Exhibit 10.1

COMMON STOCK PURCHASE AGREEMENT

Dated April 18, 2006

by and between

CV THERAPEUTICS, INC.

and

AZIMUTH OPPORTUNITY LTD.

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TABLE OF CONTENTS

 

         Page

Article I PURCHASE AND SALE OF COMMON STOCK

   1

    Section 1.1

 

Purchase and Sale of Stock

   1

    Section 1.2

 

Effective Date; Settlement Dates

   1

    Section 1.3

 

The Shares

   2

    Section 1.4

 

Current Report; Prospectus Supplement

   2

Article II FIXED REQUEST TERMS; OPTIONAL AMOUNT

   2

    Section 2.1

 

Fixed Request Notice

   2

    Section 2.2

 

Fixed Requests

   3

    Section 2.3

 

Share Calculation

   3

    Section 2.4

 

Limitation of Fixed Requests

   4

    Section 2.5

 

Reduction of Commitment

   4

    Section 2.6

 

Below Threshold Price

   4

    Section 2.7

 

Rate of Discount Price

   4

    Section 2.8

 

Settlement

   5

    Section 2.9

 

Reduction of Pricing Period

   5

    Section 2.10

 

Optional Amount

   6

    Section 2.11

 

Calculation of Optional Amount Shares

   6

    Section 2.12

 

Exercise of Optional Amount

   7

    Section 2.13

 

Aggregate Limit

   7

Article III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

   7

    Section 3.1

 

Organization and Standing of the Investor

   7

    Section 3.2

 

Authorization and Power

   7

    Section 3.3

 

No Conflicts

   8

    Section 3.4

 

Information

   8

Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

   8

    Section 4.1

 

Organization, Good Standing and Power

   9

    Section 4.2

 

Authorization, Enforcement

   9

    Section 4.3

 

Capitalization

   9

    Section 4.4

 

Issuance of Shares

   10

    Section 4.5

 

No Conflicts

   10

    Section 4.6

 

Commission Documents, Financial Statements

   10

    Section 4.7

 

Subsidiaries

   12

    Section 4.8

 

No Material Adverse Effect

   12

    Section 4.9

 

Indebtedness

   12

    Section 4.10

 

Title To Assets

   12

    Section 4.11

 

Actions Pending

   12

    Section 4.12

 

Compliance With Law

   13

    Section 4.13

 

Certain Fees

   13

 

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    Section 4.14

 

Operation of Business

   13

    Section 4.15

 

Environmental Compliance

   14

    Section 4.16

 

Material Agreements

   15

    Section 4.17

 

Transactions With Affiliates

   15

    Section 4.18

 

Securities Act

   15

    Section 4.19

 

Employees

   16

    Section 4.20

 

Use of Proceeds

   16

    Section 4.21

 

Public Utility Holding Company Act and Investment Company Act Status

   16

    Section 4.22

 

ERISA

   17

    Section 4.23

 

Taxes

   17

    Section 4.24

 

Insurance

   17

    Section 4.25

 

Acknowledgement Regarding Investor’s Purchase of Shares

   17

Article V COVENANTS

   18

    Section 5.1

 

Securities Compliance

   18

    Section 5.2

 

Registration and Listing

   18

    Section 5.3

 

Compliance with Laws.

   18

    Section 5.4

 

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

   18

    Section 5.5

 

Limitations on Holdings and Issuances

   19

    Section 5.6

 

Other Agreements and Other Financings.

   19

    Section 5.7

 

Stop Orders

   20

    Section 5.8

 

Amendments to the Registration Statement; Prospectus Supplements

   21

    Section 5.9

 

Prospectus Delivery

   21

    Section 5.10

 

Selling Restrictions; Volume Limitations.

   21

    Section 5.11

 

Effective Registration Statement

   22

    Section 5.12

 

Non-Public Information

   22

    Section 5.13

 

Broker/Dealer

   22

    Section 5.14

 

Update of Disclosure Schedule

   23

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

   23

    Section 6.1

 

Opinion of Counsel and Certificate

   23

    Section 6.2

 

Conditions Precedent to the Obligation of the Company

   23

    Section 6.3

 

Conditions Precedent to the Obligation of the Investor

   24

Article VII TERMINATION

   26

    Section 7.1

 

Term, Termination by Mutual Consent

   26

    Section 7.2

 

Other Termination

   27

    Section 7.3

 

Effect of Termination

   27

Article VIII INDEMNIFICATION

   27

    Section 8.1

 

General Indemnity.

   27

    Section 8.2

 

Indemnification Procedures

   29

Article IX MISCELLANEOUS

   30

    Section 9.1

 

Fees and Expenses.

   30

    Section 9.2

 

Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial

   31

 

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    Section 9.3

 

Entire Agreement; Amendment

   31

    Section 9.4

 

Notices

   31

    Section 9.5

 

Waivers

   32

    Section 9.6

 

Headings

   33

    Section 9.7

 

Successors and Assigns

   33

    Section 9.8

 

Governing Law

   33

    Section 9.9

 

Survival

   33

    Section 9.10

 

Counterparts

   33

    Section 9.11

 

Publicity

   33

    Section 9.12

 

Severability

   33

    Section 9.13

 

Further Assurances

   34

Annex A. Definitions

  

 

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COMMON STOCK PURCHASE AGREEMENT

This COMMON STOCK PURCHASE AGREEMENT, made and entered into on this 18th day of
April 2006 (this “Agreement”), by and between Azimuth Opportunity Ltd., an
international business company incorporated under the laws of the British Virgin
Islands (the “Investor”), and CV Therapeutics, Inc., a corporation organized and
existing under the laws of the State of Delaware (the “Company”).

RECITALS

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company may issue and sell to the Investor and the
Investor shall thereupon purchase from the Company up to $200,000,000 worth of
newly issued shares of the Company’s common stock, $.001 par value (“Common
Stock”), subject, in all cases, to the Trading Market Limit;

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

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

ARTICLE I

PURCHASE AND SALE OF COMMON STOCK

Section 1.1 Purchase and Sale of Stock. Upon the terms and subject to the
conditions of this Agreement, during the Investment Period the Company in its
discretion may issue and sell to the Investor up to $200,000,000 (the “Total
Commitment”) worth of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock (subject in all cases to the Trading
Market Limit, the “Aggregate Limit”), by (i) the delivery to the Investor of not
more than 40 separate Fixed Request Notices (unless the Investor and the Company
mutually agree that a different number of Fixed Request Notices may be
delivered) as provided in Article II hereof and (ii) the exercise by the
Investor of Optional Amounts, which the Company may in its discretion grant to
the Investor and which may be exercised by the Investor, in whole or in part, as
provided in Article II hereof. The aggregate of all Fixed Request Amounts and
Optional Amount Dollar Amounts shall not exceed the Aggregate Limit.

Section 1.2 Effective Date; Settlement Dates. This Agreement shall become
effective and binding upon delivery of counterpart signature pages of this
Agreement executed by each of the parties hereto, and by delivery of an opinion
of counsel and a certificate of the Company as provided in Section 6.1 hereof,
to the offices of Greenberg Traurig, LLP, 200 Park Avenue, New York, New York
10166, at l0:00 a.m., New York time, on the Effective Date. In consideration of
and in express reliance upon the representations, warranties and covenants, and
otherwise upon the terms and subject to the conditions, of this Agreement, from
and after the Effective Date and during the Investment Period (i) the Company
shall issue and sell to the Investor, and the Investor agrees to purchase from
the Company, the Shares in respect of each Fixed Request and (ii) the Investor
may in its discretion elect to purchase Shares in respect of

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each Optional Amount. The issuance and sale of Shares to the Investor pursuant
to any Fixed Request or Optional Amount shall occur on the applicable Settlement
Date in accordance with Sections 2.8 and 2.10 (or on such Trading Day in
accordance with Section 2.9, as applicable), provided in each case that all of
the conditions precedent thereto set forth in Article VI theretofore shall have
been fulfilled or (to the extent permitted by applicable law) waived.

