Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of January 31,
2012 by and among NeurogesX, Inc., a Delaware corporation (the “Company”), and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

RECITALS

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

B. Each Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this Agreement,
that aggregate number of shares of common stock, par value $0.001 per share (the
“Common Stock”), of the Company, set forth below such Purchaser’s name on the
signature page of this Agreement (which aggregate amount for all Purchasers
together shall be 2,969,685 shares of Common Stock and shall be collectively
referred to herein as the “Shares”).

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

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

ARTICLE I

DEFINITIONS

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

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

 

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“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act. With respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary basis
by the same investment manager as such Purchaser will be deemed to be an
Affiliate of such Purchaser.

“Agreement” has the meaning set forth in the Preamble.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except Saturday, Sunday, any day which is a federal
legal holiday in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other governmental
action to close.

“Closing” means the closing of the purchase and sale of the Shares on the
Closing Date pursuant to Section 2.1.

“Closing Bid Price” means, for any security as of any date, (a) the last
reported closing bid price per share for such security on the Principal Trading
Market, as reported by Bloomberg Financial Markets, or, (b) if the Principal
Trading Market begins to operate on an extended hours basis and does not
designate the closing bid price then the last bid price of such security prior
to 4:00 p.m., New York City time, as reported by Bloomberg Financial Markets, or
(c) if the foregoing do not apply, the last closing price of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg Financial Markets, or, (d) if no closing bid price is
reported for such security by Bloomberg Financial Markets, the average of the
bid prices of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC. If the Closing Bid Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the holder of such security. If the Company and
such holder are unable to agree upon the fair market value of such security,
then the Board of Directors of the Company shall use its good faith judgment to
determine the fair market value. The Board of Directors’ determination shall be
binding upon all parties absent demonstrable error. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period.

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

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

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

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

 

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“Company” has the meaning set forth in the Preamble.

“Company Counsel” means Morrison & Foerester LLP.

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

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

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

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

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

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

“IRA” means that certain Third Amended and Restated Investors’ Rights Agreement
dated as of November 14, 2005, as amended, by and among the Company and certain
of its stockholders.

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

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

“Material Adverse Effect” means a material adverse effect on the results of
operations, prospects, assets, business or financial condition of the Company,
except that any of the following, either alone or in combination, shall not be
deemed a Material Adverse Effect: (i) effects caused by changes or circumstances
affecting general market conditions in the U.S. economy or which are generally
applicable to the industry in which the Company operates, provided that such
effects are not borne disproportionately by the Company, (ii) effects resulting
directly from or relating to the announcement or disclosure of the sale of the
Shares or other transactions contemplated by this Agreement, (iii) effects
caused by any event, occurrence or condition resulting directly from or directly
relating to the taking of any action as required in accordance with this
Agreement, or (iv) effects caused directly or indirectly (including any events
of default caused or deemed caused under any outstanding loan or loan-related
documents of the Company) as a result of (a) the Company’s current or continued
inability to meet the requirements for listing on a Trading Market, including
the Nasdaq Global Market, (b) any delisting of the Company’s securities from
trading on any Trading Market or (c) any notification by Nasdaq of a potential
delisting in connection with the Company not meeting a listing requirement.

 

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

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

“Outside Date” means the fifth Business Day following the date of this
Agreement.

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

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

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

“Purchase Price” means $1.01 per Share, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement.

“Purchaser” or “Purchasers” has the meaning set forth in the Recitals.

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

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

“Regulation D” has the meaning set forth in the Recitals.

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

“Securities Act” has the meaning set forth in the Recitals.

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

 

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“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 (but
shall not be deemed to include the location and/or reservation of borrowable
shares of Common Stock).

“Subscription Amount” means, with respect to each Purchaser, the aggregate
amount in United States dollars and in immediately available funds to be paid
for the Shares purchased hereunder as indicated on such Purchaser’s signature
page to this Agreement as determined by multiplying the number of Shares
indicated thereon next to the heading “Aggregate Shares to be Purchased” by the
Purchase Price.

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

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

“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Registration Rights Agreement and any other documents or
agreements explicitly contemplated hereunder.

“Transfer Agent” means Wells Fargo Bank, N.A., the current transfer agent of the
Company, with a mailing address of 161 North Concord Exchange South St. Paul, MN
55075-1139, or any successor transfer agent for the Company.

ARTICLE II

PURCHASE AND SALE

2.1 Closing.

(a) Amount. Subject to the terms and conditions set forth in this Agreement, at
the Closing, the Company shall issue and sell to each Purchaser, and each
Purchaser shall, severally and not jointly, purchase from the Company, such
number of Shares set forth below such Purchaser’s name on their signature page
of this Agreement.

(b) Closing. The Closing of the purchase and sale of the Shares shall take place
at the offices of the Company on the Closing Date or at such other locations or
remotely by facsimile transmission or other electronic means as the parties may
mutually agree.

 

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(c) Form of Payment. On or prior to the Closing Date, (i) the Company shall
deliver to each Purchaser certificates representing such aggregate number of
Shares to the address and in the manner as is set forth on such Purchaser’s
signature page hereto, duly executed on behalf of the Company and registered in
the name of such Purchaser in the manner as is set forth on such Purchaser’s
signature page hereto (provided that the issuance of shares reflected in such
certificates shall be ineffective until the Subscription Amount for such shares
has been received by the Company) and (ii) upon confirmation that the
certificates representing such aggregate number of Shares has been received by
each Purchaser’s respective custodian, each Purchaser shall pay its respective
Subscription Amount to the Company for the Shares to be issued and sold to such
Purchaser at the Closing, by wire transfer of immediately available funds in
accordance with the Company’s written wire instructions.

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

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

(ii) one or more original stock certificates, free and clear of all restrictive
and other legends (except as provided in Section 4.1(b) hereof), evidencing the
Shares subscribed for by such Purchaser hereunder, registered in the name of
such Purchaser as set forth on the signature page hereto;

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

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

(v) the Compliance Certificate referred to in Section 5.1(i);

(vi) a certificate evidencing the formation and good standing of the Company
issued by the Secretary of State of the State of Delaware as of a date within
five business days of the Closing Date;

(vii) a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State of the State of
California as of a date within five business days of the Closing Date; and

(viii) a certified copy of the certificate of incorporation of the Company, as
certified by the Secretary of State of the State of Delaware, as of a date
within 10 days of the Closing Date.

 

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

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

(ii) subject to Section 2.2(a)(ii), its Subscription Amount, in United States
dollars and in immediately available funds, in the amount set forth as the
“Purchase Price” indicated below such Purchaser’s name on the applicable
signature page hereto under the heading “Aggregate Purchase Price (Subscription
Amount)” by wire transfer to the Company Account, as set forth on Exhibit B
attached hereto; and

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES

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

(a) Subsidiaries. NeurogesX UK Limited, a corporation organized under the laws
of the United Kingdom (the “Subsidiary”), is the Company’s only subsidiary. The
Subsidiary has been duly organized, is validly existing and in good standing
under the laws of the United Kingdom, with corporate power and authority to own
its properties and conduct its business as described in the SEC Reports; and is
duly qualified to do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property or the conduct
of its business requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not reasonably be
expected to have a Material Adverse Effect. All of the issued shares of capital
stock of the Subsidiary has been duly and validly authorized and issued, are
fully paid and nonassessable and are owned directly by the Company, free and
clear of all liens, encumbrances, equities or claims.

