Exhibit 10.90

ANESIVA, INC.

SECURED NOTE PURCHASE AGREEMENT

THIS SECURED NOTE PURCHASE AGREEMENT (this “Agreement”) is made as of the 18th
day of May, 2009 (the “Effective Date”), by and between Anesiva, Inc., a
Delaware corporation (the “Company”), and Arcion Therapeutics, Inc. (together
with its successors and assignees, “Investor”).

WHEREAS:

A. The Company has requested a loan from Investor.

B. Subject to the terms and conditions of this Agreement, Investor has agreed
upon the terms of this Agreement to purchase from the Company, and the Company
has agreed to sell to Investor, a secured promissory Note in the form set forth
in Exhibit A.

C. In connection with the execution of this Agreement, the Company, each of the
Company’s Subsidiaries (other than Anesiva Hong Kong Limited) (the “Subsidiary
Guarantors”), and Investor are also entering into a Pledge, Security and
Collateral Agent Agreement (as such may be amended, restated, supplemented or
modified from time to time, the “Security Agreement”) in the form set forth in
Exhibit B. The Security Agreement, among other things, provides that the Note
(as defined below) issued hereunder shall be a secured obligation under such
Security Agreement.

D. In connection with the execution of this Agreement, each of the Subsidiary
Guarantors shall guaranty the obligations of the Company arising under this
Agreement and the Related Documents (as defined below) pursuant to a form of
Guaranty (as such may be amended, restated, supplemented or modified from time
to time, the “Guaranty”) in the form set forth in Exhibit C.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, and for other consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereby agree as follows:

 

1. AMOUNT AND TERMS OF THE NOTE

Subject to the terms and conditions of this Agreement, the Company agrees to
sell and issue to Investor and Investor agrees to purchase from the Company a
secured promissory Note in the form of note attached hereto as Exhibit A (as
amended, restated, supplemented or otherwise modified from time to time, the
(“Note”) in the aggregate principal amount equal to Two Million Dollars
($2,000,000.00) (the “Aggregate Commitment”). The Note shall not be issued at a
discount.

 

2. THE CLOSING

2.1 Closing. The closing (the “Closing”) of the purchase and sale of the Note to
Investor shall take place at such time and place as the Company and Investor
mutually agree upon orally or in writing. At the Closing, the Company agrees to
issue and sell to Investor and Investor agrees, subject to the satisfaction or
waiver of the conditions set forth in Section 5, to purchase the Note.

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2.2 Delivery. At the Closing: (i) Investor will deliver to the Company in
immediately available funds an amount equal to the Aggregate Commitment and
(ii) the Company shall deliver to Investor a Note dated the date of such Closing
in a principal amount equal to the Aggregate Commitment.

 

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as disclosed by the Company in the disclosure schedule delivered to
Investor on the date hereof (the “Disclosure Schedule”), the Company hereby
represents and warrants to Investor that the representations and warranties
contained in this Section 3 are true, complete and correct and accurate in all
respects. The Disclosure Schedule shall be arranged in paragraphs corresponding
to the numbered and lettered paragraphs contained in this Section 3, and the
disclosures in any paragraph of the Disclosure Schedule shall qualify only the
corresponding paragraph of this Section 3, unless it is reasonably clear from a
reading of the disclosure that such disclosure is applicable to such other
sections and subsections.

3.1 Organization, Good Standing and Qualification. The Company and each of its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. The Company and
each of the Subsidiary Guarantors has the corporate power and authority to own
and operate its properties and assets, to execute and deliver (to the extent
that it is a party to such agreement) (i) this Agreement, (ii) the Note to be
issued in connection with this Agreement, (iii) the Security Agreement, (iv) any
Guaranty, (v) the Subordination Agreement, and (vi) all other agreements related
to this Agreement and the Note (the preceding clauses (ii) through (vi),
collectively, together with all other agreements, instruments and documents
delivered from time to time in connection herewith and therewith, as any or all
of the foregoing may be supplemented, restated, extended or amended from time to
time, the “Related Documents”), to issue and sell the Note and to carry out the
provisions of this Agreement and the Related Documents and to carry on its
business as presently conducted and as proposed to be conducted. Each of the
Company and each of its Subsidiaries is duly qualified and is authorized to do
business and is in good standing as a foreign corporation in all jurisdictions
in which the nature of its activities and of its properties (both owned and
leased) makes such qualification necessary, except for those jurisdictions in
which failure to do so has not, or would not have, individually or in the
aggregate, a material adverse effect on the business, assets, liabilities,
financial condition or prospects of the Company and its Subsidiaries (a
“Material Adverse Effect”).

3.2 Authorization; Binding Obligations. All corporate action on the part of the
Company and each of its Subsidiaries (including the respective officers and
directors) necessary for the authorization of this Agreement and the Related
Documents, the performance of all obligations of the Company and its
Subsidiaries hereunder and under the Related Documents at the Closing and, the
authorization, sale, issuance and delivery of the Note has been taken or will be
taken prior to the Closing. This Agreement and the Related Documents, when
executed and delivered and to the extent it is a party thereto, will be valid
and binding obligations of each of

 

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the Company and each of its Subsidiaries, enforceable against each such Person
in accordance with their terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application
affecting enforcement of creditors’ rights and general principles of equity that
restrict the availability of equitable or legal remedies. The offer, sale and
issuance of the Note are not subject to any preemptive rights or rights of first
refusal that will not have been properly waived or complied with. No vote of the
stockholders of the Company is required in connection with the issuance and sale
of the Note or any of the other transactions contemplated by this Agreement and
the Related Documents.

3.3 Liabilities. None of the Company nor any Subsidiary has liability,
indebtedness, obligation, expense, claim, deficiency, guaranty or endorsement of
any type, whether accrued, absolute, contingent, matured, unmatured or other,
except for those which (i) have been reflected in the SEC Reports or (ii) have
arisen in the ordinary course of business consistent with past practices since
March 31, 2009.

3.4 Agreements; Action.

(a) the Company has filed as an exhibit to an SEC Report all agreements and
contracts required to be filed by Item 601 of Regulation S-K.

(b) Since December 31, 2008, neither the Company nor any of its Subsidiaries
has: (i) declared or paid any dividends, or authorized or made any distribution
upon or with respect to any class or series of its capital stock; (ii) incurred
any indebtedness for money borrowed or any other liabilities (other than
ordinary course obligations) individually in excess of Fifty Thousand Dollars
($50,000.00) or, in the case of indebtedness and/or liabilities individually
less than Fifty Thousand Dollars ($50,000.00), in excess of One Hundred Fifty
Thousand Dollars ($150,000.00) in the aggregate; (iii) made any loans or
advances to any person not in excess, individually or in the aggregate, of One
Hundred Thousand Dollars ($100,000.00), other than ordinary course advances for
travel expenses; or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights, other than the sale of its inventory in the ordinary course of
business.

(c) For the purposes of subsections (a) and (b) above, all indebtedness,
liabilities, agreements, understandings, instruments, contracts and proposed
transactions involving the same Person (including Persons the Company has reason
to believe are affiliated therewith) shall be aggregated for the purpose of
meeting the individual minimum dollar amounts of such subsections.

3.5 Obligations to Related Parties. There are no obligations of the Company or
any of its Subsidiaries to officers, directors, stockholders or employees of the
Company or any of its Subsidiaries other than (a) for payment of salary for
services rendered and for bonus payments; (b) reimbursement for reasonable
expenses incurred on behalf of the Company and its Subsidiaries; and (c) for
other standard employee benefits made generally available to all employees
(including stock option agreements outstanding under any stock option plan
approved by the Board).

 

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3.6 Changes. Since December 31, 2008, there has not been:

(a) any material change, except in the ordinary course of business, in the
obligations of the Company or any of its Subsidiaries by way of guaranty,
endorsement, indemnity, warranty or otherwise;

(b) any damage, destruction or loss, whether or not covered by insurance, that
has had, or could have, individually or in the aggregate, a Material Adverse
Effect;

(c) any waiver not in the ordinary course of business by the Company or any of
its Subsidiaries of a valuable right or of a material debt owed to it;

(d) any material change in any compensation arrangement or agreement with any
officer or director of the Company or any of its Subsidiaries;

(e) any labor organization activity related to the Company or any of its
Subsidiaries; or

(f) any arrangement or commitment by the Company or any of its Subsidiaries to
do any of the acts described in subsection (a) through (e) above.

3.7 Title to Properties and Assets; Liens, Etc. Each of the Company and each of
its Subsidiaries has good and marketable title to its respective properties and
assets, and good title to its leasehold estates, in each case subject to no
mortgage, pledge, lien, lease, encumbrance or charge, other than (a) those
resulting from taxes which have not yet become delinquent; (b) minor liens and
encumbrances which do not materially detract from the value of the property
subject thereto or materially impair the operations of the Company or any of its
Subsidiaries; (c) those that have otherwise arisen in the ordinary course of
business and (d) the Permitted Liens. All facilities, machinery, equipment,
fixtures, vehicles and other properties owned, leased or used by the Company and
its Subsidiaries are in reasonably good operating condition and repair and are
reasonably fit and usable for the purposes for which they are being used. The
Company and its Subsidiaries are in compliance with all material terms of each
lease to which it is a party or is otherwise bound.

3.8 Intellectual Property.

(a) Each of the Company and each of its Subsidiaries owns or possesses
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information and other proprietary rights
and processes reasonably necessary for its business as now conducted and to the
Company’s knowledge, as presently proposed to be conducted (the “Intellectual
Property”), without any known infringement of the rights of others.

(b) Neither the Company nor any of its Subsidiaries has received any written
communications alleging that the Company or any of its Subsidiaries has violated
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity, nor is the
Company or any of its Subsidiaries aware of any basis therefor.

 

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3.9 Compliance with Other Instruments. Neither the Company nor any of its
Subsidiaries is in violation or default of (x) any term of its Certificate of
Incorporation, Bylaws or other organizational documents or (y) of any provision
of any indebtedness, mortgage, indenture, contract, agreement or instrument to
which it is party or by which it is bound or of any judgment, decree, order or
writ, which violation or default, in the case of this clause (y), has had, or
could have, either individually or in the aggregate, a Material Adverse Effect.
The execution, delivery and performance of and compliance with this Agreement
and the Related Documents to which it is a party, and the issuance and sale of
the Note by the Company will not, with or without the passage of time or giving
of notice, result in any such violation, or be in conflict with or constitute a
default under any such term or provision, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of the Company or any of its Subsidiaries or the suspension, revocation,
impairment, forfeiture or nonrenewal of any permit, license, authorization or
approval applicable to the Company, its Subsidiaries, their businesses or
operations or any of their assets or properties.

3.10 Litigation. Except as described in the SEC Reports, (i) there are no legal
or governmental actions, suits, proceedings or investigations pending and
(ii) to the Company’s knowledge, there are no legal or governmental actions,
suits, proceedings or investigations threatened, to which the Company or any of
its Subsidiaries is or may be a party or subject or of which property of the
Company or any of its Subsidiaries is or may be the subject, or related to
applicable environmental or discrimination matters, or instituted by the
Securities and Exchange Commission (the “SEC”), the Financial Industry
Regulatory Authority, any state securities commission or other governmental or
regulatory entity; and, to the Company’s knowledge, no labor disturbance by the
employees of the Company or any of its Subsidiaries exists, or is imminent which
is reasonably expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries is a party to or subject to the provisions of any
injunction, judgment, decree or order of any court, regulatory body,
administrative agency or other governmental body.

3.11 Tax Returns and Payments. Each of the Company and each of its Subsidiaries
has timely filed all tax returns required to be filed by it. All taxes shown to
be due and payable on such returns, any assessments imposed and all other taxes
due and payable by the Company or any of its Subsidiaries on or before the
Closing, have been paid or will be paid prior to the time they become
delinquent. Except as set forth on Schedule 3.12 to the Securities Purchase
Agreement, neither the Company nor any of its Subsidiaries has been advised
(a) that any of its returns have been or are being audited or (b) of any
deficiency in assessment or proposed judgment to its taxes.

3.12 Employees. Except as set forth on Schedule 3.13 to the Securities Purchase
Agreement, neither the Company nor any of its Subsidiaries has any collective
bargaining agreements with any of its employees. There is no labor union
organizing activity pending or, to the Company’s knowledge, threatened with
respect to the Company or any of its Subsidiaries. To the knowledge of the
Company, no employee of the Company or any of its Subsidiaries has plans to
terminate his or her employment relationship with the Company and its
Subsidiaries. No director, officer or employee of or consultant to the Company
or any of its Subsidiaries is in violation of any terms of any employment
contract, non-competition agreement, non-disclosure agreement, patent disclosure
or assignment agreement or other contract or agreement containing restrictive
covenants relating to the right of any such director, officer, employee or
consultant to be employed or engaged by the Company and its Subsidiaries because
of the nature of the business conducted or proposed to be conducted by the
Company and its Subsidiaries, or relating

 

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to the use of trade secrets or proprietary information of others. The Company
and each of its Subsidiaries is in compliance with all applicable laws, rules
and contracts relating to employment, employment practices, wages, overtime,
severance pay, bonuses and terms and conditions of employment, including
employee compensation matters and required contributions to managers insurance
and pension funds.

3.13 Registration Rights and Voting Rights. Except as set forth on Schedule 3.14
to the Securities Purchase Agreement, neither the Company nor any of its
Subsidiaries is presently under any obligation, and neither the Company nor any
of its Subsidiaries has granted any rights, to register any of the Company’s or
its Subsidiaries’ presently outstanding securities or any of its securities that
may hereafter be issued. Except as set forth on Schedule 3.14 to the Securities
Purchase Agreement, to the Company’s knowledge, no stockholder of the Company or
any of its Subsidiaries has entered into any agreement with respect to the
voting of equity securities of the Company or any of its Subsidiaries.

3.14 Compliance with Laws; Permits. Neither the Company nor any of its
Subsidiaries is 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 has had, or would have, either individually or in the
aggregate, a Material Adverse Effect. No governmental orders, permissions,
consents, approvals or authorizations are required to be obtained and no
registrations or declarations are required to be filed in connection with the
execution and delivery of this Agreement or any Related Documents and the
issuance of the Note, except such as has been duly and validly obtained or
filed, or with respect to any filings that must be made after the Closing, as
will be filed in a timely manner. Each of the Company and its Subsidiaries has
all material franchises, permits, licenses and any similar authority necessary
for the conduct of its business as now being conducted by it.

3.15 Environmental and Safety Laws. Neither the Company nor any of its
Subsidiaries is in violation of any applicable statute, law or regulation
relating to the environment or occupational health and safety, and to its
knowledge, no expenditures are or will be required in order to comply with any
such existing statute, law or regulation. No Hazardous Materials (as defined
below) are used or have been used, stored or disposed of by the Company or any
of its Subsidiaries or, to the Company’s knowledge, by any other person or
entity on any property owned, leased or used by the Company or any of its
Subsidiaries. For the purposes of the preceding sentence, “Hazardous Materials”
shall mean (a) materials that are listed or otherwise defined as “hazardous” or
“toxic” under any applicable local, state, federal and/or foreign laws and
regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control of
hazardous wastes or other activities involving hazardous substances, including
building materials, or (b) any petroleum products or nuclear materials.

3.16 Valid Offering. Assuming the accuracy of the representations and warranties
of Investor contained in this Agreement, the offer, sale and issuance of the
Note will be exempt from the registration requirements of the Securities Act of
1933, as amended (the “Securities Act”), and will have been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit or qualification requirements of all applicable state
securities laws.

 

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3.17 SEC Reports. The Company has filed all proxy statements, reports and other
documents required to be filed by it under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), since January 1, 2008. The Company has
furnished or made available to Investor copies of: (i) its Annual Report on Form
10-K for its fiscal year ended December 31, 2008; (ii) its Quarterly Report on
Form 10-Q for its fiscal quarter ended March 31, 2009 and (iii) the Form 8-K
filings which it has made during the fiscal 2009 to date (collectively, the “SEC
Reports” and, together with this Agreement and the Disclosure Schedule, the
“Disclosure Materials”). Each SEC Report was, at the time of its filing, in
compliance in all material respects with the requirements of its respective form
and none of the SEC Reports, nor the financial statements (and the Note thereto)
included in the SEC Reports, as of their respective filing dates, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of the date
hereof, the Company satisfies the registrant requirements set forth in General
Instruction I.A. to Form S-3 for the use of a Registration Statement on Form
S-3.

3.18 Internal Accounting Controls. The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with U.S. generally
accepted accounting principles and to maintain asset accountability;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
the Company and designed such disclosures controls and procedures to ensure that
material information relating to the Company and its Subsidiaries is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company’s Form 10-K or 10-Q, as the case may be, is
being prepared.

3.19 No Integrated Offering. Neither the Company, nor any of its Subsidiaries or
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 cause the offering of the Note
pursuant to this Agreement to be integrated with prior offerings by the Company
for purposes of the Securities Act which would prevent the Company from selling
the Note pursuant to Rule 506 under the Securities Act, or any applicable
exchange-related stockholder approval provisions, nor will the Company or any of
its Affiliates or Subsidiaries take any action or steps that would cause the
offering of the Note to be integrated with other offerings.

3.20 Food and Drug Administration.

(a) Neither the Company nor any of its Subsidiaries is debarred under the
Generic Drug Enforcement Act of 1992 or otherwise excluded from or restricted in
any manner from participation in, any government program related to
pharmaceutical products and, to the knowledge of the Company, does not employ or
use the services of any individual who is debarred or otherwise excluded or
restricted.

 

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(b) Each of the product candidates of the Company and its Subsidiaries is being,
and at all times has been, developed, tested, manufactured and stored, as
applicable, in substantial compliance in all material respects with all
applicable statutes, laws or regulations.

(c) Neither the Company nor any of its Subsidiaries is subject to any pending
or, to the knowledge of the Company, threatened, investigation by: (A) the FDA
pursuant to its “Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991);
(B) Department of Health and Human Services Officer of Inspector General or
Department of Justice pursuant to the Federal Anti-Kickback Statute (42. U.S.C.
Section 1320a-7(b)) or the Civil False Claims Act (31 U.S.C. Section 3729 et
seq.); or (C) any equivalent statute of any other country. Neither the Company
nor any of its Subsidiaries, nor, to the knowledge of the Company, (1) any
officer or employee of the Company or any of its Subsidiaries, (2) any
authorized agent of the Company or any of its Subsidiaries or (3) any principal
investigator or sub-investigator of any clinical investigation sponsored by the
Company or any of its Subsidiaries has, in the case of each of (1) through
(3) on account of actions taken for or on behalf of the Company or any of its
Subsidiaries, been convicted of any crime under 21 U.S.C. Section 335a(a) or any
similar state or foreign statute, law or regulation or under 21 U.S.C.
Section 335a(b) or any similar state or foreign statute, law or regulation.

(d) No clinical trial of a product of the Company or any of its Subsidiaries has
been suspended, put on hold or terminated prior to completion.

3.21 Accounts Receivable; Accounts Payable.

(a) All of the accounts receivable of the Company and its Subsidiaries are
reflected on the Company’s balance sheet (the “Balance Sheet”) at December 31,
2008 (the “Balance Sheet Date”) in accordance with U.S. generally accepted
accounting principles and represent bona fide completed sales made in the
ordinary course of business, are valid claims and, to the Company’s best
knowledge, are not subject to any set offs or counterclaims and are fully
collectible in the normal course of business after deducting the reserve set
forth in the Company’s Balance Sheet. Since the Balance Sheet Date, the Company
and its Subsidiaries have collected their respective accounts receivable in the
ordinary course and in a manner that is consistent with their prior practices.
Neither the Company nor any of its Subsidiaries has any accounts receivable or
loans receivable from any Person that is an Affiliate of the Company or any of
its Subsidiaries or from any director, officer or employee of the Company or any
of its Subsidiaries or any Affiliate thereof.

(b) All of the accounts payable and notes payable of the Company and each of its
Subsidiaries arose in bona fide arms’ length transactions in the ordinary course
of business, and no such account payable or note payable is delinquent by more
than sixty (60) days in its payment. Since the Balance Sheet Date, the Company
and its Subsidiaries have paid their respective accounts payable in the ordinary
course and in a manner that is consistent with their respective prior practices.
As of the date hereof, neither the Company nor any of its Subsidiaries have any
accounts payable to any Person that is an Affiliate of the Company or any of its
Subsidiaries or to any director, officer or employee of the Company or any of
its Subsidiaries or any Affiliate thereof.

 

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3.22 Foreign Corrupt Practices Act. Neither the Company nor any of its
Subsidiaries has engaged, nor has any officer, director, employee or agent of
the Company or any of its Subsidiaries engaged, in any act or practice that
would constitute a violation of the Foreign Corrupt Practices Act of 1977, or
any rules or regulations promulgated thereunder. There is not now, and there
never has been, any employment by the Company or any of its Subsidiaries by, any
governmental or political official in any country in the world.

3.23 Reserved.

3.24 Change of Control Benefits. Except under the Securities Purchase Agreement
or the Indenture, neither the consummation of any Change of Control (either
alone or in connection with any other event, including any termination of
employment or service), will (i) result in any payment (including any bonus,
golden parachute or severance payment) becoming due to any employee or
consultant of the Company or any of its Subsidiaries; (ii) result in any
forgiveness of indebtedness owing by any employee or consultant of the Company
or any of its Subsidiaries to the Company or any of its Subsidiaries or, to the
knowledge of the Company, owing by any employee of the Company or any of its
Subsidiaries to any third party; (iii) materially increase the benefits payable
by the Company or any of its Subsidiaries, or (iv) result in any acceleration of
the time of payment or vesting of any such benefits.

3.25 Full Disclosure. Neither this Agreement, the Related Documents or the
exhibits and schedules hereto and thereto or any other information provided by
the Company or its agents to Investor in connection with the transactions
contemplated by this Agreement and the Related Documents contain any untrue
statement of a material fact nor omit to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances in which they are made, not misleading.

