Exhibit 10.1
 

    Execution Copy


     

    


     

    COMMON
STOCK PURCHASE AGREEMENT

     

    by
and between

     

    KINGSBRIDGE
CAPITAL LIMITED

     

    and

     

    DISCOVERY
LABORATORIES, INC.

     

    dated
as of December 12, 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

                              	
                                6

                              
	
                                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

                              	
                                8

                              
	
                                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

                              	
                                12

                              
	
                                Section 4.11

                              	
                                  Compliance
      with Law

                              	
                                12

                              
	
                                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

                              	
                                  No
      General Solicitation or Advertising in Regard to this
      Transaction

                              	
                                13

                              
	
                                Section 4.17

                              	
                                  No
      Integrated Offering

                              	
                                13

                              
	
                                Section 4.18

                              	
                                  Acknowledgment
      Regarding Investor’s Purchase of Shares

                              	
                                14

                              
	 	 	 
	
                                ARTICLE
      V

                              	
                                REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF THE

                              	 
      
	 
      	
                                INVESTOR

                              	
                                14

                              
	
                                Section 5.1

                              	
                                  Organization
      and Standing of the Investor

                              	
                                14

                              


                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      Section 5.2

                                    	
                                          Authorization
      and Power

                                    	
                                      14

                                    
	
                                      Section 5.3

                                    	
                                          No
      Conflicts

                                    	
                                      14

                                    
	
                                      Section 5.4

                                    	
                                          Financial
      Capability

                                    	
                                      15

                                    
	
                                      Section 5.5

                                    	
                                          Information

                                    	
                                      15

                                    
	
                                      Section 5.6

                                    	
                                          Trading
      Restrictions

                                    	
                                      15

                                    
	
                                      Section 5.7

                                    	
                                          Statutory
      Underwriter Status

                                    	
                                      15

                                    
	
                                      Section 5.8

                                    	
                                          Not
      an Affiliate

                                    	
                                      15

                                    
	
                                      Section 5.9

                                    	
                                          Manner
      of Sale

                                    	
                                      16

                                    
	
                                      Section 5.10

                                    	
                                          Prospectus
      Delivery

                                    	
                                      16

                                    
	 	 	 
	
                                      ARTICLE
      VI

                                    	
                                      COVENANTS
      OF THE COMPANY

                                    	
                                      16

                                    
	
                                      Section 6.1

                                    	
                                          Securities

                                    	
                                      16

                                    
	
                                      Section 6.2

                                    	
                                          Reservation
      of Common Stock

                                    	
                                      16

                                    
	
                                      Section 6.3

                                    	
                                          Registration
      and Listing

                                    	
                                      16

                                    
	
                                      Section 6.4

                                    	
                                          Registration
      Statement

                                    	
                                      17

                                    
	
                                      Section 6.5

                                    	
                                          Compliance
      with Laws

                                    	
                                      17

                                    
	
                                      Section 6.6

                                    	
                                          Other
      Financing

                                    	
                                      18

                                    
	
                                      Section 6.7

                                    	
                                          Prohibited
      Transactions

                                    	
                                      18

                                    
	
                                      Section 6.8

                                    	
                                          Corporate
      Existence

                                    	
                                      18

                                    
	
                                      Section 6.9

                                    	
                                          Non-Disclosure
      of Non-Public Information

                                    	
                                      18

                                    
	
                                      Section 6.10

                                    	
                                          Notice
      of Certain Events Affecting Registration; Suspension of Right
      to

                                    	 
      
	 
      	
                                          Request
      a Draw Down

                                    	
                                      19

                                    
	
                                      Section 6.11

                                    	
                                          Amendments
      to the Registration Statement

                                    	
                                      19

                                    
	
                                      Section 6.12

                                    	
                                          Prospectus
      Delivery

                                    	
                                      19

                                    
	 	 	 
	
                                      ARTICLE
      VII

                                    	
                                      CONDITIONS
      TO THE OBLIGATION OF THE INVESTOR TO ACCEPT

                                    
	 
      	
                                      A
      DRAW DOWN

                                    	
                                      20

                                    
	
                                      Section 7.1

                                    	
                                          Accuracy
      of the Company’s Representations and Warranties

                                    	
                                      20

                                    
	
                                      Section 7.2

                                    	
                                          Performance
      by the Company

                                    	
                                      20

                                    
	