(b) Organization and Qualification. The Company is an entity duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
with the requisite corporate power and authority to own or lease and use its
properties and assets and to carry on its business as currently conducted. The
Company is not in violation or default of any of the provisions of its
certificate of incorporation or bylaws or other organizational or charter
documents. The Company is duly qualified to conduct business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have or reasonably be expected to result
in a Material Adverse Effect, and no Proceeding has been instituted, is pending,
or, to the Company’s Knowledge, has been threatened in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

 

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

(d) No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation by the Company
of the transactions contemplated hereby or thereby (including, without
limitation, the issuance of the Shares) do not and will not (i) conflict with or
violate any provisions of either the Company’s certificate of incorporation or
bylaws or the Subsidiary’s articles of association or memorandum of association
or otherwise result in a violation of the organizational documents of the
Company or the Subsidiary, (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would result in a default)
under, result in the creation of any Lien upon any of the properties or assets
of either the Company or the Subsidiary or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any Material Contract, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which either the Company or the Subsidiary is
subject (including federal and state securities laws and regulations and the
rules and regulations, assuming the correctness of the representations and
warranties made by the Purchasers herein, of any self-regulatory organization to
which the Company or its securities are subject, including all applicable
Trading Markets), or by which any property or asset of either the Company or the
Subsidiary is bound or affected, except in the case of clauses (ii) and
(iii) such as would not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect or a material adverse effect on
the legality, validity or enforceability of any Transaction Document or the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document.

(e) Filings, Consents and Approvals. Neither the Company nor the Subsidiary is
required to obtain any consent, waiver, approval, authorization or order of,
give any notice to, or make any filing or registration with, any court or other
federal, state, local or other governmental authority, holder of outstanding
securities of the Company or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents (including
the issuance of the Shares), other than (i) the filing with the Commission of
one or more Registration Statements in accordance with the requirements of the
Registration Rights Agreement, (ii) filings required by applicable state
securities laws, (iii) the filing of a Notice of Sale of Securities on Form D
with the Commission under Regulation D of the Securities Act, (iv) the filing of
any requisite notices and/or application(s) to the Principal Trading Market for
the issuance and sale of the Shares and the listing of the Shares for trading or
quotation, as the case may be, thereon in the time and manner required thereby,
(v) the filings required in accordance with Section 4.5 of this Agreement, and
(vi) those that have been made or obtained prior to the date of this Agreement
(collectively, the “Required Approvals”).

 

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

(g) Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock, options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) is set forth in Schedule 3.1(g) hereto. No Person
has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents that have not been effectively waived as of the Closing Date. Except
as set forth on Schedule 3.1(g) or as a result of the purchase and sale of the
Shares, there are as of the date of this Agreement no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire any shares of Common Stock, or contracts, commitments, understandings
or arrangements by which the Company is or may become bound to issue additional
shares of Common Stock or Common Stock Equivalents. The issuance and sale of the
Shares will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers) and will not result in a
right of any holder of Company securities to adjust the exercise, conversion,
exchange or reset price under any of such securities. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance in all material respects with all
applicable federal and state securities laws and the rules and regulations of
any self-regulatory organization to which the Company or its securities are
subject, including all applicable Trading Markets, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. No further approval or authorization of
any stockholder, the Board of Directors or others is required for the issuance
and sale of the Shares. Other than the IRA, there are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the Company’s
Knowledge, between or among any of the Company’s stockholders.

(h) SEC Reports; Disclosure Materials. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it
under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the 12 months preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension,
except where the failure to file on a timely basis would not have or reasonably
be expected to result in a Material Adverse Effect and would not have or
reasonably be expected to result in any limitation or prohibition on the
Company’s ability to register the Shares for resale on Form S-3 or any
Purchaser’s ability to use Rule 144 to resell any Shares. As of their respective
filing

 

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dates, or to the extent corrected by a subsequent amendment, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
Company has never been an issuer subject to Rule 144(i) under the Securities
Act. Except for Material Contracts entered into by the Company after
September 30, 2011 where the entry into such Material Contract has been
disclosed on Current Reports on Form 8-K filed with the Commission, each of the
Material Contracts to which the Company is a party or to which the property or
assets of the Company are subject has been filed (or incorporated by reference)
as an exhibit to the SEC Reports.

(i) Financial Statements. The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing (or to the extent corrected by a
subsequent amendment). Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial year-end audit adjustments.

(j) Material Changes. Since the date of the latest financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC
Report filed prior to the date hereof, (i) there have been no events,
occurrences or developments that have had or would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect,
(ii) neither the Company nor the Subsidiary has incurred any material
liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (B) liabilities not required to be reflected in the Company’s
consolidated financial statements pursuant to GAAP or required to be disclosed
in filings made with the Commission, (iii) neither the Company nor the
Subsidiary has altered materially its method of accounting or the manner in
which it keeps its accounting books and records, (iv) neither the Company nor
the Subsidiary has declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock (other than in connection
with repurchases of unvested stock issued to employees of the Company) and
(v) neither the Company nor the Subsidiary has issued any equity securities to
any officer, director or Affiliate, except for issuances pursuant to existing
Company stock option or stock purchase plans or executive and director
compensation arrangements disclosed in the SEC Reports. Except for the issuance
of the Shares contemplated by this Agreement, no event, liability or development
has occurred or exists with respect to the Company or its business, properties,
operations or financial condition, that would be required to be disclosed by the
Company under applicable securities laws at the time this representation is made
that has not been publicly disclosed at least one Trading Day prior to the date
that this representation is made.

(k) Litigation. There is no Action which affects or challenges the legality,
validity or enforceability of any of the Transaction Documents or the Shares,
would, if there were an unfavorable decision, individually or in the aggregate,
have a Material Adverse Effect. None of the Company, the Subsidiary, nor to the
Company’s Knowledge any director or officer thereof, is or has

 

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been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the Company’s Knowledge there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company. The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act or the
Securities Act.

(l) Absence of Labor Dispute. No labor problem or dispute with the employees of
the Company or the Subsidiary exist or, to the Company’s knowledge, is
threatened or imminent, in each case that would reasonably be expected to have a
Material Adverse Effect. The Company is not aware that any key employee or
significant group of employees of the Company or the Subsidiary plans to
terminate employment with the Company.

(m) Compliance. Each of the Company and the Subsidiary (i) is not in default
under or in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a default by the
Company under), nor has either the Company or the Subsidiary received written
notice of a claim that it is in default under or that it is in violation of, any
Material Contract (whether or not such default or violation has been waived),
(ii) is not in violation of any order of any court, arbitrator or governmental
body having jurisdiction over the Company or the Subsidiary or its properties or
assets, and (iii) is not in violation of, or in receipt of written notice that
it is in violation of, any statute, rule or regulation of any governmental
authority applicable to the Company or the Subsidiary, except in each case as
would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.

(n) Title to Assets. Each of the Company and the Subsidiary has good and
marketable title to all tangible personal property owned by it that is material
to its business, in each case free and clear of all Liens except such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company or the Subsidiary.
Any real property and facilities held under lease by either the Company or the
Subsidiary are held by it under valid, subsisting and enforceable leases with
such exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company or the
Subsidiary.

