3.13.                        Tax Matters

 

There are no federal, state, county or local taxes due and payable by the
Company which have not been paid or will not be paid prior to the time they
become delinquent.  The Company has duly filed (except in cases where valid
extensions have been obtained) all federal, state, county and local tax returns
required to have been filed by it and there are in effect no waivers of
applicable statutes of limitations with respect to taxes for any year.  No tax
deficiency has been determined adversely to the Company which would be
reasonably likely to have Material Adverse Effect.  The Company is not currently
subject to a federal or state tax audit of any kind.

 

3.14.                        Intellectual Property

 

(a)                                  The Company owns all right, title and
interest in and to, or has a valid and enforceable license to use all the
Intellectual Property used by it in connection with its business, which
represents all intellectual property rights necessary to the conduct of its
business as now conducted and presently contemplated, except where the failure
to own or license such Intellectual Property would not be reasonably likely to
have a Material Adverse Effect.  The Company is not in breach of any license
agreement concerning the Company’s Intellectual Property, including the
agreements between or among the Company and the Center for Innovating
Technology, the Virginia Commonwealth University or the Virginia Commonwealth
University Intellectual Property Foundation, except for breaches that would not
be reasonably likely to have a Material Adverse Effect.  Except as disclosed in
the Filed Company SEC Reports, to the best knowledge of the Company, there are
no conflicts with or infringements of any Intellectual Property by any third
party, except for conflicts or infringements that would not be reasonably likely
to have a Material Adverse Effect.  To the knowledge of the Company, the conduct
of the business of the Company as currently conducted or contemplated does not
conflict with or infringe any proprietary right of any third party, except for
conflicts or infringements that would not be reasonably likely to have a
Material Adverse Effect.  There is no claim, suit, action or proceeding pending
or, to the knowledge of the Company, threatened against the Company: 
(i) alleging any such conflict or infringement with any third party’s
proprietary rights or

 

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(ii) challenging the Company’s ownership or use of, or the validity or
enforceability of any Intellectual Property.

 

(b)                                 To the Company’s knowledge, no present or
former employee, officer or director of the Company, or agent or outside
contractor of the Company, holds any right, title or interest, directly or
indirectly, in whole or in part, in or to any Intellectual Property, except
those formally assigned or transferred to the Company by such employees,
officers or directors.  No person has claimed rights to any patent owned by or
licensed to the Company by reason of being an inventor or co-inventor of any
claim in such patents, other than the inventors named on each such patent, and
all such inventors have duly assigned their rights to the patents to the Company
or the assignor or licensor of such patents to the Company.

 

(C)                                  NEITHER THE EXECUTION NOR DELIVERY OF THIS
AGREEMENT, NOR THE CARRYING ON OF THE COMPANY’S BUSINESS BY THE EMPLOYEES OF AND
CONSULTANTS TO THE COMPANY WILL, TO THE COMPANY’S KNOWLEDGE, CONFLICT WITH OR
RESULT IN A BREACH OF THE TERMS, CONDITIONS OR PROVISIONS OF, OR CONSTITUTE A
DEFAULT UNDER, ANY CONTRACT (INCLUDING COVENANTS OR COMMITMENTS OF ANY NATURE)
WHICH ANY OF SUCH EMPLOYEES OR CONSULTANTS IS NOW OBLIGATED.  THE COMPANY DOES
NOT BELIEVE IT IS OR WILL BE NECESSARY TO UTILIZE ANY INVENTIONS OF ANY OF ITS
EMPLOYEES (OR PEOPLE IT CURRENTLY INTENDS TO HIRE) MADE PRIOR TO THEIR
EMPLOYMENT BY THE COMPANY, EXCEPT THOSE FORMALLY ASSIGNED OR TRANSFERRED TO THE
COMPANY BY SUCH EMPLOYEES.

 

(D)                                 TO THE COMPANY’S KNOWLEDGE:  (I) NO TRADE
SECRET OF THE COMPANY HAS BEEN USED, DISCLOSED OR APPROPRIATED TO THE DETRIMENT
OF THE COMPANY OR FOR THE BENEFIT OF ANY PERSON OTHER THAN THE COMPANY; AND (II)
NO EMPLOYEE, INDEPENDENT CONTRACTOR OR AGENT OF THE COMPANY HAS MISAPPROPRIATED
ANY TRADE SECRETS OR OTHER CONFIDENTIAL INFORMATION OF ANY OTHER PERSON IN THE
COURSE OF THE PERFORMANCE OF HIS OR HER DUTIES AS AN EMPLOYEE, INDEPENDENT
CONTRACTOR OR AGENT OF THE COMPANY, EXCEPT IN THE CASES OF CLAUSES (I) AND (II)
AS WOULD NOT BE REASONABLY LIKELY TO HAVE A MATERIAL ADVERSE EFFECT.  ALL
EMPLOYEES OF  THE COMPANY HAVE EXECUTED AGREEMENTS ACKNOWLEDGING THEIR
OBLIGATION TO ASSIGN ALL INVENTIONS MADE IN THE COURSE OF THEIR EMPLOYMENT TO
THE COMPANY.

 

(E)                                  EACH EMPLOYEE, CONSULTANT AND CONTRACTOR OF
THE COMPANY WHO HAS HAD ACCESS TO CONFIDENTIAL INFORMATION OF THE COMPANY WHICH
IS NECESSARY FOR THE CONDUCT OF THE COMPANY’S BUSINESS AS CURRENTLY CONDUCTED OR
AS CURRENTLY PROPOSED TO BE CONDUCTED HAS EXECUTED AN AGREEMENT TO MAINTAIN THE
CONFIDENTIALITY OF SUCH CONFIDENTIAL INFORMATION AND HAS EXECUTED APPROPRIATE
AGREEMENTS THAT ARE SUBSTANTIALLY CONSISTENT WITH THE COMPANY’S STANDARD FORMS
THEREOF.

 

3.15.                        Title to Tangible Assets

 

The Company has good and marketable title to its properties and assets and good
title to all its leasehold estates, in each case except as disclosed in the
Filed Company SEC Reports subject to no mortgage, pledge, lien, lease,
encumbrance or charge, other than or resulting from taxes which have not yet
become delinquent and minor liens and encumbrances which do not in any case
materially detract from the value of the property subject thereto or materially
impair the operations of the Company and which have not arisen otherwise than in
the ordinary course of business.

 

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3.16.                        Condition of Properties

 

The property, assets and operations of the Company comply with all applicable
ordinances, regulations and laws, except where the failure to so comply would
not be reasonably likely to have a Material Adverse Effect.

 

3.17.                        Transactions with Related Parties

 

Except as disclosed in the Filed Company SEC Reports, the Company is not a party
to any agreement with any of the Company’s directors, officers or stockholders
or any Affiliate or family member of any of the foregoing under which it:  (i)
leases any real or personal property (either to or from such Person); (ii)
licenses technology (either to or from such Person); (iii) is obligated to
purchase any tangible or intangible asset from or sell such asset to such
Person; (iv) purchases products or services from such Person; or (v) has
borrowed money from or lent money to such Person.  Except as set forth in
Section 3.17 of the Disclosure Schedule, the Company does not employ as an
employee or engage as a consultant any family member of any of the Company’s
directors, officers or stockholders.  Except as set forth in the Standstill
Agreement, to the best knowledge of the Company, there exist no agreements among
stockholders of the Company to act in concert with respect to the voting or
holding of the Company’s securities.

 

3.18.                        Registration Statement and Prospectus

 

A registration statement on Form S-3 (File No. 333-113353) (the “Registration
Statement”) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act and the rules and
regulations of the SEC thereunder and has been filed with the Commission under
the Securities Act.  The Registration Statement, which shall be deemed to
include all information omitted therefrom in reliance upon Rule 430A and
contained in the Prospectus referred to below, has been declared effective by
the SEC under the Securities Act and no post-effective amendment to the
Registration Statement has been filed as of the date of this Agreement.  The
form of the prospectus filed by the Company with the SEC pursuant to its Rule
424(b) and Rule 430A and dated April 21, 2004, is herein referred to as the
“Prospectus.”

