Document:

exv10w5

 

Exhibit 10.5

Human Genome Sciences, Inc.

Stock Units Notice

under the

Non-Employee Director Equity Compensation Plan

     Name of Grantee:                                                            

This Notice evidences the award of stock units (each, a “Stock Unit,” and collectively, the “Stock
Units”) of Human Genome Sciences, Inc., a Delaware corporation (the “Company”), that have been
granted to you pursuant to the Human Genome Sciences, Inc. Non-Employee Director Equity
Compensation Plan (the “Plan”) and conditioned upon your agreement to the terms of the
[attached][Company’s standard form of] Stock Units Agreement (the “Agreement”)[.][, a copy of which
was provided to you previously. You may obtain an additional copy of the Agreement by contacting
the Company’s Secretary at 14200 Shady Grove Road, Rockville, Maryland 20850-3338 (Telephone:
301-251-6039).] This Notice constitutes part of and is subject to the terms and provisions of the
Agreement and the Plan, which are incorporated by reference herein. Each Stock Unit represents the
Company’s commitment to issue one share of the Company’s common stock at a future date, subject to
the terms of the Agreement and the Plan.

Grant Date:                     

Number of Stock Units:                     

Vesting Schedule: All of the Stock Units are vested and nonforfeitable as of the Grant
Date.

	 	 	 
	 
	 	 
	 

	 	 
	Human Genome Sciences, Inc.

	 	Date

 

I acknowledge that I have carefully read the Agreement and the prospectus for the Plan. I agree to
be bound by all of the provisions set forth in those documents. I also consent to electronic
delivery of all notices or other information with respect to the Stock Units or the Company.

	 	 	 
	 
	 	 
	 

	 	 
	Signature of Grantee

	 	Date

 

 

Human Genome Sciences, Inc.

Stock Units Agreement

under the

Non-Employee Director Equity Compensation Plan

     1. Terminology. Unless otherwise provided in this Agreement, capitalized terms used
herein are defined in the Glossary at the end of this Agreement.

     2. Vesting. All of the Stock Units are vested and nonforfeitable as of the Grant
Date.

     3. Restrictions on Transfer. Neither this Agreement nor any of the Stock Units may be
assigned, transferred, pledged, hypothecated or disposed of in any way, whether by operation of law
or otherwise, and the Stock Units shall not be subject to execution, attachment or similar process
or in any other manner be made subject to a hedge transaction or puts and calls. All rights with
respect to this Agreement and the Stock Units shall be exercisable during your lifetime only by you
or your guardian or legal representative.

     4. Dividend Equivalent Payments. On each dividend payment date for each cash dividend
paid on the outstanding Common Stock, the Company will credit a bookkeeping account in your name
with dividend equivalents in the form of additional Stock Units, equal to the quotient, rounded to
three decimal places, determined by dividing (a) the product of (i) the amount of cash dividend per
share of Common Stock multiplied by (ii) the number of whole Stock Units credited to your account
as of the record date, by (b) the Fair Market Value of a share of Common Stock on the dividend
payment date. If your Stock Units have been settled after the record date but prior to the
dividend payment date, any Stock Units that would be credited pursuant to the preceding sentence
shall be settled on or as soon as practicable after the dividend payment date.

     5. Settlement of Stock Units. Except as provided below with respect to a Change in
Control, your Stock Units will be settled automatically, via the issuance of Common Stock as
described herein, upon your Termination Date. You are not required to make any monetary payment as
a condition to settlement of the Stock Units. The Company will issue to you, in settlement of your
Stock Units, the number of whole shares of Common Stock that equals the number of whole Stock
Units, and the Stock Units will cease to be outstanding upon your receipt of such settlement
payment. Upon issuance of such shares, the Company will deliver such shares on your behalf
electronically to the Company’s designated stock plan administrator or such other broker as the
Company may choose at its sole discretion, within reason. Fractional Stock Units will be settled
in cash. In the event of your death, settlement of your Stock Units will be made in the same
manner on behalf of your estate. Notwithstanding the foregoing, in the event of any transaction
resulting in a Change in Control of the Company, your Stock Units will be settled at the time of
the Change in Control, or as soon as practicable thereafter, but in no event later than the close
of the calendar year in which the Change in Control occurs.

     6. Capital Adjustments. If the outstanding shares of Common Stock are increased or
decreased or changed into or exchanged for a different number or kind of security by reason of any
recapitalization, reclassification, stock split, reverse stock split, combination of shares,
exchange of shares, stock dividend, or other distribution payable in capital stock, or other
increase or decrease in the outstanding shares of Common Stock is effected without receipt of
consideration by the Company occurring after the Grant Date and before your Stock Units have been
settled, a proportionate and appropriate adjustment will be made in the number of Stock Units
credited to your account, so that your proportionate interest immediately following such event
shall, to the extent practicable, be the same as immediately before such event. Adjustments under
this paragraph will be made by the Administrator, whose determination as to what adjustments, if
any, will be made and the extent thereof will be final, binding and conclusive.

     7. Non-Guarantee of Directorship. Nothing in the Plan or in this Agreement, nor any
action taken pursuant to the Plan, shall confer any right on you to continue in the service of the
Company as a member of the Board of Directors or in any other capacity for any period of time or at
a particular retainer

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or other rate of compensation, or as limiting, interfering with or otherwise affecting the
provisions of the Company’s charter, bylaws or the Delaware General Corporation Law relating to the
removal of Directors.

     8. Rights as Stockholder. Except as otherwise provided in this Agreement with respect
to dividend equivalent payments, neither you nor any other person claiming through you shall have
any rights with respect to any shares of Common Stock subject to the Stock Units, including without
limitation, any voting rights, unless and until such shares are duly issued and delivered to you.

     9. The Company’s Rights. The existence of the Stock Units shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital structure or its
business, or any merger or consolidation of the Company, or any issue of bonds, debentures,
preferred or other stocks with preference ahead of or convertible into, or otherwise affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of the Company’s assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.

     10. Restrictions on Issuance of Shares. The issuance of shares of Common Stock upon
settlement of the Stock Units shall be subject to and in compliance with all applicable
requirements of federal, state or foreign law with respect to such securities. No shares of Common
Stock may be issued hereunder if the issuance of such shares would constitute a violation of any
applicable federal, state or foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the Common Stock may then be listed.
The inability of the Company to obtain from any regulatory body having jurisdiction the authority,
if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance of any shares
subject to the Stock Units shall relieve the Company of any liability in respect of the failure to
issue such shares as to which such requisite authority shall not have been obtained. As a
condition to the settlement of the Stock Units, the Company may require you to satisfy any
qualifications that may be necessary or appropriate to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as may be requested
by the Company.

     11. Notices. All notices and other communications made or given pursuant to this
Agreement shall be in writing and shall be sufficiently made or given if hand delivered or mailed
by certified mail, addressed to you at the address contained in the records of the Company, or
addressed to the Administrator, care of the Company for the attention of its Corporate Secretary at
its principal executive office or, if the receiving party consents in advance, transmitted and
received via telecopy or via such other electronic transmission mechanism as may be available to
the parties.

     12. Entire Agreement. This Agreement, together with the relevant Notice, contains the
entire agreement between the parties with respect to the Stock Units granted hereunder. Any oral
or written agreements, representations, warranties, written inducements or other communications
made prior to the execution of this Agreement with respect to the Stock Units granted hereunder
shall be void and ineffective for all purposes.

     13. Amendment. This Agreement may be amended from time to time by the Administrator
in its discretion; provided, however, that this Agreement may not be modified in a
manner that would have a materially adverse effect on the Stock Units as determined in the
discretion of the Administrator, except as provided in the Plan or in a written document signed by
each of the parties hereto.

     14. 409A Compliance.

          (a) This Agreement and the Stock Units granted hereunder are intended to comply with, or
otherwise be exempt from, Section 409A of the Code and any regulations and Treasury guidance
promulgated thereunder.

          (b) The Company and grantee agree that they will execute any and all amendments to this
Agreement or with respect to the Stock Units as they mutually agree in good faith may be necessary
to ensure compliance with the provisions of Section 409A of the Code.

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          (c) The preceding provisions, however, shall not be construed as a guarantee by the Company
of any particular tax effect to you under this Agreement or with respect to the Stock Units. The
Company shall not be liable to you for any payment made under this Agreement or with respect to the
Stock Units, at your direction or with your consent, which is determined to result in an additional
tax, penalty, or interest under Section 409A of the Code, nor for reporting in good faith any
payment made under this Agreement or with respect to the Stock Units as an amount includible in
gross income under Section 409A of the Code.

          (d) If you are a “specified employee” (as defined under Section 409A of the Code and
determined in good faith by the Compensation Committee) when you attain your Termination Date and
your Stock Units are to be settled on account of the occurrence of such Termination Date,
settlement of your Stock Units will be made within 15 days after the end of the six-month period
beginning on your Termination Date or, if earlier, within 15 days after the appointment of the
personal representative or executor of your estate following your death.

     15. Conformity with Plan. This Agreement is intended to conform in all respects with,
and is subject to all applicable provisions of, the Plan. Inconsistencies between this Agreement
and the Plan shall be resolved in accordance with the terms of the Plan. In the event of any
ambiguity in this Agreement or any matters as to which this Agreement is silent, the Plan shall
govern. A copy of the Plan is available upon request to the Administrator.

     16. No Funding. This Agreement constitutes an unfunded and unsecured promise by the
Company to issue shares of Common Stock in the future in accordance with its terms. You have the
status of a general unsecured creditor of the Company as a result of receiving the grant of Stock
Units. Any cash payment due under this Agreement with respect to dividend equivalent payments
under Section 4 hereof will be paid from the general assets of the Company and nothing in this
Agreement will be construed to give you or any other person rights to any specific assets of the
Company.

     17. Governing Law. The validity, construction and effect of this Agreement, and of any
determinations or decisions made by the Administrator relating to this Agreement, and the rights of
any and all persons having or claiming to have any interest under this Agreement, shall be
determined exclusively in accordance with the laws of the State of Delaware, without regard to its
provisions concerning the applicability of laws of other jurisdictions. Any suit with respect
hereto will be brought in the federal or state courts in the district which includes the city or
town in which the Company’s principal executive office is located, and you hereby agree and submit
to the personal jurisdiction and venue thereof.

     18. Headings. The headings in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.

     19. Electronic Delivery of Documents. By your signing the Notice, you (i) consent to
the electronic delivery of this Agreement, all information with respect to the Plan and the Stock
Units and any reports of the Company provided generally to the Company’s stockholders; (ii)
acknowledge that you may receive from the Company a paper copy of any documents delivered
electronically at no cost to you by contacting the Company by telephone or in writing; (iii)
further acknowledge that you may revoke your consent to the electronic delivery of documents at any
time by notifying the Company of such revoked consent by telephone, postal service or electronic
mail; and (iv) further acknowledge that you understand that you are not required to consent to
electronic delivery of documents.

{Glossary begins on next page}

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GLOSSARY

          (a) “Administrator” means the Board of Directors of Human Genome Sciences, Inc. or such
committee or committees appointed by the Board to administer the Plan.

          (b) “Affiliate” means any entity, whether now or hereafter existing, which controls, is
controlled by, or is under common control with Human Genome Sciences, Inc. (including but not
limited to joint ventures, limited liability companies and partnerships). For this purpose,
“control” means ownership of 50% or more of the total combined voting power or value of all classes
of stock or interests of the entity.

          (c) “Agreement” means this document, as amended from time to time, together with the Plan
which is incorporated herein by reference.

          (d) “Change in Control” means the earliest to occur of any of the following events, construed
in accordance with Section 409A of the Code:

               (i) Any one person or more than one person acting as a group acquires, or has acquired during
the 12-month period ending on the date of the most recent acquisition by such person or group,
beneficial ownership of more than 50% of the total voting power of the Company’s then outstanding
voting securities;

               (ii) A majority of the members of the Company’s Board of Directors is replaced during any
12-month period by directors whose appointment or election is not endorsed or approved by a
majority of the members of the Board who were members of the Board prior to the initiation of the
replacement; or

               (iii) Any one person or more than one person acting as a group acquires, or has acquired
during the 12-month period ending on the date of the most recent acquisition by such person or
group, assets of the Company that have a total gross fair market value of 50% or more of the total
gross fair market value of all of the assets of the Company immediately prior to the initiation of
the acquisition.

          (e) “Code” means the Internal Revenue Code of 1986, as amended, and the Treasury regulations
and other guidance promulgated thereunder.

          (f) “Common Stock” means the common stock, $0.01 par value per share, of Human Genome
Sciences, Inc.

          (g) “Company” means Human Genome Sciences, Inc. and its Affiliates, except where the context
otherwise requires. For purposes of determining whether a Change in Control has occurred, Company
shall mean only Human Genome Sciences, Inc.

          (h) “Fair Market Value” has the meaning set forth in the Plan. The Plan generally defines
Fair Market Value to mean the closing price on the relevant date as quoted on the principal
securities exchange on which shares of Common Stock are then listed or admitted to trading. If no
public trading of the Common Stock occurs on the relevant date, the Fair Market Value will be
determined as of the most recent preceding date on which trading of the Common Stock does occur.

          (i) “Grant Date” means the effective date of a grant of Stock Units made to you as set forth
in the relevant Notice.

          (j) “Notice” means the statement, letter or other written notification provided to you by the
Company setting forth the terms of a grant of Stock Units made to you.

          (k) “Plan” means the Human Genome Sciences, Inc. Non-Employee Director Equity Compensation
Plan, as amended from time to time.

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          (l) “Stock Unit” means the Company’s commitment to issue one share of Common Stock at a future
date, subject to the terms of the Agreement and the Plan.

          (m) “Termination Date” means the date on which you cease to serve as a member of the Board of
Directors and have otherwise incurred a “separation from service” within the meaning of Section
409A of the Code.

          (n) “You” or “Your” means the recipient of the Stock Units as reflected on the
applicable
Notice. Whenever the word “you” or “your” is used in any provision of this Agreement under
circumstances where the provision should logically be construed, as determined by the
Administrator, to apply to the estate, personal representative, or beneficiary to whom the Stock
Units may be transferred by will or by the laws of descent and distribution, the words “you” and
“your” shall be deemed to include such person.

{End of Agreement}

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EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is dated as of December 19, 2007, by and
among Ardea Biosciences, Inc., a Delaware corporation (the “Company”), and each purchaser
identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser”
and collectively, the “Purchasers”).

RECITALS

          A. The Company and each Purchaser is executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section 4(2) of the Securities Act of 1933,
as amended (the “Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by
the United States Securities and Exchange Commission (the “Commission”) under the Securities Act.

          B. Each Purchaser, severally and not jointly, wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement, that aggregate number of shares of
common stock, par value $0.001 per share (the “Common Stock”), of the Company, set forth below such
Purchaser’s name on the signature page of this Agreement (which aggregate amount for all Purchasers
together shall be 3,018,868 shares of Common Stock and shall be collectively referred to herein as
the “Shares”).

