Document:

MINERAL PROPERTY PURCHASE AGREEMENT

EXHIBIT  10.1

MINERAL PROPERTY PURCHASE AGREEMENT

THIS AGREEMENT dated for reference September 24, 2005.

BETWEEN:

Donald Murdock of LM122 – 2303 4th Street, SW, Calgary, AB T2S 2S7 (the”seller”)

AND:

Global Sunrise, Inc., a body corporate, duly incorporated under the laws of the State of Colorado and having an office at 1628 Second Avenue, Suite 2C, New York, NY 10028 (the "Purchaser")

W H E R E A S:

A.

The Seller is the owner of a certain mineral claims located in the Red Lake Mining District, Province of Ontario, Canada The claim is more particularly described in Schedule "A" attached hereto which forms a material part hereof (collectively, the "Claims");

B.

The Seller has agreed to sell and the Purchaser has agreed to purchase a 100% right, interest and title in and to the Claims upon the terms and conditions hereinafter set forth;

NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants and provisos herein contained, 

THE PARTIES HERETO AGREE AS FOLLOWS:

1.

SELLER’S REPRESENTATIONS

1.1

The Seller represents and warrants to the Purchaser that:

(a)

The Seller is the beneficial owner of the Claims and holds the right to transfer title to the Claims and to explore and develop the Claims;

(b)

The Seller holds the Claims free and clear of all liens, charges and claims of others, and the Seller has a free and unimpeded right of access to the Claims and has use of the Claims surface for the herein purposes;

(c)

The Claims have been duly and validly located and recorded in a good and miner-like manner pursuant to the laws of the Province of Ontario and are in good standing in Ontario as of the date of this Agreement;

(d)

There are no adverse claims or challenges against or to the Seller’s ownership of or title to any of the Claims nor to the knowledge of the Seller is there any basis therefore and there are no outstanding agreements or options to acquire or purchase the Claims or any portion thereof;

(e)

The Seller has the full right, authority and capacity to enter into this Agreement without first obtaining the consent of any other person or body corporate and the consummation of the transaction herein contemplated will not conflict with or result in any breach of any covenants or agreements contained in, or constitute a default under, or result in the creation of any encumbrance under the provisions of any indenture, agreement or other instrument whatsoever to which the Seller is a party or by which he is bound or to which he is subject; and

(f)

No proceedings are pending for, and the Seller is unaware of any basis for, the institution of any proceedings which could lead to the placing of either Seller in bankruptcy, or in any position similar to bankruptcy.

(g) 

The Seller agrees that Coast Mountain Geophysical Ltd. of Vancouver, British Columbia will hold all claims covered by this agreement “in trust” indefinitely in order to comply with the laws of the Province of Ontario or until such time as Purchaser has made other arrangements.

1.2

The representations and warranties of the Seller set out in paragraph 1.1 above form a part of this Agreement and are conditions upon which the Purchaser has relied in entering into this Agreement and shall survive the acquisition of any interest in the Claims by the Purchaser.

2.

THE PURCHASER'S REPRESENTATIONS

The Purchaser warrants and represents to the Seller that it is a body corporate, duly incorporated under the laws of the State of Colorado with full power and absolute capacity to enter into this Agreement and that the terms of this Agreement have been authorized by all necessary corporate acts and deeds in order to give effect to the terms hereof.

3.

SALE OF CLAIMS

The Seller hereby sells, grants and devises to the Purchaser a 100% undivided right, title and interest in and to the Claims in consideration of Fifteen Thousand United States Dollars ($15,000) and the Purchaser issuing 500,000 shares of the Purchaser’s common stock to the Seller upon the closing of this Agreement.

4.

CLOSING

The sale and purchase of the interest in the Claims shall be closed concurrently with the execution of this Agreement at 5:30 P.M. on September 30, 2005 at the offices of the Purchaser, or such other place and time acceptable to both parties.

BYLAWS, PAGE 1

5.

FORCE MAJEURE

If the Purchaser is prevented from or delayed in complying with any provisions of this Agreement by reason of strikes, labor disputes, lockouts, labor shortages, power shortages, fires, wars, acts of God, governmental regulations restricting normal operations or any other reason or reasons beyond the control of the Purchaser, the time limited for the performance of the various provisions of this Agreement as set out above shall be extended by a period of time equal in length to the period of such prevention and delay, and the Purchaser, insofar as is possible, shall promptly give written notice to the Seller of the particulars of the reasons for any prevention or delay under this section, and shall take all reasonable steps to remove the cause of such prevention or delay and shall give written notice to the Seller as soon as such cause ceases to exist.

6.

ENTIRE AGREEMENT

This Agreement constitutes the entire agreement to date between the parties hereto and supersedes every previous agreement, communication, expectation, negotiation, representation or understanding, whether oral or written, express or implied, statutory or otherwise, between the parties with respect to the subject matter of this Agreement.

7.

NOTICE

       7.1

Any notice required to be given under this Agreement shall be deemed to be well and sufficiently given if delivered to the other party at its respective address first noted above, and any notice given as aforesaid shall be deemed to have been given, if delivered, when delivered, or if mailed, on the fourth business day after the date of mailing thereof.

       7.2

Either party may from time to time by notice in writing change its address for the purpose of this paragraph.

8.

RELATIONSHIP OF PARTIES

Nothing contained in this Agreement shall, except to the extent specifically authorized hereunder, be deemed to constitute either party a partner, agent or legal representative of the other party.

9.

FURTHER ASSURANCES

The parties hereto agree to do or cause to be done all acts or things necessary to implement and carry into effect the provisions and intent of this Agreement.

10.

TIME OF ESSENCE

Time shall be of the essence of this Agreement.

11.

TITLES

The titles to the respective sections hereof shall not be deemed a part of this Agreement but shall be regarded as having been used for convenience only.

12.

NONSEVERABILITY

This Agreement shall be considered and construed as a single instrument and the failure to perform any of the terms and conditions in this Agreement shall constitute a violation or breach of the entire instrument or Agreement and shall constitute the basis for cancellation or termination.

14.

APPLICABLE LAW

The situs of the Agreement is New York, NY and for all purposes this Agreement will be governed exclusively by and construed and enforced in accordance with the laws prevailing in the State of New York.

15.

INUREMENT

This Agreement shall inure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns.

IN WITNESS WHEREOF this Agreement has been executed as of the day and year first above written.

PURCHASER: GLOBAL SUNRISE, INC.

 

                           /s/ Brant E. Hodyno

                                Brant Hodyno, President

         

    

SELLER:        /s/ Donald Murdock

                              Donald Murdock

     

SCHEDULE "A"

SUNRISE CLAIM, RED LAKE MINING DISTRICT, ONTARIO, CANADA

	CLAIM NUMBER

	UNITS

	EXPIRY DATE

	WORK REQUIREMENT

	 	 	 	 
	KRL 3019641

	15

	May 20, 2007

	$6,000

	KRL 3019644

	9

	May 20, 2007

	$3,600

	KRL 3019624

	8

	May 20, 2007

	$3,200

LOCATION AND ACCESS

The claims are situated in the Red Lake Mining District, northwestern Ontario, 40 km southeast of Red Lake (Figures 1 and 2). Claims KRL 3019644 and KRL 3019645 are contiguous claims 11 km northeast of Highway 105, the Red Lake Highway connecting the Red Lake district to the Trans Canada Highway near Vermillion Bay some 110 km to the south, between Dryden and Kenora. The southwest corner of claim KRL 3019641 lies within a few hundred metres of the highway. A secondary road passes immediately west of the latter claimAll areas can be reached year round. The property totals 508 hectares and is centered on 500 55’ N Latitude and 930 24’ W Longitude.

