Exhibit 10.41


 


Execution Copy


 




 





 


SECURITIES PURCHASE AGREEMENT


 


 


BY AND BETWEEN


 


 


THE INVESTORS LISTED ON THE SIGNATURE PAGES
HERETO


 


AND


 


ALLOS THERAPEUTICS, INC.


 


MARCH 2, 2005


 




 





 





















 


TABLE OF CONTENTS


 


	
  SECTION 1.

  	
  INTERPRETATION
  OF THIS AGREEMENT

  	
   

  
	
  1.1.

  	
  Defined Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.

  	
  AUTHORIZATION
  OF SHARES; PURCHASE AND SALE OF SHARES

  	
   

  
	
  2.1.

  	
  Authorization of Shares

  	
   

  
	
  2.2.

  	
  Issuance of Shares

  	
   

  
	
  2.3.

  	
  Closing and Closing Date

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY

  	
   

  
	
  3.1.

  	
  Corporate Organization

  	
   

  
	
  3.2.

  	
  Subsidiaries

  	
   

  
	
  3.3.

  	
  Capitalization

  	
   

  
	
  3.4.

  	
  Corporate Proceedings,
  etc.

  	
   

  
	
  3.5.

  	
  Consents and Approvals

  	
   

  
	
  3.6.

  	
  Absence of
  Defaults, Conflicts, etc.

  	
   

  
	
  3.7.

  	
  Reports and
  Financial Statements

  	
   

  
	
  3.8.

  	
  Absence of Certain
  Developments

  	
   

  
	
  3.9.

  	
  Compliance with Law

  	
   

  
	
  3.10.

  	
  Litigation

  	
   

  
	
  3.11.

  	
  Absence of
  Undisclosed Liabilities

  	
   

  
	
  3.12.

  	
  Employees

  	
   

  
	
  3.13.

  	
  Tax Matters

  	
   

  
	
  3.14.

  	
  Intellectual Property

  	
   

  
	
  3.15.

  	
  Title to Tangible Assets

  	
   

  
	
  3.16.

  	
  Condition of Properties

  	
   

  
	
  3.17.

  	
  Transactions
  with Related Parties

  	
   

  
	
  3.18.

  	
  Registration
  Statement and Prospectus

  	
   

  
	
  3.19.

  	
  Registration Rights

  	
   

  
	
  3.20.

  	
  Brokerage

  	
   

  
	
  3.21.

  	
  Illegal
  or Unauthorized Payments; Political Contributions

  	
   

  
	
  3.22.

  	
  Takeover Statute

  	
   

  
	
  3.23.

  	
  NASDAQ Compliance

  	
   

  
	
  3.24.

  	
  Reporting Status

  	
   

  
	
  3.25.

  	
  No Manipulation
  of Common Stock

  	
   

  
	
  3.26.

  	
  Accountants

  	
   

  
	
  3.27.

  	
  Internal
  Accounting Controls

  	
   

  
	
  3.28.

  	
  Environmental Matters

  	
   

  
	
  3.29.

  	
  FDA Approval

  	
   

  
	
  3.30.

  	
  Insurance

  	
   

  
	
  3.31.

  	
  Transfer
  Taxes

  	
   

  
	
  3.32.

  	
  Investment Company

  	
   

  



 


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  SECTION
  4.

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE INVESTORS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.

  	
  ADDITIONAL
  AGREEMENTS OF THE PARTIES

  	
   

  
	
  5.1.

  	
  Resale
  of Shares

  	
   

  
	
  5.2.

  	
  Covenants Pending
  Closing

  	
   

  
	
  5.3.

  	
  Further Assurances

  	
   

  
	
  5.4.

  	
  Investor Designees

  	
   

  
	
  5.5.

  	
  Subscription Right

  	
   

  
	
  5.6.

  	
  Consents
  and Approvals; Proxy Statement

  	
   

  
	
  5.7.

  	
  Use of Proceeds

  	
   

  
	
  5.8.

  	
  Takeover Statute

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  INVESTORS’
  CLOSING CONDITIONS

  	
   

  
	
  6.1.

  	
  Representations and
  Warranties

  	
   

  
	
  6.2.

  	
  Compliance with
  Agreement

  	
   

  
	
  6.3.

  	
  Injunction

  	
   

  
	
  6.4.

  	
  Counsel’s Opinion

  	
   

  
	
  6.5.

  	
  Adverse Development

  	
   

  
	
  6.6.

  	
  Directors

  	
   

  
	
  6.7.

  	
  Registration Rights
  Agreement

  	
   

  
	
  6.8.

  	
  Standstill Agreement

  	
   

  
	
  6.9.

  	
  Rights Amendment

  	
   

  
	
  6.10.

  	
  Stop Orders

  	
   

  
	
  6.11.

  	
  Listing of the Common
  Stock

  	
   

  
	
  6.12

  	
  Nasdaq
  Interpretative Ruling

  	
   

  
	
  6.13

  	
  Filing of
  Certificate of Designations

  	
   

  
	
  6.14.

  	
  Officer’s Certificate

  	
   

  
	
  6.15.

  	
  Secretary’s Certificate

  	
   

  
	
  6.16.

  	
  Approval of Proceedings

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  COMPANY CLOSING
  CONDITIONS

  	
   

  
	
  7.1.

  	
  Representations and
  Warranties

  	
   

  
	
  7.2.

  	
  Compliance with
  Agreement

  	
   

  
	
  7.3.

  	
  Investors’ Certificates

  	
   

  
	
  7.4.

  	
  Injunction

  	
   

  
	
  7.5

  	
  Standstill Agreement

  	
   

  
	
  7.6

  	
  Rights Amendment

  	
   

  
	
  7.7

  	
  Nasdaq Interpretive
  Ruling

  	
   

  
	
  7.8

  	
  Filing of
  Certificate of Designations

  	
   

  
	
  7.9.

  	
  Approval of Proceedings

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  COVENANTS

  	
   

  
	
  8.1.

  	
  Inspection

  	
   

  
	
  8.2.

  	
  Confidentiality

  	
   

  
	
  8.3.

  	
  Lost,
  etc. Certificates Evidencing Shares; Exchange

  	
   

  
	
  8.4.

  	
  Securities
  Law Disclosure; Publicity

  	
   

  
	
  8.5.

  	
  HSR Act Filing

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  MISCELLANEOUS

  	
   

  
	
  9.1.

  	
  Notices

  	
   

  
	
  9.2.

  	
  Expenses and Taxes

  	
   

  
	
  9.3.

  	
  Reproduction of
  Documents

  	
   

  



 


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  9.4.

  	
  Termination and Survival

  	
   

  
	
  9.5.

  	
  Successors and Assigns

  	
   

  
	
  9.6.

  	
  Severability

  	
   

  
	
  9.7.

  	
  Governing Law

  	
   

  
	
  9.8.

  	
  Paragraph and
  Section Headings

  	
   

  
	
  9.9.

  	
  Limitation
  on Enforcement of Remedies

  	
   

  
	
  9.10.

  	
  Counterparts

  	
   

  
	
  9.11.

  	
  Entire
  Agreement; Amendment and Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Certificate of Designations

  	
   

  
	
  Exhibit B

  	
  Restated Certificate of Incorporation, as amended

  	
   

  
	
  Exhibit C

  	
  By-laws, as amended

  	
   

  
	
  Exhibit D

  	
  Opinion of Cooley Godward LLP

  	
   

  
	
  Exhibit E

  	
  Registration Rights Agreement

  	
   

  
	
  Exhibit F

  	
  Standstill Agreement

  	
   

  
	
  Exhibit G

  	
  Rights Amendment

  	
   

  



 


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ALLOS THERAPEUTICS, INC.


 


SECURITIES PURCHASE AGREEMENT


 


Dated as of March 2, 2005


 


TO THE INVESTORS LISTED


ON THE SIGNATURE PAGES HERETO


 


Ladies and Gentlemen:


 


Allos Therapeutics, Inc., a Delaware corporation (the “Company”),
hereby agrees with each of the Investors (each an “Investor” and
collectively the “Investors”) listed on the signature pages to this
Securities Purchase Agreement, dated as of March 2, 2005 (this “Agreement”),
as follows:


 


SECTION 1.                                INTERPRETATION
OF THIS AGREEMENT


 


1.1.                              Defined Terms


 


As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such
term:


 


Additional Shares:  shall have the meaning set forth in Section
2.5.


 


Affiliate: 
shall mean any Person or entity, directly or indirectly, controlling,
controlled by or under common control with such Person or entity.


 


Agreement: 
shall have the meaning set forth in the Introduction hereto.


 


Board: 
shall have the meaning set forth in Section 3.3(c).


 


Business Day: 
shall mean a day other than a Saturday, Sunday or other day on which
banks in the State of New York are required or authorized to close.


 


Certificate of Designations:  shall mean the Certificate of Designations,
Number, Voting Powers, Preferences and Rights of Series A Exchangeable
Preferred Stock of the Company, a copy of which is attached hereto as Exhibit
B.


 


Closing: 
shall have the meaning set forth in Section 2.3.


 


Closing Date: 
shall have the meaning set forth in Section 2.3.


 


Code: 
shall mean the Internal Revenue Code of 1986, as amended.


 


Common Stock: shall mean the common stock, par
value $0.001 per share, of the Company.


 


Company: 
shall have the meaning set forth in the Introduction hereto.


 





















 


Company SEC Reports:  shall have the meaning set forth in Section
3.7.


 


Contract: 
shall mean any material agreement, contract, commitment, understanding,
arrangement, restriction or other instrument to which the Company is currently
a party, and which is or was required to be filed as an exhibit to any Company
SEC Report.