(o) The Exchange Act and Nasdaq. The Company is subject to and in compliance in
all material respects with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act. The Common Stock is registered pursuant to
Section 12(b) of the Exchange Act and is listed on the NASDAQ Global Market, and
the Company has taken no action designed to, or reasonably likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the NASDAQ Global Market, nor has the
Company received any notification that the Commission or the Nasdaq Stock Market
LLC (“Nasdaq”) is contemplating terminating such registration or listing. No
consent, approval, authorization or order of, or filing, notification or
registration with, the NASDAQ Global Market is required for the listing and
trading of the Shares on the NASDAQ Global Market, except for (i) a Notification
Form: Listing of Additional Shares and (ii) a Notification Form: Change in the
Number of Shares Outstanding. The Company is in compliance in all material
respects with all applicable corporate governance requirements set forth in the
Nasdaq Listing Rules. The Company’s board of directors has validly appointed an
audit committee whose composition satisfies the requirements of Rule 5605(c)(2)
of the Nasdaq Listing Rules and the Company’s board of directors and/or the
audit committee has adopted a charter that satisfies the requirements of Rule
5605(c)(1) of the Nasdaq

 

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Listing Rules. Notwithstanding the foregoing or anything to the contrary in this
Agreement, the Purchasers hereby acknowledge and agree that (i) the Company is
not currently in compliance with Nasdaq Listing Rules, has received a
notification from Nasdaq of a potential delisting and may receive after date of
signing of this Agreement further notices of non-compliance, including, without
limitation, due to failure to meet the minimum bid price rules, (ii) the matters
disclosed in this sentence shall be deemed disclosed for all applicable
representations and warranties contained in this Agreement.

(p) Intellectual Property. To the Company’s Knowledge, the Company owns,
possesses or has valid, binding and enforceable rights to use the Company
Intellectual Property (as defined below) through ownership or otherwise. Except
as described in the SEC Reports, (A) the Company has not received any written
notice, nor to the Company’s knowledge, any other notice, of any infringement by
the Company with respect to any Intellectual Property (as defined below) of any
third party, (B) the Company’s commercial products as described in SEC Reports
do not, to the Company’s knowledge, infringe or interfere with any right or
valid patent claim of any third party, (C) to the Company’s Knowledge, the
Company Intellectual Property consisting of patents and patent applications that
are owned by the Company (the “Company Patents”) has been duly and properly
filed; the Company is not aware of any facts required to be disclosed to the
United States Patent and Trademark Office (the “PTO”) that were not disclosed to
the PTO and which would preclude the grant of a patent for the Company Patents;
and the Company is not aware of any facts which would preclude it from having
clear title to the Company Patents that have been identified by the Company as
being owned by the Company. For purposes of this Agreement, “Intellectual
Property” means patents, patent rights, trademarks, servicemarks, trade dress
rights, copyrights, trade names and domain names, and all registrations and
applications for each of the foregoing, trade secrets, know-how (including other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), inventions and technology, and “Company Intellectual Property”
means Intellectual Property that is reasonably necessary or used in any material
respect to conduct the business of the Company, as described in the SEC Reports.
Except as described in the SEC Reports, or as would not reasonably be expected
to have a Material Adverse Effect, to the knowledge of the Company, the Company
has complied with the United States Patent and Trademark Office (the “PTO”) and
applicable foreign patent authorities duty of candor and disclosure for all
patent applications directed to Company Intellectual Property that are owned by
the Company or which the Company is prosecuting on behalf of the owner of such
patent applications (the “Company Patent Applications”) and has made no material
misrepresentation in the Company Patent Applications.

(q) No Shareholder Approval Required. No approval of the stockholders of the
Company under the rules and regulations of Nasdaq is required for the Company to
issue and deliver to the Purchasers the Shares.

(r) Absence of Further Requirements. No consent, approval, authorization or
order of, or any filing or declaration with, any court or governmental agency or
body is required for the consummation by the Company of the transactions on its
part contemplated herein, including the offering and sale of the Shares, except
such as have been obtained or as may be required under the Securities Act, the
Securities Act Regulations, state securities laws or the rules and regulations
of the Financial Industry Regulatory Authority, Inc. (“FINRA”), or Nasdaq.

 

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(s) Possession of Licenses and Permits. The Company and the Subsidiary
(A) possesses all certificates, authorizations, registrations, permits,
licenses, approvals and consents issued by the appropriate federal, state, local
or foreign regulatory agencies or bodies necessary to conduct the business of
the Company as described in the SEC Reports, including without limitation, all
such certificates, authorizations, registrations, permits, licenses, approvals
and consents required by the United States Food and Drug Administration (the
“FDA”), the United States Drug Enforcement Administration or any other federal,
state, local or foreign agencies or bodies engaged in the regulation of clinical
trials, pharmaceuticals, biologics or biohazardous substances or materials
(collectively, “Governmental Licenses”), except where the failure so to possess
such Governmental Licenses would not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect ; and (B) is in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, reasonably be expected to
have a Material Adverse Effect. All of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect would not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect; and neither the Company nor the Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such
Governmental Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be expected to have a
Material Adverse Effect.

(t) Regulatory Compliance. Except as described in the SEC Reports, the Company:
(A) has operated and currently is in compliance in all material respects with,
except where the failure so to comply would not, singly or in the aggregate,
reasonably be expected to have a Material Adverse Effect, all statutes, rules or
regulations applicable to the ownership, business, testing, research,
development, manufacture, handling, packaging, processing, use, distribution,
marketing, labeling, promotion, sale, offer for sale, storage, import, export or
disposal of any product that is under development, manufactured or distributed
by the Company (“Applicable Laws”); (B) (other than a Form 483 which was
received by a clinical investor of the Company involved in the Company’s HIV-PN
clinical trials for Qutenza, the receipt or matters addressed therein would not
reasonably be expected to have a Material Adverse Effect) has not received any
FDA Form 483, notice of adverse finding, warning letter, untitled letter or
other correspondence or other written notice from the FDA or any other
applicable federal, state, local or foreign governmental or regulatory authority
alleging or asserting material noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations, permits and
supplements or amendments thereto required by any such Applicable Laws
(“Authorizations”), which would, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; (C) possesses all material
Authorizations and such Authorizations are valid and in full force and effect
and is not in material violation of any term of any such Authorizations; (D) has
not received notice of any claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from the FDA or any
other federal, state, local or foreign governmental or regulatory authority or
third party alleging that any product, testing, research, operation or activity
is in material violation of any Applicable Laws or Authorizations; (E) has not
received notice that the FDA or any other federal, state, local or foreign
governmental authority or regulatory authority has initiated action to limit,
suspend, modify or revoke any material Authorizations; (F) has filed, obtained,
maintained or submitted all material reports, documents, forms, notices,
applications, records, claims, submissions and supplements or amendments as
required by any Applicable Laws or Authorizations and that all such reports,
documents, forms, notices, applications, records, claims, submissions and
supplements or amendments were materially complete and correct on the date filed
(or were corrected or supplemented by a subsequent submission); and (G) has not,
either voluntarily or involuntarily, initiated, conducted, or issued or caused
to be initiated, conducted or issued, any recall, market withdrawal or
replacement, safety alert, post-sale warning, “dear doctor” letter, or other
notice or

 

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action relating to the alleged lack of safety or efficacy of any Company product
or any alleged Company product defect or violation. To the extent required by
applicable laws and regulations of the FDA or any other applicable federal,
state, local or foreign governmental or regulatory authority, the Company has
submitted an Investigational New Drug Application or amendment or supplement
thereto or other required documentation for each clinical trial it has conducted
or sponsored or is conducting or sponsoring, all such submissions were in
material compliance with applicable laws and rules and regulations when
submitted and no material deficiencies have been asserted by the FDA or any
other applicable federal, state, local or foreign governmental or regulatory
authority with respect to any such submissions.