 

The SEC has not issued an order preventing or suspending the use of the
Prospectus relating to the offering of the Shares nor instituted proceedings for
that purpose.  The Registration Statement and the Prospectus contain all
statements which are required to be stated therein by, and in all respects
conform, as the case may be, to the requirements of the Securities Act and the
rules and regulations of the SEC thereunder.  Neither the Registration Statement
nor any amendment thereto, nor the Prospectus, contains, as the case may be, any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.

 

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3.19.                        Registration Rights

 

Except as disclosed in the Filed Company SEC Reports and pursuant to the
Registration Rights Agreement, the Company will not, as of the Initial Closing
Date, be under any obligation to register any of its securities under the
Securities Act.

 

3.20.                        Brokerage

 

Except for fees payable pursuant to that certain letter agreement dated February
24, 2005, by and between the Company and Needham & Company, a copy of which has
been provided to WP, there are no claims for brokerage commissions or finder’s
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement made by or on behalf of the Company and
the Company agrees to indemnify and hold the Investors harmless against any
costs or damages incurred as a result of any such claim.

 

3.21.                                          Illegal or Unauthorized Payments;
Political Contributions

 

Neither the Company nor, to the best of the Company’s knowledge (after
reasonable inquiry of its officers and directors), any of the officers,
directors, employees, agents or other representatives of the Company or any
other business entity or enterprise with which the Company is or has been
affiliated or associated, has, directly or indirectly taken any action
prohibited by Section 30A of the Exchange Act.

 

3.22.                        Takeover Statute

 

The Board has taken all action necessary to approve the transactions
contemplated hereby, as it relates to the Investors, for the purposes of the
provisions of Section 203 of the DGCL.  To the Company’s knowledge, no other
Takeover Statute is applicable to the transactions contemplated hereby.

 

3.23.                        NASDAQ Compliance

 

The Common Stock is registered pursuant to Section 12(g) of the Exchange Act,
and is listed on The NASDAQ National Market (the “NASDAQ Stock Market”), and
trading in the Common Stock has not been suspended and the Company has taken no
action designed to, or that is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the NASDAQ Stock Market, nor has the Company received any
notification that the SEC or the NASD is contemplating terminating such
registration or listing.  To the best of the Company’s knowledge, the Company
and the Common Stock meet the criteria for continued listing and trading on the
NASDAQ Stock Market.

 

3.24.                        Reporting Status

 

The Company is currently eligible to register the resale of Common Stock in a
secondary offering on a registration statement on Form S-3 under the Securities
Act.

 

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3.25.                        No Manipulation of Common Stock

 

The Company has not taken and will not take any action outside the ordinary
course of business designed to or that might reasonably be expected to cause or
result in unlawful manipulation of the price of the Common Stock to facilitate
the sale or resale of the Shares or the Exchange Shares.

 

3.26.                        Accountants

 

PricewaterhouseCoopers LLP has advised the Company that it is, and to the best
knowledge of the Company it is, an independent accountant as required by the
Sarbanes-Oxley Act, the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder.

 

3.27.                        Internal Accounting Controls 

 

The Company maintains a system of internal accounting controls sufficient, in
the judgment of the management of the Company, to provide reasonable assurance
that:  (i) transactions are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

 

3.28.                        Environmental Matters

 

To its knowledge, the Company is in compliance with all applicable Environmental
Laws, except where any failure to comply would not be reasonably likely to have
a Material Adverse Effect.  There is no civil, criminal or administrative
judgment, action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or to the Company’s
knowledge threatened against the Company pursuant to Environmental Laws.  To the
Company’s knowledge, there are no past or present events, conditions,
circumstances, activities, practices, incidents, agreements, actions or plans
which could reasonably be expected to prevent compliance with, or which have
given rise to or will give rise to liability which would have a Material Adverse
Effect, under Environmental Laws.

 

3.29.                        FDA Approval

 

After due investigation, (i) the Company has no knowledge that any Governmental
Authority, including, but not limited to, the FDA, will ultimately prohibit the
marketing, sale, license or use in the United States or elsewhere of any product
(including, but not limited to, EFAPROXYN) proposed to be developed, produced or
marketed by the Company (each, a “Product”), (ii) to the Company’s knowledge,
the FDA has not prohibited any product or process from being marketed or used in
the United States which product or process is substantially similar in function
or composition to the Company’s lead product candidate, EFAPROXYN, (iii) the
Company has no Product on clinical hold nor does the Company have any reason to
expect that any Product is reasonably likely to be placed on clinical hold, (iv)
the

 

16

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Company has made available to WP all submissions to the FDA and the FDA
responses (and other material correspondence received from or submitted to the
FDA), including, but not limited to, all FDA warning letters, regulatory letters
and notice of adverse finding letters and the relevant responses, received by
the Company or any agent thereof relative to the development of its Products,
including, but not limited to, EFAPROXYN, (v) none of the Company or its
Affiliates or, to the Company’s knowledge, its employees or agents, has ever
been sanctioned, formally or otherwise, by the FDA, and (vi) there has not been
any suspensions or debarments by the FDA or other federal departments and state
regulatory bodies against the Company or, to the knowledge of the Company, any
current or former employee of the Company.

 

3.30.                        Insurance

 

THE COMPANY MAINTAINS AND WILL CONTINUE TO MAINTAIN INSURANCE WITH FINANCIALLY
SOUND AND REPUTABLE INSURERS IN SUCH AMOUNTS AND COVERING SUCH RISKS AS IS
REASONABLY ADEQUATE AND CONSISTENT WITH INDUSTRY PRACTICE FOR THE CONDUCT OF ITS
BUSINESS AND THE VALUE OF ITS PROPERTY, ALL OF WHICH INSURANCE IS IN FULL FORCE
AND EFFECT.  THE COMPANY HAS NOT RECEIVED NOTICE FROM, AND HAS NO KNOWLEDGE OF
ANY THREAT BY, ANY INSURER THAT HAS ISSUED ANY INSURANCE POLICY TO THE COMPANY
THAT SUCH INSURER INTENDS TO DENY COVERAGE UNDER OR CANCEL, DISCONTINUE OR NOT
RENEW ANY INSURANCE POLICY PRESENTLY IN FORCE.

 

3.31.                        Transfer Taxes

 

On the Initial Closing Date, all stock transfer or other taxes (other than
income taxes) which are required to be paid in connection with the sale and
issuance of the Shares hereunder will be, or will have been, fully paid or
provided for by the Company and the Company will have complied with all laws
imposing such taxes.

 

3.32.                        Investment Company

 

The Company is not an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for an investment company, within the
meaning of the Investment Company Act of 1940, as amended.

 

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SECTION 4.                                REPRESENTATIONS AND WARRANTIES OF THE
INVESTORS

 

Each Investor severally represents and warrants to the Company as of the date of
this Agreement (or, if made as of a specified date, as of such date) that:

 

(A)                                  IT IS ACQUIRING THE SHARES AND, SUBJECT TO
STOCKHOLDER APPROVAL, THE EXCHANGE SHARES FOR ITS OWN ACCOUNT FOR INVESTMENT AND
NOT WITH A VIEW TOWARDS THE RESALE, TRANSFER OR DISTRIBUTION THEREOF, NOR WITH
ANY PRESENT INTENTION OF DISTRIBUTING THE SHARES OR THE EXCHANGE SHARES, BUT
SUBJECT, NEVERTHELESS, TO ANY REQUIREMENT OF LAW THAT THE DISPOSITION OF THE
INVESTOR’S PROPERTY SHALL AT ALL TIMES BE WITHIN THE INVESTOR’S CONTROL, AND
WITHOUT PREJUDICE TO THE INVESTOR’S RIGHT AT ALL TIMES TO SELL OR OTHERWISE
DISPOSE OF ALL OR ANY PART OF SUCH SECURITIES UNDER A REGISTRATION UNDER THE
SECURITIES ACT OR UNDER AN EXEMPTION FROM SAID REGISTRATION AVAILABLE UNDER THE
SECURITIES ACT.

