Exhibit 10.1


COMMON STOCK PURCHASE AGREEMENT


          This Common Stock Purchase Agreement (this “Agreement”) is dated as of May 10, 2006, among Avigen, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”).


          WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, common stock of the Company as more fully described in this Agreement.


          NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:


ARTICLE I.
 DEFINITIONS


          1.1 Definitions In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:

	
  
 
  	
  
          “Action”   shall have the meaning ascribed to such term in Section 3.1(j).
  
	
   
  	
  
 
  
	
  
 
  	
  
          “Affiliate”   means any Person that, directly or indirectly through one or more   intermediaries, controls or is controlled by or is under common control with   a Person as such terms are used in and construed under Rule 144 under the   Securities Act.  With respect to a   Purchaser, any investment fund or managed account that is managed on a   discretionary basis by the same investment manager as such Purchaser will be   deemed to be an Affiliate of such Purchaser.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Closing”   means the closing of the purchase and sale of the Shares pursuant to Section   2.1.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Closing   Date” means the Trading Day when this Agreement has been executed and   delivered by the applicable parties hereto, and all conditions precedent to   (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the   Company’s obligations to deliver the Shares have been satisfied or waived.
  
	
  
 
  	
  
 
  
	
   
  	
  
          “Commission”   means the Securities and Exchange Commission.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Common   Stock” means the common stock of the Company, par value $0.001 per share,   and any other class of securities into which such securities may hereafter be   reclassified or changed into.
  












	
  
 
  	
  
          “Common   Stock Equivalents” means any securities of the Company which would   entitle the holder thereof to acquire at any time Common Stock, including,   without limitation, any debt, preferred stock, rights, options, warrants or   other instrument that is at any time convertible into or exercisable or   exchangeable for, or otherwise entitles the holder thereof to receive, Common   Stock.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Company   Counsel” means Cooley Godward LLP.
  
	
   
  	
  
 
  
	
  
 
  	
  
          “Company   Form 10-K” means the Company’s Annual Report on Form 10-K, as filed with   the Commission on March 16, 2006.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Effective   Date” means the date that the initial Registration Statement filed by the   Company is first declared effective by the Commission.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Evaluation   Date” shall have the meaning ascribed to such term in Section 3.1(p).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Exchange   Act” means the Securities Exchange Act of 1934, as amended, and the rules   and regulations promulgated thereunder.
  
	
   
  	
  
 
  
	
  
 
  	
  
          “Exempt   Issuance” means the issuance of (a) shares of Common Stock or options to   employees, officers or directors of the Company pursuant to any stock or   option plan duly adopted by the Board of Directors of the Company or a   majority of the members of a committee of non-employee directors established   for such purpose, (b) securities upon the exchange of any Shares issued   hereunder and/or other securities exercisable or exchangeable for or   convertible into shares of Common Stock issued and outstanding on the date of   this Agreement, provided that such securities have not been amended since the   date of this Agreement to increase the number of such securities or to   decrease the exercise, exchange or conversion price of any such securities,   and (c) securities issued pursuant to acquisitions or strategic transactions   approved by a majority of the directors (excluding any
directors who are   “interested” under the Delaware General Corporation Law), provided any such   issuance shall only be to a Person which is, itself or through its   subsidiaries, an operating company in a business synergistic with the   business of the Company and in which the Company receives benefits in   addition to the investment of funds, but shall not include a transaction in   which the Company is issuing securities primarily for the purpose of raising   capital or to an entity whose primary business is investing in securities.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “FW”   means Feldman Weinstein LLP with offices located at 420 Lexington Avenue,   Suite 2620, New York, New York 10170-0002.
  
	
   
  	
  
 
  
	
  
 
  	
  
          “GAAP”   shall have the meaning ascribed to such term in Section 3.1(h).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Intellectual   Property Rights” means all of the following: (i) patents, patent   applications, patent disclosures, and inventions (whether or not patentable   and whether or not reduced to    practice); (ii) trademarks, trademark applications, service marks,   trade names,; (iii) copyrights and copyrightable works; (iv) registrations,   applications and renewals for any of the foregoing; and (v) trade secrets,   licenses (including licenses of any Intellectual Property Rights).
  




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          “Liens”   means a lien, charge, security interest, encumbrance, right of first refusal,   preemptive right or other restriction.
  
	
  
 
  	
  
 
  
	
   
  	
  
          “Material   Adverse Effect” shall have the meaning assigned to such term in Section   3.1(b).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Material   Permits” shall have the meaning ascribed to such term in Section 3.1(m).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Per   Share Purchase Price” equals $5.37.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Person”   means an individual or corporation, partnership, trust, incorporated or unincorporated   association, joint venture, limited liability company, joint stock company,   sole proprietorship, government (or an agency or subdivision thereof) or   other entity of any kind.
  
	
  
 
  	
  
 
  
	
   
  	
  
          “Proceeding”   means an action, claim, suit, investigation or proceeding (including, without   limitation, an investigation or partial proceeding, such as a deposition),   whether commenced or threatened.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Prohibited   Transaction” shall have the meaning assigned to such term in Section   3.2(h).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Prospectus”   means the prospectus included in the Registration Statement (including,   without limitation, a prospectus that includes any information previously   omitted from a prospectus filed as part of an effective registration   statement in reliance upon Rule 430A promulgated under the Securities Act),   as amended or supplemented by any prospectus supplement, with respect to the   terms of the Offering of any portion of the Registrable Securities covered by   the Registration Statement, and all other amendments and supplements to the   Prospectus, including post-effective amendments, and all material   incorporated by reference or deemed to be incorporated by reference in such   Prospectus.
  
	
  
 
  	
  
 
  
	
   
  	
  
          “Registration   Statement” means the registration statement required to be filed under   Article V, including the Prospectus, amendments and supplements to such   registration statement or Prospectus, including pre- and post-effective   amendments, all exhibits thereto, and all material incorporated by reference   or deemed to be incorporated by reference in such registration statement.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Registrable   Securities” shall mean any Shares issued or issuable pursuant to this   Agreement together with any securities issued or issuable upon any stock   split, dividend or other distribution, adjustment, recapitalization or   similar event with respect to the foregoing; provided, however, that   any such Shares and securities shall cease to be Registrable Securities at   such time as they are sold pursuant to Rule 144 or pursuant to the   Registration Statement.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Required   Approvals” shall have the meaning ascribed to such term in Section   3.1(e).
  




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          “Required Effectiveness Date” shall have the   meaning ascribed to such term in Section 5.1(d)(ii).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Rule 144” means Rule 144 promulgated by the   Commission pursuant to the Securities Act, as such Rule may be amended from   time to time, or any similar rule or regulation hereafter adopted by the   Commission having substantially the same effect as such Rule.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “SEC Reports” shall have the meaning ascribed   to such term in Section 3.1(h).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Securities Act” means the Securities Act of   1933, as amended, and the rules and regulations promulgated thereunder.
  