 


DGCL: 
shall mean the Delaware General Corporation Law.


 


Environmental Laws:  shall mean federal, state, local and foreign
laws, regulations, and codes, as well as orders, decrees, judgments or
injunctions, issued, promulgated, approved or entered thereunder relating to
pollution, protection of the environment or public health and safety.


 


Exchange: 
shall mean the exchange of the Exchangeable Preferred Stock for shares
of Common Stock in accordance with the terms of the Certificate of
Designations.


 


Exchange Act: 
shall mean the Securities Exchange Act of 1934, as amended.


 


Exchange Date Shares:  shall have the meaning set forth in Section
5.4(a).


 


Exchange Shares:  shall mean those shares of Common Stock to be
issued upon exchange of the Exchangeable Preferred Stock.


 


Exchangeable Preferred Stock:  shall have the meaning set forth in Section
2.1(a).


 


FDA: 
shall mean the United States Food and Drug Administration.


 


Filed Company SEC Reports:  shall have the meaning set forth in Section
3.7.


 


GAAP: 
shall have the meaning set forth in Section 3.7.


 


Governmental Authority:  shall mean the government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.


 


HSR Act: 
shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.


 


Initial Closing:  shall have the meaning set forth in Section
2.3.


 


Initial Closing Date:  shall have the meaning set forth in Section
2.3


 


Intellectual Property:  shall mean all of the following, owned or
used primarily in the current or contemplated business of the Company: (i)
registered and unregistered trademarks and service marks, trade dress, product
configurations, trade names and other indications of origin, applications or
registrations in any jurisdiction pertaining to the foregoing and all goodwill
associated therewith; (ii) patentable and unpatentable inventions, discoveries,


 


3





















 


improvements,
ideas, know-how, formula methodology, processes, compounds, technology,
software (including password unprotected interpretive code or source code,
object code, development documentation, programming tools, drawings,
specifications and data) and applications and patents in any jurisdiction
pertaining to the foregoing, including re-issues, continuations, divisions,
continuations-in-part, renewals or extensions; (iii) trade secrets, including
confidential information and the right in any jurisdiction to limit the use or
disclosure thereof; (iv) copyrights in writings, designs software, mask works
or other works, applications or registrations in any jurisdiction for the foregoing
and all moral rights related thereto; (v) database rights; (vi) Internet Web
sites, domain names and applications and registrations pertaining thereto and
all intellectual property used in connection with or contained in all versions
of the Company’s Web sites; (vii) rights under all agreements relating to the
foregoing; (viii) books and records pertaining to the foregoing; and (ix)
claims or causes of action arising out of or related to past, present or future
infringement or misappropriation of the foregoing.


 


Institutional Investors:  shall have the meaning set forth in Section
2.5.


 


Investor(s): 
shall have the meaning set forth in the Introduction hereto.


 


Investor Designees:  shall have the meaning set forth in Section
5.4(a).


 


Majority Investors:  shall mean the Investors having commitments
to purchase at least 70% of the Shares at the Initial Closing.


 


Material Adverse Effect:  shall mean, collectively, a material adverse
effect on, or a material adverse change in, or group of such effects on or
changes in the business, properties, business prospects, assets, liabilities,
operations or condition (financial or otherwise) of the Company taken as a
whole.


 


NASD: 
shall mean National Association of Securities Dealers, Inc.


 


NASDAQ Stock Market:  shall have the meaning set forth in Section
3.23.


 


Organizational Documents:  shall have the meaning set forth in Section
3.1(a).


 


Owns, Own, Owned:  shall mean the aggregate beneficial
ownership, within the meaning of Rule 13d-3 under the Exchange Act, of an
Investor and any of its Affiliates.


 


Person: 
shall mean an individual, partnership, joint-stock company, corporation,
limited liability company, trust or unincorporated organization, and a
government or agency or political subdivision thereof.


 


Preferred Stock:  shall mean the preferred stock, par value
$0.001 per share, of the Company.


 


Preferred Stock Purchase Price:  shall mean $22.10 per share.


 


Product: 
shall have the meaning set forth in Section 3.29.


 


4





















 


Prospectus: 
shall have the meaning set forth in Section 3.18.


 


Proposed Securities:  shall have the meaning set forth in Section
5.5(a)(1).


 


Proxy Statement:  shall have the meaning set forth in Section
5.6(b).


 


Registration Rights Agreement:  shall have the meaning set forth in Section
6.7.


 


Registration Statement:  shall have the meaning set forth in Section
3.18.


 


Rights Amendment:  shall have the meaning set forth in Section
6.9.


 


Sarbanes-Oxley Act:  shall mean the Sarbanes-Oxley Act of 2002.


 


SEC: 
shall mean the Securities and Exchange Commission.


 


Securities Act:  shall mean the Securities Act of 1933, as
amended.


 


Shares: 
shall mean the shares of Exchangeable Preferred Stock to be purchased by
the Investors hereunder.


 


Standstill Agreement:  shall have the meaning set forth in Section
6.8.


 


Subsequent Closing: 
shall have the meaning set forth in Section 2.3


 


Subsidiary: 
shall mean an entity of which a Person owns, directly or indirectly,
more than 50% of the Voting Stock.


 


Stockholder Approval:  shall have the meaning set forth in Section
5.6(b).


 


Takeover Statute:  shall mean any corporate takeover provision
under laws of the State of Delaware or any other state or federal “fair price”,
“moratorium”, “control share acquisition” or other similar antitakeover statute
or regulation.


 


Voting Stock: 
shall mean securities of any class or classes of an entity, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).


 


WP: 
shall mean Warburg Pincus Private Equity VIII, L.P., a Delaware limited
partnership.


 


SECTION 2.                                AUTHORIZATION
OF SHARES; PURCHASE AND SALE OF SHARES


 


2.1.                              Authorization of
Shares


 


On or prior to the
Initial Closing, the Company shall have authorized the sale and issuance of up
to an aggregate of two million seven hundred fourteen thousand nine hundred
thirty-two (2,714,932) shares of its Series A Exchangeable Preferred Stock, par
value $0.001 per share (the “Exchangeable Preferred Stock”), on the
terms and conditions set forth in this


 


5





















 


Agreement.  The terms, limitations and relative rights
and preferences of the Exchangeable Preferred Stock shall be as set forth in
the Certificate of Designations.


 


2.2.                              Issuance of Shares


 


Subject to the terms and
conditions set forth in this Agreement, and in reliance upon the Company’s and
the Investors’ representations set forth below, at the Initial Closing, the
Company shall sell to the Investors, and the Investors shall purchase from the
Company, the number of shares of Exchangeable Preferred Stock set forth
opposite each Investor’s respective name on Exhibit A, at a purchase
price equal to the Preferred Stock Purchase Price per share.


 


2.3.                              Closing and Closing
Date


 


The closing of the transactions contemplated by Section 2.2 (the “Initial
Closing”) shall take place at 10:00 A.M., New York City time, on the first
Business Day following the date on which the last to be fulfilled or waived of
the conditions set forth in Sections 6 and 7 hereof shall have been fulfilled
or waived in accordance with this Agreement, or on such earlier date as may be
mutually agreed by the Company and the Majority Investors (the “Initial
Closing Date”), at the offices of Willkie Farr & Gallagher LLP, 787
Seventh Avenue, New York, New York 10019, or such other location as the
Majority Investors and the Company shall mutually select.  The subsequent closing(s) of the sale and
purchase of Shares as set forth in Section 2.5 below shall take place at such
time and place as the Company and the Investors participating therein shall
mutually agree (a “Subsequent Closing”) (the Initial Closing and any
Subsequent Closing shall collectively be referred to herein as a “Closing”
and each such date is referred to as a “Closing Date”).  The Company’s agreement with each Investor is
a separate agreement and the sales to each Investor are separate sales.


 


2.4                                 Delivery


 


The sale and purchase of the Shares shall be effected on the applicable
Closing Date by the Company executing and delivering to each Investor, duly
registered in such Investor’s name, duly executed stock certificates evidencing
the Shares being purchased by it, against payment of the purchase price
therefore by wire transfer of immediately available funds to such account as
the Company shall designate in writing.


 


2.5                                 Subsequent Sales of
Shares.  At any time on or
before March 8, 2005, the Company may sell up to the balance of the authorized
shares of Exchangeable Preferred Stock authorized for sale as set forth in
Section 2.1 above that are not sold to the Investors at the Initial Closing
(the “Additional Shares”) to not more than three (3) institutional
investors (the “Institutional Investors”) each Owning more than three
percent (3%) of the Common Stock outstanding on the date of this Agreement (as
certified by such Institutional Investors in writing).  All such sales shall be made on the terms and
conditions set forth in this Agreement, and (i) the representations and
warranties of the Company set forth in Section 3 hereof (and the Disclosure
Schedule) shall speak as of the Initial Closing and the Company shall have no
obligation to update any such disclosure, and (ii) the representations and
warranties of the Institutional Investors in Section 4 hereof shall speak as of
such Subsequent Closing.  Not more than
an aggregate of four hundred fifty-two thousand four hundred eighty-nine
(452,489) Additional


 


6





















 


Shares of
Exchangeable Preferred Stock may be sold to the Institutional Investors, and no
Institutional Investor shall acquire more than the number of shares of
Exchangeable Preferred Stock that results in such Institutional Investor Owning
the same percentage of the Company’s outstanding Common Stock (including, for
purposes of this determination, all shares of Common Stock issuable upon
exchange of the Exchangeable Preferred Stock) immediately after the Subsequent
Closing (assuming, for purposes of this determination, the issuance of all
shares of Exchangeable Preferred Stock authorized for sale pursuant to Section
2.1) as such Institutional Investor Owned on the date of this Agreement (as
certified by such Institutional Investor in writing).  The signature pages to this Agreement may be
amended by the Company without the consent of the Investors to include any Institutional
Investors upon the execution by such Institutional Investors of a counterpart
signature page hereto.  Any Shares sold
pursuant to this Section 2.5 shall be deemed to be “Shares” for all purposes
under this Agreement and any Institutional Investors shall be deemed to be “Investors”
for all purposes under this Agreement.


