Exhibit 10.1


 


Execution Copy


 


COMMON STOCK PURCHASE AGREEMENT


 


Dated October 30,
2008


 


by and between


 


DYAX CORP.


 


and


 


AZIMUTH OPPORTUNITY LTD.


 

















 


TABLE OF
CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I PURCHASE AND SALE OF COMMON STOCK

  	
  1

  
	
  Section 1.1.

  	
  Purchase and
  Sale of Stock

  	
  1

  
	
  Section 1.2.

  	
  Effective
  Date; Settlement Dates

  	
  1

  
	
  Section 1.3.

  	
  The Shares

  	
  2

  
	
  Section 1.4.

  	
  Current
  Report; Prospectus Supplement

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE II FIXED REQUEST TERMS; OPTIONAL
  AMOUNT

  	
  2

  
	
  Section 2.1.

  	
  Fixed
  Request Notice

  	
  3

  
	
  Section 2.2.

  	
  Fixed Requests

  	
  3

  
	
  Section 2.3.

  	
  Share
  Calculation

  	
  4

  
	
  Section 2.4.

  	
  Limitation
  of Fixed Requests

  	
  4

  
	
  Section 2.5.

  	
  Reduction of
  Commitment

  	
  4

  
	
  Section 2.6.

  	
  Below
  Threshold Price

  	
  4

  
	
  Section 2.7.

  	
  Settlement

  	
  5

  
	
  Section 2.8.

  	
  Reduction of
  Pricing Period

  	
  5

  
	
  Section 2.9.

  	
  Optional
  Amount

  	
  6

  
	
  Section 2.10.

  	
  Calculation
  of Optional Amount Shares

  	
  6

  
	
  Section 2.11.

  	
  Exercise of
  Optional Amount

  	
  7

  
	
  Section 2.12.

  	
  Aggregate
  Limit

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE III REPRESENTATIONS AND WARRANTIES
  OF THE INVESTOR

  	
  8

  
	
  Section 3.1.

  	
  Organization
  and Standing of the Investor

  	
  8

  
	
  Section 3.2.

  	
  Authorization
  and Power

  	
  8

  
	
  Section 3.3.

  	
  No Conflicts

  	
  9

  
	
  Section 3.4.

  	
  Information

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES
  OF THE COMPANY

  	
  9

  
	
  Section 4.1.

  	
  Organization,
  Good Standing and Power

  	
  9

  
	
  Section 4.2.

  	
  Authorization,
  Enforcement

  	
  10

  
	
  Section 4.3.

  	
  Capitalization

  	
  10

  
	
  Section 4.4.

  	
  Issuance of
  Shares

  	
  11

  
	
  Section 4.5.

  	
  No Conflicts

  	
  11

  
	
  Section 4.6.

  	
  Commission
  Documents, Financial Statements

  	
  11

  
	
  Section 4.7.

  	
  Subsidiaries

  	
  13

  
	
  Section 4.8.

  	
  No Material
  Adverse Effect

  	
  13

  
	
  Section 4.9.

  	
  Indebtedness

  	
  13

  
	
  Section 4.10.

  	
  Title To
  Assets

  	
  13

  
	
  Section 4.11.

  	
  Actions
  Pending

  	
  14

  
	
  Section 4.12.

  	
  Compliance
  With Law

  	
  14

  
	
  Section 4.13.

  	
  Certain Fees

  	
  14

  
				



 


i

















 


	
  Section 4.14.

  	
  Operation of
  Business

  	
  14

  
	
  Section 4.15.

  	
  Environmental
  Compliance

  	
  16

  
	
  Section 4.16.

  	
  Material
  Agreements

  	
  17

  
	
  Section 4.17.

  	
  Transactions
  With Affiliates

  	
  17

  
	
  Section 4.18.

  	
  Securities
  Act; NASD Conduct Rules

  	
  17

  
	
  Section 4.19.

  	
  Employees

  	
  19

  
	
  Section 4.20.

  	
  Use of
  Proceeds

  	
  19

  
	
  Section 4.21.

  	
  Investment
  Company Act Status

  	
  19

  
	
  Section 4.22.

  	
  ERISA

  	
  20

  
	
  Section 4.23.

  	
  Taxes

  	
  20

  
	
  Section 4.24.

  	
  Insurance

  	
  20

  
	
  Section 4.25.

  	
  Acknowledgement
  Regarding Investor’s Purchase of Shares

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE V COVENANTS

  	
  21

  
	
  Section 5.1.

  	
  Securities
  Compliance

  	
  21

  
	
  Section 5.2.

  	
  Registration
  and Listing

  	
  21

  
	
  Section 5.3.

  	
  Compliance
  with Laws

  	
  21

  
	
  Section 5.4.

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

  	
  22

  
	
  Section 5.5.

  	
  Limitations
  on Holdings and Issuances

  	
  22

  
	
  Section 5.6.

  	
  Other
  Agreements and Other Financings

  	
  23

  
	
  Section 5.7.

  	
  Stop Orders

  	
  24

  
	
  Section 5.8.

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

  	
  24

  
	
  Section 5.9.

  	
  Prospectus
  Delivery

  	
  25

  
	
  Section 5.10.

  	
  Selling
  Restrictions

  	
  26

  
	
  Section 5.11.

  	
  Effective Registration
  Statement

  	
  27

  
	
  Section 5.12.

  	
  Non-Public
  Information

  	
  27

  
	
  Section 5.13.

  	
  Broker/Dealer

  	
  27

  
	
  Section 5.14.

  	
  Disclosure
  Schedule

  	
  27

  
	
   

  	
   

  	
   

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

  	
  28

  
	
  Section 6.1.

  	
  Opinion of
  Counsel and Certificate

  	
  28

  
	
  Section 6.2.

  	
  Conditions
  Precedent to the Obligation of the Company

  	
  28

  
	
  Section 6.3.

  	
  Conditions
  Precedent to the Obligation of the Investor

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII TERMINATION

  	
  32

  
	
  Section 7.1.

  	
  Term,
  Termination by Mutual Consent

  	
  32

  
	
  Section 7.2.

  	
  Other
  Termination

  	
  32

  
	
  Section 7.3.

  	
  Effect of
  Termination

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII INDEMNIFICATION

  	
  33

  
	
  Section 8.1.

  	
  General
  Indemnity

  	
  33

  
	
  Section 8.2.

  	
  Indemnification
  Procedures

  	
  34

  



 


ii

















 


	
  ARTICLE IX MISCELLANEOUS

  	
  36

  
	
  Section 9.1.

  	
  Fees and
  Expenses

  	
  36

  
	
  Section 9.2.

  	
  Specific
  Enforcement, Consent to Jurisdiction, Waiver of Jury Trial

  	
  36

  
	
  Section 9.3.

  	
  Entire
  Agreement; Amendment

  	
  37

  
	
  Section 9.4.

  	
  Notices

  	
  37

  
	
  Section 9.5.

  	
  Waivers

  	
  38

  
	
  Section 9.6.

  	
  Headings

  	
  39

  
	
  Section 9.7.