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

Section 1.4 Current Report; Prospectus Supplement. Within four business days
after the Effective Date, the Company shall file with the Commission a report on
Form 8-K relating to the transactions contemplated by, and briefly describing
the material terms and conditions of, this Agreement and, to the extent not
included in a Prospectus Supplement, disclosing all information relating to the
transactions contemplated hereby required to be disclosed in the Registration
Statement and the Base Prospectus (but which permissibly has been omitted
therefrom in accordance with the Securities Act), including, without limitation,
information required to be disclosed in the section captioned “Plan of
Distribution” in the Base Prospectus (the “Current Report”). The Current Report
may include a copy of this Agreement as an exhibit. To the extent applicable,
the Current Report shall be incorporated by reference in the Registration
Statement in accordance with the provisions of Rule 430B under the Securities
Act. Prior to filing the Current Report with the Commission, the Company shall
provide the Investor a reasonable opportunity to comment on a draft of such
Current Report and shall give due consideration to such comments.

Pursuant to Section 5.9 and subject to the provisions of Section 5.8, on the
first Trading Day immediately following the end of each Pricing Period, the
Company shall file with the Commission a Prospectus Supplement disclosing the
number of Shares to be issued and sold to the Investor thereunder, the total
purchase price therefor and the net proceeds to be received by the Company
therefrom and, to the extent required by the Securities Act, identifying the
Current Report.

ARTICLE II

FIXED REQUEST TERMS; OPTIONAL AMOUNT

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

Section 2.1 Fixed Request Notice. The Company shall, from time to time in its
sole discretion, provide a notice to the Investor of a Fixed Request before 9:30
a.m. (New York time) on the first Trading Day of the Pricing Period (the “Fixed
Request Notice”), substantially in the form attached hereto as Exhibit A. The
Fixed Request Notice shall specify the Fixed Amount Requested, establish the
Threshold Price for such Fixed Request, designate the first Trading Day of the
Pricing Period and specify the Optional Amount, if any, that the Company elects
to grant

 

2

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to the Investor during the Pricing Period and the applicable Threshold Price for
such Optional Amount (the “Optional Amount Threshold Price”). Upon the terms and
subject to the conditions of this Agreement, the Investor is obligated to accept
each Fixed Request Notice prepared and delivered in accordance with the
provisions of this Agreement.

Section 2.2 Fixed Requests. From time to time during the Investment Period, the
Company may in its sole discretion deliver to the Investor a Fixed Request
Notice for a specified Fixed Amount Requested in accordance with the following
price and shares amount parameters:

 

Threshold Price

  

Fixed Amount Requested

Equal to or greater than $10.00 and less than $20.00    Not to exceed
$10,000,000 Equal to or greater than $20.00    Not to exceed $15,000,000

, and upon the terms and subject to the conditions of this Agreement, the
Investor shall purchase from the Company the Shares subject to such Fixed
Request Notice; provided, however, that the Company may not deliver any single
Fixed Request Notice for a Fixed Amount Requested in excess of 2.5% of the
Market Capitalization. Anything to the contrary in this Agreement
notwithstanding, at no time shall the Investor be required to purchase more than
$15,000,000 worth of Common Stock in respect of any Pricing Period (not
including Common Stock subject to any Optional Amount). The date on which the
Company delivers any Fixed Request Notice in accordance with this Section 2.2
hereinafter shall be referred to as a “Fixed Request Exercise Date”.

Section 2.3 Share Calculation. Subject to Section 2.6, the number of Shares to
be issued by the Company to the Investor pursuant to a Fixed Request shall equal
the aggregate sum of each quotient (calculated for each Trading Day during the
applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price) determined pursuant to the following equation (rounded to the nearest
whole Share):

 

N

  =   (A x B)/C, where:

N

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

A

  =   0.0555556 (the “Multiplier”); provided, however, that if the number of
Trading Days constituting a Pricing Period is decreased as set forth in
Section 2.9 hereof, then the Multiplier correspondingly shall be increased to
equal the decimal equivalent (in 10-millionths) of a fraction, the numerator of
which is one and the denominator of which equals the number of Trading Days in
the Pricing Period as so decreased,

B

  =   the Fixed Amount Requested, and

C

  =   the applicable discount price determined in accordance with the Market
Capitalization thresholds set forth in Section 2.7 (the “Discount Price”).

 

3

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Section 2.4 Limitation of Fixed Requests. The Company shall not make more than
one Fixed Request in each Pricing Period. Not less than five Trading Days shall
elapse between the end of one Pricing Period and the commencement of any other
Pricing Period during the Investment Period. There shall be permitted a maximum
of 40 Fixed Requests during the Investment Period. Each Fixed Request
automatically shall expire immediately following the last Trading Day of each
Pricing Period.

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

Section 2.6 Below Threshold Price. If the VWAP on any Trading Day in a Pricing
Period is lower than the Threshold Price, then for each such Trading Day the
total amount of the Fixed Amount Requested shall be reduced, on a
dollar-for-dollar basis, by an amount equal to the product of (x) the Multiplier
and (y) the original Fixed Amount Requested, and no Shares shall be purchased or
sold with respect to such Trading Day, except as provided below. If trading in
the Common Stock on NASDAQ (or any national securities exchange on which the
Common Stock is then listed) is suspended for any reason for more than three
hours on any Trading Day, the Investor may at its option deem the price of the
Common Stock to be lower than the Threshold Price for such Trading Day and, for
each such Trading Day, the total amount of the Fixed Amount Requested shall be
reduced as provided in the immediately preceding sentence, and no Shares shall
be purchased or sold with respect to such Trading Day, except as provided below.
For each Trading Day during a Pricing Period on which the VWAP is (or is deemed
to be) lower than the Threshold Price, the Investor may in its sole discretion
elect to purchase such U.S. dollar amount of Shares equal to the amount by which
the Fixed Amount Requested has been reduced in accordance with this Section 2.6,
at the Threshold Price multiplied by the applicable percentage determined in
accordance with the Market Capitalization thresholds set forth in Section 2.7.
The Investor shall inform the Company via facsimile transmission not later than
8:00 p.m. (New York time) on the last Trading Day of such Pricing Period as to
the number of Shares, if any, the Investor elects to purchase as provided in
this Section 2.6.

Section 2.7 Rate of Discount Price. With respect to any Fixed Request, the
Discount Price shall be determined in accordance with the applicable Market
Capitalization thresholds, as follows:

 

Market Capitalization

  

Discount Price

Equal to or greater than $1.0 billion    96.2% of the VWAP Less than $1.0
billion and equal to or greater than $750.0 million    95.7% of the VWAP Less
than $750.0 million and equal to or greater than $500.0 million    95.2% of the
VWAP Less than $500.0 million and equal to or greater than $400.0 million   
94.7% of the VWAP Less than $400.0 million    94.2% of the VWAP

 

4

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Section 2.8 Settlement. The payment for, against simultaneous delivery of,
Shares in respect of each Fixed Request shall be settled on the second Trading
Day next following the last Trading Day of each Pricing Period (the “Settlement
Date”). On each Settlement Date, the Company shall deliver the Shares purchased
by the Investor to the Investor or its designees via DTC’s Deposit Withdrawal
Agent Commission (DWAC) system, against simultaneous payment therefor to the
Company’s designated account by wire transfer of immediately available funds,
provided that if the Shares are received by the Investor later than 1:00 p.m.
(New York time), payment therefor shall be made with next day funds. As set
forth in Section 9.1(ii), a failure by the Company to deliver such Shares shall
result in the payment of liquidated damages by the Company to the Investor.

