Document:

Exhibit
10.1

Execution
Version

 

COMMON
STOCK PURCHASE AGREEMENT

 

Dated August 19, 2009

 

by and between

 

PONIARD
PHARMACEUTICALS, INC.

 

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

  	
  9

  
	
  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

  	
  10

  
	
  Section 4.3.

  	
  Capitalization

  	
  10

  
	
  Section 4.4.

  	
  Issuance
  of Shares

  	
  11

  
	
  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

  

 

 

	
  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.

  	
  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

  	
  21

  
	
  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

  	
  25

  
	
  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

  
	
  Section 5.14.

  	
  Disclosure
  Schedule

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI OPINION OF COUNSEL AND
  CERTIFICATE; CONDITIONS TO THE SALE AND PURCHASE OF THE SHARES

  	
  27

  
	
  Section 6.1.

  	
  Opinion
  of Counsel and Certificate

  	
  27

  
	
  Section 6.2.

  	
  Conditions
  Precedent to the Obligation of the Company

  	
  27

  
	
  Section 6.3.

  	
  Conditions
  Precedent to the Obligation of the Investor

  	
  29

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII TERMINATION 

  	
  31

  
	
  Section 7.1.

  	
  Term,
  Termination by Mutual Consent

  	
  31

  
	
  Section 7.2.

  	
  Other
  Termination

  	
  32

  
	
  Section 7.3.

  	
  Effect
  of Termination

  	
  32

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII INDEMNIFICATION

  	
  33

  
	
  Section 8.1.

  	
  General
  Indemnity

  	
  33

  
	
  Section 8.2.

  	
  Indemnification
  Procedures

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  	
  35

  
	
  Section 9.1.

  	
  Fees
  and Expenses

  	
  35

  
	
  Section 9.2.

  	
  Specific
  Enforcement, Consent to Jurisdiction, Waiver of Jury Trial

  	
  36

  

 

ii

 

	
  Section 9.3.

  	
  Entire
  Agreement; Amendment

  	
  37

  
	
  Section 9.4.

  	
  Notices

  	
  37

  
	
  Section 9.5.

  	
  Waivers

  	
  38

  
	
  Section 9.6.

  	
  Headings

  	
  38

  
	
  Section 9.7.

  	
  Successors
  and Assigns

  	
  38

  
	
  Section 9.8.

  	
  Governing
  Law

  	
  38

  
	
  Section 9.9.

  	
  Survival

  	
  38

  
	
  Section 9.10.

  	
  Counterparts

  	
  39

  
	
  Section 9.11.

  	
  Publicity

  	
  39

  
	
  Section 9.12.

  	
  Severability

  	
  39

  
	
  Section 9.13.

  	
  Further Assurances

  	
  39

  

 

Annex
A.      Definitions

 

iii

 

COMMON
STOCK PURCHASE AGREEMENT

 

This COMMON STOCK
PURCHASE AGREEMENT, made and entered into on this 19th day of August 2009 (this “Agreement”),
by and between Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands (the “Investor”), and
Poniard Pharmaceuticals, Inc., a corporation organized and existing under
the laws of the State of Washington (the “Company”). Capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in Annex
A hereto.

 

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 $60,000,000 of newly issued shares of the
Company’s common stock, $0.02 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 $60,000,000 (the “Total Commitment”)
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 or will have duly authorized
and reserved for issuance, and covenants to continue to so reserve once reserved
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, in any case prior to
the issuance to the Investor of such Shares.

 

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.  The Company may, from time to time in its
sole discretion, no later than 9:30 a.m. (New York time) on the second
Trading Day immediately preceding the first Trading Day of the Pricing Period,
provide to the Investor a Fixed Request notice, substantially in the form
attached hereto as Exhibit A (the “Fixed Request Notice”), 

 

2

 

which Fixed Request Notice shall become effective at 9:30 a.m.
(New York time) on the first Trading Day of the Pricing Period. 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 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 $15.00

  	
   

  	
  Not
  to exceed $11,000,000

  	
   

  	
  96.000%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $14.00 and less than $15.00

  	
   

  	
  Not
  to exceed $10,250,000

  	
   

  	
  95.875%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $13.00 and less than $14.00

  	
   

  	
  Not
  to exceed $9,500,000

  	
   

  	
  95.750% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $12.00 and less than $13.00

  	
   

  	
  Not to exceed
  $8,750,000

  	
   

  	
  95.625% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $11.00 and less than $12.00

  	
   

  	
  Not to exceed
  $8,000,000

  	
   

  	
  95.500% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $10.00 and less than $11.00

  	
   

  	
  Not to exceed
  $7,250,000

  	
   

  	
  95.375% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $9.00 and less than $10.00

  	
   

  	
  Not to exceed
  $6,500,000

  	
   

  	
  95.250% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $8.00 and less than $9.00

  	
   