          C. The Company has engaged Piper Jaffray & Co. as lead placement agent (the “Lead Placement
Agent”) and Cowen Group and Oppenheimer & Co. Inc. as co-placement agents (each a “Co-Placement
Agent” and together with the Lead Placement Agent, the “Placement Agents”) for the offering of the
Shares on a “best efforts” basis.

          D. Contemporaneously with the execution and delivery of this Agreement, the parties hereto are
executing and delivering a Registration Rights Agreement, substantially in the form attached hereto
as Exhibit A (the “Registration Rights Agreement”), pursuant to which, among other things,
the Company will agree to provide certain registration rights with respect to the Shares under the
Securities Act and the rules and regulations promulgated thereunder and applicable state securities
laws.

     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the Company and the Purchasers hereby agree as follows:

ARTICLE I.

DEFINITIONS

     1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms shall have the meanings indicated in this
Section 1.1:

          “Action” means any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or, to the Company’s Knowledge,
threatened in writing against the Company, any Subsidiary or any of their respective properties or
any officer, director or employee of the Company or any Subsidiary acting in his or her capacity as
an officer, director or employee before or by any federal, state, county, local or foreign court,
arbitrator, governmental or administrative agency, regulatory authority, stock market, stock
exchange or trading facility.

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          “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly
through one or more intermediaries, Controls, is controlled by or is under common control with such
Person, as such terms are used in and construed under Rule 144. With respect to a Purchaser, any
investment fund or managed account that is managed on a discretionary basis by the same investment
manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.

          “Agreement” shall have the meaning ascribed to such term in the Preamble.

          “Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City
are open for the general transaction of business.

          “Buy-In” has the meaning set forth in Section 4.1(f).

          “Buy-In Price” has the meaning set forth in Section 4.1(f).

          “Closing” means the closing of the purchase and sale of the Shares pursuant to this Agreement.

          “Closing Bid Price” means, for any security as of any date, the last closing price for such
security on the Principal Trading Market, as reported by Bloomberg, or, if the Principal Trading
Market begins to operate on an extended hours basis and does not designate the closing bid price
then the last bid price of such security prior to 4:00:00 p.m., New York City Time, as reported by
Bloomberg, or, if the Principal Trading Market is not the principal securities exchange or trading
market for such security, the last closing price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid
price is reported for such security by Bloomberg, the average of the bid prices of any market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Closing Bid Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid Price of such security on such date
shall be the fair market value as mutually determined by the Company and the holder. If the Company
and the holder are unable to agree upon the fair market value of such security, then the Company
shall, within two business days submit via facsimile (a) the disputed determination to an
independent, reputable investment bank selected by the Company and approved by the holder or (b)
the disputed arithmetic calculation to the Company’s independent, outside accountant. The Company
shall cause at its expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the holder of the results no later
than ten business days from the time it receives the disputed determinations or calculations. Such
investment bank’s or accountant’s determination or calculation, as the case may be, shall be
binding upon all parties absent demonstrable error. All such determinations shall be appropriately
adjusted for any stock dividend, stock split, stock combination or other similar transaction during
the applicable calculation period.

          “Closing Date” means the Trading Day when all of the Transaction Documents have been executed
and delivered by the applicable parties thereto, and all of the conditions set forth in Sections
2.1, 2.2, 5.1 and 5.2 hereof are satisfied, or such other date as the parties may agree.

          “Commission” has the meaning set forth in the Recitals.

          “Common Stock” has the meaning set forth in the Recitals, and also includes any securities
into which the Common Stock may hereafter be reclassified or changed.

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          “Common Stock Equivalents” means any securities of the Company or any Subsidiary which would
entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any
debt, preferred stock, rights, options, warrants or other instrument that is at any time
convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or indirectly, Common Stock.

          “Company Counsel” means Cooley Godward Kronish LLP.

          “Company Deliverables” has the meaning set forth in Section 2.2(a).

          “Company’s Knowledge” means with respect to any statement made to the knowledge of the
Company, that the statement is based upon the actual knowledge of the executive officers of the
Company having responsibility for the matter or matters that are the subject of the statement.

          “Control” (including the terms “controlling”, “controlled by” or “under common control with”)
means the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

          “Disclosure Materials” has the meaning set forth in Section 3.1(h).

          “Effective Date” means the date on which the initial Registration Statement required by
Section 2(a) of the Registration Rights Agreement is first declared effective by the Commission.

          “Effectiveness Deadline” means the date on which the initial Registration Statement is
required to be declared effective by the Commission under the terms of the Registration Rights
Agreement.

          “Environmental Laws” has the meaning set forth in Section 3.1(l).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor
statute, and the rules and regulations promulgated thereunder.

          “GAAP” means U.S. generally accepted accounting principles, as applied by the Company.

          “Indemnified Person” has the meaning set forth in Section 4.9(b).

          “Intellectual Property” has the meaning set forth in Section 3.1(r).

          “Irrevocable Transfer Agent Instructions” means, with respect to the Company, the Irrevocable
Transfer Agent Instructions, in the form of Exhibit E, executed by the Company and
delivered to and acknowledged in writing by the Transfer Agent.

          “Lien” means any lien, charge, claim, encumbrance, security interest, right of first refusal,
preemptive right or other restrictions of any kind.

          “Material Adverse Effect” means a material adverse effect on the results of operations,
assets, business or financial condition of the Company, except that any of the following, either
alone or in combination, shall not be deemed a Material Adverse Effect: (i) effects caused by
changes or circumstances affecting general market conditions in the U.S. economy or which are
generally applicable to the industry in which the Company operates, (ii) effects resulting from or
relating to the announcement or disclosure of the sale of the Securities or other transactions
contemplated by this Agreement, or (iii) effects caused by any

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event, occurrence or condition resulting from or relating to the taking of any action in
accordance with this Agreement.

          “Material Contract” means any contract of the Company that was filed as an exhibit to the SEC
Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

          “Material Permits” has the meaning set forth in Section 3.1(p).

          “New York Courts” means the state and federal courts sitting in the City of New York, Borough
of Manhattan.

          “Outside Date” means the thirtieth day following the date of this Agreement.

          “Person” means an individual, corporation, partnership, limited liability company, trust,
business trust, association, joint stock company, joint venture, sole proprietorship,
unincorporated organization, governmental authority or any other form of entity not specifically
listed herein.

          “Principal Trading Market” means the Trading Market on which the Common Stock is primarily
listed on and quoted for trading, which, as of the date of this Agreement and the Closing Date,
shall be the NASDAQ Capital Market.

          “Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition), whether commenced or
threatened.

          “Purchase Price” means $13.25 per share.

          “Purchaser Deliverables” has the meaning set forth in Section 2.2(b).

          “Purchaser Party” has the meaning set forth in Section 4.9(a).

          “Registration Rights Agreement” has the meaning set forth in the Recitals.

          “Registration Statement” means a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale by the Purchasers of the Registrable
Securities (as defined in the Registration Rights Agreement).

          “Required Approvals” has the meaning set forth in Section 3.1(e).

          “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by
the Commission having substantially the same effect as such Rule.

          “SEC Reports” has the meaning set forth in Section 3.1(h).

          “Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(vi).

          “Securities Act” means the Securities Act of 1933, as amended.

          “Short Sales” include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and all
types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short
sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and
similar arrangements

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(including on a total return basis), and sales and other transactions through non-U.S. broker
dealers or foreign regulated brokers.

          “Subscription Amount” means with respect to each Purchaser, the aggregate amount to be paid
for the Shares purchased hereunder as indicated on such Purchaser’s signature page to this
Agreement next to the heading “Aggregate Purchase Price (Subscription Amount)”.

          “Subsidiary” means any entity in which the Company, directly or indirectly, owns capital stock
or holds an equity or similar interest.

          “Trading Affiliate” has the meaning set forth in Section 3.2(h).

          “Trading Day” means (i) a day on which the Common Stock is listed or quoted and traded on its
Principal Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not
listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported in the “pink sheets” by Pink Sheets LLC (or any similar
organization or agency succeeding to its functions of reporting prices); provided, that in the
event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
then Trading Day shall mean a Business Day.

          “Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

          “Transaction Documents” means this Agreement, the schedules and exhibits attached hereto, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions and any other documents
or agreements executed in connection with the transactions contemplated hereunder.

          “Transfer Agent” means Computershare Trust Company N.A., or any successor transfer agent for
the Company.

ARTICLE II.

PURCHASE AND SALE

     2.1 Closing.

          (a) Amount. Subject to the terms and conditions set forth in this Agreement, at the
Closing, the Company shall issue and sell to each Purchaser, and each Purchaser shall, severally
and not jointly, purchase from the Company, such number of Shares equal to the quotient resulting
from dividing (i) the Subscription Amount for such Purchaser by (ii) the Purchase Price, rounded
down to the nearest whole Share.

          (b) Closing. The Closing of the purchase and sale of the Shares shall take place at
the offices of Lowenstein Sandler PC, 1251 Avenue of the Americas, New York, New York on the
Closing Date or at such other locations or remotely by facsimile transmission or other electronic
means as the parties may mutually agree.

          (c) Form of Payment. On the Closing Date (i) the Company and the Lead Placement Agent
shall instruct the Escrow Agent to wire the Escrow Amount in accordance with the terms of Section
2.1(d), (ii) each Purchaser that has agreed to wire funds directly to the Company shall wire such
Purchaser’s

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Subscription Amount to the Company in accordance with the written directions from the Company,
and (iii) the Company shall irrevocably instruct the Transfer Agent to deliver to each Purchaser
one or more stock certificates, free and clear of all restrictive and other legends (except as
expressly provided in Section 4.1(b) hereof), evidencing the number of Shares such Purchaser is
purchasing as is set forth on such Purchaser’s signature page to this Agreement next to the heading
“Number of Shares to be Acquired”, within three (3) Business Days after the Closing, duly executed
on behalf of the Company and registered in the name of such Purchaser.

          (d) Escrow. With respect to each Purchaser that has not agreed to wire its
Subscription Amount directly to the Company:

               (i) Simultaneously with the execution and delivery of this Agreement by such Purchaser, such
Purchaser shall promptly cause a wire transfer of immediately available funds (U.S. dollars) in an
amount representing such Purchaser’s Subscription Amount to be paid to a non-interest bearing
escrow account of Lowenstein Sandler PC (the “Escrow Agent”) set forth on Exhibit G
attached hereto (the aggregate amounts received being held in escrow by the Escrow Agent are
referred to herein as the “Escrow Amount”). The Escrow Agent shall hold the Escrow Amount in
escrow in accordance with Section 2.1(d)(ii) below.

               (ii) The Escrow Agent shall continue to hold the Escrow Amount in escrow in accordance with
and subject to this Agreement, from the date of its receipt of the funds constituting the Escrow
Amount until the soonest of:

                    (A) in the case of the termination of this Agreement in accordance with Section 6.17, in which
case, if the Escrow Agent then holds any portion of the Escrow Amount, then: (1) in the event of a
termination by the Company, the Escrow Agent shall return the portion of the Escrow Amount received
from each Purchaser which it then holds, to each such Purchaser, and in the event of a termination
by a Purchaser, the Escrow Agent shall return the portion of the Escrow Amount received from such
Purchaser which it then holds, to such Purchaser, in accordance with written wire transfer
instructions received from the Purchaser; and (2) if the Escrow Agent has not received written wire
transfer instructions from any Purchaser before the 30th day after such termination
date, then the Escrow Agent may, in its sole and absolute discretion, either (x) deposit that
portion of the Escrow Amount to be returned to such Purchaser in a court of competent jurisdiction
on written notice to such Purchaser, and the Escrow Agent shall thereafter have no further
liability with respect to such deposited funds, or (y) continue to hold such portion of the Escrow
Amount pending receipt of written wire transfer instructions from such Purchaser or an order from a
court of competent jurisdiction; OR

                    (B) in the case of the Closing, receipt of written instructions from the Company and the Lead
Placement Agent that the Closing shall have been consummated, in which case, the Escrow Agent shall
release the Escrow Amount constituting the aggregate purchase price as follows: (1) to the
Placement Agents, the fees payable to such Placement Agents (which fees shall be set forth in such
instructions), and (2) the balance of the aggregate purchase price to the Company.

               (iii) The Company and the Purchasers contributing to the Escrow Amount acknowledge and agree
for the benefit of the Escrow Agent (which shall be deemed to be a third party beneficiary of this
Section 2.1(d)) as follows:

                    (A) The Escrow Agent: (i) is not responsible for the performance by the Company, the
Purchasers or Placement Agents of this Agreement or any of the Transaction Documents or for
determining or compelling compliance therewith; (ii) is only responsible for (A) holding the Escrow
Amount in escrow pending receipt of written instructions from the Company and the Lead Placement
Agent directing

6

 

the release of the Escrow Amount, and (B) disbursing the Escrow Amount in accordance with the
written instructions from the Company and the Lead Placement Agent, each of the responsibilities of
the Escrow Agent in clause (A) and (B) is ministerial in nature, and no implied duties or
obligations of any kind shall be read into this Agreement against or on the part of the Escrow
Agent (collectively, the “Escrow Agent Duties”); (iii) shall not be obligated to take any legal or
other action hereunder which might in its judgment involve or cause it to incur any expense or
liability unless it shall have been furnished with indemnification acceptable to it, in its sole
discretion; (iv) may rely on and shall be protected in acting or refraining from acting upon any
written notice, instruction (including, without limitation, wire transfer instructions, whether
incorporated herein or provided in a separate written instruction), instrument, statement,
certificate, request or other document furnished to it hereunder and believed by it to be genuine
and to have been signed or presented by the proper Person, and shall have no responsibility for
making inquiry as to, or for determining, the genuineness, accuracy or validity thereof, or of the
authority of the Person signing or presenting the same; and (v) may consult counsel satisfactory to
it, and the opinion or advice of such counsel in any instance shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with the opinion or advice of such counsel. Documents and written
materials referred to in this Section 2.1(d)(iii)(A) include, without limitation, e-mail and other
electronic transmissions capable of being printed, whether or not they are in fact printed; and any
such e-mail or other electronic transmission may be deemed and treated by the Escrow Agent as
having been signed or presented by a Person if it bears, as sender, the Person’s e-mail address.

                    (B) The Escrow Agent shall not be liable to anyone for any action taken or omitted to be taken
by it hereunder, except in the case of Escrow Agent’s gross negligence or willful misconduct in
breach of the Escrow Agent Duties. IN NO EVENT SHALL THE ESCROW AGENT BE LIABLE FOR INDIRECT,
PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGE OR LOSS (INCLUDING BUT NOT LIMITED TO LOST PROFITS)
WHATSOEVER, EVEN IF THE ESCROW AGENT HAS BEEN INFORMED OF THE LIKELIHOOD OF SUCH LOSS OR DAMAGE AND
REGARDLESS OF THE FORM OF ACTION.

                    (C) The Company hereby indemnifies and holds harmless the Escrow Agent from and against any
and all loss, liability, cost, damage and expense, including, without limitation, reasonable
counsel fees and expenses, which the Escrow Agent may suffer or incur by reason of any action,
claim or proceeding brought against the Escrow Agent arising out of or relating to the performance
of the Escrow Agent Duties, except to the extent such action, claim or proceeding is exclusively
the result of the willful misconduct, bad faith or gross negligence of the Escrow Agent.