	
  
 
  	
  
 
  
	
   
  	
  
          “Shares” means the shares of Common Stock issued   or issuable to each Purchaser pursuant to this Agreement.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Short Sales” shall include all “short sales”   as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall   not be deemed to include the location and/or reservation of borrowable shares   of Common Stock).
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Subscription Amount” means, as to each   Purchaser, the aggregate amount to be paid for Shares purchased hereunder as   specified below such Purchaser’s name on the signature page of this Agreement   and next to the heading “Subscription Amount”, in United States Dollars and   in immediately available funds.
  
	
  
 
  	
  
 
  
	
  
 
  	
  
          “Trading Day” means a day on which the Common   Stock is traded on a Trading Market.
  
	
  
 
  	
  
 
  
	
   
  	
  
          “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 Nasdaq Capital Market, the American Stock Exchange, the   New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin   Board.
  




ARTICLE II.
 PURCHASE AND SALE


          2.1 Closing.  On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser agrees to purchase, severally and not jointly, such Purchaser’s Subscription Amount which, together with the Subscription Amounts of the other Purchasers, in the aggregate, shall be up to $22,457,340 of Shares.  Each Purchaser shall deliver to the Company via wire transfer to the account identified in Section 2.2(b)(ii) or a certified check immediately available funds equal to their Subscription Amount and the Company shall deliver to each Purchaser their respective Shares as determined pursuant to Section 2.2(a) and the other items set forth in Section 2.2 to be delivered at the Closing.  Upon satisfaction of the conditions set
forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of FW, or such other location as the parties shall mutually agree.


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          2.2 Deliveries.


                    (a)     On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:


                              (i)       this Agreement duly executed by the Company;


                              (ii)      a legal opinion of Company Counsel, in form and substance previously agreed to by RBC Capital Markets Corporation (“RBC”) and BVF Partners L.P. (“BVF”); and


                              (iii)     a copy of the irrevocable instructions to the Company’s transfer agent instructing the transfer agent to deliver, on an expedited basis, a certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser.


                    (b)     On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:


                              (i)       this Agreement duly executed by such Purchaser; and


                              (ii)      such Purchaser’s Subscription Amount by wire transfer to the account as specified in writing by the Company or a certified check immediately available funds.


          2.3 Closing Conditions. 


                    (a)     The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:


                              (i)       the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Purchasers contained herein; 


                              (ii)      all obligations, covenants and agreements of the Purchasers required to be performed at or prior to the Closing Date shall have been performed; and


                              (iii)     the delivery by the Purchasers of the items set forth in Section 2.2(b) of this Agreement.


                    (b)     The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:


                              (i)       the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein;


                              (ii)      all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; 


                              (iii)     the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; 


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                              (iv)      there shall have been no Material Adverse Effect with respect to the Company since the date hereof;


                              (v)       Subscriptions for at least $10,000,000 have been received by the Company; and


                              (vi)      from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg Financial Markets shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, 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
escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Shares at the Closing.


ARTICLE III.
 REPRESENTATIONS AND WARRANTIES


          3.1 Representations and Warranties of the Company.  The Company hereby makes the following representations and warranties set forth below to each Purchaser:


                    (a)     Subsidiaries.  The Company has no subsidiaries.


                    (b)     Organization and Qualification.  The Company is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  The Company is not in violation or default of any of the provisions of its certificate of incorporation, bylaws or other organizational or charter documents.  The Company is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not reasonably be expected to result in a Material Adverse Effect and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. For purposes of this Agreement, “Material Adverse Effect” means a material adverse effect on (i) the legality, validity or enforceability of this Agreement, (ii) the results of operations, assets, liabilities, business, prospects or condition (financial or otherwise) of the Company, or (iii) the Company’s ability to perform its obligations under this Agreement. 


                    (c)     Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder.


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The execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby (including authorization and issuance of the Shares and delivery thereof) have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith other than in connection with the Required Approvals.  This Agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies. 


                    (d)     No Conflicts.  The execution, delivery and performance of this Agreement by the Company, the issuance and sale of the Shares and the consummation by the Company of the other transactions contemplated hereby do not and will not (i) conflict with or violate any provision of the Company’s certificate of incorporation or the Company’s bylaws, as in effect on the date hereof and the Closing Date, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected, or (iv) conflict with, or result in a breach or violation of any material term and provision of, or constitute a default under any agreement or instrument to which the Company is a party or by which the Company is bound or to which any of its assets or properties is subject; except in the case of each of clauses (ii), (iii) and (iv), such as has not or would not reasonably be expected to result in a Material Adverse Effect.


                    (e)     Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of this Agreement, other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Registration Statement, (iii) application(s) to each applicable Trading Market for the listing of the Shares for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the
“Required Approvals”).  The Company does not have a shareholder rights plan, commonly referred to as a “poison pill.”


                    (f)     Issuance of the Shares.  The Shares are duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in this Agreement.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement.


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                    (g)     Capitalization.  The capitalization of the Company is as set forth in the most recent periodic SEC Report as of the date set forth therein and no material change has occurred since the date of said SEC Report.  The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement.  Except as a result of the
purchase and sale of the Shares, and except as set forth in the most recent periodic SEC Report (and for the grant of employee stock options under the Company’s stock option plans), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  The issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Shares.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.  Except as provided in this Agreement, no Person has the right to require the Company to register any securities of the Company under the Securities Act, whether on a demand basis or in connection with the registration of securities of the Company for its own
account or for the account of any other person.


                    (h)     SEC Reports; Financial Statements; Eligibility for Form S-3.  Since December 31, 2004, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension, except where the failure to timely file would not cause the Company to lose its ability to use Form S-3.  To the Company’s knowledge and belief (i) the Company is
eligible to use Form S-3 to register the Shares hereunder for sale by the Purchasers as contemplated in Article V hereof, and (ii) no facts or circumstances currently exist or are pending or threatened which would prevent the Company from remaining eligible to use Form S-3 to register the Shares on the basis contemplated hereunder.


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As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company as of and for 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, immaterial, year-end audit adjustments.  The Company is engaged in all material respects only in the business described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company.


                    (i)     Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed prior to the date hereof in a subsequent SEC Report, (i) there has been no event, occurrence or development that has had or that would reasonably be expected to have or result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP and which were immaterial, (iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (v) there has been no damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company, in each case in excess of $100,000 individually or $250,000 in the aggregate, (vi) there has been no change or amendment to any material contract or arrangement or waiver, other than in the ordinary course of business, by the Company of any material right or of a material debt owed to it, (vii) the Company has not lost the services of or terminated or changed the status of any key employee and there has been no change in the composition or duties of the senior management of the Company, other than the departure of the Company’s Chief Medical Officer disclosed by press release on March 27, 2006, and (viii) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company
stock option plans.  Except with respect to Exhibits 10.58 and 10.59 to the Company Form 10-K, the Company does not have pending before the Commission any request for confidential treatment of information.  Except for the entering into of this Agreement and the issuance of the Shares contemplated by this Agreement, no event, liability or development has occurred or exists with respect to the Company or its business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed at least one Trading Day prior to the date that this representation is made.


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                    (j)     Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of this Agreement or the Shares or (ii) together with any other such actions, suits, inquiries, notices of violations, proceedings or investigations, has had or would reasonably be expected to have or result in a Material Adverse Effect.  Neither the Company nor any director or officer thereof, is or has been the subject of
any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.  


