Document:

Exhibit 10.1

 

Execution
Version

 

COMMON
STOCK PURCHASE AGREEMENT

 

Dated August 5, 2009

 

by and between

 

NPS
PHARMACEUTICALS, INC.

 

and

 

AZIMUTH
OPPORTUNITY LTD.

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  Article I
  PURCHASE AND SALE OF COMMON STOCK

  	
  1

  
	
  Section 1.1

  	
  Purchase and Sale of Stock

  	
  1

  
	
  Section 1.2

  	
  Effective Date; Settlement
  Dates

  	
  1

  
	
  Section 1.3

  	
  The Shares

  	
  2

  
	
  Section 1.4

  	
  Current Report; Prospectus
  Supplement

  	
  2

  
	
   

  	
   

  	
   

  
	
  Article II
  FIXED REQUEST TERMS; OPTIONAL AMOUNT

  	
  2

  
	
  Section 2.1

  	
  Fixed Request Notice

  	
  2

  
	
  Section 2.2

  	
  Fixed Requests

  	
  3

  
	
  Section 2.3

  	
  Share Calculation

  	
  4

  
	
  Section 2.4

  	
  Limitation of Fixed
  Requests

  	
  4

  
	
  Section 2.5

  	
  Reduction of Commitment

  	
  4

  
	
  Section 2.6

  	
  Below Threshold Price

  	
  4

  
	
  Section 2.7

  	
  Settlement

  	
  5

  
	
  Section 2.8

  	
  Reduction of Pricing
  Period

  	
  5

  
	
  Section 2.9

  	
  Optional Amount

  	
  6

  
	
  Section 2.10

  	
  Calculation of Optional
  Amount Shares

  	
  6

  
	
  Section 2.11

  	
  Exercise of Optional
  Amount

  	
  7

  
	
  Section 2.12

  	
  Aggregate Limit

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article III
  REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

  	
  8

  
	
  Section 3.1

  	
  Organization and Standing
  of the Investor

  	
  8

  
	
  Section 3.2

  	
  Authorization and Power

  	
  8

  
	
  Section 3.3

  	
  No Conflicts

  	
  8

  
	
  Section 3.4

  	
  Information

  	
  9

  
	
   

  	
   

  	
   

  
	
  Article IV
  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

  	
  9

  
	
  Section 4.1

  	
  Organization, Good
  Standing and Power

  	
  9

  
	
  Section 4.2

  	
  Authorization, Enforcement

  	
  9

  
	
  Section 4.3

  	
  Capitalization

  	
  10

  
	
  Section 4.4

  	
  Issuance of Shares

  	
  10

  
	
  Section 4.5

  	
  No Conflicts

  	
  10

  
	
  Section 4.6

  	
  Commission Documents,
  Financial Statements

  	
  11

  
	
  Section 4.7

  	
  Subsidiaries

  	
  12

  
	
  Section 4.8

  	
  No Material Adverse Effect

  	
  12

  
	
  Section 4.9

  	
  Indebtedness

  	
  13

  
	
  Section 4.10

  	
  Title To Assets

  	
  13

  
	
  Section 4.11

  	
  Actions Pending

  	
  13

  
	
  Section 4.12

  	
  Compliance With Law

  	
  13

  
	
  Section 4.13

  	
  Certain Fees

  	
  14

  
	
  Section 4.14

  	
  Operation of Business

  	
  14

  

 

i

 

	
  Section 4.15

  	
  Environmental Compliance

  	
  16

  
	
  Section 4.16

  	
  Material Agreements

  	
  16

  
	
  Section 4.17

  	
  Transactions With
  Affiliates

  	
  16

  
	
  Section 4.18

  	
  Securities Act; NASD
  Conduct Rules

  	
  17

  
	
  Section 4.19

  	
  Employees

  	
  19

  
	
  Section 4.20

  	
  Use of Proceeds

  	
  19

  
	
  Section 4.21

  	
  Investment Company Act
  Status

  	
  19

  
	
  Section 4.22

  	
  ERISA

  	
  19

  
	
  Section 4.23

  	
  Taxes

  	
  19

  
	
  Section 4.24

  	
  Insurance

  	
  20

  
	
  Section 4.25

  	
  Acknowledgement Regarding
  Investor’s Purchase of Shares

  	
  20

  
	
   

  	
   

  	
   

  
	
  Article V
  COVENANTS

  	
  20

  
	
  Section 5.1

  	
  Securities Compliance

  	
  20

  
	
  Section 5.2

  	
  Registration and Listing

  	
  20

  
	
  Section 5.3

  	
  Compliance with Laws

  	
  20

  
	
  Section 5.4

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

  	
  21

  
	
  Section 5.5

  	
  Limitations on Holdings
  and Issuances

  	
  21

  
	
  Section 5.6

  	
  Other Agreements and Other
  Financings

  	
  22

  
	
  Section 5.7

  	
  Stop Orders

  	
  23

  
	
  Section 5.8

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

  	
  24

  
	
  Section 5.9

  	
  Prospectus Delivery

  	
  24

  
	
  Section 5.10

  	
  Selling Restrictions

  	
  25

  
	
  Section 5.11

  	
  Effective Registration
  Statement

  	
  26

  
	
  Section 5.12

  	
  Non-Public Information

  	
  26

  
	
  Section 5.13

  	
  Broker/Dealer

  	
  26

  
	
  Section 5.14

  	
  Disclosure Schedule

  	
  26

  
	
   

  	
   

  	
   

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

  	
  27

  
	
  Section 6.1

  	
  Opinion of Counsel and
  Certificate

  	
  27

  
	
  Section 6.2

  	
  Conditions Precedent to
  the Obligation of the Company

  	
  27

  
	
  Section 6.3

  	
  Conditions Precedent to
  the Obligation of the Investor

  	
  28

  
	
   

  	
   

  	
   

  
	
  Article VII
  TERMINATION

  	
  30

  
	
  Section 7.1

  	
  Term, Termination by
  Mutual Consent

  	
  30

  
	
  Section 7.2

  	
  Other Termination

  	
  31

  
	
  Section 7.3

  	
  Effect of Termination

  	
  32

  
	
   

  	
   

  	
   

  
	
  Article VIII
  INDEMNIFICATION

  	
  32

  
	
  Section 8.1

  	
  General Indemnity

  	
  32

  
	
  Section 8.2

  	
  Indemnification Procedures

  	
  34

  
	
   

  	
   

  	
   

  
	
  Article IX
  MISCELLANEOUS

  	
  35

  
	
  Section 9.1

  	
  Fees and Expenses

  	
  35

  
	
  Section 9.2

  	
  Specific Enforcement,
  Consent to Jurisdiction, Waiver of Jury Trial

  	
  36

  

 

ii

 

	
  Section 9.3

  	
  Entire Agreement;
  Amendment

  	
  36

  
	
  Section 9.4

  	
  Notices

  	
  36

  
	
  Section 9.5

  	
  Waivers

  	
  37

  
	
  Section 9.6

  	
  Headings

  	
  38

  
	
  Section 9.7

  	
  Successors and Assigns

  	
  38

  
	
  Section 9.8

  	
  Governing Law

  	
  38

  
	
  Section 9.9

  	
  Survival

  	
  38

  
	
  Section 9.10

  	
  Counterparts

  	
  38

  
	
  Section 9.11

  	
  Publicity

  	
  38

  
	
  Section 9.12

  	
  Severability

  	
  38

  
	
  Section 9.13

  	
  Further Assurances

  	
  39

  
	
   

  	
   

  	
   

  
	
  Annex A.

  	
  Definitions

  	
   

  
				

 

iii

 

COMMON
STOCK PURCHASE AGREEMENT

 

This COMMON STOCK
PURCHASE AGREEMENT, made and entered into on this 5th day of August 2009 (this “Agreement”),
by and between Azimuth Opportunity Ltd., an international business company
incorporated under the laws of the British Virgin Islands (the “Investor”),
and NPS Pharmaceuticals, Inc., a corporation organized and existing under
the laws of the State of Delaware (the “Company”). Capitalized terms
used but not defined herein shall have the meanings ascribed to such terms in Annex
A hereto.

 

RECITALS

 

WHEREAS, the parties
desire that, upon the terms and subject to the conditions contained herein, the
Company may issue and sell to the Investor and the Investor shall thereupon
purchase from the Company up to $40,000,000 of newly issued shares of the
Company’s common stock, $0.001 par value (“Common Stock”), subject, in
all cases, to the Trading Market Limit; and

 

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

 

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

 

ARTICLE I

PURCHASE AND SALE OF COMMON
STOCK

 

Section 1.1                                   Purchase
and Sale of Stock.  Upon
the terms and subject to the conditions of this Agreement, during the
Investment Period the Company in its discretion may issue and sell to the
Investor up to $40,000,000 (the “Total Commitment”) of duly authorized,
validly issued, fully paid and non-assessable shares of Common Stock (subject
in all cases to the Trading Market Limit, the “Aggregate Limit”), by (i) the
delivery to the Investor of not more than 24 separate Fixed Request Notices
(unless the Investor and the Company mutually agree that a different number of
Fixed Request Notices may be delivered) as provided in Article II hereof
and (ii) the exercise by the Investor of Optional Amounts, which the
Company may in its discretion grant to the Investor and which may be exercised
by the Investor, in whole or in part, as provided in Article II
hereof.  The aggregate of all Fixed
Request Amounts and Optional Amount Dollar Amounts shall not exceed the
Aggregate Limit.

 

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

 

 

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

 

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

 

Section 1.4                                   Current
Report; Prospectus Supplement.  As soon as practicable, but in any event not
later than 5:30 p.m. (New York time) on the first Trading Day immediately
following the Effective Date, the Company shall file with the Commission a
report on Form 8-K relating to the transactions contemplated by, and
describing the material terms and conditions of, this Agreement and disclosing
all information relating to the transactions contemplated hereby required to be
disclosed in the Registration Statement and the Base Prospectus (but which
permissibly has been omitted therefrom in accordance with the Securities Act),
including, without limitation, information required to be disclosed in the
section captioned “Plan of Distribution” in the Base Prospectus (the “Current
Report”).  The Current Report shall
include a copy of this Agreement as an exhibit. 
To the extent applicable, the Current Report shall be incorporated by
reference in the Registration Statement in accordance with the provisions of Rule 430B
under the Securities Act.  The Company
heretofore has provided the Investor a reasonable opportunity to comment on a
draft of such Current Report and has given due consideration to such
comments.  The Company shall file a final
Base Prospectus pursuant to Rule 424(b) under the Securities Act on
or prior to the second Trading Day immediately following the Effective
Date.  Pursuant to Section 5.9 and
subject to the provisions of Section 5.8, on the first Trading Day
immediately following the last Trading Day of each Pricing Period, the Company
shall file with the Commission a Prospectus Supplement pursuant to Rule 424(b) under
the Securities Act disclosing the number of Shares to be issued and sold to the
Investor thereunder, the total purchase price therefor and the net proceeds to
be received by the Company therefrom and, to the extent required by the
Securities Act, identifying the Current Report.

 

ARTICLE II

FIXED REQUEST TERMS; OPTIONAL
AMOUNT

 

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

 

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

 

2

 

Request
Notice shall specify the Fixed Amount Requested, establish the Threshold Price
for such Fixed Request, designate the first Trading Day of the Pricing Period
and specify the Optional Amount, if any, that the Company elects to grant to
the Investor during the Pricing Period and the applicable Threshold Price for
such Optional Amount (the “Optional Amount Threshold Price”).  The Threshold Price and the Optional Amount
Threshold Price established by the Company in a Fixed Request Notice may be the
same or different, in the Company’s sole discretion.  Upon the terms and subject to the conditions
of this Agreement, the Investor is obligated to accept each Fixed Request
Notice prepared and delivered in accordance with the provisions of this
Agreement.