                    (D) The Escrow Agent has acted as legal counsel to the Placement Agents in connection with
this Agreement and the other Transaction Documents, is merely acting as a stakeholder under this
Agreement and is, therefore, hereby authorized to continue acting as legal counsel to the Placement
Agents including, without limitation, with regard to any dispute arising out of this Agreement, the
other Transaction Documents, the Escrow Amount or any other matter. The Purchasers hereby
expressly consent to permit the Escrow Agent to represent the Placement Agents in connection with
all matters relating to this Agreement, including, without limitation, with regard to any dispute
arising out of this Agreement, the other Transaction Documents, the Escrow Amount or any other
matter, and hereby waives any conflict of interest or appearance of conflict or impropriety with
respect to such representation. Each of the Purchasers has consulted with its own counsel
specifically about this Section 2.1(d) to the extent they deemed necessary, and has entered into
this Agreement after being satisfied with such advice.

                    (E) The Escrow Agent shall have the right at any time to resign for any reason and be
discharged of its duties as escrow agent hereunder (including without limitation the Escrow Agent
Duties) by giving written notice of its resignation to the Company, the Placement Agents and the
Purchasers at least ten (10) calendar days prior to the specified effective date of such
resignation. All

7

 

obligations of the Escrow Agent hereunder shall cease and terminate on the effective date of its
resignation and its sole responsibility thereafter shall be to hold the Escrow Amount, for a period
of ten (10) calendar days following the effective date of resignation, at which time,

                    (I) if a successor escrow agent shall have been appointed and have accepted such
appointment in a writing to both the Company and the Purchasers, then upon written
notice thereof given to each of the Purchasers, the Escrow Agent shall deliver the
Escrow Amount to the successor escrow agent, and upon such delivery, the Escrow Agent
shall have no further liability or obligation; or

                    (II) if a successor escrow agent shall not have been appointed, for any reason
whatsoever, the Escrow Agent shall at its option in its sole discretion, either (A)
deliver the Escrow Amount to a court of competent jurisdiction selected by the Escrow
Agent and give written notice thereof to the Company, the Placement Agents and the
Purchasers, or (B) continue to hold the Escrow Amount in escrow pending written
direction from the Company and the Lead Placement Agent in form and formality
satisfactory to the Escrow Agent.

                    (F) In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder
or shall receive instructions with respect to the Escrow Amount or any portion thereunder which, in
its sole discretion, are in conflict either with other instructions received by it or with any
provision of this Agreement, the Escrow Agent shall have the absolute right to suspend all further
performance of its duties under this Agreement (except for the safekeeping of such Escrow Amount)
until such uncertainty or conflicting instructions have been resolved to the Escrow Agent’s sole
satisfaction by final judgment of a court of competent jurisdiction, joint written instructions
from the Company, the Lead Placement Agent and all of the Purchasers, or otherwise. In the event
that any controversy arises between the Company and one or more of the Purchasers or any other
party with respect to this Agreement or the Escrow Amount, the Escrow Agent shall not be required
to determine the proper resolution of such controversy or the proper disposition of the Escrow
Amount, and shall have the absolute right, in its sole discretion, to deposit the Escrow Amount
with the clerk of a court selected by the Escrow Agent and file a suit in interpleader in that
court and obtain an order from that court requiring all parties involved to litigate in that court
their respective claims arising out of or in connection with the Escrow Amount. Upon the deposit
by the Escrow Agent of the Escrow Amount with the clerk of such court in accordance with this
provision, the Escrow Agent shall thereupon be relieved of all further obligations and released
from all liability hereunder.

                    (G) The provisions of this Section 2.1(d) shall survive any termination of this Agreement.

     2.2 Closing Deliveries.   

          (a) On or prior to the Closing, the Company shall issue, deliver or cause to be delivered to
each Purchaser the following (the “Company Deliverables”):

               (i) this Agreement, duly executed by the Company;

               (ii) facsimile copies of one or more stock certificates, free and clear of all restrictive and
other legends (except as provided in Section 4.1(b) hereof), evidencing the Shares
subscribed for by Purchaser hereunder, registered in the name of such Purchaser as set forth on the
Stock Certificate Questionnaire included as Exhibit B-2 hereto (the “Stock Certificates”),
with the original Stock Certificates sent within three (3) Business Days of Closing;

8

 

               (iii) a legal opinion of Company Counsel, dated as of the Closing Date and in the form
attached hereto as Exhibit C, executed by such counsel and addressed to the Purchasers;

               (iv) the Registration Rights Agreement, duly executed by the Company;

               (v) duly executed Irrevocable Transfer Agent Instructions acknowledged in writing by the
Transfer Agent;

               (vi) a certificate of the Secretary of the Company (the “Secretary’s Certificate”), dated as
of the Closing Date, (a) certifying the resolutions adopted by the Board of Directors of the
Company or a duly authorized committee thereof approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the Shares, (b) certifying the
current versions of the certificate or articles of incorporation, as amended, and by-laws of the
Company and (c) certifying as to the signatures and authority of persons signing the Transaction
Documents and related documents on behalf of the Company, in the form attached hereto as
Exhibit E;

               (vii) the Compliance Certificate referred to in Section 5.1(g);

               (viii) a certificate evidencing the formation and good standing of the Company in its
jurisdiction of formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within five (5) Business Days of the Closing Date;

               (ix) a certificate evidencing the Company’s qualification as a foreign corporation and good
standing issued by the Secretary of State of the State of California, as of a date within ten (10)
Business Days of the Closing Date; and

               (x) a certified copy of the Certificate of Incorporation, as certified by the Secretary of
State of the State (or comparable office) of such entity’s jurisdiction of formation, as of a date
within ten (10) Business Days of the Closing Date.

          (b) On or prior to the Closing, each Purchaser shall deliver or cause to be delivered to the
Company the following (the “Purchaser Deliverables”):

               (i) this Agreement, duly executed by such Purchaser;

               (ii) its Subscription Amount, in United States dollars and in immediately available funds, in
the amount set forth as the “Purchase Price” indicated below such Purchaser’s name on the
applicable signature page hereto under the heading “Aggregate Purchase Price (Subscription Amount)”
by wire transfer to the escrow account set forth on Exhibit G attached hereto or to the
account of the Company pursuant to Section 2.1(c);

               (iii) the Registration Rights Agreement, duly executed by such Purchaser;

               (iv) a fully completed and duly executed Selling Stockholder Questionnaire in the form
attached as Annex B to the Registration Rights Agreement; and

               (v) a fully completed and duly executed Accredited Investor Questionnaire, reasonably
satisfactory to the Company, and Stock Certificate Questionnaire in the forms attached hereto as
Exhibits B-1 and B-2, respectively.

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants as of the date hereof and the Closing Date (except for the representations and warranties
that speak as of a specific date, which shall be made as of such date), to each of the Purchasers
and to the Placement Agents that, except as set forth in the Schedules delivered herewith or
disclosed in the SEC Reports:

          (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than those
listed in Schedule 3.1(a) hereto. Except as disclosed in Schedule 3.1(a) hereto,
the Company owns, directly or indirectly, all of the capital stock or comparable equity interests
of each Subsidiary free and clear of any and all Liens which could reasonably be expected to have a
Material Adverse Effect, and all the issued and outstanding shares of capital stock or comparable
equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights to subscribe for or purchase securities.

          (b) Organization and Qualification. The Company and each of its Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite
corporate power and authority to own or lease and use its properties and assets and to carry on its
business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company and each of its Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good standing, as the
case may be, would not have a Material Adverse Effect.

          (c) Authorization; Enforcement; Validity. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions contemplated by each of the
Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder
and thereunder. The Company’s execution and delivery of each of the Transaction Documents to which
it is a party and the consummation by it of the transactions contemplated hereby and thereby
(including, but not limited to, the sale and delivery of the Shares) have been duly authorized by
all necessary corporate action on the part of the Company, and no further corporate action is
required by the Company, its Board of Directors or its stockholders in connection therewith other
than in connection with the Required Approvals. Each of the Transaction Documents to which it is a
party has been (or upon delivery will have been) duly executed by the Company and is, or when
delivered in accordance with the terms hereof, will constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its terms, except (i)
as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of,
creditors’ rights and remedies or by other equitable principles of general , (ii) as limited by
laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law. Except for Material Contracts and as set forth on Schedule 3.1(c) hereto,
there are no stockholder agreements, voting agreements, or other similar arrangements with respect
to the Company’s capital stock to which the Company is a party or, to the Company’s Knowledge,
between or among any of the Company’s stockholders.

          (d) No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation by the Company of the
transactions contemplated hereby or thereby (including, without limitation, the issuance of the
Shares) do not and will not (i) conflict with or violate any provisions of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or otherwise result in a violation of
the organizational documents of the Company, (ii)

10

 

conflict with, or constitute a default (or an event that with notice or lapse of time or both
would result in a default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any Material Contract, or (iii)
subject to the Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company is subject (including federal and state securities laws and
regulations and the rules and regulations, assuming the correctness of the representations and
warranties made by the Purchasers herein, of any self-regulatory organization to which the Company
or its securities are subject, including all applicable Trading Markets), or by which any property
or asset of the Company is bound or affected, except in the case of clauses (ii) and (iii) such as
would not, individually or in the aggregate, have a Material Adverse Effect.

          (e) Filings, Consents and Approvals. Neither the Company nor any of its Subsidiaries
is required to obtain any consent, waiver, authorization or order of, give any notice to, or make
any filing or registration with, any court or other federal, state, local or other governmental
authority or other Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents (including the issuance of the Shares), other than (i) the filing with
the Commission of one or more Registration Statements in accordance with the requirements of the
Registration Rights Agreement, (ii) filings required by applicable state securities laws, (iii) the
filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the
Securities Act, (iv) the filing of any requisite notices and/or application(s) to the Principal
Trading Market for the issuance and sale of the Common Stock and the listing of the Common Stock
for trading or quotation, as the case may be, thereon in the time and manner required thereby, (v)
the filings required in accordance with Section 4.7 of this Agreement and (vi) those that have been
made or obtained prior to the date of this Agreement (collectively, the “Required Approvals”).

          (f) Issuance of the Shares. The Shares have been duly authorized and, when issued and
paid for in accordance with the terms of the Transaction Documents, will be duly and validly
issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by applicable securities laws, and
shall not be subject to preemptive or similar rights. Assuming the accuracy of the representations
and warranties of the Purchasers in this Agreement, the Shares will be issued in compliance with
all applicable federal and state securities laws.

          (g) Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock, options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock of the Company) has
been set forth in the SEC Reports and has changed since the date of such SEC Reports only due to
stock grants or other equity awards or stock option and warrant exercises that do not, individually
or in the aggregate, have a material effect on the issued and outstanding capital stock, options
and other securities. All of the outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and non-assessable, have been issued in compliance in all
material respects with all applicable federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase any capital stock of the Company. Except as specified in the SEC Reports: (i) no
shares of the Company’s outstanding capital stock are subject to preemptive rights or any other
similar rights; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, or exercisable or exchangeable for, any shares of capital stock of the Company, or contracts,
commitments, understandings or arrangements by which the Company is or may become bound to issue
additional shares of capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company,
other than those issued or granted pursuant to Material Contracts or equity or incentive plans or
arrangements described in the SEC Reports; (iii) there are no material outstanding debt securities,
notes,

11

 

credit agreements, credit facilities or other agreements, documents or instruments evidencing
indebtedness of the Company or by which the Company is bound; (iv) to the Company’s Knowledge,
there are no financing statements securing obligations in any material amounts, either singly or in
the aggregate, filed in connection with the Company; (v) there are no agreements or arrangements
under which the Company is obligated to register the sale of any of their securities under the
Securities Act (except the Registration Rights Agreement); (vi) there are no outstanding securities
or instruments of the Company or which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company is or may become
bound to redeem a security of the Company; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of the Shares; (viii)
the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or
any similar plan or agreement; and (ix) the Company has no liabilities or obligations required to
be disclosed in the SEC Reports but not so disclosed in the SEC Reports, other than those incurred
in the ordinary course of the Company’s businesses and which, individually or in the aggregate, do
not or would not have a Material Adverse Effect.

          (h) SEC Reports. The Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it under the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the twelve months preceding the date hereof (or such shorter period as
the Company was required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports” and together with this Agreement and the Schedules to this
Agreement (if any), the “Disclosure Materials”), on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective filing dates, or to the extent corrected by a subsequent
restatement, the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted 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.

          (i) Financial Statements. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing (or to the
extent corrected by a subsequent restatement). Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved, except as may be
otherwise specified in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated subsidiaries taken as
a whole as of and for 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.

          (j) Tax Matters. The Company (i) has prepared and filed all foreign, federal and
state income and all other tax returns, reports and declarations required by any jurisdiction to
which it is subject, (ii) has paid all taxes and other governmental assessments and charges that
are material in amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith, with respect to which adequate reserves have been set
aside on the books of the Company and (iii) has set aside on its books provisions reasonably
adequate for the payment of all taxes for periods subsequent to the periods to which such returns,
reports or declarations apply, except, in the case of clauses (i) and (ii) above, where the failure
to so pay or file any such tax, assessment, charge or return would not have a Material Adverse
Effect.

12

 

          (k) Material Changes. Since the date of the latest financial statements included
within the SEC Reports, except as specifically disclosed in the SEC Reports or as set forth in
Schedule 3.1(k) hereto, (i) there have been no events, occurrences or developments that
have had or would reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or
otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in
filings made with the Commission, (iii) the Company has not altered materially its method of
accounting or the manner in which it keeps its accounting books and records, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock
(other than in connection with repurchases of unvested stock issued to employees of the Company),
(v) the Company has not issued any equity securities to any officer, director or Affiliate, except
Common Stock issued in the ordinary course as dividends on outstanding preferred stock or issued
pursuant to existing Company stock option or stock purchase plans or executive and director
corporate arrangements disclosed in the SEC Reports and (vi) there has not been any material change
or amendment to, or any waiver of any material right by the Company under, any Material Contract
under which the Company or any of its Subsidiaries is bound or subject. Except for the transactions
contemplated by this Agreement or as set forth in Schedule 3.1(k) hereto, no event,
liability or development has occurred or exists with respect to the Company or its Subsidiaries or
their respective business, properties, operations or financial condition that would be required to
be disclosed by the Company under applicable securities laws at the time this representation is
made that has not been publicly disclosed at least one Trading Day prior to the date that this
representation is made.

          (l) Environmental Matters. To the Company’s Knowledge, neither the Company nor any of
its Subsidiaries (i) is in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) owns or operates any real property contaminated with any substance that is in
violation of any Environmental Laws, (iii) is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or (iv) is subject to any claim relating to any Environmental
Laws; which violation, contamination, liability or claim has had or would have, individually or in
the aggregate, a Material Adverse Effect; and, to the Company’s Knowledge, there is no pending or
threatened investigation that might lead to such a claim.