                    (k)     Employment Matters.   


                              (i)       No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company to any liability with respect to any of the foregoing matters.  The Company is in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.


                              (ii)      Except as disclosed in the SEC Reports, the Company is not a party to or bound by any collective bargaining agreements or other agreements with labor organizations.  The Company has not violated in any material respect any laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees, labor organizations or any laws, regulations or orders affecting employment discrimination, equal opportunity employment, or employees’ health, safety, welfare, wages and hours. 


                              (iii)     The Company is, and at all times has been, in compliance in all material respects with all applicable laws respecting employment (including laws relating to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration and naturalization.  There are no claims pending against the Company before the Equal Employment Opportunity Commission or any other administrative body or in any court asserting any violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination Act of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance barring discrimination in employment.


                              (iv)     Except as disclosed in the SEC Filings, the Company is not a party to, or bound by, any employment or other contract or agreement that contains any severance, termination pay or change of control liability or obligation, including, without limitation, any “excess parachute payment,” as defined in Section 2806(b) of the Internal Revenue Code.


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                              (v)       To the Company’s knowledge, each of the Company’s employees is a Person who is either a United States citizen or a permanent resident entitled to work in the United States.  To the Company’s knowledge, the Company has no liability for the improper classification by the Company of such employees as independent contractors or leased employees prior to the Closing.


                    (l)     Compliance.  The Company (i) is not in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is not in violation of any order of any court, arbitrator or governmental body, and (iii) is not nor has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to
its business and all such laws that affect the environment, except in each case as would not reasonably be expected to result in a Material Adverse Effect.


                    (m)     Regulatory Permits.  The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business as described in the Company Form 10-K, except where the failure to possess such permits would not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and the Company has not received any notice of proceedings relating to the revocation or modification of any Material Permit.


                    (n)     Title to Assets.  The Company has good and marketable title in all personal property owned by it that is material to the business of the Company, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any facilities held under lease by the Company are held under valid, subsisting and enforceable leases with which the Company is in compliance in all material respects.


                    (o)     Patents and Trademarks.  Except as described in the SEC Reports, to the Company’s knowledge and in all material respects:


                              (i)       All Intellectual Property Rights of the Company or licensed by it and necessary for the conduct of its business are currently in compliance with all legal requirements (including timely filings, proofs and payments of fees) and are valid and enforceable, subject, in the case of any patent application, to any modification or other action that may be taken by the Patent and Trademark Office.  No Intellectual Property Rights of the Company which are necessary for the conduct of Company’s business as currently conducted or as currently proposed to be conducted has been or is now involved in any cancellation, dispute or litigation, and no such action is threatened.  No patent of the Company has been or is now involved in any
interference, reissue, re-examination or opposition proceeding.


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                              (ii)      All of the licenses and sublicenses and consent, royalty or other agreements concerning Intellectual Property Rights which are necessary for the conduct of the Company’s business as currently conducted or as currently proposed to be conducted to which the Company  is a party or by which any of its assets are bound (other than commercially available, off-the-shelf software application programs having a retail acquisition price of less than $25,000 per license) (collectively, “License Agreements”) are valid and binding obligations of the Company  and the other parties thereto, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally, and there exists no event or condition which will result in a material violation or breach of or constitute (with or without due notice or lapse of time or both) a default by the Company or any of its Subsidiaries under any such License Agreement.


                              (iii)     The Company has filed for, and will use commercially reasonable efforts to obtain, patent rights that it believes will be material for use in connection with its business as described in the Company Form 10-K and which the failure to so have would reasonably be expected to have a Material Adverse Effect.  The Company has not received any written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person.  The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of all of its Intellectual Property Rights, except where failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 



                    (p)     Sarbanes-Oxley; Internal Accounting Controls.  The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date.  The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


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                    (q)     Certain Fees.  Except for fees to be paid to RBC and the legal fees described in Section 6.2, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.


                    (r)     Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the Trading Market.


                    (s)     Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Shares, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  


                    (t)     Registration Rights.  Other than each of the Purchasers, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.


                    (u)     Listing and Maintenance Requirements.  The Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance requirements.


                    (v)     Disclosure.  Except for the material terms and conditions of the transactions contemplated by this Agreement, the Company confirms that, neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company.  All disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby with respect to the representations and warranties made herein are true and correct with respect to such representations and warranties and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.


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The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.


                    (w)     No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.


                    (x)     No General Solicitation.  Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising.  The Company has offered the Shares for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.


                    (y)     Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is  in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.


                    (z)     Acknowledgment Regarding Purchasers’ Purchase of Shares.  The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Purchasers’ purchase of the Shares.  The Company further represents to each Purchaser that the Company’s decision
to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


                    (aa)   
Acknowledgement Regarding Purchasers’ Trading Activity.
Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(h) and 4.11 hereof), it is understood and acknowledged by the Company (i) that none of the Purchasers have been asked to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Shares
for any specified term; 


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(ii) that past or future open market or other transactions by any Purchaser, including Short Sales, and specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) that any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in the Common Stock, and (iv) that each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction.  The Company further understands and acknowledges that (a) one or more Purchasers may engage in hedging activities at various times during the period that the Shares are outstanding, and (b) such hedging
activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a breach of this Agreement.


                    (bb)   Regulation M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares in violation of Regulation M under the Exchange Act, (ii) sold (except pursuant to this Agreement), bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Shares, or (iii) within 12 months prior to the date of this Agreement, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with
the placement of the Shares.


          3.2 Representations and Warranties of the Purchasers.  Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants as of the date hereof and as of the Closing Date to the Company as follows:


                    (a)     Organization; Authority.  Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of such Purchaser.  This Agreement has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms,
except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.


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                    (b)     Own Account.  Such Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Shares or any part thereof, has no present intention of distributing any of such Shares and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares (this representation and warranty not limiting such Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Shares hereunder in the
ordinary course of its business.


                    (c)     Rule 144.  Such Purchaser understands that the Shares must be held indefinitely unless such Shares are registered under the Securities Act or an exemption from registration is available.  Such Purchaser acknowledges that it is familiar with Rule 144, and that Purchaser has been advised that Rule 144 permits resales only under certain circumstances.  Such Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any Shares without either registration under the Securities Act or the existence of another exemption from such registration requirement.


                    (d)     Purchaser Status.  At the time such Purchaser was offered the Shares, it was, and at the date hereof it is, either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.  Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.  


                    (e)     Experience of Such Purchaser.  Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Shares, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.


                    (f)     General.  Such Purchaser understands that the Shares are being offered and sold in reliance on a transactional exemption from the registration requirements of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Shares.  Such Purchaser understands that no United States federal or state agency or any government or governmental agency has passed upon or made any recommendation or endorsement of the Shares.


                    (g)     General Solicitation.  Such Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.