Section 2.9 Reduction of Pricing Period. If during a Pricing Period the Company
elects to reduce the number of Trading Days in such Pricing Period (and thereby
amend its previously delivered Fixed Request Notice), the Company shall so
notify the Investor before 9:00 a.m. (New York time) on any Trading Day during a
Pricing Period (a “Reduction Notice”) and the last Trading Day of such Pricing
Period shall be the Trading Day immediately preceding the Trading Day on which
the Investor received such Reduction Notice; provided, however, that if the
Company delivers the Reduction Notice later than 9:00 a.m. (New York time) on a
Trading Day during a Pricing Period, then the last Trading Day of such Pricing
Period instead shall be the Trading Day on which the Investor received such
Reduction Notice.

Upon receipt of a Reduction Notice, the Investor (i) shall purchase the Shares
in respect of each Trading Day in such reduced Pricing Period for which the VWAP
equals or exceeds the Threshold Price in accordance with Sections 2.3 and 2.7
hereof; (ii) may elect to purchase the Shares in respect of any Trading Day in
such reduced Pricing Period for which the VWAP is (or is deemed to be) lower
than the Threshold Price in accordance with Section 2.6 hereof; and (iii) may
elect to exercise all or any portion of an Optional Amount on any Trading Day
during such reduced Pricing Period in accordance with Sections 2.11 and 2.12
hereof.

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

 

D

  =  

A x 1/B x (B – C), where:

D

  =  

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

A

  =  

the Fixed Amount Requested,

B

  =   18 or, for purposes of this Section 2.9, such lesser number of Trading
Days as the parties may mutually agree to, and

C

  =  

the number of Trading Days in the reduced Pricing Period,

 

5

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

The Investor may also elect to exercise any portion of the applicable Optional
Amount which was unexercised during the reduced Pricing Period (for an Optional
Amount Dollar Amount not in excess of $1,500,000) by issuing an Optional Amount
Notice to the Company not later than 10:00 a.m. (New York time) on the first
Trading Day next following the last Trading Day of the reduced Pricing Period.
The number of Shares to be issued upon exercise of such Optional Amount shall be
calculated pursuant to the equation set forth in Section 2.11 hereof, except
that “C” shall equal the greater of (i) the VWAP for the Common Stock on the
last Trading Day of the reduced Pricing Period or (ii) the Optional Amount
Threshold Price.

The payment for, against simultaneous delivery of, Shares to be purchased and
sold in accordance with this Section 2.9 shall be settled on the second Trading
Day next following the Trading Day on which the Investor receives a Reduction
Notice.

Section 2.10 Optional Amount. With respect to any Pricing Period, the Company
may in its sole discretion grant to the Investor the right to exercise, from
time to time during the Pricing Period (but not more than once on any Trading
Day), all or any portion of an Optional Amount; provided, however, that (i) each
Optional Amount Dollar Amount shall be not less than $50,000, (ii) the aggregate
of all Optional Amount Dollar Amounts during a Pricing Period shall not exceed
$15,000,000, and (iii) the Optional Amount Dollar Amount on any Trading Day
during the Pricing Period may not exceed $1,500,000. The maximum Optional Amount
Dollar Amount and the Optional Amount Threshold Price shall be set forth in the
Fixed Request Notice. Each daily Optional Amount exercise shall be aggregated
during the Pricing Period and settled on the next Settlement Date. The Optional
Amount Threshold Price designated by the Company in its Fixed Request Notice
shall apply to each Optional Amount during the applicable Pricing Period.

Section 2.11 Calculation of Optional Amount Shares. The number of shares of
Common Stock to be issued in connection with the exercise of an Optional Amount
shall be the quotient determined pursuant to the following equation (rounded to
the nearest whole Share):

 

O   =   A/(B x C), where: O   =   the number of shares of Common Stock to be
issued in connection with such Optional Amount exercise, A   =   the Optional
Amount Dollar Amount with respect to which the Investor has delivered an
Optional Amount Notice, B   =   the applicable percentage determined in
accordance with Market Capitalization thresholds set forth in Section 2.7, and C
  =   the greater of (i) the VWAP for the Common Stock on the day the Investor
delivers the Optional Amount Notice or (ii) the Optional Amount Threshold Price.

 

6

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Section 2.12 Exercise of Optional Amount. If granted by the Company to the
Investor with respect to a Pricing Period, all or any portion of the Optional
Amount may be exercised by the Investor on any Trading Day during the Pricing
Period, subject to the limitations set forth in Section 2.10. As a condition to
each exercise of an Optional Amount pursuant to this Section 2.12, the Investor
shall issue an Optional Amount Notice to the Company no later than 8:00 p.m.
(New York time) on the day of such Optional Amount exercise. If the Investor
does not exercise an Optional Amount in full by 8:00 p.m. (New York time) on the
last Trading Day of the applicable Pricing Period, such unexercised portion of
the Investor’s Optional Amount with respect to that Pricing Period automatically
shall lapse and terminate.

Section 2.13 Aggregate Limit. Notwithstanding anything to the contrary contained
in this Agreement, in no event may the Company issue a Fixed Request Notice or
grant an Optional Amount to the extent that the sale of Shares pursuant thereto
and pursuant to all prior Fixed Request Notices or Optional Amounts issued
hereunder would cause the Company to sell or the Investor to purchase Shares
which in the aggregate are in excess of the Aggregate Limit. If the Company
issues a Fixed Request Notice or Optional Amount that otherwise would permit the
Investor to purchase shares of Common Stock which would cause the aggregate
purchases by Investor hereunder to exceed the Aggregate Limit, such Fixed
Request Notice or Optional Amount shall be void ab initio to the extent of the
amount by which the dollar value of shares or number of shares, as the case may
be, of Common Stock otherwise issuable pursuant to such Fixed Request Notice or
Optional Amount together with the dollar value of shares or number of shares, as
the case may be, of all other Common Stock purchased by the Investor pursuant
hereto would exceed the Aggregate Limit. The Company hereby represents, warrants
and covenants that neither it nor any of its Subsidiaries (i) has effected any
transaction or series of transactions, (ii) is a party to any pending
transaction or series of transactions or (iii) shall enter into any contract,
agreement, agreement-in-principle, arrangement or understanding with respect to,
or shall effect, any Other Financing which, in any of such cases, would be
integrated with the transactions contemplated by this Agreement for purposes of
determining whether approval of the Company’s stockholders is required under any
bylaw, listed securities maintenance standards or other rules of the Trading
Market; provided, however, that the Company shall be permitted to take any
action referred to in clause (iii) above if the Company has timely provided the
Investor with an Integration Notice as provided in Section 5.6(ii) hereof.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

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

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

Section 3.2 Authorization and Power. The Investor has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement and to purchase the Shares in accordance with the terms hereof. The
execution, delivery and performance of this Agreement by the Investor and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further

 

7

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consent or authorization of the Investor, its Board of Directors or stockholders
is required. This Agreement has been duly executed and delivered by the
Investor. This Agreement constitutes a valid and binding obligation of the
Investor enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership, or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

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

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

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

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

 

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Section 4.1 Organization, Good Standing and Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted. As of the Effective Date, the Company does not have any
Subsidiaries except as set forth in the 2005 Form 10-K. The Company and each
such Subsidiary is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except for
any jurisdiction in which the failure to be so qualified would not have a
Material Adverse Effect.