(u) Regulatory Status. The Company has no Knowledge of any pending communication
from the FDA that would cause the Company to revise its strategy for seeking
marketing approval from the FDA for any of the Company’s products under
development as described in the SEC Reports.

(v) General Healthcare Regulatory Compliance.

(i) Except as would not reasonably be expected to have a Material Adverse
Effect, each of the Company, the Subsidiary, and each of the Company’s and the
Subsidiary’s directors, officers, employees, and, to the Company’s Knowledge,
each of its agents (while acting in such capacity), is, and at all times has
been, in compliance with all health care laws, rules and regulations applicable
to the Company or by which any of its properties, businesses, products or other
assets is bound or affected, including, without limitation, the federal
Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Anti-Inducement Law (42
U.S.C. § 1320a-7a(a)(5)), the civil False Claims Act (31 U.S.C. §§ 3729 et
seq.), the administrative False Claims Law (42 U.S.C. § 1320a-7b(a)), the Health
Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et
seq.), the exclusion laws (42 U.S.C. § 1320a-7), the Food Drug and Cosmetic Act
(21 U.S.C. §§ 301 et seq.) and the Veterans Administration Federal Supply
Schedule (38 U.S.C. § 8126) (collectively, “Health Care Laws”). Except as
described in the SEC Reports and except as would not reasonably be expected to
have a Material Adverse Effect, neither the Company nor the Subsidiary has
received any notification, correspondence or any other written or oral
communication from any federal or state governmental agency alleging or
asserting a violation of any Health Care Laws.

(ii) Neither of the Company nor the Subsidiary is a party to any corporate
integrity agreements, monitoring agreements, consent decrees, settlement orders,
or similar agreements with or imposed by any governmental entity.

(w) Compliance With ERISA. (i) Each employee benefit plan, within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), for which the Company or any member of its “Controlled Group”
(defined as any organization which is a member of a controlled group of
corporations within the meaning of Section 414 of the Internal Revenue Code of
1986, as amended (the “Code”)) would have any liability (each, a “Plan”) has
been maintained in compliance in all material respects with its terms and the
requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Code; (ii) no prohibited transaction,
within the meaning of Section 406 of ERISA or Section 4975 of the Code, has
occurred with respect to any Plan excluding transactions effected pursuant to a
statutory or administrative exemption; (iii) for each Plan that is subject to
the funding rules of Section 412 of the Code or Section 302 of ERISA, no
“accumulated funding deficiency” as defined in Section 412 of the Code, whether
or not waived, has occurred or is reasonably expected to

 

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occur; (iv) the fair market value of the assets of each Plan exceeds the present
value of all benefits accrued under such Plan (determined based on those
assumptions used to fund such Plan); (v) no “reportable event” (within the
meaning of Section 4043(c) of ERISA) has occurred or is reasonably expected to
occur; and (vi) neither the Company nor any member of the Controlled Group has
incurred, nor reasonably expects to incur, any material liability under Title IV
of ERISA (other than contributions to the Plan or premiums to the PBGC, in the
ordinary course and without default) in respect of a Plan (including a
“multiemployer plan”, within the meaning of Section 4001(a)(3) of ERISA).

(x) No Undisclosed Relationships. No relationship, direct or indirect, exists
between or among the Company or the Subsidiary, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company or the
Subsidiary, on the other hand, that is required by the Securities Act to be
described in the SEC Reports.

(y) Statistical and Market-Related Data. Any statistical and market-related data
included in the SEC Reports was as of the date of disclosure based on or derived
from sources that the Company believes to be reliable.

(z) Money Laundering Laws. The operations of the Company and the Subsidiary are
and have been conducted at all times in material compliance with applicable
financial recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes of
all applicable jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or the Subsidiary with
respect to the Money Laundering Laws is pending or, to the knowledge of the
Company, threatened.

(aa) Margin Rules. Neither the issuance, sale and delivery of the Shares nor the
application of the proceeds thereof by the Company will violate Regulation T, U
or X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors.

(bb) Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as the Company
believes to be prudent and customary in the businesses and locations in which
the Company is engaged. The Company has not received any notice of cancellation
of any such insurance, nor, to the Company’s Knowledge, will it be unable to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.

(cc) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports and except with respect to the sale and issuance of shares of Common
Stock and warrants pursuant to the Securities Purchase Agreement, dated as of
July 21, 2011, and the transactions contemplated thereby, none of the executive
officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company is presently a party to any transaction with the
Company (other than for services as employees, officers and directors) that
would be required to be disclosed pursuant to Item 404 of Regulation S-K
promulgated under the Securities Act.

 

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(dd) Accounting Controls and Disclosure Controls.

(i) The Company maintains a system of internal accounting controls sufficient to
provide reasonable assurances that (w) transactions are executed in accordance
with management’s general or specific authorization; (x) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (y) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (z) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Since the end of the Company’s most recent audited
fiscal year, there has been (1) no material weakness in the Company’s internal
control over financial reporting (whether or not remediated) and (2) no change
in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting. Neither the Company’s board of directors nor
the audit committee has been informed, nor is any director of the Company aware,
of (x) any significant deficiencies in the design or operation of the Company’s
internal controls that could adversely affect the Company’s ability to record,
process, summarize and report financial data or any material weakness in the
Company’s internal controls; or (y) any fraud, whether or not material, that
involves management or other employees of the Company who have a significant
role in the Company’s internal controls.

(ii) The Company employs disclosure controls and procedures that are designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms, and is accumulated and communicated to the Company’s
management, including its principal executive officer or officers and the
principal financial officer or officers, as appropriate, to allow timely
decisions regarding disclosure.

(ee) Compliance with the Sarbanes-Oxley Act. The Company is in compliance in all
material respects with all provisions of the Sarbanes-Oxley Act and all rules
and regulations promulgated thereunder or implementing the provisions thereof,
including Section 402 related to loans and Sections 302 and 906 related to
certifications.

(ff) Certain Fees. No person or entity will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or a Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company with respect to the offer and sale of the
Shares, other than the fees of Leerink Swann LLC (the “Financial Advisor”)
acting as a financial advisor to the Company (which fees are being paid by the
Company). The Purchasers shall have no obligation with respect to any fees or
with respect to any claim made by or on behalf of other Persons for fees of a
type contemplated in this paragraph (ff) that may be due in connection with the
transactions contemplated by the Transaction Documents. The Company shall
indemnify, pay, and hold each Purchaser harmless against, any liability, loss or
expense (including, without limitation, attorneys’ fees and out-of-pocket
expenses) arising in connection with any such right, interest or claim.

(gg) Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2 of this Agreement, no registration under
the Securities Act is required for the offer and sale of the Shares by the
Company to the Purchasers under the Transaction Documents. The issuance and sale
of the Shares hereunder does not contravene the rules and regulations of the
Principal Trading Market.

