Document:

Exhibit 10.41

 

Execution Copy

 

 

 

SECURITIES PURCHASE AGREEMENT

 

 

BY AND BETWEEN

 

 

THE INVESTORS LISTED ON THE SIGNATURE PAGES
HERETO

 

AND

 

ALLOS THERAPEUTICS, INC.

 

MARCH 2, 2005

 

 

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.

  	
  INTERPRETATION
  OF THIS AGREEMENT

  	
   

  
	
  1.1.

  	
  Defined Terms

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  2.

  	
  AUTHORIZATION
  OF SHARES; PURCHASE AND SALE OF SHARES

  	
   

  
	
  2.1.

  	
  Authorization of Shares

  	
   

  
	
  2.2.

  	
  Issuance of Shares

  	
   

  
	
  2.3.

  	
  Closing and Closing Date

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  3.

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY

  	
   

  
	
  3.1.

  	
  Corporate Organization

  	
   

  
	
  3.2.

  	
  Subsidiaries

  	
   

  
	
  3.3.

  	
  Capitalization

  	
   

  
	
  3.4.

  	
  Corporate Proceedings,
  etc.

  	
   

  
	
  3.5.

  	
  Consents and Approvals

  	
   

  
	
  3.6.

  	
  Absence of
  Defaults, Conflicts, etc.

  	
   

  
	
  3.7.

  	
  Reports and
  Financial Statements

  	
   

  
	
  3.8.

  	
  Absence of Certain
  Developments

  	
   

  
	
  3.9.

  	
  Compliance with Law

  	
   

  
	
  3.10.

  	
  Litigation

  	
   

  
	
  3.11.

  	
  Absence of
  Undisclosed Liabilities

  	
   

  
	
  3.12.

  	
  Employees

  	
   

  
	
  3.13.

  	
  Tax Matters

  	
   

  
	
  3.14.

  	
  Intellectual Property

  	
   

  
	
  3.15.

  	
  Title to Tangible Assets

  	
   

  
	
  3.16.

  	
  Condition of Properties

  	
   

  
	
  3.17.

  	
  Transactions
  with Related Parties

  	
   

  
	
  3.18.

  	
  Registration
  Statement and Prospectus

  	
   

  
	
  3.19.

  	
  Registration Rights

  	
   

  
	
  3.20.

  	
  Brokerage

  	
   

  
	
  3.21.

  	
  Illegal
  or Unauthorized Payments; Political Contributions

  	
   

  
	
  3.22.

  	
  Takeover Statute

  	
   

  
	
  3.23.

  	
  NASDAQ Compliance

  	
   

  
	
  3.24.

  	
  Reporting Status

  	
   

  
	
  3.25.

  	
  No Manipulation
  of Common Stock

  	
   

  
	
  3.26.

  	
  Accountants

  	
   

  
	
  3.27.

  	
  Internal
  Accounting Controls

  	
   

  
	
  3.28.

  	
  Environmental Matters

  	
   

  
	
  3.29.

  	
  FDA Approval

  	
   

  
	
  3.30.

  	
  Insurance

  	
   

  
	
  3.31.

  	
  Transfer
  Taxes

  	
   

  
	
  3.32.

  	
  Investment Company

  	
   

  

 

i

 

	
  SECTION
  4.

  	
  REPRESENTATIONS
  AND WARRANTIES OF THE INVESTORS

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION
  5.

  	
  ADDITIONAL
  AGREEMENTS OF THE PARTIES

  	
   

  
	
  5.1.

  	
  Resale
  of Shares

  	
   

  
	
  5.2.

  	
  Covenants Pending
  Closing

  	
   

  
	
  5.3.

  	
  Further Assurances

  	
   

  
	
  5.4.

  	
  Investor Designees

  	
   

  
	
  5.5.

  	
  Subscription Right

  	
   

  
	
  5.6.

  	
  Consents
  and Approvals; Proxy Statement

  	
   

  
	
  5.7.

  	
  Use of Proceeds

  	
   

  
	
  5.8.

  	
  Takeover Statute

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  INVESTORS’
  CLOSING CONDITIONS

  	
   

  
	
  6.1.

  	
  Representations and
  Warranties

  	
   

  
	
  6.2.

  	
  Compliance with
  Agreement

  	
   

  
	
  6.3.

  	
  Injunction

  	
   

  
	
  6.4.

  	
  Counsel’s Opinion

  	
   

  
	
  6.5.

  	
  Adverse Development

  	
   

  
	
  6.6.

  	
  Directors

  	
   

  
	
  6.7.

  	
  Registration Rights
  Agreement

  	
   

  
	
  6.8.

  	
  Standstill Agreement

  	
   

  
	
  6.9.

  	
  Rights Amendment

  	
   

  
	
  6.10.

  	
  Stop Orders

  	
   

  
	
  6.11.

  	
  Listing of the Common
  Stock

  	
   

  
	
  6.12

  	
  Nasdaq
  Interpretative Ruling

  	
   

  
	
  6.13

  	
  Filing of
  Certificate of Designations

  	
   

  
	
  6.14.

  	
  Officer’s Certificate

  	
   

  
	
  6.15.

  	
  Secretary’s Certificate

  	
   

  
	
  6.16.

  	
  Approval of Proceedings

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  COMPANY CLOSING
  CONDITIONS

  	
   

  
	
  7.1.

  	
  Representations and
  Warranties

  	
   

  
	
  7.2.

  	
  Compliance with
  Agreement

  	
   

  
	
  7.3.

  	
  Investors’ Certificates

  	
   

  
	
  7.4.

  	
  Injunction

  	
   

  
	
  7.5

  	
  Standstill Agreement

  	
   

  
	
  7.6

  	
  Rights Amendment

  	
   

  
	
  7.7

  	
  Nasdaq Interpretive
  Ruling

  	
   

  
	
  7.8

  	
  Filing of
  Certificate of Designations

  	
   

  
	
  7.9.

  	
  Approval of Proceedings

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  COVENANTS

  	
   

  
	
  8.1.

  	
  Inspection

  	
   

  
	
  8.2.

  	
  Confidentiality

  	
   

  
	
  8.3.

  	
  Lost,
  etc. Certificates Evidencing Shares; Exchange

  	
   

  
	
  8.4.

  	
  Securities
  Law Disclosure; Publicity

  	
   

  
	
  8.5.

  	
  HSR Act Filing

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  MISCELLANEOUS

  	
   

  
	
  9.1.

  	
  Notices

  	
   

  
	
  9.2.

  	
  Expenses and Taxes

  	
   

  
	
  9.3.

  	
  Reproduction of
  Documents

  	
   

  

 

ii

 

	
  9.4.

  	
  Termination and Survival

  	
   

  
	
  9.5.

  	
  Successors and Assigns

  	
   

  
	
  9.6.

  	
  Severability

  	
   

  
	
  9.7.

  	
  Governing Law

  	
   

  
	
  9.8.

  	
  Paragraph and
  Section Headings

  	
   

  
	
  9.9.

  	
  Limitation
  on Enforcement of Remedies

  	
   

  
	
  9.10.

  	
  Counterparts

  	
   

  
	
  9.11.

  	
  Entire
  Agreement; Amendment and Waiver

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Certificate of Designations

  	
   

  
	
  Exhibit B

  	
  Restated Certificate of Incorporation, as amended

  	
   

  
	
  Exhibit C

  	
  By-laws, as amended

  	
   

  
	
  Exhibit D

  	
  Opinion of Cooley Godward LLP

  	
   

  
	
  Exhibit E

  	
  Registration Rights Agreement

  	
   

  
	
  Exhibit F

  	
  Standstill Agreement

  	
   

  
	
  Exhibit G

  	
  Rights Amendment

  	
   

  

 

iii

 

ALLOS THERAPEUTICS, INC.

 

SECURITIES PURCHASE AGREEMENT

 

Dated as of March 2, 2005

 

TO THE INVESTORS LISTED

ON THE SIGNATURE PAGES HERETO

 

Ladies and Gentlemen:

 

Allos Therapeutics, Inc., a Delaware corporation (the “Company”),
hereby agrees with each of the Investors (each an “Investor” and
collectively the “Investors”) listed on the signature pages to this
Securities Purchase Agreement, dated as of March 2, 2005 (this “Agreement”),
as follows:

 

SECTION 1.                                INTERPRETATION
OF THIS AGREEMENT

 

1.1.                              Defined Terms

 

As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such
term:

 

Additional Shares:  shall have the meaning set forth in Section
2.5.

 

Affiliate: 
shall mean any Person or entity, directly or indirectly, controlling,
controlled by or under common control with such Person or entity.

 

Agreement: 
shall have the meaning set forth in the Introduction hereto.

 

Board: 
shall have the meaning set forth in Section 3.3(c).

 

Business Day: 
shall mean a day other than a Saturday, Sunday or other day on which
banks in the State of New York are required or authorized to close.

 

Certificate of Designations:  shall mean the Certificate of Designations,
Number, Voting Powers, Preferences and Rights of Series A Exchangeable
Preferred Stock of the Company, a copy of which is attached hereto as Exhibit
B.

 

Closing: 
shall have the meaning set forth in Section 2.3.

 

Closing Date: 
shall have the meaning set forth in Section 2.3.

 

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

 

Common Stock: shall mean the common stock, par
value $0.001 per share, of the Company.

 

Company: 
shall have the meaning set forth in the Introduction hereto.

 

 

Company SEC Reports:  shall have the meaning set forth in Section
3.7.

 

Contract: 
shall mean any material agreement, contract, commitment, understanding,
arrangement, restriction or other instrument to which the Company is currently
a party, and which is or was required to be filed as an exhibit to any Company
SEC Report.

 

DGCL: 
shall mean the Delaware General Corporation Law.

 

Environmental Laws:  shall mean federal, state, local and foreign
laws, regulations, and codes, as well as orders, decrees, judgments or
injunctions, issued, promulgated, approved or entered thereunder relating to
pollution, protection of the environment or public health and safety.

 

Exchange: 
shall mean the exchange of the Exchangeable Preferred Stock for shares
of Common Stock in accordance with the terms of the Certificate of
Designations.

 

Exchange Act: 
shall mean the Securities Exchange Act of 1934, as amended.

 

Exchange Date Shares:  shall have the meaning set forth in Section
5.4(a).

 

Exchange Shares:  shall mean those shares of Common Stock to be
issued upon exchange of the Exchangeable Preferred Stock.

 

Exchangeable Preferred Stock:  shall have the meaning set forth in Section
2.1(a).

 

FDA: 
shall mean the United States Food and Drug Administration.

 

Filed Company SEC Reports:  shall have the meaning set forth in Section
3.7.

 

GAAP: 
shall have the meaning set forth in Section 3.7.

 

Governmental Authority:  shall mean the government of any nation,
state, city, locality or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.

 

HSR Act: 
shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

 

Initial Closing:  shall have the meaning set forth in Section
2.3.

 

Initial Closing Date:  shall have the meaning set forth in Section
2.3

 

Intellectual Property:  shall mean all of the following, owned or
used primarily in the current or contemplated business of the Company: (i)
registered and unregistered trademarks and service marks, trade dress, product
configurations, trade names and other indications of origin, applications or
registrations in any jurisdiction pertaining to the foregoing and all goodwill
associated therewith; (ii) patentable and unpatentable inventions, discoveries,

 

3

 

improvements,
ideas, know-how, formula methodology, processes, compounds, technology,
software (including password unprotected interpretive code or source code,
object code, development documentation, programming tools, drawings,
specifications and data) and applications and patents in any jurisdiction
pertaining to the foregoing, including re-issues, continuations, divisions,
continuations-in-part, renewals or extensions; (iii) trade secrets, including
confidential information and the right in any jurisdiction to limit the use or
disclosure thereof; (iv) copyrights in writings, designs software, mask works
or other works, applications or registrations in any jurisdiction for the foregoing
and all moral rights related thereto; (v) database rights; (vi) Internet Web
sites, domain names and applications and registrations pertaining thereto and
all intellectual property used in connection with or contained in all versions
of the Company’s Web sites; (vii) rights under all agreements relating to the
foregoing; (viii) books and records pertaining to the foregoing; and (ix)
claims or causes of action arising out of or related to past, present or future
infringement or misappropriation of the foregoing.

 

Institutional Investors:  shall have the meaning set forth in Section
2.5.

 

Investor(s): 
shall have the meaning set forth in the Introduction hereto.

 

Investor Designees:  shall have the meaning set forth in Section
5.4(a).

 

Majority Investors:  shall mean the Investors having commitments
to purchase at least 70% of the Shares at the Initial Closing.

 

Material Adverse Effect:  shall mean, collectively, a material adverse
effect on, or a material adverse change in, or group of such effects on or
changes in the business, properties, business prospects, assets, liabilities,
operations or condition (financial or otherwise) of the Company taken as a
whole.

 

NASD: 
shall mean National Association of Securities Dealers, Inc.

 

NASDAQ Stock Market:  shall have the meaning set forth in Section
3.23.

 

Organizational Documents:  shall have the meaning set forth in Section
3.1(a).

 

Owns, Own, Owned:  shall mean the aggregate beneficial
ownership, within the meaning of Rule 13d-3 under the Exchange Act, of an
Investor and any of its Affiliates.

 

Person: 
shall mean an individual, partnership, joint-stock company, corporation,
limited liability company, trust or unincorporated organization, and a
government or agency or political subdivision thereof.

 

Preferred Stock:  shall mean the preferred stock, par value
$0.001 per share, of the Company.

