Exhibit 10.1


 


Execution Copy


 


COMMON
STOCK PURCHASE AGREEMENT


 


by
and between


 


KINGSBRIDGE
CAPITAL LIMITED


 


and


 


BIOSANTE
PHARMACEUTICALS INC.


 


dated
as of December 15, 2008


 

















 


TABLE
OF CONTENTS


 


	
  ARTICLE I

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  PURCHASE AND
  SALE OF COMMON STOCK

  	
   

  	
  5

  



 


	
   

  	
  Section 2.1

  	
   

  	
  Purchase and Sale of Stock

  	
   

  	
  5

  
	
   

  	
  Section 2.2

  	
   

  	
  Closing

  	
   

  	
  5

  
	
   

  	
  Section 2.3

  	
   

  	
  Registration Statement and Prospectus

  	
   

  	
  6

  
	
   

  	
  Section 2.4

  	
   

  	
  Warrant

  	
   

  	
  6

  
	
   

  	
  Section 2.5

  	
   

  	
  Blackout Shares

  	
   

  	
  6

  



 


	
  ARTICLE III

  	
   

  	
  DRAW DOWN
  TERMS 

  	
   

  	
  6

  



 


	
   

  	
  Section 3.1

  	
   

  	
  Draw Down Notice

  	
   

  	
  6

  
	
   

  	
  Section 3.2

  	
   

  	
  Number of Shares

  	
   

  	
  6

  
	
   

  	
  Section 3.3

  	
   

  	
  Limitation on Draw Downs

  	
   

  	
  6

  
	
   

  	
  Section 3.4

  	
   

  	
  Trading Cushion

  	
   

  	
  7

  
	
   

  	
  Section 3.5

  	
   

  	
  Settlement

  	
   

  	
  7

  
	
   

  	
  Section 3.6

  	
   

  	
  Delivery of Shares; Payment of Draw Down Amount.

  	
   

  	
  7

  
	
   

  	
  Section 3.7

  	
   

  	
  Failure to Deliver Shares

  	
   

  	
  8

  



 


	
  ARTICLE IV

  	
   

  	
  REPRESENTATIONS AND WARRANTIES OF THE
  COMPANY

  	
   

  	
  8

  



 


	
   

  	
  Section 4.1

  	
   

  	
  Organization, Good Standing and Power

  	
   

  	
  9

  
	
   

  	
  Section 4.2

  	
   

  	
  Authorization; Enforcement

  	
   

  	
  9

  
	
   

  	
  Section 4.3

  	
   

  	
  Capitalization

  	
   

  	
  9

  
	
   

  	
  Section 4.4

  	
   

  	
  Issuance of Shares

  	
   

  	
  10

  
	
   

  	
  Section 4.5

  	
   

  	
  No Conflicts

  	
   

  	
  10

  
	
   

  	
  Section 4.6

  	
   

  	
  Commission Documents, Financial Statements

  	
   

  	
  11

  
	
   

  	
  Section 4.7

  	
   

  	
  No Material Adverse Change

  	
   

  	
  12

  
	
   

  	
  Section 4.8

  	
   

  	
  No Undisclosed Liabilities

  	
   

  	
  12

  
	
   

  	
  Section 4.9

  	
   

  	
  No Undisclosed Events or Circumstances

  	
   

  	
  12

  
	
   

  	
  Section 4.10

  	
   

  	
  Actions Pending

  	
   

  	
  13

  
	
   

  	
  Section 4.11

  	
   

  	
  Compliance with Law

  	
   

  	
  13

  
	
   

  	
  Section 4.12

  	
   

  	
  Certain Fees

  	
   

  	
  13

  
	
   

  	
  Section 4.13

  	
   

  	
  Disclosure

  	
   

  	
  13

  
	
   

  	
  Section 4.14

  	
   

  	
  Material Non-Public Information

  	
   

  	
  13

  
	
   

  	
  Section 4.15

  	
   

  	
  Exemption from Registration; Valid Issuances

  	
   

  	
  13

  
	
   

  	
  Section 4.16

  	
   

  	
  Form S-3 Eligibility

  	
   

  	
  14

  
	
   

  	
  Section 4.17

  	
   

  	
  No General Solicitation or Advertising in Regard to this Transaction

  	
   

  	
  14

  
	
   

  	
  Section 4.18

  	
   

  	
  No Integrated Offering

  	
   

  	
  14

  
	
   

  	
  Section 4.19

  	
   

  	
  Acknowledgment Regarding Investor’s Purchase of Shares

  	
   

  	
  14

  



 

















 


	
  ARTICLE V

  	
   

  	
  REPRESENTATIONS,
  WARRANTIES AND COVENANTS OF THE INVESTOR

  	
   

  	
  15

  



 


	
   

  	
  Section 5.1

  	
   

  	
  Organization and Standing of the Investor

  	
   

  	
  15

  
	
   

  	
  Section 5.2

  	
   

  	
  Authorization and Power

  	
   

  	
  15

  
	
   

  	
  Section 5.3

  	
   

  	
  No Conflicts

  	
   

  	
  15

  
	
   

  	
  Section 5.4

  	
   

  	
  Financial Capability

  	
   

  	
  16

  
	
   

  	
  Section 5.5

  	
   

  	
  Information

  	
   

  	
  16

  
	
   

  	
  Section 5.6

  	
   

  	
  Trading Restrictions

  	
   

  	
  16

  
	
   

  	
  Section 5.7

  	
   

  	
  Statutory Underwriter Status

  	
   

  	
  16

  
	
   

  	
  Section 5.8

  	
   

  	
  Not an Affiliate

  	
   

  	
  17

  
	
   

  	
  Section 5.9

  	
   

  	
  Manner of Sale

  	
   

  	
  17

  
	
   

  	
  Section 5.10

  	
   

  	
  Prospectus Delivery

  	
   

  	
  17

  



 


	
  ARTICLE VI

  	
   

  	
  COVENANTS OF
  THE COMPANY

  	
   

  	
  17

  



 


	
   

  	
  Section 6.1

  	
   

  	
  Securities Compliance

  	
   

  	
  17

  
	
   

  	
  Section 6.2

  	
   

  	
  Reservation of Common Stock

  	
   

  	
  17

  
	
   

  	
  Section 6.3

  	
   

  	
  Registration and Listing

  	
   

  	
  18

  
	
   

  	
  Section 6.4

  	
   

  	
  Registration Statement

  	
   

  	
  18

  
	
   

  	
  Section 6.5

  	
   

  	
  Compliance with Laws

  	
   

  	
  18

  
	
   

  	
  Section 6.6

  	
   

  	
  Other Financing

  	
   

  	
  19

  
	
   

  	
  Section 6.7

  	
   

  	
  Prohibited Transactions

  	
   

  	
  19

  
	
   

  	
  Section 6.8

  	
   

  	
  Corporate Existence

  	
   

  	
  20

  
	
   

  	
  Section 6.9

  	
   

  	
  Non-Disclosure of Non-Public Information

  	
   

  	
  20

  
	
   

  	
  Section 6.10

  	
   

  	
  Notice of Certain Events Affecting Registration; Suspension of Right
  to Request a Draw Down

  	
   

  	
  20

  
	
   

  	
  Section 6.11

  	
   

  	
  Amendments to the Registration Statement

  	
   

  	
  20

  
	
   

  	
  Section 6.12

  	
   

  	
  Prospectus Delivery

  	
   

  	
  21

  



 


	
  ARTICLE VII

  	
   

  	
  CONDITIONS
  TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW DOWN

  	
   

  	
  21

  



 


	
   

  	
  Section 7.1

  	
   

  	
  Accuracy of the Company’s Representations and Warranties

  	
   

  	
  21

  
	
   

  	
  Section 7.2

  	
   

  	
  Performance by the Company

  	
   

  	
  22

  
	
   

  	
  Section 7.3

  	
   

  	
  Compliance with Law

  	
   

  	
  22

  
	
   

  	
  Section 7.4

  	
   

  	
  Effective Registration Statement

  	
   

  	
  22

  
	
   

  	
  Section 7.5

  	
   

  	
  No Knowledge

  	
   

  	
  22

  
	
   

  	
  Section 7.6

  	
   

  	
  No Suspension

  	
   

  	
  22

  
	
   

  	
  Section 7.7

  	
   

  	
  No Injunction

  	
   

  	
  22

  
	
   

  	
  Section 7.8

  	
   

  	
  No Proceedings or Litigation

  	
   

  	
  22

  
	
   

  	
  Section 7.9

  	
   

  	
  Sufficient Shares Registered for Resale

  	
   

  	
  23

  
	
   

  	
  Section 7.10

  	
   

  	
  Warrant

  	
   

  	
  23

  
	
   

  	
  Section 7.11

  	
   

  	
  Opinion of Counsel

  	
   

  	
  23

  
	
   

  	
  Section 7.12

  	
   

  	
  Accuracy of Investor’s Representation and Warranties

  	
   

  	
  23

  



 


ii

















 


	
  ARTICLE VIII

  	
   

  	
  TERMINATION

  	
   

  	
  23

  



 


	
   

  	
  Section 8.1

  	
   

  	
  Term

  	
   

  	
  23

  
	
   

  	
  Section 8.2

  	
   

  	
  Other Termination

  	
   

  	
  23

  
	
   

  	
  Section 8.3

  	
   

  	
  Effect of Termination

  	
   

  	
  24

  



 


	
  ARTICLE IX

  	
   

  	
  INDEMNIFICATION

  	
   

  	
  24

  



 


	
   

  	
  Section 9.1

  	
   

  	
  Indemnification

  	
   

  	
  24

  
	
   

  	
  Section 9.2

  	
   

  	
  Notification of Claims for Indemnification

  	
   

  	
  25

  



 


	
  ARTICLE X

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  27

  



 


	
   

  	
  Section 10.1

  	
   

  	
  Fees and Expenses

  	
   

  	
  27

  
	
   

  	
  Section 10.2

  	
   

  	
  Reporting Entity for the Common Stock

  	
   

  	
  27

  
	
   

  	
  Section 10.3

  	
   

  	
  Brokerage

  	
   

  	
  28

  
	
   

  	
  Section 10.4

  	
   

  	
  Notices

  	
   

  	
  29

  
	
   

  	
  Section 10.5

  	
   

  	
  Assignment

  	
   

  	
  30

  
	
   

  	
  Section 10.6

  	
   

  	
  Amendment; No Waiver

  	
   

  	
  30

  
	
   

  	
  Section 10.7

  	
   

  	
  Entire Agreement

  	
   

  	
  30

  
	
   

  	
  Section 10.8

  	
   

  	
  Severability

  	
   

  	
  30

  
	
   

  	
  Section 10.9

  	
   

  	
  Title and Subtitles

  	
   

  	
  31

  
	
   

  	
  Section 10.10

  	
   

  	
  Counterparts

  	
   

  	
  31

  
	
   

  	
  Section 10.11

  	
   

  	
  Choice of Law

  	
   

  	
  31

  
	
   

  	
  Section 10.12

  	
   

  	
  Specific Enforcement, Consent to Jurisdiction

  	
   

  	
  31

  
	
   

  	
  Section 10.13

  	
   

  	
  Survival

  	
   

  	
  31

  
	
   

  	
  Section 10.14

  	
   

  	
  Publicity

  	
   

  	
  32

  
	
   

  	
  Section 10.15

  	
   

  	
  Further Assurances

  	
   

  	
  32

  



 


iii
















 


This COMMON STOCK PURCHASE AGREEMENT (this “Agreement”)
is entered into as of the 15th day of December,
2008, by and between Kingsbridge Capital Limited, an entity organized and
existing under the laws of the British Virgin Islands, whose business address
is P.O. Box 1075, Elizabeth House, 9 Castle Street, St. Helier, Jersey,
Channel Islands (the “Investor”), and BioSante Pharmaceuticals Inc., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”).