                                      Section 7.3

                                    	
                                          Compliance
      with Law

                                    	
                                      20

                                    
	
                                      Section 7.4

                                    	
                                          Effective
      Registration Statement

                                    	
                                      20

                                    
	
                                      Section 7.5

                                    	
                                          No
      Knowledge

                                    	
                                      21

                                    
	
                                      Section 7.6

                                    	
                                          No
      Suspension

                                    	
                                      21

                                    
	
                                      Section 7.7

                                    	
                                          No
      Injunction

                                    	
                                      21

                                    
	
                                      Section 7.8

                                    	
                                          No
      Proceedings or Litigation

                                    	
                                      21

                                    
	
                                      Section 7.9

                                    	
                                          Sufficient
      Shares Registered for Resale

                                    	
                                      21

                                    
	
                                      Section 7.10

                                    	
                                          Warrant

                                    	
                                      21

                                    
	
                                      Section 7.11

                                    	
                                          Opinion
      of Counsel

                                    	
                                      21

                                    
	
                                      Section 7.12

                                    	
                                          Accuracy
      of Investor’s Representation and Warranties

                                    	
                                      21

                                    
	 	 	 
	
                                      ARTICLE
      VIII

                                    	
                                      TERMINATION

                                    	
                                      22

                                    
	
                                      Section 8.1

                                    	
                                          Term

                                    	
                                      22

                                    
	
                                      Section 8.2

                                    	
                                          Other
      Termination

                                    	
                                      22

                                    
	
                                      Section 8.3

                                    	
                                          Effect
      of Termination

                                    	
                                      22

                                    
	 	 	 
	
                                      ARTICLE
      IX

                                    	
                                      INDEMNIFICATION

                                    	
                                      23

                                    
	
                                      Section 9.1

                                    	
                                          Indemnification

                                    	
                                      23

                                    


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    
      
        
          
            	
                    Section 9.2

                  	
                      Notification
      of Claims for Indemnification

                  	
                    24

                  
	 	 	 
	
                    ARTICLE
      X

                  	
                         MISCELLANEOUS

                  	
                    25

                  
	
                    Section 10.1

                  	
                      Fees
      and Expenses

                  	
                    25

                  
	
                    Section 10.2

                  	
                      Reporting
      Entity for the Common Stock

                  	
                    26

                  
	
                    Section 10.3

                  	
                      Brokerage

                  	
                    26

                  
	
                    Section 10.4

                  	
                      Notices

                  	
                    27

                  
	
                    Section 10.5

                  	
                      Assignment

                  	
                    28

                  
	
                    Section 10.6

                  	
                      Amendment;
      No Waiver

                  	
                    28

                  
	
                    Section 10.7

                  	
                      Entire
      Agreement

                  	
                    28

                  
	
                    Section 10.8

                  	
                      Severability

                  	
                    28

                  
	
                    Section 10.9

                  	
                      Title
      and Subtitles

                  	
                    29

                  
	
                    Section 10.10

                  	
                      Counterparts

                  	
                    29

                  
	
                    Section 10.11

                  	
                      Choice
      of Law

                  	
                    29

                  
	
                    Section 10.12

                  	
                      Specific
      Enforcement, Consent to Jurisdiction

                  	
                    29

                  
	
                    Section 10.13

                  	
                      Survival

                  	
                    29

                  
	
                    Section 10.14

                  	
                      Publicity

                  	
                    30

                  
	
                    Section 10.15

                  	
                      Further
      Assurances

                  	
                    30

                  


          

        

      

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    This
COMMON STOCK PURCHASE AGREEMENT (this “Agreement”) is
entered into as of the 12th day of December, 2008, by and between Kingsbridge
Capital Limited, an entity organized and existing under the laws of the British
Virgin Islands, whose registered address is Palm Grove House, 2nd Floor, Road
Town, Tortola, British Virgin Islands (the “Investor”), and
Discovery Laboratories, 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 675,000
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 Bloomberg L.P. 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 $0.001 per share. 