  	
  Successors
  and Assigns

  	
  39

  
	
  Section 9.8.

  	
  Governing
  Law

  	
  39

  
	
  Section 9.9.

  	
  Survival

  	
  39

  
	
  Section 9.10.

  	
  Counterparts

  	
  39

  
	
  Section 9.11.

  	
  Publicity

  	
  39

  
	
  Section 9.12.

  	
  Severability

  	
  39

  
	
  Section 9.13.

  	
  Further
  Assurances

  	
  39

  
	
   

  	
   

  	
   

  
	
  Annex A.

  	
  Definitions

  	
   

  



 


iii
















 


COMMON STOCK PURCHASE AGREEMENT


 


This COMMON STOCK PURCHASE AGREEMENT, made and entered into on
this 30th day of October 2008 (this “Agreement”), by and
between Azimuth Opportunity Ltd., an international business company
incorporated under the laws of the British Virgin Islands (the “Investor”),
and Dyax Corp., a corporation organized and existing under the laws of the
State of Delaware (the “Company”). Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in Annex A
hereto.


 


RECITALS


 


WHEREAS,
the parties desire that, upon the terms and subject to the conditions contained
herein, the Company may issue and sell to the Investor and the Investor shall
thereupon purchase from the Company up to $50,000,000 worth of newly issued
shares of the Company’s common stock, $.01 par value (“Common Stock”),
subject, in all cases, to the Trading Market Limit; and


 


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


 


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


 


ARTICLE I


PURCHASE AND SALE OF COMMON STOCK


 


Section 1.1.                 Purchase and
Sale of Stock.  Upon the terms
and subject to the conditions of this Agreement, during the Investment Period
the Company in its discretion may issue and sell to the Investor up to
$50,000,000 (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 24 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 each Optional Amount.  The issuance and sale of Shares to the
Investor pursuant to any Fixed Request or Optional Amount shall occur on the
applicable Settlement Date in accordance with Sections 2.7 and 2.9 (or on such
Trading Day in accordance with Section 2.8, as applicable), provided in
each case that all of the conditions precedent thereto set forth in Article VI
theretofore shall have been fulfilled or (to the extent permitted by applicable
law) waived.


 


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


 


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


 


ARTICLE II


FIXED REQUEST TERMS; OPTIONAL AMOUNT


 


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


 


Section 2.1.                 Fixed Request
Notice.  Upon one Trading Days’
prior written notice to the Investor, the Company may, 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 


 


2

















 


Pricing Period (the “Fixed Request Notice”), substantially in the form
attached hereto as Exhibit A; provided, however, that no
prior notice shall be required if the Investor is reasonably satisfied with its
due diligence of the Company and all conditions required under Section 6.3
hereof are met at the time the Fixed Request Notice is delivered.  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 to the Investor during the
Pricing Period and the applicable Threshold Price for such Optional Amount (the
“Optional Amount Threshold Price”).  The
Threshold Price and the Optional Amount Threshold Price established by the
Company in a Fixed Request Notice may be the same or different, in the Company’s
sole discretion.  Upon the terms and
subject to the conditions of this Agreement, the Investor is obligated to
accept each Fixed Request Notice prepared and delivered in accordance with the
provisions of this Agreement.


 


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


 


	
  Threshold Price

  	
   

  	
  Fixed Amount Requested

  	
   

  	
  Discount Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater than $10.00

  	
   

  	
  Not to exceed $7,750,000

  	
   

  	
  95.950% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater than $9.00 and less than $10.00

  	
   

  	
  Not to exceed $7,000,000

  	
   

  	
  95.850% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater than $8.00 and less than $9.00

  	
   

  	
  Not to exceed $6,250,000

  	
   

  	
  95.750%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $7.00 and less than $8.00

  	
   

  	
  Not
  to exceed $5,500,000

  	
   

  	
  95.375%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $6.00 and less than $7.00

  	
   

  	
  Not
  to exceed $4,750,000

  	
   

  	
  95.125%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $5.00 and less than $6.00

  	
   

  	
  Not
  to exceed $4,000,000

  	
   

  	
  94.750%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $4.00 and less than $5.00

  	
   

  	
  Not
  to exceed $3,250,000

  	
   

  	
  94.500%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $3.00 and less than $4.00

  	
   

  	
  Not
  to exceed $2,500,000

  	
   

  	
  94.250%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $2.00 and less than $3.00

  	
   

  	
  Not
  to exceed $1,750,000

  	
   

  	
  93.750%
  of the VWAP

  



 


3

















 


Anything to
the contrary in this Agreement notwithstanding, at no time shall the Investor
be required to purchase more than $7,750,000 worth of Common Stock in respect
of any Pricing Period (not including Common Stock subject to any Optional
Amount).  The date on which the Company
delivers any Fixed Request Notice in accordance with this Section 2.2
hereinafter shall be referred to as a “Fixed Request Exercise Date”.


 


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


 


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


 


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


 


A = 0.10 (the “Multiplier”),


 


B = the total Fixed Amount Requested, and


 


C = the applicable Discount Price.


 


Section 2.4.                 Limitation of
Fixed Requests.  The Company
shall not make more than one Fixed Request in each Pricing Period.  Not less than five Trading Days shall elapse
between the end of one Pricing Period and the commencement of any other Pricing
Period during the Investment Period. 
There shall be permitted a maximum of 24 Fixed Requests during the
Investment Period.  Each Fixed Request
automatically shall expire immediately following the last Trading Day of each
Pricing Period.


 


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


 


Section 2.6.                 Below
Threshold Price.  If the VWAP on
any Trading Day in a Pricing Period is lower than the Threshold Price, then for
each such Trading Day the Fixed Amount Requested shall be reduced, on a
dollar-for-dollar basis, by an amount equal to the product of (x) the
Multiplier and (y) the total Fixed Amount Requested, and no Shares shall
be purchased or sold with respect to such Trading Day, except as provided
below.  If trading in the Common Stock on
NASDAQ (or any other U.S. national securities exchange on which the Common
Stock is then listed) is suspended for any reason for more than three hours on
any Trading Day, the Investor may at its option deem the price of the Common
Stock to be lower than the Threshold Price for such Trading Day and, for each
such Trading Day, the total amount 


 


4

















 


of the Fixed Amount Requested shall be reduced as provided in the
immediately preceding sentence, and no Shares shall be purchased or sold with
respect to such Trading Day, except as provided below.  For each Trading Day during a Pricing Period
on which the VWAP is lower (or is deemed to be lower as provided in the
immediately preceding sentence) than the Threshold Price, the Investor may in
its sole discretion elect to purchase such U.S. dollar amount of Shares equal
to the amount by which the Fixed Amount Requested has been reduced in
accordance with this Section 2.6, at the Threshold Price multiplied by the
applicable percentage determined in accordance with the price and share amount
parameters set forth in Section 2.2. 
The Investor shall inform the Company via facsimile transmission not
later than 8:00 p.m. (New York time) on the last Trading Day of such
Pricing Period as to the number of Shares, if any, the Investor elects to
purchase as provided in this Section 2.6.