                    (h)     Short Sales and Confidentiality Prior To The Date Hereof.  During the last thirty (30) days prior to the date hereof, neither such Purchaser nor any Affiliate of such Purchaser, foreign or domestic, has, directly or indirectly, effected or agreed to effect any Short Sale, whether or not against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the 1934 Act) with respect to the Common Stock,


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borrowed or pre-borrowed any shares of Common Stock, or granted any other right (including, without limitation, any put or call option) with respect to the Common Stock or with respect to any security that includes, relates to or derived any significant part of its value from the Common Stock or otherwise sought to hedge its position in the Securities (each, a “Prohibited Transaction”). Notwithstanding the foregoing, in the case of a Purchaser and/or its Affiliates that is, individually or collectively, a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s or Affiliates assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s or Affiliates assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio managers that
have knowledge about the financing transaction contemplated by this Agreement.  Other than to other Persons party (along with counsel) to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).


                    (i)     Receipt of Information by Such Purchaser.  Such Purchaser has had access to and has reviewed the SEC Reports.


                    (j)     Section 16 and Other Commission Filings. Such Purchaser acknowledges and agrees that it shall be solely responsible for timely making any required filings with the Commission, including without limitation any Section 16 filings or filings on Schedule 13D or 13G, on behalf of itself or its Affiliates and acknowledges and agrees that the Company shall have no responsibility or obligations to the Purchasers or their Affiliates in connection therewith.


                    (k)     Questionnaire.  The information contained in the selling stockholder questionnaire in the form of Exhibit B attached hereto delivered by the Purchaser in connection with this Agreement is complete and accurate in all respects.


ARTICLE IV.
 OTHER AGREEMENTS OF THE PARTIES


          4.1 Transfer Restrictions.


                    (a)     The Shares may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall
have the rights of a Purchaser under this Agreement.


                    (b)     The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Shares in the following form:


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	 THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER

 THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.






	
  
 
  	
  
          The   Company acknowledges and agrees that a Purchaser may from time to time pledge   pursuant to a bona fide margin agreement with a registered broker-dealer or   grant a security interest in some or all of the Shares to a financial   institution that is an “accredited investor” as defined in Rule 501(a) under   the Securities Act and who agrees to be bound by the provisions of this   Agreement and, if required under the terms of such arrangement, such   Purchaser may transfer pledged or secured Shares to the pledgees or secured   parties.  Such a pledge or transfer   would not be subject to approval of the Company and no legal opinion of legal   counsel of the pledgee, secured party or pledgor shall be required in   connection therewith.  Further, no   notice shall be required of such pledge.    At the appropriate Purchaser’s expense, the Company will execute and   deliver such re

asonable documentation as a pledgee or secured party of Shares   may reasonably request in connection with a pledge or transfer of the Shares,   including, if the Shares are subject to registration pursuant to Article V   hereof, the preparation and filing of any required prospectus supplement   under Rule 424(b)(3) under the Securities Act or other applicable provision   of the Securities Act to appropriately amend the list of selling stockholders   thereunder.
  



                    (c)  Certificates evidencing the Shares shall not contain the legend set forth in Section 4.1(b), (i) following a sale of such Shares pursuant to an effective registration statement (including the Registration Statement), or (ii) following any sale of such Shares pursuant to Rule 144, or (iii) if such Shares are eligible for sale under Rule 144(k); provided, however, that in each of instances (ii) through (iii) above, (A) each Purchaser shall have provided representations that such Purchaser is permitted to dispose of such Shares without limitation as to amount or manner of sale pursuant to Rule 144 under the Securities Act and (B) such certificates evidencing the Shares shall have been surrendered along with a notice requesting removal of any legend and requesting the issuance of new certificates free of the legend to
replace those surrendered.  The Company shall cause its counsel to issue a legal opinion to, or otherwise 


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instruct, the Company’s transfer agent promptly after receipt of a request for legend removal in accordance with this Section 4.1(c) if required by the Company’s transfer agent to effect the removal of the legend hereunder.


          4.2 Furnishing of Information.  Until the first date upon which each Purchaser may sell all of the Shares owned by it without reliance on Rule 144 (other than Rule 144(k)), the Company covenants to use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. The Company further covenants that, until the second anniversary of the Closing, it will take such further action as any holder of Shares may reasonably request, to the extent required from time to time to enable such Person to sell such Shares without registration under the Securities Act within the requirements of the exemption provided by Rule 144.  


          4.3 Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration under the Securities Act of the sale of the Shares to the Purchasers or that would be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.


          4.4 Securities Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m. Eastern time on the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and shall, by 8:30 a.m. Eastern time on the Trading Day immediately following the Closing Date, issue a Current Report on Form 8-K disclosing the closing of the transactions contemplated hereby and shall attach this Agreement thereto.  From and after the filing of the Form 8-K with the SEC pursuant to the preceding sentence, no Purchaser shall be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries or any of its respective officers, directors, employees or agents, that is not disclosed in the Form 8-K or SEC Reports.  The Company shall not, and shall not cause any of its officers, directors,
employees and agents to, provide any Purchaser with any material nonpublic information regarding the Company from and after the filing of the Form 8-K with the SEC without the express written consent of such Purchaser.  The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby and which name such Purchaser, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company naming such Purchaser, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.  Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with (A) the Registration Statement and (B) the filing of the final 


19









Agreement (including signature pages hereto) with the Commission and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this subclause (ii).


          4.5 Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.  The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company.


          4.6 Use of Proceeds.  The Company shall use the net proceeds from the sale of the Shares hereunder for working capital purposes and the conduct of the Company’s business, and not for the satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), to redeem any Common Stock or Common Stock Equivalents or to settle any outstanding litigation.


          4.7 Reservation of Common Stock.  As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement.   


          4.8 Listing of Common Stock.  The Company hereby agrees to use commercially reasonable efforts, as soon as reasonably practicable following the Closing, to list all of the Shares on the Company’s principal Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of the Shares, and will take such other action as is necessary to cause all of the Shares to be listed on such other Trading Market as promptly as possible.  The Company will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Company’s principal Trading Market.


          4.9 Equal Treatment of Purchasers.  No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties to this Agreement.  For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended to treat for the Company the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Shares or otherwise.


          4.10 Sales by Purchasers.  Each Purchaser will sell any Shares held by it in compliance with applicable prospectus delivery requirements, if any, or otherwise in compliance with the requirements for an exemption from registration under the Securities Act and the rules and regulations promulgated thereunder.  No Purchaser will make any sale, transfer or other disposition of the Shares in violation of federal or state securities laws.


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          4.11 Short Sales and Confidentiality After The Date Hereof.  Prior to the earliest to occur of (i) the termination of this Agreement, (ii) the Effective Date or (iii) the Required Effectiveness Date, each Purchaser, severally and not jointly with the other Purchasers, covenants that it shall not, and shall cause its Affiliates not to, engage, directly or indirectly, in (a) a Prohibited Transaction nor (b) any sale, assignment, pledge, hypothecation, put, call, or other transfer of any of the shares of Common Stock, warrants or other securities of the issuer acquired hereunder. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.4, such Purchaser will maintain the confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).  Each Purchaser understands and acknowledges, severally and not jointly with any other Purchaser, that the Commission currently takes the position that coverage of short sales of shares of the Common Stock “against the box” prior to the Effective Date of the Registration Statement with the Shares is a violation of Section 5 of the Securities Act, as set forth in Item 65, Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief Counsel, Division of Corporation Finance.  Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth
above shall only apply with respect to the portion of assets managed by the portfolio managers that have knowledge about the financing transaction contemplated by this Agreement.