BYLAWS, PAGE 2Exhibit
10.1

 

 

 

 

 

 

 

 

 

COMMON
STOCK PURCHASE AGREEMENT

Dated August 31,
2006

by and between

ACUSPHERE,
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

  	
   

  	
  5

  
	
  Section 2.5

  	
   

  	
  Reduction of Commitment

  	
   

  	
  5

  
	
  Section 2.6

  	
   

  	
  Below Threshold Price

  	
   

  	
  5

  
	
  Section 2.7

  	
   

  	
  Settlement

  	
   

  	
  5

  
	
  Section 2.8

  	
   

  	
  Reduction of Pricing Period

  	
   

  	
  5

  
	
  Section 2.9

  	
   

  	
  Optional Amount

  	
   

  	
  7

  
	
  Section 2.10

  	
   

  	
  Calculation of Optional Amount Shares

  	
   

  	
  7

  
	
  Section 2.11

  	
   

  	
  Exercise of Optional Amount

  	
   

  	
  7

  
	
  Section 2.12

  	
   

  	
  Aggregate Limit

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article III REPRESENTATIONS AND WARRANTIES OF THE
  INVESTOR

  	
   

  	
  8

  
	
  Section 3.1

  	
   

  	
  Organization and Standing of the Investor

  	
   

  	
  8

  
	
  Section 3.2

  	
   

  	
  Authorization and Power

  	
   

  	
  8

  
	
  Section 3.3

  	
   

  	
  No Conflicts

  	
   

  	
  8

  
	
  Section 3.4

  	
   

  	
  Information

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article IV REPRESENTATIONS AND WARRANTIES OF THE
  COMPANY

  	
   

  	
  9

  
	
  Section 4.1

  	
   

  	
  Organization, Good Standing and Power

  	
   

  	
  9

  
	
  Section 4.2

  	
   

  	
  Authorization, Enforcement

  	
   

  	
  9

  
	
  Section 4.3

  	
   

  	
  Capitalization

  	
   

  	
  10

  
	
  Section 4.4

  	
   

  	
  Issuance of Shares

  	
   

  	
  10

  
	
  Section 4.5

  	
   

  	
  No Conflicts

  	
   

  	
  10

  
	
  Section 4.6

  	
   

  	
  Commission Documents, Financial Statements

  	
   

  	
  11

  
	
  Section 4.7

  	
   

  	
  Subsidiaries

  	
   

  	
  12

  
	
  Section 4.8

  	
   

  	
  No Material Adverse Effect

  	
   

  	
  12

  
	
  Section 4.9

  	
   

  	
  Indebtedness

  	
   

  	
  13

  
	
  Section 4.10

  	
   

  	
  Title To Assets

  	
   

  	
  13

  
	
  Section 4.11

  	
   

  	
  Actions Pending

  	
   

  	
  13

  
	
  Section 4.12

  	
   

  	
  Compliance With Law

  	
   

  	
  13

  
	
  Section 4.13

  	
   

  	
  Certain Fees

  	
   

  	
  13

  
	
  Section 4.14

  	
   

  	
  Operation of Business

  	
   

  	
  14

  
										

 

 i
 

 

 

	
  Section 4.15

  	
   

  	
  Environmental Compliance

  	
   

  	
  16

  
	
  Section 4.16

  	
   

  	
  Material Agreements

  	
   

  	
  17

  
	
  Section 4.17

  	
   

  	
  Transactions With Affiliates

  	
   

  	
  17

  
	
  Section 4.18

  	
   

  	
  Securities Act; NASD Conduct Rules

  	
   

  	
  17

  
	
  Section 4.19

  	
   

  	
  Employees

  	
   

  	
  19

  
	
  Section 4.20

  	
   

  	
  Use of Proceeds

  	
   

  	
  19

  
	
  Section 4.21

  	
   

  	
  Public Utility Holding Company Act and Investment
  Company Act Status

  	
   

  	
  19

  
	
  Section 4.22

  	
   

  	
  ERISA

  	
   

  	
  19

  
	
  Section 4.23

  	
   

  	
  Taxes

  	
   

  	
  20

  
	
  Section 4.24

  	
   

  	
  Insurance

  	
   

  	
  20

  
	
  Section 4.25

  	
   

  	
  Acknowledgement Regarding Investor’s Purchase of
  Shares

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article V COVENANTS

  	
   

  	
  21

  
	
  Section 5.1

  	
   

  	
  Securities Compliance; NASD Filing

  	
   

  	
  21

  
	
  Section 5.2

  	
   

  	
  Registration and Listing

  	
   

  	
  22

  
	
  Section 5.3

  	
   

  	
  Compliance with Laws.

  	
   

  	
  22

  
	
  Section 5.4

  	
   

  	
  Keeping of Records and Books of Account; Foreign
  Corrupt Practices Act

  	
   

  	
  22

  
	
  Section 5.5

  	
   

  	
  Limitations on Holdings and Issuances

  	
   

  	
  23

  
	
  Section 5.6

  	
   

  	
  Other Agreements and Other Financings.

  	
   

  	
  23

  
	
  Section 5.7

  	
   

  	
  Stop Orders

  	
   

  	
  24

  
	
  Section 5.8

  	
   

  	
  Amendments to the Registration Statement; Prospectus
  Supplements; Free Writing Prospectuses

  	
   

  	
  25

  
	
  Section 5.9

  	
   

  	
  Prospectus Delivery

  	
   

  	
  26

  
	
  Section 5.10

  	
   

  	
  Selling Restrictions.

  	
   

  	
  26

  
	
  Section 5.11

  	
   

  	
  Effective Registration Statement

  	
   

  	
  27

  
	
  Section 5.12

  	
   

  	
  Non-Public Information

  	
   

  	
  27

  
	
  Section 5.13

  	
   

  	
  Broker/Dealer

  	
   

  	
  27

  
	
  Section 5.14

  	
   

  	
  Update of Disclosure Schedule

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article VI OPINION OF COUNSEL AND CERTIFICATE;
  CONDITIONS TO THE SALE AND

          PURCHASE OF THE SHARES

  	
   

  	
  28

  
	
  Section 6.1

  	
   

  	
  Opinion of Counsel and Certificate

  	
   

  	
  28

  
	
  Section 6.2

  	
   

  	
  Conditions Precedent to the Obligation of the
  Company

  	
   

  	
  28

  
	
  Section 6.3

  	
   

  	
  Conditions Precedent to the Obligation of the
  Investor

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article VII TERMINATION

  	
   

  	
  32

  
	
  Section 7.1

  	
   

  	
  Term, Termination by Mutual Consent

  	
   

  	
  32

  
	
  Section 7.2

  	
   

  	
  Other Termination

  	
   

  	
  32

  
	
  Section 7.3

  	
   

  	
  Effect of Termination

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article VIII INDEMNIFICATION

  	
   

  	
  33

  
	
  Section 8.1

  	
   

  	
  General Indemnity.

  	
   

  	
  33

  
	
  Section 8.2

  	
   

  	
  Indemnification Procedures

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Article IX MISCELLANEOUS

  	
   

  	
  36

  
	
  Section 9.1

  	
   

  	
  Fees and Expenses.

  	
   

  	
  36

  
	
  Section 9.2

  	
   

  	
  Specific Enforcement, Consent to Jurisdiction,
  Waiver of Jury Trial

  	
   

  	
  37

  
							

 

 ii
 

 

 

	
  Section 9.3

  	
   

  	
  Entire Agreement; Amendment

  	
   

  	
  38

  
	
  Section 9.4

  	
   

  	
  Notices

  	
   

  	
  38

  
	
  Section 9.5

  	
   

  	
  Waivers

  	
   

  	
  39

  
	
  Section 9.6

  	
   

  	
  Headings

  	
   

  	
  39

  
	
  Section 9.7

  	
   

  	
  Successors and Assigns

  	
   

  	
  39

  
	
  Section 9.8

  	
   

  	
  Governing Law

  	
   

  	
  39

  
	
  Section 9.9

  	
   

  	
  Survival

  	
   

  	
  39

  
	
  Section 9.10

  	
   

  	
  Counterparts

  	
   

  	
  39

  
	
  Section 9.11

  	
   

  	
  Publicity

  	
   

  	
  39

  
	
  Section 9.12

  	
   

  	
  Severability

  	
   

  	
  40

  
	
  Section 9.13

  	
   

  	
  Further Assurances

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annex A.

  	
   

  	
  Definitions

  	
   

  	
   

  

 

 iii

COMMON
STOCK PURCHASE AGREEMENT

This COMMON STOCK PURCHASE
AGREEMENT, made and entered into on this 31st day of August 2006 (this “Agreement”),
by and between Azimuth Opportunity Ltd., an international business company
incorporated under the laws of the British Virgin Islands (the “Investor”),
and Acusphere, Inc., a corporation organized and existing under the laws of the
State of Delaware (the “Company”).