 


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


 


Section 2.8.                 Reduction of
Pricing Period.  If during a
Pricing Period the Company elects to reduce the number of Trading Days in such
Pricing Period (and thereby amend its previously delivered Fixed Request
Notice), the Company shall so notify the Investor before 9:00 a.m. (New
York time) on any Trading Day during a Pricing Period (a “Reduction Notice”)
and the last Trading Day of such Pricing Period shall be the Trading Day
immediately preceding the Trading Day on which the Investor received such
Reduction Notice; provided, however, that if the Company delivers the Reduction
Notice later than 9:00 a.m. (New York time) on a Trading Day during a
Pricing Period, then the last Trading Day of such Pricing Period instead shall
be the Trading Day on which the Investor received such Reduction Notice.


 


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


 


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


 


D = (A/B) x (B – C), where:


 


5

















 


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


 


A = the Fixed Amount Requested,


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6

















 


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


 


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


 


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


 


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


 


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


 


At the Company’s
sole discretion, and effective automatically upon receipt by the Investor of
notice thereof from the Company, this Agreement may be amended by the Company 


 


7

















 


from time to time to reduce the Aggregate Limit by a specified dollar
amount of Common Stock which shall be no greater than is required to enable the
Company to utilize the Registration Statement to consummate an underwritten
public offering of Common Stock or a registered direct public offering of
Common Stock during the Investment Period; provided, however,
that any such amendment of this Agreement (and any such purported amendment)
shall be void and of no force and effect if the effect thereof would restrict,
materially delay, conflict with or impair the ability or right of the Company
to perform its obligations under this Agreement, including, without limitation,
the obligation of the Company to deliver Shares to the Investor in respect of a
Fixed Request or Optional Amount on the applicable Settlement Date.  In the event the Company shall have elected
to reduce the Aggregate Limit as provided in the immediately preceding
sentence, at the Company’s sole discretion, and effective automatically upon
receipt by the Investor of notice thereof from the Company, the Company may
subsequently amend this Agreement to increase the Aggregate Limit up to
$50,000,000; provided, however, that in no event shall the
Company be entitled to issue Fixed Requests and grant Optional Amounts during
the remainder of the Investment Period for an aggregate amount greater than the
amount obtained by subtracting (x) the aggregate of all Fixed Request
Amounts and Optional Amount Dollar Amounts (including any amounts paid as
liquidated damages pursuant to Section 9.1(ii) hereunder) covered by
all Fixed Requests and Optional Amounts theretofore issued or granted by the
Company in respect of which a settlement has occurred pursuant to Section 2.7
from (y) $50,000,000, subject in all cases to the Trading Market Limit.


 


ARTICLE III


REPRESENTATIONS AND WARRANTIES OF THE
INVESTOR


 


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


 


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


 


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


 


Section 3.3.                 No Conflicts.  The execution, delivery and performance by
the Investor of this Agreement and the consummation by the Investor of the
transactions contemplated herein do not and shall not (i) result in a
violation of such Investor’s charter documents, bylaws or other 


 


8

















 


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:


 


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


 


9

















 


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 are as set forth in the
Commission Documents as of the dates reflected therein.  All of the outstanding shares of Common Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable.  Except as set forth in
the Commission Documents, as of the Effective Date, no shares of Common Stock
were entitled to preemptive rights or registration rights and there were no
outstanding options (other than options granted pursuant to existing stock
option plans as described in the Commission Documents), 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
that would have a Material Adverse Effect. 
The Company has furnished or made available to the Investor via the
Commission’s Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”)
true and correct copies of the Company’s Certificate of Incorporation as in
effect on the Effective Date (the “Charter”), and the Company’s Bylaws as in
effect on the Effective Date (the “Bylaws”), and true and correct copies
(redacted as appropriate) of all executed resolutions of the Company’s Board of
Directors (and committees thereof) relating to the capital stock of the Company
(and transactions in respect thereof) since December 31, 2005 (except with
respect to issuances of shares of capital stock of the Company to directors or
employees of the Company as 


 


10

















 


fees or compensation that were duly approved by the Company’s Board of
Directors or a committee thereof).


 


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


 


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


 


Section 4.6.                 Commission
Documents, Financial Statements. 
(a)  The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act and, except as disclosed in the Commission
Documents, as of the Effective Date the Company had timely filed (giving effect
to permissible extensions in accordance with Rule 12b-25 under the
Exchange Act) all Commission Documents. 
The Company has delivered or made available to the Investor via EDGAR or
otherwise true and complete copies of the Commission Documents filed with the
Commission prior to the Effective Date (including, without limitation, the 2007
Form 10-K) and has delivered or made available to the Investor via EDGAR
or otherwise true and complete copies of all of the Commission Documents
heretofore incorporated by reference in the 


 


11

















 


Registration Statement and the Prospectus.  The Company has not provided to the Investor
any information which, according to applicable law, rule or regulation,
should have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this
Agreement.  As of its filing date, each
Commission Document filed with the Commission and incorporated by reference in
the Registration Statement and the Prospectus (including, without limitation,
the 2007 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 filing date (or, if amended or superseded by a filing prior
to the Effective Date, on the date of such amended or superseded filing), such
Commission Document did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.  Each
Commission Document to be filed with the Commission after the Effective Date
and incorporated by reference in the Registration Statement, the Prospectus and
any Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9
hereof during the Investment Period (including, without limitation, the Current
Report), when such document becomes effective or is filed with the Commission,
as the case may be, shall comply in all material respects with the requirements
of the Securities Act or the Exchange Act, as applicable, and other federal,
state and local laws, rules and regulations applicable to it, and shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.


 


(b)           The financial statements, together with the
related notes and schedules, of the Company included in the Commission
Documents comply as to form in all material respects with all applicable
accounting requirements and the published rules and regulations of the
Commission and all other applicable rules and regulations with respect
thereto.  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 via EDGAR or otherwise all
certifications and statements required by (x) Rule 13a-14 or Rule 15d-14
under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906
of the Sarbanes-Oxley Act of 2002 (“SOXA”)) with respect to all relevant
Commission Documents.  The Company is in
compliance in all material respects with the provisions of SOXA applicable to
it as of the date hereof.  The Company
maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15
under the Exchange Act; such controls and procedures are effective to ensure
that all material information concerning the Company and its Subsidiaries is
made known on a timely basis to the individuals responsible for the timely and
accurate preparation of the Company’s Commission filings and other public disclosure
documents.  As 


 


12

















 


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.


 


(d)           PricewaterhouseCoopers 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 are, with respect to the Company, independent public
accountants as required by the Securities Act and is an independent registered
public accounting firm within the meaning of SOXA as required by the rules of
the Public Company Accounting Oversight Board.


 


Section 4.7.                 Subsidiaries.  The 2007 Form 10-K sets forth each
Subsidiary of the Company as of the Effective Date, showing its jurisdiction of
incorporation or organization and the percentage of the Company’s ownership of
the outstanding capital stock or other ownership interests of such Subsidiary,
and the Company does not have any other Subsidiaries as of the Effective Date.