 


WHEREAS, the parties desire that, upon the terms and
subject to the conditions and limitations set forth herein, the Company may
issue and sell to the Investor, from time to time as provided herein, and the
Investor shall purchase from the Company, up to $25 million worth of shares of
Common Stock (as defined below); and


 


WHEREAS, such investments will be made in reliance
upon the provisions of Section 4(2) (“Section 4(2)”) and
Regulation D (“Regulation D”) of the United States Securities Act
of 1933, as amended and the rules and regulations promulgated thereunder
(the “Securities Act”), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available with
respect to any or all of the investments in Common Stock to be made hereunder;
and


 


WHEREAS, the parties hereto are concurrently entering
into a Registration Rights Agreement in the form of Exhibit A
hereto (the “Registration Rights Agreement”) pursuant to which the
Company shall register the Common Stock issued and sold to the Investor under
this Agreement and issuable under the Warrant (as defined below), upon the
terms and subject to the conditions set forth therein; and


 


WHEREAS, in consideration for the Investor’s execution
and delivery of, and its performance of its obligations under, this Agreement,
the Company is concurrently issuing to the Investor a Warrant in the form of Exhibit B
hereto (the “Warrant”) pursuant to which the Investor may purchase from
the Company up to 300,000 shares of Common Stock, upon the terms and subject to
the conditions set forth therein;


 


NOW, THEREFORE, the parties hereto agree as follows:


 


ARTICLE I

DEFINITIONS


 


As used in this Agreement, the following terms shall
have the meanings set forth below:


 


“Blackout Amount” shall have the meaning assigned
to such term in the Registration Rights Agreement.


 


“Blackout Shares” shall have the meaning
assigned to such term in the Registration Rights Agreement.


 


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


 


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


 

















 


“Closing Date” shall have the meaning assigned
to such term in Section 2.2 hereof.


 


“Closing Price” as of any particular day shall
mean the closing price per share of the Common Stock as reported by the
Principal Market on such day.


 


“Commission” means the United States Securities
and Exchange Commission.


 


“Commission Documents” shall have the meaning
assigned to such term in Section 4.6 hereof.


 


“Commitment Period” means the period commencing
on the Effective Date and expiring on the earliest to occur of (i) the
date on which the Investor shall have purchased Shares pursuant to this
Agreement for an aggregate purchase price equal to the Maximum Commitment
Amount, (ii) the date this Agreement is terminated pursuant to Article VIII
hereof, and (iii) the date occurring twenty-four (24) months from the
Effective Date.


 


“Common Stock” means the common stock of the
Company, par value $0.0001 per share.


 


“Condition Satisfaction Date” shall have the
meaning assigned to such term in Article VII hereof.


 


“Damages” means any loss, claim, damage,
liability, costs and expenses (including, without limitation, reasonable
attorneys’ fees and expenses and costs and reasonable expenses of expert
witnesses and investigation).


 


“Draw Down” shall have the meaning assigned to
such term in Section 3.1 hereof.


 


“Draw Down Amount” means the actual dollar
amount of a Draw Down paid to the Company.


 


“Draw Down Discount Price” means (i) 86%
of the VWAP on any Trading Day during a Draw Down Pricing Period when the VWAP
equals or exceeds $1.15 but is less than or equal to $2.75, (ii) 88% of
the VWAP on any Trading Day during the Draw Down Pricing Period when VWAP
exceeds $2.75 but is less than or equal to $6.75, (iii) 90% of the VWAP on
any Trading Day during the Draw Down Pricing Period when VWAP exceeds $6.75 but
is less than or equal to $11.00, or (iv) 92% of the VWAP on any Trading
Day during the Draw Down Pricing Period when VWAP exceeds $11.00.


 


“Draw Down Notice” shall have the meaning
assigned to such term in Section 3.1 hereof.


 


“Draw Down Pricing Period” shall mean, with
respect to each Draw Down, a period of eight (8) consecutive Trading Days
beginning on the first Trading Day specified in a Draw Down Notice.


 


“DTC” shall mean the Depository Trust Company,
or any successor thereto.


 


2

















 


“Effective Date” means the first Trading Day
immediately following the date on which the Registration Statement is declared
effective by the Commission.


 


“Exchange Act” means the United States
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.


 


“Excluded Merger or Sale” shall have the
meaning assigned to such term in the Warrant.


 


“FINRA” means the Financial Industry Regulatory
Authority.


 


“Knowledge” means the actual knowledge of the
Company’s Chief Executive Officer or Chief Financial Officer.


 


“Make Whole Amount” shall have the meaning
specified in Section 3.7.


 


“Market Capitalization” means, as of any
Trading Day, the product of (i) the closing sale price of the Common Stock
as reported by Bloomberg L.P. using the AQR function and (ii) the number
of outstanding shares of Common Stock as reported by Bloomberg L.P. using the
DES function.


 


“Material Adverse Effect” means any effect that
is not negated, corrected, cured or otherwise remedied within a reasonable
period of time on the business, operations, properties or financial condition
of the Company and its consolidated subsidiaries that is material and adverse
to the Company and such subsidiaries, taken as a whole, and/or any condition,
circumstance, or situation that would prohibit or otherwise interfere with the
ability of the Company to perform any of its obligations under this Agreement, the
Registration Rights Agreement or the Warrant in any material respect; provided,
however, that none of the following shall individually constitute a “Material
Adverse Effect”:  (i) the
effects of conditions or events that are generally applicable to the capital,
financial, banking or currency markets or the biotechnology or pharmaceutical
industries; (ii) the effects of conditions or events that are reasonably
expected to occur in the Company’s ordinary course of business (such as, by way
of example only, failed clinical trials, serious adverse events involving the
Company’s product candidates or products, delays in product development or
commercial launch, unfavorable regulatory determinations, difficulties in
generating product sales or involving collaborators or intellectual property
disputes); (iii) any changes or effects resulting from the announcement or
consummation of the transactions contemplated by this Agreement, including,
without limitation, any changes or effects associated with any particular Draw
Down, and (iv) changes in the market price of the Common Stock.


 


“Maximum Commitment Amount” means the lesser of
(i) $25 million in aggregate Draw Down Amounts or (ii) 5,405,840 shares of Common Stock (as
adjusted for stock splits, stock combinations, stock dividends and
recapitalizations that occur on or after the date of this Agreement) minus the
number of Blackout Shares, if any, delivered to the Investor under the
Registration Rights Agreement; provided, however, that the Maximum Commitment
Amount shall not exceed under any circumstances that number of shares of Common
Stock that the Company may issue pursuant to this Agreement and the
transactions contemplated hereby without (a) breaching the Company’s
obligations under the rules and regulations of the Principal 


 


3

















 


Market or (b) obtaining
stockholder approval under the applicable rules and regulations of the
Principal Market (notwithstanding that such approval may have been obtained).


 


“Maximum Draw Down Amount” means the lesser
of:  (i)(w) 1.5% of the Market
Capitalization as of the date the applicable Draw Down Notice is given if such
Market Capitalization is equal to or greater than $325 million, (x) 1.0%
of the Market Capitalization as of the date the applicable Draw Down Notice is
given if such Market Capitalization is equal to or greater than $180 million
but less than $325 million, (y) 0.5% of the Market Capitalization as of
the date the applicable Draw Down Notice is given if such Market Capitalization
is equal to or greater than $35 million but less than $180 million or (z) zero
if the Market Capitalization as of the date the applicable Draw Down Notice is
given is less than $35 million and (ii) $5 million.


 


“Permitted Transaction” shall have the meaning
assigned to such term in Section 6.6 hereof.


 


“Person” means any individual, corporation,
partnership, limited liability company, association, trust or other entity or
organization, including any government or political subdivision or an agency or
instrumentality thereof.


 


“Principal Market” means the NASDAQ Capital
Market, the NASDAQ Global Select Market, the NASDAQ Global Market, the American
Stock Exchange or the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock.


 


“Prohibited Transaction” shall have the meaning
assigned to such term in Section 6.7 hereof.


 


“Prospectus” as used in this Agreement means
the prospectus in the form included in the Registration Statement, as
supplemented from time to time pursuant to Rule 424(b) of the
Securities Act.


 


“Registrable Securities” means (i) the
Shares, (ii) the Warrant Shares, and (iii) any Common Stock issued or
issuable with respect to any of the Shares or Warrant Shares while such Shares
or Warrant Shares are Registrable Securities by way of exchange, stock dividend
or stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization or otherwise (including, for the
avoidance of doubt, any Blackout Shares issued pursuant to the Registration
Rights Agreement).  As to any particular
Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (w) the Registration Statement has been
declared effective by the Commission and such Registrable Securities have been
disposed of pursuant to the Registration Statement, (x) such Registrable
Securities have been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) under the
Securities Act (“Rule 144”) are met, (y) such time as such
Registrable Securities have been otherwise transferred to holders who may trade
such shares without restriction under the Securities Act, and the Company has
delivered a new certificate or other evidence of ownership for such securities
not bearing a restrictive legend or (z) in the opinion of counsel to the
Company such Registrable Securities may be sold without 


 


4

















 


registration and without
any time, volume or manner limitations pursuant to Rule 144 (or any
similar provision then in effect) under the Securities Act.


 


“Registration Rights Agreement” shall have the
meaning set forth in the recitals of this Agreement.


 


“Registration Statement” shall have the meaning
assigned to such term in the Registration Rights Agreement.


 


“Regulation D” shall have the meaning set
forth in the recitals of this Agreement. “Section 4(2)” shall have
the meaning set forth in the recitals of this Agreement.


 


“Securities Act” shall have the meaning set
forth in the recitals of this Agreement.


 


“Settlement Date” shall have the meaning
assigned to such term in Section 3.5 hereof.


 


“Shares” means the shares of Common Stock of
the Company that are and/or may be purchased hereunder.


 


“Trading Day” means any day other than a
Saturday or a Sunday on which the Principal Market is open for trading in
equity securities.


 


“VWAP” means the volume weighted average price
(the aggregate sales price of all trades of Common Stock during each Trading
Day divided by the total number of shares of Common Stock traded during such
Trading Day) of the Common Stock during any Trading Day as reported by
Bloomberg, L.P. using the AQR function.


 


“Warrant” shall have the meaning set forth in
the recitals of this Agreement.


 


“Warrant Shares” means the shares of Common
Stock issuable to the Investor upon exercise of the Warrant.


 


ARTICLE II

PURCHASE AND SALE OF COMMON STOCK


 


Section 2.1      Purchase
and Sale of Stock.  Upon the terms
and subject to the conditions set forth in this Agreement, the Company shall to
the extent it elects to make Draw Downs in accordance with Article III
hereof, issue and sell to the Investor and the Investor shall purchase Common
Stock from the Company for an aggregate (in Draw Down Amounts) of up to the
Maximum Commitment Amount, consisting of purchases based on Draw Downs in
accordance with Article III hereof.


 


Section 2.2      Closing.  In consideration of and in express reliance
upon the representations, warranties, covenants, terms and conditions of this
Agreement, the Company agrees to issue and sell to the Investor, and the
Investor agrees to purchase from the Company, that number of the Shares to be
issued in connection with each Draw Down. 
The execution and delivery of this Agreement (the “Closing”)
shall take place at the offices of Stroock & Stroock & Lavan
LLP, 180 Maiden Lane, New York, NY 10038 at 5:00 p.m. local time on December 15th, 


 


5





















 


2008, or at such
other time and place (including, without limitation, by way of facsimile
exchange of documents from different locations) or on such date as the Investor
and the Company may agree upon (the “Closing Date”).  Each party shall deliver at or prior to the
Closing all documents, instruments and writings required to be delivered at the
Closing by such party pursuant to this Agreement.


 


Section 2.3      Registration
Statement and Prospectus.  The
Company shall prepare and file with the Commission the Registration Statement
(including the Prospectus) in accordance with the provisions of the Securities
Act and the Registration Rights Agreement.