          4.12 Delivery of Shares After Closing.  The Company shall deliver, or cause to be delivered, the Shares purchased by each Purchaser to such Purchaser within three Trading Days of the Closing Date.


          4.13 Form D.  The Company agrees to timely file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser.


ARTICLE V.
 REGISTRATION RIGHTS


          5.1 Shelf Registration.


                    (a)  The Company shall use commercially reasonable efforts to cause to prepare and file with the Commission a “Shelf” Registration Statement covering the resale of all Registrable Securities for an offering to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act on or prior to thirty (30) days from the date hereof (such date of actual filing, the “Filing Date”).  The Registration Statement shall be on Form S-3 (or if such form is not available to the Company, on such other form as is then available to the Company) 


21









and shall contain (except if otherwise directed by the Purchasers) a “Plan of Distribution” substantially in the form attached hereto as Exhibit A.  Each Purchaser has furnished or will promptly furnish to the Company a completed questionnaire in the form set forth as Exhibit B hereto. Each Purchaser agrees to promptly update such questionnaire in order to make the information previously furnished to the Company by such Purchaser not materially misleading.  The Registration Statement shall register the Registrable Securities for resale by the holders thereof.


                    (b)  The Company shall use commercially reasonable efforts to cause the Registration Statement to be declared effective by the Commission on or prior to the 90th day following the Closing, and shall use commercially reasonable efforts to keep the Registration Statement continuously effective under the Securities Act until the earlier of (i) the second anniversary of the Closing, or (ii) the date when all Registrable Securities covered by such Registration Statement have been sold (the period ending on such earlier date, the “Effectiveness Period”).


                    (c)  The Company shall request effectiveness of the Registration Statement (and any post-effective amendments thereto) within five (5) business days following the Company’s receipt of notice from the Commission that the Registration Statement will not be reviewed by the Commission or that the Commission has completed its review of such Registration Statement and has no further comments.  The Company shall request effectiveness of the Registration Statement (and any post-effective amendments thereto) at 5:00 p.m., Eastern time, on the effective date and use its commercially reasonable efforts to deliver the Prospectus (or any supplements thereto), which delivery may be made electronically, by 8:00 a.m. Eastern time on the second business day after such effective date.


                    (d)  Upon the occurrence of any Event (as defined below), as partial relief for the damages suffered therefrom by the Purchasers (which remedy shall not be exclusive of any other remedies which are available at law or in equity; and provided further that the Purchasers shall be entitled to pursue an action for specific performance of the Company’s obligations under Section 5.1(b) above and any such actions at law, in equity, for specific performance or otherwise shall not require the Purchaser to post a bond), the Company shall pay to each Purchaser, as liquidated damages and not as a penalty (it being agreed that it would not be feasible to ascertain the extent of such damages with precision), such amounts and at such times as shall be determined pursuant to this Section 5.1(d).  For such purposes, each of the
following shall constitute an “Event”:


                              (i)     the Filing Date does not occur on the date contemplated by Section 5.1(a) above (such date is defined herein as the “Filing Default Date”), in which case the Company shall pay to each Purchaser an amount in cash equal to: (A) one percent (1.0%) of the aggregate purchase price paid by such Purchaser for the first 30-day period following such Filing Default, on a pro-rata basis for any portion of such 30-day period; and (B) for each successive 30-day period thereafter or any portion thereof until the Filing Date, one percent (1.0%) of the aggregate purchase price paid by such Purchaser, on a pro-rata basis for any portion of such 30-day period, to be paid at the end of each 30-day period; or


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                               (ii)     the Registration Statement is not declared effective on or prior to the date that is 90 days after the Closing Date (the “Required Effectiveness Date”), in which case the Company shall pay to each Purchaser an amount in cash equal to: (A) for the first 30 days after such 90th day, one percent (1.0%) of the aggregate purchase price paid by such Purchaser, on a pro-rata basis for any portion of such 30-day period; and (B) for each successive 30-day period thereafter until the Registration Statement is deemed effective, one percent (1.0%) of the aggregate purchase price paid by such Purchaser, on a pro rata basis for any portion of such 30-day period, at the end of each 30-day period. 


The payment obligations of the Company under this Section 5.1(d) (i) shall be cumulative, and (ii) notwithstanding any of the above or any other provision set forth in this Agreement, shall not exceed, in the aggregate (including pursuant to the penultimate sentence of Section 5.2(f)), 10% of the aggregate purchase price paid by such Purchaser. 


          5.2 Registration Procedures.  In connection with the Company’s registration obligations hereunder, the Company shall:


                    (a)  Use commercially reasonable efforts: (i) to prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep the Registration Statement continuously effective as to the Registrable Securities for the Effectiveness Period; (ii) to cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; and (iii) to respond as promptly as reasonably possible, and in any event within ten (10) trading days, to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and as promptly as reasonably possible provide RBC true and complete copies of all correspondence from and to the Commission relating to the
Registration Statement.


                    (b)  Notify RBC and the Purchasers as promptly as reasonably possible, and (if requested by RBC and the Purchasers) confirm such notice in writing no later than one (1) trading day thereafter, of any of the following events:  (i) the Commission notifies the Company whether there will be a “review” of the Registration Statement; (ii) the Commission comments in writing on the Registration Statement (in which case the Company shall deliver to RBC a copy of such comments); (iii) the Commission or any other Federal or state governmental authority in writing requests any amendment or supplement to the Registration Statement or Prospectus or requests additional information related thereto; (iv) if the Commission issues any stop order suspending the effectiveness of the Registration Statement or initiates any Proceeding for that
purpose; (v) the Company receives notice in writing of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; (vi) a pending proceeding against the Company under Section 8A of the Securities Act in connection with the offering of the Registrable Securities; or (vii) the financial statements included in the Registration Statement become ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference is untrue in any material respect or any revision to the Registration Statement, Prospectus or other document is required so that it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not
misleading.  


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                    (c)  Use commercially reasonable efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.


                    (d)  Deliver to each Purchaser, which delivery may be made electronically, by 8:00 a.m. Eastern time on the second business day after the date first available, without charge, such reasonable number of copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Purchasers may reasonably request.  The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Purchasers in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.


                    (e)  To the extent required by law, prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the selling Purchasers in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “blue sky” laws of such jurisdictions within the United States as any Purchaser requests in writing, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided, however, that the Company shall not be required
for any such purpose (i) to consent to service of process or to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not be otherwise required to consent or qualify but for the requirements of this Section 5.2(e), or (ii) to subject itself to taxation.