 

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

 

	
  Threshold Price

  	
   

  	
  Fixed Amount Requested

  	
   

  	
  Discount Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal to or greater than $9.00

  	
   

  	
  Not
  to exceed $7,250,000

  	
   

  	
  96.750%
  of the VWAP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $6,500,000

  	
   

  	
  96.500%
  of the VWAP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not
  to exceed $5,750,000

  	
   

  	
  96.250% of the VWAP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not to exceed
  $5,000,000

  	
   

  	
  96.000% of the VWAP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not to exceed
  $4,250,000

  	
   

  	
  95.750% of the VWAP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not to exceed
  $3,500,000

  	
   

  	
  95.500% of the VWAP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  Not to exceed
  $2,750,000

  	
   

  	
  95.250% of the VWAP

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Equal
  to or greater than $2.00 and less than $3.00

  	
   

  	
  Not to exceed
  $1,750,000

  	
   

  	
  95.000% of the VWAP

  	
   

  

 

Anything
to the contrary in this Agreement notwithstanding, at no time shall the
Investor be required to purchase more than $7,250,000 worth of Common Stock in
respect of any Pricing Period (not including Common Stock subject to any
Optional Amount).  The date on which the
Company delivers any Fixed Request Notice in accordance with this Section 2.2
hereinafter shall be referred to as a “Fixed Request Exercise Date”.

 

3

 

Section 2.3                                   Share
Calculation.  With
respect to the Trading Days during the applicable Pricing Period for which the
VWAP equals or exceeds the Threshold Price, the number of Shares to be issued
by the Company to the Investor pursuant to a Fixed Request shall equal the
aggregate sum of each quotient (calculated for each Trading Day during the
applicable Pricing Period for which the VWAP equals or exceeds the Threshold
Price) determined pursuant to the following equation (rounded to the nearest
whole Share):

 

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

 

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

 

A = 0.10 (the “Multiplier”),

 

B = the total Fixed Amount
Requested, and

 

C = the applicable Discount
Price.

 

Section 2.4                                   Limitation
of Fixed Requests.  The
Company shall not make more than one Fixed Request in each Pricing Period.  Not less than five Trading Days shall elapse
between the end of one Pricing Period and the commencement of any other Pricing
Period during the Investment Period. 
There shall be permitted a maximum of 24 Fixed Requests during the
Investment Period.  Each Fixed Request
automatically shall expire immediately following the last Trading Day of each
Pricing Period.

 

Section 2.5                                   Reduction
of Commitment.  On the last
Trading Day of each Pricing Period, the Investor’s Total Commitment under this
Agreement automatically (and without the need for any amendment to this
Agreement) shall be reduced, on a dollar-for-dollar basis, by the total amount
of the Fixed Request Amount and the Optional Amount Dollar Amount, if any, for
such Pricing Period paid to the Company at the Settlement Date.

 

Section 2.6                                   Below
Threshold Price.  If the VWAP
on any Trading Day in a Pricing Period is lower than the Threshold Price, then
for each such Trading Day the Fixed Amount Requested shall be reduced, on a dollar-for-dollar
basis, by an amount equal to the product of (x) the Multiplier and (y) the
total Fixed Amount Requested, and no Shares shall be purchased or sold with
respect to such Trading Day, except as provided below.  If trading in the Common Stock on NASDAQ (or
any other U.S. national securities exchange on which the Common Stock is then
listed) is suspended for any reason for more than three hours on any Trading
Day, the Investor may at its option deem the price of the Common Stock to be
lower than the Threshold Price for such Trading Day and, for each such Trading
Day, the total amount of the Fixed Amount Requested shall be reduced as
provided in the immediately preceding sentence, and no Shares shall be
purchased or sold with respect to such Trading Day, except as provided
below.  For each Trading Day during a
Pricing Period on which the VWAP is lower (or is deemed to be lower as provided
in the immediately preceding sentence) than the Threshold Price, the Investor
may in its sole discretion elect to purchase  such
U.S. dollar amount of Shares equal to the amount by which the Fixed Amount
Requested has been reduced in accordance with this Section 2.6, at the
Threshold Price multiplied by the applicable percentage determined in
accordance 

 

4

 

with
the price and share amount parameters set forth in Section 2.2.  The Investor shall inform the Company via
facsimile transmission not later than 8:00 p.m. (New York time) on the
last Trading Day of such Pricing Period as to the number of Shares, if any, the
Investor elects to purchase as provided in this Section 2.6.

 

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

 

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

 

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

 

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

 

D
= (A/B) x (B – C), where:

 

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

 

A
= the Fixed Amount Requested,

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

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

 

Section 2.12                            Aggregate
Limit. 
Notwithstanding anything to the contrary contained in this Agreement, in
no event may the Company issue a Fixed Request Notice or grant an Optional
Amount to the extent that the sale of Shares pursuant thereto and pursuant to
all prior Fixed Request Notices and Optional Amounts issued hereunder, and as
liquidated damages pursuant to Section 9.1(ii), would cause the Company to
sell or the Investor to purchase Shares which in the aggregate are in excess of
the Aggregate Limit.  If the Company
issues a Fixed Request Notice or Optional Amount that otherwise would permit
the Investor to purchase shares of Common Stock which would cause the aggregate
purchases by Investor hereunder to exceed the Aggregate Limit, such Fixed
Request Notice or Optional Amount shall be void ab initio
to the extent of the amount by which the dollar value of shares or number of
shares, as the case may be, of Common Stock otherwise issuable pursuant to such
Fixed Request Notice or Optional Amount together with the dollar value of
shares or number of shares, as the case may be, of all other Common Stock
purchased by the Investor pursuant hereto, or issued as liquidated damages
pursuant to Section 9.1(ii), would exceed the Aggregate Limit.  The Company hereby represents, warrants and
covenants that neither it nor any of its Subsidiaries (i) has effected any
transaction or series of transactions, (ii) is a party to any pending
transaction or series of transactions or (iii) shall enter into any
contract, agreement, agreement-in-principle, arrangement or understanding with
respect to, or shall effect, any Other Financing which, in any of such cases,
may be aggregated with the transactions contemplated by this Agreement for
purposes of determining whether approval of the Company’s stockholders is
required under any bylaw, listed securities maintenance standards or other rules of
the Trading Market; provided, however, that the Company shall be
permitted to take any action referred to in clause (iii) above if the
Company has timely provided the Investor with an Integration Notice as provided
in Section 5.6(ii) hereof.

 

At
the Company’s sole discretion, and effective automatically upon receipt by the
Investor of notice thereof from the Company, this Agreement may be amended by
the Company from time to time to reduce the Aggregate Limit by a specified
dollar amount of Common Stock which shall be no greater than is required to
enable the Company to utilize the Registration Statement to consummate an
underwritten public offering of Common Stock or a registered direct public
offering of Common Stock during the Investment Period; provided, however,
that any such amendment of this Agreement (and any such purported amendment)
shall be void and of no force and effect if the effect thereof would restrict,
materially delay, conflict with or impair the ability or right of the Company
to perform its obligations under this Agreement, including, without limitation,
the obligation of the Company to deliver Shares to the Investor in respect of a
Fixed Request or Optional Amount on the applicable Settlement Date.  In the event the Company shall have elected
to reduce the Aggregate Limit as provided in the immediately preceding
sentence, at the Company’s sole discretion, and effective automatically upon
receipt by the 

 

7

 

Investor of notice thereof
from the Company, the Company may subsequently amend this Agreement to increase
the Aggregate Limit up to $40,000,000; provided, however, that in
no event shall the Company be entitled to issue Fixed Requests and grant
Optional Amounts during the remainder of the Investment Period for an aggregate
amount greater than the amount obtained by subtracting (x) the aggregate
of all Fixed Request Amounts and Optional Amount Dollar Amounts (including any
amounts paid as liquidated damages pursuant to Section 9.1(ii) hereunder)
covered by all Fixed Requests and Optional Amounts theretofore issued or
granted by the Company in respect of which a settlement has occurred pursuant
to Section 2.7 from (y) $40,000,000, subject in all cases to the
Trading Market Limit.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

 

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

 

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

 

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

 

Section 3.3                                   No
Conflicts.  The
execution, delivery and performance by the Investor of this Agreement and the
consummation by the Investor of the transactions contemplated herein do not and
shall not (i) result in a violation of such Investor’s charter documents,
bylaws or other applicable organizational instruments, (ii) conflict with,
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give rise to any rights of termination,
amendment, acceleration or cancellation of, any material agreement, mortgage,
deed of trust, indenture, note, bond, license, lease agreement, instrument or
obligation to which the Investor is a party or is bound, (iii) create or
impose any lien, charge or encumbrance on any property of the Investor under
any agreement or any commitment to which the Investor is party or under which
the Investor is bound or under which any of its properties or assets are bound,
or (iv) result in a violation of any federal, state, local or foreign
statute, rule, or regulation, or any order, judgment or decree of any court or
governmental agency applicable to the Investor or by which any of its
properties or assets are bound or affected, except, in the case of clauses (ii),
(iii) and (iv), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, prohibit or otherwise interfere with the 

 

8

 

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

 

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

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

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

 

Section 4.1                                   Organization,
Good Standing and Power.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own, lease and operate
its properties and assets and to conduct its business as it is now being
conducted.  The Company and each
Subsidiary is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
for any jurisdiction in which the failure to be so qualified would not have a
Material Adverse Effect.

 

Section 4.2                                   Authorization,
Enforcement.  The Company
has the requisite corporate power and authority to enter into and perform this
Agreement and to issue and sell the Shares in accordance with the terms
hereof.  Except for approvals of the
Company’s Board of Directors or a committee thereof as may be required in
connection with any issuance and sale of Shares to the Investor hereunder
(which approvals shall be obtained prior to the delivery of any Fixed Request
Notice), the execution, delivery and performance by the Company of this
Agreement and the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action and no
further consent or authorization of the Company or its Board of Directors or
stockholders is required.  This Agreement
has been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting generally
the 

 

9

 

enforcement
of, creditor’s rights and remedies or by other equitable principles of general
application.

 

Section 4.3                                   Capitalization.  The authorized capital stock of the Company
and the shares thereof issued and outstanding are as set forth in the
Commission Documents as of the dates reflected therein.  All of the outstanding shares of Common Stock
have been duly authorized and validly issued, and are fully paid and
nonassessable.  Except as set forth in
the Commission Documents, as of the Effective Date, no shares of Common Stock
were entitled to preemptive rights or registration rights and there were no
outstanding options (other than options granted pursuant to existing equity
incentive plans described in the Commission Documents), warrants, scrip, rights
to subscribe to, call or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, any shares of
capital stock of the Company.  Except as
set forth in the Commission Documents, there were no contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of the capital stock of the Company or options,
securities or rights convertible into or exchangeable for any shares of capital
stock of the Company.  Except for
customary transfer restrictions contained in agreements entered into by the
Company to sell restricted securities or as set forth in the Commission
Documents, as of the Effective Date, the Company was not a party to, and it had
no knowledge of, any agreement restricting the voting or transfer of any shares
of the capital stock of the Company. 
Except as set forth in the Commission Documents, the offer and sale of
all capital stock, convertible or exchangeable securities, rights, warrants or
options of the Company issued prior to the Effective Date complied with all
applicable federal and state securities laws, and no stockholder has any right
of rescission or damages or any “put” or similar right with respect thereto
that would have a Material Adverse Effect. 
The Company has furnished or made available to the Investor via the
Commission’s Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”)
true and correct copies of the Company’s Certificate of Incorporation as in
effect on the Effective Date (the “Charter”), and the Company’s Bylaws
as in effect on the Effective Date (the “Bylaws”), and true and correct
copies (redacted as appropriate) of all executed resolutions of the Company’s
Board of Directors (and committees thereof) relating to the capital stock of
the Company (and transactions in respect thereof) since December 31, 2005
(except with respect to issuances of shares of capital stock of the Company to
directors or employees of the Company as fees or compensation that were duly
approved by the Company’s Board of Directors or a committee thereof).

 

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

 

Section 4.5                                   No
Conflicts.  The
execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated herein do not and
shall not (i) result in a violation of any provision of the Company’s
Charter or Bylaws, (ii) conflict with, constitute a default (or an event
which, with notice or lapse of time or both, would become a default) under, or
give rise to any rights of termination, amendment, acceleration or cancellation
of, any material agreement, mortgage, deed of trust, indenture, note, 

 

10

 

bond,
license, lease agreement, instrument or obligation to which the Company or any
of its Significant Subsidiaries is a party or is bound (including, without
limitation, any listing agreement with the Trading Market), (iii) create
or impose a lien, charge or encumbrance on any property of the Company or any
of its Significant Subsidiaries under any agreement or any commitment to which
the Company or any of its Significant Subsidiaries is a party or under which
the Company or any of its Significant Subsidiaries is bound or under which any
of their respective properties or assets are bound, or (iv) result in a
violation of any federal, state, local or foreign statute, rule, regulation,
order, judgment or decree applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries are
bound or affected, except, in the case of clauses (ii), (iii) and (iv),
for such conflicts, defaults, terminations, amendments, acceleration,
cancellations, liens, charges, encumbrances and violations as would not,
individually or in the aggregate, have a Material Adverse Effect.  The Company is not required under federal,
state, local or foreign law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with, any court
or governmental agency in order for it to execute, deliver or perform any of
its obligations under this Agreement, or to issue and sell the Shares to the
Investor in accordance with the terms hereof (other than any filings which may
be required to be made by the Company with the Commission or the Trading Market
subsequent to the Effective Date, including but not limited to a Prospectus
Supplement under Sections 1.4 and 5.9 of this Agreement, and any registration
statement, prospectus or prospectus supplement which has been or may be filed
pursuant to this Agreement).

 

Section 4.6                                   Commission
Documents, Financial Statements.  (a)  The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act and,
except as disclosed in the Commission Documents, as of the Effective Date the
Company had timely filed (giving effect to permissible extensions in accordance
with Rule 12b-25 under the Exchange Act) all Commission Documents.  The Company has delivered or made available
to the Investor via EDGAR or otherwise true and complete copies of the
Commission Documents filed with the Commission prior to the Effective Date
(including, without limitation, the 2008 Form 10-K) and has delivered or
made available to the Investor via EDGAR or otherwise true and complete copies
of all of the Commission Documents heretofore incorporated by reference in the
Registration Statement and the Prospectus. 
The Company has not provided to the Investor any information which,
according to applicable law, rule or regulation, should have been
disclosed publicly by the Company but which has not been so disclosed, other
than with respect to the transactions contemplated by this Agreement.  As of its filing date, each Commission
Document filed with the Commission and incorporated by reference in the
Registration Statement and the Prospectus (including, without limitation, the
2008 Form 10-K) complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as applicable, and other federal, state
and local laws, rules and regulations applicable to it, and, as of its
filing date (or, if amended or superseded by a filing prior to the Effective
Date, on the date of such amended or superseded filing), such Commission
Document did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.  Each Commission
Document to be filed with the Commission after the Effective Date and
incorporated by reference in the Registration Statement, the Prospectus and any
Prospectus Supplement required to be filed pursuant to Sections 1.4 and 5.9
hereof during the Investment Period (including, without limitation, the Current
Report), when such document 

 

11

 

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

 

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

 

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

 

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

 

Section 4.7                                   Subsidiaries.  The 2008 Form 10-K sets forth each
Subsidiary of the Company as of the Effective Date, showing its jurisdiction of
incorporation or organization, and the Company does not have any other
Subsidiaries as of the Effective Date.

 

Section 4.8                                   No
Material Adverse Effect.  Since December 31, 2008, the Company has
not experienced or suffered any Material Adverse Effect, and there exists no
current state of 

 

12

 

facts,
condition or event which would have a Material Adverse Effect, except (i) as
disclosed in any Commission Documents filed since December 31, 2008 or (ii) continued
losses from operations.

 

Section 4.9                                   Indebtedness.  The Company’s Quarterly Report on Form 10-Q
for its fiscal quarter ended March 31, 2009 sets forth, as of March 31,
2009, all outstanding secured and unsecured Indebtedness of the Company or any
Subsidiary, or for which the Company or any Subsidiary has commitments through
such date. For the purposes of this Agreement, “Indebtedness” shall mean
(a) any liabilities for borrowed money or amounts owed in excess of
$10,000,000 (other than trade accounts payable incurred in the ordinary course
of business), (b) all guaranties, endorsements, indemnities and other
contingent obligations in respect of Indebtedness of others in excess of
$10,000,000, whether or not the same are or should be reflected in the Company’s
balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (c) the present value of any lease
payments in excess of $10,000,000 due under leases required to be capitalized
in accordance with GAAP.  There is no
existing or continuing default or event of default in respect of any
Indebtedness of the Company or any of its Subsidiaries.

 

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

 

Section 4.11                            Actions
Pending.  There is no
action, suit, claim, investigation or proceeding pending, or to the knowledge
of the Company threatened, against the Company or any Subsidiary which
questions the validity of this Agreement or the transactions contemplated
hereby or any action taken or to be taken pursuant hereto or thereto.  Except as set forth in the Commission
Documents, there is no action, suit, claim, investigation or proceeding
pending, or to the knowledge of the Company threatened, against or involving
the Company, any Subsidiary or any of their respective properties or assets, or
involving any officers or directors of the Company or any of its Subsidiaries,
including, without limitation, any securities class action lawsuit or
stockholder derivative lawsuit, in each case which, if determined adversely to
the Company, its Subsidiary or any officer or director of the Company or its
Subsidiaries, would have a Material Adverse Effect.  With respect to each of those certain claims,
disputes, investigations, arbitrations, actions or proceedings described in
Note 10, Legal Proceedings, in “Notes to Condensed Consolidated Financial
Statements” in Part I of the Company’s Quarterly Report on Form 10-Q
for its fiscal quarter ended March 31, 2009, there has been no event or
change required to be disclosed in a filing under the Exchange Act that has not
been so disclosed.

 

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

 

13

 

Section 4.13                            Certain
Fees.  Except for
the placement fee payable by the Company to Reedland Capital Partners, an
Institutional Division of Financial West Group, Member FINRA/SIPC (“Reedland”),
which shall be set forth in a separate engagement letter between the Company
and Reedland (a true and complete fully executed copy of which has heretofore
been provided to the Investor), no brokers, finders or financial advisory fees
or commissions shall be payable by the Company or any Subsidiary (or any of
their respective affiliates) with respect to the transactions contemplated by
this Agreement.

 

Section 4.14                            Operation
of Business.  (a) 
The Company or one or more of its Subsidiaries possesses such permits,
licenses, approvals, consents and other authorizations (including licenses,
accreditation and other similar documentation or approvals of any local health
departments) (collectively, “Governmental Licenses”) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies,
including, without limitation, the United States Food and Drug Administration (“FDA”),
necessary to conduct the business now operated by it, except where the failure
to possess such Governmental Licenses, individually or in the aggregate, would
not have a Material Adverse Effect.  The
Company and its Subsidiaries are in compliance with the terms and conditions of
all such Governmental Licenses and all applicable FDA rules and
regulations, guidelines and policies, and all applicable rules and
regulations, guidelines and policies of any governmental authority exercising
authority comparable to that of the FDA (including any non-governmental
authority whose approval or authorization is required under foreign law
comparable to that administered by the FDA), except where the failure to so
comply, individually or in the aggregate, would not have a Material Adverse
Effect.  All of the Governmental Licenses
are valid and in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect, individually or in the aggregate, would not have a
Material Adverse Effect.  As to each product
that is subject to FDA regulation or similar legal provisions in any foreign
jurisdiction that is developed, manufactured, tested, packaged, labeled,
marketed, sold, distributed and/or commercialized by the Company or any of its
Subsidiaries, each such product is being developed, manufactured, tested,
packaged, labeled, marketed, sold, distributed and/or commercialized in
compliance with all applicable requirements of the FDA (and any
non-governmental authority whose approval or authorization is required under
foreign law comparable to that administered by the FDA), including, but not
limited to, those relating to investigational use, investigational device
exemption, premarket notification, premarket approval, good clinical practices,
good manufacturing practices, record keeping, filing of reports, and patient
privacy and medical record security, except where such non-compliance,
individually or in the aggregate, would not have a Material Adverse
Effect.  As to each product or product
candidate of the Company or any of its Subsidiaries subject to FDA regulation
or similar legal provision in any foreign jurisdiction, all manufacturing
facilities of the Company and its Subsidiaries are operated in compliance with
the FDA’s Quality System Regulation requirements at 21 C.F.R. Part 820, as
applicable, except where such non-compliance, individually or in the aggregate,
would not have a Material Adverse Effect. 
Except as set forth in the Commission Documents or the Registration
Statement, neither the Company nor any of its Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
Governmental Licenses or relating to a potential violation of, failure to
comply with, or request to produce additional information under, any FDA rules and
regulations, guidelines or policies which, if the subject of any unfavorable
decision, ruling or finding, individually or in the aggregate, would have a
Material Adverse Effect.  Except as set
forth in the Commission 

 

14

 

Documents
or the Registration Statement, neither the Company nor any of its Subsidiaries
has received any correspondence or notice from the FDA indicating that any one
or more products or product candidates of the Company or any of its
Subsidiaries failed to receive approval from the FDA for use for any one or
more indications.  This Section 4.14
does not relate to environmental matters, such items being the subject of Section 4.15.

 

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

 

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

 

15

 

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

 

Section 4.16         Material Agreements.  Except as set forth in the Commission
Documents, neither the Company nor any Subsidiary of the Company is a party to
any written or oral contract, instrument, agreement commitment, obligation,
plan or arrangement, a copy of which would be required to be filed with the
Commission as an exhibit to an annual report on Form 10-K (collectively, “Material
Agreements”).  The Company and each
of its Subsidiaries have performed in all material respects all the obligations
required to be performed by them under the Material Agreements, have received
no notice of default or an event of default by the Company or any of its
Subsidiaries thereunder and are not aware of any basis for the assertion
thereof, and neither the Company or any of its Subsidiaries nor, to the
knowledge of the Company, any other contracting party thereto are in default
under any Material Agreement now in effect, in each case, the result of which
would have a Material Adverse Effect. 
Each of the Material Agreements is in full force and effect, and
constitutes a legal, valid and binding obligation enforceable in accordance
with its terms against the Company and/or any of its Subsidiaries and, to the
knowledge of the Company, each other contracting party thereto, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

 

Section 4.17         Transactions With Affiliates.  Except as set forth in the Commission
Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts, service arrangements or other continuing
transactions exceeding $120,000 between (a) 

 

16

 

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

 

Section 4.18         Securities Act; NASD Conduct Rules.  The Company is in compliance with all
applicable federal and state securities laws in connection with the
transactions contemplated by this Agreement.