 


SECTION 3.                                REPRESENTATIONS
AND WARRANTIES OF THE COMPANY


 


Except as set forth in the Disclosure Schedule delivered by the Company
to the Investors at the Initial Closing or any Subsequent Closing, as the case
may be, the Company represents and warrants to the Investors as of the date of
this Agreement (or, if made as of a specified date, as of such date) that:


 


3.1.                              Corporate Organization


 


(a)                                  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. 
Attached hereto as Exhibits C and D, respectively, are
true and complete copies of the Restated Certificate of Incorporation and
By-laws of the Company, as amended through the date hereof (collectively, the “Organizational
Documents”).


 


(b)                                 The
Company has all requisite corporate power and authority to carry on its
business as now conducted.  The Company
has all requisite power and authority to execute and deliver this Agreement and
to perform its obligations hereunder.


 


(c)                                  The
Company has filed all necessary documents to qualify to do business as a
foreign corporation in each jurisdiction in which the conduct of the Company’s
business or the nature of the property owned requires such qualification,
except where the failure to so qualify would not be reasonably likely to have a
Material Adverse Effect.


 


3.2.                              Subsidiaries


 


The Company has no
subsidiaries and no equity interests or investments in any partnership, trust
or other entity or organization.


 


3.3.                              Capitalization


 


(a)                                  The
authorized capital stock of the Company, immediately prior to the Initial
Closing, shall consist of (i) 75,000,000 shares of Common Stock and (ii)
10,000,000 shares of Preferred Stock, of which 2,714,932 shares shall be
designated as Exchangeable


 


7





















 


Preferred
Stock and 1,000,000 shares shall be designated as Series A Junior Participating
Preferred Stock.  As of March 2, 2005,
the issued and outstanding shares of capital stock of the Company consisted of
31,175,783 shares of Common Stock and no shares of Preferred Stock.


 


(b)                                 All
the outstanding shares of capital stock of the Company have been duly and
validly issued and are fully paid and non-assessable, and were issued in
accordance with the registration or qualification requirements of the
Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom.  As of the Initial
Closing Date, the Shares will be duly authorized and, upon issuance, sale and
delivery as contemplated by this Agreement, the Shares will be validly issued,
fully paid and non-assessable securities of the Company.  Upon their issuance in accordance with the
terms of the Exchangeable Preferred Stock, the shares of Common Stock issuable
upon exchange of the Exchangeable Preferred Stock will be free and clear of any
and all security interests, pledges, liens, charges, claims, options,
restrictions on transfer, preemptive or similar rights, proxies and voting or
other agreements, or other encumbrances of any nature whatsoever, except for
those provided for herein or otherwise created or imposed upon the Investors
and other than restrictions on transfer imposed by federal or state securities
laws, and except as set forth in the Standstill Agreement.


 


(c)                                  On
the Initial Closing Date, except for the Exchangeable Preferred Stock and
except as disclosed in the Filed Company SEC Reports, there will be no shares
of Common Stock or any other equity security of the Company issuable upon
conversion, exchange or exercise of any outstanding security of the Company,
nor will there be any rights, options, calls or warrants outstanding or other
agreements to acquire shares of Common Stock nor will the Company be
contractually obligated to purchase, redeem or otherwise acquire any of its
outstanding shares.  Except to the extent
otherwise provided in this Agreement or the Standstill Agreement or as
disclosed in the Filed Company SEC Reports, (i) no stockholder of the Company
is entitled to any preemptive or similar rights to subscribe for shares of
capital stock of the Company and no stockholder of the Company has any rights,
contractual or otherwise, to designate members of the Company’s Board of
Directors (the “Board”), other than in accordance with the DGCL, and
(ii) there are no stockholder, voting or other agreements relating to the
rights and obligations of the Company’s stockholders.


 


3.4.                              Corporate Proceedings,
etc.


 


The Company has authorized the execution, delivery and performance of
this Agreement and each of the transactions and agreements contemplated
hereby.  No other corporate action is
necessary to authorize such execution, delivery and performance of this
Agreement, and upon such execution and delivery, this Agreement shall
constitute the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights and general
principles of equity.  The Company has
authorized the issuance and delivery of the Shares in accordance with this
Agreement and, subject to the issuance of the Shares, the Company has reserved
for issuance shares of Common Stock initially issuable upon exchange of the
Shares.


 


8





















 


3.5.                              Consents and Approvals


 


Except as set forth in Section 3.5 of the Disclosure Schedule or as
otherwise provided in this Agreement, the execution and delivery by the Company
of this Agreement, the issuance of any of the Shares, the performance by the
Company of its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby do not require the Company to obtain any
consent, approval, clearance or action of, or make any filing, submission or
registration with, or give any notice to, any governmental authority or
judicial authority.


 


3.6.                              Absence
of Defaults, Conflicts, etc.


 


(a)                                  The
execution and delivery of this Agreement by the Company does not, and the
fulfillment of the terms hereof and thereof by the Company, and the issuance,
sale and delivery of the Shares will not, (i) violate or conflict with the
Organizational Documents; (ii) result in a breach of any of the terms,
conditions or provisions of, or constitute a default (with or without the
giving of notice or the passage of time (or both)) under, or result in the
modification of, or permit the acceleration of rights under or termination of,
any Contract of the Company; (iii) violate any law, ordinance, standard,
judgment, rule or regulation of any court or federal, state or foreign
regulatory board or body or administrative agency having jurisdiction over the
Company or over its properties or business; or (iv) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company,
except, in the cases of clauses (ii), (iii) or (iv), where such event would not
be reasonably likely to have a Material Adverse Effect.


 


(b)                                 The
Company is not in default under or in violation of (and no event has occurred
and no condition exists which, upon notice or the passage of time (or both),
would constitute a default under) (i) the Company’s Organizational Documents,
(ii) any Contract of the Company, (iii) any license, permit or
authorization to which the Company is a party or by which it may be bound or
(iv) any order, writ, injunction or decree of any court or any Federal, state,
municipal or other domestic or foreign governmental department, commission,
board, bureau, agency or instrumentality except, in the case of clause (ii),
(iii) or (iv), for defaults or violations which would not be reasonably likely
to have a Material Adverse Effect.  Each
Contract of the Company is valid, binding and enforceable against the Company
and, to the Company’s best knowledge, the other parties thereto, in accordance
with its terms, and in full force and effect on the date hereof.


 


3.7.                              Reports
and Financial Statements


 


The Company has furnished or made available to the Investors, via its
EDGAR filings with the SEC, true and complete copies of the Company’s (i)
Annual Reports on Form 10-K for the fiscal years ended December 31, 2003,
December 31, 2002, December 31, 2001, and December 31, 2000, as amended, as
filed with the SEC, (ii) proxy statements, as amended, related to all meetings
of its stockholders (whether annual or special) held since March
27, 2000, and (iii) all other reports filed with or registration statements
declared effective by the SEC since March 27,
2000, except registration statements on Form S-8 relating to employee benefit
plans, which are all the documents (other than preliminary material) that the
Company was required to file with the SEC since that date (the documents
referred to in clauses (i) through (iii), together


 


9





















 


with all
accompanying exhibits and all information incorporated therein by reference,
being referred to herein collectively as the “Company SEC Reports”).  The Company has timely made all filings and
furnishings with the SEC required of the Company pursuant to the Exchange Act
during the 12 months preceding the date of this Agreement.  As of their respective dates, the Company SEC
Reports were duly filed or furnished with the SEC and complied in all material
respects with the requirements of the Sarbanes-Oxley Act, the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations promulgated
by the SEC and NASDAQ Stock Market thereunder applicable to such Company SEC
Reports.  Except to the extent that
information contained in any Company SEC Report filed or furnished with the SEC
and made publicly available prior to the date of this Agreement (a “Filed
Company SEC Report”) has been revised or superseded by a later Filed
Company SEC Report, as of their respective dates, none of the Filed Company SEC
Reports contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The audited consolidated
financial statements included in the Filed Company SEC Reports comply in all
material respects with applicable accounting requirements of the Securities Act
or the Exchange Act and with the published rules and regulations of the SEC
with respect thereto.  The financial
statements (including the schedules and notes thereto) included in the Company’s
SEC Reports (i) have been prepared in accordance with generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout
the periods indicated, except as disclosed therein, and (ii) present fairly, in
all material respects, the financial position of the Company as at the dates
thereof and the results of its operations and cash flow for the periods then
ended, except that the unaudited financial statements may not be in accordance
with GAAP because of the absence of footnotes normally contained therein and
are subject to normal year-end audit adjustments.