 

4. REPRESENTATIONS AND WARRANTIES OF INVESTOR

Investor represents and warrants to the Company, as of the date hereof, as
follows:

4.1 Purchase for Own Account. Investor represents that it is acquiring the Note
solely for its own account and beneficial interest for investment and not for
sale or with a view to distribution of the Note or any part thereof, has no
present intention of selling (in connection with a distribution or otherwise),
granting any participation in or otherwise distributing the same. Investor is
not a registered broker-dealer under Section 15 of the Exchange Act or an entity
engaged in a business that would require it to be so registered as a
broker-dealer. Investor further represents that it has full power and authority
to enter into this Agreement and the Related Documents to which it is a party
and all such agreements, when executed and delivered by Investor, shall
constitute valid and legally binding obligations of Investor, enforceable
against Investor in accordance with their respective terms except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other laws of general application affecting enforcement of
creditor’s rights generally and as limited by laws relating to the availability
of specific performance, injunctive relief or other equitable remedies.

 

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4.2 Information and Sophistication. Investor has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Note. Investor further represents that it has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risk of this investment. The foregoing,
however, shall not be deemed in any way to limit the scope of the
representations and warranties of the Company in Section 3 or the ability of
Investor to rely thereupon.

4.3 Ability to Bear Economic Risk. Investor acknowledges that investment in the
Note involves a high degree of risk, and represents that it is able, without
materially impairing its financial condition, to hold the Note for an indefinite
period of time and to suffer a complete loss of the investment.

4.4 Further Limitations on Disposition. Investor understands that the Note are
characterized as “restricted securities” for the purposes of federal securities
laws and are being acquired in a transaction not involving a public offering,
have not been registered under the Securities Act and that such securities may
only be resold only if registered pursuant to the provisions of the Securities
Act or if an exemption from registration is available and that the Company is
not required to register the Note under the Securities Act. Investor
acknowledges that it is familiar with Rule 144 promulgated under the Securities
Act and understands the resale limitation imposed thereby.

4.5 Experience. Investor is an “accredited investor” as such term is defined in
Rule 501 under the Securities Act.

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

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

 

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representation set forth above shall apply only with respect to the portion of
assets managed by the portfolio managers that have knowledge about the financing
transaction contemplated by this Agreement. Other than to other Persons party to
this Agreement and to advisors, Investor has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). For purposes of this Section 4.7,
“Short Sales” include, without limitation, (i) all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and all types of direct and indirect stock pledges, forward
sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and (ii) sales and other
transactions through non-U.S. broker dealers or foreign regulated brokers.

4.8 Regulation M. Investor is aware that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of the Company’s Common
Stock and other activities with respect to the Company’s Common Stock by
Investor.

4.9 California Securities Laws. Investor acknowledges and agrees that the sale
of the Note has not been qualified with the Commissioner of Corporations of the
State of California and the issuance of such securities or the payment or
receipt of any part of the consideration for such securities prior to such
qualification is unlawful, unless the sale of securities is exempt from
qualification by Section 25100, 25102 or 25105 of the California Corporations
Code. The rights of all parties to this agreement are expressly conditioned upon
such qualification being obtained, unless the sale is so exempt.

4.10 Legends. Each Note may bear a form of the following legends:

(a) “THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAW. NO SALE, PLEDGE OR DISPOSITION
MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SAID ACT AND APPLICABLE
STATE SECURITIES LAW OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAW.”

(b) Any legend required by applicable corporations or securities laws of any
state.

 

5. CONDITIONS TO CLOSING OF INVESTOR

Investor’s obligation to lend money to the Company at the Closing is subject to
the satisfaction or waiver, each at the discretion of Investor, of the following
conditions:

5.1 Representations and Warranties. The representations and warranties of the
Company contained in Section 3 shall be true and correct on and as of the
Closing.

 

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5.2 Performance. The Company and its Subsidiaries shall have performed and
complied with all covenants, agreements, obligations and conditions contained in
this Agreement and the Related Documents that are required to be performed or
complied with by it on or before the Closing, including the filing of UCC-1
financing statements and appropriate filings with the Patent and Trademark
Office.

5.3 Reserved.

5.4 Security Agreement. The Company, the Subsidiary Guarantors and Investor
shall have executed and delivered the Security Agreement and such agreement
shall be in full force and effect.

5.5 Guaranty and Subordination Agreement. Each of the Subsidiary Guarantors
shall have executed and delivered a Guaranty and Subordination Agreement for the
benefit of Investor and each such agreement shall be in full force and effect.

5.6 Consents and Approvals. All consents, approvals, waivers, authorizations,
licenses or orders of, registrations, qualifications, designations, declarations
or filings with, or notice to any governmental entity or any other Person
necessary to be obtained, made or given as of the Closing in connection with the
transactions contemplated hereby shall have been duly obtained, made or given
and shall be in full force and effect, without the imposition upon the Company
of any condition, restriction or required undertaking.

5.7 Proceedings. All corporate and other proceedings taken or required to be
taken by the Company and the Subsidiary Guarantors and in connection with the
transactions contemplated hereby, including the approvals by the Board and the
Special Committee, shall be reasonably satisfactory in form and substance to
Investor and all documents incident thereto shall have been executed and
delivered to Investor or their counsel, and shall be reasonably satisfactory in
form and substance to Investor and their counsel. In addition, the Company shall
have delivered good standing certificates and tax good standing certificates
with respect to the Company and its Subsidiaries from each jurisdiction in which
such Person is incorporated.

5.8 Legal Opinion. Investor shall have received from Cooley Godward Kronish LLP,
corporate counsel for the Company, an opinion, dated as of the Closing, in
substantially the form agreed to as of the date hereof.

5.9 Secretary’s Certificate. The Secretary of the Company shall have delivered
to Investor at the Closing a certificate certifying: (a) the Company’s
Certificate of Incorporation as in effect as of the Closing; (b) the Bylaws of
the Company as in effect as of the Closing; (c) resolutions of the Board
approving this Agreement, the Related Documents and the transactions
contemplated hereby and thereby; and (d) resolutions of the Special Committee of
the Board recommending to the Board this Agreement, the Related Documents and
the transactions contemplated hereby and thereby.

5.10 Due Diligence. Investor shall be satisfied in its sole discretion at the
Closing with the diligence review of the business, legal, accounting and other
investigations undertaken by Investor and their advisors and agents with respect
to the Company.

 

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5.11 Financing Statements. The Company shall have authorized Investor (as
defined in the Security Agreement), for the benefit of Investor, to prepare and
file such financing statements and other instruments, including, without
limitation, the filing of UCC-1 financing statements and appropriate filings
with the Patent and Trademark Office (collectively, “Financing Statements”), as
Investor shall require in order to perfect and maintain the continued perfection
of the first priority security interest created by the Security Agreement and
the other applicable Related Documents and the Company hereby authorizes
Investor to prepare and file such Financing Statements.

5.12 No Event of Default. No event shall have occurred and be continuing or
would result from the consummation of the Closing that would constitute an Event
of Default.

5.13 Letter Agreement. The Company and Investor shall have executed and
delivered a letter agreement dated as of the date of the Closing.

 

6. REGISTRATION, TRANSFER AND EXCHANGE OF NOTE

6.1 [Intentionally Omitted].

6.2 Transfer. Subject to Section 4, Investor shall be entitled to transfer its
Note in any manner permitted by applicable law and to the registration of such
transfer by the Company in the name of such transferee or transferees as shall
be specified by Investor. In the event of a proposed transfer, the transferring
Investor shall give written notice to the Company of Investor’s intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall, if the
Company so requests, be accompanied by either: (i) a written opinion of legal
counsel, who shall be reasonably satisfactory to the Company, addressed to the
Company and reasonably satisfactory in form and substance to the Company’s
counsel, to the effect that the proposed transfer of the Note may be effected
without registration under the Securities Act or (ii) a “no action” letter from
the SEC to the effect that the transfer of such Note without registration will
not result in a recommendation by the staff of the SEC that action be taken with
respect thereto, whereupon the holder of such restricted securities shall be
entitled to transfer such restricted securities in accordance with the terms of
the notice delivered by such holder to the Company; provided, however, that no
opinion or “no action” letter need be obtained with respect to a transfer to:
(a) an affiliate (as such term is defined in the Securities Act) of Investor;
(b) a partner, active or retired, of Investor; (c) the estate of any such
partner; or (d) the spouse, children, grandchildren or spouse of such children
or grandchildren of any holder or to trusts for the benefit of Investor or such
Persons. In connection with any transfer in accordance with this Section 6.2 and
at all other times hereunder, Investor shall be entitled to surrender its Note
to the Company together with a written request for the issuance of one or more
new Note, specifying the denomination or denominations thereof and, in the case
of a transfer of a Note, the name and address of the new transferee or
transferees. As soon as reasonably practicable, the Company shall issue a new
Note bearing the same interest rate and in the same form, in the same aggregate
principal amount as the Note being surrendered in the name of Investor. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. Each Note
presented or surrendered for reissuance and registration of a new Note shall be
endorsed, or, in the case of a transfer of a Note, shall be accompanied by a
duly executed written instrument of transfer in an appropriate form. The
applicable Investor shall be responsible for any transfer taxes associated with
the

 

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transfer of any Note. Any transferee, by its acceptance of a Note in its name
(or the name of its nominee), shall be deemed to have made the representations
set forth in Section 4. Notwithstanding the foregoing, any such transferee shall
execute and deliver a counterpart of this Agreement, the Security Agreement and
the Guaranty to the Company and Investor, in form and substance satisfactory to
Investor, and, by delivering such counterpart, such transferee shall be deemed
to agree to be bound by the provisions of this Agreement, the Security
Agreement, the Guaranty and the other Related Documents.

6.3 Issuance of Notes. The Company and Investor may treat the Person in whose
name any Note is issued as the absolute owner of such Note for all purposes, and
all payments in respect of a Note made to any such Person or upon such Person’s
order shall satisfy and discharge the liability of the Company or Investor (as
the case may be) on such Note to the extent of the sum or sums so paid.

6.4 Mutilated, Destroyed, Lost or Stolen Note. In case the Note shall become
mutilated or defaced, or be destroyed, lost or stolen, the Company shall execute
and deliver a new Note of like principal amount in exchange and substitution for
the mutilated or defaced Note, or in lieu of and in substitution for the
destroyed, lost or stolen Note. In the case of a mutilated or defaced Note,
Investor shall surrender such Note to the Company. In the case of any destroyed,
lost or stolen Note, Investor shall furnish to the Company: (i) evidence to the
Company’s satisfaction of the destruction, loss or theft of such Note and
(ii) such security or indemnity as may be reasonably required by the Company.

 

7. AFFIRMATIVE COVENANTS

The Company hereby covenants that so long as any portion of the Note remains
outstanding:

7.1 Notices. The Company shall notify Investor within five (5) Business Days
after the Board of Directors or senior officers of the Company has knowledge or
becomes aware of the occurrence of: (i) any action, suit or proceeding before
any arbitrator, court or governmental department, domestic or foreign, pending,
or to the Company’s knowledge, threatened against or affecting the Company or
any Subsidiary of the Company, which if adversely determined could have a
Material Adverse Effect, (ii) any material dispute or default by the Company,
any of its Subsidiaries or any other party under any joint venture, partnering,
distribution, cross-licensing, strategic alliance, collaborative research or
manufacturing, license or similar agreement which would reasonably be expected
to have a Material Adverse Effect, or (iii) any default or Event of Default
hereunder or under any Related Document.

7.2 Existence. The Company shall maintain and preserve the existence, present
form of business and all rights and privileges necessary or desirable in the
normal course of business of the Company and its Subsidiaries; and keep all of
the property of the Company and its Subsidiaries in good working order and
condition, ordinary wear and tear excepted.

7.3 Insurance. The Company shall (and shall cause its Subsidiaries to) obtain
and keep in force insurance in such amounts and types as is usual in the type of
business conducted by the Company or such Subsidiary, as applicable, with
insurance carriers having a policyholder

 

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rating of not less than “A” and financial category rating of Class VII in
“Best’s Insurance Guide,” unless otherwise approved by Investor. Such insurance
policies must be in form and substance reasonably satisfactory to Investor, and
shall list Investor as an additional insured or loss payee, as applicable, on
endorsement(s) in form reasonably acceptable to Investor. The Company shall
furnish to Investor such endorsements, and upon Investor’s request, copies of
any or all such policies. If no Event of Default has occurred and is continuing,
proceeds payable under any casualty policy will, at the Company’s option, be
payable to the Company to replace the property subject to the claim, provided
that such replacement property shall be deemed part of the Collateral (as
defined in the Security Agreement). If an Event of Default has occurred and is
continuing, then, at Investor’s option, the proceeds payable under any casualty
policy will be payable to Investor and applied toward satisfaction of the
Obligations.

7.4 Accounting Records. On and after the date of this Agreement, the Company
shall (and shall cause its Subsidiaries to) maintain adequate books, accounts
and records, and prepare all financial statements in accordance with U.S.
generally accepted accounting principles, and in compliance with the regulations
of any governmental or regulatory authority having jurisdiction over the
Company, such Subsidiary or the business of the Company or such Subsidiary.

7.5 Compliance with Laws. The Company shall (and shall cause its Subsidiaries
to) comply with all laws, rules, regulations applicable to, and all orders and
directives of any governmental or regulatory authority having jurisdiction over,
the Company, such Subsidiary or the business of the Company or such Subsidiary,
and with all material agreements to which the Company or such Subsidiary is a
party, except where the failure to so comply would not have a Material Adverse
Effect.

7.6 Taxes and Other Liabilities. The Company shall (and shall cause its
Subsidiaries to) pay all of Indebtedness (as defined below) of the Company or
such Subsidiary when due; pay all taxes and other governmental or regulatory
assessments before delinquency or before any penalty attaches thereto, except as
may be contested in good faith by the appropriate procedures and for which the
Company shall maintain appropriate reserves; and timely file all required tax
returns.

7.7 Special Collateral Covenants. The Company shall (and shall cause its
Subsidiaries to):

(a) do all things reasonably necessary to maintain, preserve, protect and keep
all Collateral in good working order and saleable condition, ordinary wear and
tear excepted, deal with the Collateral in all ways as are considered good
practice by owners of like property and use the Collateral lawfully and, to the
extent applicable, only as permitted by the insurance policies of the Company
and its Subsidiaries;

(b) maintain, or cause to be maintained, complete and accurate Records (as
defined below) relating to the Collateral;

 

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(c) upon reasonable prior notice at reasonable times during normal business
hours with reasonable prior notice, permit Investor’s officers, employees,
representatives and agents to inspect the Collateral and to discuss the
Collateral and the Records relating thereto with the officers and employees of
the Company and its Subsidiaries, and, in the case of any Rights to Payment (as
defined below), with any Person which is or may be obligated thereon;

(d) at the request of Investor, firmly affix a decal, stencil or other marking
to designated items of Equipment (as defined below), indicating thereon the
security interest of Investor; and

(e) obtain and maintain such acknowledgments, consents, waivers and agreements
from the owner, lienholder, mortgagee and landlord with respect to any real
property on which Collateral is located as Investor may reasonably require, all
in form and substance satisfactory to Investor.

7.8 Financing Statements and Other Actions. The Company shall execute and
deliver to Investor all financing statements, notices and other documents
(including, without limitation, any filings with the Patent and Trademark
Office) from time to time as may be reasonably requested by Investor to maintain
a first priority perfected security interest in the Collateral in favor of
Investor; and perform such other acts, and execute and deliver to Investor such
additional conveyances, assignments, agreements and instruments, as Investor may
at any time reasonably request in connection with the administration and
enforcement of this Agreement or Investor’s rights, powers and remedies
hereunder.

7.9 Reserved.

7.10 Reserved.

7.11 Further Assurances. The Company shall, and shall cause any of its
Subsidiaries to, take such actions as are necessary or as Investor may
reasonably request from time to time (including the execution and delivery of
joinders and/or guaranties to this Agreement and any other applicable Related
Documents, termination statements, deposit account control agreements,
securities account control agreement and other documents, the filing or
recording of any of the foregoing, and the delivery of stock certificates and
other collateral with respect to which perfection is obtained by possession) to
ensure that the obligations of the Company and its Subsidiaries hereunder and
under the other Related Documents are secured by substantially all of the
assets, equity securities and personal property of the Company and its
Subsidiaries (whether now existing or promptly upon the acquisition or creation
thereof after the date hereof).

7.12 Additional Subsidiaries. If any additional Subsidiary of the Company is
formed or acquired after the Effective Date, the Company shall, within three
Business Days after such Subsidiary is formed or acquired, (i) notify Investor
and the Lenders thereof, (ii) cause such Subsidiary to execute and become a
party to a guaranty of the obligations hereunder, the Security Agreement or any
other security agreement, and such other Related Documents in favor of Investor
as Investor may request and (iii) pledge one hundred percent (100%) of the
Capital Stock of such Subsidiary (except that the Company or any of its
Subsidiaries shall not be required to pledge more than 65% of the outstanding
voting Capital Stock of any Subsidiary organized under the laws of any
jurisdiction outside the United States of America) to Investor pursuant to the
Security Agreement or any other security agreement. The Company agrees to

 

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provide such evidence as Investor shall request as to the perfection and
priority status of each security interest and Lien created by such security
documents. The Company shall dispose of the notes outstanding pursuant to the
Securities Purchase Agreement at a price equal to one (1) times the price per
share of the Company’s Common Stock as quoted on Nasdaq at the close of trading
on the date of the Closing.

 

8. NEGATIVE COVENANTS

The Company hereby covenants that so long as any portion of the Note remains
outstanding:

8.1 Restrictions on Fundamental Changes. Except with the prior written approval
of Investor or pursuant to the terms of the letter agreement, dated as of the
date of the Closing, between the Company and Investor, as the same may be
amended, restated or otherwise modified in writing from time to time, neither
the Company nor any of its Subsidiaries will merge with or consolidate into, or
acquire all or substantially all of the assets of, any Person, or sell,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all or any material amount of its
assets or commence any Insolvency Proceeding with respect to itself; or a
custodian, receiver, trustee, assignee for the benefit of creditors, or other
similar official shall be appointed to take possession, custody or control of
the properties of the Company or any Subsidiary, and such involuntary Insolvency
Proceeding, petition or appointment is acquiesced to by the Company or such
Subsidiary as applicable or is not dismissed within sixty (60) days; or dissolve
or terminate of the business of the Company or any Subsidiary.

8.2 Change of Control. The Company will not permit a Change of Control to occur.

8.3 Distributions. Except with the prior approval of Investor, neither the
Company nor any of its Subsidiaries will declare or pay any dividends in respect
of their Capital Stock, or purchase, redeem, retire or otherwise acquire for
value any of their Capital Stock now or hereafter outstanding, return any
capital to their stockholders as such, or make any distribution of assets to
their stockholders as such, or permit any of its Subsidiaries to purchase,
redeem, retire or otherwise acquire for value any stock of the Company, except
that the Company may: (i) declare and deliver dividends and distributions
payable solely in Common Stock of the Company and (ii) purchase shares or
options of employees, consultants and other service providers in accordance with
stock option, stock issuance or other stock purchase plans and employment
contracts of the Company.

8.4 Indebtedness. Except with the prior approval of Investor, neither the
Company nor any Subsidiary will create, incur, assume or otherwise become liable
for or suffer to exist any Indebtedness (including under existing indentures,
loan agreements and other facilities), other than the following (“Permitted
Indebtedness”): (i) Indebtedness for borrowed money to Investor hereunder;
(ii) Guaranty and any other guarantees by any Subsidiaries of the Company of
Indebtedness of the Company incurred hereunder; (iii) Indebtedness consisting of
guarantees resulting from endorsement of negotiable instruments for collection
by the Company in the ordinary course of business; (iv) Indebtedness incurred
for the purpose of financing the acquisition of equipment provided that the
principal amount therefore does not exceed the purchase price of such equipment;
and (v) Indebtedness consisting of accounts payable to trade creditors for goods
and services and expenses (other than for borrowed money), in each case incurred
in the ordinary course of business as presently conducted.

 

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8.5 Liens. Except with the prior written approval of Investor, neither the
Company nor any Subsidiary will create, incur, assume or suffer to exist any
Lien upon or with respect to any of its properties, revenues or assets, whether
now owned or hereafter acquired except for any of the following (“Permitted
Liens”): (i) Liens in favor of Investor in respect of the indebtedness hereunder
and under the Security Agreement and second priority Liens in connection with
the Securities Purchase Agreement; (ii) Liens for taxes, fees, assessments or
other governmental charges or levies, either not delinquent or being contested
in good faith by appropriate proceedings and which are adequately reserved for
in accordance with U.S. generally accepted accounting principles; (iii) Liens of
materialmen, mechanics, warehousemen, carriers or employees or other like Liens
arising in the ordinary course of business and securing obligations either not
delinquent or being contested in good faith by appropriate proceedings;
(iv) Liens consisting of deposits or pledges to secure the payment of worker’s
compensation, unemployment insurance or other social security benefits or
obligations, or to secure the performance of bids, trade contracts, leases,
public or statutory obligations, surety or appeal bonds or other obligations of
a like nature incurred in the ordinary course of business; (v) easements, rights
of way, servitudes or zoning or building restrictions and other minor
encumbrances on real property and irregularities in the title to such property
which do not in the aggregate materially impair the use or value of such
property or risk the loss or forfeiture of title thereto; (vi) non-exclusive
licenses granted in the ordinary course of business and consistent with past
practices; and (vii) Liens upon or in any equipment acquired or held by the
Company or any Subsidiary to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment, provided that the Lien is confined solely to the equipment so
acquired and accessions thereon.

8.6 Capital Expenditures. Except with the prior written approval of Investor,
neither the Company nor any Subsidiary shall make any Capital Expenditures in
excess of One Hundred Thousand Dollars ($100,000.00) in any one instance or
series of related instances.

8.7 Use of Proceeds. Except with the prior written approval of Investor, neither
the Company nor any Subsidiary shall use any proceeds from the Note hereunder,
directly or indirectly, for the purposes of repaying any pre-existing debt of
the Company or any of its Subsidiaries outside the ordinary course of business.
Notwithstanding the foregoing, the Company shall use $609,000 of the proceeds of
the issuance of the Note within one (1) Business Day of the date of the Closing
to pay amounts due to Hospira.