 


Section 4.8.                 No Material
Adverse Effect.  Since December 31,
2007, 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, 2007 or (ii) continued losses from
operations.


 


Section 4.9.                 Indebtedness.  The Company’s Quarterly Report on Form 10-Q
for its fiscal quarter ended September 30, 2008 sets forth, as of September 30,
2008, 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.


 


13
















 


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 Company, its Subsidiary or any officer or
director of the Company or its Subsidiaries, would have a Material Adverse
Effect.


 


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


 


Section 4.13.               Certain Fees.  Except for the placement fee payable by the
Company to Reedland Capital Partners, an Institutional Division of Financial
West Group, Member FINRA/SIPC (“Reedland”), which shall be set forth in a
separate placement agency agreement between the Company and Reedland (a true
and complete fully executed copy of which has heretofore been provided to the
Investor), no brokers, finders or financial advisory fees or commissions shall
be payable by the Company or any Subsidiary (or any of their respective
affiliates) with respect to the transactions contemplated by this Agreement.


 


Section 4.14.               Operation of Business.  (a)  The Company or one or more of its
Subsidiaries possesses such permits, licenses, approvals, consents and other
authorizations (including licenses, accreditation and other similar
documentation or approvals of any local health departments) (collectively, “Governmental
Licenses”) issued by the appropriate federal, state, local or foreign
regulatory agencies or bodies, including, without limitation, the United States
Food and Drug Administration (“FDA”), necessary to conduct the business now
operated by it, except where the failure to possess such Governmental Licenses,
individually or in the aggregate, would not have a Material Adverse
Effect.  The Company and its Subsidiaries
are in compliance with the terms and conditions of all such Governmental
Licenses and all applicable FDA rules and regulations, guidelines and
policies, and all applicable rules and regulations, guidelines and
policies of any governmental authority exercising authority comparable to that
of the FDA (including any non-governmental authority whose approval or
authorization is required under foreign law comparable to that administered by
the FDA), except where the failure to so comply, individually or in the
aggregate, would not have a Material Adverse Effect.  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.  As to each product that is
subject to FDA regulation or similar legal provisions in any foreign
jurisdiction that is developed, manufactured, tested, packaged, labeled,
marketed, sold, distributed and/or commercialized by the Company or any of its
Subsidiaries, each such product is being 


 


14

















 


developed, manufactured, tested, packaged, labeled, marketed, sold,
distributed and/or commercialized in compliance with all applicable
requirements of the FDA (and any non-governmental authority whose approval or
authorization is required under foreign law comparable to that administered by
the FDA), including, but not limited to, those relating to investigational use,
good clinical practices, good manufacturing practices, record keeping, filing
of reports, and patient privacy and medical record security, except where such
non-compliance, individually or in the aggregate, would not have a Material
Adverse Effect.  As to each product or
product candidate of the Company or any of its Subsidiaries subject to FDA
regulation or similar legal provision in any foreign jurisdiction, all
manufacturing facilities of the Company and its Subsidiaries are operated in
compliance with applicable FDA requirements, except where such non-compliance,
individually or in the aggregate, would not have a Material Adverse
Effect.  Except as set forth in the
Commission Documents or the Registration Statement, neither the Company nor any
of its Subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses or relating to a potential
violation of, failure to comply with, or request to produce additional
information under, any FDA rules and regulations, guidelines or policies
which, if the subject of any unfavorable decision, ruling or finding,
individually or in the aggregate, would have a Material Adverse Effect.  Except as set forth in the Commission
Documents or the Registration Statement, neither the Company nor any of its
Subsidiaries has received any correspondence, notice or request from the FDA,
including, without limitation, notice that any one or more products or product
candidates of the Company or any of its Subsidiaries failed to receive approval
from the FDA for use for any one or more indications, and neither the Company
nor any of its Subsidiaries knows of any basis therefor.  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 has obtained valid and
enforceable licenses for, or other rights to use 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
where the failure to own, license or have such rights would not, individually
or in the aggregate, have a Material Adverse Effect.  Except as set forth in the Commission
Documents, there are no actions, suits or judicial proceedings pending, or to
the Company’s knowledge threatened, relating to patents or proprietary
information to which the Company or any of its Subsidiaries is a party or of
which any property of the Company or any of its Subsidiaries is subject, and
neither the Company nor any of its Subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted rights of
others with respect to any Intellectual Property or of any facts or
circumstances which could render any Intellectual Property invalid or
inadequate to protect the interest of the Company and its Subsidiaries therein,
and which infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, individually or in the
aggregate, would have a Material Adverse Effect.


 


15

















 


(c)           All
clinical trials conducted by, or on behalf of, the Company or any of its
Subsidiaries, or in which the Company or any of its Subsidiaries has
participated that are described in the Registration Statement or the Commission
Documents, or the results of which are referred to in the Registration
Statement or the Commission Documents, if any, are the only clinical trials
currently being conducted by or on behalf of the Company and its
Subsidiaries.  All such clinical trials
conducted, supervised or monitored by, or on behalf of, the Company or any of
its Subsidiaries have been conducted in material compliance with all applicable
federal, state, local and foreign laws, and the regulations and requirements of
any applicable governmental entity, including, but not limited to, FDA good
clinical practice and good laboratory practice requirements.  Except as set forth in the Registration
Statement or the Commission Documents, neither the Company nor any of its
Subsidiaries has received any notices or correspondence from the FDA or any
other governmental agency requiring the termination, suspension, delay or
modification of any clinical trials conducted by, or on behalf of, the Company
or any of its Subsidiaries or in which the Company or any of its Subsidiaries
has participated that are described in the Registration Statement or the
Commission Documents, if any, or the results of which are referred to in the
Registration Statement or the Commission Documents.  All 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 material
compliance with all applicable federal, state, local and foreign laws, and the
regulations and requirements of any applicable governmental entity, including,
but not limited to, FDA good clinical practice and good laboratory practice
requirements.


 


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 knowledge of the Company, 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
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.


 


16

















 


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 are not aware of any basis for the assertion
thereof, and neither the Company or any of its Subsidiaries nor, to the
knowledge of the Company, any other contracting party thereto are in default
under any Material Agreement now in effect, the result of which would have a
Material Adverse Effect.  Each of the
Material Agreements is in full force and effect, and constitutes a legal, valid
and binding obligation enforceable in accordance with its terms against the Company
and/or any of its Subsidiaries and, to the knowledge of the Company, each other
contracting party thereto, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application.


 


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


 


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


 


(i)            The Company has
prepared and filed with the Commission in accordance with the provisions of the
Securities Act the Registration Statement, including a base prospectus relating
to the Shares.  The Registration
Statement was declared effective by order of the Commission on January 7,
2008.  As of the date hereof, no stop
order suspending the effectiveness of the Registration Statement has been
issued by the Commission or is continuing in effect under the Securities Act
and no proceedings therefor are pending before or, to the Company’s knowledge,
threatened by the Commission.  No order
preventing or suspending the use of the Prospectus or any Permitted Free
Writing Prospectus has been issued by the Commission.