 

(i)            The Company has prepared and filed
with the Commission in accordance with the provisions of the Securities Act the
Registration Statement, including a base prospectus relating to the Shares. The
Registration Statement was declared effective by order of the Commission on June 5,
2009. As of the date hereof, no stop order suspending the effectiveness of the
Registration Statement has been issued by the Commission or is continuing in
effect under the Securities Act and no proceedings therefor are pending before
or, to the Company’s knowledge, threatened by the Commission.  No order preventing or suspending the use of
the Prospectus or any Permitted Free Writing Prospectus has been issued by the
Commission.

 

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

 

17

 

omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading; provided
that this representation and warranty does not apply to statements in or
omissions from the Base Prospectus made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by or
on behalf of the Investor expressly for use therein.

 

(iii)          In accordance with Rule 5110(b)(7)(C)(i) of
the Financial Industry Regulatory Authority (the “FINRA”) Manual, the
offering of the Shares pursuant to this Agreement has been registered with the
Commission on Form S-3 under the Securities Act pursuant to the standards
for Form S-3 in effect prior to October 21, 1992, and the Shares are
being offered pursuant to Rule 415 promulgated under the Securities Act.

 

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

 

(v)           At the earliest time after the filing
of the Registration Statement that the Company or another offering participant
made a bona fide offer (within the meaning of Rule 164(h)(2) under
the Securities Act) relating to the Shares, the Company was not and is not an “ineligible
issuer” (as defined in Rule 405 under the Securities Act).  Each Permitted Free Writing Prospectus (a) shall
conform in all material respects to the requirements of the Securities Act on
the date of its first use, (b) when considered together with the
Prospectus on each applicable Fixed Request Exercise Date and on each
applicable Settlement Date, shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading, and (c) shall not include any
information that conflicts with the information contained in the Registration
Statement, including any document incorporated by reference therein and any
Prospectus Supplement deemed to be a part thereof that has not been superseded
or modified.  The immediately preceding
sentence does not apply to statements in or omissions from any Permitted Free
Writing Prospectus made in reliance upon and in conformity with information
relating to the Investor furnished to the Company in writing by or on behalf of
the Investor expressly for use therein.

 

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

 

18

 

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

 

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

 

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

 

Section 4.22         ERISA.  No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company or any of
its Subsidiaries which has had or would have a Material Adverse Effect.  No “prohibited transaction” (as defined in Section 406
of ERISA or Section 4975 of the Code) or “accumulated funding deficiency”
(as defined in Section 203 of ERISA) or any of the events set forth in Section 4043(b) of
ERISA has occurred with respect to any Plan which has had or would have a
Material Adverse Effect, and the execution and delivery of this Agreement and
the issuance and sale of the Shares hereunder shall not result in any of the
foregoing events.  Each Plan is in
compliance in all material respects with applicable law, including ERISA and
the Code; the Company has not incurred and does not expect to incur liability
under Title IV of ERISA with respect to the termination of, or withdrawal from,
any Plan; and each Plan for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or failure to act, which would cause the loss of such qualifications.  As used in this Section 4.22, the term “Plan”
shall mean an “employee pension benefit plan” (as defined in Section 3
of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company or any Subsidiary or by any
trade or business, whether or not incorporated, which, together with the
Company or any Subsidiary, is under common control, as described in Section 414(b) or
(c) of the Code.

 

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

 

19

 

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

 

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

 

ARTICLE V

COVENANTS

 

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

 

Section 5.1            Securities Compliance.  The Company shall notify the Commission and
the Trading Market, as applicable, in accordance with their respective rules and
regulations, of the transactions contemplated by this Agreement, and shall take
all necessary action, undertake all proceedings and obtain all registrations,
permits, consents and approvals for the legal and valid issuance of the Shares
to the Investor in accordance with the terms of this Agreement.

 

Section 5.2            Registration and Listing.  The Company shall take all action necessary
to cause the Common Stock to continue to be registered as a class of securities
under Sections 12(b) or 12(g) of the Exchange Act, shall comply with
its reporting and filing obligations under the Exchange Act, and shall not take
any action or file any document (whether or not permitted by the Securities
Act) to terminate or suspend such registration or to terminate or suspend its
reporting and filing obligations under the Exchange Act or Securities Act,
except as permitted herein. The Company shall take all action necessary to
continue the listing and trading of its Common Stock and the listing of the
Shares purchased by Investor hereunder on the Trading Market, and shall comply
with the Company’s reporting, filing and other obligations under the bylaws,
listed securities maintenance standards and other rules of the Trading
Market.

 

Section 5.3            Compliance with Laws.

 

(i)            The Company shall comply, and cause
each Subsidiary to comply, (a) with all laws, rules, regulations and
orders applicable to the business and operations of the Company and its
Subsidiaries except as would not have a Material Adverse Effect and (b) with
all applicable provisions of the Securities Act, the Exchange Act and the
listing standards of the Trading Market. 
Without limiting the generality of the foregoing, neither the Company
nor any of its officers, directors or affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or
manipulate the price of any security of the Company, or 

 

20

 

which caused or resulted
in, or which would in the future reasonably be expected to cause or result in,
stabilization or manipulation of the price of any security of the Company.

 

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

 

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

 

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

 

(ii)           Neither the Company, nor any of its
Subsidiaries, nor to the knowledge of the Company, any of their respective
directors, officers, agents, employees or any other persons acting on their
behalf shall, in connection with the operation of the Company’s and its
Subsidiaries’ respective businesses, (a) use any corporate funds for
unlawful contributions, payments, gifts or entertainment or to make any
unlawful expenditures relating to political activity to government officials,
candidates or members of political parties or organizations, (b) pay,
accept or receive any unlawful contributions, payments, expenditures or gifts,
or (c) violate or operate in noncompliance with any export restrictions,
anti-boycott regulations, embargo regulations or other applicable domestic or
foreign laws and regulations.

 

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

 

Section 5.5            Limitations on Holdings and Issuances.  The Company shall not be obligated to issue
and the Investor shall not be obligated to purchase any shares of Common 

 

21

 

Stock which, when
aggregated with all other shares of Common Stock then owned beneficially by the
Investor, would result in the beneficial ownership by the Investor of more than
9.9% of the then issued and outstanding shares of Common Stock.

 

Section 5.6            Other Agreements and Other
Financings.

 

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

 

(ii)           The Company shall notify the
Investor, within 48 hours, if it enters into any agreement, plan, arrangement
or transaction with a third party, the principal purpose of which is to obtain
during a Pricing Period an Other Financing not constituting an Acceptable
Financing (an “Other Financing Notice”); provided, however,
that the Company shall notify the Investor immediately (an “Integration
Notice”) if it enters into any agreement, plan, arrangement or transaction
with a third party, the principal purpose of which is to obtain at any time
during the Investment Period an Other Financing that may be aggregated with the
transactions contemplated by this Agreement for purposes of determining whether
approval of the Company’s stockholders is required under any bylaw, listed
securities maintenance standards or other rules of the Trading Market and,
if required under applicable law, including, without limitation, Regulation FD
promulgated by the Commission, or under the applicable rules and regulations
of the Trading Market, the Company shall simultaneously publicly disclose such
information in accordance with Regulation FD and the applicable rules and
regulations of the Trading Market. For purposes of this Section 5.6(ii),
any press release issued by, or Commission Document filed by, the Company shall
constitute sufficient notice, provided that it is issued or filed, as the case
may be, within the time requirements set forth in the first sentence of this Section 5.6(ii) for
an Other Financing Notice or an Integration Notice, as applicable.  For greater certainty, the entry by the
Company into any agreement, plan, arrangement or transaction with a third party
to obtain an Other Financing (or any other financing) outside of a Pricing
Period shall not trigger any requirement for the Company to deliver an Other
Financing Notice (it being acknowledged and agreed that nothing contained in
this Section 5.6(ii) shall limit or modify in any respect the Company’s
obligations in Section 7.2). During any Pricing Period in which the
Company is required to provide an Other Financing Notice pursuant to the first
sentence of this Section 5.6(ii), the Investor shall (i) have the
option to purchase the Shares subject to the Fixed Request at (x) the
price therefor in accordance with the terms of this Agreement or (y) the
third party’s per share purchase price in connection with the Other Financing,
net of such third party’s discounts, Warrant Value and fees, or (ii) the
Investor may elect to not purchase any Shares subject to the Fixed Request for
that Pricing Period. An “Other Financing” shall mean (x) the
issuance of Common Stock for a purchase price less than, or the issuance of
securities convertible into or exchangeable for Common Stock at an exercise or
conversion price (as the case may be) less than, the then Current Market Price
of the Common Stock (in each case, after all fees, discounts, Warrant Value and
commissions associated with the transaction) (a “Below Market Offering”);
(y) the implementation by the Company of any mechanism in respect of any
securities convertible into or exchangeable for Common Stock for the reset of
the purchase price 

 

22

 

of the Common Stock to
below the then Current Market Price of the Common Stock (including, without
limitation, any antidilution or similar adjustment provisions in respect of any
Company securities, but specifically excluding customary adjustments for stock
splits, stock dividends, stock combinations and similar events); or (z) the
issuance of options, warrants or similar rights of subscription in each case
not constituting an Acceptable Financing. “Acceptable Financing” shall
mean the issuance by the Company of: (1) shares of Common Stock or
securities convertible into or exchangeable for Common Stock other than in
connection with a Below Market Offering; (2) shares of Common Stock or
securities convertible into or exchangeable for Common Stock in connection with
awards under the Company’s benefit and equity plans and arrangements or
shareholder rights plan and the issuance of shares of Common Stock upon the
conversion, exercise or exchange thereof; (3) shares of Common Stock
issuable upon the conversion or exchange of equity awards or convertible or
exchangeable securities outstanding as of the Effective Date; (4) shares
of Common Stock or securities convertible into or exchangeable for Common Stock
or similar rights to subscribe for the purchase of shares of Common Stock in
connection with technology sharing, licensing, research and joint development
agreements (or amendments thereto) with third parties, and the issuance of
shares of Common Stock upon the conversion, exercise or exchange thereof; and (5) shares
of Common Stock and/or warrants or similar rights to subscribe for the purchase
of shares of Common Stock issued in connection with equipment financings and/or
real property leases (or amendments thereto) and the issuance of shares of
Common Stock upon the exercise thereof.

 

Section 5.7            Stop Orders.  The Company shall advise the Investor
immediately and shall confirm such advice in writing: (i) of the Company’s
receipt of notice of any request by the Commission for amendment of or a
supplement to the Registration Statement, the Prospectus, any Permitted Free
Writing Prospectus or for any additional information; (ii) of the Company’s
receipt of notice of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or prohibiting or
suspending the use of the Prospectus or any Prospectus Supplement, or of the
suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation or contemplated initiation of any proceeding
for such purpose; and (iii) of the Company becoming aware of the happening
of any event, which makes any statement of a material fact made in the
Registration Statement, the Prospectus or any Permitted Free Writing Prospectus
untrue or which requires the making of any additions to or changes to the
statements then made in the Registration Statement, the Prospectus or any
Permitted Free Writing Prospectus in order to state a material fact required by
the Securities Act to be stated therein or necessary in order to make the
statements then made therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, or of the necessity
to amend the Registration Statement or supplement the Prospectus or any
Permitted Free Writing Prospectus to comply with the Securities Act or any
other law. The Company shall not be required to disclose to the Investor the
substance or specific reasons of any of the events set forth in clauses (i) through
(iii) of the immediately preceding sentence, but rather, shall only be
required to disclose that the event has occurred.  The Company shall not issue any Fixed Request
during the continuation of any of the foregoing events. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement or prohibiting or suspending the use of the Prospectus
or any Prospectus Supplement, the Company shall use commercially reasonable
efforts to obtain the withdrawal of such order at the earliest possible time.

 

23

 

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

 

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

 

(ii)           The Company agrees that, unless it
obtains the prior written consent of the Investor, it has not made and will not
make an offer relating to the Shares that would constitute an Issuer Free
Writing Prospectus or that would otherwise constitute a Free Writing Prospectus
required to be filed by the Company or the Investor with the Commission or
retained by the Company or the Investor under Rule 433 under the
Securities Act.  The Investor agrees
that, unless it obtains the prior written consent of the Company, it has not
made and will not make an offer relating to the Shares that would constitute a
Free Writing Prospectus required to be filed by the Company with the Commission
or retained by the Company under Rule 433 under the Securities Act.  Any such Issuer Free Writing Prospectus or
other Free Writing Prospectus consented to by the Investor or the Company is
referred to in this Agreement as a “Permitted Free Writing Prospectus.”  The Company agrees that (x) it has
treated and will treat, as the case may be, each Permitted Free Writing
Prospectus as an Issuer Free Writing Prospectus and (y) it has complied
and will comply, as the case may be, with the requirements of Rules 164
and 433 under the Securities Act applicable to any Permitted Free Writing
Prospectus, including in respect of timely filing with the Commission,
legending and record keeping.

 

Section 5.9            Prospectus Delivery.  The Company shall file with the Commission a
Prospectus Supplement pursuant to Rule 424(b) under the Securities
Act on the first Trading Day immediately following the last Trading Day of each
Pricing Period.  The Company shall
provide the Investor a reasonable opportunity to comment on a draft of each
such Prospectus Supplement and any Issuer Free Writing Prospectus, shall give
due consideration to all such comments and, subject to the provisions of Section 5.8
hereof, shall deliver or make available to the Investor, without charge, an
electronic copy of each form of Prospectus Supplement, together with the Base
Prospectus, and any Permitted Free Writing Prospectus on each applicable
Settlement Date.  The Company consents to
the use of the Prospectus (and of any Prospectus Supplement thereto) 

 

24

 

in accordance with the
provisions of the Securities Act and with the securities or “blue sky” laws of
the jurisdictions in which the Shares may be sold by the Investor, in
connection with the offering and sale of the Shares and for such period of time
thereafter as the Prospectus (or in lieu thereof, the notice referred to in Rule 173(a) under
the Securities Act) is required by the Securities Act to be delivered in
connection with sales of the Shares. If during such period of time any event
shall occur that in the judgment of the Company and its counsel is required to
be set forth in the Registration Statement or the Prospectus or any Permitted
Free Writing Prospectus or should be set forth therein in order to make the
statements made therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, or if it is necessary
to amend the Registration Statement or supplement or amend the Prospectus or
any Permitted Free Writing Prospectus to comply with the Securities Act or any
other applicable law or regulation, the Company shall forthwith prepare and,
subject to Section 5.8 above, file with the Commission an appropriate
amendment to the Registration Statement or Prospectus Supplement to the
Prospectus (or supplement to the Permitted Free Writing Prospectus) and shall
expeditiously furnish or make available to the Investor an electronic copy
thereof.

 

Section 5.10         Selling Restrictions.

 

(i)            The Investor covenants that from and
after the date hereof through and including the 90th day next following the termination of this
Agreement (the “Restricted Period”), neither the Investor nor any of its
affiliates (within the meaning of the Exchange Act) nor any entity managed or
controlled by the Investor shall, directly or indirectly, sell any securities
of the Company, except the Shares that it owns or has the right to purchase as
provided in a Fixed Request Notice. 
During the Restricted Period, neither the Investor or any of its
affiliates nor any entity managed or controlled by the Investor shall sell any
shares of Common Stock of the Company it does not “own” or have the
unconditional right to receive under the terms of this Agreement (within the
meaning of Rule 200 of Regulation SHO promulgated by the Commission under
the Exchange Act), including Shares in any account of the Investor or in any
account directly or indirectly managed or controlled by the Investor or any of
its affiliates or any entity managed or controlled by the Investor.  Without limiting the generality of the
foregoing, prior to and during the Restricted Period, neither the Investor nor any
of its affiliates nor any entity managed or controlled by the Investor or any
of its affiliates shall enter into a short position with respect to shares of
Common Stock of the Company, including in any account of the Investor’s or in
any account directly or indirectly managed or controlled by the Investor or any
of its Affiliates or any entity managed or controlled by the Investor, except
that the Investor may sell Shares that it is obligated to purchase under a
pending Fixed Request Notice but has not yet taken possession of so long as the
Investor (or the Broker-Dealer, as applicable) covers any such sales with the
Shares purchased pursuant to such Fixed Request Notice; provided, however,
that the Investor (or the Broker-Dealer, as applicable) shall not be required
to cover any such sales with the Shares purchased pursuant to such Fixed
Request Notice if (a) the Fixed Request is terminated by mutual agreement
of the Company and the Investor and, as a result of such termination, no Shares
are delivered to the Investor under this Agreement or (b) the Company
otherwise fails to deliver such Shares to the Investor on the applicable
Settlement Date upon the terms and subject to the provisions of this
Agreement.  Prior to and during the
Restricted Period, the Investor shall not grant any option to purchase or
acquire any right to dispose or otherwise dispose for value of any shares of
Common Stock or any securities convertible into or 

 

25

 

exercisable or exchangeable
for, or warrants to purchase, any shares of Common Stock, or enter into any
swap, hedge or other agreement that transfers, in whole or in part, the
economic risk of ownership of the Common Stock, except for such sales expressly
permitted by this Section 5.10(i).

 

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

 

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

 

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

 

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

 

Section 5.14         Disclosure Schedule.

 

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

 

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

 

26

 

interpreting the terms “material” or “Material Adverse
Effect” or other similar terms in this Agreement.

 

ARTICLE VI

OPINION OF COUNSEL AND CERTIFICATE; CONDITIONS TO THE SALE AND

PURCHASE OF THE SHARES

 

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

 

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

 

(i)            Accuracy of the Investor’s
Representations and Warranties. 
The representations and warranties of the Investor contained in this
Agreement (i) that are not qualified by “materiality” shall have been true
and correct in all material respects when made and shall be true and correct in
all material respects as of the applicable Fixed Request Exercise Date and the
applicable Settlement Date with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct in all material respects as of such other date and (ii) that
are qualified by “materiality” shall have been true and correct when made and
shall be true and correct as of the applicable Fixed Request Exercise Date and
the applicable Settlement Date with the same force and effect as if made on
such dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date.

 

(ii)           Registration Statement.  The Registration Statement is effective and
neither the Company nor the Investor shall have received notice that the Commission
has issued or intends to issue a stop order with respect to the Registration
Statement.  The Company shall have a
maximum dollar amount certain of Shares registered under the Registration
Statement which are in an amount (A) as of the Effective Date, not less
than the Total Commitment and (B) as of the applicable Fixed Request
Exercise Date, not less than the maximum dollar amount worth of Shares issuable
pursuant to the applicable Fixed Request Notice and applicable Optional Amount,
if any.  The Current Report shall have
been filed with the Commission, as required pursuant to Section 1.4, and
all Prospectus Supplements shall have been filed with the Commission, as
required pursuant to Sections 1.4 and 5.9 hereof, to disclose the sale of the
Shares prior to each Settlement Date, as applicable.  Any other material required to be filed by
the Company or any other offering participant pursuant to Rule 433(d) under
the Securities Act shall have been filed with the Commission within the
applicable time periods prescribed for such filings by Rule 433 under the
Securities Act.

 

27

 

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

 

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

 

(v)           No Suspension, Etc.  Trading in the Common Stock shall not have
been suspended by the Commission or the Trading Market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the applicable Fixed Request Exercise
Date and applicable Settlement Date), and, at any time prior to the applicable
Fixed Request Exercise Date and applicable Settlement Date, none of the events
described in clauses (i), (ii) and (iii) of Section 5.7 shall
have occurred, trading in securities generally as reported on the Trading
Market shall not have been suspended or limited, nor shall a banking moratorium
have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity or crisis of such
magnitude in its effect on, or any material adverse change in, any financial,
credit or securities market which, in each case, in the reasonable judgment of
the Company, makes it impracticable or inadvisable to issue the Shares.

 

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

 

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

 

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

 

(i)            Accuracy of the Company’s
Representations and Warranties. 
The representations and warranties of the Company contained in this
Agreement (i) that are not qualified by “materiality” or “Material Adverse
Effect” shall have been true and correct in all material respects when made and
shall be true and correct in all material respects as of the applicable Fixed
Request Exercise Date and the applicable Settlement Date with the same force 

 

28

 

and effect as if made on
such dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct in all material respects as of such other date and (ii) that
are qualified by “materiality” or “Material Adverse Effect” shall have been
true and correct when made and shall be true and correct as of the applicable
Fixed Request Exercise Date and the applicable Settlement Date with the same
force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct as of such other date.

 

(ii)           Registration Statement.
The Registration Statement is effective and neither the Company nor the
Investor shall have received notice that the Commission has issued or intends
to issue a stop order with respect to the Registration Statement. The Company
shall have a maximum dollar amount certain of Shares registered under the
Registration Statement which are in an amount (A) as of the Effective
Date, not less than the Total Commitment and (B) as of the applicable
Fixed Request Exercise Date, not less than the maximum dollar amount worth of
Shares issuable pursuant to the applicable Fixed Request Notice and applicable
Optional Amount, if any. The Current Report shall have been filed with the
Commission, as required pursuant to Section 1.4, and all Prospectus
Supplements shall have been filed with the Commission, as required pursuant to
Sections 1.4 and 5.9 hereof, to disclose the sale of the Shares prior to each
Settlement Date, as applicable, and an electronic copy of each such Prospectus
Supplement together with the Base Prospectus shall have been delivered or made
available to the Investor in accordance with Section 5.9 hereof.  Any other material required to be filed by
the Company or any other offering participant pursuant to Rule 433(d) under
the Securities Act shall have been filed with the Commission within the
applicable time periods prescribed for such filings by Rule 433 under the
Securities Act.

 

(iii)          No Suspension.  Trading in the Common Stock shall not have
been suspended by the Commission or the Trading Market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the applicable Fixed Request Exercise
Date and applicable Settlement Date), and, at any time prior to the applicable
Fixed Request Exercise Date and applicable Settlement Date, none of the events
described in clauses (i), (ii) and (iii) of Section 5.7 shall
have occurred, trading in securities generally as reported on the Trading
Market shall not have been suspended or limited, nor shall a banking moratorium
have been declared either by the United States or New York State authorities,
nor shall there have occurred any material outbreak or escalation of
hostilities or other national or international calamity or crisis of such
magnitude in its effect on, or any material adverse change in, any financial,
credit or securities market which, in each case, in the reasonable judgment of
the Investor, makes it impracticable or inadvisable to purchase the Shares.

 

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

 

29

 

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

 

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

 

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

 

(viii)        Shares Authorized.  The Shares issuable pursuant to such Fixed
Request Notice or Optional Amount shall have been duly authorized by all
necessary corporate action of the Company.

 

(ix)           Notification of Listing of
Shares.  If required, the
Company shall have submitted to the Trading Market a notification form of
listing of additional shares related to the Shares issuable pursuant to such
Fixed Request or Optional Amount in accordance with the bylaws, listed
securities maintenance standards and other rules of the Trading Market.