 


3.8.                              Absence
of Certain Developments


 


Except as disclosed in the Filed Company SEC Reports, since December
31, 2003, there has been no (i) change or event which is reasonably likely to
have a Material Adverse Effect, (ii) declaration, setting aside or payment of
any dividend or other distribution with respect to the capital stock of the
Company, (iii) issuance of capital stock (other than pursuant to (1) the
exercise of options, warrants, or convertible securities outstanding at such
date or (2) employee benefit plans) or options, warrants or rights to acquire
capital stock (other than the rights granted pursuant to employee benefit plans),
(iv) material loss, destruction or damage to any property of the Company,
whether or not insured, (v) acceleration of any indebtedness for borrowed
money or the refunding of any such indebtedness, (vi) labor trouble
involving the Company or any material change in its personnel or the terms and
conditions of employment, (vii) waiver of any valuable right in favor of the
Company, (viii) loan or extension of credit to any officer of the Company or to
any employee of the Company in an amount in excess of $25,000 or (ix)
acquisition or disposition of any material assets (or any contract or
arrangement therefore) or any other material transaction by the Company
otherwise than for fair value in the ordinary course of business.


 


3.9.                              Compliance with Law


 


(a)                                  The
Company is not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject, including without limitation laws or
regulations


 


10





















 


relating
to the environment or to occupational health and safety, except for violations
that would not be reasonably likely to have a Material Adverse Effect, and no
material expenditures are known to be or expected to be required in order to
cause its current operations or properties to comply with any such laws,
ordinances, governmental rules or regulations, except such expenditures as may
be required in order for the Company to comply with Section 404 of the
Sarbanes-Oxley Act.


 


(b)                                 The
Company has all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its property or to the conduct of
its business in the manner described in the Filed Company SEC Reports, which if
violated or not obtained would be reasonably likely to have a Material Adverse
Effect.  The Company has not been finally
denied any application for any such licenses, permits, franchises or other
governmental authorizations necessary to its business.


 


(c)                                  The
Company has not received any written notice from the FDA or any other federal,
state or foreign regulatory agency questioning the manufacturing practices of
any of the Company’s contractors and the Company is not aware of any intent to
deliver any such written notice.


 


(d)                                 The
Company is in material compliance with and is taking all action required for
the Company to remain in material compliance with all provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated thereunder and all
provisions of the NASDAQ Stock Market, in each case as to which the Company is
required to be in compliance.


 


3.10.                        Litigation


 


Except as disclosed in the Filed Company SEC Reports, there is no legal
action, suit, arbitration or other legal, administrative or other governmental
investigation, inquiry or proceeding (whether federal, state, local or foreign)
pending or, to the best of the Company’s knowledge, threatened against or
affecting the Company or any of its properties, assets or business which would
be reasonably likely to have a Material Adverse Effect.  The Company is not subject to any order,
writ, judgment, injunction, decree, determination or award of any court or of
any governmental agency or instrumentality (whether federal, state, local or
foreign).


 


3.11.                        Absence
of Undisclosed Liabilities


 


Except as disclosed in the Filed Company SEC Reports, subsequent to the
respective dates as of which such information is given in the Filed Company SEC
Reports, the Company has not incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Company taken as a whole, and there has not
been any change in the capital stock, or material increase in the short-term or
long-term debt, of the Company taken as a whole.


 


3.12.                        Employees


 


(a)                                  The
Company is not engaged in any unfair labor practice or discriminatory
employment practice and no complaint of any such practice against the Company
has been filed or, to the best of the Company’s knowledge, threatened to be
filed with or by the National Labor


 


11





















 


Relations
Board, the Equal Employment Opportunity Commission or any other administrative
agency, federal or state, that regulates labor or employment practices, nor is
any grievance filed or, to the best of the Company’s knowledge, threatened to
be filed, against the Company by any employee pursuant to any collective
bargaining or other employment agreement to which the Company is a party or is
bound which, in any such case, would be reasonably likely to have a Material
Adverse Effect.  The Company is in
compliance with all applicable foreign, federal, state and local laws and
regulations regarding occupational safety and health standards except to the
extent that noncompliance would not be reasonably likely to have a Material
Adverse Effect, and has received no complaints from any foreign, federal, state
or local agency or regulatory body alleging such violations of any such laws
and regulations.


 


(b)                                 The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing.


 


3.13.                        Tax Matters


 


There are no federal, state, county or local taxes due and payable by
the Company which have not been paid or will not be paid prior to the time they
become delinquent.  The Company has duly
filed (except in cases where valid extensions have been obtained) all federal,
state, county and local tax returns required to have been filed by it and there
are in effect no waivers of applicable statutes of limitations with respect to
taxes for any year.  No tax deficiency
has been determined adversely to the Company which would be reasonably likely
to have Material Adverse Effect.  The
Company is not currently subject to a federal or state tax audit of any kind.


 


3.14.                        Intellectual Property 


 


(a)                                  The
Company owns all right, title and interest in and to, or has a valid and
enforceable license to use all the Intellectual Property used by it in
connection with its business, which represents all intellectual property rights
necessary to the conduct of its business as now conducted and presently
contemplated, except where the failure to own or license such Intellectual Property
would not be reasonably likely to have a Material Adverse Effect.  The
Company is not in breach of any license agreement concerning the Company’s
Intellectual Property, including the agreements between or among the Company
and the Center for Innovating Technology, the Virginia Commonwealth University
or the Virginia Commonwealth University Intellectual Property Foundation,
except for breaches that would not be reasonably likely to have a Material
Adverse Effect.  Except as
disclosed in the Filed Company SEC Reports, to the best knowledge of the
Company, there are no conflicts with or infringements of any Intellectual
Property by any third party, except for conflicts or infringements that would
not be reasonably likely to have a Material Adverse Effect.  To the knowledge of the Company, the conduct
of the business of the Company as currently conducted or contemplated does not
conflict with or infringe any proprietary right of any third party, except for
conflicts or infringements that would not be reasonably likely to have a
Material Adverse Effect.  There is no
claim, suit, action or proceeding pending or, to the knowledge of the Company,
threatened against the Company:  (i) alleging
any such conflict or infringement with any third party’s proprietary rights or


 


12





















 


(ii) challenging the
Company’s ownership or use of, or the validity or enforceability of any
Intellectual Property.


 


(b)                                 To
the Company’s knowledge, no present or former employee, officer or director of
the Company, or agent or outside contractor of the Company, holds any right,
title or interest, directly or indirectly, in whole or in part, in or to any
Intellectual Property, except those formally assigned or transferred to the
Company by such employees, officers or directors.  No
person has claimed rights to any patent owned by or licensed to the Company by
reason of being an inventor or co-inventor of any claim in such patents, other
than the inventors named on each such patent, and all such inventors have duly
assigned their rights to the patents to the Company or the assignor or licensor
of such patents to the Company.


 


(c)                                  Neither
the execution nor delivery of this Agreement, nor the carrying on of the
Company’s business by the employees of and consultants to the Company will, to
the Company’s knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Contract
(including covenants or commitments of any nature) which any of such employees
or consultants is now obligated.  The
Company does not believe it is or will be necessary to utilize any inventions
of any of its employees (or people it currently intends to hire) made prior to
their employment by the Company, except those formally assigned or transferred
to the Company by such employees.


 


(d)                                 To
the Company’s knowledge:  (i) no trade
secret of the Company has been used, disclosed or appropriated to the detriment
of the Company or for the benefit of any Person other than the Company; and
(ii) no employee, independent contractor or agent of the Company has
misappropriated any trade secrets or other confidential information of any
other Person in the course of the performance of his or her duties as an
employee, independent contractor or agent of the Company, except in the cases
of clauses (i) and (ii) as would not be reasonably likely to have a Material
Adverse Effect.  All employees of  the Company have
executed agreements acknowledging their obligation to assign all inventions made
in the course of their employment to the Company.


 


(e)                                  Each
employee, consultant and contractor of the Company who has had access to
confidential information of the Company which is necessary for the conduct of
the Company’s business as currently conducted or as currently proposed to be
conducted has executed an agreement to maintain the confidentiality of such
confidential information and has executed appropriate agreements that are
substantially consistent with the Company’s standard forms thereof.


 


3.15.                        Title to Tangible Assets


 


The Company has good and marketable title to its properties and assets
and good title to all its leasehold estates, in each case except as disclosed
in the Filed Company SEC Reports subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than or resulting from taxes which have not yet become
delinquent and minor liens and encumbrances which do not in any case materially
detract from the value of the property subject thereto or materially impair the
operations of the Company and which have not arisen otherwise than in the
ordinary course of business.


 


13





















 


3.16.                        Condition of Properties


 


The property, assets and operations of the Company comply with all
applicable ordinances, regulations and laws, except where the failure to so
comply would not be reasonably likely to have a Material Adverse Effect.


 


3.17.                        Transactions
with Related Parties


 


Except as disclosed in the Filed Company SEC Reports, the Company is
not a party to any agreement with any of the Company’s directors, officers or
stockholders or any Affiliate or family member of any of the foregoing under
which it:  (i) leases any real or
personal property (either to or from such Person); (ii) licenses technology (either
to or from such Person); (iii) is obligated to purchase any tangible or
intangible asset from or sell such asset to such Person; (iv) purchases
products or services from such Person; or (v) has borrowed money from or lent
money to such Person.  Except as set
forth in Section 3.17 of the Disclosure Schedule, the Company does not employ
as an employee or engage as a consultant any family member of any of the
Company’s directors, officers or stockholders. 
Except as set forth in the Standstill Agreement, to the best knowledge
of the Company, there exist no agreements among stockholders of the Company to
act in concert with respect to the voting or holding of the Company’s
securities.


 


3.18.                        Registration
Statement and Prospectus


 


A registration statement on Form S-3 (File No. 333-113353) (the “Registration
Statement”) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act and the rules and
regulations of the SEC thereunder and has been filed with the Commission under
the Securities Act.  The Registration
Statement, which shall be deemed to include all information omitted therefrom
in reliance upon Rule 430A and contained in the Prospectus referred to below,
has been declared effective by the SEC under the Securities Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement.  The form of the
prospectus filed by the Company with the SEC pursuant to its Rule 424(b) and
Rule 430A and dated April 21, 2004, is herein referred to as the “Prospectus.”