 


17

















 


(ii)           The Company meets
the requirements for the use of Form S-3 under the Securities Act.  The Commission has not notified the Company
of any objection to the use of the form of the Registration Statement.  The Registration Statement complied in all
material respects on the date on which it was declared effective by the
Commission and on the Effective Date of this Agreement, and will comply in all
material respects on each applicable Fixed Request Exercise Date and on each
applicable Settlement Date, with the requirements of the Securities Act and the
Registration Statement (including the documents incorporated by reference
therein) did not on the date it was declared effective by the Commission and on
the Effective Date of this Agreement and shall not on each applicable Fixed
Request Exercise Date and on each applicable Settlement Date contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided that this representation and warranty does not apply to statements in
or omissions from the Registration Statement made in reliance upon and in
conformity with information relating to the Investor furnished to the Company
in writing by or on behalf of the Investor expressly for use therein. The
Registration Statement, as of the Effective Date, meets the requirements set
forth in Rule 415(a)(1)(x) under the Securities Act.  The Base Prospectus complied in all material
respects on its date and on the Effective Date, and will comply in all material
respects on each applicable Fixed Request Exercise Date and, when taken
together with the applicable Prospectus Supplement and any applicable Permitted
Free Writing Prospectus, on each applicable Settlement Date, with the
requirements of the Securities Act and did not on its date and on the Effective
Date and shall not on each applicable Fixed Request Exercise Date and, when
taken together with the applicable Prospectus Supplement and any applicable
Permitted Free Writing Prospectus, on each applicable Settlement Date contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that this representation and warranty does not apply to statements in
or omissions from the Base Prospectus made in reliance upon and in conformity
with information relating to the Investor furnished to the Company in writing
by or on behalf of the Investor expressly for use therein.


 


(iii)          In accordance with
NASD Conduct Rule 2710(b)(7)(C)(i) of the FINRA Financial Industry
Regulatory Authority (the “FINRA”), the offering of the Shares pursuant to this
Agreement has been registered with the Commission on Form S-3 under the
Securities Act pursuant to the standards for Form S-3 in effect prior to October 21,
1992, and the Shares are being offered pursuant to Rule 415 promulgated
under the Securities Act.


 


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


 


18

















 


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


 


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


 


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


 


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


 


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


 


Section 4.22.               ERISA.  No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company or any of
its Subsidiaries which has had 


 


19

















 


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 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.


 


20

















 


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, the Exchange Act and the
listing standards of the Trading Market. 
Without limiting the generality of the foregoing, neither the Company
nor any of its officers, directors or affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or manipulate
the price of any security of the Company, or which caused or resulted in, or
which would in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company.


 


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


 


21

















 


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


 


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


 


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


 


(iii)          Subject to the
requirements of Section 5.12 of this Agreement, from time to time from and
after the period beginning on the latter of (i) the first Trading Day
immediately preceding each Fixed Request Exercise Date and (ii) in the
event that no prior notice is required under Section 2.1 of this
Agreement, the delivery of a Fixed Request Notice through and including the
applicable Settlement Date, the Company shall make available for inspection and
review by the Investor, customary documentation allowing the Investor and/or
its appointed counsel or advisors to conduct due diligence.


 


Section 5.5.                 Limitations on Holdings and Issuances.  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.


 


22
















 


Section 5.6.                 Other Agreements and Other
Financings.


 


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


 


(ii)           The Company shall
notify the Investor, within 48 hours, if it enters into any agreement, plan,
arrangement or transaction with a third party, the principal purpose of which
is to obtain during a Pricing Period an Other Financing not constituting an
Acceptable Financing (an “Other Financing Notice”); provided, however,
that the Company shall notify the Investor immediately (an “Integration
Notice”) if it enters into any agreement, plan, arrangement or transaction
with a third party, the principal purpose of which is to obtain at any time
during the Investment Period an Other Financing that may be aggregated with the
transactions contemplated by this Agreement for purposes of determining whether
approval of the Company’s stockholders is required under any bylaw, listed
securities maintenance standards or other rules of the Trading Market and,
if required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and
regulations of the Trading Market, the Company shall simultaneously publicly
disclose such information in accordance with Regulation FD and the applicable rules and
regulations of the Trading Market. For purposes of this Section 5.6(ii),
any press release issued by, or Commission Document filed by, the Company shall
constitute sufficient notice, provided that it is issued or filed, as the case
may be, within the time requirements set forth in the first sentence of this Section 5.6(ii) for
an Other Financing Notice or an Integration Notice, as applicable.  During any Pricing Period in which the
Company is required to provide an Other Financing Notice pursuant to the first
sentence of this Section 5.6(ii), the Investor shall (i) have the option
to purchase the Shares subject to the Fixed Request at (x) the price
therefor in accordance with the terms of this Agreement or (y) the third
party’s per share purchase price in connection with the Other Financing, net of
such third party’s discounts, Warrant Value and fees, or (ii) the Investor
may elect to not purchase any Shares subject to the Fixed Request for that
Pricing Period. An “Other Financing” shall mean (x) the issuance of
Common Stock for a purchase price less than, or the issuance of securities
convertible into or exchangeable for Common Stock at an exercise or conversion
price (as the case may be) less than, the then Current Market Price of the
Common Stock (in each case, after all fees, discounts, Warrant Value and
commissions associated with the transaction) (a “Below Market Offering”);
(y) the implementation by the Company of any mechanism in respect of any
securities convertible into or exchangeable for Common Stock for the reset of
the purchase price of the Common Stock to below the then Current Market Price
of the Common Stock (including, without limitation, any antidilution or similar
adjustment provisions in respect of any Company securities, but specifically
excluding customary adjustments for stock splits, stock dividends, stock
combinations and similar events); or (z) the issuance of options, warrants
or similar rights of subscription in each case not constituting an Acceptable
Financing. “Acceptable Financing” shall mean the issuance by the Company
of: (1) shares of Common Stock or securities convertible into or
exchangeable for Common Stock other than in connection with a Below Market
Offering; (2) shares of Common Stock or securities 


 


23

















 


convertible
into or exchangeable for Common Stock in connection with awards under the
Company’s benefit and equity plans and arrangements and the issuance of shares
of Common Stock upon the conversion, exercise or exchange thereof; (3) shares
of Common Stock issuable upon the conversion or exchange of equity awards or
convertible or exchangeable securities outstanding as of the Effective Date; (4) shares
of Common Stock or securities convertible into or exchangeable for Common Stock
or similar rights to subscribe for the purchase of shares of Common Stock in
connection with technology sharing, licensing, research and joint development
agreements (or amendments thereto) with third parties, and the issuance of
shares of Common Stock upon the conversion, exercise or exchange thereof; and (5) shares
of Common Stock and/or warrants or similar rights to subscribe for the purchase
of shares of Common Stock issued in connection with equipment financings and/or
real property 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, any Permitted Free
Writing Prospectus or for any additional information; (ii) of the Company’s
receipt of notice of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or prohibiting or
suspending the use of the Prospectus or any Prospectus Supplement, or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or contemplated initiation of any proceeding
for such purpose; and (iii) of the Company becoming aware of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement, the Prospectus or any Permitted Free Writing Prospectus
untrue or which requires the making of any additions to or changes to the
statements then made in the Registration Statement, the Prospectus or any
Permitted Free Writing Prospectus in order to state a material fact required by
the Securities Act to be stated therein or necessary in order to make the
statements then made therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, or of the necessity
to amend the Registration Statement or supplement the Prospectus or any
Permitted Free Writing Prospectus to comply with the Securities Act or any
other law. The Company shall not be required to disclose to the Investor the
substance or specific reasons of any of the events set forth in clauses (i) through
(iii) of the immediately preceding sentence, but rather, shall only be
required to disclose that the event has occurred.  The Company shall not issue any Fixed Request
during the continuation of any of the foregoing events. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the Prospectus
or any Prospectus Supplement, the Company shall use commercially reasonable
efforts to obtain the withdrawal of such order at the earliest possible time.