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

Section 4.3 Capitalization. The authorized capital stock of the Company and the
shares thereof issued and outstanding as of the Effective Date are as set forth
in the 2005 Form 10-K. All of the outstanding shares of Common Stock have been
duly authorized and validly issued, and are fully paid and nonassessable. Except
as set forth in the Commission Documents, as of the Effective Date, no shares of
Common Stock were entitled to preemptive rights or registration rights and there
were no outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the
Company. Except as set forth in the Commission Documents, there were no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into or exchangeable for
any shares of capital stock of the Company. Except for customary transfer
restrictions contained in agreements entered into by the Company to sell
restricted securities or as set forth in the Commission Documents, as of the
Effective Date, the Company was not a party to, and it had no knowledge of, any
agreement restricting the voting or transfer of any shares of the capital stock
of the Company. Except as set forth in the Commission Documents, the offer and
sale of all capital stock, convertible or exchangeable securities, rights,
warrants or options of the Company issued prior to the Effective Date complied
with all applicable federal and state securities laws, and no stockholder has
any right of rescission or damages or any “put” or similar right with respect
thereto which would have a Material Adverse Effect. The Company has furnished or
made available to the Investor true and correct copies of the Company’s
Certificate of

 

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Incorporation as in effect on the Effective Date (the “Charter”), and the
Company’s Bylaws as in effect on the Effective Date (the “Bylaws”), and true and
correct copies (redacted as appropriate) of all executed resolutions of the
Company’s Board of Directors (and committees thereof) relating to the capital
stock of the Company (and transactions in respect thereof) since December 31,
2002.

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

Section 4.5 No Conflicts. The execution, delivery and performance by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated herein do not and shall not (i) result in a violation of any
provision of the Company’s Charter or Bylaws, (ii) conflict with, constitute a
default (or an event which, with notice or lapse of time or both, would become a
default) under, or give rise to any rights of termination, amendment,
acceleration or cancellation of, any material agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company or any of its Significant Subsidiaries is a party or is
bound, (iii) create or impose a lien, charge or encumbrance on any property of
the Company or any of its Significant Subsidiaries under any agreement or any
commitment to which the Company or any of its Significant Subsidiaries is a
party or under which the Company or any of its Significant Subsidiaries is bound
or under which any of their respective properties or assets are bound, or
(iv) result in a violation of any federal, state, local or foreign statute,
rule, regulation, order, judgment or decree applicable to the Company or any of
its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected, except, in the case of clauses (ii),
(iii) and (iv), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The Company is not required under
federal, state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement, or to issue and sell the Shares to the
Investor in accordance with the terms hereof (other than any filings which may
be required to be made by the Company with the Commission or the Trading Market
subsequent to the Effective Date, including but not limited to a Prospectus
Supplement under Sections 1.4 and 5.9 hereof, and any registration statement,
prospectus or prospectus supplement which has been or may be filed pursuant
hereto).

Section 4.6 Commission Documents, Financial Statements. (a) The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act and, except as
disclosed in the Commission Documents, as of the Effective Date the Company had
timely filed (giving effect to permissible extensions in accordance with Rule
12b-25 under the Exchange Act) all Commission Documents. The Company has made
available to the Investor true and complete copies of the Commission Documents
filed with the Commission prior to the Effective Date (including, without
limitation, the 2005 Form 10-K) and has made available to the Investor true and
complete copies of all of the Commission Documents heretofore incorporated by
reference in the Registration Statement and the Prospectus. The Company has not
provided to

 

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the Investor any information which, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed, other than with respect to the transactions contemplated by
this Agreement. As of its date, each Commission Document filed with the
Commission and incorporated by reference in the Registration Statement and the
Prospectus (including, without limitation, the 2005 Form 10-K) complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and other federal, state and local laws, rules and
regulations applicable to it, and, as of its date, such Commission Document did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Each Commission Document to be filed with the Commission after the
Effective Date and incorporated by reference in the Registration Statement, the
Prospectus and any Prospectus Supplement required to be filed pursuant to
Sections 1.4 and 5.9 hereof during the Investment Period (including, without
limitation, the Current Report), when such document becomes effective or is
filed with the Commission, as the case may be, shall comply in all material
respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and other federal, state and local laws, rules and regulations
applicable to it, and shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.

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

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

 

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

Section 4.7 Subsidiaries. The 2005 Form 10-K sets forth each Subsidiary of the
Company as of the Effective Date, showing its jurisdiction of incorporation or
organization and the percentage of the Company’s ownership of the outstanding
capital stock or other ownership interests of such Subsidiary.

Section 4.8 No Material Adverse Effect. Since December 31, 2005, the Company has
not experienced or suffered any Material Adverse Effect, and there exists no
current state of facts, condition or event which would have a Material Adverse
Effect, except (i) as disclosed in any Commission Documents filed since
December 31, 2005 or (ii) continued losses from operations.

Section 4.9 Indebtedness. The 2005 Form 10-K sets forth, as of December 31,
2005, all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments through
such date. For the purposes of this Agreement, “Indebtedness” shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $10,000,000 (other
than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements, indemnities and other contingent obligations
in respect of Indebtedness of others in excess of $10,000,000, whether or not
the same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business; and
(c) the present value of any lease payments in excess of $10,000,000 due under
leases required to be capitalized in accordance with GAAP. There is no existing
or continuing default or event of default in respect of any Indebtedness of the
Company or any of its Subsidiaries.

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

Section 4.11 Actions Pending. There is no action, suit, claim, investigation or
proceeding pending, or to the knowledge of the Company threatened, against the
Company or any Subsidiary which questions the validity of this Agreement or the
transactions contemplated hereby or any action taken or to be taken pursuant
hereto or thereto. Except as set forth in the Commission Documents, there is no
action, suit, claim, investigation or proceeding pending, or to the knowledge of
the Company threatened, against or involving the Company, any Subsidiary or any
of their respective properties or assets, or involving any officers or directors
of the Company or any of its Subsidiaries, including, without limitation, any
securities class action lawsuit or stockholder derivative lawsuit, in each case
which, if determined adversely to the

 

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Company, its Subsidiary or any officer or director of the Company or its
Subsidiaries, would have a Material Adverse Effect. With respect to that certain
securities class action lawsuit filed in August 2003 in the U.S. District Court
for the Northern District of California captioned In re CV Therapeutics, Inc.
Securities Litigation and that certain derivative lawsuit filed in August 2003
in California Superior Court, Santa Clara County, captioned Kangos v. Lange, et
al., there has been no event or change required to be disclosed in the
Commission Documents that has not been so disclosed.

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

Section 4.13 Certain Fees. Except for the placement fee payable by the Company
to Reedland Capital Partners an Institutional Division of the Financial West
Group, Member NASD/SIPC, no brokers, finders or financial advisory fees or
commissions shall be payable by the Company or any Subsidiary with respect to
the transactions contemplated by this Agreement.

Section 4.14 Operation of Business. (a) The Company or one or more of its
Subsidiaries possesses such permits, licenses, approvals, consents and other
authorizations (including licenses, pharmacy licenses, accreditation and other
similar documentation or approvals of any local health departments)
(collectively, “Governmental Licenses”) issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies, including, without
limitation, the United States Food and Drug Administration (“FDA”), necessary to
conduct the business now operated by it, except where the failure to possess
such Governmental Licenses, individually or in the aggregate, would not have a
Material Adverse Effect. The Company and its Subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses and all applicable
FDA rules and regulations, guidelines and policies, except where the failure to
so comply, individually or in the aggregate, would not have a Material Adverse
Effect. All of the Governmental Licenses are valid and in full force and effect,
except where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect, individually or in the
aggregate, would not have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, if the
subject of any unfavorable decision, ruling or finding, individually or in the
aggregate, would have a Material Adverse Effect. This Section 4.14 does not
relate to environmental matters, such items being the subject of Section 4.15.