RECITALS

WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the
Company may issue and sell to the Investor and the Investor shall thereupon
purchase from the Company up to $30,000,000 worth of newly issued shares of the
Company’s common stock, $.01 par value (“Common Stock”), subject, in all
cases, to the Trading Market Limit;

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 $30,000,000 (the “Total
Commitment”) worth of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock (subject in all cases to the Trading Market
Limit, the “Aggregate Limit”), by (i) the delivery to the Investor of
not more than 24 separate Fixed Request Notices (unless the Investor and the
Company mutually agree in writing that a different number of Fixed Request
Notices may be delivered) as provided in Article II hereof and (ii) the
exercise by the Investor of Optional Amounts, which the Company may in its
discretion grant to the Investor and which may be exercised by the Investor, in
whole or in part, as provided in Article II hereof.  The aggregate of all Fixed Request Amounts
and Optional Amount Dollar Amounts shall not exceed the Aggregate Limit.

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

 

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

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

Section 1.4            Current
Report; Prospectus Supplement.   Within four business
days after the Effective Date, the Company shall file with the Commission a
report on Form 8-K relating to the transactions contemplated by, and briefly
describing the material terms and conditions of, this Agreement and, to the
extent not included in a Prospectus Supplement, 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 may 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.  Prior to filing the
Current Report with the Commission, the Company shall provide the Investor a
reasonable opportunity to comment on a draft of such Current Report and shall
give due consideration to such comments.

If required under the
Securities Act, the Company shall file a final Base Prospectus pursuant to Rule
424(b) under the Securities Act on or prior to the first Fixed Request Exercise
Date.  Pursuant to Section 5.9 and
subject to the provisions of Section 5.8, on the first Trading Day immediately
following the end of each Pricing Period, the Company shall file with the
Commission a Prospectus Supplement disclosing the number of Shares to be issued
and sold to the Investor thereunder, the total purchase price therefor and the
net proceeds to be received by the Company therefrom and, to the extent
required by the Securities Act, identifying the Current Report.

ARTICLE II

FIXED REQUEST TERMS; OPTIONAL AMOUNT

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

Section 2.1            Fixed
Request Notice.   Upon three Trading Days’ prior
written notice to the Investor, the Company may, from time to time in its sole
discretion, provide a notice to the Investor of a Fixed Request before 9:30
a.m. (New York time) on the first Trading Day of the Pricing Period (the “Fixed
Request Notice”), substantially in the form attached hereto as Exhibit 

 2
 

 

A.  The Fixed Request Notice shall specify the
Fixed Amount Requested, establish the Threshold Price for such Fixed Request,
designate the first Trading Day of the Pricing Period and specify 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 in writing 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 the
Company may not deliver any single Fixed Request Notice for a Fixed Amount
Requested in excess of the lesser of: (i) the amount in the applicable Fixed
Amount Requested column below and (ii) 2.5% of the Market Capitalization:

	
  Threshold
  Price

  	
   

  	
  Fixed Amount
  Requested

  	
   

  	
  Discount
  Price

  
	
  Equal to or
  greater than $18.00

  	
   

  	
  Not to exceed $6,250,000

  	
   

  	
  96.125% of the VWAP

  
	
  Equal to or
  greater than $17.00 and less than $18.00

  	
   

  	
  Not to exceed
  $6,000,000

  	
   

  	
  95.875% of the VWAP

  
	
  Equal to or
  greater than $16.00 and less than $17.00

  	
   

  	
  Not to exceed
  $5,750,000

  	
   

  	
  95.875% of the VWAP

  
	
  Equal to or
  greater than $15.00 and less than $16.00

  	
   

  	
  Not to exceed
  $5,550,000

  	
   

  	
  95.625% of the VWAP

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

  	
   

  	
  Not to exceed
  $5,250,000

  	
   

  	
  95.625% of the VWAP

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

  	
   

  	
  Not to exceed
  $5,000,000

  	
   

  	
  95.375% of the VWAP

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

  	
   

  	
  Not to exceed
  $4,750,000

  	
   

  	
  95.375% of the VWAP

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

  	
   

  	
  Not to exceed
  $4,500,000

  	
   

  	
  95.125% of the VWAP

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

  	
   

  	
  Not to exceed
  $4,250,000

  	
   

  	
  94.875% of the VWAP

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

  	
   

  	
  Not to exceed
  $4,000,000

  	
   

  	
  94.875% of the VWAP

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

  	
   

  	
  Not to exceed
  $3,750,000

  	
   

  	
  94.625% of the VWAP

  
	
  Equal to or
  greater than $7.50 and less than $8.00

  	
   

  	
  Not to exceed
  $3,500,000

  	
   

  	
  94.625% of the VWAP

  
	
  Equal to or
  greater than $7.00 and less than $7.50

  	
   

  	
  Not to exceed
  $3,250,000

  	
   

  	
  94.625% of the VWAP

  
	
  Equal to or
  greater than $6.50 and less than $7.00

  	
   

  	
  Not to exceed
  $3,000,000

  	
   

  	
  94.625% of the VWAP

  
	
  Equal to or
  greater than $6.00 and less than $6.50

  	
   

  	
  Not to exceed
  $2,750,000

  	
   

  	
  94.525% of the VWAP

  
	
  Equal to or
  greater than $5.50 and less than $6.00

  	
   

  	
  Not to exceed
  $2,500,000

  	
   

  	
  94.425% of the VWAP

  
	
  Equal to or
  greater than $5.00 and less than $5.50

  	
   

  	
  Not to exceed
  $2,250,000

  	
   

  	
  94.325% of the VWAP

  
	
  Equal to or
  greater than $4.50 and less than $5.00

  	
   

  	
  Not to exceed
  $2,000,000

  	
   

  	
  94.225% of the VWAP

  
	
  Equal to or
  greater than $4.00 and less than $4.50

  	
   

  	
  Not to exceed
  $1,750,000

  	
   

  	
  94.125% of the VWAP

  
	
  Equal to or
  greater than $3.50 and less than $4.00

  	
   

  	
  Not to exceed
  $1,500,000

  	
   

  	
  94.125% of the VWAP

  
	
  Equal to or
  greater than $3.00 and less than $3.50

  	
   

  	
  Not to exceed
  $1,250,000

  	
   

  	
  94.125% of the VWAP

  
	
  Equal to or
  greater than $2.50 and less than $3.00

  	
   

  	
  Not to exceed
  $1,000,000

  	
   

  	
  94.125% of the VWAP

  

 

 3
 

 

 

Anything to the contrary
in this Agreement notwithstanding, at no time shall the Investor be required to
purchase more than $6,250,000 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.   Subject to Section 2.6, the number of
Shares to be issued by the Company to the Investor pursuant to a Fixed Request
shall equal the aggregate sum of each quotient (calculated for each Trading Day
during the applicable Pricing Period for which the VWAP equals or exceeds the
Threshold Price) determined pursuant to the following equation (rounded to the
nearest whole Share):

	
  N

  	
  =

  	
  (A x B)/C,
  where:

  
	
  N

  	
  =

  	
  the number of
  Shares to be issued by the Company to the Investor in respect of a Trading
  Day during the applicable Pricing Period for which the VWAP equals or exceeds
  the Threshold Price,

  
	
  A

  	
  =

  	
  0.10 (the “Multiplier”);
  provided, however, that if the number of Trading Days
  constituting a Pricing Period is decreased as set forth in Section 2.8
  hereof, then the Multiplier correspondingly shall be increased to equal the
  decimal equivalent (in 10-millionths) of a fraction, the numerator of which
  is one and the denominator of which equals the number of Trading Days in the
  Pricing Period as so decreased,

  
	
  B

  	
  =

  	
  the Fixed Amount
  Requested, and

  
	
  C

  	
  =

  	
  the applicable
  Discount Price.

  

 

 4
 

 

 

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 Settlement Date in respect 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.

Section 2.6            Below
Threshold Price.   If the VWAP on any Trading Day in
a Pricing Period is lower than the Threshold Price, then for each such Trading
Day the total amount of the Fixed Amount Requested shall be reduced, on a
dollar-for-dollar basis, by an amount equal to the product of (x) the
Multiplier and (y) the original Fixed Amount Requested, and no Shares shall be
purchased or sold with respect to such Trading Day, except as provided
below.  If trading in the Common Stock on
NASDAQ (or any national securities exchange on which the Common Stock is then
listed) is suspended for any reason for more than three hours on any Trading
Day, the Investor may at its option deem the price of the Common Stock to be
lower than the Threshold Price for such Trading Day and, for each such Trading
Day, the total amount of the Fixed Amount Requested shall be reduced as
provided in the immediately preceding sentence, and no Shares shall be
purchased or sold with respect to such Trading Day, except as provided
below.  For each Trading Day during a
Pricing Period on which the VWAP is (or is deemed to be) lower than the
Threshold Price, the Investor may in its sole discretion elect to purchase such U.S. dollar amount of Shares equal to the amount by
which the Fixed Amount Requested has been reduced in accordance with this
Section 2.6, at the Threshold Price multiplied by the applicable percentage
determined in accordance with the price and share amount parameters set forth
in Section 2.2.  The Investor shall
inform the Company via facsimile transmission not later than 8:00 p.m. (New
York time) on the last Trading Day of such Pricing Period as to the number of
Shares, if any, the Investor elects to purchase as provided in this Section
2.6.

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

Section 2.8            Reduction
of Pricing Period.   If during a Pricing Period the
Company elects to reduce the number of Trading Days in such Pricing Period (and
thereby amend its 

 5
 

 

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

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

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

	
  D

  	
  =

  	
  A x 1/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 in writing, and

  
	
  C

  	
  =

  	
  the number of
  Trading Days in the reduced Pricing Period,

  

 

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

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

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

 6
 

 

 

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. Each daily Optional Amount exercise shall be aggregated during the
Pricing Period and settled on the next Settlement Date.  The Optional Amount Threshold Price
designated by the Company in its Fixed Request Notice shall apply to each
Optional Amount during the applicable Pricing Period.

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

	
  O

  	
  =

  	
  A/(B x C), where:

  
	
  O

  	
  =

  	
  the number of
  shares of Common Stock to be issued in connection with such Optional Amount
  exercise,

  
	
  A

  	
  =

  	
  the Optional
  Amount Dollar Amount with respect to which the Investor has delivered an
  Optional Amount Notice,

  
	
  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 or Optional
Amounts issued hereunder 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

 7
 

 

Fixed Request Notice or Optional Amount together with
the dollar value of shares or number of shares, as the case may be, of all
other Common Stock purchased by the Investor pursuant hereto would exceed the
Aggregate Limit.  The Company hereby
represents and warrants that neither it nor any of its Subsidiaries (i) has
effected any transaction or series of transactions, or (ii) is a party to any
pending transaction or series of transactions which, in any of such cases, may
be integrated with the transactions contemplated by this Agreement for purposes
of determining whether approval of the Company’s stockholders is required under
any bylaw, listed securities maintenance standards or other rules of the
Trading Market.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

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

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

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

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

 8
 

 

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.   The
Company has furnished or made available to the Investor and its advisors all
materials relating to the business, financial condition, management and
operations of the Company and materials relating to the offer and sale of the
Shares which have been requested by the Investor.  The Investor and its advisors have been
afforded the opportunity to ask questions of representatives of the
Company.  The Investor has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the
Shares.  The Investor understands that it
(and not the Company) shall be responsible for its own tax liabilities that may
arise as a result of this investment or the transactions contemplated by this
Agreement.

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

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

 9
 

 

 

Section 4.3            Capitalization.   The
authorized capital stock of the Company and the shares thereof issued and
outstanding as of the Effective Date are as set forth in the Company’s Form
10-Q for the fiscal quarter ended June 30, 2006, except for issued and
outstanding shares of capital stock resulting from the issuance of equity
awards under the Company’s benefit and equity plans and arrangements or the
exercise or conversion, as the case may be, of exercisable or convertible
securities outstanding as of the Effective Date or issued in connection with an
Acceptable Financing.  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.  Except as
set forth in the Commission Documents, there were no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue a substantial number of 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 other than in connection with the
issuance of equity awards under the Company’s benefit and equity plans and
arrangements existing on the date hereof or other than in connection with an
Acceptable Financing.  Except for
customary transfer restrictions contained in agreements entered into by the
Company to sell restricted securities or as set forth in the Commission
Documents, as of the Effective Date, the Company was not a party to, and it had
no knowledge of, any agreement restricting the voting or transfer of any shares
of the capital stock of the Company. 
Except as set forth in the Commission Documents, the offer and sale of
all capital stock, convertible or exchangeable securities, rights, warrants or
options of the Company issued prior to the Effective Date complied with all
applicable federal and state securities laws, and no stockholder has any right
of rescission or damages or any “put” or similar right with respect thereto
which would have a Material Adverse Effect. 
The Company has furnished or made available to the Investor true and
correct copies of the Company’s Certificate of Incorporation as in effect on
the Effective Date (the “Charter”), and the Company’s Bylaws as in
effect on the Effective Date (the “Bylaws”), and true and correct copies
(redacted as appropriate) of all executed resolutions of the Company’s Board of
Directors (and committees thereof) relating to the capital stock of the Company
(and transactions in respect thereof) since December 31, 2004 (except with
respect to issuances of shares of capital stock of the Company to directors or
employees of the Company as fees or compensation that were duly approved by the
Company’s Board of Directors or a committee thereof).

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

 10
 

 

acceleration or cancellation of, any material
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company or any of its
Significant Subsidiaries is a party or is bound (including, without limitation,
any listing agreement with the Trading Market), (iii) create or impose a lien,
charge or encumbrance on any property of the Company or any of its Significant
Subsidiaries under any agreement or any commitment to which the Company or any
of its Significant Subsidiaries is a party or under which the Company or any of
its Significant Subsidiaries is bound or under which any of their respective
properties or assets are bound, or (iv) result in a violation of any federal,
state, local or foreign statute, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which any property
or asset of the Company or any of its Subsidiaries are bound or affected,
except, in the case of clauses (ii), (iii) and (iv), for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.  The Company is not required under federal,
state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of
its obligations under this Agreement, or to issue and sell the Shares to the
Investor in accordance with the terms hereof (other than any filings which may
be required to be made by the Company with the Commission, the National
Association of Securities Dealers, Inc. (the “NASD”) 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, the NASD
Filing under Section 5.1 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 true and
complete copies of the Commission Documents filed with the Commission prior to
the Effective Date (including, without limitation, the 2005 Form 10-K) and has
delivered or made available to the Investor true and complete copies of all of
the Commission Documents heretofore incorporated by reference in the
Registration Statement and the Prospectus. 
The Company has not provided to the Investor any information which,
according to applicable law, rule or regulation, should have been disclosed
publicly by the Company but which has not been so disclosed, other than with
respect to the transactions contemplated by this Agreement.  As of its filing date, each Commission
Document filed with the Commission and incorporated by reference in the
Registration Statement and the Prospectus (including, without limitation, the
2005 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,
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 

 11
 

 

all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and other federal, state and
local laws, rules and regulations applicable to it, and shall not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.

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

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

(d)           Deloitte & Touche LLP, who have
expressed their audit opinions on the Company’s audited financial statements
and, to the extent required, have reviewed the related schedules included or
incorporated by reference in the Registration Statement and the Base Prospectus
is, with respect to the Company, an independent registered public accounting
firm as required by the rules of the Public Company Accounting Oversight Board.

Section 4.7            Subsidiaries.   The
2005 Form 10-K sets forth each Subsidiary of the Company as of the Effective
Date, showing its jurisdiction of incorporation or organization and the
percentage of the Company’s ownership of the outstanding capital stock or other
ownership interests of such Subsidiary, and the Company does not have any other
Subsidiaries as of the Effective Date.

Section 4.8            No
Material Adverse Effect.   Since December 31, 2005,
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 

 12
 

 

any Commission Documents filed since December 31, 2005
or (ii) continued losses from operations.

Section 4.9            Indebtedness.   The
Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2006 sets forth, as of June 30, 2006, 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 and the Company’s Commission
Documents describe any material Indebtedness from that date to the Effective
Date.  For the purposes of this
Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed
money or amounts owed in excess of $10,000,000 (other than trade accounts
payable incurred in the ordinary course of business), (b) all guaranties,
endorsements, indemnities and other contingent obligations in respect of
Indebtedness of others in excess of $10,000,000, whether or not the same are or
should be reflected in the Company’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $10,000,000 due under
leases required to be capitalized in accordance with GAAP.  There is no existing or continuing default or
event of default in respect of any Indebtedness of the Company or any of its
Subsidiaries.

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

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

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 the
Financial West Group, Member NASD/SIPC (“Reedland”), which shall be set
forth in a separate placement agency agreement 

 13
 

 

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. Except as set forth
in this Section 4.13 or as disclosed in Section 4.13 of the Disclosure Schedule
or in the Registration Statement, the Prospectus or the Current Report, there
are no contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company, the Investor
or the Broker-Dealer for a brokerage commission, finder’s fee or other like
payment in connection with the transactions contemplated by this Agreement or,
to the Company’s knowledge, any arrangements, agreements, understandings,
payments or issuance with respect to the Company or any of its Subsidiaries
that may affect the NASD’s determination of the amount of compensation to be
received by any NASD member (including, without limitation, those NASD members
set forth on Schedule 4.13 of the Disclosure Schedule) or person associated
with any NASD member in connection with the transactions contemplated by this
Agreement.  Except as set forth in this
Section 4.13 or as disclosed in Section 4.13 of the Disclosure Schedule or in
the Registration Statement, the Prospectus or the Current Report, no “items of
value” (within the meaning of Rule 2710 of the NASD’s Conduct Rules) have been
received, and no arrangements have been entered into for the future receipt of
any items of value, from the Company or any of its Subsidiaries by any NASD
member (including, without limitation, those NASD members set forth on Schedule
4.13 of the Disclosure Schedule) or person associated with any NASD member,
during the period commencing 180 days immediately preceding the Effective Date
and ending on the date this Agreement is terminated in accordance with Article
VII, that may affect the NASD’s determination of the amount of compensation to
be received by any NASD member or person associated with any NASD member in
connection with the transactions contemplated by this Agreement.  The Company hereby acknowledges and agrees
that in connection with its preparation of the NASD Filing, the Investor may
directly rely on (i) the representations and warranties of the Company
contained in this Section 4.13 and elsewhere in this Agreement and (ii) the
Company’s Directors’ and Officers’ NASD Questionnaires completed by each of the
Company’s directors and executive officers, true and correct copies of which
are included in Section 4.13 of the Disclosure Schedule.

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 

 14
 

 

Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect, individually or in the
aggregate, would not have a Material Adverse Effect.  As to each product that is subject to FDA
regulation or similar legal provisions in any foreign jurisdiction that is
developed, manufactured, tested, packaged, labeled, marketed, sold, distributed
and/or commercialized by the Company or any of its Subsidiaries, each such
product is being developed, manufactured, tested, packaged, labeled, marketed,
sold, distributed and/or commercialized in compliance with all applicable
requirements of the FDA (and any non-governmental authority whose approval or
authorization is required under foreign law comparable to that administered by
the FDA), including, but not limited to, those relating to investigational use,
investigational device exemption, premarket notification, premarket approval,
good clinical practices, good manufacturing practices, record keeping, filing of
reports, and patient privacy and medical record security, except where such
non-compliance, individually or in the aggregate, would not have a Material
Adverse Effect.  As to each product or
product candidate of the Company or any of its Subsidiaries subject to FDA
regulation or similar legal provision in any foreign jurisdiction, all
manufacturing facilities of the Company and its Subsidiaries which are
currently in operation 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
or contemplated by the Commission Documents or as disclosed in Section 4.14 of
the Disclosure Schedule, 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, 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)           The Company or one or more of its
Subsidiaries owns or possesses adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names, trade dress, logos,
copyrights and other intellectual property, including, without limitation, all
of the intellectual property described in the Commission Documents as being
owned or licensed by the Company (collectively, “Intellectual Property”),
necessary to carry on the business now operated by it.  Except as set forth in the Commission
Documents, there are no actions, suits or judicial proceedings pending, or to
the Company’s knowledge threatened, relating to patents or proprietary information
to which the Company or any of its Subsidiaries is a party or of which any
property of the Company or any of its Subsidiaries is subject, and, except as
set forth in the Commission Documents, neither the Company nor any of its
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which could render any Intellectual
Property invalid or inadequate to protect the interest of the Company and its
Subsidiaries therein, and which infringement or conflict (if the subject of any
unfavorable decision, ruling or finding) 

 15
 

 

or invalidity or
inadequacy, individually or in the aggregate, would have a Material Adverse Effect.

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

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

 16
 

 

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 or described 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”). 
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 best 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 Contracts 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 best 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 the Base Prospectus, relating to the
Shares.  The Registration Statement was
declared effective by order of the Commission on June 1, 2006.  On August 9, 2006, the Company filed with the
Commission a post-effective amendment to the Registration Statement, which
post-effective amendment was declared effective by order of the Commission on
August 18, 2006.  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 

 17
 

 

pending before or, to the
Company’s knowledge, threatened by the Commission.  No order preventing or suspending the use of
the Prospectus or any Permitted Free Writing Prospectus has been issued by the
Commission.

(ii)           The Company meets the requirements
for the use of Form S-3 under the Securities Act.  The Commission has not notified the Company
of any objection to the use of the form of the Registration Statement.  The Registration Statement complied in all
material respects on the date on which the post-effective amendment thereto was
declared effective by the Commission and on the Effective Date of this Agreement,
and will comply in all material respects on each applicable Fixed Request
Exercise Date and on each applicable Settlement Date, with the requirements of
the Securities Act and the Registration Statement (including the documents
incorporated by reference therein) did not as of the Effective Date and shall
not on each applicable Fixed Request Exercise Date and on each applicable
Settlement Date contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that this representation and
warranty does not apply to statements in or omissions from the Registration
Statement made in reliance upon and in conformity with information relating to
the Investor furnished to the Company in writing by or on behalf of the
Investor expressly for use therein. The Registration Statement, as of the
Effective Date, meets the requirements set forth in Rule 415(a)(1)(x) under the
Securities Act.  The Base Prospectus
complied in all material respects on its date and on the Effective Date, and
will comply in all material respects on each applicable Fixed Request Exercise
Date and on each applicable Settlement Date, with the requirements of the
Securities Act and did not as of the Effective Date and shall not on each
applicable Fixed Request Exercise Date and on each applicable Settlement Date
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, 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)          Each Prospectus Supplement required to
be filed pursuant to Sections 1.4 and 5.9 hereof, when filed with the
Commission under Rule 424(b) under the Securities Act and on the applicable
Settlement Date, shall comply in all material respects with the provisions of
the Securities Act and shall not when filed or on the 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.

(iv)          At the earliest time after the filing
of the Registration Statement that the Company or another offering participant
made a bona fide offer (within the meaning of Rule 164(h)(2) under the
Securities Act) relating to the Shares, the Company was not and is not an
Ineligible Issuer (as defined in Rule 405 under the Securities Act), without
taking account of any determination by the Commission pursuant to Rule 405 that
it is not necessary that the Company be considered an Ineligible Issuer.  Each Permitted Free Writing Prospectus (a)
shall conform in 

 18
 

 

all material respects to
the requirements of the Securities Act on the date of its first use, (b) when
considered together with the Prospectus on each applicable Fixed Request
Exercise Date and on each applicable Settlement Date, shall not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading, and (c) shall not
include any information that conflicts with the information contained in the
Registration Statement, including any document incorporated by reference
therein and any Prospectus Supplement deemed to be a part thereof that has not
been superseded or modified.  The
immediately preceding sentence does not apply to statements in or omissions
from any Permitted Free Writing Prospectus made in reliance upon and in
conformity with information relating to the Investor furnished to the Company
in writing by or on behalf of the Investor expressly for use therein.

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

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

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

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

Section 4.22         ERISA.   No
liability to the Pension Benefit Guaranty Corporation has been incurred with
respect to any Plan by the Company or any of its Subsidiaries which has had or
would have a Material Adverse Effect.  No
“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of
the Code) or “accumulated funding deficiency” (as defined in Section 203 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred 

 19
 

 

with respect to any Plan which has had or would have a
Material Adverse Effect, and the execution and delivery of this Agreement and
the issuance and sale of the Shares hereunder shall not result in any of the
foregoing events.  Each Plan is in
compliance in all material respects with applicable law, including ERISA and
the Code; the Company has not incurred and does not expect to incur liability
under Title IV of ERISA with respect to the termination of, or withdrawal from,
any Plan; and each Plan for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in
all material respects and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualifications.  As used in this Section 4.22, the term “Plan”
shall mean an “employee pension benefit plan” (as defined in Section 3
of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company or any Subsidiary or by any
trade or business, whether or not incorporated, which, together with the
Company or any Subsidiary, is under common control, as described in
Section 414(b) or (c) of the Code.

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

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

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

 20

 

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; NASD Filing.

(i)            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.

(ii)           As promptly as practicable, the
Investor shall prepare and, no later than 24 hours after the Effective Date,
file with the NASD’s Corporate Financing Department via CobraDesk all documents
and information required to be filed with the NASD pursuant to Rule 2710 of the
NASD’s Conduct Rules with regard to the transactions contemplated by this
Agreement (the “NASD Filing”).  In
connection therewith, on the Effective Date, the Company shall pay to the NASD
by wire transfer of immediately available funds the applicable filing fee, if
any is then due, with respect to the NASD Filing, and the Company shall be
solely responsible for payment of such fee. 
The Company hereby agrees to provide the Investor all requisite
information reasonably requested and otherwise to assist the Investor in a timely
fashion in order for the Investor to complete the preparation and submission of
the NASD Filing in accordance with this Section 5.1(ii) and to promptly respond
to any inquiries or requests from NASD or its staff.  Each party hereto shall (A) promptly notify
the other party of any communication to that party or its affiliates from the
NASD, including, without limitation, any request from the NASD or its staff for
amendments or supplements to or additional information in respect of the NASD
Filing and permit the other party to review in advance any proposed written
communication to the NASD and (B) furnish the other party with copies of all
written correspondence, filings and communications between them and their
affiliates and their respective representatives and advisors, on the one hand,
and the NASD or members of its staff, on the other hand, with respect to this
Agreement or the transactions contemplated hereby.  Each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all actions, and
to do, or cause to be done, and to assist and cooperate with the other party in
doing, all things necessary, proper or advisable to obtain as promptly as
practicable (but in no event later than 60 days after the Effective Date)
written confirmation from the NASD to the effect that the NASD’s Corporate
Financing Department has determined not to raise any objection with respect to
the fairness and reasonableness of the terms of this Agreement or the
transactions contemplated hereby; provided, however, that neither
the Investor nor the Company shall be required to (x) disclose to the NASD or
to any other governmental agency, person or entity any business, financial or
other information that the Investor deems, in its sole and absolute discretion,
to be proprietary, confidential or otherwise sensitive information, (y) amend,
modify or change any of the terms or conditions of this Agreement or (z)
otherwise take any other action, including, without limitation, modifying the
Discount Price thresholds referred to in Section 2.2 or the amount of fees and
commissions to be paid to the Broker-Dealer in connection with the transactions
contemplated by this Agreement, in each case, in such a manner that would, in
such party’s sole and absolute discretion, render the terms and conditions of
this Agreement and the transactions contemplated hereby to be no longer
advisable to such party.  Notwithstanding
anything to the contrary contained in this Agreement, the Company shall not be
permitted to deliver any Fixed Request Notice to the Investor, and the Investor
shall not be obligated to purchase any Shares pursuant to a Fixed Request
Notice, unless and until the parties hereto shall have received written
confirmation from the NASD to the effect that the NASD’s Corporate Financing Department
has determined not to raise any objection with respect to the fairness and
reasonableness of the terms of this Agreement or the transactions contemplated
hereby.

 21
 

 

 

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, the rules and regulations
of the NASD 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
which are sufficient to provide reasonable assurance that (a) transactions are
executed with management’s authorization; (b) transactions are recorded as
necessary to permit preparation of the consolidated financial statements of the
Company and to maintain accountability for the Company’s consolidated assets;
(c) access to the Company’s assets is permitted only in accordance with
management’s authorization; and (d) the reporting of the Company’s assets is
compared with existing assets at regular intervals.

 22
 

 

 

(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 their 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.

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

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

Section
5.6            Other Agreements and
Other Financings.

(i)            The Company shall not enter into,
announce or recommend to its stockholders any agreement, plan, arrangement or
transaction in or of which the terms thereof would restrict, materially delay,
conflict with or impair the ability or right of the Company or any Subsidiary
to perform its obligations under this Agreement, including, without limitation,
the obligation of the Company to deliver Shares to the Investor in respect of a
Fixed Request 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 (a “Pricing Period Other Financing Notice”); provided, however,
that the Company shall notify the Investor immediately (an “Integration
Notice”) if it enters into any agreement, plan, arrangement or transaction
with a third party, the principal purpose of which is to obtain an Other
Financing which, based on advice from the relevant Trading Market, would likely
be integrated with the transactions contemplated by this Agreement for purposes
of determining whether approval of the Company’s stockholders is required under
any bylaw, listed securities maintenance standards or other rules of the
Trading Market and, if required under applicable law, including, without
limitation, Regulation FD promulgated by the Commission, or under the
applicable rules and regulations of the Trading Market, the Company shall
simultaneously publicly disclose such information in accordance with Regulation
FD and the applicable rules 

 23
 

 

and regulations of the Trading Market. For purposes of
this Section 5.6(ii), any press release issued by, or Commission Document filed
by, the Company shall constitute sufficient notice, provided that it is issued
or filed, as the case may be, within the time requirements set forth in the
first sentence of this Section 5.6(ii) for a Pricing Period Other Financing
Notice or an Integration Notice, as applicable. 
During any Pricing Period in which the Company is required to provide a
Pricing Period Other Financing Notice pursuant to clause (A) of 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 not constituting an Acceptable Financing. “Acceptable
Financing” shall mean the issuance by the Company of: (1) shares of Common
Stock, preferred stock or securities convertible into or exchangeable for
Common Stock other than in connection with a Below Market Offering; (2) shares
of Common Stock or securities convertible into or exchangeable for Common Stock
in connection with awards under the Company’s benefit and equity plans and
arrangements and the issuance of shares of Common Stock upon the conversion,
exercise or exchange thereof; (3) shares of Common Stock issuable upon the
conversion or exchange of equity awards or convertible or exchangeable
securities outstanding as of the Effective Date; (4) shares of Common Stock
and/or warrants or similar rights to subscribe for the purchase of shares of
Common Stock in connection with technology sharing, licensing, research and
joint development agreements (or amendments thereto) with third parties,
including any such securities paid to the Company’s advisors in connection with
any such transactions, and the issuance of shares of Common Stock upon the
exercise thereof; and (5) shares of Common Stock and/or warrants or similar
rights to subscribe for the purchase of shares of Common Stock issued in
connection with equipment financings and/or real property leases (or amendments
thereto) and the issuance of shares of Common Stock upon the exercise thereof.

Section 5.7            Stop Orders.  The Company shall advise the Investor immediately
and shall confirm such advice in writing: (i) of the Company’s receipt of
notice of any request by the Commission for amendment of or a supplement to the
Registration Statement, the Prospectus, any Permitted Free Writing Prospectus
or for any additional information with respect thereto; (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 of the suspension
of qualification of the Shares for offering or sale in any jurisdiction or the
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 Prospectus or any Permitted Free Writing Prospectus

 24
 

 

untrue or which requires the making of any additions
to or changes to the statements then made in 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 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. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company shall use commercially reasonable efforts
to obtain the withdrawal of such order at the earliest possible time. The
Company shall also advise the Investor immediately and shall confirm such
advice in writing of the Company becoming aware of the happening of any event,
which makes any statement made in the NASD Filing untrue or which requires the
making of any additions to or changes to the statements then made in the NASD
Filing in order to comply with Rule 2710 of the NASD’s Conduct Rules.

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

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

(ii)           The Company agrees that, unless it
obtains the prior written consent of the Investor, it has not made and will not
make an offer relating to the Shares that would constitute an Issuer Free
Writing Prospectus or that would otherwise constitute a Free Writing Prospectus
required to be filed by the Company or the Investor with the Commission or
retained by the Company or the Investor under Rule 433 under the Securities
Act.  The Investor agrees that, unless it
obtains the prior written consent of the Company, it has not made and will not
make an offer relating to the Shares that would constitute a Free Writing
Prospectus required to be filed by the Company with the Commission or retained
by the Company under Rule 433 under the Securities Act.  Any such Issuer Free Writing Prospectus or
other Free Writing Prospectus consented to by the Investor or the Company is
referred to in this Agreement as a “Permitted Free Writing Prospectus.”  The Company agrees that (x) it has treated
and will treat, as the case 

 25
 

 

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 on the first Trading Day immediately following the end 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 (and 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 Prospectus or any
Permitted Free Writing Prospectus or should be set forth therein in order to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, or if it is necessary to 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 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 by
the Investor shall, directly or indirectly, sell any securities of the Company,
except the Shares that it owns or has the right to purchase as provided in a
Fixed Request Notice.  During the Restricted
Period, neither the Investor or any of its affiliates nor any entity managed 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 by the Investor or any of its
affiliates or any entity managed 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 by the Investor or any of its
affiliates shall enter into a short position with respect to shares of Common
Stock of the Company, including in any account of the Investor’s or in any
account directly or indirectly managed by the Investor or any of its Affiliates
or any entity managed by the Investor, except that the Investor may sell Shares
that it is obligated to purchase under a pending Fixed Request 

 26
 

 

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 simultaneous public announcement thereof is
made by the Company in the manner contemplated by Regulation FD.

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

Section 5.14         Update of Disclosure Schedule.  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 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 remedies with respect thereto.

 

 27
 

 

 

ARTICLE VI

OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND

PURCHASE OF THE SHARES

Section
6.1            Opinion of Counsel and
Certificate. 
Simultaneously with the execution and delivery of this Agreement, the
Investor has received and relied upon (i) an opinion of outside counsel to the
Company, dated the Effective Date, in the form of Exhibit C hereto, and
(ii) a certificate from the Company, dated the Effective Date, in the form of Exhibit
D 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 Notice 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 Article
III of this Agreement (i) that are not qualified by “materiality” shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects as of the applicable Fixed Request Exercise
Date and the applicable Settlement Date with the same force and effect as if
made on such dates, except to the extent such representations and warranties
are as of another date, in which case, such representations and warranties
shall be true and correct in all material respects as of such other date and
(ii) that are qualified by “materiality” shall have been true and correct
when made and shall be true and correct as of the applicable Fixed Request
Exercise Date and the applicable Settlement Date with the same force and effect
as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of such other date.

(ii)           Registration Statement.  The Registration Statement is effective and
neither the Company nor the Investor shall have received notice that the
Commission has issued or intends to issue a stop order with respect to the
Registration Statement.  The Company
shall have a maximum dollar amount certain of Shares registered under the
Registration Statement which are in an amount (A) as of the Effective Date, not
less than the maximum dollar amount worth of Shares issuable pursuant to all
Fixed Request Notices and Optional Amounts during the Investment Period 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 

 28
 

 

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

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

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

(viii)        No Unresolved NASD
Objection.   There shall
not exist any unresolved objection raised by the NASD’s Corporate Financing
Department with respect to the fairness and reasonableness of the terms of this
Agreement or the transactions contemplated hereby, and the parties hereto shall
have obtained written confirmation thereof from the NASD.

Section
6.3            Conditions Precedent to
the Obligation of the Investor.  The obligation hereunder of the Investor to
accept a Fixed Request 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 Article
IV of 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 

 29
 

 

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 maximum dollar amount worth of Shares issuable pursuant to all
Fixed Request Notices and Optional Amounts during the Investment Period 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 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) or the last sentence of Section 5.7
shall have occurred, trading in securities generally as reported on the Trading
Market shall not have been suspended or limited, nor shall a banking moratorium
have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity or crisis of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of the Investor, makes
it impracticable or inadvisable to purchase the Shares.

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

 30
 

 

have delivered to the Investor on the applicable
Settlement Date the Compliance Certificate substantially in the form attached
hereto as Exhibit E.

(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.

(ix)           Notification of Listing of
Shares.  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 of Exhibit F hereto.  On each Settlement Date, the Investor shall
have received an opinion “bring down” from outside counsel to the Company in
the form of Exhibit G hereto.

(xi)           No Unresolved NASD
Objection.   There shall
not exist any unresolved objection raised by the NASD’s Corporate Financing
Department with respect to the fairness and reasonableness of the terms of this
Agreement or the transactions contemplated hereby, and the parties hereto shall
have obtained written confirmation thereof from the NASD.

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

 31
 

 

 

ARTICLE VII

TERMINATION

Section
7.1            Term, Termination by
Mutual Consent. 
Unless earlier terminated as provided hereunder, this Agreement shall
terminate automatically on the earliest of (i) the first day of the month next
following the 18-month anniversary of the Effective Date (the “Investment
Period”), (ii) the date that the entire dollar amount of Shares registered
under the Registration Statement have been issued and sold and (iii) the date
the Investor shall have purchased the Total Commitment of shares of Common
Stock (subject in all cases to the Trading Market Limit). The Company may
terminate this Agreement effective upon three Trading Days’ prior written
notice to the Investor under Section 9.4; provided, however, that
such termination shall not occur during a Pricing Period or prior to a
Settlement Date. This Agreement may be terminated at any time (A) 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, or (B) by either the Company or the Investor effective upon written
notice to the other party under Section 9.4, if the NASD’s Corporate Financing
Department has raised any objection with respect to the fairness and
reasonableness of the terms of this Agreement or the transactions contemplated
hereby, or has otherwise failed to confirm in writing that it has determined
not to raise any such objection, and such objection shall not have been
resolved, or such confirmation of no objection shall not have been obtained,
prior to (1) the 60th day immediately following the Effective Date, in the case
of an objection raised or confirmation failure occurring prior to the first
Fixed Request Exercise Date, or (2) prior to the 60th day immediately following
the receipt by the Company or the Investor of notice of such objection, in the
case of an objection raised after the first Fixed Request Exercise Date; provided
however, that (x) the party seeking to terminate this Agreement pursuant
to this clause (B) of Section 7.1 shall have used its commercially reasonable
efforts to resolve such objection and/or to obtain such confirmation of no
objection in accordance with and subject to the provisions of Section 5.1(ii)
of this Agreement and (y) the right to terminate this Agreement pursuant to
this clause (B) of Section 7.1 shall not be available to any party whose action
or failure to act has been a principal cause of, or has resulted in, such
objection or confirmation failure and such action or failure to act constitutes
a breach of this Agreement.

Section 7.2            Other Termination.  If the Company provides the Investor with a
Pricing Period Other Financing Notice (other than in respect of an underwritten
public offering of equity securities of the Company (including warrants to
purchase shares of Common Stock) or an Acceptable Financing) or an Integration
Notice, 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 notify the Investor and the
Investor shall have the right to terminate this Agreement at any time if: (i)
any condition, occurrence, state of facts or event constituting a Material
Adverse Effect has occurred and is continuing; (ii) a Material Change in
Ownership has occurred; or (iii) a default or event of default has occurred and
is continuing under the terms of any agreement, contract, note or other
instrument to which 

 32
 

 

the Company or any of its Subsidiaries is a party with
respect to any indebtedness for borrowed money representing more than 10% of
the Company’s consolidated assets, in any such case, upon one Trading Day’s
prior written notice delivered to the Company in accordance with Section 9.4
hereof.

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

ARTICLE VIII

INDEMNIFICATION

Section
8.1            General Indemnity.

(i)            Indemnification by the
Company.  The Company
shall indemnify and hold harmless the Investor, the Broker-Dealer, each
affiliate, employee, representative and advisor of and to the Investor and the
Broker-Dealer, and each person, if any, who
controls the Investor or the Broker-Dealer within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Exchange Act from and against all
losses, claims, damages, liabilities and expenses (including reasonable costs
of defense and investigation and all attorneys’ fees) to which the Investor,
the Broker-Dealer and each such other person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are
based upon (i) any violation of law (including United States federal securities
laws) in connection with the transactions contemplated by this Agreement by the
Company or any of its Subsidiaries, affiliates, officers, directors or
employees, (ii) any untrue statement or alleged untrue statement of a material
fact contained, or incorporated by reference, in the Registration Statement or
any amendment thereto or any omission or alleged omission to state therein, or
in any document incorporated by reference therein, a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(iii) any untrue statement or alleged untrue statement of a material fact
contained, or incorporated by reference, in the Prospectus, any Issuer Free
Writing Prospectus, or in any amendment thereof or supplement thereto, or in
any “issuer information” (as defined in Rule 433 under the Securities Act) of
the Company, which “issuer information” is required to be, or is, filed with
the Commission or otherwise contained in any Free Writing Prospectus, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein, or in any document incorporated by reference therein, a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or (iv)
any untrue statement or alleged untrue statement contained in the NASD Filing,
or any amendment thereof or supplement thereto, or any omission or alleged
omission to state therein a fact necessary in order to comply with Rule 2710 of
the NASD’s Conduct Rules, but only to the extent the untrue statement, alleged
untrue statement, omission or alleged 

 33
 

 

omission was made in reliance upon, and in conformity
with, information furnished by the Company to the Investor expressly for
inclusion in the NASD Filing, or any amendment thereof or supplement thereto; 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 resulting directly and solely from any such
acts or failures to act, undertaken or omitted to be taken by the Investor or
such person through its bad faith or willful misconduct, (B) the foregoing
indemnity shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by the Investor expressly for use in the Current Report or any
Prospectus Supplement or Permitted Free Writing Prospectus, or any amendment
thereof or supplement thereto, and (C) with respect to the Prospectus, the
foregoing indemnity shall not inure to the benefit of the Investor or any such
person from whom the person asserting any loss, claim, damage, liability or
expense purchased Common Stock, if copies of all Prospectus Supplements
required to be filed pursuant to Section 1.4 and 5.9, together with the Base
Prospectus, were timely delivered or made available to the Investor pursuant
hereto and a copy of the Base Prospectus, together with a Prospectus Supplement
(as applicable), was not sent or given by or on behalf of the Investor or any
such person to such person, if required by law to have been delivered, at or
prior to the written confirmation of the sale of the Common Stock to such
person, and if delivery of the Base Prospectus, together with a Prospectus
Supplement (as applicable), would have cured the defect giving rise to such
loss, claim, damage, liability or expense.

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

(ii)           Indemnification by the
Investor. The Investor shall indemnify and hold harmless the
Company, each of its directors and officers, and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act from and against all losses, claims, damages,
liabilities and expenses (including reasonable costs of defense and
investigation and all attorneys fees) to which the Company and each such other
person may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities and expenses (or actions in respect
thereof) arise out of or are based upon (i) any violation of law (including
United States federal securities laws) in connection with the transactions
contemplated by this Agreement by the Investor or any of its affiliates,
officers, directors or employees, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Current Report or any Prospectus
Supplement or Permitted Free Writing Prospectus, or in any amendment thereof or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in each case, to the extent, but only to the extent, the untrue
statement, alleged untrue statement, omission or alleged omission was made in
reliance upon, and in conformity with, written information furnished by the
Investor to the Company expressly for inclusion in the 

 34
 

 

Current Report or such
Prospectus Supplement or Permitted Free Writing Prospectus, or any amendment
thereof or supplement thereto, or (iii) any untrue statement or alleged untrue
statement contained in the NASD Filing, or any amendment thereof or supplement
thereto, or any omission or alleged omission to state therein a fact necessary
in order to comply with Rule 2710 of the NASD’s Conduct Rules; provided,
however, that the foregoing indemnity for statements or omissions
referred to in clause (iii) above 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 Investor by the Company expressly for use in the
NASD Filing, or any amendment thereof or supplement thereto.

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

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

 35
 

 

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 (A) to the NASD, the applicable filing
fee with respect to the NASD Filing, if any is then due, and (B) to an account
designated by the Investor’s counsel, all reasonable attorneys’ fees and
expenses (exclusive of disbursements and out-of-pocket expenses) incurred by
the Investor, up to $35,000, in connection with the preparation, negotiation,
execution and delivery of this Agreement, legal due diligence of the Company
and review of the Registration Statement, the Base Prospectus, the Current
Report, any Permitted Free Writing Prospectus and preparation of the NASD
Filing. In addition, the Company shall pay, on the 30th day of the third month in each calendar
quarter during the Investment Period, not to exceed $12,500, representing (x)
the due diligence expenses incurred by the Investor during the Investment
Period and (y) the attorneys’ fees and expenses incurred by the Investor in
connection with ongoing legal due diligence of the Company and in connection
with any amendments, modifications or waivers of this Agreement, any amendments
of or supplements to the NASD Filing and review of Prospectus Supplements,
Permitted Free Writing Prospectuses, opinion “bring downs” and all other
related documents to be delivered by the Company and its counsel in connection
with a Fixed Request Exercise Date and the 

 36
 

 

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. 
Notwithstanding the foregoing, the Company shall not be responsible for
any such amounts based on the income or capital gains of the Investor.

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

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.

(i)            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.

(ii)           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.

 37
 

 

 

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:

  	
  Acusphere, Inc.

  
	
   

  	
  500 Arsenal Street

  
	
   

  	
  Watertown,
  Massachusetts 02472

  
	
   

  	
  Telephone
  Number: (617) 648-8800

  
	
   

  	
  Fax: (617)
  926-3605

  
	
   

  	
  Attention: Chief
  Financial Officer

  
	
   

  	
   

  
	
  With copies to:

  	
  Goodwin Procter LLP

  
	
   

  	
  53 State Street

  
	
   

  	
  Boston,
  Massachusetts 02472

  
	
   

  	
  Telephone
  Number: (617) 570-1000

  
	
   

  	
  Fax: (617)
  523-1231

  
	
   

  	
  Attention:

  	
  Lawrence S. Wittenberg, Esq.

  
	
   

  	
   

  	
  Michael H. Bison, Esq.

  
	
   

  	
   

  
	
  If to the Investor:

  	
  Azimuth Opportunity Ltd.

  
	
   

  	
  c/o Fortis Prime
  Fund Solutions (BVI) Limited

  
	
   

  	
  P.O. Box 761, 1st Floor

  
	
   

  	
  James Frett
  Building

  
	
   

  	
  Road Town,
  Tortola

  
	
   

  	
  British Virgin
  Islands

  
	
   

  	
  Telephone
  Number: (284) 494-6046

  
	
   

  	
  Fax: (284)
  494-6898

  
	
   

  	
  Attention: Peter
  O’Connell

  

 

 38
 

 

 

	
  With copies to:

  	
  Greenberg Traurig, LLP

  
	
   

  	
  The MetLife
  Building

  
	
   

  	
  200 Park Avenue

  
	
   

  	
  New York, NY
  10166

  
	
   

  	
  Telephone
  Number: (212) 801-9200

  
	
   

  	
  Fax: (212)
  801-6400

  
	
   

  	
  Attention:

  	
  Clifford E. Neimeth, Esq.

  
	
   

  	
   

  	
  Anthony J. Marsico, Esq.

  

 

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

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

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

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

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

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

Section
9.10         Counterparts.  This Agreement may be executed in
counterparts, all of which taken together shall constitute one and the same
original and binding instrument and shall become effective when all
counterparts have been signed by each party and delivered to the other parties
hereto, it being understood that all parties hereto need not sign the same
counterpart. In the event any signature is delivered by facsimile transmission,
the party using such means of delivery shall cause four additional executed
signature pages to be physically delivered to the other parties within five
days of the execution and delivery hereof.

Section
9.11         Publicity.  On or after the Effective Date, the Company
may issue a press release or otherwise make a public statement or announcement
with respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement (including, without 

 39
 

 

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]

 40
 

 

 

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.

	
  

  	
  ACUSPHERE, INC.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sherri C. Oberg

  
	
   

  	
   

  	
  Name: Sherri C. Oberg

  
	
   

  	
   

  	
  Title: President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  AZIMUTH OPPORTUNITY LTD.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deirdre M. McCoy

  
	
   

  	
   

  	
  Name: Deirdre M. McCoy

  
	
   

  	
   

  	
  Title: Corporate Secretary

  

 

 41

 

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 31, 2006, a preliminary form of
which is included in the Registration Statement.

(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 the Form 10-K filed by the Company for its fiscal year
ended December 31, 2005 (the “2005 Form 10-K”) and which hereafter shall
be filed by the Company during the Investment Period, including, without
limitation, the Current Report and the Company’s Quarterly Report on Form 10-Q
for its fiscal quarter ended June 30, 2006, (2) the Registration Statement, as
the same may be amended from time to time, the Prospectus and each Prospectus
Supplement, and each Permitted Free Writing Prospectus and (3) all information
contained in such filings and all documents and disclosures that have been and
heretofore shall be incorporated by reference therein.

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

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

 

 

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

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

(o)           “Effective Date” shall mean
August 31, 2006.

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

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

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

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

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

(u)           “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.

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

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

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

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

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

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

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

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

 

 

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

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

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

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

(hh)         “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.

(ii)           “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.

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

(kk)         “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 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.

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

(mm)       “NASD” shall have the meaning
assigned to such term in Section 4.5 hereof.

(nn)         “NASD Filing” shall have the
meaning assigned to such term in Section 5.1 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)         “Permitted Free Writing Prospectus”
shall have the meaning assigned to such term in Section 5.8(ii) hereof.

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

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

 

 

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

(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.

(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.

(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
333-134263, 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.

(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.

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

(kkk)       “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 $2.50 per share unless
the Company and the Investor mutually shall otherwise agree in writing.

(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 p.m. to 4:00 p.m. (New
York time)) of the Company on the NASDAQ as reported by Bloomberg Financial
L.P. using the AQR function.

(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 assuming 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.”

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