 

Preferred Stock Purchase Price:  shall mean $22.10 per share.

 

Product: 
shall have the meaning set forth in Section 3.29.

 

4

 

Prospectus: 
shall have the meaning set forth in Section 3.18.

 

Proposed Securities:  shall have the meaning set forth in Section
5.5(a)(1).

 

Proxy Statement:  shall have the meaning set forth in Section
5.6(b).

 

Registration Rights Agreement:  shall have the meaning set forth in Section
6.7.

 

Registration Statement:  shall have the meaning set forth in Section
3.18.

 

Rights Amendment:  shall have the meaning set forth in Section
6.9.

 

Sarbanes-Oxley Act:  shall mean the Sarbanes-Oxley Act of 2002.

 

SEC: 
shall mean the Securities and Exchange Commission.

 

Securities Act:  shall mean the Securities Act of 1933, as
amended.

 

Shares: 
shall mean the shares of Exchangeable Preferred Stock to be purchased by
the Investors hereunder.

 

Standstill Agreement:  shall have the meaning set forth in Section
6.8.

 

Subsequent Closing: 
shall have the meaning set forth in Section 2.3

 

Subsidiary: 
shall mean an entity of which a Person owns, directly or indirectly,
more than 50% of the Voting Stock.

 

Stockholder Approval:  shall have the meaning set forth in Section
5.6(b).

 

Takeover Statute:  shall mean any corporate takeover provision
under laws of the State of Delaware or any other state or federal “fair price”,
“moratorium”, “control share acquisition” or other similar antitakeover statute
or regulation.

 

Voting Stock: 
shall mean securities of any class or classes of an entity, the holders
of which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or Persons performing similar functions).

 

WP: 
shall mean Warburg Pincus Private Equity VIII, L.P., a Delaware limited
partnership.

 

SECTION 2.                                AUTHORIZATION
OF SHARES; PURCHASE AND SALE OF SHARES

 

2.1.                              Authorization of
Shares

 

On or prior to the
Initial Closing, the Company shall have authorized the sale and issuance of up
to an aggregate of two million seven hundred fourteen thousand nine hundred
thirty-two (2,714,932) shares of its Series A Exchangeable Preferred Stock, par
value $0.001 per share (the “Exchangeable Preferred Stock”), on the
terms and conditions set forth in this

 

5

 

Agreement.  The terms, limitations and relative rights
and preferences of the Exchangeable Preferred Stock shall be as set forth in
the Certificate of Designations.

 

2.2.                              Issuance of Shares

 

Subject to the terms and
conditions set forth in this Agreement, and in reliance upon the Company’s and
the Investors’ representations set forth below, at the Initial Closing, the
Company shall sell to the Investors, and the Investors shall purchase from the
Company, the number of shares of Exchangeable Preferred Stock set forth
opposite each Investor’s respective name on Exhibit A, at a purchase
price equal to the Preferred Stock Purchase Price per share.

 

2.3.                              Closing and Closing
Date

 

The closing of the transactions contemplated by Section 2.2 (the “Initial
Closing”) shall take place at 10:00 A.M., New York City time, on the first
Business Day following the date on which the last to be fulfilled or waived of
the conditions set forth in Sections 6 and 7 hereof shall have been fulfilled
or waived in accordance with this Agreement, or on such earlier date as may be
mutually agreed by the Company and the Majority Investors (the “Initial
Closing Date”), at the offices of Willkie Farr & Gallagher LLP, 787
Seventh Avenue, New York, New York 10019, or such other location as the
Majority Investors and the Company shall mutually select.  The subsequent closing(s) of the sale and
purchase of Shares as set forth in Section 2.5 below shall take place at such
time and place as the Company and the Investors participating therein shall
mutually agree (a “Subsequent Closing”) (the Initial Closing and any
Subsequent Closing shall collectively be referred to herein as a “Closing”
and each such date is referred to as a “Closing Date”).  The Company’s agreement with each Investor is
a separate agreement and the sales to each Investor are separate sales.

 

2.4                                 Delivery

 

The sale and purchase of the Shares shall be effected on the applicable
Closing Date by the Company executing and delivering to each Investor, duly
registered in such Investor’s name, duly executed stock certificates evidencing
the Shares being purchased by it, against payment of the purchase price
therefore by wire transfer of immediately available funds to such account as
the Company shall designate in writing.

 

2.5                                 Subsequent Sales of
Shares.  At any time on or
before March 8, 2005, the Company may sell up to the balance of the authorized
shares of Exchangeable Preferred Stock authorized for sale as set forth in
Section 2.1 above that are not sold to the Investors at the Initial Closing
(the “Additional Shares”) to not more than three (3) institutional
investors (the “Institutional Investors”) each Owning more than three
percent (3%) of the Common Stock outstanding on the date of this Agreement (as
certified by such Institutional Investors in writing).  All such sales shall be made on the terms and
conditions set forth in this Agreement, and (i) the representations and
warranties of the Company set forth in Section 3 hereof (and the Disclosure
Schedule) shall speak as of the Initial Closing and the Company shall have no
obligation to update any such disclosure, and (ii) the representations and
warranties of the Institutional Investors in Section 4 hereof shall speak as of
such Subsequent Closing.  Not more than
an aggregate of four hundred fifty-two thousand four hundred eighty-nine
(452,489) Additional

 

6

 

Shares of
Exchangeable Preferred Stock may be sold to the Institutional Investors, and no
Institutional Investor shall acquire more than the number of shares of
Exchangeable Preferred Stock that results in such Institutional Investor Owning
the same percentage of the Company’s outstanding Common Stock (including, for
purposes of this determination, all shares of Common Stock issuable upon
exchange of the Exchangeable Preferred Stock) immediately after the Subsequent
Closing (assuming, for purposes of this determination, the issuance of all
shares of Exchangeable Preferred Stock authorized for sale pursuant to Section
2.1) as such Institutional Investor Owned on the date of this Agreement (as
certified by such Institutional Investor in writing).  The signature pages to this Agreement may be
amended by the Company without the consent of the Investors to include any Institutional
Investors upon the execution by such Institutional Investors of a counterpart
signature page hereto.  Any Shares sold
pursuant to this Section 2.5 shall be deemed to be “Shares” for all purposes
under this Agreement and any Institutional Investors shall be deemed to be “Investors”
for all purposes under this Agreement.

 

SECTION 3.                                REPRESENTATIONS
AND WARRANTIES OF THE COMPANY

 

Except as set forth in the Disclosure Schedule delivered by the Company
to the Investors at the Initial Closing or any Subsequent Closing, as the case
may be, the Company represents and warrants to the Investors as of the date of
this Agreement (or, if made as of a specified date, as of such date) that:

 

3.1.                              Corporate Organization

 

(a)                                  The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. 
Attached hereto as Exhibits C and D, respectively, are
true and complete copies of the Restated Certificate of Incorporation and
By-laws of the Company, as amended through the date hereof (collectively, the “Organizational
Documents”).

 

(b)                                 The
Company has all requisite corporate power and authority to carry on its
business as now conducted.  The Company
has all requisite power and authority to execute and deliver this Agreement and
to perform its obligations hereunder.

 

(c)                                  The
Company has filed all necessary documents to qualify to do business as a
foreign corporation in each jurisdiction in which the conduct of the Company’s
business or the nature of the property owned requires such qualification,
except where the failure to so qualify would not be reasonably likely to have a
Material Adverse Effect.

 

3.2.                              Subsidiaries

 

The Company has no
subsidiaries and no equity interests or investments in any partnership, trust
or other entity or organization.

 

3.3.                              Capitalization

 

(a)                                  The
authorized capital stock of the Company, immediately prior to the Initial
Closing, shall consist of (i) 75,000,000 shares of Common Stock and (ii)
10,000,000 shares of Preferred Stock, of which 2,714,932 shares shall be
designated as Exchangeable

 

7

 

Preferred
Stock and 1,000,000 shares shall be designated as Series A Junior Participating
Preferred Stock.  As of March 2, 2005,
the issued and outstanding shares of capital stock of the Company consisted of
31,175,783 shares of Common Stock and no shares of Preferred Stock.

 

(b)                                 All
the outstanding shares of capital stock of the Company have been duly and
validly issued and are fully paid and non-assessable, and were issued in
accordance with the registration or qualification requirements of the
Securities Act and any relevant state securities laws or pursuant to valid
exemptions therefrom.  As of the Initial
Closing Date, the Shares will be duly authorized and, upon issuance, sale and
delivery as contemplated by this Agreement, the Shares will be validly issued,
fully paid and non-assessable securities of the Company.  Upon their issuance in accordance with the
terms of the Exchangeable Preferred Stock, the shares of Common Stock issuable
upon exchange of the Exchangeable Preferred Stock will be free and clear of any
and all security interests, pledges, liens, charges, claims, options,
restrictions on transfer, preemptive or similar rights, proxies and voting or
other agreements, or other encumbrances of any nature whatsoever, except for
those provided for herein or otherwise created or imposed upon the Investors
and other than restrictions on transfer imposed by federal or state securities
laws, and except as set forth in the Standstill Agreement.

 

(c)                                  On
the Initial Closing Date, except for the Exchangeable Preferred Stock and
except as disclosed in the Filed Company SEC Reports, there will be no shares
of Common Stock or any other equity security of the Company issuable upon
conversion, exchange or exercise of any outstanding security of the Company,
nor will there be any rights, options, calls or warrants outstanding or other
agreements to acquire shares of Common Stock nor will the Company be
contractually obligated to purchase, redeem or otherwise acquire any of its
outstanding shares.  Except to the extent
otherwise provided in this Agreement or the Standstill Agreement or as
disclosed in the Filed Company SEC Reports, (i) no stockholder of the Company
is entitled to any preemptive or similar rights to subscribe for shares of
capital stock of the Company and no stockholder of the Company has any rights,
contractual or otherwise, to designate members of the Company’s Board of
Directors (the “Board”), other than in accordance with the DGCL, and
(ii) there are no stockholder, voting or other agreements relating to the
rights and obligations of the Company’s stockholders.

 

3.4.                              Corporate Proceedings,
etc.

 

The Company has authorized the execution, delivery and performance of
this Agreement and each of the transactions and agreements contemplated
hereby.  No other corporate action is
necessary to authorize such execution, delivery and performance of this
Agreement, and upon such execution and delivery, this Agreement shall
constitute the valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights and general
principles of equity.  The Company has
authorized the issuance and delivery of the Shares in accordance with this
Agreement and, subject to the issuance of the Shares, the Company has reserved
for issuance shares of Common Stock initially issuable upon exchange of the
Shares.

 

8

 

3.5.                              Consents and Approvals

 

Except as set forth in Section 3.5 of the Disclosure Schedule or as
otherwise provided in this Agreement, the execution and delivery by the Company
of this Agreement, the issuance of any of the Shares, the performance by the
Company of its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby do not require the Company to obtain any
consent, approval, clearance or action of, or make any filing, submission or
registration with, or give any notice to, any governmental authority or
judicial authority.

 

3.6.                              Absence
of Defaults, Conflicts, etc.

 

(a)                                  The
execution and delivery of this Agreement by the Company does not, and the
fulfillment of the terms hereof and thereof by the Company, and the issuance,
sale and delivery of the Shares will not, (i) violate or conflict with the
Organizational Documents; (ii) result in a breach of any of the terms,
conditions or provisions of, or constitute a default (with or without the
giving of notice or the passage of time (or both)) under, or result in the
modification of, or permit the acceleration of rights under or termination of,
any Contract of the Company; (iii) violate any law, ordinance, standard,
judgment, rule or regulation of any court or federal, state or foreign
regulatory board or body or administrative agency having jurisdiction over the
Company or over its properties or business; or (iv) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the material properties or assets of the Company,
except, in the cases of clauses (ii), (iii) or (iv), where such event would not
be reasonably likely to have a Material Adverse Effect.

 

(b)                                 The
Company is not in default under or in violation of (and no event has occurred
and no condition exists which, upon notice or the passage of time (or both),
would constitute a default under) (i) the Company’s Organizational Documents,
(ii) any Contract of the Company, (iii) any license, permit or
authorization to which the Company is a party or by which it may be bound or
(iv) any order, writ, injunction or decree of any court or any Federal, state,
municipal or other domestic or foreign governmental department, commission,
board, bureau, agency or instrumentality except, in the case of clause (ii),
(iii) or (iv), for defaults or violations which would not be reasonably likely
to have a Material Adverse Effect.  Each
Contract of the Company is valid, binding and enforceable against the Company
and, to the Company’s best knowledge, the other parties thereto, in accordance
with its terms, and in full force and effect on the date hereof.

 

3.7.                              Reports
and Financial Statements

 

The Company has furnished or made available to the Investors, via its
EDGAR filings with the SEC, true and complete copies of the Company’s (i)
Annual Reports on Form 10-K for the fiscal years ended December 31, 2003,
December 31, 2002, December 31, 2001, and December 31, 2000, as amended, as
filed with the SEC, (ii) proxy statements, as amended, related to all meetings
of its stockholders (whether annual or special) held since March
27, 2000, and (iii) all other reports filed with or registration statements
declared effective by the SEC since March 27,
2000, except registration statements on Form S-8 relating to employee benefit
plans, which are all the documents (other than preliminary material) that the
Company was required to file with the SEC since that date (the documents
referred to in clauses (i) through (iii), together

 

9

 

with all
accompanying exhibits and all information incorporated therein by reference,
being referred to herein collectively as the “Company SEC Reports”).  The Company has timely made all filings and
furnishings with the SEC required of the Company pursuant to the Exchange Act
during the 12 months preceding the date of this Agreement.  As of their respective dates, the Company SEC
Reports were duly filed or furnished with the SEC and complied in all material
respects with the requirements of the Sarbanes-Oxley Act, the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations promulgated
by the SEC and NASDAQ Stock Market thereunder applicable to such Company SEC
Reports.  Except to the extent that
information contained in any Company SEC Report filed or furnished with the SEC
and made publicly available prior to the date of this Agreement (a “Filed
Company SEC Report”) has been revised or superseded by a later Filed
Company SEC Report, as of their respective dates, none of the Filed Company SEC
Reports contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.  The audited consolidated
financial statements included in the Filed Company SEC Reports comply in all
material respects with applicable accounting requirements of the Securities Act
or the Exchange Act and with the published rules and regulations of the SEC
with respect thereto.  The financial
statements (including the schedules and notes thereto) included in the Company’s
SEC Reports (i) have been prepared in accordance with generally accepted
accounting principles (“GAAP”) applied on a consistent basis throughout
the periods indicated, except as disclosed therein, and (ii) present fairly, in
all material respects, the financial position of the Company as at the dates
thereof and the results of its operations and cash flow for the periods then
ended, except that the unaudited financial statements may not be in accordance
with GAAP because of the absence of footnotes normally contained therein and
are subject to normal year-end audit adjustments.

 

3.8.                              Absence
of Certain Developments

 

Except as disclosed in the Filed Company SEC Reports, since December
31, 2003, there has been no (i) change or event which is reasonably likely to
have a Material Adverse Effect, (ii) declaration, setting aside or payment of
any dividend or other distribution with respect to the capital stock of the
Company, (iii) issuance of capital stock (other than pursuant to (1) the
exercise of options, warrants, or convertible securities outstanding at such
date or (2) employee benefit plans) or options, warrants or rights to acquire
capital stock (other than the rights granted pursuant to employee benefit plans),
(iv) material loss, destruction or damage to any property of the Company,
whether or not insured, (v) acceleration of any indebtedness for borrowed
money or the refunding of any such indebtedness, (vi) labor trouble
involving the Company or any material change in its personnel or the terms and
conditions of employment, (vii) waiver of any valuable right in favor of the
Company, (viii) loan or extension of credit to any officer of the Company or to
any employee of the Company in an amount in excess of $25,000 or (ix)
acquisition or disposition of any material assets (or any contract or
arrangement therefore) or any other material transaction by the Company
otherwise than for fair value in the ordinary course of business.

 

3.9.                              Compliance with Law

 

(a)                                  The
Company is not in violation of any laws, ordinances, governmental rules or
regulations to which it is subject, including without limitation laws or
regulations

 

10

 

relating
to the environment or to occupational health and safety, except for violations
that would not be reasonably likely to have a Material Adverse Effect, and no
material expenditures are known to be or expected to be required in order to
cause its current operations or properties to comply with any such laws,
ordinances, governmental rules or regulations, except such expenditures as may
be required in order for the Company to comply with Section 404 of the
Sarbanes-Oxley Act.

 

(b)                                 The
Company has all licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its property or to the conduct of
its business in the manner described in the Filed Company SEC Reports, which if
violated or not obtained would be reasonably likely to have a Material Adverse
Effect.  The Company has not been finally
denied any application for any such licenses, permits, franchises or other
governmental authorizations necessary to its business.

 

(c)                                  The
Company has not received any written notice from the FDA or any other federal,
state or foreign regulatory agency questioning the manufacturing practices of
any of the Company’s contractors and the Company is not aware of any intent to
deliver any such written notice.

 

(d)                                 The
Company is in material compliance with and is taking all action required for
the Company to remain in material compliance with all provisions of the
Sarbanes-Oxley Act and the rules and regulations promulgated thereunder and all
provisions of the NASDAQ Stock Market, in each case as to which the Company is
required to be in compliance.

 

3.10.                        Litigation

 

Except as disclosed in the Filed Company SEC Reports, there is no legal
action, suit, arbitration or other legal, administrative or other governmental
investigation, inquiry or proceeding (whether federal, state, local or foreign)
pending or, to the best of the Company’s knowledge, threatened against or
affecting the Company or any of its properties, assets or business which would
be reasonably likely to have a Material Adverse Effect.  The Company is not subject to any order,
writ, judgment, injunction, decree, determination or award of any court or of
any governmental agency or instrumentality (whether federal, state, local or
foreign).

 

3.11.                        Absence
of Undisclosed Liabilities

 

Except as disclosed in the Filed Company SEC Reports, subsequent to the
respective dates as of which such information is given in the Filed Company SEC
Reports, the Company has not incurred any liability or obligation, direct or
contingent, or entered into any transaction, not in the ordinary course of
business, that is material to the Company taken as a whole, and there has not
been any change in the capital stock, or material increase in the short-term or
long-term debt, of the Company taken as a whole.

 

3.12.                        Employees

 

(a)                                  The
Company is not engaged in any unfair labor practice or discriminatory
employment practice and no complaint of any such practice against the Company
has been filed or, to the best of the Company’s knowledge, threatened to be
filed with or by the National Labor

 

11

 

Relations
Board, the Equal Employment Opportunity Commission or any other administrative
agency, federal or state, that regulates labor or employment practices, nor is
any grievance filed or, to the best of the Company’s knowledge, threatened to
be filed, against the Company by any employee pursuant to any collective
bargaining or other employment agreement to which the Company is a party or is
bound which, in any such case, would be reasonably likely to have a Material
Adverse Effect.  The Company is in
compliance with all applicable foreign, federal, state and local laws and
regulations regarding occupational safety and health standards except to the
extent that noncompliance would not be reasonably likely to have a Material
Adverse Effect, and has received no complaints from any foreign, federal, state
or local agency or regulatory body alleging such violations of any such laws
and regulations.

 

(b)                                 The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing.

 

3.13.                        Tax Matters

 

There are no federal, state, county or local taxes due and payable by
the Company which have not been paid or will not be paid prior to the time they
become delinquent.  The Company has duly
filed (except in cases where valid extensions have been obtained) all federal,
state, county and local tax returns required to have been filed by it and there
are in effect no waivers of applicable statutes of limitations with respect to
taxes for any year.  No tax deficiency
has been determined adversely to the Company which would be reasonably likely
to have Material Adverse Effect.  The
Company is not currently subject to a federal or state tax audit of any kind.

 

3.14.                        Intellectual Property 

 

(a)                                  The
Company owns all right, title and interest in and to, or has a valid and
enforceable license to use all the Intellectual Property used by it in
connection with its business, which represents all intellectual property rights
necessary to the conduct of its business as now conducted and presently
contemplated, except where the failure to own or license such Intellectual Property
would not be reasonably likely to have a Material Adverse Effect.  The
Company is not in breach of any license agreement concerning the Company’s
Intellectual Property, including the agreements between or among the Company
and the Center for Innovating Technology, the Virginia Commonwealth University
or the Virginia Commonwealth University Intellectual Property Foundation,
except for breaches that would not be reasonably likely to have a Material
Adverse Effect.  Except as
disclosed in the Filed Company SEC Reports, to the best knowledge of the
Company, there are no conflicts with or infringements of any Intellectual
Property by any third party, except for conflicts or infringements that would
not be reasonably likely to have a Material Adverse Effect.  To the knowledge of the Company, the conduct
of the business of the Company as currently conducted or contemplated does not
conflict with or infringe any proprietary right of any third party, except for
conflicts or infringements that would not be reasonably likely to have a
Material Adverse Effect.  There is no
claim, suit, action or proceeding pending or, to the knowledge of the Company,
threatened against the Company:  (i) alleging
any such conflict or infringement with any third party’s proprietary rights or

 

12

 

(ii) challenging the
Company’s ownership or use of, or the validity or enforceability of any
Intellectual Property.

 

(b)                                 To
the Company’s knowledge, no present or former employee, officer or director of
the Company, or agent or outside contractor of the Company, holds any right,
title or interest, directly or indirectly, in whole or in part, in or to any
Intellectual Property, except those formally assigned or transferred to the
Company by such employees, officers or directors.  No
person has claimed rights to any patent owned by or licensed to the Company by
reason of being an inventor or co-inventor of any claim in such patents, other
than the inventors named on each such patent, and all such inventors have duly
assigned their rights to the patents to the Company or the assignor or licensor
of such patents to the Company.

 

(c)                                  Neither
the execution nor delivery of this Agreement, nor the carrying on of the
Company’s business by the employees of and consultants to the Company will, to
the Company’s knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any Contract
(including covenants or commitments of any nature) which any of such employees
or consultants is now obligated.  The
Company does not believe it is or will be necessary to utilize any inventions
of any of its employees (or people it currently intends to hire) made prior to
their employment by the Company, except those formally assigned or transferred
to the Company by such employees.

 

(d)                                 To
the Company’s knowledge:  (i) no trade
secret of the Company has been used, disclosed or appropriated to the detriment
of the Company or for the benefit of any Person other than the Company; and
(ii) no employee, independent contractor or agent of the Company has
misappropriated any trade secrets or other confidential information of any
other Person in the course of the performance of his or her duties as an
employee, independent contractor or agent of the Company, except in the cases
of clauses (i) and (ii) as would not be reasonably likely to have a Material
Adverse Effect.  All employees of  the Company have
executed agreements acknowledging their obligation to assign all inventions made
in the course of their employment to the Company.

 

(e)                                  Each
employee, consultant and contractor of the Company who has had access to
confidential information of the Company which is necessary for the conduct of
the Company’s business as currently conducted or as currently proposed to be
conducted has executed an agreement to maintain the confidentiality of such
confidential information and has executed appropriate agreements that are
substantially consistent with the Company’s standard forms thereof.

 

3.15.                        Title to Tangible Assets

 

The Company has good and marketable title to its properties and assets
and good title to all its leasehold estates, in each case except as disclosed
in the Filed Company SEC Reports subject to no mortgage, pledge, lien, lease, encumbrance
or charge, other than or resulting from taxes which have not yet become
delinquent and minor liens and encumbrances which do not in any case materially
detract from the value of the property subject thereto or materially impair the
operations of the Company and which have not arisen otherwise than in the
ordinary course of business.

 

13

 

3.16.                        Condition of Properties

 

The property, assets and operations of the Company comply with all
applicable ordinances, regulations and laws, except where the failure to so
comply would not be reasonably likely to have a Material Adverse Effect.

 

3.17.                        Transactions
with Related Parties

 

Except as disclosed in the Filed Company SEC Reports, the Company is
not a party to any agreement with any of the Company’s directors, officers or
stockholders or any Affiliate or family member of any of the foregoing under
which it:  (i) leases any real or
personal property (either to or from such Person); (ii) licenses technology (either
to or from such Person); (iii) is obligated to purchase any tangible or
intangible asset from or sell such asset to such Person; (iv) purchases
products or services from such Person; or (v) has borrowed money from or lent
money to such Person.  Except as set
forth in Section 3.17 of the Disclosure Schedule, the Company does not employ
as an employee or engage as a consultant any family member of any of the
Company’s directors, officers or stockholders. 
Except as set forth in the Standstill Agreement, to the best knowledge
of the Company, there exist no agreements among stockholders of the Company to
act in concert with respect to the voting or holding of the Company’s
securities.

 

3.18.                        Registration
Statement and Prospectus

 

A registration statement on Form S-3 (File No. 333-113353) (the “Registration
Statement”) with respect to the Shares has been prepared by the Company in
conformity with the requirements of the Securities Act and the rules and
regulations of the SEC thereunder and has been filed with the Commission under
the Securities Act.  The Registration
Statement, which shall be deemed to include all information omitted therefrom
in reliance upon Rule 430A and contained in the Prospectus referred to below,
has been declared effective by the SEC under the Securities Act and no
post-effective amendment to the Registration Statement has been filed as of the
date of this Agreement.  The form of the
prospectus filed by the Company with the SEC pursuant to its Rule 424(b) and
Rule 430A and dated April 21, 2004, is herein referred to as the “Prospectus.”

 

The SEC has not issued an order preventing or suspending the use of the
Prospectus relating to the offering of the Shares nor instituted proceedings
for that purpose.  The Registration
Statement and the Prospectus contain all statements which are required to be
stated therein by, and in all respects conform, as the case may be, to the
requirements of the Securities Act and the rules and regulations of the SEC
thereunder.  Neither the Registration
Statement nor any amendment thereto, nor the Prospectus, contains, as the case
may be, any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

 

14

 

3.19.                        Registration Rights

 

Except as disclosed in the Filed Company SEC Reports and pursuant to
the Registration Rights Agreement, the Company will not, as of the Initial
Closing Date, be under any obligation to register any of its securities under
the Securities Act.

 

3.20.                        Brokerage

 

Except for fees payable pursuant to that certain letter agreement dated
February 24, 2005, by and between the Company and Needham & Company, a copy
of which has been provided to WP, there are no claims for brokerage commissions
or finder’s fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement made by or on behalf of
the Company and the Company agrees to indemnify and hold the Investors harmless
against any costs or damages incurred as a result of any such claim.

 

3.21.                                          Illegal
or Unauthorized Payments; Political Contributions

 

Neither the Company nor, to the best of the Company’s knowledge (after
reasonable inquiry of its officers and directors), any of the officers,
directors, employees, agents or other representatives of the Company or any
other business entity or enterprise with which the Company is or has been
affiliated or associated, has, directly or indirectly taken any action
prohibited by Section 30A of the Exchange Act.

 

3.22.                        Takeover Statute 

 

The Board has taken all action necessary to approve the transactions
contemplated hereby, as it relates to the Investors, for the purposes of the
provisions of Section 203 of the DGCL. 
To the Company’s knowledge, no other Takeover Statute is applicable to
the transactions contemplated hereby.

 

3.23.                        NASDAQ Compliance

 

The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act, and is listed on The NASDAQ National Market
(the “NASDAQ Stock Market”), and trading in the Common Stock has not
been suspended and the Company has taken no action designed to, or that is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the NASDAQ Stock
Market, nor has the Company received any notification that the SEC or the NASD
is contemplating terminating such registration or listing.  To the best of the Company’s knowledge, the
Company and the Common Stock meet the criteria for continued listing and
trading on the NASDAQ Stock Market.

 

3.24.                        Reporting Status

 

The Company is currently eligible to register the resale of Common Stock
in a secondary offering on a registration statement on Form S-3 under the
Securities Act.

 

15

 

3.25.                        No
Manipulation of Common Stock

 

The Company has not taken and will not take
any action outside the ordinary course of business designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock to facilitate the sale or resale of the Shares or the
Exchange Shares.

 

3.26.                        Accountants

 

PricewaterhouseCoopers LLP has advised the
Company that it is, and to the best knowledge of the Company it is, an
independent accountant as required by the Sarbanes-Oxley Act, the Securities
Act and the Exchange Act and the rules and regulations promulgated thereunder.

 

3.27.                        Internal
Accounting Controls  

 

The Company maintains a system of internal accounting controls
sufficient, in the judgment of the management of the Company, 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 generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.

 

3.28.                        Environmental Matters

 

To its knowledge, the Company is in compliance with all applicable
Environmental Laws, except where any failure to comply would not be reasonably
likely to have a Material Adverse Effect. 
There is no civil, criminal or administrative judgment, action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter pending or to the Company’s knowledge threatened against the
Company pursuant to Environmental Laws. 
To the Company’s knowledge, there are no past or present events,
conditions, circumstances, activities, practices, incidents, agreements,
actions or plans which could reasonably be expected to prevent compliance with,
or which have given rise to or will give rise to liability which would have a
Material Adverse Effect, under Environmental Laws.

 

3.29.                        FDA Approval

 

After due investigation, (i) the Company has no knowledge that any
Governmental Authority, including, but not limited to, the FDA, will ultimately
prohibit the marketing, sale, license or use in the United States or elsewhere
of any product (including, but not limited to, EFAPROXYN) proposed to be
developed, produced or marketed by the Company (each, a “Product”), (ii)
to the Company’s knowledge, the FDA has not prohibited any product or process
from being marketed or used in the United States which product or process is
substantially similar in function or composition to the Company’s lead product
candidate, EFAPROXYN, (iii) the Company has no Product on clinical hold nor
does the Company have any reason to expect that any Product is reasonably
likely to be placed on clinical hold, (iv) the

 

16

 

Company has
made available to WP all submissions to the FDA and the FDA responses (and
other material correspondence received from or submitted to the FDA),
including, but not limited to, all FDA warning letters, regulatory letters and
notice of adverse finding letters and the relevant responses, received by the
Company or any agent thereof relative to the development of its Products,
including, but not limited to, EFAPROXYN, (v) none of the Company or its
Affiliates or, to the Company’s knowledge, its employees or agents, has ever
been sanctioned, formally or otherwise, by the FDA, and (vi) there has not been
any suspensions or debarments by the FDA or other federal departments and state
regulatory bodies against the Company or, to the knowledge of the Company, any
current or former employee of the Company.

 

3.30.                        Insurance

 

The Company maintains and
will continue to maintain insurance with financially sound and reputable
insurers in such amounts and covering such risks as is reasonably adequate and
consistent with industry practice for the conduct of its business and the value
of its property, all of which insurance is in full force and effect.  The Company has not received notice from, and
has no knowledge of any threat by, any insurer that has issued any insurance
policy to the Company that such insurer intends to deny coverage under or
cancel, discontinue or not renew any insurance policy presently in force.

 

3.31.                        Transfer Taxes

 

On the Initial Closing Date, all stock
transfer or other taxes (other than income taxes) which are required to be paid
in connection with the sale and issuance of the Shares hereunder will be, or
will have been, fully paid or provided for by the Company and the Company will
have complied with all laws imposing such taxes.

 

3.32.                        Investment Company

 

The Company is not an “investment company” or an “affiliated person”
of, or “promoter” or “principal underwriter” for an investment company, within
the meaning of the Investment Company Act of 1940, as amended.

 

17

 

SECTION 4.                                REPRESENTATIONS
AND WARRANTIES OF THE INVESTORS

 

Each Investor severally represents and warrants to the Company as of
the date of this Agreement (or, if made as of a specified date, as of such
date) that:

 

(a)                                  It
is acquiring the Shares and, subject to Stockholder Approval, the Exchange
Shares for its own account for investment and not with a view towards the
resale, transfer or distribution thereof, nor with any present intention of
distributing the Shares or the Exchange Shares, but subject, nevertheless, to
any requirement of law that the disposition of the Investor’s property shall at
all times be within the Investor’s control, and without prejudice to the
Investor’s right at all times to sell or otherwise dispose of all or any part
of such securities under a registration under the Securities Act or under an
exemption from said registration available under the Securities Act.

 

(b)                                 It
has full power and legal right to execute and deliver this Agreement and to
perform its obligations hereunder.

 

(c)                                  It
is a validly existing partnership, limited liability company, trust or
corporation, as the case may be, duly organized under the laws of its
jurisdiction of organization or formation.

 

(d)                                 It
has taken all action necessary for the authorization, execution, delivery, and
performance of this Agreement and its obligations hereunder, and, upon
execution and delivery by the Company, this Agreement shall constitute the
valid and binding obligation of such Investor, enforceable against such
Investor in accordance with its terms, except that such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights and general
principles of equity.

 

(e)                                  There
are no claims for brokerage commissions or finder’s fees or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement made by or on behalf of such Investor and such
Investor agrees to indemnify and hold the Company harmless against any costs or
damages incurred as a result of any such claim.

 

(f)                                    It
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of its investment in the Company as
contemplated by this Agreement, and is able to bear the economic risk of such
investment for an indefinite period of time. 
It has been furnished access to such information and documents as it has
requested and has been afforded an opportunity to ask questions of and receive
answers from representatives of the Company concerning the terms and conditions
of this Agreement and the purchase of the Shares contemplated hereby.  It is a “qualified institutional buyer”
within the meaning of Rule 144A(a) of the Securities Act or an “accredited
investor” within the meaning of Rule 501(a) of Regulation D under the
Securities Act.

 

(g)                                 Except
such consents, approvals and filings, the failure to obtain or make would not,
individually or in the aggregate, have a material adverse effect on the ability
of the Investor to consummate the transactions contemplated by this Agreement,
the execution and delivery by it of this Agreement and the performance by such
Investor of its obligations

 

18

 

hereunder
and the consummation by such Investor of the transactions contemplated hereby
do not require such Investor to obtain any consent, approval, clearance or
action of, or make any filing, submission or registration with, or give any
notice to, any governmental authority or judicial authority.

 

(h)                                 The
execution and delivery of this Agreement by such Investor do not, and the
fulfillment of the terms hereof and thereof by such Investor will not, (i)
violate or conflict with its partnership agreement, trust agreement, the
articles of incorporation, other constitutive documents or by-laws (or other
similar applicable documents) of the Investor, as applicable; (ii) result
in a breach of any of the terms, conditions or provisions of, or constitute a
default (with or without the giving of notice or the passage of time (or both))
under, or result in the modification of, or permit the acceleration of rights
under or termination of, any material contract to which such Investor is a
party or (iii) violate any law, ordinance, standard, judgment, rule or regulation
of any court or federal, state or foreign regulatory board or body or
administrative agency having jurisdiction over such Investor or over its
respective properties or businesses; except, in the cases of clauses (ii) and
(iii) where such event would not be reasonably likely to have a material
adverse effect on the Investor’s ability to consummate the transactions
contemplated by this Agreement.

 

(i)                                     On
the date of this Agreement, the Investor (1) is not an “interested stockholder”
within the meaning of Section 203(c)(5) of the DGCL or (2) has been an “interested
stockholder” for a period of more than three years preceding the date of this
Agreement.

 

SECTION 5.                                ADDITIONAL
AGREEMENTS OF THE PARTIES

 

5.1.                              Resale of Shares

 

Each Investor severally covenants that it will not sell or otherwise
transfer the Shares or, subject to Stockholder Approval, the Exchange Shares,
except pursuant to an effective registration under the Securities Act or in a
transaction which, in the opinion of counsel reasonably satisfactory to the
Company, qualifies as an exempt transaction under the Securities Act and the
rules and regulations promulgated thereunder.

 

5.2.                              Covenants Pending
Closing

 

Pending the Initial Closing, the Company will conduct its business in
the ordinary course, and will not, without the Investors’ prior written
consent, such consent not to be unreasonably withheld, delayed or conditioned,
take any action which would result in any of the representations or warranties
contained in this Agreement not being true at and as of the time immediately
after such action, or in any of the covenants contained in this Agreement
becoming incapable of performance. 
Pending the Initial Closing, the Company will promptly advise the
Investors of any action or event of which it becomes aware which has the effect
of making materially incorrect any of such representations or warranties or
which has the effect of rendering any of such covenants incapable of
performance.

 

19

 

5.3.                              Further Assurances

 

The Company and each Investor shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable
to carry out the provisions hereof and the transactions contemplated hereby.  The Company and each Investor shall use its
reasonable efforts to fulfill or obtain the fulfillment of the conditions to
the Closing as promptly as practicable.

 

5.4.                              Investor Designees

 

(a)                                  For
so long as WP Owns at least two thirds of (i) the aggregate number of Shares acquired
by it on the Initial Closing Date, or (ii) in the event the Exchange occurs,
the aggregate number of shares of Common Stock Owned by WP immediately after
giving effect to the Exchange (the “Exchange Date Shares”), then,
subject to applicable law and the rules and regulations of the SEC and NASDAQ
Stock Market, the Company will nominate and use its reasonable best efforts to
cause to be elected and cause to remain as a directors on the Board two
individuals designated by WP (each, an “Investor Designee” and
collectively, the “Investor Designees”).

 

(b)                                 In
the event Section 5.4(a) is no longer applicable and for so long as WP Owns at
least 50% of (i) the aggregate number of Shares acquired by it on the Initial
Closing Date, or (ii) in the event the Exchange occurs, the Exchange Date
Shares, then, subject to applicable law and the rules and regulations of the
SEC and NASDAQ Stock Market, the Company will nominate and use its reasonable
best efforts to cause to be elected and cause to remain as a director on the
Board, one Investor Designee.

 

(c)                                  Subject
to applicable law and the rules and regulations of the SEC and NASDAQ Stock
Market, for so long as at least one Investor Designee continues to serve as a
director on the Board, the Company will use its reasonable best efforts to
cause one of the Investor Designees to be a member of each principle committee
of the Board.

 

5.5.                              Subscription Right

 

(a)                                  If
at any time after the date hereof, the Company determines to issue equity
securities of any kind (for these purposes, the term “equity securities”
shall include, without limitation, Common Stock, warrants, options or other
rights to acquire equity securities convertible or exchangeable into equity
securities) of the Company (other than: 
(i) to the public in a firm commitment underwriting pursuant to a
registration statement filed under the Securities Act; (ii) the issuance of
equity securities to employees, officers or directors of, or consultants or
advisors to the Company pursuant to any employee benefit plan approved by the
Board; (iii) any equity securities issued as consideration in connection with
an acquisition, merger or consolidation by the Company provided such
acquisition, merger or consolidation has been approved by the Board; (iv)
securities issued in connection with licensing, marketing or distribution
arrangements or similar strategic transactions approved by the Board; (v) stock
issued or issuable pursuant to any rights or agreements outstanding as of the
date of this Agreement, including warrants outstanding as of the date of this
Agreement to purchase up to 1,706,893 shares of Common Stock, and stock issued
pursuant to any such rights or agreements

 

20

 

granted
after the date of this Agreement approved by the Board; provided that the subscription
rights established by this Section 5.5 apply with respect to the initial sale
or grant by the Company of such rights or agreements; (vi) shares of
Exchangeable Preferred Stock issued as dividends with respect to the Shares
purchased by the Investors hereunder, or (vii) shares of Common Stock issued or
issuable upon exchange of the Exchangeable Preferred Stock) then, for so long
as WP Owns at least two-thirds of (i) the aggregate number of Shares acquired by
it on the Initial Closing Date, or (ii) in the event the Exchange occurs, the
Exchange Date Shares, the Company shall:

 

(1)                                   give
written notice to WP setting forth in reasonable detail (A) the designation and
all of the terms and provisions of the securities proposed to be issued (the “Proposed
Securities”), including, where applicable, the voting powers, preferences
and relative participating, optional or other special rights, and the
qualification, limitations or restrictions thereof and interest rate and
maturity; (B) the price and other terms of the proposed sale of such
securities; (C) the amount of such Proposed Securities; and (D) such other
information as WP may reasonably request in order to evaluate the proposed
issuance; and

 

(2)                                   subject
to applicable law and the rules and regulations of the SEC and NASDAQ Stock
Market, offer to issue to WP upon the terms described in the notice delivered
pursuant to Section 5.5(a)(1) above, a portion of the Proposed Securities equal
to (i) the percentage of the Common Stock (including the Exchange Shares
issuable upon the Exchange, if the Exchange has not occurred) Owned by WP
immediately prior to the issuance of the equity securities relative to the
total number of shares of Common Stock (including the Exchange Shares issuable
upon the Exchange, if the Exchange has not occurred) outstanding immediately
prior to the issuance of the equity securities, multiplied by (ii) the total
number of Proposed Securities. 
Notwithstanding the foregoing, the Company shall not be required to
offer or sell such Proposed Securities to WP if it would cause the Company to
be in violation of applicable federal securities laws by virtue of such offer
or sale.

 

(b)                                 WP
must exercise its purchase rights hereunder within 5 Business Days after
receipt of such notice from the Company. 
To the extent that the Company offers two or more securities in units,
WP must purchase such units as a whole and will not be given the opportunity to
purchase only one of the securities making up such unit.

 

(c)                                  Upon
the expiration of the offering period described above, the Company will be free
to sell such Proposed Securities that WP has not elected to purchase during the
90 days following such expiration on terms and conditions no more favorable to
the purchasers thereof than those offered to WP.

 

(d)                                 The
election by WP not to exercise its subscription rights under this Section 5.5
in any one instance shall not affect its right (other than in respect of a
reduction in its percentage holdings) as to any subsequent proposed
issuance.  Any sale of such securities by
the Company without first giving WP the rights described in this Section 5.5
shall be void and of no force and effect.

 

21

 

(e)                                  The
subscription rights established by this Section 5.5 shall not apply to, and
shall terminate upon a consolidation, merger, reorganization or other form of
acquisition of or by the Company in which the Company’s stockholders
immediately prior to the transaction retain less than 50% of the voting power
of or economic interest in the surviving or resulting entity (or its parent),
or a sale of the Company’s assets in excess of a majority of the Company’s
assets (valued at fair market value as determined in good faith by the Board).

 

(f)                                    Injunctive
Relief.  The Company and WP hereby
declare that it is impossible to measure in money the damages which will accrue
to the parties hereto by reason of the failure of any party to perform any of
its obligations set forth in this Section 5.5.  Therefore, the Company and WP shall have the
right to specific performance of such obligations, and if any party hereto
shall institute any action or proceeding to enforce the provisions hereof, each
of the Company and WP hereby waive the claim or defense that the party
instituting such action or proceeding has an adequate remedy at law.

 

5.6.                              Consents
and Approvals; Proxy Statement

 

(a)                                  From
and after the date hereof, the Company shall use its reasonable best efforts to
obtain as promptly as practicable any consent or approval of any Person,
including any regulatory authority, required in connection with the
transactions contemplated hereby.

 

(b)                                 From
and after the date of the Initial Closing, the Company shall use its reasonable
best efforts to obtain as promptly as practicable any vote of stockholders
necessary for approval of the Exchange (“Stockholder Approval”).  In furtherance of the foregoing statement, as
promptly as reasonably practicable after the date hereof and in any event no
later than March 25, 2005, the Company shall prepare and file with the SEC, and
shall use its reasonable best efforts to have cleared by the SEC, a preliminary
proxy statement, and as soon as practicable thereafter (subject to applicable
waiting periods under the Exchange Act, review by the SEC or as required by the
Organizational Documents and applicable law) file with the SEC and promptly
thereafter mail a definitive proxy statement to the Company’s stockholders (the
“Proxy Statement”).  The Proxy
Statement shall contain the recommendation of the Board, to the extent
consistent with its fiduciary duties, that the Company’s stockholders approve
the Exchange in accordance with the Organizational Documents and applicable
law, including without limitation, the requirements of NASD Rule 4350.  WP will be given a reasonable opportunity to
review and comment on drafts of the Proxy Statement and the Company will use
its reasonable best efforts to accept comments thereto given by WP and its representatives.  The Company shall promptly take all action
necessary in accordance with applicable law and its Organizational Documents to
convene a meeting of the Company’s stockholders, no later than May 30, 2005 or,
if such date is impracticable due to review by the SEC, as soon as practicable
thereafter.  To the extent consistent
with its fiduciary duties, the Company shall use its reasonable best efforts to
solicit from the Company’s stockholders proxies in favor of the Exchange and
shall take all other action reasonably necessary to secure Stockholder
Approval.

 

5.7.                              Use of Proceeds

 

The proceeds received by the Company from the issuance and sale of the
Shares shall be used by the Company for working capital and other general
corporate purposes.

 

22

 

5.8.                              Takeover Statute

 

If any Takeover Statute shall become applicable to the transactions
contemplated hereby, including without limitation any takeover provision under
the laws of the State of Delaware, the Company and the members of the Board
shall, to the extent consistent with its fiduciary duties, grant such approvals
and take such actions as are necessary so that the transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise use their reasonable best efforts to act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.

 

SECTION 6.                                INVESTORS’
CLOSING CONDITIONS

 

The Investors’ obligations to purchase the Shares at each Closing shall
be subject to the performance by the Company of its agreements theretofore to
be performed hereunder and to the satisfaction (or waiver), prior thereto or
concurrently therewith, of the following further conditions:

 

6.1.                              Representations
and Warranties

 

The representations and warranties of the Company contained in Section
3 of this Agreement shall be true on and as of the Initial Closing Date in all
material respects (except for such representations and warranties that are
qualified as to materiality, which shall be true in all respects) as though
such representations and warranties were made at and as of such date.

 

6.2.                              Compliance with
Agreement

 

The Company shall have performed and complied in all material respects
with all agreements, covenants and conditions contained in this Agreement which
are required to be performed or complied with by the Company prior to or on the
applicable Closing Date.

 

6.3.                              Injunction

 

There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.

 

6.4.                              Counsel’s Opinion

 

Each Investor shall have received an opinion,
dated the applicable Closing Date from the Company’s counsel, Cooley Godward
LLP, substantially in the form of Exhibit E attached hereto.

 

6.5.                              Adverse Development

 

There shall have been no developments in the business of the Company
which would be reasonably likely to have a Material Adverse Effect.

 

23

 

6.6.                              Directors

 

Stewart Hen and Jonathan S. Leff shall have
been elected to the Board, effective on the Initial Closing Date.  Subject to the applicable law and the rules
and regulations of the SEC and NASDAQ Stock Market, one of the Investor
Designees shall be a member of each principle committee of the Board.

 

6.7.                              Registration
Rights Agreement

 

The Company and the Investors shall have executed the Registration
Rights Agreement, the form of which is attached as Exhibit F hereto (the
“Registration Rights  Agreement”).

 

6.8.                              Standstill Agreement

 

The Company and WP shall have executed the letter agreement, the form
of which is attached as Exhibit G hereto (the “Standstill Agreement”).

 

6.9.                              Rights Amendment

 

The Company and Mellon Investor Services LLC, as Rights Agent, shall
have executed the Amendment to Rights Agreement, the form of which is attached
as Exhibit H hereto (the “Rights Amendment”).

 

6.10.                        Stop Orders

 

No stop order or suspension of trading shall been imposed by the NASDAQ
Stock Market, the SEC or any other governmental regulatory body with respect to
public trading in the Common Stock.

 

6.11.                        Listing of the Common Stock

 

In connection with the issuance of the Shares and the transactions
contemplated hereby, the Company shall have submitted to the NASDAQ Stock
Market a “Notification Form:  Listing of
Additional Shares” as well as any necessary supporting documentation.

 

6.12.                        Nasdaq
Interpretative Ruling

 

The NASDAQ Stock Market shall have issued a written interpretation
confirming that the transactions contemplated hereby, including the terms of
the Exchangeable Preferred Stock, comply with all applicable Nasdaq rules,
including the requirements of Rule 4350(i) and IM-4350-2 (“Interpretive Material Regarding the Use of Share
Caps to Comply with Rule 4350(i)”) and the voting rights
requirements of Rule 4351 and IM-4351 (“Voting
Rights Policy”).

 

24

 

6.13.                        Filing
of Certificate of Designations

 

The Certificate of Designations shall have been filed with the
Secretary of State of the State of Delaware and shall continue to be in full
force and effect as of the applicable Closing Date.

 

6.14.                        Officer’s Certificate

 

Each Investor shall have received a
certificate, dated the applicable Closing Date, signed by a duly authorized
executive officer of the Company, certifying that the conditions specified in
the foregoing Sections 6.1, 6.2, 6.3 and 6.5 hereof have been fulfilled.

 

6.15.                        Secretary’s Certificate

 

Each Investor shall have received a certificate, dated the applicable
Closing Date, of the Secretary of the Company attaching:  (i) a true and complete copy of the Restated
Certificate of Incorporation of the Company, with all amendments thereto; (ii)
true and complete copies of the Company’s By-laws, as amended, in effect as of
such date; (iii) a certificate from the Secretary of State of the State of
Delaware as to the good standing of the Company; (iv) certificates of good standing
from the appropriate officials of the jurisdictions in each state in which the
Company is qualified to do business as a foreign corporation; and (iv)
resolutions of the Board authorizing the execution and delivery of this
Agreement, the transactions contemplated hereby, and the issuance of the
Shares.

 

6.16.                        Approval of Proceedings

 

All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
satisfactory in form and substance to WP and its special counsel, Willkie Farr
& Gallagher LLP.  WP shall have
received copies of all documents or other evidence which they and Willkie Farr
& Gallagher LLP may reasonably request in connection with such transactions
and of all records of corporate proceedings in connection therewith in form and
substance reasonably satisfactory to WP and Willkie Farr & Gallagher LLP.

 

SECTION 7.                                COMPANY
CLOSING CONDITIONS

 

The Company’s obligation to issue and sell the Shares at each Closing
shall be subject to the performance by each Investor of its agreements
theretofore to be performed hereunder and to the satisfaction (or waiver),
prior thereto or concurrently therewith, of the following further conditions:

 

7.1.                              Representations
and Warranties

 

The representations and warranties of the Investors contained in
Section 4 of this Agreement shall be true in all material respects on and as of
the applicable Closing Date (except for such representations and warranties
that are qualified as to materiality, which shall be true in all respects) as
though such representations and warranties were made at and as of such date.

 

25

 

7.2.                              Compliance with
Agreement

 

The Investors shall have performed and complied in all material
respects with all agreements, covenants and conditions contained in this
Agreement which are required to be performed or complied with by them prior to
or on the applicable Closing Date.

 

7.3.                              Investors’
Certificates

 

The Company shall have received a certificate from each Investor, dated
the applicable Closing Date, signed by a duly authorized representative of the
Investor, certifying that the conditions specified in the foregoing Sections
7.1 and 7.2 hereof have been fulfilled.

 

7.4.                              Injunction

 

There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.

 

7.5.                              Standstill Agreement

 

The Company and WP shall have executed the letter agreement, the form
of which is attached as Exhibit G hereto (the “Standstill Agreement”).

 

7.6.                              Rights Amendment

 

The Company and Mellon Investor Services LLC, as Rights Agent, shall
have executed the Amendment to Rights Agreement, the form of which is attached
as Exhibit H hereto (the “Rights Amendment”).

 

7.7.                              Nasdaq
Interpretative Ruling

 

The NASDAQ
Stock Market shall have issued a written interpretation confirming that the
transactions contemplated hereby, including the terms of the Exchangeable
Preferred Stock, comply with all applicable Nasdaq rules, including the
requirements of Rule 4350(i) and IM-4350-2 (“Interpretive
Material Regarding the Use of Share Caps to Comply with Rule 4350(i)”)
and the voting rights requirements of Rule 4351 and IM-4351 (“Voting Rights Policy”).

 

7.8.                              Filing
of Certificate of Designations

 

The
Certificate of Designations shall have been filed with the Secretary of State
of the State of Delaware and shall continue to be in full force and effect as
of the applicable Closing Date.

 

7.9.                              Approval of
Proceedings

 

All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and

 

26

 

substance to
the Company.  The Company shall have
received copies of all documents or other evidence which it may have reasonably
requested in connection therewith in form and substance reasonably satisfactory
to the Company.

 

SECTION 8.                                COVENANTS

 

8.1.                              Inspection

 

As long as an Investor Owns at least twenty percent (20%) of the
outstanding Common Stock, the Company shall permit the Investor, its nominee,
assignee, and its representative to visit and inspect any of the properties of
the Company, to examine all its books of account, records, reports and other
papers, to make copies and extracts therefrom, and provide reasonable access to
and the right to consult with, its officers, directors, key employees and
independent public accountants or any of them (and by this provision the
Company authorizes said accountants to discuss with such Investor, its
nominees, assignees and representatives the finances and affairs of the Company),
all at such reasonable times and as often as may be reasonably requested; provided, however, that
the Company shall not be obligated under this Section 8.1 with respect to
information the Company is contractually obligated to keep confidential or secret
or which the Board of Directors determines in good faith is confidential and
should not, therefore, be disclosed.

 

8.2.                              Confidentiality

 

(a)                                  As
to so much of the information and other material furnished under or in
connection with this Agreement (including without limitation information
furnished pursuant to Section 8.1 hereof) as constitutes or contains
confidential business, financial or other information of the Company, each
Investor covenants for itself and its members and officers that it will use due
care to prevent its officers, members, employees, counsel, accountants,
consultants, advisors and other representatives from disclosing such
information to Persons other than their respective authorized employees,
counsel, accountants, stockholders, partners, limited partners and other
authorized representatives or from using such information except as an Investor
or for the benefit of the Company; provided, however, that such
Investor may disclose or deliver any information or other material disclosed to
or received by it should the Investor be advised by its counsel that such
disclosure or delivery is required by law, regulation or judicial or
administrative order.  In the event of
any termination of this Agreement prior to the Initial Closing Date, the
Investor shall return to the Company all confidential material previously
furnished to the Investor or its officers, members, employees, counsel,
accountants and other representatives in connection with this transaction.  For purposes of this Section 8.2, “due
care” means at least the same level of care that such Investor would use to
protect the confidentiality of its own sensitive or proprietary information,
and this obligation shall survive termination of this Agreement.

 

(b)                                 Notwithstanding
the foregoing or anything else contained herein to the contrary, the terms and
conditions of (i) that certain Non-Disclosure Agreement dated January 11, 2005,
between the Company and WP, and (ii) that certain Non-Disclosure Agreement
dated January 27, 2005, between the Company and WP, shall remain in full force
and effect in accordance with their terms with respect to all confidential
information of the Company disclosed to WP thereunder.

 

27

 

8.3.                              Lost,
etc. Certificates Evidencing Shares; Exchange

 

Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any certificate evidencing any
Shares or Exchange Shares owned by an Investor, and (in the case of loss, theft
or destruction) of an unsecured indemnity satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of such certificate, if mutilated, the Company
will make and deliver in lieu of such certificate a new certificate of like
tenor and for the number of securities evidenced by such certificate which
remain outstanding.  Each Investor’s
agreement of indemnity shall constitute indemnity satisfactory to the Company
for purposes of this Section 8.3.  Upon
surrender of any certificate representing any Shares or Exchange Shares, for
exchange at the office of the Company, the Company at its expense will cause to
be issued in exchange therefor new certificates in such denomination or
denominations as may be requested for the same aggregate number of Shares or
Exchange Shares represented by the certificate so surrendered and
registered as such holder may request. 
The Company will also pay the cost of all deliveries of certificates for
such Shares or Exchange Shares to the office of the Investor (including the
cost of insurance against loss or theft in an amount satisfactory to the
holders) upon any exchange provided for in this Section 8.3.

 

8.4.                              Securities
Law Disclosure; Publicity

 

The Company shall, at or prior to 8:30 a.m., Eastern Standard Time, on
the first day following the date of this Agreement on which trading occurs on
the NASDAQ Stock Market, (i) issue a press release reasonably acceptable to the
Majority Investors disclosing the transactions contemplated hereby, and (ii)
file a Current Report on Form 8-K with the SEC (the “8-K Filing”)
describing the transactions contemplated hereby and including this Agreement as
an exhibit thereto, in the form required by the Exchange Act.  Thereafter, the Company shall timely file any
filings and notices required by the SEC or the NASD with respect to the
transactions contemplated hereby. 
Notwithstanding the foregoing, the Company shall not publicly disclose
the name of any Investor, or include the name of any Investor in any filing
with the SEC (other than pursuant to the Registration Statement and exhibits to
the 8-K Filing and other periodic filings made by the Company under the
Exchange Act) or the NASD (other than pursuant to an application for the
listing of the Shares on the NASDAQ Stock Market), without the prior written
consent of such Investor, except to the extent such disclosure is required by
law or NASD regulations, in which case the Company shall provide the Investors
with prior notice of such disclosure.

 

8.5.                              HSR Act Filing

 

The Company and WP shall, as soon as practicable after the date of this
Agreement, but in no event later than April 3, 2005, file Notification and
Report Forms under the HSR Act with the Federal Trade Commission (the “FTC”)
and the Antitrust Division of the Department of Justice (the “Antitrust
Division”) relating to the transaction contemplated by this Agreement and
shall use their reasonable best efforts to respond as promptly as practicable
to all inquiries received from the FTC or the Antitrust Division for additional
information or documentation; provided,
however, that no such filing shall be made if, on or before March
15, 2005 (or such later date as

 

28

 

agreed upon by
the Company), WP notifies the Company of its determination that such filing
will not be required by applicable law.

 

SECTION 9.                                MISCELLANEOUS

 

9.1.                              Notices

 

(a)                                  All
communications under this Agreement shall be in writing and shall be delivered
by hand or facsimile or mailed by overnight courier or by registered mail or
certified mail, postage prepaid:

 

(1)                                   if
to an Investor, at the address or facsimile number set forth on Exhibit A,
or at such other address or facsimile number as such Investor may have
furnished the Company in writing; and

 

(2)                                   if
to the Company, at:  11080 CirclePoint
Road, Westminster, Colorado, 80020 (facsimile: (303) 426-4731), Attention:  General Counsel, or at such other address or
facsimile number as it may have furnished the Investors in writing, with a copy
(which shall not constitute notice) to Cooley Godward LLP, 380 Interlocken
Crescent, Suite 900, Broomfield, Colorado, 80021-8023 (facsimile: (720)
566-4099), Attention: Brent Fassett,
Esq.

 

(b)                                 Any
notice so addressed shall be deemed to be given:  if delivered by hand or facsimile, on the
date of such delivery; if mailed by overnight courier, on the first Business
Day following the date of such mailing; and if mailed by registered or
certified mail, on the third Business Day after the date of such mailing.

 

9.2.                              Expenses and Taxes

 

(a)                                  The
Company shall reimburse WP, within fifteen Business Days of such request by WP
and in an amount not to exceed $250,000, all of WP’s out-of-pocket fees and
expenses incurred in connection with the negotiation, preparation, execution
and delivery of this Agreement and the transactions contemplated hereby,
including, without limitation, the fees and expenses of WP’s attorneys,
accountants and consultants employed in connection with WP’s consideration,
negotiation and consummation of the transactions contemplated hereby, WP’s due
diligence on the Company and any documentation relating to the transactions
contemplated hereby.

 

(b)                                 The
Company will pay, and save and hold each Investor harmless from any and all
liabilities (including interest and penalties) with respect to, or resulting
from any delay or failure in paying, stamp and other taxes (other than income
taxes), if any, which may be payable or determined to be payable on the execution
and delivery or acquisition of the Shares or the Exchange Shares.

 

9.3.                              Reproduction of
Documents

 

This Agreement and all documents relating thereto, including, without
limitation, (i) consents, waivers and modifications which may hereafter be
executed, (ii) documents

 

29

 

received by
the Investors on the applicable Closing Date (except for certificates
evidencing the Shares themselves), and (iii) financial statements, certificates
and other information previously or hereafter furnished to the Investors, may
be reproduced by the Company and the Investors by any photographic,
photostatic, microfilm, micro-card, miniature photographic or other similar
process and the Company and the Investors may destroy any original document so
reproduced.  All parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made by
the Company or any such Investor in the regular course of business) and that
any enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.

 

9.4.                              Termination and Survival

 

Notwithstanding anything to the contrary contained herein, this
Agreement may be terminated at any time (i) by mutual consent of the Company
and the Majority Investors, (ii) by either the Company or WP if the Initial
Closing shall not have occurred on or prior to March 11, 2005 (unless such date is extended by mutual written consent);
(iii) by the Investors, for any material breach of this Agreement by the
Company; and (iv) by the Company, for any material breach of this Agreement by
the Investors.  In the event of
termination pursuant to this Section 9.4, this Agreement shall become null and
void and have no effect, with no liability on the part of the Company or the
Investors, or their members, partners, directors, officers, agents or
stockholders, with respect to this Agreement, except for the (i) liability of
the Company for expenses pursuant to Section 9.2 and (ii) subject to the
foregoing sentence, liability for any breach of any representation, warranty or
covenant contained in this Agreement.

 

9.5.                              Successors and Assigns

 

Except as otherwise expressly provided herein, this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties.  The Company may not
assign its rights or obligations hereunder without the prior written consent of
the Majority Investors.  WP may assign
its rights and obligations hereunder to not more than three (3) of its members
or Affiliates or Affiliates of its members; provided, that the assignee
provides the Company with written representations and warranties substantially
similar to those provided in Section 4.

 

9.6.                              Severability

 

In the event that any part or parts of this Agreement shall be held
illegal or unenforceable by any court or administrative body of competent jurisdiction,
such determination shall not affect the remaining provisions of this Agreement
which shall remain in full force and effect.

 

9.7.                              Governing Law

 

This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to contracts made and to be
performed entirely within such State.

 

30

 

9.8.                              Paragraph
and Section Headings

 

The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof.

 

9.9.                              Limitation
on Enforcement of Remedies

 

The Company hereby agrees that it will not assert against the limited
partners of any members of any Investor any claim it may have under this Agreement
by reason of any failure or alleged failure by such Investor to meet its
obligations hereunder.

 

9.10.                        Counterparts

 

This Agreement may be executed in one or more counterparts (including
by facsimile), each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.

 

9.11.                        Entire
Agreement; Amendment and Waiver

 

This Agreement, the schedules and exhibits attached hereto constitute
the entire understandings of the parties hereto and supersede all prior
agreements or understandings with respect to the subject matter hereof among
such parties.  This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of the Company and the Majority Investors.

 

[Signature
Page to Follow.]

 

31

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  ALLOS THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael E. Hart

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Michael E. Hart

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  
	
   

  	
   

  
	
  WARBURG PINCUS PRIVATE EQUITY VIII, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Warburg Pincus & Co.,

  	
   

  
	
   

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Jonathan
  Leff

  	
   

  	
   

  
	
   

  	
  Name:Jonathan Leff

  	
   

  
	
   

  	
  Title: Partner

  	
   

  
							

 

 

SIGNATURE PAGE
TO

SECURITIES
PURCHASE AGREEMENT

 

 

EXHIBIT A

 

SCHEDULE OF INVESTORS

 

	
  INVESTOR NAME AND ADDRESS

  	
   

  	
  SHARES OF

  EXCHANGEABLE

  PREFERRED STOCK

  
	
  Warburg Pincus Private Equity VIII, L.P.

  466 Lexington Avenue

  New York, NY 10017

  Facsimile: (212) 878-0850

  Attention: Mr. Jonathan S. Leff

  	
   

  	
  2,262,443

  
	
   

  	
   

  	
   

  
	
  with a copy (which shall not constitute notice) to:

  Willkie Farr & Gallagher LLP

  787 Seventh Avenue

  New York, NY 10019

  Facsimile: (212) 728-9222

  Attention: Steven J. Gartner, Esq.Exhibit
10.42

 

Execution Copy

 

ALLOS THERAPEUTICS, INC.

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS
AGREEMENT, dated as of March 4, 2005, among the investors listed on
Schedule I hereto (the “Investors”) and Allos Therapeutics, Inc., a
Delaware corporation (the “Company”).

 

R
E C I T A L S

 

WHEREAS, the Investors have,
pursuant to the terms of the Securities Purchase Agreement, dated as of
March 2, 2005, by and among the Company and the Investors (the “Purchase
Agreement”), agreed to purchase shares of Series A Exchangeable Preferred
Stock, par value $0.001 per share, of the Company (the “Exchangeable
Preferred Stock”); and

 

WHEREAS, the shares of
Exchangeable Preferred Stock are, under certain conditions, exchangeable into
shares of common stock, par value $0.001 per share of the Company (the “Common
Stock”); and

 

WHEREAS, the Company has
agreed, as a condition precedent to the Investors’ obligations under the
Purchase Agreement, to grant the Investors certain registration rights; and

 

WHEREAS, the Company and the
Investors desire to define the registration rights of the Investors on the
terms and subject to the conditions herein set forth.

 

NOW, THEREFORE, in
consideration of the foregoing premises and for other good and valuable
consideration, the parties hereby agree as follows:

 

SECTION 1. 
DEFINITIONS

 

As used in this Agreement,
the following terms have the respective meanings set forth below:

 

Agreement: 
shall mean this Registration Rights Agreement among the Investors and
the Company;

 

Commission: 
shall mean the Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act;

 

Exchange Act: 
shall mean the Securities Exchange Act of 1934, as amended;

 

Holder: 
shall mean any Investor who is a holder of Registrable Securities or any
assignee of record of such Registrable Securities in accordance with the terms
hereof;

 

 

Initiating Holder: 
shall mean Warburg Pincus Private Equity VIII, L.P.;

 

Person: 
shall mean an individual, partnership, joint-stock company, corporation,
trust or unincorporated organization, and a government or agency or political
subdivision thereof;

 

Register, Registered and Registration:  shall mean a registration effected by
preparing and filing a registration statement in compliance with the Securities
Act (and any post-effective amendments filed or required to be filed) and the
declaration or ordering of effectiveness of such registration statement;

 

Registrable Securities: 
shall mean (A) shares of Common Stock issuable upon exchange of the
shares of Exchangeable Preferred Stock purchased by the Investors pursuant to
the Securities Purchase Agreement, (B) any other shares of Common Stock
acquired by the Investors and (C) any stock of the Company issued as a dividend
or other distribution with respect to, or in exchange for or in replacement of,
the shares of Exchangeable Preferred Stock or Common Stock referred to in
clause (A) or (B); provided, however,  that notwithstanding the foregoing, Registrable
Securities shall not include any securities (i) sold by a Holder to the public
either pursuant to a registration statement or Rule 144, or (ii) sold in a
private transaction in which the transferor’s rights under Section 2
hereof are not assigned in accordance with the terms of this Agreement.