 

(B)                                 IT HAS FULL POWER AND LEGAL RIGHT TO EXECUTE
AND DELIVER THIS AGREEMENT AND TO PERFORM ITS OBLIGATIONS HEREUNDER.

 

(C)                                  IT IS A VALIDLY EXISTING PARTNERSHIP,
LIMITED LIABILITY COMPANY, TRUST OR CORPORATION, AS THE CASE MAY BE, DULY
ORGANIZED UNDER THE LAWS OF ITS JURISDICTION OF ORGANIZATION OR FORMATION.

 

(D)                                 IT HAS TAKEN ALL ACTION NECESSARY FOR THE
AUTHORIZATION, EXECUTION, DELIVERY, AND PERFORMANCE OF THIS AGREEMENT AND ITS
OBLIGATIONS HEREUNDER, AND, UPON EXECUTION AND DELIVERY BY THE COMPANY, THIS
AGREEMENT SHALL CONSTITUTE THE VALID AND BINDING OBLIGATION OF SUCH INVESTOR,
ENFORCEABLE AGAINST SUCH INVESTOR IN ACCORDANCE WITH ITS TERMS, EXCEPT THAT SUCH
ENFORCEMENT MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM
OR OTHER SIMILAR LAWS NOW OR HEREAFTER IN EFFECT RELATING TO CREDITORS’ RIGHTS
AND GENERAL PRINCIPLES OF EQUITY.

 

(E)                                  THERE ARE NO CLAIMS FOR BROKERAGE
COMMISSIONS OR FINDER’S FEES OR SIMILAR COMPENSATION IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT BASED ON ANY ARRANGEMENT MADE BY OR
ON BEHALF OF SUCH INVESTOR AND SUCH INVESTOR AGREES TO INDEMNIFY AND HOLD THE
COMPANY HARMLESS AGAINST ANY COSTS OR DAMAGES INCURRED AS A RESULT OF ANY SUCH
CLAIM.

 

(F)                                    IT HAS SUCH KNOWLEDGE AND EXPERIENCE IN
FINANCIAL AND BUSINESS MATTERS THAT IT IS CAPABLE OF EVALUATING THE MERITS AND
RISKS OF ITS INVESTMENT IN THE COMPANY AS CONTEMPLATED BY THIS AGREEMENT, AND IS
ABLE TO BEAR THE ECONOMIC RISK OF SUCH INVESTMENT FOR AN INDEFINITE PERIOD OF
TIME.  IT HAS BEEN FURNISHED ACCESS TO SUCH INFORMATION AND DOCUMENTS AS IT HAS
REQUESTED AND HAS BEEN AFFORDED AN OPPORTUNITY TO ASK QUESTIONS OF AND RECEIVE
ANSWERS FROM REPRESENTATIVES OF THE COMPANY CONCERNING THE TERMS AND CONDITIONS
OF THIS AGREEMENT AND THE PURCHASE OF THE SHARES CONTEMPLATED HEREBY.  IT IS A
“QUALIFIED INSTITUTIONAL BUYER” WITHIN THE MEANING OF RULE 144A(A) OF THE
SECURITIES ACT OR AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A) OF
REGULATION D UNDER THE SECURITIES ACT.

 

(G)                                 EXCEPT SUCH CONSENTS, APPROVALS AND FILINGS,
THE FAILURE TO OBTAIN OR MAKE WOULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE
A MATERIAL ADVERSE EFFECT ON THE ABILITY OF THE INVESTOR TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE EXECUTION AND DELIVERY BY IT OF
THIS AGREEMENT AND THE PERFORMANCE BY SUCH INVESTOR OF ITS OBLIGATIONS

 

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HEREUNDER AND THE CONSUMMATION BY SUCH INVESTOR OF THE TRANSACTIONS CONTEMPLATED
HEREBY DO NOT REQUIRE SUCH INVESTOR TO OBTAIN ANY CONSENT, APPROVAL, CLEARANCE
OR ACTION OF, OR MAKE ANY FILING, SUBMISSION OR REGISTRATION WITH, OR GIVE ANY
NOTICE TO, ANY GOVERNMENTAL AUTHORITY OR JUDICIAL AUTHORITY.

 

(H)                                 THE EXECUTION AND DELIVERY OF THIS AGREEMENT
BY SUCH INVESTOR DO NOT, AND THE FULFILLMENT OF THE TERMS HEREOF AND THEREOF BY
SUCH INVESTOR WILL NOT, (I) VIOLATE OR CONFLICT WITH ITS PARTNERSHIP AGREEMENT,
TRUST AGREEMENT, THE ARTICLES OF INCORPORATION, OTHER CONSTITUTIVE DOCUMENTS OR
BY-LAWS (OR OTHER SIMILAR APPLICABLE DOCUMENTS) OF THE INVESTOR, AS APPLICABLE;
(II) RESULT IN A BREACH OF ANY OF THE TERMS, CONDITIONS OR PROVISIONS OF, OR
CONSTITUTE A DEFAULT (WITH OR WITHOUT THE GIVING OF NOTICE OR THE PASSAGE OF
TIME (OR BOTH)) UNDER, OR RESULT IN THE MODIFICATION OF, OR PERMIT THE
ACCELERATION OF RIGHTS UNDER OR TERMINATION OF, ANY MATERIAL CONTRACT TO WHICH
SUCH INVESTOR IS A PARTY OR (III) VIOLATE ANY LAW, ORDINANCE, STANDARD,
JUDGMENT, RULE OR REGULATION OF ANY COURT OR FEDERAL, STATE OR FOREIGN
REGULATORY BOARD OR BODY OR ADMINISTRATIVE AGENCY HAVING JURISDICTION OVER SUCH
INVESTOR OR OVER ITS RESPECTIVE PROPERTIES OR BUSINESSES; EXCEPT, IN THE CASES
OF CLAUSES (II) AND (III) WHERE SUCH EVENT WOULD NOT BE REASONABLY LIKELY TO
HAVE A MATERIAL ADVERSE EFFECT ON THE INVESTOR’S ABILITY TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

(I)                                     ON THE DATE OF THIS AGREEMENT, THE
INVESTOR (1) IS NOT AN “INTERESTED STOCKHOLDER” WITHIN THE MEANING OF SECTION
203(C)(5) OF THE DGCL OR (2) HAS BEEN AN “INTERESTED STOCKHOLDER” FOR A PERIOD
OF MORE THAN THREE YEARS PRECEDING THE DATE OF THIS AGREEMENT.

 

SECTION 5.                                ADDITIONAL AGREEMENTS OF THE PARTIES

 

5.1.                              Resale of Shares

 

Each Investor severally covenants that it will not sell or otherwise transfer
the Shares or, subject to Stockholder Approval, the Exchange Shares, except
pursuant to an effective registration under the Securities Act or in a
transaction which, in the opinion of counsel reasonably satisfactory to the
Company, qualifies as an exempt transaction under the Securities Act and the
rules and regulations promulgated thereunder.

 

5.2.                              Covenants Pending Closing

 

Pending the Initial Closing, the Company will conduct its business in the
ordinary course, and will not, without the Investors’ prior written consent,
such consent not to be unreasonably withheld, delayed or conditioned, take any
action which would result in any of the representations or warranties contained
in this Agreement not being true at and as of the time immediately after such
action, or in any of the covenants contained in this Agreement becoming
incapable of performance.  Pending the Initial Closing, the Company will
promptly advise the Investors of any action or event of which it becomes aware
which has the effect of making materially incorrect any of such representations
or warranties or which has the effect of rendering any of such covenants
incapable of performance.