 


Section 2.4      Warrant.  On the Closing Date, the Company shall issue
and deliver the Warrant to the Investor.


 


Section 2.5      Blackout Shares.  The Company shall deliver any Blackout Amount
or issue and deliver any Blackout Shares to the Investor in accordance with Section 1.1(e) of
the Registration Rights Agreement.


 


ARTICLE III

DRAW DOWN TERMS


 


Subject to the satisfaction of the conditions
hereinafter set forth in this Agreement, the parties agree as follows:


 


Section 3.1      Draw
Down Notice.  During the Commitment
Period, the Company may, in its sole discretion, issue a Draw Down Notice (as
hereinafter defined) which shall specify the dollar amount of Shares the
Company elects to sell to the Investor (each such election, a “Draw Down”)
up to a Draw Down Amount equal to the Maximum Draw Down Amount, which Draw Down
the Investor shall be obligated to accept. 
The Company shall inform the Investor in writing by sending a duly
completed Draw Down Notice (as hereinafter defined) in the form of Exhibit C
hereto by e-mail to the addresses set forth in Section 10.4, with a copy
to the Investor’s counsel, as to such Draw Down Amount before commencement of
trading on the first Trading Day of the related Draw Down Pricing Period (the “Draw
Down Notice”).  In addition to the
Draw Down Amount, each Draw Down Notice shall designate the first Trading Day
of the Draw Down Pricing Period.  In no
event shall any Draw Down Amount exceed the Maximum Draw Down Amount.  Each Draw Down Notice shall be accompanied by
a certificate, signed by the Chief Executive Officer or Chief Financial
Officer, dated as of the date of such Draw Down Notice, in the form of Exhibit D
hereof.


 


Section 3.2      Number
of Shares.  Subject to Section 3.6(b),
the number of Shares to be issued in connection with each Draw Down shall be
equal to the sum of the number of shares issuable on each Trading Day of the
Draw Down Pricing Period.  Subject to Section 3.6(b),
the number of shares issuable on a Trading Day during a Draw Down Pricing
Period shall be equal to the quotient of one eighth (1/8th) of the Draw Down
Amount divided by the Draw Down Discount Price for such Trading Day.


 


Section 3.3      Limitation on
Draw Downs.  Only one Draw Down shall
be permitted for each Draw Down Pricing Period.


 


6





















 


Section 3.4      Trading Cushion.  Unless the parties agree in writing
otherwise, there shall be a minimum of fifteen (15) Trading Days between the
expiration of any Draw Down Pricing Period and the beginning of the next
succeeding Draw Down Pricing Period.


 


Section 3.5      Settlement.  The number of Shares purchased by the
Investor in any Draw Down shall be determined and settled on two separate
dates.  Shares purchased by the Investor
during the first four Trading Days of any Draw Down Pricing Period shall be
determined and settled no later than the sixth Trading Day of such Draw Down
Pricing Period.  Shares purchased by the
Investor during the second four Trading Days of any Draw Down Pricing Period
shall be determined and settled no later than the second Trading Day after the
last Trading Day of such Draw Down Pricing Period.  Each date on which settlement of the purchase
and sale of Shares occurs hereunder being referred to as a “Settlement Date.”
The Investor shall provide the Company with delivery instructions for the
Shares to be issued at each Settlement Date at least two Trading Days in
advance of such Settlement Date.  The
number of Shares actually issued shall be rounded down to the nearest whole
number of Shares.


 


Section 3.6      Delivery of
Shares; Payment of Draw Down Amount.


 


(a)      On
each Settlement Date, the Company shall deliver the Shares purchased by the
Investor to the Investor or its designees exclusively via book-entry through
the DTC to an account designated by the Investor, and upon receipt of the
Shares, the Investor shall cause payment thereof to be made to the Company’s
designated account by wire transfer of immediately available funds, if the
Shares are received by the Investor no later than 1:00 p.m. (Eastern
Time), or next day available funds, if the Shares are received thereafter.  Upon the written request of the Company, the
Investor will cause its banker to confirm to the Company that the Investor has
provided irrevocable instructions to cause payment for the Shares to be made as
set forth above, upon confirmation by such banker that the Shares have been
delivered through the DTC in unrestricted form.


 


(b)      For
each Trading Day during a Draw Down Pricing Period on which the VWAP is less
than the greater of (i) 90% of the Closing Price of the Company’s Common
Stock on the Trading Day immediately preceding the commencement of such Draw
Down Pricing Period, or (ii) $1.15, such Trading Day shall not be used in
calculating the number of Shares to be issued in connection with such Draw
Down, and the Draw Down Amount in respect of such Draw Down Pricing Period
shall be reduced by one eighth (1/8th) of the initial Draw Down Amount
specified in the Draw Down Notice.  If
trading in the Company’s Common Stock is suspended for any reason for more than
three (3) consecutive or non-consecutive hours during trading hours on the
Principal Market on any Trading Day during a Draw Down Pricing Period, such
Trading Day shall be disregarded in calculating the number of Shares to be
issued in connection with such Draw Down, and the Draw Down Amount in respect
of such Draw Down Pricing Period shall be reduced by one eighth (1/8th) of the
initial Draw Down Amount specified in the Draw Down Notice.  In addition, in the event that the Company
delivers a Blackout Notice to the Investor at any time on or after the date
that a Draw Down Notice is delivered, each Trading Day during the applicable
Draw Down Pricing Period  after the
delivery of such Blackout Notice shall be disregarded (subject to waiver by the
Investor) for the purposes of calculating the number of Shares to be issued in
respect of the applicable Draw Down, and the 


 


7





















 


Draw
Down Amount in respect of such Draw Down Pricing Period shall be reduced by one
eighth (1/8th) of the initial Draw Down Amount specified in the Draw Down
Notice for each such Trading Day that is so disregarded.  For the avoidance of doubt, any Trading Day
that is disregarded for the purposes of calculating the number of Shares to be
issued in connection with a Draw Down in accordance with the foregoing shall
only reduce such number of Shares by one eighth (1/8th), notwithstanding that
such Trading Day may be so disregarded for more than one of the reasons
specified above.


 


Section 3.7      Failure to
Deliver Shares.  If on any Settlement
Date, the Company fails to cause the delivery of the Shares purchased by the
Investor, and such failure is not cured within two (2) Trading Days
following such Settlement Date, the Company shall pay to the Investor on demand
in cash by wire transfer of immediately available funds to an account
designated by the Investor the “Make Whole Amount;” provided, however,
that in the event that the Company is prevented from delivering Shares in
respect of any such Settlement Date in a timely manner by any fact or
circumstance that is not reasonably within the control of, or directly
attributable to, the Company, or is otherwise reasonably within the control of,
or directly attributable to, the Investor, then such two (2) Trading Day
period shall be automatically extended until such time as such fact or
circumstance is cured.  As used herein,
the Make Whole Amount shall be an amount equal to the sum of (i) the Draw
Down Amount actually paid by the Investor in respect of such Shares plus (ii) an
amount equal to the actual loss suffered by the Investor in respect of sales to
subsequent purchasers, pursuant to transactions entered into before the
Settlement Date, of the Shares that were required to be delivered by the
Company, which shall be based upon documentation reasonably satisfactory to the
Company demonstrating the difference (if greater than zero) between (A) the
price per share paid by the Investor to purchase such number of shares of
Common Stock necessary for the Investor to meet its share delivery obligations
to such subsequent purchasers minus (B) the average Draw Down Discount
Price during the applicable Draw Down Pricing Period.  In the event that the Make Whole Amount is
not paid within two (2) Trading Days following a demand therefor from the
Investor, the Make Whole Amount shall accrue annual interest (on the basis of
the 365 day year) compounded daily at a rate equal to the greater of (i) the
prime rate of interest then in effect as published by the Wall Street Journal
plus three percent (3%) and (ii) ten percent (10%), up to and including
the date on which the Make Whole Amount is actually paid.  For the purposes of this Section 3.7
facts or circumstances that are reasonably within the control of the Company
include such facts and circumstances solely attributable to acts or omissions
of the Company, its officers, directors, employees, agents and representatives,
including, without limitation, any transfer agent(s) and/or accountant(s) engaged
by the Company in connection with the Company’s performance of its obligations
hereunder.  Notwithstanding anything to
the contrary set forth in this Agreement, in the event that the Company pays
the Make Whole Amount (plus interest, if applicable) in respect of any
Settlement Date in accordance with this Section 3.7, such payment shall be
the Investor’s sole remedy in respect of the Company’s failure to deliver
Shares in respect of such Settlement Date, and the Company shall not be
obligated to deliver such Shares.


 


ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


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


 


8





















 


Section 4.1      Organization,
Good Standing and Power.  The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and assets and to carry on
its business as now being conducted. 
Except as set forth in the Commission Documents (as defined below), as
of the date hereof, the Company does not own more than fifty percent (50%) of
the outstanding capital stock of or control any other business entity, other
than any wholly-owned subsidiary that is not “significant” within the
meaning of Regulation S-X promulgated by the Commission.  The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, other than those in which the failure to be so
qualified or be in good standing would not have a Material Adverse Effect.


 


Section 4.2      Authorization;
Enforcement.  (i) The Company
has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Agreement and the
Warrant and to issue the Shares, the Warrant, the Warrant Shares and any
Blackout Shares (except to the extent that the number of Blackout Shares
required to be issued exceeds the number of authorized shares of Common Stock
under the Charter); (ii) the execution and delivery of this Agreement and
the Registration Rights Agreement, and the execution, issuance and delivery of
the Warrant, by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required (other than as
contemplated by Section 6.5); and (iii) each of this Agreement and
the Registration Rights Agreement has been duly executed and delivered, and the
Warrant has been duly executed, issued and delivered, by the Company and constitutes
a valid and binding obligation of the Company enforceable against the Company
in accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of, creditors’ rights and remedies or indemnification
or by other equitable principles of general application (including any
limitation of equitable remedies).


 


Section 4.3      Capitalization.  The authorized capital stock of
the Company and the shares thereof issued and outstanding as of November 10,
2008 are set forth in the Commission Documents. 
All of the outstanding shares of the Common Stock have been duly and
validly authorized and issued, and are fully paid and non-assessable.  Except as set forth in this Agreement, as
described in the Commission Documents or as disclosed on a schedule (the “Disclosure
Schedule”) previously delivered to the Investor, as of November 10,
2008, no shares of Common Stock were entitled to preemptive rights or
registration rights and there were no outstanding options, warrants, scrip,
rights issued by the Company to subscribe to, call or commitments of any
character whatsoever issued by the Company relating to, or securities or rights
convertible into or exchangeable for or giving any right to subscribe for, any
shares of capital stock of the Company, except for stock options issued by the
Company to its employees, directors and consultants.  Except as set forth in this Agreement, the
Commission Documents, or as previously disclosed to the Investor in the
Disclosure Schedule, as of November 10, 2008, there were no contracts,
commitments, understandings, or arrangements by which the Company 


 


9





















 


is or may
become bound to issue additional shares of the capital stock of the Company or
options, securities or rights convertible into or exchangeable for or giving
any right to subscribe for any shares of capital stock of the Company.  Except as described in the Commission
Documents or as previously disclosed to the Investor in the Disclosure
Schedule, as of the date hereof the Company is not a party to any agreement
granting registration rights to any Person with respect to any of its equity or
debt securities.  Except as set forth in
the Commission Documents or as previously disclosed to the Investor in the
Disclosure Schedule, as of the date hereof the Company is not a party to, and
it has no Knowledge of, any agreement restricting the voting or transfer of any
shares of the capital stock of the Company. 
The offer and sale of all capital stock, convertible securities, rights,
warrants, or options of the Company issued during the twelve month period immediately
prior to the Closing complied in all material respects with all applicable
federal and state securities laws, and no stockholder has a right of rescission
or damages with respect thereto that would have a Material Adverse Effect.  The Company has furnished or made available
to the Investor true and correct copies of the Company’s Amended and Restated
Certificate of Incorporation, as amended and in effect on the date hereof (the “Charter”),
and the Company’s Amended and Restated Bylaws, as amended and in effect on the
date hereof (the “Bylaws”).