 

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(hh) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act of 1940,
as amended.

(ii) Registration Rights. Other than each of the Purchasers pursuant to the
Registration Rights Agreement, no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the
Company.

(jj) Application of Takeover Protections; Rights Agreements. The Company and the
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s charter documents or the laws of its
state of incorporation that is or could reasonably be expected to become
applicable to any of the Purchasers as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including, without limitation, the Company’s issuance of
the Shares and the Purchasers’ ownership of the Shares.

(kk) Disclosure. The Company confirms that it has not provided, and none of its
officers or directors nor, to the Company’s Knowledge, any other Person acting
on its or their behalf has provided any Purchaser or its respective agents or
counsel with any information that it believes constitutes material, non-public
information except insofar as the existence, provisions and terms of the
Transaction Documents and the proposed transactions hereunder may constitute
such information, all of which will be disclosed by the Company in the Press
Release as contemplated by Section 4.5 hereof. The Company understands and
confirms that the Purchasers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure furnished by
or on behalf of the Company to the Purchasers regarding the Company, its
business and the transactions contemplated hereby is true and correct in all
material respects and does not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereto.

(ll) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company
nor, to the Company’s Knowledge, any Person acting on its behalf has, directly
or indirectly, at any time within the past six months, made any offers or sales
of any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Shares as contemplated hereby or (ii) cause
the offering of the Shares pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any applicable
law, regulation or stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market on which any
of the securities of the Company are listed or designated.

 

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(mm) Payment of Taxes. The Company has filed all United States federal income
tax returns that have been required to be filed and has paid all taxes shown
thereon or otherwise assessed, which are due and payable, except assessments
against which appeals have been or will be promptly taken and as to which
adequate reserves have been provided. Each of the Company and the Subsidiary has
filed all other tax returns that are required to have been filed by it pursuant
to applicable state, local or foreign law, except insofar as the failure to file
such returns would not reasonably be expected to have a Material Adverse Effect,
and has paid all taxes shown thereon or otherwise assessed, which are due and
payable, except assessments against which appeals have been or will be promptly
taken and as to which adequate reserves have been provided. Neither the Company
nor the Subsidiary has any tax deficiency that has been or, to the knowledge of
the Company, might be asserted or threatened against it that would reasonably be
expected to have a Material Adverse Effect.

(nn) Environmental Laws. Each of the Company and the Subsidiary (a) to the
Company’s Knowledge, is in compliance with any and all applicable federal,
state, local and foreign laws, rules, regulations, decisions and orders relating
to the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants (collectively,
“Environmental Laws”); (b) to the Company’s Knowledge has received and is in
compliance with all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business; and (c) has not received
notice of any actual or potential liability for the investigation or remediation
of any disposal or release of hazardous or toxic substances or wastes,
pollutants or contaminants, except, in each case described above, as would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(oo) No General Solicitation. Neither the Company nor, to the Company’s
Knowledge, any person acting on behalf of the Company has offered or sold any of
the Shares by any form of general solicitation or general advertising.

(pp) Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in the SEC
Reports and is not so disclosed.

(qq) Foreign Corrupt Practices Act. Neither the Company, the Subsidiary nor, to
the knowledge of the Company, any director, officer, agent, employee, affiliate
or other person acting on behalf of the Company or the Subsidiary, is aware of
or has taken any action, directly or indirectly, that would result in a
violation by such persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”), including,
without limitation, making use of the mails or any means or instrumentality of
interstate commerce corruptly in furtherance of an offer, payment, promise to
pay or authorization of the payment of any money, or other property, gift,
promise to give, or authorization of the giving of anything of value to any
“foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political
office, in contravention of the FCPA; and each of the Company, the Subsidiary,
and, to the knowledge of the Company, its affiliates, has conducted its
businesses in compliance with the FCPA, and has instituted and maintain policies
and procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith.

 

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(rr) Acknowledgment Regarding Purchasers’ Purchase of Shares. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Shares. The Company further
represents to each Purchaser that the Company’s decision to enter into this
Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.

(ss) Regulation M Compliance. The Company has not, and to the Company’s
Knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
any of the Shares, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Shares in violation of Regulation M under
the Exchange Act, or (iii) paid or agreed to pay to any Person any compensation
for soliciting another to purchase any other securities of the Company, other
than, in the case of clauses (ii) and (iii), compensation paid to the Financial
Advisor in connection with the transactions contemplated by this Agreement.

(tt) PFIC Status. Neither the Company nor the Subsidiary is or intends to become
a “passive foreign investment company” within the meaning of Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended.

(uu) OFAC. Neither the Company, the Subsidiary, nor, to the knowledge of the
Company, any director, officer, agent, employee, affiliate or person acting on
behalf of the Company or the Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not directly or indirectly
use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or other person
or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC in contravention of the laws,
rules and regulations pertaining to the U.S. sanctions administered by OFAC.

(vv) Business With Cuba. The Company and the Subsidiary have complied in all
material respects with all provisions of Section 517.075, Florida Statutes
(Chapter 92-198, Laws of Florida) relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.

(ww) Forward-Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in SEC Reports has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith.

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

 

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(yy) Certain Declined Information. Notwithstanding anything to the contrary in
this Agreement, no representation or warranty of the Company contained in
Sections 3.1(h), (j), (m), (s), (t) or (u) shall be deemed breached or otherwise
be deemed not to be true and correct, and the Company shall not be deemed to
have breached any covenant hereunder, or otherwise be liable, with respect to
any information contained in the draft material that is currently in the
possession of the Company (the “Draft Information”) from the U.S. Food and Drug
Administration related to the meeting of the Anesthetic and Analgesic Drug
Products Advisory Committee (“AADPAC”) regarding the Qutenza label expansion
Supplemental New Drug Application (the “Meeting”) or with respect to any
subsequent versions of such materials (the “Subsequent Information”) or any
information in other material released by the U.S. Food and Drug Administration
in connection with the Meeting (along with the Draft Information and Subsequent
Information, collectively the “FDA Information”).

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

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

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

(c) Investment Intent. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Shares as principal for
its own account and not with a view to, or for distributing or reselling such
Shares or any part thereof in violation of the Securities Act or any applicable
state securities laws; provided, however, that by making the representations
herein, such

 

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Purchaser does not agree to hold any of the Shares for any minimum period of
time and reserves the right, subject to the provisions of this Agreement and the
Registration Rights Agreement, at all times to sell or otherwise dispose of all
or any part of such Shares pursuant to an effective registration statement under
the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Such Purchaser is
acquiring the Shares hereunder in the ordinary course of its business. Such
Purchaser does not presently have any agreement, plan or understanding, directly
or indirectly, with any Person to distribute or effect any distribution of any
of the Shares (or any securities which are derivatives thereof) to or through
any person or entity; such Purchaser is not a registered broker-dealer under
Section 15 of the Exchange Act or an entity engaged in a business that would
require it to be so registered as a broker-dealer.

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

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

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

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

(h) Certain Trading Activities. Such Purchaser has not directly or indirectly
engaged in any transactions in the securities of the Company (including, without
limitation, Short Sales involving the Company’s securities) since the time that
such Purchaser was first contacted by the Company regarding the investment in
the Company contemplated herein. “Short Sales” include, without limitation, all
“short sales” as defined in Rule 200 promulgated under Regulation SHO under the
1934 Act and all types of direct and indirect stock pledges, forward sales
contracts, options, puts, calls, swaps and similar arrangements (including on a
total return basis), and sales and other transactions through non-U.S. broker
dealers or foreign regulated brokers (but shall not be deemed to include the
location and/or reservation of borrowable shares of Shares).