 

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

 

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

 

ARTICLE VII

TERMINATION

 

Section 7.1            Term, Termination by Mutual Consent.  Unless earlier terminated as provided
hereunder, this Agreement shall terminate automatically on the earliest of (i) the
first 

 

30

 

day of the month next
following the 18-month anniversary of the Effective Date (the “Investment
Period”), (ii) the date that the entire dollar amount of Shares
registered under the Registration Statement have been issued and sold and (iii) the
date the Investor shall have purchased the Total Commitment of shares of Common
Stock (subject in all cases to the Trading Market Limit). The Company may
terminate this Agreement effective upon three Trading Days’ prior written
notice to the Investor delivered in accordance with Section 9.4; provided,
however, that (A) such termination shall not occur during a Pricing
Period or, subsequent to the issuance of a Fixed Request Notice, prior to the
Settlement Date related to such Fixed Request Notice and (B) prior to
issuing any press release, or making any public statement or announcement, with
respect to such termination, the Company shall consult with the Investor and
shall obtain the Investor’s consent to the form and substance of such press
release or other disclosure, which consent shall not be unreasonably delayed or
withheld. This Agreement may be terminated at any time by the mutual written
consent of the parties, effective as of the date of such mutual written consent
unless otherwise provided in such written consent, it being hereby acknowledged
and agreed that the Investor may not consent to such termination during a
Pricing Period or prior to a Settlement Date in the event the Investor has
instructed the Broker-Dealer to effect an open-market sale of Shares which are
subject to a pending Fixed Request Notice but which have not yet been
physically delivered by the Company (and/or credited by book-entry) to the
Investor in accordance with the terms and subject to the conditions of this
Agreement.

 

Section 7.2            Other Termination.  If the Company provides the Investor with an
Other Financing Notice (other than in respect of an underwritten public
offering of equity securities of the Company or a registered direct public
offering of equity securities of the Company) or an Integration Notice, in each
case pursuant to Section 5.6(ii) of this Agreement, or if the Company
otherwise enters into any agreement, plan, arrangement or transaction with a
third party, the principal purpose of which is to obtain outside a Pricing
Period, but otherwise during the Investment Period, an Other Financing not
constituting an Acceptable Financing (other than in respect of an underwritten
public offering of equity securities of the Company or a registered direct
public offering of equity securities of the Company), in which latter case the
Company shall so notify the Investor within 48 hours thereof, then in all such
cases the Investor shall have the right to terminate this Agreement within the
subsequent 30-day period (the “Event Period”), effective upon one
Trading Day’s prior written notice delivered to the Company in accordance with Section 9.4
at any time during the Event Period.  The
Company shall immediately notify the Investor (and, if required under
applicable law, including, without limitation, Regulation FD promulgated by the
Commission, or under the applicable rules and regulations of the Trading
Market, the Company shall simultaneously publicly disclose such information in
accordance with Regulation FD and the applicable rules and regulations of
the Trading Market), and the Investor shall have the right to terminate this
Agreement at any time after receipt of such notification, if: (i) any
condition, occurrence, state of facts or event constituting a Material Adverse
Effect has occurred; (ii) a Material Change in Ownership has occurred or
the Company enters into a definitive agreement providing for a Material Change
in Ownership; or (iii) a default or event of default has occurred and is
continuing under the terms of any agreement, contract, note or other instrument
to which the Company or any of its Subsidiaries is a party with respect to any
indebtedness for borrowed money representing more than 10% of the Company’s
consolidated assets, in any such case, upon one Trading Day’s prior written
notice delivered to the Company in accordance with Section 9.4 hereof.

 

31

 

Section 7.3            Effect of Termination.  In the event of termination by the Company or
the Investor pursuant to Section 7.1 or 7.2, as applicable, written notice
thereof shall forthwith be given to the other party as provided in Section 9.4
and the transactions contemplated by this Agreement shall be terminated without
further action by either party. If this Agreement is terminated as provided in Section 7.1
or 7.2 herein, this Agreement shall become void and of no further force and
effect, except that the provisions of Article VIII (Indemnification), Section 9.1
(Fees and Expenses), Section 9.2 (Specific Enforcement, Consent to
Jurisdiction, Waiver of Jury Trial), Section 9.4 (Notices), Section 9.8
(Governing Law), Section 9.9 (Survival), Section 9.12 (Severability)
and this Article VII (Termination) shall remain in full force and effect
notwithstanding such termination. Nothing in this Section 7.3 shall be
deemed to release the Company or the Investor from any liability for any breach
under this Agreement, or to impair the rights of the Company and the Investor
to compel specific performance by the other party of its obligations under this
Agreement.

 

ARTICLE VIII

INDEMNIFICATION

 

Section 8.1            General Indemnity.

 

(i)            Indemnification by the
Company.  The Company
shall indemnify and hold harmless the Investor, the Broker-Dealer, each
affiliate, employee, representative and advisor of and to the Investor and the
Broker-Dealer, and each person, if any, who
controls the Investor or the Broker-Dealer within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act from and
against all losses, claims, damages, liabilities and expenses (including
reasonable costs of defense and investigation and all attorneys’ fees) to which
the Investor, the Broker-Dealer and each such other person may become subject,
under the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities and expenses (or actions in respect thereof) arise out of or are
based upon (i) any violation of law (including United States federal
securities laws) in connection with the transactions contemplated by this
Agreement by the Company or any of its Subsidiaries, affiliates, officers,
directors or employees, (ii) any untrue statement or alleged untrue
statement of a material fact contained, or incorporated by reference, in the
Registration Statement or any amendment thereto or any omission or alleged
omission to state therein, or in any document incorporated by reference
therein, a material fact required to be stated therein or necessary to make the
statements therein not misleading, or (iii) any untrue statement or
alleged untrue statement of a material fact contained, or incorporated by
reference, in the Prospectus, any Issuer Free Writing Prospectus, or in any
amendment thereof or supplement thereto, or in any “issuer information” (as
defined in Rule 433 under the Securities Act) of the Company, which “issuer
information” is required to be, or is, filed with the Commission or otherwise
contained in any Free Writing Prospectus, or any amendment or supplement
thereto, or any omission or alleged omission to state therein, or in any
document incorporated by reference therein, a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that (A) the Company shall not be liable under this Section 8.1(i) to
the extent that a court of competent jurisdiction shall have determined by a
final judgment (from which no further appeals are available) that such loss,
claim, damage, liability or expense resulting directly and solely from any such
acts or failures to act, undertaken or omitted to be taken by the Investor, any
Broker-Dealer or such person through its bad faith or willful 

 

32

 

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

 

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

 

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

 

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

 

33

 

Section 8.2            Indemnification Procedures.  Promptly after a person receives notice of a
claim or the commencement of an action for which the person intends to seek
indemnification under Section 8.1, the person will notify the indemnifying
party in writing of the claim or commencement of the action, suit or proceeding;
provided, however, that failure to notify the indemnifying party
will not relieve the indemnifying party from liability under Section 8.1,
except to the extent it has been materially prejudiced by the failure to give
notice.  The indemnifying party will be
entitled to participate in the defense of any claim, action, suit or proceeding
as to which indemnification is being sought, and if the indemnifying party
acknowledges in writing the obligation to indemnify the party against whom the
claim or action is brought, the indemnifying party may (but will not be
required to) assume the defense against the claim, action, suit or proceeding
with counsel satisfactory to it.  After
an indemnifying party notifies an indemnified party that the indemnifying party
wishes to assume the defense of a claim, action, suit or proceeding, the
indemnifying party will not be liable for any legal or other expenses incurred
by the indemnified party in connection with the defense against the claim,
action, suit or proceeding except that if, in the opinion of counsel to the
indemnifying party, one or more of the indemnified parties should be separately
represented in connection with a claim, action, suit or proceeding, the
indemnifying party will pay the reasonable fees and expenses of one separate
counsel for the indemnified parties. 
Each indemnified party, as a condition to receiving indemnification as
provided in Section 8.1, will cooperate in all reasonable respects with
the indemnifying party in the defense of any action or claim as to which
indemnification is sought.  No
indemnifying party will be liable for any settlement of any action effected
without its prior written consent. 
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested (by written notice provided in accordance with Section 9.4)
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated hereby effected without its written
consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received written notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.  No indemnifying party will, without the prior
written consent of the indemnified party, effect any settlement of a pending or
threatened action with respect to which an indemnified party is, or is informed
that it may be, made a party and for which it would be entitled to
indemnification, unless the settlement includes an unconditional release of the
indemnified party from all liability and claims which are the subject matter of
the pending or threatened action.

 

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

 

34

 

on the other hand, with
respect to the statements or omissions which are the subject of the claim,
action, suit or proceeding that resulted in the loss or liability, as well as
any other relevant equitable considerations.

 

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

 

ARTICLE IX

MISCELLANEOUS

 

Section 9.1            Fees and Expenses.

 

(i)            Each party shall bear its own fees
and expenses related to the transactions contemplated by this Agreement; provided,
however, that the Company shall pay, on the Effective Date, by wire
transfer of immediately available funds to an account designated by the
Investor’s counsel, promptly following the receipt of an invoice therefor, all
reasonable attorneys’ fees and expenses (exclusive of disbursements and
out-of-pocket expenses) incurred by the Investor, up to $35,000, in connection
with the preparation, negotiation, execution and delivery of this Agreement,
legal due diligence of the Company and review of the Registration Statement,
the Base Prospectus, the Current Report, any Permitted Free Writing Prospectus
and all other related transaction documentation. In addition, during any full
calendar quarter that falls within the Investment Period when no Shares have
been purchased or sold because the Company did not deliver a Fixed Request
Notice, the Company shall pay following the end of such calendar quarter,
promptly upon receipt of an invoice therefor, all reasonable attorneys’ fees
and expenses, up to $12,500, representing the due diligence expenses incurred
by the Investor during such calendar quarter. The Company shall pay all U.S.
federal, state and local stamp and other similar transfer and other taxes and
duties levied in connection with issuance of the Shares pursuant hereto.

 

(ii)           If the Company issues a Fixed Request
Notice and fails to deliver the Shares to the Investor on the applicable
Settlement Date and such failure continues for 10 Trading Days, the Company
shall pay the Investor, in cash (or, at the option of the Investor, in shares
of Common Stock which have not been registered under the Securities Act valued
at the applicable Discount Price of the Shares failed to be delivered; provided
that the issuance thereof by the Company would not violate the Securities Act
or any applicable U.S. state securities laws), as liquidated damages for such
failure and not as a penalty, an amount equal to 2.0% of the payment required
to be paid by the Investor on such Settlement Date (i.e., the sum of the Fixed
Amount Requested and the Optional Amount Dollar Amount) for the initial 30 days
following such Settlement Date until the Shares have been delivered, and an
additional 2.0% for each additional 30-day period thereafter until the Shares
have been delivered, which amount shall be prorated for such periods less than
30 days (subject in all cases to the Trading Market Limit).

 

35

 

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

 

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

 

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

 

(i)            (iii)          Each of the Company and the Investor hereby waives to the
fullest extent permitted by applicable law, any right it may have to a trial by
jury in respect to any litigation directly or indirectly arising out of, under
or in connection with this Agreement or the transactions contemplated hereby or
disputes relating hereto. Each of the Company and the Investor (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that
it and the other parties hereto have been induced to enter into this Agreement
by, among other things, the mutual waivers and certifications in this Section 9.2.

 

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

 

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

 

36

 

service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The address for such communications shall be:

 

	
  If to the Company:

  	
  NPS
  Pharmaceuticals, Inc.

  
	
   

  	
  550 Hills Drive, 3rd Floor

  
	
   

  	
  Bedminster, New Jersey
  07921

  
	
   

  	
  Telephone Number: (908)
  450-5300

  
	
   

  	
  Fax: (908) 450-5343

  
	
   

  	
  Attention: Luke M.
  Beshar

  
	
   

  	
   

  
	
  With copies to:

  	
  Curtis, Mallet-Prevost,
  Colt & Mosle LLP

  
	
   

  	
  101 Park Avenue

  
	
   

  	
  New York, New York
  10178

  
	
   

  	
  Telephone Number: (212)
  696-6000

  
	
   

  	
  Fax: (212) 697-1559

  
	
   

  	
  Attention: Lawrence
  Goodman, Esq.