 


Section 4.4      Issuance of
Shares.  Subject to Section 6.5,
the Shares, the Warrant and the Warrant Shares have been, and any Blackout
Shares will be, duly authorized by all necessary corporate action (except to
the extent that the number of Blackout Shares required to be issued exceeds the
number of authorized shares of Common Stock under the Charter) and, when issued
and paid for in accordance with the terms of this Agreement, the Registration
Rights Agreement and the Warrant, and subject to, and in reliance on, the
representations, warranties and covenants made herein by the Investor, the
Shares and the Warrant Shares shall be validly issued and outstanding, fully
paid and non-assessable, and the Investor shall be entitled to all rights
accorded to a holder of shares of Common Stock.


 


Section 4.5      No Conflicts.  The execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Warrant and any other
document or instrument contemplated hereby or thereby, by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and shall not in any material respect: (i) result in the violation
of any provision of the Charter or Bylaws, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Company is a party and that has not been waived where
such default or conflict would constitute a Material Adverse Effect, (iii) create
or impose a lien, charge or encumbrance on any property of the Company under
any agreement or any commitment to which the Company is a party or by which the
Company is bound or by which any of its respective properties or assets are
bound which would constitute a Material Adverse Effect, (iv) result in a
violation of any federal, state, local or foreign statute, rule, regulation,
order, writ, judgment or decree (including federal and state securities laws
and regulations) applicable to the Company or any of its subsidiaries or by which
any property or asset of the Company or any of its subsidiaries are bound or
affected where such violation would constitute a Material Adverse Effect, or (v) require
any consent of any third-party that has not


 


10
















 


been obtained
pursuant to any material contract to which the Company is subject or to which
any of its assets, operations or management may be subject where the failure to
obtain any such consent would constitute a Material Adverse Effect.  The Company is not required under applicable
federal, state or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of
its obligations under this Agreement, the Registration Rights Agreement or the
Warrant, or issue and sell the Shares, the Warrant Shares or the Blackout
Shares (except to the extent that the number of Blackout Shares required to be
issued exceeds the number of authorized shares of Common Stock under the
Charter) in accordance with the terms hereof and thereof (other than any
required filings that the Company is permitted to make with the Commission, the
FINRA/NASDAQ or state securities commissions subsequent to the Closing, and,
any registration statement (including any amendment or supplement thereto) or
any other filing or consent which may be filed pursuant to this Agreement, the
Registration Rights Agreement or the Warrant); provided that, for purposes of
the representation made in this sentence, the Company is assuming and relying
upon the accuracy of the relevant representations and agreements of the
Investor herein.


 


Section 4.6                                      Commission Documents, Financial
Statements.


 


(a)                                  The
Common Stock is registered pursuant to Section 12(b) or 12(g) of
the Exchange Act, and since December 1, 2007 the Company has timely filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the Commission pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a) or
15(d) of the Exchange Act (all of the foregoing, and, for the purpose of
determining the Company’s compliance with Section 7.1 hereof, any such
reports, schedules, forms, statements and other documents filed with the
Commission and publicly available after the date hereof but on or prior to the
applicable Condition Satisfaction Date, including filings incorporated by
reference, being referred to herein as the “Commission Documents”).  Except as previously disclosed to the
Investor in writing, since December 31, 2007 the Company has maintained
all requirements for the continued listing or quotation of its Common Stock,
and such Common Stock is currently listed or quoted on the NASDAQ Global
Market.  The Company has made available
(including through the Commission’s EDGAR filing system) to the Investor true
and complete copies of the Commission Documents filed with the Commission since
December 31, 2007 and prior to the Closing Date.  The Company has not provided to the Investor
any information which, according to applicable law, rule or regulation,
should have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this
Agreement.  As of the date it was filed
with the Commission, the Company’s Annual Report on Form 10-K for the year
ended December 31, 2007 complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the
Commission promulgated thereunder then-applicable to such document, and, as of
the date it was filed with the Commission, after giving effect to the
information disclosed and incorporated by reference therein, to the Company’s
Knowledge such Annual Report on Form 10-K did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.  As of their respective dates, to the Company’s
Knowledge the financial statements, together with the related notes and
schedules thereto, of the


 


11

















 


Company
included in the Commission Documents filed with the Commission since December 31,
2007 complied as to form in all material respects with all then-applicable
accounting requirements and the published rules and regulations of the
Commission or other then-applicable rules and regulations with respect
thereto.  Such financial statements,
together with the related notes and schedules thereto, have been prepared in
accordance with generally accepted accounting principles (“GAAP”)
applied on a consistent basis during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto or
(ii) in the case of unaudited interim statements, to the extent they may
not include footnotes or may be condensed or summary statements), and fairly
present in all material respects the financial condition of the Company and its
subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).


 


(b)                                 The Company has timely filed
with the Commission and made available to the Investor via EDGAR or otherwise
all certifications and statements required by (x) Rule 13a-14 or Rule 15d-14
under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906
of the Sarbanes-Oxley Act of 2002 (“SOXA”)) with respect to all relevant
Commission Documents.  The Company is in
compliance in all material respects with the provisions of SOXA applicable to
it as of the date hereof.  The Company
maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15
under the Exchange Act.  As used in this Section 4.6(b),
the term “file” shall be broadly construed to include any manner in which a
document or information is furnished, supplied or otherwise made available to
the Commission.


 


Section 4.7                                      No Material Adverse Change.  Except as disclosed in the Commission
Documents, as previously disclosed to the Investor in the Disclosure Schedule
or as disclosed in a publicly available press release of the Company, since September 30,
2008 no event or series of events has or have occurred that would, individually
or in the aggregate, have a Material Adverse Effect on the Company.


 


Section 4.8                                      No Undisclosed Liabilities.  To the Company’s Knowledge, neither the
Company nor any of its subsidiaries has any liabilities, obligations, claims or
losses (whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) that would be required to be disclosed on a
balance sheet of the Company or any subsidiary (including the notes thereto) in
conformity with GAAP and are not disclosed in the Commission Documents, other
than those incurred in the ordinary course of the Company’s or its subsidiaries
respective businesses since September 30, 2008 or which, individually or
in the aggregate, do not or would not have a Material Adverse Effect on the
Company.


 


Section 4.9                                      No Undisclosed Events or
Circumstances.  Except as previously disclosed to the
Investor in writing, to the Company’s Knowledge, no event or circumstance has
occurred or exists with respect to the Company or its subsidiaries or their
respective businesses, properties, operations or financial condition, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed and which, individually or in the aggregate, would have a Material
Adverse Effect on the Company.


 


12

















 


Section 4.10                                Actions Pending.  There is no action, suit, claim,
investigation or proceeding pending or, to the Knowledge of the Company,
threatened against the Company or any subsidiary which questions the validity
of this Agreement or the transactions contemplated hereby or any action taken
or to be taken pursuant hereto or thereto. 
Except as set forth in the Commission Documents or in the Disclosure
Schedule, there is no action, suit, claim, investigation or proceeding pending
or, to the Knowledge of the Company, threatened, against or involving the
Company, any subsidiary or any of their respective properties or assets, or to
the Knowledge of the Company involving any officers or directors, in their
capacity as officers or directors, of the Company or any of its subsidiaries,
including, without limitation, any securities class action lawsuit or
stockholder derivative lawsuit, that would be reasonably expected to have a
Material Adverse Effect on the Company. 
Except as set forth in the Commission Documents or as previously
disclosed to the Investor in writing, no judgment, order, writ, injunction or
decree or award has been issued by or, to the Knowledge of the Company,
requested of any court, arbitrator or governmental agency which would be
reasonably expected to result in a Material Adverse Effect.


 


Section 4.11                                Compliance with Law.  The business of the Company and its
subsidiaries has been and is presently being conducted in accordance with all
applicable federal, state, local and foreign governmental laws, rules, regulations
and ordinances, except as set forth in the Commission Documents or such that
would not reasonably be expected to cause a Material Adverse Effect.  Except as set forth in the Commission
Documents, each of the Company and its subsidiaries have all franchises,
permits, licenses, consents and other governmental or regulatory authorizations
and approvals necessary for the conduct of their respective businesses as now
being conducted by them, except for such franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals, the
failure to possess which, individually or in the aggregate, would not be
reasonably expected to have a Material Adverse Effect.


 


Section 4.12                                Certain Fees.  Except as expressly set forth in this
Agreement, no brokers, finders or financial advisory fees or commissions will
be payable by the Company or any of its subsidiaries in respect of the
transactions contemplated by this Agreement.


 


Section 4.13                                Disclosure.  To the Company’s Knowledge, neither this
Agreement nor any other documents, certificates or instruments furnished to the
Investor by or on behalf of the Company or any subsidiary in connection with
the transactions contemplated by this Agreement contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made herein or therein, in the light of the circumstances under
which they were made herein or therein, not misleading.


 


Section 4.14                                Material Non-Public Information.  Except for this Agreement and the
transactions contemplated hereby and the Disclosure Schedule, neither the
Company nor its employees have disclosed to the Investor, any material
non-public information that, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company prior to the
date hereof but which has not been so disclosed.


 


Section 4.15                                Exemption from Registration;
Valid Issuances.  Subject to, and in reliance on, the
representations, warranties and covenants made herein by the Investor, the
issuance and


 


13

















 


sale of the
Shares, the Warrant, the Warrant Shares and any Blackout Shares in accordance
with the terms and on the bases of the representations and warranties set forth
in this Agreement, may and shall be properly issued pursuant to Section 4(2),
Regulation D and/or any other applicable federal and state securities laws;
provided, however, that at the request of and with the express agreement of the
Investor, the Shares, and under certain circumstances the Warrant Shares will
be delivered to the Investor via book entry through DTC and will not bear
legends noting restrictions as to resale of such Shares under federal and state
securities laws, nor will such Shares be subject to stop transfer
instructions.  Neither the sales of the
Shares, the Warrant, the Warrant Shares or any Blackout Shares pursuant to, nor
the Company’s performance of its obligations under, this Agreement, the
Registration Rights Agreement, or the Warrant shall (i) result in the
creation or imposition of any liens, charges, claims or other encumbrances upon
the Shares, the Warrant Shares or any Blackout Shares, or (ii) except as
previously disclosed to the Investor in writing, entitle the holders of any
outstanding shares of capital stock of the Company to preemptive or other
rights to subscribe to or acquire the shares of Common Stock or other
securities of the Company.


 


Section 4.16                                Form S-3 Eligibility.  As of the date hereof, the Company qualifies
to register the Shares and the Warrant Shares for resale by the Investor on Form S-3
promulgated by the Commission, without reliance on General Instruction I.B.6.
thereof, and the Company is not subject to any volume limitations imposed by
the Securities Act or the Commission in respect of such registration, it being
acknowledged that the Company may be subject to the shareholder approval rules of
the Principal Market (it being acknowledged and agreed that the Company may not
so qualify after the date hereof).


 


Section 4.17                                No General Solicitation or
Advertising in Regard to this Transaction.  Except for such registration statements to be
filed as contemplated herein or in the Registration Rights Agreement, neither
the Company nor any of its affiliates or any Person acting on its or their
behalf (i) has conducted any general solicitation (as that term is used in
Rule 502(c) of Regulation D) or general advertising with respect
to any of the Shares, the Warrant, the Warrant Shares or any Blackout Shares or
(ii) has made any offers or sales of any security or solicited any offers
to buy any security under any circumstances that would require registration of
the Shares under the Securities Act.