                    (f)  Upon the occurrence of any event described in Section 5.2(b)(vi) above, as promptly as reasonably practicable, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will 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 light of the circumstances under which they were made, not misleading; provided, however, that the Company may suspend sales pursuant to the Registration Statement for a period or periods in the aggregate
of up to thirty (30) days (unless the holders of at least two-thirds of the then-eligible Registrable Securities consisting of outstanding shares of Common Stock consent in writing to a longer delay of up to an additional thirty (30) days) in any twelve-month period if the Company furnishes to the holders of the Registrable Securities a certificate signed by the Company’s Chief Executive Officer stating that in the good faith judgment of the Company’s Board of Directors, (i) the offering could reasonably be expected to interfere in any material respect with any acquisition, corporate reorganization or other material transaction under consideration by the Company or (ii) there is some other material development relating to the operations or condition 


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(financial or other) of the Company that has not been disclosed to the general public and as to which it is in the Company’s best interests not to disclose such development.  Each violation of the Company’s obligation not to suspend sales pursuant to the Registration Statement longer than permitted pursuant to the proviso of this Section 5.2(f) shall be deemed an “Event” and for each such default, Purchaser shall be entitled to the payment provisions set forth in Section 5.1(d)(i), but treating the aggregate purchase price referred to in such Section 5.1(d)(i) as the aggregate purchase price of only the Affected Securities.  For the purposes hereof, the “Affected Securities” shall mean only those Shares held by Purchaser at such time that may not be sold in any three month period in reliance on Rule 144.  


                    (g)  Comply with all applicable rules and regulations of the Commission in all material respects.


                    (h)  File electronically on EDGAR the Registration Statement and any amendments or supplements thereto.


          5.3 Registration Expenses.  The Company shall pay (or reimburse the Purchasers for) all fees and expenses incident to the performance of or compliance with this Agreement by the Company, including without limitation (a) all registration and filing fees and expenses, including without limitation those related to filings with the Commission, Nasdaq and in connection with applicable state securities or “Blue Sky” laws (including, without limitation, reasonable fees and disbursements of counsel in connection with Blue Sky qualifications of the Registrable Securities under the laws of such jurisdictions as holders of a majority of the Registrable Securities being sold pursuant to the Registration Statement may designate), (b) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing copies of Prospectuses reasonably
requested by the Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, and (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement.  Notwithstanding the foregoing, each Purchaser shall pay any and all costs, fees, discounts or commissions attributable to the sale of its respective Registrable Securities.


          5.4 Indemnification.


                    (a)  Indemnification by the Company.  The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Purchaser, and each of their officers and directors, partners, members, agents, brokers and employees of each of them, each Person who controls any such Purchaser (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, and each underwriter of Registrable Securities, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, settlement costs and expenses, including without limitation costs of preparation and reasonable attorneys’ fees (collectively, “Losses”), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or form of prospectus or in any amendment or supplement thereto, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein


25









 (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based upon information regarding such Purchaser furnished in writing to the Company by such Purchaser expressly for use therein, or to the extent that such information related to such Purchaser or such Purchaser’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Purchaser expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (which shall, however, be deemed to include disclosure substantially in accordance with the “Plan of Distribution” attached hereto), or (ii) in the case of an occurrence of an event of the type
specified in Section 5.2(b) above, the use by such Purchaser of an outdated or defective Prospectus after the Company has notified such Purchaser in writing that the Prospectus is outdated or defective and prior to the receipt by such Purchaser of the Advice contemplated in Section 5.5 below.  The Company shall notify RBC and the Purchasers promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.


                    (b)  Indemnification by Purchasers.  Each Purchaser shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, and each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses  arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus or in any amendment or supplement thereto, or arising out of or based upon any omission of a material fact required to be stated therein or necessary to make the statements therein not
misleading to the extent, but only to the extent, that such untrue statement or omission is contained in any information furnished in writing by such Purchaser to the Company specifically for inclusion in such Registration Statement or Prospectus or to the extent that (i) such untrue statements or omissions are based upon information regarding such Purchaser furnished in writing to the Company by such Purchaser expressly for use therein, or to the extent that such information related to such Purchaser or such Purchaser’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Purchaser expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (which shall, however, be deemed to include disclosure substantially in accordance with the “Plan of Distribution” attached hereto), or (ii) in the case of an occurrence of an event of the type specified in 5.2(b)
above, the use by such Purchaser of an outdated or defective Prospectus after the Company has notified such Purchaser in writing that the Prospectus is outdated or defective and prior to the receipt by such Purchaser of the Advice contemplated in Section 5.5 below.  In no event shall the liability of any selling Purchaser hereunder be greater in amount than the dollar amount of the net proceeds received by such Purchaser upon the sale of the Registrable Securities giving rise to such indemnification obligation.


                    (c)  Conduct of Indemnification Proceedings.  If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought 


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(the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof, provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have prejudiced the Indemnifying Party.  An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party; provided, however, that in the event that the Indemnifying Party shall be required to pay the fees and expenses of separate counsel, the Indemnifying Party shall only be required to pay the fees and expenses of one separate counsel for such
Indemnified Party or Parties.  The Indemnifying Party shall not be liable for any settlement of any such Proceeding affected without its written consent, which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.  All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, but no more frequently than on a monthly basis, within ten trading days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).


                    (d)  Contribution.  If a claim for indemnification under Section 5.4(a) or (b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or
omission or alleged omission of a material fact, has been taken or made by, or related to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, 


27









access to information and opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 5.4(d) was available to such party in accordance with its terms.


          The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding Section.  Notwithstanding the provision of this Section 5.4(d), no Purchaser shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Purchaser from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent misrepresentation.


          The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.


          5.5  Dispositions.  Each Purchaser agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.  Each Purchaser further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 5.2(b), such Purchaser will discontinue disposition of such Registrable Securities under the Registration Statement until such Purchaser’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 5.2(f), or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or
deemed to be incorporated by reference in such Prospectus or Registration Statement.  The Company may provide appropriate stop orders to enforce the provisions of this Section.


          5.6  No Piggy-Back on Registrations.  Neither the Company nor any of its security holders (other than the Purchasers) may include securities of the Company in the Registration Statement, and the Company shall not after the date hereof enter into any agreement providing any such right with respect to the Registration Statement to any of its security holders other than an aggregate of not more that an additional 15,000 shares of Common Stock.


          5.7  Piggy-Back Registrations.  If at any time during the Effectiveness Period, other than any suspension period referred to in Section 5.2(f), there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents 


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relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Purchaser written notice of such determination and if, within fifteen (15) days after receipt of such notice, any such Purchaser shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities not already covered by an effective Registration Statement such Purchaser requests to be registered.


          5.8  Rule 144. For a period of two years following the date hereof, the Company agrees with each holder of Registrable Securities to:


                    (a)     use commercially reasonable efforts to comply with the requirements of Rule 144(c) under the Securities Act with respect to current public information about the Company;


                    (b)     use commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time it is subject to such reporting requirements); and


                    (c)     furnish to any holder of Registrable Securities upon request (i) a written statement by the Company as to its compliance with the requirements of said Rule 144(c) and the reporting requirements of the Securities Act and the Exchange Act (at any time it is subject to such reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents of the Company as such holder may reasonably request to avail itself of any similar rule or regulation of the Commission allowing it to sell any such securities without registration.


          5.9  Early Termination.  Subject to the compliance with Section 4.2 hereunder, the obligations of the Company pursuant to this Article V shall not apply at any time during which the Company’s Common Stock is not registered under the Exchange Act. 