 

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

(j) Independent Investment Decision. Such Purchaser has independently evaluated
the merits of its decision to purchase Shares pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Shares constitutes legal, tax or investment advice. Such
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Shares.

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

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

(m) Beneficial Ownership. The purchase by such Purchaser of the Shares issuable
to it at the Closing will not result in such Purchaser (individually or together
with any other Person with whom such Purchaser has identified, or will have
identified, itself as part of a “group” in a public filing made with the
Commission involving the Company’s securities) acquiring, or obtaining the right
to acquire, in excess of 19.999% of the outstanding shares of Common Stock or
the voting power of the Company on a post-transaction basis that assumes that
such Closing shall have occurred. Such Purchaser does not presently intend to,
alone or together with others, make a public filing with the Commission to
disclose that it has (or that it together with such other Persons have)
acquired, or obtained the right to acquire, as a result of such Closing (when
added to any other securities of the Company that it or they then own or have
the right to acquire), in excess of 19.999% of the outstanding shares of Common
Stock or the voting power of the Company on a post-transaction basis that
assumes that each Closing shall have occurred.

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

 

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(o) Certain Declined Information. Each of the undersigned Purchasers hereby
acknowledges and agrees that the Company has offered to provide to such
Purchaser the FDA Information in its possession or otherwise known to the
Company, and has made such information and materials available for review by or
disclosure to such Purchaser, and that such Purchaser has (i) had the
opportunity to receive the FDA Information, and to ask questions of, and receive
answers from, the Company, concerning the FDA Information and (ii) requested
that the Company not disclose to such Purchaser any FDA Information and has not
asked any questions concerning the FDA Information.

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

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) Compliance with Laws. Notwithstanding any other provision of this Article
IV, each Purchaser, severally but not jointly, covenants that the Shares may be
disposed of only pursuant to an effective registration statement under, and in
compliance with the requirements of, the Securities Act, or pursuant to an
available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state
and federal securities laws. In connection with any transfer of the Shares other
than (i) pursuant to an effective registration statement, (ii) to the Company,
(iii) pursuant to Rule 144 (provided that the applicable Purchaser provides the
Company with reasonable assurances (in the form of seller and, if applicable,
broker representation letters) that the securities may be sold pursuant to such
rule) or (iv) in connection with a bona fide pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Shares under the Securities Act. As
a condition of transfer, any such transferee shall agree in writing to be bound
by the terms of this Agreement and the Registration Rights Agreement and shall
have the rights of a Purchaser under this Agreement and the Registration Rights
Agreement with respect to such transferred Shares.

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

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE

 

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STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II)
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. [NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.]

The Company acknowledges and agrees that a Purchaser that is not an Affiliate of
the Company may from time to time pledge, and/or grant a security interest in,
some or all of the legended Shares in connection with applicable securities
laws, pursuant to a bona fide margin agreement in compliance with a bona fide
margin loan. Such a pledge would not be subject to approval or consent of the
Company and no legal opinion of legal counsel to the pledgee, secured party or
pledgor shall be required in connection with the pledge, but such legal opinion
shall be required in connection with a subsequent transfer or foreclosure
following default by the Purchaser transferee of the pledge. No notice shall be
required of such pledge, but Purchaser’s transferee shall promptly notify the
Company of any such subsequent transfer or foreclosure of such legended Shares.
Each Purchaser acknowledges that the Company shall not be responsible for
(i) any pledges relating to, or the grant of any security interest in, any of
the Shares or for any agreement, understanding or arrangement between any
Purchaser and its pledgee or secured party. At the appropriate Purchaser’s
expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Shares may reasonably request in connection with a
pledge or transfer of the Shares, including the preparation and filing of any
required prospectus supplement under Rule 424(b)(3) of the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list
of Selling Stockholders thereunder, and (ii) any violations of applicable
securities laws that may result from the sale of pledged shares as a result of
the Purchaser holding material non-public information at the time of such sale.
Each Purchaser acknowledges and agrees that, except as otherwise provided in
Section 4.1(c), any Shares subject to a pledge or security interest as
contemplated by this Section 4.1(b) shall continue to bear the legend set forth
in this Section 4.1(b) and be subject to the restrictions on transfer set forth
in Section 4.1(a).

(c) Removal of Legends. The legend set forth in Section 4.1(b) above shall be
removed and the Company shall issue a certificate without such legend or any
other legend to the holder of the applicable Shares upon which it is stamped or
issue to such holder by electronic delivery at the applicable balance account at
the Depository Trust Company (“DTC”), if (i) such Shares are registered for
resale under the Securities Act (provided that, if the Purchaser is selling
pursuant to the effective registration statement registering the Shares for
resale, the Purchaser agrees to only sell such Shares during such time that such
registration statement is effective and not withdrawn or suspended, and only as
permitted by such registration statement), (ii) such Shares are sold or
transferred pursuant to Rule 144 (if the transferor is not an Affiliate of the
Company), or (iii) such Shares are eligible for sale under Rule 144, without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such securities and without volume or
manner-of-sale restrictions. Following the earlier of (i) the Effective Date or
(ii) Rule 144 becoming available for the resale of Shares, without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such securities and without volume or
manner-of-sale restrictions, the Company shall deliver to the Transfer Agent
irrevocable instructions that the Transfer Agent shall reissue a certificate
representing the applicable Shares without legend upon receipt by the Transfer
Agent of the legended certificates for such

 

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Shares. Any fees (with respect to the Transfer Agent or otherwise) associated
with the removal of such legend shall be borne by the Company. Following the
Effective Date, or at such earlier time as a legend is no longer required for
certain Shares, the Company will no later than three Trading Days following the
delivery by a Purchaser to the Company or the Transfer Agent (with notice to the
Company) of a legended certificate representing Shares (endorsed or with stock
powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer), and an opinion of counsel to the extent
required by Section 4.1(a) (such third Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to the transferee of such Purchaser or such
Purchaser, as applicable, a certificate representing such Shares that is free
from all restrictive and other legends. The Company may not make any notation on
its records or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4.1(c). Certificates for
Shares subject to legend removal hereunder may be transmitted by the Transfer
Agent to the Purchasers by crediting the account of the Purchaser’s prime broker
with DTC as directed by such Purchaser.

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

4.3 Furnishing of Information. In order to enable the Purchasers to sell the
Shares under Rule 144, until the date that the Shares cease to be Registrable
Securities (as defined in the Registration Rights Agreement) (and for no less
than 12 months from the Closing), the Company shall timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. During such period, if the Company is not required to file
reports pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Shares under Rule 144.