          (m) Litigation. To the Company’s Knowledge, there is no Action which (i) adversely
affects or challenges the legality, validity or enforceability of any of the Transaction Documents
or the Shares or (ii) except as specifically disclosed in the SEC Reports, could, if there were an
unfavorable decision, individually or in the aggregate, have a Material Adverse Effect. The
Commission has not issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any of its Subsidiaries under the Exchange Act or
the Securities Act.

          (n) Employment Matters. No material labor dispute exists or, to the Company’s
Knowledge, is imminent with respect to any of the employees of the Company which would have a
Material Adverse Effect. None of the Company’s employees is a member of a union that relates to
such employee’s relationship with the Company, and neither the Company nor any of its Subsidiaries
is a party to a collective bargaining agreement, and the Company and each Subsidiary believes that
its relationship with its employees is good. No executive officer of the Company (as defined in
Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the
Company or otherwise terminate such officer’s employment with the Company. To the Company’s
Knowledge, it is in compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of

13

 

employment and wages and hours, except where the failure to be in compliance would not,
individually or in the aggregate, have a Material Adverse Effect.

          (o) Compliance. Neither the Company nor any of its Subsidiaries (i) is in default
under or in violation of (and no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or any of its Subsidiaries under),
nor has the Company or any of its Subsidiaries received written notice of a claim that it is in
default under or that it is in violation of, any Material Contract (whether or not such default or
violation has been waived), (ii) is in violation of any order of which the Company has been made
aware in writing of any court, arbitrator or governmental body having jurisdiction over the Company
or its properties or assets, or (iii) is in violation of, or in receipt of written notice that it
is in violation of, any statute, rule or regulation of any governmental authority applicable to the
Company, except in each case as would not, individually or in the aggregate, have a Material
Adverse Effect.

          (p) Regulatory Permits. The Company possesses or has applied for all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct its business as currently conducted and as described in the SEC
Reports, except where the failure to possess such permits, individually or in the aggregate, has
not and would not have, individually or in the aggregate, a Material Adverse Effect (“Material
Permits”), and (i) neither the Company nor any of its Subsidiaries has received any notice in
writing of proceedings relating to the revocation or material adverse modification of any such
Material Permits and (ii) the Company is unaware of any facts or circumstances that would give rise
to the revocation or material adverse modification of any Material Permits.

          (q) Title to Assets. The Company and its Subsidiaries do not own any real property.
The Company and its Subsidiaries have good and marketable title to all tangible personal property
owned by them which is material to the business of the Company and its Subsidiaries, taken as
whole, in each case free and clear of all Liens except such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made of such property by
the Company and any of its Subsidiaries. Any real property and facilities held under lease by the
Company and any of its Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries.

          (r) Patents and Trademarks. To the Company’s Knowledge, the Company and its
Subsidiaries own, possess, license or have other rights to use all foreign and domestic patents,
patent applications, trade and service marks, trade and service mark registrations, trade names,
copyrights, inventions, trade secrets, technology, Internet domain names, know-how and other
intellectual property (collectively, the “Intellectual Property”) necessary for the conduct of
their respective businesses as now conducted or as proposed to be conducted. Except as set forth
in the SEC Reports and except where such violations or infringements would not have, either
individually or in the aggregate, a Material Adverse Effect, (a) to the Company’s Knowledge, there
are no rights of third parties to any such Intellectual Property; (b) to the Company’s Knowledge,
there is no infringement by third parties of any such Intellectual Property; (c) to the Company’s
Knowledge, there is no pending or threatened action, suit, proceeding or claim by others
challenging the Company’s and its Subsidiaries’ rights in or to any such Intellectual Property; (d)
to the Company’s Knowledge, there is no pending or threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual Property; and (e) to the
Company’s Knowledge, there is no pending or threatened action, suit, proceeding or claim by others
that the Company and/or any Subsidiary infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others.

14

 

          (s) Insurance. The Company and each of the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as the
Company believes to be prudent and customary in the businesses and locations in which the Company
and the Subsidiaries are engaged. Neither the Company nor any of its Subsidiaries has received any
notice of cancellation of any such insurance, nor, to the Company’s Knowledge, will it or any
Subsidiary be unable to renew their respective existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business.

          (t) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports and other than the grant of stock options or other equity awards that are not individually
or in the aggregate material in amount, none of the officers or directors of the Company and, to
the Company’s Knowledge, none of the employees of the Company, is presently a party to any
transaction with the Company or to a presently contemplated transaction (other than for services as
employees, officers and directors) that would be required to be disclosed pursuant to Item 404 of
Regulation S-K promulgated under the Securities Act.

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

          (v) Sarbanes-Oxley; Disclosure Controls. To the Company’s Knowledge, the Company is
in compliance in all material respects with all of the provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it, except where such noncompliance would not have, individually or in the
aggregate, a Material Adverse Effect. The Company maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act).

          (w) Certain Fees. No person or entity will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or upon the Company or a
Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company, other than the Placement Agents with
respect to the offer and sale of the Shares (which placement agent fees are being paid by the
Company). The Company shall indemnify, pay, and hold each Purchaser harmless against, any
liability, loss or expense (including, without limitation, attorneys’ fees and out-of-pocket
expenses) arising in connection with any such right, interest or claim.

          (x) Private Placement. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2 of this Agreement and the accuracy of the information disclosed
in the Accredited Investor Questionnaires, no registration under the Securities Act is required for
the offer and sale of the Shares by the Company to the Purchasers under the Transaction Documents.

          (y) Registration Rights. Other than as set forth in the SEC Reports and other than
each of the Purchasers or as set forth in Schedule 3.1(y) hereto, no Person has any right
to cause the Company to effect the registration under the Securities Act of any securities of the
Company other than those securities which are currently registered on an effective registration
statement on file with the Commission.

          (z) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2, none of the Company, its Subsidiaries nor, to the
Company’s

15

 

Knowledge, any of its Affiliates or any Person acting on its behalf has, directly or
indirectly, at any time within the past six months, made any offers or sales of any Company
security or solicited any offers to buy any security under circumstances that would (i) eliminate
the availability of the exemption from registration under Regulation D under the Securities Act in
connection with the offer and sale by the Company of the Shares as contemplated hereby or (ii)
cause the offering of the Shares pursuant to the Transaction Documents to be integrated with prior
offerings by the Company for purposes of any applicable law, regulation or stockholder approval
provisions, including, without limitation, under the rules and regulations of any Trading Market on
which any of the securities of the Company are listed or designated.

          (aa) Listing and Maintenance Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to terminate the registration of the Common Stock under the Exchange Act nor has the
Company received any notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the date hereof, received written
notice from any Trading Market on which the Common Stock is listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading Market.
The Company is in compliance in all material respects with the listing and maintenance requirements
for continued trading of the Common Stock on the Principal Trading Market.

          (bb) Investment Company. Neither the Company nor any of its Subsidiaries is required
to be registered as, and is not an Affiliate of, and immediately following the Closing will not be
required to register as, an “investment company” within the meaning of the Investment Company Act
of 1940, as amended.

          (cc) Questionable Payments. To the Company’s Knowledge, neither the Company nor any
of its Subsidiaries, nor any directors, officers, employees, agents or other Persons acting at the
direction of the Company has, in the course of its actions for, or on behalf of, the Company: (a)
directly or indirectly, used any material corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to foreign or domestic political activity; (b)
made any material direct or indirect unlawful payments to any foreign or domestic governmental
officials or employees or to any foreign or domestic political parties or campaigns from corporate
funds; (c) violated in any material respect any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (d) made any other material unlawful bribe, rebate, payoff, influence payment,
kickback or other material unlawful payment to any foreign or domestic government official or
employee.

          (dd) Application of Takeover Protections; Rights Agreements. The Company and its
board of directors have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any distribution under a
rights agreement) or other similar anti-takeover provision under the Company’s charter documents or
the laws of its state of incorporation that is applicable to any of the Purchasers as a result of
the Purchasers and the Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, the Company’s issuance of the Shares and the
Purchasers’ ownership of the Shares. The Company has not adopted a stockholder rights plan or
similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change
in control of the Company.

          (ee) Disclosure. To the Company’s Knowledge, no event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its or their business,
properties, operations or financial conditions, which, under applicable law, rule or regulation,
requires public disclosure or announcement by the Company but which has not been so publicly
announced or disclosed (assuming for this purpose that the Company’s reports filed under the
Exchange Act are being incorporated into an effective registration statement filed by the Company
under the Securities Act), except for the

16

 

announcement of this Agreement and related transactions and as may be disclosed on the Form
8-K filed pursuant to Section 4.6.

          (ff) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company (or any Subsidiary) and an unconsolidated or other off balance
sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not
so disclosed and would have a Material Adverse Effect.

          (gg) Acknowledgment Regarding Purchasers’ Purchase of Shares.  The Company
acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby.  The Company further acknowledges that no Purchaser is acting as a financial advisor
or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the Transaction Documents and the
transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Shares. 

          (hh) Regulation M Compliance.  In the last thirty days, the Company has not, and to
the Company’s Knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the securities of the
Company or (iii) paid or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii)
compensation paid to the Placement Agents in connection with the placement of the Shares.

          (ii) OFAC. Neither the Company nor any Subsidiary nor, to the Company’s Knowledge, any
director, officer, agent, employee, Affiliate or Person acting on behalf of the Company or any
Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not knowingly directly or
indirectly use the proceeds of the sale of the Shares, or lend, contribute or otherwise make
available such proceeds to any Subsidiary, joint venture partner or other Person or entity, towards
any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by
OFAC or for the purpose of financing the activities of any Person currently subject to any U.S.
sanctions administered by OFAC.

          (jj) Money Laundering Laws. To the Company’s Knowledge, the operations of each of the
Company and any Subsidiary are and have been conducted at all times in compliance with the money
laundering statutes of applicable jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any
applicable governmental agency (collectively, the “Money Laundering Laws”) and to the Company’s
Knowledge, no action, suit or proceeding by or before any court or governmental agency, authority
or body or any arbitrator involving the Company and/or any Subsidiary with respect to the Money
Laundering Laws is pending or threatened.

          (kk) FDA.   To the Company’s Knowledge, there is no pending, completed or threatened,
action (including any lawsuit, arbitration, or legal or administrative or regulatory proceeding,
charge, complaint, or investigation) against the Company or any of its Subsidiaries, and none of
the Company or any of its Subsidiaries has received any notice, warning letter or other
communication from the U.S. Food and Drug Administration (“FDA”) or any other governmental entity,
which (i) contests the premarket clearance, licensure, registration, or approval of, the uses of,
the distribution of, the manufacturing or packaging of, the testing of, the sale of, or the
labeling and promotion of any product subject to the jurisdiction of the FDA under the Federal
Food, Drug and Cosmetic Act, as amended, and the regulations

17

 

thereunder that is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed
by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical Product”), (ii)
imposes a clinical hold on any clinical investigation by the Company or any of its Subsidiaries,
(iii) enjoins production at any facility of the Company or any of its Subsidiaries, (iv) enters or
proposes to enter into a consent decree of permanent injunction with the Company or any of its
Subsidiaries, or (v) otherwise alleges any violation of any laws, rules or regulations by the
Company or any of its Subsidiaries, and which, either individually or in the aggregate, would have
a Material Adverse Effect.  The Company has not been informed in writing by the FDA that the FDA
will prohibit the marketing, sale, license or use in the United States of any product proposed to
be developed, produced or marketed by the Company.

          (ll) No Additional Agreements. The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents.

     3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:

          (a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by the applicable Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution, delivery and performance by such Purchaser of
the transactions contemplated by this Agreement have been duly authorized by all necessary
corporate or, if such Purchaser is not a corporation, such partnership, limited liability company
or other applicable like action, on the part of such Purchaser. Each of this Agreement and the
Registration Rights Agreement has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.

          (b) No Conflicts. The execution, delivery and performance by such Purchaser of this
Agreement and the Registration Rights Agreement and the consummation by such Purchaser of the
transactions contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of such Purchaser, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which such Purchaser is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities laws) applicable to
such Purchaser, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of such Purchaser to perform its obligations
hereunder.

          (c) Investment Intent. Such Purchaser understands that the Shares are “restricted
securities” and have not been registered under the Securities Act or any applicable state
securities law and is acquiring the Shares as principal for its own account and not with a view to,
or for distributing or reselling such Shares or any part thereof in violation of the Securities Act
or any applicable state securities laws, provided, however, that by making the representations
herein, such Purchaser does not agree to hold any of the Shares for any minimum period of time and
reserves the right, subject to the provisions of this Agreement and the Registration Rights
Agreement, at all times to sell or otherwise dispose of all or any part of such

18

 

Shares pursuant to an effective registration statement under the Securities Act or under an
exemption from such registration and in compliance with applicable federal and state securities
laws. Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business.
Such Purchaser does not presently have any agreement, plan or understanding, directly or
indirectly, with any Person to distribute or effect any distribution of any of the Shares (or any
securities which are derivatives thereof) to or through any person or entity; such Purchaser is not
a registered broker-dealer under Section 15 of the Exchange Act or an entity engaged in a business
that would require it to be so registered as a broker-dealer.

          (d) Purchaser Status. At the time such Purchaser was offered the Shares, it was, and
at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities
Act.

          (e) General Solicitation. Such Purchaser is not purchasing the Shares as a result of
any advertisement, article, notice or other communication regarding the Shares published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar or any other general advertisement.

          (f) Experience of Such Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the prospective investment in the
Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to
bear the economic risk of an investment in the Shares and, at the present time, is able to afford a
complete loss of such investment.

          (g) Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded (i) the opportunity to ask
such questions as it has deemed necessary of, and to receive answers from, representatives of the
Company concerning the terms and conditions of the offering of the Shares and the merits and risks
of investing in the Shares; (ii) access to information about the Company and the Subsidiaries and
their respective financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain
such additional information that the Company possesses or can acquire without unreasonable effort
or expense that is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such Purchaser’s right to
rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents. Such Purchaser has sought
such accounting, legal and tax advice as it has considered necessary to make an informed decision
with respect to its acquisition of the Shares.

          (h) Certain Trading Activities. Other than with respect to the transactions
contemplated herein, since the time that such Purchaser was first contacted by the Company, the
Placement Agents or any other Person regarding the transactions contemplated hereby, neither the
Purchaser nor any Affiliate of such Purchaser which (x) had knowledge of the transactions
contemplated hereby, (y) has or shares discretion relating to such Purchaser’s investments or
trading or information concerning such Purchaser’s investments, including in respect of the Shares,
and (z) is subject to such Purchaser’s review or input concerning such Affiliate’s investments or
trading (collectively, “Trading Affiliates”) has directly or indirectly, nor has any Person acting
on behalf of or pursuant to any understanding with such Purchaser or Trading Affiliate, effected or
agreed to effect any purchases or sales of the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities). Notwithstanding the foregoing, in
the case of a Purchaser and/or Trading Affiliate that is, individually or collectively, a
multi-managed investment bank or vehicle whereby separate portfolio managers manage separate
portions of such Purchaser’s or Trading Affiliate’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers managing other portions
of such Purchaser’s or Trading Affiliate’s assets, the

19

 

representation set forth above shall apply only with respect to the portion of assets managed
by the portfolio manager that have knowledge about the financing transaction contemplated by this
Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, except as provided in
Section 4.11, no Purchaser makes any representation, warranty or covenant hereby that it will not
engage in Short Sales in the securities of the Company after the time that the Registration
Statement becomes effective.