  	
  Not to exceed
  $5,750,000

  	
   

  	
  95.125% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $7.00 and less than $8.00

  	
   

  	
  Not to exceed
  $5,000,000

  	
   

  	
  95.000% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $6.00 and less than $7.00

  	
   

  	
  Not to exceed
  $4,250,000

  	
   

  	
  94.750% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $5.00 and less than $6.00

  	
   

  	
  Not to exceed
  $3,500,000

  	
   

  	
  94.500% of the VWAP

  

 

3

 

	
  Equal to or greater
  than $4.00 and less than $5.00

  	
   

  	
  Not to exceed
  $2,750,000

  	
   

  	
  94.250% of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater
  than $3.00 and less than $4.00

  	
   

  	
  Not to exceed
  $2,000,000

  	
   

  	
  94.000% of the VWAP

  

 

Anything to the contrary in
this Agreement notwithstanding, at no time shall the Investor be required to
purchase more than $11,000,000 worth of Common Stock in respect of any Pricing
Period (not including Common Stock subject to any Optional Amount).  The date on 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.  With respect to the Trading Days during the
applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price, 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”),

 

B =  the total 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
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 total
Fixed Amount Requested, and no Shares shall be purchased or 

 

4

 

sold with respect to such Trading Day, except as provided below.  If trading in the Common Stock on NASDAQ (or
any other U.S. 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 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 lower (or is deemed to be lower as provided
in the immediately preceding sentence) 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 at Custodian (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.

 

5

 

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 product 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,

 

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 clauses (i) and (ii) (as
applicable) 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 exercised 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):

 

6

 

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,

 

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, or
issued as liquidated damages pursuant to Section 9.1(ii), 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 aggregated 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 

 

7

 

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 delivery of notice by the Company
to the Investor, this Agreement may be amended by the Company from time to time
to reduce the Aggregate Limit by a specified dollar amount and/or number of
Common Stock as shall be determined by the Company in its sole discretion; provided,
however, that any such amendment of this Agreement (and any 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 in
connection with a previously provided Fixed Request Notice or the settlement
thereof, including, without limitation, the obligation of the Company to
deliver Shares to the Investor in respect of a previously provided Fixed
Request or Optional Amount on an 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
delivery of notice by the Company to the Investor, the Company may subsequently
amend this Agreement to increase the Aggregate Limit up to $60,000,000; subject
in all cases to the Trading Market Limit; provided, however, that
in no event shall the Company be entitled to issue Fixed Requests and grant
Optional Amounts during the remainder of the Investment Period for an aggregate
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) $60,000,000, 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.

 

8

 

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 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 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.  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 have been furnished or otherwise made available to the Investor or its
advisors (subject to Section 5.12 of this Agreement).  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.

 

ARTICLE
IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the
disclosure schedule delivered by the Company to the Investor (which is hereby
incorporated by reference in, and constitutes an integral part of, this
Agreement) (the “Disclosure Schedule”), 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 Washington 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 

 

9

 

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 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.  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, 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 those issued or granted in the ordinary course of
business.  Except as set forth in the
Commission Documents, as of the Effective Date, there were no contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock of the Company or
options, securities or rights convertible into or exchangeable for 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
that 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 Articles 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 

 

10

 

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 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, liens,
charges, encumbrances 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.  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 2008 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 

 

11

 

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 2008 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 applicable to
it, and, as of its filing date (or, if amended or superseded by a filing prior
to the Effective Date, on the date of such amended or superseded filing), 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 are subject to normal year-end audit
adjustments), 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 

 

12

 

which
a document or information is furnished, supplied or otherwise made available to
the Commission.

 

(d)           KPMG 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.

 

Section 4.7.           Subsidiaries.  NeoRx Manufacturing Group, Inc. (“NMG”),
a corporation organized under Washington law, is the only Subsidiary of the
Company as of the Effective Date.  NMG is
wholly-owned by the Company.

 

Section 4.8.           No Material Adverse Effect.  Since December 31, 2008, 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,
2008 or (ii) continued losses from operations.

 

Section 4.9.           Indebtedness.  The Company’s Quarterly Report on Form 10-Q
for its fiscal quarter ended June 30, 2009 sets forth, as of June 30,
2009, 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.  To the Company’s knowledge, 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 

 

13

 

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.

 

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 FINRA/SIPC (“Reedland”), which shall be set forth in
a separate engagement letter 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, 

 

14

 

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
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.  This Section 4.14 does not relate to
environmental matters, such items being the subject of Section 4.15.