 


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


 


(i)            Except as provided
in this Agreement and other than periodic reports required to be filed pursuant
to the Exchange Act, the Company shall not file with the Commission any
amendment to the Registration Statement that relates to the Investor, the
Agreement or the transactions contemplated hereby or file with the Commission
any Prospectus 


 


24

















 


Supplement that
relates to the Investor, this Agreement or the transactions contemplated hereby
with respect to which (a) the Investor shall not previously have been
advised, (b) the Company shall not have given due consideration to any
comments thereon received from the Investor or its counsel, or (c) the
Investor shall reasonably object after being so advised, unless it is necessary
to amend the Registration Statement or make any supplement to the Prospectus to
comply with the Securities Act or any other applicable law or regulation, in
which case the Company shall immediately so inform the Investor, the Investor
shall be provided with a reasonable opportunity to review and comment upon any
disclosure relating to the Investor and the Company shall expeditiously furnish
to the Investor an electronic copy thereof. In addition, for so long as, in the
reasonable opinion of counsel for the Investor, the Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities
Act) is required to be delivered in connection with any purchase of Shares by
the Investor, the Company shall not file any Prospectus Supplement with respect
to the Shares without delivering or making available a copy of such Prospectus
Supplement, together with the Base Prospectus, to the Investor promptly.


 


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


 


Section 5.9.                 Prospectus Delivery.  The Company shall file with the Commission a
Prospectus Supplement pursuant to Rule 424(b) under the Securities
Act on the first Trading Day immediately following the last Trading Day of each
Pricing Period.  The Company shall
provide the Investor a reasonable opportunity to comment on a draft of each
such Prospectus Supplement and any Issuer Free Writing Prospectus, shall give
due consideration to all such comments and, subject to the provisions of Section 5.8
hereof, shall deliver or make available to the Investor, without charge, an
electronic copy of each form of Prospectus Supplement, together with the Base
Prospectus, and any Permitted Free Writing Prospectus on each applicable
Settlement Date.  The Company consents to
the use of the Prospectus (and of any Prospectus Supplement thereto) in
accordance with the provisions of the Securities Act and with the securities or
“blue sky” laws of the jurisdictions in which the Shares may be sold by the
Investor, in connection with the offering and sale of the Shares and for such
period of time thereafter as the Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required by
the Securities Act to be delivered in connection with sales of the Shares. If
during such period of time any event shall occur that in the judgment of the
Company and its counsel is required to be 


 


25

















 


set forth in the Registration Statement or the Prospectus or any
Permitted Free Writing Prospectus or should be set forth therein in order to
make the statements made therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading, or if it is
necessary to amend the Registration Statement or supplement or amend the
Prospectus or any Permitted Free Writing Prospectus to comply with the
Securities Act or any other applicable law or regulation, the Company shall
forthwith prepare and, subject to Section 5.8 above, file with the
Commission an appropriate amendment to the Registration Statement or Prospectus
Supplement to the Prospectus (or supplement to the Permitted Free Writing
Prospectus) and shall expeditiously furnish or make available to the Investor
an electronic copy thereof.


 


Section 5.10.               Selling Restrictions.


 


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


 


26

















 


(ii)           In addition to the
foregoing, in connection with any sale of the Company’s securities (including
any sale permitted by paragraph (i) above), the Investor shall comply in
all 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 shall provide the Company with all information regarding
the Broker-Dealer reasonably requested by the Company.  The Investor shall be solely responsible for
all fees and commissions of the Broker-Dealer.


 


Section 5.14.               Disclosure Schedule.


 


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


 


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


 


27

















 


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 mutually agreed to by the parties hereto, and (ii) a certificate from
the Company, dated the Effective Date, in the form of Exhibit C hereto.


 


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


 


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


 


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


 


28

















 


(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 shall
have occurred, trading in securities generally as reported on the Trading
Market shall not have been suspended or limited, nor shall a banking moratorium
have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity or crisis of such
magnitude in its effect on, or any material adverse change in, any financial,
credit or securities market which, in each case, in the reasonable judgment of
the Company, makes it impracticable or inadvisable to issue the Shares.


 


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


 


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


 


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


 


(i)            Accuracy of the Company’s Representations and
Warranties.  The
representations and warranties of the Company contained in this Agreement (i) that
are not qualified by “materiality” or “Material Adverse Effect” shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the 


 


29

















 


applicable
Fixed Request Exercise Date and the applicable Settlement Date with the same
force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (ii) that are qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct when made and
shall be true and correct as of the applicable Fixed Request Exercise Date and
the applicable Settlement Date with the same force and effect as if made on
such dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date.


 


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


 


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


 


30

















 


have delivered
to the Investor on the applicable Settlement Date the Compliance Certificate
substantially in the form attached hereto as Exhibit D.


 


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


 


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


 


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


 


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


 


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


 


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


 


(xi)           Payment of Investor’s Counsel Fees.  On the Effective
Date, the Company shall have paid by wire transfer of immediately available
funds to an account designated by the Investor’s counsel, the fees and expenses
of the Investor’s counsel in accordance with the proviso to the first sentence
of Section 9.1(i) of this Agreement.


 


ARTICLE VII

TERMINATION


 


Section 7.1.                 Term, Termination by Mutual Consent.  Unless earlier terminated as provided
hereunder, this Agreement shall terminate automatically on the earliest of (i) the
first day of the month next following the 18-month anniversary of the Effective
Date (the “Investment Period”), (ii) the date that the entire dollar
amount of Shares registered under the Registration 


 


31

















 