ARTICLE VI.
 MISCELLANEOUS


          6.1  Termination.  This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before May 17, 2006; provided, however, that the right to terminate this Agreement under this Section 6.1 shall not be available to any party whose breach of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date;  provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties).


          6.2  Fees and Expenses. Except as expressly set forth in this Agreement to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  Upon Closing, the Company shall promptly pay the reasonable fees and expenses of counsel to BVF in an amount not to exceed $10,000. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to the Purchasers.


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          6.3  Entire Agreement.  This Agreement, together with the exhibits hereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Agreement and exhibits.


          6.4  Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or
(d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.   Each Purchaser consents to the receipt of such notices in such manner, and agrees that any previous receipt of notices or other documents, including this Agreement, transmitted as set forth above, shall be deemed to have been received by such Purchaser within the time periods set forth above.


          6.5  Amendments; Waivers.  No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver 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 subsequent default or a waiver of any other provision, 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.


          6.6  Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.


          6.7  Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns.  The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger or sale of all or substantially all of the assets of the Company).  Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers all of the Shares held by such Purchaser, provided such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of this Agreement that apply to the “Purchasers”.


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          6.8  No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.


          6.9  Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of San Francisco. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of San Francisco for the adjudication of any dispute hereunder or in connection herewith or
with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  The parties hereby waive all rights to a
trial by jury.  If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.


          6.10  Survival.  The representations and warranties contained herein shall survive the Closing and the delivery of the Shares.


          6.11  Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.


          6.12  Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, 


31









covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.


          6.13  Rescission and Withdrawal Right.  Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) this Agreement, whenever any Purchaser exercises a right, election, demand or option under this Agreement and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.


          6.14  Replacement of Shares.  If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.


          6.15  Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under this Agreement.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in this Agreement and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.


          6.16  Payment Set Aside.  To the extent that the Company makes a payment or payments to any Purchaser pursuant to this Agreement or a Purchaser enforces or exercises its rights hereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not
occurred.


          6.17  Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under this Agreement are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under this Agreement.  Nothing contained herein, and no action taken by any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement.  Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement,
and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.  Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of this Agreement.  RBC has acted as placement agent for the Company in connection with the transaction.  The Company has elected to provide all Purchasers with the same terms under this Agreement for the convenience of the Company and not because it was required or requested to do so by the Purchasers.


          6.18  Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments hereto.


33


(Signature Pages Follow)








                IN WITNESS WHEREOF, the parties hereto have caused this Common Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.


	
  
 AVIGEN, INC.

  	
  
 
  	
  
Address for Notice:
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
By:
  	
  
 
  	
  
 
  	
  
 
 
	
  
 
  	
  


  	
  
 
  	
  
 Avigen, Inc.
  
	
  Name:
  	
  
Kenneth Chahine
  	
  
 
  	
  
Attn: Corporate Counsel
  
	
  
Title:
  	
  
President and Chief Executive Officer
  	
  
 
  	
  
1301 Harbor Bay Pkwy
  
	
  
 
  	
  
 
  	
  
 
  	
  
Alameda, CA 94502
  
	
  
 
  	
  
 
  	
  
 
  	
  
Fax: (510) 748-7285
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
With a copy to (which shall not constitute notice): 
   
   
   Cooley Godward LLP 
   Attn: Brett D. White 
   Five Palo Alto Square 
   3000 El Camino Real 
   Palo Alto, CA 94306 
   Fax: (650) 849-7400
  	
  
 
  	
  
 
  




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
 SIGNATURE PAGE FOR PURCHASER FOLLOWS]


34









[PURCHASER SIGNATURE PAGES TO AVIGEN COMMON STOCK PURCHASE AGREEMENT]


                    IN WITNESS WHEREOF, the undersigned have caused this Common Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

	
  Name of Purchaser: ________________________________________________________
  
	
  
 
  
	
  
Signature   of Authorized Signatory of Purchaser:   __________________________________
  
	
  
 
  
	
  
Name of Authorized Signatory:   ____________________________________________________
  
	
  
 
  
	
  
Title of Authorized Signatory: _____________________________________________________
  
	
  
 
  
	
  
Email Address of   Purchaser:________________________________________________
  
	
  
 
  
	
  
Fax Number of Purchaser:   ________________________________________________
  
	
  
 
  
	
  
Address for Notice of Purchaser:
  
	
  
 
  
	
  
 
  
	
  
 
  
	
  
 
  
	
  Address for Delivery of Shares for Purchaser (if not   same as above):
  
	
  
 
  
	
  
 
  
	
  
 
  
	
  
Name to Appear on Certificate (if different from   above):
  
	
  
 
  
	
  
 
  
	
  
Subscription Amount:
  
	
  
Shares:
  
	
  
EIN Number:  [PROVIDE   THIS UNDER SEPARATE COVER]
  
	
  
 
  
	
  
 
  
	
  
[SIGNATURE PAGES CONTINUE]
  




35









EXHIBIT A


PLAN OF DISTRIBUTION


          We are registering the shares offered by this prospectus on behalf of the selling stockholders. The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices. To the extent any of the
selling stockholders gift, pledge or otherwise transfer the shares offered hereby, such transferees may offer and sell the shares from time to time under this prospectus, provided that this prospectus has been amended under Rule 424(b)(3) or other applicable provision of the Securities Act to include the name of such transferee in the list of selling stockholders under this prospectus.


          The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:

	
  
•  
  	
  
ordinary brokerage transactions and transactions in   which the broker-dealer solicits purchasers;
  
	
  
 
  	
  
 
  
	
  
•  
  	
  
block trades in which the broker-dealer will attempt   to sell the shares as agent, but may position and resell a portion of the   block as principal to facilitate the transaction;
  
	
  
 
  	
  
 
  
	
  
•  
  	
  
purchases by a broker-dealer as principal and resale   by the broker-dealer for its account;
  
	
  
 
  	
  
 
  
	
  
•  
  	
  
an exchange distribution in accordance with the   rules of the applicable exchange;
  
	
   
  	
  
 
  
	
  
•  
  	
  
privately negotiated transactions;
  
	
  
 
  	
  
 
  
	
  
•  
  	
  
“at the market” or through market makers or into an   existing market for the shares;
  
	
  
 
  	
  
 
  
	
  
•  
  	
  
short sales entered into after the effective date of   the registration statement of which this prospectus is a part;
  
	
  
 
  	
  
 
  
	
  
•  
  	
  
through the writing or settlement of options or   other hedging transactions, whether through an options exchange or otherwise;
  
	
  
 
  	
  
 
  
	
  
•  
  	
  
broker-dealers may agree with the selling   stockholders to sell a specified number of such shares at a stipulated price   per share;
  



36








	
  
•  
  	
  
a combination of any such methods of sale; and
  
	
  
 
  	
  
 
  
	
  
•  
  	
  
any other method permitted pursuant to applicable   law.
  




          The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. 


          In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).


          The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any. Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. 


          The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.


          The selling shareholders and any broker-dealers that act in connection with the sale of securities may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act in connection with such sales, and any commissions received by such broker-dealers and any profit on the resale of the securities sold by them while acting as principals may be deemed to be underwriting discounts or commissions under the Securities Act. 


          To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.


37









          In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.


          We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates. In addition, we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.


          We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.