          (i) Brokers and Finders. No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or upon the Company or
any Purchaser for any commission, fee or other compensation pursuant to any agreement, arrangement
or understanding entered into by or on behalf of the Purchaser.

          (j) Independent Investment Decision. Such Purchaser has independently evaluated the
merits of its decision to purchase Shares pursuant to the Transaction Documents, and such Purchaser
confirms that it has not relied on the advice of any other Purchaser’s business and/or legal
counsel in making such decision. Such Purchaser understands that nothing in this Agreement or any
other materials presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Shares constitutes legal, tax or investment advice. Such Purchaser has consulted
such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Shares. Such Purchaser understands that each of
the Placement Agents has acted solely as the agent of the Company in this placement of the Shares
and such Purchaser has not relied on the business or legal advice of the Placement Agents or any of
their agents, counsel or Affiliates in making its investment decision hereunder, and confirms that
none of such Persons has made any representations or warranties to such Purchaser in connection
with the transactions contemplated by the Transaction Documents.

          (k) Reliance on Exemptions. Such Purchaser understands that the Shares being offered
and sold to it in reliance on specific exemptions from the registration requirements of United
States federal and state securities laws and that the Company is relying in part upon the truth and
accuracy of, and such Purchaser’s compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire the Shares.

          (l) No Governmental Review. Such Purchaser understands that no United States federal
or state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Shares or the fairness or suitability of the investment in the
Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

          (m) Regulation M. Such Purchaser is aware that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of Common Stock and other activities with
respect to the Common Stock by the Purchasers.

          (n) Residency. Such Purchaser’s residence (if an individual) or office in which its
investment decision with respect to the Shares was made (if an entity) are located at the address
immediately below such Purchaser’s name on its signature page hereto.

The Company and each of the Purchasers acknowledge and agree that no party to this Agreement has
made or makes any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Article III and the Transaction Documents.

20

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

     4.1 Transfer Restrictions.

          (a) Compliance with Laws. Notwithstanding any other provision of this Article IV,
each Purchaser covenants that the Shares may be disposed of only pursuant to an effective
registration statement under, and in compliance with the requirements of, the Securities Act, or
pursuant to an available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state and federal
securities laws. In connection with any transfer of the Shares other than (i) pursuant to an
effective registration statement, (ii) to the Company, (iii) pursuant to Rule 144 (provided that
the Purchaser provides the Company with reasonable assurances (in the form of seller and broker
representation letters) that the securities may be sold pursuant to such rule) or Rule 144A, (iv)
pursuant to Rule 144(k) (or any successor thereto) following the applicable holding period or (v)
in connection with a bona fide pledge, the Company may require the transferor thereof to provide to
the Company and the Transfer Agent an opinion of counsel selected by the transferor and reasonably
acceptable to the Company and the Transfer Agent, the form and substance of which opinion shall be
reasonably satisfactory to the Company and the Transfer Agent, to the effect that such transfer
does not require registration of such transferred Shares under the Securities Act. As a condition
of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement
and shall have the rights of a Purchaser under this Agreement and the Registration Rights
Agreement.

          (b) Legends. Certificates evidencing the Shares shall bear any legend as required by
the “blue sky” laws of any state and a restrictive legend in substantially the following form,
until such time as they are not required under Section 4.1(c):

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED EXCEPT AS PROVIDED BY SECTION 4 OF THAT CERTAIN SECURITIES
PURCHASE AGREEMENT, DATED AS OF DECEMBER 19, 2007, BY AND AMONG ARDEA
BIOSCIENCES, INC. AND EACH PURCHASER IDENTIFIED ON THE SIGNATURE PAGES
THERETO.

          (c) Removal of Legends. The legend set forth in Section 4.1(b) above shall be removed
and the Company shall issue a certificate without such legend or any other legend to the holder of
the applicable Shares upon which it is stamped or issue to such holder by electronic delivery at
the applicable balance account at the Depository Trust Company (“DTC”), if (i) such Shares are
registered for resale under the Securities Act (provided that the Purchaser agrees to only sell
such Shares when, and as permitted, by the effective registration statement permitting such
resale), (ii) such Shares are sold or transferred pursuant to Rule 144 (if the transferor is not an
Affiliate of the Company), or (iii) such Shares are eligible for sale under Rule 144(k), or any
successor thereto. Any fees (with respect to the Transfer Agent, Company Counsel or otherwise)
associated with the removal of such legend shall be borne by the Company. Following the Effective
Date, or at such earlier time as a legend is no longer required for certain Shares, the Company
will no later than three (3) Trading Days following the delivery by a Purchaser to the Company or
the Transfer Agent (with notice to the Company) of a legended certificate representing such Shares
(endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer) and an opinion of counsel to the extent required by Section
4.1(a) (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to
such Purchaser or the transferee of such Purchaser, as applicable, a certificate representing such
Shares that is free from all restrictive and other

21

 

legends. The Company may not make any notation on its records or give instructions to the Transfer
Agent that enlarge the restrictions on transfer set forth in this Section. Certificates for Shares
subject to legend removal hereunder may be transmitted by the Transfer Agent to the Purchasers by
crediting the account of the Purchaser’s prime broker with DTC.

          (d) Irrevocable Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its Transfer Agent, and any subsequent transfer agent in the form of Exhibit
D attached hereto (the “Irrevocable Transfer Agent Instructions”). The Company represents and
warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in
this Section 4.1(d) or instructions that are not contradictory therewith will be given by the
Company to its transfer agent in connection with this Agreement, and that the Shares shall
otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents and applicable law. The Company
acknowledges that a breach by it of its obligations under this Section 4.1(d) will cause
irreparable harm to a Purchaser. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 4.1(d) will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Section 4.1(d), that a
Purchaser shall be entitled, in addition to all other available remedies, to an order and/or
injunction restraining any breach and requiring immediate issuance and transfer, without the
necessity of showing economic loss and without any bond or other security being required.

          (e) Acknowledgement. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell or otherwise transfer the
Shares or any interest therein without complying with the requirements of the Securities Act.
Except as otherwise provided below, while the above-referenced registration statement remains
effective, each Purchaser hereunder may sell the Shares in accordance with the plan of distribution
contained in the registration statement and if it does so it will comply therewith and with the
related prospectus delivery requirements unless an exemption therefrom is available. Each
Purchaser, severally and not jointly with the other Purchasers, agrees that if it is notified by
the Company in writing at any time that the registration statement registering the resale of the
Shares is not effective or that the prospectus included in such registration statement no longer
complies with the requirements of Section 10 of the Securities Act, the Purchaser will refrain from
selling such Shares until such time as the Purchaser is notified by the Company that such
registration statement is effective or such prospectus is compliant with Section 10 of the Exchange
Act, unless such Purchaser is able to, and does, sell such Shares pursuant to an available
exemption from the registration requirements of Section 5 of the Securities Act. Both the Company
and its Transfer Agent, and their respective directors, officers, employees and agents, may rely on
this subsection (e) and each Purchaser hereunder will indemnify and hold harmless each of such
persons from any breaches or violations of this paragraph.

          (f) Buy-In. If the Company shall fail for any reason or for no reason to issue to a
Purchaser unlegended certificates within three (3) Business Days of receipt of all documents
necessary for the removal of the legend set forth above (the “Deadline Date”), then, in addition to
all other remedies available to such Purchaser, if on or after the Business Day immediately
following such three (3) Business Day period, such Purchaser purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the holder
of shares of Common Stock that such Purchaser anticipated receiving from the Company without any
restrictive legend (a “Buy-In”), then the Company shall, within three (3) Business Days after such
Purchaser’s request and in such Purchaser’s sole discretion, either (i) pay cash to the Purchaser
in an amount equal to such Purchaser’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such shares of Common Stock) shall terminate,
or (ii) promptly honor its obligation to deliver to such Purchaser a certificate or certificates
representing such shares of Common Stock and pay cash to the Purchaser in an amount equal to the
excess (if any) of the Buy-

22

 

In Price over the product of (a) such number of shares of Common Stock, times (b) the Closing Bid
Price on the Deadline Date.

     4.2 Acknowledgment of Dilution.  The Company acknowledges that the issuance of the
Shares may result in dilution of the outstanding shares of Common Stock.  The Company further
acknowledges that its obligations under the Transaction Documents, including without limitation its
obligation to issue the Shares pursuant to the Transaction Documents, are unconditional and
absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim the Company may have against any Purchaser and
regardless of the dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company.

     4.3 Furnishing of Information. In order to enable the Purchasers to sell the Shares
under Rule 144 of the Securities Act, for a period of one year from the Closing, the Company shall
use its commercially reasonable efforts to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the Company after the
date hereof pursuant to the Exchange Act. During such one year period, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is required for the
Purchasers to sell the Shares under Rule 144.

     4.4 Form D and Blue Sky. The Company agrees to timely file a Form D with respect to
the Shares as required under Regulation D. The Company, on or before the Closing Date, shall take
such action as the Company shall reasonably determine is necessary in order to obtain an exemption
for or to qualify the Shares for sale to the Purchasers at the Closing pursuant to this Agreement
under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an
exemption from such qualification). The Company shall make all filings and reports relating to the
offer and sale of the Shares required under applicable securities or “Blue Sky” laws of the states
of the United States following the Closing Date.

     4.5 No Integration. The Company shall not, and shall use its commercially reasonable
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that will be integrated with the offer or sale of the Shares in a manner that would require
the registration under the Securities Act of the sale of the Shares to the Purchasers, or that will
be integrated with the offer or sale of the Shares for purposes of the rules and regulations of any
Trading Market such that it would require stockholder approval prior to the closing of such other
transaction unless stockholder approval is obtained before the closing of such subsequent
transaction.

     4.6 Securities Laws Disclosure; Publicity. By 9:00 a.m., New York City time, on the
Trading Day immediately following the execution of this Agreement, the Company shall issue a press
release (the “Press Release”) reasonably acceptable to the Lead Placement Agent disclosing all
material terms of the transactions contemplated hereby. On or before 9:00 a.m., New York City
time, on the Trading Day immediately following the execution of this Agreement, the Company will
file a Current Report on Form 8-K with the Commission describing the terms of the Transaction
Documents (and including as exhibits to such Current Report on Form 8-K the material Transaction
Documents (including, without limitation, this Agreement and the Registration Rights Agreement)).
Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser or
an Affiliate of any Purchaser, or include the name of any Purchaser or an Affiliate of any
Purchaser in any press release or filing with the Commission (other than the Registration
Statement) or any regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with (A) any registration
statement contemplated by the Registration Rights Agreement and (B) the filing of final Transaction
Documents (including signature pages thereto) with the Commission and (ii) to the extent such
disclosure is required by law, request of the Staff of the Commission or Trading Market
regulations, in which case the

23

 

Company shall provide the Purchasers with prior written notice of such disclosure permitted
under this subclause (ii). From and after the issuance of the Press Release, no Purchaser shall be
in possession of any material, non-public information received from the Company, any Subsidiary or
any of their respective officers, directors, employees or agents, that is not disclosed in the
Press Release unless a Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until such time as the transactions contemplated by this Agreement
are publicly disclosed by the Company as described in this Section 4.6, such Purchaser will
maintain the confidentiality of all disclosures made to it in connection with this transaction
(including the existence and terms of this transaction).

     4.7 Non-Public Information. Except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, and except with the express written
consent of such Purchaser and unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information the Company shall not, and
shall cause each Subsidiary and each of their respective officers, directors, employees and agents,
not to, and each Purchaser shall not directly solicit the Company, any of its Subsidiaries or any
of their respective officers, directors, employees or agents to provide any Purchaser with any
material, non-public information regarding the Company or any of its Subsidiaries from and after
the filing of the Press Release.

     4.8 Indemnification.

          (a) Indemnification of Purchasers. In addition to the indemnity provided in the
Registration Rights Agreement, the Company will indemnify and hold each Purchaser and its
directors, officers, stockholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title), each Person who controls such Purchaser (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers,
stockholders, agents, members, partners or employees (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such title or any other
title) of such controlling person (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses, including all
judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of any breach of any of
the representations, warranties, covenants or agreements made by the Company in this Agreement or
in the other Transaction Documents; provided that such a claim for indemnification relating to any
breach of any of the representations or warranties made by the Company in this Agreement is made
within one year from Closing.  The Company will not be liable to any Purchaser Party under this
Agreement to the extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants
or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents.

          (b) Conduct of Indemnification Proceedings. Promptly after receipt by any Person (the
"Indemnified Person”) of notice of any demand, claim or circumstances which would or might give
rise to a claim or the commencement of any action, proceeding or investigation in respect of which
indemnity may be sought pursuant to Section 4.8(a), such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the
Company shall not relieve the Company of its obligations hereunder except to the extent that the
Company is actually and materially prejudiced by such failure to notify. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of such counsel; (ii)

24

 

the Company shall have failed promptly to assume the defense of such proceeding and to employ
counsel reasonably satisfactory to such Indemnified Person in such proceeding; or (iii) in the
reasonable judgment of counsel to such Indemnified Person, representation of both parties by the
same counsel would be inappropriate due to actual or potential differing interests between them.
The Company shall not be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or conditioned. Without the
prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld,
delayed or conditioned, the Company shall not effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Person from all liability arising out of such proceeding.

     4.9 Listing of Shares. In the time and manner required by the Principal Trading
Market, the Company shall prepare and file with such Trading Market an additional shares listing
application covering all of the Shares and shall use its commercially reasonable efforts to take
all steps necessary to cause the Shares to be approved for listing on the Principal Trading Market
as soon as possible thereafter.

     4.10 Use of Proceeds. The Company intends to use the net proceeds from the sale of
the Shares hereunder for working capital and general corporate purposes.

     4.11 Dispositions After The Date Hereof. Each Purchaser shall not, and shall cause
its Trading Affiliates not to, prior to the effectiveness of the Registration Statement: (a) sell,
offer to sell, solicit offers to buy, dispose of, loan, pledge or grant any right with respect to
(collectively, a “Disposition") the Shares unless pursuant to an exemption from the registration
requirements under the Securities Act; or (b) engage in any hedging or other transaction which is
designed or could reasonably be expected to lead to or result in a Disposition of the Shares by
such Purchaser or an Affiliate. In addition, Purchaser agrees that for so long as it owns any
Common Stock, it will not enter into any short sale of Shares executed at a time when the Purchaser
has no equivalent offsetting long position in the Common Stock. For purposes of determining whether
the Purchaser has an equivalent offsetting long position in the Common Stock, shares that the
Purchaser is entitled to receive within sixty (60) days (whether pursuant to contract or upon
conversion or exercise of convertible securities) will be included as if held long by the
Purchaser. Such Purchaser covenants that neither it nor any Person acting on its behalf or pursuant
to any understanding with it will engage in any transactions in the Company’s securities
(including, without limitation, any Short Sales involving the Company’s securities) during the
period from the date hereof until the earlier of such time as (i) the transactions contemplated by
this Agreement are first publicly announced as described in Section 4.6 or (ii) this Agreement is
terminated in full pursuant to Section 6.17. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of
the investment decisions made by the portfolio managers managing other portions of such Purchaser’s
assets, the representation set forth above shall apply only with respect to the portion of assets
managed by the portfolio manager that have knowledge about the financing transaction contemplated
by this Agreement. Each Purchaser understands and acknowledges, severally and not jointly with any
other Purchaser, that the Commission currently takes the position that covering a short position
established prior to effectiveness of a resale registration statement with shares included in such
registration statement would be a violation of Section 5 of the Securities Act, as set forth in
Item 65, Section 5 under Section A, of the Manual of Publicly Available Telephone Interpretations,
dated July 1997, compiled by the Office of Chief Counsel, Division of Corporation Finance.

 

25

 

ARTICLE V.

CONDITIONS PRECEDENT TO CLOSING

     5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase Shares. The
obligation of each Purchaser to acquire Shares at the Closing is subject to the fulfillment to such
Purchaser’s satisfaction, on or prior to the Closing Date, of each of the following conditions, any
of which may be waived by such Purchaser (as to itself only):

          (a) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct in all material respects (except for those
representations and warranties which are qualified as to materiality, in which case such
representations and warranties shall be true and correct in all respects) as of the date when made
and as of the Closing Date, as though made on and as of such date, except for such representations
and warranties that speak as of a specific date.

          (b) Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to the Closing.

          (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.

          (d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary for consummation of the purchase
and sale of the Shares at the Closing (including all Required Approvals), all of which shall be and
remain so long as necessary in full force and effect.

          (e) No Suspensions of Trading in Common Stock; Listing. The Common Stock (i) shall be
designated for quotation or listed on the Principal Trading Market and (ii) shall not have been
suspended, as of the Closing Date, by the Commission or the Principal Trading Market from trading
on the Principal Trading Market nor shall suspension by the Commission or the Principal Trading
Market have been threatened, as of the Closing Date, either (A) in writing by the Commission or the
Principal Trading Market or (B) by falling below the minimum listing maintenance requirements of
the Principal Trading Market.

          (f) Company Deliverables. The Company shall have delivered the Company Deliverables
in accordance with Section 2.2(a).

          (g) Compliance Certificate. The Company shall have delivered to each Purchaser a
certificate, dated as of the Closing Date and signed by its Chief Executive Officer or its Chief
Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions
specified in Sections 5.1(a) and (b) in the form attached hereto as Exhibit F.

          (h) Termination. This Agreement shall not have been terminated as to such Purchaser in
accordance with Section 6.17 herein.

     5.2 Conditions Precedent to the Obligations of the Company to sell Shares. The
Company’s obligation to sell and issue the Shares at the Closing is subject to the fulfillment to
the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of
which may be waived by the Company:

26

 

          (a) Representations and Warranties. The representations and warranties made by the
Purchaser in Section 3.2 hereof shall be true and correct in all material respects as of the date
when made, and as of the Closing Date as though made on and as of such date, except for
representations and warranties that speak as of a specific date.

          (b) Performance. Such Purchaser shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Purchaser at or prior to the Closing
Date.

          (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the transactions
contemplated by the Transaction Documents.

          (d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary for consummation of the purchase
and sale of the Shares, all of which shall be and remain so long as necessary in full force and
effect.

          (e) Purchasers Deliverables. Such Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b).

          (f) Termination. This Agreement shall not have been terminated as to such Purchaser in
accordance with Section 6.17 herein.

ARTICLE VI.

MISCELLANEOUS

     6.1 Fees and Expenses. Except as otherwise expressly set forth in the Company’s
engagement letter with the Placement Agents, the Company and the Purchasers shall each pay the fees
and expenses of their respective advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp
taxes and other taxes and duties levied in connection with the sale and issuance of the Shares to
the Purchasers. Each party acknowledges that Lowenstein Sandler PC has rendered legal advice to the
Placement Agents and not to such party in connection with the transactions contemplated hereby, and
that such party has relied for such matters on the advice of its own respective counsel.

     6.2 Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings, discussions and representations,
oral or written, with respect to such matters, which the parties acknowledge have been merged into
such documents, exhibits and schedules. At or after the Closing, and without further
consideration, the Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect to the intention of the
parties under the Transaction Documents.

     6.3 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile (provided the sender receives a machine-generated confirmation of successful
transmission) at the facsimile number specified in this Section prior to 5:00 p.m., New York City
time, on a Trading Day, (b) the next Trading Day after the date of

27

 

transmission, if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day or later than 5:00 p.m., New
York City time, on any Trading Day, (c) the Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service with next day delivery specified, or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

	 	 	 	 	 
	 

	 	If to the Company:
	 	Ardea Biosciences, Inc.
	 

	 	 	 	2131 Palomar Airport Road, Suite 300
	 

	 	 	 	Carlsbad, CA 92011
	 

	 	 	 	Telephone No.: (760) 702-8422
	 

	 	 	 	Facsimile No.: (760) 602-9018
	 

	 	 	 	Attention: Barry D. Quart
	 

	 	 	 	E-mail: bquart@ardeabiosciences.com
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Cooley Godward Kronish LLP
	 

	 	 	 	4401 Eastgate Mall
	 

	 	 	 	San Diego, CA 92121-1909
	 

	 	 	 	Telephone No.: (858) 550-6067
	 

	 	 	 	Facsimile No.: (858) 550-6420
	 

	 	 	 	Attention: Ethan Christensen
	 

	 	 	 	E-mail: echristensen@cooley.com
	 
	

	 	 If to a Purchaser:
	 	To the address set forth under such Purchaser’s name on the signature page hereof;

or such other address as may be designated in writing hereafter, in the same manner, by such
Person.

     6.4 Amendments; Waivers; No Additional Consideration. No provision of this Agreement
may be waived or amended except in a written instrument signed, in the case of an amendment, by the
Company and each of the Purchasers holding or having the right to acquire a majority of the Shares
on a fully-diluted basis at the time of such amendment or, in the case of a waiver, by the party
against whom enforcement of any such waiver is sought. No waiver 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 subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right. No consideration shall be offered
or paid to any Purchaser to amend or consent to a waiver or modification of any provision of any
Transaction Document unless the same consideration is also offered to all Purchasers who then hold
Shares.

     6.5 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.
This Agreement shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement or any of the Transaction Documents.

     6.6 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted assigns. This
Agreement, or any rights or obligations hereunder, may not be assigned by the Company without the
prior written consent of the Purchasers. Any Purchaser may assign its rights hereunder in whole or
in part to any Person to whom such Purchaser assigns or transfers any Shares in compliance with the
Transaction Documents and applicable law,

28

 

provided such transferee shall agree in writing to be bound, with respect to the transferred
Shares, by the terms and conditions of this Agreement that apply to the “Purchasers”.

     6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not for the benefit of,
nor may any provision hereof be enforced by, any other Person, except (i) each of the Placement
Agents is an intended third party beneficiary of Article III hereof and (ii) the Escrow Agent is an
intended third party beneficiary of Section 2.1(d), and each of the Placement Agents or the Escrow
Agent, as the case may be, may enforce the provisions of such Section directly against the parties
with obligations thereunder.

     6.8 Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the principles of conflicts of
law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective Affiliates, employees or agents) shall be
commenced exclusively in the New York Courts. Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and
agrees not to assert in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) 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 contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by law. EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

     6.9 Survival. Subject to applicable statute of limitations, the representations,
warranties, agreements and covenants contained herein shall survive the Closing and the delivery of
the Shares, except that the representations and warranties contained herein shall terminate upon
the one year anniversary of the Closing Date.

     6.10 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile signature page were
an original thereof.

     6.11 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.

29

 

     6.12 Replacement of Shares. If any certificate or instrument evidencing any Shares is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company
and the Transfer Agent of such loss, theft or destruction and the execution by the holder thereof
of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and the Transfer Agent for any losses in connection therewith or, if required
by the Transfer Agent, a bond in such form and amount as is required by the Transfer Agent. The
applicants for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such replacement Shares. If a
replacement certificate or instrument evidencing any Shares is requested due to a mutilation
thereof, the Company may require delivery of such mutilated certificate or instrument as a
condition precedent to any issuance of a replacement.

     6.13 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any action for a
temporary restraining order) the defense that a remedy at law would be adequate.

     6.14 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,
recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent
of any such restoration the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

     6.15 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or other securities or
rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock), combination or other similar recapitalization or event occurring after the date
hereof and prior to the Closing, each reference in any Transaction Document to a number of shares
or a price per share shall be deemed to be amended to appropriately account for such event.

     6.16 Independent Nature of Purchasers’ Obligations and Rights. The obligations of
each Purchaser under any Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the performance of the
obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser
to purchase Shares pursuant to the Transaction Documents has been made by such Purchaser
independently of any other Purchaser and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or any Subsidiary which
may have been made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser and any of its agents or employees shall have any liability to any
other Purchaser (or any other Person) relating to or arising from any such information, materials,
statement or opinions. Nothing contained herein or in any Transaction Document, and no action
taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Purchasers are in any

30

 

way acting in concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment in
the Shares or enforcing its rights under the Transaction Documents. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without limitation the rights
arising out of this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any proceeding for such
purpose. The Company acknowledges that each of the Purchasers has been provided with the same
Transaction Documents for the purpose of closing a transaction with multiple Purchasers and not
because it was required or requested to do so by any Purchaser. The Company’s obligations to each
Purchaser under this Agreement are identical to its obligations to each other Purchaser other than
such differences resulting solely from the number of Shares purchased by such Purchaser, but
regardless of whether such obligations are memorialized herein or in another agreement between the
Company and a Purchaser.

     6.17 Termination. This Agreement may be terminated and the sale and purchase of the
Shares abandoned at any time prior to the Closing by either the Company or any Purchaser (with
respect to itself only) upon written notice to the other, if the Closing has not been consummated
on or prior to 5:00 p.m., New York City time, on the Outside Date; provided, however, that the
right to terminate this Agreement under this Section 6.17 shall not be available to any Person
whose failure to comply with its obligations under this Agreement has been the cause of or resulted
in the failure of the Closing to occur on or before such time. Nothing in this Section 6.17 shall
be deemed to release any party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this Agreement or the
other Transaction Documents. In the event of a termination pursuant to this Section, the Company
shall promptly notify all non-terminating Purchasers and the Escrow Agent. Upon a termination in
accordance with this Section, the Company and the terminating Purchaser(s) shall not have any
further obligation or liability (including arising from such termination) to the other, and no
Purchaser will have any liability to any other Purchaser under the Transaction Documents as a
result therefrom.

     6.18 Waiver of Conflicts. Each party to this Agreement acknowledges that Company
Counsel, outside general counsel to the Company, has in the past performed and is or may now or in
the future represent one or more Purchasers or their affiliates in matters unrelated to the
transactions contemplated by the Transaction Documents, including representation of such Purchasers
or their affiliates in matters of a similar nature to the transactions contemplated by the
Transaction Documents. The applicable rules of professional conduct require that Company Counsel
inform the parties hereunder of this representation and obtain their consent. Company Counsel has
served as outside general counsel to the Company and has negotiated the terms of the transactions
contemplated by the Transaction Documents solely on behalf of the Company. The Company and each
Purchaser hereby (a) acknowledge that they have had an opportunity to ask for and have obtained
information relevant to such representation, including disclosure of the reasonably foreseeable
adverse consequences of such representation; (b) acknowledge that with respect to the transactions
contemplated by the Transaction Documents, Company Counsel has represented solely the Company, and
not any Purchaser or any stockholder, director or employee of the Company or any Purchaser; and (c)
gives its informed consent to Company Counsel’s representation of the Company in the transactions
contemplated by the Transaction Documents.

31

 

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

	 	 	 	 	 	 	 
	 	 	ARDEA BIOSCIENCES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Barry D. Quart, Pharm.D.
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Barry D. Quart, Pharm.D.	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

32

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: Baker Bros. Investments II, L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Baker Bros. Capital, L.P. (general partner)	 	 
	 	 	By: Baker Bros. Capital (GP), LLC, (general partner)	 	 
	 	 	By: Julian Baker, Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Julian Baker
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Julian Baker	 	 
	 	 	Title: Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $27,281.75	 	 
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 2,059.0	 	 
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notice:	 	 
	 
	 	 	 	 	 	 
	 	 	667 Madison Avenue, 17th Fl.

New York, NY 10065	 	 
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 212-339-5633	 	 
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 212-339-5688	 	 
	 
	 	 	 	 	 	 
	 	 	E-mail Address: lkirby@bbinvestments.com	 	 
	 
	 	 	 	 	 	 
	 	 	Attention: Leo Kirby	 	 

Delivery Instructions:

(if different than above)

	 	 	 	 	 
	c/o

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Street:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Attention:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: Baker/Tisch Investments, L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Baker/Tisch Capital, L.P. (general partner)	 	 
	 	 	By: Baker/Tisch Capital (GP), LLC, (general partner)	 	 
	 	 	By: Julian Baker, Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By: 
	/s/ Julian Baker
	 	 
	 

	 	 	 	 	 
	 	 	Name: Julian Baker	 	 
	 	 	Title: Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $208,740.50	 	 
	 
	 	 	 	 	 	 
	 	 	Number of Shares
to be Acquired: 	Cert.#1: 8,876 shs

Cert.#2: 6,878 shs	 	 
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notice:	 	 
	 
	 	 	 	 	 	 
	 	 	667 Madison Avenue, 17th Fl.	 	 
	 	 	New York, NY 10065	 	 
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 212-339-5633	 	 
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 212-339-5688	 	 
	 
	 	 	 	 	 	 
	 	 	E-mail Address: lkirby@bbinvestments.com	 	 
	 
	 	 	 	 	 	 
	 	 	Attention: Leo Kirby	 	 

Delivery Instructions:

(if different than above)

	 	 	 	 	 
	c/o

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Street:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Attention:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: Baker Biotech Fund I, L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Baker Biotech
Capital, L.P. (general partner)	 	 
	 	 	By: Baker Biotech Capital (GP), LLC, (general partner)	 	 
	 	 	By: Julian Baker, Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	/s/ Julian Baker
	 	 
	 

	 	 	 	 	 
	 	 	Name: Julian Baker	 	 
	 	 	Title: Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $3,949,030.00	 	 
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be
Acquired:  	Cert.#1: 177,992 shs
Cert.#2: 120,048 shs	 	 
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notice:	 	 
	 
	 	 	 	 	 	 
	 	 	667 Madison Avenue, 17th Fl.	 	 
	 	 	New York, NY 10065	 	 
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 212-339-5633	 	 
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 212-339-5688	 	 
	 
	 	 	 	 	 	 
	 	 	E-mail Address: lkirby@bbinvestments.com	 	 
	 
	 	 	 	 	 	 
	 	 	Attention: Leo Kirby	 	 

Delivery Instructions:

(if different than above)

	 	 	 	 	 
	c/o

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Street:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Attention:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: Baker Bros. Life Sciences, L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Baker Bros.
Life Sciences Capital, L.P. (general partner)	 	 
	 	 	By: Baker Bros. Life Sciences Capital (GP), LLC, (general partner)	 	 
	 	 	By: Julian Baker, Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Julian Baker
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Julian Baker	 	 
	 

	 	Title:
	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $9,997,376.75	 	 
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 754,519 shs	 	 
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notice:	 	 
	 
	 	 	 	 	 	 
	 	 	667 Madison Avenue, 17th Fl.

New York, NY 10065	 	 
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 212-339-5633	 	 
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 212-339-5688	 	 
	 
	 	 	 	 	 	 
	 	 	E-mail Address: lkirby@bbinvestments.com	 	 
	 
	 	 	 	 	 	 
	 	 	Attention: Leo Kirby	 	 

Delivery Instructions:

(if different than above)

	 	 	 	 	 
	c/o

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Street:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Attention:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: 14159, L.P.	 	 
	 
	 	 	 	 	 	 
	 	 	By: 14159 Capital, L.P. (general partner)	 	 
	 	 	By: 14159 Capital (GP), LLC, (general partner)	 	 
	 	 	By: Julian Baker, Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Julian Baker
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Julian Baker	 	 
	 	 	Title: Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $317,576.00	 	 
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 23,968 shs	 	 
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notice:	 	 
	 
	 	 	 	 	 	 
	 	 	667 Madison Avenue, 17th Fl.

New York, NY 10065	 	 
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 212-339-5633	 	 
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 212-339-5688	 	 
	 
	 	 	 	 	 	 
	 	 	E-mail Address: lkirby@bbinvestments.com	 	 
	 
	 	 	 	 	 	 
	 	 	Attention: Leo Kirby	 	 

Delivery Instructions:

(if different than above)

	 	 	 	 	 
	c/o

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Street:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Attention:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 	 	 

 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: Jennison Health Sciences Fund, a series of
Jennison Sector Funds, Inc.	 	 
	 
	 	 	 	 	 	 
	 	 	By: Jennison Associates LLC, as sub-advisor to the Fund	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Chan
	 	 
	 

	 	 	 	 	 	 
	 	 	Name: David Chan	 	 
	 	 	Title: 	Managing Director of Jennison and Portfolio Manager to

the Fund	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $5,500,008.75
(at $13.25 per share)	 	 
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 415,095	 	 
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:	 	 
	 
	 	 	 	 	 	 
	 	 	Address for Notice:	 	 
	 
	 	 	 	 	 	 
	 	 	c/o Jennison Associates LLC

466 Lexington Avenue

New York, NY 10017	 	 
	 
	 	 	 	 	 	 
	 	 	Telephone No.: (212) 833-0476	 	 
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: (212) 986-6138	 	 
	 
	 	 	 	 	 	 
	 	 	E-mail Address: DCHAN@JENNISON.COM	 	 
	 
	 	 	 	 	 	 
	 	 	Attention: David Chan*	 	 

Delivery Instructions:

(if different than above)

c/o The Bank of New York

			
	Street:	 	One Wall Street – 3rd Floor

Window A

City/State/Zip: New York, NY 10286

Attention: Jennison Health Sciences Fund #296227

Contact Person: Leif Hines

Telephone No.: (407) 833-0476

Email: LHINES@BANKOFNY.COM

 

*See attached Schedule A for additional contacts

 

 

SCHEDULE A

Additional contacts:

For Operational Matters:

Jennison Associates LLC

ATTN: Michael Ryan / Spiro Kartsonis

466 Lexington Avenue

New York, NY 10017

E-mail: mryan@jennison.com / skartsonis@jennison.com

Telephone: (212) 833-0618 / (212) 833-0484

Fax: (212) 949-9753

For Legal Matters:

Jennison Associates LLC

ATTN: Lisa K. Price, Esq.

466 Lexington Avenue

New York, NY 10017

E-mail: Lprice@jennison.com

Telephone: (212) 833-0702

Fax: (212) 682-9831

 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: Visium Long Bias Fund, LP
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Mark Gottlieb
 

Mark Gottlieb
	 	 
	 

	 	Title:
	 	CEO	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $6,250,025.00
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 471,700
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:
	 
	 	 	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	 	 	950 Third Avenue, 29th Fl.
	 	 	New York, NY 10026
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 646-840-5800
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 646-840-5801
	 
	 	 	 	 	 	 
	 	 	E-mail Address: mgottlieb@visiumfunds.com
	 
	 	 	 	 	 	 
	 	 	Attention: Mark Gottlieb

	 	 	 	 	 
	Delivery Instructions:	 	 
	(if different than above) [see attached]	 	 
	 
	 	 	 	 
	c/o
	 	 	 	 
	 

	 	 

	 	 
	Street:
	 	 	 	 
	 

	 	 

	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 

	 	 
	Attention:
	 	 	 	 
	 

	 	 

	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 

	 	 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: MILLENNIUM PARTNERS, L.P.

	 
	 	 	 	 	 	 
	 

	 	By:
	 	Millennium Management LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Terry Feeney
 

Terry Feeney
	 	 
	 

	 	Title:
	 	Chief Operating Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $6,250,025
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 471,700 Shares of Common
Stock
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:
	 
	 	 	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	 	 	c/o: Millennium Management LLC
	 	 	666 Fifth Avenue, 8th Floor

	 	 	New York, NY 10103
	 
	 	 	 	 	 	 
	 	 	Telephone No.: (212) 841-4100
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: (212) 841-4141
	 
	 	 	 	 	 	 
	 	 	E-mail Address: tfeeney@mlp.com
	 
	 	 	 	 	 	 
	 	 	Attention: Terry Feeney

Delivery Instructions:

(if different than above)

Same as Above

Attention: Lisa Halustick

Telephone No.: (212) 841-4102

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: RA Capital Biotech Fund, LP
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Peter Kolchinsky
 

Peter Kolchinsky
	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $3,947,996.50
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 297,962
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:
	 
	 	 	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	 	 	111 Huntington Avenue, Suite 610
	 	 	Boston, MA 02199
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 617/778-2509
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 617/778-2510
	 
	 	 	 	 	 	 
	 	 	E-mail Address: pkolchinsky@racap.com
	 
	 	 	 	 	 	 
	 	 	Attention: Amanda Daniels

	 	 	 	 	 
	Delivery Instructions:	 	 
	(if different than above)	 	 
	 
	 	 	 	 
	c/o
	 	 	 	 
	 

	 	 

	 	 
	Street:
	 	 	 	 
	 

	 	 

	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 

	 	 
	Attention:
	 	 	 	 
	 

	 	 

	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 

	 	 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: RA Capital Biotech Fund II, LP
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Peter Kolchinsky
 

Peter Kolchinsky
	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $52,006.25
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 3,925
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:
	 
	 	 	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	 	 	111 Huntington Avenue, Suite 610
	 	 	Boston, MA 02199
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 617/778-2509
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 617-778-2510
	 
	 	 	 	 	 	 
	 	 	E-mail Address: pkolchinsky@racap.com
	 
	 	 	 	 	 	 
	 	 	Attention: Amanda Daniels

	 	 	 	 	 
	Delivery Instructions:	 	 
	(if different than above)	 	 
	 
	 	 	 	 
	c/o
	 	 	 	 
	 

	 	 

	 	 
	Street:
	 	 	 	 
	 

	 	 

	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 

	 	 
	Attention:
	 	 	 	 
	 

	 	 

	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 

	 	 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: Boxer Capital LLC
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Aaron Davis
 

Aaron Davis
	 	 
	 

	 	Title:
	 	Principal	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $2,999,998.75
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 226,415
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:
	 
	 	 	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	 	 	9381 Judicial Drive, Suite 200
	 	 	San Diego, CA 92121
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 858-964-2006
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 858-225-0413
	 
	 	 	 	 	 	 
	 	 	E-mail Address: adavis@tavistock.com
	 
	 	 	 	 	 	 
	 	 	Attention: Aaron Davis

	 	 	 	 	 
	Delivery Instructions:	 	 
	(if different than
above)	 	 
	 
	 	 	 	 
	c/o
	 	 	 	 
	 

	 	 

	 	 
	Street:
	 	 	 	 
	 

	 	 

	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 

	 	 
	Attention:
	 	 	 	 
	 

	 	 

	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 

	 	 

 

	 	 	 	 	 	 	 
	 	 	NAME OF PURCHASER: TANG CAPITAL PARTNERS, L.P.
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Kevin C. Tang
 

Kevin C. Tang
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	Aggregate Purchase Price (Subscription Amount): $499,935.75
	 
	 	 	 	 	 	 
	 	 	Number of Shares to be Acquired: 37,731
	 
	 	 	 	 	 	 
	 	 	Tax ID No.:
	 
	 	 	 	 	 	 
	 	 	Address for Notice:
	 
	 	 	 	 	 	 
	 	 	4401 Eastgate Mall
	 	 	San Diego, CA 92121
	 
	 	 	 	 	 	 
	 	 	Telephone No.: 858-200-3830
	 
	 	 	 	 	 	 
	 	 	Facsimile No.: 858-200-3837
	 
	 	 	 	 	 	 
	 	 	E-mail Address: jlemkey@tangcapital.com
	 
	 	 	 	 	 	 
	 	 	Attention: John Lemkey

	 	 	 	 	 
	Delivery Instructions:	 	 
	(if different than above)	 	 
	 
	 	 	 	 
	c/o
	 	 	 	 
	 

	 	 

	 	 
	Street:
	 	 	 	 
	 

	 	 

	 	 
	City/State/Zip:
	 	 	 	 
	 

	 	 

	 	 
	Attention:
	 	 	 	 
	 

	 	 

	 	 
	Telephone No.:
	 	 	 	 
	 

	 	 

	 	 

 

EXHIBITS:

	 	 	 
	A:

	 	Form of Registration Rights Agreement
	 
	 	 
	B-1:

	 	Accredited Investor Questionnaire
	 
	 	 
	B-2:

	 	Stock Certificate Questionnaire
	 
	 	 
	C:

	 	Form of Opinion of Company Counsel
	 
	 	 
	D:

	 	Irrevocable Transfer Agent Instructions
	 
	 	 
	E:

	 	Form of Secretary’s Certificate
	 
	 	 
	F:

	 	Form of Officer’s Certificate

 

EXHIBIT A

Form of Registration Rights Agreement

 

Instruction Sheet

(to be read in conjunction with the entire Securities Purchase Agreement and Registration Rights Agreement)

A. Complete the following items in the Securities Purchase Agreement and/or Registration Rights
Agreement:

	 	1.	 	Provide the information regarding the Purchaser requested on the signature
page. The Securities Purchase Agreement and the Registration Rights Agreement must be
executed by an individual authorized to bind the Purchaser.
	 
	 	2.	 	Exhibit B-1 — Accredited Investor Questionnaire:
	 
	 	 	 	Provide the information requested by the Accredited Investor Questionnaire
	 
	 	3.	 	Exhibit B-2 Stock Certificate Questionnaire:
	 
	 	 	 	Provide the information requested by the Stock Certificate Questionnaire
	 
	 	4.	 	Annex B to the Registration Rights Agreement — Selling Securityholder
Notice and Questionnaire
	 
	 	 	 	Provide the information requested by the Selling Securityholder Notice and
Questionnaire
	 
	 	5.	 	Return the signed Securities Purchase Agreement and Registration Rights
Agreement to:

David W. Stadinski

Piper Jaffray & Co.

150 East 42nd Street, 35th Floor

New York, New York 10017

Tel: (212) 284-9572

Fax: (212) 658-9604

Email: david.w.stadinski@pjc.com

	B.	 	Instructions regarding the transfer of funds for the purchase of Shares is set forth on
Exhibit G to the Securities Purchase Agreement.

 

EXHIBIT B-1

ACCREDITED INVESTOR QUESTIONNAIRE

(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)

To: Ardea Biosciences, Inc.

This Investor Questionnaire (“Questionnaire”) must be completed by each potential investor
in connection with the offer and sale of the shares of the common stock, par value $0.001 per share
(the “Securities”), of Ardea Biosciences, Inc., a Delaware corporation (the
“Corporation”). The Securities are being offered and sold by the Corporation without
registration under the Securities Act of 1933, as amended (the “Act”), and the securities
laws of certain states, in reliance on the exemptions contained in Section 4(2) of the Act and on
Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state
laws. The Corporation must determine that a potential investor meets certain suitability
requirements before offering or selling Securities to such investor. The purpose of this
Questionnaire is to assure the Corporation that each investor will meet the applicable suitability
requirements. The information supplied by you will be used in determining whether you meet such
criteria, and reliance upon the private offering exemptions from registration is based in part on
the information herein supplied.

This Questionnaire does not constitute an offer to sell or a solicitation of an offer to buy any
security. Your answers will be kept strictly confidential. However, by signing this
Questionnaire, you will be authorizing the Corporation to provide a completed copy of this
Questionnaire to such parties as the Corporation deems appropriate in order to ensure that the
offer and sale of the Securities will not result in a violation of the Act or the securities laws
of any state and that you otherwise satisfy the suitability standards applicable to purchasers of
the Securities. All potential investors must answer all applicable questions and complete, date
and sign this Questionnaire. Please print or type your responses and attach additional sheets of
paper if necessary to complete your answers to any item.

PART A. BACKGROUND INFORMATION

Name of Beneficial Owner of the Securities:   
                 
              
               
            

Business Address:   
               
              
              
              
            
            
             
            
              
               
              
              
               

(Number and Street)

	 	 	 	 	 
	 
	(City)
	 	(State)
	 	(Zip Code)

Telephone Number: (      
              )     
                  
                 
         
                 
                 
           
                  
                  
            
                 
                 
                  

If a corporation, partnership, limited liability company, trust or other entity:

Type of entity:                                                 
                     
                                                   

State of formation:                                         Approximate Date of formation:                        
                 

Set forth in the space provided below the (i) state(s), if any, in the United States in which you
maintained your principal office during the past two years and the dates during which you
maintained your office in each state, and (ii) state(s), if any, in which you pay income taxes:

 

       
                 
                 
                   

                 
                 
                 
         

                 
                
                
           

Were you formed for the purpose of investing in the securities being offered?

     Yes   
                 
  No                
     

If an individual:

Residence Address:      
                  
                  
                
                
                
                
                
          
               
                 
                   

(Number and Street)

	 	 	 	 	 
	 
	(City)
	 	(State)
	 	(Zip Code)

Telephone Number: (      
              )   
                 
          
                   
                  
                  
                  
                  
         
                  
                  
                  

Age:         
                  
               Citizenship:  
      
                
                
  Where registered to vote:          
              
                 

Set forth in the space provided below the state(s), if any, in the United States in which you
maintained your residence during the past two years and the dates during which you resided in each
state:

Are you a director or executive officer of the Corporation?