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

4.5 Securities Laws Disclosure; Publicity. On or before 9:00 a.m., New York City
time, on the Business Day immediately following the date hereof, the Company
shall issue a press release (the “Press Release”) disclosing all material terms
of the transactions contemplated hereby. On or before 5:30 p.m., New York City
time, by the fourth Business Day immediately following the execution of this
Agreement, the Company will file a Current Report on Form 8-K with the
Commission describing the material terms of the Transaction Documents (and
including as exhibits to such Current Report on Form 8-K the material
Transaction Documents (including, without

 

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limitation, this Agreement and the Registration Rights Agreement)). From and
after the issuance of the Press Release, no Purchaser shall be in possession of
any material, non-public information received from the Company or any of its
officers, directors, employees or agents, that is not disclosed in the Press
Release. Each Purchaser, severally and not jointly with the other Purchasers,
covenants that until such time as the transactions contemplated by this
Agreement are required to be publicly disclosed by the Company as described in
this Section 4.5, such Purchaser will maintain the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).

4.6 Shareholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by the Company,
or that any Purchaser could be deemed to trigger the provisions of any such plan
or arrangement, in either case solely by virtue of receiving Shares under the
Transaction Documents or under any other written agreement between the Company
and the Purchasers; provided, however, that no such Purchaser owns any equity in
the Company prior to its purchase of the Shares hereunder.

4.7 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents,
including this Agreement, or as expressly required by any applicable securities
law, the Company covenants and agrees that neither it, nor any other Person
acting on its behalf, will provide any Purchaser or its agents or counsel with
any information regarding the Company that the Company believes constitutes
material non-public information without the express written consent of such
Purchaser, unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information. The Company
understands and confirms that each Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the Company. Notwithstanding
the foregoing, the terms of this Section 4.7 shall not apply to any Potentially
Disclosed Information or information provided to a Purchaser, directly or
indirectly, that has a representative occupying management or director positions
with the Company.

4.8 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Shares hereunder for working capital and general corporate purposes. The Company
shall, subject to the closing conditions set forth in Article II, be obligated
to issue not less than 2,900,000 shares pursuant to this Agreement.

4.9 Indemnification of Purchasers. Subject to the provisions of this
Section 4.9, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation (the “Indemnified Liabilities”) that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other

 

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Transaction Documents or (b) any action instituted against a Purchaser in any
capacity, or any Purchaser Party or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser seeking
indemnification, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser may have with any
such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities which is permissible under applicable law. Promptly
after receipt by any such Person (the “Indemnified Person”) of notice of any
demand, claim or circumstances which would or might give rise to a claim or the
commencement of any action, proceeding or investigation in respect of which
indemnity may be sought pursuant to this Section 4.9, such Indemnified Person
shall promptly notify the Company in writing and the Company shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Person, and shall assume the payment of all fees and expenses
relating to such action, proceeding or investigation; provided, however, that
the failure of any Indemnified Person so to notify the Company shall not relieve
the Company of its obligations hereunder except to the extent that the Company
is actually and materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; (ii) the Company shall
have failed promptly to assume the defense of such proceeding and to employ
counsel reasonably satisfactory to such Indemnified Person in such proceeding;
or (iii) in the reasonable judgment of counsel to such Indemnified Person,
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. The Company shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned. Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, delayed or conditioned, the Company
shall not effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Person, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.

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

4.11 Form D; Blue Sky. The Company agrees to timely file a Form D with respect
to the Shares as required under Regulation D and to provide a copy thereof,
promptly upon the written request of any Purchaser. The Company, on or before
the Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Shares for sale to the Purchasers at the Closing pursuant to this Agreement
under applicable securities or “blue sky” laws of the states of the United
States (or to obtain an exemption from such qualification) and shall provide
evidence of such actions promptly upon the written request of any Purchaser.

 

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4.12 Confidentiality After The Date Hereof. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.5, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Transaction Documents.

4.13 Subsequent Equity Sales. From the date hereof until 30 days after the
Effective Date, the Company shall not issue shares of Common Stock or Common
Stock Equivalents; provided, however, the 30-day period set forth in this
Section 4.13 shall be extended for the number of Trading Days during such period
in which (i) trading in the Common Stock is suspended by any Trading Market, or
(ii) following the Effective Date, the Registration Statement is not effective
or the prospectus included in the Registration Statement may not be used by the
Purchasers for the resale of the Shares. Notwithstanding the foregoing, in no
event shall this Section 4.13 prohibit the Company from issuing shares of Common
Stock or Common Stock Equivalents (i) in connection with acquisitions or
strategic transactions approved by a majority of the disinterested directors of
the Company, provided that any such issuance shall only be to a Person which is,
itself or through its subsidiaries, an operating company in a business
synergistic with the business of the Company and in which the Company receives
benefits in addition to the investment of funds, but shall not include a
transaction in which the Company is issuing securities primarily for the purpose
of raising capital or to an entity whose primary business is investing in
securities, (ii) upon the exercise of any options, warrants or convertible
securities outstanding on the date hereof, provided they are not amended after
the date hereof, other than an amendment solely in connection with the repricing
of any options, (iii) to employees, directors or consultants pursuant to any
stock option or equity incentive or employee stock purchase plan, (iv) to banks,
financial institutions or venture lenders with which the Company has entered
into debt arrangements or facilities as of the date hereof, or (v) in connection
with the entry by the Company into settlement agreements or similar arrangements
with parties adverse to the Company in any litigation or disputes described in
the SEC Reports prior to the date hereof.

ARTICLE V

CONDITIONS PRECEDENT TO CLOSING

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

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

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

 

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

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

(e) Adverse Change. Since the date of execution of this Agreement, no event or
series of events shall have occurred that has had or would reasonably be
expected to have a Material Adverse Effect, provided that no direct or indirect
effects or circumstances that have occurred or may occur with respect to, or as
a result of, the release by the U.S. Food and Drug Administration of any FDA
Information or the use by the AADPAC panel of the FDA Information shall be
considered to be a Material Adverse Effect for purposes of this Section 5.1.

(f) Listing. The NASDAQ Global Market shall have approved the listing of
additional shares application for the Shares, if such application and approval
are required.

(g) No Suspensions of Trading in Common Stock. The Common Stock shall not have
been suspended, as of the Closing Date, by the Commission or the Principal
Trading Market from trading on the Principal Trading Market.

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

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

(j) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.18 herein.

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

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

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

 

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

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

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

(f) Listing. The NASDAQ Global Market shall have approved the listing of
additional shares application for the Shares, if such application and approval
are required.

(g) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.18 herein.

ARTICLE VI

MISCELLANEOUS

6.1 Fees and Expenses. The Company and the Purchasers shall each pay the fees
and expenses of their respective advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other
taxes and duties levied in connection with the sale and issuance of the Shares
to the Purchasers.

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

6.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender receives
a machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section 6.3 prior to 5:00 p.m., New York City time, on
a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section 6.3 on a day that is not a Trading Day or later than
5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service with next day delivery specified, or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices
and communications shall be as follows:

 

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                    If to the Company:    NeurogesX, Inc.    2215 Bridgepointe
Parkway, Suite 200    San Mateo, CA 94404    Telephone No.: 650-358-3300   
Facsimile No.: 650-412-1999    Attention: Stephen Ghiglieri    E-mail:
sghiglieri@neurogesx.com                        With a copy to:    Morrison &
Foerster LLP    755 Page Mill Road    Palo Alto, CA 94304    Telephone No.:
650-813-5600    Attention: Michael J. O’Donnell    E-mail:
MichaelODonnell@mofo.com                        If to a Purchaser:    To the
address set forth under such Purchaser’s name on the signature page hereof; or
such other address as may be designated in writing hereafter, in the same
manner, by such Person.