     

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


     

    “Convertible Security”
shall have the meaning assigned to such term in Section 6.07
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) 85% of the VWAP on any Trading Day during a Draw
Down Pricing Period when the VWAP equals or exceeds $.60 but is less than or
equal to $1.10, (ii) 88% of the VWAP on any Trading Day during a Draw Down
Pricing Period when the VWAP equals or exceeds $1.10 but is less than or equal
to $1.75, (iii) 90% of the VWAP on any Trading Day during the Draw Down Pricing
Period when VWAP exceeds $1.75 but is less than or equal to $3.85, (iv) 92% of
the VWAP on any Trading Day during the Draw Down Pricing Period when VWAP
exceeds $3.85 but is less than or equal to $7.25 or (v) 94% of the VWAP on any
Trading Day during the Draw Down Pricing Period when VWAP exceeds
$7.25.

     

    “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 six (6)
consecutive Trading Days beginning on the first Trading Day specified in a Draw
Down Notice. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

    “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 those officers of the Company required to file statements
pursuant to Section 16 of the Exchange Act.

     

    “LIBOR” means the
offered rate for twelve-month U.S. dollar deposits that appears on Moneyline
Telerate Page 3750 (or such other page as may replace such Moneyline Telerate
Page 3750 for the purpose of displaying comparable rates), as of 11:00 a.m.
(London time) two (2) business days prior to the beginning of the relevant
period.

     

     “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 Company’s Common Stock as reported by Bloomberg L.P.
using the AQR function and (ii) the number of outstanding shares of Common
Stock of the Company 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 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), except for purposes of Section 4.9 herein;
(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. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    “Maximum Commitment
Amount” means the lesser of (i) $25 million in aggregate Draw Down
Amounts or (ii) 15,000,000 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 that number of
shares of Common Stock that the Company may issue pursuant to this Agreement and
the transactions contemplated hereby without breaching the Company’s obligations
under the rules and regulations of the Principal Market.

     

    “Maximum Draw Down
Amount” means the lesser of $3 million and 1.5% of the Company’s Market
Capitalization at the time of the Draw Down.

     

    “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 (including, without limitation, any information that may have
been omitted from such prospectus pursuant to Rules 430(a), 430(b) and 430(c) of
the Securities Act).

     

    “Registrable
Securities” means (i) the Shares, (ii) the Warrant Shares, and
(iii) any securities issued or issuable with respect to any of the
foregoing 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.  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 registration and without any time, volume or manner limitations
pursuant to Rule 144 (or any similar provision then in effect) under the
Securities Act. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    “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 12, 2008, or at such
other time and place 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.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    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, Chief Financial Officer or
Executive Vice President and General Counsel, 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 sixth (1/6th) 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.

     

    Section
3.4 Trading
Cushion.  Unless the parties agree in writing otherwise, there
shall be a minimum of two (2) Trading Days between the expiration of any Draw
Down Pricing Period and the beginning of the next succeeding Draw Down Pricing
Period.

     

    
      
        
        

      

      
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    Section
3.5 Settlement.  Subject
to Section 3.6(b), 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 three Trading Days of any Draw Down
Pricing Period shall be determined and settled no later than the fifth Trading
Day of such Draw Down Pricing Period.  Shares purchased by the
Investor during the second three 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 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) $.60, 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
sixth (1/6th) 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 any
Trading Day during a Draw Down Pricing Period, 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 sixth (1/6th) of the initial Draw Down Amount specified
in the Draw Down Notice.

     

    
      
        
        

      

      
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    Section
3.7 Failure to Deliver
Shares.  If on any Settlement Date, the Company fails to take
all actions within the reasonable control of the Company 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 respect of such Settlement Date.  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 interest
compounded daily at a rate of LIBOR plus 300 basis points, per annum 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 directly attributable to acts or omissions of the Company, its
officers, directors, employees, agents and representatives, including, without
limitation, any transfer agent(s), accountant(s) and/or attorney(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:

     

    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.

     

    
      
        
        

      

      
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    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, securities,
insolvency, 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.

     

    Section
4.3 Capitalization.  The
authorized capital stock of the Company and the shares thereof issued and
outstanding as of September 30, 2008 are set forth in a Commission
Document.  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 September 30, 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 and restricted stock units 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 September 30, 2008, there were no
contracts, commitments, understandings, or arrangements by which the Company is
or may become bound to issue additional shares of the capital stock of the
Company or options, securities or rights convertible into or exchangeable for 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
twenty-four 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
reasonably be expected to have a Material Adverse Effect.  The Company
has furnished or made available to the Investor true and correct copies of the
Company’s 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”).