(b) The Company or one or more of its Subsidiaries owns or possesses adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names, trade dress, logos, copyrights and other intellectual property,
including, without limitation, all of the intellectual property described in the
Commission Documents as being owned or licensed by the Company (collectively,
“Intellectual Property”), necessary to carry on the business now operated by it.
Except as set forth in the Commission Documents, there are no actions, suits or
judicial proceedings pending

 

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or, to the Company’s knowledge, threatened relating to patents or proprietary
information to which the Company or any of its Subsidiaries is a party or of
which any property of the Company or any of its Subsidiaries is subject, and
neither the Company nor any of its Subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which could render any Intellectual Property invalid or inadequate
to protect the interest of the Company and its Subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, individually or in the aggregate, would
have a Material Adverse Effect.

(c) The material human clinical trials conducted by the Company or any of its
Subsidiaries or in which the Company or any of its Subsidiaries has participated
related to ranolazine (Ranexa) or regadenoson that are described in the
Commission Documents, or the results of which are referred to in the Commission
Documents, if any, are the only material human clinical trials currently being
conducted by or on behalf of the Company and its Subsidiaries and, to the best
knowledge of the Company, such studies and tests were and, if still pending, are
being conducted in accordance with experimental protocols, procedures and
controls pursuant to accepted professional scientific standards. Neither the
Company nor any of its Subsidiaries has received any notices or correspondence
from the FDA or any other governmental agency requiring the termination,
suspension or modification of any clinical trials conducted by, or on behalf of,
the Company or any of its Subsidiaries or in which the Company or any of its
Subsidiaries has participated that are described in the Commission Documents, if
any, or the results of which are referred to in the Commission Documents. All
human clinical trials previously conducted by or on behalf of the Company or any
of its Subsidiaries while conducted by or on behalf of the Company or any of its
Subsidiaries, were conducted in accordance with experimental protocols,
procedures and controls pursuant to accepted professional scientific standards.

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

 

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could reasonably be expected to give rise to any environmental liability, or
otherwise form the basis of any claim, action, demand, suit, proceeding,
hearing, study or investigation (i) under any Environmental Law, or (ii) based
on or related to the manufacture, processing, distribution, use, treatment,
storage (including without limitation underground storage tanks), disposal,
transport or handling, or the emission, discharge, release or threatened release
of any hazardous substance.

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

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

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

(i) The Company has prepared and filed with the Commission in accordance with
the provisions of the Securities Act the Registration Statement, including the
Base Prospectus, relating to the Shares. The Registration Statement was declared
effective by order of the Commission on April 18, 2006. As of the date hereof,
no stop order suspending the effectiveness of the Registration Statement has
been issued by the Commission or is continuing in effect under the Securities
Act and no proceedings therefor are pending before or, to the Company’s
knowledge, threatened by the Commission. No order preventing or suspending the
use of the Prospectus has been issued by the Commission.

(ii) The Company meets the requirements for the use of Form S-3 under the
Securities Act. The Registration Statement in the form in which it became
effective and the Base Prospectus complied in all material respects with the
provisions of the Securities Act and did not at any such time contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein (in the case of the

 

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Prospectus, in the light of the circumstances under which they were made) not
misleading; provided that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Base
Prospectus made in reliance upon and in conformity with information relating to
the Investor and/or Reedland Capital Partners furnished to the Company in
writing by or on behalf of the Investor and/or Reedland Capital Partners
expressly for use therein.

(iii) Each Prospectus Supplement required to be filed pursuant to Sections 1.4
and 5.9 hereof, when filed with the Commission under Rule 424(b) under the
Securities Act, shall comply in all material respects with the provisions of the
Securities Act and shall not at such time contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading, except that this representation and
warranty does not apply to statements in or omissions from any Prospectus
Supplement made in reliance upon and in conformity with information relating to
the Investor and/or Reedland Capital Partners furnished to the Company in
writing by or on behalf of the Investor and/or Reedland Capital Partners
expressly for use therein.

(iv) The Company has not distributed and, prior to the completion of the
distribution of the Shares, shall not distribute any offering material in
connection with the offering and sale of the Shares other than the Registration
Statement, the Base Prospectus as supplemented by any Prospectus Supplement or
such other materials, if any, permitted by the Securities Act.

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

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

Section 4.21 Public Utility Holding Company Act and Investment Company Act
Status. The Company is not a “holding company” or a “public utility company” as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of the consummation of the
transactions contemplated by this Agreement and the application of the proceeds
from the sale of the Shares as set forth in the Base Prospectus and any
Prospectus Supplement shall not be, an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended.

 

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Section 4.22 ERISA. No liability to the Pension Benefit Guaranty Corporation has
been incurred with respect to any Plan by the Company or any of its Subsidiaries
which has had or would have a Material Adverse Effect. No “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) or
“accumulated funding deficiency” (as defined in Section 203 of ERISA) or any of
the events set forth in Section 4043(b) of ERISA has occurred with respect to
any Plan which has had or would have a Material Adverse Effect, and the
execution and delivery of this Agreement and the issuance and sale of the Shares
hereunder shall not result in any of the foregoing events. Each Plan is in
compliance in all material respects with applicable law, including ERISA and the
Code; the Company has not incurred and does not expect to incur liability under
Title IV of ERISA with respect to the termination of, or withdrawal from, any
Plan; and each Plan for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualifications. As used in this Section 4.22,
the term “Plan” shall mean an “employee pension benefit plan” (as defined in
Section 3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company or any Subsidiary or by any
trade or business, whether or not incorporated, which, together with the Company
or any Subsidiary, is under common control, as described in Section 414(b) or
(c) of the Code.

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

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

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

 

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ARTICLE V

COVENANTS

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

Section 5.1 Securities Compliance. The Company shall notify the Commission and
the Trading Market, as applicable, in accordance with their respective rules and
regulations, of the transactions contemplated by this Agreement, and shall take
all necessary action, undertake all proceedings and obtain all registrations,
permits, consents and approvals for the legal and valid issuance of the Shares
to the Investor in accordance with the terms of this Agreement.

Section 5.2 Registration and Listing. The Company shall take all action
necessary to cause the Common Stock to continue to be registered as a class of
securities under Sections 12(b) or 12(g) of the Exchange Act, shall comply with
its reporting and filing obligations under the Exchange Act, and shall not take
any action or file any document (whether or not permitted by the Securities Act)
to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein. The Company shall take all action necessary to
continue the listing and trading of its Common Stock and the listing of the
Shares purchased by Investor hereunder on the Trading Market, and shall comply
with the Company’s reporting, filing and other obligations under the bylaws,
listed securities maintenance standards and other rules of the Trading Market.

Section 5.3 Compliance with Laws.

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

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

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

(i) The Company shall keep and cause each Subsidiary to keep adequate records
and books of account, in which complete entries shall be made in accordance with

 

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GAAP consistently applied, reflecting all financial transactions of the Company
and its Subsidiaries, and in which, for each fiscal year, all proper reserves
for depreciation, depletion, obsolescence, amortization, taxes, bad debts and
other purposes in connection with its business shall be made. The Company shall
maintain a system of internal accounting controls which are sufficient to
provide reasonable assurance that (a) transactions are executed with
management’s authorization; (b) transactions are recorded as necessary to permit
preparation of the consolidated financial statements of the Company and to
maintain accountability for the Company’s consolidated assets; (c) access to the
Company’s assets is permitted only in accordance with management’s
authorization; and (d) the reporting of the Company’s assets is compared with
existing assets at regular intervals.

(ii) Neither the Company, nor any of its Subsidiaries, nor to the knowledge of
the Company, any of their respective directors, officers, agents, employees or
any other persons acting on their behalf shall, in connection with the operation
of their respective businesses, (a) use any corporate funds for unlawful
contributions, payments, gifts or entertainment or to make any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, (b) pay, accept or receive any
unlawful contributions, payments, expenditures or gifts, or (c) violate or
operate in noncompliance with any export restrictions, anti-boycott regulations,
embargo regulations or other applicable domestic or foreign laws and
regulations.