 


The SEC has not issued an order preventing or suspending the use of the
Prospectus relating to the offering of the Shares nor instituted proceedings
for that purpose.  The Registration
Statement and the Prospectus contain all statements which are required to be
stated therein by, and in all respects conform, as the case may be, to the
requirements of the Securities Act and the rules and regulations of the SEC
thereunder.  Neither the Registration
Statement nor any amendment thereto, nor the Prospectus, contains, as the case
may be, any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.


 


14





















 


3.19.                        Registration Rights


 


Except as disclosed in the Filed Company SEC Reports and pursuant to
the Registration Rights Agreement, the Company will not, as of the Initial
Closing Date, be under any obligation to register any of its securities under
the Securities Act.


 


3.20.                        Brokerage


 


Except for fees payable pursuant to that certain letter agreement dated
February 24, 2005, by and between the Company and Needham & Company, a copy
of which has been provided to WP, there are no claims for brokerage commissions
or finder’s fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement made by or on behalf of
the Company and the Company agrees to indemnify and hold the Investors harmless
against any costs or damages incurred as a result of any such claim.


 


3.21.                                          Illegal
or Unauthorized Payments; Political Contributions


 


Neither the Company nor, to the best of the Company’s knowledge (after
reasonable inquiry of its officers and directors), any of the officers,
directors, employees, agents or other representatives of the Company or any
other business entity or enterprise with which the Company is or has been
affiliated or associated, has, directly or indirectly taken any action
prohibited by Section 30A of the Exchange Act.


 


3.22.                        Takeover Statute 


 


The Board has taken all action necessary to approve the transactions
contemplated hereby, as it relates to the Investors, for the purposes of the
provisions of Section 203 of the DGCL. 
To the Company’s knowledge, no other Takeover Statute is applicable to
the transactions contemplated hereby.


 


3.23.                        NASDAQ Compliance


 


The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act, and is listed on The NASDAQ National Market
(the “NASDAQ Stock Market”), and trading in the Common Stock has not
been suspended and the Company has taken no action designed to, or that is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the NASDAQ Stock
Market, nor has the Company received any notification that the SEC or the NASD
is contemplating terminating such registration or listing.  To the best of the Company’s knowledge, the
Company and the Common Stock meet the criteria for continued listing and
trading on the NASDAQ Stock Market.


 


3.24.                        Reporting Status


 


The Company is currently eligible to register the resale of Common Stock
in a secondary offering on a registration statement on Form S-3 under the
Securities Act.


 


15





















 


3.25.                        No
Manipulation of Common Stock


 


The Company has not taken and will not take
any action outside the ordinary course of business designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock to facilitate the sale or resale of the Shares or the
Exchange Shares.


 


3.26.                        Accountants


 


PricewaterhouseCoopers LLP has advised the
Company that it is, and to the best knowledge of the Company it is, an
independent accountant as required by the Sarbanes-Oxley Act, the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.


 


3.27.                        Internal
Accounting Controls  


 


The Company maintains a system of internal accounting controls
sufficient, in the judgment of the management of the Company, to provide
reasonable assurance that:  (i)
transactions are executed in accordance with management’s general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.


 


3.28.                        Environmental Matters


 


To its knowledge, the Company is in compliance with all applicable
Environmental Laws, except where any failure to comply would not be reasonably
likely to have a Material Adverse Effect. 
There is no civil, criminal or administrative judgment, action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter pending or to the Company’s knowledge threatened against the
Company pursuant to Environmental Laws. 
To the Company’s knowledge, there are no past or present events,
conditions, circumstances, activities, practices, incidents, agreements,
actions or plans which could reasonably be expected to prevent compliance with,
or which have given rise to or will give rise to liability which would have a
Material Adverse Effect, under Environmental Laws.


 


3.29.                        FDA Approval


 


After due investigation, (i) the Company has no knowledge that any
Governmental Authority, including, but not limited to, the FDA, will ultimately
prohibit the marketing, sale, license or use in the United States or elsewhere
of any product (including, but not limited to, EFAPROXYN) proposed to be
developed, produced or marketed by the Company (each, a “Product”), (ii)
to the Company’s knowledge, the FDA has not prohibited any product or process
from being marketed or used in the United States which product or process is
substantially similar in function or composition to the Company’s lead product
candidate, EFAPROXYN, (iii) the Company has no Product on clinical hold nor
does the Company have any reason to expect that any Product is reasonably
likely to be placed on clinical hold, (iv) the


 


16





















 


Company has
made available to WP all submissions to the FDA and the FDA responses (and
other material correspondence received from or submitted to the FDA),
including, but not limited to, all FDA warning letters, regulatory letters and
notice of adverse finding letters and the relevant responses, received by the
Company or any agent thereof relative to the development of its Products,
including, but not limited to, EFAPROXYN, (v) none of the Company or its
Affiliates or, to the Company’s knowledge, its employees or agents, has ever
been sanctioned, formally or otherwise, by the FDA, and (vi) there has not been
any suspensions or debarments by the FDA or other federal departments and state
regulatory bodies against the Company or, to the knowledge of the Company, any
current or former employee of the Company.


 


3.30.                        Insurance


 


The Company maintains and
will continue to maintain insurance with financially sound and reputable
insurers in such amounts and covering such risks as is reasonably adequate and
consistent with industry practice for the conduct of its business and the value
of its property, all of which insurance is in full force and effect.  The Company has not received notice from, and
has no knowledge of any threat by, any insurer that has issued any insurance
policy to the Company that such insurer intends to deny coverage under or
cancel, discontinue or not renew any insurance policy presently in force.


 


3.31.                        Transfer Taxes


 


On the Initial Closing Date, all stock
transfer or other taxes (other than income taxes) which are required to be paid
in connection with the sale and issuance of the Shares hereunder will be, or
will have been, fully paid or provided for by the Company and the Company will
have complied with all laws imposing such taxes.


 


3.32.                        Investment Company


 


The Company is not an “investment company” or an “affiliated person”
of, or “promoter” or “principal underwriter” for an investment company, within
the meaning of the Investment Company Act of 1940, as amended.


 


17





















 


SECTION 4.                                REPRESENTATIONS
AND WARRANTIES OF THE INVESTORS


 


Each Investor severally represents and warrants to the Company as of
the date of this Agreement (or, if made as of a specified date, as of such
date) that:


 


(a)                                  It
is acquiring the Shares and, subject to Stockholder Approval, the Exchange
Shares for its own account for investment and not with a view towards the
resale, transfer or distribution thereof, nor with any present intention of
distributing the Shares or the Exchange Shares, but subject, nevertheless, to
any requirement of law that the disposition of the Investor’s property shall at
all times be within the Investor’s control, and without prejudice to the
Investor’s right at all times to sell or otherwise dispose of all or any part
of such securities under a registration under the Securities Act or under an
exemption from said registration available under the Securities Act.


 


(b)                                 It
has full power and legal right to execute and deliver this Agreement and to
perform its obligations hereunder.


 


(c)                                  It
is a validly existing partnership, limited liability company, trust or
corporation, as the case may be, duly organized under the laws of its
jurisdiction of organization or formation.


 


(d)                                 It
has taken all action necessary for the authorization, execution, delivery, and
performance of this Agreement and its obligations hereunder, and, upon
execution and delivery by the Company, this Agreement shall constitute the
valid and binding obligation of such Investor, enforceable against such
Investor in accordance with its terms, except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights and general
principles of equity.


 


(e)                                  There
are no claims for brokerage commissions or finder’s fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement made by or on behalf of such Investor and such
Investor agrees to indemnify and hold the Company harmless against any costs or
damages incurred as a result of any such claim.


 


(f)                                    It
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the Company as
contemplated by this Agreement, and is able to bear the economic risk of such
investment for an indefinite period of time. 
It has been furnished access to such information and documents as it has
requested and has been afforded an opportunity to ask questions of and receive
answers from representatives of the Company concerning the terms and conditions
of this Agreement and the purchase of the Shares contemplated hereby.  It is a “qualified institutional buyer”
within the meaning of Rule 144A(a) of the Securities Act or an “accredited
investor” within the meaning of Rule 501(a) of Regulation D under the
Securities Act.


 


(g)                                 Except
such consents, approvals and filings, the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Investor to consummate the transactions contemplated by this Agreement,
the execution and delivery by it of this Agreement and the performance by such
Investor of its obligations


 


18





















 


hereunder
and the consummation by such Investor of the transactions contemplated hereby
do not require such Investor to obtain any consent, approval, clearance or
action of, or make any filing, submission or registration with, or give any
notice to, any governmental authority or judicial authority.


 


(h)                                 The
execution and delivery of this Agreement by such Investor do not, and the
fulfillment of the terms hereof and thereof by such Investor will not, (i)
violate or conflict with its partnership agreement, trust agreement, the
articles of incorporation, other constitutive documents or by-laws (or other
similar applicable documents) of the Investor, as applicable; (ii) result
in a breach of any of the terms, conditions or provisions of, or constitute a
default (with or without the giving of notice or the passage of time (or both))
under, or result in the modification of, or permit the acceleration of rights
under or termination of, any material contract to which such Investor is a
party or (iii) violate any law, ordinance, standard, judgment, rule or regulation
of any court or federal, state or foreign regulatory board or body or
administrative agency having jurisdiction over such Investor or over its
respective properties or businesses; except, in the cases of clauses (ii) and
(iii) where such event would not be reasonably likely to have a material
adverse effect on the Investor’s ability to consummate the transactions
contemplated by this Agreement.


