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Exhibit 10.16  

 
 

COMMON STOCK WARRANT
  THE SCO GROUP, INC.    
    

NEITHER
THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). NO SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR (iii) RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED. THE WARRANT EVIDENCED HEREBY IS NON-TRANSFERABLE 

        Right
to Purchase 25,000

Shares of Common Stock 

        The
SCO Group, a Delaware corporation (the "Company") hereby certified that, for value received, S2 Strategic Consulting, LLC, a Delaware
LLC ("S2"), is entitled, on the terms set forth below, to purchase from the Company at any time during the period commencing on July 1, 2003 (the
"Exercisability Date") and, subject to the provisions of Section 1 below, ending at 5:00 p.m., Mountain Standard time, on July 2,
2005, Twenty five Thousand (25,000) fully paid and nonassessable shares of the common stock, par value $0.001 per share (the "Warrant Shares"), of the
Company, at a price of $8.50 per share, subject to adjustments as provided below (the "Purchase Price"). As used herein, the term
"Stock" shall mean the Company's presently authorized common stock or any stock into or for which such common stock may hereafter be converted or
exchanged prior to or concurrent with the exercise of this Warrant. 

	1.
	Expiration. This Warrant shall expire upon the first to occur of the following: (i) 5:00 p.m., Mountain Standard time, on
July 2, 2005; and (ii) the sale of all or substantially all of the assets of the Company or an acquisition of the Company by another corporation or entity by consolidation, merger or
other reorganization or series of related transactions in which the holders of the Company's outstanding voting stock immediately prior to such transaction own, immediately after such transaction,
securities representing less than fifty percent (50%) of the voting power of the surviving corporation, the surviving entity or the entity that controls such surviving entity (such sale of assets or
acquisition, a "Merger or Consolidation").

	2.
	Exercise of Warrant. 
	(a)
	Exercisability of the Warrant. This Warrant will become exercisable on the Exercisability Date.

	(b)
	Full Exercise. This Warrant may be exercised by the Holder at any time during the period commencing on the Exercisability Date and
ending upon its expiration for the full number of Warrant Shares by surrendering this Warrant and the Notice of Exercise attached hereto as  Exhibit A properly endorsed to the Company's principal
office, accompanied by payment in cash, by check or by wire transfer in an amount equal to
the product of the Purchase Price and the number of Warrant Shares indicated on the face of this Warrant.

	(c)
	Taxes. The Company will not be required to pay any tax imposed in connection with any transfer involved in the issuance of a Warrant or
a certificate for shares of Stock in any name other than that of the original holder hereof, and in such case, the Company will not be required to issue or deliver any stock certificate or warrant
until such tax is paid. 

1

 

	3.
	Representations and Covenants of the Holder. This Warrant has been issued by the Company in reliance upon the following representations
and covenants of the Holder:

	(a)
	Investment Purpose. The Stock issuable upon exercise of the Holder's rights contained herein will be acquired for investment and not
with a view to the sale or distribution of any part thereof, and the holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or
exemption.

	(b)
	Private Issue. The Holder understands (i) that the Stock issuable upon exercise of this Warrant is not registered under the Act
or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and
(ii) that the Company's reliance on such exemption is predicated on the representations set forth in this Section 3.

	(c)
	Disposition of Holder's Rights. This Warrant and all rights hereunder are non-transferable. 

The
Stock issuable upon exercise of this Warrant is non-transferable, except in accordance with the terms of this provision. Notwithstanding the foregoing, the restrictions imposed upon
the transferability of shares of the Stock shall terminate as to any particular share of Stock when (1) the transfer of such security shall have been effectively registered under the Act and
transferred by the Holder thereof in accordance with such registration, or (2) such security shall have been sold without registration in compliance with Rule 144 under the Act or
(3) a letter shall have been issued to the Holder at its request by the staff of the Securities and Exchange Commission or a ruling shall have been issued to the Holder at its request by such
Commission stating that no action shall be recommended by such staff or taken by such Commission, as the case may be, if such security is transferred without registration under the Act in accordance
with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required. Whenever the Stock issuable upon exercise of this
Warrant may be sold pursuant to Rule 144(k), the restrictions imposed herein shall terminate, the Holder or holder of a share of Stock issued upon exercise of this Warrant as to which such
restrictions have terminated shall be entitled to receive from the Company, without expense to such holder, one or more new certificates for the Warrant or for such shares of Stock not bearing any
restrictive legend. 

	(d)
	Financial Risk. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the
merits and risks of its investment, and has the ability to bear the economic risks of its investment.

	(e)
	Risk of No Registration. The Holder understands that if a registration statement covering the transfer of the Stock under the Act is
not in effect when it desires to sell the Stock issuable upon exercise of this Warrant, it may be required to hold such securities for an indefinite period. The Holder also understands that any sale
of Stock issuable upon exercise of this Warrant which might be made by it in reliance upon Rule 144 under the Act may be made only in accordance with the terms and conditions of that Rule.

	4.
	Delivery of Stock Certificates on Exercise. Promptly after the exercise of this Warrant and the payment of the
Purchase Price pursuant to Section 2(b) or after the net exercise of this Warrant pursuant to Section 2(c), the Company will issue to the Holder or upon the order of the Holder
hereof, a certificate or certificates for the number of whole shares of Stock to which the Holder is entitled; provided, however, that (i) the Holder shall have furnished to the Company at the
time of such exercise a signed Investment Representation Statement substantially in the form attached hereto as Exhibit B and (ii) the
Company will place on each certificate the following legend: 

"THE
SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT 

2

 

OF
1933, AS AMENDED (THE "ACT"). THESE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER THE ACT. 

Furthermore,
the Company will place on each certificate any legend required by any applicable state blue sky law. 

	5.
	Adjustment for Dividends in Other Stock or Property; Reclassifications. The Purchase Price and the number and type of Warrant Shares
and/or other property issuable upon exercise of this Warrant shall be appropriately and proportionately adjusted to reflect any stock dividend, stock split, combination of shares, reclassification,
recapitalization, any corporate reorganization other than as provided in Section 1 hereof or other similar event affecting the number or character of outstanding Warrant Shares, so that the
number and type of securities and/or other property issuable upon exercise of this Warrant shall be equal to that which would have been issuable with respect to the number of Warrant Shares subject
hereto at the time of such event, had such Warrant Shares then been outstanding.

	6.
	Certificate as to Adjustments. In each case of an adjustment in the Purchase Price or in the shares of Stock or other stock, securities
or property receivable on the exercise of the Warrant, the Company, at its expense, will compute such adjustment in accordance with the terms of the Warrant and prepare a certificate setting forth
such adjustment and showing in detail the facts upon which the adjustment is based. The Company will mail a copy of each such certificate to the Holder of the Warrant outstanding at that time.

	7.
	Notices of Record Date. In case (i) the Company takes a record of the holders of its Stock (or other stock or securities at the
time receivable upon the exercise of the Warrant) for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for any purchase any shares of stock of any
class or any other securities; or (ii) of any capital reorganization of the Company, any reclassification of the common stock of the Company, any consolidation or merger of the Company with or
into another corporation, including, without limitation, any Merger or Consolidation, or any conveyance of all or substantially all of the assets of the Company to another corporation; or
(iii) of any voluntary dissolution,, liquidation or winding-up on the Company; then, in each such case. The Company will mail or cause to be mailed to each Holder of a Warrant at
the time outstanding a notice specifying, as the case may be, (a) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (b) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and time, if any is to be fixed as of which the holders of record of Stock (or such other stock or securities at the time receivable upon the exercise of the
Warrant) will be entitled to exchange their shares of Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up, and in the case of a reorganization, consolidation, merger or conveyance, the fair market value of such securities or other
property as determined by the Board of Directors of the Company. Such notice shall be mailed at least ten (10) days prior to the date specified therein; provided, however, that in the event of
a Merger or Consolidation the Company shall use its best efforts to provide such notice in accordance with Section 11 below at least twenty-one (21) days prior to the closing
date of such Merger or Consolidation and, in any event, shall provide such notice in accordance with Section 11 below at least fifteen (15) days prior to such closing date.

	8.
	Reservation of Stock Issuable on Exercise of Warrant. The Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant, all such shares of 

3

 

Stock
and other stock, or such other stock, securities and property as from time to time are receivable upon the exercise of the Warrant. 

	9.
	Replacement of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement in such reasonable amount as the Company may determine, or (in the case of mutilation) upon
surrender and cancellation thereof, the Company at its expense, will issue a replacement warrant in substantially identical form to this Warrant.

	10.
	Notices. Any notices, demand, offer, request or other communication required or permitted to be given by either the Company or a Holder
(collectively, a "Notice") pursuant to the terms of this Agreement, if delivered to the Holder, shall be sent to the following address: 

	
	 	 
	

	
 	

 
	Fax No.
	 	 
	With a copy to:	 	 
	
	 	 
	

	
 	

 
	Fax No.
	 	 

or
at such other addressed provided to the Company or such other address as a party may request by notifying the other in writing. 

	(a)
	Any
notice shall be delivered in writing. Any such Notice shall be deemed effectively given the earlier of (i) when received, (ii) when delivered personally,
(iii) one (1) business day after being delivered by facsimile (with receipt of appropriate confirmation), (iv) one (1) business day after being deposited with an overnight
courier service and (v) four (4) days after being deposited in the U.S. mail, First Class with postage prepaid.

	11.
	Change; Waiver. Neither this warrant nor any term hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.

	12.
	No Fractional Shares or Script. No fractional shares or script representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make cash payment therefore upon the basis of the Purchase Price then in effect.

	13.
	No Rights as Stockholder. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company
prior to the exercise of this Warrant.

	14.
	Headings. The headings in this Warrant are for purposes of reference only and shall not be deemed to constitute a part hereof.

	15.
	Counterparts. This Warrant may be executed in two or more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

	16.
	Governing Law. This Warrant is delivered in the State of Delaware and shall be construed in accordance with and governed by the laws of
such state. 

4

 
	17.
	Confidentiality; No Public Disclosure. The terms and conditions of this Warrant are confidential. Neither party shall make any public
disclosure concerning the terms and conditions of this Warrant without the prior written consent of the other party, except as required by the rules and regulations of the securities and Exchange
Commission, the Nasdaq National Market or any other applicable stock exchanges. 

	Dated: July 1, 2003	 	THE SCO GROUP, INC.
	

 	
 	

/s/  ROBERT K. BENCH      
Signature of Authorized Signatory
	

 	
 	

Robert K. Bench, CFO
Print Name and Title
	
Agreed and Accepted:	
 	
S2 Strategic Consulting, LLC
	

 	
 	

/s/  MICHAEL ANDERER      
Signature of Authorized Signatory
	

 	
 	

Michael Anderer, CEO
Print Name and Title

5

  

EXHIBIT A  

 
 

NOTICE OF EXERCISE    
    

TO: THE SCO GROUP, INC.  

        1.     The
undersigned hereby elects to purchase 25,000 shares of Common Stock of The SCO Group, Inc. pursuant to the terms of the attached Warrant. 

        2.     Exercise
(Please initial the blank): 

	
	 	The undersigned elects to exercise the attached Warrant by means of a cash payment, and tenders herewith payment in full for the purchase price of the shares being purchased, together with all applicable transfer taxes,
if any.

	3.
	Please
issue a certificate, or certificates representing said shares of stock, in the name of the undersigned or in such other name as are specified below 

	 	 	
 (Name)	 	 
	 	 	
	 	 
	 	 	
 (Address)	 	 

	4.
	The
undersigned represents that the aforesaid shares of stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection
with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares. In support thereof, the undersigned has executed an Investment Representation
Statement attached hereto as Exhibit B. 

	

 	
 	

Name of Warrantholder
	

 	
 	

Signature of Authorized Signatory
	

 	
 	

Print Name and Title

6

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COMMON STOCK WARRANT THE SCO GROUP, INC.

NOTICE OF EXERCISEEXHIBIT 4.8

 

 

	
   

  

 

 

SECURITIES PURCHASE AGREEMENT

 

 

BY AND BETWEEN

 

 

ABGENIX, INC.

 

 

AND

 

 

ASTRAZENECA UK LIMITED

 

 

OCTOBER 15, 2003

 

	
   

  

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Definitions

  	
   

  
	
   

  	
  1.1.

  	
  General

  	
   

  
	
   

  	
  1.2.

  	
  Defined Terms

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Authorization,
  Purchase and Sale of Securities

  	
   

  
	
   

  	
  2.1.

  	
  Authorization of Securities

  	
   

  
	
   

  	
  2.2.

  	
  Purchase
  and Sale of Securities

  	
   

  
	
   

  	
  2.3.

  	
  Closing(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Representations and Warranties of the Company

  	
   

  
	
   

  	
  3.1.

  	
  Incorporation

  	
   

  
	
   

  	
  3.2.

  	
  Subsidiaries

  	
   

  
	
   

  	
  3.3.

  	
  Capitalization;
  Indebtedness

  	
   

  
	
   

  	
  3.4.

  	
  Authorization

  	
   

  
	
   

  	
  3.5.

  	
  Valid
  Issuance; Offering

  	
   

  
	
   

  	
  3.6.

  	
  Financial Statements

  	
   

  
	
   

  	
  3.7.

  	
  Absence of Certain Changes

  	
   

  
	
   

  	
  3.8.

  	
  Absence
  of Litigation

  	
   

  
	
   

  	
  3.9.

  	
  Intellectual
  Property

  	
   

  
	
   

  	
  3.10.

  	
  Disclosure Documents; Registration Statements

  	
   

  
	
   

  	
  3.11.

  	
  Consents

  	
   

  
	
   

  	
  3.12.

  	
  No
  Conflict, Violation or Default

  	
   

  
	
   

  	
  3.13.

  	
  Compliance
  with Laws; Permits

  	
   

  
	
   

  	
  3.14.

  	
  Tax
  Matters

  	
   

  
	
   

  	
  3.15.

  	
  Nasdaq
  National Market

  	
   

  
	
   

  	
  3.16.

  	
  Title
  to Property and Assets

  	
   

  
	
   

  	
  3.17.

  	
  Labor
  Relations

  	
   

  
	
   

  	
  3.18.

  	
  Environmental
  Matters

  	
   

  
	
   

  	
  3.19.

  	
  Insurance

  	
   

  
	
   

  	
  3.20.

  	
  Related
  Party Transactions

  	
   

  
	
   

  	
  3.21.

  	
  Solvency

  	
   

  
	
   

  	
  3.22.

  	
  Registration
  Rights

  	
   

  
	
   

  	
  3.23.

  	
  Form
  S-3 Eligibility

  	
   

  
	
   

  	
  3.24.

  	
  No
  Integrated Offering

  	
   

  
	
   

  	
  3.25.

  	
  General
  Solicitation

  	
   

  
	
   

  	
  3.26.

  	
  Brokers and Finders

  	
   

  
	
   

  	
  3.27.

  	
  Rights Plan

  	
   

  
	
   

  	
  3.28.

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations and Warranties of The Purchaser

  	
   

  
	
   

  	
  4.1.

  	
  Organization

  	
   

  
	
   

  	
  4.2.

  	
  Authorization

  	
   

  
	
   

  	
  4.3.

  	
  Purchase
  Entirely for Own Account Etc

  	
   

  
	
   

  	
  4.4.

  	
  Investor
  Status; Etc

  	
   

  
	
   

  	
  4.5.

  	
  Securities
  Not Registered

  	
   

  
	
   

  	
  4.6.

  	
  No Conflict

  	
   

  

 

 

	
   

  	
  4.7.

  	
  Consents

  	
   

  
	
   

  	
  4.8.

  	
  Purchaser’s Ownership of Common Stock

  	
   

  
	
   

  	
  4.9.

  	
  Brokers
  and Finders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Covenants

  	
   

  
	
   

  	
  5.1.

  	
  HSR Act Filings

  	
   

  
	
   

  	
  5.2.

  	
  Other Governmental Approvals

  	
   

  
	
   

  	
  5.3.

  	
  Further
  Assurances

  	
   

  
	
   

  	
  5.4.

  	
  Standstill

  	
   

  
	
   

  	
  5.5.

  	
  Form D; Blue Sky Laws

  	
   

  
	
   

  	
  5.6.

  	
  Reservation of Shares; Compliance with Listing Rules

  	
   

  
	
   

  	
  5.7.

  	
  Best
  Efforts

  	
   

  
	
   

  	
  5.8.

  	
  Rights
  Agreement and Similar Plans or Agreements

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Conditions Precedent

  	
   

  
	
   

  	
  6.1.

  	
  Conditions to the Obligation of the Purchaser to Consummate the
  Initial Closing

  	
   

  
	
   

  	
  6.2.

  	
  Conditions to the Obligation of the Company
  to Consummate the Initial Closing

  	
   

  
	
   

  	
  6.3.

  	
  Conditions to the Obligation of the
  Purchaser to Consummate each Subsequent Closing

  	
   

  
	
   

  	
  6.4.

  	
  Conditions to the Obligation of the Company
  to Consummate each Subsequent Closing

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Registration of the Securities; Compliance
  with the Securities Act

  	
   

  
	
   

  	
  7.1.

  	
  Transfer Restrictions

  	
   

  
	
   

  	
  7.2.

  	
  Legends

  	
   

  
	
   

  	
  7.3.

  	
  Revised
  Legends

  	
   

  
	
   

  	
  7.4.

  	
  State Restrictions

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Registration Rights

  	
   

  
	
   

  	
  8.1.

  	
  Mandatory Registration

  	
   

  
	
   

  	
  8.2.

  	
  Registration Procedures and Other Matters

  	
   

  
	
   

  	
  8.3.

  	
  Transfer of Securities; Suspension

  	
   

  
	
   

  	
  8.4.

  	
  Obligations of the Holders

  	
   

  
	
   

  	
  8.5.

  	
  Registration Expenses

  	
   

  
	
   

  	
  8.6.

  	
  Indemnification

  	
   

  
	
   

  	
  8.7.

  	
  Registration Defaults

  	
   

  
	
   

  	
  8.8.

  	
  Rule 144

  	
   

  
	
   

  	
  8.9.

  	
  Transfer of Registration Rights

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Termination

  	
   

  
	
   

  	
  9.1.

  	
  Conditions of Termination

  	
   

  
	
   

  	
  9.2.

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Information

  	
   

  
	
   

  	
  10.1.

  	
  SEC Filings and Financial Statements

  	
   

  
	
   

  	
  10.2.

  	
  Press
  Releases

  	
   

  

 

 

	
   

  	
  10.3.

  	
  Nonpublic Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Miscellaneous Provisions

  	
   

  
	
   

  	
  11.1.

  	
  Public Statements or Releases

  	
   

  
	
   

  	
  11.2.

  	
  Survival; Rights Cumulative

  	
   

  
	
   

  	
  11.3.

  	
  Pronouns

  	
   

  
	
   

  	
  11.4.

  	
  Notices

  	
   

  
	
   

  	
  11.5.

  	
  Captions

  	
   

  
	
   

  	
  11.6.

  	
  Severability

  	
   

  
	
   

  	
  11.7.

  	
  Governing
  Law

  	
   

  
	
   

  	
  11.8.

  	
  Service of Process; Consent to
  Jurisdiction; Venue

  	
   

  
	
   

  	
  11.9.

  	
  Waiver

  	
   

  
	
   

  	
  11.10.

  	
  Expenses

  	
   

  
	
   

  	
  11.11.

  	
  Assignment

  	
   

  
	
   

  	
  11.12.

  	
  Counterparts

  	
   

  
	
   

  	
  11.13.

  	
  Entire Agreement; Amendments

  	
   

  
	
   

  	
  11.14.

  	
  No Right of Setoff

  	
   

  

 

	
  EXHIBIT A

  	
  [RESERVED]

  
	
   

  	
   

  
	
  EXHIBIT B

  	
  CERTIFICATE
  OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES A-1 CONVERTIBLE PREFERRED
  STOCK

  
	
   

  	
   

  
	
  EXHIBIT C

  	
  CERTIFICATE OF DESIGNATIONS, PREFERENCES
  AND RIGHTS OF THE SERIES A-2 CONVERTIBLE PREFERRED STOCK

  
	
   

  	
   

  
	
  EXHIBIT D

  	
  FORM
  OF CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE SERIES A-3
  CONVERTIBLE PREFERRED STOCK AND SERIES A-4 CONVERTIBLE PREFERRED STOCK

  
	
   

  	
   

  
	
  EXHIBIT E

  	
  MILESTONE
  EVENTS

  
	
   

  	
   

  
	
  EXHIBIT F-A

  	
  FORM
  OF LEGAL OPINION - INITIAL CLOSING

  
	
   

  	
   

  
	
  EXHIBIT F-B

  	
  FORM
  OF LEGAL OPINION - INITIAL CLOSING

  
	
   

  	
   

  
	
  EXHIBIT G

  	
  FORM
  OF AMENDMENT NO. 1 TO RIGHTS AGREEMENT

  
	
   

  	
   

  
	
  EXHIBIT H

  	
  MATTERS TO BE COVERED BY LEGAL OPINION -
  SUBSEQUENT CLOSING

  

 

 

This SECURITIES
PURCHASE AGREEMENT (this “Agreement”) is dated as of the 15th day
of October, 2003 by and between Abgenix, Inc., a Delaware corporation with its
principal office at 6701 Kaiser Drive, Fremont, California 94555, United States
of America (the “Company”), and AstraZeneca UK Limited, a company
organized under the laws of England with its principal office at Alderley
House, Alderley Park, Macclesfield, Cheshire SK10 4TF, United Kingdom (the “Purchaser”).

 

WHEREAS, the
Company and the Purchaser are, simultaneously herewith, entering into a
Collaboration Agreement, of even date herewith (the “Collaboration Agreement”),
and, in connection with the transactions contemplated thereby, the Company
desires to issue and sell to the Purchaser, and the Purchaser desires to
purchase from the Company, certain securities of the Company, upon the terms
and conditions set forth herein;

 

WHEREAS, the
Company proposes to designate and authorize for issuance (i) 50,000 shares of
its Series A-1 Convertible Preferred Stock, $0.0001 par value per share (the “Series
A-1 Preferred Stock”), having the terms, rights, limitations and
preferences set forth in the form of Certificate of Designations attached
hereto as Exhibit B (the “Series A-1 Certificate of Designation”),
(ii) 50,000 shares of its Series A-2 Convertible Preferred Stock, $0.0001 par
value per share (the “Series A-2 Preferred Stock”), having the terms,
rights, limitations and preferences set forth in the form of Certificate of
Designations attached hereto as Exhibit C (the “Series A-2
Certificate of Designation”), which shares of Series A-2 Preferred Stock
will be exchangeable for a Convertible Subordinated Promissory Note of the
Company in the form attached to the Series A-2 Certificate of Designation as
Exhibit A, (iii) 30,000 shares of its Series A-3 Convertible Preferred Stock,
$0.0001 par value per share (the “Series A-3 Preferred Stock”), and (iv)
30,000 shares of its Series A-4 Convertible Preferred Stock, $0.0001 par value
per share (the “Series A-4 Preferred Stock”) (each of the Series A-3
Preferred Stock and the Series A-4 Preferred Stock having the terms, rights,
limitations and preferences set forth in the form of Certificate of
Designations attached hereto as Exhibit D (the “Series A-3/A-4
Certificate of Designation”)), which shares of Series A-1 Preferred Stock,
Series A-2 Preferred Stock, Series A-3 Preferred Stock, Series A-4 Preferred
Stock and the Convertible Note, if any, will, upon issuance, be convertible
into authorized but unissued shares of common stock, $0.0001 par value per
share, of the Company (the “Common Stock”);

 

WHEREAS, the
Company desires initially to issue and sell to the Purchaser, and the Purchaser
desires initially to purchase from the Company, 50,000 shares of Series A-1
Preferred Stock and 50,000 shares of Series A-2 Preferred Stock (the “Initial
Preferred”), upon the terms and conditions set forth herein; and

 

WHEREAS, upon the
achievement of certain milestones relating to the collaborative efforts
contemplated by the Collaboration Agreement, as more fully specified herein,
the Company desires to have the option to issue and sell to the Purchaser up to
30,000 shares of Series A-3 Preferred Stock and up to 30,000 shares of Series
A-4 Preferred Stock (collectively, the “Conditional Preferred”), upon
the terms and conditions set forth herein;

 

 

NOW THEREFORE, in
consideration of the mutual agreements, representations, warranties and
covenants herein contained, the parties hereto, intending to be legally bound,
hereby agree as follows:

 

1.                                       Definitions.

 

1.1.                              General.  Unless otherwise specified, references in
this Agreement to any section are references to such section of this Agreement
and, unless otherwise specified, references in any section or definition to any
clause are references to such clause of such section or definition.  Terms for which meanings are defined in this
Agreement shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
permit or require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The term
“including” means including, without limiting the generality of any description
preceding such term.  Each reference
herein to any Person shall include a reference to such Person’s successors and
permitted assigns.  Unless otherwise
specified, references to any agreement, instrument or other document in this
Agreement refer to such agreement, instrument or other document as originally
executed or, if subsequently varied, replaced or supplemented from time to
time, as so varied, replaced or supplemented and in effect at the relevant time
of reference thereto.

 

1.2.                              Defined Terms.  As
used in this Agreement, the following terms shall have the following respective
meanings:

 

(a)                                “Adverse
Rights Plan Event” has the meaning set forth in Section 5.8.

 

(b)                               “Affiliate”
means, with respect to any Person, any other Person controlling, controlled by
or under direct or indirect common control with such Person.  For the purposes of this definition “control,”
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” shall have meanings correlative to
the foregoing.

 

(c)                                “Agreement”
has the meaning set forth in the first paragraph hereof.

 

(d)                               “Amended
Rights Agreement” has the meaning set forth in Section 6.1(k).

 

(e)                                “Beneficially
Own” or “Beneficial Ownership” is defined in Rules 13d-3 and 13d-5
of the Exchange Act.

 

(f)                                  “Board
of Directors” means the board of directors of the Company.

 

(g)                               “Business
Day” means any day that, in the State of New York and the State of
California, is not a day on which banking institutions are authorized by law or
regulation to close.

 

(h)                               “Certificates
of Designation” means the Series A-1 Certificate of Designation, Series A-2
Certificate of Designation and the Series A-3/A-4 Certificate of Designation.

 

2

 

(i)                                   “Closings”
has the meaning set forth in Section 2.3.

 

(j)                                   “Collaboration
Agreement” has the meaning set forth in the preamble hereto.

 

(k)                                “Commitment”
has the meaning set forth in Section 3.7.

 

(l)                                   “Common
Stock” has the meaning set forth in the preamble hereto.

 

(m)                             “Company”
has the meaning set forth in the first paragraph hereof.

 

(n)                               “Conditional
Preferred” has the meaning set forth in the preamble hereto.

 

(o)                               “Conditional
Preferred Option” has the meaning set forth in Section 2.2.

 

(p)                               “Controlled
Entity” has the meaning set forth in Section 5.4.

 

(q)                               “Conversion
Stock” means the shares of Common Stock issuable upon conversion of the
Preferred Stock or the Convertible Note, if any.

 

(r)                                  “Convertible
Note” means a Convertible Subordinated Promissory Note of the Company in
the form attached to the Series A-2 Certificate of Designation as Exhibit A,
which may be issued by the Company pursuant to Section 7 of the Series A-2
Certificate of Designation.

 

(s)                                “Correspondence”
has the meaning set forth in Section 11.4.

 

(t)                                  “Current
Average Market Price” means, with respect to shares of the Common Stock as
of a given day, the arithmetic mean of the daily Market Prices of shares of the
Common Stock for the 30 consecutive Trading Days commencing 45 Trading Days
before the date of determination, calculated by taking the sum of the Market
Prices for shares of the Common Stock for each of the 30 days in the specified
period and dividing the foregoing sum by 30.

 

(u)                               “Disclosure
Documents” means the Company’s Annual Report on Form 10-K for the year
ended December 31, 2002, the Company’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003, the Company’s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2003, and any Current Reports on Form 8-K filed by
the Company on or after August 14, 2003, together in each case with any
documents incorporated by reference therein or exhibits thereto.

 

(v)                               “Disclosure
Schedule” has the meaning set forth in Section 3.

 

(w)                             “Employees”
has the meaning set forth in Section 3.17.

 

(x)                                 “Environmental
Laws” has the meaning set forth in Section 3.18.

 

3

 

(y)                               “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and all of the
rules and regulations promulgated thereunder.

 

(z)                                 “Fifteen-Day
Notice Period” has the meaning set forth in Section 8.1(e).

 

(aa)                          “Final
Closing Date” means the later of (a) November 14, 2003, and (b) the date
that is ten (10) days after the receipt of all required approvals or waivers
under any antitrust laws required to be sought pursuant to the provisions of
Section 5.1 but in no event later than March 31, 2004.

 

(bb)                        “Final
Date” has the meaning set forth in Section 8.1.

 

(cc)                          “Financial
Statements” has the meaning set forth in Section 3.6.

 

(dd)                        “First
Milestone Event” means the achievement of the research and development
milestone described as the “First Milestone” in Exhibit E.

 

(ee)                          “Forced
Conversion Event” has the meaning set forth in Section 8.1(e).