     

    
      
        
        

      

      
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    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 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 where such violation
would constitute a Material Adverse Effect, or (v) require any consent of
any third-party that has not been obtained pursuant to any material contract to
which the Company is a party or to which any of its assets, operations or
management may be bound where the failure to obtain any such consent would
constitute a Material Adverse Effect.  The Company is not required
under 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 filings that may be
required to be made by the Company 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.

     

    
      
        
        

      

      
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    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, including filings incorporated by reference
therein, being referred to herein as the “Commission
Documents”).  Except as previously disclosed to the Investor in
writing, since December 1, 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 1, 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 its date, 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 applicable to
such document, and, as of its date, 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 Company included in the Commission
Documents filed with the Commission since December 1, 2007 complied as to form
and substance in all material respects with all applicable accounting
requirements and the published rules and regulations of the Commission or other
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.

     

    
      
        
        

      

      
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    Section
4.7 No Material Adverse
Change.  Except as disclosed in the Commission Documents or a
press release of the Company, since September 30, 2008 no event or series of
events has or have occurred that, individually or in the aggregate, have had a
Material Adverse Effect.

     

    Section
4.8 No Undisclosed
Liabilities.  Except as disclosed in the Commission Documents,
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.  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.

     

    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 material 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 could 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 could
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 each of its
subsidiaries has all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it, 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, could not reasonably be expected to have a Material Adverse
Effect.

     

    
      
        
        

      

      
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    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, 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 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.  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, any Blackout Shares or any of the assets of the
Company, or (ii) except as previously disclosed to the Investor in the
Disclosure Schedule, 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 No General Solicitation or
Advertising in Regard to this Transaction.    Except
for the Registration Statement, 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
4.17 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
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.

     

    
      
        
        

      

      
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    Section
4.18 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
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, securities, 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.

     

    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, by the Investor and the consummation of the
transactions contemplated 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
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 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.

     

    
      
        
        

      

      
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    Section
5.4 Financial
Capability.  The Investor has the financial capability to
perform all of its obligations under this Agreement, including the capability to
purchase the Shares, the Warrant, the Warrant Shares and any Blackout Shares in
accordance with the terms hereof.  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 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.

     

    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 amendments
thereto) and in any Prospectus contained therein to the extent required by
applicable law.

     

    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.

     

    
      
        
        

      

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

     

    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.  The Investor acknowledges and agrees that the
Company shall be under no 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 second 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.  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 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.

     

    
      
        
        

      

      
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    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.

     

    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.

     

    (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 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.

     

    
      
        
        

      

      
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    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 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 of one or more other companies,
equipment, technologies or lines of business, (iii) issue shares of Common Stock
and/or Preferred Stock in connection with the Company’s option or award plans,
stock purchase plans, stock bonus programs, rights plans, warrants or options,
(iv) issue shares of Common Stock and/or Preferred Stock in connection with the
acquisition of products, licenses, equipment or other assets and strategic
collaborations or partnerships or joint ventures; (v) issue shares of Common
and/or Preferred Stock 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, (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, 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 a convertible security (“Convertible
Security”) that contains provisions that adjust the conversion price of
such Convertible Security in the event of stock splits, dividends, distributions
or similar events or pursuant to anti-dilution provisions 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.  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.

     

    
      
        
        

      

      
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    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 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; (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; and (iv) the Company becoming aware of the
happening of any event, which makes any statement of a material fact made in the
Registration Statement or Prospectus untrue in a material respect or which
requires the making of any material additions to or material changes to the
statements then made in the Registration Statement or Prospectus in order to
state a material fact required by the Securities Act to be stated therein or
necessary in order to make the statements then made therein, in light of the
circumstances under which they were made, not misleading, or of the necessity to
amend the Registration Statement or supplement the Prospectus to comply with the
Securities Act.  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 (iv) of the previous sentence, 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, the Company shall not (a) file any
amendment to the Registration Statement or make any amendment or supplement to
the Prospectus of which the Investor shall not have been previously or be
simultaneously advised; provided, however, that the Company may, to the extent
it deems advisable, and without the prior consent of or notice to Investor,
supplement the Prospectus within two Trading Days following the second
Settlement Date for each Draw Down solely to reflect the issuance of Shares with
respect to such Draw Down, 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.