 

(b)           Except as set forth
in the Commission Documents, 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 where failure to
own, license, or have such rights would not, individually or in the aggregate,
have a Material Adverse Effect..  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 would 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 pre-clinical and
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 pre-clinical and
clinical trials currently being conducted by or on behalf of the Company and
its Subsidiaries.  To the Company’s
knowledge, all such pre-clinical and clinical trials have been conducted in
material compliance with all applicable federal, state, local 

 

15

 

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 (or the foreign equivalent
requirements).  Except as set forth in
the Registration Statement or the Commission Documents or as would not likely
result in a Material Adverse Effect, 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 pre-clinical or 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 Documents.  To the Company’s knowledge, all pre-clinical
and 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 material 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 (or the foreign
equivalent 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
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 would reasonably be
expected to violate any Environmental Law after the Effective Date or that
would 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 or oral 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 an annual report on Form 10-K (collectively, “Material
Agreements”).  Except as set forth in
the Commission 

 

16

 

Documents, 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, 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 June 2,
2009. 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 satisfies all of the requirements for the
use of Form S-3 for the offering and sale of the Shares contemplated by
this Agreement (without reliance on General Instruction I.B.6. of
Form S-3). The Commission has not notified the Company of any objection to
the use of the form of the Registration Statement pursuant to
Rule 401(g)(1) under the Securities Act. The Registration Statement
complied in all material respects on the date on which it was declared
effective by the Commission, and will comply in all material respects at 

 

17

 

each deemed effective
date with respect to the Investor pursuant to Rule 430B(f)(2) of the
Securities Act, 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
shall not at each deemed effective date with respect to the Investor pursuant
to Rule 430 B (f) (2) of
the Securities Act, 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, when taken
together with the applicable Prospectus Supplement and any applicable Permitted
Free Writing Prospectus, 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, when
taken together with the applicable Prospectus Supplement and any applicable
Permitted Free Writing Prospectus, 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 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 5110(b)(7)(C)(i) of
the Financial Industry Regulatory Authority (the “FINRA”) Manual, 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, when taken together with the Base
Prospectus and any applicable Permitted Free Writing Prospectus, 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).  Each Permitted Free Writing
Prospectus (a) shall conform in all material respects to the requirements
of the Securities 

 

18

 

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.

 

(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.        Investment Company Act Status. 
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 

 

19

 

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 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
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
the Company deems 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.

 

20

 

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 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 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
directors 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 would likely have a material effect on the
Company’s financial statements.

 

21

 

(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 or
operate in noncompliance with any export restrictions, anti-boycott
regulations, embargo regulations or other applicable domestic or foreign laws
and regulations, except for such violations or noncompliant operations that
would not likely result in a Material Adverse Effect.

 

(iii)          Subject to the requirements of Section 5.12 of
this Agreement, from time to time from and after the period beginning with the
third 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. 
The Company shall not be obligated to issue and the Investor shall not
be obligated to purchase any shares of Common Stock 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 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 promptly (but in no event later than 24 hours) (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 that would be aggregated 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 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 

 

22

 

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.  For
greater certainty, the entry by the Company into any agreement, plan,
arrangement or transaction with a third party to obtain an Other Financing (or
any other financing) outside of a Pricing Period shall not trigger any
requirement for the Company to deliver an Other Financing Notice (it being
acknowledged and agreed that nothing contained in this
Section 5.6(ii) shall limit or modify in any respect the Company’s
obligations in Section 7.2). 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 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 above 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
exercisable or exchangeable for Common Stock in connection with awards under
the Company’s benefit and equity plans and arrangements or pursuant to
consulting or other vendor agreements and the issuance of shares of Common
Stock upon the conversion, exercise or exchange thereof; (3) shares of Common
Stock issuable upon the conversion, exercise or exchange of equity awards or
convertible, exercisable or exchangeable securities outstanding as of the
Effective Date; (4) shares of Common Stock or securities convertible into
or exercisable 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, development, marketing, manufacturing supply or
other similar strategic or collaborative agreements or arrangements (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 commercial credit
arrangements, equipment financings and/or real property leases or service
agreements (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 promptly (but in no event later than 24 hours) 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 

 

23

 

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 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. The Company shall not be required to
disclose to the Investor the substance or specific reasons of any of the events
set forth in clauses (i) through (iii) of the immediately preceding
sentence, but rather, shall only be required to disclose that the event has
occurred.  The Company shall not issue
any Fixed Request during the continuation of any of the foregoing events. 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 the Company has
determined that 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 promptly (but in
no event later than 24 hours) 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 

 

24

 

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 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 

 

25

 

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 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 or any of its affiliates, 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 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 timely 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 

 

26

 

Company.  The Investor shall be
solely responsible for all fees and commissions of the Broker-Dealer.

 

Section 5.14.        Disclosure Schedule.

 

(i)            During the
Investment Period, the Company shall from time to time update the Disclosure
Schedule as may be required to satisfy the condition set forth in Section 6.3(i).  For purposes of this Section 5.14, any
disclosure made in a schedule to the Compliance Certificate substantially in
the form attached hereto as Exhibit D shall be deemed to be an
update of the Disclosure Schedule. 
Notwithstanding anything in this Agreement to the contrary, no update to
the Disclosure Schedule pursuant to this Section 5.14 shall cure any
breach of a representation or warranty of the Company contained in this
Agreement and shall not affect any of the Investor’s rights or remedies with
respect thereto.