6.4 Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and the
Purchasers holding or having the right to acquire 66 2/3% of the Shares at the
time of such amendment or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought; provided, that any amendment, waiver
modification or supplement of this Agreement that modifies the Subscription
Amount of any Purchaser, the Purchase Price or Section 2.1(a) of this Agreement
or causes any such Purchaser to assume any additional liability or obligation,
may be effected only pursuant to a written instrument signed by the Company and
such Purchaser. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right. No consideration shall be offered or paid to any
Purchaser to amend or consent to a waiver or modification of any provision of
this Agreement unless the same consideration is also offered to all Purchasers
who then hold Shares.

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

 

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6.6 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder, may not be
assigned by the Company without the prior written consent of Purchasers holding
or having the right to acquire more than 50% of the Shares at the time of such
consent. Any Purchaser may assign its rights hereunder in whole or in part to
any Person to whom such Purchaser assigns or transfers any Shares in compliance
with the Transaction Documents and applicable law, provided such transferee
shall agree in writing to be bound, with respect to the transferred Shares, by
the terms and conditions of this Agreement that apply to the “Purchasers”.

6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except each Purchaser Party is an intended third party beneficiary of
Section 4.9.

6.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

6.9 Survival. Subject to applicable statute of limitations, the representations,
warranties agreements and covenants contained herein shall survive the Closing
and the delivery of the Shares.

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

 

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

6.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

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

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

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

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

 

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6.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase Shares pursuant
to the Transaction Documents has been made by such Purchaser independently of
any other Purchaser and independently of any information, materials, statements
or opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other
Purchaser or by any agent or employee of any other Purchaser, and no Purchaser
and any of its agents or employees shall have any liability to any other
Purchaser (or any other Person) relating to or arising from any such
information, materials, statement or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Shares or enforcing its rights under the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in its review and negotiation of the Transaction
Documents. The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by any Purchaser.

6.18 Termination. This Agreement may be terminated and the sale and purchase of
the Shares abandoned at any time prior to the Closing by either the Company or
any Purchaser (with respect to itself only) upon written notice to the other, if
the Closing has not been consummated on or prior to 5:00 p.m., New York City
time, on the Outside Date; provided, however, that the right to terminate this
Agreement under this Section 6.18 shall not be available to any Person whose
failure to comply with its obligations under this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or before such time.
Nothing in this Section 6.18 shall be deemed to release any party from any
liability for any breach by such party of the terms and provisions of this
Agreement or the other Transaction Documents or to impair the right of any party
to compel specific performance by any other party of its obligations under this
Agreement or the other Transaction Documents. In the event of a termination
pursuant to this Section 6.18, the Company shall promptly notify all
non-terminating Purchasers. Upon a termination in accordance with this
Section 6.18, the Company and the terminating Purchaser(s) shall not have any
further obligation or liability (including arising from such termination) to the
other, and no Purchaser will have any liability to any other Purchaser under the
Transaction Documents as a result therefrom. The Company and any Purchaser(s)
may extend the term of this Agreement in accordance with the amendment
provisions of Section 6.4 herein.

 

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6.19 Massachusetts Business Trust. A copy of the Agreement and Declaration of
Trust of each Purchaser or any affiliate thereof is on file with the Secretary
of State of the Commonwealth of Massachusetts and notice is hereby given that
this Agreement is executed on behalf of the trustees of such Purchaser or any
affiliate thereof as trustees and not individually and that the obligations of
this Agreement are not binding on any of the trustees, officers or stockholders
of such Purchaser or any affiliate thereof individually but are binding only
upon such Purchaser or any affiliate thereof and its assets and property.

6.20 No Promotion. Except to the extent required by law or applicable
regulation, the Company agrees that it will not, and shall cause each of its
Subsidiaries to not, without the prior written consent of Fidelity Management &
Research Company (“Fidelity”), use in advertising, publicity, or otherwise the
name of Fidelity, or any Purchaser, or any partner or employee of Fidelity or
any Purchaser, nor any trade name, trademark, trade device, service mark, symbol
or any abbreviation, contraction or simulation thereof owned by Fidelity, any
Purchaser or any of their respective affiliates. The Company further agrees that
it shall obtain the written consent of Fidelity prior to the Company’s or any of
its Subsidiaries” issuance of any public statement detailing the purchase of
Common Units by Purchasers pursuant to this Agreement.

[Remainder of Page Intentionally Left Blank, Signatures Follow]

 

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

 

NEUROGESX, INC. By:  

 

  Name:   Stephen Ghiglieri   Title:   Executive Vice President, Chief Operating
Officer and Chief Financial Officer

Company Signature Page to Securities Purchase Agreement

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

 

 

NAME OF PURCHASER: By:       Name:   Title:   Aggregate Shares to be
Purchased:                                                      Aggregate
Purchase Price (Subscription Amount):    $                                   
                                  Tax ID No.:
                                                              Address for
Notice:       Telephone No.:                                          
                    Facsimile No.:                                          
                        E-mail Address:                                       
                          Attention:                                          
                           

 

Registration Information:                   Delivery Instructions:   (if
different than above)     c/o                                          
                                    Street:
                                                                         
City/State/Zip:                                                            
Attention:                                                                    
Telephone No.:                                                            
Street:                                          
                                  City/State/Zip:
                                                            Attention:
                                                                    Telephone
No.:                                                          

Purchaser Signature Page to Securities Purchase Agreement

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

NeurogesX, Inc.

Securities Purchase Agreement

Schedule per Section 3.1(g)

 

As of January 31, 2012:

   Authorized      Issued      Outstanding *  

Common Stock, $0.001 par value

     100,000,000         29,912,186         29,912,182   

Warrants to acquire Common Stock

           7,932,295   

Options to acquire Common Stock

           3,542,584   

Restricted Stock Units

           859,000   

Redeemable Convertible Preferred Stock, $0.001 par value

     10,000,000         0         0         

 

 

    

 

 

 

Total

        29,912,186         42,246,065         

 

 

    

 

 

 

 

* Excludes potential stock or stock options that may be issued under a final
settlement agreement as more fully described in footnote 10 to the financial
statements included in NeurogesX, Inc. 2010 Annual Report on Form 10-K.

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

EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

(SEE ATTACHED)

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

EXHIBIT B

COMPANY ACCOUNT

Wire Instructions:

Silicon Valley Bank

NeurogesX, Inc.

Checking Account # 33002-47915

3003 Tasman Drive

Santa Clara, CA 95054

Bank Routing No: 121140399

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

EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

The undersigned, Stephen Ghiglieri, hereby certifies on behalf of NeurogesX,
Inc. that:

1. He is the duly elected, qualified and acting Executive Vice President, Chief
Operating Officer and Chief Financial Officer of NeurogesX, Inc., a Delaware
corporation (the “Company”).

2. This Compliance Certificate is provided pursuant to Section 5.1(i) of the
Securities Purchase Agreement (the “Purchase Agreement”), dated as of
            , 2012, by and among the Company and the purchasers indentified on
the signature pages thereto. Capitalized terms not otherwise defined herein
shall have the meaning assigned to them in the Purchase Agreement.

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

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

IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as
of             , 2012.

 

NEUROGESX, INC. By:       Stephen Ghiglieri   Executive Vice President, Chief
Operating   Officer and Chief Financial Officer