 

(ff)                              “Forced
Conversion Shares” has the meaning set forth in Section 8.1(e).

 

(gg)                        “GAAP”
has the meaning set forth in Section 3.6.

 

(hh)                        “Holders”
has the meaning set forth in Section 8.3.

 

(ii)                                “HSR
Act” has the meaning set forth in Section 3.11.

 

(jj)                                “Indebtedness”
means, with respect to any Person, (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
Person in respect of letters of credit or similar instruments (including
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay deferred and unpaid purchase price of property or services, which
purchase price is due more than 6 months after the date of placing such
property or service or taking delivery or title thereto or the completion of
such services, except trade payables, (v) all capitalized lease obligations of
such Person, (vi) all indebtedness of other Persons secured by a lien on any
asset of such Person, whether or not such indebtedness is assumed by such
Person, (vii) all indebtedness of other Persons guaranteed by such Person to
the extent such indebtedness is guaranteed by such Person and (viii) to the
extent not otherwise included in this definition, obligations under currency
agreements and interest rate agreements.

 

(kk)                          “Initial
Closing” has the meaning set forth in Section 2.3.

 

(ll)                                “Initial
Closing Date” has the meaning set forth in Section 2.3.

 

(mm)                    “Initial
Preferred” has the meaning set forth in the preamble hereto.

 

4

 

(nn)                        “Initial
Registration Statement” has the meaning set forth in Section 8.1.

 

(oo)                        “Intellectual
Property” has the meaning set forth in Section 3.9.

 

(pp)                        “Market
Price” means, with respect to a particular security, on any given day, the
last reported sales price or, in case no such reported sale takes place on such
date, the average of the reported closing bid and asked prices in either case
on the NNM or, if the security is not listed or admitted to trading on the NNM,
on the principal national securities exchange on which the security is listed
or admitted to trading or, if not listed or admitted to trading on the NNM or
any national securities exchange, the last reported sales price of the security
as quoted on NASDAQ or, in case no reported sales takes place, the average of
the closing bid and asked prices as quoted on NASDAQ or any comparable system
or, if the security is not quoted on NASDAQ or any comparable system, the
closing sales price or, in case no reported sale takes place, the average of
the closing bid and asked prices, as furnished by any two members of the
National Association of Securities Dealers, Inc. selected from time to time by
the Maker for that purpose.  If the
Common Stock is not listed and traded in a manner that the quotations referred
to above are available for the period required hereunder, the Market Price per
share of Common Stock shall be deemed to be the fair value per share of such
security as determined in good faith by the Board of Directors.

 

(qq)                        “Material
Adverse Effect” means, individually or collectively, a material adverse
effect on, or a material adverse change in, or group of such effects on or
changes in, (i) the business, operations, condition (financial or otherwise),
results of operations, properties, assets or liabilities (contingent or
otherwise) of the Company and its Subsidiaries, taken as a whole or
(ii) the ability of the Company to perform its obligations under or with
respect to this Agreement, the Preferred Stock, the Convertible Note, if any,
or any Promissory Note.

 

(rr)                              “Milestone
Event” means the First Milestone Event and the Second Milestone Event.

 

(ss)                          “NNM”
means the Nasdaq National Market.

 

(tt)                              “Non-Notifying
Party” has the meaning set forth in Section 5.4.

 

(uu)                        “Notifying
Party” has the meaning set forth in Section 5.4.

 

(vv)                        “Option
Exercise Notice” has the meaning set forth in Section 2.2.

 

(ww)                    “Person”
means an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association or joint
venture.

 

(xx)                            “Preemptive
Notice” has the meaning set forth in Section 5.4.

 

(yy)                        “Preferred
Stock” means the Initial Preferred and the Conditional Preferred.

 

5

 

(zz)                            “Promissory
Note” means any Subordinated Promissory Note in the form attached as an
Exhibit to the Certificates of Designation or any Subordinated Promissory Note
in the form attached as Exhibit A to the Convertible Note.

 

(aaa)                    “Prospectus”
has the meaning set forth in Section 8.1.

 

(bbb)                 “Purchaser”
has the meaning set forth in the first paragraph hereof.

 

(ccc)                    “Registrable
Securities” means the shares of Common Stock issuable upon conversion of
the Preferred Stock and the Convertible Note, if any, together with all
additional shares of the Company’s capital stock issued or issuable in
connection therewith or with respect thereto as the result of any stock split,
stock dividend or distribution, exchange, recapitalization, anti-dilution
adjustment, or any similar transaction.

 

(ddd)                 “Registration
Default” has the meaning set forth in Section 8.7.

 

(eee)                    “Registration
Default Price” means

 

(i)                                     for
purposes of Section 8.7(b), with respect to shares of Common Stock and any
given 30-day period or part thereof during which a Registration Default has
occured or is continuing, the conversion price per share at which such shares
of Common Stock were delivered upon conversion of shares of Preferred Stock or
the Convertible Note, as the case may be; and

 

(ii)                                  for
purposes of Section 8.7(d), with respect to shares of Common Stock, the greater
of (A) the arithmetic mean of the daily Market Prices of shares of Common Stock
for the ten (10) consecutive Trading Days commencing on the eleventh (11th)
Trading Day preceding the closing date for the purchase of shares of Common
Stock pursuant to Section 8.7(d) and ending on the Trading Day next preceding
such closing date and (B) the arithmetic mean of the daily Market Prices of
shares of Common Stock for the ten (10) consecutive Trading Days commencing on
the eleventh (11th) Trading Day preceding the first day of the Registration
Default giving rise to the right of the Company to purchase Registrable
Securities pursuant to Section 8.7(d) and ending on the Trading Day next
preceding the first day of such Registration Default.

 

(fff)                          “Registration
Statement(s)” has the meaning set forth in Section 8.1 and, for purposes of
Section 8.6, the meaning set forth in Section 8.6.

 

(ggg)                 “Rights
Agreement” has the meaning set forth in Section 6.1(k).

 

(hhh)                 “SEC”
means the Securities and Exchange Commission.

 

(iii)                             “Second
Milestone Event” means the achievement of the research and development
milestone described as the “Second Milestone” in Exhibit E.

 

(jjj)                             “Securities”
means the shares of Preferred Stock, the Convertible Note, if any, and any
Promissory Notes issued pursuant to this Agreement or in connection with the
transactions contemplated hereby.

 

6

 

(kkk)                    “Securities
Act” means the Securities Act of 1933, as amended, and all of the rules and
regulations promulgated thereunder.

 

(lll)                             “Selling
Stockholder” has the meaning set forth in Section 8.6.

 

(mmm)           “Series A-1
Certificate of Designation” has the meaning set forth in the preamble
hereto.

 

(nnn)                 “Series A-2
Certificate of Designation” has the meaning set forth in the preamble
hereto.

 

(ooo)                 “Series
A-3/A-4 Certificate of Designation” has the meaning set forth in the
preamble hereto.

 

(ppp)                 “Series A-1
Preferred Stock” has the meaning set forth in the preamble hereto.

 

(qqq)                 “Series A-2
Preferred Stock” has the meaning set forth in the preamble hereto.

 

(rrr)                          “Series
A-3 Option” has the meaning set forth in Section 2.2.

 

(sss)                    “Series A-3
Preferred Stock” has the meaning set forth in the preamble hereto.

 

(ttt)                          “Series
A-4 Option” has the meaning set forth in Section 2.2.

 

(uuu)                 “Series A-4
Preferred Stock” has the meaning set forth in the preamble hereto.

 

(vvv)                 “Standstill
Period” means the period commencing on the date hereof and ending on the
first day on which (i) either (A) all shares of Preferred Stock issuable
pursuant to this Agreement have been issued by the Company to the Purchaser, or
(B) each of the Series A-3 Option and the Series A-4 Option has expired without
having been exercised by the Company or has been terminated by Purchaser in
accordance with the terms of Section 2.3(b); (ii) no shares of Preferred Stock
remain outstanding as a result of any and all such shares having been converted
or redeemed; and (iii) no portion of the principal amount of the Convertible
Note, if any, remains outstanding as a result of the entire principal amount
having been converted or repaid.

 

(www)           “Standstill-Related
Notice” has the meaning set forth in Section 5.4.

 

(xxx)                       “Standstill
Restricted Securities” has the meaning set forth in Section 5.4.

 

(yyy)                 “Subsequent
Closing” has the meaning set forth in Section 2.3.

 

(zzz)                       “Subsequent
Closing Date” has the meaning set forth in Section 2.3.

 

7

 

(aaaa)              “Subsequent
Registration Statements” has the meaning set forth in Section 8.1.

 

(bbbb)          “Subsidiary” has
the meaning given to such term in Rule 12b-2 under the Exchange Act.

 

(cccc)              “Suspension”
has the meaning set forth in Section 8.3.

 

(dddd)          “Suspension Notice”
has the meaning set forth in Section 8.3.

 

(eeee)              “Suspension
Period” has the meaning set forth in Section 8.3.

 

(ffff)                      “Trading
Day” means, with respect to any security, each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are generally not
traded on the principal exchange or market in which such security is traded.

 

(gggg)          “Transferee” has
the meaning set forth in Section 8.3.

 

(hhhh)           “Voting Securities”
has the meaning set forth in Section 5.4.

 

2.                                       Authorization, Purchase and Sale of
Securities.

 

2.1.                              Authorization of Securities.  The Company has, or on or before the Initial
Closing Date will have, (a) created a series of its preferred stock consisting
of 50,000 shares of Series A-1 Preferred Stock and authorized the issuance
thereof, (b) created a series of its preferred stock consisting of 50,000
shares of Series A-2 Preferred Stock and authorized the issuance thereof, (c)
authorized the issuance of the shares of Conversion Stock issuable upon
conversion of the Initial Preferred, (d) authorized a series of its preferred
stock consisting of 30,000 shares of Series A-3 Preferred Stock, (e) authorized
a series of its preferred stock consisting of 30,000 shares of Series A-4
Preferred Stock, and (f) authorized the issuance of the shares of Conversion
Stock issuable upon the conversion of the Conditional Preferred.

 

2.2.                              Purchase
and Sale of Securities.

 

(a)          Purchase and Sale of
Initial Preferred.  Subject to and
upon the terms and conditions set forth in this Agreement, at the Initial Closing,
the Company shall issue and sell to the Purchaser, and the Purchaser shall
purchase from the Company, 50,000 shares of Series A-1 Preferred and 50,000
shares of Series A-2 Preferred, all at a purchase price of $1,000 per share.

 

(b)         Purchase and Sale of
Subsequent Preferred Stock.  Subject
to and upon the terms and conditions set forth in this Agreement, at one or
more Subsequent Closings, the Company shall have the option (but shall not be
obligated) to issue and sell to the Purchaser, and upon the exercise by the
Company of such option, the Purchaser shall purchase from the Company, (i) up
to 30,000 shares of Series A-3 Preferred Stock (the “Series A-3 Option”)
and (ii) up to 30,000 shares of Series A-4 Preferred Stock (the “Series A-4
Option;” and, together with the Series A-3 Option, a “Conditional
Preferred Option”), in each case at a purchase price of $1,000 per
share.  The Company shall have the right
to exercise the Series A-3 Option at any time and from time to time within the
one hundred eighty (180) days following the date on which

 

8

 

the First Milestone Event occurs and shall
have the right to exercise the Series A-4 Option at any time and from time to
time within the one hundred eighty (180) days following the date on which the
Second Milestone Event occurs; provided, however, that each
exercise of a Conditional Preferred Option shall be for the issuance and sale
by the Company of not less than ten thousand (10,000) shares; provided, further,
that the Company shall not have the right to exercise the Series A-3 Option
more than two (2) times and shall not have the right to exercise the Series A-4
Option more than two (2) times.  The
Series A-3 Option and the Series A-4 Option are exercisable by the Company upon
thirty (30) days’ prior written notice (each an “Option Exercise Notice”)
to the Purchaser, which notice shall indicate the type (i.e., Series A-3 Preferred Stock or Series
A-4 Preferred Stock) and number of shares of Conditional Preferred to be issued
and sold at a Subsequent Closing.

 

2.3.                              Closing(s).

 

(a)          The initial closing (the
“Initial Closing”) shall take place at the offices of Covington &
Burling, 1330 Avenue of the Americas, New York, New York on the fifth day (or,
if such day is not a Business Day, then on the next Business Day thereafter)
following the date upon which the conditions to the obligations of the parties
to proceed with the Initial Closing set forth in Sections 6.1(h) and 6.2(e)
have been satisfied, provided that, as of such date, all terms and conditions
set forth in this Agreement are satisfied with respect to the issuance of the
shares of Initial Preferred, or in the event that as of such date one or more
such terms or conditions are not satisfied, then the Initial Closing shall take
place on the first date on which all such terms and conditions are satisfied
with respect to such issuance (such closing date, the “Initial Closing Date”).  At the Initial Closing, the Company shall
deliver to each Purchaser a certificate for the number of shares of Preferred
Stock being purchased by it at the Initial Closing as set forth in Section
2.2(a), against payment to the Company of the purchase price therefor set forth
in Section 2.2(a) by wire transfer to the Company of immediately available
funds.

 

(b)         Each subsequent closing,
if any (each, a “Subsequent Closing”), shall take place at the offices
of Covington & Burling, 1330 Avenue of the Americas, New York, New York on
the thirtieth day (or, if such day is not a Business Day, then on the next
Business Day thereafter) following the date of the Company’s Option Exercise
Notice, provided that, as of such date, all terms and conditions set forth in
this Agreement are satisfied with respect to the issuance of the shares of
Conditional Preferred that are the subject of such Option Exercise Notice, or
in the event that as of such date one or more such terms or conditions are not
satisfied, then such Subsequent Closing shall take place on the first date on
which all such terms and conditions are satisfied with respect to such issuance
(each such closing date, a “Subsequent Closing Date”).  In
the event that one or more conditions set forth in Section 6.3 are not
satisfied with respect to the issuance of the shares of Conditional Preferred
that are the subject of an Option Exercise Notice within two hundred seventy
(270) days following the date of the related Milestone Event, then as of such
date the provisions of this Agreement relating to the right and obligation of the Company to sell such shares to the
Purchaser and the right and obligation
of the Purchaser to purchase such shares from the Company shall, at the
election of the Purchaser made by written notice to the Company at any time
following the expiration of such two hundred seventy (270) day period, terminate and be of no further force or
effect.  At each Subsequent
Closing, the Company shall deliver to each Purchaser a certificate for the
number of shares of the relevant series of Conditional Preferred issuable to
the Purchaser at such Subsequent Closing,

 

9

 

against payment to the Company of the
purchase price therefor set forth in Section 2.2(b).  The Initial Closing and each Subsequent Closing, if any, are
collectively referred to as the “Closings.”

 

3.                                       Representations and Warranties
of the Company.  The Company hereby
represents and warrants to the Purchaser that, (a) in the case of Sections
3.7(a) and Section 3.9, except as set forth in the Disclosure Documents and,
(b) in the case of all sections and subsections of this Article 3, except as
set forth in the corresponding numbered section of the disclosure schedule
delivered to the Purchaser prior to the execution of this Agreement (the “Disclosure
Schedule”):

 

3.1.                              Incorporation.
  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly registered, qualified and authorized to transact business
and is in good standing in each jurisdiction in which the character of its
properties or the nature or conduct of its business requires such registration,
qualification or authorization, except where the failure to so qualify or
register would not be reasonably expected to have a Material Adverse Effect.  The Company has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now conducted and as presently proposed to be conducted.

 

3.2.                              Subsidiaries.  Each Subsidiary of the Company has been duly
incorporated or formed and organized, is validly existing and in good standing
under the laws of the jurisdiction of its incorporation or other formation, has
the corporate or other power and authority to own, lease and operate its
properties and to conduct its business as now conducted and as presently
proposed to be conducted and is duly registered, qualified and authorized to
transact business and is in good standing in each jurisdiction in which the
nature or conduct of its business or the character of its properties requires
such registration, qualification or authorization, except where the failure to
so qualify or register would not be reasonably expected to have a Material
Adverse Effect.

 

3.3.                              Capitalization;
Indebtedness.

 

(a)          As of the date of this
Agreement,

 

(i)                                     the
authorized capital stock of the Company consists of 220,000,000 shares of
Common Stock, par value $0.0001, and 5,000,000 shares of preferred stock, par
value $0.0001 per share;

 

(ii)                                  (A)
50,000 shares of the Company’s authorized preferred stock have been designated
as shares of Series A Participating Preferred Stock, par value $.0001 per
share, and (B) one share of the Company’s preferred stock has been designated
as a Special Voting Share, par value $.0001 per share;

 

(iii)                               no
other shares of the Company’s preferred stock have been designated;

 

(iv)                              50,000
shares of preferred stock have been reserved for issuance pursuant to the terms
of the Amended Rights Agreement; and

 

10

 

(v)                                 there
are no shares of the Company’s preferred stock issued and outstanding.

 

The statements made in clauses (i) through (v) of this Section 3.3(a)
will also be true and accurate as of the Initial Closing Date as though made on
and as of such date, except insofar as the issuance of shares of the Initial
Preferred may affect the truth and accuracy thereof.

 

(b)         As of the Initial Closing
Date,

 

(i)                                     50,000
shares of the Company’s preferred stock will have been designated as Series A-1
Preferred Stock, par value $.0001 per share, and

 

(ii)                                  50,000
shares of the Company’s preferred stock will have been designated as Series A-2
Preferred Stock, par value $.0001 per share.

 

(c)           The number of
outstanding shares of Common Stock as of September 30, 2003 was 88,017,227 and
the total number of shares of Common Stock issuable pursuant to stock options
outstanding at September 30, 2003 was 8,932,580.  In addition, as of September 30, 2003, the Company had 6,777,591
shares of Common Stock reserved for issuance pursuant to the terms of its stock
option plans and employee stock purchase plans.

 

(d)         Except for the stock
options referenced in Section 3.3(c), stock options or Common Stock issued by
the Company to employees, consultants or directors in the ordinary course of
business, or as contemplated by this Agreement, (i) there are no existing
options, warrants, calls, preemptive (or similar) rights, subscriptions or
other rights, agreements, arrangements or commitments of any character
obligating the Company to issue, transfer or sell, or cause to be issued,
transferred or sold, any shares of the capital stock of the Company or other
equity interests in the Company or any securities convertible into or
exchangeable for such shares of capital stock or other equity interests and
(ii) there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of its capital stock or
other equity interests.

 

(e)          There are no voting
agreements or other similar agreements with respect to the Common Stock to which
the Company is a party or with respect to which the Company has knowledge.

 

(f)            Except for the
Convertible Note (if any) and Promissory Notes (if any) to be issued hereunder
and the Company’s 3.5% Convertible Subordinated Notes due 2007, the Company has
no Indebtedness.

 

3.4.                              Authorization.  The Company has all requisite corporate
power and authority to (a) authorize and issue the Securities and the
Conversion Stock and file the Certificates of Designation, (b) authorize,
execute, deliver and perform this Agreement, the Collaboration Agreement, the
Convertible Note, if any, and each Promissory Note, if any, and (c) consummate
the transactions contemplated by this Agreement, the Collaboration Agreement,
the Convertible Note, if any, and each Promissory Note, if any.  All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the (i)
authorization and issuance of the Securities and the Conversion Stock and the
filing of the Certificates of

 

11

 

Designation, (ii) authorization, execution, delivery and performance of
this Agreement, the Collaboration Agreement, the Convertible Note, if any, and
each Promissory Note, if any, and (iii) consummation of the transactions contemplated
by this Agreement, the Collaboration Agreement, the Convertible Note, if any,
and each Promissory Note, if any, has been taken.  This Agreement and the Collaboration Agreement each has been duly
executed and delivered by the Company, and each constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors’ rights generally, by the public
policy underlying state or federal securities laws (with respect only to the
indemnity granted by the Company in Section 8.6), and by general equitable
principles.  At or prior to the Initial
Closing, the Company will have reserved for issuance the shares of Conversion
Stock initially issuable upon conversion of the Initial Preferred and at or
prior to each Subsequent Closing, the Company will have reserved for issuance
the shares of Conversion Stock initially issuable upon conversion of the
Conditional Preferred issued in connection with such closing.

 

3.5.                              Valid
Issuance; Offering.

 

(a)          The Preferred Stock
being purchased by the Purchaser hereunder will, upon issuance pursuant to the
terms hereof and upon payment therefor, be duly authorized and validly issued,
fully paid and non-assessable shares of the Company’s preferred stock, free of
encumbrances and preemptive or similar rights. 
The Convertible Note, if any, and each Promissory Note, if any,
contemplated by the terms of the Preferred Stock or the Convertible Note will,
upon issuance pursuant to the terms of the Preferred Stock or the Convertible
Note, as the case may be, constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors’ rights generally and by general equitable principles.  Upon its issuance in accordance with the
terms of the Securities, the Conversion Stock will be duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock, free of
encumbrances and preemptive or similar rights.

 

(b)         Subject to the accuracy
of the representations made by the Purchaser in Section 4, the offer, sale
and issuance of the Securities and the Conversion Stock will be exempt from the
registration and prospectus delivery requirements of the Securities Act, and
will have been registered or qualified (or exempt from registration or
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws.

 

3.6.                              Financial
Statements.  The
financial statements of the Company included in the Disclosure Documents
(collectively, the “Financial Statements”) have been prepared in
accordance with the published rules and regulations of the SEC and with United
States generally accepted accounting principles applied on a consistent basis
(“GAAP”) throughout the periods indicated therein, except as may be
indicated therein or in the notes thereto, and present fairly, in all material
respects, the consolidated financial position of the Company and its
subsidiaries as of the dates indicated, and the consolidated results of the
operations and cash flows of the Company and its subsidiaries for the periods
therein specified (except in the case of quarterly financial statements for the
absence of footnote disclosure and subject, in the case of interim periods, to
normal year-end adjustments which, individually and in the aggregate, are not
material).  Except as reflected in such
Financial Statements, the Company and its subsidiaries have no material

 

12

 

liabilities, absolute or contingent, other than (x) ordinary course
liabilities incurred since the date of the last such Financial Statements in
connection with the conduct of the business of the Company and its subsidiaries
and (y) intercompany liabilities among the Company and its wholly-owned
Subsidiaries.  The Company has
implemented and maintains a system of internal accounting controls meeting SEC
requirements.

 

3.7.                              Absence
of Certain Changes.

 

(a)          Since December 31, 2002,
(i) the Company and its Subsidiaries have conducted their business in all
material respects only in the ordinary course of such business consistent with
past practice, (ii) there has been no material adverse change, nor any
development involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its Subsidiaries taken as a whole, and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.

 

(b)         Since December 31, 2002,
there has not been:

 

(i)                                     any
material commitment, contractual obligation, borrowing, capital expenditure or
transaction (each, a “Commitment”) entered into by the Company or any of
its Subsidiaries, other than (A) Commitments in the ordinary course of
business and (B) this Agreement and other Commitments contemplated hereby;

 

(ii)                                  any
waiver by the Company of a valuable right or of a debt owed to it, except for
such waivers made in the ordinary course of business as are not material to the
assets, properties, financial condition, operating results or business of the
Company;

 

(iii)                               any
material change or amendment to a Commitment to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
its or their assets or properties is bound or subject;

 

(iv)                              any
resignation or termination of any executive officer, key employee or group of
employees of the Company or any of its Subsidiaries; or

 

(v)                                 any
material change, except in the ordinary course of business, in the contingent
obligations of the Company or any of its Subsidiaries by way of guaranty,
endorsement, indemnity, warranty or otherwise, which change is other than with
respect to an indemnity or warranty granted by the Company in a license,
collaboration or similar commercial agreement.

 

3.8.                              Absence
of Litigation.  There is
no action, suit, proceeding, arbitration, claim, investigation or inquiry
pending or, to the Company’s knowledge, threatened by or before any
governmental body or other forum against the Company that would reasonably be
expected to have a Material Adverse Effect, or which are otherwise material in
the context of the sale of the Securities. 
The Company is not a party to or subject to the provisions of any order,
writ, injunction, judgment or decree of any court or government agency or instrumentality
that would reasonably be expected to have a Material Adverse Effect.  There is no material action, suit,

 

13

 

proceeding, arbitration or claim by the Company pending or that the
Company currently intends to initiate.

 

3.9.                              Intellectual  Property.  Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect and except
as disclosed to Purchaser during the course of Purchaser’s due diligence
investigation of the Company, (a) the Company owns or possesses sufficient
legal rights to all trademarks, trade names and other rights to inventions,
know-how, patents, copyrights, confidential information and other intellectual
property (collectively, “Intellectual Property”) reasonably necessary to
conduct the business now operated by it and as presently proposed to be
operated by it (it being understood that, for purposes of this Section 3.9,
“presently proposed to be operated by it” does not include activities to be
conducted under the Collaboration Agreement), and (b) to the knowledge of the
Company, the present business, activities and products of the Company do not
infringe any Intellectual Property of any other Person.  Insofar
as they contain representations and warranties to the effect that the Company
owns or possesses sufficient Intellectual Property to conduct the activities
proposed to be conducted by it under the Collaboration Agreement, the
representations and warranties of the Company as set forth in Section 14.2
(other than Sections 14.2.3, 14.2.6, 14.2.8, 14.2.9 and 14.2.11) of the
Collaboration Agreement are true and correct. 
The Company has not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights, that, if determined adversely to the Company, would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

3.10.                        Disclosure
Documents; Registration Statements.  The Disclosure Documents represent all filings required of the
Company pursuant to the Exchange Act since December 31, 2002.  The Disclosure Documents complied, as of the
date of their filing with the SEC, as to form in all material respects with the
requirements of the Exchange Act.  The
information contained or incorporated by reference in the Disclosure Documents
was true, complete and correct in all material respects as of the respective
dates of the filing thereof with the SEC; and, as of such respective dates, the
Disclosure Documents did 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 light of the circumstances under which they
were made, not misleading, except to the extent updated or superseded by any
report subsequently filed by the Company with the SEC.

 

3.11.                        Consents.  All consents, approvals, orders and
authorizations required on the part of the Company in connection with the
execution, delivery or performance of this Agreement and the consummation of
the transactions contemplated herein, other than in connection with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and the
regulations promulgated thereunder (the “HSR Act”), the filing of the
Certificates of Designation with the Secretary of State of the State of
Delaware, and such filings, if any, as may be required to be made after the
Initial Closing or the Subsequent Closing(s), as the case may be, under
applicable federal and state securities laws and the NNM, have been obtained
and will be effective as of the Initial Closing Date and each Subsequent
Closing Date.

 

14

 

3.12.                        No
Conflict, Violation or Default.

 

(a)          The execution and
delivery of this Agreement by the Company and the consummation of the
transactions contemplated hereby will not conflict with or result in any breach
or violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to a loss of a material benefit under, (i) any provision of
the Certificate of Incorporation or By-laws of the Company or (ii) any
agreement or instrument, permit, franchise, license, judgment, order, statute,
law, ordinance, rule or regulation applicable to the Company or its properties
or assets, or to which the Company is a party or by which the Company or its
assets is bound, except, in the case of clause (ii), as would not, individually
or in the aggregate, be reasonably expected to have a Material Adverse Effect.

 

(b)         Except where it would not
have a Material Adverse Effect, the Company is not in breach or violation of or
default (with or without notice or lapse of time, or both) under (i) its
Certificate of Incorporation or By-laws, or (ii) any mortgage, indenture,
agreement, instrument or contract to which it is a party or by which it is
bound.

 

3.13.                        Compliance
with Laws; Permits. 
Since January 1, 2000, the Company has not been, and the Company is not
currently, in violation of any applicable statute, rule, regulation, order or
restriction of any domestic or foreign government or any instrumentality or
agency thereof in respect of the conduct of its business or the ownership of
its properties, which violation would be reasonably likely to result in a
Material Adverse Effect.  The Company
has all franchises, permits, licenses, and any similar authority necessary for
the conduct of its business as now being conducted by it, the lack of which would
be reasonably likely to result in a Material Adverse Effect, and has not
received any notice of proceedings relating to the revocation or modification
of any such franchise, permit, license or other similar authority.  The Company is not in default under any such
franchise, permit, license or other similar authority, which default would be
reasonably likely to have a Material Adverse Effect.

 

3.14.                        Tax
Matters.  Except in each case as
would not reasonably be expected to have a Material Adverse Effect:

 

(a)          The Company has timely
prepared and filed all tax returns required to have been filed by the Company
and timely paid all taxes owed by it.

 

(b)         The charges, accruals and
reserves included in the Financial Statements in respect of taxes for all
fiscal periods covered by the Financial Statements are adequate, and there are
no unpaid assessments against the Company.

 

(c)          All taxes that the
Company is required to withhold or to collect for payment have been duly
withheld and collected and paid to the proper governmental entity or Person
when due.

 

(d)         There are no tax liens or
claims pending, or, to the Company’s knowledge, threatened against the Company
or any of its respective assets or properties.

 

15

 

(e)          The Company has fully
disclosed to the Purchaser all open, unresolved audit matters concerning the
Company and each of its subsidiaries that are known to the Company as of the
date hereof.

 

3.15.                        Nasdaq
National Market.  The
Common Stock is registered pursuant to Section 12(g) of the Exchange Act
and is listed on the NNM.  The Company
is in compliance with all applicable NNM continued listing requirements.  There is no proceeding pending or, to the
Company’s knowledge, threatened against the Company relating to the continued
listing of its Common Stock on the NNM and the Company has not received any
notice of, nor to the knowledge of the Company is there any basis for, the
delisting of its Common Stock from the NNM.

 

3.16.                        Title
to Property and Assets. 
The Company and each of its subsidiaries owns or possesses the necessary
right to use or title to all properties, assets, licenses, permits and the like
required to operate its business as currently operated and as currently
proposed to be conducted, except for such properties, assets, licenses, permits
and the like, the absence of which would not result in a Material Adverse
Effect.  The properties and assets of
the Company and each of its subsidiaries owned by them are owned free and clear
of all mortgages, deeds of trust, liens, charges, encumbrances and security
interests except (a) for statutory liens for the payment of current taxes
that are not yet delinquent, (b) liens, encumbrances and security
interests that arise in the ordinary course of business and do not in any
material respect impair the properties and assets of the Company and its
subsidiaries.  With respect to the
property and assets it leases, the Company and each of its subsidiaries is in
compliance with such leases in all material respects.

 

3.17.                        Labor
Relations.  Neither the
Company nor its subsidiaries is party to any collective bargaining agreement
covering any individual who performs services as an employee primarily for the
Company or any of its subsidiaries (including such persons who are on an
approved leave of absence, vacation, short-term disability or otherwise treated
as an active employee of the Company or any of its subsidiaries, “Employees”),
and there are no controversies or unfair labor practice proceedings pending or,
to the Company’s knowledge, threatened between the Company or any of its
subsidiaries and any of their current or former Employees or any labor or other
collective bargaining unit representing any current or former Employee of the
Company or any of its subsidiaries that, in each case, would reasonably be
expected to have a Material Adverse Effect. 
To the Company’s knowledge, no organizational effort is presently being
made or, to the Company’s knowledge, threatened by or on behalf of any labor
union.

 

3.18.                        Environmental
Matters.  Neither the
Company nor any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the
environment or human exposure to hazardous or toxic substances  (collectively, “Environmental Laws”), owns or operates any real property
contaminated with any substance that is subject to any Environmental Laws, is
liable for any off-site disposal or contamination pursuant to any Environmental
Laws, or is subject to any claim (or aware of any pending investigation that
would reasonably be expected

 

16

 

to lead to such a claim) relating to any Environmental Laws, which
violation, contamination, liability or claim would individually or in the
aggregate have a Material Adverse Effect.

 

3.19.                        Insurance.  All insurance policies carried by the
Company, or covering the Company’s properties, are in full force and effect,
and no notice of cancellation has been given with respect to any such
policy.  All premiums due on such
policies have been paid in a timely manner and the Company has complied in all
material respects with the terms and provisions of such policies.  The insurance coverage provided by such
policies is provided by insurers that, to the knowledge of the Company, are
solvent, and is in such amount and types of coverage which are adequate and
customary for the industry in which the Company operates.

 

3.20.                        Related
Party Transactions. 
There have been no transactions between the Company, on the one hand,
and its employees, officers, directors or stockholders, on the other hand, that
would have been required to be disclosed by the Company in the Disclosure
Documents pursuant to the Exchange Act and the rules and regulations
promulgated thereunder, that were not so disclosed as required.

 

3.21.                        Solvency.  The Company has sufficient funds and cash
flow to pay its debts and liabilities as they become due.

 

3.22.                        Registration
Rights.  Except as
contemplated in this Agreement, as of the date of this Agreement, the Company
is not a party to and has no obligations under any currently effective
agreement or instrument that requires or may require the Company to register
under the Securities Act the sale of any of its presently outstanding
securities or any of its securities that may be subsequently issued.

 

3.23.                        Form
S-3 Eligibility.  The Company is eligible to register the
resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act.

 

3.24.                        No
Integrated Offering. 
Neither the Company nor any of is Affiliates nor any Person acting on
its or their behalf has, directly or indirectly, made any offers or sales of
any security or solicited any offers to buy any security under circumstances
that would adversely affect reliance by the Company on Section 4(2) of the
Securities Act for the exemption from registration for the transactions
contemplated hereby or would require registration of the Securities under the
Securities Act; or would require the integration of this offering with any
other offering of securities for purposes of determining the need to obtain
stockholder approval of the transactions contemplated hereby under the rules of
the Nasdaq Stock Market.

 

3.25.                        General
Solicitation.  Neither
the Company nor any other person or entity authorized by the Company to act on
its behalf has engaged in a general solicitation or general advertising (within
the meaning of Regulation D of the Securities Act) of investors with respect to
offers or sales of the Securities.

 

3.26.                        Brokers and
Finders.  The Company has not dealt
with any broker or finder in connection with the transactions contemplated by
this Agreement.  The Purchaser shall
have no liability or responsibility for the payment of any commission or
finder’s fee to any Person in connection with or resulting from this Agreement
or the transactions contemplated hereby by reason of any agreement of or action
taken by the Company.

 

17

 

3.27.                        Rights Plan.  None of the acquisition of the Securities,
the deemed Beneficial Ownership by the Purchaser and its Affiliates of shares
of Common Stock issuable upon the conversion of the Securities, or the
acquisition by the Purchaser of shares of Common Stock upon any conversion at
the election of the Company of any Preferred Stock or any principal amount of
the Convertible Note, if any, will trigger the “poison pill” or similar
provisions of any stockholder rights or similar plan or agreement to which the
Company is subject or a party; provided, that (a) the Purchaser’s
representation and warranty set forth in Section 4.8 is true and correct and
(b) the Purchaser is in compliance with Section 5.4.

 

3.28.                        Disclosure.  Neither the representations and warranties
of the Company contained in Section 3 of this Agreement, nor any information
contained in the Disclosure Schedule, contains any untrue statements of a
material fact.

 

4.                                       Representations
and Warranties of the Purchaser.  The Purchaser represents and warrants to the
Company as follows:

 

4.1.                              Organization.  The Purchaser is duly and validly existing
as a corporation under the jurisdiction of its organization.

 

4.2.                              Authorization.  All corporate action on the part of the
Purchaser necessary for the authorization, execution, delivery and performance
of this Agreement and the Collaboration Agreement and the consummation of the
transactions contemplated herein and therein has been taken.  This Agreement and the Collaboration
Agreement each has been duly executed and delivered by the Purchaser, and each
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors’ rights generally, by the public policy underlying state or federal
securities laws (with respect only to the indemnity granted by the Purchaser in
Section 8.6) and by general equitable principles.  The Purchaser has all requisite power to enter into this
Agreement and the Collaboration Agreement and to carry out and perform its
obligations under the terms of this Agreement and the Collaboration Agreement.

 

4.3.                              Purchase
Entirely for Own Account Etc. 
The Purchaser is acquiring the Securities for its own account, and not
with a view to, or for sale in connection with, any distribution of the
Securities in violation of the Securities Act. 
Except as contemplated by this Agreement, the Purchaser has no present
agreement, undertaking, arrangement, obligation or commitment providing for the
disposition of the Securities.  The
Purchaser has not been organized, reorganized or recapitalized specifically for
the purpose of investing in the Securities.

 

4.4.                              Investor Status; Etc.  The Purchaser certifies and represents to the Company that, as of
the date hereof and at the time the Purchaser acquires any of the Securities, the
Purchaser is and will be an “accredited investor” as defined in Rule 501 of
Regulation D promulgated under the Securities Act.  The Purchaser’s financial condition is such that it is able to
bear the risk of holding the Securities for an indefinite period of time and
the risk of loss of its entire investment. 
The Purchaser has been afforded the opportunity to ask questions of and
receive answers from the management of the Company concerning this investment
and is able to evaluate the risks and merits of its investment in the Company.

 

18

 

4.5.                              Securities
Not Registered.  Such
Purchaser understands that the Securities have not been registered under the
Securities Act, by reason of their issuance by the Company in a transaction
exempt from the registration requirements of the Securities Act, and that the
Securities must continue to be held by such Purchaser unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration.  The Purchaser
understands that the exemptions from registration afforded by Rule 144 (the
provisions of which are known to it) promulgated under the Securities Act
depend on the satisfaction of various conditions, and that, if applicable, Rule
144 may afford the basis for sales only in limited amounts.

 

4.6.                              No Conflict.  The execution and delivery of this Agreement
by the Purchaser and the consummation of the transactions contemplated hereby
will not conflict with or result in any breach or violation of or default by
the Purchaser (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any material
obligation or to a loss of a material benefit under (a) any provision of the
organizational documents of the Purchaser or (b) any agreement or instrument,
permit, franchise, license, judgment, order, statute, law, ordinance, rule or
regulation applicable to the Purchaser or its properties or assets, or to which
the Purchaser is a party or by which the Purchaser or its assets is bound,
except, in the case of clause (b), as would not reasonably be expected,
individually or collectively, to result in a material adverse effect on, or a
material adverse change in, or group of such effects on or changes in, (i) the
business, operations, condition (financial or otherwise), results of
operations, properties, assets, or liabilities (contingent or otherwise) of the
Purchaser or (b) the ability of the Purchaser to perform its obligations
under or with respect to this Agreement.

 

4.7.                              Consents.  All consents, approvals, orders and
authorizations required on the part of the Purchaser in connection with the
execution, delivery or performance of this Agreement and the consummation of
the transactions contemplated herein have been obtained and will be effective
as of the Initial Closing Date and each Subsequent Closing Date, other than in
connection with the HSR Act.

 

4.8.                              Purchaser’s Ownership of Common Stock.  Neither the Purchaser nor, to the best
knowledge of the Purchaser, any of its Affiliates, Beneficially Owns, as of the
date hereof, any shares of Common Stock. 
On the Initial Closing Date and each Subsequent Closing Date, neither
the Purchaser nor, to the best knowledge of the Purchaser, any of its
Affiliates, shall Beneficially Own any Common Stock (except as a result of
their ownership of Securities).

 

4.9.                              Brokers
and Finders.  The
Purchaser has not dealt with any broker or finder in connection with the
transactions contemplated by this Agreement. 
The Company shall have no liability or responsibility for the payment of
any commission or finder’s fee to any Person in connection with or resulting
from this Agreement or the transactions contemplated hereby by reason of any
agreement of or action taken by the Purchaser.

 

5.                                       Covenants.

 

5.1.                              HSR Act
Filings.  The Company and the
Purchaser shall, as may be required from time to time following the date hereof
to permit the consummation of all transactions contemplated hereby, by the
Preferred Stock, by the Convertible Note, if any, and by

 

19

 

the Collaboration Agreement, including the conversion of the Preferred
Stock and the Convertible Note, if any, into shares of Common Stock in
accordance with their terms,

 

(a)          file as promptly as
possible with the proper authorities all forms and other documents required to
be filed pursuant to the HSR Act and the regulations promulgated thereunder,

 

(b)         cooperate with the each
other in connection with any investigation or other inquiry instituted by any
antitrust authority, by

 

(i)                                     promptly
producing such additional information as those antitrust authorities may
reasonably require;

 

(ii)                                  keeping
the other party informed about any material communication received by such
party from, or given by such party, to any antitrust authority; and

 

(iii)                               to
the extent a party believes it appropriate and useful for cooperation as
provided in Section 5.1(b)(i), permitting the other party to review substantive
communications given by it to any antitrust authority and consulting with the
other party in advance of any substantive meeting or conference with any
antitrust authority;

 

(c)          take, or cause to be
taken all other actions, all as necessary, proper or advisable, to allow termination
or expiration of all applicable waiting periods provided by the HSR Act, or as
otherwise necessary, proper or advisable to comply with regulatory requirements
of the Federal Trade Commission or the Department of Justice.

 

Each of the Company and the Purchaser shall pay its own HSR filing fees
payable in connection with filings made under the HSR Act in connection with
the transactions contemplated hereby.

 

5.2.                              Other Governmental Approvals.  As soon as practicable after the execution
of this Agreement, the Company and the Purchaser shall file all applications
and reports and take such other action (in addition to filings, if any,
required under the HSR Act) which is reasonably required to be taken or filed
with any governmental authority in connection with the transactions
contemplated by this Agreement.  The
Company and each Purchaser shall give all additional notices to third parties
and take other action reasonably required to be taken by it under any authorization,
lease, note, mortgage, indenture, agreement or other instrument or any law,
rule, regulation, demand or court or administrative order in connection with
the transactions contemplated by this Agreement.

 

5.3.                              Further
Assurances.  Each party
agrees to cooperate with each other and their respective officers, employees,
attorneys, accountants and other agents, and, generally, do such other acts and
things in good faith as may be reasonable or appropriate to timely effectuate
the intents and purposes of this Agreement and the consummation of the
transactions contemplated hereby, including, but not limited to, taking any
action to facilitate the filing of any document or the taking of any action to
assist the other parties hereto in complying with the terms of Sections 5.1 and
5.2.

 

20

 

5.4.                              Standstill.

 

(a)          During the Standstill
Period, without the prior written consent of the Company pursuant to a specific
resolution of the Company’s board of directors, the Purchaser shall not
acquire, and shall cause its Affiliates not to acquire, Beneficial Ownership of
securities of the Company entitled to vote generally in the election of
directors of the Company (“Voting Securities”), except as provided in
this Agreement and the transactions contemplated hereby (any Voting Securities
other than those acquired by the Purchaser pursuant to this Agreement or the
transactions contemplated hereby, the “Standstill Restricted Securities”);
provided that neither the acquisition of Beneficial Ownership of
Standstill Restricted Securities as a result of the acquisition by the
Purchaser or its Affiliates of control of any Person that, at the time of such
acquisition of control, is the Beneficial Owner of any Standstill Restricted
Securities nor the acquisition of any Standstill Restricted Securities by
operation of law shall be deemed to be a breach of this Section 5.4 so long as
the Purchaser (i) gives written notice to the Company of any such acquisition
of Beneficial Ownership of Standstill Restricted Securities within five (5)
Business Days after any member of the executive management of the Purchaser or
of AstraZeneca plc first has actual knowledge of such acquisition and that such
acquisition constitutes acquisition of Beneficial Ownership of Standstill
Restricted Securities and, thereafter, (ii) complies with the provisions of
Section 5.4(b).

 

(b)         During the Standstill
Period, if the Purchaser and its Affiliates shall acquire Beneficial Ownership
of Standstill Restricted Securities as a result of the acquisition by the
Purchaser or its Affiliates of control of any Person (a “Controlled Entity”)
that, at the time of such acquisition of control, is the Beneficial Owner of
any Standstill Restricted Securities or by operation of law, then the Purchaser
shall give written notice to the Company of any such acquisition of a
Controlled Entity within five (5) Business Days after any member of the
executive management of the Purchaser or of AstraZeneca plc first has actual
knowledge of the acquisition of such Controlled Entity.  The Company shall have the option,
exercisable by written notice given to the Purchaser within ninety (90) days
after the Company receives notice from the Purchaser of such acquisition of
control and such Beneficial Ownership, either

 

(i)                                     to
purchase (or to cause a Person designated by the Company to purchase) all or
any portion of such Standstill Restricted Securities at a closing to occur on
the twentieth Business Day after the giving of such notice of exercise of this
option, at a price equal to the lower of (x) the Market Price of such
Standstill Restricted Securities as of the date of such acquisition of control
of such Controlled Entity or (y) the Market Price of such Standstill Restricted
Securities on the date on which the Purchaser delivers to the Company notice of
its acquisition of such Standstill Restricted Securities; or

 

(ii)                                  to
require the Purchaser and its Affiliates to cause such Controlled Entity to
sell such Standstill Restricted Securities or to require the Purchaser and its
Affiliates to sell such Standstill Restricted Securities acquired by operation
of law, as the case may be, in either case to third parties in open market
transactions and to require the applicable party or parties use commercially
reasonable efforts to sell such securities within sixty (60) days following the
giving of such notice of exercise of this option; provided that such
sale is permitted by applicable law.

 

21

 

(c)          If the Purchaser and its
Affiliates shall acquire Beneficial Ownership of Standstill Restricted
Securities inadvertently in violation of Section 5.4(a) above and the Purchaser
shall have given written notice to the Company of such inadvertent violation
within five (5) Business Days after any member of the executive management of
the Purchaser or of AstraZeneca plc first has actual knowledge of such
violation, the Company shall, in lieu of any right that it might otherwise have
to monetary damages (whether compensatory or punitive) for such inadvertent breach,
have the option, exercisable by written notice given to the Purchaser within
ninety (90) days after the Company receives written notice from the Purchaser
of the violation, either (i) to purchase (or cause a Person designated by the
Company to purchase) all or any portion of such Standstill Restricted
Securities then Beneficially Owned by the Purchaser and its Affiliates in
violation of Section 5.4(a) at a closing to occur on the twentieth Business Day
after the giving of such notice of exercise of this option at a price equal to
the lower of (x) the cost of such Standstill Restricted Securities to such
Persons that have acquired Beneficial Ownership of such Standstill Restricted
Securities or (y) the Market Price of the Standstill Restricted Securities on
the date the Purchaser delivers to the Company notice of such acquisition or
(ii) to require the Purchaser or its Affiliates to sell such Standstill
Restricted Securities then Beneficially Owned by the Purchaser and its
Affiliates in violation of Section 5.4(a) to third parties in open market
transactions and to require the applicable party or parties to use commercially
reasonable efforts to sell such securities within sixty (60) days following the
giving of such notice of exercise of this option; provided that such
sale is permitted by applicable law.

 

(d)         The provisions of
Sections 5.4(a), (b) and (c) shall cease to apply as follows:

 

(i)                                     in
the event that any Person who is not a member of a group of which the Purchaser
or any of its Affiliates are members shall acquire (A) in the case of any
Person other than Cell Genesys, Inc., Beneficial Ownership of 20% or more by
voting power of the then-outstanding Voting Securities, (B) in the case of Cell
Genesys, Inc., Beneficial Ownership of 30% or more by voting power of the
then-outstanding Voting Securities, or (C) assets of the Company in a
transaction that, pursuant to applicable law, would require the approval of the
stockholders of the Company; and, in each such case, the Board of Directors has
publicly announced a desire to pursue a transaction with such Person that, if
consummated, would result in such Person Beneficially Owning at least 30% or
more by voting power of the then-outstanding Voting Securities, then the
provisions of Sections 5.4(a), (b) and (c) shall cease to apply for so long as
the conditions in this Section 5.4(d)(i) are met; or

 

(ii)                                  in
the event of the announcement of an offer made by any Person (other than the
Company) who is not a member of a group of which the Purchaser or any of its
Affiliates are members (A) for at least 30% or more by voting power of the
then-outstanding Voting Securities or (B) to effect a purchase of assets of the
Company that, pursuant to applicable law, would require the approval of the
stockholders of the Company, in which case the provisions of Sections 5.4(a),
(b) and (c) shall cease to apply during the period beginning at the time of the
announcement and continuing while the offer remains open for acceptance; provided,
however, that nothing in this clause (ii) shall permit the Purchaser or
its Affiliates to acquire or make any offer to acquire Beneficial Ownership of
any Standstill Restricted Securities in circumstances in which the Purchaser is
acting in conjunction with any Person, other than an

 

22

 

Affiliate of Purchaser, or with any group of
which Persons other than the Purchaser and its Affiliates are members in (x)
offering to acquire, or acquiring, Voting Securities or (y) attempting to
effect, or effecting, a purchase of assets of the Company that, pursuant to
applicable law, would require the approval of the stockholders of the Company; provided,
further, that this clause (ii) shall not permit the Purchaser or its
Affiliates to, directly or indirectly, encourage, request, solicit or direct
any Person to (x) offer to acquire, or acquire, Voting Securities or (y)
attempt to effect, or effect, a purchase of assets of the Company that,
pursuant to applicable law, would require the approval of the stockholders of
the Company.

 

(e)          Within five (5) Business
Days of the first date on which the Company becomes aware of facts or
circumstances that make it reasonably likely that any of the events described
in Section 5.4(e)(i), (ii) or (iii) below will occur, or that any Person is
taking steps to cause such an event to occur, the Company shall provide written
notice thereof to the Purchaser:

 

(i)                                     any
Person who is not a member of a group of which the Purchaser or any of its
Affiliates are members shall acquire (A) in the case of any Person other than
Cell Genesys, Inc., Beneficial Ownership of 20% or more by voting power of the
then-outstanding Voting Securities, (B) in the case of Cell Genesys, Inc.,
Beneficial Ownership of 30% or more by voting power of the then-outstanding
Voting Securities, or (C) assets of the Company in a transaction that, pursuant
to applicable law, would require the approval of the stockholders of the
Company;

 

(ii)                                  the
Board of Directors is asked to consider or is considering pursuing a transaction
with a Person that, if consummated, would result in such Person Beneficially
Owning at least 30% or more by voting power of the then-outstanding Voting
Securities; or

 

(iii)                               any
event described in Section 5.4(d)(ii).

 

Each notice provided by the Company to Purchaser pursuant to this
Section 5.4(e) shall indicate, at a minimum, to the extent applicable, the
percentage of Voting Securities (if any) acquired or to be acquired by the
acquiring Person and whether, to the Company’s knowledge of the facts and
circumstances then in existence, the Purchaser is or will be released pursuant
to Section 5.4(d) from compliance with the provisions of Section 5.4(a), (b)
and (c); provided that the Company need not express such an opinion if the
Company is unable in good faith to make such a determination at the time it
required to give such notice to the Purchaser.

 

(f)                                    In
the event that the Purchaser or any of its Affiliates shall acquire Beneficial
Ownership of Standstill Restricted Securities (i) in violation of this Section
5.4 or (ii) which acquisition would trigger the applicability of Section 5.4(b)
or Section 5.4(c), then, notwithstanding any voting rights that may otherwise
be conferred on the holder of such securities, Purchaser or such Affiliate, as
the case may be, shall have no right to exercise any voting rights with respect
to such securities (except for voting rights exercised at the express request
of the Company) for so long as Purchaser or its Affiliates continue to hold
such Standstill Restricted Securities and the provisions of Sections 5.4(a),
(b) and (c) continue to apply.

 

23

 

(g)                                 For
purposes of any notice required to be given by the Purchaser to the Company or
by the Company to the Purchaser pursuant to this Section 5.4 (each a “Standstill-Related
Notice”), in the event that, prior to giving such notice, the party with
the obligation to provide such notice (the “Notifying Party”) is
provided by the other party (the “Non-Notifying Party”) with written
notice of facts, circumstances or events (each a “Preemptive Notice”)
that would otherwise have been required to be included in the
Standstill-Related Notice, for purposes of determining the parties’ rights and
obligations under this Section 5.4, the Notifying Party shall be deemed to have
given the Standstill-Related Notice to the Non-Notifying Party as of the date
on which the Notifying Party receives the Preemptive Notice; provided, however,
that nothing contained in this Section 5.4(g) shall prejudice any rights or
remedies that the Non-Notifying Party may have as a result of the Notifying
Party’s failure, if any, to satisfy its notice obligations under Section 5.4.

 

(h)                                 Notwithstanding
anything contained in this Section 5.4, the acquisition of Beneficial Ownership
of Standstill Restricted Securities by any pension plan, employee benefit plan,
or other similar plan with respect to which neither Purchaser nor any of its
Affiliates exercise, directly or indirectly, control of investment or voting decisions
shall not constitute a violation of this Section 5.4.

 

5.5.                              Form D;
Blue Sky Laws.  The Company agrees
to file a Form D with respect to the Securities as required under Regulation D
and to provide a copy thereof to the Purchaser promptly after such filing.  The Company shall take such action as the
Company shall reasonably determine is necessary to qualify the Securities for
sale to the Purchaser pursuant to this Agreement under the applicable
securities or blue sky laws of the states of the United States (or to obtain an
exemption from such qualifications), and shall provide to the Purchaser
evidence of any such action so taken.

 

5.6.                              Reservation of Shares; Compliance with Listing Rules.

 

(a)          The Company shall at all
times have authorized, and reserved for the purpose of issuance, a sufficient
number of shares of Common Stock to provide for the full conversion of all
shares of the Preferred Stock then outstanding and the conversion of the
Convertible Note, if any.  If at any
time the number of shares of Common Stock authorized and issuable is below the
number issuable upon conversion of the shares Preferred Stock then outstanding
and the Convertible Note, if any, the Company will promptly take all corporate
action necessary to authorize and reserve a sufficient number of shares,
including calling a special meeting of stockholders to authorize additional
shares to meet the Company’s obligations under this Section 5.6, in the case of
an insufficient number of authorized shares, and using its commercially reasonable
efforts to obtain stockholder approval of an increase in such authorized number
of shares.

 

(b)         Neither the Company nor
any of its Affiliates shall, directly or indirectly, make any offers or sales
of any security or solicit any offer to buy any security the effect of which
would be to cause the integration of the offering made by the Company hereunder
with any other offering of securities for purposes of determining the need to
obtain stockholder approval of the transactions contemplated hereby under the
bylaws and rules of the NNM.

 

24

 

5.7.                              Best Efforts.

 

(a)          By the Company.  The Company shall use its best efforts to
cause those conditions to the obligations of the Purchaser set forth in
Sections 6.1 and 6.3 that are within the Company’s control to be satisfied on
or before the time specified herein for the Initial Closing and the relevant
Subsequent Closing, respectively.  For
the avoidance of doubt, nothing contained in this Section 5.7(a) shall impose
on the Company any obligation to use its best efforts to resist any
administrative or judicial action or proceeding that may be instituted or
threatened challenging any transaction contemplated by this Agreement or the
Collaboration Agreement as violative of any competition, merger control,
antitrust or similar laws.

 

(b)         By the Purchaser.  The Purchaser shall use its best efforts to
cause those conditions to the obligations of the Company set forth in Sections
6.2 and 6.4 that are within the Purchaser’s control to be satisfied on or
before the time specified herein for the Initial Closing and the relevant
Subsequent Closing, respectively.  For
the avoidance of doubt, nothing contained in this Section 5.7(b) shall impose
on the Purchaser any obligation to use its best efforts to resist any
administrative or judicial action or proceeding that may be instituted or
threatened challenging any transaction contemplated by this Agreement or the
Collaboration Agreement as violative of any competition, merger control,
antitrust or similar laws.

 

5.8.                              Rights
Agreement and Similar Plans or Agreements.  During the Standstill Period, the Company
shall not amend the Amended Rights Agreement or adopt or enter into any other
stockholder rights or similar plan or agreement, which amendment, plan or
agreement would result in the Purchaser being or becoming, or permit the
Purchaser to be or become, an “Acquiring Person” (as such term is defined and
used in the Amended Rights Agreement) or the substantive equivalent thereof
under any amendment of the Amended Rights Agreement or any other stockholder
rights or similar plan or agreement to which the Company may become subject or
a party (an “Adverse Rights Plan Event”) as a direct or indirect result
or consequence of (i) the acquisition by the Purchaser and its Affiliates of
the Securities, (ii) the deemed Beneficial Ownership by the Purchaser and its
Affiliates of shares of Common Stock issuable upon the conversion of the
Securities, or (iii) the conversion of (A) any shares of Preferred Stock into
Common Stock pursuant to Section 6(a)(ii) of any Certificate of Designation, or
(B) any principal amount of the Convertible Note, if any, into shares of Common
Stock pursuant to Section 4.1(b) of the Convertible Note; provided that
the Company shall not be subject to the provisions of this Section 5.8 if and
for so long as the Purchaser is in breach of any of the provisions of Section
5.4.  Following the termination of the
Standstill Period, the Company shall not take any action that would trigger an
Adverse Rights Plan Event or otherwise permit an Adverse Rights Plan Event to
occur; provided, that the foregoing restriction shall not apply if the
Purchaser and its Affiliates shall by way of any acquisition of Beneficial
Ownership of Voting Securities increase their percentage of Beneficial
Ownership of Voting Securities (calculated by dividing the number of Voting
Securities Beneficially Owned by Purchaser and its Affiliates by the total
number of Voting Securities then outstanding) from the level that was in effect
on the date of the termination of the Standstill Period.

 

5.9.                              Supplements to
Disclosure Schedule.  The Company
shall be permitted to update and supplement the Disclosure Schedule from time
to time prior to the Initial Closing Date in order to take into account events
or circumstances arising on or after the date of this

 

25

 

Agreement and on or prior to the Initial Closing Date; provided
that if any update or supplement to the Disclosure Schedule discloses an event
or circumstance that would reasonably be expected to have a Material Adverse
Effect, then the Company shall not be permitted to add such update or
supplement to the Disclosure Schedule without the consent of the Purchaser.

 

6.                                       Conditions
Precedent.

 

6.1.                              Conditions to the Obligation of the
Purchaser to Consummate the Initial Closing.  The obligation of the Purchaser to consummate the transactions to
be consummated at the Initial Closing, and to purchase and pay for the
Securities being purchased by it at the Initial Closing pursuant to this
Agreement, are subject to the satisfaction of the following conditions
precedent, the waiver of which shall not be effective against the Purchaser if
the Purchaser does not consent in writing thereto:

 

(a)          The representations and
warranties of the Company contained herein and in the Collaboration Agreement
shall be true and correct on and as of the Initial Closing Date with the same
force and effect as though made on and as of the Initial Closing Date (it being
understood and agreed that, in the case of any representation and warranty of
the Company contained herein or in the Collaboration Agreement which is made as
of a specific date, such representation and warranty need be true and correct
only as of such specific date and it being further understood and agreed that,
in the case of any representation and warranty of the Company contained herein
or in the Collaboration Agreement which is not hereinabove qualified or
qualified in the Collaboration Agreement by application thereto of a
materiality standard, such representation and warranty need be true and correct
only in all material respects in order to satisfy as to such representation and
warranty the condition precedent set forth in the foregoing provision of this
Section 6.1(a)).

 

(b)         The Company shall have
performed in all material respects all obligations, agreements, covenants and
conditions herein required to be performed or observed by the Company on or
prior to the Initial Closing Date.

 

(c)          The purchase of and
payment for the Initial Preferred by the Purchaser shall not be prohibited,
restricted or enjoined by any law or governmental or court order or
regulation.  No action or proceeding shall be pending
or threatened by any third party (i) seeking to restrain, prohibit or enjoin
the Company or the Purchaser from consummating all or any part of the
contemplated transactions or (ii) seeking to recover from the Company or the
Purchaser any damages or obtain from the Company or the Purchaser other
monetary relief as a result of the consummation of all or any part of the
contemplated transactions.

 

(d)         All necessary consents or
approvals, including all authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state,
that are required in connection with the issuance and sale of the Securities
shall have been duly obtained and be effective as of the Initial Closing.

 

(e)          The Series A-1
Certificate of Designation and the Series A-2 Certificate of Designation shall
have been filed by the Company with, and shall have been accepted for filing 

 

26

 

by, the Secretary of State of the State of
Delaware, and satisfactory evidence of such filings and such acceptance shall
have been delivered to the Purchaser.

 

(f)            All corporate and
other proceedings to be taken by the Company in connection with the
transactions contemplated hereby and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Purchaser and the
Purchaser shall have received all such counterpart originals or copies of such
documents as it may reasonably request.

 

(g)         The Purchaser shall have
received from the Company in accordance with Section 20.15.2 of the
Collaboration Agreement a certificate that complies with the terms set forth
therein.

 

(h)         The waiting period under
the HSR Act with respect to the transactions contemplated hereby and by the
Collaboration Agreement shall have expired or notice of early termination of
the waiting period shall have been received by the Company and the Purchaser.

 

(i)             The Purchaser shall
have received a legal opinion or legal opinions of the Company’s outside
counsel, dated as of the Initial Closing Date, in substantially the form of Exhibit
F-A, and shall have received a legal opinion or legal opinions of the
Company’s inside or outside counsel, dated as of the Initial Closing Date, in
substantially the form of Exhibit F-B.

 

(j)             The Company shall not
be insolvent and no insolvency proceeding shall have been commenced by or
against the Company.

 

(k)          The Company shall have
taken all necessary actions, and obtained all necessary consents and approvals,
required for the Company to amend, and shall have amended, that certain Amended
and Restated Preferred Shares Rights Agreement between the Company and Mellon
Investor Services LLC, as Rights Agent, dated May 9, 2002 (the “Rights
Agreement”), which amended Rights Agreement (the “Amended Rights
Agreement”) shall be in the form attached hereto as Exhibit G and
shall be in full force and effect as of the Initial Closing.

 

(l)             The Purchaser shall
have received a certificate, dated the Initial Closing Date, signed by an
executive officer of the Company, certifying on behalf of the Company that the
conditions specified in the foregoing Sections 6.1(a), (b), (c), (d), (j) and
(k) have been fulfilled.

 

6.2.                              Conditions to the Obligation of the
Company to Consummate the Initial Closing. 
The obligation of the Company to consummate the transactions to be
consummated at the Initial Closing, and to issue and sell to the Purchaser the
Securities to be purchased by it at the Initial Closing pursuant to this
Agreement, is subject to the satisfaction of the following conditions
precedent, the waiver of which shall not be effective against the Company if
the Company does not consent in writing thereto:

 

(a)          The representations and
warranties of the Purchaser contained herein and in the Collaboration Agreement
shall be true and correct on and as of the Initial Closing Date, with the same
force and effect as though made on and as of Initial Closing Date (it being
understood and agreed that, in the case of any representation and warranty of
the Purchaser 

 

27

 

contained herein or in the Collaboration
Agreement which is not hereinabove qualified or qualified in the Collaboration
Agreement by application thereto of a materiality standard, such representation
and warranty need be true and correct only in all material respects in order to
satisfy as to such representation and warranty the condition precedent set
forth in the foregoing provision of this Section 6.2(a)).

 

(b)         The Purchaser shall have
performed in all material respects all obligations, agreements, covenants and
conditions herein required to be performed or observed by the Purchaser on or
prior to the Initial Closing Date.

 

(c)          The sale of the
Securities by the Company shall not be prohibited, restricted or enjoined by
any law or governmental or court order or regulation, and all necessary
consents or approvals required for the issuance of such Securities shall have
been obtained.  No action or proceeding shall be pending
or threatened by any third party (i) seeking to restrain, prohibit or enjoin
the Company or the Purchaser from consummating all or any part of the
contemplated transactions or (ii) seeking to recover from the Company or the
Purchaser any damages or obtain from the Company or the Purchaser other
monetary relief as a result of the consummation of all or any part of the
contemplated transactions.

 

(d)         All necessary consents or
approvals, including all authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities shall be duly obtained and effective as of the Initial Closing.

 

(e)          The waiting period under
the HSR Act with respect to the transactions contemplated hereby and by the
Collaboration Agreement shall have expired or notice of early termination of
the waiting period shall have been received by the Company and the Purchaser.

 

(f)            The Company shall have
received from the Purchaser a certificate, dated the Initial Closing Date,
signed by an executive officer of the Purchaser, certifying on behalf of the
Purchaser that the conditions specified in the foregoing Sections 6.2(a), (b),
(c) and (d) have been fulfilled.

 

6.3.                              Conditions to the Obligation of the
Purchaser to Consummate Each Subsequent Closing.  The obligations of the Purchaser to purchase
Conditional Preferred and to consummate the transactions to be consummated at a
Subsequent Closing, if any, are subject to the satisfaction of the following
conditions precedent, the waiver of which shall not be effective against the
Purchaser if the Purchaser does not consent in writing thereto:

 

(a)          The representations and
warranties of the Company contained herein shall have been true and correct on
and as of the Initial Closing Date with the same force and effect as though
made on and as of the Initial Closing Date (it being understood and agreed
that, in the case of any representation and warranty of the Company contained
herein which is made as of a specific date, such representation and warranty
need be true and correct only as of such specific date and it being further
understood and agreed that, in the case of any representation and warranty of
the Company contained herein which is not hereinabove qualified by application
thereto of a materiality standard, such representation and warranty need be
true and correct only 

 

28

 

in all material respects in order to satisfy
as to such representation and warranty the condition precedent set forth in the
foregoing provision of this Section 6.3(a)).

 

(b)         The representations and
warranties of the Company contained in Sections 3.1, 3.2, 3.4, 3.5, 3.11,
3.12(a), 3.15, 3.24, 3.25 and 3.26 shall be true and correct on and as of the Subsequent
Closing Date with the same force and effect as though made on and as of the
Subsequent Closing Date (it being understood and agreed that, in the case of
any representation and warranty of the Company contained herein which is not
hereinabove qualified by application thereto of a materiality standard, such
representation and warranty need be true and correct only in all material
respects in order to satisfy as to such representation and warranty the
condition precedent set forth in the foregoing provision of this Section
6.3(b)).

 

(c)          The Company shall have
performed in all material respects all obligations, agreements, covenants and
conditions herein required to be performed or observed by the Company on or
prior to the Subsequent Closing Date.

 

(d)         The purchase of and
payment for the Conditional Preferred by the Purchaser at such Subsequent
Closing shall not be prohibited, restricted or enjoined by any law or
governmental or court order or regulation. 
No action or proceeding shall be pending or threatened by any third
party (i) seeking to restrain, prohibit or enjoin the Company or the Purchaser
from consummating all or any part of the contemplated transactions or (ii)
seeking to recover from the Company or the Purchaser any damages or obtain from
the Company or the Purchaser other monetary relief as a result of the
consummation of all or any part of the contemplated transactions.

 

(e)          All necessary consents
or approvals, including all authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state, that are required in connection with the issuance and sale of the
Conditional Preferred shall have been duly obtained and be effective as of the
Subsequent Closing.

 

(f)            The Series A-3/A-4
Certificate of Designation with respect to the sale of the relevant series of
Conditional Preferred shall have been filed by the Company with, and shall have
been accepted for filing by, the Secretary of State of the State of Delaware,
and satisfactory evidence of such filing and such acceptance shall have been
delivered to the Purchaser.

 

(g)         All corporate and other
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchaser and the Purchaser shall
have received all such counterpart originals or copies of such documents as it
may reasonably request.

 

(h)         In the event that filings
under HSR are necessary with respect to such Subsequent Closing, then the
respective obligations of the Company and the Purchaser to effect such
Subsequent Closing(s) pursuant to this Agreement and the transactions
contemplated hereby shall be subject to the expiration or early termination of
the waiting period applicable to such HSR filing.

 

29

 

(i)             The Purchaser shall
have received a legal opinion or legal opinions of the Company’s inside or
outside counsel, covering the matters set forth in Exhibit H (subject to
customary assumptions, qualifications and limitations) and in a form reasonably
acceptable to the Purchaser.

 

(j)             The Company shall not
be insolvent and no insolvency proceeding shall have been commenced by or
against the Company.

 

(k)          The Purchaser shall not
have, in good faith pursuant to the terms and conditions of the relevant
instrument, sought (i) repayment of any principal amount of the Convertible
Note, if any, under Section 3.2 thereof as a result of a Prepayment Event (as
defined therein) of the Company or (ii) redemption of any shares of Preferred
Stock under Section 5(d) of the applicable Certificate of Designation as a
result of a Redemption Event (as defined therein) of the Company.

 

(l)             The Company shall not
be in default (after taking into account any applicable grace periods) of any
of its obligations under the then-outstanding Preferred Stock or the
Convertible Note, if any.

 

(m)       The Company shall not be in
default of any of its obligations under Section 5.8 of this Agreement (subject
to the limitations set forth therein).

 

(n)         The Company shall either
be eligible to register the resale of its Common Stock on a registration
statement on Form S-3 under the Securities Act or, if not so eligible,
reasonably expect that a registration statement on another Form under the
Securities Act can be filed and will be declared effective no later than 180
days after the Subsequent Closing Date.

 

(o)         The Purchaser shall have
received a certificate, dated the Subsequent Closing Date, signed by an
executive officer of the Company, certifying on behalf of the Company that the
conditions specified in the foregoing Sections 6.3(a), (b), (c), (d), (e), (j),
(l), (m) and (n) have been fulfilled.

 

6.4.                              Conditions to the Obligation of the
Company to Consummate Each Subsequent Closing.  The obligations of the Company to purchase
the relevant series of Conditional Preferred and to consummate the transactions
to be consummated at each Subsequent Closing, if any, are subject to the
satisfaction of the following conditions precedent, the waiver of which shall
not be effective against the Company if the Company does not consent in writing
thereto:

 

(a)        The representations and warranties of the
Purchaser contained herein shall have been true and correct on and as of the
Initial Closing Date with the same force and effect as though made on and as of
the Initial Closing Date (it being understood and agreed that, in the case of
any representation and warranty of the Purchaser contained herein which is made
as of a specific date, such representation and warranty need be true and
correct only as of such specific date and it being further understood and
agreed that, in the case of any representation and warranty of the Purchaser
contained herein which is not hereinabove qualified by application thereto of a
materiality standard, such representation and warranty need be true and correct
only 

 

30

 

in all material respects in order to satisfy
as to such representation and warranty the condition precedent set forth in the
foregoing provision of this Section 6.4(a)).

 

(b)         The representations and
warranties of the Purchaser contained in Sections 4.3, 4.4, 4.5 and 4.8 shall
be true and correct on and as of the Subsequent Closing Date with the same
force and effect as though made on and as of the Subsequent Closing Date (it
being understood and agreed that, in the case of any representation and
warranty of the Purchaser contained herein which is not hereinabove qualified by
application thereto of a materiality standard, such representation and warranty
need be true and correct only in all material respects in order to satisfy as
to such representation and warranty the condition precedent set forth in the
foregoing provision of this Section 6.4(b)).

 

(c)          The Purchaser shall have
performed in all material respects all obligations, agreements, covenants and
conditions herein required to be performed or observed by the Purchaser on or
prior to the Subsequent Closing Date.

 

(d)         The sale by the Company
to the Purchaser of the relevant series of Conditional Preferred shall not be
prohibited, restricted or enjoined by any law or governmental or court order or
regulation, and all necessary consents or approvals required for the issuance
of such Securities shall have been obtained. 
No action or proceeding shall be pending or threatened by any third
party (i) seeking to restrain, prohibit or enjoin the Company or the Purchaser
from consummating all or any part of the contemplated transactions or (ii)
seeking to recover from the Company or the Purchaser any damages or obtain from
the Company or the Purchaser other monetary relief as a result of the
consummation of all or any part of the contemplated transactions.

 

(e)          All necessary consents
or approvals, including all authorizations, approvals or permits, if any, of
any governmental authority or regulatory body of the United States or of any
state, that are required in connection with the issuance and sale of the
Conditional Preferred shall have been duly obtained and be effective as of the
Subsequent Closing.

 

(f)            In the event that
filings under HSR are necessary with respect to such Subsequent Closing, then
the respective obligations of the Company and the Purchaser to effect such
Subsequent Closing(s) pursuant to this Agreement and the transactions
contemplated hereby shall be subject to the expiration or early termination of
the waiting period applicable to such HSR filing.

 

(g)         The Company shall have
received from the Purchaser a certificate, dated the Subsequent Closing Date,
signed by an executive officer of the Purchaser, certifying on behalf of the
Purchaser that the conditions specified in the foregoing Sections 6.4(a), (b),
(c), (d) and (e) have been fulfilled.

 

31

 

7.                                       Registration of the Securities;
Compliance with the Securities Act.

 

7.1.                              Transfer Restrictions.

 

(a)          The Purchaser shall not
sell, assign, pledge, transfer or otherwise dispose or encumber any of the
Securities acquired by it hereunder or pursuant to the terms of any Security
acquired by it hereunder or any Conversion Stock, except (i) pursuant to an
effective registration statement under the Securities Act or (ii) pursuant to
an available exemption from registration under the Securities Act and
applicable state securities laws and, if requested by the Company, upon
delivery by the Purchaser of an opinion of counsel reasonably satisfactory to
the Company to the effect that the proposed transfer is exempt from registration
under the Securities Act and applicable state securities laws.  The Company shall not register any transfer
of the Securities in violation of this Section 7.1.

 

(b)         In addition to any
restrictions on transfer imposed by the Securities Act, each proposed transfer
by the Purchaser of any shares of Preferred Stock, the Convertible Note, if
any, or any Promissory Note shall be subject to the prior consent of the
Company, which shall not be unreasonably withheld, provided, however,
that no such consent shall be required in the case of a transfer by the
Purchaser to any of its Affiliates.

 

7.2.                              Legends.  Each certificate representing any of the
Securities shall be endorsed with the legend set forth below, and the Purchaser
covenants that, except to the extent such restrictions are waived by the
Company, it shall not transfer the shares represented by any such certificate
without complying with the restrictions on transfer described in this Agreement
and the legends endorsed on such certificate:

 

“THE SECURITIES REPRESENTED BY THIS
CERTIFICATE [AND THE SECURITIES ISSUABLE UPON ITS CONVERSION] HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT OR SUCH LAWS
AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS EXEMPT FROM THE ACT
OR SUCH LAWS.  THE TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN TRANSFER
RESTRICTIONS CONTAINED IN THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS
OF OCTOBER 15, 2003, BETWEEN THE COMPANY AND THE PURCHASER NAMED THEREIN.”

 

32

 

7.3.                              Revised
Legends.  The Company shall be
obligated to reissue promptly certificates at the request (and at the expense)
of the Purchaser (or any permitted transferee) if the Purchaser (or transferee)
has obtained an opinion of counsel reasonably acceptable to the Company to the
effect that the securities proposed to be disposed may lawfully be so disposed
without registration, qualification or legend, provided that such certificates
shall continue to bear the following legend:

 

“THE TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS CONTAINED IN
THAT CERTAIN SECURITIES PURCHASE AGREEMENT, DATED AS OF OCTOBER 15, 2003,
BETWEEN THE COMPANY AND THE PURCHASER NAMED THEREIN.”

 

7.4.                              State Restrictions.  Any legend endorsed on an instrument pursuant to applicable state
securities laws shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.

 

8.                                       Registration Rights.

 

8.1.                              Mandatory Registration.

 

(a)          Registration Statements.

 

(i)                                     Subject
to Sections 8.2, 8.4, and 8.6, the Company shall prepare and file with the SEC,

 

(A)      as promptly as practicable
following the Initial Closing, but in no event more than 90 days after the
Initial Closing, a registration statement on Form S-3 or, if Form S-3 is not
available, on an appropriate form under the Securities Act (as amended from
time to time, the “Initial Registration Statement”) for the purpose of
registering under the Securities Act all of the Registrable Securities for
resale by, and for the account of, the Holders, from time to time, in
compliance with the Securities Act, such Registration Statement to cover, to
the extent allowable under the Securities Act and the rules and regulations
promulgated thereunder, such indeterminate number of additional shares of
Common Stock as may result from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities;

 

(B)        as promptly as practicable
following each Subsequent Closing, but in no event more than 90 days after such
Subsequent Closing, a registration statement on Form S-3 or, if Form S-3 is not
available, on an appropriate form under the Securities Act, or one or more
post-effective amendments to the Initial Registration Statement (any such
additional registration statements, the “Subsequent Registration Statements”)
for the purpose of registering under the Securities Act all of the Registrable
Securities issued or issuable pursuant to or in connection with Securities
issued in the Subsequent Closing for resale by, and for the account of, the
Purchaser or the Holders, from time to time, in compliance with the Securities
Act, such Registration Statement to cover, to the extent allowable under the
Securities Act and the rules and regulations promulgated thereunder, such
indeterminate number of additional shares of 

 

33

 

Common Stock as may result from stock splits,
stock dividends or similar transactions with respect to the Registrable
Securities; and

 

(C)        such additional
registration statements on Form S-3 or, if Form S-3 is not available, on an
appropriate form under the Securities Act (any such additional registration
statements, together with the Initial Registration Statement and the Subsequent
Registration Statements, the “Registration Statements”) as may be necessary
to effect the registration at all times and from time to time of all
Registrable Securities then issued or issuable pursuant to or in connection
with Securities issued hereunder, any such registration contemplated by this
Section 8.1(a)(i)(C) to be filed so that no Registrable Security issued or
issuable pursuant to or in connection with Securities issued hereunder will
fail to be the subject of a filed registration statement for more than 90 days.

 

(b)         Effectiveness.  The Company shall use its commercially
reasonable efforts to cause the Registration Statements and any post-effective
amendments thereto to become effective as promptly as practicable after filing.

 

(c)          Continued
Effectiveness.  The Company shall
use its commercially reasonable efforts to prepare and file with the SEC such
amendments and supplements to each Registration Statement and each prospectus
used in connection therewith (the “Prospectus”) as may be necessary to
keep each Registration Statement continuously effective and current at least
until, with respect to each Holder’s Registrable Securities registered under
such Registration Statement, the earlier of (i) the first date on which the
Holder may sell all Registrable Securities then held by such Holder without
restriction in accordance with the provisions of Rule 144(k) under the
Securities Act (or any successor provision) or (ii) such time as all
Registrable Securities purchased by such Holder have been sold pursuant to a
registration statement or are otherwise freely tradable (the “Final Date”);  provided, that the Company shall be deemed not to
have used its commercially reasonable efforts to keep the Registration
Statements effective during the requisite period if it voluntarily takes any
action that would result in the Holders of Registrable Securities covered
thereby not being able to offer and sell such Registrable Securities during
that period, unless such action is (i) required by applicable law or (ii) taken
by the Company in good faith and contemplated by Section 8.3(c), and the
Company thereafter complies with the requirements of Section 8.3(b) and (c).

 

(d)         Compliance with Law.  Notwithstanding any other provisions of this
Agreement to the contrary, the Company shall cause each Registration Statement
and any amendment thereto, as of the effective date thereof, and each related
Prospectus and any supplement thereto, as of the effective date thereof, (i) to
comply in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the SEC and (ii) not to 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.

 

(e)          Underwritten
Offerings.  Notwithstanding anything
to the contrary herein, no offering pursuant to this Agreement shall take the
form of an underwritten offering without the consent of the Company in its sole
discretion; provided, however, that, in the event that as a
direct result or consequence of the conversion of (i) any shares of Preferred
Stock into Common 

 

34

 

Stock pursuant to Section 6(a)(ii) of any
Certificate of Designation, or (ii) any principal amount of the Convertible
Note, if any, into shares of Common Stock pursuant to Section 4.1(b) of the
Convertible Note (each a “Forced Conversion Event”), which shares issued
upon a conversion described in clause (i) or (ii) above (the “Forced
Conversion Shares”) represent, in the aggregate, at least 5% of the
Company’s Common Stock then outstanding immediately following such conversion,
the Purchaser shall have the right to elect to proceed with one (and only one)
underwritten offering of its Registrable Securities that were issued upon a
conversion described in clause (i) or (ii) above and may, at its option,
include in such offering any other Registrable Securities (whether or not such
Registrable Securities are Forced Conversion Shares) held by the Purchaser or
any of its Affiliates at the time of such offering; provided, further,
that any such underwritten offering shall cover Registrable Securities that
represent at least 5% of the Company’s Common Stock outstanding at the time of
such offering.  In the event that the
Purchaser elects to proceed with an underwritten offering pursuant to the first
proviso clause of the preceding sentence, (A) the Purchaser and the Company,
(1) within fifteen (15) days of the last conversion event that results in the
Purchaser and its Affiliates holding in the aggregate Forced Conversion Shares
representing 5% of the then outstanding Common Stock immediately following such
conversion event (the “Fifteen-Day Notice Period”), shall commence
preparations for and diligently proceed with such underwritten offering, if the
Purchaser provides notice to Company of Purchaser’s desire to proceed with such
offering within such Fifteen-Day Notice Period, or (2) at a time reasonably
acceptable to both the Company and the Purchaser, shall commence preparations
for and diligently proceed with such underwritten offering, if the Purchaser
provides notice to the Company of the Purchaser’s desire to proceed with such
offering at any time after the expiration of the Fifteen Day Notice Period, and
(B) the Purchaser shall have the right to select an investment banker and
manager to administer any such offering, which investment banker or manager
shall be reasonably satisfactory to the Company.  Once the provisions of this Section 8.1(e) have been triggered by
the Purchaser, the provisions of this Section 8.1(e) shall similarly be
triggered and apply in each instance, if any, in which the Purchaser and its
Affiliates acquire (through one or more Forced Conversion Events) Forced Conversion
Shares that result in their holding Forced Conversion Shares that represent at
least 5% of the then outstanding Common Stock immediately following the
applicable conversion event(s) (which shares are in addition to any Forced
Conversion Shares that formed the basis for an earlier triggering event
pursuant to this Section 8.1(e)).  In
the event the Purchaser elects to engage the services of an underwriter in
accordance with this Section 8.1(e), the Company agrees to enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, including customary indemnification and contribution obligations, with
the managing underwriter of such offering and to take such other actions as are
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities; provided that, notwithstanding anything to the
contrary in Section 8.5(a), all fees and expenses of such underwritten offering
shall be for the account of the Purchaser (and not for the account of the
Company) other than (i) the fees and expenses of counsel to the Company and
(ii) of independent certified public accountants of the Company (including the
expenses of any special audit and comfort letters required by or incident to
such performance).

 

(f)            Certain Limitations.  In the event that the Purchaser elects to
proceed with an underwritten offering pursuant to the first proviso clause of
the first sentence of Section 8.1(e), no securities other than Registrable
Securities shall be included in the Registration Statement without the consent
of the Purchaser.

 

35

 

(g)         Other Assistance.  The Company shall cooperate with the
Purchaser in good faith to support and facilitate the sale or other disposition
by the Purchaser of any Registrable Securities.

 

8.2.                              Registration Procedures and Other
Matters.

 

(a)          The Company shall (i)
furnish to the Purchaser, prior to the filing thereof with the SEC, a copy of
each Registration Statement and each amendment thereto and each Prospectus and
each supplement, if any, thereto, and shall use its commercially reasonable
efforts to reflect in each such document, when so filed with the SEC, such
comments as the Purchaser reasonably may propose; and (ii) include in the Registration
Statement, at the time it is first declared effective, the name of each Holder,
and all other required information with respect to such Holder, that provided
written notice to the Company that such Holder would participate in such
registration; provided, that such Holder shall have provided the
information described in Section 8.4.

 

(b)         The Company shall
furnish, without charge, to each Holder with respect to the Registrable
Securities registered under each Registration Statement such number of copies
of the Registration Statement, Prospectus and preliminary prospectus each
prepared in conformity with the requirements of the Securities Act and such
other documents as such Holder may reasonably request, in order to facilitate
the public sale or other disposition of all or any of the Registrable
Securities by such Holder; provided, however, that the obligation
of the Company to deliver copies of the Prospectus or preliminary prospectus to
such Holder shall be subject to the receipt by the Company of such reasonable
assurances from such Holder as the Company may reasonably request that such
Holder will comply with the applicable provisions of the Securities Act and of
such other securities or blue sky laws as may be applicable in connection with
any use of such Prospectus or preliminary prospectus.

 

(c)          The Company shall file
documents required of the Company for normal blue sky clearance in states
specified in writing by any Holder and use its commercially reasonable efforts
to maintain such blue sky qualifications during the period the Company is
required to maintain the effectiveness of the Registration Statements pursuant
to Section 8.1(c); provided, however, that the Company shall
not be required to qualify to do business or consent to service of process in
any jurisdiction in which it is not now so qualified or has not so consented.

 

(d)         The Company shall
cooperate with the Holders of Registrable Securities to facilitate the timely
preparation and delivery of certificates, if any, representing the Registrable
Securities to be sold pursuant to the Registration Statements free of any
restrictive legends and in such denominations and registered in such names as
the Holders may reasonably request within a reasonable period of time prior to
sale of the Registrable Securities pursuant to the Registration Statements.

 

(e)          Subject to the
provisions of the second sentence of this Section 8.2(e), in the event that the
Purchaser selects underwriters for the offering as permitted by the first
proviso clause in the first sentence of Section 8.1(e), (i) the Company shall
include in the Registration Statements such information as the underwriters may
reasonably request for marketing reasons, whether or not the information is
required to be included, and, (ii) if requested by the 

 

36

 

underwriters selected by
the Purchaser in order to facilitate the sale of the Registrable Securities,
the Company shall, at the Purchaser’s expense, participate in reasonable road
show and similar marketing arrangements and otherwise cooperate, in such manner
as the Purchaser may reasonably request, with the Purchaser and the
underwriters selected by it in the marketing of the offering.  The provisions of the previous sentence
shall not obligate the Company to include information in the Registration
Statements or to make any other public disclosure of information other than
information previously disclosed by the Company in filings made by it with the
SEC under the Securities Act or the Exchange Act.

 

(f)            At the request of the
Purchaser, the Company shall furnish, on the date that Registrable Securities
are delivered to an underwriter, if any, for sale in connection with the
Registration Statements, (i) an opinion, dated as of such date, from counsel
representing the Company for purposes of the Registration Statements, and
addressed to the underwriter and the Purchaser, in such form, scope and
substance as is customarily given in an underwritten public offering, and (ii)
a letter, dated as of such date, from the Company’s independent certified
public accountants, and addressed to the underwriters and the Purchaser, in
such form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering.

 

(g)         The Company shall (i)
make reasonably available for inspection by the Holders and any underwriter
that they may designate as permitted by the first proviso clause of the first
sentence of Section 8.1(e), and any attorney, accountant or other agent
retained by the Holders or any such underwriter, all relevant financial and
other records, pertinent corporate documents, and properties of the Company and
(ii) cause the Company’s officers, directors, employees, and independent
certified public accountants to supply all relevant information reasonably
requested by the Holders or any such underwriter, or their respective
attorneys, accountants or agents, in connection with the Registration
Statements, in each case, as shall be reasonably necessary to enable such
Persons to conduct a reasonable investigation within the meaning of Section 11
of the Securities Act, provided, however,  that no Person shall be granted the
rights set forth in clauses (i) and (ii) above unless and until such Person
shall first have executed and delivered a confidentiality agreement in favor of
the Company in customary form reasonably acceptable to the Company with respect
to any information received by such Person from the Company pursuant to the
exercise of such rights.

 

(h)         The Company shall use its
commercially reasonable efforts to cause the Registrable Securities to be
listed on the NNM.

 

(i)             The Company shall use
its commercially reasonable efforts, subject to the terms and conditions of
this Agreement, to take all other steps necessary to effect and maintain the
registration of the Registrable Securities.

 

8.3.                              Transfer of Securities; Suspension.

 

(a)          The Purchaser agrees
that in case of any disposition of its Securities (other than pursuant to a
Registration Statement) effected with the Company’s consent pursuant to Section
7.1(b) to a third party who agrees to be bound by the provisions of Section 5.4
(as if it were considered the “Purchaser” hereunder) and this Section 8 and
makes the representations to 

 

37

 

the Company contained in Section 4 (other
than the representation contained in Section 4.8) (the “Transferee”, and
together with the Purchaser, the “Holders”), the Purchaser will promptly
notify the Company of any changes in the information set forth in any
Registration Statement regarding the Holders or their plans of
distribution.  The Company agrees, in
case of such disposition (to the extent made in accordance with Section 7.1),
to use its commercially reasonable efforts to file one or more supplements to
the Prospectus, and, if required by applicable law, to file with the SEC a
post-effective amendment to the Registration Statement, naming each Transferee
that is an Affiliate of Purchaser as a selling stockholder, in each case in
accordance with the provisions of the Securities Act and in such manner as to
permit such Holder to deliver a lawful Prospectus to purchasers of the
Registrable Securities; provided, that each Transferee that wishes to be
included in a supplement to the Prospectus or such post-effective amendment
shall have provided the Company with all necessary information regarding the
Transferee or its plan of distribution as the Company shall reasonably request;
provided, further, that in no event shall the Company be required
to file a post-effective amendment to name any Transferee other than any
Transferee that is an Affiliate of Purchaser as a selling stockholder.

 

(b)         Except in the event that
Section 8.3(c) applies, the Company shall (i) prepare and file from time
to time with the SEC a post-effective amendment to any Registration Statement
or a supplement to the Prospectus or a supplement or amendment to any document
incorporated therein by reference or file any other required document so that such
Registration Statement will 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 not misleading, and so that, as thereafter
delivered to the purchasers of Registrable Securities being sold thereunder,
such Prospectus will 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 light of the circumstances under which they were made,
not misleading; (ii) provide each Holder copies of any documents filed
pursuant to this Section 8.3(b); and (iii) inform each Holder that
the Company has complied with its obligations in this Section 8.3(b) (or
that, if the Company has filed a post-effective amendment to a Registration
Statement which has not yet been declared effective, the Company will notify
each Holder to that effect, will use its commercially reasonable efforts to
secure the effectiveness of such post-effective amendment as promptly as
possible and will promptly notify each Holder pursuant to this
Section 8.3(b) when the amendment has become effective).

 

(c)          In the event (i) of
any request by the SEC or any other federal or state governmental authority during
the period of effectiveness of a Registration Statement for amendments or
supplements to the Registration Statement or Prospectus or for additional
information; (ii) of the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) of any event or
circumstance which, upon the advice of its counsel, necessitates the making of
any changes in the Registration Statement or Prospectus, or any document
incorporated or deemed to be incorporated therein by reference, so that, in the
case of the Registration Statement, it will not contain any untrue statement of
a material fact or any omission to state a material fact required to be stated
therein or necessary to make the 

 

38

 

statements therein not misleading and that,
in the case of the Prospectus, it will not contain any untrue statement of a
material fact or any omission 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; or (v) the Company
determines in good faith that offers and sales pursuant to the Registration
Statement should not be made by reason of the presence of material undisclosed
circumstances or developments with respect to which the disclosure that could
be required in such Registration Statement or related Prospectus (A) is
premature, (B) could reasonably be expected to have an adverse effect on the
Company or (C) is otherwise inadvisable, then the Company shall deliver a
certificate in writing to each Holder (the “Suspension Notice”) to the
effect of the foregoing and, upon receipt of such Suspension Notice, such
Holder will refrain from selling any Registrable Securities pursuant to the
Registration Statement (a “Suspension”) until such Holder’s receipt of
copies of a supplemented or amended Prospectus prepared and filed by the
Company, or until it is advised in writing by the Company that the current
Prospectus may be used, and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in any such Prospectus.  In the event of
any Suspension, the Company shall use its commercially reasonable efforts to
cause the use of the Prospectus so suspended to be resumed on the earliest
possible date after the delivery of a Suspension Notice to each Holder.

 

(d)         The Company shall be
entitled to exercise its rights to deliver a Suspension Notice under Section
8.3(c) to suspend the availability of a Registration Statement or related
Prospectus, without incurring or accruing any obligation to pay the amounts provided
for in Section 8.7(b), for one or more periods not to exceed, in the aggregate
for all Registration Statements and Prospectuses, 45 consecutive days in any
90-day period and 90 days in any 365-day period (such period during which the
availability of any Registration Statement and related Prospectus is suspended
being a “Suspension Period”).

 

(e)          Provided that a
Suspension is not then in effect, each Holder may sell Registrable Securities
under the Registration Statements, provided that it arranges for delivery of a
current Prospectus to the transferee of such Registrable Securities.

 

(f)            Each Holder
acknowledges and agrees that the Registrable Securities sold pursuant to the
Registration Statements are not transferable on the books of the Company unless
the stock certificate submitted to the transfer agent evidencing such
Registrable Securities is accompanied by a certificate reasonably satisfactory
to the Company to the effect that (i) the Registrable Securities have been sold
in accordance with the relevant Registration Statement and (ii) the requirement
of delivering a current Prospectus has been satisfied.

 

(g)         The Company shall,
promptly following the effectiveness of each Registration Statement, cause to
be delivered to the transfer agent for the Registrable Securities an opinion of
counsel satisfactory to the transfer agent advising that the Registrable
Securities covered by the Registration Statement have been registered under the
Securities Act and that the stock certificates for the Registrable Securities
sold pursuant to the Registration Statement need not include a legend
restricting the resale of the shares under the Securities Act; provided that
each seller of Registrable Securities sold pursuant to the Registration
Statement shall confirm that it has fulfilled its obligations under the
Securities Act as a selling holder.

 

39

 

(h)         In the event of a sale of
Registrable Securities by any Holder pursuant to the Registration Statements,
such Holder shall deliver to the Company’s transfer agent an appropriate
notification of the sale, so that the Registrable Securities may be properly
transferred.

 

8.4.                              Obligations of the Holders.  The Holder or Holders of Registrable
Securities included in any Registration Statement shall furnish the Company
such information regarding such Holder or Holders, the Registrable Securities
held by them and the proposed distribution proposed by such Holder or Holders
as the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Section 8.

 

(a)          In the event the
Purchaser determines to engage the services of an underwriter as permitted by
the proviso clause of the first sentence of Section 8.1(e), the Holders agree
to enter into and perform their obligations under an underwriting agreement, in
usual and customary form, including customary indemnification and contribution
obligations, with the managing underwriter of such offering and to take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities.

 

(b)         No Holder may participate
in any underwritten registration hereunder unless it (i) agrees to sell the
Registrable Securities on the basis provided in any underwriting arrangements
in usual and customary form entered into by the Company, (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreement and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata share of all
underwriting discounts and commissions and any expenses other than those
payable by the Company pursuant to the terms of the last sentence of Section
8.1(e) of this Agreement.

 

8.5.                              Registration Expenses.

 

(a)          Subject to Section
8.5(b) and, in the case of an underwritten offering, subject to the final
sentence of Section 8.1(e), all expenses incident to the Company’s performance
of and compliance with Section 8 of this Agreement will be borne by the
Company, regardless of whether a Registration Statement is ever filed or
becomes effective, including:  (i) all
registration and filing fees and expenses; (ii) all fees and expenses of
compliance with federal securities and state blue sky or securities laws; (iii)
all expenses of printing (including printing certificates for the securities to
be issued and printing of Prospectuses), messenger and delivery services and
telephone (to the extent the foregoing are actually incurred by the Company);
(iv) all fees and disbursements of counsel for the Company; (v) all application
and filing fees in connection with listing the securities on a national
securities exchange or automated quotation system pursuant to the requirements
hereof; and (vi) all fees and disbursements of independent certified public
accountants of the Company (including the expenses of any special audit and
comfort letters required by or incident to such performance).  The Company will bear its internal expenses
(including all salaries and expenses to its officers and employees performing
legal or accounting duties), the expenses of any annual audit and the fees and
expenses of any Person, including special experts, retained by the Company.

 

40

 

(b)         Except as expressly
provided herein, the Holders shall bear the cost of all selling commissions and
similar fees applicable to the sale of Registrable Securities and all fees and
expenses of legal counsel for any Holder and all transfer taxes applicable to
the resale of the Registrable Securities.

 

8.6.                              Indemnification.

 

(a)          For the purpose of this
Section 8.6:

 

(i)                                     the
term “Selling Stockholder” shall include each Holder and any Affiliate
of such Holder; and

 

(ii)                                  the
term “Registration Statement” shall include the related Prospectus in
the form first filed with the SEC pursuant to Rule 424(b) of the
Securities Act or filed as part of the Registration Statements at the time of
effectiveness if no Rule 424(b) filing is required, exhibit, supplement or
amendment included in or relating to the Registration Statements referred to in
Section 8.1.

 

(b)         The Company agrees to
indemnify and hold harmless each Selling Stockholder (and each Person, if any,
who controls the Selling Stockholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and its officers, directors,
partners, employees and agents from and against any losses, claims, damages or
liabilities to which such Person may become subject (under the Securities Act
or otherwise) insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement, any Prospectus or any amendment or supplement
thereto or any omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Company will reimburse each such indemnified Person for any
reasonable legal or other out-of-pocket expenses incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim, provided, however, that the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of, or is based upon, an untrue statement made in such Registration
Statement, any Prospectus or any amendment or supplement thereto or any
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Selling Stockholder specifically for use in preparation of the
Registration Statement, any Prospectus or any amendment or supplement thereto
or the failure of such Selling Stockholder to comply with its covenants and
agreements contained in Section 8.3 respecting sale of the Registrable
Securities or any statement or omission in any Prospectus that is corrected in
any subsequent Prospectus that was delivered to the Selling Stockholder prior
to the pertinent sale or sales by the Selling Stockholder.  The indemnification for which provision is
made in this Section 8.6(b) shall be in addition to any liability which the
Company may otherwise have to an indemnified party.

 

(c)          Each Selling
Stockholder, severally and not jointly, agrees to indemnify and hold harmless
the Company (and each Person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), and each of its 

 

41

 

officers, directors, employees and agents
from and against any losses, claims, damages or liabilities to which the
Company (or any such officer, director, employee, agent or controlling person)
may become subject (under the Securities Act or otherwise), insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of, or are based upon, (i) any failure by a Selling
Stockholder to comply with the covenants and agreements contained in
Section 8.3 hereof respecting the sale of the Registrable Securities, or
(ii) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any amendment or
supplement thereto or any omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading if and to the extent that such untrue statement or omission was
made in reliance upon and in conformity with written information furnished by
or on behalf of any Selling Stockholder specifically for use in preparation of
the Registration Statement, any Prospectus or any amendment or supplement
thereto and each Selling Stockholder, severally and not jointly, will reimburse
the Company (or such officer, director, employee, agent or controlling person),
as the case may be, for any reasonable legal or other out-of-pocket
expenses incurred in investigating, defending or preparing to defend any such
action, proceeding or claim.  The
indemnification for which provision is made in this Section 8.6(c) shall be in
addition to any liability which the Selling Stockholder may otherwise have to
an indemnified party.

 

(d)         Promptly after receipt by
any indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 8.6, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, but the omission to so notify the indemnifying person will not relieve
the indemnifying Person from any liability which it may have to any indemnified
person under this Section 8.6 (except to the extent that such omission
materially and adversely affects the indemnifying person’s ability to defend
such action) or from any liability otherwise than under this
Section 8.6.  Subject to the
provisions hereinafter stated, in case any such action shall be brought against
an indemnified person, the indemnifying person shall be entitled to participate
therein, and, to the extent that it shall elect by written notice delivered to
the indemnified person promptly after receiving the aforesaid notice from such
indemnified person, shall be entitled to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified person.  After notice from the indemnifying person to
such indemnified person of its election to assume the defense thereof, such
indemnifying person shall not be liable to such indemnified person for any
legal expenses subsequently incurred by such indemnified person in connection
with the defense thereof; provided, however, that if there exists
or shall exist a conflict of interest that would make it inappropriate, in the
opinion of counsel to the indemnified person, for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person; provided, further,
that no indemnifying person shall be responsible for the fees and expenses of
more than one separate law firm (together with appropriate local counsel) for
all indemnified parties.  In no event
shall any indemnifying person be liable in respect of any amounts paid in
settlement of any action unless the indemnifying person shall have approved the
terms of such settlement; provided, further, that such consent
shall not be unreasonably withheld.  No
indemnifying person shall, without the prior written consent of the indemnified
person, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified 

 

42

 

person is or could have been a party and
indemnification could have been sought hereunder by such indemnified person,
unless such settlement includes an unconditional release of such indemnified
person from all liability on claims that are the subject matter of such
proceeding.

 

(e)          If the indemnification
provided for in this Section 8.6 is unavailable to or insufficient to hold
harmless an indemnified person under Section 8.6(b) or (c) above in respect of
any losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to therein, then each indemnifying person shall
contribute to the amount paid or payable by such indemnified person as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
Company on the one hand and the Selling Stockholders under such Registration
Statement on the other in connection with the statements or omissions or other
matters which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations.  The relative fault
shall be determined by reference to, among other things, in the case of an
untrue statement, whether the untrue statement relates to information supplied
by the Company on the one hand or any Selling Stockholder on the other and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement. 
The Company and the Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 8.6(e) were determined by
pro rata allocation (even if the Purchaser and other Selling Stockholders were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to above
in this Section 8.6(e).  The amount paid
or payable by an indemnified person as a result of the losses, claims, damages
or liabilities (or actions in respect thereof) referred to above in this
Section 8.6(e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified person in connection with investigating
or defending any such action or claim. 
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.  The Selling Stockholders’ obligations in
this paragraph to contribute shall be several and not joint.

 

8.7.                              Registration Defaults.

 

(a)          A “Registration
Default” shall be deemed to occur in the event that, prior to the Final
Date, any of the following events occur: 
(i) an Initial Registration Statement is not filed with the SEC by the
90th day after the Initial Closing Date; (ii) the Initial Registration
Statement is not declared effective by the SEC by the 180th day after the
Initial Closing Date; (iii) a Subsequent Registration Statement is not filed
with the SEC by the 90th day after any Subsequent Closing Date; (iv) a
Subsequent Registration Statement is not declared effective by the SEC by the
180th day after the relevant Subsequent Closing Date; or (v) a Suspension.  Each of the foregoing will constitute a
Registration Default whatever the reason for such event and whether it is
voluntary or involuntary or is beyond the control of the Company pursuant to
operation of law or as a result of any action or inaction by the SEC.  A Registration Default referred to in clause
(v) of the preceding sentence shall be deemed to have occurred and be
continuing only to the extent that the Suspension Period has extended past the
periods permitted by Section 8.3(d).

 

43

 

(b)         Subject to Section
8.7(c), in the event of any Registration Default, the Company shall be required
to pay to each Holder liquidated damages (which shall not be considered a
penalty) for every 30-day period or part thereof during which the Registration
Default continues, in an amount equal to 0.8333 percent of the sum of (i) the
aggregate Redemption Price (as defined in the applicable Certificates of
Designation) of all shares of Preferred Stock, if any, outstanding at the
beginning of such 30-day period and held by such Holder and (ii) the
outstanding principal amount of the Convertible Note, if any, held by such Holder
at the beginning of such 30-day period, and (iii) the Registration Default
Price per share of each Registrable Security held by such Holder at the
beginning of such 30-day period. 
Notwithstanding the foregoing, (1) the accrual of such liquidated damages
shall immediately cease on the first day on which such Registration Default is
cured (or deemed to be cured in accordance with Section 8.7(c) or (d)); and (2)
in no event shall liquidated damages accrue (x) after the applicable Final Date
or (y) at a rate in excess of that specified in the preceding sentence.  Any and all such liquidated damages shall be
payable in immediately available funds within 10 Business Days of the first
date on which the Registration Default is cured; provided, however,
that in the event that the Registration Default is not cured within 90 days
after the first date on which such default occurs or within any additional
30-day period following such initial 90-day period, such amount as shall be
payable pursuant to the previous sentence assuming the Registration Default
ended on such 90th day or on the last day of any successive 30-day period, as
applicable, shall be payable by the Company on the fifth day following demand
therefor by the Holder.

 

(c)          In the event of an
occurrence of a Registration Default, with respect to any shares of Preferred
Stock held by a Holder and any unpaid principal amount of the Convertible Note,
if any, held in the name of such Holder, in each case at the time of the
Registration Default, the Company may exercise its rights, if any, to redeem
such Preferred Stock pursuant to Section 5(b) of the applicable Certificate of
Designation, or to prepay any principal amount of the Convertible Note then
outstanding pursuant to Section 3.1(a) of the Convertible Note, in which event
the Registration Default shall be deemed to be cured as of the applicable
Redemption Date with respect to any Preferred Stock that is so redeemed, and to
be cured as of the Prepayment Date with respect to any principal amount of the
Convertible Note that is so prepaid.

 

(d)         In the event of an
occurrence of a Registration Default, with respect to any Registrable
Securities held by a Holder at the time of the Registration Default, the
Company shall have the right to purchase from the Holder any or all of such
Registrable Securities at the Registration Default Price per share, upon at
least 5 Business Days’ prior notice thereof to such Holder (which notice shall
state the number of Registrable Securities that the Company will purchase and the
closing date for such purchase), by tendering the Registration Default Price
per share at a closing to occur at the Company’s principal executive offices or
such other location as the Company may by notice direct, in which event the
Registration Default shall be deemed to be cured with respect to any such
Registrable Securities as of the date of such tender by the Company at such
closing of the purchase price therefor. 
In order to effect such purchase by the Company of such Registrable
Securities, on or prior to the applicable closing date, the Holder shall
surrender its certificate or certificates representing shares of the
Registrable Securities to be purchased by the Company at the Company’s
principal executive offices or such other location as the Company may by notice
direct, and thereupon the purchase price for such shares shall be 

 

44

 

payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. 
In the event less than all the shares represented by any such
certificate are purchased by the Company, a new certificate shall be issued
representing the unpurchased shares.

 

8.8.                              Rule
144.  The Company shall (a) file
in a timely manner the reports and other information required to be filed by
the Company under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder to the extent required from time to
time to enable the Holders to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 under the Securities Act, as such rule may be amended from time to
time, or any similar rule or regulation hereafter adopted by the SEC, (b) upon
the request of any Holder, deliver to such Holder a written statement as to
whether the Company has complied with such information requirements, and (c)
undertake any additional actions reasonably necessary to maintain the
availability to the Holders for the sale of Registrable Securities of the said
Rule 144 or similar rule or regulation.

 

8.9.                              Transfer of Registration Rights.  None of rights of any Holder under this
Section 8 shall be transferred or assigned by the Holder to any Person unless
such Person agrees, pursuant to a written instrument in form and substance
reasonably satisfactory to the Company, to become a party to, and bound by, all
of the terms and conditions of this Section 8.

 

9.                                       Termination.

 

9.1.                              Conditions of Termination.

 

(a)          If any condition
precedent to the Company’s obligation to effect the Initial Closing, as set
forth in Section 6.2, is not satisfied (otherwise than as a result of a breach
by the Company of its obligations under this Agreement) and such condition is
not waived, if waivable, by the Company on or prior to the Final Closing Date,
the Company shall not be obligated to effect any of the Closings contemplated
hereby and may, to the extent permitted by Section 9.2, terminate this Agreement
by written notice given to the Purchaser.

 

(b)         If any condition
precedent to the Purchaser’s obligation to effect the Initial Closing, as set
forth in Section 6.1, is not satisfied (otherwise than as a result of a breach
by the Purchaser of its obligations under this Agreement) and such condition is
not waived, if waivable, by the Purchaser on or prior to the Final Closing
Date, the Purchaser shall not be obligated to effect any of the Closings
contemplated hereby and may, to the extent permitted by Section 9.2, terminate
this Agreement by written notice given to the Purchaser.

 

(c)          Notwithstanding anything
to the contrary contained herein, this Agreement will, without any further
action of the Company or the Purchaser, terminate automatically upon any termination
of the Collaboration Agreement pursuant to Section 16.1.2 thereof.

 

(d)         Notwithstanding anything
to the contrary contained herein, this Agreement may be terminated at any time
before the Initial Closing by mutual consent of the Company and the Purchaser.

 

45

 

9.2.                              Effect of Termination.  In the event of termination pursuant to
Section 9.1, this Agreement shall become null and void and have no effect, with
no liability on the part of the Company or the Purchaser, or their directors,
officers, agents or stockholders, with respect to this Agreement, except for
liability for any breach of this Agreement occurring prior to the date of
termination; provided, that the provisions of Section 11 shall survive
any such termination and continue thereafter and the provisions of Section 5.4
shall remain in effect for ninety (90) days following such termination.

 

10.                                 Information.

 

10.1.                        SEC Filings and Financial Statements.  Beginning on the date of this Agreement and
continuing through the Initial Closing and thereafter for so long as the
Purchaser Beneficially Owns any of the Securities or any shares of Common Stock
issued upon conversion of the Securities, the Company shall use its
commercially reasonable efforts to promptly furnish to the Purchaser the
following reports to the extent such reports are not filed with the SEC via
EDGAR or are not posted on the Company’s website, each of which shall be
provided to the Purchaser by airmail or reputable express international
courier:

 

(a)          The Company’s quarterly
report on Form 10-Q or, in the absence of such report, a consolidated balance
sheet of the Company as at the end of such period and the related consolidated
statements of operations, stockholders’ equity and cash flows for such period
and for the portion of the Company’s fiscal year ended on the last day of such
quarter, all in reasonable detail and certified by the Company to have been
prepared in accordance with GAAP, subject to year-end audit adjustments;

 

(b)         The Company’s annual
report on Form 10-K or, in the absence of such report, a consolidated balance
sheet of the Company as at the end of such fiscal year and the related
consolidated statements of earnings, stockholders’ equity and cash flows for
such year, all in reasonable detail and accompanied by the report on such
consolidated financial statements of an independent certified public accountant
selected by the Company; and

 

(c)          Copies of all (i)
notices, proxy statements, financial statements, reports and documents as the
Company shall send or make available generally to its stockholders or to
financial analysts, promptly after providing the same to the stockholders, and
(ii) periodic and special reports, documents and registration statements (other
than on Form S-8) which the Company furnishes or files with the SEC.

 

10.2.                        Press
Releases.  Beginning on the date
of this Agreement and continuing through the Initial Closing and thereafter for
so long as the Purchaser Beneficially Owns any of the Securities or any shares
of Common Stock issued upon conversion of the Securities, the Company will use
its commercially reasonable efforts to furnish to the Purchaser copies of all
press releases within one (1) Business Day following release to the public to
the extent that such releases are not immediately available on Yahoo Finance
and are not available on the Company’s website.

 

10.3.                        Nonpublic
Information.  Notwithstanding
anything to the contrary contained in this Section 10, the Company shall not,
except in connection with the matters 

 

46

 

contemplated by the Collaboration Agreement, disclose material
nonpublic information to the Purchaser, or to advisors to or representatives of
the Purchaser, unless prior to disclosure of such information the Company
identifies such information as being material nonpublic information and
provides the Purchaser, such advisors, or such representatives with the
opportunity to accept or refuse to accept such material nonpublic information
for review.

 

11.                                 Miscellaneous Provisions.

 

11.1.                        Public Statements or Releases.  Neither the Company nor the Purchaser shall
make any public announcement with respect to the existence or terms of this
Agreement, the Collaboration Agreement or the transactions provided for herein
or therein without the prior approval of the other party, which shall not be
unreasonably withheld or delayed. 
Notwithstanding the foregoing, nothing in this Section 11.1 shall prevent
either party from making any public announcement it considers necessary in
order to satisfy its obligations under law or the rules of any national
securities exchange or other administrative body having jurisdiction over such
party; provided that such party, to the extent practicable, provides the
other party with an opportunity to review and comment on any proposed public
announcement before it is made.

 

11.2.                        Survival; Rights Cumulative.

 

(a)          All representations,
warranties, covenants and agreements made by the Company pursuant to this Agreement
(i) shall survive the execution and delivery of this Agreement, the Closings,
the transfer by the Purchaser of any Security in accordance with the terms
hereof, the conversion, redemption or repayment, as the case may be, of the
Preferred Stock or the Convertible Note, if any, and sale by the Purchaser of
any shares of Common Stock issued upon the conversion of any Security and (ii)
may be relied upon by Purchaser and its permitted assigns regardless of any
investigation that may have been made at any time by Purchaser or any
assignee.  All representations,
warranties, covenants and agreements made by the Purchaser pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closings and may be relied upon by the Company and its permitted assigns.

 

(b)         Each and all of the
various rights, powers and remedies of the parties shall be considered to be
cumulative with and in addition to any other rights, powers and remedies which
the parties may have at law or in equity in the event of the breach of any of
the terms of this Agreement.  The
exercise or partial exercise of any right, power or remedy shall neither
constitute the exclusive election thereof nor the waiver of any other right, power
or remedy available to such party.

 

11.3.                        Pronouns.  All pronouns or any variation thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the person, persons, entity or entities may require.

 

11.4.                        Notices.

 

(a)          Any notices, reports or other
correspondence (hereinafter collectively referred to as “Correspondence”)
required or permitted to be given hereunder shall be given in writing, shall expressly reference the section(s) of this
Agreement to which they pertain, and 

 

47

 

shall be delivered to the
other party, and shall be deemed given only if delivered by hand
or sent by facsimile transmission (with transmission confirmed) or by
internationally recognized overnight delivery service that maintains records of
delivery, at the
appropriate address as set forth below or to such other addresses as may be
designated in writing by the parties from time to time during the term of this
Agreement.  Such Correspondence
shall be deemed to have been given as of the date delivered by hand or
transmitted by facsimile (with transmission confirmed) or on the second
delivery day after deposit with an internationally recognized overnight
delivery service.  Any Correspondence
delivered by facsimile shall be confirmed by a hard copy delivered as soon as
practicable thereafter.

 

(b)         All Correspondence to the
Company shall be addressed as follows:

 

Abgenix, Inc.

6701 Kaiser Drive

Fremont, California  94555

U.S.A.

Attention:  President

Facsimile:  (510) 608-6547

 

with a copy to:

 

Abgenix, Inc.

6701 Kaiser Drive

Fremont, California  94555

U.S.A.

Attention: General Counsel

Facsimile:  (510) 790-5102

 

(c)          All Correspondence to
the Purchaser shall be addressed as follows:

 

AstraZeneca UK Limited

Alderley House

Alderley Park

Macclesfield

Cheshire SK10 4TF

U.K.

Attention: 
Assistant General Counsel

Facsimile:  0
162 5583105

 

with a copy to

 

AstraZeneca

15 Stanhope Gate

London W1K 1LN

U.K.

Attention: 
Chief Financial Officer

Facsimile:  0
207 3045193

 

48

 

(d)         Any Person may change the
address to which correspondence to it is to be addressed by notification as
provided for herein.

 

11.5.                        Captions.  The captions and paragraph headings of this
Agreement are solely for the convenience of reference and shall not affect its
interpretation.

 

11.6.                        Severability.  Should any part or provision of this
Agreement be held unenforceable or in conflict with the applicable laws or
regulations of any jurisdiction, the invalid or unenforceable part or
provisions shall be replaced with a provision which accomplishes, to the extent
possible, the original business purpose of such part or provision in a valid
and enforceable manner, and the remainder of this Agreement shall remain
binding upon the parties hereto.

 

11.7.                        Governing Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.

 

11.8.                        Service of Process; Consent to
Jurisdiction; Venue.

 

(a)          Each Party agrees that
service of any process, summons, notice or document by registered mail to its
address set forth in Section 11.4, or any other lawful means, shall be
effective service of process for any action, suit or proceeding brought against
it under this Agreement in any court identified in clause (b) below.

 

(b)         The Parties hereby
irrevocably and unconditionally consent to the exclusive jurisdiction of the
courts of the State of New York and the United States District Court for the
Southern District of New York for any action, suit or proceeding (other than
appeals therefrom) arising out of or relating to this Agreement, and agree not
to commence any action, suit or proceeding (other than appeals therefrom)
related thereto except in such courts. 
The Parties further hereby irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit or proceeding (other than
appeals therefrom) arising out of or relating to this Agreement in the courts
of the State of New York or the United States District Court for the Southern District
of New York, and hereby further irrevocably and unconditionally waive and agree
not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.

 

11.9.                        Waiver.  No waiver of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or be construed as, a further or
continuing waiver of any such term, provision or condition or as a waiver of
any other term, provision or condition of this Agreement.

 

11.10.                  Expenses.  Except as otherwise expressly provided
herein, each of the Company and the Purchaser shall pay its own fees and
expenses incurred in connection with this Agreement.

 

11.11.                  Assignment.  Neither party may assign its rights or
delegate its obligations under this Agreement, whether by operation of law or
otherwise, in whole or in part without the prior written consent of the other
party, except that, subject to the provisions of Section 8.9, the 

 

49

 

Purchaser shall always have the right, without such consent, (a) to
perform any or all of its obligations and exercise any or all of its rights
under this Agreement through any of its Affiliates and, (b) upon written notice
to (and with the prior consent of) the Company, to assign any or all of its
rights and delegate any or all of its obligations hereunder to any of its
Affiliates or any successor in interest (whether by merger, acquisition, asset
purchase or otherwise) to all or substantially all of the business to which
this Agreement relates; provided, however, that Purchaser shall
not require the Company’s consent to assign any or all of its rights or
delegate any or all of its obligations hereunder to any of its Affiliates.  All
validly assigned rights and delegated obligations of a party shall inure to the
benefit of and be enforceable against the permitted successors, assigns and
delegees of such party, provided that the delegating party shall remain jointly
and severally liable for the performance of any delegated obligations under
this Agreement.  Any attempted
assignment or delegation in violation of this Section 11.11 shall be void.  Notwithstanding any other provision of this
Section 11.11, the terms of this Agreement may be varied, amended and modified
or this Agreement may be suspended, cancelled or terminated without the consent
of any assignee or delegate that is not deemed pursuant to the provisions of
this Section 11.11 to have become a party to this Agreement.

 

11.12.                  Counterparts.  This Agreement may be signed in one or more
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.  Copies
of executed counterparts of this Agreement transmitted by facsimile shall be
considered original executed counterparts provided receipt of such facsimile is
confirmed.

 

11.13.                  Entire
Agreement; Amendments.  This
Agreement and the Collaboration Agreement, together with the schedules and exhibits
hereto and thereto and the other agreements and instruments contemplated hereby
and thereby, constitute the entire agreement between the parties hereto
respecting the subject matter hereof and supersede all prior agreements,
negotiations, understandings, representations and statements respecting the
subject matter hereof (including
that certain Confidential Letter of Intent dated April 7, 2003, as
amended, and that certain Memorandum of Intent dated September 22, 2003),
whether written or oral.  No modification,
alteration, waiver or change in any of the terms of this Agreement shall be
valid or binding upon the parties hereto unless made in writing and duly
executed by the Company and the Purchaser.

 

11.14.                  No
Right of Setoff.  NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THE
COMPANY HEREBY EXPRESSLY WAIVES, AND SHALL BE PROHIBITED FROM ENFORCING OR
SEEKING TO ENFORCE, ANY RIGHT OR REMEDY (INCLUDING ANY COMMON LAW RIGHT OR
REMEDY) TO SET OFF, COUNTERCLAIM, DEDUCT OR OTHERWISE REDUCE ANY AMOUNT WHICH
THE COMPANY MAY BE ENTITLED TO RECEIVE FROM THE PURCHASER OR ITS AFFILIATES
FROM OR AGAINST ANY AMOUNTS PAYABLE UNDER ANY SECURITY ISSUED HEREUNDER.

 

50

 

11.15.                  Understanding Regarding Purchase
Price.  For the avoidance of doubt,
none of the purchase price paid by the Purchaser to the Company hereunder for
any shares of Preferred Stock is being provided by the Purchaser to the Company
as payment for, or on account of, the manufacture by the Company on behalf of
the Purchaser, or the supply by the Company to the Purchaser, of any products.

 

 

[The remainder of this page was left blank
intentionally.]

 

51

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement under seal as of the day and year first above written.

 

 

	
   

  	
  ABGENIX, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  Raymond M. Withy

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Raymond M. Withy

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ASTRAZENECA
  UK LIMITED

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  	
  J.R. Symonds

  	
   

  
	
   

  	
   

  	
  Name:

  	
  J.R.
  Symonds

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
							

 

52

 

EXHIBIT
A

 

[RESERVED]

 

 

EXHIBIT B

 

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS OF THE

SERIES A-1 CONVERTIBLE PREFERRED STOCK

 

[See Exhibit 4.6]

 

 

EXHIBIT C

 

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
RIGHTS OF THE

SERIES A-2 CONVERTIBLE PREFERRED STOCK

 

[See Exhibit 4.7]

 

 

Exhibit d

 

FORM OF CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE

SERIES A-3 CONVERTIBLE PREFERRED STOCK AND SERIES A-4 CONVERTIBLE

PREFERRED STOCK

 

 

EXHIBIT D

 

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A-X(1)

CONVERTIBLE PREFERRED STOCK OF ABGENIX, INC.

 

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

 

The undersigned, pursuant to the provisions
of Section 151 of the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to the authority expressly vested in the Board of
Directors of Abgenix, Inc., a Delaware corporation (the “CORPORATION”), by the
Corporation’s Certificate of Incorporation, the Board of Directors of the
Corporation (the “BOARD OF DIRECTORS”) has duly provided for the issuance of
and created a series of Preferred Stock (the “PREFERRED STOCK”) of the
Corporation, par value $0.0001 per share, and in order to fix the designation
and amount and the voting powers, designations, preferences and other rights,
and the qualifications, limitations and restrictions, of a series of Preferred
Stock, has duly adopted this Certificate of Designations, Preferences and
Rights of Preferred Stock (the “CERTIFICATE”).

 

Each share of such series of Preferred Stock
shall rank equally in all respects and shall be subject to the following
provisions:

 

1.                                       NUMBER
OF SHARES AND DESIGNATION. 
[               ]
shares of Preferred Stock of the Corporation shall constitute a series of
Preferred Stock designated as Series A-X Convertible Preferred Stock (the
“SERIES A-X PREFERRED STOCK”).  Subject
to Section 8(c), the number of shares of Series A-X Preferred Stock may be
increased (to the extent of the Corporation’s authorized and unissued Preferred
Stock) or decreased (but not below the number of shares of Series A-X Preferred
Stock then outstanding) by further resolution duly adopted by the Board of
Directors and the filing of a certificate of increase or decrease, as the case
may be, with the Secretary of State of the State of Delaware.

 

2.                                       RANK.  The Series A-X Preferred Stock shall, with
respect to rights upon liquidation, dissolution or winding up of the affairs of
the Corporation, or otherwise (a) rank senior and prior to the Common Stock,
and each other class or series of equity securities of the Corporation, whether
currently issued or issued in the future, that by its terms ranks junior to the
Series A-X Preferred Stock (all of such equity securities, including the Common
Stock, are collectively referred to herein as the “JUNIOR SECURITIES”), (b)
rank on a parity with each other class or series of equity securities of the Corporation,
whether currently issued or issued in the future, that does not by its terms
expressly provide that it ranks senior to or junior to the Series A-X Preferred
Stock (all of such equity securities are collectively referred to herein as the
“PARITY SECURITIES”), and (c) rank junior to each other class or series of
equity securities of the Corporation, whether currently issued or issued in the
future, that by its terms ranks senior to the Series A-X Preferred Stock (all
of such equity securities are collectively referred to herein as the “SENIOR
SECURITIES”).  The respective
definitions of Junior Securities, Parity Securities

 

(1) The “X” is to be replaced
throughout by a “3” or “4”, as appropriate.

 

 

 

and Senior Securities shall also include any
rights or options exercisable or exchangeable for or convertible into any of
the Junior Securities, Parity Securities or Senior Securities, as the case may
be.

 

3.                                       DIVIDENDS.

 

(a)          Ratably with Common
Stock.  The holders of shares of
Series A-X Preferred Stock shall be entitled to participate equally and ratably
with the holders of shares of Common Stock in all dividends and distributions
paid (whether in the form of cash, stock or otherwise) on the shares of Common
Stock as if immediately prior to each record date for the Common Stock, shares
of Series A-X Preferred Stock then outstanding were converted into shares of
Common Stock (in the manner, and at the Conversion Price, described in Section
6(a)(i)).  Notwithstanding anything
contained in this Certificate to the contrary, the provisions of this Section
3(a) shall be given effect as though each share of Series A-X Preferred Stock
had been issued by the Corporation to the holder thereof on the Initial Closing
Date (as such term is defined in the Purchase Agreement), such that upon issue
of any share of the Series A-X Preferred Stock the holder thereof shall,
immediately upon issue and without any further action by such holder, be
entitled to receive any dividends to which such holder would have been entitled
had such share of Series A-X Preferred Stock been issued by the Corporation on
the Initial Closing Date and held by such holder from the Initial Closing Date
to and including the date of issue of such share.

 

(b)         Dividend Trigger Date.  Subject to the rights of the holders of any
Senior Securities, in addition to the dividends specified in Section 3(a), upon
the occurrence and during the continuation of any Event of Default described in
Section 10(a)(i) (the date of each such occurrence, a “DIVIDEND TRIGGER DATE”),
thereafter and continuing until the earlier of the redemption or conversion of
the relevant shares of Series A-X Preferred Stock and the date on which such
Event of Default is cured and ceases to exist, the holders of such shares shall
be entitled to receive, out of funds legally available for that purpose, cash
dividends at the Dividend Rate.  Such
dividends shall be cumulative from the Dividend Trigger Date and shall be
payable in arrears on each Dividend Payment Date, provided that if any such
payment date is not a Business Day then such dividend shall be payable on the
next Business Day.  The dividends per
share of the Series A-X Preferred Stock for any full quarterly period shall be
computed by multiplying the Dividend Rate for such Dividend Period by the
Redemption Price per share and dividing the result by four.  Dividends payable for any period less than a
full quarterly period shall be computed on the basis of a 360-day year of
twelve 30-day months and the actual number of days elapsed for such period less
than one month.

 

(c)          Ratable Distribution.  If the full cash dividends required to be
paid by the Corporation to the holder of Series A-X Preferred Stock pursuant to
Section 3(b) are not paid or made available to the holders of all outstanding
shares of Series A-X Preferred Stock, and funds available shall be insufficient
to permit payment in full in cash to all such holders and the holders of any
Parity Securities of the preferential amounts to which they are then entitled,
the entire amount available for payment of cash dividends shall be distributed
among the holders of the Series A-X Preferred Stock and such holders of Parity
Securities ratably and in proportion to the full amount to which they would
otherwise be respectively entitled, and any remainder not paid in cash to such
holders shall cumulate.

 

2

 

(d)         Junior Securities.  So long as any shares of Series A-X
Preferred Stock shall be outstanding after the Dividend Trigger Date or any
dividends accrued but unpaid in respect of shares of Series A-X Preferred Stock
redeemed pursuant to Section 5 or converted pursuant to Section 6 remain
unpaid, the Corporation shall not (i) declare or pay any dividend or make any
distribution on any Junior Securities, whether in cash, property or otherwise
(other than dividends payable on shares of the class or series upon which such
dividends are declared or paid, or payable in shares of Common Stock with
respect to Junior Securities other than Common Stock), or (ii) purchase or
redeem any Junior Securities, or pay or make available any monies for a sinking
fund for the purchase or redemption of any Junior Securities, unless all
dividends to which the holders of Series A-X Preferred Stock shall have been
entitled for all previous Dividend Periods shall have been paid or declared and
a sum of money sufficient for the payment thereof set apart.

 

4.                                       LIQUIDATION
PREFERENCE.

 

(a)          Amount.  The liquidation preference for the shares of
Series A-X Preferred Stock shall be One Thousand United States Dollars (U.S.
$1,000.00) per share (the “BASE LIQUIDATION VALUE”), plus the amount of any
accrued but unpaid dividends (the “LIQUIDATION VALUE”).

 

(b)         Entitlement of Series
A-X Preferred Stockholders.  In the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, the holders of shares of Series A-X Preferred Stock shall be
entitled to receive the greater of (i) the Liquidation Value of such shares in
effect on the date of such liquidation, dissolution or winding up or (ii) the
payment such holders would have received had such holders, immediately prior to
such liquidation, dissolution or winding up, converted their shares of Series
A-X Preferred Stock into shares of Common Stock (pursuant to, and at the
Conversion Price described in, Section 6(a)(i)).

 

(c)          Seniority.  In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the holders of
shares of Series A-X Preferred Stock (i) shall not be entitled to receive the
Liquidation Value of such shares until payment in full or provision has been
made for the payment in full of all claims of creditors of the Corporation and
the liquidation preferences for all Senior Securities, and (ii) shall be
entitled to receive the Liquidation Value of such shares before any payment or
distribution of any assets of the Corporation shall be made or set apart for
holders of any Junior Securities. 
Subject to clause (i) above, if the assets of the Corporation are not
sufficient to pay in full the Liquidation Value payable to the holders of
shares of Series A-X Preferred Stock and the liquidation preference payable to
the holders of any Parity Securities, then such assets, or the proceeds
thereof, shall be distributed among the holders of shares of Series A-X
Preferred Stock and any such other Parity Securities ratably in accordance with
the Liquidation Value for the Series A-X Preferred Stock and the liquidation
preference for the Parity Securities, respectively.

 

(d)         Events Constituting
Liquidation.  Neither a
consolidation or merger of the Corporation with or into any other entity, nor a
merger of any other entity with or into the Corporation, nor a sale or transfer
of all or any part of the Corporation’s assets for cash, securities or other
property shall be considered a liquidation, dissolution or winding up of the
Corporation within the meaning of this Section 4.

 

3

 

5.                                       REDEMPTION;
PROCEDURES FOR REDEMPTION.

 

(a)          Redemption Upon Final
Maturity.  On the fifth (5th)
anniversary of the date on which the Corporation first issues any shares of
Series A-X Preferred Stock (the “MATURITY DATE”), the Corporation shall redeem all shares of Series
A-X Preferred Stock, if then outstanding, at a cash redemption price per share
equal to the Liquidation Value (such amount being referred to herein as the
“REDEMPTION PRICE”).

 

(b)         Redemption at Option
of the Corporation.  At any time
prior to the Maturity Date, at its sole option, the Corporation may redeem any
or all shares of Series A-X Preferred Stock at a cash redemption price per
share equal to the Redemption Price if (i) a shelf registration statement
covering resales of the Common Stock issuable upon conversion of Series A-X
Preferred Stock is effective and available for use in accordance with Section
8.1 of the Purchase Agreement and is expected to remain effective and available
for use for the thirty (30) days following the date of the notice provided by
the Corporation pursuant to Section 5(c), unless registration is no longer
required pursuant to the terms and conditions of the Purchase Agreement and
(ii) the Common Stock issuable upon conversion of the Series A-X Preferred
Stock is listed or admitted for trading on an Approved Market and is expected
to remain so listed or admitted for trading for the thirty (30) days following
the date of the notice provided by the Corporation pursuant to Section
5(c).  Except as set forth in this
Section 5(b), the Corporation shall not have the option to redeem any shares of
Series A-X Preferred Stock.  If fewer
than all of the outstanding shares of Series A-X Preferred Stock are to be
redeemed pursuant to this Section 5(b), the shares of each holder of Series A-X
Preferred Stock shall be redeemed on a pro rata basis (according to the number
of shares of Series A-X Preferred Stock held by each holder, with any
fractional shares rounded to the nearest whole share or in such other manner as
the Board of Directors may determine, as may be prescribed by resolution of the
Board of Directors).

 

(c)          Notice of Redemption.  In the event of a redemption of shares of
Series A-X Preferred Stock pursuant to Section 5(a) or (b), notice of such
redemption shall be given by the Corporation, by first class mail, postage
prepaid, mailed not less than fifteen (15) days nor more than forty-five
(45) days prior to the Redemption Date, to each holder of Series A-X
Preferred Stock at the address appearing in the Corporation’s records.  Such notice shall state:

 

(i)                                     the date on which
the holder is to surrender to the Corporation the certificates for any shares
to be redeemed (such date, the “REDEMPTION DATE”);

 

(ii)                                  the number of shares
of Series A-X Preferred Stock to be redeemed and, if fewer than all the shares
held by such holder are to be redeemed, the number of shares to be redeemed
from such holder (such notice being referred to as the “REDEMPTION NOTICE”);

 

(iii)                               the then-current
Conversion Price;

 

(iv)                              that if the holder wishes
to convert any or all shares of Series A-X Preferred Stock that are the subject
of the Redemption Notice, the holder must give

 

4

 

notice of such conversion no later than the close of business on the
Business Day immediately preceding the Redemption Date; and

 

(v)                                 that, unless the
Corporation defaults in paying the Redemption Price with respect to such shares
of Series A-X Preferred Stock, the only remaining right of the holder in
respect of such shares shall be to receive the payment of the Redemption Price.

 

Once a
Redemption Notice is given by the Corporation to a holder, the shares of Series
A-X Preferred Stock that are the subject of such Redemption Notice shall not
thereafter be convertible pursuant to Section 6(a)(ii) and the Redemption Price
shall become due and payable on the Redemption Date, except to the extent that
all or any portion of the shares of Series A-X Preferred Stock held by such
holder are converted in accordance with the provisions of Section 6(a)(i).

 

(d)         Redemption Events.

 

(i)                                     Notwithstanding
anything contained in Section 5(a), (b) or (c) to the contrary, if at any time
there shall occur a Redemption Event, then on the date that is thirty (30)
Business Days after the date of such Redemption Event (or, if such day is not a
Business Day, then the next Business Day thereafter) (the “ REDEMPTION EVENT
DATE”), the Corporation shall either, as it may elect,

 

(1)          redeem
from each holder of Series A-X Preferred Stock, at a cash redemption price
equal to the Redemption Price, as many of the Maximum Number of Redemption
Event Shares as the holder may specify in a Redemption Event Notice (for each
holder, such number of shares, the “DESIGNATED NUMBER OF REDEMPTION EVENT
SHARES”), or

 

(2)          exercise
its rights pursuant to, and subject to all of the terms and provisions of,
Section 6(a)(ii) to require the holder of the Series A-X Preferred Stock to
convert the Designated Number of Redemption Event Shares; provided, however,
that if and to the extent, as of the Redemption Event Date, the Corporation is
prevented by the terms of Section 6(a)(ii)(B) from requiring the holder to
convert shares of Series A-X Preferred Stock pursuant to Section 6(a)(ii)(A),
then the Corporation shall, notwithstanding any election that it may otherwise
have made pursuant to this Section 5(d)(i), redeem from each holder on the
Redemption Event Date in accordance with clause (1) above such of the
Designated Number of Redemption Event Shares as the Corporation is prevented by
the terms of Section 6(a)(ii)(B) from requiring the holder to convert as of
such date.

 

(ii)                                  Within ten (10)
Business Days after the occurrence of a Redemption Event, the Corporation shall
provide each holder of Series A-X Preferred Stock with notice of the Redemption
Event. The notice shall state:

 

(A)      the date of such Redemption Event, and, briefly,
the events causing such Redemption Event;

 

5

 

(B)        the date by which the Redemption Event Notice
pursuant to this Section 5(d) must be given;

 

(C)        the Redemption Event Date;

 

(D)       the Maximum Number of Redemption Event Shares;

 

(E)         the holder’s right to require the Corporation
to redeem or convert (at the Corporation’s election) such number of shares of
Series A-X Preferred Stock as would equal the Maximum Number of Redemption
Event Shares;

 

(F)         whether the Corporation is electing to redeem
or exercise its rights to convert such Designated Number of Redemption Event
Shares as may thereafter be specified by the holder (and in the event that the
Corporation is electing to exercise its rights to convert such shares, the
place or places where certificates for such shares are to be surrendered for
issuance of certificates representing shares of Common Stock);

 

(G)        the then-current Conversion Price and the
then-current Corporation Conversion Price;

 

(H)       that the Series A-X Preferred Stock that is the
subject of redemption pursuant to a Redemption Event Notice may be converted
into Common Stock pursuant to Section 6(a)(i) only to the extent that the
Redemption Event Notice has been withdrawn in accordance with the terms of this
Certificate;

 

(I)            the procedures that the holder must follow
to exercise rights under this Section 5(d); and

 

(J)           the procedures for withdrawing a Redemption
Event Notice.

 

(iii)                               The holder may exercise
its rights specified in this Section 5(d) by delivery to the Corporation of a
written notice (a “REDEMPTION EVENT NOTICE”) at any time prior to the close of
business on the Business Day next preceding the Redemption Event Date specifying
the Designated Number of Redemption Event Shares.  The holder may specify a Designated Number of Redemption Event
Shares that is less than the Maximum Number of Redemption Event Shares only if
the amount so designated is not less than one whole share.  Notwithstanding anything herein to the
contrary, the holder shall have the right to withdraw any Redemption Event
Notice in whole or in a portion thereof so long as the remaining Designated
Number of Redemption Event Shares, if any, is not less than one whole share at
any time prior to the close of business on the Business Day next preceding the
Redemption Event Date by written notice of withdrawal given to the Corporation.

 

(e)          Rights of Holder.  Upon receipt by the Corporation of the
Redemption Event Notice specified in Section 5(d)(iii), the holder shall
(unless such Redemption Event Notice is withdrawn as specified in Section
5(d)(iii)) thereafter be entitled to receive on the Redemption Event Date,
either the Redemption Price or the certificates and payment amount (if any) to
which it is entitled upon conversion as provided in Section 6(b)(ii), as
applicable, in each case with

 

6

 

respect to each share of Series A-X Preferred
Stock held by such holder that is included in the Designated Number of
Redemption Event Shares.  Any Series A-X
Preferred Stock in respect of which a Redemption Event Notice has been given by
the holder thereof may not be converted into shares of Common Stock pursuant to
Section 6(a) on or after the date of the delivery of such Redemption Event
Notice unless such Redemption Event Notice has first been validly withdrawn.

 

(f)            Redemption Terms.  In the event that any Designated Number of
Redemption Event Shares are to be redeemed pursuant to this Section 5, the
following terms and conditions shall apply.

 

(i)                                     Surrender of
Certificates.  On or prior to the
Redemption Date or the Redemption Event Date, as the case may be, each holder
of Series A-X Preferred Stock to be redeemed shall surrender its certificate or
certificates representing shares of Series A-X Preferred Stock to be redeemed
to the Corporation at the Corporation’s principal executive offices or such
other location as the Corporation may by notice direct, and thereupon the Redemption
Price of such shares shall be payable to the order of the person whose name
appears on such certificate or certificates as the owner thereof and each
surrendered certificate shall be canceled. 
In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares.  From and after the
Redemption Date or the Redemption Event Date, as the case may be, unless there
shall have been a default in payment of the Redemption Price, all rights of the
holders of the Series A-X Preferred Stock (except the right to receive the
Redemption Price without interest upon surrender of their certificate or
certificates) shall cease with respect to the Series A-X Preferred Stock subject
to redemption, and such shares shall not thereafter be transferred on the books
of the Corporation or deemed to be outstanding for any purpose whatsoever.

 

(ii)                                  Consequences of
Nonpayment.  In the event that the
Corporation does not pay the Redemption Price on the Redemption Date or the
Redemption Event Date, as the case may be, the Redemption Price shall be
calculated as if the Redemption Date or the Redemption Event Date, as the case
may be, were the later of such date and the date on which such payment is
made.  If the Corporation is unable at
the Redemption Date or the Redemption Event Date, as the case may be, to redeem
any or all shares of Series A-X Preferred Stock then to be redeemed because
such redemption would violate the applicable laws of the State of Delaware,
then the Corporation shall redeem such shares as soon thereafter as redemption
would not violate such laws.  In the
event of any redemption of only a part of the then outstanding Series A-X
Preferred Stock subject to redemption, the Corporation shall effect such
redemption pro rata among the holders thereof (based on the number of shares of
Series A-X Preferred Stock held on the date of notice of redemption).

 

(g)         Conversion Terms.  In the event that the Corporation elects,
pursuant to clause (2) of Section 5(d)(i), to exercise its rights to require the holder to
convert shares of Series A-X Preferred Stock pursuant to Section 6(a)(ii) with
respect to the Designated Number of Redemption Event Shares specified by each
holder, the terms of Section 6 shall govern the conversion of such shares,
except that the notice provisions of Section 5(d)(ii) shall apply in lieu

 

7

 

of the notice requirements of Section
6(b)(i)(B) such that, upon the Corporation’s giving of the notice required
pursuant to Section 5(d)(ii), the Corporation shall be deemed to have exercised
its conversion rights pursuant to Section 6(a)(ii) with respect to the
Designated Number of Redemption Event Shares specified by each holder and the
Corporation shall not be required to provide any additional notice under
Section 6(b)(i)(B) in order to exercise such rights with respect to such
shares.

 

6.                                       CONVERSION.

 

(a)          Right to Convert;
Right of Corporation to Require Conversion.

 

(i)                                     Voluntary
Conversion at the Option of the Holder. 
Subject to the provisions of Section 5, this Section 6 and
Section 9, each holder of shares of Series A-X Preferred Stock shall have
the right, at any time and from time to time, at such holder’s option, to convert
any or all of such holder’s shares of Series A-X Preferred Stock, in whole or
in part, into fully paid and non-assessable shares of Common Stock at the
conversion price equal to the Initial Conversion Price per share of Common
Stock, subject to adjustment as described in Section 6(c) (as adjusted, the
“CONVERSION PRICE”).  The number of
shares of Common Stock into which a share of the Series A-X Preferred Stock
shall be convertible pursuant to this Section 6(a)(i) (calculated as to each
conversion to the nearest 1/100th of a share) shall be determined by dividing
the Base Liquidation Value by the Conversion Price in effect at the time of
conversion. The “INITIAL CONVERSION PRICE” shall be Thirty United States
Dollars (U.S. $30.00) per share. 
Notwithstanding the foregoing provisions of this Section 6(a)(i), if
some or all of the shares of Series A-X Preferred Stock held by the holder are
to be redeemed pursuant to Section 5, the conversion right specified in this
Section 6(a)(i) shall terminate as to such shares at the close of business on
the Business Day immediately preceding the Redemption Date or the Redemption
Event Date, as the case may be (unless the Corporation shall default in paying
the Redemption Price per share, when due, in which case the conversion right
shall terminate at the close of business on the date such default is cured).

 

(ii)                                  Mandatory
Conversion at the Option of the Corporation.

 

(A)      Subject to the provisions of Section 5, this
Section 6 and Section 9, the Corporation shall have the right to require
the holder of shares of Series A-X Preferred Stock, at the Corporation’s
option, to convert any or all of such holder’s shares of Series A-X Preferred
Stock, in whole or in part, into fully paid and non-assessable shares of Common
Stock at a conversion price equal to the lower of (1) the Average Market Price
for Corporation’s Conversion Option or (2) the Conversion Price described in
Section 6(a)(i) above (such lower price, the “CORPORATION CONVERSION PRICE”).  The number of shares of Common Stock into
which a share of the Series A-X Preferred Stock shall be convertible pursuant
to this Section 6(a)(ii) (calculated as to each conversion to the nearest
1/100th of a share) shall be determined by dividing the Base Liquidation Value
by the Corporation Conversion Price.

 

8

 

(B)        Notwithstanding anything contained herein to
the contrary, in no event shall the Corporation have the right to require the
holder of shares of Series A-X Preferred Stock to convert any or all of such
shares into shares of Common Stock pursuant to Section 6(a)(ii)(A):  (1) at any time during the period commencing
on the date of the Initial Closing (as such term is defined in the Purchase
Agreement) and ending on the third anniversary thereof (the “RESTRICTED
CONVERSION PERIOD”), except to the extent permitted by the terms and conditions
of Section 6(a)(ii)(C); (2) unless (y) a shelf registration statement covering
resales of the Common Stock issuable upon conversion of the Series A-X
Preferred Stock is effective and available for use in accordance with Section
8.1 of the Purchase Agreement and is expected to remain effective and available
for use for the thirty (30) days following the Conversion Date unless
registration is no longer required pursuant to the terms and conditions of the
Purchase Agreement and (z) the Common Stock issuable upon conversion of the
Series A-X Preferred Stock is listed or admitted for trading on an Approved
Market and is expected to remain so listed or admitted for trading for the
thirty (30) days following the Conversion Date; (3) if there exists and is
continuing an Event of Default; or (4) during any period when any member of the
Corporation’s senior management is, to the knowledge of the Corporation, at the
time of the giving of the Corporation’s Election Notice (or, in the event of a
conversion by the Corporation pursuant to an election under clause (2) of
Section 5(d)(i), at the time of the Corporation’s giving of the notice required
pursuant to Section 5(d)(ii)), prohibited or restricted from trading in shares
of Common Stock under the Corporation’s internal rules and procedures relating
to insider trading in the Corporation’s securities.

 

(C)                                During
the Restricted Conversion Period, the Corporation shall have no right to
require the holders of shares of Series A-X Preferred Stock to convert in any
three month period shares of Series A-X Preferred Stock that yield shares of
Common Stock exceeding the greater of (1) one percent of the shares of Common
Stock outstanding as of the beginning of such three month period and (2) the
average weekly trading volume on the NNM for shares of Common Stock during the
four weeks ending on the first day of such three month period, in each case as
such amounts are determined pursuant to Rule 144 of the Securities Act.

 

(b)         Mechanics of
Conversion.

 

(i)                                     Procedures to
Exercise Conversion Rights.  A
holder of shares of Series A-X Preferred Stock or the Corporation, as the case
may be, that elects to exercise its conversion rights pursuant to Section 6(a)
shall provide notice to the other party as follows:

 

(A)      Holder’s Notice and Surrender.  To exercise its conversion right pursuant to
Section 6(a)(i), the holder of shares of Series A-X Preferred Stock to be
converted shall surrender the certificate or certificates representing such
shares at the office of the Corporation (or any transfer agent of the
Corporation previously designated by the Corporation to the holders of Series
A-X Preferred Stock for this

 

9

 

purpose) with a written notice of election to convert, completed and
signed, specifying the number of shares to be converted.

 

(B)        Corporation’s Notice.  Subject to Section 5(g), to exercise its
conversion right pursuant to Section 6(a)(ii), the Corporation shall deliver
written notice to such holder (the “CORPORATION’S ELECTION NOTICE”), at least
twenty (20) days and no more than forty-five (45) days prior to the Conversion
Date, specifying: (1) the number of shares of Series A-X Preferred Stock to be
converted and, if fewer than all the shares held by such holder are to be
converted, the number of shares to be held by such holder; (2) the Conversion
Date; and (3) the place or places where certificates for such shares are to be
surrendered for issuance of certificates representing shares of Common Stock.

 

(ii)                                  Surrender and
Delivery of Certificates.  Unless
the shares issuable upon conversion are to be issued in the same name as the
name in which such shares of Series A-X Preferred Stock are registered, each
share surrendered for conversion shall be accompanied by instruments of
transfer, in form reasonably satisfactory to the Corporation, duly executed by
the holder or the holder’s duly authorized attorney and an amount sufficient to
pay any transfer or similar tax in accordance with Section 6(b)(vi).  As promptly as practicable after the
surrender by the holder of the certificates for shares of Series A-X Preferred
Stock as aforesaid, the Corporation shall issue and shall deliver to such
holder, or on the holder’s written order to the holder’s transferee, a
certificate or certificates for the whole number of shares of Common Stock
issuable upon the conversion of such shares, a check payable in an amount
corresponding to any fractional interest in a share of Common Stock as provided
in Section 6(b)(vii), and, in the case of a conversion pursuant to Section
6(a)(ii), a certificate of an executive officer of the Corporation setting
forth the Corporation Conversion Price and, in reasonable detail, the
determination thereof and the number of shares of Common Stock issued in
respect of each converted share of Series A-X Preferred Stock.

 

(iii)                               Effective Date of
Conversion.  Each conversion shall
be deemed to have been effected immediately prior to the close of business on
(A) in the case of conversion pursuant to Section 6(a)(i), the first Business
Day on which the certificates for shares of Series A-X Preferred Stock shall
have been surrendered and such notice received by the Corporation as aforesaid
or (B) in the case of conversion pursuant to Section 6(a)(ii), the date
specified as the Conversion Date in the Corporation’s notice of conversion
delivered to each holder pursuant to Section 6(b)(i)(B) (in each case, the
“CONVERSION DATE”); provided, however, that in the event of a
conversion by the Corporation under Section 6(a)(ii) pursuant to an election
made by the Corporation under clause (2) of Section 5(d)(i), the “CONVERSION
DATE” shall be the Redemption Event Date. 
At such time on the Conversion Date: 
(A) the person in whose name or names any certificate or certificates
for shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder of record of the shares of Common Stock
represented thereby at such time; and (B) such shares of Series A-X Preferred
Stock so converted shall no longer be deemed to be outstanding, and all rights
of a holder with respect to such shares, in the event of conversion pursuant to
Section

 

10

 

6(a)(i), surrendered for conversion and, in the event of conversion
pursuant to Section 6(a)(ii), covered by the Corporation’s notice of
conversion, shall immediately terminate except the right to receive (x) the
Common Stock, (y) other amounts payable pursuant to this Section 6, and (z) any
dividends then accrued but unpaid in respect of the converted Series A-X
Preferred Stock.

 

(iv)                              Duly Issued Shares.  All shares of Common Stock delivered upon
conversion of the Series A-X Preferred Stock shall, upon delivery, be duly and
validly authorized and issued, fully paid and nonassessable, free from all
preemptive rights and free from all taxes, liens, security interests and
charges (other than liens or charges created by or imposed upon the holder or
taxes in respect of any transfer occurring contemporaneously therewith).

 

(v)                                 Reservation and
Listing of Shares.  The Corporation
shall at all times reserve and keep available, free from preemptive rights, out
of its authorized but unissued Common Stock, solely for the purpose of
effecting conversions of the Series A-X Preferred Stock, the aggregate number
of shares of Common Stock issuable upon conversion of the Series A-X Preferred
Stock pursuant to Section 6(a)(i). 
Prior to any conversion by the Corporation pursuant to Section 6(a)(ii),
the Corporation shall ensure that it then has a sufficient number of authorized
but unissued shares of Common Stock in order to effect such conversion.  The Corporation shall, promptly following
the issuance of the shares of Series A-X Preferred Stock, take such action to
cause the shares of Common Stock initially issuable upon conversion of the
shares of Series A-X Preferred Stock to be listed on the NNM as promptly as
possible but no later than the effective date of the Registration Statement
providing for the resale by the holder of shares of Common Stock issuable upon
conversion of shares of the Series A-X Preferred Stock as contemplated by
Section 8 of the Purchase Agreement. 
The Corporation further agrees that if it applies to have its Common
Stock or other securities traded on any other stock exchange or market it will
include in such application all shares of Common Stock to be issued upon the
shares of Series A-X Preferred Stock and will take all such other actions as
may be necessary to cause such shares of Common Stock to be so listed.  During the period beginning on the date
hereof and ending on the Final Date (as such term is defined in the Purchase Agreement),
the Corporation shall take all actions necessary to continue the listing and
trading of its Common Stock on an Approved Market and will comply in all
material respects with the Corporation’s reporting, filing and other
obligations under the bylaws and rules of each such exchange or market on which
shares of the Common Stock may from time to time be listed to the extent
necessary to ensure the continued eligibility for trading of shares of Common
Stock.  The Corporation shall take all
commercially reasonable action as may be necessary to ensure that the shares of
Common Stock may be issued without violation of any applicable law or
regulation or of any requirement of any securities exchange or inter-dealer
quotation system on which the shares of Common Stock are listed or traded.

 

(vi)                              Fees and Taxes.  Issuances of certificates for shares of
Common Stock upon conversion of the Series A-X Preferred Stock shall be made
without charge to the holder of shares of Series A-X Preferred Stock for any
issue or transfer tax (other than taxes in respect of any transfer occurring
contemporaneously therewith or as a result of the holder being a non-U.S.
person) or other incidental expense in respect of the issuance

 

11

 

of such certificates, all of which taxes and expenses shall be paid by
the Corporation; provided, however, that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance or delivery of shares of Common Stock in a name other than that of the
holder of the Series A-X Preferred Stock, and no such issuance or delivery
shall be made unless and until the person requesting such issuance or delivery
has paid to the Corporation the amount of any such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid.

 

(vii)                           Fractions of Shares.  In connection with the conversion of any
shares of Series A-X Preferred Stock, no fractions of shares of Common Stock
shall be issued, but in lieu thereof the Corporation shall pay a cash
adjustment in respect of such fractional interest in an amount equal to such
fractional interest multiplied by the Market Price per share of Common Stock on
the Conversion Date.

 

(viii)                        Conversion on Pro Rata Basis.  If fewer than all of the outstanding shares
of Series A-X Preferred Stock are to be converted pursuant to Section 6(a)(ii),
the shares of each holder of Series A-X Preferred Stock shall be converted on a
pro rata basis (according to the number of shares of Series A-X Preferred Stock
held by each holder, with any fractional shares rounded to the nearest whole
share or in such other manner as the Board of Directors may determine, as may
be prescribed by resolution of the Board of Directors).

 

(c)          Adjustments to
Conversion Price.  The Conversion
Price shall be adjusted from time to time pursuant to the following provisions.

 

(i)                                     Stock Splits,
Etc.  In case the Corporation shall
(A) pay a dividend on its Common Stock in shares of Common Stock, (B) make a
distribution on its Common Stock in shares of Common Stock, (C) subdivide its
Outstanding Common Stock into a greater number of shares, or (D) combine its
Outstanding Common Stock into a smaller number of shares, the Conversion Price
in effect immediately prior thereto shall be adjusted so that the holder shall
upon conversion of the shares of Series A-X Preferred Stock held by it be
entitled to receive that number of shares of Common Stock which it would have
owned had such shares of Series A-X Preferred Stock been converted immediately
prior to the happening of such event. An adjustment made pursuant to this
Section 6(c)(i) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of subdivision or combination.

 

(ii)                                  Rights to Purchase
Common Stock.  In case the
Corporation shall issue rights or warrants to all or substantially all holders
of its Common Stock entitling them (for a period commencing no earlier than the
record date described below and expiring not more than sixty (60) days after
such record date) to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price per share (or having a
conversion price per share) less than the Current Average Market Price per
share of Common Stock on the record date for the determination of stockholders
entitled to receive such rights or warrants, the Conversion Price in effect
immediately prior thereto shall be adjusted so that the same shall equal the
price determined by multiplying the

 

12

 

Conversion Price in effect immediately prior to such record date by a
fraction of which the numerator shall be the number of shares of Common Stock
Outstanding on such record date plus the number of shares which the aggregate
offering price of the total number of shares of Common Stock so offered (or the
aggregate conversion price of the convertible securities so offered, which
shall be determined by multiplying the number of shares of Common Stock
issuable upon conversion of such convertible securities by the conversion price
per share of Common Stock pursuant to the terms of such convertible securities)
would purchase at the Current Average Market Price per share of Common Stock on
such record date, and of which the denominator shall be the number of shares of
Common Stock Outstanding on such record date plus the number of additional
shares of Common Stock offered (or into which the convertible securities so
offered are convertible).  Such
adjustment shall be made successively whenever any such rights or warrants are
issued, and shall become effective immediately after such record date.  If at the end of the period during which
such rights or warrants are exercisable not all rights or warrants shall have
been exercised, the adjusted Conversion Price shall be immediately readjusted
to what it would have been based upon the number of additional shares of Common
Stock actually issued (or the number of shares of Common Stock issuable upon
conversion of convertible securities actually issued).

 

(iii)                               Distributions to
Holders of Common Stock.

 

(A)      In case the Corporation shall distribute to all
or substantially all holders of its Common Stock any shares of Capital Stock of
the Corporation (other than Common Stock), evidences of indebtedness or other
non-cash assets (including securities of any person other than the Corporation
but excluding (1) dividends or distributions paid exclusively in cash or (2) dividends
or distributions referred to in Section 6(c)(i)), or shall distribute to all or
substantially all holders of its Common Stock rights or warrants to subscribe
for or purchase any of its securities (excluding those rights and warrants
referred to in Section 6(c)(ii) and also excluding the distribution of rights
to all holders of Common Stock pursuant to the adoption of a stockholders
rights plan or the detachment of such rights under the terms of such
stockholder rights plan), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
current Conversion Price by a fraction of which the numerator shall be the
Current Average Market Price per share of the Common Stock on the record date
mentioned below less the fair market value on such record date (as reasonably
determined by the Board of Directors, whose determination shall be conclusive
evidence of such fair market value and which shall be evidenced by an Officers’
Certificate delivered to the holder) of the portion of the Capital Stock,
evidences of indebtedness or other non-cash assets so distributed or of such
rights or warrants applicable to one share of Common Stock (determined on the
basis of the number of shares of Common Stock Outstanding on the record date),
and of which the denominator shall be the Current Average Market Price per
share of the Common Stock on such record date. Such adjustment shall be made
successively whenever any such distribution is made and shall become effective
immediately after the record date for the determination of shareholders
entitled to receive such distribution.

 

13

 

(B)        In the event the then fair market value (as so
determined) of the portion of the Capital Stock, evidences of indebtedness or
other non-cash assets so distributed or of such rights or warrants applicable
to one share of Common Stock is equal to or greater than the Current Average
Market Price per share of the Common Stock on such record date, in lieu of the
foregoing adjustment, adequate provision shall be made so that the holder has
the right to receive upon conversion the amount of Capital Stock, evidences of
indebtedness or other non-cash assets so distributed or of such rights or
warrants the holder would have received had the holder converted the shares of
Series A-X Preferred Stock then held by it on such record date.  In the event that such dividend or
distribution is not so paid or made, the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.  If
the Board of Directors determines the fair market value of any distribution for
purposes of this Section 6(c)(iii)(B) by reference to the actual or when issued
trading market for any securities, it must in doing so consider the prices in
such market over the same period used in computing the Current Average Market
Price of the Common Stock.

 

(C)        In the event that the Corporation has implemented
or implements a preferred shares rights plan (“RIGHTS PLAN”), upon conversion
by each holder of the shares of Series A-X Preferred Stock held by it into
Common Stock, to the extent that the Rights Plan has been implemented and is
still in effect upon such conversion, the holder shall receive, in addition to
the Common Stock, the rights described therein (whether or not the rights have
separated from the Common Stock at the time of conversion), subject to the
limitations set forth in the Rights Plan. 
Any distribution of rights or warrants pursuant to a Rights Plan
complying with the requirements set forth in the immediately preceding sentence
of this paragraph shall not constitute a distribution of rights or warrants
pursuant to this Section 6(c)(iii)(C).

 

(D)       Rights or warrants distributed by the
Corporation to all holders of Common Stock entitling the holders thereof to
subscribe for or purchase shares of the Corporation’s Capital Stock (either
initially or under certain circumstances), which rights or warrants, until the
occurrence of a specified event or events (“TRIGGER EVENT”): (1) are deemed to
be transferred with such shares of Common Stock; (2) are not exercisable; and
(3) are also issued in respect of future issuances of Common Stock, shall be
deemed not to have been distributed for purposes of this Section 6(c)(iii)(D)
(and no adjustment to the Conversion Price under this Section 6(c)(iii)(D) will
be required) until the occurrence of the earliest Trigger Event, whereupon such
rights and warrants shall be deemed to have been distributed and an appropriate
adjustment (if any is required) to the Conversion Price shall be made under
this Section 6(c)(iii)(D). If any such right or warrant, including any such
existing rights or warrants distributed prior to the date of the Initial
Closing Date (as such term is defined in the Purchase Agreement), are subject
to events upon the occurrence of which such rights or warrants become
exercisable to purchase different securities, evidences of indebtedness or
other assets, then the date of the occurrence of any and each such event shall
be deemed to be the date of distribution and record date with respect to new
rights or warrants with such rights (and a termination or expiration of the
existing rights or warrants without exercise by any of the holders thereof). In

 

14

 

addition, in the event of any distribution (or deemed distribution) of
rights or warrants, or any Trigger Event or other event (of the type described
in the preceding sentence) with respect thereto that was counted for purposes
of calculating a distribution amount for which an adjustment to the Conversion
Price under this Section 6(c)(iii)(D) was made, (y) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Price shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Trigger Event, as the case may be, as though it were a cash distribution, equal
to the per share redemption or repurchase price received by a holder or holders
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of Common Stock as
of the date of such redemption or repurchase, and (z) in the case of such
rights or warrants which shall have expired or been terminated without exercise
by any holders thereof, the Conversion Price shall be readjusted as if such
rights and warrants had not been issued.

 

(E)         In case the Corporation shall, by dividend or
otherwise, at any time distribute (a “TRIGGERING DISTRIBUTION”) to all or
substantially all holders of its Common Stock cash in an aggregate amount that,
together with the aggregate amount of (1) any cash and the fair market value
(as reasonably determined by the Board of Directors, whose determination shall
be conclusive evidence thereof and which shall be evidenced by an Officers’
Certificate delivered to the holder) of any other consideration payable in
respect of any tender offer by the Corporation or a Subsidiary of the
Corporation for Common Stock consummated within the twelve (12) months
preceding the date of payment of the Triggering Distribution and in respect of
which no Conversion Price adjustment pursuant to this Section 6(c)(iii)(E) has
been made and (2) all other cash distributions to all or substantially all
holders of its Common Stock made within the twelve (12) months preceding the
date of payment of the Triggering Distribution and in respect of which no
Conversion Price adjustment pursuant to this Section 6(c)(iii)(E) has been made
(and in which the holder did not otherwise participate), exceeds an amount
equal to ten percent (10%) of the product of the Current Average Market Price
per share of Common Stock on the Business Day (the “DETERMINATION DATE”)
immediately preceding the day on which such Triggering Distribution is declared
by the Corporation multiplied by the number of shares of Common Stock Outstanding
on the Determination Date (excluding shares held in the treasury of the
Corporation), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying such Conversion Price in effect
immediately prior to the Determination Date by a fraction of which the
numerator shall be the Current Average Market Price per share of the Common
Stock on the Determination

 

15

 

Date less the sum of the aggregate amount of cash and the aggregate
fair market value (determined as aforesaid in this Section 6(c)(iii)(E)) of any
such other consideration so distributed, paid or payable within such twelve
(12) months (including the Triggering Distribution) applicable to one share of
Common Stock (determined on the basis of the number of shares of Common Stock
Outstanding on the Determination Date) and the denominator shall be such
Current Average Market Price per share of the Common Stock on the Determination
Date, such reduction to become effective immediately prior to the opening of
business on the day following the date on which the Triggering Distribution is
paid.

 

(F)         In case any tender offer made by the
Corporation or any of its Subsidiaries for Common Stock shall expire and such
tender offer (as amended upon the expiration thereof) shall involve the payment
of aggregate consideration in an amount (determined as the sum of the aggregate
amount of cash consideration and the aggregate fair market value (as reasonably
determined by the Board of Directors, whose determination shall be conclusive
evidence thereof and which shall be evidenced by an Officers’ Certificate
delivered to the holder) of any other consideration) that, together with the
aggregate amount of (1) any cash and the fair market value (as reasonably
determined by the Board of Directors, whose determination shall be conclusive
evidence thereof and which shall be evidenced by an Officers’ Certificate
delivered to the holder) of any other consideration payable in respect of any
other tender offers by the Corporation or any Subsidiary of the Corporation for
Common Stock consummated within the twelve (12) months preceding the date of
the Expiration Date and in respect of which no Conversion Price adjustment
pursuant to this Section 6(c)(iii)(F) has been made and (2) all cash
distributions to all or substantially all holders of its Common Stock made
within the twelve (12) months preceding the Expiration Date and in respect of
which no Conversion Price adjustment pursuant to this Section 6(c)(iii)(F) has
been made (and in which the holder did not otherwise participate), exceeds an
amount equal to ten percent (10%) of the product of the Current Average Market
Price per share of Common Stock as of the last date (the “EXPIRATION DATE”)
tenders could have been made pursuant to such tender offer (as it may be
amended) (the last time at which such tenders could have been made on the
Expiration Date is hereinafter sometimes called the “EXPIRATION TIME”)
multiplied by the number of shares of Common Stock Outstanding (including
tendered shares but excluding any shares held in the treasury of the
Corporation) at the Expiration Time, then, immediately prior to the opening of
business on the day after the Expiration Date, the Conversion Price shall be
reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the
Expiration Date by a fraction of which the numerator shall be the product of
the number of shares of Common Stock Outstanding (including tendered shares but
excluding any shares held in the treasury of the Corporation) at the Expiration
Time multiplied by the Current Average Market Price per share of the Common
Stock on the Trading Day next succeeding the Expiration Date and the
denominator shall be the sum of (y) the aggregate consideration (determined as
aforesaid) payable to stockholders based on the acceptance (up to any maximum
specified in the terms of the tender offer) of all shares validly tendered and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
any such maximum, being referred to as the “PURCHASED SHARES”) and (z) the
product of the number of shares of Common Stock Outstanding (less any Purchased
Shares and excluding any shares held in the treasury of the Corporation) at the
Expiration Time and the Current Average Market Price per share of Common Stock
on the Trading Day next succeeding the Expiration Date, such reduction to
become effective immediately prior to the opening of business on the day
following the Expiration Date. In the event that

 

16

 

the Corporation is obligated to purchase shares pursuant to any such
tender offer, but the Corporation is permanently prevented by applicable law
from effecting any or all such purchases or any or all such purchases are
rescinded, the Conversion Price shall again be adjusted to be the Conversion
Price which would have been in effect based upon the number of shares actually
purchased. If the application of this Section 6(c)(iii)(F) to any tender offer
would result in an increase in the Conversion Price, no adjustment shall be
made for such tender offer under this Section 6(c)(iii)(F).

 

(G)        For purposes of this Section 6(c), the term
“tender offer” shall mean and include both tender offers and exchange offers,
all references to “purchases” of shares in tender offers (and all similar
references) shall mean and include both the purchase of shares in tender offers
and the acquisition of shares pursuant to exchange offers, and all references
to “tendered shares” (and all similar references) shall mean and include shares
tendered in both tender offers and exchange offers.

 

(iv)                              Deferral.  In any case in which this Section 6(c) shall
require that an adjustment be made following a record date or a Determination
Date or Expiration Date, as the case may be, established for purposes of this
Section 6(c), the Corporation may elect to defer (but only until five (5)
Business Days following the giving by the Corporation to the holder the
certificate described in Section 6(c)(vii)) issuing to the holder of any Series
A-X Preferred Stock converted after such record date or Determination Date or
Expiration Date the shares of Common Stock and other Capital Stock of the
Corporation issuable upon such conversion over and above the shares of Common
Stock and other Capital Stock of the Corporation issuable upon such conversion
only on the basis of the Conversion Price prior to adjustment; and, in lieu of
the shares the issuance of which is so deferred, the Corporation shall issue or
cause its transfer agents to issue due bills or other appropriate evidence
prepared by the Corporation of the right to receive such shares.  If any distribution in respect of which an
adjustment to the Conversion Price is required to be made as of the record date
or Determination Date or Expiration Date therefor is not thereafter made or
paid by the Corporation for any reason, the Conversion Price shall be
readjusted to the Conversion Price which would then be in effect if such record
date had not been fixed or such effective date or Determination Date or
Expiration Date had not occurred.

 

(v)                                 No Adjustment.  No adjustment in the Conversion Price shall
be required unless the adjustment would require an increase or decrease of at
least one half of one percent (.5%) in the Conversion Price as last adjusted;
provided, however, that any adjustments which by reason of this Section 6(c)(v)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 6(c)(v) shall be
made to the nearest cent or to the nearest one-hundredth (1/100th) of a share,
as the case may be.  No adjustment need
be made for issuances of Common Stock pursuant to a Corporation plan for
reinvestment of dividends or interest or for a change in the par value or a
change to no par value of the Common Stock. 
To the extent that the Series A-X Preferred Stock held by a holder
becomes redeemable for, or convertible into the right to receive cash, no
adjustment need be made thereafter as to the cash.

 

17

 

(vi)                              Adjustment for Tax
Purposes.  The Corporation shall be
entitled to make such reductions in the Conversion Price, in addition to those
required by the preceding sections of this Section 6(c), as it in its
discretion shall determine to be advisable in order that any stock dividends,
subdivisions of shares, distributions of rights to purchase stock or securities
or distributions of securities convertible into or exchangeable for stock
hereafter made by the Corporation to its stockholders shall not be taxable.

 

(vii)                           Notice of Adjustment.  Whenever the Conversion Price or conversion
privilege is adjusted, the Corporation shall promptly notify the holder of the
adjustment and provide the holder with an Officers’ Certificate briefly stating
the facts requiring the adjustment and the manner of computing it.

 

(viii)                        Notice of Certain
Transactions.  In the event that:

 

(A)      the Corporation takes any action which would
require an adjustment in the Conversion Price;

 

(B)        the Corporation consolidates or merges with, or
transfers all or substantially all of its property and assets to, another
corporation and shareholders of the Corporation must approve the transaction;
or

 

(C)        there is a dissolution or liquidation of the
Corporation;

 

then the Corporation shall notify the holder of the proposed
transaction and the related record or effective date, as the case may be.  The Corporation shall give the notice at
least ten (10) days before such date. 
Failure to give such notice or any defect therein shall not affect the
validity of any transaction referred to in clause (A), (B) or (C) of this
Section 6(c)(viii).

 

(ix)                                Provisions to be
Given Effect from Initial Closing Date. 
Notwithstanding anything contained in this Certificate to the contrary,
the provisions of this Section 6(c) shall be given effect as though each share
of Series A-X Preferred Stock had been issued by the Corporation to the holder
thereof on the Initial Closing Date, such that upon issue of any share of the
Series A-X Preferred Stock the Conversion Price shall, immediately upon issue
and without any further action by such holder, be adjusted to take account of
all events occurring from the Initial Closing Date until the date of issue of
such share of Series A-X Preferred Stock as though such share of Series A-X
Preferred Stock had been outstanding continuously during such period.

 

(d)         Effect of Reclassification,
Consolidation, Merger or Sale on Conversion Privilege.  If any of the following shall occur, namely:

 

(i)                                     any
reclassification or change of shares of Common Stock issuable upon conversion
of the Series A-X Preferred Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination, or any other change for which an adjustment is
provided in Section 6(c));

 

18

 

(ii)                                  any consolidation or
merger or combination to which the Corporation is a party other than a merger
in which the Corporation is the continuing corporation and which does not
result in any reclassification of, or change (other than in par value, or from
par value to no par value, or from no par value to par value, or as a result of
a subdivision or combination) in, Outstanding shares of Common Stock; or

 

(iii)                               any sale or conveyance
as an entirety or substantially as an entirety of the property and assets of
the Corporation, directly or indirectly, to any person,

 

then the
Corporation, or such successor, purchasing or transferee corporation, as the
case may be, shall, as a condition precedent to such reclassification, change,
combination, consolidation, merger, sale or conveyance, execute and deliver to
the holder a supplemental instrument providing that (A) the holder shall have
the right to convert its shares of Series A-X Preferred Stock into the kind and
amount of shares of stock and other securities and property (including cash)
receivable upon such reclassification, change, combination, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
deliverable upon conversion of such Series A-X Preferred Stock, at a conversion
price equal to the Conversion Price determined pursuant to Section 6(a)(i),
immediately prior to such reclassification, change, combination, consolidation,
merger, sale or conveyance, and (B) in the event of any exercise by the
Corporation of its right to convert any shares of Series A-X Preferred Stock
held by such holder pursuant to Section 6(a)(ii), such shares of Series A-X
Preferred Stock shall be convertible into the kind and amount of shares of
stock and other securities and property (including cash) receivable upon such
reclassification, change, combination, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock deliverable upon
conversion of such Series A-X Preferred Stock, at a conversion price equal to the
Corporation Conversion Price determined pursuant to Section 6(a)(ii)(A),
immediately prior to such reclassification, change, combination, consolidation,
merger, sale or conveyance.  Any such
supplemental instrument shall provide for adjustments of the Conversion Price
which shall be as nearly equivalent as may be practicable to the adjustments of
the Conversion Price provided for in Section 6(c). If, in the case of any such
consolidation, merger, combination, sale or conveyance, the stock or other
securities and property (including cash) receivable thereupon by a holder of
Common Stock include shares of stock or other securities and property of a
person other than the successor, purchasing or transferee corporation, as the
case may be, in such consolidation, merger, combination, sale or conveyance,
then such supplemental instrument shall also be executed by such other person
and shall contain such additional provisions to protect the interests of the
holder as the Board of Directors shall reasonably consider necessary by reason
of the foregoing. The provisions of this Section 6(d) shall similarly apply to
successive reclassifications, changes, combinations, consolidations, mergers,
sales or conveyances.  In the event the
Corporation shall execute a supplemental instrument pursuant to this Section
6(d), the Corporation shall promptly file with the holder (x) an Officers’
Certificate briefly stating the reasons therefor, the kind or amount of shares
of stock or other securities or property (including cash) receivable by the
holder upon the conversion of its shares of Series A-X Preferred Stock after
any such reclassification, change, combination, consolidation, merger, sale or
conveyance, any adjustment to be made with respect thereto and that all
conditions precedent have been complied with and (y) an Opinion of Counsel that
all conditions precedent have been complied with.  Notwithstanding anything contained in this Certificate to the
contrary, the provisions of this Section 6(d) shall be given effect as though
each share of Series A-X Preferred Stock had

 

19

 

been issued by
the Corporation to the holder thereof on the Initial Closing Date, such that
upon issue of any share of the Series A-X Preferred Stock the holder thereof
shall, immediately upon issue and without any further action by such holder, be
entitled to the benefit of all provisions of this Section 6(d) with respect to
any and all events occurring from the Initial Closing Date until the date of
issue of such share of Series A-X Preferred Stock as though such share of
Series A-X Preferred Stock had been outstanding continuously during such
period.

 

(e)          Voluntary Reduction.  The Corporation from time to time may reduce
the Conversion Price by any amount for any period of time if the period is at
least twenty (20) days and if the reduction is irrevocable during the period if
the Board of Directors determines that such reduction would be in the best
interest of the Corporation or to avoid or diminish income tax to holders of
shares of the Common Stock in connection with a dividend or distribution of
stock or similar event, and the Corporation provides fifteen (15) days’ prior
notice of any reduction in the Conversion Price; provided, however,
that in no event may the Corporation reduce the Conversion Price to be less
than the par value of a share of Common Stock.

 

(f)            Miscellaneous.

 

(i)                                     Except as
otherwise explicitly contemplated by this Section 6, no adjustment in respect
of any dividends or other payments or distributions made to holders of Series
A-X Preferred Stock or securities issuable upon the conversion of the Series
A-X Preferred Stock will be made during the term of the Series A-X Preferred
Stock or upon the conversion of the Series A-X Preferred Stock.  The provisions of this Section 6(f) are
without prejudice to the right of holders of Series A-X Preferred Stock to
receive any dividends to which they may be entitled under Section 3.

 

(ii)                                  If
any event occurs of the type contemplated by the provisions of Section 6(c),
(d), or (e) but not expressly provided for by such provisions (including the
granting of stock appreciation rights, phantom stock rights or other rights
with equity features), then the Board of Directors shall make any appropriate
adjustment in the Conversion Price necessary to protect the rights of the
holder as and to the extent contemplated by Sections 6(c), (d), or (e); provided,
that no such adjustment shall increase the Conversion Price as otherwise
determined pursuant to this Section 6 or decrease the number of shares of
Common Stock issuable upon any conversion of shares of Series A-X Preferred
Stock.

 

(iii)                               If the Corporation shall
enter into any transaction for the purpose of avoiding the application of the
provisions of Sections 6(c), (d) or (e) or this Section 6(f), the benefits of
such provisions shall nevertheless apply and be preserved.

 

(iv)                              Any dividend or
distribution that was paid or distributed to, or otherwise made available to or
set aside for, to the holders of Series A-X Preferred Stock (pursuant to
Section 3(a) or otherwise) shall not also result in an adjustment to the
Conversion Price pursuant to Section 6.

 

7.                                       STATUS
OF SHARES.  All shares of Series A-X
Preferred Stock that are at any time redeemed pursuant to Section 5 or
converted pursuant to Section 6 and all shares of

 

20

 

Series A-X Preferred Stock that are otherwise
reacquired by the Corporation shall (upon compliance with any applicable
provisions of the laws of the State of Delaware) have the status of authorized
but unissued shares of Preferred Stock, without designation as to series,
subject to reissuance by the Board of Directors as shares of any one or more
other series.

 

8.                                       VOTING
RIGHTS.

 

(a)          Limited Voting Rights.  The holders of record of shares of Series
A-X Preferred Stock shall not be entitled to any voting rights except as
hereinafter provided in this Section 8 or as otherwise provided by law.

 

(b)         Right to Vote with
Common Stock.  The holders of the
shares of Series A-X Preferred Stock (i) shall be entitled to vote with the
holders of the Common Stock on all matters submitted for a vote of holders of
Common Stock (voting together with the holders of Common Stock as one class)
and (ii) shall be entitled to a number of votes equal to the number of votes to
which shares of Common Stock issuable upon conversion by the holder of such
shares of Series A-X Preferred Stock pursuant to Section 6(a)(i) would
have been entitled if such shares of Common Stock had been Outstanding at the
time of the applicable record date.

 

(c)          Right to Vote as a
Separate Class.  In addition to the
rights provided in Section 8(b) and any other rights provided by law, the
Corporation shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than a majority by voting power of the then
outstanding shares of Series A-X Preferred Stock voting together as a single
class:

 

(i)                                     change the rights,
preferences, privileges or restrictions of the shares of Series A-X Preferred
Stock;

 

(ii)                                  increase or decrease
the aggregate number of authorized shares of Series A-X Preferred;

 

(iii)                               create, authorize,
designate or issue Senior Securities; or

 

(iv)                              merge or consolidate into
or with any other corporation or entity if the effect of any such transaction
would be to change or adversely affect in any manner whatsoever the rights,
privileges, seniority or preferences of the Series A-X Preferred Stock.

 

9.                                       AGGREGATE
OWNERSHIP LIMITATION.  If upon any
proposed conversion of Series A-X Preferred Stock pursuant to
Section 6(a), any holder of Series A-X Preferred would be entitled to
receive Common Stock that, taken together with all other shares of Common Stock
Beneficially Owned by such holder and its Affiliates, would result in such
holder and its Affiliates acquiring Beneficial Ownership of more than 19.9% of
the Corporation’s Common Stock then Outstanding immediately following such
conversion (the “OWNERSHIP THRESHOLD”), then:

 

(a)          Such holder shall
instead receive upon conversion a number of shares of Common Stock up to the
Ownership Threshold; and

 

21

 

(b)         To the extent such holder
would have otherwise received shares of Common Stock in excess of the Ownership
Threshold, the Corporation shall redeem such number of shares of Series A-X
Preferred Stock as would result in such holder exceeding the Ownership
Threshold at a cash redemption price equal to the product of (i) such number of
shares of Common Stock in excess of the Ownership Threshold times (ii)
the Current Average Market Price on the relevant Conversion Date (the
“OWNERSHIP THRESHOLD REDEMPTION AMOUNT”).

 

10.                                 CERTAIN
DEFAULTS AND REMEDIES.

 

(a)          Events of Default.  Subject to Section 10(b), an “EVENT OF DEFAULT”
shall occur if:

 

(i)                                     the Corporation
(A) defaults in the payment of any principal of (including any premium, if any,
on) (1) any Convertible Note when the same becomes due and payable (whether at
maturity, on a Prepayment Date, on a Prepayment Event Date, or otherwise) or
(2) any Promissory Note (as such term is defined in the Purchase Agreement)
held by AstraZeneca UK Limited or any of its Affiliates; or (B) fails to
redeem, and to pay to any holder the Redemption Price for, each share of
Preferred Stock that the Corporation is required to redeem on the date
specified for such redemption herein;

 

(ii)                                  the Corporation fails
to comply with any of its obligations under (A) the Convertible Note, if any,
or any Promissory Note (as such term is defined in the Purchase Agreement) held
by AstraZeneca UK Limited or any of its Affiliates or (B) Section 5.6(a) or
Section 5.8 of the Purchase Agreement, in each case other than any obligation
specified in Section 10(a)(i), and the default continues for the period and
after the notice specified in Section 10(b);

 

(iii)                               the Corporation fails to
provide notice of a Redemption Event to the holder when required by Section
5(d)(ii) for a period of thirty (30) days after notice of failure to do so;

 

(iv)                              the Corporation shall
default in respect of any of its obligations under the Preferred Stock other
than any obligation specified in Section 10(a)(i) and the default continues for
the period and after the notice specified in Section 10(b);

 

(v)                                 the Purchase
Agreement, or any other agreement or instrument contemplated by the Purchase
Agreement, shall be asserted by the Corporation not to be a legal, valid and
binding obligation of the Corporation, enforceable against the Corporation in
accordance with its terms;

 

(vi)                              the Corporation or any
Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy
Law:

 

(A)      commences a voluntary case or proceeding;

 

22

 

(B)        consents to the entry of an order for relief
against it in an involuntary case or proceeding;

 

(C)        consents to the appointment of a Custodian of
it or for all or substantially all of its property; or

 

(D)       makes a general assignment for the benefit of
its creditors; or

 

(vii)                           a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that:

 

(A)      is for relief against the Corporation or any
Significant Subsidiary in an involuntary case or proceeding;

 

(B)        appoints a Custodian of the Corporation or any
Significant Subsidiary or for all or substantially all of the property of the
Corporation or any Significant Subsidiary; or

 

(C)        orders the liquidation of the Corporation or
any Significant Subsidiary;

 

and in each case the order or decree remains unstayed and in effect for
sixty (60) consecutive days.

 

 

The term
“Bankruptcy Law” means Title 11 of the United States Code (or any successor
thereto) or any similar federal or state law for the relief of debtors. The
term “Custodian” means any receiver, holder, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.

 

(b)         Notice and Cure.

 

(i)                                     A default under
Section 10(a)(ii) or (a)(iv) is not an Event of Default until the holder
notifies the Corporation in writing of the default and the Corporation does not
cure the default within sixty (60) days after receipt of such notice.  The notice given pursuant to this Section
10(b) must specify the Event of Default, demand that it be remedied and state
that the notice is a “NOTICE OF DEFAULT.”

 

(ii)                                  When any Event of
Default under Section 10(a) is cured, it ceases.

 

(iii)                               The Corporation shall
immediately notify each holder of Series A-X Preferred Stock upon becoming
aware of the existence of any condition or event which constitutes a default or
an Event of Default hereunder by written notice which specifies the nature and
period of existence of such default or Event of Default and what action the
Corporation is taking or proposes to take with respect thereto.  No holder shall be charged with knowledge of
any Event of Default unless written notice thereof shall have been given to the
holder or any agent of the holder.

 

23

 

(c)          Redemption.

 

(i)                                     If an Event of
Default (other than an Event of Default specified in Section 10(a)(vi) or
(vii)) occurs and is continuing, the holders of a majority of the shares of
Series A-X Preferred Stock then outstanding may, by notice to the Corporation,
demand in a notice to the Corporation that the Corporation redeem, on a
Business Day specified in such notice, which day shall be not less than ten
(10) days following the date of such notice (such specified date the “DEFAULT
REDEMPTION DATE”), all of the shares of Series A-X Preferred Stock then
outstanding, and the Corporation shall redeem all such shares at a cash
redemption price per share equal to the Redemption Price.  If an Event of Default specified in Section
10(a)(vi) or (vii) occurs, all Series A-X Preferred Stock then outstanding
shall ipso facto become and be immediately redeemable by the Corporation at a
cash redemption price per share equal to the Redemption Price without any
declaration or other act on the part of the holders.  Each holder may at any time, by notice to the Corporation,
rescind a redemption notice and its consequences.  No such rescission shall affect any subsequent default of impair
any right consequent thereto.

 

(ii)                                   On or prior to the
Default Redemption Date, the holders of the Series A-X Preferred Stock shall
surrender their certificates representing such shares to the Corporation at the
Corporation’s principal executive offices or such other location as the
Corporation may by notice direct, and thereupon the Redemption Price of such
shares shall be payable to the order of the person whose name appears on each
such certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled.  From and
after the Default Redemption Date, unless there shall have been a default in
payment of Redemption Price, all rights of the holders of the Series A-X
Preferred Stock (except the right to receive the Redemption Price without
interest upon surrender of their certificate or certificates) shall cease with
respect to such shares, and such shares shall not thereafter be transferred on
the books of the Corporation or deemed to be outstanding for any purpose
whatsoever.

 

(iii)                               In the event that the
Corporation does not pay the Redemption Price on the Default Redemption Date,
the Redemption Price shall be calculated as if the Default Redemption Date were
the later of such date and the date on which such payment is made.  If the Corporation is unable at the Default
Redemption Date to redeem any or all shares of Series A-X Preferred Stock then
to be redeemed because such redemption would violate the applicable laws of the
State of Delaware, then the Corporation shall redeem such shares as soon
thereafter as redemption would not violate such laws.  In the event of any redemption of only a part of the then
outstanding Series A-X Preferred Stock, the Corporation shall effect such
redemption pro rata among the holders thereof (based on the number of shares of
Series A-X Preferred Stock held on the date of notice of redemption).

 

(d)         Other Remedies.  A delay or omission by any holder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default.  No remedy is
exclusive of any other remedy.  All available
remedies are cumulative to the extent permitted by law.

 

24

 

11.                                 DEFINITIONS.

 

(a)          General.  Unless otherwise specified, references in
this Certificate to any section are references to such section of this
Certificate and, unless otherwise specified, references in any section or
definition to any clause are references to such clause of such section or
definition.  Terms for which meanings
are defined in this Certificate shall apply equally to the singular and plural
forms of the terms defined.  Whenever
the context may permit or require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. 
The term “including” means including, without limiting the generality of
any description preceding such term. 
Each reference herein to any person shall include a reference to such
person’s successors and permitted assigns. 
Unless otherwise specified, references to any agreement, instrument or
other document in this Certificate refer to such agreement, instrument or other
document as originally executed or, if subsequently varied, replaced or
supplemented from time to time, as so varied, replaced or supplemented and in
effect at the relevant time of reference thereto.

 

(b)         Defined Terms.  Unless the context otherwise requires, when
used herein the following terms shall have the meaning indicated:

 

“Affiliate” means with respect to any Person,
any other Person directly, or indirectly through one or more intermediaries,
controlling, controlled by or under common control with such Person.  For purposes of this definition, the term
“control” (and correlative terms “controlling,” “controlled by” and “under
common control with”) means possession of the power, whether by contract,
equity ownership or otherwise, to direct the policies or management of a
Person.

 

“Approved Market” means the NNM, the New York
Stock Exchange, or the American Stock Exchange.

 

“Average Market Price for Corporation’s
Conversion Option” means, with respect to shares of Common Stock, the
arithmetic mean of the daily Market Prices of shares of Common Stock for the
ten (10) consecutive Trading Days commencing on the eleventh (11th) Trading Day
preceding the Conversion Date and ending on the Trading Day next preceding the
Conversion Date; provided, however, that in no event shall the
“Average Market Price for Corporation’s Conversion Option” be more than one
hundred one percent (101%) of the Market Price of shares of Common Stock for
the last Trading Day preceding the Conversion Date.

 

“Bankruptcy Law” has the meaning set forth in
Section 10(a).

 

“Base Liquidation Value” has the meaning set
forth in Section 4(a).

 

“Beneficially Own” or “Beneficial Ownership”
are used herein with the same meanings given to such terms in Rules 13d-3 and
13d-5 of the Exchange Act.

 

“Board of Directors” has the meaning set
forth in the first paragraph hereof.

 

“Business Day” means any day that, in the
State of New York and the State of California, is not a day on which banking
institutions are authorized by law or regulation to close.

 

25

 

“Capital Stock” of any Person means any and
all shares, interests, rights to purchase, warrants, options, participations or
other equivalents of or interests in (however designated) equity of such
Person, but excluding any debt securities convertible into such equity.

 

“Certificate” has the meaning set forth in
the first paragraph hereof.

 

“Collaboration Agreement” means the
Collaboration Agreement, dated as of October 15, 2003, between the Corporation
and AstraZeneca UK Limited.

 

“Common Stock” means the Common Stock of the
Corporation, par value $0.0001 per share.

 

“Conversion Date” has the meaning set forth
in Section 6(b)(iii).

 

“Conversion Price” has the meaning set forth
in Section 6(a)(i).

 

“Convertible Note” has the meaning set forth
in the Purchase Agreement.

 

“Corporation” has the meaning set forth in
the first paragraph hereof.

 

“Corporation Conversion Price” has the
meaning set forth in Section 6(a)(ii).

 

“Corporation’s Election Notice” has the
meaning set forth in Section 6(b)(i)(B).

 

“Current Average Market Price” means, with
respect to shares of the Common Stock as of a given day, the arithmetic mean of
the daily Market Prices of shares of the Common Stock for the thirty (30)
consecutive Trading Days commencing forty-five (45) Trading Days before the
date of determination or, for purposes of all computations under Section
6(c)(ii) and (iii), (a) the Determination Date or the Expiration Date, as the
case may be, with respect to distributions or tender offers under Section
6(c)(iii) or (b) the record date with respect to distributions, issuances or
other events requiring such computation under Section 6(c)(ii) and (iii),
calculated in any case by taking the sum of the Market Prices for shares of the
Common Stock for each of the thirty (30) days in the specified period and
dividing the foregoing sum by thirty (30).

 

“Custodian” has the meaning set forth in
Section 10(a).

 

“Default Redemption Date” has the meaning set
forth in Section 10(c).

 

“Designated Number of Redemption Event
Shares” has the meaning set forth in Section 5(d).

 

“Determination Date” has the meaning set
forth in Section 6(c)(iii)(E).

 

“Discovery Period” means the period
commencing on the effective date of the Collaboration Agreement and ending on
the later to occur of (a) the date of expiration or termination of the Antigen
Designation Term (as such term is defined in the Collaboration Agreement) and
(b) the date of expiration or termination of the Research Program Term (as such
term is defined in the Collaboration Agreement) with respect to the Research
Program (as such

 

26

 

term is defined in the Collaboration
Agreement) that is the last such program to terminate or expire pursuant to the
Collaboration Agreement.

 

“Dividend Payment Date” means March 31, June
30, September 30 and December 31 of each year.

 

“Dividend Period” means (a) the period
beginning on the Dividend Trigger Date and ending on the first Dividend Payment
Date and (b) each quarterly period between Dividend Payment Dates.

 

“Dividend Rate” means (a) during the period
commencing on the Initial Closing Date (as such term is defined in the Purchase
Agreement) and ending on the fifth anniversary of such date, a rate equal to
the 10-Year United States Treasury Bond yield rate as reported in The Wall
Street Journal Western edition on the Initial Closing Date, plus an
additional three percent (3%) compounded annually, and (b) during the period
commencing on the date following the fifth anniversary of the Initial Closing
Date and continuing until the last date on which all shares of Preferred Stock
have been converted or redeemed, a rate equal to the 10-Year United States
Treasury Bond yield rate as reported in The Wall Street Journal Western
edition on the first day of such period, plus an additional three percent (3%)
compounded annually; provided, however, that if The Wall
Street Journal ceases to be published, then the 10-Year United States
Treasury Bond yield rate to be used shall be that reported in such other business
publication of national circulation in the United States as the Corporation and
the holder reasonably agree.

 

“Dividend Trigger Date” has the meaning set
forth in Section 3(b).

 

“Event of Default” has the meaning set forth
in Section 10(a).

 

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

 

“Expiration Date” has the meaning set forth
in Section 6(c)(iii)(F).

 

“Expiration Time” has the meaning set forth in
Section 6(c)(iii)(F).

 

“Initial Conversion Price” has the meaning
set forth in Section 6(a)(i).

 

“Junior Securities” has the meaning set for
in Section 2.

 

“Liquidation Value” has the meaning set forth
in Section 4(a).

 

“Market Price” means, with respect to a
particular security, on any given day, the last reported sales price or, in
case no such reported sale takes place on such date, the average of the
reported closing bid and asked prices in either case on the NNM or, if the
security is not listed or admitted to trading on the NNM, on the principal
national securities exchange on which the security is listed or admitted to
trading or, if not listed or admitted to trading on the NNM or any national
securities exchange, the last reported sales price of the security as quoted on
Nasdaq or, in case no reported sales takes place, the average of the closing
bid and asked prices as quoted

 

27

 

on Nasdaq or any comparable system or, if the
security is not quoted on Nasdaq or any comparable system, the closing sales
price or, in case no reported sale takes place, the average of the closing bid
and asked prices, as furnished by any two members of the National Association
of Securities Dealers, Inc. selected from time to time by the Corporation for
that purpose.  If the Common Stock is
not listed and traded in a manner that the quotations referred to above are
available for the period required hereunder, the Market Price per share of
Common Stock shall be deemed to be the fair value per share of such security as
determined in good faith by the Board of Directors.

 

“Maturity Date” has the meaning set forth in
Section 5(a).

 

“Maximum Number of Redemption Event Shares”
means the total number of shares of Series A-X Preferred Stock held by a holder
as of a Redemption Event Date.

 

 “NNM”
means the Nasdaq National Market.

 

“Notice of Default” has the meaning set forth
in Section 10(b).

 

“Officer” means the chairman or any
co-chairman of the board, any vice chairman of the board, the chief executive
officer, the president, any vice president, the chief financial officer, the
controller, the secretary or any assistant controller or assistant secretary of
the Corporation.

 

“Officers’ Certificate” means a certificate
signed by two Officers.

 

“Opinion of Counsel” means a written opinion
from legal counsel.  The counsel may be
an employee of or counsel to the Corporation.

 

“Outstanding” means, at any time, the number
of shares of Common Stock then outstanding calculated on a fully diluted basis,
assuming the exercise, exchange or conversion into Common Stock of all
outstanding securities exercisable, exchangeable or convertible into shares of
Common Stock (whether or not then exercisable, exchangeable or convertible).

 

“Ownership Threshold” has the meaning set
forth in Section 9.

 

“Ownership Threshold Redemption Amount” has
the meaning set forth in Section 9(b).

 

 “Parity Securities” has the meaning set forth in Section 2.

 

“Person” means an individual, corporation,
partnership, other entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act).

 

“Preferred Stock” has the meaning set forth
in the first paragraph hereof.

 

 “Purchase Agreement” means the Securities Purchase Agreement,
dated as of October 15, 2003, between the Corporation and AstraZeneca UK
Limited.

 

28

 

“Purchased Shares” has the meaning set forth
in Section 6(c)(iii)(F).

 

“Redemption Date” has the meaning set forth
in Section 5(c).

 

“Redemption Event” means a Change in Control
(as such term is defined in the Collaboration Agreement) that occurs at any
time after the last day of the Discovery Period.

 

“Redemption Event Date” has the meaning set
forth in Section 5(d)(i).

 

“Redemption Event Notice” has the meaning set
forth in Section 5(d)(iii).

 

“Redemption Notice” has the meaning set forth
in Section 5(c).

 

“Redemption Price” has the meaning set forth
in Section 5(a).

 

“Restricted Conversion Period” has the
meaning set forth in Section 6(a)(ii).

 

“Rights Plan” has the meaning set forth in
Section 6(c)(iii)(C).

 

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

 

“Senior Securities” has the meaning set forth
in Section 2.

 

“Series A-2 Certificate of Designation” has
the meaning given to such term in the Purchase Agreement.

 

“Series A-X Preferred Stock” has the meaning
set forth in Section 1.

 

“Significant Subsidiary” means, in respect of
any Person, a Subsidiary of such Person that would constitute a “significant
subsidiary” as such term is defined under Rule 1-02 of Regulation S-X under the
Securities Act and the Exchange Act.

 

“Subsidiary” means, in respect of any Person,
any corporation, association, partnership, or other business entity of which
more than fifty percent (50%) of the total voting power of shares of Capital
Stock or other interests (including partnership interests) entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers, general partners or holders thereof is at the time owned
or controlled, directly or indirectly, by (a) such Person; (b) such Person and
one or more Subsidiaries of such Person; or (c) one or more Subsidiaries of
such Person.

 

“Trading Day” means, with respect to any
security, each Monday, Tuesday, Wednesday, Thursday and Friday, other than any
day on which securities are generally not traded on the principal exchange or
market in which such security is traded.

 

“Trigger Event” has the meaning set forth in
Section 6(c)(iii)(D).

 

“Triggering Distribution” has the meaning set
forth in Section 6(c)(iii)(E).

 

29

 

12.                                 NO
OTHER RIGHTS.

 

The shares of Series A-X Preferred Stock
shall not have any relative, optional or other special rights and powers except
as set forth herein or as may be required by law.

 

[The remainder of this page was left blank
intentionally.]

 

30

 

IN WITNESS
WHEREOF, the Corporation has caused this Certificate to be duly executed and acknowledged
by its undersigned duly authorized officer this
[       ] day of
[          ,] 2003.

 

	
   

  	
  ABGENIX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

31

 

EXHIBIT E

 

MILESTONE EVENTS

 

Capitalized terms used in this Exhibit E that are not defined in this
Agreement shall have the meanings set forth in the Collaboration Agreement.

 

1.                                       First
Milestone Event.  For purposes of
Section 2.2(b) of this Agreement, the “First Milestone Event” shall be deemed
to have occurred on the first date on which at least one (1) Research Antibody
with respect to each of three (3) separate Collaboration Antigens for which the
Company has completed the applicable Research Program has been (i) determined
to have met or exceeded the applicable Candidate Drug Target Profile for each
such Collaboration Antigen (whether or not designated a Candidate Drug), or
(ii) designated a Candidate Drug.

 

2.                                       Second
Milestone Event.  For purposes of
Section 2.2(b) of this Agreement, the “Second Milestone Event” shall be deemed
to have occurred on the first date on which at least one (1) Research Antibody
with respect to each of six (6) separate Collaboration Antigens, in the
aggregate, for which the Company has completed the applicable Research Program
has been (i) determined to have met or exceeded the applicable Candidate Drug
Target Profile for each such Collaboration Antigen (whether or not designated a
Candidate Drug), or (ii) designated a Candidate Drug.

 

3.                                       Disputes.  Any dispute between the Purchaser and the
Company as to whether a Research Antibody has met or exceeded the applicable
Candidate Drug Target Profile shall be resolved in accordance with the
provisions of Section 3.6 of the Collaboration Agreement.

 

4.                                       Additional
Clarifications Regarding the First Milestone Event and the Second Milestone
Event.  For the avoidance of doubt,
if the Purchaser terminates a Research Program with respect to a Collaboration
Antigen pursuant to Section 16.2, 16.3 or 16.6 of the Collaboration Agreement,
no Research Antibodies with respect to that Research Program shall count
towards the First Milestone Event or the Second Milestone Event, as the case
may be.  For the further avoidance of
doubt, no Research Antibodies with respect to a Co-Development Antigen shall
count towards the First Milestone Event or the Second Milestone Event, as the
case may be.

 

 

EXHIBIT F-A

 

FORM OF LEGAL OPINION - INITIAL CLOSING

 

[Omitted]

 

 

EXHIBIT F-B

 

FORM OF LEGAL OPINION - INITIAL CLOSING

 

[Omitted]

 

 

EXHIBIT G

 

FORM OF AMENDMENT NO. 1 TO RIGHTS AGREEMENT

 

[See Exhibit 4.5]

 

 

EXHIBIT H

 

MATTERS TO BE COVERED BY LEGAL OPINION(S)-
SUBSEQUENT CLOSING

 

[The Purchase Agreement, Convertible Note and each Promissory Note are
referred to herein collectively as the “Transaction Instruments.”]

 

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

 

2.               The Company’s authorized capital stock consists of
             
shares, of which
                        
are common stock, par value $.0001 per share, and
               
are preferred stock, $.0001 per share. 
Of the authorized shares of preferred stock, (i) 50,000 shares have been
designated as shares of Series A Participating Preferred Stock, par value
$.0001 per share, (ii) one share has been designated as a Special Voting Share,
par value $.0001 per share, (iii) 50,000 shares have been designated as Series
A-1 Preferred Stock, par value $.0001 per share, (iv) 50,000 shares have been
designated as Series A-2 Preferred Stock, par value $.0001 per share, (v)
             
shares have been designated as Series [A-3/A-4] Preferred Stock, par value
$.0001 per share, and (vi)                   
shares have been designated as
                           .  [To be revised as appropriate to reflect the Company’s
capital structure at the time of the Subsequent Closing].

 

3.               The shares of Series [A-3/A-4] Preferred Stock to be
issued and sold by the Company to you at the Subsequent Closing have been duly
authorized for issuance and, when issued and delivered in accordance with the
terms of the Purchase Agreement, will be validly issued, fully paid, and
non-assessable.

 

4.               The shares of Common Stock initially issuable upon the
conversion of the shares of Series [A-3/A-4] Preferred Stock to be sold by the
Company to you at the Subsequent Closing have been duly authorized and reserved
for issuance upon such conversion.  Upon
issuance and delivery of any shares of Common Stock in accordance with the
terms of the said shares of Series [A-3/A-4] Preferred Stock, such shares of
Common Stock will be validly issued, fully paid and non-assessable.

 

5.               There are no preemptive rights under federal,
California or New York law or under the Delaware General Corporation Law to
subscribe for or purchase shares of the Company’s capital stock in connection
with the transactions contemplated by the Purchase Agreement.  There are no preemptive or other rights to
subscribe for or to purchase any shares of the Company’s capital stock in
connection with the transactions contemplated by the Purchase Agreement
pursuant to the Company’s Certificate of Incorporation or By-laws or any
agreement or other instrument identified on Schedule A attached to this opinion
letter, which is a list of all material agreements and instruments to which the
Company is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject (“Schedule A”).

 

 

6.               No consent, approval, authorization, order,
registration or qualification of or with any federal, California or New York
governmental agency or body or any Delaware governmental agency or body acting
pursuant to the Delaware General Corporation Law or, to our knowledge, any
federal, California or New York court or any Delaware court acting pursuant to
the Delaware General Corporation Law is required for issuance and sale by the
Company of shares of Series [A-3/A-4] Preferred Stock at the Subsequent Closing
except (i) those already obtained or made or (ii) those required under
applicable Federal or state securities laws.

 

7.               The issuance by the Company of the shares of Series
[A-3/A-4] Preferred Stock to be delivered by the Company to you at the
Subsequent Closing will not breach or result in a default under any agreement
or other instrument identified on Schedule A, nor will such action violate the
Certificate of Incorporation or By-laws of the Company or any federal,
California or New York statute or the Delaware General Corporation Law or any
rule or regulation that has been issued pursuant to any federal, California or
New York statute or the Delaware General Corporation Law or any order known to
us issued pursuant to any federal, California or New York statute or the
Delaware General Corporation Law by any court or governmental agency or body or
court having jurisdiction over the Company or any of its subsidiaries or any of
their properties.

 

8.               To such counsel’s knowledge, there is no action, suit,
proceeding, arbitration, claim, investigation or inquiry pending or threatened
to which the Company or any of its subsidiaries is a party or to which any of
the properties of the Company or its subsidiaries is subject that questions or
challenges the validity or enforceability of the Transaction Instruments or the
right of the Company to enter into the Transaction Instruments and to
consummate the transactions contemplated thereby.  As used in this paragraph 8, the expression “to such counsel’s
knowledge” means that, after an examination of each of the Transaction
Instruments and the [Series A-3/A-4] Certificate of Designation, and after
inquiries of other lawyers in the Company’s legal department or such counsel’s
law firm, as the case may be, but without any further independent factual
investigation made for purposes of such opinion, such counsel does not believe
that the opinion set forth herein is incorrect.

 

9.               No registration of the shares of Series [A-3/A-4]
Preferred Stock to be delivered by it to you at the Subsequent Closing under
the Securities Act or under the securities laws of the State of California or
New York is required in connection with the issuance and sale of such shares of
Series [A-3/A-4] Preferred Stock by the Company to the Purchaser solely in the
manner contemplated by the Purchase Agreement.

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