 

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5.3.                              Further Assurances

 

The Company and each Investor shall execute such documents and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby.  The Company
and each Investor shall use its reasonable efforts to fulfill or obtain the
fulfillment of the conditions to the Closing as promptly as practicable.

 

5.4.                              Investor Designees

 

(A)                                  FOR SO LONG AS WP OWNS AT LEAST TWO THIRDS
OF (I) THE AGGREGATE NUMBER OF SHARES ACQUIRED BY IT ON THE INITIAL CLOSING
DATE, OR (II) IN THE EVENT THE EXCHANGE OCCURS, THE AGGREGATE NUMBER OF SHARES
OF COMMON STOCK OWNED BY WP IMMEDIATELY AFTER GIVING EFFECT TO THE EXCHANGE (THE
“EXCHANGE DATE SHARES”), THEN, SUBJECT TO APPLICABLE LAW AND THE RULES AND
REGULATIONS OF THE SEC AND NASDAQ STOCK MARKET, THE COMPANY WILL NOMINATE AND
USE ITS REASONABLE BEST EFFORTS TO CAUSE TO BE ELECTED AND CAUSE TO REMAIN AS A
DIRECTORS ON THE BOARD TWO INDIVIDUALS DESIGNATED BY WP (EACH, AN “INVESTOR
DESIGNEE” AND COLLECTIVELY, THE “INVESTOR DESIGNEES”).

 

(B)                                 IN THE EVENT SECTION 5.4(A) IS NO LONGER
APPLICABLE AND FOR SO LONG AS WP OWNS AT LEAST 50% OF (I) THE AGGREGATE NUMBER
OF SHARES ACQUIRED BY IT ON THE INITIAL CLOSING DATE, OR (II) IN THE EVENT THE
EXCHANGE OCCURS, THE EXCHANGE DATE SHARES, THEN, SUBJECT TO APPLICABLE LAW AND
THE RULES AND REGULATIONS OF THE SEC AND NASDAQ STOCK MARKET, THE COMPANY WILL
NOMINATE AND USE ITS REASONABLE BEST EFFORTS TO CAUSE TO BE ELECTED AND CAUSE TO
REMAIN AS A DIRECTOR ON THE BOARD, ONE INVESTOR DESIGNEE.

 

(C)                                  SUBJECT TO APPLICABLE LAW AND THE RULES AND
REGULATIONS OF THE SEC AND NASDAQ STOCK MARKET, FOR SO LONG AS AT LEAST ONE
INVESTOR DESIGNEE CONTINUES TO SERVE AS A DIRECTOR ON THE BOARD, THE COMPANY
WILL USE ITS REASONABLE BEST EFFORTS TO CAUSE ONE OF THE INVESTOR DESIGNEES TO
BE A MEMBER OF EACH PRINCIPLE COMMITTEE OF THE BOARD.

 

5.5.                              Subscription Right

 

(A)                                  IF AT ANY TIME AFTER THE DATE HEREOF, THE
COMPANY DETERMINES TO ISSUE EQUITY SECURITIES OF ANY KIND (FOR THESE PURPOSES,
THE TERM “EQUITY SECURITIES” SHALL INCLUDE, WITHOUT LIMITATION, COMMON STOCK,
WARRANTS, OPTIONS OR OTHER RIGHTS TO ACQUIRE EQUITY SECURITIES CONVERTIBLE OR
EXCHANGEABLE INTO EQUITY SECURITIES) OF THE COMPANY (OTHER THAN:  (I) TO THE
PUBLIC IN A FIRM COMMITMENT UNDERWRITING PURSUANT TO A REGISTRATION STATEMENT
FILED UNDER THE SECURITIES ACT; (II) THE ISSUANCE OF EQUITY SECURITIES TO
EMPLOYEES, OFFICERS OR DIRECTORS OF, OR CONSULTANTS OR ADVISORS TO THE COMPANY
PURSUANT TO ANY EMPLOYEE BENEFIT PLAN APPROVED BY THE BOARD; (III) ANY EQUITY
SECURITIES ISSUED AS CONSIDERATION IN CONNECTION WITH AN ACQUISITION, MERGER OR
CONSOLIDATION BY THE COMPANY PROVIDED SUCH ACQUISITION, MERGER OR CONSOLIDATION
HAS BEEN APPROVED BY THE BOARD; (IV) SECURITIES ISSUED IN CONNECTION WITH
LICENSING, MARKETING OR DISTRIBUTION ARRANGEMENTS OR SIMILAR STRATEGIC
TRANSACTIONS APPROVED BY THE BOARD; (V) STOCK ISSUED OR ISSUABLE PURSUANT TO ANY
RIGHTS OR AGREEMENTS OUTSTANDING AS OF THE DATE OF THIS AGREEMENT, INCLUDING
WARRANTS OUTSTANDING AS OF THE DATE OF THIS AGREEMENT TO PURCHASE UP TO
1,706,893 SHARES OF COMMON STOCK, AND STOCK ISSUED PURSUANT TO ANY SUCH RIGHTS
OR AGREEMENTS

 

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GRANTED AFTER THE DATE OF THIS AGREEMENT APPROVED BY THE BOARD; PROVIDED THAT
THE SUBSCRIPTION RIGHTS ESTABLISHED BY THIS SECTION 5.5 APPLY WITH RESPECT TO
THE INITIAL SALE OR GRANT BY THE COMPANY OF SUCH RIGHTS OR AGREEMENTS; (VI)
SHARES OF EXCHANGEABLE PREFERRED STOCK ISSUED AS DIVIDENDS WITH RESPECT TO THE
SHARES PURCHASED BY THE INVESTORS HEREUNDER, OR (VII) SHARES OF COMMON STOCK
ISSUED OR ISSUABLE UPON EXCHANGE OF THE EXCHANGEABLE PREFERRED STOCK) THEN, FOR
SO LONG AS WP OWNS AT LEAST TWO-THIRDS OF (I) THE AGGREGATE NUMBER OF SHARES
ACQUIRED BY IT ON THE INITIAL CLOSING DATE, OR (II) IN THE EVENT THE EXCHANGE
OCCURS, THE EXCHANGE DATE SHARES, THE COMPANY SHALL:

 

(1)                                   GIVE WRITTEN NOTICE TO WP SETTING FORTH IN
REASONABLE DETAIL (A) THE DESIGNATION AND ALL OF THE TERMS AND PROVISIONS OF THE
SECURITIES PROPOSED TO BE ISSUED (THE “PROPOSED SECURITIES”), INCLUDING, WHERE
APPLICABLE, THE VOTING POWERS, PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATION, LIMITATIONS OR RESTRICTIONS
THEREOF AND INTEREST RATE AND MATURITY; (B) THE PRICE AND OTHER TERMS OF THE
PROPOSED SALE OF SUCH SECURITIES; (C) THE AMOUNT OF SUCH PROPOSED SECURITIES;
AND (D) SUCH OTHER INFORMATION AS WP MAY REASONABLY REQUEST IN ORDER TO EVALUATE
THE PROPOSED ISSUANCE; AND

 

(2)                                   SUBJECT TO APPLICABLE LAW AND THE RULES
AND REGULATIONS OF THE SEC AND NASDAQ STOCK MARKET, OFFER TO ISSUE TO WP UPON
THE TERMS DESCRIBED IN THE NOTICE DELIVERED PURSUANT TO SECTION 5.5(A)(1) ABOVE,
A PORTION OF THE PROPOSED SECURITIES EQUAL TO (I) THE PERCENTAGE OF THE COMMON
STOCK (INCLUDING THE EXCHANGE SHARES ISSUABLE UPON THE EXCHANGE, IF THE EXCHANGE
HAS NOT OCCURRED) OWNED BY WP IMMEDIATELY PRIOR TO THE ISSUANCE OF THE EQUITY
SECURITIES RELATIVE TO THE TOTAL NUMBER OF SHARES OF COMMON STOCK (INCLUDING THE
EXCHANGE SHARES ISSUABLE UPON THE EXCHANGE, IF THE EXCHANGE HAS NOT OCCURRED)
OUTSTANDING IMMEDIATELY PRIOR TO THE ISSUANCE OF THE EQUITY SECURITIES,
MULTIPLIED BY (II) THE TOTAL NUMBER OF PROPOSED SECURITIES.  NOTWITHSTANDING THE
FOREGOING, THE COMPANY SHALL NOT BE REQUIRED TO OFFER OR SELL SUCH PROPOSED
SECURITIES TO WP IF IT WOULD CAUSE THE COMPANY TO BE IN VIOLATION OF APPLICABLE
FEDERAL SECURITIES LAWS BY VIRTUE OF SUCH OFFER OR SALE.

 

(B)                                 WP MUST EXERCISE ITS PURCHASE RIGHTS
HEREUNDER WITHIN 5 BUSINESS DAYS AFTER RECEIPT OF SUCH NOTICE FROM THE COMPANY. 
TO THE EXTENT THAT THE COMPANY OFFERS TWO OR MORE SECURITIES IN UNITS, WP MUST
PURCHASE SUCH UNITS AS A WHOLE AND WILL NOT BE GIVEN THE OPPORTUNITY TO PURCHASE
ONLY ONE OF THE SECURITIES MAKING UP SUCH UNIT.

 

(C)                                  UPON THE EXPIRATION OF THE OFFERING PERIOD
DESCRIBED ABOVE, THE COMPANY WILL BE FREE TO SELL SUCH PROPOSED SECURITIES THAT
WP HAS NOT ELECTED TO PURCHASE DURING THE 90 DAYS FOLLOWING SUCH EXPIRATION ON
TERMS AND CONDITIONS NO MORE FAVORABLE TO THE PURCHASERS THEREOF THAN THOSE
OFFERED TO WP.

 

(D)                                 THE ELECTION BY WP NOT TO EXERCISE ITS
SUBSCRIPTION RIGHTS UNDER THIS SECTION 5.5 IN ANY ONE INSTANCE SHALL NOT AFFECT
ITS RIGHT (OTHER THAN IN RESPECT OF A REDUCTION IN ITS PERCENTAGE HOLDINGS) AS
TO ANY SUBSEQUENT PROPOSED ISSUANCE.  ANY SALE OF SUCH SECURITIES BY THE COMPANY
WITHOUT FIRST GIVING WP THE RIGHTS DESCRIBED IN THIS SECTION 5.5 SHALL BE VOID
AND OF NO FORCE AND EFFECT.

 

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(E)                                  THE SUBSCRIPTION RIGHTS ESTABLISHED BY THIS
SECTION 5.5 SHALL NOT APPLY TO, AND SHALL TERMINATE UPON A CONSOLIDATION,
MERGER, REORGANIZATION OR OTHER FORM OF ACQUISITION OF OR BY THE COMPANY IN
WHICH THE COMPANY’S STOCKHOLDERS IMMEDIATELY PRIOR TO THE TRANSACTION RETAIN
LESS THAN 50% OF THE VOTING POWER OF OR ECONOMIC INTEREST IN THE SURVIVING OR
RESULTING ENTITY (OR ITS PARENT), OR A SALE OF THE COMPANY’S ASSETS IN EXCESS OF
A MAJORITY OF THE COMPANY’S ASSETS (VALUED AT FAIR MARKET VALUE AS DETERMINED IN
GOOD FAITH BY THE BOARD).

 

(F)                                    INJUNCTIVE RELIEF.  THE COMPANY AND WP
HEREBY DECLARE THAT IT IS IMPOSSIBLE TO MEASURE IN MONEY THE DAMAGES WHICH WILL
ACCRUE TO THE PARTIES HERETO BY REASON OF THE FAILURE OF ANY PARTY TO PERFORM
ANY OF ITS OBLIGATIONS SET FORTH IN THIS SECTION 5.5.  THEREFORE, THE COMPANY
AND WP SHALL HAVE THE RIGHT TO SPECIFIC PERFORMANCE OF SUCH OBLIGATIONS, AND IF
ANY PARTY HERETO SHALL INSTITUTE ANY ACTION OR PROCEEDING TO ENFORCE THE
PROVISIONS HEREOF, EACH OF THE COMPANY AND WP HEREBY WAIVE THE CLAIM OR DEFENSE
THAT THE PARTY INSTITUTING SUCH ACTION OR PROCEEDING HAS AN ADEQUATE REMEDY AT
LAW.

 

5.6.                              Consents and Approvals; Proxy Statement

 

(A)                                  FROM AND AFTER THE DATE HEREOF, THE COMPANY
SHALL USE ITS REASONABLE BEST EFFORTS TO OBTAIN AS PROMPTLY AS PRACTICABLE ANY
CONSENT OR APPROVAL OF ANY PERSON, INCLUDING ANY REGULATORY AUTHORITY, REQUIRED
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(B)                                 FROM AND AFTER THE DATE OF THE INITIAL
CLOSING, THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO OBTAIN AS PROMPTLY
AS PRACTICABLE ANY VOTE OF STOCKHOLDERS NECESSARY FOR APPROVAL OF THE EXCHANGE
(“STOCKHOLDER APPROVAL”).  IN FURTHERANCE OF THE FOREGOING STATEMENT, AS
PROMPTLY AS REASONABLY PRACTICABLE AFTER THE DATE HEREOF AND IN ANY EVENT NO
LATER THAN MARCH 25, 2005, THE COMPANY SHALL PREPARE AND FILE WITH THE SEC, AND
SHALL USE ITS REASONABLE BEST EFFORTS TO HAVE CLEARED BY THE SEC, A PRELIMINARY
PROXY STATEMENT, AND AS SOON AS PRACTICABLE THEREAFTER (SUBJECT TO APPLICABLE
WAITING PERIODS UNDER THE EXCHANGE ACT, REVIEW BY THE SEC OR AS REQUIRED BY THE
ORGANIZATIONAL DOCUMENTS AND APPLICABLE LAW) FILE WITH THE SEC AND PROMPTLY
THEREAFTER MAIL A DEFINITIVE PROXY STATEMENT TO THE COMPANY’S STOCKHOLDERS (THE
“PROXY STATEMENT”).  THE PROXY STATEMENT SHALL CONTAIN THE RECOMMENDATION OF THE
BOARD, TO THE EXTENT CONSISTENT WITH ITS FIDUCIARY DUTIES, THAT THE COMPANY’S
STOCKHOLDERS APPROVE THE EXCHANGE IN ACCORDANCE WITH THE ORGANIZATIONAL
DOCUMENTS AND APPLICABLE LAW, INCLUDING WITHOUT LIMITATION, THE REQUIREMENTS OF
NASD RULE 4350.  WP WILL BE GIVEN A REASONABLE OPPORTUNITY TO REVIEW AND COMMENT
ON DRAFTS OF THE PROXY STATEMENT AND THE COMPANY WILL USE ITS REASONABLE BEST
EFFORTS TO ACCEPT COMMENTS THERETO GIVEN BY WP AND ITS REPRESENTATIVES.  THE
COMPANY SHALL PROMPTLY TAKE ALL ACTION NECESSARY IN ACCORDANCE WITH APPLICABLE
LAW AND ITS ORGANIZATIONAL DOCUMENTS TO CONVENE A MEETING OF THE COMPANY’S
STOCKHOLDERS, NO LATER THAN MAY 30, 2005 OR, IF SUCH DATE IS IMPRACTICABLE DUE
TO REVIEW BY THE SEC, AS SOON AS PRACTICABLE THEREAFTER.  TO THE EXTENT
CONSISTENT WITH ITS FIDUCIARY DUTIES, THE COMPANY SHALL USE ITS REASONABLE BEST
EFFORTS TO SOLICIT FROM THE COMPANY’S STOCKHOLDERS PROXIES IN FAVOR OF THE
EXCHANGE AND SHALL TAKE ALL OTHER ACTION REASONABLY NECESSARY TO SECURE
STOCKHOLDER APPROVAL.

 

5.7.                              Use of Proceeds

 

The proceeds received by the Company from the issuance and sale of the Shares
shall be used by the Company for working capital and other general corporate
purposes.

 

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5.8.                              Takeover Statute

 

If any Takeover Statute shall become applicable to the transactions contemplated
hereby, including without limitation any takeover provision under the laws of
the State of Delaware, the Company and the members of the Board shall, to the
extent consistent with its fiduciary duties, grant such approvals and take such
actions as are necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise use their reasonable best efforts to act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby.

 

SECTION 6.                                INVESTORS’ CLOSING CONDITIONS

 

The Investors’ obligations to purchase the Shares at each Closing shall be
subject to the performance by the Company of its agreements theretofore to be
performed hereunder and to the satisfaction (or waiver), prior thereto or
concurrently therewith, of the following further conditions:

 

6.1.                              Representations and Warranties

 

The representations and warranties of the Company contained in Section 3 of this
Agreement shall be true on and as of the Initial Closing Date in all material
respects (except for such representations and warranties that are qualified as
to materiality, which shall be true in all respects) as though such
representations and warranties were made at and as of such date.

 

6.2.                              Compliance with Agreement

 

The Company shall have performed and complied in all material respects with all
agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by the Company prior to or on the
applicable Closing Date.

 

6.3.                              Injunction

 

There shall be no effective injunction, writ, preliminary restraining order or
any order of any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.

 

6.4.                              Counsel’s Opinion

 

Each Investor shall have received an opinion, dated the applicable Closing Date
from the Company’s counsel, Cooley Godward LLP, substantially in the form of
Exhibit E attached hereto.

 

6.5.                              Adverse Development

 

There shall have been no developments in the business of the Company which would
be reasonably likely to have a Material Adverse Effect.

 

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6.6.                              Directors

 

Stewart Hen and Jonathan S. Leff shall have been elected to the Board, effective
on the Initial Closing Date.  Subject to the applicable law and the rules and
regulations of the SEC and NASDAQ Stock Market, one of the Investor Designees
shall be a member of each principle committee of the Board.

 

6.7.                              Registration Rights Agreement

 

The Company and the Investors shall have executed the Registration Rights
Agreement, the form of which is attached as Exhibit F hereto (the “Registration
Rights Agreement”).

 

6.8.                              Standstill Agreement

 

The Company and WP shall have executed the letter agreement, the form of which
is attached as Exhibit G hereto (the “Standstill Agreement”).

 

6.9.                              Rights Amendment

 

The Company and Mellon Investor Services LLC, as Rights Agent, shall have
executed the Amendment to Rights Agreement, the form of which is attached as
Exhibit H hereto (the “Rights Amendment”).

 

6.10.                        Stop Orders

 

No stop order or suspension of trading shall been imposed by the NASDAQ Stock
Market, the SEC or any other governmental regulatory body with respect to public
trading in the Common Stock.

 

6.11.                        Listing of the Common Stock

 

In connection with the issuance of the Shares and the transactions contemplated
hereby, the Company shall have submitted to the NASDAQ Stock Market a
“Notification Form:  Listing of Additional Shares” as well as any necessary
supporting documentation.

 

6.12.                        Nasdaq Interpretative Ruling

 

The NASDAQ Stock Market shall have issued a written interpretation confirming
that the transactions contemplated hereby, including the terms of the
Exchangeable Preferred Stock, comply with all applicable Nasdaq rules, including
the requirements of Rule 4350(i) and IM-4350-2 (“Interpretive Material Regarding
the Use of Share Caps to Comply with Rule 4350(i)”) and the voting rights
requirements of Rule 4351 and IM-4351 (“Voting Rights Policy”).

 

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6.13.                        Filing of Certificate of Designations

 

The Certificate of Designations shall have been filed with the Secretary of
State of the State of Delaware and shall continue to be in full force and effect
as of the applicable Closing Date.

 

6.14.                        Officer’s Certificate

 

Each Investor shall have received a certificate, dated the applicable Closing
Date, signed by a duly authorized executive officer of the Company, certifying
that the conditions specified in the foregoing Sections 6.1, 6.2, 6.3 and 6.5
hereof have been fulfilled.

 

6.15.                        Secretary’s Certificate

 

Each Investor shall have received a certificate, dated the applicable Closing
Date, of the Secretary of the Company attaching:  (i) a true and complete copy
of the Restated Certificate of Incorporation of the Company, with all amendments
thereto; (ii) true and complete copies of the Company’s By-laws, as amended, in
effect as of such date; (iii) a certificate from the Secretary of State of the
State of Delaware as to the good standing of the Company; (iv) certificates of
good standing from the appropriate officials of the jurisdictions in each state
in which the Company is qualified to do business as a foreign corporation; and
(iv) resolutions of the Board authorizing the execution and delivery of this
Agreement, the transactions contemplated hereby, and the issuance of the Shares.

 

6.16.                        Approval of Proceedings

 

All proceedings to be taken in connection with the transactions contemplated by
this Agreement, and all documents incident thereto, shall be satisfactory in
form and substance to WP and its special counsel, Willkie Farr & Gallagher LLP. 
WP shall have received copies of all documents or other evidence which they and
Willkie Farr & Gallagher LLP may reasonably request in connection with such
transactions and of all records of corporate proceedings in connection therewith
in form and substance reasonably satisfactory to WP and Willkie Farr & Gallagher
LLP.

 

SECTION 7.                                COMPANY CLOSING CONDITIONS

 

The Company’s obligation to issue and sell the Shares at each Closing shall be
subject to the performance by each Investor of its agreements theretofore to be
performed hereunder and to the satisfaction (or waiver), prior thereto or
concurrently therewith, of the following further conditions:

 

7.1.                              Representations and Warranties

 

The representations and warranties of the Investors contained in Section 4 of
this Agreement shall be true in all material respects on and as of the
applicable Closing Date (except for such representations and warranties that are
qualified as to materiality, which shall be true in all respects) as though such
representations and warranties were made at and as of such date.

 

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7.2.                              Compliance with Agreement

 

The Investors shall have performed and complied in all material respects with
all agreements, covenants and conditions contained in this Agreement which are
required to be performed or complied with by them prior to or on the applicable
Closing Date.

 

7.3.                              Investors’ Certificates

 

The Company shall have received a certificate from each Investor, dated the
applicable Closing Date, signed by a duly authorized representative of the
Investor, certifying that the conditions specified in the foregoing Sections 7.1
and 7.2 hereof have been fulfilled.

 

7.4.                              Injunction

 

There shall be no effective injunction, writ, preliminary restraining order or
any order of any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be consummated as
herein provided.

 

7.5.                              Standstill Agreement

 

The Company and WP shall have executed the letter agreement, the form of which
is attached as Exhibit G hereto (the “Standstill Agreement”).

 

7.6.                              Rights Amendment

 

The Company and Mellon Investor Services LLC, as Rights Agent, shall have
executed the Amendment to Rights Agreement, the form of which is attached as
Exhibit H hereto (the “Rights Amendment”).

 

7.7.                              Nasdaq Interpretative Ruling

 

The NASDAQ Stock Market shall have issued a written interpretation confirming
that the transactions contemplated hereby, including the terms of the
Exchangeable Preferred Stock, comply with all applicable Nasdaq rules, including
the requirements of Rule 4350(i) and IM-4350-2 (“Interpretive Material Regarding
the Use of Share Caps to Comply with Rule 4350(i)”) and the voting rights
requirements of Rule 4351 and IM-4351 (“Voting Rights Policy”).

 

7.8.                              Filing of Certificate of Designations

 

The Certificate of Designations shall have been filed with the Secretary of
State of the State of Delaware and shall continue to be in full force and effect
as of the applicable Closing Date.

 

7.9.                              Approval of Proceedings

 

All proceedings to be taken in connection with the transactions contemplated by
this Agreement, and all documents incident thereto, shall be reasonably
satisfactory in form and

 

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substance to the Company.  The Company shall have received copies of all
documents or other evidence which it may have reasonably requested in connection
therewith in form and substance reasonably satisfactory to the Company.

 

SECTION 8.                                COVENANTS

 

8.1.                              Inspection

 

As long as an Investor Owns at least twenty percent (20%) of the outstanding
Common Stock, the Company shall permit the Investor, its nominee, assignee, and
its representative to visit and inspect any of the properties of the Company, to
examine all its books of account, records, reports and other papers, to make
copies and extracts therefrom, and provide reasonable access to and the right to
consult with, its officers, directors, key employees and independent public
accountants or any of them (and by this provision the Company authorizes said
accountants to discuss with such Investor, its nominees, assignees and
representatives the finances and affairs of the Company), all at such reasonable
times and as often as may be reasonably requested; provided, however, that the
Company shall not be obligated under this Section 8.1 with respect to
information the Company is contractually obligated to keep confidential or
secret or which the Board of Directors determines in good faith is confidential
and should not, therefore, be disclosed.

 

8.2.                              Confidentiality

 

(A)                                  AS TO SO MUCH OF THE INFORMATION AND OTHER
MATERIAL FURNISHED UNDER OR IN CONNECTION WITH THIS AGREEMENT (INCLUDING WITHOUT
LIMITATION INFORMATION FURNISHED PURSUANT TO SECTION 8.1 HEREOF) AS CONSTITUTES
OR CONTAINS CONFIDENTIAL BUSINESS, FINANCIAL OR OTHER INFORMATION OF THE
COMPANY, EACH INVESTOR COVENANTS FOR ITSELF AND ITS MEMBERS AND OFFICERS THAT IT
WILL USE DUE CARE TO PREVENT ITS OFFICERS, MEMBERS, EMPLOYEES, COUNSEL,
ACCOUNTANTS, CONSULTANTS, ADVISORS AND OTHER REPRESENTATIVES FROM DISCLOSING
SUCH INFORMATION TO PERSONS OTHER THAN THEIR RESPECTIVE AUTHORIZED EMPLOYEES,
COUNSEL, ACCOUNTANTS, STOCKHOLDERS, PARTNERS, LIMITED PARTNERS AND OTHER
AUTHORIZED REPRESENTATIVES OR FROM USING SUCH INFORMATION EXCEPT AS AN INVESTOR
OR FOR THE BENEFIT OF THE COMPANY; PROVIDED, HOWEVER, THAT SUCH INVESTOR MAY
DISCLOSE OR DELIVER ANY INFORMATION OR OTHER MATERIAL DISCLOSED TO OR RECEIVED
BY IT SHOULD THE INVESTOR BE ADVISED BY ITS COUNSEL THAT SUCH DISCLOSURE OR
DELIVERY IS REQUIRED BY LAW, REGULATION OR JUDICIAL OR ADMINISTRATIVE ORDER.  IN
THE EVENT OF ANY TERMINATION OF THIS AGREEMENT PRIOR TO THE INITIAL CLOSING
DATE, THE INVESTOR SHALL RETURN TO THE COMPANY ALL CONFIDENTIAL MATERIAL
PREVIOUSLY FURNISHED TO THE INVESTOR OR ITS OFFICERS, MEMBERS, EMPLOYEES,
COUNSEL, ACCOUNTANTS AND OTHER REPRESENTATIVES IN CONNECTION WITH THIS
TRANSACTION.  FOR PURPOSES OF THIS SECTION 8.2, “DUE CARE” MEANS AT LEAST THE
SAME LEVEL OF CARE THAT SUCH INVESTOR WOULD USE TO PROTECT THE CONFIDENTIALITY
OF ITS OWN SENSITIVE OR PROPRIETARY INFORMATION, AND THIS OBLIGATION SHALL
SURVIVE TERMINATION OF THIS AGREEMENT.

 

(b)                                 Notwithstanding the foregoing or anything
else contained herein to the contrary, the terms and conditions of (i) that
certain Non-Disclosure Agreement dated January 11, 2005, between the Company and
WP, and (ii) that certain Non-Disclosure Agreement dated January 27, 2005,
between the Company and WP, shall remain in full force and effect in accordance
with their terms with respect to all confidential information of the Company
disclosed to WP thereunder.

 

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8.3.                              Lost, etc. Certificates Evidencing Shares;
Exchange

 

Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any certificate evidencing any Shares
or Exchange Shares owned by an Investor, and (in the case of loss, theft or
destruction) of an unsecured indemnity satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such certificate, if mutilated, the Company
will make and deliver in lieu of such certificate a new certificate of like
tenor and for the number of securities evidenced by such certificate which
remain outstanding.  Each Investor’s agreement of indemnity shall constitute
indemnity satisfactory to the Company for purposes of this Section 8.3.  Upon
surrender of any certificate representing any Shares or Exchange Shares, for
exchange at the office of the Company, the Company at its expense will cause to
be issued in exchange therefor new certificates in such denomination or
denominations as may be requested for the same aggregate number of Shares or
Exchange Shares represented by the certificate so surrendered and registered as
such holder may request.  The Company will also pay the cost of all deliveries
of certificates for such Shares or Exchange Shares to the office of the Investor
(including the cost of insurance against loss or theft in an amount satisfactory
to the holders) upon any exchange provided for in this Section 8.3.

 

8.4.                              Securities Law Disclosure; Publicity

 

The Company shall, at or prior to 8:30 a.m., Eastern Standard Time, on the first
day following the date of this Agreement on which trading occurs on the NASDAQ
Stock Market, (i) issue a press release reasonably acceptable to the Majority
Investors disclosing the transactions contemplated hereby, and (ii) file a
Current Report on Form 8-K with the SEC (the “8-K Filing”) describing the
transactions contemplated hereby and including this Agreement as an exhibit
thereto, in the form required by the Exchange Act.  Thereafter, the Company
shall timely file any filings and notices required by the SEC or the NASD with
respect to the transactions contemplated hereby.  Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Investor, or include the
name of any Investor in any filing with the SEC (other than pursuant to the
Registration Statement and exhibits to the 8-K Filing and other periodic filings
made by the Company under the Exchange Act) or the NASD (other than pursuant to
an application for the listing of the Shares on the NASDAQ Stock Market),
without the prior written consent of such Investor, except to the extent such
disclosure is required by law or NASD regulations, in which case the Company
shall provide the Investors with prior notice of such disclosure.

 

8.5.                              HSR Act Filing

 

The Company and WP shall, as soon as practicable after the date of this
Agreement, but in no event later than April 3, 2005, file Notification and
Report Forms under the HSR Act with the Federal Trade Commission (the “FTC”) and
the Antitrust Division of the Department of Justice (the “Antitrust Division”)
relating to the transaction contemplated by this Agreement and shall use their
reasonable best efforts to respond as promptly as practicable to all inquiries
received from the FTC or the Antitrust Division for additional information or
documentation; provided, however, that no such filing shall be made if, on or
before March 15, 2005 (or such later date as

 

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agreed upon by the Company), WP notifies the Company of its determination that
such filing will not be required by applicable law.