8.8 Affiliate Transactions. Except with the prior written approval of Investor,
neither the Company nor any Subsidiary shall enter into any transaction,
including the purchase, sale or exchange of property or the rendering of any
services or debt financing, with any Affiliate or enter into, assume or suffer
to exist any employment or consulting contract with any Affiliate, except a
transaction or contract which is in the ordinary course of the business of the
Company or such Subsidiary, as applicable, and which is upon fair and reasonable
terms not less favorable to the Company or such Subsidiary, as applicable, than
it would obtain in a comparable arm’s length transaction with a Person not an
Affiliate.

 

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8.9 Investments. Except with the prior written approval of Investor, neither the
Company nor any Subsidiary shall make loans to, investments in or purchase
securities of any Person or Subsidiary, or otherwise extend credit to any Person
or Subsidiary (other than extensions of trade credit arising from the sale of
goods or services in the ordinary course of business) or loans or advances to
employees for travel expenses as approved by the Board, in amounts in excess of
Ten Thousand Dollars ($10,000.00) individually or Twenty-Five Thousand Dollars
($25,000.00) in the aggregate.

8.10 Sales of Assets. Except with the prior written approval of Investor or
pursuant to the terms of the letter agreement, dated as of the date of the
Closing, between the Company and Investor, as the same may be amended, restated
or otherwise modified in writing from time to time, neither the Company nor any
Subsidiary shall sell, transfer, lease, license or otherwise dispose of (a
“Transfer”) any of its assets except: (i) non-exclusive licenses of Intellectual
Property in the ordinary course of business consistent with industry practice;
(ii) Transfers of worn-out, obsolete or surplus property (each as determined by
the Company in its reasonable judgment); (iii) Transfers of Inventory (as
defined below); (iv) Transfers constituting Permitted Liens; and (v) Transfers
of assets (other than Intellectual Property) for fair consideration and in the
ordinary course of its business consistent with past practices.

8.11 Other Business. Except with the prior written approval of Investor, neither
the Company nor any Subsidiary shall engage in any material line of business
other than the business that the Company or such Subsidiary conducts or intends
to conduct as of the Effective Date.

8.12 Deposit Accounts and Securities Accounts. Except with the prior written
approval of Investor, neither the Company nor its Subsidiaries shall maintain
any Deposit Accounts or accounts holding securities owned by the Company or any
Subsidiary except for Deposit Accounts and securities/investment accounts, in
each case, with respect to which the Company or the Subsidiary, as applicable,
and Investor shall have taken such action as Investor reasonably deem necessary
to obtain a perfected first security interest therein, including the execution
and delivery of control agreements in favor of Investor.

8.13 Documents of Title. Except with the prior written approval of Investor or
with respect to Permitted Liens, neither the Company nor any Subsidiary shall
sign or authorize the signing of any financing statement or other document
naming the Company or such Subsidiary, as applicable, as debtor or obligor, or
acquiesce or cooperate in the issuance of any bill of lading, warehouse receipt
or other document or instrument of title with respect to any Collateral, except
those negotiated to Investor, or those naming Investor as secured party.

8.14 Debt or Equity Offering. Except with the prior written approval of
Investor, neither the Company nor any of its Subsidiaries shall issue, deliver,
sell, authorize, grant, pledge or otherwise encumber any shares of Capital Stock
or any securities convertible into shares of Capital Stock, or any debt or
convertible debt securities, or subscriptions, rights, warrants or options to
acquire any shares of Capital Stock or any securities convertible into shares of
Capital Stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares, debt or convertible securities, other
than (i) the issuance, delivery and/or sale of shares of the Company’s Common
Stock pursuant to the exercise of stock options therefor outstanding as of the
date of this Agreement; and (ii) the issuance or delivery of shares of the
Company’s Common Stock pursuant to the exercise of warrants outstanding on the
date of this Agreement.

 

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8.15 Certain Agreements on Rights to Payment. Except with the prior written
approval of Investor or as done in the ordinary course of business, neither the
Company nor any Subsidiary shall make any material discount, credit, rebate or
other reduction in the original amount owing on a Rights to Payment or accept in
satisfaction of a Rights to Payment less than the original amount thereof.

8.16 Modifications Organizational Documents. Except with the prior written
approval of Investor, neither the Company nor any Subsidiary shall amend, modify
or change its articles of incorporation (or corporate charter or other similar
organizational documents) or its bylaws (or other similar documents) in any
manner adverse in any respect to the rights or interests of Investor.

8.17 Modification or Prepayment of Indebtedness. Except with the prior written
approval of Investor, neither the Company nor any Subsidiary shall (i) cancel,
forgive, repay, prepay, redeem, purchase, defease or otherwise satisfy in any
manner, or make any payment in violation of any subordination terms of, any
Indebtedness incurred pursuant to any indenture or the Securities Purchase
Agreement, or any other Indebtedness that is contractually subordinated in right
of payment to the Note, or (ii) amend, modify or change in any manner any term
or condition of any such Indebtedness, provided, however, that the Securities
Purchase Agreement and the other Subordinated Debt Documents (as defined in the
Subordination Agreement) may be amended from time to time to the extent
explicitly permitted by the Subordination Agreement.

 

9. EVENTS OF DEFAULT; ACCELERATION

9.1 Events of Default. The occurrence of any of the following, upon written
notice by Investor to the Company (which notice shall be waived if the Company
fails to deliver notice of such Event of Default pursuant to Section 7.1), shall
constitute an “Event of Default.” Upon the occurrence and during the
continuation of an Event of Default that has not been cured within the
applicable period of time or waived by Investor in accordance with the terms
hereof, (1) all sums of unpaid principal and interest on the Note and any
Obligations and other amounts due and owing under this Agreement or any Related
Document immediately shall become due and payable (including, in the case where
the underling Event of Default would trigger the Company’s obligations set forth
in Section 8.2 hereof, the sums due pursuant to Section 8.2) and (2) Investor
shall have the right to exercise any other right or remedy provided by contract
or applicable law:

(a) the Company shall fail to pay any principal or interest due under the Note,
or fail to pay any fees or other charges when due under this Agreement or any of
the Related Documents, and such failure continues for three (3) Business Days or
more after the same first becomes due;

(b) any representation or warranty made, or financial statement, certificate or
other document provided, by the Company or any Subsidiary under this Agreement
or any Related Document shall prove to have been false or misleading in any
material respect when made or deemed made herein;

 

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(c) any registration statement, proxy statement, report or other document filed
by the Company under the Securities Act or the Exchange Act shall contain any
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;

(d) the Company or any Subsidiary shall admit its inability to pay its debts
generally as they become due or shall commence any Insolvency Proceeding with
respect to itself; an involuntary Insolvency Proceeding shall be filed against
the Company or any Subsidiary, or a custodian, receiver, trustee, assignee for
the benefit of creditors, or other similar official shall be appointed to take
possession, custody or control of the properties of the Company or any
Subsidiary, and such involuntary Insolvency Proceeding, petition or appointment
is acquiesced to by the Company or such Subsidiary as applicable or is not
dismissed within sixty (60) days; or the dissolution or termination of the
business of the Company or any Subsidiary;

(e) the Company or any Subsidiary shall be in default beyond any applicable
period of grace or cure under any other agreement involving the borrowing of
money, the issuance of debt securities, the purchase of property, the advance of
credit or any other monetary liability of any kind to any Investor or to any
other Person that results in the acceleration of payment of such obligation in
an amount in excess of One Hundred Thousand Dollars ($100,000.00);

(f) any governmental or regulatory authority shall take any judicial or
administrative action, or any defined benefit pension plan maintained by the
Company or any Subsidiary shall have any unfunded liabilities, any of which, in
the reasonable judgment of Investor, would reasonably be expected to have a
Company Material Adverse Effect;

(g) any sale, transfer or other disposition of all or a substantial or material
part of the assets of the Company or any Subsidiary (other than any sale,
transfer or other disposition of all or a substantial or material part of any
products or assets of the Company pursuant to the terms of the letter agreement,
dated as of the date of the Closing, between the Company and Investor, as the
same may be amended, restated or otherwise modified in writing from time to
time), including, without limitation, to any trust or similar entity, shall
occur, except where such transaction is consented to by Investor;

(h) any judgment(s) singly or in the aggregate in excess of One Hundred Thousand
Dollars ($100,000.00) shall be entered against the Company or any Subsidiary
that remain unsatisfied, unvacated or unstayed pending appeal for forty-five
(45) or more days after entry thereof;

(i) the Company or any Subsidiary shall fail to perform or observe any covenant
contained in this Agreement;

(j) reserved;

 

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(k) there shall be a Material Adverse Effect on the Company and its Subsidiaries
after the Closing (for the avoidance of doubt, the departure of key members of
the Company’s management shall constitute a Material Adverse Effect) or the
Collateral shall be impaired;

(l) the Company or any Subsidiary shall fail to perform or observe any covenant
or agreement contained in this Agreement or any Related Document (other than a
covenant that is dealt with specifically elsewhere in this Article 9) and, if
capable of being cured, the breach of such covenant is not cured within thirty
(30) days after the sooner to occur of the Company’s receipt of notice of such
breach from Investor or the date on which such breach first becomes known to any
officer of the Company; provided, however, that if such breach is not capable of
being cured within such thirty (30)-day period and the Company timely notifies
Investor of such fact and the Company diligently pursues such cure, then the
cure period shall be extended to the date requested in the Company’s notice but
in no event more than ninety (90) days from the initial breach; provided,
further, that such additional sixty (60)-day opportunity to cure shall not apply
in the case of any failure to perform or observe any covenant which has been the
subject of a prior failure within the preceding one hundred eighty (180) days or
which is a willful and knowing breach by the Company or any Subsidiary;

(m) an “Event of Default” shall have occurred under the Securities Purchase
Agreement or any indenture to which the Company or any Subsidiary is party; and

(n) The Company shall fail to perform or observe any of its obligations in the
letter agreement, dated as of the date of the Closing, between the Company and
Investor, as the same may be amended, restated or otherwise modified in writing
from time to time.

Notwithstanding the foregoing, or anything to the contrary contained in this
Agreement, the Company may repay the Obligations in full (but not in part) with
the proceeds of a Change of Control, debt financing or equity financing and,
provided the Obligations are repaid in full concurrently (and in any event on
the same Business Day) with the closing or funding of such Change of Control,
debt financing or equity financing, no Event of Default shall occur solely as a
result of such Change of Control, debt financing or equity financing. No delay
or omission to exercise any right, power or remedy accruing to any party under
this Agreement, upon any breach or default of any other party under this
Agreement, will impair any such right, power or remedy of such non-breaching or
non-defaulting party nor will it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor will any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and will be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, will be cumulative
and not alternative.

9.2 Remedies Upon Default. (a) Upon the occurrence and during the continuance of
an Event of Default described in Section 9.1(c), each of (i) the unpaid
principal amount of and accrued interest on the Note and (ii) all other
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of

 

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which are hereby expressly waived by the Company, and (b) upon the occurrence
and during the continuance of any other Event of Default, Investor shall be
entitled to, at its option, exercise any or all of the rights and remedies
available to a secured party under the UCC or any other applicable law, and
exercise any or all of their rights and remedies provided for in this Agreement
and in any Related Document. The obligations of the Company under this Agreement
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any Obligations is rescinded or must otherwise be returned
by a Investor upon, on account of or in connection with, the insolvency,
bankruptcy or reorganization of the Company, any Subsidiary or otherwise, all as
though such payment had not been made.

9.3 Sale of Collateral. In addition to any other rights set forth in this
Agreement or any of the Related Documents, upon the occurrence and during the
continuance of an Event of Default, Investor may sell all or any part of the
Collateral, at public or private sales, to themselves, a wholesaler, retailer or
investor, for cash, upon credit or for future delivery, and at such price or
prices as Investor may deem commercially reasonable. To the extent permitted by
law, the Company hereby specifically waives all rights of redemption and any
rights of stay or appraisal that it has or may have under any applicable law in
effect from time to time. Any such public or private sales shall be held at such
times and at such place(s) as Investor may determine. In case of the sale of all
or any part of the Collateral on credit or for future delivery, the Collateral
so sold may be retained by Investor until the selling price is paid by the
purchaser, but Investor shall not incur any liability in case of the failure of
such purchaser to pay for the Collateral and, in case of any such failure, such
Collateral may be resold. Investor may, instead of exercising their power of
sale, proceed to enforce their security interest in the Collateral by seeking a
judgment or decree of a court of competent jurisdiction. Without limiting the
generality of the foregoing, if an Event of Default is in effect:

(a) Subject to the rights of any third parties, Investor may, in compliance with
applicable law, license, or sublicense, whether general, special or otherwise,
and whether on an exclusive or non-exclusive basis, any Copyrights, Patents,
Trademarks or other Intellectual Property included in the Collateral throughout
the world for such term or terms, on such conditions and in such manner as
Investor shall in their sole discretion determine;

(b) Investor may (without assuming any obligations or liability thereunder), at
any time and from time to time, enforce (and shall have the exclusive right to
enforce) against any licensee or sublicensee all rights and remedies of the
Company in, to and under any Copyright Licenses, Patent Licenses, Trademark
Licenses or other Intellectual Property and take or refrain from taking any
action under any thereof, and the Company hereby releases Investor from, and
agrees to hold Investor free and harmless from and against any claims arising
out of, any lawful action so taken or omitted to be taken with respect thereto
other than claims arising out of an Investor’s gross negligence or willful
misconduct; and

(c) Upon request by Investor, the Company will execute and deliver to Investor a
power of attorney, in form and substance reasonably satisfactory to Investor,
for the implementation of any lease, assignment, license, sublicense, grant of
option, sale or other disposition of a Copyright, Patent, Trademark or other
Intellectual Property. In the event of any such disposition pursuant to this
clause (c), the Company shall supply its know-how and expertise

 

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relating to the products or services made or rendered in connection with
Patents, the manufacture and sale of the products bearing Trademarks and its
customer lists and other records relating to such Copyrights, Patents,
Trademarks or other Intellectual Property and to the distribution of said
products, to Investor.

9.4 Company’s Obligations Upon Default. Upon the request of Investor after the
occurrence and during the continuance of an Event of Default, the Company will:

(a) Assemble and make available to Investor the Collateral at such place(s) as
Investor shall reasonably designate, segregating all Collateral so that each
item is capable of identification; and

(b) Subject to the rights of any lessor, permit Investor, by Investor’s
officers, employees, agents and representatives, to enter any premises where any
Collateral is located, to take possession of the Collateral, to complete the
processing, manufacture or repair of any Collateral, and to remove the
Collateral, or to conduct any public or private sale of the Collateral, all
without any liability of Investor for rent or other compensation for the use of
the Company’s premises.

 

10. RESERVED.

 

11. INDEMNIFICATION

The Company hereby agrees to indemnify Investor and its directors, officers,
employees, agents, counsel, Affiliates and other advisors (each an “Indemnified
Person”) against, and hold each of them harmless from, any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including the
reasonable fees and disbursements of counsel to an Indemnified Person (including
allocated costs of internal counsel), that may be imposed on, incurred by or
asserted against any Indemnified Person (i) in any way relating to or arising
out of this Agreement or any of the Related Documents, the use or intended use
of the proceeds of the Note, or the transactions contemplated hereby or thereby;
(ii) the breach or default by the Company or any of its Subsidiaries of any
representation, warranty, covenant or agreement of the Company or any of its
Subsidiaries contained in this Agreement or any of the Related Documents and
(iii) with respect to any investigation, litigation or other proceeding relating
to any of the foregoing, irrespective of whether the Indemnified Person shall be
designated a party thereto (the “Indemnified Liabilities”); provided, however,
that the Company shall not be liable to any Indemnified Person for any portion
of such Indemnified Liabilities to the extent that they are found by a final
decision of a court of competent jurisdiction to have resulted from such
Indemnified Person’s gross negligence or willful misconduct. If and to the
extent that the foregoing indemnification is for any reason held unenforceable,
the Company agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities that is permissible under
applicable law.

 

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12. MISCELLANEOUS

12.1 Binding Agreement. The terms and conditions of this Agreement shall inure
to the benefit of and be enforceable by the Company and Investor and its
respective successors and assigns. The Company may not assign, transfer,
hypothecate or otherwise convey its rights, benefits, obligations or duties
hereunder without the prior express written consent of Investor. Any such
purported assignment, transfer, hypothecation or other conveyance by the Company
without the prior express written consent of Investor shall be void. Nothing in
this Agreement, express or implied, is intended to confer upon any third party
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.

12.2 Governing Law; Venue; Arbitration; Dispute Resolution.

(a) This Agreement shall be governed by and construed according to the laws of
the State of California, without regard to conflict of law principles thereof.
The Company hereby (i) submits to the exclusive jurisdiction of the courts of
the County of San Francisco, State of California and the Federal courts of the
United States sitting in the Northern District of the State of California for
the purpose of any action or proceeding arising out of or relating to this
Agreement and the Related Documents; (ii) agrees that all claims in respect of
any such action or proceeding may be heard and determined in such courts;
(iii) irrevocably waives (to the extent permitted by applicable law) any
objection that it now or hereafter may have to the laying of venue of any such
action or proceeding brought in any of the foregoing courts, and any objection
on the ground that any such action or proceeding in any such court has been
brought in an inconvenient forum; and (iv) agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner permitted by law.

(b) The parties agree that any dispute, controversy or claim (including any
counterclaim) (each, a “Dispute”) arising out of or relating to this Agreement
or any Related Documents shall be finally resolved by confidential binding
arbitration in San Francisco County, California as the sole and exclusive method
of resolving such dispute, controversy or claim. Any Dispute shall be settled by
arbitration under the rules then in effect of JAMS/Endispute conducted by a
single arbitrator reasonably acceptable to the parties. The arbitrator shall
have no power to amend this Agreement or any Related Documents. The arbitrator
shall issue an award in writing (including an explanation of the grounds for
such award) as promptly as practicable that shall be final and binding on the
parties. Judgment upon any award thus obtained may be entered in any court
having jurisdiction thereof. No action at law or in equity based upon any claim
arising out of or related to this Agreement or any Related Documents shall be
instituted in any court by any party except (a) an action to compel arbitration
pursuant to this Section 12.2(b); or (b) an action to enforce an award obtained
in an arbitration proceeding in accordance with this Section 12.2(b). Pending
the submission to arbitration and thereafter until the arbitrator publishes its
award, each party shall, except in the event of termination, continue to perform
all its obligations under this Agreement and the Related Documents without
prejudice to a final adjustment in accordance with the award.

12.3 Counterparts. This Agreement may be executed in two or more counterparts,
including counterparts transmitted by facsimile, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.

12.4 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

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12.5 Notices. Any notice required or permitted under this Agreement shall be
given in writing and shall be deemed effectively given upon personal delivery,
overnight courier, facsimile or upon deposit with the United States Post Office,
postage prepaid, addressed to the Company, or to Investor at its address shown
on the signature pages hereto, or at such other address as such party may
designate by ten (10) days advance written notice to the other party.

12.6 Entire Agreement. This Agreement, the Related Documents and the exhibits
and schedules hereto and thereto constitute the full and entire understanding
and agreement among the parties with regard to the subjects hereof, and
supersede any prior agreements among the parties regarding the subject matter
hereof. No party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein.

12.7 Amendments and Waivers. Any term of this Agreement, the Security Agreement,
the Guaranty, the Note and the other Related Documents may be amended and the
observance of any term of this Agreement, the Security Agreement, the Guaranty,
the Note and the other Related Documents (other than the Subordination
Agreement) may be waived (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of the Company
and Investor. Any amendment or waiver effected in accordance with this
Section 12.7 shall be binding upon Investor and each other holder of any Note
purchased under this Agreement at the time outstanding, each future holder of
all such Notes and the Company.

12.8 Maximum Interest. Notwithstanding anything to the contrary in this
Agreement or any Related Documents, in no event whatsoever shall the aggregate
of all amounts deemed interest hereunder, under the Note or under any other
Related Documents and charged or collected pursuant to the terms of this
Agreement, the Note or such Related Document exceed the highest rate permissible
under any law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto or thereto. If any provisions of this
Agreement, the Note or any other Related Documents are in contravention of any
such law, such provisions shall be deemed amended to conform thereto (the
“Maximum Rate”). If at any time, the amount of interest paid hereunder, under
the Note or any other Related documents is limited by the Maximum Rate, and the
amount at which interest accrues hereunder or thereunder shall remain at the
Maximum Rate, until such time as the aggregate interest paid hereunder or
thereunder equals the amount of interest that would have been paid had the
Maximum Rate not applied.

12.9 Severability. Whenever possible, each provision of this Agreement and the
Related Documents shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement or any of the
Related Documents is held to be prohibited by or invalid under applicable law in
any jurisdiction, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating any other provision of this
Agreement or the Related Documents. To the extent that any Obligations otherwise
paid or payable by the Company to any Investor hereunder or under any of the
Related Documents shall have been finally adjudicated to exceed the maximum
amount permitted by applicable law, Investor shall be entitled to the maximum
amount allowable under applicable law.

 

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12.10 Expenses. The Company shall pay all costs and expenses, including
attorneys’ fees (including allocated costs of internal counsel), fees, costs and
expenses of accountants, advisors and consultants and costs of settlement,
incurred by the Collateral Agent and Investor in connection with (i) the
preparation, negotiation, execution, delivery and administration of this
Agreement and the Related Documents or any amendments, modifications or waivers
of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) creating, maintaining
and perfecting Liens in favor of the Collateral Agent, for the benefit of
Investor, including filing and recording fees and expenses; (iii) in connection
with the enforcement or protection of its rights and remedies in connection with
this Agreement and the Related Documents, and (iv) in enforcing any Obligations
of or in collecting any payments due from the Company or any of its Subsidiaries
hereunder or under the Related Documents (including in connection with the sale
of, collection from, or other realization upon any of the Collateral or the
enforcement of this Agreement and the Related Documents) or in connection with
any refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a “work-out” or pursuant to any insolvency or
bankruptcy proceedings.

 

13. DEFINITIONS

The definitions appearing in this Agreement shall be applicable to both the
singular and plural forms of the defined terms:

“Account” means any “account,” as such term is defined in the UCC, now owned or
hereafter acquired by the Company or any Subsidiary or in which the Company or
any Subsidiary now holds or hereafter acquires any interest and, in any event,
shall include, without limitation, all accounts receivable, book debts and other
forms of obligations (other than forms of obligations evidenced by Chattel
Paper, Documents or Instruments) now owned or hereafter received or acquired by
or belonging or owing to the Company or any Subsidiary (including, without
limitation, under any trade name, style or division thereof) whether arising out
of goods sold or services rendered by the Company or any Subsidiary or from any
other transaction, whether or not the same involves the sale of goods or
services by the Company or any Subsidiary (including, without limitation, any
such obligation that may be characterized as an account or contract right under
the UCC) and all of the rights of the Company or any of its Subsidiaries in, to
and under all purchase orders or receipts now owned or hereafter acquired by it
for goods or services, and all of the rights of the Company or any of its
Subsidiaries to any goods represented by any of the foregoing (including,
without limitation, unpaid seller’s rights of rescission, replevin, reclamation
and stoppage in transit and rights to returned, reclaimed or repossessed goods),
and all monies due or to become due to the Company or any Subsidiary under all
purchase orders and contracts for the sale of goods or the performance of
services or both by the Company or any Subsidiary or in connection with any
other transaction (whether or not yet earned by performance on the part of the
Company or any Subsidiary), now in existence or hereafter occurring, including,
without limitation, the right to receive the proceeds of said purchase orders
and contracts, and all collateral security and guarantees of any kind given by
any Person with respect to any of the foregoing.

 

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“Affiliate” means any Person which directly or indirectly controls, is
controlled by or is under common control with such Person. “Control,”
“controlled by” and “under common control with” mean direct or indirect
possession of the power to direct or cause the direction of management or
policies (whether through ownership of voting securities, by contract or
otherwise); provided, that control shall be conclusively presumed when any
Person or affiliated group directly or indirectly owns five percent (5%) or more
of the securities having ordinary voting power for the election of directors of
a corporation.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in San Francisco, California or New York City, New York are
authorized or required by law to close.

“Capital Expenditures” shall mean capital expenditures of the Company and its
Subsidiaries determined and consolidated in accordance with U.S. generally
accepted accounting principles, excluding expenditures made in connection with
the replacement, substitution or restoration of assets to the extent financed
with insurance proceeds, cash awards arising from a taking by eminent domain or
condemnation or cash proceeds of asset dispositions reinvested in replacement
assets.

“Capital Stock” means (a) with respect to any Person that is a corporation, any
and all shares, interests or equivalents in capital stock (whether voting or
nonvoting, and whether common or preferred) of such corporation and (b) with
respect to any Person that is not a corporation, any and all partnership,
membership, limited liability company or other equity interests of such Person
(including all economic, voting and other rights related thereto); and in each
case, any and all warrants, rights or options to purchase any of the foregoing.

“Cash and Cash Equivalents” means, as at any date of determination: (i) cash;
(ii) marketable securities (a) issued or directly and unconditionally guaranteed
as to interest and principal by the United States government or (b) issued by
any agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (iii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, investment grade rating
from either Standard & Poor’s (“S&P”) or Moody’s Investor Service, Inc.
(“Moody’s”); (iv) commercial paper maturing no more than one year from the date
of creation thereof and having, at the time of the acquisition thereof, a rating
of at least A-1 from S&P or at least P-1 from Moody’s; (v) certificates of
deposit or bankers’ acceptances maturing within one year after such date and
issued or accepted by any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia that (a) is
at least “adequately capitalized” (as defined in the regulations of its primary
Federal banking regulator) and (b) has Tier 1 capital (as defined in such
regulations) of not less than U.S. $100,000,000; and (vi) shares of any money
market mutual fund that (a) has at least 95% of its assets invested continuously
in the types of investments referred to in clauses (ii) and (iii) above, (b) has
net assets of not less than U.S. $500,000,000, and (c) has an investment grade
rating from either S&P or Moody’s.

 

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“Change of Control” means the occurrence of any of the following:

(a) any transaction or series of related transactions resulting in the sale or
issuance of securities or any rights to securities of the Company representing
in the aggregate more than fifty percent (50%) of the Company’s issued and
outstanding voting securities, on a fully diluted basis, or any transaction or
series of related transactions resulting in the sale, transfer, assignment or
other conveyance or disposition of any securities or any rights to securities of
the Company by any holder or holders thereof representing in the aggregate more
than fifty percent (50%) of the issued and outstanding voting securities of the
Company;

(b) a merger, consolidation, reorganization, recapitalization or share exchange
(whether or not the Company is the surviving and continuing entity) in which the
stockholders or equityholders of the Company immediately prior to such
transaction receive, in exchange for securities of the Company owned by them
(whether alone or together with cash, property or other securities), cash,
property or securities of the resulting or surviving entity and as a result
thereof Persons who were holders of voting securities of the Company immediately
prior to such transaction hold less than fifty percent (50%) of the issued and
outstanding Capital Stock of the resulting or surviving entity entitled to vote
in the election of directors, managers or similar governing body or otherwise;

(c) a sale, transfer, exclusive license, exclusive partnering arrangement or
other disposition in a single transaction or series of related transactions of
fifty percent (50%) or more of the assets of the Company and its Subsidiaries,
on a consolidated basis, other than sales of inventory in good faith to
customers for fair value in the ordinary course of business and dispositions of
obsolete equipment not used or useful in the business of the Company and its
Subsidiaries;

(d) a sale, transfer, exclusive license, exclusive partnering arrangement or
other disposition in a single transaction or series of related transactions of
the Company’s Adlea assets;

(e) the Company or any Subsidiary shall fail to pay or admit its inability to
pay its debts generally as they become due or shall commence any Insolvency
Proceeding with respect to itself; an involuntary Insolvency Proceeding shall be
filed against the Company or any Subsidiary, or a custodian, receiver, trustee,
assignee for the benefit of creditors, or other similar official shall be
appointed to take possession, custody or control of the properties of the
Company or any Subsidiary, and such involuntary Insolvency Proceeding, petition
or appointment is acquiesced to by the Company or such Subsidiary as applicable
or is not dismissed within sixty (60) days; or the dissolution or termination of
the business of the Company or any Subsidiary; and

(f) the failure of the Company to own and control, directly or indirectly,
through one or more wholly-owned Subsidiaries, one hundred percent (100%) of the
issued and outstanding Capital Stock of its Subsidiaries.

“Chattel Paper” means any “chattel paper,” as such term is defined in the UCC,
now owned or hereafter acquired by the Company or any Subsidiary or in which the
Company or any Subsidiary now holds or hereafter acquires any interest.

 

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“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration now owned or hereafter acquired by the
Company or any Subsidiary or in which the Company or any Subsidiary now holds or
hereafter acquires any interest.

“Copyrights” means all of the following now owned or hereafter acquired by the
Company or any Subsidiary or in which the Company or any Subsidiary now holds or
hereafter acquires any interest: (i) all copyrights, whether registered or
unregistered, held pursuant to the laws of the United States, any State thereof
or of any other country; (ii) all registrations, applications and recordings in
the United States Copyright Office or in any similar office or agency of the
United States, any State thereof or any other country; (iii) all continuations,
renewals or extensions thereof; and (iv) any registrations to be issued under
any pending applications.

“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, now owned or hereafter acquired by the Company or any Subsidiary or in
which the Company or any Subsidiary now holds or hereafter acquires any
interest.

“Documents” means any “documents,” as such term is defined in the UCC, now owned
or hereafter acquired by the Company or any Subsidiary or in which the Company
or any Subsidiary now holds or hereafter acquires any interest.

“Equipment” means any “equipment,” as such term is defined in the UCC, now owned
or hereafter acquired by the Company or any Subsidiary or in which the Company
or any Subsidiary now holds or hereafter acquires any interest and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto.

“Indebtedness” of any Person means at any date, without duplication and without
regard to whether matured or unmatured, absolute or contingent: (i) all
obligations of such Person for borrowed money; (ii) all obligations of such
Person evidenced by bonds, debentures, note or other similar instruments;
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business; (iv) all obligations of such Person as lessee under capital
leases; (v) all obligations of such Person to reimburse or prepay any bank or
other Person in respect of amounts paid under a letter of credit, banker’s
acceptance or similar instrument, whether drawn or undrawn; (vi) all obligations
of such Person to purchase securities that arise out of or in connection with
the sale of the same or substantially similar securities; (vii) all obligations
of such Person to purchase, redeem, exchange, convert or otherwise acquire for
value any Capital Stock of such Person or any warrants, rights or options to
acquire such Capital Stock, now or hereafter outstanding, except to the extent
that such obligations remain performable solely at the option of such Person;
(viii) all obligations to repurchase assets previously sold (including any
obligation to repurchase any accounts or chattel paper under any factoring,
receivables purchase or similar arrangement); (ix) obligations of such Person
under interest rate swap, cap, collar or similar hedging arrangements; and
(x) all obligations of others of any type described in clause (i) through clause
(ix) above guaranteed by such Person.

“Indenture” means the Senior Debt Indenture and the Supplemental Indenture to
Indenture, each dated April 2, 2009, by and between the Company and The Bank of
New York Mellon Trust Company, N.A., as amended by the Second Supplemental
Indenture to Indenture on April 28, 2009 (collectively, the “Indenture”).

 

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“Insolvency Proceeding” means with respect to a Person: (a) any case, action or
proceeding before any court or other governmental authority relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors with respect to such Person or (b) any general
assignment for the benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of such Person’s creditors
generally or any substantial portion of its creditors, undertaken under federal,
state or foreign law, including the Bankruptcy Code, but in each case, excluding
any avoidance or similar action against such Person commenced by an assignee for
the benefit of creditors, bankruptcy trustee, debtor in possession or other
representative of another Person or such other Person’s estate.

“Instruments” means any “instrument,” as such term is defined in the UCC, now
owned or hereafter acquired by the Company or any Subsidiary or in which the
Company or any Subsidiary now holds or hereafter acquires any interest.

“Inventory” means any “inventory,” as such term is defined in the UCC, wherever
located, now owned or hereafter acquired by the Company or any Subsidiary or in
which the Company or any Subsidiary now holds or hereafter acquires any
interest, and, in any event, shall include, without limitation, all inventory,
goods and other personal property that are held by or on behalf of the Company
or any Subsidiary for sale or lease or are furnished or are to be furnished
under a contract of service or that constitute raw materials, work in process or
materials used or consumed or to be used or consumed in the business of the
Company or any Subsidiary, or the processing, packaging, promotion, delivery or
shipping of the same, and all finished goods, whether or not the same is in
transit or in the constructive, actual or exclusive possession of the Company,
any Subsidiary or is held by others for the account of the Company or any
Subsidiary, including, without limitation, all goods covered by purchase orders
and contracts with suppliers and all goods billed and held by suppliers and all
such property first may be in the possession or custody of any carriers,
forwarding agents, truckers, warehousemen, vendors, selling agents or other
Persons.

“knowledge” means the knowledge of the Company’s officers and other
manager-level employees, and it shall be deemed that such persons shall have
made due and diligent inquiry of such matter in question.

“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
any lease in the nature of a security interest, and the filing of any financing
statement (other than a precautionary financing statement with respect to a
lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.

“Obligations” means all loans, advances, debts, liabilities and obligations,
howsoever arising, owed by the Company or any Subsidiary to Investor of every
kind and description (whether or not evidenced by any note or instrument and
whether or not for the payment of money), now

 

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existing or hereafter arising under or pursuant to the terms of this Agreement,
the Note and each of the Related Documents, including, all interest, fees,
charges, expenses, attorneys’ fees and costs and accountants’ fees and costs
chargeable to and payable by the Company or any Subsidiary hereunder and
thereunder, in each case, whether direct or indirect, absolute or contingent,
due or to become due, and whether or not arising after the commencement of a
proceeding under Title 11 of the United States Code (11 U.S.C. Section 101 et
seq.), as amended from time to time (including post-petition interest) and
whether or not allowed or allowable as a claim in any such proceeding.

“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence now owned or hereafter acquired
by the Company or any Subsidiary or in which the Company or any Subsidiary now
holds or hereafter acquires any interest.

“Patents” means all of the following property now owned or hereafter acquired by
the Company or any Subsidiary or in which the Company or any Subsidiary now
holds or hereafter acquires any interest: (a) all letters patent of, or rights
corresponding thereto in, the United States or any other country, all
registrations and recordings thereof, and all applications for letters patent
of, or rights corresponding thereto in, the United States or any other country,
including, without limitation, registrations, recordings and applications in the
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country; (b) all reissues, continuations,
continuations-in-part or extensions thereof; (c) all petty patents, divisionals
and patents of addition; and (d) all patents to be issued under any such
applications.

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, public benefit corporation, other entity or government
(whether federal, state, county, city, municipal, local, foreign or otherwise,
including any instrumentality, division, agency, body or department thereof).

“Records” means all of the computer programs, software, hardware, source codes
and data processing information of the Company and its Subsidiaries, all written
documents, books, invoices, ledger sheets, financial information and statements
of the Company and its Subsidiaries, and all other writings concerning the
business of the Company and its Subsidiaries.

“Rights to Payment” means all of the accounts, instruments, contract rights,
documents, chattel paper and all other rights to payment of the Company and its
Subsidiaries, including, without limitation, the Accounts, all negotiable
certificates of deposit and all rights to payment under any Patent License, any
Trademark License or any commercial or standby letter of credit.

“Securities Purchase Agreement” means that certain Securities Purchase
Agreement, dated January 20, 2009, by and among Anesiva, Inc., Sofinnova Venture
Partners VII, L.P., Alta California Partners III, L.P., Alta Embarcadero
Partners III, LLC, Alta Partners VIII, LP, CMEA Ventures VII, L.P., CMEA
Ventures VII (Parallel), L.P., InterWest Partners VIII, LP, InterWest Investors
VIII, LP, and InterWest Investors Q VIII, LP, as amended by that certain
Amendment to Securities Purchase Agreement, dated April 1, 2009, by and among
Anesiva, Inc. and Sofinnova Venture Partners VII, L.P., Alta California Partners
III, L.P., Alta Embarcadero Partners III, LLC,

 

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Alta Partners VIII, LP, CMEA Ventures VII, L.P., CMEA Ventures VII (Parallel),
L.P., InterWest Partners VIII, LP, InterWest Investors VIII, LP, and InterWest
Investors Q VIII, LP, as amended, restated, supplemented or otherwise modified
from time to time in accordance with the Subordination Agreement.

“Subordination Agreement” means that certain Subordination Agreement dated as of
May 18, 2009 by and among each of the creditors party thereto, Investor, Company
and AlgoRx Pharmaceuticals, Inc., as amended, restated, supplemented or
otherwise modified from time to time.

“Subsidiary” means with respect to any Person, (a) any corporation (or similar
entity under foreign law) of which an aggregate of more than fifty percent
(50%) of the outstanding Capital Stock having ordinary voting power to elect a
majority of the board of directors (or equivalent body) of such corporation
(irrespective of whether, at the time, Capital Stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of more than fifty percent (50%) of such Capital Stock
whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership, limited liability company, association, joint venture, trust or
other entity in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than fifty percent (50%) or of which
any such Person is a general partner or managing member or may exercise the
powers of a general partner or managing member. Unless the context otherwise
requires, each reference to a Subsidiary shall be a reference to a Subsidiary of
the Company.

“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration now owned or hereafter acquired by the
Company or any of its Subsidiaries or in which the Company or any of its
Subsidiaries now holds or hereafter acquires any interest.

“Trademarks” means all of the following property now owned or hereafter acquired
by the Company or any of its Subsidiaries or in which the Company or any of its
Subsidiaries now holds or hereafter acquires any interest: (a) all trademarks,
trade names, corporate names, business names, trade styles, service marks,
logos, other source or business identifiers, prints and labels on which any of
the foregoing have appeared or appear, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and any applications in connection therewith, including,
without limitation, registrations, recordings and applications in the Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof and
(b) reissues, extensions or renewals thereof.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of Delaware; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Investor’s Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of Delaware, the term “UCC” shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions. Unless otherwise defined herein, terms that are defined in the UCC
and used herein shall have the meanings given to them in the UCC.

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IN WITNESS WHEREOF, the parties have executed this Secured Note Purchase
Agreement as of the date first written above.

 

COMPANY: ANESIVA, INC. By:   /s/ Michael L. Kranda Name:   Michael L. Kranda
Title:   President and CEO 400 Oyster Point, Suite 502 South San Francisco, CA
94080

 

INVESTOR: ARCION THERAPEUTICS, INC. By:   /s/ James N. Campbell, M.D. Name:  
James N. Campbell, M.D. Title:   Chief Executive Officer 2400 BOSTON STREET,
SUITE 330, BALTIMORE, MD 21224

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EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”). NO SALE, PLEDGE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE
WITH RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT.

THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THE PURCHASE AGREEMENT (AS
DEFINED BELOW).

NOTE

 

[                ]          [                ]

For value received, Anesiva, Inc., a Delaware corporation (the “Company”),
promises to pay to the order of [            ] (together with its successors and
assigns, the “Holder”), the principal sum of [            ], together with
interest accrued but unpaid thereon, upon the terms of this Note (the “Note”).

Interest shall accrue from the date hereof until maturity at a continuously
compounding rate equal to ten percent (10%) per annum payable in cash; provided,
however, that, during the occurrence and continuance of an Event of Default (as
defined in that certain Secured Note Purchase Agreement, dated as of May 18,
2009 (as amended, restated, supplemented or otherwise modified from time to
time, the “Purchase Agreement”), among the Company and the Holder), interest
shall accrue at a continuously compounding rate equal to fourteen percent
(14%) per annum. All computations of interest shall be made on the basis of a
year of 365 or 366 days, as the case may be, for the actual number of days
(including the first day but excluding the last) occurring in the period for
which such interest is payable.

Unless earlier paid pursuant to the terms hereof or the Purchase Agreement or
accelerated in connection with an Event of Default, subject to the terms of the
Purchase Agreement, the outstanding principal and accrued but unpaid interest
shall be immediately due and payable on October 20, 2009 (the “Maturity Date”).
Company may prepay this Note at any time without penalty or premium.

1. This Note is issued pursuant to the terms of the Purchase Agreement. The
Holder is entitled to the benefit of, and is subject to certain restrictions
contained in, the Purchase Agreement and the other Related Documents.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Purchase Agreement. The indebtedness evidenced by this Note is
secured by certain collateral, as more particularly described in that certain
Pledge, Security and Collateral Agent Agreement, dated as of May 18, 2009 (as
may be further amended, restated, supplemented or modified from time to time,
the “Security Agreement”), among the Company, AlgoRx Pharmaceuticals, Inc. and
the Collateral Agent and that certain Guaranty, dated as of January 20, 2009 (as
may be further amended or modified from time to time, the “Guaranty”) by and
between AlgoRx Pharmaceuticals, Inc. and the Holder.

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Each holder of this Note will be deemed, by its acceptance hereof, to have
agreed to the provisions and to have made the representations and warranties set
forth in Section 4 the Purchase Agreement. Subject to the terms of the Purchase
Agreement, this Note is transferable by surrender hereof at the principal office
of the Company, duly endorsed or accompanied by a written instrument of transfer
duly executed by the registered holder of this Note or by any other method
permitted by the Purchase Agreement.

2. All payments hereunder shall be applied in the order provided for in the
Purchase Agreement. Whenever any payment hereunder shall be stated to be due, or
whenever any return payment date or any other date specified hereunder would
otherwise occur, on a day other than a Business Day, then such payment shall be
made, and such return payment date or other date shall occur, on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest hereunder.

3. All payments in respect of this Note shall be in immediately available lawful
money of the United States of America and shall be sent so as to be received no
later than 2 p.m. (Pacific time) on the date of payment, at the address
specified in the Purchase Agreement, or at such other address as may be
specified from time to time by such Holder in a written notice delivered to the
Company. All payments in respect of this Note shall be made unconditionally in
full without any deduction, set off, counterclaim or other defense. If any
scheduled payment date is not a Business Day, such payment shall be made on the
next succeeding Business Day.

4. The Company hereby waives demand, notice, presentment, protest and notice of
dishonor.

5. (a) The terms of this Note shall be construed in accordance with the laws of
the State of California, as applied to contracts entered into by California
residents within the State of California, which contracts are to be performed
entirely within the State of California. The Company hereby (i) submits to the
exclusive jurisdiction of the courts of the County of San Francisco, State of
California and the Federal courts of the United States sitting in the Northern
District of the State of California for the purpose of any action or proceeding
arising out of or relating to this Note, the Purchase Agreement and the Related
Documents; (ii) agrees that all claims in respect of any such action or
proceeding may be heard and determined in such courts; (iii) irrevocably waives
(to the extent permitted by applicable law) any objection that it now or
hereafter may have to the laying of venue of any such action or proceeding
brought in any of the foregoing courts, and any objection on the ground that any
such action or proceeding in any such court has been brought in an inconvenient
forum; and (iv) agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner permitted by law.

(b) The parties agree that any dispute, controversy or claim (including any
counterclaim) (each, a “Dispute”) arising out of or relating to this Note, the
Purchase Agreement or any Related Documents shall be finally resolved by
confidential binding arbitration in San Francisco County, California as the sole
and exclusive method of resolving such dispute, controversy or claim. Any
Dispute shall be settled by arbitration under the rules then in effect of
JAMS/Endispute conducted by a single arbitrator reasonably acceptable to the
parties. The arbitrator shall have no power to amend this Note, the Purchase
Agreement or any Related

 

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Documents. The arbitrator shall issue an award in writing (including an
explanation of the grounds for such award) as promptly as practicable that shall
be final and binding on the parties. Judgment upon any award thus obtained may
be entered in any court having jurisdiction thereof. No action at law or in
equity based upon any claim arising out of or related to this Note, the Purchase
Agreement or any Related Documents shall be instituted in any court by any party
except (a) an action to compel arbitration pursuant to this Section 5(b); or
(b) an action to enforce an award obtained in an arbitration proceeding in
accordance with this Section 5(b). Pending the submission to arbitration and
thereafter until the arbitrator publishes its award, each party shall, except in
the event of termination, continue to perform all its obligations under this
Note, the Purchase Agreement and the Related Documents without prejudice to a
final adjustment in accordance with the award.

6. Notwithstanding any provision of this Note to the contrary, any payments
hereunder deemed to be interest shall not exceed the maximum rate permitted by
applicable law. To the extent that any interest otherwise paid or payable by the
Company to the Holder shall have been finally adjudicated to exceed the maximum
amount permitted by applicable law, such interest shall be retroactively deemed
to have been a required repayment of principal (and any such amount paid in
excess of the outstanding principal amount shall be promptly returned to the
Company).

7. Any term of this Note and the other Securities may be amended and the
observance of any term of this Note and the other Securities may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only in accordance with the terms of the Purchase Agreement. Any
such amendment or waiver shall be effective only for the specific instance and
for the specific purpose for which given.

8. No remedy herein conferred upon the Holder is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be in
addition to every right or other remedy now or hereafter existing at law or in
equity or by statute or otherwise.

9. No course of dealing between the Company and the Holder or any delay on the
part of the Holder in exercising any rights or remedies shall operate as a
waiver of any such right or remedy of the Holder.

10. This Note shall be binding on and inure to the benefit of and be enforceable
by the Company, the Holder and their respective successors and assigns. The
Company may not assign, transfer, hypothecate or otherwise convey its rights,
benefits, obligations or duties hereunder without the prior express written
consent of the Majority Investors. Any such purported assignment, transfer,
hypothecation or other conveyance by the Company without the prior express
written consent of the Majority Investors shall be void.

11. Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under all applicable laws and regulations.
If, however, any provision of this Note shall be prohibited by or invalid under
any such law or regulation in any jurisdiction, it shall, as to such
jurisdiction, be deemed modified to conform to the minimum requirements of such
law or regulation, or, if for any reason it is not deemed so modified, it shall
be ineffective and invalid only to the extent of such prohibition or invalidity
without affecting the remaining provisions of this Note, or the validity or
effectiveness of such provision in any other jurisdiction.

 

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12. This Note is issued pursuant to the Purchase Agreement and in connection
with the Security Agreement, the Pledge Agreement and the other Related
Documents. Material terms applicable to this Note are set forth in the Purchase
Agreement, the Security Agreement, the Pledge Agreement and the other Related
Documents. This Note shall be interpreted in a manner to give full effect to its
provisions and the provisions of the Purchase Agreement, the Security Agreement,
the Pledge Agreement and the other Related Documents.

13. The Company agrees to pay on demand all costs and expenses of the Holder,
and the reasonable fees and disbursements of its counsel (including the
allocated costs of internal counsel), in connection with: (i) any amendments,
modifications or waivers of the terms hereof or of the Purchase Agreement or of
any other Related Documents; (ii) the protection or preservation of the Holder’s
rights under this Note, under the Purchase Agreement or under any other Related
Documents, whether by judicial proceeding or otherwise; (iii) enforcement or
attempted enforcement of, and preservation of any rights under, this Note, the
Purchase Agreement or any other Related Documents; (iv) creating, maintaining
and perfecting Liens in favor of the Collateral Agent, for the benefit of the
Holder, including filing and recording fees and expenses, and (v) any
out-of-court workout or other refinancing or restructuring or in any bankruptcy
case, including, without limitation, any and all losses, costs and expenses
sustained by the Holder as a result of any failure by the Company to perform or
observe its obligations contained herein or in the Purchase Agreement or in any
of the other Related Documents.

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This Note has been issued in reliance upon the representations and warranties
and covenants and agreements of the Company and the Holder set forth in the
Purchase Agreement.

 

ANESIVA, INC. By:     Name:     Title:    

 

Accepted and Agreed: [            ] By:     Name:     Title:    

[SIGNATURE PAGE TO SECURITY]

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EXHIBIT B

PLEDGE, SECURITY AND

COLLATERAL AGENT AGREEMENT

THIS PLEDGE, SECURITY AND COLLATERAL AGENT AGREEMENT (this “Agreement”), dated
as of May 18, 2009, is made by and among Anesiva, Inc., a Delaware corporation
(“Anesiva”), and AlgoRx Pharmaceuticals, Inc., a Delaware corporation (together
with Anesiva, each a “Grantor” and, collectively, the “Grantors”), the Secured
Parties (as defined below) and Arcion Therapeutics, Inc., as collateral agent
for the Secured Parties (in such capacity, the “Collateral Agent”).

The Grantor, the Collateral Agent and the Secured Parties hereby agree as
follows:

Section 1. Definitions; Interpretation.

(a) All capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings assigned to them in the Purchase Agreement (as
defined below).

(b) As used in this Agreement, the following terms shall have the following
meanings:

“Capital Stock” means (a) with respect to any Person that is a corporation, any
and all shares, interests or equivalents in capital stock (whether voting or
nonvoting, and whether common or preferred) of such corporation and (b) with
respect to any Person that is not a corporation, any and all partnership,
membership, limited liability company or other equity interests of such Person
(including all economic, voting and other rights related thereto); and in each
case, any and all warrants, rights or options to purchase any of the foregoing.

“Collateral” has the meaning set forth in Section 2.

“Event of Default” has the meaning ascribed to it in the Purchase Agreement.

“Foreign Subsidiary” means any Subsidiary organized under the laws of any
jurisdiction outside the United States of America.

“Foreign Subsidiary Voting Stock” means the voting Capital Stock of any Foreign
Subsidiary.

“Investment Property” means the collective reference to (a) all “investment
property” as such term is defined in the UCC (other than any Foreign Subsidiary
Voting Stock excluded from the definition of “Pledged Stock” in this Section 1)
and (b) whether or not constituting “investment property” as so defined, all
Pledged Stock.

“Issuers” means the collective reference to each issuer of any Investment
Property.

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“Majority Secured Parties” at any time means the Secured Parties holding at
least sixty percent (60%) of the aggregate principal amount of the Notes
purchased pursuant to the Purchase Agreement and then outstanding.

“Permitted Lien” has the meaning ascribed to it in the Purchase Agreement.

“Pro Rata Share” with respect to any Secured Party at any time, means the
percentage equivalent to the outstanding principal amount plus accrued but
unpaid returns of the Obligations owed to such Secured Party divided by the
outstanding principal amount of all the Obligations plus all accrued but unpaid
returns owed to all Secured Parties.

“Pledged Stock” means the shares of Capital Stock listed on Schedule 1, together
with any other shares, stock certificates, options or rights of any nature
whatsoever in respect of the Capital Stock of any Person that may be issued or
granted to, or held by, any Grantor while this Agreement is in effect; provided
that in no event shall more than 65% of the total outstanding Foreign Subsidiary
Voting Stock of any Foreign Subsidiary be required to be pledged hereunder.

“Proceeds” means all “proceeds” as such term is defined in the UCC and, in any
event, including, without limitation, all dividends or other income from the
Investment Property, collections thereon or distributions or payments with
respect thereto.

“Purchase Agreement” means that certain Secured Note Purchase Agreement of even
date herewith by and among Anesiva and the Secured Parties party thereto, as it
may be amended, restated, supplemented or otherwise modified from time to time.

“Receivable” means any right to payment for goods sold, leased, licensed,
assigned or otherwise disposed of, or for services rendered, whether or not such
right is evidenced by an Instrument or Chattel Paper and whether or not it has
been earned by performance (including, without limitation, any Account and
health-care insurance receivables).

“Secured Party” means each Investor (as defined in the Purchase Agreement), and
collectively the “Secured Parties.”

“Notes” means, collectively, any secured promissory note issued from time to
time by Anesiva pursuant to the Purchase Agreement in favor of an Investor.

“UCC” means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of California; provided, however, in the event that, by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of the security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
California, the term “UCC” shall mean the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof relating to
such attachment, perfection or priority and for purposes of definitions related
to such provisions.

 

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(c) Where applicable and except as otherwise defined herein, terms used in this
Agreement shall have the meanings assigned to them in the UCC.

(d) In this Agreement, (i) the meaning of defined terms shall be equally
applicable to both the singular and plural forms of the terms defined; and
(ii) the captions and headings are for convenience of reference only and shall
not affect the construction of this Agreement.

Section 2. Security Interest.

(a) As security for the payment and performance of the Obligations, each Grantor
hereby pledges, assigns, transfers, hypothecates and sets over to the Collateral
Agent, for itself and on behalf of and for the ratable benefit of the Secured
Parties, and hereby grants to the Collateral Agent, a first priority security
interest in, and right of setoff against, any and all of such Grantor’s right,
title and interest in, to and under the following property, wherever located and
whether now existing or owned or hereafter acquired or arising (collectively,
the “Collateral”):

(i) all accounts, accounts receivable, contract rights, rights to payment,
chattel paper, rights to trade, letter-of-credit rights, documents, money and
instruments and Investment Property, whether held directly or through a
securities intermediary, and other obligations of any kind owed to the Grantor,
however evidenced;

(ii) all deposits and deposit accounts with any bank, savings and loan
association, credit union or like organization, and all funds and amounts
therein, and whether or not held in trust, or in custody or safekeeping, or
otherwise restricted or designated for a particular purpose;

(iii) all inventory, including, without limitation, all materials, raw
materials, parts, components, work in progress, finished goods, merchandise,
supplies and all other goods that are held for sale, lease or other disposition
or furnished under contracts of service or consumed in such Grantor’s business,
including, without limitation, those held for display or demonstration or out on
lease or consignment;

(iv) all equipment owned by such Grantor, including, without limitation, all
machinery, furniture, furnishings, fixtures, trade fixtures, tools, parts and
supplies, appliances, computer and other electronic data processing equipment
and other office equipment, computer programs and related data processing
software, and all additions, substitutions, replacements, parts, accessories and
accessions to and for the foregoing;

(v) all general intangibles and other personal property of such Grantor,
including, without limitation, (A) all tax and other refunds, rebates or credits
of every kind and nature to which such Grantor is now or hereafter may become
entitled; (B) all intellectual property and all rights therein of any type or
description, including, without limitation, all inventions and discoveries,
patents and patent applications (and all inventions and improvements described
and claimed therein), copyrights and applications for copyright (together with
the underlying works of authorship) whether or not registered, together with any
renewals and extensions thereof, trademarks, service marks and trade names, and
applications for

 

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registration of such trademarks, service marks and trade names, trade secrets,
trade dress, trade styles, , Internet domain names, logos, other source of
business identifiers, mask-works, mask-work registrations, mask-work
applications, software, confidential and proprietary information, customer
lists, other license rights, advertising materials, operating manuals, methods,
processes, know-how, algorithms, formulae, databases, quality control
procedures, product, service and technical specifications, operating, production
and quality control manuals, sales literature, drawings, specifications, blue
prints, descriptions, inventions, name plates and catalogs, and the entire good
will of or associated with the businesses now or hereafter conducted by such
Grantor connected with and symbolized by any of the aforementioned properties
and assets, and all licenses relating to any of the foregoing, all reissuance,
renewals, continuations and continuations-in-part of the foregoing, all other
rights derived from or associated with the foregoing, including the right to sue
and recover for any and all past, present and future infringement or
misappropriations thereof, and all income and royalties with respect thereto;
(C) all good will, choses in action and causes of action; (D) all interests in
partnerships; and (E) all indemnity agreements, guaranties, insurance policies,
insurance claims and other contractual, equitable and legal rights of whatever
kind or nature;

(vi) all books, records and other written, electronic or other documentation in
whatever form maintained by or for such Grantor in connection with the ownership
of its assets or the conduct of its business or evidencing or containing
information relating to the Collateral;

(vii) all supporting obligations; and

(viii) all accessions, products and Proceeds at any time, including insurance
proceeds, of any and all of the foregoing.

(b) Anything herein to the contrary notwithstanding, (i) the Grantors shall
remain liable under any contracts, agreements and other documents included in
the Collateral, to the extent set forth therein, to perform all of their duties
and obligations thereunder to the same extent as if this Agreement had not been
executed; (ii) the exercise by the Collateral Agent or any of the Secured
Parties of any of the rights hereunder shall not release the Grantors from any
of their duties or obligations under such contracts, agreements and other
documents included in the Collateral; and (iii) none of the Secured Parties or
the Collateral Agent shall have any obligation or liability under any contracts,
agreements and other documents included in the Collateral by reason of this
Agreement, nor shall the Collateral Agent or any of the Secured Parties be
obligated to perform any of the obligations or duties of the Grantors thereunder
or to take any action to collect or enforce any such contract, agreement or
other document included in the Collateral hereunder.

(c) Notwithstanding the foregoing provisions of this Section 2, the grant of a
security interest as provided herein shall not extend to, and the term
“Collateral” shall not include, any general intangibles or other assets of any
Grantor (whether owned or held as licensee or lessee, or otherwise), to the
extent that (i) such general intangibles or assets are not assignable or capable
of being encumbered as a matter of law or under the terms of the license, lease
or other agreement applicable thereto (but solely to the extent that any such
restriction shall be enforceable under applicable law), without the consent of
the licensor or lessor thereof or

 

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other applicable party thereto and (ii) such consent has not been obtained;
provided, however, that the foregoing grant of security interest shall extend
to, and the term “Collateral” shall include, (A) any general intangible or asset
that is an account receivable or a proceed of, or otherwise related to the
enforcement or collection of, any account receivable, or goods that are the
subject of any account receivable; (B) any and all proceeds of any general
intangibles or assets that are otherwise excluded to the extent that the
assignment or encumbrance of such proceeds is not so restricted; and (C) upon
obtaining the consent of any such licensor, lessor or other applicable party’s
consent with respect to any such otherwise excluded general intangibles or
assets, such general intangibles and assets as well as any and all proceeds
thereof that might have theretofore have been excluded from such grant of a
security interest and the term “Collateral.”

(d) Notwithstanding the foregoing provisions of this Section 2, the grant of a
security interest as provided herein shall not extend to, and the term
“Collateral” shall not include more than 65% of the total outstanding Foreign
Subsidiary Voting Stock of any Foreign Subsidiary.

(e) This Agreement shall create a continuing security interest in the Collateral
that shall remain in effect until terminated in accordance with Section 18
hereof.

Section 3. Pledge of Pledged Collateral.

(a) Each Grantor hereby assigns and pledges to the Collateral Agent, its
successors and assigns, for the ratable benefit of the Secured Parties, a
security interest in, all of such Grantor’s right, title and interest in, to and
under (i) the Pledged Stock; (ii) subject to Section 9(d), all payments of
dividends, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of, in exchange for or upon
conversion of, and all other Proceeds received in respect of the Pledged Stock;
(iii) subject to Section 9(d), all rights and privileges of such Grantor with
respect to the securities and other property referred to in clauses (i) and
(ii) above; and (iv) all Proceeds of any of the foregoing (the items in clauses
(i) through (iv) above being collectively referred to as the “Pledged
Collateral”);

(b) Each Grantor agrees to promptly deliver or cause to be delivered to the
Collateral Agent any and all Pledged Stock. Upon delivery to the Collateral
Agent, (i) any Pledged Stock shall be accompanied by stock powers duly executed
in blank or other instruments of transfer satisfactory to the Collateral Agent
and by such other instruments and documents as the Collateral Agent may
reasonably request and (ii) all other property comprising part of the Pledged
Collateral shall be accompanied by proper instruments of assignment duly
executed by the applicable Grantor and such other instruments or documents as
the Collateral Agent may reasonably request. Each delivery of Pledged Stock
shall be accompanied by a schedule describing the securities, which schedule
shall be attached hereto as Schedule 1 and made a part hereof; provided that the
failure to attach any such schedule hereto shall not affect the validity of such
pledge of such Pledged Collateral. Each schedule so delivered shall supplement
any prior schedules so delivered. In the event that any Grantor shall deliver
Pledged Stock representing more than 65% of the total outstanding Foreign
Subsidiary Voting Stock of any Foreign Subsidiary, such Grantor shall be deemed
to have pledged and delivered 65% of the total outstanding Foreign Subsidiary
Voting Stock of such Foreign Subsidiary.

 

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Section 4. Collateral Agent and Indemnification.

(a) Each of the Secured Parties, by signing below or by its acceptance of the
benefits of this Agreement, hereby appoints Arcion Therapeutics, Inc. as
“Collateral Agent.” Nothing in this Agreement shall restrict or prevent the
Collateral Agent from being a Secured Party. In its capacity as a Secured Party,
the Collateral Agent shall have the same rights and powers under this Agreement,
the Purchase Agreement and the Related Documents as any other Secured Party and
may exercise the same as though it were not the Collateral Agent. In this
regard, the term “Secured Party” shall, unless otherwise expressly indicated,
include the Collateral Agent in its individual capacity. The Collateral Agent
shall receive no compensation but shall be entitled to reimbursement of expenses
and indemnification as set forth herein. The Collateral Agent’s duties and
obligations shall commence as of the first day a Note is executed by Anesiva in
favor of any Secured Party. Each Secured Party hereby authorizes the Collateral
Agent to take such action as agent on its behalf and to exercise such powers and
perform such duties under this Agreement, the Purchase Agreement and the Related
Documents as are delegated to the Collateral Agent by the terms hereof or
thereof, together with such powers as are reasonably incidental thereto. The
duties and obligations of the Collateral Agent are strictly limited to those
expressly provided for herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or otherwise exist against the Collateral Agent. Notwithstanding
anything to the contrary contained herein, the Collateral Agent shall not be
required to take any action that is contrary to this Agreement, the Purchase
Agreement, the Related Documents or applicable law.

(b) The Collateral Agent is hereby appointed as agent and attorney-in-fact and
is authorized on behalf of each of the Secured Parties and at the direction of
the Majority Secured Parties to: (i) exercise or refrain from exercising any
rights, remedies or powers of the Secured Parties under applicable law in
respect of the Notes or all or any portion of any Collateral; (ii) sell,
release, surrender, realize upon or otherwise deal with, in any manner and in
any order, all or any portion of any Collateral; (iii) make any demands or give
any notices under or in connection with this Agreement, the Purchase Agreement
and the Related Documents; (iv) distribute payments to the Secured Parties of
amounts paid to it by any Grantor or received by it in connection with the
Collateral; (v) receive and hold on behalf of the Secured Parties any
instruments or other possessory Collateral; and (vi) engage, replace, instruct
and remunerate on behalf of the Secured Parties consultants, experts, counsel
and other persons to be engaged by the Collateral Agent or the Secured Parties,
including legal counsel for the Collateral Agent or the Secured Parties. As to
the exercise of any of its powers and discharge of any of its duties, the
Collateral Agent shall be entitled to obtain instructions of the Majority
Secured Parties, and shall be fully protected in acting or refraining from
acting upon such instructions and such instructions shall be binding upon all
Secured Parties. Except for actions expressly required of the Collateral Agent
hereunder, the Collateral Agent shall in all cases be fully justified in failing
or refusing to act under this Agreement, the Purchase Agreement and the Related
Documents unless it shall be indemnified to its satisfaction by the Secured
Parties against any and all liability and expense that may be incurred by reason
of taking or continuing to take any such action, and the Collateral Agent shall
not in any event be required to take any action that exposes the Collateral
Agent to liability or that is contrary to this Agreement, the Purchase
Agreement, the Related Documents or applicable law.

 

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(c) The Collateral Agent shall hold the Collateral for the ratable benefit of
Secured Parties in accordance with their Pro Rata Shares. Distribution of
Collateral or any and all proceeds of any of the Collateral shall be made in
accordance with Secured Parties respective Pro Rata Shares.

(d) Neither the Collateral Agent nor any of its directors, officers, employees
or agents shall be responsible to any Secured Party for any action taken or
omitted to be taken by it or them hereunder or in connection herewith, except in
the case of gross negligence or willful misconduct. The Collateral Agent may
rely upon any notice, consent, certificate, telegram, facsimile, telex or
teletype message, statement or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties or by acting upon any
representation or warranty made or deemed to be made hereunder or under any
other Related Document. The Collateral Agent shall use the level of care it uses
with respect to its own property of a similar nature to assure the safe custody
of the Collateral in its possession. Beyond the exercise of such level of care
to assure the safe custody of the Collateral in its possession as the Collateral
Agent, and the accounting for any monies actually received by the Collateral
Agent in such capacity, the Collateral Agent shall have no duty or liability to
exercise or preserve any rights, privileges and powers pertaining to the
Collateral.

(e) The Secured Parties hereby agree to indemnify the Collateral Agent, and any
affiliates, directors, officers, employees, partners, members, agents, counsel
and other advisors (collectively, the “Related Persons”) of the Collateral Agent
ratably in accordance with their Pro Rata Share, against and hold each of them
harmless from any and all liabilities, obligations, losses, claims, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever, including the fees and disbursements of counsel to
the Collateral Agent (collectively, the “Liabilities”), that may be imposed on,
incurred by or asserted against the Collateral Agent or any such Related Person
to be indemnified, in any way relating to or arising out of this Agreement, the
Purchase Agreement or the Related Documents or any action taken or omitted by
the Collateral Agent or other such Related Person to be indemnified in
connection with any of the foregoing, unless such Liabilities shall be caused by
the willful misconduct or gross negligence of the Collateral Agent.

(f) The Collateral Agent may, in its discretion, employ from time to time one or
more agents or attorneys-in-fact (including any of the Collateral Agent’s
affiliates) to perform any of the Collateral Agent’s duties under this
Agreement, the Purchase Agreement and the Related Documents. The Collateral
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

(g) Subject to the appointment and acceptance of a successor Collateral Agent as
provided below, the Collateral Agent may resign at any time by giving five
(5) Business Days’ written notice thereof to the Secured Parties and the
Grantors. Upon any such resignation, the Majority Secured Parties shall have the
right to appoint a successor Collateral Agent from among the Secured Parties,
and the Secured Parties shall use their best efforts so to appoint a successor
Collateral Agent. The Grantors shall promptly execute all documents and
instruments necessary to convey all rights and interests under this Agreement
and related documents and instruments to any successor Collateral Agent. If no
successor Collateral Agent shall have been so appointed by the Majority Secured
Parties, and shall have accepted

 

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such appointment, prior to the effective date of the retiring Collateral Agent’s
resignation, the retiring Collateral Agent may, on behalf of the Secured
Parties, appoint a successor Collateral Agent from among the Secured Parties.
Upon the effectiveness of the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges,
duties and obligations of the retiring Collateral Agent, and the retiring
Collateral Agent shall be discharged from its duties and obligations under this
Agreement, the Purchase Agreement and the Related Documents. After any retiring
Collateral Agent’s resignation hereunder as Collateral Agent, the provisions of
this Section 4 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Collateral Agent under this Agreement, the Purchase
Agreement and the Related Documents.

Section 5. Financing Statements; Further Assurances.

(a) Pursuant to any applicable law, each Grantor authorizes the Collateral Agent
to file or record financing statements and other filing or recording documents
or instruments with respect to the Collateral without the signature of such
Grantor in such form and in such offices as the Collateral Agent determines
appropriate to perfect the security interests granted hereby. Each Grantor
authorizes the Collateral Agent to use the collateral description “all personal
property” or “all assets” in any such financing statements. Each Grantor hereby
ratifies and authorizes the filing by the Collateral Agent of any financing
statement with respect to the Collateral made prior to the date hereof.

(b) Upon request to a Grantor by the Collateral Agent, at any time following the
execution of this Agreement, and at any time and from time to time thereafter,
each Grantor shall promptly execute, acknowledge and deliver, or cause the
execution acknowledgment and delivery of, and, as applicable, thereafter
register, file or record, or cause to be registered, filed or recorded, all
financing statements, assignments, continuation financing statements,
termination statements, account control agreements, intellectual property
security agreements and other documents and instruments, in form reasonably
satisfactory to the Collateral Agent, and take all other action, as the
Collateral Agent may reasonably request, including, without limitation, the
provision of assistance in the preparation of any of the aforementioned
documents and instruments and the filing of intellectual property security
agreements with the United States Patent and Trademark Office and the United
States Copyright Office, to perfect and continue perfected, maintain the
priority of or provide notice of the security interest of the Collateral Agent
in the Collateral subject to no Liens other than Permitted Liens and to
accomplish the purposes of this Agreement. Without limiting the generality of
the foregoing, each Grantor will: (a) (i) execute (if necessary) and file such
financing or continuation statements, or amendments thereto, (ii) execute and
deliver, and cause to be executed and delivered, agreements establishing that
the Collateral Agent has control of deposit accounts and Investment Property of
such Grantor and (iii) deliver such instruments or notices, in each case, as may
be necessary or desirable, or as Collateral Agent may request, in order to
perfect and preserve the security interests granted or purported to be granted
hereby; (b) furnish to the Collateral Agent from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail; (c) at any reasonable time, upon request by
the Collateral Agent, exhibit the Collateral to and allow inspection of the

 

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Collateral by the Collateral Agent, or persons designated by the Collateral
Agent; (d) at Collateral Agent’s request, appear in and defend any action or
proceeding that may affect such Grantor’s title to or the Collateral Agent’s
security interest in all or any part of the Collateral; and (e) use commercially
reasonable efforts to obtain any necessary consents of third parties to the
creation and perfection of a security interest in favor of the Collateral Agent
with respect to any Collateral. Upon the exercise by the Collateral Agent or the
Secured Parties of any power, right, privilege or remedy pursuant to this
Security Agreement, the Purchase Agreement or the Related Documents which
requires any consent, approval, registration, qualification or authorization of
any governmental authority, Grantor and each of its Subsidiaries shall execute
and deliver all applications, certifications, instruments and other documents
and papers that the Collateral Agent or the Secured Parties may be so required
to obtain.

Section 6. Representations and Warranties. To induce the Collateral Agent and
the Secured Parties to enter into the Purchase Agreement and to induce the
Investors to make their respective extensions of credit to Anesiva thereunder,
each Grantor hereby, jointly and severally, represents and warrants to the
Collateral Agent and each other Secured Party that:

(a) The Grantor is a corporation duly organized, validly existing and in good
standing under the law of the jurisdiction of its incorporation and has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement.

(b) All corporate action on the part of the Grantors, their officers, directors
and stockholders necessary for the authorization, execution and delivery of this
Agreement, the Purchase Agreement and the Related Documents, the performance of
all obligations of the Grantors hereunder and thereunder and the authorization,
issuance and delivery of the Notes has been taken or will be taken prior to the
Initial Closing, and this Agreement, the Purchase Agreement and the Related
Documents, when executed and delivered by the Grantors, shall constitute valid
and legally binding obligations of the Grantors, enforceable against the
Grantors in accordance with their terms except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other laws of general application affecting enforcement of creditors’ rights
generally and as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.

(c) No consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any foreign, federal,
state or local governmental authority or any third party on the part of the
Grantors is required in connection with the consummation of the transactions
(including the granting of the security interest in the Collateral, the
perfection of such security interest (to the extent such security interest can
be perfected by filing under the UCC, the granting of control (to the extent
required under section 7(h) hereof) or by filing appropriate documents with the
United States Patent and Trademark Office or the United States Copyright Office)
and the exercise of the rights and remedies thereunder) contemplated by the
Purchase Agreement and the Related Documents, except for (i) filings pursuant to
applicable state securities laws and Regulation D of the Securities Act of 1933,
as amended, which filings will be effected within the time prescribed by law and
(ii) the filing or recording of UCC financing statements, the filing of
appropriate documentation with the United States Patent and Trademark Office and
the United States Copyright Office, obtaining control to perfect the Liens
created by this Agreement (to the extent required under Section 7(h) hereof),
such actions as may be required by applicable foreign Laws affecting the pledge
of the Pledged Equity of Foreign Subsidiaries and foreign Copyrights, Trademarks
and Patents and consents, authorizations, filings or other actions which have
been obtained or made.

 

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(d) Each Grantor’s chief executive offices and principal places of business are
located at the addresses set forth in Schedule 1; all other locations where each
of the Grantors conduct business or the Collateral is kept are set forth in
Schedule 3; and all trade names and fictitious names under which each of the
Grantors at any time in the past have conducted or presently conduct their
business operations are set forth in Schedule 1.

(e) Each of the Grantor’s U.S. and foreign patents and patent applications,
registered copyrights, applications for copyright, trademarks, service marks and
trade names (whether registered or unregistered), and applications for
registration of such trademarks, service marks and trade names, are set forth in
Schedule 2.

(f) (i) This Agreement creates a first priority security interest in favor of
the Collateral Agent, for the benefit of the Secured Parties, that is
enforceable against the Collateral in which the Grantors now have rights and
will create a security interest that is enforceable against the Collateral in
which the Grantors hereafter acquire rights at the time any Grantor acquires any
such rights and (ii) the Secured Parties have a perfected and first priority
security interest in the Collateral in which the Grantors now have rights, and
will have a perfected and first priority security interest in the Collateral in
which the Grantors hereafter acquire rights at the time any Grantor acquires any
such rights, in each case securing the payment and performance of the
Obligations, free and clear of all Liens except in each case for Permitted
Liens.

(g) The names and addresses of all financial institutions at which any Grantor
maintains its deposit accounts, and the account numbers and account names of
such deposit accounts, are set forth in Schedule 1.

(h) All securities accounts of the Grantors and other Investment Property of the
Grantors are set forth in Schedule 1. No account control agreements exist with
respect to any Investment Property other than any account control agreements in
favor of the Secured Parties.

(i) The Grantors have the right and power to pledge, sell, assign and transfer
the Collateral, and the Grantors are the sole and complete legal and beneficial
owners of the Collateral, free from any Lien other than Permitted Liens. There
exists no adverse claim with respect to the Pledged Stock of any Grantor.

(j) (i) The shares of Pledged Stock pledged by any Grantor hereunder constitute
all the issued and outstanding shares of all classes of the Capital Stock of
each Issuer owned by such Grantor or, in the case of a Foreign Subsidiary Voting
Stock, if less, 65% of the outstanding Foreign Subsidiary Voting Stock of each
relevant Issuer.

(ii) All the shares of the Pledged Stock have been duly and validly issued and
are fully paid and nonassessable and is not subject to the preemptive rights of
any Person.

 

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(iii) Schedule 1 correctly sets forth the percentage of the issued and
outstanding shares of each class of Capital Stock of the Issuer thereof
represented by such Pledged Stock.

(iv) Such Grantor is the record and beneficial owner of, and has good and
marketable title to, the Investment Property pledged by it hereunder, free of
any and all Liens or options in favor of, or claims of, any other Person.

(v) Except for restrictions and limitations imposed by the Purchase Agreement,
the Related Documents or securities laws generally, the Pledged Stock is and
will continue to be freely transferable and assignable, and none of the Pledged
Collateral is or will be subject to any option, right of first refusal,
shareholders agreement, charter or by-law provisions or contractual restriction
of any nature that might prohibit, impair, delay or otherwise affect the pledge
of such Pledged Collateral hereunder, the sale or disposition thereof pursuant
hereto or the exercise by the Collateral Agent of rights and remedies hereunder.

(vi) By virtue of the execution and delivery by the Grantors of this Agreement,
when any Pledged Stock is delivered to the Collateral Agent in accordance with
this Agreement, the Collateral Agent will obtain a legal, valid and perfected
first priority lien upon and security interest in such Pledged Stock as security
for the payment and performance of the Obligations.

(vii) The pledge effected hereby is effective to vest in the Collateral Agent,
for the benefit of the Secured Parties, the rights of the Collateral Agent in
the Pledged Collateral as set forth herein.

(k) As of the time any Receivable owned by a Grantor becomes subject to the
security interest provided for hereby, and at all times thereafter, such Grantor
shall be deemed to have represented and warranted as to each and all of such
Receivables that:

(i) all representations and warranties of such Grantor set forth in this
Agreement are true and correct in all material respects with respect to each
such Receivable;

(ii) each Receivable represents a bona fide transaction completed in accordance
with the terms and provisions contained in the invoices and other documents
evidencing the same in all material respects, and all such invoices and other
documents relating thereto are genuine and in all material respects what they
purport to be;

(iii) each Receivable is valid and subsisting; that no amount payable to such
Grantor under or in connection with any Receivable is evidenced by any
Instrument or Chattel Paper which has not been delivered to the Collateral Agent
to the extent required by Section 7(h);

(iv) the amount of such Receivable represented as owing is not disputed and is
not subject to any set-offs, credits, deductions or countercharges other than
those arising in the ordinary course of business; and

 

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(v) the goods giving rise to Receivables are not subject to any Lien, except in
favor of the Collateral Agent and the Secured Parties and except as permitted by
the Purchase Agreement and the Related Documents.

(l) As of the Closing Date, no Obligor has any Commercial Tort Claims.

(m) With respect to any equipment and/or inventory of a Grantor, each such
Grantor has exclusive possession and control (including through rented space in
a warehouse) of such equipment and inventory of such Grantor except for
(i) equipment leased by such Grantor as a lessee or (ii) equipment or inventory
in transit with common carriers. No inventory of a Grantor is held by a Person
other than a Grantor pursuant to consignment, sale or return, sale on approval
or similar arrangement.

Section 7. Covenants. So long as any of the Obligations remain unsatisfied, each
Grantor agrees that:

(a) Such Grantor shall appear in and defend any action, suit or proceeding that
may affect to a material extent its title to, or right or interest in, or
Collateral Agent’s right or interest in, the Collateral, and shall do and
perform all reasonable acts that may be necessary and appropriate to maintain,
preserve and protect in all material respects the Collateral.

(b) Such Grantor shall comply in all material respects with all laws,
regulations and ordinances, and all policies of insurance, relating in a
material way to the possession, operation, maintenance and control of the
Collateral.

(c) Such Grantor shall give prompt written notice to the Collateral Agent (and
in any event not later than ten (10) days prior to any change described below in
this subsection) of: (i) any change in the location of a Grantor’s chief
executive office or principal place of business; (ii) any change in the
locations set forth in Schedule 1 or Schedule 3; (iii) any change in its name;
(iv) any changes in, additions to or other modifications of its trade names and
trade styles set forth in Schedule 1 or Schedule 2; and (v) any changes in its
identity or structure, including its jurisdiction of organization, in any manner
that might make any financing statement filed hereunder incorrect or misleading.

(d) Such Grantor shall carry and maintain in full force and effect, at its own
expense and with financially sound and reputable insurance companies, insurance
with respect to the Collateral in such amounts, with such deductibles and
covering such risks as is customarily carried by companies engaged in the same
or similar businesses and owning similar properties in the localities where such
Grantor operates.

(e) Such Grantor shall not surrender or lose possession of (other than to the
Collateral Agent), sell, lease, rent or otherwise dispose of or transfer any of
the Collateral or any right or interest therein, except in the ordinary course
of business; provided that no such disposition or transfer of Collateral
consisting of Investment Property or instruments shall be permitted while any
Event of Default exists.

 

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(f) Such Grantor shall keep the Collateral free of all Liens except Permitted
Liens.

(g) Such Grantor shall maintain and preserve its corporate existence, its rights
to transact business and all other rights, franchises and privileges necessary
or reasonably desirable in the normal course of its business and operations and
the ownership of the Collateral, except in connection with any transactions
expressly permitted by the Purchase Agreement or the Related Documents.

(h) Such Grantor shall (i) immediately deliver to the Collateral Agent
appropriately endorsed or accompanied by appropriate instruments of transfer or
assignment, all documents and instruments, all certificated securities with
respect to any Investment Property, all letters of credit and all accounts and
other rights to payment at any time evidenced by promissory notes, trade
acceptances or other instruments; (ii) cause any securities intermediaries to
show on their books that the Collateral Agent is the entitlement holder with
respect to any Investment Property, and/or upon the request of the Collateral
Agent obtain account control agreements in favor of the Collateral Agent from
such securities intermediaries, in form and substance satisfactory to the
Collateral Agent with respect to any Investment Property; (iii) mark all
documents and chattel paper with such legends as the Collateral Agent shall
reasonably specify; and (iv) obtain consents from any letter of credit issuers
with respect to the assignment to the Collateral Agent of any letter of credit
proceeds.

(i) If and when such Grantor shall obtain rights to any material new patents,
trademarks, service marks, trade names, mask works or copyrights, or otherwise
acquire or become entitled to the benefit of, or apply for registration of, any
of the foregoing, such Grantor (i) shall promptly notify the Collateral Agent
thereof and (ii) hereby authorizes the Collateral Agent to modify, amend or
supplement Schedule 2 and from time to time to include any of the foregoing and
make all necessary or appropriate filings with respect to the perfection of any
security interest therein granted pursuant to this Agreement.

(j) The Grantor shall promptly notify the Collateral Agent of the establishment
of any deposit account or other bank account.

(k) (i) If such Grantor shall become entitled to receive or shall receive any
certificate (including, without limitation, any certificate representing a
dividend or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights in respect of the Capital Stock of any Issuer,
whether in addition to, in substitution of, as a conversion of, or in exchange
for, any shares of the Pledged Stock, or otherwise in respect thereof, such
Grantor shall accept the same as the agent of the Collateral Agent and the
Secured Parties, hold the same in trust for the Collateral Agent and the Secured
Parties and deliver the same forthwith to the Collateral Agent in the exact form
received, duly indorsed by such Grantor to the Collateral Agent, if required,
together with an undated stock power covering such certificate duly executed in
blank by such Grantor and with, if the Collateral Agent so requests, signature
guaranteed, to be held by the Collateral Agent, subject to the terms hereof, as
additional collateral security for the Obligations; provided that,
notwithstanding anything in the foregoing to the contrary, no Grantor shall be
required to deliver certificates evidencing more than 65% of the total
outstanding

 

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Foreign Subsidiary Voting Stock. Any sums paid upon or in respect of the
Investment Property upon the liquidation or dissolution of any Issuer shall be
paid over to the Collateral Agent to be held by it hereunder as additional
collateral security for the Obligations, and in case any distribution of capital
shall be made on or in respect of the Investment Property, or any property shall
be distributed upon or with respect to the Investment Property pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant to
the reorganization thereof, the property so distributed shall, unless otherwise
subject to a perfected security interest in favor of the Collateral Agent, be
delivered to the Collateral Agent to be held by it hereunder as additional
collateral security for the Obligations. If any sums of money or property so
paid or distributed in respect of the Investment Property shall be received by
such Grantor, such Grantor shall, until such money or property is paid or
delivered to the Collateral Agent, hold such money or property in trust for the
Secured Parties, segregated from other funds of such Grantor, as additional
collateral security for the Obligations.

(ii) Without the prior written consent of the Collateral Agent, such Grantor
will not (i) vote to enable, or take any other action to permit, any Issuer to
issue any stock or other equity securities of any nature or to issue any other
securities convertible into or granting the right to purchase or exchange for
any stock or other equity securities of any nature of any Issuer, unless such
securities are delivered to the Collateral Agent, concurrently with the issuance
thereof, to be held by the Collateral Agent as Collateral, (ii) sell, assign,
transfer, exchange or otherwise dispose of, or grant any option with respect to,
the Investment Property or Proceeds thereof (except pursuant to a transaction
expressly permitted by the Purchase Agreement), (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Investment Property or Proceeds thereof, or any interest therein,
except for Permitted Liens or (iv) enter into any agreement or undertaking
restricting the right or ability of such Grantor or the Collateral Agent to
sell, assign or transfer any of the Pledged Collateral.

(iii) In the case of each Grantor which is an Issuer, such Issuer agrees that
(i) it will be bound by the terms of this Agreement relating to the Pledged
Stock issued by it and will comply with such terms insofar as such terms are
applicable to it, (ii) it will notify the Collateral Agent promptly in writing
of the occurrence of any of the events described in Section 7(k)(i) with respect
to the Pledged Stock issued by it and (iii) the terms of Sections 9(d) and 9(e)
shall apply to it, mutatis mutandis, with respect to all actions that may be
required of it pursuant to Sections 9(d) or 9(e) with respect to the Pledged
Stock issued by it.

(iv) Each interest in any limited liability company or partnership controlled by
any Grantor and pledged hereunder shall be represented by a certificate, shall
be a “security” within the meaning of Article 8 of the UCC and shall be governed
by the UCC.

(l) Such Grantor shall pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, services, materials and supplies) against, the
Collateral except to the extent the validity thereof is being contested in good
faith; provided that such Grantor shall in any event pay such taxes,
assessments, charges, levies or claims not later than five days prior to the
date of any proposed sale under any judgment, writ or warrant of attachment
entered or filed against such Grantor or any of the Collateral as a result of
the failure to make such payment.

 

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(m) Such Grantor shall permit representatives of the Collateral Agent at any
time during normal business hours to inspect and make abstracts from records of
the Collateral, and each Grantor agrees to render to the Collateral Agent, at
such Grantor’s cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto.

Section 8. Authorization; Collateral Agent Appointed Attorney-in-Fact. The
Collateral Agent shall have the right to, in the name of any Grantor, or in the
name of the Secured Parties or the Collateral Agent or otherwise, and each
Grantor hereby constitutes and appoints the Collateral Agent (and any of the
Collateral Agent’s officers, employees or agents designated by the Collateral
Agent) as such Grantor’s true and lawful attorney-in-fact, with full power and
authority to in the place and stead of such Grantor, from time to time in the
Collateral Agent’s discretion to take any action and to execute any instrument
that the Collateral may deem necessary or advisable to maintain, realize upon
and preserve the Collateral and the Collateral Agent’s security interest, on
behalf of the Secured Parties, therein and to accomplish the purposes of this
Agreement, including, without limitation:

(a) upon the occurrence and during the continuance of an Event of Default, to
obtain and adjust any insurance required to be maintained by such Grantor;

(b) upon the occurrence and during the continuance of an Event of Default, to
ask for, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral;

(c) upon the occurrence and during the continuance of an Event of Default, to
receive, endorse and collect any drafts or other instruments, chattel paper and
other documents in connection with clauses (a) and (b) above;

(d) upon the occurrence and during the continuance of an Event of Default, to
file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce or protect the rights of a Secured Party
with respect to any of the Collateral;

(e) to pay or discharge liens (other than liens permitted under this Agreement
or the Purchase Agreement) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Collateral Agent in its sole
discretion, any such payments made by the Collateral Agent to become obligations
of such Grantor to the Collateral Agent, due and payable immediately without
demand;

(f) upon the occurrence and during the continuance of an Event of Default, to
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other documents
relating to the Collateral; and

 

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(g) upon the occurrence and during the continuance of an Event of Default,
generally to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Collateral Agent were the absolute owner thereof for all purposes, and to do, at
the Collateral Agent’s option and the Grantors’ expense, at any time or from
time to time, all acts and things that the Collateral Agent deems necessary to
protect, preserve or realize upon the Collateral and the Collateral Agent’s
security interest therein in order to effect the intent of this Agreement, all
as fully and effectively as such Grantor might do.

The foregoing power of attorney is coupled with an interest and irrevocable so
long as the Obligations have not been paid in full in cash and performed in
full. Each Grantor hereby ratifies, to the extent permitted by law, all that the
Collateral Agent shall lawfully and in good faith do or cause to be done by
virtue of and in compliance with this Section 8.

Section 9. Remedies.

(a) In addition to all other rights and remedies granted to it in this
Agreement, the Purchase Agreement or any of the Related Documents, each Secured
Party, through the Collateral Agent, shall be entitled to all rights and
remedies of a secured party under the UCC (whether or not the UCC applies to the
affected Collateral) and other applicable laws. Without limiting the generality
of the foregoing, the Collateral Agent, at its sole discretion, may (i) require
each Grantor to, and each Grantor hereby agrees that it will at its expense and
upon request of the Collateral Agent forthwith, assemble all or part of the
Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent the Collateral Agent deems appropriate,
(iv) consistent with commercial reasonableness, take possession of any Grantor’s
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any of such Grantor’s equipment for the purpose of
completing any work in process, taking any actions described in the preceding
clause (iii) and collecting any obligation and (v) sell, resell, lease, use,
assign, license, sublicense, transfer or otherwise dispose of any or all of the
Collateral in its then condition or following any commercially reasonable
preparation or processing (utilizing in connection therewith any of the
Grantors’ assets, without charge or liability to the Secured Parties therefor)
at public or private sale, by one or more contracts, in one or more parcels, at
the same or different times, for cash or credit, or for future delivery without
assumption of any credit risk; provided, however, that the Grantors shall be
credited with the net proceeds of sale only when such proceeds are finally
collected by the Collateral Agent. The Collateral Agent shall have the right
upon any such public sale, and, to the extent permitted by law, upon any such
private sale, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption, which right or equity of redemption the
Grantors hereby release, to the extent permitted by law. Each of the Secured
Parties hereby authorizes the Collateral Agent to credit bid all or any part of
the Obligations owed to such Secured Party. The Collateral Agent shall make such
bids in accordance with each Secured Party’s Pro Rata Share and shall hold any
Collateral so acquired in trust on behalf of the Secured Parties in accordance
with their respective Pro Rata Shares. The Grantors hereby agree that the
sending of notice by

 

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ordinary mail, postage prepaid, to the address of the Grantors set forth herein,
of the place and time of any public sale or of the time after which any private
sale or other intended disposition is to be made, shall be deemed reasonable
notice thereof if such notice is sent ten (10) Business Days prior to the date
of such sale or other disposition or the date on or after which such sale or
other disposition may occur, provided that the Collateral Agent may provide the
Grantors shorter notice or no notice, to the extent permitted by the UCC or
other applicable law.

(b) Solely for the purpose of enabling the Collateral Agent to exercise its
rights and remedies under this Agreement, effective upon the occurrence and
during the continuance of an Event of Default, the Grantors hereby grant the
Collateral Agent an irrevocable, non-exclusive and assignable license
(exercisable without payment or royalty or other compensation to the Grantors)
to use, license or sublicense any of the Collateral.

(c) The cash proceeds actually received from the sale or other disposition or
collection of the Collateral and any other amounts received in respect of the
Collateral or the application of which is not otherwise provided for herein,
shall be applied first, to the payment of the reasonable costs and expenses of
the Collateral Agent (including the reasonable costs and expenses of legal
counsel) in exercising or enforcing its rights hereunder and in collecting or
attempting to collect any of the Collateral; and second, to the payment of the
Obligations. Any surplus thereof that exists after payment and performance in
full of the Obligations shall be promptly paid over to the Grantors or otherwise
disposed of in accordance with the UCC or other applicable law. The Grantors
shall remain liable to the Collateral Agent and the Secured Parties for any
deficiency that exists after any sale or other disposition or collection of the
Collateral.

(d) (i) Unless an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have given notice to the relevant Grantor of the
Collateral Agent’s intent to exercise its corresponding rights pursuant to
Section 9(d)(ii), each Grantor shall be permitted to receive all cash dividends
paid in respect of the Pledged Stock paid in the normal course of business of
the relevant Issuer and consistent with past practice, to the extent permitted
in the Purchase Agreement, and to exercise all voting and corporate rights with
respect to the Pledged Collateral; provided, however, that no vote shall be cast
or corporate right exercised or other action taken which, in the Collateral
Agent’s reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Purchase
Agreement, this Agreement or any Related Document.

(ii) If an Event of Default shall occur and be continuing and the Collateral
Agent shall give notice of its intent to exercise such rights to the relevant
Grantor or Grantors, (i) the Collateral Agent shall have the right to receive
any and all cash dividends, payments or other Proceeds paid in respect of the
Pledged Collateral and make application thereof to the Obligations in the order
set forth in Section 9(c) and (ii) any or all of the Pledged Collateral shall be
registered in the name of the Collateral Agent or its nominee, and the
Collateral Agent or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Pledged Collateral at any meeting
of stockholders of the relevant Issuer or Issuers or otherwise and (y) any and
all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Pledged Collateral as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of

 

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the Pledged Collateral upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by any Grantor or the Collateral Agent of any
right, privilege or option pertaining to such Pledged Collateral, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Collateral with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Agent may
determine), all without liability except to account for property actually
received by it, but the Collateral Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for
any failure to do so or delay in so doing.

(iii) Each Grantor hereby authorizes and instructs each Issuer of any Pledged
Collateral pledged by such Grantor hereunder to (i) comply with any instruction
received by it from the Collateral Agent in writing that (x) states that an
Event of Default has occurred and is continuing and (y) is otherwise in
accordance with the terms of this Agreement, without any other or further
instructions from such Grantor, and each Grantor agrees that each Issuer shall
be fully protected in so complying and (ii) unless otherwise expressly permitted
hereby, pay any dividends or other payments with respect to the Pledged
Collateral directly to the Collateral Agent.

(e) (i) If the Collateral Agent shall determine to exercise its right to sell
any or all of the Pledged Stock pursuant to Section 9(a), and if in the opinion
of the Collateral Agent it is necessary or advisable to have the Pledged Stock,
or that portion thereof to be sold, registered under the provisions of the
Securities Act of 1933, as amended, the relevant Grantor will cause the Issuer
thereof to (i) execute and deliver, and cause the directors and officers of such
Issuer to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts as may be, in the opinion of the Collateral
Agent, necessary or advisable to register the Pledged Stock, or that portion
thereof to be sold, under the provisions of the Securities Act of 1933, as
amended, (ii) use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of one year
from the date of the first public offering of the Pledged Stock, or that portion
thereof to be sold, and (iii) make all amendments thereto and/or to the related
prospectus which, in the opinion of the Collateral Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act of
1933, as amended, and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Each Grantor agrees to cause such Issuer to
comply with the provisions of the securities or “Blue Sky” laws of any and all
jurisdictions that the Collateral Agent shall designate and to make available to
its security holders, as soon as practicable, an earnings statement (which need
not be audited) which will satisfy the provisions of Section 11(a) of the
Securities Act of 1933, as amended.

(ii) Each Grantor recognizes that the Collateral Agent may be unable to effect a
public sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers that will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such

 

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circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Collateral Agent shall be under no
obligation to delay a sale of any of the Pledged Stock for the period of time
necessary to permit the Issuer thereof to register such securities for public
sale under the Securities Act of 1933, as amended, or under applicable state
securities Laws, even if such Issuer would agree to do so.

(iii) Each Grantor agrees to use its best efforts to do or cause to be done all
such other acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Stock pursuant to this Section 9(e) valid and binding and
in compliance with any and all other applicable laws. Each Grantor further
agrees that a breach of any of the covenants contained in this Section 9(e) will
cause irreparable injury to the Collateral Agent and the Secured Parties, that
the Collateral Agent and the Secured Parties have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this Section 9(e) shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Purchase Agreement.

(f) The Collateral Agent hereby authorizes each Grantor to collect such
Grantor’s Receivables, subject to the Collateral Agent’s direction and control
after the occurrence and during the continuance of an Event of Default, and the
Collateral Agent may curtail or terminate said authority at any time after the
occurrence and during the continuance of an Event of Default. If required by the
Collateral Agent at any time after the occurrence and during the continuance of
an Event of Default, any payments of Receivables, when collected by any Grantor,
(i) shall be forthwith (and, in any event, within two Business Days) deposited
by such Grantor in the exact form received, duly indorsed by such Grantor to the
Collateral Agent if required, in a collateral account maintained under the sole
dominion and control of the Collateral Agent, subject to withdrawal by the
Collateral Agent for the account of the Secured Parties at its discretion, and
(ii) until so turned over, shall be held by such Grantor in trust for the
Collateral Agent and the Secured Parties, segregated from other funds of such
Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments
included in the deposit.

(g) At any time after the occurrence and during the continuance of an Event of
Default, at the Collateral Agent’s request, each Grantor shall deliver to the
Collateral Agent all original and other documents evidencing, and relating to,
the agreements and transactions that gave rise to the Receivables, including,
without limitation, all original orders, invoices and shipping receipts.

(h) At any time after the occurrence and during the continuance of an Event of
Default, each Grantor will cooperate with the Collateral Agent to establish a
system of lockbox accounts, under the sole dominion and control of the
Collateral Agent, into which all Receivables shall be paid and from which all
collected funds will be transferred to a Collateral Account.

 

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(i) Upon the request of the Collateral Agent at any time after the occurrence
and during the continuance of an Event of Default, each Grantor hereby
authorizes the Collateral Agent to notify each obligor on the Receivables that
the Receivables have been assigned to the Collateral Agent for the ratable
benefit of the Secured Parties as Collateral hereunder and to instruct such
obligor to make all payments in respect thereof directly to the Collateral Agent
or to the Collateral Account or as otherwise directed by the Collateral Agent.

Section 10. Certain Waivers. Each Grantor waives, to the fullest extent
permitted by law, (i) any right of redemption with respect to the Collateral,
whether before or after sale hereunder; and (ii) any right to require the
Collateral Agent or any Secured Party (A) to proceed against any Person, (B) to
exhaust any other collateral or security for any of the Obligations, (C) to
pursue any remedy in any Secured Party’s or Collateral Agent’s power, or (D) to
make or give any presentments, demands for performance, notices of
nonperformance, protests, notices of protests or notices of dishonor in
connection with any of the Collateral.

Section 11. Notices. All notices or other communications hereunder shall be in
writing (including by facsimile transmission) and mailed, sent or delivered to
the respective parties hereto at or to their respective addresses or facsimile
numbers set forth below their names on the signature pages hereof, or at or to
such other address or facsimile number as shall be designated by any party in a
written notice to the other parties hereto. All such notices and other
communications shall be effective (i) if delivered by hand, when delivered;
(ii) if sent by mail, upon the earlier of the date of receipt or five Business
Days after deposit in the mail, first class (or air mail, with respect to
communications to be sent to or from the United States); (iii) if sent by
overnight mail, one day after deposit with the overnight courier; and (iv) if
sent by facsimile transmission, when sent so long as a valid confirmation is
received by sender.

Section 12. No Waiver; Cumulative Remedies. No failure on the part of any
Secured Party or the Collateral Agent to exercise, and no delay in exercising,
any right, remedy, power or privilege under this Agreement, the Purchase
Agreement and the Related Documents shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights and remedies under this Agreement,
the Purchase Agreement and the Related Documents are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise be
available to such Secured Party or the Collateral Agent.

Section 13. Binding Effect. This Agreement shall be binding upon, inure to the
benefit of and be enforceable by any Grantor, any Secured Party, any Collateral
Agent appointed hereunder and their respective successors and assigns.

Section 14. Governing Law and Jurisdiction. This Agreement shall be governed by,
and construed in accordance with, the law of the State of California, without
regard to the choice of law rules thereof, except to the extent the validity or
perfection of the security interests hereunder, or the remedies hereunder, in
respect of any Collateral are governed by the law of a jurisdiction other than
California.

Section 15. Entire Agreement; Amendment and Waiver. This Agreement contains the
entire agreement of the parties with respect to the subject matter hereof and no
amendment to this Agreement, or any waiver of any provision hereof, shall be
effective unless it is in writing and signed by the Majority Secured Parties and
(in the case of any amendment) each Grantor; except that no amendment, waiver or
consent shall, unless in writing and additionally signed by the Collateral Agent
affect the rights or duties of the Collateral Agent under this Agreement.

 

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Section 16. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Agreement
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.

Section 17. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.

Section 18. Termination. This Agreement shall be terminated upon indefeasible
payment and performance in full of all Obligations. Upon termination, the
Secured Parties and the Collateral Agent, as applicable, shall promptly, at the
cost of the Grantors, execute and deliver to the Grantors such documents and
instruments reasonably requested by the Grantors as shall be necessary to
evidence termination of all security interests given by the Grantors to the
Secured Parties hereunder; provided, however, that the obligations under
Section 4 hereof shall survive such termination.

Section 19. Suretyship Waivers by Grantors, etc.

(a) Each Grantor agrees that its Obligations are irrevocable, absolute,
independent and unconditional and shall not be affected by any circumstance that
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Obligations. In furtherance of the foregoing and without
limiting the generality thereof, each Grantor agrees as follows: (i) Secured
Parties may from time to time, without notice or demand and without affecting
the validity or enforceability of the Purchase Agreement or any Related Document
or giving rise to any limitation, impairment or discharge of such Grantor’s
liability under the Purchase Agreement or any Related Document, (A) renew,
extend, accelerate or otherwise change the time, place, manner or terms of
payment of the Obligations, (B) settle, compromise, release or discharge, or
accept or refuse any offer of performance with respect to, or substitutions for,
the Obligations or any agreement relating thereto and/or subordinate the payment
of the same to the payment of any other obligations, (C) request and accept
guaranties of the Obligations and take and hold other security for the payment
of the Obligations, (D) release, exchange, compromise, subordinate or modify,
with or without consideration, any other security for payment of the
Obligations, any guaranties of the Obligations, or any other obligation of any
Person with respect to the Obligations, (E) enforce and apply any other security
now or hereafter held by or for the benefit of Secured Party in respect of the
Obligations and direct the order or manner of sale thereof, or exercise any
other right or remedy that a Secured

 

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Party may have against any such security, as Secured Party in its discretion may
determine consistent with the Purchase Agreement, the Related Documents and any
applicable security agreement, including foreclosure on any such security
pursuant to one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable, and (F) exercise any other
rights available to such Secured Party under the Purchase Agreement and the
Related Documents at law or in equity; and (ii) the Purchase Agreement, the
Related Documents and the Obligations shall be valid and enforceable and shall
not be subject to any limitation, impairment or discharge for any reason (other
than payment in full in cash of the Obligations), including, without limitation,
the occurrence of any of the following, whether or not such Grantor shall have
had notice or knowledge of any of them: (A) any failure to assert or enforce or
agreement not to assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy with respect to the Obligations or any
agreement relating thereto, or with respect to any guaranty of or other security
for the payment of the Obligations, (B) any waiver, amendment or modification
of, or any consent to departure from, any of the terms or provisions (including,
without limitation, provisions relating to events of default) of the Purchase
Agreement, any of the Related Documents or any agreement or instrument executed
pursuant thereto, or of any guaranty or other security for the Obligations,
(C) the Obligations, or any agreement relating thereto, at any time being found
to be illegal, invalid or unenforceable in any respect, (D) the application of
payments received from any source to the payment of indebtedness other than the
Obligations, even though a Secured Party might have elected to apply such
payment to any part or all of the Obligations, (E) any failure to perfect or
continue perfection of a security interest in any other collateral that secures
any of the Obligations, (F) any defenses, set-offs or counterclaims that any
Grantor may allege or assert against a Secured Party in respect of the
Obligations, including, but not limited to, failure of consideration, breach of
warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury, and (G) any other act or thing or omission, or delay to
do any other act or thing, that may or might in any manner or to any extent vary
the risk of any Grantor as an obligor in respect of the Obligations.

(b) Each Grantor hereby waives, for the benefit of the Secured Parties: (i) any
right to require a Secured Party as a condition of payment or performance by
such Grantor, to (A) proceed against such Grantor, any guarantor of the
Obligations or any other Person, (B) proceed against or exhaust any other
security held from such Grantor, any guarantor of the Obligations or any other
Person, (C) proceed against or have resort to any balance of any deposit account
or credit on the books of Secured Party of such Grantor or any other Person, or
(D) pursue any other remedy in the power of Secured Party whatsoever; (ii) any
defense arising by reason of the incapacity, lack of authority or any disability
or other defense of such Grantor including, without limitation, any defense
based on or arising out of the lack of validity or the unenforceability of the
Obligations or any agreement or instrument relating thereto or by reason of the
cessation of the liability of such Grantor from any cause other than payment in
full of the Obligations; (iii) any defense based upon any statute or rule of law
that provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal; (iv) any
defense based upon a Secured Party’s errors or omissions in the administration
of the Obligations, except behavior that amounts to bad faith; (v) (A) any
principles or provisions of law, statutory or otherwise, that are or might be in
conflict with the

 

22

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terms of the Purchase Agreement, any Related Document and any legal or equitable
discharge of such Grantor’s obligations under the Purchase Agreement or any
Related Document, (B) the benefit of any statute of limitations affecting such
Grantor’s liability hereunder or the enforcement of any Obligations, (C) any
rights to set-offs, recoupments and counterclaims, and (D) promptness, diligence
and any requirement that a Secured Party protect, secure, perfect or insure any
other security interest or lien or any property subject thereto; (vi) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, notices of default under the Purchase
Agreement, any Related Document or any agreement or instrument related thereto,
notices of any renewal, extension or modification of the Obligations or any
agreement related thereto, notices of any extension of credit to such Grantor
and notices of any of the matters referred to in the preceding paragraph and any
right to consent to any thereof; and (vii) to the fullest extent permitted by
law, any defenses or benefits that may be derived from or afforded by law that
limit the liability of or exonerate guarantors or sureties, or that may conflict
with the terms of the Purchase Agreement or any Related Document.

(c) As used in this Section 19(c), any reference to “the principal” includes
each Grantor, and any reference to “the creditor” includes each Secured Party.
In accordance with Section 2856 of the California Civil Code (a) each Grantor
waives any and all rights and defenses available to the Grantor by reason of
Sections 2787 to 2855, inclusive, 2899 and 3433 of the California Civil Code. No
other provision of this Agreement shall be construed as limiting the generality
of any of the covenants and waivers set forth in this Section 19.

(d) Until the Obligations shall have been paid in full in cash, each Grantor
shall withhold exercise of (i) any claim, right or remedy, direct or indirect,
that such Grantor now has or may hereafter have against the other Grantors or
any of their assets in connection with the Purchase Agreement and the Related
Documents or the performance by such Grantor of its obligations under the
Purchase Agreement and the Related Documents, in each case whether such claim,
right or remedy arises in equity, under contract, by statute (including, without
limitation, under California Civil Code Section 2847, 2848 or 2849), under
common law or otherwise and including without limitation (A) any right of
subrogation, reimbursement or indemnification that a Grantor now has or may
hereafter have against another Grantor, (B) any right to enforce, or to
participate in, any claim, right or remedy that a Secured Party now has or may
hereafter have against any Grantor, and (C) any benefit of, and any right to
participate in, any other collateral or security now or hereafter held by a
Secured Party and (ii) any right of contribution such Grantor may have against
any other guarantor of the Obligations. Each Grantor further agrees that, to the
extent the waiver of its rights of subrogation, reimbursement, indemnification
and contribution as set forth herein is found by a court of competent
jurisdiction to be void or voidable for any reason, any rights of subrogation,
reimbursement or indemnification such Grantor may have against any other Grantor
or against any other collateral or security, and any rights of contribution such
Grantor may have against any such guarantor, shall be junior and subordinate to
any rights a Secured Party may have against the other Grantors, to all right,
title and interest a Secured Party may have in any such other collateral or
security, and to any right a Secured Party, may have against any such guarantor.

 

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(e) No Secured Party shall have any obligation to disclose or discuss with any
Grantor its assessment, or such Grantor’s assessment, of the financial condition
of any other Grantor. Each Grantor has adequate means to obtain information from
the other Grantors on a continuing basis concerning the financial condition of
the other Grantors and their ability to perform their obligations under the
Purchase Agreement and the Related Documents, and such Grantor assumes the
responsibility for being and keeping informed of the financial condition of the
other Grantors and of all circumstances bearing upon the risk of nonpayment of
the Obligations. Each Grantor hereby waives and relinquishes any duty on the
part of a Secured Party to disclose any matter, fact or thing relating to the
business, operations or condition of the other Grantors now known or hereafter
known by a Secured Party.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of
the date first above written.

 

GRANTORS: ANESIVA, INC. By:     Name:     Title:     Address:          

 

ALGORX PHARMACEUTICALS, INC. By:     Name:     Title:     Address:          

SIGNATURE PAGE TO PLEDGE, SECURITY

AND COLLATERAL AGENT AGREEMENT

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COLLATERAL AGENT: ARCION THERAPEUTICS, INC. By:       Name:     Title:  

 

SECURED PARTIES: ARCION THERAPEUTICS, INC. By:       Name:     Title:  

SIGNATURE PAGE TO PLEDGE, SECURITY

AND COLLATERAL AGENT AGREEMENT

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SCHEDULE 1

to the Pledge, Security and Collateral Agent Agreement

for Anesiva, Inc.

 

1. Locations of Chief Executive Office and Other Locations, Including of
Collateral

 

  a. Chief Executive Office and Principal Place of Business:

 

  b. Other locations where the Debtor conducts business or Collateral is kept:

 

2. Trade Names and Trade Styles; Other Corporate, Trade or Fictitious Names,
Etc.

 

3. Bank Accounts

 

4. Organizational Identification Number; Federal Employer Identification Number.

 

5. State of Incorporation; Prior Names.

 

6. Assets in Possession of Third Parties. The following are names and addresses
of all persons or entities other than the Grantors, such as lessees, consignees,
warehousemen or purchasers of chattel paper, which have possession or are
intended to have possession of any of the Collateral consisting of instruments,
chattel paper, inventory or equipment:

 

7. Existing Security Interests. The Grantors’ assets are subject to the
following security interest of Persons other than the Collateral Agent:

 

8. Tax Assessments. The following tax assessments are currently outstanding and
unpaid:

 

9. Guaranties. The Grantors have directly or indirectly guaranteed the following
obligations of third parties:

 

10. Subsidiaries. The Grantors have the following subsidiaries (list
jurisdiction and date of incorporation, federal employer identification number,
type and value of assets):

 

11. Securities; Instruments. The following is a complete list of all stocks,
bonds, debentures, notes and other securities and investment property owned by
the Grantor (provide name of issuer, whether certificated or uncertificated,
certificate no. (if applicable), number of shares):

 

12. Securities Accounts: The following is a complete list of all securities
accounts maintained by the Grantors (provide name and address of brokerage firm,
type of account and account number):

 

13. Pledged Stock:

 

S-1-1

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SCHEDULE 2

to the Security Agreement

for Anesiva, Inc.

 

1. Patents and Patent Applications

 

2. Copyrights and Copyright Applications

 

3. Mask Works and Mask Work Applications

 

4. Trademarks, Service Marks and Trade Names and Trademark, Service Mark and
Trade Name Applications

 

S-2-1

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SCHEDULE 3

Business Locations and Locations of Collateral

for Anesiva, Inc.

--------------------------------------------------------------------------------

SCHEDULE 1

to the Pledge, Security and Collateral Agent Agreement

for AlgoRx Pharmaceuticals, Inc.

 

12. Locations of Chief Executive Office and Other Locations, Including of
Collateral

 

  a. Chief Executive Office and Principal Place of Business:

 

  b. Other locations where the Debtor conducts business or Collateral is kept:

 

13. Trade Names and Trade Styles; Other Corporate, Trade or Fictitious Names,
Etc.

 

14. Bank Accounts

 

15. Organizational Identification Number; Federal Employer Identification
Number.

 

16. State of Incorporation; Prior Names.

 

17. Assets in Possession of Third Parties. The following are names and addresses
of all persons or entities other than the Grantors, such as lessees, consignees,
warehousemen or purchasers of chattel paper, which have possession or are
intended to have possession of any of the Collateral consisting of instruments,
chattel paper, inventory or equipment:

 

18. Existing Security Interests. The Grantors’ assets are subject to the
following security interest of Persons other than the Collateral Agent:

 

19. Tax Assessments. The following tax assessments are currently outstanding and
unpaid:

 

20. Guaranties. The Grantors have directly or indirectly guaranteed the
following obligations of third parties:

 

21. Subsidiaries. The Grantors have the following subsidiaries (list
jurisdiction and date of incorporation, federal employer identification number,
type and value of assets):

 

22. Securities; Instruments. The following is a complete list of all stocks,
bonds, debentures, notes and other securities and investment property owned by
the Grantor (provide name of issuer, whether certificated or uncertificated,
certificate no. (if applicable), number of shares):

 

12. Securities Accounts: The following is a complete list of all securities
accounts maintained by the Grantors (provide name and address of brokerage firm,
type of account and account number):

 

13. Pledged Stock:

 

S-1-1

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SCHEDULE 2

to the Security Agreement

for AlgoRx Pharmaceuticals, Inc.

 

5. Patents and Patent Applications

 

6. Copyrights and Copyright Applications

 

7. Mask Works and Mask Work Applications

 

8. Trademarks, Service Marks and Trade Names and Trademark, Service Mark and
Trade Name Applications

 

S-2-1

--------------------------------------------------------------------------------

SCHEDULE 3

Business Locations and Locations of Collateral

for AlgoRx Pharmaceuticals, Inc.

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EXHIBIT C

GUARANTY

This Guaranty is entered into as of May 18, 2009 by AlgoRx Pharmaceuticals,
Inc., a Delaware corporation (the “Guarantor”), in favor of and for the benefit
of Arcion Therapeutics, Inc., a Delaware corporation (together with its
successors and assignees, the “Beneficiary”) under that certain Secured Note
Purchase Agreement, dated as of May 18, 2009, by and among Anesiva, Inc., a
Delaware corporation (the “Company”), and the Beneficiary (said Secured Note
Purchase Agreement, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the “Purchase Agreement;” capitalized terms
defined therein and not otherwise defined herein being used herein as therein
defined).

1. Guaranty. (a) In order to induce the Beneficiary to extend credit to the
Company pursuant to the Purchase Agreement, the Guarantor irrevocably and
unconditionally guaranties, as primary obligor and not merely as surety, the due
and punctual payment in full of all Guarantied Amounts (as hereinafter defined)
when the same shall become due, whether at stated maturity, by acceleration,
demand or otherwise (including amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code).
The term “Guarantied Amounts” is used herein in its most comprehensive sense and
includes any and all obligations of Company in respect of notes, advances,
borrowings, loans, debts, interest, fees, costs, expenses (including, without
limitation, legal fees and expenses of counsel and allocated costs of internal
counsel), indemnities and liabilities of whatsoever nature now or hereafter
made, incurred or created, whether absolute or contingent, liquidated or
unliquidated, whether due or not due, and however arising under or in connection
with the Purchase Agreement, the Notes, this Guaranty and the other Related
Documents, including those arising under successive borrowing transactions under
the Purchase Agreement which shall either continue such obligations of the
Company or from time to time renew them after they have been satisfied.

The Guarantor acknowledges that the Guarantied Amounts are being incurred for
and will inure to the benefit of the Guarantor.

Any returns on any portion of the Guarantied Amounts that accrues after the
commencement of any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement
of the Company (or, if returns on any portion of the Guarantied Amounts ceases
to accrue by operation of law by reason of the commencement of said proceeding,
such returns as would have accrued on such portion of the Guarantied Amounts if
said proceeding had not been commenced) shall be included in the Guarantied
Amounts because it is the intention of the Guarantor and the Beneficiary that
the Guarantied Amounts should be determined without regard to any rule of law or
order that may relieve the Company of any portion of such Guarantied Amounts.

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In the event that all or any portion of the Guarantied Amounts is paid by the
Company, the obligations of the Guarantor hereunder shall continue and remain in
full force and effect or be reinstated, as the case may be, in the event that
all or any part of such payment(s) is rescinded or recovered directly or
indirectly from the Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments that are so rescinded or recovered shall
constitute Guarantied Amounts.

Subject to the other provisions of this Section 1, upon the failure of the
Company to pay any of the Guarantied Amounts when and as the same shall become
due, the Guarantor will upon demand pay, or cause to be paid, in cash, to the
Beneficiary, an amount equal to the aggregate of the unpaid Guarantied Amounts.
Such payments shall be made in accordance with the applicable provisions of the
Purchase Agreement.

(b) Anything contained in this Guaranty to the contrary notwithstanding, the
obligations of the Guarantor under this Guaranty and the other Related Documents
shall be limited to a maximum aggregate amount equal to the largest amount that
would not render its obligations hereunder subject to avoidance as a fraudulent
transfer or conveyance under Section 548 of Title 11 of the United States Code
or any applicable provisions of comparable state or foreign law (collectively,
the “Fraudulent Transfer Laws”), in each case after giving effect to all other
liabilities of the Guarantor, contingent or otherwise, that are relevant under
the Fraudulent Transfer Laws (specifically excluding, however, any liabilities
of the Guarantor (x) in respect of intercompany indebtedness to the Company or
other affiliates of the Company to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by the Guarantor hereunder and
(y) under any guaranty of subordinated indebtedness which guaranty contains a
limitation as to maximum amount similar to that set forth in this Section 1(b),
pursuant to which the liability of the Guarantor hereunder is included in the
liabilities taken into account in determining such maximum amount) and after
giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to subrogation,
reimbursement, indemnification or contribution of the Guarantor pursuant to
applicable law or pursuant to the terms of any agreement.

(c) The Guarantor under this Guaranty, and each guarantor under other
guaranties, if any, relating to the Purchase Agreement (the “Related
Guaranties”) that contain a contribution provision similar to that set forth in
this Section 1(c), together desire to allocate among themselves (collectively,
the “Contributing Guarantors”), in a fair and equitable manner, their
obligations arising under this Guaranty and the Related Guaranties. Accordingly,
in the event any payment or distribution is made on any date by the Guarantor
under this Guaranty or a guarantor under a Related Guaranty, the Guarantor or
such other guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in the maximum amount permitted by law so as to maximize
the aggregate amount of the Guarantied Amounts paid to the Beneficiary.

2. Guaranty Absolute; Continuing Guaranty. The obligations of the Guarantor
hereunder are irrevocable, absolute, independent and unconditional and shall not
be affected by any circumstance that constitutes a legal or equitable discharge
of a guarantor or surety other than payment in full of the Guarantied Amounts.
In furtherance of the foregoing, and without limiting the generality thereof,
the Guarantor agrees that: (a) this Guaranty is a guaranty of payment when due
and not of collectibility; (b) the

 

2

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Beneficiary may enforce this Guaranty upon the occurrence and during the
continuance of an Event of Default under the Purchase Agreement notwithstanding
the existence of any dispute between the Company and the Beneficiary with
respect to the existence of such event; (c) the obligations of the Guarantor
hereunder are independent of the obligations of the Company under the Purchase
Agreement and the Related Documents and the obligations of any other guarantor
of obligations of the Company and a separate action or actions may be brought
and prosecuted against the Guarantor whether or not any action is brought
against the Company or any of such other guarantors and whether or not the
Company is joined in any such action or actions; and (d) the Guarantor’s payment
of a portion, but not all, of the Guarantied Amounts shall in no way limit,
affect, modify or abridge the Guarantor’s liability for any portion of the
Guarantied Amounts that has not been paid. This Guaranty is a continuing
guaranty and shall be binding upon the Guarantor and its successors and assigns,
and the Guarantor irrevocably waives any right (including, without limitation,
any such right arising under California Civil Code Section 2815) to revoke this
Guaranty as to future transactions giving rise to any Guarantied Amounts.

3. Actions by Beneficiary. The Beneficiary may from time to time, without notice
or demand and without affecting the validity or enforceability of this Guaranty
or giving rise to any limitation, impairment or discharge of the Guarantor’s
liability hereunder, (a) renew, extend, accelerate or otherwise change the time,
place, manner or terms of payment of the Guarantied Amounts; (b) settle,
compromise, release or discharge, or accept or refuse any offer of performance
with respect to, or substitutions for, the Guarantied Amounts or any agreement
relating thereto and/or subordinate the payment of the same to the payment of
any other obligations; (c) request and accept other guaranties of the Guarantied
Amounts and take and hold security for the payment of this Guaranty or the
Guarantied Amounts; (d) release, exchange, compromise, subordinate or modify,
with or without consideration, any security for payment of the Guarantied
Amounts, any other guaranties of the Guarantied Amounts, or any other obligation
of any Person with respect to the Guarantied Amounts; (e) enforce and apply any
security now or hereafter held by or for the benefit of the Beneficiary in
respect of this Guaranty or the Guarantied Amounts and direct the order or
manner of sale thereof, or exercise any other right or remedy that the
Beneficiary, may have against any such security, as the Beneficiary in its
discretion may determine consistent with the Purchase Agreement, the Related
Documents and any applicable security agreement, including foreclosure on any
such security pursuant to one or more judicial or nonjudicial sales, whether or
not every aspect of any such sale is commercially reasonable; and (f) exercise
any other rights available to the Beneficiary, under the Purchase Agreement or
the Related Documents, at law or in equity.

4. No Discharge. This Guaranty and the obligations of the Guarantor hereunder
shall be valid and enforceable and shall not be subject to any limitation,
impairment or discharge for any reason (other than payment in full of the
Guarantied Amounts), including without limitation the occurrence of any of the
following, whether or not the Guarantor shall have had notice or knowledge of
any of them: (a) any failure to assert or enforce or agreement not to assert or
enforce, or the stay or enjoining, by order of court, by operation of law or
otherwise, of the exercise or enforcement of, any claim or

 

3

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demand or any right, power or remedy with respect to the Guarantied Amounts or
any agreement relating thereto, or with respect to any other guaranty of or
security for the payment of the Guarantied Amounts; (b) any waiver or
modification of, or any consent to departure from, any of the terms or
provisions of the Purchase Agreement, any of the Related Documents or any
agreement or instrument executed pursuant thereto, or of any other guaranty or
security for the Guarantied Amounts; (c) the Guarantied Amounts, or any
agreement relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect; (d) the application of payments received from any
source to the payment of indebtedness other than the Guarantied Amounts, even
though the Beneficiary, might have elected to apply such payment to any part or
all of the Guarantied Amounts; (e) any failure to perfect or continue perfection
of a security interest in any collateral that secures any of the Guarantied
Amounts; (f) any defenses, set-offs or counterclaims that the Company may assert
against the Beneficiary in respect of the Guarantied Amounts, including, but not
limited to, failure of consideration, breach of warranty, payment, statute of
frauds, statute of limitations, accord and satisfaction and usury; and (g) any
other act or thing or omission, or delay to do any other act or thing, that may
or might in any manner or to any extent vary the risk of the Guarantor as an
obligor in respect of the Guarantied Amounts.

5. Waivers. The Guarantor waives, for the benefit of the Beneficiary: (a) any
right to require the Beneficiary, as a condition of payment or performance by
the Guarantor, to (i) proceed against the Company, any other guarantor of the
Guarantied Amounts or any other Person, (ii) proceed against or exhaust any
security held from the Company, any other guarantor of the Guarantied Amounts or
any other Person, (iii) proceed against or have resort to any balance of any
deposit account or credit on the books of the Beneficiary in favor of the
Company or any other Person, or (iv) pursue any other remedy in the power of the
Beneficiary; (b) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of the Company including, without
limitation, any defense based on or arising out of the lack of validity or the
unenforceability of the Guarantied Amounts or any agreement or instrument
relating thereto or by reason of the cessation of the liability of the Company
from any cause other than payment in full of the Guarantied Amounts; (c) any
defense based upon any statute or rule of law that provides that the obligation
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal; (d) any defense based upon the
Beneficiary’s errors or omissions in the administration of the Guarantied
Amounts, except behavior that amounts to bad faith; (e) (i) any principles or
provisions of law, statutory or otherwise, that are or might be in conflict with
the terms of this Guaranty and any legal or equitable discharge of the
Guarantor’s obligations hereunder, (ii) the benefit of any statute of
limitations affecting the Guarantor’s liability hereunder or the enforcement
hereof, (iii) any rights to set-offs, recoupments and counterclaims and
(iv) promptness, diligence and any requirement that the Beneficiary protect,
secure, perfect or insure any Lien or any property subject thereto; (f) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance of this Guaranty,
notices of default under the Purchase Agreement or any agreement or instrument
related thereto, notices of any renewal, extension or modification of the
Guarantied Amounts or any agreement related thereto, notices of any extension of
credit to the Company and notices of any of the matters referred to in Sections
3 and 4 and any right to consent to any thereof; and (g) to the fullest extent
permitted by law, any defenses or benefits that may be derived from or afforded
by law that limit the liability of or exonerate guarantors or sureties, or that
may conflict with the terms of this Guaranty.

 

4

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As used in this paragraph, any reference to “the principal” includes the
Company, and any reference to “the creditor” includes the Beneficiary. In
accordance with Section 2856 of the California Civil Code, the Guarantor waives
any and all rights and defenses available to the Guarantor by reason of Sections
2787 to 2855, inclusive, of the California Civil Code, including, without
limitation, any and all rights or defenses the Guarantor may have because the
Guarantied Amounts are or may be secured by real property. This means, among
other things: (1) the creditor may collect from the Guarantor without first
foreclosing on any real or personal property collateral pledged by the principal
and (2) if the creditor forecloses on any real property collateral pledged by
the principal: (A) the amount of the Guarantied Amounts may be reduced only by
the price for which the collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price and (B) the creditor may collect
from the Guarantor even if the creditor, by foreclosing on the real property
collateral, has destroyed any right the Guarantor may have to collect from the
principal. This is an unconditional and irrevocable waiver of any right and
defenses the Guarantor may have because the Guarantied Amounts are secured by
real property. These rights and defenses include, but are not limited to, any
rights and defenses based upon Section 580a, 580b, 580d or 726 of the California
Code of Civil Procedure. The Guarantor also waives all rights and defenses
arising out of an election of remedies by the creditor, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for a Guarantied Amount, has destroyed the Guarantor’s rights of subrogation and
reimbursement against the principal by the operation of Section 580d of the Code
of Civil Procedure or otherwise; and even though that election of remedies by
the creditor, such as nonjudicial foreclosure with respect to security for an
obligation of any other guarantor of any of the Guarantied Amounts, has
destroyed the Guarantor’s rights of contribution against such other guarantor.
No other provision of this Guaranty shall be construed as limiting the
generality of any of the covenants and waivers set forth in this paragraph.

6. Guarantor’s Rights of Subrogation, Contribution, Etc.; Subordination of Other
Obligations. Until the Guarantied Amounts shall have been paid in full, the
Guarantor shall withhold exercise of (a) any claim, right or remedy, direct or
indirect, that the Guarantor now has or may hereafter have against the Company
or any of its assets in connection with this Guaranty or the performance by the
Guarantor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute (including without
limitation under California Civil Code Section 2847, 2848 or 2849), under common
law or otherwise and including, without limitation, (i) any right of
subrogation, reimbursement or indemnification that the Guarantor now has or may
hereafter have against the Company; (ii) any right to enforce, or to participate
in, any claim, right or remedy that the Beneficiary now has or may hereafter
have against the Company; and (iii) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by the Beneficiary and
(b) any right of contribution the Guarantor now has or may hereafter have
against any other guarantor of

 

5

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any of the Guarantied Amounts. The Guarantor further agrees that, to the extent
the agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification the Guarantor may have
against the Company or against any collateral or security, and any rights of
contribution the Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights the Beneficiary may have against the
Company, to all right, title and interest the Beneficiary may have in any such
collateral or security, and to any right the Beneficiary may have against such
other guarantor.

Any indebtedness of the Company now or hereafter held by the Guarantor is
subordinated in right of payment to the Guarantied Amounts, and any such
indebtedness of the Company to the Guarantor collected or received by the
Guarantor after an Event of Default has occurred and is continuing, and any
amount paid to the Guarantor on account of any subrogation, reimbursement,
indemnification or contribution rights referred to in the preceding paragraph
when all Guarantied Amounts have not been paid in full, shall be held in trust
for the Beneficiary and shall forthwith be paid over to the Beneficiary to be
credited and applied against the Guarantied Amounts.

7. Expenses. The Guarantor agrees to pay, or cause to be paid, on demand, and to
save the Beneficiary harmless against liability for, (i) any and all costs and
expenses (including fees, costs of settlement and disbursements of counsel and
allocated costs of internal counsel) incurred or expended by the Beneficiary in
connection with the enforcement of or preservation of any rights under this
Guaranty and (ii) any and all costs and expenses (including those arising from
rights of indemnification) required to be paid by the Guarantor under the
provisions of the Purchase Agreement or any Related Document.

8. Financial Condition of Company. The Beneficiary shall not have any
obligation, and the Guarantor waives any duty on the part of the Beneficiary, to
disclose or discuss with the Guarantor its assessment, or the Guarantor’s
assessment, of the financial condition of the Company or any matter or fact
relating to the business, operations or condition of the Company. The Guarantor
has adequate means to obtain information from the Company on a continuing basis
concerning the financial condition of the Company and its ability to perform its
obligations under the Purchase Agreement and the Related Documents, and the
Guarantor assumes the responsibility for being and keeping informed of the
financial condition of the Company and of all circumstances bearing upon the
risk of nonpayment of the Guarantied Amounts.

9. Representations and Warranties. The Guarantor makes, for the benefit of the
Beneficiary, each of the representations and warranties made in the Purchase
Agreement by the Company as to the Guarantor, its assets, financial condition,
operations, organization, legal status, business and the Related Documents to
which it is a party.

 

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10. Covenants. The Guarantor agrees that, so long as any part of the Guarantied
Amounts shall remain unpaid, the Guarantor will, unless the Majority Investors
shall otherwise consent in writing, perform or observe, and cause its
Subsidiaries to perform or observe, all of the terms, covenants and agreements
that the Purchase Agreement and the Related Documents state that the Company is
to cause the Guarantor and such Subsidiaries to perform or observe.

11. Set Off. In addition to any other rights the Beneficiary may have under law
or in equity, if any amount shall at any time be due and owing by the Guarantor
to the Beneficiary under this Guaranty, the Beneficiary is authorized at any
time or from time to time, without notice (any such notice being expressly
waived), to set off and to appropriate and to apply any and all deposits
(general or special, including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured) and any other
indebtedness of the Beneficiary owing to the Guarantor and any other property of
the Guarantor held by the Beneficiary to or for the credit or the account of the
Guarantor against and on account of the Guarantied Amounts and liabilities of
the Guarantor to the Beneficiary under this Guaranty.

12. Amendments and Waivers. No amendment, modification, termination or waiver of
any provision of this Guaranty, and no consent to any departure by the Guarantor
therefrom, shall in any event be effective without the written concurrence of
the Majority Investors and, in the case of any such amendment or modification,
the Guarantor. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given. Any
amendment or waiver effected in accordance with this Section 12 shall be binding
upon the Beneficiary and each other holder of any Notes purchased under the
Purchase Agreement at the time outstanding, each future holder of all such Notes
and the Guarantor.

13. Miscellaneous. It is not necessary for the Beneficiary to inquire into the
capacity or powers of the Guarantor or the Company or the officers, directors or
any agents acting or purporting to act on behalf of any of them.

The rights, powers and remedies given to the Beneficiary by this Guaranty are
cumulative and shall be in addition to and independent of all rights, powers and
remedies given to the Beneficiary by virtue of any statute or rule of law or in
the Purchase Agreement or any of the Related Documents or any agreement between
the Guarantor and the Beneficiary or between the Company and the Beneficiary.
Any forbearance or failure to exercise, and any delay by the Beneficiary in
exercising, any right, power or remedy hereunder shall not impair any such
right, power or remedy or be construed to be a waiver thereof, nor shall it
preclude the further exercise of any such right, power or remedy.

In case any provision in or obligation under this Guaranty shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.

THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE GUARANTOR AND THE
BENEFICIARY HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.

 

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This Guaranty shall inure to the benefit of the Beneficiary and their respective
successors and assigns.

ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GUARANTOR ARISING OUT OF OR
RELATING TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE COURT OF COMPETENT
JURISDICTION IN SAN FRANCISCO COUNTY, STATE OF CALIFORNIA, OR IN ANY FEDERAL
COURT OF COMPETENT JURISDICTION IN THE NORTHERN DISTRICT FOR THE STATE OF
CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY THE GUARANTOR ACCEPTS
FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS GUARANTY. The Guarantor agrees that service of
all process in any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to the Guarantor at its address set
forth below its signature hereto, such service being acknowledged by the
Guarantor to be sufficient for personal jurisdiction in any action against the
Guarantor in any such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of the Beneficiary to
bring proceedings against the Guarantor in the courts of any other jurisdiction.

THE GUARANTOR AND THE BENEFICIARY EACH AGREE TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
GUARANTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE
GUARANTOR AND THE BENEFICIARY EACH (I) ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR THE GUARANTOR AND THE BENEFICIARY TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT THE GUARANTOR AND THE BENEFICIARY HAVE ALREADY
RELIED ON THIS WAIVER IN ENTERING INTO THIS GUARANTY AND THAT EACH WILL CONTINUE
TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS, AND (II) FURTHER
WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS OF THIS GUARANTY.
In the event of litigation, this Guaranty may be filed as a written consent to a
trial by the court.

 

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14. Counterparts. This Guaranty may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of which when
so executed and delivered shall be deemed to be an original for all purposes;
but all such counterparts together shall constitute but one and the same
instrument.

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IN WITNESS WHEREOF, the Guarantor and the Beneficiary have caused this Guaranty
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

 

GUARANTOR: ALGORX PHARMACEUTICALS, INC. By:       Name:     Title:   Address:  
           

[Signature Page to Guaranty]

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BENEFICIARY: ARCION THERAPEUTICS, INC. By:       Name:     Title:  

[Signature Page to Guaranty]