     

    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) 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 the Investor
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 second Trading Day following the second Settlement Date with respect to such
Draw Down.

     

    
      
        
        

      

      
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    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 and each Settlement
Date in respect of the applicable Draw Down Pricing Period.

     

    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.

     

    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.

     

    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 could not reasonably be 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.

     

    
      
        
        

      

      
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    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 six 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 be pending or, to the
Knowledge of the Company, threatened, and, to the Knowledge of the Company, no
inquiry or investigation by any governmental authority shall be 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, except for any action, suit or
proceeding which could not reasonably be expected to have a Material Adverse
Effect.

     

    Section
7.9 Sufficient Shares Registered
for Resale.  The Company shall have sufficient Shares,
calculated using the closing trade price of the Common Stock as of the Trading
Day immediately preceding such 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 to between the parties on the date of this
Agreement.

     

    Section
7.12 Accuracy of Investor’s
Representation and Warranties.  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.

     

    
      
        
        

      

      
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    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 termination of this Agreement by the Company
hereunder, 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(k) (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.

     

    
      
        
        

      

      
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    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 Indemnified Party agrees to use commercially
reasonable efforts 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
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
Indemnified Party will 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).  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 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.

     

    
      
        
        

      

      
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    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.

     

    (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.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    (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 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 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, including, without limitation, all
reasonable attorneys fees and expenses, (ii)  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  for
legal fees and expenses), and provided further, that the maximum aggregate
amount payable by the Company pursuant to clause (i) above shall be $35,000 and
the Investor shall bear all fees and expenses in excess of $35,000 in connection
with clause (i) above. 

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    (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.  The written mutual consent of the Investor and
the Company shall be required to employ any other reporting entity.

     

    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.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    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:

                          
	 
	
                            Discovery
      Laboratories, Inc.

                          
	
                            2600
      Kelley Road, Suite 100

                          
	
                            Warrington,
      Pennsylvania 18976

                          
	
                            Facsimile:
      215-488-9557

                          
	
                            Attention:
      Deputy General Counsel

                          
	
                            Email:
      mtempleton@DiscoveryLabs.com

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

                          
	 
	
                            Dickstein
      Shapiro LLP

                          
	
                            1177
      Avenue of the Americas, 41st Floor

                          
	
                            New
      York, NY 10036-2714

                          
	
                            Telephone:  (212)
      227-6500

                          
	
                            Facsimile:   (212)
      227-6501

                          
	
                            E-mail:
      koteli@dicksteinshapiro.com

                          	 
      
	
                            Attention:    Ira
      L. Kotel

                          
	 
	
                            if
      to the Investor:

                          
	 
	
                            Kingsbridge
      Capital Limited

                          
	
                            Attention:
      Mr. Tony Gardner-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

                          
	 
      
	
                            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

                          


                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    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 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.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    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 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.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    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]

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    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:
      

              	 	 
	 	 	
                Maria
      O'Donohue

              	 
	 	 	
                Director

              	 
	 	 	 	 


      

    

     

    
      
        	 	
                DISCOVERY
      LABORATORIES, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	 	 
	 	 	
                Name:  John
      G. Cooper

              	 
	 	 	
                Title:  Executive
      Vice President and

              	 
	 	 	
                Chief
      Financial Officer

              	
                 

              


      

    

     

    
      
        
        

      

      
        Signature
Page - Stock Purchase Agreement dated December 12, 2008

        
          

        

      

      
        
        

      

    

     

    Exhibit
A

     

    Form
of Registration Rights Agreement

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    Exhibit
B

     

    Form
of Warrant

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

     

    Exhibit
C

     

    Form
of Draw Down Notice

     

    
      	
              Kingsbridge
      Capital Limited

            
	
              Attention:
      Mr. Tony Gardner-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 12, 2008 (the “Agreement”) by and between Discovery Laboratories, 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.

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    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 Discovery Laboratories, 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 12, 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):

     

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

     

    2. 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).

     

    3. 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.

     

    4. The
Shares issuable in respect of the Notice will be delivered without restrictive
legend via book entry through the Depositary Trust Company to an account
designated by the Investor.

     

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

     

     

    
      
        
          
            
              
                
                  
                    
                      	
                              Name:

                            	 
	 	 
	
                              Title:

                            	 


                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        iv