 


Section 4.18                                No Integrated Offering.  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, other than pursuant to this Agreement, the Registration
Statement and the Prospectus, and employee benefit plans, under circumstances
that would require registration under the Securities Act of shares of the
Common Stock issuable hereunder with any other offers or sales of securities of
the Company.


 


Section 4.19                                Acknowledgment Regarding
Investor’s Purchase of Shares.  The Company acknowledges and agrees that the
Investor is acting solely in the capacity of an arm’s length investor with
respect to this Agreement and the transactions contemplated hereunder.  The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company (or
in any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder and any advice given by the Investor or any of its
representatives or


 


14

















 


agents
in connection with this Agreement and the transactions contemplated hereunder
is merely incidental to the Investor’s purchase of the Shares.


 


ARTICLE V

REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR


 


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


 


Section 5.1                                      Organization and Standing of the
Investor.  The Investor is a company duly organized,
validly existing and in good standing under the laws of the British Virgin
Islands.


 


Section 5.2                                      Authorization and Power.  The Investor has the requisite power and
authority to enter into and perform its obligations under this Agreement, the
Warrant and the Registration Rights Agreement and to purchase the Shares, any
Blackout Shares, the Warrant and the Warrant Shares in accordance with the
terms hereof and thereof.  The execution,
delivery and performance of this Agreement, the Warrant and the Registration
Rights Agreement by Investor and the consummation by it of the transactions
contemplated hereby or thereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of the Investor, its
Board of Directors or stockholders is required. 
Each of this Agreement and the Registration Rights Agreement has been
duly executed and delivered by the Investor and constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of creditor’s rights and remedies or indemnification
or by other equitable principles of general application (including any
limitation of equitable remedies).


 


Section 5.3                                      No Conflicts.  The execution, delivery and performance of
this Agreement, the Registration Rights Agreement, the Warrant and any other
document or instrument contemplated hereby and thereby, by the Investor and the
consummation of the transactions contemplated hereby and thereby do not (i) violate
any provision of the Investor’s charter documents or bylaws, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any material
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Investor is a party, (iii) create
or impose a lien, charge or encumbrance on any property of the Investor under
any agreement or any commitment to which the Investor is a party or by which
the Investor is bound or by which any of its respective properties or assets
are bound, (iv) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, writ, judgment or decree (including
federal and state securities laws and regulations) applicable to the Investor
or by which any property or asset of the Investor are bound or affected, or (v) require
the consent of any third-party that has not been obtained pursuant to any
material contract to which Investor is subject or to which any of its assets,
operations or management may be subject. 
The Investor is not required under applicable federal, state, foreign or
local law, rule or regulation to obtain any consent, authorization or
order of, or make any filing or registration with, any court or


 


15
















 


governmental agency in order for
it to execute, deliver or perform any of its obligations under this Agreement,
the Registration Rights Agreement or the Warrant or to purchase or acquire the
Shares, the Warrant, the Warrant Shares or any Blackout Shares in accordance
with the terms hereof, provided that, for purposes of the representation made
in this sentence, the Investor is assuming and relying upon the accuracy of the
relevant representations and agreements of the Company herein.


 


Section 5.4         Financial Capability.  The Investor has the financial capability to
perform all of its obligations under this Agreement, the Registration Rights
Agreement and the Warrant, including the capability to purchase the Shares, the
Warrant, the Warrant Shares and any Blackout Shares in accordance with the
terms hereof and thereof.  The Investor
has such knowledge and experience in business and financial matters that it is
capable of evaluating the merits and risks of an investment in Common Stock and
the Warrant.  The Investor is an “accredited
investor” as defined in Regulation D. 
The Investor is a “sophisticated investor” as described in Rule 506(b)(2)(ii) of
Regulation D.  The Investor
acknowledges that an investment in the Common Stock and the Warrant is
speculative and involves a high degree of risk.


 


Section 5.5         Information.  The Investor and its advisors, if any, have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the Shares,
any Blackout Shares, the Warrant and the Warrant Shares which have been
requested by the Investor.  The Investor
has reviewed or received copies of the Commission Documents.  The Investor and its advisors, if any, have
been afforded the opportunity to ask questions of the Company.  The Investor has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Shares, any Blackout
Shares, the Warrant and the Warrant Shares. 
The Investor understands that it (and not the Company) shall be
responsible for its own tax liabilities that may arise as a result of this
investment or the transactions contemplated by this Agreement.


 


Section 5.6         Trading Restrictions.  The Investor covenants that during the
Commitment Period, neither the Investor nor any of its affiliates nor any
entity managed or controlled by the Investor will (i) enter into or
execute or cause or assist any Person to enter into or execute any “short sale”
(as such term is defined in Rule 200 of Regulation SHO, or any successor
regulation, promulgated by the Commission under the Exchange Act) of any
securities of the Company or (ii) engage, through related parties or
otherwise, in any derivative transaction directly related to shares of Common
Stock (including, without limitation, the purchase of any option or contract to
sell) except during the term of a Draw Down Pricing Period with respect to
Shares that the Investor purchased pursuant to the Draw Down pertaining to such
Draw Down Pricing Period, and that the Investor and its affiliates shall comply
with all other applicable laws. Subject to clause (i) above, the Investor
shall have the right during any Draw Down Pricing Period to sell shares of
Common Stock equal in number to the aggregate number of the Shares purchased
pursuant to the Draw Down pertaining to such Draw Down Pricing Period.


 


Section 5.7         Statutory Underwriter Status.  The Investor acknowledges that, pursuant to
the Commission’s current interpretations of the Securities Act, the Investor
will be disclosed as an “underwriter” within the meaning of the
Securities Act in the Registration Statement (and


 


16





















 


amendments
thereto) and in any Prospectus contained therein to the extent required by
applicable law and to the extent such Prospectus is related to the resale of
Registrable Securities.


 


Section 5.8         Not an Affiliate.  The Investor is not an officer, director or “affiliate”
(as defined in Rule 405 of the Securities Act) of the Company.


 


Section 5.9         Manner of Sale.  At no time was the Investor presented with or
solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertising by or on
behalf of the Company.


 


Section 5.10       Prospectus Delivery.  The Investor agrees that unless the Shares,
the Warrant Shares or any Blackout Shares are eligible for resale pursuant to
all the conditions of Rule 144, it will resell the Shares, the Warrant
Shares and any Blackout Shares only pursuant to the Registration Statement, in
a manner described under the caption “Plan of Distribution” in the
Registration Statement, and in a manner in compliance with all applicable
securities laws, including, without limitation, any applicable prospectus
delivery requirements of the Securities Act and the insider trading
restrictions of the Exchange Act; provided that in no event shall the Company
be under any obligation to the Investor to supplement the Prospectus to reflect
the issuance of any Shares pursuant to a Draw Down at any time prior to the day
following the last Settlement Date with respect to such Draw Down.


 


ARTICLE VI

COVENANTS OF THE COMPANY


 


The Company covenants with the Investor as follows,
which covenants are for the benefit of the Investor and its permitted assignees
(as defined herein):


 


Section 6.1         Securities Compliance.  The
Company shall notify the Commission and the Principal Market, if and as
applicable, in accordance with their respective rules and regulations, of
the transactions contemplated by this Agreement, and shall use commercially
reasonable efforts to take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the
legal and valid issuance of the Shares, the Warrant Shares and the Blackout
Shares, if any, to the Investor, provided that in no event shall the Company be
under any obligation to the Investor hereunder to supplement the Prospectus to
reflect the issuance of any Shares pursuant to a Draw Down at any time prior to
the date following the Settlement Date with respect to such Shares.  Each Commission Document to be filed with the
Commission after the Closing Date and incorporated by reference in the Registration
Statement and Prospectus, when such document becomes effective or is filed with
the Commission, as the case may be, shall comply in all material respects with
the requirements of the Securities Act or the Exchange Act, as applicable, and
other federal, state and local laws, rules and regulations applicable to
it, and shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.


 


Section 6.2         Reservation of Common Stock.  As of the date hereof, the Company has
available and the Company shall reserve and keep available at all times, free
of preemptive rights and other similar contractual rights of stockholders,
shares of Common Stock for the purpose of


 


17





















 


enabling the
Company to satisfy any obligation to issue the Shares in connection with all
Draw Downs contemplated hereunder and the Warrant Shares.  The number of shares so reserved from time to
time, as theretofore increased or reduced as hereinafter provided, may be
reduced by the number of shares actually delivered hereunder.


 


Section 6.3         Registration and Listing.  During the Commitment Period, the Company
shall use commercially reasonable efforts to: (i) take all action
necessary to cause its Common Stock to continue to be registered under Section 12(b) or
12(g) of the Exchange Act, (ii) comply in all material respects with
its reporting and filing obligations under the Exchange Act, (iii) prevent
the termination or suspension of such registration, or the termination or
suspension of its reporting and filing obligations under the Exchange Act or
Securities Act (except as expressly permitted herein).  The Company shall use commercially reasonable
efforts to maintain the listing and trading of its Common Stock and the listing
of the Shares purchased by Investor hereunder on the Principal Market
(including, without limitation, maintaining sufficient net tangible assets) and
will comply in all material respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the FINRA and the Principal
Market.  The Company will not be required
to carry out any action pursuant to this Agreement, the Registration Rights
Agreement or the Warrant that would adversely impact the listing of the Company’s
securities on the Principal Market, which Principal Market may be changed by
the Company in the future in the Company’s discretion.


 


Section 6.4         Registration Statement.  Without the prior written consent of the
Investor, the Registration Statement shall be used solely in connection with
the transactions between the Company and the Investor contemplated hereby or in
connection with any other offering of the Company’s securities described under
the caption “Plan of Distribution” in the Registration Statement.


 


Section 6.5         Compliance with Laws.


 


(a)        The
Company shall comply, and cause each subsidiary to comply, with all applicable
laws, rules, regulations and orders, noncompliance with which would reasonably
be expected to have a Material Adverse Effect. 
Without limiting the generality of the foregoing, neither the Company
nor any of its officers, directors or affiliates will take, directly or
indirectly, any action designed or intended to stabilize or manipulate the
price of any security of the Company, or which would in the future reasonably
be expected to cause or result in, stabilization or manipulation of the price
of any security of the Company, in each case in contravention of applicable
laws, rules regulations or orders.


 


(b)        Without the consent of its stockholders in accordance with
FINRA and The NASDAQ Stock Market LLC rules, the Company will not be obligated
to issue, and the Investor will not be obligated to purchase, any Shares or
Blackout Shares which would result in the issuance under this Agreement, the
Warrant and the Registration Rights Agreement of Shares, Warrant Shares and
Blackout Shares (collectively) representing more than the applicable percentage
under the rules of the FINRA and The NASDAQ Stock Market LLC, including,
without limitation, NASDAQ Marketplace Rule 4350(i), that would require
stockholder approval of the issuance thereof. 
Nothing herein shall compel the Company to seek such consent of its
stockholders.  In addition, the Company
will not be obligated to issue, and the Investor will not


 


18





















 


be obligated
to purchase, any Shares, Warrant Shares or Blackout Shares if as a result of
the acquisition of such Shares, Warrant Shares and/or Blackout Shares, the
Company would be required to file any notification or report forms under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.  Nothing herein shall compel the Company to
file such notification and report forms.