          We have agreed with the selling stockholders to keep the registration statement that includes this prospectus effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement, (2) the date on which the shares may be sold pursuant to Rule 144(k) of the Securities Act or (3) the date upon which all of the shares may be sold in any three month period in reliance on Rule 144.


38









EXHIBIT B


SELLING STOCKHOLDER QUESTIONNAIRE

	
   
  	
  
To:
  	
  
Avigen, Inc.
  
	
  
 
  	
  
 
  	
  
c/o Cooley Godward LLP
  
	
  
 
  	
  
 
  	
  
5 Palo Alto Square
  
	
  
 
  	
  
 
  	
  
3000 El Camino Real
  
	
  
 
  	
  
 
  	
  
Palo Alto, CA 94306
  
	
  
 
  	
  
 
  	
  
Fax No.: 650-849-7400
  
	
  
 
  	
  
 
  	
  
Attention: Brett D. White, Esq.
  




          Reference is made to the Common Stock Purchase Agreement (the “Agreement”), made between Avigen, Inc., a Delaware corporation (the “Company”), and the Purchasers noted therein. 


          Pursuant to Section 3.2(k) of the Agreement, the undersigned hereby furnishes to the Company the following information for use by the Company in connection with the preparation of the Registration Statement contemplated by Article V of the Agreement.

	
  
 
  	
  
(1)     Name   and Contact Information:
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Full legal name of record holder:
  	
  
 
  	
  
__________________________________________
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Address of record holder:
  	
  
 
  	
  
__________________________________________
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Social Security Number or Taxpayer identification   number of record holder:
  	
  
 
  	
  
__________________________________________
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Identity of beneficial owner (if different than   record holder):
  	
  
 
  	
  
__________________________________________
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Name of contact person:
  	
  
 
  	
  
__________________________________________
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Telephone number of contact person:
  	
  
 
  	
  
__________________________________________
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Fax number of contact person:
  	
  
 
  	
  
__________________________________________
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
E-mail address of contact person:
  	
  
 
  	
  
__________________________________________
  




39








	
  
 
  	
  
(2)     Beneficial   Ownership of Registrable Securities:
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
(a)
  	
  
Number of Registrable Securities owned by Selling   Stockholder:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
___________________________________________________________________________________________________
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)
  	
  
Number of Registrable Securities requested to be   registered:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
___________________________________________________________________________________________________
  





	
  
 
  	
  
(3)
  	
  
Beneficial   Ownership of Other Securities of the Company Owned by the Selling   Stockholder:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Except as set forth below in this Item (3), the   undersigned is not the beneficial or registered owner of any securities of   the Company other than the Registrable Securities listed above in Item   (2)(a).
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Type and amount of other securities beneficially   owned by the Selling Stockholder:
  
	
  
 
  	
  
 
  	
  
 
  
	
   
  	
  
(4)
  	
  
Relationships   with the Company:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Except as set forth below, neither the undersigned   nor any of its affiliates, officers, directors or principal equity holders   (5% or more) has held any position or office or has had any other material   relationship with the Company (or its predecessors or affiliates) during the   past three years.
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
State any exceptions here:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
___________________________________________________________________________________________________
  
	
  
 
  	
  
 
  
	
   
  	
  
___________________________________________________________________________________________________
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(5)
  	
  
Plan   of Distribution:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
Except as set forth below, the undersigned intends   to distribute pursuant to the Registration Statement the Registrable   Securities listed above in Item (2) in accordance with the “Plan of   Distribution” section set forth therein:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
State any exceptions here:
  
	
  
 
  	
  
 
  
	
   
  	
  
___________________________________________________________________________________________________
  
	
  
 
  	
  
 
  
	
  
 
  	
  
___________________________________________________________________________________________________
  




40








	
  
 
  	
  
(6)
  	
  
Selling   Stockholder Affiliations:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(a)
  	
  
Is the Selling Stockholder a registered   broker-dealer?
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  
___________________________________________________________________________________________________
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(b)     Is the Selling   Stockholder an affiliate of a registered broker-dealer(s)?  (For purposes of this response, an   “affiliate” of, or person “affiliated” with, a specified person, is a person   that directly, or indirectly through one or more intermediaries, controls or   is controlled by, or is under common control with, the person specified.)
  
	
  
 
  	
  
 
  
	  
	 ___________________________________________________________________________________________________

	  
	  

	
  
 
  	
  
(c)     If the answer to   Item (6)(b) is yes, identify the registered broker-dealer(s) and describe the   nature of the affiliation(s):
  
	  
	  

	  
	 ___________________________________________________________________________________________________

	
  
 
  	
  
 
  
	
  
 
  	
  
(d)     If the answer to   Item (6)(b) is yes, did the Selling Stockholder acquire the Registrable   Securities in the ordinary course of business (if not, please explain)?
  
	  
	  

	  
	 ___________________________________________________________________________________________________

	
   
  	
  
 
  
	
  
 
  	
  
(e)     If the answer to   Item (6)(b) is yes, did the Selling Stockholder, at the time of purchase of   the Registrable Securities, have any agreements, plans or understandings,   directly or indirectly, with any person to distribute the Registrable   Securities (if yes, please explain)?
  
	  
	  

	  
	 ___________________________________________________________________________________________________

	
  
 
  	
  
 
  
	
  
 
  	
  
(7)
  	
  
Voting   or Investment Control over the Registrable Securities:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
If the Selling Stockholder is not a natural person,   please identify the natural person or persons who have voting or investment   control over the Registrable Securities listed in Item (2) above:
  
	
  
 
  	
  
 
  
	
  
 
  	
  
___________________________________________________________________________________________________
  



          Pursuant to Section 5.2 of the Agreement, the undersigned acknowledges that the Company may, by notice to each Purchaser at its last known address, suspend or withdraw the Registration Statement and require that the undersigned immediately cease sales of Registrable Securities pursuant to the Registration Statement under certain circumstances described in the Agreement.  At any time that such notice has been given, the undersigned may not sell Registrable Securities pursuant to the Registration Statement.


41









          The undersigned hereby further acknowledges that pursuant to Section 5.4(b) of the Agreement, the undersigned shall indemnify the Company and each of its directors and officers against, and hold the Company and each of its directors and officers harmless from, any losses, claims, damages, expenses or liabilities (including reasonable attorneys fees) to which the Company or its directors and officers may become subject by reason of any statement or omission in the Registration Statement made in reliance upon, or in conformity with, a written statement by the undersigned, including the information furnished in this Questionnaire by the undersigned.


          By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items (1) through (7) above and the inclusion of such information in the Registration Statement, any amendments thereto and the related prospectus.  The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus.


          The undersigned has reviewed the answers to the above questions and affirms that the same are true, complete and accurate in all material respects.  THE UNDERSIGNED AGREES TO NOTIFY THE COMPANY IMMEDIATELY OF ANY CHANGES IN THE FOREGOING INFORMATION.


	
   
  	
   
  	
  


  
	
  Dated: _____________, 2006 
  	
   
  	
  Signature of Record Holder
  
	
   
  	
   
  	
  (Please sign your name in exactly the same manner as   the certificate(s) for the shares being registered)
  



42