 

Registration Expenses: 
shall mean all expenses incurred by the Company in compliance with
Section 2(a), (b) and (c) hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, fees and expenses of one counsel for all the Holders
in an amount not to exceed $15,000, blue sky fees and expenses and the expense
of any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company, which shall be
paid in any event by the Company);

 

security, securities: 
shall have the meaning set forth in Section 2(1) of the Securities
Act;

 

Securities Act: 
shall mean the Securities Act of 1933, as amended; and

 

Selling Expenses: 
shall mean all underwriting discounts and selling commissions applicable
to the sale of Registrable Securities and all fees and disbursements of counsel
for each of the Holders other than fees and expenses of one counsel for all the
Holders in an amount not to exceed $15,000.

 

SECTION 2.  REGISTRATION RIGHTS

 

(a)                                  Requested Registration.

 

(i)                                     Request for Registration. 
Subject to the conditions of this Section 2(a), if the Company
shall receive from the Initiating Holder, at any time on or after the second

 

2

 

anniversary
of the date hereof, a written request that the Company effect any registration
with respect to all or a part of the Registrable Securities, the Company will:

 

(1)                                  promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and

 

(2)                                  subject to the limitations of this
Section 2(a), as soon as practicable, use its commercially reasonable
efforts to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities Act)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within ten (10) business days after
written notice from the Company is given under Section 2(a)(i)(1) above; provided
that the Company shall not be obligated to effect, or take any action to
effect, any such registration pursuant to this Section 2(a):

 

(A)                              In any particular jurisdiction in which the
Company would be required to qualify to do business or execute a general
consent to service of process in effecting such registration, qualification or
compliance, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act or applicable
rules or regulations thereunder;

 

(B)                                After the Company has effected one (1) such
registration pursuant to this Section 2(a) and such registration has been
declared or ordered effective;

 

(C)                                If the Registrable Securities requested by
all Holders to be registered pursuant to such request do not have an
anticipated aggregate public offering price (before any underwriting discounts
and commissions) of not less than $7,500,000;

 

(D)                               if within thirty (30) days of receipt of a
written request from the Initiating Holder pursuant to Section 2(a), the
Company gives notice to the Holders of the Company’s intention to file a
registration statement for a public offering within sixty (60) days, other than
pursuant to (i) a registration statement relating to any employee benefit plan
or (ii) with respect to any corporate reorganization or transaction under
Rule 145 of the Securities Act, including any registration statements
related to the issuance or resale of securities issued in such a transaction or
(iii) a registration related to stock issued upon conversion of debt securities
(each a “Special Registration Statement”);

 

3

 

(E)                                 if the Initiating Holders propose to dispose
of shares of Registrable Securities that may be immediately registered on
Form S-3 pursuant to a request made pursuant to Section 2(c) below;
or

 

(F)                                 If the Board of Directors, in its good faith
judgment, determines that any registration of Registrable Securities requested
pursuant to this Section 2(a) (a “Requested Registration”) should
not be made or continued because it would interfere with any material
financing, acquisition, corporate reorganization or merger or other material
transaction involving the Company (a “Valid Business Reason”), the
Company may (x) postpone filing a registration statement relating to a Requested
Registration until such Valid Business Reason no longer exists, but in no event
for more than ninety (90) days, and (y) in case a registration statement has
been filed relating to a Request Registration, if the Valid Business Reason has
not resulted from actions taken by the Company, the Company may cause such
registration statement to be withdrawn and its effectiveness terminated or may
postpone amending or supplementing such registration statement (so long as the
Initiating Holders shall have the rights set forth in this Section 2(a)
within ninety (90) days of any such event). 
The Company shall give written notice of its determination to postpone
or withdraw a registration statement (provided that the Company shall not
disclose any information that could be deemed material non-public information
to any holder of Registrable Securities that are included in a registration
statement that is subject to such postponement or withdrawal) and of the fact
that the Valid Business Reason for such postponement or withdrawal no longer
exists, in each case, promptly after the occurrence thereof.  Notwithstanding anything to the contrary
contained herein, the Company may not postpone or withdraw a filing due to a
Valid Business Reason more than once in any twelve (12) month period.  In addition, the Company shall not be
required to effect any registration pursuant to Section 2(a), within
ninety (90) days after the effective date of any other Registration Statement
of the Company if the Registration Statement was not for the account of the
Initiating Holders but the Initiating Holders had the opportunity to include at
least two-thirds  of the Registrable Securities they
requested to include in such registration pursuant to Section 2(b).

 

The registration statement
filed pursuant to the request of the Initiating Holders may, subject to the
provisions of Section 2(a)(ii) below, include other securities of the
Company which are held by Persons who, by virtue of agreements with the
Company, are entitled to include their securities in any such registration (“Other
Stockholders”).  In the event any
Holder requests a registration pursuant to this Section 2(a) in connection
with a distribution of Registrable Securities to its partners, the registration
shall provide for the resale by such partners, if requested by such Holder.

 

4

 

The registration rights set
forth in this Section 2 may be assigned, in whole or in part, to any
transferee of Registrable Securities (who shall be bound by all obligations of
this Agreement) that (a) is a subsidiary, parent, general partner, limited
partner, retired partner, member or retired member, of a Holder that is a
corporation, partnership or limited liability company, (b) is a Holder’s family
member or trust for the benefit of an individual Holder, or (c) acquires at
least five hundred thousand (500,000)
shares of Registrable Securities (as adjusted for stock splits and
combinations); or (d) is an entity affiliated by common control with such
Holder; provided, however,  (i) the transferor shall, within
ten (10) days after such transfer, furnish to the Company written notice of the
name and address of such transferee or assignee and the securities with respect
to which such registration rights are being assigned and (ii) such transferee
shall agree to be subject to all restrictions set forth in this Agreement.

 

(ii)                                  Underwriting.  If
the Initiating Holders intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to Section 2(a)(i).

 

If Other Stockholders
request inclusion of their securities in the underwriting, the Holders shall
offer to include the securities of such Other Stockholders in the underwriting
and may condition such offer on their acceptance of the further applicable
provisions of this Section 2.  The
Holders whose shares are to be included in such registration and the Company
shall (together with all Other Stockholders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Initiating Holders and reasonably acceptable
to the Company; provided, however, that such underwriting
agreement shall not provide for indemnification or contribution obligations on
the part of the Holders materially greater than the obligations of the Holders
under Section (f)(ii).  Notwithstanding
any other provision of this Section 2(a), if the representative advises
the Holders in writing that marketing factors require a limitation on the
number of shares to be underwritten, the securities of the Company held by
Other Stockholders shall be excluded from such registration to the extent so
required by such limitation.  If, after
the exclusion of such shares, further reductions are still required, the number
of shares included in the registration by each Holder shall be reduced on a pro
rata basis (based on the number of shares held by such Holder), by such minimum
number of shares as is necessary to comply with such request.  No Registrable Securities or any other
securities excluded from the underwriting by reason of the underwriter’s
marketing limitation shall be included in such registration.  If any Other Stockholder who has requested
inclusion in such registration as provided above disapproves of the terms of
the underwriting, such Person may elect to withdraw therefrom by written notice
to the Company, the underwriter and the Initiating Holders.  The securities so withdrawn shall also be
withdrawn from registration.  If the
underwriter has not limited the number of Registrable Securities or other
securities to be underwritten, the Company and officers and directors of the
Company may include its or their securities for its or their own account in
such registration if the representative so agrees and if the number of
Registrable Securities and other securities which would otherwise have been included
in such registration and underwriting will not thereby be limited.

 

5

 

(b)                                 Company Registration.

 

(i)                                     If at any time on or after the second
anniversary of the date hereof, the Company shall determine to register any of
its equity securities either for its own account or for the account of Other
Stockholders, other than a registration relating solely to employee benefit
plans, or a registration relating solely to a Rule 145 transaction under the
Securities Act, or a registration on any registration form which does not
permit secondary sales or does not include substantially the same information
as would be required to be included in a registration statement covering the
sale of Registrable Securities, the Company will:

 

(1)                                  promptly give to each of the Holders a
written notice thereof (which shall include a list of the jurisdictions in
which the Company intends to attempt to qualify such securities under the
applicable blue sky or other state securities laws); and

 

(2)                                  include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made by the Holders within fifteen (15) days after receipt of the
written notice from the Company described in clause (1) above, except as set
forth in Section 2(b)(ii) below. 
Such written request may specify all or a part of the Holders’
Registrable Securities and shall describe the intended method of disposition of
the Registrable Securities by such Holders. 
In the event any Holder requests inclusion in a registration pursuant to
this Section 2(b) in connection with a distribution of Registrable
Securities to its partners, the registration shall provide for the resale by
such partners, if requested by such Holder.

 

(ii)                                  Underwriting.  If
the registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise each of the
Holders as a part of the written notice given pursuant to
Section 2(b)(i)(1) above.  In such
event, the right of each of the Holders to registration pursuant to this
Section 2(b) shall be conditioned upon such Holders’ participation in such
underwriting and the inclusion of such Holders’ Registrable Securities in the
underwriting to the extent provided herein. 
The Holders whose shares are to be included in such registration shall
(together with the Company and the Other Stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for underwriting by the Company; provided, however, that
such underwriting agreement shall not provide for indemnification or
contribution obligations on the part of the Holders materially greater than the
obligations of the Holders under Section f(ii).  Notwithstanding any other provision of this Section 2(b), if
the representative determines that marketing factors require a limitation on
the number of shares to be underwritten, the representative may (subject to the
allocation priority set forth below) limit the number of Registrable Securities
to be included in the registration and underwriting to not less than twenty
five percent (25%) of the shares included therein (based on the number of
shares).  The Company shall so advise
all holders of securities requesting registration, and the number of shares of
securities that are entitled to be included in the registration and
underwriting shall be allocated in the following manner:  the securities of the Company held by
officers, directors and Other Stockholders of the Company (other than
Registrable

 

6

 

Securities
and other than securities held by holders who by contractual right demanded
such registration (“Demanding Holders”)) shall be excluded from such
registration and underwriting to the extent required by such limitation, and,
if a limitation on the number of shares is still required, the number of shares
that may be included in the registration and underwriting by each of the
Holders and Demanding Holders shall be reduced, on a pro rata basis (based on
the number of shares held by such holder), by such minimum number of shares as
is necessary to comply with such limitation. 
If any of the Holders or any officer, director or Other Stockholder
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the underwriter, delivered at
least five (5) business days prior to the effective date of the registration
statement.  Any Registrable Securities
or other securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.

 

(iii)                               Right to Terminate Registration.  The
Company shall have the right to terminate or withdraw any registration
initiated by it under this Section 2(b) whether or not any Holder has
elected to include securities in such registration , and shall promptly notify
any Holder that has elected to include shares in such registration of such
termination or withdrawal.  The
Registration Expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 2(d) hereof.

 

(c)                                  Form S-3.  The Company shall use
commercially reasonable efforts to maintain its qualification for registration
on Form S-3 for secondary sales.  The
Initiating Holder shall, at any time on or after the second anniversary of the
date hereof, have the right to collectively request two (2) registrations on
Form S-3 (such requests shall be in writing and shall state the number of
shares of Registrable Securities to be disposed of and the intended method of
disposition of shares by such holders), provided that the Company shall
not be obligated to effect, or take any action to effect, any such registration
pursuant to this Section 2(c):

 

(i)                                     Unless the Initiating Holder or Holders
requesting registration propose to dispose of shares of Registrable Securities
having an aggregate price to the public (before deduction of Selling Expenses)
of more than $2,000,000;

 

(ii)                                  In any particular jurisdiction in which the
Company would be required to qualify to do business or execute a general
consent to service of process in effecting such registration, qualification or
compliance, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Securities Act or applicable
rules or regulations thereunder;

 

(iii)                               if within thirty (30) days of receipt of a
written request from  any Holder or
Holders pursuant to this Section 2(c), the Company gives notice to such
Holder or Holders of the Company’s intention to make  a public offering within
sixty (60) days, other than pursuant to a Special Registration Statement;

 

(iv)                              If the Board of
Directors, in its good faith judgment, determines that any registration of
Registrable Securities pursuant to this Section 2(c) (an “S-3
Registration”) should not be made or continued because of a Valid Business
Reason, the Company may

 

7

 

(x) postpone filing a registration statement
relating to a S-3 Registration until such Valid Business Reason no longer
exists, but in no event for more than ninety (90) days, and (y) in case a
registration statement has been filed relating to a S-3 Registration, if the Company reasonably believes that there
is or may be in existence material nonpublic information or events involving
the Company, the failure of which to be disclosed in the prospectus included in
the registration statement could result in a Violation (as defined below), the Company may cause such registration
statement to be withdrawn and its effectiveness terminated or may postpone
amending or supplementing such registration statement (so long as the Holders
shall have the rights set forth in this Section 2(c) within ninety (90)
days of any such event).  The Company
shall give written notice of its determination to postpone or withdraw a
registration statement (provided that the Company shall not disclose any
information that could be deemed material non-public information to any holder
of Registrable Securities that are included in a registration statement that is
subject to such postponement or withdrawal) and of the fact that the Valid
Business Reason for such postponement or withdrawal no longer exists, in each
case, promptly after the occurrence thereof. 
Notwithstanding anything to the contrary contained herein, the Company
may not postpone or withdraw a filing due to a Valid Business Reason more than
once in any twelve (12) month period. 
In addition, the Company shall not be required to effect any
registration pursuant to Section 2(c), (i) within ninety (90) days after
the effective date of any other Registration Statement of the Company if the
Registration Statement was not for the account of the Holders but the Holders
had the opportunity to include at least two-thirds of the Registrable
Securities they requested to include in such registration or (ii) if Form S-3
(or any successor form then in effect) is not available for such offering by
the Holders.