 


Section 6.6         Other Financing.  Nothing
in this Agreement shall be construed to restrict the right of the Company to
offer, sell and/or issue securities of any kind whatsoever, provided such
transaction is not a Prohibited Transaction (as defined below) (any such
transaction that is not a Prohibited Transaction is referred to in this
Agreement as a “Permitted Transaction”). 
Without limiting the generality of the preceding sentence, the Company
may, without the prior written consent of the Investor, (i) establish
stock option, stock purchase, stock bonus or other equity incentive or award
plans or agreements (for directors, employees, consultants and/or advisors),
and issue securities thereunder, and amend such plans or agreements, including
increasing the number of shares available thereunder, (ii) issue equity
securities to finance, or otherwise in connection with, the acquisition,
license or sale of one or more other companies, equipment, technologies or
lines of business, (iii) issue shares of Common Stock and/or other
securities in connection with the Company’s option, equity incentive or award
plans, stock purchase plans, stock bonus programs, rights plans, warrants or
options, (iv) issue shares of Common Stock and/or other securities in
connection with the acquisition, license or sale of products, licenses,
equipment or other assets and strategic collaborations, partnerships, joint
ventures or similar transactions; (v) issue shares of Common and/or other
securities to employees, consultants and/or advisors as consideration for
services rendered or to be rendered, (vi) issue and sell equity or debt
securities in a public offering (including, without limitation, any issuance
and sale of securities under the Registration Statement), (vii) issue and
sell any equity or debt securities in a private placement (other than in
connection with any Prohibited Transaction), (viii) issue equity
securities to equipment lessors, equipment vendors, banks or similar lending
institutions in connection with leases or loans, or in connection with
strategic commercial or licensing transactions, (ix) issue securities in
connection with any stock split, stock dividend, recapitalization,
reclassification or similar event by the Company and (x) issue shares of
Common Stock to the Investor under any other agreement entered into between the
Investor and the Company.


 


Section 6.7         Prohibited Transactions.  Except as set forth on Schedule 6.7 of the
Disclosure Schedule and except as permitted by Section 6.6, during the
term of this Agreement, the Company shall not enter into any Prohibited
Transaction without the prior written consent of the Investor, which consent
may be withheld at the sole discretion of the Investor.  For the purposes of this Agreement, the term “Prohibited
Transaction” shall refer to the issuance by the Company of any “future
priced securities,” which shall mean the issuance of shares of Common Stock or
securities of any type whatsoever that are, or may become, convertible or
exchangeable into shares of Common Stock where the purchase, conversion or
exchange price for such Common Stock is determined using any floating discount
or other post-issuance adjustable discount to the market price of Common Stock,
including, without limitation, pursuant to any equity line or other financing
that is substantially similar to the financing provided for under this
Agreement, provided  that any
future issuance by the Company of (i) a convertible security (“Convertible
Security”) that (A) contains provisions that adjust the conversion
price of such


 


19





















 


Convertible
Security in the event of stock splits, dividends, distributions,
reclassifications or similar events or pursuant to anti-dilution provisions or (B) is
issued in connection with the Company obtaining debt financing for research and
development purposes where the issuance of Convertible Securities is
conditioned upon the Company meeting certain defined clinical milestones, (ii) securities
in a registered direct public offering or an unregistered private placement
where the price per share of such securities is fixed concurrently with the
execution of definitive documentation relating to the offering or placement, as
applicable and (iii) securities issued in connection with a secured debt
financing, shall not be a Prohibited Transaction.


 


Section 6.8         Corporate Existence.  The Company shall take all steps necessary to
preserve and continue the corporate existence of the Company; provided,
however, that nothing in this Agreement shall be deemed to prohibit the Company
from engaging in any Excluded Merger or Sale with another Person, subject to
the terms of the Warrant.


 


Section 6.9         Non-Disclosure of Non-Public Information.  Subject to Section 6.10
below, except as otherwise expressly provided in this Agreement, the
Registration Rights Agreement or the Warrant, none of the Company, its
officers, directors, employees nor agents shall disclose material non-public
information to the Investor, its advisors or representatives.


 


Section 6.10       Notice of Certain Events Affecting Registration; Suspension
of Right to Request a Draw Down.  The Company shall promptly notify the
Investor upon the occurrence of any of the following events in respect of the
Registration Statement or the Prospectus related to the offer, issuance and
sale of the Shares and the Warrant Shares hereunder: (i) receipt of any
request for material additional information by the Commission or any other
federal or state governmental authority or for amendments or supplements to the
Registration Statement or the Prospectus (to the extent related to the resale
of Registrable Securities) during the period of effectiveness of the
Registration Statement; (ii) the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; and (iii) receipt of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.  If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement, the
Company shall use commercially reasonable efforts to obtain the withdrawal of
such order at the earliest possible time. 
The Company shall not be required to disclose to the Investor the
substance or specific reasons of any of the events set forth in clauses (i) through
(iii) of the first sentence of this Section 6.10, only that the event
has occurred.  The Company shall not
request a Draw Down during the continuation of any of the foregoing events.


 


Section 6.11       Amendments to the Registration Statement.  After the
Registration Statement has been declared effective by the Commission, (a) the
Company shall not file any amendment to the Registration Statement or make any
amendment or supplement to the Prospectus (to the extent related to the resale
of Registrable Securities) of which the Investor shall not have been previously
or be simultaneously advised; provided, however, that the Company shall, to the
extent it deems advisable, and without the prior consent of or notice to the
Investor, supplement the Prospectus within two Trading Days following the
Settlement Date for


 


20





















 


each Draw
Down solely to reflect the issuance of Shares with respect to such Draw Down;
and provided further that the Company need not advise the Investor regarding
any supplement the purpose of which is to update the Registration Statement and
the Prospectus to include information the Company has previously filed with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act, and (b) so
long as, in the reasonable opinion of counsel for the Investor, a Prospectus is
required to be delivered in connection with sales of the Shares by the Investor,
if the Company files any information, documents or reports that are
incorporated by reference in the Registration Statement pursuant to the
Exchange Act, the Company shall, if requested in writing by the Investor,
deliver a copy of such information, documents or reports to the Investor
promptly following such filing to the extent such information, documents or
reports are not available on the Commission’s EDGAR filing system.


 


Section 6.12       Prospectus Delivery.  From time to time for such period as in the
reasonable opinion of counsel for the Investor a prospectus is required by the
Securities Act to be delivered in connection with sales by the Investor, the
Company will expeditiously deliver to the Investor, without charge, as many
copies of the Prospectus (and of any amendment or supplement thereto related to
sales by the Investor) as the Investor may reasonably request.  Subject to the Registration Rights Agreement,
the Company consents to the use of the Prospectus (and of any amendment or
supplement thereto) in accordance with the provisions of the Securities Act and
state securities laws in connection with the offering and sale of the Shares
and the Warrant Shares and for such period of time thereafter as the Prospectus
is required by the Securities Act to be delivered in connection with sales of
the Shares and the Warrant Shares. Notwithstanding the foregoing, in no event
shall the Company be under any obligation to supplement the Prospectus or to
reflect the issuance of any Shares pursuant to a Draw Down or deliver any
Prospectus as so supplemented at any time prior to the Trading Day following
the Settlement Date with respect to such Shares.


 


ARTICLE VII

CONDITIONS TO THE OBLIGATION OF THE INVESTOR

TO ACCEPT A DRAW DOWN


 


The obligation of the Investor hereunder to accept a
Draw Down Notice and to acquire and pay for the Shares in accordance therewith
is subject to the satisfaction or waiver, at each Condition Satisfaction Date,
of each of the conditions set forth below. 
Other than those conditions set forth in Section 7.12 which are for
the Company’s sole benefit and may be waived by the Company at any time in its
sole discretion, the conditions are for the Investor’s sole benefit and may be
waived by the Investor at any time in its sole discretion.  As used in this Agreement, the term “Condition
Satisfaction Date” shall mean, with respect to each Draw Down, the date on
which the applicable Draw Down Notice is delivered to the Investor, each
Trading Day of the applicable Draw Down Pricing Period and each Settlement
Date.


 


Section 7.1         Accuracy of the Company’s Representations and Warranties.  Each of the
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made as though made at that time except
for representations and warranties that are expressly made as of a particular
date.


 


21





















 


Section 7.2         Performance by the Company.  The Company shall have, in all material
respects, performed, satisfied and complied with all covenants, agreements and
conditions required by this Agreement, the Registration Rights Agreement and
the Warrant to be performed, satisfied or complied with by the Company on or
prior to the applicable Condition Satisfaction Date.


 


Section 7.3         Compliance with Law.  The Company shall have complied in all
respects with all applicable federal, state and local governmental laws, rules,
regulations and ordinances in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby except for any failures to so comply which would not be
reasonably expected to have a Material Adverse Effect.


 


Section 7.4         Effective Registration Statement.  Upon the terms and
subject to the conditions set forth in the Registration Rights Agreement, the
Registration Statement shall have previously become effective and shall remain
effective and (i) neither the Company nor the Investor shall have received
notice that the Commission has issued or intends to issue a stop order with
respect to the Registration Statement or that the Commission otherwise has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or intends or has threatened to do so (unless the
Commission’s concerns have been addressed and the Investor is reasonably
satisfied that the Commission no longer is considering or intends to take such
action), and (ii) no other suspension of the use or withdrawal of the
effectiveness of the Registration Statement or the Prospectus shall exist.


 


Section 7.5         No Knowledge.  The Company shall have no Knowledge of any
event that could reasonably be expected to have the effect of causing the
Registration Statement with respect to the resale of the Registrable Securities
by the Investor to be suspended or otherwise ineffective (which event is
reasonably likely to occur within eight Trading Days following the Trading Day
on which a Draw Down Notice is delivered) as of the Settlement Date.


 


Section 7.6         No Suspension.  Trading in the Company’s Common Stock shall
not have been suspended by the Commission, the Principal Market or the FINRA
and trading in securities generally as reported on the Principal Market shall
not have been suspended or limited as of the Condition Satisfaction Date.


 


Section 7.7         No Injunction.  No statute, rule, regulation, order, decree,
writ, ruling or injunction shall have been enacted, entered, promulgated,
endorsed or, to the Knowledge of the Company, threatened by any court or governmental
authority of competent jurisdiction which prohibits the consummation of or
which would materially modify or delay any of the transactions contemplated by
this Agreement.


 


Section 7.8         No Proceedings or Litigation.  No action, suit or proceeding before any
arbitrator or any court or governmental authority shall have been commenced or,
to the Knowledge of the Company, threatened, and, to the Knowledge of the
Company no inquiry or investigation by any governmental authority shall have
been threatened, against the Company or any subsidiary, or any of the officers,
directors or affiliates of the Company or any subsidiary, seeking to enjoin,
prevent or change the transactions contemplated by this Agreement, or seeking
material damages in connection with such transactions.


 


22




















 


Section 7.9         Sufficient Shares Registered for Resale.  The Company shall
have sufficient Shares, calculated using the Closing Price of the Common Stock
as of the Trading Day immediately preceding the applicable Draw Down Notice,
registered under the Registration Statement to issue and sell such Shares in
accordance with such Draw Down Notice.


 


Section 7.10       Warrant.  The Warrant shall have been duly executed,
delivered and issued to the Investor, and the Company shall not be in default
in any material respect under any of the provisions thereof, provided that any
refusal by or failure of the Company to issue and deliver Warrant Shares in
respect of any exercise (in whole or in part) thereof shall be deemed to be
material for the purposes of this Section 7.10.


 


Section 7.11       Opinion of Counsel.  The Investor shall have received the form of
opinion mutually agreed upon between the parties on the date of this Agreement,
a specimen of which has been delivered by counsel to the Investor to counsel to
the Company.


 


Section 7.12       Accuracy of Investor’s Representation and Warranties.  Each of the
representations and warranties of the Investor shall be true and correct in all
material respects as of the date when made as though made at that time except
for representations and warranties that are made as of a particular date.


 


ARTICLE VIII

TERMINATION


 


Section 8.1         Term.  Unless otherwise terminated in accordance
with Section 8.2 below, this Agreement shall terminate upon the earlier to
occur of (i) the expiration of the Commitment Period or (ii) the
issuance of Shares pursuant to this Agreement in an amount equal to the Maximum
Commitment Amount.


 


Section 8.2         Other Termination.