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 Trading Days’ prior written notice to the
Investor in accordance with 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
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 of equity securities of the Company or a registered direct public
offering of equity securities of the Company, including an underwritten public
offering of equity securities of the Company at less than the Current Market
Price) or an Integration Notice, in each case pursuant to Section 5.6(ii) of
this Agreement, or if the Company otherwise enters into any agreement, plan,
arrangement or transaction with a third party, the principal purpose of which
is to obtain outside a Pricing Period, but otherwise during the Investment
Period, an Other Financing not constituting an Acceptable Financing (other than
in respect of an underwritten public offering of equity securities of the
Company or a registered direct public offering of equity securities of the
Company, including an underwritten public offering of equity securities of the
Company at less than the Current Market Price), in which latter case the
Company shall so notify the Investor within 48 hours thereof, then in all such
cases the Investor shall have the right to terminate this Agreement within the
subsequent 30-day period (the “Event Period”), effective upon one Trading Day’s
prior written notice delivered to the Company in accordance with Section 9.4
at any time during the Event Period.  The
Company shall immediately notify the Investor (and, if required under
applicable law, including, without limitation, Regulation FD promulgated by the
Commission, or under the applicable rules and regulations of the Trading
Market, the Company shall simultaneously publicly disclose such information in
accordance with Regulation FD and the applicable rules and regulations of
the Trading Market), and the Investor shall have the right to terminate this
Agreement at any time after receipt of such notification, if: (i) any
condition, occurrence, state of facts or event constituting a Material Adverse
Effect has occurred; (ii) a Material Change in Ownership has occurred or
the Company enters into a definitive agreement providing for a Material Change in
Ownership; 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 for borrowed money representing more than 10% of the Company’s
consolidated assets, in any such case, upon one Trading Day’s prior written
notice delivered to the Company in accordance with Section 9.4 hereof.


 


Section 7.3.                 Effect of Termination.  In the event of termination by the Company or
the Investor, 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 


 


32

















 


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 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 (ii) any untrue statement or alleged untrue statement of a
material fact contained, or incorporated by reference, in the Prospectus, any
Issuer Free Writing Prospectus, or in any amendment thereof or supplement
thereto, or in any “issuer information” (as defined in Rule 433 under the
Securities Act) of the Company, which “issuer information” is required to be,
or is, filed with the Commission or otherwise contained in any Free Writing
Prospectus, or any amendment or supplement thereto, or any omission or alleged
omission to state therein, or in any document incorporated by reference
therein, a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that (A) the Company shall
not be liable under this Section 8.1(i) to the extent that a court of
competent jurisdiction shall have determined by a final judgment (from which no
further appeals are available) that such loss, claim, damage, liability or
expense resulting directly and solely from any such acts or failures to act,
undertaken or omitted to be taken by the Investor, any Broker-Dealer or such
person through its bad faith or willful misconduct, (B) the foregoing
indemnity shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Investor or any Broker-Dealer expressly for use in the Current
Report or any Prospectus Supplement or Permitted Free Writing Prospectus, or
any amendment thereof or supplement thereto, and (C) with respect to the
Prospectus, the foregoing indemnity shall not inure to the benefit of the
Investor or any such person from whom the person asserting any loss, claim,
damage, liability or expense purchased Common Stock, if copies of all
Prospectus 


 


33

















 


Supplements
required to be filed pursuant to Section 1.4 and 5.9, together with the
Base Prospectus, were timely delivered or made available to the Investor
pursuant hereto and a copy of the Base Prospectus, together with a Prospectus
Supplement (as applicable), was not sent or given by or on behalf of the
Investor or any such person to such person, if required by law to have been
delivered, at or prior to the written confirmation of the sale of the Common
Stock to such person, and if delivery of the Base Prospectus, together with a
Prospectus Supplement (as applicable), would have cured the defect giving rise
to such loss, claim, damage, liability or expense.


 


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


 


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


 


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 


 


34

















 


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.


 


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.


 


35
















 


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


 


ARTICLE IX

MISCELLANEOUS


 


Section 9.1.           Fees and Expenses.


 


(i)            Each party shall bear its own fees
and expenses related to the transactions contemplated by this Agreement; provided,
however, that the Company shall pay, on the Effective Date, by wire
transfer of immediately available funds to an account designated by the
Investor’s counsel, promptly following the receipt of an invoice therefor, all
reasonable attorneys’ fees and expenses (exclusive of disbursements and
out-of-pocket expenses) incurred by the Investor, up to $35,000, in connection
with the preparation, negotiation, execution and delivery of this Agreement,
legal due diligence of the Company and review of the Registration Statement,
the Base Prospectus, the Current Report, any Permitted Free Writing Prospectus
and all other related transaction documentation. 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 valued
at the applicable Discount Price of the Shares failed to be delivered; provided
that the issuance thereof by the Company would not violate the Securities Act
or any applicable U.S. state securities laws), as liquidated damages for such
failure and not as a penalty, an amount equal to 2.0% of the payment required
to be paid by the Investor on such Settlement Date (i.e., the sum of the Fixed
Amount Requested and the Optional Amount Dollar Amount) for the initial 30 days
following such Settlement Date until the Shares have been delivered, and an
additional 2.0% for each additional 30-day period thereafter until the Shares
have been delivered, which amount shall be prorated for such periods less than
30 days (subject in all cases to the Trading Market Limit).


 


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


 


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


 


36

















 


(ii)           Each of the Company and the Investor (a) hereby
irrevocably submits to the jurisdiction of the United States District Court and
other courts of the United States sitting in the State of 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
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:

  	
  Dyax Corp.

  
	
   

  	
  300
  Technology Square

  
	
   

  	
  Cambridge,
  Massachusetts 02139

  
	
   

  	
  Telephone
  Number: (617) 225-2500

  
	
   

  	
  Fax: (617)
  225-2501

  
	
   

  	
  Attention:
  Henry E. Blair, Chief Executive Officer

  



 


37

















 


	
  With copies to:

  	
  Edwards
  Angell Palmer & Dodge LLP

  
	
   

  	
  111
  Huntington Avenue

  
	
   

  	
  Boston,
  Massachusetts 02199

  
	
   

  	
  Telephone
  Number: (617) 239-0100

  
	
   

  	
  Fax: (617)
  227-4420

  
	
   

  	
  Attention:
  Stacie S. Aarestad, Esq.

  
	
   

  	
   

  
	
  If to the Investor:

  	
  Azimuth
  Opportunity Ltd.

  
	
   

  	
  c/o Folio
  Administrators Limited

  
	
   

  	
  Folio House

  
	
   

  	
  P.O. Box
  800

  
	
   

  	
  Road Town,
  Tortola VG1110

  
	
   

  	
  British
  Virgin Islands

  
	
   

  	
  Telephone
  Number: (284) 494-7065 Ext. 250

  
	
   

  	
  Fax: (284)
  494-8356/7422

  
	
   

  	
  Attention:
  Tamara Singh

  
	
   

  	
   

  
	
  With copies to:

  	
  Greenberg
  Traurig, LLP

  
	
   

  	
  The MetLife
  Building

  
	
   

  	
  200 Park
  Avenue

  
	
   

  	
  New York, NY
  10166

  
	
   

  	
  Telephone
  Number: (212) 801-9200

  
	
   

  	
  Fax: (212)
  801-6400

  
	
   

  	
  Attention:  Anthony
  J. Marsico, Esq.

  



 


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


 


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


 


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


 


Section 9.7.           Successors
and Assigns. 
The Investor may not assign this Agreement to any person without the
prior consent of the Company, in the Company’s sole discretion. This Agreement
shall be binding upon and inure to the benefit of the parties and their
successors and


 


38

















 


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 that would cause the application
of the laws of any other jurisdiction.