 


(i)                                     On
the date of this Agreement, the Investor (1) is not an “interested stockholder”
within the meaning of Section 203(c)(5) of the DGCL or (2) has been an “interested
stockholder” for a period of more than three years preceding the date of this
Agreement.


 


SECTION 5.                                ADDITIONAL
AGREEMENTS OF THE PARTIES


 


5.1.                              Resale of Shares


 


Each Investor severally covenants that it will not sell or otherwise
transfer the Shares or, subject to Stockholder Approval, the Exchange Shares,
except pursuant to an effective registration under the Securities Act or in a
transaction which, in the opinion of counsel reasonably satisfactory to the
Company, qualifies as an exempt transaction under the Securities Act and the
rules and regulations promulgated thereunder.


 


5.2.                              Covenants Pending
Closing


 


Pending the Initial Closing, the Company will conduct its business in
the ordinary course, and will not, without the Investors’ prior written
consent, such consent not to be unreasonably withheld, delayed or conditioned,
take any action which would result in any of the representations or warranties
contained in this Agreement not being true at and as of the time immediately
after such action, or in any of the covenants contained in this Agreement
becoming incapable of performance. 
Pending the Initial Closing, the Company will promptly advise the
Investors of any action or event of which it becomes aware which has the effect
of making materially incorrect any of such representations or warranties or
which has the effect of rendering any of such covenants incapable of
performance.


 


19





















 


5.3.                              Further Assurances


 


The Company and each Investor shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable
to carry out the provisions hereof and the transactions contemplated hereby.  The Company and each Investor shall use its
reasonable efforts to fulfill or obtain the fulfillment of the conditions to
the Closing as promptly as practicable.


 


5.4.                              Investor Designees


 


(a)                                  For
so long as WP Owns at least two thirds of (i) the aggregate number of Shares acquired
by it on the Initial Closing Date, or (ii) in the event the Exchange occurs,
the aggregate number of shares of Common Stock Owned by WP immediately after
giving effect to the Exchange (the “Exchange Date Shares”), then,
subject to applicable law and the rules and regulations of the SEC and NASDAQ
Stock Market, the Company will nominate and use its reasonable best efforts to
cause to be elected and cause to remain as a directors on the Board two
individuals designated by WP (each, an “Investor Designee” and
collectively, the “Investor Designees”).


 


(b)                                 In
the event Section 5.4(a) is no longer applicable and for so long as WP Owns at
least 50% of (i) the aggregate number of Shares acquired by it on the Initial
Closing Date, or (ii) in the event the Exchange occurs, the Exchange Date
Shares, then, subject to applicable law and the rules and regulations of the
SEC and NASDAQ Stock Market, the Company will nominate and use its reasonable
best efforts to cause to be elected and cause to remain as a director on the
Board, one Investor Designee.


 


(c)                                  Subject
to applicable law and the rules and regulations of the SEC and NASDAQ Stock
Market, for so long as at least one Investor Designee continues to serve as a
director on the Board, the Company will use its reasonable best efforts to
cause one of the Investor Designees to be a member of each principle committee
of the Board.


 


5.5.                              Subscription Right


 


(a)                                  If
at any time after the date hereof, the Company determines to issue equity
securities of any kind (for these purposes, the term “equity securities”
shall include, without limitation, Common Stock, warrants, options or other
rights to acquire equity securities convertible or exchangeable into equity
securities) of the Company (other than: 
(i) to the public in a firm commitment underwriting pursuant to a
registration statement filed under the Securities Act; (ii) the issuance of
equity securities to employees, officers or directors of, or consultants or
advisors to the Company pursuant to any employee benefit plan approved by the
Board; (iii) any equity securities issued as consideration in connection with
an acquisition, merger or consolidation by the Company provided such
acquisition, merger or consolidation has been approved by the Board; (iv)
securities issued in connection with licensing, marketing or distribution
arrangements or similar strategic transactions approved by the Board; (v) stock
issued or issuable pursuant to any rights or agreements outstanding as of the
date of this Agreement, including warrants outstanding as of the date of this
Agreement to purchase up to 1,706,893 shares of Common Stock, and stock issued
pursuant to any such rights or agreements


 


20





















 


granted
after the date of this Agreement approved by the Board; provided that the subscription
rights established by this Section 5.5 apply with respect to the initial sale
or grant by the Company of such rights or agreements; (vi) shares of
Exchangeable Preferred Stock issued as dividends with respect to the Shares
purchased by the Investors hereunder, or (vii) shares of Common Stock issued or
issuable upon exchange of the Exchangeable Preferred Stock) then, for so long
as WP Owns at least two-thirds of (i) the aggregate number of Shares acquired by
it on the Initial Closing Date, or (ii) in the event the Exchange occurs, the
Exchange Date Shares, the Company shall:


 


(1)                                   give
written notice to WP setting forth in reasonable detail (A) the designation and
all of the terms and provisions of the securities proposed to be issued (the “Proposed
Securities”), including, where applicable, the voting powers, preferences
and relative participating, optional or other special rights, and the
qualification, limitations or restrictions thereof and interest rate and
maturity; (B) the price and other terms of the proposed sale of such
securities; (C) the amount of such Proposed Securities; and (D) such other
information as WP may reasonably request in order to evaluate the proposed
issuance; and


 


(2)                                   subject
to applicable law and the rules and regulations of the SEC and NASDAQ Stock
Market, offer to issue to WP upon the terms described in the notice delivered
pursuant to Section 5.5(a)(1) above, a portion of the Proposed Securities equal
to (i) the percentage of the Common Stock (including the Exchange Shares
issuable upon the Exchange, if the Exchange has not occurred) Owned by WP
immediately prior to the issuance of the equity securities relative to the
total number of shares of Common Stock (including the Exchange Shares issuable
upon the Exchange, if the Exchange has not occurred) outstanding immediately
prior to the issuance of the equity securities, multiplied by (ii) the total
number of Proposed Securities. 
Notwithstanding the foregoing, the Company shall not be required to
offer or sell such Proposed Securities to WP if it would cause the Company to
be in violation of applicable federal securities laws by virtue of such offer
or sale.


 


(b)                                 WP
must exercise its purchase rights hereunder within 5 Business Days after
receipt of such notice from the Company. 
To the extent that the Company offers two or more securities in units,
WP must purchase such units as a whole and will not be given the opportunity to
purchase only one of the securities making up such unit.


 


(c)                                  Upon
the expiration of the offering period described above, the Company will be free
to sell such Proposed Securities that WP has not elected to purchase during the
90 days following such expiration on terms and conditions no more favorable to
the purchasers thereof than those offered to WP.


 


(d)                                 The
election by WP not to exercise its subscription rights under this Section 5.5
in any one instance shall not affect its right (other than in respect of a
reduction in its percentage holdings) as to any subsequent proposed
issuance.  Any sale of such securities by
the Company without first giving WP the rights described in this Section 5.5
shall be void and of no force and effect.


 


21





















 


(e)                                  The
subscription rights established by this Section 5.5 shall not apply to, and
shall terminate upon a consolidation, merger, reorganization or other form of
acquisition of or by the Company in which the Company’s stockholders
immediately prior to the transaction retain less than 50% of the voting power
of or economic interest in the surviving or resulting entity (or its parent),
or a sale of the Company’s assets in excess of a majority of the Company’s
assets (valued at fair market value as determined in good faith by the Board).


 


(f)                                    Injunctive
Relief.  The Company and WP hereby
declare that it is impossible to measure in money the damages which will accrue
to the parties hereto by reason of the failure of any party to perform any of
its obligations set forth in this Section 5.5.  Therefore, the Company and WP shall have the
right to specific performance of such obligations, and if any party hereto
shall institute any action or proceeding to enforce the provisions hereof, each
of the Company and WP hereby waive the claim or defense that the party
instituting such action or proceeding has an adequate remedy at law.


 


5.6.                              Consents
and Approvals; Proxy Statement


 


(a)                                  From
and after the date hereof, the Company shall use its reasonable best efforts to
obtain as promptly as practicable any consent or approval of any Person,
including any regulatory authority, required in connection with the
transactions contemplated hereby.


 


(b)                                 From
and after the date of the Initial Closing, the Company shall use its reasonable
best efforts to obtain as promptly as practicable any vote of stockholders
necessary for approval of the Exchange (“Stockholder Approval”).  In furtherance of the foregoing statement, as
promptly as reasonably practicable after the date hereof and in any event no
later than March 25, 2005, the Company shall prepare and file with the SEC, and
shall use its reasonable best efforts to have cleared by the SEC, a preliminary
proxy statement, and as soon as practicable thereafter (subject to applicable
waiting periods under the Exchange Act, review by the SEC or as required by the
Organizational Documents and applicable law) file with the SEC and promptly
thereafter mail a definitive proxy statement to the Company’s stockholders (the
“Proxy Statement”).  The Proxy
Statement shall contain the recommendation of the Board, to the extent
consistent with its fiduciary duties, that the Company’s stockholders approve
the Exchange in accordance with the Organizational Documents and applicable
law, including without limitation, the requirements of NASD Rule 4350.  WP will be given a reasonable opportunity to
review and comment on drafts of the Proxy Statement and the Company will use
its reasonable best efforts to accept comments thereto given by WP and its representatives.  The Company shall promptly take all action
necessary in accordance with applicable law and its Organizational Documents to
convene a meeting of the Company’s stockholders, no later than May 30, 2005 or,
if such date is impracticable due to review by the SEC, as soon as practicable
thereafter.  To the extent consistent
with its fiduciary duties, the Company shall use its reasonable best efforts to
solicit from the Company’s stockholders proxies in favor of the Exchange and
shall take all other action reasonably necessary to secure Stockholder
Approval.