 


(a)        The
Investor may terminate this Agreement upon (x) one (1) Trading Day’s
notice if the Company enters into any Prohibited Transaction as set forth in Section 6.7
without the Investor’s prior written consent, or (y) one (1) Trading
Day’s notice if the Investor provides written notice of a Material Adverse
Effect to the Company, and such Material Adverse Effect continues for a period
of ten (10) Trading Days after the receipt by the Company of such notice.


 


(b)        The Investor may terminate this Agreement upon one (1) Trading
Day’s notice to the Company at any time in the event that the Registration Statement
is not initially declared effective in accordance with the Registration Rights
Agreement, provided, however, that in the event the Registration Statement is
declared effective prior to the delivery of such notice, the Investor shall
thereafter have no right to terminate this Agreement pursuant to this Section 8.2(b).


 


(c)        The Company may terminate this Agreement upon one (1) Trading
Day’s notice; provided, however, that the Company shall not terminate this
Agreement pursuant to this Section 8.2(c) during any Draw Down
Pricing Period; provided further, that, in the event of any


 


23





















 


termination
of this Agreement by the Company pursuant to this Section 8.2(c), so long
as the Investor owns Shares purchased hereunder and/or Warrant Shares, unless
all of such shares of Common Stock may be resold by the Investor without
registration and without any time, volume or manner limitations pursuant to Rule 144(b) (or
any similar provision then in effect) under the Securities Act, the Company
shall not suspend or withdraw the Registration Statement or otherwise cause the
Registration Statement to become ineffective, or voluntarily delist the Common
Stock from, the Principal Market without listing the Common Stock on another
Principal Market.


 


(d)        Each of the parties hereto may terminate this Agreement upon
one (1) Trading Day’s notice if the other party has breached a material
representation, warranty or covenant to this Agreement and such breach is not
remedied within ten (10) Trading Days after notice of such breach is
delivered to the breaching party.


 


Section 8.3         Effect of Termination.  In the event of termination by the Company or
the Investor, written notice thereof shall forthwith be given to the other
party and the transactions contemplated by this Agreement shall be terminated
without further action by either party. 
If this Agreement is terminated as provided in Section 8.1 or 8.2
herein, this Agreement shall become void and of no further force and effect, except
as provided in Section 10.13. 
Nothing in this Section 8.3 shall be deemed to release the Company
or the Investor from any liability for any breach under this Agreement
occurring prior to such termination, or to impair the rights of the Company and
the Investor to compel specific performance by the other party of its
obligations under this Agreement arising prior to such termination.


 


ARTICLE IX

INDEMNIFICATION


 


Section 9.1         Indemnification.


 


(a)        Except as otherwise provided in this Article IX, unless
disputed as set forth in Section 9.2, the Company agrees to indemnify,
defend and hold harmless the Investor and its affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, an “Investor Indemnified Party”), to the
fullest extent permitted by law from and against any and all Damages directly
resulting from or directly arising out of any breach of any representation or
warranty, covenant or agreement (except as otherwise specifically provided) by
the Company in this Agreement, the Registration Rights Agreement or the
Warrant; provided, however, that the Company shall not be liable under this Article IX
to an Investor Indemnified Party to the extent that such Damages resulted or
arose from the breach by an Investor Indemnified Party of any representation,
warranty, covenant or agreement of an Investor Indemnified Party contained in
this Agreement, the Registration Rights Agreement or the Warrant or the
negligence, recklessness, willful misconduct or bad faith of an Investor
Indemnified Party.  The parties intend
that any Damages subject to indemnification pursuant to this Article IX
will be net of insurance proceeds (which the Investor agrees to use
commercially reasonable efforts to recover or to cause any Investor Indemnified
Party to recover).  Accordingly, the
amount which the Company is required to pay to any Investor Indemnified Party
hereunder (a “Company Indemnity Payment”) will be reduced by any
insurance proceeds actually recovered by or on behalf of any Investor
Indemnified Party in reduction of the related


 


24





















 


Damages.  In addition, if an Investor Indemnified Party
receives a Company Indemnity Payment required by this Article IX in
respect of any Damages and subsequently receives any such insurance proceeds,
then the Investor will pay, or will cause such other Investor Indemnified Party
to pay, to the Company an amount equal to the Company Indemnity Payment
received less the amount of the Company Indemnity Payment that would have been
due if the insurance proceeds had been received, realized or recovered before
the Company Indemnity Payment was made.


 


(b)        Except as otherwise provided in this Article IX, unless
disputed as set forth in Section 9.2, the Investor agrees to indemnify,
defend and hold harmless the Company and its affiliates and their respective
officers, directors, agents, employees, subsidiaries, partners, members and
controlling persons (each, a “Company Indemnified Party”), to the
fullest extent permitted by law from and against any and all Damages directly
resulting from or directly arising out of any breach of any representation or
warranty, covenant or agreement by the Investor in this Agreement, the
Registration Rights Agreement or the Warrant; provided, however, that the
Investor shall not be liable under this Article IX to a Company
Indemnified Party to the extent that such Damages resulted or arose from the
breach by a Company Indemnified Party of any representation, warranty, covenant
or agreement of a Company Indemnified Party contained in this Agreement, the
Registration Rights Agreement or the Warrant or the negligence, recklessness,
willful misconduct or bad faith of a Company Indemnified Party.  The parties intend that any Damages subject
to indemnification pursuant to this Article IX will be net of insurance
proceeds (which the Company agrees to use commercially reasonable efforts to
recover or to cause any Company Indemnified Party to recover).  Accordingly, the amount which the Investor is
required to pay to any Company Indemnified Party hereunder (an “Investor
Indemnity Payment”) will be reduced by any insurance proceeds theretofore
actually recovered by or on behalf of any Company Indemnified Party in reduction
of the related Damages.  In addition, if
a Company Indemnified Party receives an Investor Indemnity Payment required by
this Article IX in respect of any Damages and subsequently receives any
such insurance proceeds, then the Company Indemnified Party will pay, or will
cause such other Company Indemnified Party to pay, to the Investor an amount
equal to the Investor Indemnity Payment received less the amount of the
Investor Indemnity Payment that would have been due if the insurance proceeds
had been received, realized or recovered before the Investor Indemnity Payment
was made.


 


Section 9.2         Notification of Claims for Indemnification.  Each party entitled
to indemnification under this Article IX (an “Indemnified Party”)
shall, promptly after the receipt of notice of the commencement of any claim
against such Indemnified Party in respect of which indemnity may be sought from
the party obligated to indemnify such Indemnified Party under this Article IX
(the “Indemnifying Party”), notify the Indemnifying Party in writing of
the commencement thereof.  Any such
notice shall describe the claim in reasonable detail.  The failure of any Indemnified Party to so
notify the Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party (a) other than pursuant to this Article IX or (b) under
this Article IX unless, and only to the extent that, such failure results
in the Indemnifying Party’s forfeiture of substantive rights or defenses or the
Indemnifying Party is prejudiced by such delay. 
The procedures listed below shall govern the procedures for the handling
of indemnification claims.


 


25





















 


(a)        Any claim for indemnification for Damages that do not result
from a Third Party Claim as defined in the following paragraph, shall be
asserted by written notice given by the Indemnified Party to the Indemnifying
Party.  Such Indemnifying Party shall
have a period of thirty (30) days after the receipt of such notice within which
to respond thereto.  If such Indemnifying
Party does not respond within such thirty (30) day period, such Indemnifying
Party shall be deemed to have refused to accept responsibility to make payment
as set forth in Section 9.1.  If
such Indemnifying Party does not respond within such thirty (30) day period or
rejects such claim in whole or in part, the Indemnified Party shall be free to
pursue such remedies as specified in this Agreement.


 


(b)        If an Indemnified Party shall receive notice or otherwise
learn of the assertion by a person or entity not a party to this Agreement of
any threatened legal action or claim (collectively a “Third Party Claim”),
with respect to which an Indemnifying Party may be obligated to provide
indemnification, the Indemnified Party shall give such Indemnifying Party
written notice thereof within twenty (20) days after becoming aware of such
Third Party Claim.


 


(c)        An Indemnifying Party may elect to defend (and, unless the
Indemnifying Party has specified any reservations or exceptions, to seek to
settle or compromise) at such Indemnifying Party’s own expense and by such
Indemnifying Party’s own counsel, any Third Party Claim.  Within thirty (30) days after the receipt of
notice from an Indemnified Party (or sooner if the nature of such Third Party
Claim so requires), the Indemnifying Party shall notify the Indemnified Party
whether the Indemnifying Party will assume responsibility for defending such
Third Party Claim, which election shall specify any reservations or
exceptions.  If such Indemnifying Party
does not respond within such thirty (30) day period or rejects such claim in
whole or in part, the Indemnified Party shall be free to pursue such remedies
as specified in this Agreement.  In case
any such Third Party Claim shall be brought against any Indemnified Party, and
it shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to assume the defense thereof at its own
expense, with counsel satisfactory to such Indemnified Party in its reasonable
judgment; provided, however, that any Indemnified Party may, at its own
expense, retain separate counsel to participate in such defense at its own
expense.  Notwithstanding the foregoing,
in any Third Party Claim in which both the Indemnifying Party, on the one hand,
and an Indemnified Party, on the other hand, are, or are reasonably likely to
become, a party, such Indemnified Party shall have the right to employ separate
counsel and to control its own defense of such claim if, in the reasonable
opinion of counsel to such Indemnified Party, either (x) one or more
significant defenses are available to the Indemnified Party that are not
available to the Indemnifying Party or (y) a conflict or potential
conflict exists between the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, that would make such separate
representation advisable; provided, however, that in such circumstances the
Indemnifying Party (i) shall not be liable for the fees and expenses of
more than one counsel to all Indemnified Parties and (ii) shall reimburse
the Indemnified Parties for such reasonable fees and expenses of such counsel
incurred in any such Third Party Claim, as such expenses are incurred, provided
that the Indemnified Parties agree to repay such amounts if it is ultimately
determined that the Indemnifying Party was not obligated to provide
indemnification under this Article IX. 
The Indemnifying Party agrees that it will not, without the prior
written consent of the Indemnified Party, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim relating to the
matters contemplated hereby (if any


 


26





















 


Indemnified
Party is a party thereto or has been actually threatened to be made a party
thereto) unless such settlement, compromise or consent includes an
unconditional release of such Indemnified Party from all liability arising or
that may arise out of such claim.  The
Indemnifying Party shall not be liable for any settlement of a claim effected
against an Indemnified Party without the Indemnifying Party’s written consent,
which consent shall not be unreasonably withheld, conditioned or delayed. The
rights accorded to an Indemnified Party hereunder shall be in addition to any
rights that any Indemnified Party may have at common law, by separate agreement
or otherwise; provided, however, that notwithstanding the foregoing or anything
to the contrary contained in this Agreement, nothing in this Article IX
shall restrict or limit any rights that any Indemnified Party may have to seek
equitable relief.


 


ARTICLE X

MISCELLANEOUS


 


Section 10.1       Fees and Expenses.


 


(a)        Each of the Company and the Investor agrees to pay its own
expenses incident to the performance of its obligations hereunder, except that
the Company shall be solely responsible for (i) all reasonable attorneys
fees and expenses incurred by the Investor in connection with the preparation,
negotiation, execution and delivery of this Agreement, the Registration Rights
Agreement and the Warrant, and review of the Registration Statement, and in
connection with any amendments, modifications or waivers of this Agreement, (ii) subject
in all cases to Section 10.1(b) hereof, all reasonable fees and
expenses incurred in connection with the Investor’s enforcement of this
Agreement, including, without limitation, all reasonable attorneys fees and
expenses, (iii) due diligence expenses incurred by the Investor during the
term of this Agreement equal to $15,000 per calendar quarter, and (iv) all
stamp or other similar taxes and duties, if any, levied in connection with
issuance of the Shares pursuant hereto; provided, however, that in each of the
above instances the Investor shall provide customary supporting invoices or
similar documentation in reasonable detail describing such expenses (however,
the Investor shall not be obligated to provide detailed time sheets); and
provided further, that the maximum aggregate amount payable by the Company
pursuant to clauses (i) and (ii) above shall be $70,000 and the
Investor shall bear all fees and expenses described in clauses (i) and (ii) above
in excess of $70,000.