 

SECTION 9.                                MISCELLANEOUS

 

9.1.                              Notices

 

(A)                                  ALL COMMUNICATIONS UNDER THIS AGREEMENT
SHALL BE IN WRITING AND SHALL BE DELIVERED BY HAND OR FACSIMILE OR MAILED BY
OVERNIGHT COURIER OR BY REGISTERED MAIL OR CERTIFIED MAIL, POSTAGE PREPAID:

 

(1)                                   IF TO AN INVESTOR, AT THE ADDRESS OR
FACSIMILE NUMBER SET FORTH ON EXHIBIT A, OR AT SUCH OTHER ADDRESS OR FACSIMILE
NUMBER AS SUCH INVESTOR MAY HAVE FURNISHED THE COMPANY IN WRITING; AND

 

(2)                                   IF TO THE COMPANY, AT:  11080 CIRCLEPOINT
ROAD, WESTMINSTER, COLORADO, 80020 (FACSIMILE: (303) 426-4731), ATTENTION: 
GENERAL COUNSEL, OR AT SUCH OTHER ADDRESS OR FACSIMILE NUMBER AS IT MAY HAVE
FURNISHED THE INVESTORS IN WRITING, WITH A COPY (WHICH SHALL NOT CONSTITUTE
NOTICE) TO COOLEY GODWARD LLP, 380 INTERLOCKEN CRESCENT, SUITE 900, BROOMFIELD,
COLORADO, 80021-8023 (FACSIMILE: (720) 566-4099), ATTENTION: BRENT FASSETT, ESQ.

 

(B)                                 ANY NOTICE SO ADDRESSED SHALL BE DEEMED TO
BE GIVEN:  IF DELIVERED BY HAND OR FACSIMILE, ON THE DATE OF SUCH DELIVERY; IF
MAILED BY OVERNIGHT COURIER, ON THE FIRST BUSINESS DAY FOLLOWING THE DATE OF
SUCH MAILING; AND IF MAILED BY REGISTERED OR CERTIFIED MAIL, ON THE THIRD
BUSINESS DAY AFTER THE DATE OF SUCH MAILING.

 

9.2.                              Expenses and Taxes

 

(A)                                  THE COMPANY SHALL REIMBURSE WP, WITHIN
FIFTEEN BUSINESS DAYS OF SUCH REQUEST BY WP AND IN AN AMOUNT NOT TO EXCEED
$250,000, ALL OF WP’S OUT-OF-POCKET FEES AND EXPENSES INCURRED IN CONNECTION
WITH THE NEGOTIATION, PREPARATION, EXECUTION AND DELIVERY OF THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION, THE FEES
AND EXPENSES OF WP’S ATTORNEYS, ACCOUNTANTS AND CONSULTANTS EMPLOYED IN
CONNECTION WITH WP’S CONSIDERATION, NEGOTIATION AND CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY, WP’S DUE DILIGENCE ON THE COMPANY AND ANY
DOCUMENTATION RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(B)                                 THE COMPANY WILL PAY, AND SAVE AND HOLD EACH
INVESTOR HARMLESS FROM ANY AND ALL LIABILITIES (INCLUDING INTEREST AND
PENALTIES) WITH RESPECT TO, OR RESULTING FROM ANY DELAY OR FAILURE IN PAYING,
STAMP AND OTHER TAXES (OTHER THAN INCOME TAXES), IF ANY, WHICH MAY BE PAYABLE OR
DETERMINED TO BE PAYABLE ON THE EXECUTION AND DELIVERY OR ACQUISITION OF THE
SHARES OR THE EXCHANGE SHARES.

 

9.3.                              Reproduction of Documents

 

This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents

 

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received by the Investors on the applicable Closing Date (except for
certificates evidencing the Shares themselves), and (iii) financial statements,
certificates and other information previously or hereafter furnished to the
Investors, may be reproduced by the Company and the Investors by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process and the Company and the Investors may destroy any original
document so reproduced.  All parties hereto agree and stipulate that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Company or any
such Investor in the regular course of business) and that any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence.

 

9.4.                              Termination and Survival

 

Notwithstanding anything to the contrary contained herein, this Agreement may be
terminated at any time (i) by mutual consent of the Company and the Majority
Investors, (ii) by either the Company or WP if the Initial Closing shall not
have occurred on or prior to March 11, 2005 (unless such date is extended by
mutual written consent); (iii) by the Investors, for any material breach of this
Agreement by the Company; and (iv) by the Company, for any material breach of
this Agreement by the Investors.  In the event of termination pursuant to this
Section 9.4, this Agreement shall become null and void and have no effect, with
no liability on the part of the Company or the Investors, or their members,
partners, directors, officers, agents or stockholders, with respect to this
Agreement, except for the (i) liability of the Company for expenses pursuant to
Section 9.2 and (ii) subject to the foregoing sentence, liability for any breach
of any representation, warranty or covenant contained in this Agreement.

 

9.5.                              Successors and Assigns

 

Except as otherwise expressly provided herein, this Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties.  The Company may not assign its rights or obligations hereunder without
the prior written consent of the Majority Investors.  WP may assign its rights
and obligations hereunder to not more than three (3) of its members or
Affiliates or Affiliates of its members; provided, that the assignee provides
the Company with written representations and warranties substantially similar to
those provided in Section 4.

 

9.6.                              Severability

 

In the event that any part or parts of this Agreement shall be held illegal or
unenforceable by any court or administrative body of competent jurisdiction,
such determination shall not affect the remaining provisions of this Agreement
which shall remain in full force and effect.

 

9.7.                              Governing Law

 

This Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware applicable to contracts made and to be performed entirely
within such State.

 

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9.8.                              Paragraph and Section Headings

 

The headings of the sections and subsections of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part thereof.

 

9.9.                              Limitation on Enforcement of Remedies

 

The Company hereby agrees that it will not assert against the limited partners
of any members of any Investor any claim it may have under this Agreement by
reason of any failure or alleged failure by such Investor to meet its
obligations hereunder.

 

9.10.                        Counterparts

 

This Agreement may be executed in one or more counterparts (including by
facsimile), each of which shall be deemed an original and all of which together
shall be considered one and the same agreement.

 

9.11.                        Entire Agreement; Amendment and Waiver

 

This Agreement, the schedules and exhibits attached hereto constitute the entire
understandings of the parties hereto and supersede all prior agreements or
understandings with respect to the subject matter hereof among such parties. 
This Agreement may be amended, and the observance of any term of this Agreement
may be waived, with (and only with) the written consent of the Company and the
Majority Investors.

 

[Signature Page to Follow.]

 

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Very truly yours,

 

 

 

ALLOS THERAPEUTICS, INC.

 

 

 

 

 

By:

/s/ Michael E. Hart

 

 

 

Name:

Michael E. Hart

 

 

Title:

President and Chief Executive Officer

 

 

 

 

ACCEPTED AND AGREED:

 

 

 

WARBURG PINCUS PRIVATE EQUITY VIII, L.P.

 

 

 

By:

Warburg Pincus & Co.,

 

 

General Partner

 

 

 

 

By:

/s/ Jonathan Leff

 

 

 

Name:Jonathan Leff

 

 

Title: Partner

 

 

 

SIGNATURE PAGE TO

SECURITIES PURCHASE AGREEMENT

 

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EXHIBIT A

 

SCHEDULE OF INVESTORS

 

INVESTOR NAME AND ADDRESS

 

SHARES OF
EXCHANGEABLE
PREFERRED STOCK

Warburg Pincus Private Equity VIII, L.P.
466 Lexington Avenue
New York, NY 10017
Facsimile: (212) 878-0850
Attention: Mr. Jonathan S. Leff

 

2,262,443

 

 

 

with a copy (which shall not constitute notice) to:
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
Facsimile: (212) 728-9222
Attention: Steven J. Gartner, Esq.

 

 

 

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