 


5.7.                              Use of Proceeds


 


The proceeds received by the Company from the issuance and sale of the
Shares shall be used by the Company for working capital and other general
corporate purposes.


 


22





















 


5.8.                              Takeover Statute


 


If any Takeover Statute shall become applicable to the transactions
contemplated hereby, including without limitation any takeover provision under
the laws of the State of Delaware, the Company and the members of the Board
shall, to the extent consistent with its fiduciary duties, grant such approvals
and take such actions as are necessary so that the transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise use their reasonable best efforts to act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.


 


SECTION 6.                                INVESTORS’
CLOSING CONDITIONS


 


The Investors’ obligations to purchase the Shares at each Closing shall
be subject to the performance by the Company of its agreements theretofore to
be performed hereunder and to the satisfaction (or waiver), prior thereto or
concurrently therewith, of the following further conditions:


 


6.1.                              Representations
and Warranties


 


The representations and warranties of the Company contained in Section
3 of this Agreement shall be true on and as of the Initial Closing Date in all
material respects (except for such representations and warranties that are
qualified as to materiality, which shall be true in all respects) as though
such representations and warranties were made at and as of such date.


 


6.2.                              Compliance with
Agreement


 


The Company shall have performed and complied in all material respects
with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by the Company prior to or on the
applicable Closing Date.


 


6.3.                              Injunction


 


There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.


 


6.4.                              Counsel’s Opinion


 


Each Investor shall have received an opinion,
dated the applicable Closing Date from the Company’s counsel, Cooley Godward
LLP, substantially in the form of Exhibit E attached hereto.


 


6.5.                              Adverse Development


 


There shall have been no developments in the business of the Company
which would be reasonably likely to have a Material Adverse Effect.


 


23





















 


6.6.                              Directors


 


Stewart Hen and Jonathan S. Leff shall have
been elected to the Board, effective on the Initial Closing Date.  Subject to the applicable law and the rules
and regulations of the SEC and NASDAQ Stock Market, one of the Investor
Designees shall be a member of each principle committee of the Board.


 


6.7.                              Registration
Rights Agreement


 


The Company and the Investors shall have executed the Registration
Rights Agreement, the form of which is attached as Exhibit F hereto (the
“Registration Rights  Agreement”).


 


6.8.                              Standstill Agreement


 


The Company and WP shall have executed the letter agreement, the form
of which is attached as Exhibit G hereto (the “Standstill Agreement”).


 


6.9.                              Rights Amendment


 


The Company and Mellon Investor Services LLC, as Rights Agent, shall
have executed the Amendment to Rights Agreement, the form of which is attached
as Exhibit H hereto (the “Rights Amendment”).


 


6.10.                        Stop Orders


 


No stop order or suspension of trading shall been imposed by the NASDAQ
Stock Market, the SEC or any other governmental regulatory body with respect to
public trading in the Common Stock.


 


6.11.                        Listing of the Common Stock


 


In connection with the issuance of the Shares and the transactions
contemplated hereby, the Company shall have submitted to the NASDAQ Stock
Market a “Notification Form:  Listing of
Additional Shares” as well as any necessary supporting documentation.


 


6.12.                        Nasdaq
Interpretative Ruling


 


The NASDAQ Stock Market shall have issued a written interpretation
confirming that the transactions contemplated hereby, including the terms of
the Exchangeable Preferred Stock, comply with all applicable Nasdaq rules,
including the requirements of Rule 4350(i) and IM-4350-2 (“Interpretive Material Regarding the Use of Share
Caps to Comply with Rule 4350(i)”) and the voting rights
requirements of Rule 4351 and IM-4351 (“Voting
Rights Policy”).


 


24





















 


6.13.                        Filing
of Certificate of Designations


 


The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware and shall continue to be in full
force and effect as of the applicable Closing Date.


 


6.14.                        Officer’s Certificate


 


Each Investor shall have received a
certificate, dated the applicable Closing Date, signed by a duly authorized
executive officer of the Company, certifying that the conditions specified in
the foregoing Sections 6.1, 6.2, 6.3 and 6.5 hereof have been fulfilled.


 


6.15.                        Secretary’s Certificate


 


Each Investor shall have received a certificate, dated the applicable
Closing Date, of the Secretary of the Company attaching:  (i) a true and complete copy of the Restated
Certificate of Incorporation of the Company, with all amendments thereto; (ii)
true and complete copies of the Company’s By-laws, as amended, in effect as of
such date; (iii) a certificate from the Secretary of State of the State of
Delaware as to the good standing of the Company; (iv) certificates of good standing
from the appropriate officials of the jurisdictions in each state in which the
Company is qualified to do business as a foreign corporation; and (iv)
resolutions of the Board authorizing the execution and delivery of this
Agreement, the transactions contemplated hereby, and the issuance of the
Shares.


 


6.16.                        Approval of Proceedings


 


All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
satisfactory in form and substance to WP and its special counsel, Willkie Farr
& Gallagher LLP.  WP shall have
received copies of all documents or other evidence which they and Willkie Farr
& Gallagher LLP may reasonably request in connection with such transactions
and of all records of corporate proceedings in connection therewith in form and
substance reasonably satisfactory to WP and Willkie Farr & Gallagher LLP.


 


SECTION 7.                                COMPANY
CLOSING CONDITIONS


 


The Company’s obligation to issue and sell the Shares at each Closing
shall be subject to the performance by each Investor of its agreements
theretofore to be performed hereunder and to the satisfaction (or waiver),
prior thereto or concurrently therewith, of the following further conditions:


 


7.1.                              Representations
and Warranties


 


The representations and warranties of the Investors contained in
Section 4 of this Agreement shall be true in all material respects on and as of
the applicable Closing Date (except for such representations and warranties
that are qualified as to materiality, which shall be true in all respects) as
though such representations and warranties were made at and as of such date.


 


25





















 


7.2.                              Compliance with
Agreement


 


The Investors shall have performed and complied in all material
respects with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by them prior to
or on the applicable Closing Date.


 


7.3.                              Investors’
Certificates


 


The Company shall have received a certificate from each Investor, dated
the applicable Closing Date, signed by a duly authorized representative of the
Investor, certifying that the conditions specified in the foregoing Sections
7.1 and 7.2 hereof have been fulfilled.


 


7.4.                              Injunction


 


There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.


 


7.5.                              Standstill Agreement


 


The Company and WP shall have executed the letter agreement, the form
of which is attached as Exhibit G hereto (the “Standstill Agreement”).


 


7.6.                              Rights Amendment


 


The Company and Mellon Investor Services LLC, as Rights Agent, shall
have executed the Amendment to Rights Agreement, the form of which is attached
as Exhibit H hereto (the “Rights Amendment”).


 


7.7.                              Nasdaq
Interpretative Ruling


 


The NASDAQ
Stock Market shall have issued a written interpretation confirming that the
transactions contemplated hereby, including the terms of the Exchangeable
Preferred Stock, comply with all applicable Nasdaq rules, including the
requirements of Rule 4350(i) and IM-4350-2 (“Interpretive
Material Regarding the Use of Share Caps to Comply with Rule 4350(i)”)
and the voting rights requirements of Rule 4351 and IM-4351 (“Voting Rights Policy”).


 


7.8.                              Filing
of Certificate of Designations


 


The
Certificate of Designations shall have been filed with the Secretary of State
of the State of Delaware and shall continue to be in full force and effect as
of the applicable Closing Date.


 


7.9.                              Approval of
Proceedings


 


All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and


 


26





















 


substance to
the Company.  The Company shall have
received copies of all documents or other evidence which it may have reasonably
requested in connection therewith in form and substance reasonably satisfactory
to the Company.


 


SECTION 8.                                COVENANTS


 


8.1.                              Inspection


 


As long as an Investor Owns at least twenty percent (20%) of the
outstanding Common Stock, the Company shall permit the Investor, its nominee,
assignee, and its representative to visit and inspect any of the properties of
the Company, to examine all its books of account, records, reports and other
papers, to make copies and extracts therefrom, and provide reasonable access to
and the right to consult with, its officers, directors, key employees and
independent public accountants or any of them (and by this provision the
Company authorizes said accountants to discuss with such Investor, its
nominees, assignees and representatives the finances and affairs of the Company),
all at such reasonable times and as often as may be reasonably requested; provided, however, that
the Company shall not be obligated under this Section 8.1 with respect to
information the Company is contractually obligated to keep confidential or secret
or which the Board of Directors determines in good faith is confidential and
should not, therefore, be disclosed.


 


8.2.                              Confidentiality


 


(a)                                  As
to so much of the information and other material furnished under or in
connection with this Agreement (including without limitation information
furnished pursuant to Section 8.1 hereof) as constitutes or contains
confidential business, financial or other information of the Company, each
Investor covenants for itself and its members and officers that it will use due
care to prevent its officers, members, employees, counsel, accountants,
consultants, advisors and other representatives from disclosing such
information to Persons other than their respective authorized employees,
counsel, accountants, stockholders, partners, limited partners and other
authorized representatives or from using such information except as an Investor
or for the benefit of the Company; provided, however, that such
Investor may disclose or deliver any information or other material disclosed to
or received by it should the Investor be advised by its counsel that such
disclosure or delivery is required by law, regulation or judicial or
administrative order.  In the event of
any termination of this Agreement prior to the Initial Closing Date, the
Investor shall return to the Company all confidential material previously
furnished to the Investor or its officers, members, employees, counsel,
accountants and other representatives in connection with this transaction.  For purposes of this Section 8.2, “due
care” means at least the same level of care that such Investor would use to
protect the confidentiality of its own sensitive or proprietary information,
and this obligation shall survive termination of this Agreement.