 


(b)        If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Registration Rights Agreement or the
Warrant, the prevailing party shall be entitled to reasonable fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.


 


Section 10.2       Reporting Entity for the Common Stock.  The reporting
entity relied upon for the determination of the trading price or trading volume
of the Common Stock on any given Trading Day for the purposes of this Agreement
shall be Bloomberg, L.P. or any successor thereto, provided that the Closing
Price shall be reported by the Principal Market.  The written mutual consent of the Investor
and the Company shall be required to employ any other reporting entity.


 


27





















 


Section 10.3       Brokerage.  Each of the parties hereto represents that it
has had no dealings in connection with this transaction with any finder or
broker who will demand payment of any fee or commission from the other party.  The Company on the one hand, and the Investor,
on the other hand, agree to indemnify the other against and hold the other
harmless from any and all liabilities to any Persons claiming brokerage
commissions or finder’s fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with this Agreement
or the transactions contemplated hereby.


 


28




















 


Section 10.4       Notices.  All notices, demands, requests, consents,
approvals, and other communications required or permitted hereunder shall be in
writing and, unless otherwise specified herein, shall be (i) personally
served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air
courier service with charges prepaid, or (iv) transmitted by hand
delivery, telegram, or facsimile, addressed as set forth below or to such other
address as such party shall have specified most recently by written notice
given in accordance herewith, in each case with a copy to the e-mail address
set forth beside the facsimile number for the addressee below.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand
delivery or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a Trading Day during normal business hours where such notice is to
be received), or the first Trading Day following such delivery (if delivered
other than on a Trading Day during normal business hours where such notice is
to be received) or (b) on the second Trading Day following the date of
mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall
be:


 


If to the Company:


 


BioSante Pharmaceuticals Inc.


111 Barclay Boulevard


Lincolnshire, Illinois 60069


Facsimile: 847-478-9263


Attention: Phillip B. Donenberg, Chief Financial Officer


Email: pdonenberg@biosantepharma.com 


 


with a copy (which shall not constitute notice) to:


 


Oppenheimer Wolff & Donnelly LLP


Plaza VII, Suite 3300


45 South Seventh Street


Minneapolis, Minnesota 55402


Facsimile: 612-607-7100


Attention: Amy E. Culbert, Esq.


 


if to the Investor:


 


Kingsbridge Capital Limited


Attention: Mr. Antony Garner-Hillman


P.O. Box 1075


Elizabeth House


9 Castle Street


St. Helier


Jersey


JE42QP


Channel Islands


Telephone: 011-44-1534-636-041


Facsimile: 011-44-1534-636-042


Email: admin@kingsbridgecap.com; and adamgurney@kingsbridgecap.com


 


29

















 


with a copy (which shall not constitute notice) to:


 


Kingsbridge Corporate Services Limited


Kingsbridge House


New Abbey


Kilcullen, County Kildare


Republic of Ireland


Telephone: 011-353-45-481-811


Facsimile: 011-353-45-482-003 


Email: adamgurney@kingsbridge.ie; emmagalway@kingsbridge.ie; and 


pwhelan@kingsbridge.ie


 


and another copy (which shall not constitute notice) to:


 


Stroock & Stroock & Lavan LLP


180 Maiden Lane


New York, NY 10038


Facsimile: (212) 806-5400


Attention: Keith M. Andruschak, Esq. – kandruschak@stroock.com


 


Either party hereto may from time to time change its
contact information for notices under this Section by giving at least ten (10) days’
prior written notice of such changed contact information to the other party
hereto.


 


Section 10.5       Assignment.  Neither this Agreement nor any rights of the
Investor or the Company hereunder may be assigned by either party to any other
Person.


 


Section 10.6       Amendment; No Waiver.  No party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants
except as specifically set forth in this Agreement, the Warrant and the
Registration Rights Agreement.  Except as
expressly provided in this Agreement, neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by a written
instrument signed by both parties hereto. 
The failure of either party to insist on strict compliance with this
Agreement, or to exercise any right or remedy under this Agreement, shall not
constitute a waiver of any rights provided under this Agreement, nor estop the
parties from thereafter demanding full and complete compliance nor prevent the
parties from exercising such a right or remedy in the future.


 


Section 10.7       Entire Agreement.  This Agreement, the Registration Rights
Agreement and the Warrant set forth the entire agreement and understanding of
the parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements, negotiations and understandings between the
parties, both oral and written, relating to the subject matter hereof.


 


Section 10.8       Severability.  If any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision; provided that, if the severance of such provision materially changes
the economic benefits of this Agreement to either party as such 


 


30

















 


benefits are
anticipated as of the date hereof, then such party may terminate this Agreement
on five (5) Trading Days prior written notice to the other party.  In such event, the Registration Rights
Agreement will terminate simultaneously with the termination of this Agreement;
provided that in the event that this Agreement is terminated by the Company in
accordance with this Section 10.8 and the Warrant Shares either have not
been registered for resale by the Investor in accordance with the Registration
Rights Agreement or are otherwise not freely tradable (if and when issued) in
accordance with applicable law, then the Registration Rights Agreement in
respect of the registration of the Warrant Shares shall remain in full force
and effect.


 


Section 10.9       Title and Subtitles.  The titles and subtitles used in this
Agreement are used for the convenience of reference and are not to be
considered in construing or interpreting this Agreement.


 


Section 10.10     Counterparts.  This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together
shall constitute one and the same instrument.


 


Section 10.11     Choice
of Law.  This Agreement shall be
construed under the laws of the State of New York.


 


Section 10.12     Specific
Enforcement, Consent to Jurisdiction.


 


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


 


(b)        Each
of the Company and the Investor (i) hereby irrevocably submits to the
jurisdiction of the United States District Court and other courts of the United
States sitting in the State of New York for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper.  Each of the Company and the Investor consents
to process being served in any such suit, action or proceeding by mailing a
copy thereof to such party at the address in effect for notices to it under
this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof.  Nothing in this Section 10.12 shall
affect or limit any right to serve process in any other manner permitted by
law.


 


Section 10.13     Survival.  The representations and warranties of the
Company and the Investor contained in Articles IV and V and the covenants
contained in Article V and Article VI shall survive the execution and
delivery hereof and the Closing until the termination of this 


 


31

















 


Agreement, and the
agreements and covenants set forth in Article VIII and Article IX of
this Agreement shall survive the execution and delivery hereof and the Closing
hereunder.


 


Section 10.14     Publicity.  Except as otherwise required by applicable
law or regulation, or NASDAQ rule or judicial process, prior to the
Closing, neither the Company nor the Investor shall issue any press release or
otherwise make any public statement or announcement with respect to this
Agreement or the transactions contemplated hereby or the existence of this
Agreement.  In the event the Company is
required by law, regulation, NASDAQ rule or judicial process, based upon
reasonable advice of the Company’s counsel, to issue a press release or
otherwise make a public statement or announcement with respect to this
Agreement prior to the Closing, the Company shall consult with the Investor on
the form and substance of such press release, statement or announcement.  Promptly after the Closing, each party may
issue a press release or otherwise make a public statement or announcement with
respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement; provided that, prior to issuing any such press
release, making any such public statement or announcement, the party wishing to
make such release, statement or announcement consults and cooperates in good
faith with the other party in order to formulate such press release, public
statement or announcement in form and substance reasonably acceptable to both
parties.


 


Section 10.15     Further
Assurances.  From and after the date
of this Agreement, upon the request of the Investor or the Company, each of the
Company and the Investor shall execute and deliver such instruments, documents
and other writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement.


 


[Remainder
of this page intentionally left blank]


 


32





















 


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


 


 




	
   

  	
   

  	
  KINGSBRIDGE CAPITAL LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Antony
  Gardner-Hilman

  
	
   

  	
   

  	
   

  	
  Antony Gardner-Hillman

  
	
   

  	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BIOSANTE PHARMACEUTICALS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Phillip B. Donenberg

  
	
   

  	
   

  	
   

  	
  Phillip B. Donenberg

  
	
   

  	
   

  	
   

  	
  Chief
  Financial Officer, Treasurer and Secretary

  






 


[Signature Page to Common Stock Purchase
Agreement]


 
















 


Exhibit A


 


Form of
Registration Rights Agreement


 

















 


Exhibit B


 


Form of
Warrant


 

















 


Exhibit C


 


Form of
Draw Down Notice


 


Kingsbridge
Capital Limited


Attention:
Mr. Tony Hillman


P.O. Box
1075


Elizabeth
House


9
Castle Street


St.
Helier


Jersey


JE42QP


Channel
Islands


Facsimile:
011-44-1534-636-042


Email:
admin@kingsbridgecap.com; and adamgurney@kingsbridgecap.com


 


Kingsbridge
Corporate Services Limited


Kingsbridge
House


New
Abbey


Kilcullen,
County Kildare


Republic
of Ireland


Facsimile:
011-353-45-482-003 


Email:
adamgurney@kingsbridge.ie; and pwhelan@kingsbridge.ie


 


Stroock &
Stroock & Lavan LLP


180
Maiden Lane


New
York, NY 10038


Facsimile:
(212) 806-5400


Attention:
Keith M. Andruschak, Esq. – kandruschak@stroock.com


 


Reference is hereby made to that certain Common Stock
Purchase Agreement dated as of December     , 2008
(the “Agreement”) by and between BioSante Pharmaceuticals Inc., a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
and Kingsbridge Capital Limited, an entity organized and existing under the
laws of the British Virgin Islands (the “Investor”).  Capitalized terms used and not otherwise
defined herein shall have the meanings given such terms in the Agreement.


 


In accordance with and pursuant to Section 3.1 of the
Agreement, the Company hereby issues this Draw Down Notice to the Investor
pursuant to the terms set forth below.


 


Draw Down Amount:
$                      ;
and


 


First Trading Day of Draw Down Pricing Period:
                    ,
20[   ].


 


Enclosed with this Draw Down Notice is an executed copy of
the Officer’s Certificate described in Section 3.1 of the Agreement, the
base form of which is attached to such Agreement as Exhibit D.


 

















 


Exhibit D


 


Officer’s
Certificate


 


I, [NAME OF OFFICER], do hereby certify to Kingsbridge
Capital Limited (the “Investor”), with respect to the common stock of
BioSante Pharmaceuticals Inc. (the “Company”) issuable in connection
with the Draw Down Notice, dated
                              
(the “Notice”) attached hereto and delivered pursuant to Article III
of the Common Stock Purchase Agreement, dated December     ,
2008 (the “Agreement”), by and between the Company and the Investor, as
follows (capitalized terms used but undefined herein have the meanings given to
such terms in the Agreement):


 


I am the duly elected
[OFFICER] of the Company.


 


The representations and
warranties of the Company set forth in Article IV of the Agreement are
true and correct in all material respects as though made on and as of the date
hereof (except for such representations and warranties that are made as of a
particular date).


 


The Company has performed in
all material respects all covenants and agreements to be performed by the
Company on or prior to the date hereof related to the Notice and has satisfied
each of the conditions to the obligation of the Investor set forth in Article VII
of the Agreement.


 


Assuming the accuracy of the
representations and agreements of the Investor contained in Section 5.10
of the Agreement, the Shares issuable in respect of the Notice will be
delivered without restrictive legend via book entry through the DTC to an
account designated by the Investor.


 


The undersigned has executed this Certificate this
           day of, 20[   ].


 




	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title: