exv10w1



 





EXHIBIT 10.1




EXECUTION VERSION




COMMON STOCK PURCHASE AGREEMENT




Dated October 11, 2007




by and between




DENDREON CORPORATION




and




AZIMUTH OPPORTUNITY LTD.




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Article I PURCHASE AND SALE OF COMMON STOCK
	 	 	1	 
	Section 1.1
	 	Purchase and Sale of Stock	 	 	1	 
	Section 1.2
	 	Effective Date; Settlement Dates	 	 	1	 
	Section 1.3
	 	The Shares	 	 	2	 
	Section 1.4
	 	Current Report; Prospectus Supplement	 	 	2	 
	 
	 	 	 	 	 	 
	Article II FIXED REQUEST TERMS; OPTIONAL AMOUNT	 	 	2	 
	Section 2.1
	 	Fixed Request Notice	 	 	2	 
	Section 2.2
	 	Fixed Requests	 	 	3	 
	Section 2.3
	 	Share Calculation	 	 	4	 
	Section 2.4
	 	Limitation of Fixed Requests	 	 	4	 
	Section 2.5
	 	Reduction of Commitment	 	 	4	 
	Section 2.6
	 	Below Threshold Price	 	 	4	 
	Section 2.7
	 	Settlement	 	 	5	 
	Section 2.8
	 	Reduction of Pricing Period	 	 	5	 
	Section 2.9
	 	Optional Amount	 	 	6	 
	Section 2.10
	 	Calculation of Optional Amount Shares	 	 	6	 
	Section 2.11
	 	Exercise of Optional Amount	 	 	7	 
	Section 2.12
	 	Aggregate Limit	 	 	7	 
	 
	 	 	 	 	 	 
	Article III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR	 	 	8	 
	Section 3.1
	 	Organization and Standing of the Investor	 	 	8	 
	Section 3.2
	 	Authorization and Power	 	 	8	 
	Section 3.3
	 	No Conflicts	 	 	8	 
	Section 3.4
	 	Information	 	 	9	 
	 
	 	 	 	 	 	 
	Article IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	9	 
	Section 4.1
	 	Organization, Good Standing and Power	 	 	9	 
	Section 4.2
	 	Authorization, Enforcement	 	 	9	 
	Section 4.3
	 	Capitalization	 	 	10	 
	Section 4.4
	 	Issuance of Shares	 	 	10	 
	Section 4.5
	 	No Conflicts	 	 	11	 
	Section 4.6
	 	Commission Documents, Financial Statements	 	 	11	 
	Section 4.7
	 	Subsidiaries	 	 	13	 
	Section 4.8
	 	No Material Adverse Effect	 	 	13	 
	Section 4.9
	 	Indebtedness	 	 	13	 
	Section 4.10
	 	Title To Assets	 	 	13	 
	Section 4.11
	 	Actions Pending	 	 	13	 
	Section 4.12
	 	Compliance With Law	 	 	14	 
	Section 4.13
	 	Certain Fees	 	 	14	 
	Section 4.14
	 	Operation of Business	 	 	14	 






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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 4.15
	 	Environmental Compliance	 	 	16	 
	Section 4.16
	 	Material Agreements	 	 	16	 
	Section 4.17
	 	Transactions With Affiliates	 	 	17	 
	Section 4.18
	 	Securities Act; NASD Conduct Rules	 	 	17	 
	Section 4.19
	 	Employees	 	 	19	 
	Section 4.20
	 	Use of Proceeds	 	 	19	 
	Section 4.21
	 	Public Utility Holding Company Act and Investment Company Act Status	 	 	19	 
	Section 4.22
	 	ERISA	 	 	19	 
	Section 4.23
	 	Taxes	 	 	20	 
	Section 4.24
	 	Insurance	 	 	20	 
	Section 4.25
	 	Acknowledgement Regarding Investor's Purchase of Shares	 	 	20	 
	 
	 	 	 	 	 	 
	Article V COVENANTS	 	 	20	 
	Section 5.1
	 	Securities Compliance	 	 	20	 
	Section 5.2
	 	Registration and Listing	 	 	20	 
	Section 5.3
	 	Compliance with Laws	 	 	21	 
	Section 5.4
	 	Keeping of Records and Books of Account; Foreign Corrupt Practices Act	 	 	21	 
	Section 5.5
	 	Limitations on Holdings and Issuances	 	 	22	 
	Section 5.6
	 	Other Agreements and Other Financings	 	 	22	 
	Section 5.7
	 	Stop Orders	 	 	23	 
	Section 5.8
	 	Amendments to the Registration Statement; Prospectus Supplements; Free Writing Prospectuses	 	 	24	 
	Section 5.9
	 	Prospectus Delivery	 	 	24	 
	Section 5.10
	 	Selling Restrictions	 	 	25	 
	Section 5.11
	 	Effective Registration Statement	 	 	26	 
	Section 5.12
	 	Non-Public Information	 	 	26	 
	Section 5.13
	 	Broker/Dealer	 	 	26	 
	 
	 	 	 	 	 	 
	Article VI OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES	 	 	26	 
	Section 6.1
	 	Opinion of Counsel and Certificate	 	 	26	 
	Section 6.2
	 	Conditions Precedent to the Obligation of the Company	 	 	26	 
	Section 6.3
	 	Conditions Precedent to the Obligation of the Investor	 	 	28	 
	 
	 	 	 	 	 	 
	Article VII TERMINATION	 	 	30	 
	Section 7.1
	 	Term, Termination by Mutual Consent	 	 	30	 
	Section 7.2
	 	Other Termination	 	 	31	 
	Section 7.3
	 	Effect of Termination	 	 	31	 
	 
	 	 	 	 	 	 
	Article VIII INDEMNIFICATION	 	 	31	 
	Section 8.1
	 	General Indemnity	 	 	31	 
	Section 8.2
	 	Indemnification Procedures	 	 	33	 
	 
	 	 	 	 	 	 
	Article IX MISCELLANEOUS	 	 	34	 
	Section 9.1
	 	Fees and Expenses	 	 	34	 
	Section 9.2
	 	Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial	 	 	35	 
	Section 9.3
	 	Entire Agreement; Amendment	 	 	36	 






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	 	 	 	 	Page	 
	 
	 	 	 	 	 	 
	Section 9.4
	 	Notices	 	 	36	 
	Section 9.5
	 	Waivers	 	 	37	 
	Section 9.6
	 	Headings	 	 	37	 
	Section 9.7
	 	Successors and Assigns	 	 	37	 
	Section 9.8
	 	Governing Law	 	 	37	 
	Section 9.9
	 	Survival	 	 	37	 
	Section 9.10
	 	Counterparts	 	 	37	 
	Section 9.11
	 	Publicity	 	 	38	 
	Section 9.12
	 	Severability	 	 	38	 
	Section 9.13
	 	Further Assurances	 	 	38	 






Annex A. Definitions





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COMMON STOCK PURCHASE AGREEMENT




     This COMMON STOCK PURCHASE AGREEMENT, made and entered into on this 11th day of
October 2007 (this “Agreement”), by and between Azimuth Opportunity Ltd., an international
business company incorporated under the laws of the British Virgin Islands (the
“Investor”), and Dendreon Corporation, a corporation organized and existing under the laws
of the State of Delaware (the “Company”).



RECITALS




     WHEREAS, the parties desire that, upon the terms and subject to the conditions contained
herein, the Company may issue and sell to the Investor and the Investor shall thereupon purchase
from the Company up to $130,000,000 worth of newly issued shares of the Company’s common stock,
$0.001 par value (“Common Stock”), subject, in all cases, to the Trading Market Limit; and



     WHEREAS, the offer and sale of the shares of Common Stock hereunder have been registered by
the Company in the Registration Statement, which has been declared effective by order of the
Commission under the Securities Act;



     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:



ARTICLE I

PURCHASE AND SALE OF COMMON STOCK




     Section 1.1 Purchase and Sale of Stock. Upon the terms and subject to the conditions of this
Agreement, during the Investment Period the Company in its discretion may issue and sell to the
Investor up to $130,000,000 (the “Total Commitment”) worth of duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock (subject in all cases to the Trading
Market Limit, the “Aggregate Limit”), by (i) the delivery to the Investor of not more than
24 separate Fixed Request Notices (unless the Investor and the Company mutually agree that a
different number of Fixed Request Notices may be delivered) as provided in Article II hereof and
(ii) the exercise by the Investor of Optional Amounts, which the Company may in its discretion
grant to the Investor and which may be exercised by the Investor, in whole or in part, as provided
in Article II hereof. The aggregate of all Fixed Request Amounts and Optional Amount Dollar
Amounts shall not exceed the Aggregate Limit.



     Section 1.2 Effective Date; Settlement Dates. This Agreement shall become effective and binding upon
delivery of counterpart signature pages of this Agreement executed by each of the parties hereto,
and by delivery of an opinion of counsel and a certificate of the Company as provided in Section
6.1 hereof, to the offices of Greenberg Traurig, LLP, 200 Park Avenue, New York, New York 10166, at
l0:00 a.m., New York time, on the Effective Date. In consideration of and in express reliance upon
the representations, warranties and covenants, and otherwise upon the terms and subject to the
conditions, of this Agreement, from and after the Effective Date and during the Investment Period
(i) the Company shall issue and sell to the Investor, and the Investor agrees to purchase from the
Company, the Shares in respect of each Fixed Request and (ii) the Investor may in its discretion
elect to purchase Shares in respect of



 









 




each Optional Amount. The issuance and sale of Shares to the Investor pursuant to any Fixed
Request or Optional Amount shall occur on the applicable Settlement Date in accordance with
Sections 2.7 and 2.9 (or on such Trading Day in accordance with Section 2.8, as applicable),
provided in each case that all of the conditions precedent thereto set forth in Article VI
theretofore shall have been fulfilled or (to the extent permitted by applicable law) waived.




     Section 1.3 The Shares. The Company has duly authorized and reserved for issuance, and covenants
to continue to reserve for issuance, free of all preemptive and other similar rights, at all times
during the Investment Period, the requisite aggregate number of authorized but unissued shares of
its Common Stock to timely effect the issuance, sale and delivery in full to the Investor of all
Shares to be issued in respect of all Fixed Requests and Optional Amounts under this Agreement.



     Section 1.4 Current Report; Prospectus Supplement. As soon as practicable, but in any event not later
than 5:30 p.m. (New York time) on the first Trading Day immediately following the Effective Date,
the Company shall file with the Commission a report on Form 8-K relating to the transactions
contemplated by, and describing the material terms and conditions of, this Agreement and disclosing
all information relating to the transactions contemplated hereby required to be disclosed in the
Registration Statement and the Base Prospectus (but which permissibly has been omitted therefrom in
accordance with the Securities Act), including, without limitation, information required to be
disclosed in the section captioned “Plan of Distribution” in the Base Prospectus (the “Current
Report”). The Current Report shall include a copy of this Agreement as an exhibit. To the
extent applicable, the Current Report shall be incorporated by reference in the Registration
Statement in accordance with the provisions of Rule 430B under the Securities Act. The Company
heretofore has provided the Investor a reasonable opportunity to comment on a draft of such Current
Report and has given due consideration to such comments. The Company shall file a final Base
Prospectus pursuant to Rule 424(b) under the Securities Act on or prior to the second Trading Day
immediately following the Effective Date. Pursuant to Section 5.9 and subject to the provisions of
Section 5.8, on the first Trading Day immediately following the last Trading Day of each Pricing
Period, the Company shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b)
under the Securities Act disclosing the number of Shares to be issued and sold to the Investor
thereunder, the total purchase price therefor and the net proceeds to be received by the Company
therefrom and, to the extent required by the Securities Act, identifying the Current Report.



ARTICLE II

FIXED REQUEST TERMS; OPTIONAL AMOUNT




     Subject to the satisfaction of the conditions set forth in this Agreement, the parties agree
(unless otherwise mutually agreed upon by the parties in writing) as follows:



     Section 2.1 Fixed Request Notice. Upon one Trading Day’s prior written notice to the Investor, the
Company may, from time to time in its sole discretion, provide a notice to the Investor of a Fixed
Request before 9:30 a.m. (New York time) on the first Trading Day of the Pricing Period (the
“Fixed Request Notice”), substantially in the form attached hereto as Exhibit A.
The Fixed Request Notice shall specify the Fixed Amount Requested, establish the Threshold Price
for such Fixed Request, designate the first Trading Day of the Pricing Period and specify



2









 




the Optional Amount, if any, that the Company elects to grant to the Investor during the Pricing
Period and the applicable Threshold Price for such Optional Amount (the “Optional Amount
Threshold Price”). The Threshold Price and the Optional Amount Threshold Price established by
the Company in a Fixed Request Notice may be the same or different, in the Company’s sole
discretion. Upon the terms and subject to the conditions of this Agreement, the Investor is
obligated to accept each Fixed Request Notice prepared and delivered in accordance with the
provisions of this Agreement.




     Section 2.2 Fixed Requests. From time to time during the Investment Period, the Company may in its
sole discretion deliver to the Investor a Fixed Request Notice for a specified Fixed Amount
Requested, and the applicable discount price (the “Discount Price”) shall be determined, in
accordance with the price and share amount parameters as set forth below or such other parameters
mutually agreed upon by the Investor and the Company, and upon the terms and subject to the
conditions of this Agreement, the Investor shall purchase from the Company the Shares subject to
such Fixed Request Notice; provided, however, that (i) if an ex-dividend date is
established by the Trading Market in respect of the Common Stock on or between the first Trading
Day of the applicable Pricing Period and the applicable Settlement Date, the Discount Price shall
be reduced by the per share dividend amount and (ii) the Company may not deliver any single Fixed
Request Notice for a Fixed Amount Requested in excess of the lesser of (a) the amount in the
applicable Fixed Amount Requested column below and (b) 2.5% of the Market Capitalization:



	 	 	 	 	 
	Threshold Price	 	Fixed Amount Requested	 	Discount Price
	Equal to or greater than $18.00

	 	Not to exceed $55,000,000
	 	97.00% of the VWAP
	Equal to or greater than $16.00 and less than $18.00

	 	Not to exceed $50,000,000
	 	97.00% of the VWAP
	Equal to or greater than $14.00 and less than $16.00

	 	Not to exceed $45,000,000
	 	97.00% of the VWAP
	Equal to or greater than $12.00 and less than $14.00

	 	Not to exceed $40,000,000
	 	97.00% of the VWAP
	Equal to or greater than $10.00 and less than $12.00

	 	Not to exceed $35,000,000
	 	96.75% of the VWAP
	Equal to or greater than $9.00 and less than $10.00

	 	Not to exceed $32,500,000
	 	96.50% of the VWAP
	Equal to or greater than $8.00 and less than $9.00

	 	Not to exceed $30,000,000
	 	96.25% of the VWAP
	Equal to or greater than $7.00 and less than $8.00

	 	Not to exceed $27,500,000
	 	96.25% of the VWAP
	Equal to or greater than $6.00 and less than $7.00

	 	Not to exceed $25,000,000
	 	96.00% of the VWAP
	Equal to or greater than $5.00 and less than $6.00

	 	Not to exceed $22,500,000
	 	95.50% of the VWAP
	Equal to or greater than $4.00 and less than $5.00

	 	Not to exceed $20,000,000
	 	95.00% of the VWAP






     Anything to the contrary in this Agreement notwithstanding, at no time shall the Investor be
required to purchase more than $55,000,000 worth of Common Stock in respect of any Pricing Period
(not including Common Stock subject to any Optional Amount). The date on



3









 




which the Company delivers any Fixed Request Notice in accordance with this Section 2.2
hereinafter shall be referred to as a “Fixed Request Exercise Date”.




     Section 2.3 Share Calculation. Subject to Section 2.6, the number of Shares to be issued by the
Company to the Investor pursuant to a Fixed Request shall equal the aggregate sum of each quotient
(calculated for each Trading Day during the applicable Pricing Period for which the VWAP equals or
exceeds the Threshold Price) determined pursuant to the following equation (rounded to the nearest
whole Share):




	N	=	(A x B)/C, where:
	 
	N	=	the number of Shares to be issued by the Company to the Investor in respect of a Trading
Day during the applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price,
	 
	A	=	0.10 (the “Multiplier”); provided, however, that if the number of
Trading Days constituting a Pricing Period is decreased as set forth in Section 2.8 hereof,
then the Multiplier correspondingly shall be increased to equal the decimal equivalent (in
10-millionths) of a fraction, the numerator of which is one and the denominator of which
equals the number of Trading Days in the Pricing Period as so decreased,
	 
	B	=	the Fixed Amount Requested, and
	 
	C	=	the applicable Discount Price.





     Section 2.4 Limitation of Fixed Requests. The Company shall not make more than one Fixed Request in
each Pricing Period. Not less than five Trading Days shall elapse between the end of one Pricing
Period and the commencement of any other Pricing Period during the Investment Period. There shall
be permitted a maximum of 24 Fixed Requests during the Investment Period. Each Fixed Request
automatically shall expire immediately following the last Trading Day of each Pricing Period.



     Section 2.5 Reduction of Commitment. On the last Trading Day of each Pricing Period, the Investor’s
Total Commitment under this Agreement automatically (and without the need for any amendment to this
Agreement) shall be reduced, on a dollar-for-dollar basis, by the total amount of the Fixed Request
Amount and the Optional Amount Dollar Amount, if any, for such Pricing Period paid to the Company
at the Settlement Date.



     Section 2.6 Below Threshold Price. If the VWAP on any Trading Day in a Pricing Period is lower than
the Threshold Price, then for each such Trading Day the total amount of the Fixed Amount Requested
shall be reduced, on a dollar-for-dollar basis, by an amount equal to the product of (x) the
Multiplier and (y) the original Fixed Amount Requested, and no Shares shall be purchased or sold
with respect to such Trading Day, except as provided below. If trading in the Common Stock on
NASDAQ (or any national securities exchange on which the Common Stock is then listed) is suspended
for any reason for more than three hours on any Trading Day, the Investor may at its option deem
the price of the Common Stock to be lower than the Threshold Price for such Trading Day and, for
each such Trading Day, the total amount of the Fixed Amount Requested shall be reduced as provided
in the immediately preceding



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sentence, and no Shares shall be purchased or sold with respect to such Trading Day, except as
provided below. For each Trading Day during a Pricing Period on which the VWAP is (or is deemed to
be) lower than the Threshold Price, the Investor may in its sole discretion elect to purchase such
U.S. dollar amount of Shares equal to the amount by which the Fixed Amount Requested has been
reduced in accordance with this Section 2.6, at the Threshold Price multiplied by the applicable
percentage determined in accordance with the price and share amount parameters set forth in Section
2.2. The Investor shall inform the Company via facsimile transmission not later than 8:00 p.m.
(New York time) on the last Trading Day of such Pricing Period as to the number of Shares, if any,
the Investor elects to purchase as provided in this Section 2.6.




     Section 2.7 Settlement. The payment for, against simultaneous delivery of, Shares in respect of each
Fixed Request shall be settled on the second Trading Day next following the last Trading Day of
each Pricing Period, or on such earlier date as the parties may mutually agree (the “Settlement
Date”). On each Settlement Date, the Company shall deliver the Shares purchased by the
Investor to the Investor or its designees via DTC’s Deposit Withdrawal Agent Commission (DWAC)
system, against simultaneous payment therefor to the Company’s designated account by wire transfer
of immediately available funds, provided that if the Shares are received by the Investor later than
1:00 p.m. (New York time), payment therefor shall be made with next day funds. As set forth in
Section 9.1(ii), a failure by the Company to deliver such Shares shall result in the payment of
liquidated damages by the Company to the Investor.



     Section 2.8 Reduction of Pricing Period. If during a Pricing Period the Company elects to reduce the
number of Trading Days in such Pricing Period (and thereby amend its previously delivered Fixed
Request Notice), the Company shall so notify the Investor before 9:00 a.m. (New York time) on any
Trading Day during a Pricing Period (a “Reduction Notice”) and the last Trading Day of such
Pricing Period shall be the Trading Day immediately preceding the Trading Day on which the Investor
received such Reduction Notice; provided, however, that if the Company delivers the
Reduction Notice later than 9:00 a.m. (New York time) on a Trading Day during a Pricing Period,
then the last Trading Day of such Pricing Period instead shall be the Trading Day on which the
Investor received such Reduction Notice.



     Upon receipt of a Reduction Notice, the Investor (i) shall purchase the Shares in respect of
each Trading Day in such reduced Pricing Period for which the VWAP equals or exceeds the Threshold
Price in accordance with Section 2.3 hereof; (ii) may elect to purchase the Shares in respect of
any Trading Day in such reduced Pricing Period for which the VWAP is (or is deemed to be) lower
than the Threshold Price in accordance with Section 2.6 hereof; and (iii) may elect to exercise all
or any portion of an Optional Amount on any Trading Day during such reduced Pricing Period in
accordance with Sections 2.10 and 2.11 hereof.



     In addition, upon receipt of a Reduction Notice, the Investor may elect to purchase such U.S.
dollar amount of additional Shares equal to the quotient determined pursuant to the following
equation:




	D	=	A/B x (B - C), where:
	 
	D	=	the U.S. dollar amount of additional Shares to be purchased,




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	A 	=	the Fixed Amount Requested,
	 
	B	=	10 or, for purposes of this Section 2.8, such lesser number of Trading Days as the parties
may mutually agree to, and
	 
	C	=	the number of Trading Days in the reduced Pricing Period,




at a per Share price equal to (x) the Fixed Amount Requested attributable to the reduced Pricing
Period divided by (y) the number of Shares to be purchased during such reduced Pricing Period
pursuant to clause (i) of the immediately preceding paragraph.




     The Investor may also elect to exercise any portion of the applicable Optional Amount which
was unexercised during the reduced Pricing Period by issuing an Optional Amount Notice to the
Company not later than 10:00 a.m. (New York time) on the first Trading Day next following the last
Trading Day of the reduced Pricing Period. The number of Shares to be issued upon exercise of such
Optional Amount shall be calculated pursuant to the equation set forth in Section 2.10 hereof,
except that “C” shall equal the greater of (i) the VWAP for the Common Stock on the last Trading
Day of the reduced Pricing Period or (ii) the Optional Amount Threshold Price.



     The payment for, against simultaneous delivery of, Shares to be purchased and sold in
accordance with this Section 2.8 shall be settled on the second Trading Day next following the
Trading Day on which the Investor receives a Reduction Notice.



     Section 2.9 Optional Amount. With respect to any Pricing Period, the Company may in its sole
discretion grant to the Investor the right to exercise, from time to time during the Pricing Period
(but not more than once on any Trading Day), all or any portion of an Optional Amount. The maximum
Optional Amount Dollar Amount and the Optional Amount Threshold Price shall be set forth in the
Fixed Request Notice. If an ex-dividend date is established by the Trading Market in respect of
the Common Stock on or between the first Trading Day of the applicable Pricing Period and the
applicable Settlement Date, the applicable exercise price in respect of the Optional Amount shall
be reduced by the per share dividend amount. Each daily Optional Amount exercise shall be
aggregated during the Pricing Period and settled on the next Settlement Date. The Optional Amount
Threshold Price designated by the Company in its Fixed Request Notice shall apply to each Optional
Amount during the applicable Pricing Period.



     Section 2.10 Calculation of Optional Amount Shares. The number of shares of Common Stock to be issued
in connection with the exercise of an Optional Amount shall be the quotient determined pursuant to
the following equation (rounded to the nearest whole Share):




	O	=	A/(B x C), where:
	 
	O	=	the number of shares of Common Stock to be issued in connection with such Optional Amount
exercise,
	 
	A	=	the Optional Amount Dollar Amount with respect to which the Investor has delivered an
Optional Amount Notice,




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	B	=	the applicable percentage determined in accordance with the price and shares amount
parameters set forth in Section 2.2 (with the Optional Amount Threshold Price serving as the
Threshold Price for such purposes), and
	 
	C	=	the greater of (i) the VWAP for the Common Stock on the day the Investor delivers the
Optional Amount Notice or (ii) the Optional Amount Threshold Price.





     Section 2.11 Exercise of Optional Amount. If granted by the Company to the Investor with respect to a
Pricing Period, all or any portion of the Optional Amount may be exercised by the Investor on any
Trading Day during the Pricing Period, subject to the limitations set forth in Section 2.9. As a
condition to each exercise of an Optional Amount pursuant to this Section 2.11, the Investor shall
issue an Optional Amount Notice to the Company no later than 8:00 p.m. (New York time) on the day
of such Optional Amount exercise. If the Investor does not exercise an Optional Amount in full by
8:00 p.m. (New York time) on the last Trading Day of the applicable Pricing Period, such
unexercised portion of the Investor’s Optional Amount with respect to that Pricing Period
automatically shall lapse and terminate.



     Section 2.12 Aggregate Limit. Notwithstanding anything to the contrary contained in this Agreement, in
no event may the Company issue a Fixed Request Notice or grant an Optional Amount to the extent
that the sale of Shares pursuant thereto and pursuant to all prior Fixed Request Notices and
Optional Amounts issued hereunder, and as liquidated damages pursuant to Section 9.1(ii), would
cause the Company to sell or the Investor to purchase Shares which in the aggregate are in excess
of the Aggregate Limit. If the Company issues a Fixed Request Notice or Optional Amount that
otherwise would permit the Investor to purchase shares of Common Stock which would cause the
aggregate purchases by Investor hereunder to exceed the Aggregate Limit, such Fixed Request Notice
or Optional Amount shall be void ab initio to the extent of the amount by which the dollar value of
shares or number of shares, as the case may be, of Common Stock otherwise issuable pursuant to such
Fixed Request Notice or Optional Amount together with the dollar value of shares or number of
shares, as the case may be, of all other Common Stock purchased by the Investor pursuant hereto
would exceed the Aggregate Limit. The Company hereby represents, warrants and covenants that
neither it nor any of its Subsidiaries (i) has effected any transaction or series of transactions,
(ii) is a party to any pending transaction or series of transactions or (iii) shall enter into any
contract, agreement, agreement-in-principle, arrangement or understanding with respect to, or shall
effect, any Other Financing which, in any of such cases, may be integrated with the transactions
contemplated by this Agreement for purposes of determining whether approval of the Company’s
stockholders is required under any bylaw, listed securities maintenance standards or other rules of
the Trading Market; provided, however, that the Company shall be permitted to take
any action referred to in clause (iii) above if the Company has timely provided the Investor with
an Integration Notice as provided in Section 5.6(ii) hereof.



     At the Company’s sole discretion, and effective automatically upon receipt by the Investor of
notice thereof from the Company, this Agreement may be amended by the Company from time to time to
reduce the Aggregate Limit by a specified dollar amount of Common Stock which shall be no greater
than is required to enable the Company to utilize the Registration Statement to consummate an
offering of Common Stock or other securities during the Investment Period); provided,
however, that any such amendment of this Agreement (and any



7









 




such purported amendment) shall be void and of no force and effect if the effect thereof would
restrict, materially delay, conflict with or impair the ability or right of the Company to perform
its obligations under this Agreement, including, without limitation, the obligation of the Company
to deliver Shares to the Investor in respect of a Fixed Request or Optional Amount on the
applicable Settlement Date. In the event the Company shall have elected to reduce the Aggregate
Limit as provided in the immediately preceding sentence, at the Company’s sole discretion, and
effective automatically upon receipt by the Investor of notice thereof from the Company, the
Company may subsequently amend this Agreement to increase the Aggregate Limit; provided,
however, that in no event shall the Aggregate Limit thereby be increased to an amount
greater than the amount obtained by subtracting (x) the aggregate of all Fixed Request Amounts and
Optional Amount Dollar Amounts (including any amounts paid as liquidated damages pursuant to
Section 9.1(ii) hereunder) covered by all Fixed Requests and Optional Amounts theretofore issued or
granted by the Company in respect of which a settlement has occurred pursuant to Section 2.7 from
(y) $130,000,000, subject in all cases to the Trading Market Limit.




ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR




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



     Section 3.1 Organization and Standing of the Investor. The Investor is an international business
company duly organized, validly existing and in good standing under the laws of the British Virgin
Islands.



     Section 3.2 Authorization and Power. The Investor has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement and to purchase the Shares in
accordance with the terms hereof. The execution, delivery and performance of this Agreement by the
Investor and the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate action, and no further consent or authorization of the
Investor, its Board of Directors or stockholders is required. This Agreement has been duly
executed and delivered by the Investor. This Agreement constitutes a valid and binding obligation
of the Investor enforceable against it in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general application.



     Section 3.3 No Conflicts. The execution, delivery and performance by the Investor of this Agreement
and the consummation by the Investor of the transactions contemplated herein do not and shall not
(i) result in a violation of such Investor’s charter documents, bylaws or other applicable
organizational instruments, (ii) conflict with, constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give rise to any rights of
termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the
Investor is a party or is bound, (iii) create or impose any lien, charge or encumbrance on any
property of the Investor under any agreement or any commitment to which the Investor is party



8









 




or under which the Investor is bound or under which any of its properties or assets are bound, or
(iv) result in a violation of any federal, state, local or foreign statute, rule, or regulation, or
any order, judgment or decree of any court or governmental agency applicable to the Investor or by
which any of its properties or assets are bound or affected, except, in the case of clauses (ii),
(iii) and (iv), for such conflicts, defaults, terminations, amendments, acceleration, cancellations
and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with
the ability of the Investor to enter into and perform its obligations under this Agreement in any
material respect. The Investor is not required under federal, state, local or foreign law, rule or
regulation to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental or regulatory authority or agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or to purchase the Shares in
accordance with the terms hereof.




     Section 3.4 Information. The Investor and its advisors have been furnished with all materials relating
to the business, financial condition, management and operations of the Company and materials
relating to the offer and sale of the Shares which have been requested by the Investor. The
Investor and its advisors have been afforded the opportunity to ask questions of representatives of
the Company. The Investor has sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its acquisition of the Shares.
The Investor understands that it (and not the Company) shall be responsible for its own tax
liabilities that may arise as a result of this investment or the transactions contemplated by this
Agreement. The Investor is knowledgeable, sophisticated and experienced in making, and is
qualified to make decisions with respect to, investments in shares presenting an investment
decision like that involved in the purchase of the Shares, including investments in securities
issued by the Company and investments in comparable companies.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY




     Except as set forth in the Commission Documents, the Company hereby makes the following
representations and warranties to the Investor:



     Section 4.1 Organization, Good Standing and Power. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its properties and assets and to conduct
its business as it is now being conducted. The Company and each Subsidiary is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction in which the
nature of the business conducted or property owned by it makes such qualification necessary, except
for any jurisdiction in which the failure to be so qualified would not have a Material Adverse
Effect.



     Section 4.2 Authorization, Enforcement. The Company has the requisite corporate power and authority to
enter into and perform this Agreement and to issue and sell the Shares in accordance with the terms
hereof. Except for approvals of the Company’s Board of Directors or a committee thereof as may be
required in connection with any issuance and sale of Shares to the Investor hereunder (which
approvals shall be obtained prior to the delivery of any Fixed Request Notice), the execution,
delivery and performance by the Company of this Agreement and the



9









 




consummation by it of the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action and no further consent or authorization of the Company or its Board
of Directors or stockholders is required. This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies
or by other equitable principles of general application.




     Section 4.3 Capitalization. The authorized capital stock of the Company and the shares thereof issued
and outstanding are as set forth in the Commission Documents as of the dates reflected therein.
All of the outstanding shares of Common Stock have been duly authorized and validly issued, and are
fully paid and nonassessable, other than shares of restricted stock, which will be fully paid and
nonassessable when such shares have become vested. Except as set forth in the Commission
Documents, as of the Effective Date, no shares of Common Stock were entitled to preemptive rights
or registration rights and there were no outstanding options, restricted stock, warrants, scrip,
rights to subscribe to, call or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, any shares of capital stock of the Company (other
than for subsequent issuances, if any, pursuant to employee benefit plans described in the
Commission Documents). Except as set forth in the Commission Documents, there were no contracts,
commitments, understandings, or arrangements by which the Company is or may become bound to issue
additional shares of the capital stock of the Company or options, restricted stock, securities or
rights convertible into or exchangeable for any shares of capital stock of the Company. Except for
customary transfer restrictions contained in agreements entered into by the Company to sell
restricted securities or as set forth in the Commission Documents, as of the Effective Date, the
Company was not a party to, and it had no knowledge of, any agreement restricting the voting or
transfer of any shares of the capital stock of the Company. Except as set forth in the Commission
Documents, the offer and sale of all capital stock, convertible or exchangeable securities, rights,
warrants or options of the Company issued prior to the Effective Date complied with all applicable
federal and state securities laws, and no stockholder has any right of rescission or damages or any
“put” or similar right with respect thereto which would have a Material Adverse Effect. The
Company has furnished or made available to the Investor via the Commission’s Electronic Data
Gathering, Analysis and Retrieval System (“EDGAR”) true and correct copies of the Company’s
Certificate of Incorporation as in effect on the Effective Date (the “Charter”), and the
Company’s Bylaws as in effect on the Effective Date (the “Bylaws”), and true and correct
copies (redacted as appropriate) of all executed resolutions of the Company’s Board of Directors
(and committees thereof) relating to the capital stock of the Company (and transactions in respect
thereof) since December 31, 2005 (except with respect to issuances of shares of capital stock of
the Company to directors or employees of the Company as fees or compensation that were duly
approved by the Company’s Board of Directors or a committee thereof).



     Section 4.4 Issuance of Shares. The Shares to be issued under this Agreement have been or will be duly
authorized by all necessary corporate action and, when paid for or issued in accordance with the
terms hereof, the Shares shall be validly issued and outstanding, fully paid



10









 




and nonassessable, and, when the Shares have been issued to the Investor, the Investor shall be
entitled to all rights accorded to a holder and beneficial owner of Common Stock.




     Section 4.5 No Conflicts. The execution, delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions contemplated herein do not and shall not (i)
result in a violation of any provision of the Company’s Charter or Bylaws, (ii) conflict with,
constitute a default (or an event which, with notice or lapse of time or both, would become a
default) under, or give rise to any rights of termination, amendment, acceleration or cancellation
of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company or any of its Significant Subsidiaries is
a party or is bound (including, without limitation, any listing agreement with the Trading Market),
(iii) create or impose a lien, charge or encumbrance on any property of the Company or any of its
Significant Subsidiaries under any agreement or any commitment to which the Company or any of its
Significant Subsidiaries is a party or under which the Company or any of its Significant
Subsidiaries is bound or under which any of their respective properties or assets are bound, or
(iv) result in a violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries are bound or affected, except, in the
case of clauses (ii), (iii) and (iv), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the aggregate, have a
Material Adverse Effect. The Company is not required under federal, state, local or foreign law,
rule or regulation to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement, or to issue and sell the Shares to the Investor in
accordance with the terms hereof (other than any filings which may be required to be made by the
Company with the Commission or the Trading Market subsequent to the Effective Date, including but
not limited to a Prospectus Supplement under Sections 1.4 and 5.9 of this Agreement, and any
registration statement, prospectus or prospectus supplement which has been or may be filed pursuant
to this Agreement).



     Section 4.6 Commission Documents, Financial Statements. (a) The Common Stock is registered pursuant
to Section 12(b) or 12(g) of the Exchange Act and, except as disclosed in the Commission Documents,
as of the Effective Date the Company had timely filed (giving effect to permissible extensions in
accordance with Rule 12b-25 under the Exchange Act) all Commission Documents required to be filed
as of such date. The Company has delivered or made available to the Investor via EDGAR or
otherwise true and complete copies of the Commission Documents filed with the Commission prior to
the Effective Date (including, without limitation, the 2006 Form 10-K) and has delivered or made
available to the Investor via EDGAR or otherwise true and complete copies of all of the Commission
Documents heretofore incorporated by reference in the Registration Statement and the Prospectus.
The Company has not provided to the Investor any information which, according to applicable law,
rule or regulation, should have been disclosed publicly by the Company but which has not been so
disclosed, other than with respect to the transactions contemplated by this Agreement. As of its
filing date, each Commission Document filed with the Commission and incorporated by reference in
the Registration Statement and the Prospectus (including, without limitation, the 2006 Form 10-K)
complied in all material respects with the requirements of the Securities Act or the Exchange Act,
as applicable, and other federal, state and local laws, rules and regulations



11









 




applicable to it, and, as of its filing date, such Commission Document did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading. Each Commission Document to be filed with the Commission after the
Effective Date and incorporated by reference in the Registration Statement, the Prospectus and any
Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9 hereof during the
Investment Period (including, without limitation, the Current Report), when such document becomes
effective or is filed with the Commission, as the case may be, shall comply in all material
respects with the requirements of the Securities Act or the Exchange Act, as applicable, and other
federal, state and local laws, rules and regulations applicable to it, and shall not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which
they were made, not misleading.




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




          (c) The Company has timely filed with the Commission and made available to the Investor via
EDGAR or otherwise all certifications and statements required by (x) Rule 13a-14 or Rule 15d-14
under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002
(“SOXA”)) with respect to all relevant Commission Documents. The Company is in compliance
in all material respects with the provisions of SOXA applicable to it as of the date hereof. The
Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under
the Exchange Act; such controls and procedures are effective to ensure that all material
information concerning the Company and its Subsidiaries is made known on a timely basis to the
individuals responsible for the timely and accurate preparation of the Company’s Commission filings
and other public disclosure documents. As used in this Section 4.6(c), the term “file” shall be
broadly construed to include any manner in which a document or information is furnished, supplied
or otherwise made available to the Commission.




          (d) Ernst & Young LLP, who have expressed their opinions on the audited financial statements
and related schedules included or incorporated by reference in the Registration Statement and the
Base Prospectus are, with respect to the Company, independent public accountants as required by the
Securities Act and is an independent registered public accounting firm within the meaning of SOXA
as required by the rules of the Public Company Accounting Oversight Board.




12









 








     Section 4.7 Subsidiaries. The 2006 Form 10-K sets forth each Subsidiary of the Company as of the
Effective Date, showing its jurisdiction of incorporation or organization and the percentage of the
Company’s ownership of the outstanding capital stock or other ownership interests of such
Subsidiary, and the Company does not have any other Subsidiaries as of the Effective Date.



     Section 4.8 No Material Adverse Effect. Since December 31, 2006, the Company has not experienced or
suffered any Material Adverse Effect, and there exists no current state of facts, condition or
event which would have a Material Adverse Effect, except (i) as disclosed in any Commission
Documents filed since December 31, 2006 or (ii) as a result of continued losses from operations.



     Section 4.9 Indebtedness. The Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended
June 30, 2007 sets forth, as of June 30, 2007, all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments
through such date. For the purposes of this Agreement, “Indebtedness” shall mean (a) any
liabilities for borrowed money or amounts owed in excess of $10,000,000 (other than trade accounts
payable incurred in the ordinary course of business), (b) all guaranties, endorsements, indemnities
and other contingent obligations in respect of Indebtedness of others in excess of $10,000,000,
whether or not the same are or should be reflected in the Company’s balance sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the present value of any lease
payments in excess of $10,000,000 due under leases required to be capitalized in accordance with
GAAP. There is no existing or continuing default or event of default in respect of any
Indebtedness of the Company or any of its Subsidiaries.



     Section 4.10 Title To Assets. Each of the Company and its Subsidiaries has good and marketable title to
all of their respective real and personal property reflected in the Commission Documents, free of
mortgages, pledges, charges, liens, security interests or other encumbrances, except for those
indicated in the Commission Documents or those that would not have a Material Adverse Effect. All
real property leases of the Company are valid and subsisting and in full force and effect in all
material respects.



     Section 4.11 Actions Pending. There is no action, suit, claim, investigation or proceeding pending, or
to the knowledge of the Company threatened, against the Company or any Subsidiary which questions
the validity of this Agreement or the transactions contemplated hereby or any action taken or to be
taken pursuant hereto or thereto. Except as set forth in the Commission Documents, there is no
action, suit, claim, investigation or proceeding pending, or to the knowledge of the Company
threatened, against or involving the Company, any Subsidiary or any of their respective properties
or assets, or involving any officers or directors of the Company or any of its Subsidiaries,
including, without limitation, any securities class action lawsuit or stockholder derivative
lawsuit, in each case which, if determined adversely to the Company, its Subsidiary or any officer
or director of the Company or its Subsidiaries, would have a Material Adverse Effect.




13











 





     Section 4.12 Compliance With Law. The business of the Company and the Subsidiaries has been and is presently being conducted in
compliance with all applicable federal, state, local and foreign governmental laws, rules,
regulations and ordinances, except as set forth in the Commission Documents and except for such
non-compliance which, individually or in the aggregate, would not have a Material Adverse Effect.



     Section 4.13 Certain Fees. Except for the placement fee payable by the Company to Reedland Capital Partners, an
Institutional Division of Financial West Group, Member NASD/SIPC (“Reedland”), which shall
be set forth in a separate placement agency agreement between the Company and Reedland (a true and
complete fully executed copy of which has heretofore been provided to the Investor), no brokers,
finders or financial advisory fees or commissions shall be payable by the Company or any Subsidiary
(or any of their respective affiliates) with respect to the transactions contemplated by this
Agreement.



     Section 4.14 Operation of Business. (a) The Company or one or more of its Subsidiaries possesses such permits, licenses, approvals,
consents and other authorizations (including licenses, accreditation and other similar
documentation or approvals of any local health departments) (collectively, “Governmental
Licenses”) issued by the appropriate federal, state, local or foreign regulatory agencies or
bodies, including, without limitation, the United States Food and Drug Administration
(“FDA”), necessary to conduct the business now operated by it, except where the failure to
possess such Governmental Licenses, individually or in the aggregate, would not have a Material
Adverse Effect. The Company and its Subsidiaries are in compliance with the terms and conditions
of all such Governmental Licenses and all applicable FDA rules and regulations, guidelines and
policies, and all applicable rules and regulations, guidelines and policies of any governmental
authority exercising authority comparable to that of the FDA (including any non-governmental
authority whose approval or authorization is required under foreign law comparable to that
administered by the FDA), except where the failure to so comply, individually or in the aggregate,
would not have a Material Adverse Effect. All of the Governmental Licenses are valid and in full
force and effect, except where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect, individually or in the aggregate, would not
have a Material Adverse Effect. As to each product that is subject to FDA regulation or similar
legal provisions in any foreign jurisdiction that is developed, manufactured, tested, packaged,
labeled, marketed, sold, distributed and/or commercialized by the Company or any of its
Subsidiaries, each such product is being developed, manufactured, tested, packaged, labeled,
marketed, sold, distributed and/or commercialized in compliance with all applicable requirements of
the FDA (and any non-governmental authority whose approval or authorization is required under
foreign law comparable to that administered by the FDA), including, but not limited to, those
relating to investigational use, investigational device exemption, premarket notification,
premarket approval, good clinical practices, good manufacturing practices, record keeping, filing
of reports, and patient privacy and medical record security, except where such non-compliance,
individually or in the aggregate, would not have a Material Adverse Effect. As to each product or
product candidate of the Company or any of its Subsidiaries subject to FDA regulation or similar
legal provision in any foreign jurisdiction, all manufacturing facilities of the Company and its
Subsidiaries are operated in compliance with the FDA’s Quality System Regulation requirements at 21
C.F.R. Part 820, as applicable, except where such non-compliance, individually or in the aggregate,
would not have a Material Adverse Effect. Except as set forth in the Commission



14









 







Documents or the Registration Statement, neither the Company nor any of its Subsidiaries has
received any notice of proceedings relating to the revocation or modification of any such
Governmental Licenses or relating to a potential violation of, failure to comply with, or request
to produce additional information under, any FDA rules and regulations, guidelines or policies
which, if the subject of any unfavorable decision, ruling or finding, individually or in the
aggregate, would have a Material Adverse Effect. Except as set forth in the Commission Documents
or the Registration Statement, neither the Company nor any of its Subsidiaries has received any
correspondence, notice or request from the FDA, including, without limitation, notice that any one
or more products or product candidates of the Company or any of its Subsidiaries failed to receive
approval from the FDA for use for any one or more indications, and neither the Company nor any of
its Subsidiaries knows of any basis therefor. This Section 4.14 does not relate to environmental
matters, such items being the subject of Section 4.15.



          (b) The Company or one or more of its Subsidiaries owns or possesses adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names, trade dress, logos, copyrights and other intellectual property,
including, without limitation, all of the intellectual property described in the Commission
Documents as being owned or licensed by the Company (collectively, “Intellectual
Property”), necessary to carry on the business now operated by it. Except as set forth in the
Commission Documents, there are no actions, suits or judicial proceedings pending, or to the
Company’s knowledge threatened, relating to patents or proprietary information to which the Company
or any of its Subsidiaries is a party or of which any property of the Company or any of its
Subsidiaries is subject, and neither the Company nor any of its Subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which could render any
Intellectual Property invalid or inadequate to protect the interest of the Company and its
Subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would
have a Material Adverse Effect.



          (c) All clinical trials conducted by, or on behalf of, the Company or any of its Subsidiaries,
or in which the Company or any of its Subsidiaries has participated that are described in the
Registration Statement or the Commission Documents, or the results of which are referred to in the
Registration Statement or the Commission Documents, if any, are the only clinical trials currently
being conducted by or on behalf of the Company and its Subsidiaries. All such clinical trials
conducted, supervised or monitored by, or on behalf of, the Company or any of its Subsidiaries have
been conducted in compliance with all applicable federal, state, local and foreign laws, and the
regulations and requirements of any applicable governmental entity, including, but not limited to,
FDA good clinical practice and good laboratory practice requirements. Except as set forth in the
Registration Statement or the Commission Documents, since January 1, 2003, neither the Company nor
any of its Subsidiaries has received any notices or correspondence from the FDA or any other
governmental agency requiring the termination, suspension, delay or modification of any clinical
trials conducted by, or on behalf of, the Company or any of its Subsidiaries or in which the
Company or any of its Subsidiaries has participated that are described in the Registration
Statement or the Commission Documents, if any, or the results of which are referred to in the
Registration Statement or the Commission



15









 







Documents. All clinical trials previously conducted by, or on behalf of, the Company or any
of its Subsidiaries while conducted by or on behalf of the Company or any of its Subsidiaries, were
conducted in compliance with all applicable federal, state, local and foreign laws, and the
regulations and requirements of any applicable governmental entity, including, but not limited to,
FDA good clinical practice and good laboratory practice requirements.



     Section 4.15 Environmental Compliance. Except as disclosed in the Commission Documents, the Company and each of its Subsidiaries have
obtained all material approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations of all governmental authorities, or from any other person,
that are required under any Environmental Laws, except for any approvals, authorization,
certificates, consents, licenses, orders and permits or other similar authorizations the failure of
which to obtain does not or would not have a Material Adverse Effect. “Environmental Laws”
shall mean all applicable laws relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing, permitting, controlling,
investigating or remediating emissions, discharges, releases or threatened releases of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of hazardous substances, chemical substances, pollutants, contaminants or toxic
substances, material or wastes, whether solid, liquid or gaseous in nature. Except for such
instances as would not, individually or in the aggregate, have a Material Adverse Effect, to the
best of the Company’s knowledge, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or could reasonably be expected to violate any Environmental Law after the Effective
Date or that could reasonably be expected to give rise to any environmental liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation (i)
under any Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground storage tanks),
disposal, transport or handling, or the emission, discharge, release or threatened release of any
hazardous substance.



     Section 4.16 Material Agreements. Except as set forth in the Commission Documents, neither the Company nor any Subsidiary of the
Company is a party to any written contract, instrument, agreement commitment, obligation, plan or
arrangement, a copy of which would be required to be filed with the Commission as an exhibit to the
Commission Documents (collectively, “Material Agreements”). The Company and each of its
Subsidiaries have performed in all material respects all the obligations required to be performed
by them under the Material Agreements, have received no notice of default or an event of default by
the Company or any of its Subsidiaries thereunder and are not aware of any basis for the assertion
thereof, and neither the Company or any of its Subsidiaries nor, to the knowledge of the Company,
any other contracting party thereto are in default under any Material Agreement now in effect, the
result of which would have a Material Adverse Effect. Each of the Material Agreements is in full
force and effect, and constitutes a legal, valid and binding obligation enforceable in accordance
with its terms against the Company and/or any of its Subsidiaries and, to the knowledge of the
Company, each other contracting party thereto, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship,



16









 







receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.



     Section 4.17 Transactions With Affiliates. Except as set forth in the Commission Documents, there are no loans, leases, agreements,
contracts, royalty agreements, management contracts, service arrangements or other continuing
transactions exceeding $120,000 between (a) the Company or any Subsidiary, on the one hand, and (b)
any person or entity who would be covered by Item 404(a) of Regulation S-K, on the other hand.
Except as disclosed in the Commission Documents, there are no outstanding amounts payable to or
receivable from, or advances by the Company or any of its Subsidiaries to, and neither the Company
nor any of its Subsidiaries is otherwise a creditor of or debtor to, any beneficial owner of more
than 5% of the outstanding shares of Common Stock, or any director, employee or affiliate of the
Company or any of its Subsidiaries, other than (i) reimbursement for reasonable expenses incurred
on behalf of the Company or any of its Subsidiaries or (ii) as part of the normal and customary
terms of such persons’ employment or service as a director with the Company or any of its
Subsidiaries.



     Section 4.18 Securities Act; NASD Conduct Rules. The Company has complied with all applicable federal and state securities laws in connection
with the offer, issuance and sale of the Shares hereunder.



          (i) The Company has prepared and filed with the Commission in accordance with the provisions
of the Securities Act the Registration Statement, including a base prospectus relating to the
Shares. The Registration Statement was declared effective by order of the Commission on May 25,
2007. As of the date hereof, no stop order suspending the effectiveness of the Registration
Statement has been issued by the Commission or is continuing in effect under the Securities Act and
no proceedings therefor are pending before or, to the Company’s knowledge, threatened by the
Commission. No order preventing or suspending the use of the Prospectus or any Permitted Free
Writing Prospectus has been issued by the Commission.



          (ii) The Company meets the requirements for the use of Form S-3 under the Securities Act. The
Commission has not notified the Company of any objection to the use of the form of the Registration
Statement. The Registration Statement complied in all material respects on the date on which it
was declared effective by the Commission and on the Effective Date of this Agreement, and will
comply in all material respects on each applicable Fixed Request Exercise Date and on each
applicable Settlement Date, with the requirements of the Securities Act and the Registration
Statement (including the documents incorporated by reference therein) did not on the date it was
declared effective by the Commission and on the Effective Date of this Agreement and shall not on
each applicable Fixed Request Exercise Date and on each applicable Settlement Date contain an
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided that this
representation and warranty does not apply to statements in or omissions from the Registration
Statement made in reliance upon and in conformity with information relating to the Investor
furnished to the Company in writing by or on behalf of the Investor expressly for use therein. The
Registration Statement, as of the Effective Date, meets the requirements set forth in Rule
415(a)(1)(x) under the Securities Act. The Base Prospectus complied in all material respects on
its date and on the Effective Date, and will comply in all material respects on each applicable
Fixed Request Exercise Date and, as supplemented by the Prospectus



17









 







Supplement, on each applicable Settlement Date, with the requirements of the Securities Act
and did not on its date and on the Effective Date and shall not on each applicable Fixed Request
Exercise Date and, as supplemented by the Prospectus Supplement, on each applicable Settlement Date
contain an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided that this representation and warranty does
not apply to statements in or omissions from the Base Prospectus or Prospectus Supplement made in
reliance upon and in conformity with information relating to the Investor furnished to the Company
in writing by or on behalf of the Investor expressly for use therein.



          (iii) In accordance with Rule 2710(b)(7)(C)(i) of the Conduct Rules of the National
Association of Securities Dealers, Inc., the offering of the Shares pursuant to this Agreement has
been registered with the Commission on Form S-3 under the Securities Act pursuant to the standards
for Form S-3 in effect prior to October 21, 1992, and the Shares are being offered pursuant to Rule
415 promulgated under the Securities Act.



          (iv) Each Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9 hereof,
on its date and on the applicable Settlement Date, shall comply in all material respects with the
provisions of the Securities Act and shall not on its date and on the applicable Settlement Date
contain an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the circumstances under
which they are made, not misleading, except that this representation and warranty does not apply to
statements in or omissions from any Prospectus Supplement made in reliance upon and in conformity
with information relating to the Investor furnished to the Company in writing by or on behalf of
the Investor expressly for use therein.



          (v) At the earliest time after the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within the meaning of Rule 164(h)(2) under the
Securities Act) relating to the Shares, the Company was not and is not an Ineligible Issuer (as
defined in Rule 405 under the Securities Act), without taking account of any determination by the
Commission pursuant to Rule 405 that it is not necessary that the Company be considered an
Ineligible Issuer. Each Permitted Free Writing Prospectus (a) shall conform in all material
respects to the requirements of the Securities Act on the date of its first use, (b) when
considered together with the Prospectus on each applicable Fixed Request Exercise Date and on each
applicable Settlement Date, shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they are made, not misleading, and (c) shall not include
any information that conflicts with the information contained in the Registration Statement,
including any document incorporated by reference therein and any Prospectus Supplement deemed to be
a part thereof that has not been superseded or modified. The immediately preceding sentence does
not apply to statements in or omissions from any Permitted Free Writing Prospectus made in reliance
upon and in conformity with information relating to the Investor furnished to the Company in
writing by or on behalf of the Investor expressly for use therein.



18









 





          (vi) Prior to the Effective Date, the Company has not distributed any offering material in
connection with the offering and sale of the Shares. From and after the Effective Date and prior
to the completion of the distribution of the Shares, the Company shall not distribute any offering
material in connection with the offering and sale of the Shares, other than the Registration
Statement, the Base Prospectus as supplemented by any Prospectus Supplement or a Permitted Free
Writing Prospectus.



     Section 4.19 Employees. As of the Effective Date, neither the Company nor any Subsidiary of the Company has any
collective bargaining arrangements or agreements covering any of its employees, except as set forth
in the Commission Documents. As of the Effective Date, except as disclosed in the Registration
Statement or the Commission Documents, no officer, consultant or key employee of the Company or any
Subsidiary whose termination, either individually or in the aggregate, would reasonably be expected
to have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any
present intention of terminating his or her employment or engagement with the Company or any
Subsidiary.



     Section 4.20 Use of Proceeds. The proceeds from the sale of the Shares shall be used by the Company and its Subsidiaries as
set forth in the Base Prospectus and any Prospectus Supplement filed pursuant to Sections 1.4 and
5.9.



     Section 4.21 Public Utility Holding Company Act and Investment Company Act Status. The Company is not a “holding company” or a “public utility company” as such terms are defined
in the Public Utility Holding Company Act of 1935, as amended. The Company is not, and as a result
of the consummation of the transactions contemplated by this Agreement and the application of the
proceeds from the sale of the Shares as set forth in the Base Prospectus and any Prospectus
Supplement shall not be, an “investment company” or a company “controlled” by an “investment
company,” within the meaning of the Investment Company Act of 1940, as amended.



     Section 4.22 ERISA. No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any
Plan by the Company or any of its Subsidiaries which has had or would have a Material Adverse
Effect. No “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the
Code) or “accumulated funding deficiency” (as defined in Section 203 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA has occurred with respect to any Plan which has had or would
have a Material Adverse Effect, and the execution and delivery of this Agreement and the issuance
and sale of the Shares hereunder shall not result in any of the foregoing events. Each Plan is in
compliance in all material respects with applicable law, including ERISA and the Code; the Company
has not incurred and does not expect to incur liability under Title IV of ERISA with respect to the
termination of, or withdrawal from, any Plan; and each Plan for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or failure to act, which would cause
the loss of such qualifications. As used in this Section 4.22, the term “Plan” shall mean
an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by the Company or any
Subsidiary or by any trade or business, whether or not incorporated, which, together with the



19









 







Company or any Subsidiary, is under common control, as described in Section 414(b) or (c) of the
Code.



     Section 4.23 Taxes. The Company (i) has filed all necessary federal, state and foreign income and franchise tax
returns or has duly requested extensions thereof, except for those the failure of which to file
would not have a Material Adverse Effect, (ii) has paid all federal, state, local and foreign taxes
due and payable for which it is liable, except to the extent that any such taxes are being
contested in good faith and by appropriate proceedings, except for such taxes the failure of which
to pay would not have a Material Adverse Effect, and (iii) does not have any tax deficiency or
claims outstanding or assessed or, to the best of the Company’s knowledge, proposed against it
which would have a Material Adverse Effect.



     Section 4.24 Insurance. The Company carries, or is covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of its and its Subsidiaries’ businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in similar industries.



     Section 4.25 Acknowledgement Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor is acting solely in the capacity of an
arm’s length purchaser with respect to this Agreement and the transactions contemplated hereunder.
The Company further acknowledges that the Investor is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereunder, and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement and the transactions contemplated
hereunder is merely incidental to the Investor’s purchase of the Shares.



ARTICLE V

COVENANTS




     The Company covenants with the Investor, and the Investor covenants with the Company, as
follows, which covenants of one party are for the benefit of the other party, during the Investment
Period:



     Section 5.1 Securities Compliance. The Company shall notify the Commission and the Trading Market, as applicable, in accordance
with their respective rules and regulations, of the transactions contemplated by this Agreement,
and shall take all necessary action, undertake all proceedings and obtain all registrations,
permits, consents and approvals for the legal and valid issuance of the Shares to the Investor in
accordance with the terms of this Agreement.



     Section 5.2 Registration and Listing. The Company shall take all action necessary to cause the Common Stock to continue to be
registered as a class of securities under Sections 12(b) or 12(g) of the Exchange Act, shall comply
with its reporting and filing obligations under the Exchange Act, and shall not take any action or
file any document (whether or not permitted by the Securities Act) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. The Company shall take all action necessary to
continue the listing and trading of its Common Stock and the listing of the Shares purchased by
Investor hereunder on the Trading



20









 







Market, and shall comply with the Company’s reporting, filing and other obligations under the
bylaws, listed securities maintenance standards and other rules of the Trading Market.



     Section 5.3 Compliance with Laws.



          (i) The Company shall comply, and cause each Subsidiary to comply, (a) with all laws, rules,
regulations and orders applicable to the business and operations of the Company and its
Subsidiaries except as would not have a Material Adverse Effect and (b) with all applicable
provisions of the Securities Act, the Exchange Act and the listing standards of the Trading Market.
Without limiting the generality of the foregoing, neither the Company nor any of its officers,
directors or affiliates has taken or will take, directly or indirectly, any action designed or
intended to stabilize or manipulate the price of any security of the Company, or which caused or
resulted in, or which would in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company.



          (ii) The Investor shall comply with all laws, rules, regulations and orders applicable to the
performance by it of its obligations under this Agreement and its investment in the Shares, except
as would not, individually or in the aggregate, prohibit or otherwise interfere with the ability of
the Investor to enter into and perform its obligations under this Agreement in any material
respect. Without limiting the foregoing, the Investor shall comply with all applicable provisions
of the Securities Act and the Exchange Act.



     Section 5.4 Keeping of Records and Books of Account; Foreign Corrupt Practices Act.



          (i) The Company shall keep and cause each Subsidiary to keep adequate records and books of
account, in which complete entries shall be made in accordance with GAAP consistently applied,
reflecting all financial transactions of the Company and its Subsidiaries, and in which, for each
fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes,
bad debts and other purposes in connection with its business shall be made. The Company shall
maintain a system of internal accounting controls that (a) pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (b) provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements of the Company in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and board of the Company; and (c) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition
of the Company’s assets that could have a material effect on the Company’s financial statements.



          (ii) Neither the Company, nor any of its Subsidiaries, nor to the knowledge of the Company,
any of their respective directors, officers, agents, employees or any other persons acting on their
behalf shall, in connection with the operation of the Company’s and its Subsidiaries’ respective
businesses, (a) use any corporate funds for unlawful contributions, payments, gifts or
entertainment or to make any unlawful expenditures relating to political activity to government
officials, candidates or members of political parties or organizations, (b) pay, accept or receive
any unlawful contributions, payments, expenditures or gifts, or (c) violate



21









 







or operate in noncompliance with any export restrictions, anti-boycott regulations, embargo
regulations or other applicable domestic or foreign laws and regulations.



          (iii) Subject to the requirements of Section 5.12 of this Agreement, from time to time from
and after the period beginning with the first Trading Day immediately preceding each Fixed Request
Exercise Date through and including the applicable Settlement Date, the Company shall make
available for inspection and review by the Investor, customary documentation allowing the Investor
and/or its appointed counsel or advisors to conduct due diligence.



     Section 5.5 Limitations on Holdings and Issuances. At no time during the term of this Agreement shall the Investor directly or indirectly own more
than 9.9% of the then issued and outstanding shares of Common Stock. The Company shall not be
obligated to issue and the Investor shall not be obligated to purchase any shares of Common Stock
which would result in the issuance under this Agreement to the Investor at any time of Shares
which, when aggregated with all other shares of Common Stock then owned beneficially by the
Investor, would result in the beneficial ownership by the Investor of more than 9.9% of the then
issued and outstanding shares of the Common Stock.



     Section 5.6 Other Agreements and Other Financings.



          (i) The Company shall not enter into, announce or recommend to its stockholders any agreement,
plan, arrangement or transaction in or of which the terms thereof would restrict, materially delay,
conflict with or impair the ability or right of the Company or any Subsidiary to perform its
obligations under this Agreement, including, without limitation, the obligation of the Company to
deliver Shares to the Investor in respect of a Fixed Request or Optional Amount on the applicable
Settlement Date.



          (ii) The Company shall notify the Investor, within 48 hours, if it enters into any agreement,
plan, arrangement or transaction with a third party, the principal purpose of which is to obtain
during a Pricing Period an Other Financing not constituting an Acceptable Financing (an “Other
Financing Notice”); provided, however, that the Company shall notify the
Investor immediately (an “Integration Notice”) if it enters into any agreement, plan,
arrangement or transaction with a third party, the principal purpose of which is to obtain at any
time during the Investment Period an Other Financing which may be integrated with the transactions
contemplated by this Agreement for purposes of determining whether approval of the Company’s
stockholders is required under any bylaw, listed securities maintenance standards or other rules of
the Trading Market and, if required under applicable law, including, without limitation, Regulation
FD promulgated by the Commission, or under the applicable rules and regulations of the Trading
Market, the Company shall simultaneously publicly disclose such information in accordance with
Regulation FD and the applicable rules and regulations of the Trading Market. For purposes of this
Section 5.6(ii), any press release issued by, or Commission Document filed by, the Company shall
constitute sufficient notice, provided that it is issued or filed, as the case may be, within the
time requirements set forth in the first sentence of this Section 5.6(ii) for an Other Financing
Notice or an Integration Notice, as applicable. During any Pricing Period in which the Company is
required to provide an Other Financing Notice pursuant to the first sentence of this Section
5.6(ii), the Investor shall (i) have the option to purchase the



22









 







Shares subject to the Fixed Request at (x) the price therefor in accordance with the terms of
this Agreement or (y) the third party’s per share purchase price in connection with the Other
Financing, net of such third party’s discounts, Warrant Value and fees, or (ii) the Investor may
elect to not purchase any Shares subject to the Fixed Request for that Pricing Period. An
“Other Financing” shall mean (x) the issuance of Common Stock for a purchase price less
than, or the issuance of securities convertible into or exchangeable for Common Stock at an
exercise or conversion price (as the case may be) less than, the then Current Market Price of the
Common Stock (in each case, after all fees, discounts, Warrant Value and commissions associated
with the transaction) (a “Below Market Offering”); (y) the implementation by the Company of
any mechanism in respect of any securities convertible into or exchangeable for Common Stock for
the reset of the purchase price of the Common Stock to below the then Current Market Price of the
Common Stock (including, without limitation, any antidilution or similar adjustment provisions in
respect of any Company securities, but specifically excluding customary adjustments for stock
splits, stock dividends, stock combinations and similar events); or (z) the issuance of options,
warrants or similar rights of subscription in each case not constituting an Acceptable Financing.
“Acceptable Financing” shall mean the issuance by the Company of: (1) shares of Common
Stock or securities convertible into or exchangeable for Common Stock other than in connection with
a Below Market Offering; (2) shares of Common Stock or securities convertible into or exchangeable
for Common Stock in connection with awards under the Company’s benefit and equity plans and
arrangements or shareholder rights plan and the issuance of shares of Common Stock upon the
conversion, exercise or exchange thereof; (3) shares of Common Stock issuable upon the conversion
or exchange of equity awards or convertible or exchangeable securities outstanding as of the
Effective Date; (4) shares of Common Stock or securities convertible into or exchangeable for
Common Stock or similar rights to subscribe for the purchase of shares of Common Stock in
connection with technology sharing, licensing, research and joint development, manufacturing and
supply or other similar strategic or collaborative agreements (or amendments thereto) with third
parties, and the issuance of shares of Common Stock upon the conversion, exercise or exchange
thereof; and (5) shares of Common Stock and/or warrants or similar rights to subscribe for the
purchase of shares of Common Stock issued in connection with equipment financings and/or real
property leases (or amendments thereto) and the issuance of shares of Common Stock upon the
exercise thereof.



     Section 5.7 Stop Orders. The Company shall advise the Investor immediately and shall confirm such advice in writing:
(i) of the Company’s receipt of notice of any request by the Commission for amendment of or a
supplement to the Registration Statement, the Prospectus, any Permitted Free Writing Prospectus or
for any additional information; (ii) of the Company’s receipt of notice of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration Statement or
prohibiting or suspending the use of the Prospectus or any Prospectus Supplement, or of the
suspension of qualification of the Shares for offering or sale in any jurisdiction, or the
initiation or contemplated initiation of any proceeding for such purpose; and (iii) of the Company
becoming aware of the happening of any event, which makes any statement of a material fact made in
the Registration Statement, the Prospectus or any Permitted Free Writing Prospectus untrue or which
requires the making of any additions to or changes to the statements then made in the Registration
Statement, the Prospectus or any Permitted Free Writing Prospectus in order to state a material
fact required by the Securities Act to be stated therein or necessary in order to make the
statements then made therein (in the case of the Prospectus, in light of the circumstances under
which they were made) not misleading, or of



23









 







the necessity to amend the Registration Statement or supplement the Prospectus or any
Permitted Free Writing Prospectus to comply with the Securities Act or any other law. If at any
time the Commission shall issue any stop order suspending the effectiveness of the Registration
Statement or prohibiting or suspending the use of the Prospectus or any Prospectus Supplement, the
Company shall use commercially reasonable efforts to obtain the withdrawal of such order at the
earliest possible time.



     Section 5.8 Amendments to the Registration Statement; Prospectus Supplements; Free Writing
Prospectuses.



          (i) Except as provided in this Agreement and other than periodic reports required to be filed
pursuant to the Exchange Act, the Company shall not file with the Commission any amendment to the
Registration Statement that relates to the Investor, the Agreement or the transactions contemplated
hereby or file with the Commission any Prospectus Supplement that relates to the Investor, this
Agreement or the transactions contemplated hereby with respect to which (a) the Investor shall not
previously have been advised, (b) the Company shall not have given due consideration to any
comments thereon received from the Investor or its counsel, or (c) the Investor shall reasonably
object after being so advised, unless it is necessary to amend the Registration Statement or make
any supplement to the Prospectus to comply with the Securities Act or any other applicable law or
regulation, in which case the Company shall immediately so inform the Investor, the Investor shall
be provided with a reasonable opportunity to review and comment upon any disclosure relating to the
Investor and the Company shall expeditiously furnish to the Investor an electronic copy thereof. In
addition, for so long as, in the reasonable opinion of counsel for the Investor, the Prospectus (or
in lieu thereof, the notice referred to in Rule 173(a) under the Securities Act) is required to be
delivered in connection with any purchase of Shares by the Investor, the Company shall not file any
Prospectus Supplement with respect to the Shares without delivering or making available a copy of
such Prospectus Supplement, together with the Base Prospectus, to the Investor promptly.



          (ii) The Company agrees that, unless it obtains the prior written consent of the Investor, it
has not made and will not make an offer relating to the Shares that would constitute an Issuer Free
Writing Prospectus or that would otherwise constitute a Free Writing Prospectus required to be
filed by the Company or the Investor with the Commission or retained by the Company or the Investor
under Rule 433 under the Securities Act. The Investor agrees that, unless it obtains the prior
written consent of the Company, it has not made and will not make an offer relating to the Shares
that would constitute a Free Writing Prospectus required to be filed by the Company with the
Commission or retained by the Company under Rule 433 under the Securities Act. Any such Issuer
Free Writing Prospectus or other Free Writing Prospectus consented to by the Investor or the
Company is referred to in this Agreement as a “Permitted Free Writing Prospectus.” The
Company agrees that (x) it has treated and will treat, as the case may be, each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus and (y) it has complied and will comply, as
the case may be, with the requirements of Rules 164 and 433 under the Securities Act applicable to
any Permitted Free Writing Prospectus, including in respect of timely filing with the Commission,
legending and record keeping.



     Section 5.9 Prospectus Delivery. The Company shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b) under
the Securities Act on the first Trading Day



24









 







immediately following the last Trading Day of each Pricing Period. The Company shall provide the
Investor a reasonable opportunity to comment on a draft of each such Prospectus Supplement and any
Issuer Free Writing Prospectus, shall give due consideration to all such comments and, subject to
the provisions of Section 5.8 hereof, shall deliver or make available to the Investor, without
charge, an electronic copy of each form of Prospectus Supplement, together with the Base
Prospectus, and any Permitted Free Writing Prospectus on each applicable Settlement Date. The
Company consents to the use of the Prospectus (and of any Prospectus Supplement thereto) in
accordance with the provisions of the Securities Act and with the securities or “blue sky” laws of
the jurisdictions in which the Shares may be sold by the Investor, in connection with the offering
and sale of the Shares and for such period of time thereafter as the Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities Act) is required by the
Securities Act to be delivered in connection with sales of the Shares. If during such period of
time any event shall occur that in the judgment of the Company and its counsel is required to be
set forth in the Registration Statement or the Prospectus or any Permitted Free Writing Prospectus
or should be set forth therein in order to make the statements made therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not misleading, or if it is
necessary to amend the Registration Statement or supplement or amend the Prospectus or any
Permitted Free Writing Prospectus to comply with the Securities Act or any other applicable law or
regulation, the Company shall forthwith prepare and, subject to Section 5.8 above, file with the
Commission an appropriate amendment to the Registration Statement or Prospectus Supplement to the
Prospectus (or supplement to the Permitted Free Writing Prospectus) and shall expeditiously furnish
or make available to the Investor an electronic copy thereof.



     Section 5.10 Selling Restrictions.



          (i) The Investor covenants that from and after the date hereof through and including the
90th day next following the termination of this Agreement (the “Restricted
Period”), neither the Investor nor any of its affiliates (within the meaning of the Exchange
Act) nor any entity managed or controlled by the Investor shall, directly or indirectly, sell any
securities of the Company, except the Shares that it owns or has the right to purchase as provided
in a Fixed Request Notice. During the Restricted Period, neither the Investor or any of its
affiliates nor any entity managed or controlled by the Investor shall sell any shares of Common
Stock of the Company it does not “own” or have the unconditional right to receive under the terms
of this Agreement (within the meaning of Rule 200 of Regulation SHO promulgated by the Commission
under the Exchange Act), including Shares in any account of the Investor or in any account directly
or indirectly managed or controlled by the Investor or any of its affiliates or any entity managed
or controlled by the Investor. Without limiting the generality of the foregoing, prior to and
during the Restricted Period, neither the Investor nor any of its affiliates nor any entity managed
or controlled by the Investor or any of its affiliates shall enter into a short position with
respect to shares of Common Stock of the Company, including in any account of the Investor’s or in
any account directly or indirectly managed or controlled by the Investor or any of its Affiliates
or any entity managed or controlled by the Investor, except that the Investor may sell Shares that
it is obligated to purchase under a pending Fixed Request Notice but has not yet taken possession
of so long as the Investor (or the Broker-Dealer, as applicable) covers any such sales with the
Shares purchased pursuant to such Fixed Request Notice; provided, however, that the
Investor (or the Broker-Dealer, as applicable) shall not be required to cover any such



25









 







sales with the Shares purchased pursuant to such Fixed Request Notice if (a) the Fixed Request
is terminated by mutual agreement of the Company and the Investor and, as a result of such
termination, no Shares are delivered to the Investor under this Agreement or (b) the Company
otherwise fails to deliver such Shares to the Investor on the applicable Settlement Date upon the
terms and subject to the provisions of this Agreement. Prior to and during the Restricted Period,
the Investor shall not grant any option to purchase or acquire any right to dispose or otherwise
dispose for value of any shares of Common Stock or any securities convertible into or exercisable
or exchangeable for, or warrants to purchase, any shares of Common Stock, or enter into any swap,
hedge or other agreement that transfers, in whole or in part, the economic risk of ownership of the
Common Stock, except for such sales expressly permitted by this Section 5.10(i).



          (ii) In addition to the foregoing, in connection with any sale of the Company’s securities
(including any sale permitted by paragraph (i) above), the Investor shall comply in all respects
with all applicable laws, rules, regulations and orders, including, without limitation, the
requirements of the Securities Act and the Exchange Act.



     Section 5.11 Effective Registration Statement. During the Investment Period, the Company shall use its best efforts to maintain the continuous
effectiveness of the Registration Statement under the Securities Act.



     Section 5.12 Non-Public Information. Neither the Company nor any of its directors, officers or agents shall disclose any material
non-public information about the Company to the Investor, unless a simultaneous public announcement
thereof is made by the Company in the manner contemplated by Regulation FD.



     Section 5.13 Broker/Dealer. The Investor shall use one or more broker-dealers to effectuate all sales, if any, of the Shares
that it may purchase from the Company pursuant to this Agreement which (or whom) shall be
unaffiliated with the Investor and not then currently engaged or used by the Company (collectively,
the “Broker-Dealer”). The Investor shall provide the Company with all information
regarding the Broker-Dealer reasonably requested by the Company. The Investor shall be solely
responsible for all fees and commissions of the Broker-Dealer.



ARTICLE VI

OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND

PURCHASE OF THE SHARES




     Section 6.1 Opinion of Counsel and Certificate. Simultaneously with the execution and delivery of this Agreement, the Investor has received and
relied upon (i) an opinion of outside counsel to the Company, dated the Effective Date, in the form
mutually agreed to by the parties hereto, and (ii) a certificate from the Company, dated the
Effective Date, in the form of Exhibit C hereto.



     Section 6.2 Conditions Precedent to the Obligation of the Company. The obligation hereunder of the Company to issue and sell the Shares to the Investor under any
Fixed Request or Optional Amount is subject to the satisfaction or (to the extent permitted by



26









 







applicable law) waiver of each of the conditions set forth below. These conditions are for the
Company’s sole benefit and (to the extent permitted by applicable law) may be waived by the Company
at any time in its sole discretion.



          (i) Accuracy of the Investor’s Representations and Warranties. The representations
and warranties of the Investor contained in this Agreement (i) that are not qualified by
“materiality” shall have been true and correct in all material respects when made and shall be true
and correct in all material respects as of the applicable Fixed Request Exercise Date and the
applicable Settlement Date with the same force and effect as if made on such dates, except to the
extent such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material respects as of such other
date and (ii) that are qualified by “materiality” shall have been true and correct when made and
shall be true and correct as of the applicable Fixed Request Exercise Date and the applicable
Settlement Date with the same force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of such other date.



          (ii) Registration Statement. The Registration Statement is effective and neither the
Company nor the Investor shall have received notice that the Commission has issued or intends to
issue a stop order with respect to the Registration Statement. The Company shall have a maximum
dollar amount certain of Shares registered under the Registration Statement which are in an amount
(A) as of the Effective Date, not less than the Total Commitment and (B) as of the applicable Fixed
Request Exercise Date, not less than the maximum dollar amount worth of Shares issuable pursuant to
the applicable Fixed Request Notice and applicable Optional Amount, if any. The Current Report
shall have been filed with the Commission, as required pursuant to Section 1.4, and all applicable
Prospectus Supplements shall have been filed with the Commission, as required pursuant to Sections
1.4 and 5.9 hereof, to disclose the sale of the Shares prior to each Settlement Date, as
applicable. Any other material required to be filed by the Company or any other offering
participant pursuant to Rule 433(d) under the Securities Act shall have been filed with the
Commission within the applicable time periods prescribed for such filings by Rule 433 under the
Securities Act.



          (iii) Performance by the Investor. The Investor shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Investor at or prior to the applicable
Fixed Request Exercise Date and the applicable Settlement Date.



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



          (v) No Suspension, Etc. Trading in the Common Stock shall not have been suspended by
the Commission or the Trading Market (except for any suspension of trading of limited duration
agreed to by the Company, which suspension shall be terminated prior to the applicable Fixed
Request Exercise Date and applicable Settlement Date), and, at any time prior to the applicable
Fixed Request Exercise Date and applicable Settlement Date, none of the events



27









 







described in clauses (i), (ii) and (iii) of Section 5.7 shall have occurred, trading in
securities generally as reported on the Trading Market shall not have been suspended or limited,
nor shall a banking moratorium have been declared either by the United States or New York State
authorities, nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity or crisis of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the reasonable judgment of
the Company, makes it impracticable or inadvisable to issue the Shares.



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



          (vii) Aggregate Limit. The issuance and sale of the Shares issuable pursuant to such
Fixed Request Notice or Optional Amount shall not violate Sections 2.2, 2.12 and 5.5 hereof.



     Section 6.3 Conditions Precedent to the Obligation of the Investor. The obligation hereunder of the Investor to accept a Fixed Request Notice or Optional Amount
grant and to acquire and pay for the Shares is subject to the satisfaction or (to the extent
permitted by applicable law) waiver, at or before each Fixed Request Exercise Date and each
Settlement Date, of each of the conditions set forth below. These conditions are for the Investor’s
sole benefit and (to the extent permitted by applicable law) may be waived by the Investor at any
time in its sole discretion.



          (i) Accuracy of the Company’s Representations and Warranties. The representations and
warranties of the Company contained in this Agreement (i) that are not qualified by “materiality”
or “Material Adverse Effect” shall have been true and correct in all material respects when made
and shall be true and correct in all material respects as of the applicable Fixed Request Exercise
Date and the applicable Settlement Date with the same force and effect as if made on such dates,
except to the extent such representations and warranties are as of another date, in which case,
such representations and warranties shall be true and correct in all material respects as of such
other date and (ii) that are qualified by “materiality” or “Material Adverse Effect” shall have
been true and correct when made and shall be true and correct as of the applicable Fixed Request
Exercise Date and the applicable Settlement Date with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of another date, in which
case, such representations and warranties shall be true and correct as of such other date.



          (ii) Registration Statement. The Registration Statement is effective and neither the
Company nor the Investor shall have received notice that the Commission has issued or intends to
issue a stop order with respect to the Registration Statement. The Company shall have a maximum
dollar amount certain of Shares registered under the Registration Statement which are in an amount
(A) as of the Effective Date, not less than the Total Commitment and (B) as of the applicable Fixed
Request Exercise Date, not less than the maximum dollar amount



28









 







worth of Shares issuable pursuant to the applicable Fixed Request Notice and applicable
Optional Amount, if any. The Current Report shall have been filed with the Commission, as required
pursuant to Section 1.4, and all applicable Prospectus Supplements shall have been filed with the
Commission, as required pursuant to Sections 1.4 and 5.9 hereof, to disclose the sale of the Shares
prior to each Settlement Date, as applicable, and an electronic copy of each such Prospectus
Supplement together with the Base Prospectus shall have been delivered or made available to the
Investor in accordance with Section 5.9 hereof. Any other material required to be filed by the
Company or any other offering participant pursuant to Rule 433(d) under the Securities Act shall
have been filed with the Commission within the applicable time periods prescribed for such filings
by Rule 433 under the Securities Act.



          (iii) No Suspension. Trading in the Common Stock shall not have been suspended by the
Commission or the Trading Market (except for any suspension of trading of limited duration agreed
to by the Company, which suspension shall be terminated prior to the applicable Fixed Request
Exercise Date and applicable Settlement Date), and, at any time prior to the applicable Fixed
Request Exercise Date and applicable Settlement Date, none of the events described in clauses (i),
(ii) and (iii) of Section 5.7 shall have occurred, trading in securities generally as reported on
the Trading Market shall not have been suspended or limited, nor shall a banking moratorium have
been declared either by the United States or New York State authorities, nor shall there have
occurred any material outbreak or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in the reasonable judgment of the Investor, makes it
impracticable or inadvisable to purchase the Shares.



          (iv) Performance of the Company. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the applicable
Fixed Request Exercise Date and the applicable Settlement Date and shall have delivered to the
Investor on the applicable Settlement Date the Compliance Certificate substantially in the form
attached hereto as Exhibit D.



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



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



          (vii) Aggregate Limit. The issuance and sale of the Shares issuable pursuant to such
Fixed Request Notice or Optional Amount shall not violate Sections 2.2, 2.12 and 5.5 hereof.




29












 





          (viii) Shares Authorized. The Shares issuable pursuant to such Fixed Request Notice
or Optional Amount shall have been duly authorized by all necessary corporate action of the
Company.




          (ix) Notification of Listing of Shares. If required, the Company shall have submitted
to the Trading Market a notification form of listing of additional shares related to the Shares
issuable pursuant to such Fixed Request or Optional Amount in accordance with the bylaws, listed
securities maintenance standards and other rules of the Trading Market.




          (x) Opinions of Counsel; Bring-Down. Subsequent to the filing of the Current Report
pursuant to Section 1.4 and prior to the first Fixed Request Exercise Date, the Investor shall have
received an opinion from outside counsel to the Company in the form mutually agreed to by the
parties hereto and an opinion from in-house counsel to the Company in the form mutually agreed to
by the parties hereto. On each Settlement Date, the Investor shall have received an opinion “bring
down” from outside counsel to the Company in the form mutually agreed to by the parties hereto and
an opinion “bring down” from in-house counsel to the Company in the form mutually agreed to by the
parties hereto.




          (xi) Payment of Investor’s Counsel Fees; Due Diligence Expenses. On the Effective
Date, the Company shall have paid by wire transfer of immediately available funds to an account
designated by the Investor’s counsel, the fees and expenses of the Investor’s counsel in accordance
with the proviso to the first sentence of Section 9.1(i) of this Agreement. On the 30th
day of the third month in each calendar quarter during the Investment Period, the Company shall
have paid by wire transfer of immediately available funds (a) to an account designated by the
Investor, the due diligence expenses incurred by the Investor and (b) to an account designated by
the Investor’s counsel, the fees and expenses of the Investor’s counsel, in each case, in
accordance with the provisions of the second sentence of Section 9.1(i) of this Agreement.




ARTICLE VII

TERMINATION




     Section 7.1 Term, Termination by Mutual Consent. Unless earlier terminated as provided hereunder, this Agreement shall terminate automatically on
the earliest of (i) the first day of the month next following the 18-month anniversary of the
Effective Date (the “Investment Period”), (ii) the date that the entire dollar amount of
Shares registered under the Registration Statement have been issued and sold and (iii) the date the
Investor shall have purchased the Total Commitment of shares of Common Stock (subject in all cases
to the Trading Market Limit). The Company may terminate this Agreement effective upon three Trading
Days’ prior written notice to the Investor under Section 9.4; provided, however,
that such termination shall not occur during a Pricing Period or prior to a Settlement Date. This
Agreement may be terminated at any time by the mutual written consent of the parties, effective as
of the date of such mutual written consent unless otherwise provided in such written consent, it
being hereby acknowledged and agreed that the Investor may not consent to such termination during a
Pricing Period or prior to a Settlement Date in the event the Investor has instructed the
Broker-Dealer to effect an open-market sale of Shares which are subject to a pending Fixed Request
Notice but which have not yet been physically delivered by the Company (and/or
credited by book-entry) to the Investor in accordance with the terms and subject to the conditions
of this Agreement.



30









 





     Section 7.2 Other Termination. If the Company provides the Investor with an Other Financing Notice (other than in respect of an
underwritten public offering of equity securities of the Company or a registered direct public
offering of equity securities of the Company) or an Integration Notice, in each case pursuant to
Section 5.6(ii) of this Agreement, or if the Company otherwise enters into any agreement, plan,
arrangement or transaction with a third party, the principal purpose of which is to obtain outside
a Pricing Period, but otherwise during the Investment Period, an Other Financing not constituting
an Acceptable Financing (other than in respect of an underwritten public offering of equity
securities of the Company or a registered direct public offering of equity securities of the
Company), in which latter case the Company shall so notify the Investor within 48 hours thereof,
then in all such cases the Investor shall have the right to terminate this Agreement within the
subsequent 30-day period (the “Event Period”), effective upon one Trading Day’s prior
written notice delivered to the Company in accordance with Section 9.4 at any time during the Event
Period. The Company shall immediately notify the Investor (and, if required under applicable law,
including, without limitation, Regulation FD promulgated by the Commission, or under the applicable
rules and regulations of the Trading Market, the Company shall simultaneously publicly disclose
such information in accordance with Regulation FD and the applicable rules and regulations of the
Trading Market), and the Investor shall have the right to terminate this Agreement at any time
after receipt of such notification, if: (i) any condition, occurrence, state of facts or event
constituting a Material Adverse Effect has occurred; (ii) a Material Change in Ownership has
occurred or the Company enters into a definitive agreement providing for a Material Change in
Ownership; or (iii) an event of default has occurred and is continuing under the terms of any
agreement, contract, note or other instrument to which the Company or any of its Subsidiaries is a
party with respect to any indebtedness for borrowed money representing more than 10% of the
Company’s consolidated assets, in any such case, upon one Trading Day’s prior written notice
delivered to the Company in accordance with Section 9.4 hereof.



     Section 7.3 Effect of Termination. In the event of termination by the Company or the Investor, written notice thereof shall
forthwith be given to the other party as provided in Section 9.4 and the transactions contemplated
by this Agreement shall be terminated without further action by either party. If this Agreement is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become void and of no
further force and effect, except as provided in Section 9.9 hereof. Nothing in this Section 7.3
shall be deemed to release the Company or the Investor from any liability for any breach under this
Agreement, or to impair the rights of the Company and the Investor to compel specific performance
by the other party of its obligations under this Agreement.



ARTICLE VIII

INDEMNIFICATION




     Section 8.1 General Indemnity.



          (i) Indemnification by the Company. The Company shall indemnify and hold harmless the
Investor, the Broker-Dealer, each affiliate, employee, representative and advisor of and to the
Investor and the Broker-Dealer, and each person, if any, who controls the Investor or the
Broker-Dealer within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act from and against all losses, claims, damages, liabilities and expenses



31









 






(including reasonable costs of defense and investigation and all attorneys’ fees) to which the Investor, the
Broker-Dealer and each such other person may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities and expenses
(or actions in respect thereof) arise out of or are based upon (i) any violation of law (including United States federal securities
laws) in connection with the transactions contemplated by this Agreement by the Company or any of
its Subsidiaries, affiliates, officers, directors or employees, (ii) any untrue statement or
alleged untrue statement of a material fact contained, or incorporated by reference, in the
Registration Statement or any amendment thereto or any omission or alleged omission to state
therein, or in any document incorporated by reference therein, a material fact required to be
stated therein or necessary to make the statements therein not misleading, or (iii) any untrue
statement or alleged untrue statement of a material fact contained, or incorporated by reference,
in the Prospectus, any Issuer Free Writing Prospectus, or in any amendment thereof or supplement
thereto, or in any “issuer information” (as defined in Rule 433 under the Securities Act) of the
Company, which “issuer information” is required to be, or is, filed with the Commission or
otherwise contained in any Free Writing Prospectus, or any amendment or supplement thereto, or any
omission or alleged omission to state therein, or in any document incorporated by reference
therein, a material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; provided,
however, that (A) the Company shall not be liable under this Section 8.1(i) to the extent
that a court of competent jurisdiction shall have determined by a final judgment that such loss,
claim, damage, liability or expense resulting directly and solely from any such acts or failures to
act, undertaken or omitted to be taken by the Investor or such person through its bad faith or
willful misconduct, (B) the foregoing indemnity shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by the Investor expressly for use in
the Current Report or any Prospectus Supplement or Permitted Free Writing Prospectus, or any
amendment thereof or supplement thereto, and (C) with respect to the Prospectus, the foregoing
indemnity shall not inure to the benefit of the Investor or any such person from whom the person
asserting any loss, claim, damage, liability or expense purchased Common Stock, if copies of all
Prospectus Supplements required to be filed pursuant to Section 1.4 and 5.9, together with the Base
Prospectus, were timely delivered or made available to the Investor pursuant hereto and a copy of
the Base Prospectus, together with a Prospectus Supplement (as applicable), was not sent or given
by or on behalf of the Investor or any such person to such person, if required by law to have been
delivered, at or prior to the written confirmation of the sale of the Common Stock to such person,
and if delivery of the Base Prospectus, together with a Prospectus Supplement (as applicable),
would have cured the defect giving rise to such loss, claim, damage, liability or expense.




     The Company shall reimburse the Investor, the Broker-Dealer and each such controlling person
promptly upon demand (with accompanying presentation of documentary evidence) for all legal and
other costs and expenses reasonably incurred by the Investor, the Broker-Dealer or
such indemnified persons in investigating, defending against, or preparing to defend against
any such claim, action, suit or proceeding with respect to which it is entitled to indemnification.



          (ii) Indemnification by the Investor. The Investor shall indemnify and hold harmless
the Company, each of its directors and officers, and each person, if any, who controls



32









 






the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act from
and against all losses, claims, damages, liabilities and expenses (including reasonable costs of
defense and investigation and all attorneys fees) to which the Company and each such other person
may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are based upon (i) any
violation of law (including United States federal securities laws) in connection with the
transactions contemplated by this Agreement by the Investor or any of its affiliates, officers,
directors or employees, or (ii) any untrue statement or alleged untrue statement of a material fact
contained in the Current Report or any Prospectus Supplement or Permitted Free Writing Prospectus,
or in any amendment thereof or supplement thereto, or any omission or alleged omission to state
therein 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, in each case, to the
extent, but only to the extent, the untrue statement, alleged untrue statement, omission or alleged
omission was made in reliance upon, and in conformity with, written information furnished by the
Investor to the Company expressly for inclusion in the Current Report or such Prospectus Supplement
or Permitted Free Writing Prospectus, or any amendment thereof or supplement thereto.




     The Investor shall reimburse the Company and each such director, officer or controlling person
promptly upon demand for all legal and other costs and expenses reasonably incurred by the Company
or such indemnified persons in investigating, defending against, or preparing to defend against any
such claim, action, suit or proceeding with respect to which it is entitled to indemnification.



     Section 8.2 Indemnification Procedures. Promptly after a person receives notice of a claim or the commencement of an action for which
the person intends to seek indemnification under Section 8.1, the person will notify the
indemnifying party in writing of the claim or commencement of the action, suit or proceeding;
provided, however, that failure to notify the indemnifying party will not relieve
the indemnifying party from liability under Section 8.1, except to the extent it has been
materially prejudiced by the failure to give notice. The indemnifying party will be entitled to
participate in the defense of any claim, action, suit or proceeding as to which indemnification is
being sought, and if the indemnifying party acknowledges in writing the obligation to indemnify the
party against whom the claim or action is brought, the indemnifying party may (but will not be
required to) assume the defense against the claim, action, suit or proceeding with counsel
satisfactory to it. After an indemnifying party notifies an indemnified party that the
indemnifying party wishes to assume the defense of a claim, action, suit or proceeding, the
indemnifying party will not be liable for any legal or other expenses incurred by the indemnified
party in connection with the defense against the claim, action, suit or proceeding except that if,
in the opinion of counsel to the indemnifying party, one or more of the indemnified parties should
be separately represented in connection with a claim, action, suit or proceeding, the indemnifying
party will pay the reasonable fees and expenses of one separate counsel for the indemnified parties. Each indemnified
party, as a condition to receiving indemnification as provided in Section 8.1, will cooperate in
all reasonable respects with the indemnifying party in the defense of any action or claim as to
which indemnification is sought. No indemnifying party will be liable for any settlement of any
action effected without its prior written consent, which shall not be unreasonably delayed.
Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested
(by written notice provided in



33









 




accordance with Section 9.4) an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be
liable for any settlement of the nature contemplated hereby effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received written notice of the terms
of such settlement at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party will, without the prior written
consent of the indemnified party, which shall not be unreasonably delayed, effect any settlement of
a pending or threatened action with respect to which an indemnified party is, or is informed that
it may be, made a party and for which it would be entitled to indemnification, unless the
settlement includes an unconditional release of the indemnified party from all liability and claims
which are the subject matter of the pending or threatened action.




     If for any reason the indemnification provided for in this Agreement is not available to, or
is not sufficient to hold harmless, an indemnified party in respect of any loss or liability
referred to in Section 8.1 as to which such indemnified party is entitled to indemnification
thereunder, each indemnifying party shall, in lieu of indemnifying the indemnified party,
contribute to the amount paid or payable by the indemnified party as a result of such loss or
liability, (i) in the proportion which is appropriate to reflect the relative benefits received by
the indemnifying party, on the one hand, and by the indemnified party, on the other hand, from the
sale of Shares which is the subject of the claim, action, suit or proceeding which resulted in the
loss or liability or (ii) if the allocation provided by clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above, but also the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, with respect to the statements or omissions which are the
subject of the claim, action, suit or proceeding that resulted in the loss or liability, as well as
any other relevant equitable considerations.



     The remedies provided for in Section 8.1 and this Section 8.2 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any Indemnified Person at law or
in equity.



ARTICLE IX

MISCELLANEOUS




     Section 9.1 Fees and Expenses.



          (i) Each party shall bear its own fees and expenses related to the transactions contemplated
by this Agreement; provided, however, that the Company shall pay, on the
Effective Date, by wire transfer of immediately available funds to an account designated by
the Investor’s counsel, promptly following the receipt of an invoice therefor, all reasonable
attorneys’ fees and expenses (exclusive of disbursements and out-of-pocket expenses) incurred by
the Investor, up to $35,000, in connection with the preparation, negotiation, execution and
delivery of this Agreement, legal due diligence of the Company and review of the Registration
Statement, the Base Prospectus, the Current Report, any Permitted Free Writing Prospectus and all
other related transaction documentation. In addition, the Company shall pay, on the 30th
day



34









 






of the third month in each calendar quarter during the Investment Period, promptly following
the receipt of an invoice therefor, up to $12,500, representing (x) the due diligence expenses
incurred by the Investor during the Investment Period and (y) the attorneys’ fees and expenses
incurred by the Investor in connection with ongoing legal due diligence of the Company, any
amendments, modifications or waivers of this Agreement and review of Prospectus Supplements,
Permitted Free Writing Prospectuses, opinion “bring downs” and all other related documents to be
delivered by the Company and its counsel in connection with a Fixed Request Exercise Date and the
applicable Settlement Date. The Company shall pay all U.S. federal, state and local stamp and other
similar transfer and other taxes and duties levied in connection with issuance of the Shares
pursuant hereto.




          (ii) If the Company issues a Fixed Request Notice and fails to deliver the Shares to the
Investor on the applicable Settlement Date and such failure continues for 10 Trading Days, the
Company shall pay the Investor, in cash (or, at the option of the Investor, in shares of Common
Stock which have not been registered under the Securities Act), as liquidated damages for such
failure and not as a penalty, an amount equal to 2.0% of the payment required to be paid by the
Investor on such Settlement Date (i.e., the sum of the Fixed Amount Requested and the Optional
Amount Dollar Amount) for the initial 30 days following such Settlement Date until the Shares have
been delivered, and an additional 2.0% for each additional 30-day period thereafter until the
Shares have been delivered, which amount shall be prorated for such periods less than thirty 30
days (subject in all cases to the Trading Market Limit).




     Section 9.2 Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial.



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




          (ii) Each of the Company and the Investor (a) hereby irrevocably submits to the jurisdiction
of the United States District Court and other courts of the United States sitting in the State of
New York for the purposes of any suit, action or proceeding arising out of or relating to this
Agreement, and (b) hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of the suit, action
or proceeding is improper. Each of the Company and the Investor consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such party at the
address in effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing in this Section 9.2
shall affect or limit any right to serve process in any other manner permitted by law.




          (iii) Each of the Company and the Investor hereby waives to the fullest extent permitted by
applicable law, any right it may have to a trial by jury in respect to any litigation directly or
indirectly arising out of, under or in connection with this Agreement or the



35









 






transactions contemplated hereby or disputes relating hereto. Each of the Company and the Investor (a) certifies
that no representative, agent or attorney of any other party has represented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to
enter into this Agreement by, among other things, the mutual waivers and certifications in this
Section 9.2.




     Section 9.3 Entire Agreement; Amendment. This Agreement, together with the exhibits referred to herein, represents the entire agreement
of the parties with respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by either party relative to subject matter hereof not expressly set
forth herein. No provision of this Agreement may be amended other than by a written instrument
signed by both parties hereto. The exhibits to this Agreement are hereby incorporated by reference
in, and made a part of, this Agreement as if set forth in full herein.



     Section 9.4 Notices. Any notice, demand, request, waiver or other communication required or permitted to be given
hereunder shall be in writing and shall be effective (a) upon hand delivery or facsimile (with
facsimile machine confirmation of delivery received) at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to be received), or
the first business day following such delivery (if delivered other than on a business day during
normal business hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The address for such
communications shall be:



	 	 	 
	If to the Company:

	 	Dendreon Corporation

3005 First Avenue

Seattle, Washington 98121

Telephone Number: (206) 256-4545

Fax: (206) 219-7211

Attention: Richard F. Hamm, Jr.
	 
	 	 
	With copies to:

	 	Jones Day

901 Lakeside Avenue

Cleveland, Ohio 44114

Telephone Number: (216) 586-3939

Fax: (216) 579-0212

Attention: Christopher M. Kelly, Esq.
	 
	 	 
	If to the Investor:

	 	Azimuth Opportunity Ltd.

c/o Fortis Prime Fund Solutions (BVI) Limited

P.O. Box 761, 1st Floor

James Frett Building

Road Town, Tortola

British Virgin Islands

Telephone Number: (284) 494-6046







36









 






	 	 	 
	 

	 	Fax: (284) 494-6898

Attention: Becky McGinnis
	 
	 	 
	With copies to:

	 	Greenberg Traurig, LLP

The MetLife Building

200 Park Avenue

New York, NY 10166

Telephone Number: (212) 801-9200

Fax: (212) 801-6400

Attention: Clifford E. Neimeth, Esq.
Anthony J. Marsico, Esq.






Either party hereto may from time to time change its address for notices by giving at least 10 days
advance written notice of such changed address to the other party hereto.




     Section 9.5 Waivers. No waiver by either party of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right accruing to it
thereafter. No provision of this Agreement may be waived other than in a written instrument signed
by the party against whom enforcement of such waiver is sought.



     Section 9.6 Headings. The article, section and subsection headings in this Agreement are for convenience only and
shall not constitute a part of this Agreement for any other purpose and shall not be deemed to
limit or affect any of the provisions hereof.



     Section 9.7 Successors and Assigns. The Investor may not assign this Agreement to any person without the prior consent of the
Company, in the Company’s sole discretion. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. The assignment by a party to this
Agreement of any rights hereunder shall not affect the obligations of such party under this
Agreement.



     Section 9.8 Governing Law. This Agreement shall be governed by and construed in accordance with the internal procedural and
substantive laws of the State of New York, without giving effect to the choice of law provisions of
such state.



     Section 9.9 Survival. The representations and warranties of the Company and the Investor contained in Articles III and
IV and the covenants contained in Article V shall survive the execution and delivery hereof until
the termination of this Agreement, and the agreements and covenants set forth in Article VIII of
this Agreement shall survive the execution and delivery hereof.



     Section 9.10 Counterparts. This Agreement may be executed in counterparts, all of which taken together shall constitute one
and the same original and binding instrument and shall become effective when all counterparts have
been signed by each party and delivered to the other parties hereto, it being understood that all
parties hereto need not sign the same counterpart. In



37









 







the event any signature is delivered by facsimile transmission, the party using such means of delivery shall cause four additional executed
signature pages to be physically delivered to the other parties within five days of the execution
and delivery hereof.



     Section 9.11 Publicity. On or after the Effective Date, the Company may issue a press release or otherwise make a public
statement or announcement with respect to this Agreement or the transactions contemplated hereby or
the existence of this Agreement (including, without limitation, by filing a copy of this Agreement
with the Commission); provided, however, that prior to issuing any such press
release, or making any such public statement or announcement, the Company shall consult with the
Investor on the form and substance of such press release or other disclosure.



     Section 9.12 Severability. The provisions of this Agreement are severable and, in the event that any court of competent
jurisdiction shall determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect any other
provision or part of a provision of this Agreement, and this Agreement shall be reformed and
construed as if such invalid or illegal or unenforceable provision, or part of such provision, had
never been contained herein, so that such provisions would be valid, legal and enforceable to the
maximum extent possible.



     Section 9.13 Further Assurances. From and after the date of this Agreement, upon the request of the Investor or the Company, each
of the Company and the Investor shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.



[Signature Page Follows]




38









 





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



	 	 	 	 	 
	 	DENDREON CORPORATION:
 	 
	 	By:  	/s/ Gregory T. Schiffman	 
	 	 	 	 
	 	 	Name:  	Gregory T. Schiffman	 
	 	 	Title:  	Senior Vice President, Chief Financial Officer	 
	 
	 	AZIMUTH OPPORTUNITY LTD.:

 	 
	 	By:  	/s/ Deirdre M. McCoy	 
	 	 	 	 
	 	 	Name:  	Deirdre M. McCoy	 
	 	 	Title:  	Corporate Secretary	 
	 




39











 





ANNEX A TO THE

COMMON STOCK PURCHASE AGREEMENT

DEFINITIONS




     (a) “Acceptable Financing” shall have the meaning assigned to such term in Section
5.6(ii) hereof.



     (b) “Aggregate Limit” shall have the meaning assigned to such term in Section 1.1
hereof.



     (c) “Base Prospectus” shall mean the Company’s prospectus, dated October 11, 2007, a
preliminary form of which is included in the Registration Statement, including the documents
incorporated by reference therein.



     (d) “Below Market Offering” shall have the meaning assigned to such term in Section
5.6(ii) hereof.



     (e) “Broker-Dealer” shall have the meaning assigned to such term in Section 5.13
hereof.



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



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



     (h) “Code” shall mean the Internal Revenue Code of 1986, as amended.



     (i) “Commission” shall mean the Securities and Exchange Commission or any successor
entity.



     (j) “Commission Documents” shall mean (1) all reports, schedules, registrations,
forms, statements, information and other documents filed by the Company with the Commission
pursuant to the reporting requirements of the Exchange Act, including all material filed pursuant
to Section 13(a) or 15(d) of the Exchange Act, which have been filed by the Company since January
1, 2007 and which hereafter shall be filed by the Company during the Investment Period, including,
without limitation, the Current Report and the Form 10-K filed by the Company for its fiscal year
ended December 31, 2006 (the “2006 Form 10-K”), (2) the Registration Statement, as the same
may be amended from time to time, the Prospectus and each Prospectus Supplement, and each Permitted
Free Writing Prospectus and (3) all information contained in such filings and all documents and
disclosures that have been and heretofore shall be incorporated by reference therein.



     (k) “Common Stock” shall have the meaning assigned to such term in the Recitals.



     (l) “Current Market Price” means, with respect to any particular measurement date, the
closing price of a share of Common Stock as reported on the Trading Market for the Trading Day
immediately preceding such measurement date.



 









 





     (m) “Current Report” shall have the meaning assigned to such term in Section 1.4
hereof.



     (n) “Discount Price” shall have the meaning assigned to such term in Section 2.2
hereof.



     (o) “EDGAR” shall have the meaning assigned to such term in Section 4.3 hereof.



     (p) “Effective Date” shall mean the date of this Agreement.



     (q) “Environmental Laws” shall have the meaning assigned to such term in Section 4.15
hereof.



     (r) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.



     (s) “Event Period” shall have the meaning assigned to such term in Section 7.2 hereof.



     (t) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder.



     (u) “FDA” shall have the meaning assigned to such term in Section 4.14(a) hereof.



     (v) “Fixed Amount Requested” shall mean the amount of a Fixed Request requested by the
Company in a Fixed Request Notice delivered pursuant to Section 2.1 hereof.



     (w) “Fixed Request” means the transactions contemplated under Sections 2.1 through 2.8
of this Agreement.



     (x) “Fixed Request Amount” means the actual amount of proceeds received by the Company
pursuant to a Fixed Request under this Agreement.



     (y) “Fixed Request Exercise Date” shall have the meaning assigned to such term in
Section 2.2 hereof.



     (z) “Fixed Request Notice” shall have the meaning assigned to such term in Section 2.1
hereof.



     (aa) “Free Writing Prospectus” shall mean a “free writing prospectus” as defined in
Rule 405 promulgated under the Securities Act.



     (bb) “GAAP” shall mean generally accepted accounting principles in the United States
of America as applied by the Company.



     (cc) “Governmental Licenses” shall have the meaning assigned to such term in Section
4.14(a) hereof.



 









 





     (dd) “Indebtedness” shall have the meaning assigned to such term in Section 4.9
hereof.



     (ee) “Integration Notice” shall have the meaning assigned to such term in Section
5.6(ii) hereof.



     (ff) “Intellectual Property” shall have the meaning assigned to such term in Section
4.14(b) hereof.



     (gg) “Investment Period” shall have the meaning assigned to such term in Section 7.1
hereof.



     (hh) “Issuer Free Writing Prospectus” shall mean an “issuer free writing prospectus”
as defined in Rule 433 promulgated under the Securities Act.



     (ii) “Market Capitalization” shall be calculated on the Trading Day preceding the
applicable Pricing Period and shall be the product of (x) the number of shares of Common Stock
outstanding and (y) the closing bid price of the Common Stock, both as determined by Bloomberg
Financial LP using the DES and HP functions.



     (jj) “Material Adverse Effect” shall mean any condition, occurrence, state of facts or
event having, or insofar as reasonably can be foreseen would likely have, any effect on the
business, operations, properties or condition (financial or otherwise) of the Company that is
material and adverse to the Company and its Subsidiaries, taken as a whole, and/or any condition,
occurrence, state of facts or event that would prohibit or otherwise materially interfere with or
delay the ability of the Company to perform any of its obligations under this Agreement.



     (kk) “Material Agreements” shall have the meaning assigned to such term in Section
4.16 hereof.



     (ll) “Material Change in Ownership” shall mean the occurrence of any one or more of
the following: (i) Any Person, as defined under the Securities Exchange Act of 1934, as amended,
becomes the owner of securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then-outstanding securities other than by virtue of a
merger, consolidation or similar transaction; (ii) The consummation of a merger, consolidation or
similar transaction that directly or indirectly involves the Company (a “transaction”), and the
stockholders of the Company immediately before consummation of the transaction do not own
immediately after consummation of the transaction, either: (A) more than fifty percent (50%) of the
combined voting power of the outstanding voting securities of the entity that survives the
transaction; or (B) more than fifty percent (50%) of the combined voting power of the outstanding
voting securities of an entity that owns the surviving entity; (iii) The stockholders of the
Company approve, or the Board approves, a plan of complete dissolution or liquidation of the
Company, or a complete dissolution or liquidation of the Company otherwise occurs; (iv) The
consummation of a sale, lease or other disposition of all or substantially all of the consolidated
assets of the Company (a “disposition”) that requires approval of Company stockholders under
Delaware corporate law; provided that this paragraph (iv) excludes a disposition to an entity with
respect to which stockholders of the Company own immediately after the disposition more than fifty
percent (50%) of the combined voting power of the entity’s



 









 




outstanding voting securities; or (v) The Board ceases to be composed of at least a majority
of Incumbent Directors. “Incumbent Directors” are the current members of the Board of Directors and
any subsequent Board member who was nominated or elected by a majority vote of the Incumbent
Directors then in office. Notwithstanding the above clauses (i) through (v), a “Change of Control”
shall not have occurred (unless the Board determines otherwise) by reason of either of the
following: (A) any corporate reorganization, merger, consolidation, transfer of assets, liquidating
distribution or other transaction entered into solely by and between the Company and any subsidiary
(a “reorganization”), provided the reorganization was approved by at least two-thirds (2/3) of the
Incumbent Directors (as defined above) then in office and voting; or (B) any of the events
described in clauses (i) through (v) above occurs pursuant to an Insolvency Proceeding. An
“Insolvency Proceeding” means (A) the Company institutes or consents to the institution of any
proceeding under any debtor relief law, makes an assignment for the benefit of creditors, or
applies for or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for the Company or for all or any material part of the
Company’s property; or (B) any receiver, trustee, custodian, conservator, liquidator, rehabilitator
or similar officer is appointed without the application or consent of the Company and the
appointment continues undischarged or unstayed for 60 calendar days; or (C) any proceeding under
any debtor relief law relating to the Company or to all or any material part of the Company’s
property is instituted without the consent of the Company and continues undismissed or unstayed for
60 calendar days, or any order for relief is entered in any such proceeding.




     (mm) “Multiplier” shall have the meaning assigned to such term in Section 2.3 hereof.



     (nn) “NASDAQ” means the NASDAQ Global Market or any successor thereto.



     (oo) “Optional Amount” means the transactions contemplated under Sections 2.9 through
2.11 of this Agreement.



     (pp) “Optional Amount Dollar Amount” shall mean the actual amount of proceeds received
by the Company pursuant to the exercise of an Optional Amount under this Agreement.



     (qq) “Optional Amount Notice” shall mean a notice sent to the Company with regard to
the Investor’s election to exercise all or any portion of an Optional Amount, as provided in
Section 2.11 hereof and substantially in the form attached hereto as Exhibit B.



     (rr) “Optional Amount Threshold Price” shall have the meaning assigned to such term in
Section 2.1 hereof.



     (ss) “Other Financing” shall have the meaning assigned to such term in Section 5.6(ii)
hereof.



     (tt) “Other Financing Notice” shall have the meaning assigned to such term in Section
5.6(ii) hereof.



     (uu) “Permitted Free Writing Prospectus” shall have the meaning assigned to such term
in Section 5.8(ii) hereof.



 









 





     (vv) “Plan” shall have the meaning assigned to such term in Section 4.22 hereof.



     (ww) “Pricing Period shall mean a period of 10 consecutive Trading Days commencing on
the day of delivery of a Fixed Request Notice (or, if the Fixed Request Notice is delivered after
9:30 a.m. (New York time), on the next Trading Day), or such other period mutually agreed upon by
the Investor and the Company.



     (xx) “Prospectus” shall mean the Base Prospectus, together with any final prospectus
filed with the Commission pursuant to Rule 424(b), as supplemented by any Prospectus Supplement,
including the documents incorporated by reference therein.



     (yy) “Prospectus Supplement” shall mean any prospectus supplement to the Base
Prospectus filed with the Commission pursuant to Rule 424(b) under the Securities Act, including
the documents incorporated by reference therein.



     (zz) “Reduction Notice” shall have the meaning assigned to such term in Section 2.8
hereof.



     (aaa) “Registration Statement” shall mean the registration statement on Form S-3,
Commission File Number 333-141388, filed by the Company with the Commission under the Securities
Act for the registration of the Shares, as such Registration Statement may be amended and
supplemented from time to time, including the documents incorporated by reference therein and the
information deemed to be a part thereof at the time of effectiveness pursuant to Rule 430A or Rule
430B under the Securities Act.



     (bbb) “Restricted Period” shall have the meaning assigned to such term in Section 5.10
hereof.



     (ccc) “Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.



     (ddd) “Settlement Date” shall have the meaning assigned to such term in Section 2.7
hereof.



     (eee) “Shares” shall mean shares of Common Stock issuable to the Investor upon
exercise of a Fixed Request and shares of Common Stock issuable to the Investor upon exercise of an
Optional Amount.



     (fff) “Significant Subsidiary” means any Subsidiary of the Company that would
constitute a Significant Subsidiary of the Company within the meaning of Rule 1-02 of Regulation
S-X of the Commission.



     (ggg) “SOXA” shall have the meaning assigned to such term in Section 4.6(c) hereof.



     (hhh) “Subsidiary” shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing similar functions are at
the time owned directly or indirectly by the Company and/or any of its other Subsidiaries.



 









 





     (iii) “Threshold Price” is the lowest price (except to the extent otherwise provided
in Section 2.6) at which the Company may sell Shares during the applicable Pricing Period as set
forth in a Fixed Request Notice (not taking into account the applicable percentage discount during
such Pricing Period determined in accordance with Section 2.2); provided, however,
that at no time shall the Threshold Price be lower than $4.00 per share unless the Company and the
Investor mutually shall agree.



     (jjj) “Total Commitment” shall have the meaning assigned to such term in Section 1.1
hereof.



     (kkk) “Trading Day” shall mean a full trading day (beginning at 9:30 a.m., New York
City time, and ending at 4:00 p.m., New York City time) on the NASDAQ.



     (lll) “Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the New
York Stock Exchange or the NASDAQ.



     (mmm) “Trading Market Limit” means that number of shares which is one less than 20.0%
of the issued and outstanding shares of the Company’s Common Stock as of the Effective Date.



     (nnn) “VWAP” shall mean the daily volume weighted average price (based on a Trading
Day from 9:30 p.m. to 4:00 p.m. (New York time)) of the Company on the NASDAQ as reported by
Bloomberg Financial L.P. using the AQR function.



     (ooo) “Warrant Value” shall mean the fair value of all warrants, options and other
similar rights issued to a third party in connection with an Other Financing, determined by using a
standard Black-Scholes option-pricing model using an expected volatility percentage as shall be
mutually agreed by the Investor and the Company. In the case of a dispute relating to such
expected volatility assumption, the Investor shall obtain applicable volatility data from three
investment banking firms of nationally recognized reputation, and the parties hereto shall use the
average thereof for purposes of determining the expected volatility percentage in connection with
the Black-Scholes calculation referred to in the immediately preceding sentence.