Common Stock Purchase Agreement



 Exhibit 10.57 
  
 Execution Copy 
  
 COMMON STOCK PURCHASE AGREEMENT 
  
 by and between 
  
 KINGSBRIDGE CAPITAL LIMITED 
  
 and 
  
 NUVELO, INC.

  
 dated as of August 4, 2005 







 TABLE OF CONTENTS 
  

					
	 	  	Page


	 ARTICLE I     DEFINITIONS
	  	1
			
	 Section 1.01.
	 	 “Articles”
	  	1
			
	 Section 1.02.
	 	 “Blackout Amount”
	  	1
			
	 Section 1.03.
	 	 “Blackout Shares”
	  	2
			
	 Section 1.04.
	 	 “Closing Date”
	  	2
			
	 Section 1.05.
	 	 “Commission”
	  	2
			
	 Section 1.06.
	 	 “Commission Documents”
	  	2
			
	 Section 1.07.
	 	 “Commitment Period”
	  	2
			
	 Section 1.08.
	 	 “Common Stock”
	  	2
			
	 Section 1.09.
	 	 “Condition Satisfaction Date”
	  	2
			
	 Section 1.10.
	 	 “Damages”
	  	2
			
	 Section 1.11.
	 	 “Draw Down”
	  	2
			
	 Section 1.12.
	 	 “Draw Down Amount”
	  	2
			
	 Section 1.13.
	 	 “Draw Down Discount Price”
	  	2
			
	 Section 1.14.
	 	 “Draw Down Notice”
	  	2
			
	 Section 1.15.
	 	 “Draw Down Pricing Period”
	  	2
			
	 Section 1.16.
	 	 “DTC”
	  	2
			
	 Section 1.17.
	 	 “Effective Date”
	  	2
			
	 Section 1.18.
	 	 “Exchange Act”
	  	3
			
	 Section 1.19.
	 	 “Excluded Merger or Sale”
	  	3
			
	 Section 1.20.
	 	 “Knowledge”
	  	3
			
	 Section 1.21.
	 	 “Make Whole Amount”
	  	3
			
	 Section 1.22.
	 	 “Market Capitalization”
	  	3
			
	 Section 1.23.
	 	 “Material Adverse Effect”
	  	3
			
	 Section 1.24.
	 	 “Maximum Commitment Amount”
	  	3
			
	 Section 1.25.
	 	 “Maximum Draw Down Amount”
	  	3
			
	 Section 1.26.
	 	 “NASD”
	  	3
			
	 Section 1.27.
	 	 “Permitted Transaction”
	  	3
			
	 Section 1.28.
	 	 “Person”
	  	3
			
	 Section 1.29.
	 	 “Principal Market”
	  	3
			
	 Section 1.30.
	 	 “Prohibited Transaction”
	  	3
			
	 Section 1.31.
	 	 “Prospectus”
	  	4
			
	 Section 1.32.
	 	 “Registrable Securities”
	  	4
			
	 Section 1.33.
	 	 “Registration Rights Agreement”
	  	4

  

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 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	Page


	 Section 1.34.
	 	“Registration Statement”	  	4
			
	 Section 1.35.
	 	“RegulationD”	  	4
			
	 Section 1.36.
	 	“Section4(2)”	  	4
			
	 Section 1.37.
	 	“Securities Act”	  	4
			
	 Section 1.38.
	 	“Settlement Date”	  	4
			
	 Section 1.39.
	 	“Shares”	  	4
			
	 Section 1.40.
	 	“Trading Day”	  	4
			
	 Section 1.41.
	 	“VWAP”	  	4
			
	 Section 1.42.
	 	“Warrant”	  	4
			
	 Section 1.43.
	 	“Warrant Shares”	  	4
		
	 ARTICLE II         PURCHASE AND SALE OF COMMON STOCK
	  	5
			
	 Section 2.01.
	 	Purchase and Sale of Stock	  	5
			
	 Section 2.02.
	 	Closing	  	5
			
	 Section 2.03.
	 	Registration Statement and Prospectus	  	5
			
	 Section 2.04.
	 	Warrant	  	5
			
	 Section 2.05.
	 	Blackout Shares	  	5
		
	 ARTICLE III         DRAW DOWN TERMS
	  	5
			
	 Section 3.01.
	 	Draw Down Notice	  	5
			
	 Section 3.02.
	 	Number of Shares	  	6
			
	 Section 3.03.
	 	Limitation on Draw Downs	  	6
			
	 Section 3.04.
	 	Trading Cushion	  	6
			
	 Section 3.05.
	 	Intentionally Omitted	  	6
			
	 Section 3.06.
	 	Settlement	  	6
			
	 Section 3.07.
	 	Delivery of Shares; Payment of Draw Down Amount	  	6
			
	 Section 3.08.
	 	Failure to Deliver Shares	  	6
		
	 ARTICLE IV         REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	  	7
			
	 Section 4.01.
	 	Organization, Good Standing and Power	  	7
			
	 Section 4.02.
	 	Authorization; Enforcement	  	7
			
	 Section 4.03.
	 	Capitalization	  	8
			
	 Section 4.04.
	 	Issuance of Shares	  	8
			
	 Section 4.05.
	 	No Conflicts	  	8
			
	 Section 4.06.
	 	Commission Documents, Financial Statements	  	9
			
	 Section 4.07.
	 	No Material Adverse Change	  	9

  

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 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	Page


	 Section 4.08.
	  	No Undisclosed Liabilities	  	9
			
	 Section 4.09.
	  	No Undisclosed Events or Circumstances	  	10
			
	 Section 4.10.
	  	Actions Pending	  	10
			
	 Section 4.11.
	  	Compliance with Law	  	10
			
	 Section 4.12.
	  	Disclosure	  	10
			
	 Section 4.13.
	  	Material Non-Public Information	  	10
			
	 Section 4.14.
	  	Exemption from Registration; Valid Issuances	  	10
			
	 Section 4.15.
	  	No General Solicitation or Advertising in Regard to this Transaction	  	11
			
	 Section 4.16.
	  	No Integrated Offering	  	11
			
	 Section 4.17.
	  	Acknowledgment Regarding Investor’s Purchase of Shares	  	11
		
	 ARTICLE V         REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
INVESTOR
	  	11
			
	 Section 5.01.
	  	Organization and Standing of the Investor	  	11
			
	 Section 5.02.
	  	Authorization and Power	  	11
			
	 Section 5.03.
	  	No Conflicts	  	12
			
	 Section 5.04.
	  	Financial Capability	  	12
			
	 Section 5.05.
	  	Information	  	12
			
	 Section 5.06.
	  	Selling Restrictions	  	12
			
	 Section 5.07.
	  	Statutory Underwriter Status	  	13
			
	 Section 5.08.
	  	Not an Affiliate	  	13
			
	 Section 5.09.
	  	Manner of Sale	  	13
			
	 Section 5.10.
	  	Prospectus Delivery	  	13
		
	 ARTICLE VI         COVENANTS OF THE COMPANY
	  	13
			
	 Section 6.01.
	  	Securities	  	13
			
	 Section 6.02.
	  	Reservation of Common Stock	  	13
			
	 Section 6.03.
	  	Registration and Listing	  	13
			
	 Section 6.04.
	  	Registration Statement	  	14
			
	 Section 6.05.
	  	Compliance with Laws	  	14
			
	 Section 6.06.
	  	Reporting Requirements	  	14
			
	 Section 6.07.
	  	Other Financing	  	14
			
	 Section 6.08.
	  	Prohibited Transactions	  	15
			
	 Section 6.09.
	  	Corporate Existence	  	15
			
	 Section 6.10.
	  	Non-Disclosure of Non-Public Information	  	15

  

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 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	Page


	 Section 6.11.
	  	Notice of Certain Events Affecting Registration; Suspension of Right to Request a Draw Down	  	15
			
	 Section 6.12.
	  	Amendments to the Registration Statement	  	15
			
	 Section 6.13.
	  	Prospectus Delivery	  	16
			
	 Section 6.14.
	  	Expectations Regarding Draw Downs	  	16
		
	 ARTICLE VII         CONDITIONS TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW
DOWN
	  	16
			
	 Section 7.01.
	  	Accuracy of the Company’s Representations and Warranties	  	16
			
	 Section 7.02.
	  	Performance by the Company	  	17
			
	 Section 7.03.
	  	Compliance with Law	  	17
			
	 Section 7.04.
	  	Effective Registration Statement	  	17
			
	 Section 7.05.
	  	No Knowledge	  	17
			
	 Section 7.06.
	  	No Suspension	  	17
			
	 Section 7.07.
	  	No Injunction	  	17
			
	 Section 7.08.
	  	No Proceedings or Litigation	  	17
			
	 Section 7.09.
	  	Intentionally Omitted	  	17
			
	 Section 7.10.
	  	Sufficient Shares Registered for Resale	  	17
			
	 Section 7.11.
	  	Warrant	  	18
			
	 Section 7.12.
	  	Opinion of Counsel	  	18
			
	 Section 7.13.
	  	Accuracy of Investor’s Representation and Warranties	  	18
		
	 ARTICLE VIII         TERMINATION
	  	18
			
	 Section 8.01.
	  	Term	  	18
			
	 Section 8.02.
	  	Other Termination	  	18
			
	 Section 8.03.
	  	Effect of Termination	  	19
		
	 ARTICLE IX         INDEMNIFICATION
	  	19
			
	 Section 9.01.
	  	Indemnification	  	19
			
	 Section 9.02.
	  	Notification of Claims for Indemnification	  	20
			
	 Section 9.03.
	  	Dispute Resolution	  	21
		
	 ARTICLE X         MISCELLANEOUS
	  	22
			
	 Section 10.01.
	  	Fees and Expenses	  	22
			
	 Section 10.02.
	  	Reporting Entity for the Common Stock	  	22
			
	 Section 10.03.
	  	Brokerage	  	22
			
	 Section 10.04.
	  	Notices	  	22
			
	 Section 10.05.
	  	Assignment	  	23

  

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 TABLE OF CONTENTS 
 (continued) 
  

					
	 	  	Page


	 Section 10.06.
	  	Amendment; No Waiver	  	24
			
	 Section 10.07.
	  	Entire Agreement	  	24
			
	 Section 10.08.
	  	Severability	  	24
			
	 Section 10.09.
	  	Title and Subtitles	  	24
			
	 Section 10.10.
	  	Counterparts	  	24
			
	 Section 10.11.
	  	Choice of Law	  	24
			
	 Section 10.12.
	  	Specific Enforcement, Consent to Jurisdiction	  	24
			
	 Section 10.13.
	  	Survival	  	25
			
	 Section 10.14.
	  	Publicity	  	25
			
	 Section 10.15.
	  	Further Assurances	  	25

  

 v 








 COMMON STOCK PURCHASE AGREEMENT 
  
 by and between 
  
 KINGSBRIDGE CAPITAL LIMITED 
  
 and 
  
 NUVELO, INC. 
  
 dated as of August 4, 2005 
  
 This COMMON STOCK PURCHASE
AGREEMENT is entered into as of the 4th day of August, 2005 (this “Agreement”), by and between KINGSBRIDGE CAPITAL LIMITED, an entity organized and existing under the laws of the British Virgin Islands (the
“Investor”) and NUVELO, 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 limitations and conditions 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 $75 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 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 350,000 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 
  
 Section 1.01. “Articles” shall have the meaning assigned to such term in Section 4.03 hereof. 
  
 Section 1.02. “Blackout Amount” shall have the meaning
assigned to such term in the Registration Rights Agreement. 
  

 1 








 Section 1.03. “Blackout Shares” shall have the meaning assigned to such term in the
Registration Rights Agreement. 
  
 Section 1.04. “Closing
Date” means the date on which this Agreement is executed and delivered by the Company and the Investor. 
  
 Section 1.05. “Commission” means the United States Securities Exchange Commission. 
  
 Section 1.06. “Commission Documents” shall have the meaning
assigned to such term in Section 4.06 hereof. 
  
 Section 1.07.
“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 36 months from the Effective Date. 
  
 Section 1.08. “Common Stock” means the common stock of the Company, par value $0.001 per share. 

 
 Section 1.09. “Condition Satisfaction Date” shall have
the meaning assigned to such term in Article VII hereof. 
  
 Section 1.10. “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). 
  
 Section 1.11. “Draw Down”
shall have the meaning assigned to such term in Section 3.01 hereof. 
  
 Section 1.12. “Draw Down Amount” means the actual amount of a Draw Down paid to the Company. 
  
 Section 1.13. “Draw Down Discount Price” means (i) 90% of the VWAP on any Trading Day during the Draw Down Pricing Period when the VWAP
equals or exceeds $2.50 but is less than $7.00, (ii) 92% of the VWAP on any Trading Day during the Draw Down Pricing Period when the VWAP equals or exceeds $7.00 but is less than $11.20, or (iii) 94% of the VWAP on any Trading Day during the Draw
Down Pricing Period when the VWAP equals or exceeds $11.20. 
  
 Section 1.14. “Draw Down Notice” shall have the meaning assigned to such term in Section 3.01 hereof. 
  
 Section 1.15. “Draw Down Pricing Period” shall mean, with respect to each Draw Down, a period of eight (8) consecutive Trading Days
beginning on the first Trading Day specified in a Draw Down Notice. 
  
 Section 1.16. “DTC” shall mean the Depository Trust Company, or any successor thereto. 
  
 Section 1.17. “Effective Date” means the first Trading Day immediately following the date on which the Registration Statement is declared
effective by the Commission. 
  

 2 








 Section 1.18. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder. 
  
 Section
1.19. “Excluded Merger or Sale” shall have the meaning assigned to such term in the Warrant. 
  
 Section 1.20. “Knowledge” means the actual knowledge of the Company’s President and Chief Executive Officer, Chief Financial
Officer, Senior Vice President Human Resources, Senior Vice President Research and Development or Vice President Finance and Chief Accounting Officer. 
  
 Section 1.21. “Make Whole Amount” shall have the meaning specified in Section 3.09. 
  
 Section 1.22. “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. 
  
 Section 1.23. “Material
Adverse Effect” means any effect 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, 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, (ii) 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 (iii) changes in the market price of the
Company’s Common Stock. 
  
 Section 1.24. “Maximum
Commitment Amount” means the lesser of (i) $75 million in aggregate Draw Down Amounts or (ii) 8,075,000 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). 
  
 Section 1.25. “Maximum
Draw Down Amount” means the lesser of (i) 2.5% of the Company’s Market Capitalization at the time of the Draw Down, or (ii) $10 million. 
  
 Section 1.26. “NASD” means the National Association of Securities Dealers, Inc. 
  
 Section 1.27. “Permitted Transaction” shall have the meaning
assigned to such term in Section 6.07 hereof. 
  
 Section 1.28.
“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.

  
 Section 1.29. “Principal Market” means the
Nasdaq National Market, the Nasdaq SmallCap 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. 
  
 Section 1.30. “Prohibited Transaction” shall have the
meaning assigned to such term in Section 6.08 hereof. 
  

 3 








 Section 1.31. “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. 
  
 Section 1.32. “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 SEC 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(k) (or any similar provision then in
effect) under the Securities Act. 
  
 Section 1.33.
“Registration Rights Agreement” shall have the meaning set forth in the recitals of this Agreement. 
  
 Section 1.34. “Registration Statement” shall have the meaning assigned to such term in the Registration Rights Agreement. 
  
 Section 1.35. “Regulation D” shall have the meaning set
forth in the recitals of this Agreement. 
  
 Section 1.36.
“Section 4(2)” shall have the meaning set forth in the recitals of this Agreement. 
  
 Section 1.37. “Securities Act” shall have the meaning set forth in the recitals of this Agreement. 
  
 Section 1.38. “Settlement Date” shall have the meaning
assigned to such term in Section 3.06 hereof. 
  
 Section 1.39.
“Shares” means the shares of Common Stock of the Company that are and/or may be purchased hereunder. 
  
 Section 1.40. “Trading Day” means any day other than a Saturday or a Sunday on which the Principal Market is open for trading in equity
securities. 
  
 Section 1.41. “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. 
  
 Section
1.42. “Warrant” shall have the meaning set forth in the recitals of this Agreement. 
  
 Section 1.43. “Warrant Shares” means the shares of Common Stock issuable to the Investor upon exercise of the Warrant. 
  

 4 








 ARTICLE II 
  

PURCHASE AND SALE OF COMMON STOCK 
  
 Section 2.01. 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 from the Company Common Stock for an aggregate purchase price of up to the Maximum Commitment Amount,
consisting of purchases based on Draw Downs in accordance with Article III hereof. 
  
 Section 2.02. 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 Clifford
Chance US LLP, 31 West 52nd Street, New York, NY 10019 at 2:00 p.m. local time on August 4, 2005, or at such other time and place or on such date as the Investor and the Company may agree upon (the “Closing Date”). At or prior to
the Closing, each party shall deliver all documents, instruments and writings required to be delivered by such party at the Closing pursuant to this Agreement. 
  

Section 2.03. Registration Statement and Prospectus. Promptly after the Closing, 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 2.04. Warrant. On the Closing Date, the Company shall issue and deliver the Warrant to the Investor. 
  
 Section 2.05. Blackout Shares. The Company shall deliver any Blackout
Amount or issue and deliver any Blackout Shares to the Investor in accordance with Section 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 3.01. Draw Down Notice. The Company, may, in its sole discretion, issue a Draw Down Notice specifying the dollar amount of Shares it 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 during the Commitment Period, which Draw Down the Investor will be obligated to accept. The Company shall
inform the Investor via facsimile transmission, with a copy to the Investor’s counsel, as to such Draw Down Amount before commencement of trading on the first Trading Day of the related Draw Down Pricing Period (the “Draw Down
Notice”). In addition to the Draw Down Amount, each Draw Down Notice shall designate the first Trading Day of the Draw Down Pricing Period. In no event shall any Draw Down Amount exceed the Maximum Draw Down Amount. Each Draw Down Notice
shall be accompanied by a certificate, signed by the Chief Executive Officer or Chief Financial Officer dated, as of the date of such Draw Down Notice, in the form of Exhibit C hereof. 
  

 5 








 Section 3.02. Number of Shares. Subject to Section 3.07(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. The number of shares issuable on a Trading Day of the Draw Down Pricing Period shall be equal to the
quotient of one eighth (1/8th) of the Draw Down Amount divided by the Draw Down Discount Price for such Trading Day. 
  
 Section 3.03. Limitation on Draw Downs. Only one Draw Down shall be permitted during each Draw Down Pricing Period. 
  
 Section 3.04. Trading Cushion. Unless the parties agree in writing
otherwise, there shall be a minimum of three (3) Trading Days between the expiration of any Draw Down Pricing Period and the beginning of the next succeeding Draw Down Pricing Period. 
  
 Section 3.05. Intentionally Omitted 
  

Section 3.06. Settlement. The number of Shares purchased by the Investor in any Draw Down shall be determined and settled no later than the
second Trading Day after the last Trading Day of the related 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 3.07. 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 via book-entry through the DTC to an account designated by the Investor, and upon receipt of the Shares, the Investor shall cause payment therefor 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 1:30 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, immediately following 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 that the VWAP is less than the greater of (i) 85% 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) $2.50, such Trading Day shall not be used in calculating the number of Shares to be issued in connection with such Draw Down, and the Draw Down Amount in respect of such Draw Down Pricing Period
shall be reduced by one eighth (1/8th) of the initial Draw Down Amount specified in the Draw Down Notice. If trading in the Company’s Common Stock is suspended for any reason for more than three (3) consecutive or non-consecutive hours during
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 eighth (1/8th) of the initial Draw Down Amount specified in the Draw Down Notice. 
  
 Section 3.08. Failure to Deliver Shares. If on any Settlement Date, the Company fails to deliver the Shares purchased by the Investor, and such
failure is not cured within ten (10) Trading Days following the date on which the Investor delivered payment for such Shares, the Company shall pay to the Investor on demand in cash by wire transfer of immediately available funds to an account
designated by 

  

 6 








 
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 reasonably within the control of, or directly attributable to, the Investor, then such ten (10) Trading Day period shall be automatically extended
until such time as such fact or circumstance is cured. As used herein, the Make Whole Amount shall be an amount equal to the sum of (i) the Draw Down Amount actually paid by the Investor in respect of such Shares plus (ii) an amount equal to the
actual loss suffered by the Investor in respect of sales to subsequent purchasers, pursuant to transactions entered into before the Settlement Date, of the Shares that were required to be delivered by the Company, which shall be based upon
documentation reasonably satisfactory to the Company demonstrating the difference (if greater than zero) between (A) the price per share paid by the Investor to purchase such number of shares of Common Stock necessary for the Investor to meet its
share delivery obligations to such subsequent purchasers minus (B) the average Draw Down Discount Price during the applicable Draw Down Pricing Period. In the event that the Make Whole Amount is not paid within two (2) Trading Days following a
demand therefor from the Investor, the Make Whole Amount shall accrue interest compounded daily at a rate of five percent (5%) per annum up to and including the date on which the Make Whole Amount is actually paid. 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 3.09, 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 4.01. 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 power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Except as set forth in the Commission Documents (as
defined below), 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 so to qualify or be in good standing would not have a Material Adverse Effect. 
  
 Section 4.02. 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 Articles); (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 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 6.05); 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 constitute the valid and
binding obligations of the Company enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors’ rights and remedies or by other equitable principles of general application. 
  

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 Section 4.03. Capitalization. The authorized capital stock of the Company and the shares thereof
issued and outstanding as of June 30, 2005 are set forth on a schedule (the “Disclosure Schedule”) previously delivered to the Investor. 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 or as previously disclosed on the Disclosure Schedule, as of June 30, 2005, no shares of Common Stock are entitled to preemptive rights or registration rights and
there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for or giving any right to subscribe for, any shares of
capital stock of the Company. Except as set forth in this Agreement, the Commission Documents, or as previously disclosed to the Investor in the Disclosure Schedule, as of June 30, 2005, there are 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 writing, 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 with all applicable federal and state securities laws, and no stockholder has a right of rescission or damages with respect thereto that could 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 Amended and Restated Certificate of Incorporation, as amended and in effect on the date hereof (the “Articles”), and the
Company’s Bylaws, as amended and in effect on the date hereof (the “Bylaws”). 
  
 Section 4.04. Issuance of Shares. Subject to Section 6.05, 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 Articles) and, when issued and paid for in
accordance with the terms of this Agreement, the Registration Rights Agreement and the Warrant, 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
4.05. 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: (i) violate any provision of the Articles 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 Company is a
party, (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, (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, writ, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its subsidiaries are bound or 

  

 8 








 
affected, or (v) require any consent of any third-party that has not been obtained pursuant to any material contract to which the Company is subject or to
which any of its assets, operations or management may be subject. 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 Articles) 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 NASD/Nasdaq or state securities commissions subsequent to the Closing, and, any registration statement (including any amendment or supplement thereto) which may be filed pursuant hereto); provided that,
for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of the Investor herein. 
  
 Section 4.06. Commission Documents, Financial Statements. The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act, and since December 31, 2003 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 31, 2003 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
National Market. The Company has made available to the Investor true and complete copies of the Commission Documents filed with the Commission since December 31, 2003 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 Form 10-K for the year ended December 31, 2004 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, such 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, the financial statements of the Company included in the Commission Documents filed with the Commission
since December 31, 2003 complied as to form and substance in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such
financial statements 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 position 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). 
  
 Section 4.07. No Material Adverse Change. Except as disclosed in the
Commission Documents, since December 31, 2004 no event or series of events has or have occurred that would, individually or in the aggregate, have a Material Adverse Effect on the Company. 
  
 Section 4.08. No Undisclosed Liabilities. Neither the Company nor any
of its subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, 

  

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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 December 31, 2004 and which, individually or
in the aggregate, do not or would not have a Material Adverse Effect on the Company. 
  
 Section 4.09. No Undisclosed Events or Circumstances. 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 as previously disclosed to the Investor in the Disclosure Schedule, there is no action, suit, claim, investigation
or proceeding pending or, to the Knowledge of the Company, threatened, against or involving the Company, any subsidiary or any of their respective properties or assets 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 businesses of the Company and its subsidiaries have been and are presently being conducted in accordance
with all applicable federal, state and local 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, the Company and each of its subsidiaries have 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. 
  
 Section 4.12. 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 4.13. Material Non-Public Information. Except
for this Agreement and the transactions contemplated hereby, neither the Company nor its agents 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 4.14. 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 

  

 10 








 
pursuant to Section 4(2), Regulation D and/or any other applicable federal and state securities laws provided, however, that at the request of and
with the express agreement of the Investor, the Shares and, under certain circumstances, the Warrant Shares, will be delivered to the Investor via book entry through DTC and shall not be bear legends noting restrictions as to resale of such shares
under federal and state securities laws, nor shall such shares be subject to stop transfer instructions. Neither the sales of the Shares, the Warrant, the Warrant Shares or any Blackout Shares pursuant to, nor the Company’s performance of its
obligations under, this Agreement, the Registration Rights Agreement, or the Warrant shall (i) result in the creation or imposition of any liens, charges, claims or other encumbrances upon the Shares, the Warrant Shares, any Blackout Shares or any
of the assets of the Company, or (ii) except as previously disclosed to the Investor in writing, entitle the holders of any outstanding shares of capital stock of the Company to preemptive or other rights to subscribe to or acquire the shares of
Common Stock or other securities of the Company. 
  
 Section 4.15.
No General Solicitation or Advertising in Regard to this Transaction. 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 4.16. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy
any security, other than pursuant to this Agreement and employee benefit plans, under circumstances that would require registration under the Securities Act of shares of the Common Stock issuable hereunder with any other offers or sales of
securities of the Company. 
  
 Section 4.17. 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 5.01. 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 5.02. Authorization and Power. The Investor has the requisite power and authority to enter into and perform its obligations under this
Agreement, the Registration Rights Agreement and the Warrant and to purchase the Shares 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, 

  

 11 








 
the Warrant and the Registration Rights Agreement has been duly executed and delivered by the Investor and constitutes a valid and binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership, or similar laws
relating to, or affecting generally the enforcement of creditor’s rights and remedies or by other equitable principles of general application. 
  
 Section 5.03. No Conflicts. The execution, delivery and performance of this Agreement, Warrant, Registration Rights Agreement 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 the Shares in accordance with the terms hereof, provided that, for purposes of
the representation made in this sentence, the Investor is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein. 
  
 Section 5.04. Financial Capability. The Investor has the financial capability to perform all of its obligations under
this Agreement, including the capability to purchase the 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 5.05. 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, the Warrant Shares and the Warrant 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, the Warrant Shares and the Warrant. 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 5.06. Selling
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 ever enter into or execute or cause any Person to enter into or
execute any “short sale” (as such term is defined in Rule 200 of Regulation SHO promulgated by the Commission under the Exchange Act) of any shares of Common Stock, nor shall the Investor or any of its affiliates or any entity managed or
controlled by the Investor sell, during the term of a Draw Down Pricing Period, Common Stock other than Common Stock purchased (or to be purchased) pursuant to the Draw Down pertaining to such Draw Down Pricing Period. 
  

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 Section 5.07. Statutory Underwriter Status. The Investor acknowledges and agrees 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 5.08. Not an Affiliate. The Investor is not an officer, director or “affiliate” (as defined in Rule 405 of the Securities Act) of the Company. 
  
 Section 5.09. 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 and Warrant Shares are eligible for resale pursuant to all the
conditions of Rule 144, it will resell the Shares and Warrant 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, the prospectus delivery requirements of the Securities Act. The Investor further acknowledges and agrees that the Company shall be under no obligation 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 Settlement Date with respect to such Shares. 
  
 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 6.01. Securities. The Company shall notify the Commission and the Principal Market, if and as applicable, in
accordance with their rules and regulations, of the transactions contemplated by this Agreement, and shall use commercially reasonable efforts to take all other necessary action and proceedings as may be required and permitted by applicable law,
rule and regulation, for the legal and valid issuance of the Shares, the Warrant Shares and the Blackout Shares, if any, to the Investor; provided that in no event shall the Company be under any obligation to supplement the Prospectus to
reflect the issuance of any Shares pursuant to a Draw Down at any time prior to the day following the Settlement Date with respect to such Shares. 
  
 Section 6.02. 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 may be reduced by the number of shares actually delivered hereunder. 
  
 Section 6.03. Registration and Listing. During the Commitment Period, the Company shall use commercially reasonable efforts: (i) to 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) to comply in all respects with its reporting and filing obligations under the Exchange Act, (iii) to prevent the termination or
suspension of 

  

 13 








 
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 NASD and the Principal Market. 
  
 Section 6.04. 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 6.05. 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 could reasonably be expected to have a Material Adverse Effect. 
  
 (b) Without the consent of its stockholders in accordance with NASD 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 Agreements of Shares and Blackout Shares (collectively) representing more than the applicable percentage under the rules of the NASD that would require stockholder
approval of the issuance thereof. Nothing herein shall compel the Company to seek such consent of its stockholders. 
  
 Section 6.06. Reporting Requirements. Upon reasonable written request of the Investor during the Commitment Period, the Company shall furnish
copies of the following to the Investor within three Trading Days of such request (but not sooner than filed with or submitted to the Commission): 
  
 (a) Quarterly Reports on Form 10-Q; 
  
 (b) Annual Reports on Form 10-K; 
  
 (c) Current Reports on Form 8-K; and 
  
 (d) any other documents publicly furnished or submitted to the Commission. 
  
 Section 6.07. 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, 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 partnerships or joint ventures (the primary purpose of which is not to raise equity capital); (v) issue
shares of Common and/or Preferred Stock to consultants and/or advisors as consideration for services rendered or to be rendered, (vi) issue and sell equity or debt securities in a 

  

 14 








 
public offering, (vii) issue and sell and 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. The Company shall
use commercially reasonable efforts to notify the Investor in writing prior to the consummation of any material Permitted Transaction described in clauses (vi), (vii) or (ix) above. 
  
 Section 6.08. Prohibited Transactions. 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 be deemed to 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. 
  
 Section 6.09. 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 provided that in the event of an Excluded Merger or Sale, if the
surviving, successor or purchasing Person does not agree to assume the obligations under the Warrant, then the Company shall deliver a notice to the Investor at least 10 (ten) days before the consummation of such Excluded Merger or Sale, the
Investor may exercise the Warrant at any time before the consummation of such Excluded Merger or Sale (and such exercise may be made contingent upon the consummation of such Excluded Merger or Sale), and any portion of the Warrant that has not been
exercised before consummation of such Excluded Merger or Sale shall terminate and expire, and shall no longer be outstanding. 
  
 Section 6.10. Non-Disclosure of Non-Public Information. Except as otherwise expressly provided in this Agreement, none of the Company, its
officers, directors, employees nor agents shall disclose material non-public information to the Investor, its advisors or representatives. 
  
 Section 6.11. 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 additional
information by the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by
the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; and (iii) receipt of any notification with
respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company shall not request a
Draw Down during the continuation of any of the foregoing events. 
  
 Section 6.12. Amendments to the Registration Statement. When the Registration Statement is declared effective by the Commission, the Company shall (i) not file any amendment to the Registration 

  

 15 








 
Statement or make any amendment or supplement to the Prospectus of which the Investor shall not previously have been advised or to which the Investor shall
reasonably object after being so advised; provided, however, that the Company shall, to the extent it deems advisable, and without the prior consent of or notice to Investor, supplement the Prospectus within one day following the
Settlement Date for each Draw Down solely to reflect the issuance of Shares with respect to such Draw Down and (ii) 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 by Investor, deliver a copy of
such information, documents or reports to the Investor promptly following such filing. 
  
 Section 6.13. 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. The Company consents to the use of
the Prospectus (and of any amendment or supplement thereto) in accordance with the provisions of the Securities Act and state securities laws in connection with the offering and sale of the Shares and the Warrant Shares and for such period of time
thereafter as the Prospectus is required by the Securities Act to be delivered in connection with sales of the Shares and the Warrant Shares. Notwithstanding the foregoing, in no event shall the Company be under any obligation to supplement the
Prospectus or to reflect the issuance of any Shares pursuant to a Draw Down or deliver any Prospectus as so supplemented at any time prior to the day following the Settlement Date with respect to such Shares. 
  
 Section 6.14. Expectations Regarding Draw Downs. Within ten (10)
calendar days after the commencement of each calendar quarter occurring subsequent to the date hereof, the Company shall notify the Investor as to its reasonable expectations as to the dollar amount it intends to raise during such calendar quarter,
if any, through the issuance of Draw Down Notices. Such notification shall constitute only the Company’s good faith estimate with respect to such calendar quarter and shall in no way obligate the Company to raise such amount during such
calendar quarter or otherwise limit or restrict its right to deliver Draw Down Notices during such calendar quarter in any amount permitted under this Agreement or to refrain from delivering any Draw Down Notices during such quarter. The failure by
the Company to comply with this provision can be cured by the Company’s notifying the Investor at any time as to its reasonable expectations with respect to the current calendar quarter. 
  
 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 7.13
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 7.01. 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. 
  

 16 








 Section 7.02. 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 7.03. 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, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 
  
 Section 7.04. Effective Registration Statement. Upon the terms and subject to the conditions set forth in the Registration Rights Agreement, the
Registration Statement shall have previously become effective and shall remain effective and (i) neither the Company nor the Investor shall have received notice that the Commission has issued or intends to issue a stop order with respect to the
Registration Statement or that the Commission otherwise has suspended or withdrawn the effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened to do so (unless the Commission’s concerns have
been addressed and the Investor is reasonably satisfied that the Commission no longer is considering or intends to take such action), and (ii) no other suspension of the use or withdrawal of the effectiveness of the Registration Statement or the
Prospectus shall exist. 
  
 Section 7.05. 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 more likely than not to occur within eight Trading Days following the Trading Day on which a Draw Down Notice is delivered). 
  
 Section 7.06. No Suspension. Trading in the Company’s Common Stock shall not have been suspended by the Commission, the Principal Market or
the NASD 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 7.07. No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement. 
  
 Section 7.08. No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any governmental
authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any subsidiary, or any of the officers, directors or affiliates of the Company or any subsidiary seeking to
enjoin, prevent or change the transactions contemplated by this Agreement. 
  
 Section 7.09. Intentionally Omitted 
  
 Section 7.10. 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. 
  

 17 








 Section 7.11. 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 7.11. 
  
 Section 7.12. Opinion of Counsel. The Investor shall have received an opinion of counsel to the Company, dated as of the Effective Date, in the form reasonably agreed to by the Investor and its counsel prior to
the date hereof. 
  
 Section 7.13. 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. 
  
 ARTICLE VIII 
  
 TERMINATION 
  
 Section 8.01. Term. Unless otherwise terminated in accordance with
Section 8.02 below, this Agreement shall terminate upon the earlier of (i) expiration of the Commitment Period or (ii) issuance of Shares pursuant to this Agreement in an amount equal to the Maximum Commitment Amount. 
  
 Section 8.02. Other Termination. 
  
 (a) The Investor may terminate this Agreement upon (x) one (1) day’s
notice if the Company enters into any Prohibited Transaction as set forth in Section 6.08 without the Investor’s prior written consent, or (y) one (1) day’s notice within ten (10) Trading Days after the Investor obtains actual knowledge
that an event resulting in a Material Adverse Effect has occurred. 
  
 (b) The Investor may terminate this Agreement upon one (1) 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 8.02(b).

  
 (c) The Company may terminate this Agreement upon one (1)
day’s notice; provided, however, that the Company shall not terminate this Agreement pursuant to this Section 8.02(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) 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. 
  

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 Section 8.03. 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 8.01 or 8.02
herein, this Agreement shall become void and of no further force and effect, except as provided in Section 10.13. Nothing in this Section 8.03 shall be deemed to release the Company or the Investor from any liability for any breach under this
Agreement occurring prior to such termination, or to impair the rights of the Company and the Investor to compel specific performance by the other party of its obligations under this Agreement arising prior to such termination. 
  
 ARTICLE IX 
  
 INDEMNIFICATION 
  
 Section 9.01. Indemnification. 
  
 (a) Except as otherwise provided in this Article IX, unless disputed as set
forth in Section 9.02, 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 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 gross 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 9.02, 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 Right 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 Right Agreement or the Warrant or gross negligence, 

  

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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. 
  
 Section 9.02. 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 9.01. 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, including the dispute resolution provisions set forth in Section 9.03 below. 
  
 (b) If an Indemnified Party shall receive notice or otherwise learn of the assertion by a person or entity not a party to this Agreement of any threatened
legal action or claim (collectively a “Third Party Claim”), with respect to which an Indemnifying Party may be obligated to provide indemnification, the Indemnified Party shall give such Indemnifying Party written notice thereof
within twenty (20) days after becoming aware of such Third Party Claim. 
  
 (c) An Indemnifying Party may elect to defend (and, unless the Indemnifying Party has specified any reservations or exceptions, to seek to settle or compromise) at such Indemnifying Party’s own expense and by such Indemnifying
Party’s own counsel, any Third Party Claim. Within thirty (30) days after the receipt of notice from an Indemnified Party (or sooner if the nature of such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnified Party
whether the Indemnifying Party will assume responsibility for defending such Third Party Claim, which election shall specify any reservations or exceptions. If such Indemnifying Party does not respond within such thirty (30) day period or rejects
such claim in whole or in part, the Indemnified Party shall be free to pursue such remedies as specified in this Agreement, including the dispute resolution provisions set forth in Section 9.03 below. 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 

  

 20 








 
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 X. 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 Indemnifying Party shall not be liable for any settlement
of any claim effected against an Indemnified Party without the Indemnifying Party’s written consent, which consent shall not be unreasonably withheld, conditioned or delayed. The rights accorded to an Indemnified Party hereunder shall be in
addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise (subject, however, to the provisions of Section 9.03 below); provided, however, that notwithstanding the foregoing or anything
to the contrary contained in this Agreement, nothing in this Article X (other than Section 9.03) shall restrict or limit any rights that any Indemnified Party may have to seek equitable relief. 
  
 Section 9.03. Dispute Resolution. Any dispute under this Agreement,
the Registration Rights Agreement or the Warrant shall be submitted to arbitration (including, without limitation, pursuant to this Article IX) and shall be finally and conclusively determined by the decision of a board of arbitration consisting of
three (3) members (the “Board of Arbitration”) selected as hereinafter provided. Each of the Indemnified Party and the Indemnifying Party shall select one (1) member and the third member shall be selected by mutual agreement of the
other members, or if the other members fail to reach agreement on a third member within twenty (20) days after their selection, such third member shall thereafter be selected by the American Arbitration Association upon application made to it for
such purpose by the Indemnified Party. The Board of Arbitration shall meet on consecutive business days in New York, New York or such other place as a majority of the members of the Board of Arbitration determines more appropriate, and shall reach
and render a decision in writing (concurred in by a majority of the members of the Board of Arbitration) with respect to the amount, if any, which the Indemnifying Party is required to pay to the Indemnified Party in respect of a claim filed by the
Indemnified Party. In connection with rendering its decisions, the Board of Arbitration shall adopt and follow the rules and procedures of the American Arbitration Association. To the extent practical, decisions of the Board of Arbitration shall be
rendered no more than thirty (30) calendar days following commencement of proceedings with respect thereto. The Board of Arbitration shall cause its written decision to be delivered to the Indemnified Party and the Indemnifying Party. Any decision
made by the Board of Arbitration (either prior to or after the expiration of such thirty (30) calendar day period) shall be final, binding and conclusive on the Indemnified Party and the Indemnifying Party and entitled to be enforced to the fullest
extent permitted by law and entered in any court of competent jurisdiction. Each party to any arbitration shall bear its own expense in relation thereto, including but not limited to such party’s attorneys’ fees, if any, and the expenses
and fees of the Board of Arbitration shall be paid initially one-half by each of the Indemnifying Party and the 

  

 21 








 
Indemnified Party, but then apportioned between the Indemnifying Party and the Indemnified Party in the same proportion as the portion of the related claim
determined by the Board of Arbitration to be payable to the Indemnified Party bears to the portion of such claim determined not to be so payable. 
  
 ARTICLE X 
  
 MISCELLANEOUS 
  
 Section 10.01. Fees and Expenses. Each of the Company and the Investor agrees to pay its own expenses incident to the performance of its obligations hereunder, except that: 
  
 (a) 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 (ii) all
reasonable fees and expenses incurred by the Investor in connection with any amendments, modifications or waivers of this Agreement, including, without limitation, all reasonable attorneys fees and expenses and (iii) all reasonable fees and expenses
incurred in connection with the Investor’s enforcement of this Agreement, including, without limitation, all reasonable attorneys fees and expenses, and (iv) due diligence expenses incurred by the Investor during the term of this Agreement
equal to $12,500 per calendar quarter, and (v) all stamp or other similar taxes and duties, if any, levied in connection with issuance of the Shares pursuant hereto; provided that such $12,500 shall not be payable in respect of any calendar
quarter following the calendar quarter during which the Company shall have issued and sold Common Stock hereunder during the term of this Agreement in aggregate Draw Down Amounts equal to or exceeding $25 million; 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, and provided further that the maximum aggregate amount payable by the
Company pursuant to clause (i) above shall be $70,000 and the Investor shall bear all fees and expenses in excess of $70,000 incurred in connection with the events described under clause (i) above; and 
  
 (b) the Investor shall be solely responsible for all reasonable fees and
expenses incurred in connection with the Company’s enforcement of this Agreement, including, without limitation, all reasonable attorneys fees and expenses. 
  
 Section 10.02. 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 10.03. 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. 
  
 Section 10.04. 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 

  

 22 








 
address as such party shall have specified most recently by written notice given in accordance herewith. 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
business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on
the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

  
 If to the Company: 
  
 675 Almanor Drive 
 Sunnyvale, CA 94085 
 Facsimile: (408)
215-4001 
 Attention: Lee Bendekgey, Senior Vice President, General Counsel and Chief Financial Officer 
  
 with a copy (which shall not constitute notice) to: 
  
 Cooley Godward LLP: 
 Five Palo Alto Square 
 3000 El Camino Real

 Palo Alto, CA 94306-2155 
 Facsimile: 650 849-7400 
 Attention: John Geschke, Esq. 
  
 if to the Investor: 
  
 Kingsbridge Capital Limited/ c/o Kingsbridge Corporate Services Limited 
 Main Street 
 Kilcullen, County Kildare 
 Republic of Ireland 
 Telephone:
011-353-45-481-811 
 Facsimile: 011-353-45-482-003 
 Attention: Adam Gurney, Managing Director 
  
 with a copy (which shall not constitute notice) to: 
  
 Clifford Chance US LLP 
 31 West 52nd Street 
 New York, NY 10019 
 Telephone: (212)
878-8000 
 Facsimile: (212) 878-8375 
 Attention: Keith M. Andruschak, Esq. 
  
 Either party hereto may from
time to time change its address or facsimile number for notices under this Section by giving at least ten (10) days’ prior written notice of such changed address or facsimile number to the other party hereto. 
  
 Section 10.05. Assignment. Neither this Agreement nor any rights of
the Investor or the Company hereunder may be assigned by either party to any other Person. 
  

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 Section 10.06. 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 the 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 10.07. 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 supersede all prior and contemporaneous agreements, negotiations and understandings between the
parties, both oral and written, relating to the subject matter hereof. 
  
 Section 10.08. Severability. In the event that 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, such severability shall be ineffective if it materially changes the economic benefit of this Agreement to any party. 
  
 Section 10.09. 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 the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law
or equity. 
  
 (b) Subject to Section 9.03, 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 shall affect or limit any right to serve process in any other manner
permitted by law. 
  

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

			
	KINGSBRIDGE CAPITAL LIMITED
		
	 By:
	 	 /s/ Valentine O’Donoghue


	 	 	 Valentine O’Donoghue
 Director

	
	NUVELO, INC.
		
	 By:
	 	 /s/ Lee Bendekgey


	 	 	 Lee Bendekgey
 Senior Vice President, Chief Financial Officer
 and General Counsel



  

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