Section 5.5 Limitations on Holdings and Issuances. At no time during the term of
this Agreement shall the Investor directly or indirectly own more than 9.9% of
the then issued and outstanding shares of Common Stock. The Company shall not be
obligated to issue and the Investor shall not be obligated to purchase any
shares of Common Stock which would result in the issuance under this Agreement
to the Investor at any time of Shares which, when aggregated with all other
shares of Common Stock then owned beneficially by the Investor, would result in
the beneficial ownership by the Investor of more than 9.9% of the then issued
and outstanding shares of the Common Stock.

Section 5.6 Other Agreements and Other Financings.

(i) The Company shall not enter into, announce or recommend to its stockholders
any agreement, plan, arrangement or transaction in or of which the terms thereof
would restrict, materially delay, conflict with or impair the right of the
Company or any Subsidiary to perform their obligations under this Agreement.

(ii) The Company shall notify the Investor, within 48 hours, if it enters into
any agreement, plan, arrangement or transaction with a third party, the
principal purpose of which is to obtain during a Pricing Period an Other
Financing not constituting an Acceptable Financing (an “Other Financing
Notice”); provided, however, that the Company shall provide the Investor with
five Trading Days’ prior written notice (an “Integration Notice”) if it intends
to enter into any agreement, plan, arrangement or transaction with a third
party, the principal purpose of which is to obtain an Other Financing which may
be integrated with the transactions contemplated by this Agreement for purposes
of determining whether approval of the Company’s stockholders is required under
any bylaw, listed securities maintenance standards or other rules of the Trading
Market. For purposes of this Section 5.6(ii), any press release issued

 

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by, or Commission Document filed by, the Company shall constitute sufficient
notice, provided that it is issued or filed, as the case may be, within the time
requirements set forth in the first sentence of this Section 5.6(ii) for an
Other Financing Notice or an Integration Notice, as applicable. During any
Pricing Period in which the Company is required to provide notice pursuant to
the first sentence of this Section 5.6(ii), the Investor shall (i) have the
option to purchase the Shares subject to the Fixed Request at (x) the price
therefor in accordance with the terms of this Agreement or (y) the third party’s
price in connection with the Other Financing, net of such third party’s discount
and fees, or (ii) the Investor may elect to not purchase any Shares subject to
the Fixed Request for that Pricing Period. An “Other Financing” shall mean
(x) the issuance of Common Stock or securities convertible into or exchangeable
for Common Stock at a net discount (after all fees, discounts and commissions
associated with the transaction) to the then Current Market Price of the Common
Stock; (y) the implementation by the Company of any mechanism in respect of any
securities convertible into or exchangeable for Common Stock for the reset of
the purchase price of the Common Stock to below the then Current Market Price of
the Common Stock (including, without limitation, any antidilution or similar
adjustment provisions in respect of any Company securities); or (z) the issuance
of options, warrants or similar rights of subscription not constituting an
Acceptable Financing. “Acceptable Financing” shall mean the issuance by the
Company of shares of Common Stock or securities convertible into or exchangeable
for Common Stock in connection with awards under the Company’s benefit and
equity plans and arrangements or shareholder rights plan and the issuance of
shares of Common Stock upon the conversion, exercise or exchange thereof, shares
of Common Stock issuable upon the conversion or exchange of equity awards or
convertible or exchangeable securities outstanding as of the Effective Date,
shares of Common Stock and/or warrants or similar rights to subscribe for the
purchase of shares of Common Stock in connection with technology sharing,
licensing, research and joint development agreements (or amendments thereto)
with third parties, and the issuance of shares of Common Stock upon the exercise
thereof, and warrants or similar rights to subscribe for the purchase of shares
of Common Stock issued in connection with equipment financings and/or real
property leases (or amendments thereto) and the issuance of shares of Common
Stock upon the exercise thereof.

Section 5.7 Stop Orders. The Company shall advise the Investor immediately and
shall confirm such advice in writing: (i) of the Company’s receipt of notice of
any request by the Commission for amendment of or a supplement to the
Registration Statement, the Prospectus or for any additional information;
(ii) of the Company’s receipt of notice of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction or the initiation of any proceeding for such purpose; and (iii) of
the Company becoming aware of the happening of any event, which makes any
statement of a material fact made in the Prospectus untrue or which requires the
making of any additions to or changes to the statements then made in the
Prospectus in order to state a material fact required by the Securities Act to
be stated therein or necessary in order to make the statements then made
therein, in light of the circumstances under which they were made, not
misleading, or of the necessity to amend the Registration Statement or
supplement the Prospectus to comply with the Securities Act or any other law. If
at any time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, the Company shall use commercially
reasonable efforts to obtain the withdrawal of such order at the earliest
possible time.

 

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Section 5.8 Amendments to the Registration Statement; Prospectus Supplements.
Except as provided in this Agreement and other than periodic reports required to
be filed pursuant to the Exchange Act, the Company shall not file with the
Commission any amendment to the Registration Statement that relates to the
Investor, the Agreement or the transactions contemplated hereby or file with the
Commission any Prospectus Supplement that relates to the Investor, this
Agreement or the transactions contemplated hereby with respect to which (i) the
Investor shall not previously have been advised, (ii) the Company shall not have
given due consideration to any comments thereon received from the Investor or
its counsel, or (iii) the Investor shall reasonably object after being so
advised, unless it is necessary to amend the Registration Statement or make any
supplement to the Prospectus to comply with the Securities Act or any other
applicable law or regulation, in which case the Company shall immediately so
inform the Investor, the Investor shall be provided with a reasonable
opportunity to review any disclosure relating to the Investor and the Company
shall expeditiously furnish to the Investor an electronic copy thereof. In
addition, for so long as, in the reasonable opinion of counsel for the Investor,
the Prospectus is required to be delivered in connection with any purchase of
Shares by the Investor, the Company shall not file any Prospectus Supplement
with respect to the Shares without delivering or making available a copy of such
Prospectus Supplement, together with the Base Prospectus, to the Investor
promptly.

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

Section 5.10 Selling Restrictions; Volume Limitations.

(i) The Investor covenants that from and after the date hereof through and
including the 90th day next following the termination of this Agreement (the
“Restricted Period”), neither the Investor nor any of its affiliates (within the
meaning of the Exchange Act) nor any entity managed by the Investor shall,
directly or indirectly, sell any securities of the Company, except the Shares
that it owns or has the right to purchase as provided in a Fixed Request Notice.
During the Restricted Period, neither the Investor or any of its affiliates nor
any

 

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entity managed by the Investor shall sell any shares of Common Stock of the
Company it does not “own” or have the unconditional right to receive (within the
meaning of Rule 200 of Regulation SHO promulgated by the Commission under the
Exchange Act), including Shares in any account of the Investor or in any account
directly or indirectly managed by the Investor or any of its affiliates or any
entity managed by the Investor. Without limiting the generality of the
foregoing, prior to and during the Restricted Period, neither the Investor nor
any of its affiliates nor any entity managed by the Investor or any of its
affiliates shall enter into a short position with respect to shares of Common
Stock of the Company, including in any account of the Investor’s or in any
account directly or indirectly managed by the Investor or any of its Affiliates
or any entity managed by the Investor, except that the Investor may sell Shares
that it is obligated to purchase under a pending Fixed Request Notice but has
not yet taken possession of so long as the Investor (or the Broker-Dealer, as
applicable) covers any such sales with the Shares purchased pursuant to such
Fixed Request Notice; provided, however, that the Investor (or the
Broker-Dealer, as applicable) shall not be required to cover any such sales with
the Shares purchased pursuant to such Fixed Request Notice if the Company fails
to deliver such Shares to the Investor on the applicable Settlement Date upon
the terms and subject to the provisions of this Agreement. Prior to and during
the Restricted Period, the Investor shall not grant any option to purchase or
acquire any right to dispose or otherwise dispose for value of any shares of
Common Stock or any securities convertible into or exercisable or exchangeable
for, or warrants to purchase, any shares of Common Stock, or enter into any
swap, hedge or other agreement that transfers, in whole or in part, the economic
risk of ownership of the Common Stock, except for such sales expressly permitted
by this Section 5.10(i).