 

The Company shall give
written notice to all Holders of the receipt of a request for registration
pursuant to this Section 2(c) and shall provide a reasonable opportunity
for other Holders to participate in the registration, provided that if
the registration is for an underwritten offering, the terms of
Section 2(a)(ii) above shall apply to all participants in such
offering.  Subject to the foregoing, the
Company will use commercially reasonable efforts to effect promptly the
registration of all shares of Registrable Securities on Form S-3 to the extent
requested by the Holder or Holders thereof for purposes of disposition.  In the event any Holder requests a
registration pursuant to this Section 2(c) in connection with a
distribution of Registrable Securities to its partners, the registration shall
provide for the resale by such partners, if requested by such Holder.

 

(d)                                 Expenses of Registration.  All
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to this Section 2 shall be borne by
the Company, and all Selling Expenses shall be borne by the Holders of the
securities so registered pro rata on the basis of the number of their shares so
registered.  The Company shall not,
however, be required to pay for expenses of any registration proceeding begun
pursuant to Section 2(a) or 2(c), the request of which has been
subsequently withdrawn by the Initiating Holder unless (a) the withdrawal
is based upon material adverse information concerning the Company of which the
Initiating Holder was not aware at the time of such request or (b) the
Holders of a majority of Registrable Securities agree to deem such registration
to have been effected as of the date of such withdrawal for purposes of
determining whether the

 

8

 

Company shall be obligated pursuant to
Section 2(a) or 2(c), as applicable, to undertake any subsequent registration,
in which event such right shall be forfeited by all Holders).  If the Holders are required to pay the
Registration Expenses, such expenses shall be borne by the holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which registration was requested.  If the Company is required to pay the
Registration Expenses of a withdrawn offering pursuant to clause (a)
above, then such registration shall not be deemed to have been effected for
purposes of determining whether the Company shall be obligated pursuant to
Section 2(a) or 2(c), as applicable, to undertake any subsequent
registration.

 

(e)                                  Registration Procedures.  In
the case of each registration effected by the Company pursuant to this
Section 2, the Company will keep the Holders, as applicable, advised in
writing as to the initiation of each registration and as to the completion
thereof.  At its expense, the Company
will:

 

(i)                                     keep such registration effective for a period
of sixty (60) days or until the Holders (or in the case of a distribution to
the partners of such Holder, such partners), as applicable, have completed the
distribution described in the registration statement relating thereto,
whichever first occurs; provided, however, that (1) such sixty
(60)-day period shall be extended for a period of time equal to the period
during which the Holders or partners, as applicable, prohibited from selling
any securities included in such registration due to any suspension of effectiveness
provided for in accordance with the provisions in Sections 2(a)(i)(2)(F)
or  2(c)(iv) hereof; and (2) in the case
of any registration of Registrable Securities on Form S-3 which are intended to
be offered on a continuous or delayed basis, such sixty (60)-day period shall
be extended until all such Registrable Securities are sold, not to exceed two
(2) years or the period ending on the date on which all of the Registrable
Securities may be sold pursuant to Rule 144 (without giving effect to Rule 144(k)
thereof) of the Securities Act within ninety (90) days after such date,
provided that Rule 415, or any successor rule under the Securities Act, permits
an offering on a continuous or delayed basis, and provided further that
applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
which (y) includes any prospectus required by Section 10(a) of the
Securities Act or (z) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference of information required to be included in (y)
and (z) above to be contained in periodic reports filed pursuant to
Section 12 or 15(d) of the Exchange Act in the registration statement;

 

(ii)                                  furnish such number of prospectuses and other
documents incident thereto as each of the Holders, as applicable, from time to
time may reasonably request;

 

(iii)                               notify each Holder of Registrable Securities
covered by such registration at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material

 

9

 

fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing; and

 

(iv)                              furnish, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (1) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders participating in such registration, addressed to the underwriters, if
any, and to the Holders participating in such registration and (2) a letter,
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders participating
in such registration, addressed to the underwriters, if any, and if permitted
by applicable accounting standards, to the Holders participating in such
registration.

 

(f)                                    Indemnification.

 

(i)                                     The Company will indemnify each of the
Holders, as applicable, each of its officers, directors and partners, and each
Person controlling each of the Holders, with respect to each registration which
has been effected pursuant to this Section 2, and each underwriter, if
any, and each person who controls any underwriter, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by
the Company of the Securities Act or the Exchange Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance (collectively a “Violation”), and will reimburse each of
the Holders, each of its officers, directors and partners, and each Person
controlling each of the Holders, each such underwriter and each Person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action; provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by the Holders or underwriter
and stated to be specifically for use therein; provided, further, that the
indemnity agreement contained in this Section 2(f)(i) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Company, which
consent shall not be unreasonably withheld.

 

10

 

(ii)                                  Each of the Holders will, if Registrable
Securities held by it are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers and each underwriter, if any, of
the Company’s securities covered by such a registration statement, each person who
controls the Company or such underwriter, each Other Stockholder and each of
their officers, directors, and partners, and each person controlling such Other
Stockholder against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document made by such Holder,
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements by such Holder therein
not misleading, and will reimburse the Company and such Other Stockholders,
directors, officers, partners, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document, or
such violation is made, in reliance upon and in conformity with written
information furnished to the Company by such Holder and stated to be
specifically for use therein; provided, however, that the obligations of each
of the Holders hereunder shall be limited to an amount equal to the proceeds to
such Holder of securities sold as contemplated herein; provided further, that
the indemnity agreement contained in this Section 2(f)(ii) shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld.

 

(iii)                               Each party entitled to indemnification under
this Section 2(f) (the “Indemnified Party”) shall give notice to
the party required to provide indemnification (the “Indemnifying Party”)
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of any such claim or any litigation resulting therefrom;
provided that counsel for the Indemnifying Party, who shall conduct the defense
of such claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be withheld) and the
Indemnified Party may participate in such defense at such party’s expense
(unless the Indemnified Party shall have reasonably concluded that there may be
a conflict of interest between the Indemnifying Party and the Indemnified Party
in such action, in which case the fees and expenses of counsel shall be at the
expense of the Indemnifying Party), and provided further that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 2(f) unless the
Indemnifying Party is materially prejudiced thereby.  No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.  Each Indemnified Party
shall furnish such information regarding itself or the claim in

 

11

 

question
as an Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with the defense of such claim and litigation
resulting therefrom.

 

(iv)                              If the indemnification provided for in this
Section 2(f) is held by a court of competent jurisdiction to be
unavailable to an Indemnified Party with respect to any loss, liability, claim,
damage or expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions which
resulted in such loss, liability, claim, damage or expense, as well as any
other relevant equitable considerations. 
The relative fault of the Indemnifying Party and of the Indemnified
Party shall be determined by reference to, among other things, whether the
untrue (or alleged untrue) statement of a material fact or the omission (or
alleged omission) to state a material fact relates to information supplied by
the Indemnifying Party or by the Indemnified Party and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.

 

(v)                                 Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with any underwritten public
offering contemplated by this Agreement are in conflict with the foregoing
provisions, the provisions in such underwriting agreement shall be controlling.

 

(vi)                              The foregoing indemnity agreement of the
Company and Holders is subject to the condition that, insofar as they relate to
any loss, claim, liability or damage arising out of a statement made in or
omitted from a preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the Commission at the time the registration statement
in question becomes effective or the amended prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act (the “Final
Prospectus”), such indemnity or contribution agreement shall not inure to
the benefit of any underwriter or Holder if a copy of the Final Prospectus was
furnished to the underwriter and was not furnished to the Person asserting the
loss, liability, claim or damage at or prior to the time such action is
required by the Securities Act.

 

(g)                                 Information by the Holders.

 

(i)                                     Each of the Holders holding securities
included in any registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request in writing and as shall be reasonably required
in connection with any registration, qualification or compliance referred to in
this Section 2.

 

12

 

(ii)                                  In
the event that, either immediately prior to or subsequent to the effectiveness
of any registration statement, any Holder shall distribute Registrable
Securities to its partners, such Holder shall so advise the Company and provide
such information as shall be necessary to permit an amendment to such
registration statement to provide information with respect to such partners, as
selling security holders.  Promptly
following receipt of such information, the Company shall file an appropriate
amendment to such registration statement reflecting the information so
provided.  Any incremental expense to
the Company resulting from such amendment shall be borne by such Holder.

 

(h)                                 Rule 144 Reporting.

 

With a view to making
available the benefits of certain rules and regulations of the Commission which
may permit the sale of restricted securities to the public without
registration, the Company agrees to:

 

(i)                                     make and keep public information available as
those terms are understood and defined in Rule 144 under the Securities Act (“Rule
144”);

 

(ii)                                  use its best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act at any time after it has
become subject to such reporting requirements; and

 

(iii)                               so long as a Holder owns any Registrable
Securities, furnish to such Holder upon request, a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 and of
the Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed
as such Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing such Holder to sell any such securities
without registration.

 

(i)                                     Termination.  The registration rights set
forth in this Section 2 shall not be available to any Holder if, (i) in
the opinion of counsel to the Company, all of the Registrable Securities then
owned by such Holder could be sold in any ninety (90)-day period pursuant to
Rule 144 (without giving effect to the provisions of Rule 144(k)), or (ii) all
of the Registrable Securities held by such Holder have been sold in a
registration pursuant to the Securities Act or pursuant to Rule 144.

 

SECTION 3.  MISCELLANEOUS

 

(a)                                  Directly or Indirectly. 
Where any provision in this Agreement refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision shall
be applicable whether such action is taken directly or indirectly by such
Person.

 

13

 

(b)                                 Governing Law. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts made and to be performed
entirely within such State.

 

(c)                                  Section Headings.  The
headings of the sections and subsections of this Agreement are inserted for
convenience only and shall not be deemed to constitute a part thereof.

 

(d)                                 Notices.

 

(i)                                     All communications under this Agreement shall
be in writing and shall be delivered by hand or facsimile or mailed by
overnight courier or by registered or certified mail, postage prepaid:

 

(1)                                  if to the Company, to 11080 CirclePoint Road,
Westminster, Colorado, 80020, Attention: President Michael E. Hart (facsimile:
(303) 426-4731), or at such other address as it may have furnished in writing
to the Holders, with a copy to Cooley Godward LLP (facsimile: (720) 566-4099),
Attention: Brent Fassett, Esq.

 

(2)                                  if to the Holders, at the address or
facsimile number listed on Schedule I hereto, or at such other address or
facsimile number as may have been furnished the Company in writing, with a copy
to Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019
(facsimile: (212) 728-9222), Attention: Steven J. Gartner, Esq.

 

(ii)                                  Any notice so addressed shall be deemed to be
given: if delivered by hand or facsimile, on the date of such delivery; if
mailed by overnight courier, on the first business day following the date of
such mailing; and if mailed by registered or certified mail, on the third
business day after the date of such mailing.

 

(e)                                  Reproduction of Documents. 
This Agreement and all documents relating thereto, including, without
limitation, any consents, waivers and modifications which may hereafter be
executed may be reproduced by the Holders by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and the
Holders may destroy any original document so reproduced.  The parties hereto agree and stipulate that
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by the Holders in the
regular course of business) and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

 

(f)                                    Successors and Assigns. 
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties.

 

(g)                                 Entire Agreement; Amendment and Waiver. 
This Agreement constitutes the entire understanding of the parties
hereto relating to the subject matter hereof and supersedes all prior
understandings among such parties.  This
Agreement may be amended, and the observance of any term of this Agreement may
be waived, with (and only with) the written

 

14

 

consent of the Company and the Holders
holding a majority of the then outstanding Registrable Securities.  Any amendment or waiver effected in
accordance with this Section 3(g) shall be binding upon each Holder and
the Company.

 

(h)                                 Severability.  In
the event that any part or parts of this Agreement shall be held illegal or
unenforceable by any court or administrative body of competent jurisdiction,
such determination shall not affect the remaining provisions of this Agreement
which shall remain in full force and effect.

 

(i)                                     Counterparts. 
This Agreement may be executed in two or more counterparts (including by
facsimile), each of which shall be deemed an original and all of which together
shall be considered one and the same agreement.

 

(j)                                     Additional
Investors.  Notwithstanding anything to the
contrary contained herein, if the Company shall issue additional shares of its
Common Stock or Exchangeable Preferred Stock pursuant to the Purchase
Agreement, any purchaser of such securities shall become a party to this Agreement
by executing and delivering an additional counterpart signature page to this
Agreement and shall be deemed an “Investor,” a “Holder” and a
party hereunder.

 

 

[Remainder of Page Intentionally
Left Blank]

 

15

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.

 

	
   

  	
  ALLOS THERAPEUTICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Michael E. Hart

  	
   

  
	
   

  	
  Name:  Michael
  E. Hart

  
	
   

  	
  Title:  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
  WARBURG
  PINCUS PRIVATE EQUITY VIII, L.P.

  	
   

  
	
   

  	
   

  
	
  By: WARBURG PINCUS &
  CO.,

  	
   

  
	
  General Partner

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Jonathan Leff

  	
   

  	
   

  
	
  Name:  Jonathan
  Leff

  	
   

  
	
  Title:  Partner

  	
   

  
						

 

 

REGISTRATION
RIGHTS AGREEMENT

 

 

Schedule I

 

Investors

 

 

Investor Name and Address

 

Warburg Pincus Private
Equity VIII, L.P.

466 Lexington Avenue

New York, NY 10017

Facsimile: (212) 878-0850

Attention:  Mr. Jonathan S. Leff

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