 


(b)                                 Notwithstanding
the foregoing or anything else contained herein to the contrary, the terms and
conditions of (i) that certain Non-Disclosure Agreement dated January 11, 2005,
between the Company and WP, and (ii) that certain Non-Disclosure Agreement
dated January 27, 2005, between the Company and WP, shall remain in full force
and effect in accordance with their terms with respect to all confidential
information of the Company disclosed to WP thereunder.


 


27





















 


8.3.                              Lost,
etc. Certificates Evidencing Shares; Exchange


 


Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any certificate evidencing any
Shares or Exchange Shares owned by an Investor, and (in the case of loss, theft
or destruction) of an unsecured indemnity satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such certificate, if mutilated, the Company
will make and deliver in lieu of such certificate a new certificate of like
tenor and for the number of securities evidenced by such certificate which
remain outstanding.  Each Investor’s
agreement of indemnity shall constitute indemnity satisfactory to the Company
for purposes of this Section 8.3.  Upon
surrender of any certificate representing any Shares or Exchange Shares, for
exchange at the office of the Company, the Company at its expense will cause to
be issued in exchange therefor new certificates in such denomination or
denominations as may be requested for the same aggregate number of Shares or
Exchange Shares represented by the certificate so surrendered and
registered as such holder may request. 
The Company will also pay the cost of all deliveries of certificates for
such Shares or Exchange Shares to the office of the Investor (including the
cost of insurance against loss or theft in an amount satisfactory to the
holders) upon any exchange provided for in this Section 8.3.


 


8.4.                              Securities
Law Disclosure; Publicity


 


The Company shall, at or prior to 8:30 a.m., Eastern Standard Time, on
the first day following the date of this Agreement on which trading occurs on
the NASDAQ Stock Market, (i) issue a press release reasonably acceptable to the
Majority Investors disclosing the transactions contemplated hereby, and (ii)
file a Current Report on Form 8-K with the SEC (the “8-K Filing”)
describing the transactions contemplated hereby and including this Agreement as
an exhibit thereto, in the form required by the Exchange Act.  Thereafter, the Company shall timely file any
filings and notices required by the SEC or the NASD with respect to the
transactions contemplated hereby. 
Notwithstanding the foregoing, the Company shall not publicly disclose
the name of any Investor, or include the name of any Investor in any filing
with the SEC (other than pursuant to the Registration Statement and exhibits to
the 8-K Filing and other periodic filings made by the Company under the
Exchange Act) or the NASD (other than pursuant to an application for the
listing of the Shares on the NASDAQ Stock Market), without the prior written
consent of such Investor, except to the extent such disclosure is required by
law or NASD regulations, in which case the Company shall provide the Investors
with prior notice of such disclosure.


 


8.5.                              HSR Act Filing


 


The Company and WP shall, as soon as practicable after the date of this
Agreement, but in no event later than April 3, 2005, file Notification and
Report Forms under the HSR Act with the Federal Trade Commission (the “FTC”)
and the Antitrust Division of the Department of Justice (the “Antitrust
Division”) relating to the transaction contemplated by this Agreement and
shall use their reasonable best efforts to respond as promptly as practicable
to all inquiries received from the FTC or the Antitrust Division for additional
information or documentation; provided,
however, that no such filing shall be made if, on or before March
15, 2005 (or such later date as


 


28





















 


agreed upon by
the Company), WP notifies the Company of its determination that such filing
will not be required by applicable law.


 


SECTION 9.                                MISCELLANEOUS


 


9.1.                              Notices


 


(a)                                  All
communications under this Agreement shall be in writing and shall be delivered
by hand or facsimile or mailed by overnight courier or by registered mail or
certified mail, postage prepaid:


 


(1)                                   if
to an Investor, at the address or facsimile number set forth on Exhibit A,
or at such other address or facsimile number as such Investor may have
furnished the Company in writing; and


 


(2)                                   if
to the Company, at:  11080 CirclePoint
Road, Westminster, Colorado, 80020 (facsimile: (303) 426-4731), Attention:  General Counsel, or at such other address or
facsimile number as it may have furnished the Investors in writing, with a copy
(which shall not constitute notice) to Cooley Godward LLP, 380 Interlocken
Crescent, Suite 900, Broomfield, Colorado, 80021-8023 (facsimile: (720)
566-4099), Attention: Brent Fassett,
Esq.


 


(b)                                 Any
notice so addressed shall be deemed to be given:  if delivered by hand or facsimile, on the
date of such delivery; if mailed by overnight courier, on the first Business
Day following the date of such mailing; and if mailed by registered or
certified mail, on the third Business Day after the date of such mailing.


 


9.2.                              Expenses and Taxes


 


(a)                                  The
Company shall reimburse WP, within fifteen Business Days of such request by WP
and in an amount not to exceed $250,000, all of WP’s out-of-pocket fees and
expenses incurred in connection with the negotiation, preparation, execution
and delivery of this Agreement and the transactions contemplated hereby,
including, without limitation, the fees and expenses of WP’s attorneys,
accountants and consultants employed in connection with WP’s consideration,
negotiation and consummation of the transactions contemplated hereby, WP’s due
diligence on the Company and any documentation relating to the transactions
contemplated hereby.


 


(b)                                 The
Company will pay, and save and hold each Investor harmless from any and all
liabilities (including interest and penalties) with respect to, or resulting
from any delay or failure in paying, stamp and other taxes (other than income
taxes), if any, which may be payable or determined to be payable on the execution
and delivery or acquisition of the Shares or the Exchange Shares.


 


9.3.                              Reproduction of
Documents


 


This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents


 


29





















 


received by
the Investors on the applicable Closing Date (except for certificates
evidencing the Shares themselves), and (iii) financial statements, certificates
and other information previously or hereafter furnished to the Investors, may
be reproduced by the Company and the Investors by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process and the Company and the Investors may destroy any original document so
reproduced.  All parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made by
the Company or any such Investor in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.


 


9.4.                              Termination and Survival


 


Notwithstanding anything to the contrary contained herein, this
Agreement may be terminated at any time (i) by mutual consent of the Company
and the Majority Investors, (ii) by either the Company or WP if the Initial
Closing shall not have occurred on or prior to March 11, 2005 (unless such date is extended by mutual written consent);
(iii) by the Investors, for any material breach of this Agreement by the
Company; and (iv) by the Company, for any material breach of this Agreement by
the Investors.  In the event of
termination pursuant to this Section 9.4, this Agreement shall become null and
void and have no effect, with no liability on the part of the Company or the
Investors, or their members, partners, directors, officers, agents or
stockholders, with respect to this Agreement, except for the (i) liability of
the Company for expenses pursuant to Section 9.2 and (ii) subject to the
foregoing sentence, liability for any breach of any representation, warranty or
covenant contained in this Agreement.


 


9.5.                              Successors and Assigns


 


Except as otherwise expressly provided herein, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties.  The Company may not
assign its rights or obligations hereunder without the prior written consent of
the Majority Investors.  WP may assign
its rights and obligations hereunder to not more than three (3) of its members
or Affiliates or Affiliates of its members; provided, that the assignee
provides the Company with written representations and warranties substantially
similar to those provided in Section 4.


 


9.6.                              Severability


 


In the event that any part or parts of this Agreement shall be held
illegal or unenforceable by any court or administrative body of competent jurisdiction,
such determination shall not affect the remaining provisions of this Agreement
which shall remain in full force and effect.


 


9.7.                              Governing Law


 


This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed entirely within such State.


 


30





















 


9.8.                              Paragraph
and Section Headings


 


The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof.


 


9.9.                              Limitation
on Enforcement of Remedies


 


The Company hereby agrees that it will not assert against the limited
partners of any members of any Investor any claim it may have under this Agreement
by reason of any failure or alleged failure by such Investor to meet its
obligations hereunder.


 


9.10.                        Counterparts


 


This Agreement may be executed in one or more counterparts (including
by facsimile), each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.


 


9.11.                        Entire
Agreement; Amendment and Waiver


 


This Agreement, the schedules and exhibits attached hereto constitute
the entire understandings of the parties hereto and supersede all prior
agreements or understandings with respect to the subject matter hereof among
such parties.  This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of the Company and the Majority Investors.


 


[Signature
Page to Follow.]


 


31





















 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  ALLOS THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael E. Hart

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael E. Hart

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  
	
   

  	
   

  
	
  WARBURG PINCUS PRIVATE EQUITY VIII, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Warburg Pincus & Co.,

  	
   

  
	
   

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jonathan
  Leff

  	
   

  	
   

  
	
   

  	
  Name:Jonathan Leff

  	
   

  
	
   

  	
  Title: Partner

  	
   

  
							



 


 


SIGNATURE PAGE
TO


SECURITIES
PURCHASE AGREEMENT


 





















 


EXHIBIT A


 


SCHEDULE OF INVESTORS


 


	
  INVESTOR NAME AND ADDRESS

  	
   

  	
  SHARES OF

  EXCHANGEABLE

  PREFERRED STOCK

  
	
  Warburg Pincus Private Equity VIII, L.P.

  466 Lexington Avenue

  New York, NY 10017

  Facsimile: (212) 878-0850

  Attention: Mr. Jonathan S. Leff

  	
   

  	
  2,262,443

  
	
   

  	
   

  	
   

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

  Willkie Farr & Gallagher LLP

  787 Seventh Avenue

  New York, NY 10019

  Facsimile: (212) 728-9222

  Attention: Steven J. Gartner, Esq.