     Yes                      No                     

Social Security or Taxpayer Identification No.

PART B. ACCREDITED INVESTOR QUESTIONNAIRE

     In order for the Company to offer and sell the Securities in conformance with state and
federal securities laws, the following information must be obtained regarding your investor status.
Please initial each category applicable to you as a Purchaser of Securities of the Company.

	 	 	 	 	 
	 

	 	                    (1)
	 	A bank as defined in Section 3(a)(2) of the Securities Act,
or any savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity;
	 
	 	 	 	 
	 

	 	                    (2)
	 	A broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934;
	 
	 	 	 	 
	 

	 	                    (3)
	 	An insurance company as defined in Section 2(13) of the
Securities Act;
	 
	 	 	 	 
	 

	 	                    (4)
	 	An investment company registered under the Investment Company
Act of 1940 or a business development company as defined in Section 2(a)(48) of
that Act;
	 
	 	 	 	 
	 

	 	                    (5)
	 	A Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;

 

	 	 	 	 	 
	 

	 	                    (6)
	 	A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets in
excess of $5,000,000;
	 
	 	 	 	 
	 

	 	                    (7)
	 	An employee benefit plan within the meaning of the Employee
Retirement Income Security Act of 1974, if the investment decision is made by a
plan fiduciary, as defined in Section 3(21) of such act, which is either a bank,
savings and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made solely by
persons that are accredited investors;
	 
	 	 	 	 
	 

	 	                    (8)
	 	A private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
	 
	 	 	 	 
	 

	 	                    (9)
	 	An organization described in Section 501(c)(3) of the
Internal Revenue Code, a corporation, Massachusetts or similar business trust,
or partnership, not formed for the specific purpose of acquiring the Securities,
with total assets in excess of $5,000,000;
	 
	 	 	 	 
	 

	 	                    (10)
	 	A trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the Securities, whose purchase is
directed by a sophisticated person who has such knowledge and experience in
financial and business matters that such person is capable of evaluating the
merits and risks of investing in the Company;
	 
	 	 	 	 
	 

	 	                    (11)
	 	A natural person whose individual net worth, or joint net worth with that person’s
spouse, at the time of his purchase exceeds $1,000,000;
	 
	 	 	 	 
	 

	 	                    (12)
	 	A natural person who had an individual income in excess of $200,000 in each of the two
most recent years, or joint income with that person’s spouse in excess of $300,000, in each of
those years, and has a reasonable expectation of reaching the same income level in the current
year;
	 
	 	 	 	 
	 

	 	                    (13)
	 	An executive officer or director of the Company;
	 
	 	 	 	 
	 

	 	                    (14)
	 	An entity in which all of the equity owners qualify under any of the above
subparagraphs. If the undersigned belongs to this investor category only, list
the equity owners of the undersigned, and the investor category which each such
equity owner satisfies.

A.          FOR EXECUTION BY AN INDIVIDUAL:

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Date	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name:	 	 
	 

	 	 	 	 	 	 	 	 

B.          FOR EXECUTION BY AN ENTITY:

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Entity Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Date	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 

 

C.
         ADDITIONAL SIGNATURES (if required by partnership, corporation or trust document):

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Entity Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Date	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Entity Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Date	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 

 

EXHIBIT B-2

Stock Certificate Questionnaire

Pursuant to Section 2.2(b) of the Agreement, please provide us with the following information:

	 	 	 	 	 
	1.

	 	The exact name that the Shares are to be registered in (this is the
name that will appear on the stock certificate(s)). You may use a
nominee name if appropriate:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	2.

	 	The relationship between the Purchaser of the Shares and the
Registered Holder listed in response to Item 1 above:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	3.

	 	The mailing address, telephone and telecopy number of the Registered
Holder listed in response to Item 1 above:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	4.

	 	The Tax Identification Number (or, if an individual, the Social
Security Number) of the Registered Holder listed in response to Item 1
above:	 	 
	 

	 	 	 	 

 

EXHIBIT C

Form of Opinion of Company Counsel

1. The Company has been duly incorporated and is a validly existing corporation in good
standing under the laws of the State of Delaware.

2. The Company has the requisite corporate power to own its property and assets and to
conduct its business as it is currently being conducted.

3. The Company is duly qualified to do business as a foreign corporation and is in good
standing under the laws of the State of California.

4. The Company has the requisite corporate power to execute, deliver and perform its
obligations under the Financing Agreements, including, without limitation, to issue, sell and
deliver the Shares under the Purchase Agreement.

5. Each of the Financing Agreements has been duly and validly authorized, executed and
delivered by the Company and each such agreement constitutes a valid and binding agreement of the
Company enforceable against the Company in accordance with its terms.

6. The Company’s authorized capital stock consists of 70,000,000 shares of Common
Stock, par value $0.001 per share, and 5,000,000 shares of Preferred Stock, par value $0.001 per
share. The Shares have been duly authorized, and upon issuance and delivery against payment
therefor in accordance with the terms of the Purchase Agreement, the Shares will be validly issued,
outstanding, fully paid and nonassessable, and free of any preemptive right or similar rights
contained in the Company’s Certificate of Incorporation or Bylaws or any Material Agreement.

7. The execution and delivery of the Financing Agreements by the Company and the
issuance of the Shares pursuant thereto do not violate any provision of the Company’s Certificate
of Incorporation or Bylaws, do not constitute a default under or a material breach of any Material
Agreement, and do not violate (a) any governmental statute, rule or regulation which in our
experience is typically applicable to transactions of the nature contemplated by the Financing
Agreements or (b) any order, writ, judgment, injunction, decree, determination or award which has
been entered against the Company and of which we are aware, in each case to the extent the
violation of which would materially and adversely affect the Company and its subsidiaries, taken as
a whole.

8. To our knowledge, there is no action, proceeding or investigation pending or overtly
threatened against the Company before any court or administrative agency that questions the
validity or enforceability of the Financing Agreements, or seeks to enjoin the performance of the
Financing Agreements or that could reasonably be expected to result, either individually or in the
aggregate, in a Material Adverse Effect on the Company and its subsidiaries, taken as a whole.

9. All consents, approvals, authorizations, or orders of, and filings, registrations,
and qualifications with any U.S. Federal or California regulatory authority or governmental body or
the under the DGCL required for the issuance of the Shares, have been made or obtained, except (a)
for the filing of a Form D pursuant to Securities and Exchange Commission Regulation D, and (b) for
the filing of the notice to be filed under California Corporations Code Section 25102.1(d).

10. The offer and sale of the Shares are exempt from the registration
requirements of the Securities Act of 1933, as amended, subject to the timely filing of a Form D
pursuant to Securities and Exchange Commission Regulation D.

11. To our knowledge, there are no written contracts, agreements or
understandings between the Company and any person granting such person the right (other than rights
which have been waived in writing or otherwise satisfied) to require the Company to include any
securities of the Company in any registration statement contemplated by Section 2 of the
Registration Rights Agreement.

 

EXHIBIT D

Form of Irrevocable Transfer Agent Instructions

As of                     ,                     

Computershare Trust Company N.A.

[Address]

[Address]

Attn:                                         

Ladies and Gentlemen:

     Reference is made to that certain Securities Purchase Agreement, dated as of December
19, 2007 (the “Agreement”), by and among Ardea Biosciences, Inc., a Delaware corporation (the
“Company”), and the purchasers named on the signature pages thereto (collectively, and including
permitted transferees, the “Holders”), pursuant to which the Company is issuing to the Holders
shares (the “Shares”) of Common Stock of the Company, par value $0.001 per share (the “Common
Stock”).

     This letter shall serve as our irrevocable authorization and direction to you (provided
that you are the transfer agent of the Company at such time and the conditions set forth in this
letter are satisfied), subject to any stop transfer instructions that we may issue to you from time
to time, if any, to issue certificates representing shares of Common Stock upon transfer or resale
of the Shares.

     You acknowledge and agree that so long as you have received (a) written confirmation from the
Company that either (1) a registration statement covering resales of the Shares has been declared
effective by the Securities and Exchange Commission (the “Commission”) under the Securities Act of
1933, as amended (the “Securities Act”), or (2) the Shares have been sold in conformity with
Rule 144 under the Securities Act (“Rule 144”) or are eligible for sale under Rule 144(k), or any
successor thereto and (b) if applicable, a copy of such registration statement, then, unless
otherwise required by law, within three (3) business days of your receipt of a notice of transfer,
you shall issue the certificates representing the Shares registered in the names of such Holders or
transferees, as the case may be, and such certificates shall not bear any legend restricting
transfer of the Shares thereby and should not be subject to any stop-transfer restriction;
provided, however, that if such Shares are not registered for resale under the Securities Act or
able to be sold under Rule 144, then the certificates for such Shares shall bear the following
legend:

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED EXCEPT AS PROVIDED BY SECTION 4 OF THAT CERTAIN SECURITIES
PURCHASE AGREEMENT, DATED AS OF DECEMBER 19, 2007, BY AND AMONG ARDEA
BIOSCIENCES, INC. AND EACH PURCHASER IDENTIFIED ON THE SIGNATURE PAGES
THERETO.

     A form of written confirmation from the Company’s outside legal counsel that a
registration statement covering resales of the Shares has been declared effective by the Commission
under the Securities Act is attached hereto as Annex I.

     Please be advised that the Holders are relying upon this letter as an inducement to
enter into the Agreement and, accordingly, each Holder is a third party beneficiary to these
instructions.

 

     Please execute this letter in the space indicated to acknowledge your agreement to act
in accordance with these instructions.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Very truly yours,
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	ARDEA BIOSCIENCES, INC.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Acknowledged and Agreed:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	COMPUTERSHARE TRUST COMPANY N.A.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	Date:

	 	                    ,                     	 	 	 	 	 	 

 

Annex I

FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

Computershare Trust Company N.A.

[Address]

[Address]

Attn:                                         

     Re: Ardea Biosciences, Inc.

Ladies and Gentlemen:

     Reference is made to that certain Securities Purchase Agreement, dated as of December
19, 2007, entered into by and among Ardea Biosciences, Inc. (the “Company”) and the buyers named
therein (collectively, the “Purchasers”) pursuant to which the Company issued to the Purchasers
shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”). Pursuant to
that certain Registration Rights Agreement of even date, the Company agreed to register the resale
of the Common Stock (the “Registrable Securities”), under the Securities Act of 1933, as amended
(the “Securities Act”). In connection with the Company’s obligations under the Registration Rights
Agreement, on                                         ,                     , the Company filed a Registration Statement on
Form [S-1] (File No. 333-                                         ) (the “Registration Statement”) with the
Securities and Exchange Commission (the “Commission”) relating to the Registrable Securities which
names each of the Purchasers as a selling stockholder thereunder.

     In connection with the foregoing, we advise you that a member of the Commission’s
staff has advised us by telephone that the Commission has entered an order declaring the
Registration Statement effective under the Securities Act at                      [a.m.][p.m.] on                     ,                     .

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	Ardea Biosciences, Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 

			
	CC:	 	Purchasers

Piper Jaffray & Co.

 

EXHIBIT E

Form of Secretary’s Certificate

The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of
Ardea Biosciences, Inc., a Delaware corporation (the “Company”), and that as such he is authorized
to execute and deliver this certificate in the name and on behalf of the Company and in connection
with the Securities Purchase Agreement, dated as of December 19, 2007, by and among the Company and
the investors party thereto (the “Securities Purchase Agreement"), and further certifies in his
official capacity, in the name and on behalf of the Company, the items set forth below.
Capitalized terms used but not otherwise defined herein shall have the meaning set forth in the
Securities Purchase Agreement.

	1.	 	Attached hereto as Exhibit A is a true, correct and complete copy of the resolutions
duly adopted by the Board of Directors of the Company or the Pricing Committee of the Board of
Directors of the Company, as applicable, at meetings held on                     , 2007. Such resolutions
have not in any way been amended, modified, revoked or rescinded, have been in full force and
effect since their adoption to and including the date hereof and are now in full force and
effect.
	 
	2.	 	Attached hereto as Exhibit B is a true, correct and complete copy of the Certificate
of Incorporation of the Company, together with any and all amendments thereto currently in
effect, and no action has been taken to further amend, modify or repeal such Certificate of
Incorporation, the same being in full force and effect in the attached form as of the date
hereof.
	 
	3.	 	Attached hereto as Exhibit C is a true, correct and complete copy of the Bylaws of
the Company and any and all amendments thereto currently in effect, and no action has been
taken to further amend, modify or repeal such Bylaws, the same being in full force and effect
in the attached form as of the date hereof.
	 
	4.	 	Each person listed below has been duly elected or appointed to the position(s) indicated
opposite his name and is duly authorized to sign the Securities Purchase Agreement and each of
the Transaction Documents on behalf of the Company, and the signature appearing opposite such
person’s name below is such person’s genuine signature.

	 	 	 	 	 
	Name	 	Position	 	Signature
	 
	Barry D. Quart, Pharm.D

	 	President and Chief
Executive Officer	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Christopher W. Krueger,
J.D.

	 	Secretary	 	 
	 

	 	 	 	 

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___day of December, 2007.

	 	 	 
	 

	 	 
	 

	 	Secretary

 

I, Barry D. Quart, Pharm.D, President and Chief Executive Officer, hereby certify that Christopher
W. Krueger, J.D. is the duly elected, qualified and acting Secretary of the Company and that the
signature set forth above is his true signature.

	 	 	 
	 
	 

	 	 
	 

	 	Barry D. Quart, Pharm.D
	 

	 	President and Chief Executive Officer

 

EXHIBIT A

Resolutions

 

EXHIBIT
B

Certificate of Incorporation

 

EXHIBIT C

Bylaws

 

EXHIBIT F

Form of Officer’s Certificate

The undersigned, the President and Chief Executive Officer of Ardea Biosciences, Inc., a Delaware
corporation (the “Company”), pursuant to Section 5.1(g) of the Securities Purchase Agreement, dated
as of December 19, 2007, by and among the Company and the investors signatory thereto (the
“Securities Purchase Agreement”), hereby represents, warrants and certifies as follows (capitalized
terms used but not otherwise defined herein shall have the meaning set forth in the Securities
Purchase Agreement):

	 	1.	 	The representations and warranties of the Company contained in the Securities
Purchase Agreement are true and correct in all material respects as of the date when
made and as of the Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.

	 	2.	 	The Company has performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by it at or prior to the Closing.

IN WITNESS WHEREOF, the undersigned has executed this certificate this ___day of December, 2007.

	 	 	 
	 

	 	 
	 

	 	Barry D. Quart, Pharm.D
	 

	 	President and Chief Executive Officer

 

EXHIBIT G

Wire Instructions

	 	 	 
	Wire Room of:

	 PNC Bank New Jersey
	 

	 Caldwell, NJ

ABA No.: 031207607

	 	 	 	 	 
	For credit to:

	Lowenstein Sandler PC

	 

	Special Trust Account I

	Account No.:

	8025720174	 
	For International wires please use SWIFT Code: PNCCUS33

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