  
	
   

  	
   

  
	
  If to the Investor:

  	
  Azimuth Opportunity
  Ltd.

  
	
   

  	
  c/o Folio
  Administrators Limited

  
	
   

  	
  Folio House

  
	
   

  	
  P.O. Box 800

  
	
   

  	
  Road Town, Tortola
  VG1110

  
	
   

  	
  British Virgin Islands

  
	
   

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

  
	
   

  	
  Fax: (284)
  494-8356/7422

  
	
   

  	
  Attention: Tamara Singh

  
	
   

  	
   

  
	
  With copies to:

  	
  Greenberg Traurig, LLP

  
	
   

  	
  The MetLife Building

  
	
   

  	
  200 Park Avenue

  
	
   

  	
  New York, NY 10166

  
	
   

  	
  Telephone Number: (212)
  801-9200

  
	
   

  	
  Fax: (212) 801-6400

  
	
   

  	
  Attention: Anthony
  J. Marsico, Esq.

  

 

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

 

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

 

37

 

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

 

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

 

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

 

Section 9.9            Survival.  The representations, warranties, covenants
and agreements of the Company and the Investor contained in this Agreement
shall survive the execution and delivery hereof until the termination of this
Agreement; provided, however, that the provisions of Article VII
(Termination), Article VIII (Indemnification), Section 9.1 (Fees and
Expenses), Section 9.2 (Specific Enforcement, Consent to Jurisdiction,
Waiver of Jury Trial), Section 9.4 (Notices), Section 9.8 (Governing
Law), Section 9.9 (Survival) and Section 9.12 (Severability) shall
remain in full force and effect notwithstanding such termination.

 

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

 

Section 9.11         Publicity.  On or after the Effective Date, the Company
may issue a press release or otherwise make a public statement or announcement
with respect to this Agreement or the transactions contemplated hereby or the
existence of this Agreement (including, without limitation, by filing a copy of
this Agreement with the Commission); provided, however, that
prior to issuing any such press release, or making any such public statement or
announcement, the Company shall consult with the Investor on the form and
substance of such press release or other disclosure.

 

Section 9.12         Severability.  The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, and this Agreement 

 

38

 

shall
be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.

 

Section 9.13         Further
Assurances.  From and
after the date of this Agreement, upon the request of the Investor or the
Company, each of the Company and the Investor shall execute and deliver such
instrument, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.

 

[Remainder of this page intentionally
left blank]

 

39

 

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

 

	
   

  	
   

  	
  NPS
  PHARMACEUTICALS, INC.:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Luke M. Beshar

  
	
   

  	
   

  	
   

  	
  Name:  Luke M. Beshar

  
	
   

  	
   

  	
   

  	
  Title:    Senior Vice President and Chief Financial
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AZIMUTH
  OPPORTUNITY LTD.:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/
  Diedre M. McCoy

  
	
   

  	
   

  	
   

  	
  Name:  Diedre M. McCoy

  
	
   

  	
   

  	
   

  	
  Title:    Corporate Secretary

  

 

40

 

ANNEX A TO THE

COMMON STOCK PURCHASE AGREEMENT

DEFINITIONS

 

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

 

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

 

(c)           “Base
Prospectus” shall mean the Company’s prospectus, dated August 5, 2009,
a preliminary form of which is included in the Registration Statement,
including the documents incorporated by reference therein.

 

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

 

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

 

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

 

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

 

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

 

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

 

(j)            “Commission
Documents” shall mean (1) all reports, schedules, registrations,
forms, statements, information and other documents filed by the Company with
the Commission pursuant to the reporting requirements of the Exchange Act,
including all material filed pursuant to Section 13(a) or 15(d) of
the Exchange Act, which have been filed by the Company since December 31,
2008 and which hereafter shall be filed by the Company during the Investment
Period, including, without limitation, the Current Report and the Form 10-K
filed by the Company for its fiscal year ended December 31, 2008 (the “2008
Form 10-K”), (2) the Registration Statement, as the same may be
amended from time to time, the Prospectus and each Prospectus Supplement, and
each Permitted Free Writing Prospectus and (3) all information contained
in such filings and all documents and disclosures that have been and heretofore
shall be incorporated by reference therein.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(w)          “Fixed
Amount Requested” shall mean the amount of a Fixed Request requested by the
Company in a Fixed Request Notice delivered pursuant to Section 2.1
hereof.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

(jj)           “Market
Capitalization” shall be calculated on the Trading Day preceding the
applicable Pricing Period and shall be the product of (x) the number of
shares of Common Stock outstanding and (y) the closing bid price of the
Common Stock, both as determined by Bloomberg Financial LP using the DES and HP
functions.

 

(kk)         “Material
Adverse Effect” shall mean any condition, occurrence, state of facts or
event having, or insofar as reasonably can be foreseen would likely have, any
effect on the business, operations, properties or condition (financial or
otherwise) of the Company that is material and adverse to the Company and its
Subsidiaries, taken as a whole, and/or any condition, occurrence, state of
facts or event that would prohibit or otherwise materially interfere with or
delay the ability of the Company to perform any of its obligations under this
Agreement.

 

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

 

(mm)       “Material Change in
Ownership” shall mean the occurrence of any one or more of the following: (i) the
acquisition by any person, including any syndicate or group deemed to be a “person”
under Section 13(d)(3) of the Exchange Act, of beneficial ownership,
directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, of shares of capital stock or other
securities of the Company entitling such person to exercise, upon an event of
default or default or otherwise, 50% or more of the total voting power of all
series and classes of capital stock and other securities of the Company
entitled to vote generally in the election of directors, other than any such
acquisition by the Company, any Subsidiary of the Company or any employee
benefit plan of the Company; (ii) any consolidation or merger of the
Company with or into any other person, any merger of another person into the
Company, or any conveyance, transfer, sale, lease or other disposition of all
or substantially all of the properties and assets of the Company to another
person, other than (a) any such transaction (x) that does not result
in any reclassification, conversion, exchange or cancellation of outstanding
shares of capital stock of the Company and (y) pursuant to which holders
of capital stock of the Company immediately prior to such transaction have the
entitlement to exercise, directly or indirectly, 50% or more of the total
voting power of all shares of capital stock of the Company entitled to vote
generally in the election of directors of the continuing or surviving person
immediately after such transaction or (b) any merger which is effected
solely to change the jurisdiction of incorporation 

 

 

of
the Company and results in a reclassification, conversion or exchange of
outstanding shares of Common Stock solely into shares of common stock of the
surviving entity; (iii) during any consecutive two-year period,
individuals who at the beginning of that two-year period constituted the Board
of Directors (together with any new directors whose election to the Board of
Directors, or whose nomination for election by the stockholders of the Company,
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose elections or
nominations for election were previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office; or (iv) the
Company is liquidated or dissolved or a resolution is passed by the Company’s
stockholders approving a plan of liquidation or dissolution of the Company.
Beneficial ownership shall be determined in accordance with Rule 13d-3
promulgated by the SEC under the Exchange Act. The term “person” shall include
any syndicate or group which would be deemed to be a “person” under Section 13(d)(3) of
the Exchange Act.

 

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

 

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

 

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

 

(qq)         “Optional
Amount Dollar Amount” shall mean the actual amount of proceeds received by
the Company pursuant to the exercise of an Optional Amount under this
Agreement.

 

(rr)           “Optional
Amount Notice” shall mean a notice sent to the Company with regard to the
Investor’s election to exercise all or any portion of an Optional Amount, as
provided in Section 2.11 hereof and substantially in the form attached
hereto as Exhibit B.

 

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

 

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

 

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

 

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

 

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

 

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

 

 

(yy)         “Prospectus”
shall mean the Base Prospectus, together with any final prospectus filed with
the Commission pursuant to Rule 424(b), as supplemented by any Prospectus
Supplement, including the documents incorporated by reference therein.

 

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

 

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

 

(bbb)      “Registration
Statement” shall mean the registration statement on Form S-3,
Commission File Number 333-159321, filed by the Company with the Commission
under the Securities Act for the registration of the Shares, as such
Registration Statement may be amended and supplemented from time to time
(including pursuant to Rule 462(b) under the Securities Act),
including all documents filed as part thereof or incorporated by reference
therein, and including all information deemed to be a part thereof at the time
of effectiveness pursuant to Rule 430A or Rule 430B under the
Securities Act.

 

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

 

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

 

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

 

(fff)         “Shares”
shall mean shares of Common Stock issuable to the Investor upon exercise of a
Fixed Request and shares of Common Stock issuable to the Investor upon exercise
of an Optional Amount.

 

(ggg)      “Significant
Subsidiary” means any Subsidiary of the Company that would constitute a
Significant Subsidiary of the Company within the meaning of Rule 1-02 of
Regulation S-X of the Commission.

 

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

 

(iii)          “Subsidiary”
shall mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.

 

(jjj)          “Threshold
Price” is the lowest price (except to the extent otherwise provided in Section 2.6)
at which the Company may sell Shares during the applicable Pricing Period as
set forth in a Fixed Request Notice (not taking into account the applicable
percentage discount during such Pricing Period determined in accordance with Section 2.2);
provided, however, that 

 

 

at
no time shall the Threshold Price be lower than $2.00 per share unless the
Company and the Investor mutually shall agree.

 

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

 

(lll)          “Trading Day”
shall mean a full trading day (beginning at 9:30 a.m., New York City time,
and ending at 4:00 p.m., New York City time) on the NASDAQ.

 

(mmm)    “Trading
Market” means the following markets or exchanges on which the Common Stock
is listed or quoted for trading on the date in question: the American Stock
Exchange, the New York Stock Exchange or the NASDAQ.

 

(nnn)      “Trading
Market Limit” means that number of shares which is one less than 20.0% of
the issued and outstanding shares of the Company’s Common Stock as of the
Effective Date.

 

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

 

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

 

 

EXHIBIT
A TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF FIXED REQUEST NOTICE

 

Reference is made to the
Common Stock Purchase Agreement dated as of 
August 5, 2009, (the  “Purchase
Agreement”) between NPS Pharmaceuticals, Inc., a corporation organized
and existing under the laws of the State of Delaware (the “Company”),
and Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands. Capitalized terms used and not
otherwise defined herein shall have the meanings given such terms in the
Purchase Agreement.

 

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

 

	
   

  	
  Fixed Amount Requested:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Optional Amount Dollar
  Amount:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Pricing Period start date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Pricing Period end date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Settlement Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Fixed Request Threshold
  Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Optional Amount Threshold
  Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dollar Amount of

  Common Stock Currently Unissued under

  the Registration Statement;

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dollar Amount of

  Common Stock Currently Available under

  the Aggregate Limit:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  	
  Facsimile
  No.

  
	
   

  	
   

  	
   

  	
   

  
	
  AGREED AND ACCEPTED

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
								

 

 

EXHIBIT
B TO THE

COMMON STOCK PURCHASE AGREEMENT

FORM OF OPTIONAL AMOUNT NOTICE

 

To:

Fax#:

 

Reference is made to the
Common Stock Purchase Agreement dated as of August 5, 2009 (the “Purchase
Agreement”) between NPS Pharmaceuticals, Inc., a corporation organized
and existing under the laws of the State of Delaware (the “Company”),
and Azimuth Opportunity Ltd., an international business company incorporated
under the laws of the British Virgin Islands (the “Investor”).
Capitalized terms used and not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement.

 

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

 

	
  Optional
  Amount Dollar Amount Exercised

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number
  of Shares to be purchased

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  VWAP
  on the date hereof:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Discount
  Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Settlement
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Threshold
  Price:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:  

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address: 

  
	
   

  	
   

  	
  Facsimile No.

  
					

 

 

EXHIBIT
C TO THE

COMMON STOCK PURCHASE AGREEMENT

CERTIFICATE OF THE COMPANY

 

CLOSING
CERTIFICATE

 

August 5, 2009

 

The undersigned, the
[                      ]
of NPS Pharmaceuticals, Inc., a corporation organized and existing under
the laws of the State of Delaware (the “Company”), delivers this
certificate in connection with the Common Stock Purchase Agreement, dated as of
August 5, 2009 (the “Agreement”), by and between the Company and
Azimuth Opportunity Ltd., an international business company incorporated under
the laws of the British Virgin Islands (the “Investor”), and hereby
certifies on the date hereof that (capitalized terms used herein without
definition have the meanings assigned to them in the Agreement):

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Title:

  

 

 

EXHIBIT
D TO THE

COMMON STOCK PURCHASE AGREEMENT

COMPLIANCE CERTIFICATE

 

In connection with the
issuance of shares of common stock of NPS Pharmaceuticals, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”), pursuant to the Fixed Request Notice, dated
[                          ],
delivered by the Company to Azimuth Opportunity Ltd. (the “Investor”)
pursuant to Article II of the Common Stock Purchase Agreement, dated August 5,
2009, by and between the Company and the Investor (the “Agreement”), the
undersigned hereby certifies as follows:

 

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

 

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

 

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

 

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

 

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

 

 

	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:Exhibit 10.2

 

AMENDMENT AGREEMENT

 

Dated as of May 26, 2009

 

by and among

 

AMPHENOL FUNDING CORP.,

as Seller,

 

AMPHENOL CORPORATION,

as Servicer,

 

ATLANTIC ASSET SECURITIZATION LLC,

as Conduit Purchaser,

 

and

 

CALYON NEW YORK BRANCH,

as Administrative Agent for the Purchasers

and Related Committed Purchaser

 

 

This
AMENDMENT AGREEMENT (this “Agreement”), dated as of May 26, 2009
(the “Amendment Effective Date”), is by and among Amphenol Funding
Corp., a Delaware corporation, as Seller (“AFC”), Amphenol Corporation,
a Delaware corporation, as Servicer (“Amphenol”), Atlantic Asset
Securitization LLC, a Delaware limited liability company, as Conduit Purchaser
(“Atlantic”), and Calyon New York Branch, a French banking corporation,
duly licensed under the laws of the State of New York, as Administrative Agent
for the Purchasers and as the sole Related Committed Purchaser as of the date
hereof (“Calyon”).

 

Reference
is hereby made to (i) that certain Receivables Purchase Agreement, dated
as of July 31, 2006 (as amended or otherwise modified, the “Receivables
Purchase Agreement”), among AFC, Amphenol, Atlantic and Calyon; and (ii) that
certain Fee Letter, dated as of July 31, 2006 (as amended or otherwise
modified, the “Fee Letter”), among Atlantic and Calyon, and acknowledged
by AFC and Amphenol.

 

RECITALS

 

WHEREAS,
the parties hereto wish to amend the Receivables Purchase Agreement, as herein
set forth;

 

WHEREAS,
AFC desires that Calyon extend its Commitment in its capacity as a Related
Committed Purchaser under the Receivables Purchase Agreement, and Calyon is
willing to extend such Commitment;

 

NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

 

ARTICLE I

DEFINED TERMS

 

SECTION 1.1
Capitalized terms used herein and not otherwise defined shall have the meaning
set forth in the Receivables Purchase Agreement.

 

ARTICLE II

EXTENSION OF COMMITMENT

 

SECTION 2.1
Receivables Purchase Agreement Commitment. Calyon, in its capacity as a
Related Committed Purchaser under the Receivables Purchase Agreement, agrees
that, effective as of the date hereof, its Commitment Expiry Date is May 25,
2010, subject to extension from time to time in accordance with Section 1.12
of the Receivables Purchase Agreement.

 

ARTICLE III

AMENDMENTS TO THE AFFECTED DOCUMENTS

 

SECTION 3.1
Amendments to Receivables Purchase Agreement.

 

(a)           The definition
of “Stress Factor in” Exhibit I to the Receivables Purchase Agreement is
hereby restated in its entirety to read as follows:

 

 

“Stress
Factor” means 2.25.

 

(b)           Clause f. in Exhibit V
to the Receivables Purchase Agreement is hereby restated in its entirety to
read as follows:

 

f. (i) the (A) the monthly Dilution Ratio shall exceed
7.25%, (B) the 91-120 Days Past Due Ratio shall exceed 8.0%, (C) the
Three Month 61-90 Days Past Due Ratio shall exceed 8.50%, or (D) the Three
Month 91-120 Days Past Due Ratio shall exceed 5.0%;

 

SECTION 3.2
Amendments to Fee Letter. Concurrently with the execution of this
Agreement, the parties hereto are entering into an amendment and restatement of
the Fee Letter (the “Amended Fee Letter”), to be dated as of the date
hereof and containing certain modifications to the terms thereof, and the
parties hereto agree that the definition of “Fee Letter” in Section 1.7 of
the Receivable Purchase Agreement shall be deemed to refer to the Amended Fee
Letter from and after its execution and delivery.

 

ARTICLE IV

CONDITIONS TO EFFECTIVENESS

 

SECTION 4.1
Amendment Effective Date. This Agreement and the provisions contained
herein shall become effective as of the date hereof, provided that (i) Calyon
shall have, in form and substance satisfactory to it, received an original
counterpart (or counterparts) of this Agreement executed by each of the parties
hereto, (ii) the parties hereto shall have executed the Amended Fee
Letter, and (iii) Calyon shall have received all sums due to it as
contemplated thereunder.

 

ARTICLE V

NOTICE, CONFIRMATION, ACKNOWLEDGEMENT,

RELEASE AND REPRESENTATIONS AND WARRANTIES

 

SECTION 5.1
Notice. Each party hereto hereby acknowledges timely notice of the
execution of this Agreement and of the transactions and amendments contemplated
hereby. Each party hereto hereby waives any notice requirement contained in the
Transaction Documents with respect to the execution of this Agreement.

 

SECTION 5.2
Confirmation of the Subject Documents. The parties hereto each hereby
acknowledge and agree that, except as herein expressly amended, the Receivables
Purchase Agreement and each other Transaction Document are each ratified and
confirmed in all respects and shall remain in full force and effect in
accordance with their respective terms.

 

SECTION 5.3
Representations and Warranties. By its signature hereto, each party
hereto hereby represents and warrants that, before and after giving effect to
this Agreement, as follows:

 

(a)           Its representations and
warranties set forth in the Transaction Documents (as amended hereby) are true
and correct as if made on the date hereof, except to the extent they expressly
relate to an earlier date, and except for matters that have been disclosed to
Calyon in writing; and

 

2

 

(b) No Termination Event (as defined in the Receivables Purchase Agreement)
has occurred and is continuing.

 

ARTICLE VI

MISCELLANEOUS

 

SECTION 6.1
GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR
SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK).

 

SECTION 6.2
Execution in Counterparts. This Agreement may be executed in any number
of counterparts, each of which, when so executed, shall be deemed to be an
original, and all of which, when taken together, shall constitute one and the
same agreement.

 

SECTION 6.3
WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO WAIVES THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS OR OTHERWISE. EACH OF THE PARTIES HERETO AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT
ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS
TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY
PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.

 

SECTION 6.4
Entire Agreement. This Agreement, the Receivables Purchase Agreement, as
amended by this Agreement, and the other Transaction Documents, as amended by
this Agreement, embody the entire agreement and understanding of the parties
hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein.

 

SECTION 6.5
Headings. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation hereof or
thereof.

 

SECTION 6.6
Severability. If any provision of this Agreement, or the application
thereof to any party or any circumstance, is held to be unenforceable, invalid
or illegal (in whole or in part) for any reason (in any jurisdiction), the
remaining terms of this Agreement, modified by the deletion of the
unenforceable, invalid or illegal portion (in any relevant jurisdiction), will
continue in full force and effect, and such unenforceability, invalidity or
illegality will not otherwise affect the enforceability, validity or legality
of the remaining terms of this Agreement

 

3

 

so long as this Agreement,
as so modified, continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the deletion of
such portion of this Agreement will not substantially impair the respective
expectations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties.

 

SECTION 6.7
SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK; AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. EACH OF THE
PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW
YORK LAW.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

4

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above
written.

 

	
   

  	
  AMPHENOL FUNDING CORP.,

  
	
   

  	
  as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Diana G. Reardon

  
	
   

  	
  Name:

  	
  Diana G. Reardon

  
	
   

  	
  Title:

  	
  Senior Vice President and
  CFO

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  358 Hall Avenue

  
	
   

  	
  Wallingford, Connecticut 06492

  
	
   

  	
  Attention: Treasurer

  
	
   

  	
  Facsimile: (203) 265-8623

  
	
   

  	
   

  
	
   

  	
  AMPHENOL CORPORATION,

  
	
   

  	
  individually and as
  Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Jositas

  
	
   

  	
  Name:

  	
  David Jositas

  
	
   

  	
  Title:

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  358 Hall Avenue

  
	
   

  	
  Wallingford, Connecticut 06492

  
	
   

  	
  Attention: Treasurer

  
	
   

  	
  Facsimile: (203) 265-8623

  

 

S-1

 

	
   

  	
  ATLANTIC ASSET SECURITIZATION
  LLC,

  
	
   

  	
  as Conduit Purchaser

  
	
   

  	
   

  
	
   

  	
  BY: CALYON NEW YORK
  BRANCH,

  
	
   

  	
  as Attorney-in-fact

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kostantina Kourmpetis

  
	
   

  	
  Name:

  	
  Kostantina Kourmpetis

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sam Pilcer

  
	
   

  	
  Name:

  	
  SAM PILCER

  
	
   

  	
  Title:

  	
  MANAGING DIRECTOR

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  c/o Calyon New York Branch, as

  
	
   

  	
  Administrative Agent

  
	
   

  	
  1301 Avenue of the Americas

  
	
   

  	
  Attention: Matthew Croghan

  
	
   

  	
  Telephone: (212) 459-2619

  
	
   

  	
  Facsimile: (212) 459-3258

  

 

S-2

 

	
   

  	
  CALYON NEW YORK BRANCH,

  
	
   

  	
  as Administrative agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kostantina Kourmpetis

  
	
   

  	
  Name: 

  	
  Kostantina Kourmpetis

  
	
   

  	
  Title: 

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sam Pilcer

  
	
   

  	
  Name: 

  	
  SAM PILCER

  
	
   

  	
  Title: 

  	
  MANAGING DIRECTOR

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  1301 Avenue of the Americas

  
	
   

  	
  Attention: Matthew Croghan

  
	
   

  	
  Telephone: (212) 459-2619

  
	
   

  	
  Facsimile: (212) 459-3258

  

 

S-3

 

	
   

  	
  CALYON NEW YORK BRANCH,

  
	
   

  	
  as a Related Committed
  Purchaser for Atlantic

  
	
   

  	
  Asset Securitization LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kostantina Kourmpetis

  
	
   

  	
  Name: 

  	
  Kostantina Kourmpetis

  
	
   

  	
  Title: 

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sam Pilcer

  
	
   

  	
  Name: 

  	
  SAM PILCER

  
	
   

  	
  Title: 

  	
  MANAGING DIRECTOR

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  1301 Avenue of the Americas

  
	
   

  	
  Attention: Matthew Croghan

  
	
   

  	
  Telephone: (212) 459-2619

  
	
   

  	
  Facsimile: (212) 459-3258

  

 

S-4

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