 


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, digital or electronic
transmission, such transmission shall constitute delivery of the manually
executed original and the party using such means of delivery shall thereafter
cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery
hereof.  Failure to provide or delay in
the delivery of such additional executed signature pages shall not
adversely affect the efficacy of the original delivery.


 


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


 


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


 


Section 9.13.        Further
Assurances. 
From and after the date of this Agreement, upon the request of the
Investor or the Company, each of the Company and the Investor shall execute and
deliver such instrument, documents and other writings as may be reasonably
necessary or


 


39

















 


desirable to confirm and carry
out and to effectuate fully the intent and purposes of this Agreement.


 


[Signature Page Follows]


 


40

















 


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.


 


	
   

  	
  DYAX CORP.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ George Migausky

  
	
   

  	
   

  	
  Name:  George Migausky

  
	
   

  	
   

  	
  Title:  EVP and Chief Financial
  Officer

  
	
   

  	
   

  
	
   

  	
  AZIMUTH
  OPPORTUNITY LTD.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deirdre M. McCoy

  
	
   

  	
   

  	
  Name:  Deirdre M. McCoy

  
	
   

  	
   

  	
  Title:  Corporate Secretary

  
				



 


41
















 


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 October 30, 2008, a preliminary form of
which is included in the Registration Statement, including the documents
incorporated by reference therein.


 


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


 


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


 


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


 


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


 


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


 


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


 


(j)            “Commission Documents” shall
mean (1) all reports, schedules, registrations, forms, statements,
information and other documents filed by the Company with the Commission
pursuant to the reporting requirements of the Exchange Act, including all
material filed pursuant to Section 13(a) or 15(d) of the
Exchange Act, which have been filed by the Company since December 31, 2007
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, 2007 (the “2007 Form 10-K”),
(2) the Registration Statement, as the same may be amended from time to
time, the Prospectus and each Prospectus Supplement, and each Permitted Free
Writing Prospectus and (3) all information contained in such filings and
all documents and disclosures that have been and heretofore shall be
incorporated by reference therein.


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(w)          “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.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


(jj)           “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.


 


(kk)         “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.


 


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


 


(mm)       “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.


 


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


 


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


 


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


 


(qq)         “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.


 


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


 


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


 


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


 


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


 


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


 


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


 


(xx)          “Pricing Period shall mean a
period of 10 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.


 

















 


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


 


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


 


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


 


(bbb)      “Registration Statement” shall mean
the registration statement on Form S-3, Commission File Number 333-148317,
filed by the Company with the Commission under the Securities Act for the
registration of the Shares, as such Registration Statement may be amended and
supplemented from time to time, including the documents incorporated by
reference therein and the information deemed to be a part thereof at the time
of effectiveness pursuant to Rule 430A or Rule 430B under the
Securities Act.


 


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


 


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


 


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


 


(fff)         “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.


 


(ggg)      “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.


 


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


 


(iii)          “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.


 


(jjj)          “Threshold Price” is the lowest
price (except to the extent otherwise provided in Section 2.6) at which
the Company may sell Shares during the applicable Pricing Period as set forth
in a Fixed Request Notice (not taking into account the applicable percentage discount
during such Pricing Period determined in accordance with Section 2.2); provided,
however, that at no time shall the Threshold Price be lower than $2.00
per share unless the Company and the Investor mutually shall agree.


 

















 


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


 


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


 


(mmm)    “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.


 


(nnn)      “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; provided,
however, that in the event the Company shall commence a transaction
involving the offer or sale of Common Stock or securities convertible into or
exchangeable for Common Stock (other than a “public offering” (within the
meaning and for purposes of IM-4350-3 of the NASDAQ Marketplace Rules) of
Common Stock or securities convertible into or exchangeable for Common Stock)
that may be aggregated with the transactions contemplated by this Agreement for
purposes of determining whether approval of the Company’s stockholders is
required under any bylaw, listed securities maintenance standards or other rules of
the Trading Market, the “Trading Market Limit” shall mean that number of shares
which, when added to the total number of shares of the Company’s Common Stock
that may be issued pursuant to such transaction, is one less than 20% of the
issued and outstanding shares of the Company’s Common Stock as of the Effective
Date.


 


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


 


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


 

















 


EXHIBIT A TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF FIXED REQUEST NOTICE


 


Reference is
made to the Common Stock Purchase Agreement dated as of  October 30, 2008, (the  “Purchase Agreement”) between Dyax
Corp., a corporation organized and existing under the laws of the State of
Delaware (the “Company”), and Azimuth Opportunity Ltd., an international
business company incorporated under the laws of the British Virgin Islands.
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement.


 


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


 


	
  Fixed Amount Requested:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optional Amount Dollar Amount:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pricing Period start date: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pricing Period end date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Fixed Request Threshold Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optional Amount Threshold Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dollar Amount of

  Common Stock Currently Unissued under

  the Registration Statement;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dollar Amount of

  Common Stock Currently Available under

  the Aggregate Limit:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile No.

  
					



 


AGREED AND ACCEPTED


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title:

  	
   

  



 

















 


EXHIBIT B TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF OPTIONAL AMOUNT NOTICE


 


	
  To:

  	
   

  	
   

  
	
  Fax#:

  	
   

  	
   

  
				



 


Reference is
made to the Common Stock Purchase Agreement dated as of October 30, 2008
(the “Purchase Agreement”) between Dyax Corp., a corporation organized
and existing under the laws of the State of Delaware (the “Company”),
and Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands (the “Investor”).
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement.


 


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


 


	
  Optional Amount Dollar Amount Exercised

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of Shares to be purchased

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  VWAP on the date hereof:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Discount Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Threshold Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Facsimile No.

  
					



 

















 


EXHIBIT C TO THE

COMMON STOCK PURCHASE AGREEMENT

CERTIFICATE OF THE COMPANY


 


CLOSING CERTIFICATE


 


                  
200


 


The
undersigned, the
[                      ]
of Dyax Corp., a corporation organized and existing under the laws of the State
of Delaware (the “Company”), delivers this certificate in connection
with the Common Stock Purchase Agreement, dated as of October 30, 2008
(the “Agreement”), by and between the Company and Azimuth Opportunity Ltd.,
an international business company incorporated under the laws of the British
Virgin Islands (the “Investor”), and hereby certifies on the date hereof
that (capitalized terms used herein without definition have the meanings
assigned to them in the Agreement):


 


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


 


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


 


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


 


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


 


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


 


	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  



 

















 


EXHIBIT D TO THE

COMMON STOCK PURCHASE AGREEMENT

COMPLIANCE CERTIFICATE


 


In connection
with the issuance of shares of common stock of Dyax Corp., a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
pursuant to the Fixed Request Notice, dated
[                          ],
delivered by the Company to Azimuth Opportunity Ltd. (the “Investor”)
pursuant to Article II of the Common Stock Purchase Agreement, dated October 30,
2008, by and between the Company and the Investor (the “Agreement”), the
undersigned hereby certifies as follows:


 


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


 


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


 


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


 


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


 


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


 


 


	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title: