Document:

Exhibit 10.1.5

 

PLEDGE AGREEMENT

 

This
PLEDGE AGREEMENT, dated as of September 30, 2010 (together with all
amendments, if any, from time to time hereto, this “Pledge Agreement”)
by and among Synta Pharmaceuticals Corp., a Delaware corporation, (“Borrower”),
Synta Securities Corp., a Massachusetts corporation (“Guarantor”),
(Borrower and Guarantor, together with any other Person that joins this Pledge
Agreement as a Pledgor in accordance with Section 27, are
collectively the “Pledgors” and each a “Pledgor”) and GENERAL
ELECTRIC CAPITAL CORPORATION, a Delaware corporation, in its capacity as
Agent for the Lenders (together with any successors, endorsees and assigns, “Agent”).

 

W I T N E S S E T H:

 

WHEREAS,
pursuant to that certain Loan and Security Agreement dated as of the date
hereof by and among Borrower, the other Pledgors, the other Loan Parties
signatory thereto from time to time, Agent and the Lenders signatory thereto
from time to time (including all annexes, exhibits and schedules thereto, as
from time to time amended, restated, supplemented or otherwise modified, the “Loan
Agreement”), the Lenders have agreed to establish certain financing
arrangements for and make loans and extensions of credit to Borrower on the
terms and conditions set forth in the Loan Agreement;

 

WHEREAS,
in order to induce Agent and the Lenders to enter into the Loan Agreement and
other Debt Documents and to induce the Lenders to make the Loans as provided
for in the Loan Agreement, each Pledgor has agreed to pledge the Pledged Collateral
to Agent, on behalf of itself and the Lenders, in accordance herewith;

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

1.             Definitions.  Unless otherwise defined herein, terms
defined in the Loan Agreement are used herein as therein defined, and the
following shall have (unless otherwise provided elsewhere in this Pledge
Agreement) the following respective meanings (such meanings being equally
applicable to both the singular and plural form of the terms defined):

 

“Bankruptcy
Code” means title 11, United States Code, as amended from time to time, and
any successor statute thereto.

 

“Pledged
Collateral” has the meaning assigned to such term in Section 2
hereof.

 

“Pledged
Entity” means an issuer of Pledged Shares or Pledged Indebtedness.

 

“Pledged
Indebtedness” means the Indebtedness evidenced by promissory notes and instruments
listed on Schedule I hereto.

 

“Pledged
Shares” means those shares listed on Schedule I.

 

“Secured
Obligations” has the meaning assigned to such term in  Section 3 hereof.

 

“Stock”
means all shares, options, warrants, general or limited partnership interests,
membership interests, equity interests or similar rights and all rights to
acquire the same in any entity.

 

 

2.             Pledge.  Each Pledgor hereby pledges to Agent, on
behalf of itself and the Lenders, and grants to Agent, on behalf of itself and
the Lenders, a first priority security interest in all of the following of such
Pledgor (collectively, the “Pledged Collateral”):

 

(a)           the Pledged Shares and the
certificates representing the Pledged Shares, and all dividends, distributions,
cash, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares; and

 

(b)           such portion, as determined by Agent
as provided in Section 7(d) below, of any additional shares of Stock
of a Pledged Entity from time to time acquired by Pledgor in any manner (which
shares shall be deemed to be part of the Pledged Shares), and the certificates
representing such additional shares, and all dividends, distributions, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Stock; and

 

(c)           the Pledged Indebtedness and the
promissory notes or instruments evidencing the Pledged Indebtedness, and all
interest, cash, instruments and other property and assets from time to time
received, receivable or otherwise distributed in respect of the Pledged
Indebtedness; and

 

(d)           all additional Indebtedness arising
after the date hereof and owing to Pledgor and evidenced by promissory notes or
other instruments, together with such promissory notes and instruments,  and all interest, cash, instruments and other
property and assets from time to time received, receivable or otherwise
distributed in respect of that Pledged Indebtedness.

 

3.             Security for Obligations.  This Pledge Agreement secures, and the
Pledged Collateral is security for, the prompt payment in full when due,
whether at stated maturity, by acceleration or otherwise, and performance of
all Obligations of any kind of each Pledgor under or in connection with the
Loan Agreement, the Guaranty and the other Debt Documents and all Obligations
of each Pledgor now or hereafter existing under this Pledge Agreement
including, without limitation, all fees, costs and expenses whether in
connection with collection actions hereunder or otherwise (collectively, the “Secured
Obligations”).

 

4.             Delivery of Pledged Collateral.  All certificates and all promissory notes and
instruments evidencing the Pledged Collateral shall be delivered to and held by
or on behalf of Agent, pursuant hereto. 
All Pledged Shares shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to Agent
and all promissory notes or other instruments evidencing the Pledged
Indebtedness shall be endorsed by the applicable Pledgor.

 

5.             Control Agreement with Issuer.
If any Pledged Collateral constitutes uncertificated ownership interests, each
Pledgor shall cause each Pledged Entity to duly authorize, execute, and deliver
to the Agent on the date hereof an agreement for the benefit of Agent
substantially in the form of Exhibit B (appropriately completed to
the satisfaction of Agent and with such modifications, if any, as shall be
satisfactory to Agent) pursuant to which each Pledged Entity agrees to comply
with any and all instructions regarding the Pledged Shares originated by Agent
without further consent by any Pledgor and not to comply with instructions regarding
the Pledged Shares originated by any other Person.

 

6.             Representations and Warranties.  Each Pledgor represents and warrants to Agent
that:

 

2

 

(a)           Such Pledgor is, and at the time of
delivery of the Pledged Shares to Agent will be, the sole holder of record and
the sole beneficial owner of such Pledged Collateral pledged by such Pledgor
free and clear of any lien, security interest or encumbrance (each a “Lien”)
thereon or affecting the title thereto, except for any Lien created by this
Pledge Agreement;  such Pledgor is and at
the time of delivery of the Pledged Indebtedness to Agent will be, the sole
owner of such Pledged Collateral free and clear of any Lien thereon or
affecting title thereto, except for any Lien created by this Pledge Agreement
and Permitted Liens;

 

(b)           All of the Pledged Shares have been
duly authorized, validly issued and are fully paid and non-assessable; the
Pledged Indebtedness has been duly authorized, authenticated or issued and
delivered by, and is the legal, valid and binding obligations of, the Pledged
Entities, and no such Pledged Entity is in default thereunder beyond applicable
grace or cure periods;

 

(c)           Such Pledgor has the right and
requisite authority to pledge, assign, transfer, deliver, deposit and set over
the Pledged Collateral pledged by such Pledgor to Agent, on behalf of itself
and the Lenders, as provided herein;

 

(d)           None of the Pledged Shares or Pledged
Indebtedness has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to
which such issuance or transfer may be subject;

 

(e)           All of the Pledged Shares are
presently owned by such Pledgor, and are presently represented by the certificates
listed on Schedule I hereto.  As
of the date hereof, there are no existing options, warrants, calls or
commitments of any character whatsoever relating to the Pledged Shares;

 

(f)            No consent, approval, authorization
or other order or other action by, and no notice to or filing with, any
governmental authority or any other person or entity is required (i) for
the pledge by such Pledgor of the Pledged Collateral pursuant to this Pledge
Agreement or for the execution, delivery or performance of this Pledge
Agreement by such Pledgor, or (ii) for the exercise by Agent of the voting
or other rights provided for in this Pledge Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Pledge Agreement, except as
may be required in connection with such disposition by laws affecting the
offering and sale of securities generally;

 

(g)           The pledge, assignment and delivery
of the Pledged Collateral pursuant to this Pledge Agreement will create a valid
first priority Lien on and a first priority perfected security interest in
favor of Agent, on behalf of itself and the Lenders, in the Pledged Collateral
and the proceeds thereof, securing the payment of the Secured Obligations,
subject to no other Lien other than Permitted Liens;

 

(h)           This Pledge Agreement has been duly
authorized, executed and delivered by Pledgor and constitutes a legal, valid
and binding obligation of Pledgor enforceable against Pledgor in accordance
with its terms;

 

(i)            The Pledged Shares constitute the
percentage of the issued and outstanding shares of Stock of each Pledged Entity
as set forth in Schedule I; and

 

(j)            None of the Pledged Indebtedness is
subordinated in right of payment to other Indebtedness (except for the Secured
Obligations) or subject to the terms of an indenture.

 

3

 

The
representations and warranties set forth in this Section 6 shall survive
the execution and delivery of this Pledge Agreement.

 

7.             Covenants.  Each Pledgor covenants and agrees that until
the Commitment Termination Date:

 

(a)           Without the prior written consent of
Agent, such Pledgor will not sell, assign, transfer, pledge, or otherwise
encumber any of its rights in or to the Pledged Collateral, or any unpaid
dividends, interest or other distributions or payments with respect to the
Pledged Collateral or grant a Lien in the Pledged Collateral, unless otherwise
expressly permitted by the Loan Agreement;

 

(b)           Such Pledgor will, at its expense,
promptly execute, acknowledge and deliver all such instruments and take all
such actions as Agent from time to time may request in order to ensure to Agent
the benefits of the Liens in and to the Pledged Collateral intended to be
created by this Pledge Agreement, including the filing of any necessary Uniform
Commercial Code financing statements, which may be filed by Agent with or (to
the extent permitted by law) without the signature of such Pledgor, and will
cooperate with Agent, at such Pledgor’s expense, in obtaining all necessary
approvals and making all necessary filings under federal, state, local or
foreign law in connection with such Liens or any sale or transfer of the
Pledged Collateral;

 

(c)           Such Pledgor has and will defend the
title to the Pledged Collateral and the Liens of Agent in the Pledged Collateral
against the claim of any person or entity and will maintain and preserve such
Liens; and

 

(d)           Pledgor will, upon obtaining
ownership of any additional Stock or promissory notes or instruments of a
Pledged Entity or Stock or promissory notes or instruments otherwise required
to be pledged to Agent pursuant to any of the Debt Documents, which Stock,
notes or instruments are not already Pledged Collateral, promptly (and in any
event within five (5) Business Days) deliver to Agent a Pledge Amendment,
duly executed by Pledgor, in substantially the form of Exhibit A
hereto (a “Pledge Amendment”) in respect of any such additional Stock,
notes or instruments, pursuant to which Pledgor shall pledge to Agent all of
such additional Stock, notes and instruments; provided that if such
additional Stock is of a Foreign Subsidiary, Pledgor shall pledge to Agent, on
behalf of itself and the Lenders, no more than 65% of the outstanding capital
stock of such Foreign Subsidiary. 
Pledgor hereby authorizes Agent to attach each Pledge Amendment to this
Pledge Agreement and agrees that all Pledged Shares and Pledged Indebtedness
listed on any Pledge Amendment delivered to Agent shall for all purposes
hereunder be considered Pledged Collateral.

 

8.             Pledgor’s Rights.  As long as no Event of Default shall have
occurred and be continuing and until written notice shall be given to the
Pledgors in accordance with Section 9(a) hereof:

 

(a)           Each Pledgor shall have the right,
from time to time, to vote and give consents with respect to the Pledged
Collateral, or any part thereof for all purposes not inconsistent with the
provisions of this Pledge Agreement, the Loan Agreement or any other Debt
Document; provided, however, that no vote shall be cast, and no
consent shall be given or action taken, which would have the effect of
impairing the position or interest of Agent in respect of the Pledged
Collateral or which would authorize, effect or consent to (unless and to the
extent expressly permitted by the Loan Agreement):

 

4

 

(i)            the
dissolution or liquidation, in whole or in part, of a Pledged Entity;

 

(ii)           the
consolidation or merger of a Pledged Entity with any other person or entity;

 

(iii)          the
sale, disposition or encumbrance of all or substantially all of the assets of a
Pledged Entity, except for Liens in favor of Agent and Permitted Liens;

 

(iv)          any
change in the authorized number of shares, the stated capital or the authorized
share capital of a Pledged Entity or the issuance of any additional shares of
its Stock; or

 

(v)           the
alteration of the voting rights with respect to the Stock of a Pledged Entity;
and

 

(b)           each Pledgor shall be entitled, from
time to time, to collect and receive for its own use all cash dividends and
interest paid in respect of the Pledged Shares and Pledged Indebtedness to the
extent not in violation of the Loan Agreement other than any and all: (A) dividends
and interest paid or payable other than in cash in respect of any Pledged
Collateral, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral;  (B) dividends and other
distributions paid or payable in cash in respect of any Pledged Shares in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in capital of a Pledged
Entity; and (C) cash paid, payable or otherwise distributed, in respect of
principal of, or in redemption of, or in exchange for, any Pledged Collateral; provided,
however, that until actually paid all rights to such distributions shall
remain subject to the Lien created by this Pledge Agreement; and

 

(c)           all dividends and interest (other
than such cash dividends and interest as are permitted to be paid to each
Pledgor in accordance with clause  (i) above) and all other
distributions in respect of any of the Pledged Shares or Pledged Indebtedness,
whenever paid or made, shall be delivered to Agent to hold as Pledged
Collateral and shall, if received by such Pledgor, be received in trust for the
benefit of Agent, be segregated from the other property or funds of such
Pledgor, and be forthwith delivered to Agent as Pledged Collateral in the same
form as so received (with any necessary indorsement).

 

9.             Defaults and Remedies; Proxy.

 

(a)           Upon the occurrence of an Event of Default
and during the continuation of such Event of Default, and concurrently with
written notice to Borrower, Agent (personally or through an agent) is hereby
authorized and empowered to transfer and register in its name or in the name of
its nominee the whole or any part of the Pledged Collateral, to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations, to exercise the
voting and all other rights as a holder with respect thereto, to collect and
receive all cash dividends, interest, principal and other distributions made
thereon, to sell in one or more sales after ten (10) days’ notice of the
time and place of any public sale or of the time at which a private sale is to
take place (which notice each Pledgor agrees is commercially reasonable) the
whole or any part of the Pledged Collateral and to otherwise act with respect
to the Pledged Collateral as though Agent were the outright owner thereof.  Any sale shall be made at a public or private
sale at Agent’s place of business, or at any 

 

5

 

place to be named in the
notice of sale, either for cash or upon credit or for future delivery at such
price as Agent may reasonably and in good faith deem fair, and Agent may be the
purchaser of the whole or any part of the Pledged Collateral so sold and hold
the same thereafter in its own right free from any claim of any Pledgor or any
right of redemption.  Each sale shall be
made to the highest bidder, but Agent reserves the right to reject any and all
bids at such sale which, in its discretion, it shall deem inadequate.  Demands of performance, except as otherwise
herein specifically provided for, notices of sale, advertisements and the
presence of property at sale are hereby waived and any sale hereunder may be
conducted by an auctioneer or any officer or agent of Agent.    EACH PLEDGOR HEREBY IRREVOCABLY CONSTITUTES
AND APPOINTS AGENT AS THE PROXY AND ATTORNEY-IN-FACT OF PLEDGOR WITH RESPECT TO
THE PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE THE PLEDGED SHARES,
WITH FULL POWER OF SUBSTITUTION TO DO SO. 
THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH
AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE TERMINATION DATE.  IN ADDITION TO THE RIGHT TO VOTE THE PLEDGED
SHARES, THE APPOINTMENT OF AGENT AS PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE
RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A
HOLDER OF THE PLEDGED SHARES WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING
WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND
VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND
WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY PLEDGED
SHARES ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE
ISSUER OF THE PLEDGED SHARES OR ANY OFFICER OR AGENT THEREOF), UPON THE
OCCURRENCE OF AN EVENT OF DEFAULT. 
NOTWITHSTANDING THE FOREGOING, AGENT SHALL NOT HAVE ANY DUTY TO EXERCISE
ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE
TO DO SO OR FOR ANY DELAY IN DOING SO.

 

(b)           If, at the original time or times appointed
for the sale of the whole or any part of the Pledged Collateral, the highest
bid, if there be but one sale, shall be inadequate to discharge in full all the
Secured Obligations, or if the Pledged Collateral be offered for sale in lots,
if at any of such sales, the highest bid for the lot offered for sale would
indicate to Agent, in its discretion, that the proceeds of the sales of the
whole of the Pledged Collateral would be unlikely to be sufficient to discharge
all the Secured Obligations, Agent may, on one or more occasions and in its
discretion, postpone any of said sales by public announcement at the time of
sale or the time of previous postponement of sale, and no other notice of such
postponement or postponements of sale need be given, any other notice being
hereby waived; provided, however, that any sale or sales made
after such postponement shall be after ten (10) days’ notice to the
applicable Pledgor.

 

(c)           If, at any time when Agent in its
sole discretion determines, following the occurrence and during the continuance
of an Event of Default, that, in connection with any actual or contemplated
exercise of its rights (when permitted under this Section 9) to sell the
whole or any part of the Pledged Shares hereunder, it is necessary or advisable
to effect a public registration of all or part of the Pledged Collateral
pursuant to the Securities Act of 1933, as amended (or any similar statute then
in effect) (the “Act”), the applicable Pledgor shall, in an expeditious
manner, cause the Pledged Entities to:

 

(i)            Prepare
and file with the Securities and Exchange Commission (the “Commission”)
a registration statement with respect to the Pledged Shares and in good faith 

 

6

 

use commercially reasonable efforts to cause such
registration statement to become and remain effective;

 

(ii)           Prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective and to comply with
the provisions of the Act with respect to the sale or other disposition of the
Pledged Shares covered by such registration statement whenever Agent shall
desire to sell or otherwise dispose of the Pledged Shares;

 

(iii)          Furnish
to Agent such numbers of copies of a prospectus and a preliminary prospectus,
in conformity with the requirements of the Act, and such other documents as
Agent may request in order to facilitate the public sale or other disposition
of the Pledged Shares by Agent;

 

(iv)          Use
commercially reasonable efforts to register or qualify the Pledged Shares
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions within the United States and Puerto Rico as Agent
shall request, and do such other reasonable acts and things as may be required
of it to enable Agent to consummate the public sale or other disposition in
such jurisdictions of the Pledged Shares by Agent;

 

(v)           Furnish,
at the request of Agent, on the date that shares of the Pledged Collateral are
delivered to the underwriters for sale pursuant to such registration or, if the
security is not being sold through underwriters, on the date that the
registration statement with respect to such Pledged Shares becomes effective, (A) an
opinion, dated such date, of the independent counsel representing such
registrant for the purposes of such registration, addressed to the
underwriters, if any, and in the event the Pledged Shares are not being sold
through underwriters, then to Agent, in customary form and covering matters of
the type customarily covered in such legal opinions; and (B) a comfort
letter, dated such date, from the independent certified public accountants of
such registrant, addressed to the underwriters, if any, and in the event the
Pledged Shares are not being sold through underwriters, then to Agent, in a
customary form and covering matters of the type customarily covered by such
comfort letters and as the underwriters or Agent shall reasonably request.  The opinion of counsel referred to above
shall additionally cover such other legal matters with respect to the
registration in respect of which such opinion is being given as Agent may reasonably
request.  The letter referred to above
from the independent certified public accountants shall additionally cover such
other financial matters (including information as to the period ending not more
than five (5) Business Days prior to the date of such letter) with respect
to the registration in respect of which such letter is being given as Agent may
reasonably request; and

 

(vi)          Otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable but not later than 18 months after the effective
date of the registration statement, an earnings statement covering the period
of at least 12 months beginning with the first full month after the effective
date of such registration statement, which earnings statement shall satisfy the
provisions of Section 12(a) of the Act.

 

(d)           All expenses incurred in complying
with Section 9(c) hereof, including, without limitation, all
registration and filing fees (including all expenses incident to filing with
the National Association of Securities Dealers, Inc.), printing expenses,
fees and disbursements of counsel for the registrant, the fees and expenses of
counsel for Agent, expenses of the 

 

7

 

independent certified
public accountants (including any special audits incident to or required by any
such registration) and expenses of complying with the securities or blue sky
laws or any jurisdictions, shall be paid by the Pledgors.

 

(e)           If, at any time when Agent shall
determine to exercise its right to sell the whole or any part of the Pledged
Collateral hereunder, such Pledged Collateral or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the Act,
Agent may, in its discretion (subject only to applicable requirements of law),
sell such Pledged Collateral or part thereof by private sale in such manner and
under such circumstances as Agent may deem necessary or advisable, but subject
to the other requirements of this Section 9, and shall not be required to
effect such registration or to cause the same to be effected.  Without limiting the generality of the
foregoing, in any such event, Agent in its discretion (x) may, in
accordance with applicable securities laws, proceed to make such private sale
notwithstanding that a registration statement for the purpose of registering
such Pledged Collateral or part thereof could be or shall have been filed under
said Act (or similar statute), (y) may approach and negotiate with a
single possible purchaser to effect such sale, and (z) may restrict such
sale to a purchaser who is an accredited investor under the Act and who will
represent and agree that such purchaser is purchasing for its own account, for
investment and not with a view to the distribution or sale of such Pledged
Collateral or any part thereof.  In
addition to a private sale as provided above in this Section 9, if any of
the Pledged Collateral shall not be freely distributable to the public without
registration under the Act (or similar statute) at the time of any proposed
sale pursuant to this Section 9, then Agent shall not be required to
effect such registration or cause the same to be effected but, in its
discretion (subject only to applicable requirements of law), may require that
any sale hereunder (including a sale at auction) be conducted subject to
restrictions:

 

(i)            as
to the financial sophistication and ability of any person or entity permitted
to bid or purchase at any such sale;

 

(ii)           as
to the content of legends to be placed upon any certificates representing the
Pledged Collateral sold in such sale, including restrictions on future transfer
thereof;

 

(iii)          as
to the representations required to be made by each person or entity bidding or
purchasing at such sale relating to that person’s or entity’s access to
financial information about the Pledgors and such person’s or entity’s
intentions as to the holding of the Pledged Collateral so sold for investment
for its own account and not with a view to the distribution thereof; and

 

(iv)          as
to such other matters as Agent may, in its discretion, deem necessary or
appropriate in order that such sale (notwithstanding any failure so to
register) may be effected in compliance with the Bankruptcy Code and other laws
affecting the enforcement of creditors’ rights and the Act and all applicable
state securities laws.

 

(f)            Each Pledgor recognizes that Agent
may be unable to effect a public sale of any or all the Pledged Collateral and
may be compelled to resort to one or more private sales thereof in accordance
with clause (e) above.  Each
Pledgor also acknowledges that any such private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale
shall not be deemed to have been made in a commercially unreasonable manner
solely by virtue of such sale being private. 
Agent shall be under no obligation to delay a sale of any of the Pledged
Collateral for the period of time necessary to permit the Pledged Entity to
register such securities 

 

8

 

for public sale under the
Act, or under applicable state securities laws, even if the applicable Pledgor
and the Pledged Entity would agree to do so.

 

(g)           Each Pledgor agrees to the maximum
extent permitted by applicable law that following the occurrence and during the
continuance of an Event of Default it will not at any time plead, claim or take
the benefit of any appraisal, valuation, stay, extension, moratorium or
redemption law now or hereafter in force in order to prevent or delay the
enforcement of this Pledge Agreement, or the absolute sale of the whole or any
part of the Pledged Collateral or the possession thereof by any purchaser at
any sale hereunder, and each Pledgor waives the benefit of all such laws to the
extent it lawfully may do so.  Each
Pledgor agrees that it will not interfere with any right, power and remedy of
Agent provided for in this Pledge Agreement or now or hereafter existing at law
or in equity or by statute or otherwise, or the exercise or beginning of the
exercise by Agent of any one or more of such rights, powers or remedies.  No failure or delay on the part of Agent to
exercise any such right, power or remedy and no notice or demand which may be
given to or made upon any Pledgor by Agent with respect to any such remedies
shall operate as a waiver thereof, or limit or impair Agent’s right to take any
action or to exercise any power or remedy hereunder, without notice or demand,
or prejudice its rights as against any Pledgor in any respect.

 

(h)           Each Pledgor further agrees that a
breach of any of the covenants contained in this Section 9 will cause
irreparable injury to Agent, that Agent shall have no adequate remedy at law in
respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 9 shall be specifically enforceable
against Pledgor, and each Pledgor hereby waives and agrees not to assert any
defenses against an action for specific performance of such covenants except
for a defense that the Secured Obligations are not then due and payable in
accordance with the agreements and instruments governing and evidencing such
obligations.

 

10.           Assignment.  Agent may assign, indorse or transfer any
instrument evidencing all or any part of the Secured Obligations as provided
in, and in accordance with, the Loan Agreement, and the holder of such
instrument shall be entitled to the benefits of this Pledge Agreement.

 

11.           Termination.  Immediately following the Termination Date,
Agent shall deliver to the applicable Pledgor the Pledged Collateral pledged by
such Pledgor at the time subject to this Pledge Agreement and all instruments
of assignment executed in connection therewith, free and clear of the Liens
hereof and, except as otherwise provided herein, all of such Pledgor’s
obligations hereunder shall at such time terminate.

 

12.           Lien Absolute.  All rights of Agent, on behalf of itself and the
Lenders, hereunder, and all obligations of each Pledgor hereunder, shall be
absolute and unconditional irrespective of:

 

(a)           any lack of validity or
enforceability of the Loan Agreement, any other Debt Document or any other
agreement or instrument governing or evidencing any Secured Obligations;

 

(b)           any change in the time, manner or
place of payment of, or in any other term of, all or any part of the Secured
Obligations, or any other amendment or waiver of or any consent to any
departure from the Loan Agreement,  any
other Debt Document or any other agreement or instrument governing or
evidencing any Secured Obligations;

 

9

 

 

(c)           any exchange, release or
non-perfection of any other Collateral, or any release or amendment or waiver
of or consent to departure from any guaranty, for all or any of the Secured
Obligations;

 

(d)           the insolvency of any Loan Party; or

 

(e)           any other circumstance which might
otherwise constitute a defense available to, or a discharge of, any Pledgor.

 

13.          Release.  Each Pledgor consents and agrees that Agent
may at any time, or from time to time, in its discretion:

 

(a)           renew, extend or change the time of
payment, and/or the manner, place or terms of payment of all or any part of the
Secured Obligations; and

 

(b)           exchange, release and/or surrender
all or any of the Collateral (including the Pledged Collateral), or any part
thereof, by whomsoever deposited, which is now or may hereafter be held by
Agent in connection with all or any of the Secured Obligations; all in such
manner and upon such terms as Agent may deem proper, and without notice to or
further assent from any Pledgor, it being hereby agreed that each Pledgor shall
be and remain bound upon this Pledge Agreement, irrespective of the value or
condition of any of the Collateral, and notwithstanding any such change,
exchange, settlement, compromise, surrender, release, renewal or extension, and
notwithstanding also that the Secured Obligations may, at any time, exceed the
aggregate principal amount thereof set forth in the Loan Agreement, or any
other agreement governing any Secured Obligations.  Each Pledgor hereby waives notice of
acceptance of this Pledge Agreement, and also presentment, demand, protest and
notice of dishonor of any and all of the Secured Obligations, and promptness in
commencing suit against any party hereto or liable hereon, and in giving any
notice to or of making any claim or demand hereunder upon any Pledgor.  No act or omission of any kind on Agent’s
part shall in any event affect or impair this Pledge Agreement.

 

14.          Reinstatement.  This Pledge Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by
or against any Pledgor or any Pledged Entity for liquidation or reorganization,
should any Pledgor or any Pledged Entity become insolvent or make an assignment
for the benefit of creditors or should a receiver or trustee be appointed for
all or any significant part of a Pledgor’s or a Pledged Entity’s assets, and
shall continue to be effective or be reinstated, as the case may be, if at any
time payment and performance of the Secured Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a “voidable preference”, “fraudulent conveyance”, or otherwise, all
as though such payment or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Secured Obligations
shall be reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

 

15.          Notices.  Except as otherwise provided herein, whenever
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give and serve upon any other party any communication with respect to this
Pledge Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be given in
the manner, and deemed received, as provided for in the Loan Agreement.

 

10

 

16.          Severability.  Whenever possible, each provision of this
Pledge Agreement shall be interpreted in a manner as to be effective and valid
under applicable law, but if any provision of this Pledge Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of
this Pledge Agreement.  This Pledge
Agreement is to be read, construed and applied together with the Loan Agreement
and the other Debt Documents which, taken together, set forth the complete
understanding and agreement of Agent and the Pledgors with respect to the
matters referred to herein and therein.

 

17.          No
Waiver; Cumulative Remedies.  Agent
shall not by any act, delay, omission or otherwise be deemed to have waived any
of its rights or remedies hereunder, and no waiver shall be valid unless in
writing, signed by Agent and then only to the extent therein set forth.  A waiver by Agent of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which Agent would otherwise have had on any future occasion.  No failure to exercise nor any delay in
exercising on the part of Agent , any right, power or privilege hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or future exercise
thereof or the exercise of any other right, power or privilege.  The rights and remedies hereunder provided
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law.  None of the terms or provisions of this
Pledge Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Agent and the Pledgors.

 

18.          Limitation
By Law.  All rights, remedies and
powers provided in this Pledge Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Pledge Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Pledge
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

 

19.          Successors
And Assigns.  This Pledge Agreement
and all obligations of the Pledgors hereunder shall be binding upon the
successors and assigns of each Pledgor (including any debtor-in-possession on
behalf of such Pledgor) and shall, together with the rights and remedies of
Agent, hereunder, inure to Agent, all future holders of any instrument
evidencing any of the obligations and their respective successors and
assigns.  No sales of participations,
other sales, assignments, transfers or other dispositions of any agreement
governing or instrument evidencing the obligations or any portion thereof or
interest therein shall in any manner impair the Lien granted to Agent,
hereunder.  No Pledgor may assign, sell,
hypothecate or otherwise transfer any interest in or obligation under this
Pledge Agreement.

 

20.          Counterparts.  This Pledge Agreement may be authenticated in
any number of separate counterparts, each of which shall collectively and
separately constitute one agreement. 
This Pledge Agreement may be authenticated by manual signature,
facsimile or, if approved in writing by Agent, electronic means, all of which
shall be equally valid.

 

21.          Governing
Law.  THIS PLEDGE AGREEMENT, THE
OTHER DEBT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
AND THEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE
CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
COLLATERAL.  IF ANY ACTION ARISING OUT OF
THIS PLEDGE AGREEMENT OR ANY OTHER DEBT DOCUMENT IS COMMENCED BY AGENT IN THE 

 

11

 

STATE
COURTS OF THE STATE OF CONNECTICUT OR IN THE U.S. DISTRICT COURT FOR THE
DISTRICT OF CONNECTICUT, EACH PLEDGOR HEREBY CONSENTS TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN THE STATE OF
CONNECTICUT.  ANY PROCESS IN ANY SUCH
ACTION SHALL BE DULY SERVED IF MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO
EACH PLEDGOR AT ITS ADDRESS DESCRIBED IN SECTION 10.2 OF THE LOAN
AGREEMENT, OR IF SERVED BY ANY OTHER MEANS PERMITTED BY APPLICABLE LAW.

 

22.          Waiver
Of Jury Trial.  EACH OF THE PLEDGORS,
AGENT AND LENDERS UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS PLEDGE
AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED
HEREBY, ANY DEALINGS AMONG THE LOAN PARTIES, AGENT AND/OR LENDERS RELATING TO
THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE
RELATIONSHIP THAT IS BEING ESTABLISHED AMONG THE LOAN PARTIES, AGENT AND/OR
LENDERS.  THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED
IN ANY COURT. THIS WAIVER IS IRREVOCABLE. 
THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING.  THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS PLEDGE AGREEMENT,
ANY OTHER DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO
THIS TRANSACTION OR ANY RELATED TRANSACTION. 
THIS PLEDGE AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.

 

23.          Section Titles.  The Section titles contained in this
Pledge Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.

 

24.          No
Strict Construction.  The parties
hereto have participated jointly in the negotiation and drafting of this Pledge
Agreement.  In the event an ambiguity or
question of intent or interpretation arises, this Pledge Agreement shall be
construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Pledge Agreement.

 

25.          Advice
of Counsel.  Each of the parties
represents to each other party hereto that it has discussed this Pledge
Agreement and, specifically, the provisions of Section 21 and Section 22,
with its counsel.

 

26.          Benefit
of Agent.  All Liens granted or
contemplated hereby shall be for the benefit of Agent, on behalf of itself, and
all proceeds or payments realized from Pledged Collateral in accordance
herewith shall be applied to the Secured Obligations in accordance with the
terms of the Loan Agreement.

 

27.          Additional
Pledgors. Additional Pledgors may become party to this Pledge
Agreement by the execution and delivery by such Person of
a joinder agreement in form and substance satisfactory to Agent and
such other documents and deliverables as may be required by Agent.  Upon
receipt of such items, such Person shall become a “Pledgor” hereunder with
the same force and effect as if it were originally a party to this Pledge
Agreement and named as a “Pledgor” hereunder. 
The execution and delivery of such joinder agreement or such
other requested deliverables, and the joining of such Person to this
Pledge Agreement, shall not require 

 

12

 

the
consent of any other Pledgor hereunder, and the rights and obligations of each
Pledgor hereunder shall remain in full force and effect notwithstanding the
addition of any new Pledgor as a party to this Pledge Agreement.

 

[signature page follows]

 

13

 

IN
WITNESS WHEREOF, each of the parties hereto has caused this Pledge Agreement to
be executed and delivered by its duly authorized officer as of the date first
set forth above.

 

 

	
   

  	
  PLEDGORS:

  
	
   

  	
   

  
	
   

  	
  SYNTA
  PHARMACEUTICALS CORP.,

  
	
   

  	
  as
  Borrower

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Keith Ehrlich

  
	
   

  	
  Name:

  	
  Keith
  Ehrlich

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SYNTA
  SECURITIES CORP.,

  
	
   

  	
  as
  Guarantor

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Keith Ehrlich

  
	
   

  	
  Name:

  	
  Keith
  Ehrlich

  
	
   

  	
  Title:

  	
  Treasurer

  

 

 

	
   

  	
  GENERAL
  ELECTRIC CAPITAL CORPORATION, as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  R. Hanes Whiteley

  
	
   

  	
  Name:

  	
  R.
  Hanes Whiteley

  
	
   

  	
  Title:

  	
  Duly
  Authorized Signatory

  

 

 

SCHEDULE I

 

PART A

 

PLEDGED SHARES

 

	
  Pledged Entity

  	
   

  	
  Class

  of Stock

  	
   

  	
  Stock Certificate

  Number(s)

  	
   

  	
  Number

  of Shares

  	
   

  	
  Percentage of

  Outstanding Shares

  	
   

  
	
  Synta Securities Corp.

  	
   

  	
  Common

  	
   

  	
  No. 1

  	
   

  	
  100

  	
   

  	
  100

  	
  %

  
	
  Synta Limited

  	
   

  	
  Ordinary

  	
   

  	
  5539649

  	
   

  	
  65

  	
   

  	
  65

  	
  %

  

 

 

PART B

 

PLEDGED INDEBTEDNESS

 

	
  Pledged Entity

  	
   

  	
  Initial

  Principal Amount

  	
   

  	
  Issue Date

  	
   

  	
  Maturity Date

  	
   

  	
  Interest Rate

  	
   

  
	
  Not Applicable

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Exhibit A

 

PLEDGE AMENDMENT

 

This
Pledge Amendment, dated
                                ,
       is delivered pursuant to Section 7(d) of
the Pledge Agreement referred to below. 
All defined terms herein shall have the meanings ascribed thereto or
incorporated by reference in the Pledge Agreement.  The undersigned hereby certifies that the
representations and warranties in Section 6 of the  Pledge Agreement are and continue to be true
and correct, both as to the promissory notes, instruments and shares pledged
prior to this Pledge Amendment and as to the promissory notes, instruments and
shares pledged pursuant to this Pledge Amendment.  The undersigned further agrees that this
Pledge Amendment may be attached to that certain Pledge Agreement, dated                           ,
between undersigned, as Pledgor, the other Pledgors signatory hereto and
General Electric Capital Corporation, as Agent, (the “Pledge Agreement”)
and that the Pledged Shares and Pledged Indebtedness listed on this Pledge
Amendment shall be and become a part of the Pledged Collateral referred to in
said  Pledge Agreement and shall secure
all Secured Obligations referred to in said Pledge Agreement.  The undersigned acknowledges that any
promissory notes, instruments or shares not included in the Pledged Collateral
at the discretion of Agent may not otherwise be pledged by Pledgor to any other
person or entity otherwise used as security for any obligations other than the
Secured Obligations.

 

 

	
   

  	
  [NAME
  OF PLEDGOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

	
  Name and

  Address of

  Pledgor

  	
   

  	
  Pledged

  Entity

  	
   

  	
  Class

  Of Stock

  	
   

  	
  Certificate

  Number(s)

  	
   

  	
  Number

  Of Shares

  	
   

  	
  Percentage of

  Outstanding Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Pledged Entity

  	
   

  	
  Initial

  Principal Amount

  	
   

  	
  Issue Date

  	
   

  	
  Maturity Date

  	
   

  	
  Interest Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

Exhibit B

 

AGREEMENT REGARDING UNCERTIFICATED 

LIMITED LIABILITY COMPANY 

INTERESTS

 

AGREEMENT
(as amended, modified, restated and/or supplemented from time to time, this “Agreement”),
dated as of
                                    ,
among                             
(the “Pledgor”), GENERAL ELECTRIC CAPITAL CORPORATION (the “Pledgee”),
and
                            ,
as the issuer of the Uncertificated Limited Liability Company Interests (as defined
below) (the “Issuer”).

 

WITNESSETH:

 

WHEREAS,
Pursuant to the Loan Agreement, dated as of the date hereof, by and among
                                  ,
the Lenders signatory thereto and the Pledgee (including all annexes, exhibits
and schedules thereto, as from time to time amended, restated, supplemented or
otherwise modified, the “Loan Agreement”), Agent has agreed to establish
certain financing arrangements for and make loans and extensions of credit to
Borrower on the terms and conditions set forth in the Loan Agreement;

 

WHEREAS,
the Pledgor, in order to secure the payment of the obligations outstanding
under the Loan Agreement (the “Obligations”), has entered into a Pledge
Agreement, dated as of the date hereof, by and between the Pledgor and the
Pledgee (the “Pledge Agreement”), pursuant to which the Pledgor has
pledged to the Pledgee and the other parties signatory thereto and granted a
security interest in favor of the Pledgee in all of the right, title and
interest of the Pledgor in and to certain limited liability company membership
units in the Issuer (the “Issuer Pledged Interests”); and

 

WHEREAS,
the Pledgor desires the Issuer to enter into this Agreement in order to perfect
the security interest of the Pledgee under the Pledge Agreement in the Issuer
Pledged Interests, to vest in the Pledgee control of the Issuer Pledge
Interests and to provide for the rights of the parties under this Agreement;

 

NOW
THEREFORE, in consideration of the premises and the mutual promises and
agreements contained herein, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

 

1.             The Pledgor hereby irrevocably
authorizes and directs the Issuer, and the Issuer hereby agrees, to comply with
any and all instructions and orders originated by the Pledgee (and its
successors and assigns) regarding any and all of the Issuer Pledged Interests
without the further consent by the registered owner (including the Pledgor),
and, following its receipt of a notice from the Pledgee stating that the
Pledgee is exercising exclusive control of the Issuer Pledged Interests, not to
comply with any instructions or orders regarding any or all of the Issuer
Pledged Interests originated by any person or entity other than the Pledgee
(and its successors and assigns) or a court of competent jurisdiction.

 

2.             The Issuer hereby certifies that (i) no
notice of any security interest, lien or other encumbrance or claim affecting
the Issuer Pledged Interests (other than the security interest of the Pledgee)
has been received by it, and (ii) the security interest of the Pledgee in
the Issuer Pledged Interests has been registered in the books and records of
the Issuer.

 

 

3.             The Issuer hereby represents and
warrants that the pledge by the Pledgor of, and the granting by the Pledgor of
a security interest in, the Issuer Pledged Interests to the Pledgee does not
violate the charter, by-laws, partnership agreement, membership agreement or
any other agreement governing the Issuer or the Issuer Pledged Interests.

 

4.             All notices, statements of
accounts, reports, prospectuses, financial statements and other communications
to be sent to the Pledgor by the Issuer in respect of the Issuer will also be
sent to the Pledgee at the following address:

 

General
Electric Capital Corporation

c/o
GE Healthcare Financial Services, Inc.

Two
Bethesda Metro Center, Suite 600

Bethesda,
Maryland  20814

Attention:
General Counsel

Telephone
No.:      301-961-1640

Facsimile
No.:        301-664-9866

 

5.             Following its receipt of a notice
from the Pledgee stating that the Pledgee is exercising exclusive control of
the Issuer Pledged Interests and until the Pledgee shall have delivered written
notice to the issuer that all of the Obligations have been paid in full and
this Agreement is terminated, the Issuer will send any and all redemptions,
distributions, interest or other payments in respect of the Issuer Pledged
Interests from the Issuer for the account of the Pledgee only by wire transfers
to such account as the Pledgee shall instruct.

 

6.             Except as expressly provided
otherwise in Sections 4 and 5, all notices, instructions, orders and
communications hereunder shall be sent or delivered by mail, telecopy, or
overnight courier service and all such notices and communications shall, when
mailed, telecopied, or sent by overnight courier, be effective when deposited
in the mails or delivered to overnight courier, prepaid and properly addressed
for delivery on such or the next Business Day, or sent by telecopier, except
that notices and communications to the Pledgee or the Issuer shall not be
effective until received. All notices and other communications shall be in
writing and addressed as follows:

 

(a)           if to Pledgor at:

 

 

 

 

 

With
a copy to:

 

 

 

 

 

 

(b)           if to the Pledgee, at the address
given in Section 4;

 

(c)           if to the Issuer, at:

 

 

 

 

 

 

or
at such other address as shall have been furnished in writing by any Person
described above to the party required to give notice hereunder. As used in this
Section 6, “Business Day” means any day other than a Saturday,
Sunday, or other day in which banks in New York are authorized to remain
closed.

 

7.             This Agreement shall be binding
upon the successors and assigns of the Pledgor and the Issuer and shall inure
to the benefit of and be enforceable by the Pledgee and its successors and
assigns. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
In the event that any provision of this Agreement shall prove to be invalid or
unenforceable, such provision shall be deemed to be severable from the other
provisions of this Agreement which shall remain binding on all parties hereto.
None of the terms and conditions of this Agreement may be changed, waived,
modified or varied in any manner whatsoever except in writing signed by the
Pledgee, the Issuer and the Pledgor.

 

8.             This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to its principles of conflict of laws.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed and delivered by its duly authorized officer as of the date first set
forth above.

 

	
   

  	
  [PLEDGOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GENERAL
  ELECTRIC CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
  Duly
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [ISSUER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:Exhibit 10.1

 

EXECUTION VERSION

 

 

COMMON STOCK PURCHASE AGREEMENT

 

Dated as of October 4, 2010

 

by and between

 

SYNTA PHARMACEUTICALS CORP.

 

and

 

AZIMUTH OPPORTUNITY LTD.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I PURCHASE AND SALE
  OF COMMON STOCK

  	
   

  	
  1

  
	
  Section 1.1

  	
   

  	
  Purchase and Sale of Stock

  	
   

  	
  1

  
	
  Section 1.2

  	
   

  	
  Effective Date; Settlement Dates

  	
   

  	
  1

  
	
  Section 1.3

  	
   

  	
  The Shares

  	
   

  	
  2

  
	
  Section 1.4

  	
   

  	
  Current Report; Prospectus Supplement

  	
   

  	
  2

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II FIXED REQUEST
  TERMS; OPTIONAL AMOUNT

  	
   

  	
  2

  
	
  Section 2.1

  	
   

  	
  Fixed Request Notice

  	
   

  	
  2

  
	
  Section 2.2

  	
   

  	
  Fixed Requests

  	
   

  	
  3

  
	
  Section 2.3

  	
   

  	
  Share Calculation

  	
   

  	
  4

  
	
  Section 2.4

  	
   

  	
  Limitation of Fixed Requests

  	
   

  	
  4

  
	
  Section 2.5

  	
   

  	
  Reduction of Commitment

  	
   

  	
  4

  
	
  Section 2.6

  	
   

  	
  Below Threshold Price

  	
   

  	
  5

  
	
  Section 2.7

  	
   

  	
  Settlement

  	
   

  	
  5

  
	
  Section 2.8

  	
   

  	
  Reduction of Pricing Period

  	
   

  	
  5

  
	
  Section 2.9

  	
   

  	
  Optional Amount

  	
   

  	
  6

  
	
  Section 2.10

  	
   

  	
  Calculation of Optional Amount Shares

  	
   

  	
  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

  	
   

  	
  9

  
	
  Section 3.4

  	
   

  	
  Information

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY

  	
   

  	
  10

  
	
  Section 4.1

  	
   

  	
  Organization, Good Standing and Power

  	
   

  	
  10

  
	
  Section 4.2

  	
   

  	
  Authorization, Enforcement

  	
   

  	
  10

  
	
  Section 4.3

  	
   

  	
  Capitalization

  	
   

  	
  10

  
	
  Section 4.4

  	
   

  	
  Issuance of Shares

  	
   

  	
  11

  
	
  Section 4.5

  	
   

  	
  No Conflicts

  	
   

  	
  11

  
	
  Section 4.6

  	
   

  	
  Commission Documents, Financial Statements

  	
   

  	
  12

  
	
  Section 4.7

  	
   

  	
  Subsidiaries

  	
   

  	
  13

  
	
  Section 4.8

  	
   

  	
  No Material Adverse Effect

  	
   

  	
  13

  
	
  Section 4.9

  	
   

  	
  Indebtedness

  	
   

  	
  13

  
	
  Section 4.10

  	
   

  	
  Title To Assets

  	
   

  	
  14

  
	
  Section 4.11

  	
   

  	
  Actions Pending

  	
   

  	
  14

  
	
  Section 4.12

  	
   

  	
  Compliance With Law

  	
   

  	
  14

  
	
  Section 4.13

  	
   

  	
  Certain Fees

  	
   

  	
  14

  
	
  Section 4.14

  	
   

  	
  Operation of Business

  	
   

  	
  15

  
	
  Section 4.15

  	
   

  	
  Environmental Compliance

  	
   

  	
  17

  
	
  Section 4.16

  	
   

  	
  Material Agreements

  	
   

  	
  17

  

 

i

 

	
  Section 4.17

  	
   

  	
  Transactions With Affiliates

  	
   

  	
  18

  
	
  Section 4.18

  	
   

  	
  Securities Act

  	
   

  	
  18

  
	
  Section 4.19

  	
   

  	
  Employees

  	
   

  	
  20

  
	
  Section 4.20

  	
   

  	
  Use of Proceeds

  	
   

  	
  20

  
	
  Section 4.21

  	
   

  	
  Investment Company Act Status

  	
   

  	
  20

  
	
  Section 4.22

  	
   

  	
  ERISA

  	
   

  	
  20

  
	
  Section 4.23

  	
   

  	
  Taxes

  	
   

  	
  21

  
	
  Section 4.24

  	
   

  	
  Insurance

  	
   

  	
  21

  
	
  Section 4.25

  	
   

  	
  Acknowledgement Regarding Investor’s Purchase of Shares

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V COVENANTS

  	
   

  	
  21

  
	
  Section 5.1

  	
   

  	
  Securities Compliance; FINRA Filing

  	
   

  	
  21

  
	
  Section 5.2

  	
   

  	
  Registration and Listing

  	
   

  	
  23

  
	
  Section 5.3

  	
   

  	
  Compliance with Laws

  	
   

  	
  23

  
	
  Section 5.4

  	
   

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

  	
   

  	
  23

  
	
  Section 5.5

  	
   

  	
  Limitations on Holdings and Issuances

  	
   

  	
  24

  
	
  Section 5.6

  	
   

  	
  Other Agreements and Other Financings

  	
   

  	
  24

  
	
  Section 5.7

  	
   

  	
  Stop Orders

  	
   

  	
  26

  
	
  Section 5.8

  	
   

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

  	
   

  	
  27

  
	
  Section 5.9

  	
   

  	
  Prospectus Delivery

  	
   

  	
  28

  
	
  Section 5.10

  	
   

  	
  Selling Restrictions

  	
   

  	
  28

  
	
  Section 5.11

  	
   

  	
  Effective Registration Statement

  	
   

  	
  29

  
	
  Section 5.12

  	
   

  	
  Non-Public Information

  	
   

  	
  29

  
	
  Section 5.13

  	
   

  	
  Broker/Dealer

  	
   

  	
  29

  
	
  Section 5.14

  	
   

  	
  Disclosure Schedule

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  30

  
	
  Section 6.1

  	
   

  	
  Opinion of Counsel and Certificate

  	
   

  	
  30

  
	
  Section 6.2

  	
   

  	
  Conditions Precedent to the Obligation of the Company

  	
   

  	
  30

  
	
  Section 6.3

  	
   

  	
  Conditions Precedent to the Obligation of the Investor

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII TERMINATION

  	
   

  	
  34

  
	
  Section 7.1

  	
   

  	
  Term, Termination by Mutual Consent

  	
   

  	
  34

  
	
  Section 7.2

  	
   

  	
  Other Termination

  	
   

  	
  35

  
	
  Section 7.3

  	
   

  	
  Effect of Termination

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII INDEMNIFICATION

  	
   

  	
  36

  
	
  Section 8.1

  	
   

  	
  General Indemnity

  	
   

  	
  36

  
	
  Section 8.2

  	
   

  	
  Indemnification Procedures

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  	
   

  	
  39

  
	
  Section 9.1

  	
   

  	
  Fees and Expenses

  	
   

  	
  39

  
	
  Section 9.2

  	
   

  	
  Specific Enforcement, Consent to Jurisdiction, Waiver of
  Jury Trial

  	
   

  	
  40

  
	
  Section 9.3

  	
   

  	
  Entire Agreement; Amendment

  	
   

  	
  41

  
	
  Section 9.4

  	
   

  	
  Notices

  	
   

  	
  41

  

 

ii

 

	
  Section 9.5

  	
   

  	
  Waivers

  	
   

  	
  42

  
	
  Section 9.6

  	
   

  	
  Headings

  	
   

  	
  42

  
	
  Section 9.7

  	
   

  	
  Successors and Assigns

  	
   

  	
  42

  
	
  Section 9.8

  	
   

  	
  Governing Law

  	
   

  	
  42

  
	
  Section 9.9

  	
   

  	
  Survival

  	
   

  	
  42

  
	
  Section 9.10

  	
   

  	
  Counterparts

  	
   

  	
  43

  
	
  Section 9.11

  	
   

  	
  Publicity

  	
   

  	
  43

  
	
  Section 9.12

  	
   

  	
  Severability

  	
   

  	
  43

  
	
  Section 9.13

  	
   

  	
  Further Assurances

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annex A.       Definitions

  	
   

  	
   

  

 

iii

 

COMMON STOCK PURCHASE AGREEMENT

 

This
COMMON STOCK PURCHASE AGREEMENT, made
and entered into on this 4th day of October 2010 (this “Agreement”),
by and between Azimuth Opportunity Ltd., an international business company
incorporated under the laws of the British Virgin Islands (the “Investor”),
and Synta Pharmaceuticals Corp., a corporation organized and existing under the
laws of the State of Delaware (the “Company”). Capitalized terms used
but not defined herein shall have the meanings ascribed to such terms in Annex
A hereto.

 

RECITALS

 

WHEREAS, the parties desire that, upon the terms and
subject to the conditions contained herein, the Company may issue and sell to
the Investor and the Investor shall thereupon purchase from the Company up to
$35,000,000 of newly issued shares of the Company’s common stock, $0.0001 par
value (“Common Stock”), subject, in all cases, to the Trading Market
Limit; and

 

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

 

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

 

ARTICLE I

PURCHASE AND SALE OF COMMON STOCK

 

Section 1.1            Purchase and Sale of Stock.  Upon the terms and subject to the conditions
of this Agreement, during the Investment Period the Company in its discretion
may issue and sell to the Investor up to $35,000,000 (the “Total Commitment”)
of duly authorized, validly issued, fully paid and non-assessable shares of Common
Stock (subject in all cases to the Trading Market Limit, the “Aggregate
Limit”), by (i) the delivery to the Investor of not more than 24
separate Fixed Request Notices (unless the Investor and the Company mutually
agree that a different number of Fixed Request Notices may be delivered) as
provided in Article II hereof and (ii) the exercise by the Investor
of Optional Amounts, which the Company may in its discretion grant to the
Investor and which may be exercised by the Investor, in whole or in part, as
provided in Article II hereof.  The
aggregate of all Fixed Request Amounts and Optional Amount Dollar Amounts shall
not exceed the Aggregate Limit.

 

Section 1.2            Effective Date; Settlement Dates.  This Agreement shall become effective and
binding upon delivery of counterpart signature pages of this Agreement
executed by each of the parties hereto, and by delivery of an opinion of
counsel and a certificate of the Company as provided in Section 6.1
hereof, to the offices of Greenberg Traurig, LLP, 200 Park Avenue, New York,
New York 10166, at 4:00 p.m., New York time, on the Effective Date.  In consideration of and in express reliance
upon the representations, warranties and covenants, and otherwise upon the
terms and subject to the conditions, of this Agreement, from and after the
Effective Date and during the Investment Period (i) the Company shall
issue and sell to the Investor, and the Investor agrees to purchase from the
Company, the Shares in respect of each 

 

 

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

 

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

 

Section 1.4            Current Report; Prospectus
Supplement.  As soon as
practicable, but in any event not later than 5:30 p.m. (New York time) on
the first Trading Day immediately following the Effective Date, the Company
shall file with the Commission (i) a report on Form 8-K relating to
the transactions contemplated by, and describing the material terms and
conditions of, this Agreement (the “Current Report”), and (ii) a
Prospectus Supplement pursuant to Rule 424(b) under the Securities
Act specifically relating to the transactions contemplated by, and describing
the material terms and conditions of, this Agreement, containing information
previously omitted at the time of effectiveness of the Registration Statement
in reliance on Rule 430B under the Securities Act, and disclosing all
information relating to the transactions contemplated hereby required to be
disclosed in the Registration Statement and the Prospectus as of the Effective
Date, including, without limitation, information required to be disclosed in
the section captioned “Plan of Distribution” in the Prospectus. The Current
Report shall include a copy of this Agreement as an exhibit and shall be
incorporated by reference in the Registration Statement and the Prospectus. The
Company heretofore has provided the Investor a reasonable opportunity to
comment on a draft of such Current Report and Prospectus Supplement and has
given due consideration to such comments. Pursuant to Section 5.9 and
subject to the provisions of Section 5.8, on the first Trading Day
immediately following the last Trading Day of each Pricing Period, the Company
shall file with the Commission  a Prospectus
Supplement pursuant to Rule 424(b) under the Securities Act
disclosing the total 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.

 

ARTICLE II

FIXED REQUEST TERMS; OPTIONAL AMOUNT

 

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

 

Section 2.1            Fixed Request Notice.  The Company may, from time to time in its
sole discretion during the Investment Period, no later than 9:30 a.m. (New
York time) on the first Trading Day of the Pricing Period, provide to the
Investor a Fixed Request notice, substantially in the form attached hereto as Exhibit A
(the “Fixed Request Notice”), which Fixed Request 

 

2

 

Notice shall become effective at 9:30 a.m. (New
York time) on the first Trading Day of the Pricing Period specified in the
Fixed Request Notice; provided, however, that if the Company
delivers the Fixed Request Notice to the Investor later than 9:30 a.m.
(New York time) on a Trading Day, then the first Trading Day of such Pricing
Period shall not be the Trading Day on which the Investor received such Fixed
Request Notice, but rather shall be the next Trading Day (unless a subsequent
Trading Day is therein specified). The Fixed Request Notice shall specify the
Fixed Amount Requested, establish the Threshold Price for such Fixed Request,
designate the first and last Trading Day of the Pricing Period and specify the
Optional Amount, if any, that the Company elects to grant to the Investor
during the Pricing Period and the applicable Threshold Price for such Optional
Amount (the “Optional Amount Threshold Price”). The Threshold Price and
the Optional Amount Threshold Price established by the Company in a Fixed
Request Notice may be the same or different, in the Company’s sole discretion.
Upon the terms and subject to the conditions of this Agreement, the Investor is
obligated to accept each Fixed Request Notice prepared and delivered in
accordance with the provisions of this Agreement.

 

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

 

	
  Threshold Price

  	
   

  	
  Fixed Amount Requested

  	
   

  	
  Discount Price

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $7.00

  	
   

  	
  Not
  to exceed $4,250,000

  	
   

  	
  95.125%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $3,750,000

  	
   

  	
  95.000%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $3,250,000

  	
   

  	
  94.875%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $2,750,000

  	
   

  	
  94.750%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $2,250,000

  	
   

  	
  94.625%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $2,000,000

  	
   

  	
  94.500%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $1,750,000

  	
   

  	
  94.375%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $1,500,000

  	
   

  	
  94.250%
  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

  

 

3

 

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

  	
   

  	
  Not
  to exceed $1,000,000

  	
   

  	
  94.000%
  of the VWAP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $2.00 and less than $2.50

  	
   

  	
  Not
  to exceed $750,000

  	
   

  	
  94.000%
  of the VWAP

  

 

Anything
to the contrary in this Agreement notwithstanding, unless otherwise mutually
agreed upon by the Investor and the Company, at no time shall the Investor be
required to purchase more than $4,250,000 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.  With respect to the Trading Days during the
applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price, the number of Shares to be issued by the Company to the Investor
pursuant to a Fixed Request shall equal the aggregate sum of each quotient
(calculated for each Trading Day during the applicable Pricing Period for which
the VWAP equals or exceeds the Threshold Price) determined pursuant to the
following equation (rounded to the nearest whole Share):

 

N =             (A x B)/C, where:

 

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

 

A =            0.10 (the “Multiplier”), provided, however,
that if the Company and the Investor mutually agree prior to the commencement
of a Pricing Period that the number of consecutive Trading Days constituting a
Pricing Period shall be less than 10, 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 reduced Pricing Period (it being hereby acknowledged and
agreed that this proviso shall not apply to any unilateral determination by the
Company to reduce a Pricing Period, but rather, Section 2.8 hereof shall
apply),

 

B =              the total Fixed Amount Requested, and

 

C =              the applicable Discount Price.

 

Section 2.4            Limitation of Fixed Requests.  The Company shall not make more than one
Fixed Request in each Pricing Period. 
Unless otherwise mutually agreed by the Company and the Investor, 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 with respect to a
Pricing Period, the Investor’s Total Commitment under this Agreement
automatically (and

 

4

 

without the need for any amendment to this
Agreement) shall be reduced, on a dollar-for-dollar basis, by the total amount
of the Fixed Request Amount and the Optional Amount Dollar Amount, if any, for
such Pricing Period paid to the Company at such Settlement Date.

 

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

 

Section 2.7                                   Settlement.  The payment for, against simultaneous
delivery of, Shares in respect of each Fixed Request shall be settled on the
second Trading Day next following the last Trading Day of each Pricing Period,
or on such earlier date as the parties may mutually agree (the “Settlement
Date”).  On each Settlement Date, the
Company shall, or shall cause its transfer agent to, electronically transfer
the Shares purchased by the Investor by crediting the Investor’s or its
designees’ account at DTC through its Deposit/Withdrawal at Custodian (DWAC)
system, which Shares shall be freely tradable and transferable and without
restriction on resale, 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
partial damages by the Company to the Investor.

 

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

 

5

 

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 product
determined pursuant to the following equation:

 

D = (A/B) x (B – C), where:

 

D = the U.S. dollar amount of additional Shares to
be purchased,

 

A = the Fixed Amount Requested,

 

B = 10 or, for purposes of this Section 2.8,
such lesser number of Trading Days as the parties may mutually agree to, and

 

C = the number of Trading Days in the reduced
Pricing Period,

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

O = A/(B x C), where:

 

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

 

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

 

B = the applicable percentage determined in
accordance with the price and shares amount parameters set forth in Section 2.2
(with the Optional Amount Threshold Price serving as the Threshold Price for
such purposes), and

 

C = the greater of (i) the VWAP for the Common
Stock on the day the Investor delivers the Optional Amount Notice or (ii) the
Optional Amount Threshold Price.

 

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

 

Section 2.12                            Aggregate
Limit. 
Notwithstanding anything to the contrary contained in this Agreement, in
no event may the Company issue a Fixed Request Notice or grant an Optional
Amount to the extent that the sale of Shares pursuant thereto and pursuant to
all prior Fixed Request Notices and Optional Amounts issued hereunder, and as
partial damages pursuant to Section 9.1(ii), would cause the Company to
sell or the Investor to purchase Shares which in the aggregate are in excess of
the Aggregate Limit.  If the Company
issues a Fixed Request Notice or Optional Amount that otherwise would permit
the Investor to purchase shares of Common Stock which would cause the aggregate
purchases by Investor hereunder to exceed the Aggregate Limit, such Fixed
Request Notice or Optional Amount shall be void ab initio
to the extent of the amount by which the dollar value of shares or number of
shares, as the case may be, of Common Stock otherwise issuable pursuant to such
Fixed Request Notice or Optional Amount together with the dollar value of
shares or number of shares, as the case may be, of all other Common Stock
purchased by the Investor pursuant hereto, or issued as partial damages
pursuant to Section 9.1(ii), would exceed the Aggregate Limit.  The Company hereby represents, warrants and 

 

7

 

covenants that neither it nor any of its
Subsidiaries (i) has effected any transaction or series of transactions, (ii) is
a party to any pending transaction or series of transactions or (iii) shall
enter into any contract, agreement, agreement-in-principle, arrangement or
understanding with respect to, or shall effect, any Other Financing which, in
any of such cases, may be aggregated with the transactions contemplated by this
Agreement for purposes of determining whether approval of the Company’s
stockholders is required under any bylaw, listed securities maintenance
standards or other rules of the Trading Market; provided, however,
that the Company shall be permitted to take any action referred to in clause (iii) above
if (a) the Company has timely provided the Investor with an Integration
Notice as provided in Section 5.6(ii) hereof and (b) unless the
Investor has previously terminated this Agreement pursuant to Section 7.2,
the Company obtains any requisite stockholder approval which may be required
for the Company to consummate such Other Financing described in such
Integration Notice.

 

At
the Company’s sole discretion, and effective automatically upon delivery of
notice thereof by the Company to the Investor, this Agreement may be amended by
the Company from time to time to reduce the Aggregate Limit by a specified
dollar amount and/or number of shares of Common Stock as shall be determined by
the Company in its sole discretion; provided, however, that any
such amendment of this Agreement (and any such purported amendment) shall be
void and of no force and effect if the effect thereof would restrict,
materially delay, conflict with or impair the ability or right of the Company
to perform its obligations under this Agreement, including, without limitation,
the obligation of the Company to deliver Shares to the Investor in respect of a
previously provided Fixed Request Notice or Optional Amount on the applicable
Settlement Date.  In the event the
Company shall have elected to reduce the Aggregate Limit as provided in the
immediately preceding sentence, at the Company’s sole discretion, and effective
automatically upon delivery of notice thereof by the Company to the Investor,
the Company may subsequently amend this Agreement to increase the Aggregate
Limit up to $35,000,000; provided, however, that in no event
shall the Company be entitled to issue Fixed Requests and grant Optional
Amounts during the remainder of the Investment Period for an aggregate amount
greater than the amount obtained by subtracting (x) the aggregate of all
Fixed Request Amounts and Optional Amount Dollar Amounts (including any amounts
paid as partial damages pursuant to Section 9.1(ii) hereunder)
covered by all Fixed Requests and Optional Amounts theretofore issued or
granted by the Company in respect of which a settlement has occurred pursuant
to Section 2.7 from (y) $35,000,000, subject in all cases to the
Trading Market Limit.

 

ARTICLE III

REPRESENTATIONS AND
WARRANTIES OF THE INVESTOR

 

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

 

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

 

Section 3.2                                   Authorization
and Power.  The Investor
has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to purchase the Shares in accordance with
the terms hereof.  The execution,
delivery and 

 

8

 

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 material respect.  The
Investor is not required under federal, state, local or foreign law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or to
purchase the Shares in accordance with the terms hereof.

 

Section 3.4                                   Information.  All materials relating to the business, financial
condition, management and operations of the Company and materials relating to
the offer and sale of the Shares which have been requested by the Investor have
been furnished or otherwise made available to the Investor or its advisors
(subject to Section 5.12 of this Agreement).  The Investor and its advisors have been
afforded the opportunity to ask questions of representatives of the
Company.  The Investor has sought such
accounting, legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Shares.  The Investor understands that it (and not the
Company) shall be responsible for its own tax liabilities that may arise as a
result of this investment or the transactions contemplated by this Agreement.
The Investor is aware of all of its obligations under U.S. federal and
applicable state securities laws and all rules and regulations promulgated
thereunder in connection with this Agreement and the transactions contemplated
hereby and the purchase and sale of the Shares.

 

9

 

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
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.

 

Section 4.3                                   Capitalization.  The authorized capital stock of the Company
and the shares thereof issued and outstanding are as set forth in the
Commission Documents as of the dates reflected therein.  All of the outstanding shares of Common Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable.  Except as set forth in
the Commission Documents, as of the Effective Date, no shares of Common Stock
were entitled to preemptive rights or registration rights and there were no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, any shares of capital stock of the
Company, other than those issued or granted in the ordinary course of
business.  Except as set forth in the
Commission Documents, there were no contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into or exchangeable for any shares of capital stock of the
Company, other than those issued or granted in the ordinary course of
business.  Except for customary transfer
restrictions contained in agreements entered 

 

10

 

into by the Company to sell restricted securities or
as set forth in the Commission Documents, as of the Effective Date, the Company
was not a party to, and it had no knowledge of, any agreement restricting the
voting or transfer of any shares of the capital stock of the Company.  Except as set forth in the Commission
Documents, the offer and sale of all capital stock, convertible or exchangeable
securities, rights, warrants or options of the Company issued prior to the
Effective Date complied with all applicable federal and state securities laws, and
no stockholder has any right of rescission or damages or any “put” or similar
right with respect thereto that would have a Material Adverse Effect.  The Company has furnished or made available
to the Investor via the Commission’s Electronic Data Gathering, Analysis and
Retrieval System (“EDGAR”) true and correct copies of the Company’s
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”).

 

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

 

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

 

11

 

Section 4.6                                   Commission
Documents, Financial Statements.  (a) The
Common Stock is registered pursuant to Section 12(b) or 12(g) of
the Exchange Act and, except as disclosed in the Commission Documents, as of
the Effective Date the Company had timely filed (giving effect to permissible
extensions in accordance with Rule 12b-25 under the Exchange Act) all
Commission Documents.  The Company has
delivered or made available to the Investor via EDGAR or otherwise true and
complete copies of the Commission Documents filed with the Commission prior to
the Effective Date (including, without limitation, the 2009 Form 10-K) and
has delivered or made available to the Investor via EDGAR or otherwise true and
complete copies of all of the Commission Documents heretofore incorporated by
reference in the Registration Statement and the Prospectus.  The Company has not provided to the Investor
any information which, according to applicable law, rule or regulation,
was required to 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 2009 Form 10-K) complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as applicable, and
other federal, state and local laws, rules and regulations applicable to
it, and, as of its filing date (or, if amended or superseded by a filing prior
to the Effective Date, on the date of such amended or superseded filing), such
Commission Document did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.  Each
Commission Document to be filed with the Commission after the Effective Date
and incorporated by reference in the Registration Statement, the Prospectus and
any Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9
hereof during the Investment Period (including, without limitation, the Current
Report), when such document becomes effective or is filed with the Commission,
as the case may be, shall comply in all material respects with the requirements
of the Securities Act or the Exchange Act, as applicable, and other federal,
state and local laws, rules and regulations applicable to it, and shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

 

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

 

(c)                                  The Company has
timely filed with the Commission and made available to the Investor via EDGAR
or otherwise all certifications and statements required by (x) Rule 13a-

 

12

 

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)                                 KPMG LLP (with
respect to the fiscal year ended December 31, 2007) and Ernst &
Young LLP (with respect to the fiscal years ended December 31, 2008 and December 31,
2009), who have expressed their opinions on the audited financial statements
and related schedules included or incorporated by reference in the Registration
Statement and the Base Prospectus are, with respect to the Company, independent
public accountants as required by the Securities Act and is an independent
registered public accounting firm within the meaning of SOXA as required by the
rules of the Public Company Accounting Oversight Board.

 

Section 4.7                                   Subsidiaries.  The 2009 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, 2009, the Company has
not experienced or suffered any Material Adverse Effect, and there exists no
current state of facts, condition or event which would have a Material Adverse
Effect, except (i) as disclosed in any Commission Documents filed since December 31,
2009 or (ii) continued losses from operations.

 

Section 4.9                                   Indebtedness.  The Company’s Quarterly Report on Form 10-Q
for its fiscal quarter ended June 30, 2010 sets forth, as of June 30,
2010, all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments through
such date. For the purposes of this Agreement, “Indebtedness” shall mean
(a) any liabilities for borrowed money or amounts owed in excess of
$10,000,000 (other than trade accounts payable incurred in the ordinary course
of business), (b) all guaranties, endorsements, indemnities and other
contingent obligations in respect of Indebtedness of others in excess of
$10,000,000, whether or not the same are or should be reflected in the Company’s
balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (c) the present value of any lease
payments in excess of $10,000,000 due under leases required to be capitalized
in accordance with GAAP.  There is no
existing or continuing default or event of default in respect of any Indebtedness
of the Company or any of its Subsidiaries.

 

13

 

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 as set forth in Section 4.10 of the Disclosure
Schedule, for those indicated in the Commission Documents or for those that
would not have a Material Adverse Effect. 
To the Company’s knowledge, all real property leases of the Company are
valid and subsisting and in full force and effect in all material respects.

 

Section 4.11                            Actions
Pending.  There is no
action, suit, claim, investigation or proceeding pending, or to the knowledge
of the Company threatened in writing, 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 in writing, against or
involving the Company, any Subsidiary or any of their respective properties or assets,
or involving any officers or directors of the Company or any of its
Subsidiaries, including, without limitation, any securities class action
lawsuit or stockholder derivative lawsuit, in each case which, if determined
adversely to the Company, its Subsidiary or any officer or director of the
Company or its Subsidiaries, would have a Material Adverse Effect.

 

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

 

Section 4.13                            Certain
Fees.  Except for
the placement fee payable by the Company to Reedland Capital Partners, an
Institutional Division of Financial West Group, Member FINRA/SIPC (“Reedland”),
which shall be set forth in a separate engagement letter between the Company
and Reedland (a true and complete fully executed copy of which has heretofore
been provided to the Investor), no brokers, finders or financial advisory fees
or commissions shall be payable by the Company or any Subsidiary (or any of
their respective affiliates) with respect to the transactions contemplated by
this Agreement. 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 officers, directors, stockholders,
partners, employees, Subsidiaries or affiliates that may affect the FINRA’s
determination of the amount of compensation to be received by any FINRA member
(including, without limitation, those FINRA members set forth on Schedule 4.13
of the Disclosure Schedule) or person associated with any FINRA 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 FINRA Rule 5110) have been received, and no
arrangements have been entered into for the 

 

14

 

future receipt of any items of value, from the
Company or any of its officers, directors, stockholders, partners, employees,
Subsidiaries or affiliates by any FINRA member (including, without limitation,
those FINRA members set forth on Schedule 4.13 of the Disclosure Schedule) or
person associated with any FINRA 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 FINRA’s
determination of the amount of compensation to be received by any FINRA member
or person associated with any FINRA member in connection with the transactions
contemplated by this Agreement.

 

Section 4.14                            Operation
of Business.  (a) The
Company or one or more of its Subsidiaries possesses such permits, licenses,
approvals, consents and other authorizations (including licenses, accreditation
and other similar documentation or approvals of any local health departments)
(collectively, “Governmental Licenses”) issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies, including,
without limitation, the United States Food and Drug Administration (“FDA”),
necessary to conduct the business now operated by it, except where the failure
to possess such Governmental Licenses, individually or in the aggregate, would
not have a Material Adverse Effect or as otherwise disclosed in the Commission
Documents.  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 or as otherwise
disclosed in the Commission Documents. 
All of the Governmental Licenses are valid and in full force and effect,
except where the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect, individually or in
the aggregate, would not have a Material Adverse Effect or as otherwise
disclosed in the Commission Documents. 
As to each product that is subject to FDA regulation or similar
applicable 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 or
as otherwise disclosed in the Commission Documents.  As to each product or product candidate of
the Company or any of its Subsidiaries subject to FDA regulation or similar
legal provision in any foreign jurisdiction, all manufacturing facilities of
the Company and its Subsidiaries are operated in compliance with the FDA’s
Quality System Regulation requirements at 21 C.F.R. Part 820, as applicable,
except where such non-compliance, individually or in the aggregate, would not
have a Material Adverse Effect or as otherwise disclosed in the Commission
Documents.  Except as set forth in the
Commission Documents or the Registration Statement, neither the Company nor any
of its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of 

 

15

 

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 or as
otherwise disclosed in the Commission Documents.  Except as set forth in the Commission
Documents or the Registration Statement, neither the Company nor any of its
Subsidiaries has received any correspondence, notice or request from the FDA
that is of the nature that would be required to be set forth in the Commission
Documents or the Registration Statement and has not been so set forth or
incorporated by reference therein, including, without limitation, notice that
any one or more products or product candidates of the Company or any of its
Subsidiaries failed to receive approval from the FDA for use for any one or
more indications.  This Section 4.14
does not relate to environmental matters, such items being the subject of Section 4.15.

 

(b)                                 Except as set forth in the
Commission Documents, the Company or one or more of its Subsidiaries owns or
possesses adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names, trade dress, logos, copyrights and other
intellectual property, including, without limitation, all of the intellectual
property described in the Commission Documents as being owned or licensed by
the Company (collectively, “Intellectual Property”), necessary to carry
on the business now operated by it, except where failure to own, license, or
have such rights would not, individually or in the aggregate, have a Material
Adverse Effect.  Except as set forth in
the Commission Documents, there are no actions, suits or judicial proceedings
pending, or to the Company’s knowledge threatened in writing, relating to
patents or proprietary information to which the Company or any of its
Subsidiaries is a party or of which any property of the Company or any of its
Subsidiaries is subject, and neither the Company nor any of its Subsidiaries
has received any notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any Intellectual Property or of
any facts or circumstances which would reasonably be expected to render any
Intellectual Property invalid or inadequate to protect the interest of the
Company and its Subsidiaries therein, and which infringement or conflict (if
the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, individually or in the aggregate, would have a Material Adverse
Effect.

 

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

 

16

 

termination,
suspension, delay or modification of any pre-clinical or clinical trials
conducted by, or on behalf of, the Company or any of its Subsidiaries or in
which the Company or any of its Subsidiaries has participated that are
described in the Registration Statement or the Commission Documents, if any, or
the results of which are referred to in the Registration Statement or the
Commission Documents. To the Company’s knowledge, all pre-clinical and clinical
trials previously conducted by, or on behalf of, the Company or any of its
Subsidiaries while conducted by or on behalf of the Company or any of its
Subsidiaries, were conducted in 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
Company’s knowledge, there are no past or present events, conditions,
circumstances, incidents, actions or omissions relating to or in any way affecting
the Company or its Subsidiaries that violate or would reasonably be expected to
violate any Environmental Law after the Effective Date or that would reasonably
be expected to give rise to any environmental liability, or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or
related to the manufacture, processing, distribution, use, treatment, storage
(including without limitation underground storage tanks), disposal, transport
or handling, or the emission, discharge, release or threatened release of any
hazardous substance.

 

Section 4.16                            Material
Agreements.  Except as
set forth in the Commission Documents or in Section 4.16 of the Disclosure
Schedule, neither the Company nor any Subsidiary of the Company is a party to
any written or oral contract, instrument, agreement commitment, obligation,
plan or arrangement, a copy of which would be required to be filed with the
Commission as an exhibit to an annual report on Form 10-K (collectively, “Material
Agreements”).  Except as set forth in
the Commission Documents or in Section 4.16 of the Disclosure Schedule,
the Company and each of its Subsidiaries have performed in all material
respects all the obligations required to be performed by them under the
Material Agreements, have received no notice of default or an event of default
by the Company or any of its Subsidiaries thereunder and are not aware of any
basis for the assertion thereof, and neither the Company or any of its
Subsidiaries nor, to the knowledge of the Company, any other contracting 

 

17

 

party thereto are in default under any Material
Agreement now in effect, the result of which would have a Material Adverse
Effect.  Except as set forth in the
Commission Documents, each of the Material Agreements is in full force and
effect, and constitutes a legal, valid and binding obligation enforceable in
accordance with its terms against the Company and/or any of its Subsidiaries
and, to the knowledge of the Company, each other contracting party thereto,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the
enforcement of, creditor’s rights and remedies or by other equitable principles
of general application.

 

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

 

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

 

(i)                                     The Company has
prepared and filed with the Commission in accordance with the provisions of the
Securities Act the Registration Statement, including a base prospectus relating
to the Shares. The Registration Statement was declared effective by order of
the Commission on August 28, 2008. As of the date hereof, no stop order
suspending the effectiveness of the Registration Statement has been issued by
the Commission or is continuing in effect under the Securities Act and no
proceedings therefor are pending before or, to the Company’s knowledge,
threatened by the Commission.  No order
preventing or suspending the use of the Prospectus or any Permitted Free
Writing Prospectus has been issued by the Commission.

 

(ii)                                  As of the
Effective Date, the Company satisfies all of the requirements for the use of Form S-3
under the Securities Act for the offering and sale of the Shares contemplated
by this Agreement (without reliance on General Instruction I.B.6. of Form S-3).
If, during the term of this Agreement, the Company becomes subject to General
Instruction I.B.6. of Form S-3, the Company hereby confirms that for as
long as the Company is subject to General Instruction I.B.6. of Form S-3
during the term of this Agreement, the Company shall not offer or sell any
securities in reliance on General Instruction I.B.6. of Form S-3 to the
extent the aggregate market value of such securities, when aggregated with the
aggregate market value of all of the Shares that have been sold pursuant to
this Agreement in the 12 calendar months immediately prior to and including
such sale in reliance on General Instruction I.B.6. of Form S-3, exceeds
the aggregate market value limitations imposed by General Instruction I.B.6 of Form S-3,
calculated 

 

18

 

in
accordance with Instructions 1 and 2 to General Instruction I.B.6 of Form S-3.
The Company is not, and has not previously been at any time, a “shell company”
(as such term is defined in Rule 405 under the Securities Act). The
Commission has not notified the Company of any objection to the use of the form
of the Registration Statement pursuant to Rule 401(g)(1) under the
Securities Act. The Registration Statement complied in all material respects on
the date on which it was declared effective by the Commission, and will comply
in all material respects at each deemed effective date with respect to the
Investor pursuant to Rule 430B(f)(2) of the Securities Act, with the
requirements of the Securities Act, and the Registration Statement (including
the documents incorporated by reference therein) did not on the date it was declared
effective by the Commission, and shall not at each deemed effective date with
respect to the Investor pursuant to Rule 430B(f)(2) of the Securities
Act, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; provided that this representation and warranty does not
apply to statements in or omissions from the Registration Statement made in
reliance upon and in conformity with information relating to the Investor
furnished to the Company in writing by or on behalf of the Investor expressly
for use therein. The Registration Statement, as of the Effective Date, meets
the requirements set forth in Rule 415(a)(1)(x) under the Securities
Act.  The Base Prospectus complied in all
material respects on its date and on the Effective Date, and will comply in all
material respects on each applicable Fixed Request Exercise Date and, when
taken together with the applicable Prospectus Supplement and any applicable
Permitted Free Writing Prospectus, on each applicable Settlement Date, with the
requirements of the Securities Act and did not on its date and on the Effective
Date and shall not on each applicable Fixed Request Exercise Date and, when
taken together with the applicable Prospectus Supplement and any applicable
Permitted Free Writing Prospectus, on each applicable Settlement Date contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; provided
that this representation and warranty does not apply to statements in or
omissions from the Base Prospectus made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by or
on behalf of the Investor expressly for use therein.

 

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

 

(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).  Each Permitted Free Writing Prospectus (a) shall
conform in all material respects to the requirements of the Securities 

 

19

 

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                            Investment
Company Act Status.  The
Company is not, and as a result of the consummation of the transactions
contemplated by this Agreement and the application of the proceeds from the
sale of the Shares as set forth in the Base Prospectus and any Prospectus
Supplement shall not be, an “investment company” or a company “controlled” by
an “investment company,” within the meaning of the Investment Company Act of
1940, as amended.

 

Section 4.22                            ERISA.  No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company or any of
its Subsidiaries which has had or would have a Material Adverse Effect.  No “prohibited transaction” (as defined in Section 406
of ERISA or Section 4975 of the Code) or “accumulated funding deficiency”
(as defined in Section 203 of ERISA) or any of the events set forth in Section 4043(b) of
ERISA has occurred with respect to any Plan which has had or would have a
Material Adverse Effect, and the execution and delivery of this Agreement and
the issuance and sale of the Shares hereunder shall not result in any of the
foregoing events.  Each Plan is in
compliance in all material respects with applicable law, including ERISA and
the Code; the Company has not incurred and does not 

 

20

 

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

 

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

 

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

 

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

 

ARTICLE V

COVENANTS

 

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

 

Section 5.1                                   Securities
Compliance; FINRA Filing.

 

(i)                                     The Company
shall notify the Trading Market, as necessary, 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, 

 

21

 

consents
and approvals for the legal and valid issuance of the Shares to the Investor in
accordance with the terms of this Agreement.

 

(ii)                                  The Company
shall (with the Investor’s assistance) assist Reedland with the preparation and
filing with the FINRA’s Corporate Financing Department via CobraDesk (not later
than 24 hours after the Effective Date) of all documents and information
required to be filed with the FINRA pursuant to FINRA Rule 5110 with
regard to the transactions contemplated by this Agreement (the “FINRA Filing”).
In connection therewith, on the Effective Date, the Company shall pay to the
FINRA by wire transfer of immediately available funds the applicable filing fee
with respect to the FINRA Filing, and the Company shall be solely responsible
for payment of such fee.  The parties
hereby agree to provide each other and Reedland all requisite information and
otherwise to assist each other and Reedland in a timely fashion in order for
Reedland to complete the preparation and submission of the FINRA Filing in
accordance with this Section 5.1(ii) and to assist Reedland in
promptly responding to any inquiries or requests from FINRA or its staff. Each
party hereto shall (A) promptly notify the other party and Reedland of any
communication to that party or its affiliates from the FINRA, including,
without limitation, any request from the FINRA or its staff for amendments or
supplements to or additional information in respect of the FINRA Filing and
permit the other party and Reedland to review in advance any proposed written
communication to the FINRA and (B) furnish the other party and Reedland
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 FINRA 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 and Reedland 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 FINRA to
the effect that the FINRA’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 the Investor shall have no responsibility for the
compliance or non-compliance of any Broker-Dealer with FINRA Rule 5110 and
shall not be required to (x) disclose to the FINRA 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
the Investor’s sole and absolute discretion, render the terms and conditions of
this Agreement and the transactions contemplated hereby to be no longer
advisable to the Investor. 
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 and
Reedland shall have received written confirmation from the FINRA to the effect
that the FINRA’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.

 

22

 

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 and regulations of the FINRA and the Trading Market. The
Company shall not take any action which would reasonably be expected to result
in the delisting or suspension of the Common Stock on 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 FINRA and the listing standards of
the Trading Market.  Without limiting the
generality of the foregoing, neither the Company nor any of its officers,
directors or affiliates has taken or will take, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of any
security of the Company, or which caused or resulted in, or which would in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.

 

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

 

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

 

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

 

23

 

the
Company; and (c) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the Company’s
assets that would reasonably be expected to have a material effect on the
Company’s financial statements.

 

(ii)                                  Neither the
Company, nor any of its Subsidiaries, nor to the knowledge of the Company, any
of their respective directors, officers, agents, employees or any other persons
acting on their behalf shall, in connection with the operation of the Company’s
and its Subsidiaries’ respective businesses, (a) use any corporate funds
for unlawful contributions, payments, gifts or entertainment or to make any
unlawful expenditures relating to political activity to government officials,
candidates or members of political parties or organizations, (b) pay,
accept or receive any unlawful contributions, payments, expenditures or gifts,
or (c) violate or operate in noncompliance with any export restrictions,
anti-boycott regulations, embargo regulations or other applicable domestic or
foreign laws and regulations, except for such violations or noncompliant
operations that would not reasonably be expected to result in a Material
Adverse Effect.

 

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

 

Section 5.5                                   Limitations
on Holdings and Issuances. Notwithstanding any other
provision of this Agreement, the Company shall not issue and the Investor shall
not purchase any shares of Common Stock which, when aggregated with all other
shares of Common Stock then beneficially owned (as calculated pursuant to Section 13(d) of
the Exchange Act and Rule 13d-3 promulgated thereunder) by the Investor
and its Affiliates, would result in the beneficial ownership by the Investor of
more than 9.9% of the then issued and outstanding shares of Common Stock.

 

Section 5.6                                   Other
Agreements and Other Financings.

 

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

 

(ii)                                  If the Company
enters into any agreement, plan, arrangement or transaction with a third party
or seeks to utilize any existing agreement, plan or arrangement with a third
party, in each case the principal purpose of which is to implement, effect or
consummate, at any time during the period beginning on the first Trading Day of
any Pricing Period and ending on the second Trading Day next following the
applicable Settlement Date (the “Reference Period”), an Other Financing
that does not constitute an Acceptable Financing, the Company shall provide
prompt notice thereof (an “Other Financing Notice”) to the Investor; provided,

 

24

 

however, that such
Other Financing Notice must be received by the Investor not later than the earlier
of (a) 48 hours after the Company’s execution of any agreement, plan,
arrangement or transaction relating to such Other Financing (or, with respect
to any existing agreement, plan or arrangement, 48 hours after the Company has
determined to utilize any such existing agreement, plan or arrangement to
implement, effect or consummate such Other Financing) and (b) the second
Trading Day immediately preceding the applicable Settlement Date with respect
to the applicable Fixed Request Notice; provided, further, that
the Company shall notify the Investor within 24 hours (an “Integration
Notice”) if it enters into any agreement, plan, arrangement or transaction
with a third party, the principal purpose of which is to obtain at any time
during the Investment Period an Other Financing that may be aggregated with the
transactions contemplated by this Agreement for purposes of determining whether
approval of the Company’s stockholders is required under any bylaw, listed
securities maintenance standards or other rules of the Trading Market and,
if required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and
regulations of the Trading Market, the Company shall publicly disclose such
information in accordance with Regulation FD and the applicable rules and
regulations of the Trading Market. For purposes of this Section 5.6(ii),
any press release issued by, or Commission Document filed by, the Company shall
constitute sufficient notice, provided that it is issued or filed, as
the case may be, within the time requirements set forth in the first sentence
of this Section 5.6(ii) for an Other Financing Notice or an
Integration Notice, as applicable. With respect to any Pricing Period for which
the Company is required to provide an Other Financing Notice pursuant to the
first sentence (including the provisos thereto) 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 (w) 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 (including, without
limitation, pursuant to any “equity line” or other financing that is
substantially similar to the financing provided for under this Agreement, or
pursuant to any other transaction in which the purchase, conversion or exchange
price for such Common Stock is determined using a floating discount or other
post-issuance adjustable discount to the then Current Market Price (any such
transaction, a “Similar Financing”)), in each case, after all fees,
discounts, Warrant Value and commissions associated with the transaction (a “Below
Market Offering”); (x) an “at-the-market” offering of Common Stock or
securities convertible into or exchangeable for Common Stock pursuant to Rule 415(a)(4) under
the Securities Act (an “ATM”); (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) (a “Price
Reset Provision”); 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) debt
securities or any class or series of preferred stock of the Company, in each
case that are not 

 

25

 

convertible
into or exchangeable for Common Stock or securities convertible into or
exchangeable for Common Stock; (2) shares of Common Stock or securities
convertible into or exchangeable for Common Stock (including, without limitation,
convertible debt securities) other than in connection with a Below Market
Offering or an ATM; (3) shares of Common Stock or securities convertible
into or exchangeable for Common Stock (including, without limitation,
convertible debt securities) in connection with an underwritten public offering
of securities of the Company or a registered direct public offering of
securities of the Company, in each case where the price per share of such
Common Stock (or the conversion or exercise price of such securities, as
applicable) is fixed concurrently with the execution of definitive
documentation relating to such offering, and the issuance of shares of Common
Stock upon the conversion, exercise or exchange thereof; (4) shares of
Common Stock or securities convertible into or exchangeable for Common Stock or
similar rights in connection with awards under the Company’s benefit and equity
plans and arrangements or shareholder rights plan and the issuance of shares of
Common Stock upon the conversion, exercise or exchange thereof; (5) shares
of Common Stock issuable upon the conversion or exchange of equity awards or
convertible, exercisable or exchangeable securities (including, without
limitation, convertible debt securities) outstanding as of the Effective Date; (6) shares
of Common Stock or securities convertible into or exchangeable for Common Stock
(including, without limitation, convertible debt securities) issued in
connection with the acquisition, license or sale of one or more other
companies, equipment, technologies or lines of business, and the issuance of
shares of Common Stock upon the conversion, exercise or exchange thereof; (7) shares
of Common Stock or securities convertible into or exchangeable for Common Stock
(including, without limitation, convertible debt securities) or similar rights
to subscribe for the purchase of shares of Common Stock in connection with
technology sharing, licensing, research, marketing, manufacturing, supply,
joint development agreements or similar strategic or collaborative agreements
or arrangements (or amendments thereto) with third parties, and the issuance of
shares of Common Stock upon the conversion, exercise or exchange thereof; and (8) shares
of Common Stock and/or warrants or similar rights to subscribe for the purchase
of shares of Common Stock issued in connection with commercial credit
arrangements, equipment financings and/or real property leases or service
agreements (or amendments thereto) and the issuance of shares of Common Stock
upon the exercise thereof.

 

Section 5.7                                   Stop
Orders.  The Company
shall advise the Investor promptly (but in no event later than 24 hours) and
shall confirm such advice in writing: (i) of the Company’s receipt of
notice of any request by the Commission for amendment of or a supplement to the
Registration Statement, the Prospectus, any Permitted Free Writing Prospectus
or for any additional information; (ii) of the Company’s receipt of notice
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or prohibiting or suspending the
use of the Prospectus or any Prospectus Supplement, or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction, or the
initiation or contemplated initiation of any proceeding for such purpose; and (iii) of
the Company becoming aware of the happening of any event, which makes any
statement of a material fact made in the Registration Statement, the Prospectus
or any Permitted Free Writing Prospectus untrue or which requires the making of
any additions to or changes to the statements then made in the Registration
Statement, the Prospectus or any Permitted Free Writing Prospectus in order to
state a material fact required by the Securities Act to be stated therein or
necessary in order to make the statements then made therein (in the case of the
Prospectus, in light of the circumstances under which they were made) not
misleading, or of the necessity to amend the 

 

26

 

Registration Statement or supplement the Prospectus
or any Permitted Free Writing Prospectus to comply with the Securities Act or
any other law. The Company shall not be required to disclose to the Investor
the substance or specific reasons of any of the events set forth in clauses (i) through
(iii) of the immediately preceding sentence, but rather, shall only be
required to disclose that the event has occurred.  The Company shall not issue any Fixed Request
during the continuation of any of the foregoing events. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the Prospectus
or any Prospectus Supplement, the Company shall use commercially reasonable
efforts to obtain the withdrawal of such order at the earliest possible time.
The Company shall also advise the Investor promptly (but in no event later than
24 hours) 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
FINRA Filing untrue or which requires the making of any additions to or changes
to the statements then made in the FINRA Filing in order to comply with FINRA Rule 5110.

 

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

 

(i)                                     Except as
provided in this Agreement and other than periodic and current reports required
to be filed pursuant to the Exchange Act, the Company shall not file with the
Commission any amendment to the Registration Statement that relates to the
Investor, the Agreement or the transactions contemplated hereby or file with
the Commission any Prospectus Supplement that relates to the Investor, this
Agreement or the transactions contemplated hereby with respect to which (a) the
Investor shall not previously have been advised, (b) the Company shall not
have given due consideration to any comments thereon received from the Investor
or its counsel, or (c) the Investor shall reasonably object after being so
advised, unless the Company reasonably has determined that it is necessary to
amend the Registration Statement or make any supplement to the Prospectus to
comply with the Securities Act or any other applicable law or regulation, in
which case the Company shall promptly (but in no event later than 24 hours) so
inform the Investor, the Investor shall be provided with a reasonable
opportunity to review and comment upon any disclosure relating to the Investor
and the Company shall expeditiously furnish to the Investor an electronic copy
thereof. In addition, for so long as, in the reasonable opinion of counsel for
the Investor, the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under
the Securities Act) is required to be delivered in connection with any purchase
or sale 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 has
not made, and agrees that unless it obtains the prior written consent of the
Investor it 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
has not made, and agrees that unless it obtains the prior written consent of
the Company it 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 

 

27

 

consented
to by the Investor or the Company is referred to in this Agreement as a “Permitted
Free Writing Prospectus.”  The
Company agrees that (x) it has treated and will treat, as the case may be,
each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus and
(y) it has complied and will comply, as the case may be, with the
requirements of Rules 164 and 433 under the Securities Act applicable to
any Permitted Free Writing Prospectus, including in respect of timely filing
with the Commission, legending and record keeping.

 

Section 5.9                                   Prospectus
Delivery.  The Company
shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b) under
the Securities Act on the first Trading Day immediately following the last
Trading Day of each Pricing Period.  The
Company shall provide the Investor a reasonable opportunity to comment on a
draft of each such Prospectus Supplement and any Issuer Free Writing
Prospectus, shall give due consideration to all such comments and, subject to
the provisions of Section 5.8 hereof, shall deliver or make available to
the Investor, without charge, an electronic copy of each form of Prospectus
Supplement, together with the Base Prospectus, and any Permitted Free Writing
Prospectus on each applicable Settlement Date. 
The Company consents to the use of the Prospectus (and of any Prospectus
Supplement thereto) in accordance with the provisions of the Securities Act and
with the securities or “blue sky” laws of the jurisdictions in which the Shares
may be sold by the Investor, in connection with the offering and sale of the
Shares and for such period of time thereafter as the Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities
Act) is required by the Securities Act to be delivered in connection with sales
of the Shares. If during such period of time any event shall occur that in the
judgment of the Company and its counsel is required to be set forth in the Registration
Statement or the Prospectus or any Permitted Free Writing Prospectus or should
be set forth therein in order to make the statements made therein (in the case
of the Prospectus, in light of the circumstances under which they were made)
not misleading, or if it is necessary to amend the Registration Statement or
supplement or amend the Prospectus or any Permitted Free Writing Prospectus to
comply with the Securities Act or any other applicable law or regulation, the
Company shall forthwith prepare and, subject to Section 5.8 above, file
with the Commission an appropriate amendment to the Registration Statement or
Prospectus Supplement to the Prospectus (or supplement to the Permitted Free
Writing Prospectus) and shall expeditiously furnish or make available to the
Investor an electronic copy thereof.

 

Section 5.10                            Selling
Restrictions.

 

(i)                                     The Investor
covenants that from and after the date hereof through and including the 90th
day next following the termination of this Agreement (the “Restricted Period”),
neither the Investor nor any of its affiliates (within the meaning of the
Exchange Act) nor any entity managed or controlled by the Investor shall,
directly or indirectly, sell any securities of the Company, except the Shares
that it owns or has the right to purchase as provided in a Fixed Request
Notice.  During the Restricted Period,
neither the Investor or any of its affiliates nor any entity managed or
controlled by the Investor shall sell any shares of Common Stock of the Company
it does not “own” or have the unconditional right to receive under the terms of
this Agreement (within the meaning of Rule 200 of Regulation SHO
promulgated by the Commission under the Exchange Act), including Shares in any
account of the Investor or in any account directly or indirectly managed or
controlled by the Investor or any of its affiliates or any entity managed or
controlled by the Investor.  Without
limiting the generality of the foregoing, 

 

28

 

prior
to and during the Restricted Period, neither the Investor nor any of its
affiliates nor any entity managed or controlled by the Investor or any of its
affiliates shall enter into a short position with respect to shares of Common
Stock of the Company, including in any account of the Investor’s or in any
account directly or indirectly managed or controlled by the Investor or any of
its affiliates or any entity managed or controlled by the Investor or any of
its affiliates, except that the Investor may sell Shares that it is obligated
to purchase under a pending Fixed Request Notice but has not yet taken
possession of so long as the Investor (or the Broker-Dealer, as applicable)
covers any such sales with the Shares purchased pursuant to such Fixed Request
Notice; provided, however, that the Investor (or the
Broker-Dealer, as applicable) shall not be required to cover any such sales
with the Shares purchased pursuant to such Fixed Request Notice if (a) the
Fixed Request is terminated by mutual agreement of the Company and the Investor
and, as a result of such termination, no Shares are delivered to the Investor
under this Agreement or (b) the Company otherwise fails to deliver such
Shares to the Investor on the applicable Settlement Date upon the terms and
subject to the provisions of this Agreement. 
Prior to and during the Restricted Period, the Investor shall not grant
any option to purchase or acquire any right to dispose or otherwise dispose for
value of any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for, or warrants to purchase, any shares of Common
Stock, or enter into any swap, hedge or other agreement that transfers, in
whole or in part, the economic risk of ownership of the Common Stock, except
for such sales expressly permitted by this Section 5.10(i).

 

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

 

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

 

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

 

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

 

Section 5.14                            Disclosure
Schedule.

 

(i)                                     During the
Investment Period, the Company shall from time to time update the Disclosure
Schedule as may be required to satisfy the condition set forth in Section 

 

29

 

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

 

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

 

ARTICLE VI

OPINION OF COUNSEL AND
CERTIFICATE;

CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES

 

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

 

Section 6.2                                   Conditions
Precedent to the Obligation of the Company.  The obligation hereunder of the Company to
issue and sell the Shares to the Investor under any Fixed Request or Optional
Amount is subject to the satisfaction or (to the extent permitted by applicable
law) waiver of each of the conditions set forth below. These conditions are for
the Company’s sole benefit and (to the extent permitted by applicable law) may
be waived by the Company at any time in its sole discretion.

 

(i)                                     Accuracy
of the Investor’s Representations and Warranties.  The representations and warranties of the
Investor contained in this Agreement (a) 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 (b) 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.

 

30

 

(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 Common Stock registered under the Registration Statement
which are in an amount (a) as of the Effective Date, not less than the
Total Commitment and (b) as of the applicable Fixed Request Exercise Date,
not less than the maximum dollar amount worth of Shares issuable pursuant to
the applicable Fixed Request Notice and applicable Optional Amount, if
any.  The Current Report shall have been
filed with the Commission, as required pursuant to Section 1.4, and all
Prospectus Supplements shall have been filed with the Commission, as required
pursuant to Sections 1.4 and 5.9 hereof, to disclose the sale of the Shares
prior to each Settlement Date, as applicable. 
Any other material required to be filed by the Company or any other
offering participant pursuant to Rule 433(d) under the Securities Act
shall have been filed with the Commission within the applicable time periods
prescribed for such filings by Rule 433 under the Securities Act.

 

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

 

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

 

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

 

31

 

(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 FINRA Objection.  There shall not exist any unresolved
objection raised by the FINRA’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 and Reedland shall
have obtained written confirmation thereof from the FINRA.

 

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

 

(i)                                     Accuracy
of the Company’s Representations and Warranties.  The representations and warranties of the
Company contained in this Agreement, as modified by the Disclosure Schedule (a) that
are not qualified by “materiality” or “Material Adverse Effect” shall have been
true and correct in all material respects when made and shall be true and
correct in all material respects as of the applicable Fixed Request Exercise
Date and the applicable Settlement Date with the same force and effect as if
made on such dates, except to the extent such representations and warranties
are as of another date, in which case, such representations and warranties
shall be true and correct in all material respects as of such other date and (b) 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 Common Stock registered under the Registration Statement which are in an
amount (a) as of the Effective Date, not less than the Total Commitment
and (b) as of the applicable Fixed Request Exercise Date, not less than
the maximum dollar amount worth of Shares issuable pursuant to the applicable
Fixed Request Notice and applicable Optional Amount, if any. As of the
applicable Fixed Request Exercise Date and the applicable Settlement Date, the
Investor shall be permitted to utilize the Prospectus to resell all of the
Shares it then owns or has the right to acquire pursuant to all Fixed Request
Notices issued pursuant to this Agreement. 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 

 

32

 

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 the Company shall
not have received any notice that the listing or quotation of the Common Stock
on the Trading Market shall be terminated on a date certain (which termination
shall be final and non-appealable). 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,
credit or securities market which, in each case, in the reasonable judgment of
the Investor, makes it impracticable or inadvisable to purchase the Shares.

 

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

 

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

 

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

 

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

 

(viii)                        Shares
Authorized and Delivered.  The Shares issuable pursuant to such Fixed
Request Notice or Optional Amount shall have been duly authorized by all
necessary 

 

33

 

corporate
action of the Company. The Company shall have delivered all Shares relating to
all prior Fixed Request Notices and Optional Amounts, as applicable.

 

(ix)                                Listing
of Shares.  The Company
shall have submitted to the Trading Market, at or prior to the applicable Fixed
Request Exercise Date, a notification form of listing of additional shares
related to the Shares issuable pursuant to such Fixed Request and Optional
Amount, in accordance with the bylaws, listed securities maintenance standards
and other rules of the Trading Market and, prior to the applicable
Settlement Date, such Shares shall have been approved for listing or quotation
on the Trading Market (if such approval is required for the listing or
quotation thereof on the Trading Market), subject only to notice of issuance.

 

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

 

(xi)                                No
Unresolved FINRA Objection.  There shall not exist any unresolved objection
raised by the FINRA’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 and Reedland shall have obtained
written confirmation thereof from the FINRA.

 

(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 clause (B) of the proviso to the first sentence of Section 9.1(i) of
this Agreement.

 

ARTICLE VII

TERMINATION

 

Section 7.1                                   Term,
Termination by Mutual Consent.  Unless earlier terminated as provided hereunder,
this Agreement shall terminate automatically on the earliest of (i) the
first day of the month next following the 18-month anniversary of the Effective
Date (the “Investment Period”), (ii) the date that the entire
dollar amount of Common Stock 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). Subject to Section 7.3, 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 

 

34

 

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
FINRA’s Corporate Financing Department has raised any objection with respect to
the fairness and reasonableness of the terms of the transactions contemplated
by this Agreement, 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.  Subject to Section 7.3, the Company may
terminate this Agreement effective upon three Trading Days’ prior written
notice to the Investor delivered in accordance with Section 9.4; provided,
however, that (i) such termination shall not occur during a Pricing
Period or, subsequent to the issuance of a Fixed Request Notice, prior to the
Settlement Date related to such Fixed Request Notice and (ii) prior to
issuing any press release, or making any public statement or announcement, with
respect to such termination, the Company shall consult with the Investor and
shall obtain the Investor’s consent to the form and substance of such press
release or other disclosure, which consent shall not be unreasonably delayed or
withheld.

 

Section 7.2            Other Termination.  If the Company provides the Investor with an
Other Financing Notice or an Integration Notice, in each case pursuant to Section 5.6(ii) of
this Agreement, or if the Company otherwise enters into any agreement, plan,
arrangement or transaction with a third party or determines to utilize any
existing agreement, plan or arrangement with a third party, in each case the
principal purpose of which is to implement, effect or consummate outside a
Pricing Period, but otherwise during the Investment Period, a Similar
Financing, an ATM or a Price Reset Provision (in which case the Company shall so
notify the Investor within 48 hours thereof), then in all such cases, subject
to Section 7.3, the Investor shall have the right to terminate this
Agreement within the subsequent 30-day period (the “Event Period”),
effective upon one Trading Day’s prior written notice delivered to the Company
in accordance with Section 9.4 at any time during the Event Period. The
Company shall promptly (but in no event later than 24 hours) notify the
Investor (and, if required under applicable law, including, without limitation,
Regulation FD promulgated by the Commission, or under the applicable rules and
regulations of the Trading Market, the Company shall publicly disclose such
information in accordance with Regulation FD and the applicable rules and
regulations of the Trading Market), and, subject to Section 7.3, the
Investor shall have the right to terminate this Agreement at any time after
receipt of such notification, if: (i) any condition, occurrence, state of
facts or event constituting a Material Adverse Effect has occurred; (ii) a
Material Change in Ownership has occurred or the Company enters into a
definitive agreement providing for a Material Change in Ownership; or (iii) a
default or event of default has occurred 

 

35

 

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

 

Section 7.3            Effect of Termination.  In the event of termination by the Company or
the Investor pursuant to Section 7.1 or 7.2, as applicable, written notice
thereof shall forthwith be given to the other party as provided in Section 9.4
and the transactions contemplated by this Agreement shall be terminated without
further action by either party. If this Agreement is terminated as provided in Section 7.1
or 7.2 herein, this Agreement shall become void and of no further force and
effect, except that (i) the provisions of Article VIII
(Indemnification), Section 9.1 (Fees and Expenses), Section 9.2
(Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial), Section 9.4
(Notices), Section 9.8 (Governing Law), Section 9.9 (Survival), Section 9.11
(Publicity), Section 9.12 (Severability) and this Article VII
(Termination) shall remain in full force and effect notwithstanding such
termination, (ii) if the Investor owns any Shares at the time of such
termination, the covenants and agreements of the Company and the Investor, as
applicable, contained in Section 5.1(i) (Securities Compliance; FINRA
Filing), Section 5.3 (Compliance with Laws), Section 5.7 (Stop
Orders), Section 5.8 (Amendments to the Registration Statement; Prospectus
Supplements; Free Writing Prospectuses), Section 5.9 (Prospectus
Delivery), Section 5.11 (Effective Registration Statement), Section 5.12
(Non-Public Information) and 5.13 (Broker/Dealer) shall remain in full force
and effect notwithstanding such termination for a period of six months
following such termination, (iii) the covenants and agreements of the
Investor contained in Section 5.10 (Selling Restrictions) shall remain in
full force and effect notwithstanding such termination for a period of 90 days
following such termination, and (iv) if the Investor owns any Shares at
the time of such termination, the covenants and agreements of the Company
contained in Section 5.2 (Registration and Listing) shall remain in full
force and effect notwithstanding such termination for a period of 30 days
following such termination. Notwithstanding anything in this Agreement to the
contrary, no termination of this Agreement by any party shall affect any cash
fees paid to the Investor or its counsel pursuant to Section 9.1, in each
case all of which fees shall be non-refundable, regardless of whether any Fixed
Requests are issued by the Company or settled hereunder. 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, each affiliate, employee, representative and advisor of and to
the Investor, and each person, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20(a) of
the Exchange Act from and against all losses, claims, damages, liabilities and
expenses (including reasonable costs of defense and investigation and all
attorneys’ fees) to which the Investor and each such other person may become
subject, under the 

 

36

 

Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities and
expenses (or actions in respect thereof) arise out of or are based upon (a) any
violation of United States federal or state securities laws or the rules and
regulations of the Trading Market in connection with the transactions
contemplated by this Agreement by the Company or any of its Subsidiaries,
affiliates, officers, directors or employees, (b) any untrue statement or
alleged untrue statement of a material fact contained, or incorporated by
reference, in the Registration Statement or any amendment thereto or any
omission or alleged omission to state therein, or in any document incorporated
by reference therein, a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (c) any untrue
statement or alleged untrue statement of a material fact contained, or
incorporated by reference, in the Prospectus, any Issuer Free Writing
Prospectus, or in any amendment thereof or supplement thereto, or in any “issuer
information” (as defined in Rule 433 under the Securities Act) of the
Company, which “issuer information” is required to be, or is, filed with the
Commission or otherwise contained in any Free Writing Prospectus, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein, or in any document incorporated by reference therein, a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; provided,
however, that (A) the Company shall not be liable under this Section 8.1(i) to
the extent that a court of competent jurisdiction shall have determined by a
final judgment (from which no further appeals are available) that such loss,
claim, damage, liability or expense resulted directly and solely from any such
acts or failures to act, undertaken or omitted to be taken by the Investor or
such person through its bad faith or willful misconduct, (B) the foregoing
indemnity shall not apply to any loss, claim, damage, liability or expense to
the extent, but only to the extent, arising out of or based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Investor expressly for use in the Current
Report, any Prospectus Supplement or any 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.

 

Subject
to Section 8.2, the Company shall reimburse the Investor and each such
controlling person promptly upon demand (with accompanying presentation of
documentary evidence) for all legal and other costs and expenses reasonably
incurred by the Investor or such indemnified persons in 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 

 

37

 

Exchange
Act from and against all losses, claims, damages, liabilities and expenses
(including reasonable costs of defense and investigation and all attorneys fees)
to which the Company and each such other person may become subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Current Report or any Prospectus Supplement or Permitted Free
Writing Prospectus, or in any amendment thereof or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case, to the
extent, but only to the extent, the untrue statement, alleged untrue statement,
omission or alleged omission was made in reliance upon, and in conformity with,
written information furnished by the Investor to the Company expressly for
inclusion in the Current Report or such Prospectus Supplement or Permitted Free
Writing Prospectus, or any amendment thereof or supplement thereto.

 

Subject
to Section 8.2, 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 that is entitled to reimbursement pursuant to
this Article VIII 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 

 

38

 

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

 

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

 

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

 

ARTICLE IX

MISCELLANEOUS

 

Section 9.1            Fees and Expenses.

 

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

 

39

 

its
counsel pursuant to this Section 9.1 shall be non-refundable, regardless
of whether any Fixed Requests are issued by the Company or settled hereunder.

 

(ii)           If the Company
issues a Fixed Request Notice and fails to deliver the Shares (which have been
approved for listing or quotation on the Trading Market, if such an approval is
required for the listing or quotation thereof on the Trading Market) to the
Investor on the applicable Settlement Date and such failure continues for 10
Trading Days, the Company shall pay the Investor, in cash (or, at the option of
the Investor, in shares of Common Stock which have not been registered under
the Securities Act valued at the applicable Discount Price of the Shares failed
to be delivered; provided that the issuance thereof by the Company would
not violate the Securities Act or any applicable U.S. federal or state
securities laws), as partial 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 (which have been approved for listing or quotation on the
Trading Market, if such an approval is required for the listing or quotation
thereof on the Trading Market) have been delivered, and an additional 2.0% for
each additional 30-day period thereafter until the Shares (which have been
approved for listing or quotation on the Trading Market, if such an approval is
required for the listing or quotation thereof on the Trading Market) have been
delivered, which amount shall be prorated for such periods less than 30 days
(subject in all cases to the Trading Market Limit). Nothing in this Section 9.1(ii) shall
be deemed to release the Company from any liability for any breach under this
Agreement, or to impair the rights of the Investor to compel specific
performance by the Company of its obligations under this Agreement.

 

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

 

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

 

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

 

40

 

(iii)          EACH OF THE COMPANY
AND THE INVESTOR HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR DISPUTES RELATING HERETO.
EACH OF THE COMPANY AND THE INVESTOR (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.2.

 

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

 

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

 

	
  If
  to the Company:

  	
   

  	
  Synta
  Pharmaceuticals Corp.

  
	
   

  	
   

  	
  45
  Hartwell Avenue

  
	
   

  	
   

  	
  Lexington,
  Massachusetts 02421

  
	
   

  	
   

  	
  Telephone
  Number: (781) 274-8200

  
	
   

  	
   

  	
  Fax:
  (781) 541-7117

  
	
   

  	
   

  	
  Attention:
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
  With
  copies to:

  	
   

  	
  Mintz,
  Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

  
	
   

  	
   

  	
  One
  Financial Center

  
	
   

  	
   

  	
  Boston,
  Massachusetts 02111

  
	
   

  	
   

  	
  Telephone
  Number: (617) 542-6000

  
	
   

  	
   

  	
  Fax:
  (617) 542-2241

  
	
   

  	
   

  	
  Attention:

  	
  Jonathan
  L. Kravetz, Esq.

  
	
   

  	
   

  	
   

  	
  Scott
  A. Samuels, Esq.

  

 

41

 

	
  If
  to the Investor:

  	
   

  	
  Azimuth
  Opportunity Ltd.

  
	
   

  	
   

  	
  c/o
  Folio Administrators Limited

  
	
   

  	
   

  	
  Folio
  House

  
	
   

  	
   

  	
  P.O. Box
  800

  
	
   

  	
   

  	
  Road
  Town, Tortola VG1110

  
	
   

  	
   

  	
  British
  Virgin Islands

  
	
   

  	
   

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

  
	
   

  	
   

  	
  Fax:
  (284) 494-8356/7422

  
	
   

  	
   

  	
  Attention:
   Tamara Singh

  
	
   

  	
   

  	
   

  
	
  With
  copies to:

  	
   

  	
  Greenberg
  Traurig, LLP

  
	
   

  	
   

  	
  The
  MetLife Building

  
	
   

  	
   

  	
  200
  Park Avenue

  
	
   

  	
   

  	
  New
  York, NY 10166

  
	
   

  	
   

  	
  Telephone
  Number: (212) 801-9200

  
	
   

  	
   

  	
  Fax:
  (212) 801-6400

  
	
   

  	
   

  	
  Attention:
   Anthony J. Marsico, Esq.

  

 

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

 

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

 

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

 

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

 

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

 

Section 9.9            Survival.  The representations, warranties, covenants
and agreements of the Company and the Investor contained in this Agreement
shall survive the execution and delivery hereof until the termination of this
Agreement; provided, however, that (i) the 

 

42

 

provisions of Article VII (Termination), Article VIII
(Indemnification), Section 9.1 (Fees and Expenses), Section 9.2
(Specific Enforcement, Consent to Jurisdiction, Waiver of Jury Trial), Section 9.4
(Notices), Section 9.8 (Governing Law), Section 9.11 (Publicity), Section 9.12
(Severability) and this Section 9.9 (Survival) shall remain in full force
and effect notwithstanding such termination, (ii) if the Investor owns any
Shares at the time of such termination, the covenants and agreements of the
Company and the Investor, as applicable, contained in Section 5.1(i) (Securities
Compliance; FINRA Filing), Section 5.3 (Compliance with Laws), Section 5.7
(Stop Orders), Section 5.8 (Amendments to the Registration Statement;
Prospectus Supplements; Free Writing Prospectuses), Section 5.9
(Prospectus Delivery), Section 5.11 (Effective Registration Statement), Section 5.12
(Non-Public Information) and 5.13 (Broker/Dealer) shall remain in full force
and effect notwithstanding such termination for a period of six months
following such termination, (iii) the covenants and agreements of the
Investor contained in Section 5.10 (Selling Restrictions) shall remain in
full force and effect notwithstanding such termination for a period of 90 days
following such termination, and (iv) if the Investor owns any Shares at
the time of such termination, the covenants and agreements of the Company
contained in Section 5.2 (Registration and Listing) shall remain in full
force and effect notwithstanding such termination for a period of 30 days
following such termination.

 

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

 

Section 9.11         Publicity.  The Investor shall have the right to approve,
prior to issuance or filing, any press release, Commission filing or any other
public disclosure made by or on behalf of the Company relating to the Investor,
its purchases hereunder or any aspect of this Agreement or the transactions
contemplated hereby (unless the same disclosure has been previously reviewed
and approved by the Investor); provided, however, that except as
otherwise provided in this Agreement, the Company shall be entitled, without
the prior approval of the Investor, to make any press release or other public
disclosure (including any filings with the Commission) with respect thereto as
is required by applicable law and regulations (including the regulations of the
Trading Market), so long as prior to making any such press release or other
public disclosure, if reasonably practicable, the Company and its counsel shall
have provided the Investor and its counsel with a reasonable opportunity to
review and comment upon, and shall have consulted with the Investor and its
counsel 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 

 

43

 

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.

 

44

 

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.

 

	
   

  	
  SYNTA
  PHARMACEUTICALS CORP.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Keith S. Ehrlich

  
	
   

  	
   

  	
  Name:
  Keith S. Ehrlich

  
	
   

  	
   

  	
  Title:
  Vice President, Finance and Administration, Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AZIMUTH
  OPPORTUNITY LTD.:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Deirdre M. McCoy

  
	
   

  	
   

  	
  Name:
  Deirdre M. McCoy

  
	
   

  	
   

  	
  Title:
  Corporate Secretary

  

 

45

 

ANNEX A TO THE

COMMON STOCK PURCHASE AGREEMENT

DEFINITIONS

 

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

 

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

 

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

 

“Base
Prospectus” shall mean the Company’s prospectus, dated August 28,
2008, a preliminary form of which is included in the Registration Statement,
including the documents incorporated by reference therein.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Commission
Documents” shall mean (1) all reports, schedules, registrations,
forms, statements, information and other documents filed by the Company with
the Commission pursuant to the reporting requirements of the Exchange Act,
including all material filed pursuant to Section 13(a) or 15(d) of
the Exchange Act, which have been filed by the Company since December 31,
2009 and which hereafter shall be filed by the Company during the Investment
Period, including, without limitation, the Current Report and the Form 10-K
filed by the Company for its fiscal year ended December 31, 2009 (the “2009
Form 10-K”), (2) the Registration Statement, as the same may be
amended from time to time, the Prospectus and each Prospectus Supplement, and
each Permitted Free Writing Prospectus and (3) all information contained
in such filings and all documents and disclosures that have been and heretofore
shall be incorporated by reference therein.

 

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

 

“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.

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“FINRA”
shall have the meaning assigned to such term in Section 4.5 hereof.

 

“FINRA
Filing” shall have the meaning assigned to such term in Section 5.1
hereof.

 

“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.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

“Issuer
Free Writing Prospectus” shall mean an “issuer free writing prospectus,” as
defined in Rule 433 promulgated under the Securities Act, relating to the
Shares that (i) is required to be filed with the Commission by the Company
or (ii) is exempt from filing pursuant to Rule 433(d)(5)(i) under
the Securities Act, in each case, in the form filed or required to be filed
with the Commission or, if not required to be filed, in the form retained in
the Company’s records pursuant to Rule 433(g) under the Securities
Act.

 

“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.

 

“Material
Adverse Effect” shall mean any condition, occurrence, state of facts or
event having, or insofar as reasonably can be foreseen would reasonably be
expected to have, any effect on the business, operations, properties or
condition (financial or otherwise) of the Company that is material and adverse
to the Company and its Subsidiaries, taken as a whole, and/or any condition,
occurrence, state of facts or event that would prohibit or otherwise materially
interfere with or delay the ability of the Company to perform any of its
obligations under this Agreement; provided, however, that none of
the following, individually or in the aggregate, shall be taken into account in
determining whether a Material Adverse Effect has occurred or insofar as
reasonably can be foreseen would reasonably be expected to occur: (i) changes
in conditions in the U.S. or global capital, credit or financial markets
generally, including changes in the availability of capital or currency
exchange rates, provided such changes shall not have affected the Company in a
materially disproportionate manner as compared to other similarly situated
companies; (ii) changes generally affecting the biotechnology or
pharmaceutical industries, provided such changes shall not have affected the
Company in a materially disproportionate manner as compared to other similarly
situated companies; (iii) any effect of the announcement of this Agreement
or the consummation of the transactions contemplated by this Agreement on the
Company’s relationships, contractual or otherwise, with customers, suppliers,
vendors, bank or commercial lenders, lessors, collaboration partners, employees
or consultants; (iv) the receipt of any notice that the Common Stock may
be ineligible to continue listing or quotation on the Trading Market, other than
a final and non-appealable notice that the listing or quotation of the Common
Stock on the Trading Market shall be terminated on a date certain; (v) any
foreseeable deterioration in the business, operations, properties or condition
(financial or otherwise) of the Company and/or its Subsidiaries substantially
resulting from (A) conditions or risks (including, without limitation,
those contained in the section entitled “Risk Factors” in the 2009 Form 10-K)
existing as of the Effective Date that are specifically set forth in any of the
Commission Documents or the Base Prospectus, (B) conditions or risks
existing as of the date of any Prospectus Supplement that are 

 

 

specifically
set forth in such Prospectus Supplement or (C) any of the matters set
forth in the Disclosure Schedule as of the Effective Date; and (vi) any
decrease in the market price of the Common Stock (but excluding herefrom any
condition, occurrence, state of facts or event underlying such decrease to the
extent that such condition, occurrence, state of facts or event otherwise would
constitute a Material Adverse Effect).

 

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

 

“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.

 

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

 

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

 

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

 

 

“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.

 

“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.

 

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

 

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

 

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

 

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

 

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

 

“Price
Reset Provision” shall have the meaning assigned to such term in Section 5.6(ii) hereof.

 

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

 

“Prospectus”
shall mean the Base Prospectus, as supplemented by any Prospectus Supplement,
including the documents incorporated by reference therein, together with any
Permitted Free Writing Prospectus.

 

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

 

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

 

“Reedland”
shall have the meaning assigned to such term in Section 4.13 hereof.

 

“Registration
Statement” shall mean the registration statement on Form S 3,
Commission File Number 333-152833, filed by the Company with the Commission
under the Securities Act for the registration of the Shares, as such Registration
Statement may be amended and supplemented from time to time (including any
related registration statements filed pursuant to Rule 462(b) under
the Securities Act), including all documents filed as part thereof or
incorporated by reference therein, and including all information deemed to be a
part thereof at the time of effectiveness pursuant to Rule 430A, Rule 430B
or Rule 430C under the Securities Act.

 

 

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

 

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

 

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

 

“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.

 

“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.

 

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

 

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

 

“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.

 

“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 $2.00 per share unless the Company and the Investor shall mutually
agree.

 

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

 

“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.

 

“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 NYSE Amex
Equities, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market or the New York Stock Exchange (or any successors to any
of the foregoing), whichever is at the time the principal trading exchange or
market for the Common Stock.

 

“Trading
Market Limit” means, at any time, 8,106,329 shares of duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock (as
adjusted for any stock splits, stock combinations, stock dividends,
recapitalizations and other similar transactions that occur on or after the
date of this Agreement); provided, however, that the Trading
Market Limit shall not exceed under any circumstances that number of shares of
Common Stock that the Company 

 

 

may
issue pursuant to this Agreement and the transactions contemplated hereby
without (a) breaching the Company’s obligations under the rules and
regulations of the Trading Market or (b) obtaining stockholder approval
under the applicable rules and regulations of the Trading Market.

 

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

 

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

 

 

EXHIBIT A TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF FIXED REQUEST NOTICE

 

Reference
is made to the Common Stock Purchase Agreement dated as of October 4,
2010, (the  “Purchase Agreement”)
between Synta Pharmaceuticals Corp., a corporation organized and existing under
the laws of the State of Delaware (the “Company”), and Azimuth
Opportunity Ltd., an international business company incorporated under the laws
of the British Virgin Islands. Capitalized terms used and not otherwise defined
herein shall have the meanings given such terms in the Purchase Agreement.

 

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

 

	
  Fixed
  Amount Requested:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optional
  Amount Dollar Amount:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pricing
  Period start date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Pricing
  Period end date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Fixed
  Request Threshold Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Optional
  Amount Threshold Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dollar
  Amount of Common Stock Currently Unissued under the Registration Statement

  	
   

  	
   

  
	
   

  	
   

  	
   

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:
  

  
	
   

  	
   

  	
   

  	
  Facsimile
  No.:

  
					

 

AGREED
AND ACCEPTED

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT B TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF OPTIONAL AMOUNT NOTICE

 

	
  To:

  	
   

  	
   

  
	
  Fax#:

  	
   

  	
   

  

 

Reference
is made to the Common Stock Purchase Agreement dated as of October 4, 2010
(the “Purchase Agreement”) between Synta Pharmaceuticals Corp., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”), and Azimuth Opportunity Ltd., an international business
company incorporated under the laws of the British Virgin Islands (the “Investor”).
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement.

 

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

 

	
  Optional
  Amount Dollar Amount Exercised

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number
  of Shares to be purchased

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  VWAP
  on the date hereof:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Discount
  Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Threshold
  Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:
  

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:
  

  
	
   

  	
   

  	
   

  	
  Facsimile
  No.:

  

 

 

EXHIBIT C TO THE

COMMON STOCK PURCHASE AGREEMENT

CERTIFICATE OF THE COMPANY

 

CLOSING CERTIFICATE

 

October 4, 2010

 

The
undersigned, the Vice President, Intellectual Property and Legal Affairs,
General Counsel and Secretary of Synta Pharmaceuticals Corp., a corporation
organized and existing under the laws of the State of Delaware (the “Company”),
delivers this certificate in connection with the Common Stock Purchase
Agreement, dated as of October 4, 2010 (the “Agreement”), by and
between the Company and Azimuth Opportunity Ltd., an international business
company incorporated under the laws of the British Virgin Islands (the “Investor”),
and hereby certifies on the date hereof that (capitalized terms used herein
without definition have the meanings assigned to them in the Agreement):

 

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

 

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

 

3.             Attached hereto as Exhibit C is a true and complete copy of the
resolutions of the Board of Directors of the Company approving the transactions
contemplated by the Agreement; said approval has not been amended, rescinded or
modified and remains in full force and effect as of the date hereof.

 

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

 

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

 

	
   

  	
   

  
	
   

  	
  By:
  Wendy E. Rieder, Esq.

  
	
   

  	
  Title:
  Vice President, Intellectual Property and Legal Affairs, General Counsel
  and Secretary

  

 

 

EXHIBIT D TO THE

COMMON STOCK PURCHASE AGREEMENT

COMPLIANCE CERTIFICATE

 

In
connection with the issuance of shares of common stock of Synta Pharmaceuticals
Corp., a corporation organized and existing under the laws of the State of
Delaware (the “Company”), pursuant to the Fixed Request Notice, dated
[                          ],
delivered by the Company to Azimuth Opportunity Ltd. (the “Investor”)
pursuant to Article II of the Common Stock Purchase Agreement, dated as of
October 4, 2010, by and between the Company and the Investor (the “Agreement”),
the undersigned hereby certifies as follows:

 

1.             The undersigned is the duly elected
Vice President, Finance and Administration, Chief Financial Officer of the
Company.

 

2.             Except as set forth in the attached
Disclosure Schedule, the representations and warranties of the Company set
forth in Article IV of the Agreement (i) that are not qualified by “materiality”
or “Material Adverse Effect” are true and correct in all material respects as
of [insert Fixed Request Exercise Date] and as of the date hereof with the same
force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties are true and correct in all material respects as
of such other date and (ii) that are qualified by “materiality” or “Material
Adverse Effect” are true and correct as of [insert Fixed Request Exercise Date]
and as of the date hereof with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties are true and
correct as of such other date.

 

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

 

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

 

The
undersigned has executed this Certificate this
[      ] day of
[                      ],
20[    ].

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Keith
  S. Ehrlich

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:
  Vice President, Finance and Administration, Chief Financial Officer

  

 

 

DISCLOSURE
SCHEDULE

RELATING TO THE COMMON STOCK 

PURCHASE AGREEMENT, DATED AS OF OCTOBER 4, 2010 

BETWEEN SYNTA PHARMACEUTICALS CORP. AND AZIMUTH OPPORTUNITY LTD.

 

This disclosure schedule
is made and given pursuant to Article IV of the Common Stock Purchase
Agreement, dated as of October 4, 2010 (the “Agreement”), by and
between Synta Pharmaceuticals Corp., a Delaware corporation (the “Company”),
and Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands. 
Unless the context otherwise requires, all capitalized terms are used
herein as defined in the Agreement.  The
numbers below correspond to the section numbers of representations and
warranties in the Agreement most directly modified by the below exceptions.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00179-of-00352.parquet"}]]