(ii) The Investor agrees to restrict the volume of sales of Shares by the
Investor, its affiliates and any entity managed by the Investor on each Trading
Day to no more than 20% of the total trading volume of the Common Stock, as
reported on Bloomberg Financial LP using HP function, for such Trading Day.

(iii) In addition to the foregoing, in connection with any sale of the Company’s
securities (including any sale permitted by paragraph (i) above), the Investor
shall comply in all respects with all applicable laws, rules, regulations and
orders, including, without limitation, the requirements of the Securities Act
and the Exchange Act.

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

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

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

 

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

ARTICLE VI

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

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

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

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

(ii) Registration Statement. The Registration Statement is effective and neither
the Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement. The Company shall have a maximum dollar amount certain of Shares
registered under the Registration Statement which are in an amount not less than
the maximum dollar amount worth of Shares issuable pursuant to all Fixed Request
Notices and Optional Amounts during the Investment Period. The

 

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Current Report shall have been filed with the Commission, as required pursuant
to Section 1.4, and a Prospectus Supplement shall have been filed with the
Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the
sale of the Shares prior to each Settlement Date, as applicable.

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

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

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

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

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

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

 

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

(ii) Registration Statement. The Registration Statement is effective and neither
the Company nor the Investor shall have received notice that the Commission has
issued or intends to issue a stop order with respect to the Registration
Statement. The Company shall have a maximum dollar amount certain of Shares
registered under the Registration Statement which are in an amount not less than
the maximum dollar amount worth of Shares issuable pursuant to all Fixed Request
Notices and Optional Amounts during the Investment Period. The Current Report
shall have been filed with the Commission, as required pursuant to Section 1.4,
and a Prospectus Supplement shall have been filed with the Commission, as
required pursuant to Sections 1.4 and 5.9 hereof, to disclose the sale of the
Shares prior to each Settlement Date, as applicable, and an electronic copy of
such Prospectus Supplement together with the Base Prospectus shall have been
delivered or made available to the Investor in accordance with Section 5.9
hereof.

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

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

 

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

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

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

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

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

(x) Opinions of Counsel. Subsequent to the filing of the Current Report pursuant
to Section 1.4 and prior to the first Fixed Request Exercise Date, the Investor
shall have received an opinion and separate negative assurance letter from
outside counsel to the Company in the form of Exhibit F hereto and an opinion
from in-house counsel to the Company in the form of Exhibit G hereto. On each
Settlement Date, the Investor shall have received an opinion and separate
negative assurance letter from outside counsel to the Company in the form of
Exhibit H hereto and an opinion letter from in-house counsel to the Company in
the form of Exhibit I hereto.

ARTICLE VII

TERMINATION

Section 7.1 Term, Termination by Mutual Consent. Unless earlier terminated as
provided hereunder, this Agreement shall terminate automatically on the earliest
of (i) the first day of the month next following the 36-month anniversary of the
Effective Date (the “Investment Period”), (ii) the date that the entire dollar
amount of Shares registered under the Registration Statement have been issued
and sold and (iii) the date the Investor shall have purchased the Total
Commitment of shares of Common Stock (subject in all cases to the Trading Market
Limit). The Company may terminate this Agreement effective upon three days’
prior written notice to the Investor under Section 9.4; provided, however, that
such termination shall not occur during a Pricing Period or prior to a
Settlement Date. This Agreement may be terminated at any time by the mutual
written consent of the parties, effective as of the date of such mutual written
consent

 

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unless otherwise provided in such written consent; it being hereby acknowledged
and agreed that the Investor may not consent to such termination during a
Pricing Period or prior to a Settlement Date in the event the Investor has
instructed the Broker-Dealer to effect an open-market sale of Shares which are
subject to a pending Fixed Request Notice but which have not yet been physically
delivered by the Company (and/or credited by book-entry) to the Investor in
accordance with the terms and subject to the conditions of this Agreement.

Section 7.2 Other Termination. If the Company provides the Investor with an
Other Financing Notice (other than in respect of an underwritten public offering
or an Acceptable Financing) or an Integration Notice, the Investor shall have
the right to terminate this Agreement within the subsequent 30-day period (the
“Event Period”), effective upon one business day’s prior written notice
delivered to the Company in accordance with Section 9.4 at any time during the
Event Period. The Company shall notify the Investor and the Investor shall have
the right to terminate this Agreement at any time if: (i) an event constituting
a Material Adverse Effect has occurred or an event has occurred which would
result in the occurrence of a Material Adverse Effect; (ii) a Material Change in
Ownership has occurred; or (iii) a default or event of default has occurred and
is continuing under the terms of any agreement, contract, note or other
instrument to which the Company or any of its Subsidiaries is a party with
respect to any indebtedness representing more than 10% of the Company’s
consolidated assets, in any such case, upon one business day’s prior written
notice delivered to the Company in accordance with Section 9.4 hereof.

Section 7.3 Effect of Termination. In the event of termination by the Company or
the Investor, written notice thereof shall forthwith be given to the other party
as provided in Section 9.4 and the transactions contemplated by this Agreement
shall be terminated without further action by either party. If this Agreement is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become
void and of no further force and effect, except as provided in Section 9.9
hereof. Nothing in this Section 7.3 shall be deemed to release the Company or
the Investor from any liability for any breach under this Agreement, or to
impair the rights of the Company and the Investor to compel specific performance
by the other party of its obligations under this Agreement.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 General Indemnity.

(i) Indemnification by the Company. The Company shall indemnify and hold
harmless the Investor, the Broker-Dealer, each affiliate, employee,
representative and advisor of and to the Investor and the Broker-Dealer, and
each person, if any, who controls the Investor or the Broker-Dealer within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of defense and investigation and all attorneys’
fees) to which the Investor, the Broker-Dealer and each such other person may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities and expenses (or actions in respect thereof) arise
out of or are based upon (i) any violation of law (including United States
federal securities laws but excluding any British Virgin Islands law) in
connection with the

 

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

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

(ii) Indemnification by the Investor. The Investor shall indemnify and hold
harmless the Company, each of its directors and officers, and each person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Exchange Act from and against all losses, claims,
damages, liabilities and expenses (including reasonable costs of defense and
investigation and all attorneys fees) to which the Company and each such other
person may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities and expenses (or actions in respect
thereof) arise out of or are based upon (i) any violation of law (including
United States federal securities laws) in connection with the transactions
contemplated by this Agreement by the Investor or any of its affiliates,
officers, directors or employees, or (ii) any untrue statement or alleged untrue

 

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statement of a material fact contained in the Current Report or any Prospectus
Supplement or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, in each
case, to the extent, but only to the extent, the untrue statement, alleged
untrue statement, omission or alleged omission was made in reliance upon, and in
conformity with, written information furnished by the Investor to the Company
expressly for inclusion in the Current Report or such Prospectus Supplement.

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

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

 

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

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

ARTICLE IX

MISCELLANEOUS

Section 9.1 Fees and Expenses.