 

(ii)           Notwithstanding
anything to the contrary contained in the Disclosure Schedules or in this
Agreement, the information and disclosure contained in any Schedule of the
Disclosure Schedules shall be deemed to be disclosed and incorporated by
reference in any other Schedule of the Disclosure Schedules as though fully set
forth in such Schedule for which applicability of such information and
disclosure is readily apparent on its face. 
The fact that any item of information is disclosed in the Disclosure
Schedules shall not be construed to mean that such information is required to
be disclosed by this Agreement.  Except
as expressly set forth in this Agreement, such information and the thresholds
(whether based on quantity, qualitative characterization, dollar amounts or
otherwise) set forth herein shall not be used as a basis for interpreting the
terms “material” or “Material Adverse Effect” or other similar
terms in this Agreement.

 

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 (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 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, 

 

27

 

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 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 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,
credit or securities market which, in each case, in the reasonable judgment of
the Company, makes it impracticable or inadvisable to issue the Shares.

 

28

 

(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 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
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 

 

29

 

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, credit or
securities 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.

 

(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.

 

30

 

(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.  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.

 

(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 to an account
designated by the Investor, the due diligence expenses incurred by the Investor
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) March 1, 2011 (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 delivered in accordance with Section 9.4; provided,
however, that (i) such termination shall not occur during a Pricing Period
or, subsequent to the issuance of a Fixed Request Notice, prior to the
Settlement Date related to such Fixed Request Notice and (ii) prior to
issuing any press release, or making any public statement or announcement, with
respect to such termination, the Company shall consult with the Investor and
shall obtain the Investor’s consent to the form and substance of such press release
or other disclosure, which consent shall not be unreasonably delayed or
withheld. 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.

 

31

 

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 promptly (but in no event later than 24 hours) 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 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: (a) any
condition, occurrence, state of facts or event constituting a Material Adverse
Effect has occurred; (b) a Material Change in Ownership has occurred or
the Company enters into a definitive agreement providing for a Material Change
in Ownership; or (c) a default or 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 pursuant to Section 7.1 or 7.2, as applicable, 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 that the provisions of Article VIII (Indemnification), Section 9.1
(Fees and Expenses), Section 9.2 (Specific Enforcement, Consent to
Jurisdiction, Waiver of Jury Trial), Section 9.4 (Notices), Section 9.8
(Governing Law), Section 9.9 (Survival), Section 9.12 (Severability)
and this Article VII (Termination) shall remain in full force and effect notwithstanding
such termination. 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.

 

32

 

ARTICLE
VIII

INDEMNIFICATION

 

Section 8.1.           General
Indemnity.

 

(i)            Indemnification
by the Company.  The Company
shall indemnify and hold harmless the Investor, each affiliate, employee,
representative and advisor of and to the Investor, and each person, if any, who
controls the Investor 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 Investor 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 (a) any
violation of United States federal and state securities laws in connection with
the transactions contemplated by this Agreement by the Company or any of its
Subsidiaries, affiliates, officers, directors or employees, (b) 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 (c) 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 (from which no further appeals are available) that such loss,
claim, damage, liability or expense resulted 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 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 or such indemnified
persons in 

 

33

 

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 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 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 

 

34

 

sought.  No indemnifying party
will be liable for any settlement of any action effected without its prior
written consent.  Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested
(by written notice provided in 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, 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 an
aggregate of $35,000, in connection with the preparation, negotiation,
execution and delivery of this Agreement, legal due diligence of the Company
and review of the 

 

35

 

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 of the third month in each calendar quarter
during the Investment Period, promptly following the receipt of an invoice
therefor, up to an aggregate of $12,500, as reimbursement for the due diligence
expenses incurred by the Investor during the Investment Period and expenses
relating to the Investor’s 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 valued at the applicable Discount Price of the Shares failed to
be delivered; provided that the issuance thereof by the Company would not violate
the Securities Act or any applicable U.S. state securities laws), 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 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.

 

36

 

(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 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 and the Disclosure
Schedule, 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 Disclosure Schedule and all 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:

  	
   

  	
  Poniard
  Pharmaceuticals, Inc.

  
	
   

  	
   

  	
  7000
  Shoreline Court, Suite 270

  
	
   

  	
   

  	
  South
  San Francisco, California 94080

  
	
   

  	
   

  	
  Telephone
  Number: (650) 583-3774

  
	
   

  	
   

  	
  Fax:
  (650) 583-3789

  
	
   

  	
   

  	
  Attention:
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  With
  copies to:

  	
   

  	
  Perkins
  Coie LLP

  
	
   

  	
   

  	
  1201
  Third Avenue, Suite 4800

  
	
   

  	
   

  	
  Seattle,
  Washington 98101-3099

  
	
   

  	
   

  	
  Telephone
  Number: (206) 359-8000

  
	
   

  	
   

  	
  Fax:
  (206) 359-9000

  
	
   

  	
   

  	
  Attention:
  Faith M. Wilson, Esq.

  

 

37

 

	
  If
  to the Investor:

  	
   

  	
  Azimuth
  Opportunity Ltd.

  
	
   

  	
   

  	
  c/o
  Folio Administrators Limited

  
	
   

  	
   

  	
  Folio
  House

  
	
   

  	
   

  	
  P.O. Box
  800

  
	
   

  	
   

  	
  Road
  Town, Tortola VG1110

  
	
   

  	
   

  	
  British
  Virgin Islands

  
	
   

  	
   

  	
  Telephone
  Number: (284) 494-7065 Ext. 250

  
	
   

  	
   

  	
  Fax:
  (284) 494-8356/7422

  
	
   

  	
   

  	
  Attention:
  Tamara Singh

  
	
   

  	
   

  	
   

  
	
  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: 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 written 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  that would cause the
application of the laws of any other jurisdiction.

 

Section 9.9.           Survival.  The representations, warranties, covenants
and agreements of the Company and the Investor contained in this Agreement
shall survive the execution and delivery hereof until the termination of this
Agreement; provided, however, that the provisions of Article VII
(Termination), Article VIII (Indemnification), Section 9.1 (Fees and
Expenses), Section 9.2 (Specific Enforcement, Consent to Jurisdiction,
Waiver of Jury Trial), Section 9.4 

 

38

 

(Notices), Section 9.8 (Governing Law), Section 9.9
(Survival) and Section 9.12 (Severability) shall remain in full force and
effect notwithstanding such termination.

 

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 the event any signature is delivered by facsimile, digital or
electronic transmission, such transmission shall constitute delivery of the manually
executed original and the party using such means of delivery shall thereafter
cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery
hereof.  Failure to provide or delay in
the delivery of such additional executed signature pages shall not
adversely affect the efficacy of the original delivery.

 

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]

 

39

 

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.

 

 

	
   

  	
  PONIARD
  PHARMACEUTICALS, INC.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gregory L. Weaver

  
	
   

  	
   

  	
  Name:
  

  	
  Gregory
  L. Weaver

  
	
   

  	
   

  	
  Title:
  

  	
  Chief
  Financial Officer and 

  
	
   

  	
   

  	
   

  	
  Senior
  Vice President, Finance

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AZIMUTH
  OPPORTUNITY LTD.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Deirdre M. McCoy

  
	
   

  	
   

  	
  Name:
  Deirdre M. McCoy

  
	
   

  	
   

  	
  Title:   Corporate Secretary 

  

 

40

 

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 August 19, 2009, 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 December 31,
2008 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, 2008 (the
“2008 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.

 

1

 

(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)           “FINRA” shall have
the meaning assigned to such term in Section 4.18 hereof.

 

(w)          “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.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

(jj)           “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.

 

(kk)         “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; provided,
however, that none of the following, individually or in the aggregate,
shall be taken into account in determining whether a Material Adverse Effect
has occurred or insofar as reasonably can be foreseen would likely occur: (i) changes
in conditions in the U.S. or global capital, credit or financial markets
generally, including changes in the availability of capital or currency
exchange rates, provided such changes shall not have affected the Company in a
materially disproportionate manner as compared to other similarly situated
companies; (ii) changes generally affecting the biotechnology or
pharmaceutical industries, provided such changes shall not have affected the
Company in a materially disproportionate manner as compared to other similarly
situated companies; and (iii) any effect of the announcement of this
Agreement or the consummation of the transactions contemplated by this
Agreement on the Company’s relationships, contractual or otherwise, with
customers, suppliers, vendors, bank lenders, strategic venture partners or
employees.

 

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

 

(mm)       “Material Change in
Ownership” shall mean the occurrence of any one or more of the following: (i) the
acquisition by any person, including any syndicate or group deemed to be a
“person” under Section 13(d)(3) of the Exchange Act, of beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of capital stock
or other securities of the Company entitling such person to exercise, upon an
event of default or default or otherwise, 50% or more of the total voting power
of all series 

 

3

 

and
classes of capital stock and other securities of the Company entitled to vote
generally in the election of directors, other than any such acquisition by the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company; (ii) any consolidation or merger of the Company with or into any
other person, any merger of another person into the Company, or any conveyance,
transfer, sale, lease or other disposition of all or substantially all of the
properties and assets of the Company to another person, other than (a) any
such transaction (x) that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of capital stock of
the Company and (y) pursuant to which holders of capital stock of the
Company immediately prior to such transaction have the entitlement to exercise,
directly or indirectly, 50% or more of the total voting power of all shares of
capital stock of the Company entitled to vote generally in the election of
directors of the continuing or surviving person immediately after such
transaction or (b) any merger which is effected solely to change the
jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares
of common stock of the surviving entity; (iii) during any consecutive
two-year period, individuals who at the beginning of that two-year period
constituted the Board of Directors (together with any new directors whose
election to the Board of Directors, or whose nomination for election by the
stockholders of the Company, was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose elections or nominations for election were previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office; or (iv) the Company is liquidated or dissolved
or a resolution is passed by the Company’s stockholders approving a plan of
liquidation or dissolution of the Company. Beneficial ownership shall be
determined in accordance with Rule 13d-3 promulgated by the SEC under the
Exchange Act. The term “person” shall include any syndicate or group which
would be deemed to be a “person” under Section 13(d)(3) of the
Exchange Act.

 

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

 

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

 

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

 

(qq)         “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.

 

(rr)           “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.

 

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

 

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

 

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

 

4

 

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

 

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

 

(xx)          “Pricing Period
shall mean a period of 10 consecutive Trading Days commencing on the Pricing
Period start date set forth in the Fixed Request Notice, or such other period
mutually agreed upon by the Investor and the Company.

 

(yy)         “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.

 

(zz)          “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.

 

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

 

(bbb)      “Registration
Statement” shall mean the registration statement on Form S 3, Commission
File Number 333-159253, 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 pursuant
to Rule 462(b) under the Securities Act), including all documents
filed as part thereof or incorporated by reference therein, and including all
information deemed to be a part thereof at the time of effectiveness pursuant
to Rule 430A or Rule 430B under the Securities Act.

 

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

 

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

 

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

 

(fff)         “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.

 

(ggg)      “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.

 

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

 

5

 

(iii)          “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.

 

(jjj)          “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
$3.00 per share unless the Company and the Investor mutually shall agree.

 

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

 

(lll)          “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.

 

(mmm)      “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.

 

(nnn)      “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.

 

(ooo)      “VWAP” shall mean the
daily volume weighted average price (based on a Trading Day from 9:30 a.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.

 

(ppp)      “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.

 

6

 

EXHIBIT
A TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF FIXED REQUEST NOTICE

 

Reference is made to the
Common Stock Purchase Agreement dated as of 
August 19, 2009, (the  “Purchase
Agreement”) between Poniard Pharmaceuticals, Inc., a corporation
organized and existing under the laws of the State of Washington (the “Company”),
and Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands. Capitalized terms used and not
otherwise defined herein shall have the meanings given such terms in the
Purchase Agreement.

 

In accordance with and
pursuant to Section 2.1 of the Purchase Agreement, the Company hereby
issues this Fixed Request Notice to exercise a Fixed Request for the Fixed
Amount Requested indicated below.

 

	
  Fixed
  Amount Requested:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optional
  Amount Dollar Amount:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pricing
  Period start date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pricing
  Period end date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Fixed
  Request Threshold Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optional
  Amount Threshold Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Common Stock Currently Unissued under the Registration Statement;

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Common Stock Currently Available under the Aggregate Limit:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:
  

  
	
   

  	
   

  	
  Facsimile
  No.

  

 

	
  AGREED AND ACCEPTED

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT
B TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF OPTIONAL AMOUNT NOTICE

 

	
  To:

  	
   

  	
   

  	
   

  
	
  Fax#:

  	
   

  	
   

  	
   

  

 

Reference is made to the
Common Stock Purchase Agreement dated as of August 19, 2009 (the “Purchase
Agreement”) between Poniard Pharmaceuticals, Inc., a corporation
organized and existing under the laws of the State of Washington (the “Company”),
and Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands (the “Investor”).
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement.

 

In accordance with and
pursuant to Section 2.1 of the Purchase Agreement, the Investor hereby
issues this Optional Amount Notice to exercise an Optional Amount for the
Optional Amount Dollar Amount indicated below.

 

	
  Optional
  Amount Dollar Amount Exercised

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number
  of Shares to be purchased

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  VWAP
  on the date hereof:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Discount
  Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Threshold
  Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:
  

  
	
   

  	
   

  	
  Facsimile
  No.

  

 

 

EXHIBIT
C TO THE

COMMON STOCK PURCHASE AGREEMENT

CERTIFICATE OF THE COMPANY

 

CLOSING
CERTIFICATE

 

                  , 200   

 

The undersigned, the
[                      ]
of Poniard Pharmaceuticals, Inc., a corporation organized and existing
under the laws of the State of Washington (the “Company”), delivers this
certificate in connection with the Common Stock Purchase Agreement, dated as of
August 19, 2009 (the “Agreement”), by and between the Company and
Azimuth Opportunity Ltd., an international business company incorporated under
the laws of the British Virgin Islands (the “Investor”), and hereby
certifies on the date hereof that (capitalized terms used herein without
definition have the meanings assigned to them in the Agreement):

 

1.             Attached hereto as Exhibit A
is a true, complete and correct copy of the Articles of Incorporation of the
Company as filed with the Secretary of State of the State of Washington. The
Articles of Incorporation of the Company has not been further amended or
restated, and no document with respect to any amendment to the Articles of
Incorporation of the Company has been filed in the office of the Secretary of
State of the State of Washington since the date shown on the face of the state
certification relating to the Company’s Articles of Incorporation, which is in
full force and effect on the date hereof, and no action has been taken by the
Company in contemplation of any such amendment or the dissolution, merger or
consolidation of the Company.

 

2.             Attached hereto as Exhibit B
is a true and complete copy of the Bylaws of the Company, as amended and
restated through, and as in full force and effect on, the date hereof, and no
proposal for any amendment, repeal or other modification to the Bylaws of the
Company has been taken or is currently pending before the Board of Directors or
shareholders of the Company.

 

3.             The Board of Directors of the Company has approved the
transactions contemplated by the Agreement; said approval has not been amended,
rescinded or modified and remains in full force and effect as of the date
hereof.

 

4.             Each person who, as an officer of the Company, or as
attorney-in-fact of an officer of the Company, signed (i) the Agreement
and (ii) any other document delivered prior hereto or on the date hereof
in connection with the transactions contemplated by the Agreement, was duly
elected, qualified and acting as such officer or duly appointed and acting as
such attorney-in-fact, and the signature of each such person appearing on any
such document is his genuine signature.

 

IN WITNESS WHEREOF, I have signed
my name as of the date first above written.

 

	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  

 

 

EXHIBIT
D TO THE

COMMON STOCK PURCHASE AGREEMENT

COMPLIANCE CERTIFICATE

 

In connection with the
issuance of shares of common stock of Poniard Pharmaceuticals, Inc., a
corporation organized and existing under the laws of the State of Washington
(the “Company”), pursuant to the Fixed Request Notice, dated
[                          ],
delivered by the Company to Azimuth Opportunity Ltd. (the “Investor”)
pursuant to Article II of the Common Stock Purchase Agreement, dated August 19,
2009, by and between the Company and the Investor (the “Agreement”), the
undersigned hereby certifies as follows:

 

1.             The undersigned is the duly elected
[                          ]
of the Company.

 

2.             Except as set forth in the attached Disclosure Schedule,
the representations and warranties of the Company set forth in Article IV
of the Agreement (i) that are not qualified by “materiality” or “Material
Adverse Effect” are true and correct in all material respects as of [insert
Fixed Request Exercise Date] and as of the date hereof 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 are true and correct in all material respects as of such other date
and (ii) that are qualified by “materiality” or “Material Adverse Effect”
are true and correct as of [insert Fixed Request Exercise Date] and as of the
date hereof 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 are true and correct as of such other
date.

 

3.             The Company has performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Agreement to be performed, satisfied or complied with by the Company at or
prior to [insert Fixed Request Exercise Date] and the date hereof.

 

Capitalized terms used but
not otherwise defined herein shall have the meanings assigned to them in the
Agreement.

 

The undersigned has executed
this Certificate this [      ] day of
[                      ],
200[    ].

 

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:Exhibit 4.1

	
  

  	
  ISIN: CUSIP:
  INCORPORATED UNDER THE CANADA BUSINESS CORPORATIONS ACT CONSTITUÉES SOUS
  L’AUTORITÉ DE LA LOI SUR LES SOCIÉTÉS COMMERCIALES CANADIENNES ALGONQUIN
  POWER INC. NUMBER/NUMÉRO SHARES / ACTIONS *12345678901 ************
  **12345678901 *********** ***12345678901 *********** ****12345678901
  ********* Les presentes attestent que This certifies that PROOF CGC0878232
  CA6533352082 12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES DE FULLY
  PAID AND NON-ASSESSABLE COMMON SHARES OF ALGONQUIN POWER INC. PROOF
  CGC0878232 CA6533352082 12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES
  DE FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF ALGONQUIN POWER INC. PROOF
  CGC0878232 CA6533352082 12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES
  DE FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF ALGONQUIN POWER INC. PROOF
  CGC0878232 CA6533352082 12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES
  DE FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF ALGONQUIN POWER INC. PROOF
  CGC0878232 CA6533352082 12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES
  DE FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF ALGONQUIN POWER INC. PROOF
  CGC0878232 CA6533352082 12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES
  DE FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF ALGONQUIN POWER INC. PROOF
  CGC0878232 CA6533352082 12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES
  DE FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF ALGON Is the registered
  holder of est le détenteur immatriculé de PROOF CGC0878232 CA6533352082
  12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES DE FULLY PAID AND
  NON-ASSESSABLE COMMON SHARES OF ALGONQUIN POWER INC. PROOF CGC0878232
  CA6533352082 12345678901 ACTIONS ORDINAIRES ENTIÈREMENT LIBÉRÉES DE FULLY
  PAID AND NON-ASSESSABLE COMMON SHARES OF ALGONQUIN POWER INC. PROOF
  CGC0878232 CA6533352082 12345678901 FULLY PAID AND NON-ASSESSABLE COMMON
  SHARES WITHOUT NOMINAL OR PAR VALUE OF ALGONQUIN POWER INC. transferable only
  on the books of the Company upon surrender of this certificate properly
  endorsed by the holder hereof in person or by attorney. This certificate
  shall not become valid until countersigned by the transfer agent and
  registered by the registrar of the Company. IN WITNESS WHEREOF the Company
  has caused this certificate to be signed by the facsimile signature of its
  duly authorized officers. ACTIONS ORDINAIRES SANS VALEUR NOMINALE,
  ENTIÈREMENT LIBÉRÉES ET NON SUSCEPTIBLES D’APPELS SUBSÉQUENTS, DE ALGONQUIN
  POWER INC. transférables seulement aux livres de la Compagnie sur remise de
  ce certificat dûment endossé par le détenteur personnellement ou par son
  procureur. Ce certificat ne deviendra valide qu’après avoir été contresigné
  par l’agent des transferts et enregistré par l’agent chargé de la tenue des
  registres de la Compagnie. EN FOI DE QUOI la Compagnie a fait signer ce
  certificat par le facsimilé de la signature de ses dirigeants dûment
  autorisés. Date / Le: Countersigned and registered Contresigné et enregistré
  PRESIDENT / PRESIDENT CIBC Mellon Trust Company Compagnie Trust CIBC Mellon
  Transfer agent and registrar Agent des transferts et agent chargé de la tenue
  des registres. CHAIRMAN / PRESIDENT DU CONSEL By / Par: TORONTO Authorized
  signature / Signature autorisés The shares are transferable as the principal
  offices of CIBC Les actions sont transférables au bureau de Mellon Trust
  Company in Toronto. de Compagnie Trust CIBC Mellon a Toronto 1257002 0 G
  PROOF - 0053825 SECURITY INSTRUCTIONS ON REVERSE VOIR LES INSTRUCTIONS DE
  SECURITE AU VERSO 999999999 G3555529 1 Printed by DATA BUSINESS FORMS

   

  

 

	
  

  	
  For value
  received, the undersigned hereby sell(s), assign(s) and transfer(s) unto Pour
  valeur reçue, le soussigné vend, cède et transporte à (Print name(s) of
  person(s) to whom the securities are being transferred and the address for
  the register / Écrivez le nom de la ou des personnes à qui les titres sont
  transférés et l’adresse pour le registre) shares/ (number of shares if blank,
  deemed to be all / actions nombre d’actions - s’il n’y a rien d’écrit, la
  totalité est présumée) of the Company represented by this certificate, and
  hereby irrevocably constitutes and appoints the attorney of the undersigned
  to transfer the said securities with full power of substitution in this
  matter: de la société représentées par le présent certificat et constitue et
  nomme irrévocablement par les présentes procureur du ou des soussignés pour
  transférer lesdits titres avec plein pouvoir de substitution à cet égard:
  Dated / Fait le Signature Guarantee(s)* / Transferor(s) Signature(s)* /
  Garantie des signatures* Signature du ou des cédants* (the transfer cannot be
  processed without acceptable guarantees of all signatures / le transfert ne
  peut être effectué sans une garantie acceptable de chaque signature) * For
  transfers signed by the registered holder(s), their signature(s) must correspond
  with the name(s) on the certificate in every particular, without any changes.
  In addition, every signature must be Signature Guaranteed by a Canadian
  Schedule 1 chartered bank, a major trust company in Canada, or a member of
  one of the recognized medallion programs - Securities Transfer Agents
  Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) or New
  York Stock Exchange, Inc. Medallion Signature Program (MSP). * Pour les
  transferts signés par le ou les détenteurs inscrits, chaque signature doit
  correspondre exactement avec le ou les noms sur le ou les certificats, sans
  aucun changement. Aussi, chaque signature doit être garantie par une banque à
  charte de l’Annexe 1, une importante société de fiducie au Canada, ou un
  membre de l’un des programmes de garantie Medallion - Securities Transfer
  Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) ou
  New York Stock Exchange, Inc Medallion Signature Program (MSP). SECURITY
  INSTRUCTIONS - INSTRUCTIONS DE SÉCURITÉ THIS IS WATERMARKED PAPER, DO NOT
  ACCEPT WITHOUT NOTING WATERMARK. HOLD TO LIGHT TO VERIFY WATERMARK. PAPIER
  FILIGRANÉ, NE PÁS ACCEPTER SANS VÉRIFIER LA PRÉSENCE

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