(i) Each party shall bear its own fees and expenses related to the transactions
contemplated by this Agreement; provided, however, that the Company shall pay,
at the Effective Date, all reasonable attorneys’ fees and expenses (exclusive of
disbursements and out-of-pocket expenses) incurred by the Investor up to $50,000
in connection with the preparation, negotiation, execution and delivery of this
Agreement, and review of the Registration Statement, the Base Prospectus and the
Current Report. In addition, the Company shall pay all reasonable attorneys’
fees and expenses incurred by the Investor in connection with any amendments,
modifications or waivers of this Agreement and the review of all related
documents in connection therewith. The Company shall pay all U.S. federal, state
and local stamp and other similar transfer and other taxes and duties levied in
connection with issuance of the Shares pursuant hereto.

(ii) If the Company issues a Fixed Request Notice and fails to deliver the
Shares to the Investor on the applicable Settlement Date and such failure
continues for 10 Trading Days, the Company shall pay the Investor, in cash (or,
at the option of the Investor, in shares of Common Stock which have not been
registered under the Securities Act), as liquidated damages for such failure and
not as a penalty, an amount equal to 2.0% of the payment required to be paid by
the Investor on such Settlement Date (i.e., the sum of the Fixed Amount
Requested and the Optional Amount Dollar Amount) for the initial 30 days
following such Settlement Date until the Shares have been delivered, and an
additional 2.0% for each additional 30-day period thereafter until the Shares
have been delivered, which amount shall be prorated for such periods less than
thirty 30 days.

 

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Section 9.2 Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial.
(i) The Company and the Investor acknowledge and agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that either party shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement by
the other party and to enforce specifically the terms and provisions hereof this
being in addition to any other remedy to which either party may be entitled by
law or equity.

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

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

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

Section 9.4 Notices. Any notice, demand, request, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon hand delivery or facsimile (with facsimile machine
confirmation of delivery received) at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if

 

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delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The address
for such communications shall be:

 

If to the Company:    CV Therapeutics, Inc.    3172 Porter Drive    Palo Alto,
California 94304    Telephone Number: (650) 384-8500    Fax: (650) 858-0390   
Attention: General Counsel With copies to:    Latham & Watkins LLP    135
Commonwealth Drive    Menlo Park, California 94025    Telephone Number: (650)
328-4600    Fax: (650) 463-2600    Attention: Alan Mendelson, Esq.   
                 William Davisson, Esq. If to the Investor:    Azimuth
Opportunity Ltd.    c/o Hedge Fund Services (BVI) Ltd.    P.O. Box 761, James
Frett Building    Wickham’s Cay 1, Road Town    Tortola, British Virgin Islands
   Telephone Number: (284) 494-6046 x232    Fax: (284) 494-6898    Attention:
Michael Kane With copies to:    Greenberg Traurig, LLP    The MetLife Building
   200 Park Avenue    New York, NY 10166    Telephone Number: (212) 801-9200   
Fax: (212) 801-6400    Attention: Clifford E. Neimeth, Esq.   
                  Anthony J. Marsico, Esq.

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

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

 

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

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

Section 9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal procedural and substantive laws of the State of New
York, without giving effect to the choice of law provisions of such state.

Section 9.9 Survival. The representations and warranties of the Company and the
Investor contained in Articles III and IV and the covenants contained in Article
V shall survive the execution and delivery hereof until the termination of this
Agreement, and the agreements and covenants set forth in Article VIII of this
Agreement shall survive the execution and delivery hereof.

Section 9.10 Counterparts. This Agreement may be executed in counterparts, all
of which taken together shall constitute one and the same original and binding
instrument and shall become effective when all counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties hereto need not sign the same counterpart. In the event any
signature is delivered by facsimile transmission, the party using such means of
delivery shall cause four additional executed signature pages to be physically
delivered to the other parties within five days of the execution and delivery
hereof.

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

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

 

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

[Signature Page Follows]

 

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

 

CV THERAPEUTICS, INC.: By:  

/s/ Louis G. Lange

Name:   Louis G. Lange, M.D., Ph.D. Title:   Chairman and CEO AZIMUTH
OPPORTUNITY LTD: By:  

/s/ Deirdre M. McCoy

Name:   Deirdre M. McCoy Title:   Corporate Secretary

 

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ANNEX A TO THE

COMMON STOCK PURCHASE AGREEMENT

DEFINITIONS

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

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

(c) “Base Prospectus” shall mean the Company’s prospectus, dated April 18, 2006,
included in the Registration Statement.

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

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

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

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

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

(i) “Commission Documents” shall mean (1) all reports, schedules, registrations,
forms, statements, information and other documents filed by the Company with the
Commission pursuant to the reporting requirements of the Exchange Act, including
all material filed pursuant to Section 13(a) or 15(d) of the Exchange Act, which
have been filed by the Company since January 1, 2006 and which hereafter shall
be filed by the Company during the Investment Period, including, without
limitation, the Current Report and the Form 10-K filed by the Company for its
fiscal year ended December 31, 2005 (the “2005 Form 10-K”), (2) the Registration
Statement, as the same may be amended from time to time, the Prospectus and each
Prospectus Supplement, and (3) all information contained in such filings and all
documents and disclosures that have been and heretofore shall be incorporated by
reference therein.

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

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

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

(m) “Discount Price” shall have the meaning assigned to such term in Section 2.3
hereof.

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(n) “Effective Date” shall mean April 18, 2006.

(o) “Environmental Laws” shall have the meaning assigned to such term in
Section 4.16 hereof.

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

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

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

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

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

(u) “Fixed Request” means the transactions contemplated under Sections 2.1
through 2.9 of this Agreement.

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

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

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

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

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

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

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

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

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

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

(ff) “Material Adverse Effect” shall mean any condition, occurrence, state of
facts or event having, or insofar as reasonably can be foreseen would likely
have, any effect on the business, operations, properties or condition (financial
or otherwise) of the Company that is material and adverse to the Company and its
Subsidiaries, taken as a whole, and/or any condition, occurrence, state of facts
or event that would prohibit or otherwise materially interfere with or delay the
ability of the Company to perform any of its obligations under this Agreement.

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

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

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

(jj) “NASDAQ” means the NASDAQ National Market or any successor thereto.

(kk) “Optional Amount” means the transactions contemplated under Sections 2.10
through 2.12 of this Agreement.

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

(mm) “Optional Amount Notice” shall mean a notice sent to the Company with
regard to the Investor’s election to exercise all or any portion of an Optional
Amount, as provided in Section 2.12 hereof and substantially in the form
attached hereto as Exhibit B.

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

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

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

(qq) “Pricing Period shall mean a period of 18 consecutive Trading Days
commencing on the day of delivery of a Fixed Request Notice (or, if the Fixed
Request Notice is delivered after 9:30 a.m. (New York time), on the next Trading
Day), or such other period mutually agreed upon by the Investor and the Company.

(rr) “Prospectus” shall mean the Base Prospectus, as supplemented by any
Prospectus Supplement.

(ss) “Prospectus Supplement” shall mean any prospectus supplement to the Base
Prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act.

(tt) “Reduction Notice” shall have the meaning assigned to such term in
Section 2.9 hereof.

(uu) “Registration Statement” shall mean the registration statement on Form S-3,
Commission File Number 333-133358, filed by the Company with the Commission
under the Securities Act for the registration of the Shares, as such
Registration Statement may be amended and supplemented from time to time.

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

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

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(xx) “Settlement Date” shall have the meaning assigned to such term in
Section 2.8. hereof.

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

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

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

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

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

(ddd) “Threshold Price” is the lowest price at which the Company may sell Shares
during the applicable Pricing Period as set forth in a Fixed Request Notice (not
taking into account the applicable percentage discount during such Pricing
Period determined in accordance with Section 2.7); provided, however, that at no
time shall the Threshold Price be lower than $10.00 per share unless the Company
and the Investor mutually shall agree.

(eee) “Trading Day” shall mean a trading day on the NASDAQ.

(fff) “Trading Market” means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the
American Stock Exchange, the New York Stock Exchange or the NASDAQ National
Market.

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

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