Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of July 21,
2011 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,
(i) 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 11,749,552 shares of Common Stock and shall be collectively
referred to herein as the “Shares”) and (ii) warrants, in substantially the form
attached hereto as Exhibit A (the “Warrants”), to acquire up to that number of
additional shares of Common Stock equal to 50% of the number of Shares purchased
by such Purchaser, rounded up to the nearest whole share (the shares of Common
Stock issuable upon exercise of or otherwise pursuant to the Warrants
collectively are referred to herein as the “Warrant Shares”); provided, however,
that in the event any Purchasers are Affiliates of each other, all Shares
purchased by such Purchasers shall be aggregated together for the purpose of
determining the aggregate number of Warrant Shares subject to all Warrants
purchased by such Purchasers.

C. The Shares, the Warrants and the Warrant Shares collectively are referred to
herein as the “Securities”.

D. The Company has engaged Leerink Swann LLC to act as sole placement agent (the
“Placement Agent”) for the offering of the Shares and Warrants on a “best
efforts” basis.

E. 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 B (the “Registration Rights
Agreement”), pursuant to which, among other things, the Company will agree to
provide certain registration rights with respect to the Shares and the Warrant
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:

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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.

“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 and the
Warrants 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 such dispute shall be resolved pursuant to Section 10 of the Warrants. 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.

 

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“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.

“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.

 

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“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
Securities or other transactions contemplated by this Agreement, or
(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.

“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.

“Placement Agent” has the meaning set forth in the Recitals.

“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 $1.72 per Unit, 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.

 

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

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

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

“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 to be paid for the Shares and the related Warrants purchased hereunder as
indicated on such Purchaser’s signature page to this Agreement next to the
heading “Aggregate Purchase Price (Subscription Amount)” in United States
dollars and in immediately available funds.

“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 Warrants, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions 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.

“Unit” shall mean a unit comprised of one share of Common Stock and a Warrant to
purchase one-half (0.5) Warrant Shares.

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

 

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

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 Units equal to the quotient resulting from dividing (i) the
Subscription Amount for such Purchaser as indicated below such Purchaser’s name
on its signature page to this Agreement by (ii) the Purchase Price, rounded down
to the nearest whole Share. Warrants shall have an exercise price equal to $1.65
per Warrant Share, subject to adjustment as provided in such Warrants.

(b) Closing. The Closing of the purchase and sale of the Shares and Warrants
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.

(c) Form of Payment. Except as may otherwise be agreed to among the Company and
one or more of the Purchasers, on or prior to the Business Day immediately prior
to the Closing Date, each Purchaser shall wire its Subscription Amount, in
United States dollars and in immediately available funds, to a non-interest
bearing escrow account established by the Company and Leerink Swann, LLC with
American Stock Transfer & Trust Company, LLC, a New York limited liability trust
company, (the “Escrow Agent”) as set forth on Exhibit C hereto (the aggregate
amounts received being held in escrow by the Escrow Agent are referred to herein
as the “Escrow Amount”). On the Closing Date, (a) the Company and Leerink Swann,
LLC shall instruct the Escrow Agent to deliver, in immediately available funds,
the Escrow Amount constituting the aggregate Purchase Price as follows: (1) to
Leerink Swann, LLC the fees and reimbursable expenses payable to the Placement
Agent (which fees and expenses shall be set forth in such instructions), and
(2) the balance of the aggregate Purchase Price to the Company, (b) the Company
shall irrevocably instruct the Transfer Agent to deliver to each Purchaser one
or more stock certificates, free and clear of all restrictive and other legends
(except as expressly provided in Section 4.1(b) hereof), evidencing the number
of Shares such Purchaser is purchasing as is set forth on such Purchaser’s
signature page to this Agreement next to the heading “Number of Shares to be
Acquired,” within three Trading Days after the Closing, and (c) the Company
shall deliver to each Purchaser one or more Warrants, free and clear of all
restrictive and other legends (except as expressly provided in Section 4.1(b)
hereof), evidencing the number of Warrant Shares such Purchaser is entitled to
purchase as is set forth on such Purchaser’s signature page to this Agreement
next to the heading “Underlying Shares Subject to Warrant,” within three Trading
Days after the Closing.

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) facsimile copies of one or more 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, with the original Stock Certificates delivered
within three Trading Days of Closing;

 

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(iii) facsimile copies of one or more Warrants, executed by the Company and
registered in the name of such Purchaser, pursuant to which such Purchaser shall
have the right to acquire such number of Warrant Shares equal to 50% of the
number of Shares issuable to such Purchaser pursuant to Section 2.2(a)(ii),
rounded up to the nearest whole share (provided, however, that in the event any
Purchasers are Affiliates of each other, all Shares purchased by such Purchasers
shall be aggregated together for the purpose of determining the aggregate number
of Warrant Shares subject to all Warrants purchased by such Purchasers), on the
terms set forth therein, with the original Warrants delivered within three
Trading Days of Closing;

(iv) a legal opinion of Company Counsel, dated as of the Closing Date and in
form reasonably acceptable to the Purchasers, executed by such counsel and
addressed to the Purchasers and the Placement Agent;

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

(vi) duly executed Irrevocable Transfer Agent Instructions acknowledged in
writing by the Transfer Agent instructing the Transfer Agent to deliver, on an
expedited basis, a certificate evidencing a number of Shares equal to such
Purchaser’s Subscription Amount divided by the Purchase Price, registered in the
name of such Purchaser;

(vii) 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 Securities, (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;

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

(ix) a Lock-Up Agreement, substantially in the form of Exhibit D hereto (the
“Lock-Up Agreement”) executed by each person listed on Exhibit E hereto, and
each such Lock-Up Agreement shall be in full force and effect on the Closing
Date;

(x) 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;

(xi) 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

(xii) 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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(xiii) a comfort letter from the Company’s auditors addressed to the Placement
Agent, in form and substance reasonably satisfactory to the Placement Agent in
all material respects.

(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) 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 Escrow
Account, as set forth on Exhibit C attached hereto;

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

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 and to the Placement Agent:

(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

 

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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.

(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 and
the Warrants and the reservation for issuance and the subsequent issuance of the
Warrant Shares upon exercise of the Warrants) 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 and Warrants and the reservation for
issuance and issuance of the Warrant 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.

 

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(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 Securities), 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 Securities and the listing of the Shares and
Warrant 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 4.6 of this Agreement, and (vi) those that have been made or obtained
prior to the date of this Agreement (collectively, the “Required Approvals”).

(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. The Warrants 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, 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. The Warrant Shares issuable upon
exercise of the Warrants have been duly authorized and, when issued and paid for
in accordance with the terms of the Transaction Documents and the Warrants, will
be duly and validly issued, fully paid and nonassessable, 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
Securities will be issued in compliance with all applicable federal and state
securities laws. As of the Closing Date, the Company shall have reserved from
its duly authorized capital stock the number of shares of Common Stock issuable
upon exercise of the Warrants (without taking into account any limitations on
the exercise of the Warrants set forth in the Warrants). The Company shall, so
long as any of the Warrants are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued capital stock,
solely for the purpose of effecting the exercise of the Warrants, the number of
shares of Common Stock issuable upon exercise of the Warrants (without taking
into account any limitations on the exercise of the Warrants set forth in the
Warrants).

(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 a result of the purchase and sale of the
Shares and Warrants, there are 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

 

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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 and Warrants 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 Securities. 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 Securities for resale on Form S-3 or any
Purchaser’s ability to use Rule 144 to resell any Securities. As of their
respective filing 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. 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.

 

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(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 Securities 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 adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities, would, if there were an unfavorable decision, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect. None of the Company, the Subsidiary, nor to the Company’s Knowledge any
director or officer thereof, is or has 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.

 

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(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 Securities 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 Listing Rules.

(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

 

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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 Securities.

(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 Securities,
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.

(s) Possession of Licenses and Permits. Each of the Company and, the Subsidiary,
and, to the Company’s Knowledge, each of Astellas Pharma Europe Ltd.
(“Astellas”), Formosa Laboratories, Inc. (“Formosa”), LTS Lohmann
Therapie-Systeme AG (“LTS”), and Contract Pharmaceuticals Limited Canada
(“CPLC,” and together with Astellas, Formosa, and LTS, the “Company-Associated
Parties”), (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, the Subsidiary nor, to the Company’s Knowledge, any Company-Associated
Party 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,
and to the Company’s Knowledge, each of the Company-Associated Parties: (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) has not

 

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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 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) Preclinical Studies and Tests and Clinical Trials. The preclinical studies
and tests and clinical trials that are described in the SEC Reports were, and,
if still pending, are being, conducted by the Company, or, to the Knowledge of
the Company, on behalf of the Company in all material respects in accordance
with experimental protocols, procedures and controls pursuant to, where
applicable, accepted professional and scientific standards for products or
product candidates comparable to those being developed by the Company, including
but not limited to human subject protections and Institutional Review Board
requirements; and such preclinical studies and tests and clinical trials were
and, if still pending, are being conducted by the Company, or, to the Knowledge
of the Company, on behalf of the Company in all materials respects in accordance
with applicable laws and regulations of the FDA or any other applicable federal,
state, local or foreign governmental or regulatory authority; the descriptions
of such studies, tests and trials, and the results thereof, conducted by or on
behalf of the Company contained in the SEC Reports are accurate and complete in
all material respects; the Company is not aware of any tests, studies or trials
not described or referred to in the SEC Reports, the results of which reasonably
call into question the results of the tests, studies and trials described or
referred to in the SEC Reports; and the Company has not received any notice or
correspondence from the FDA or any other applicable federal, state, local or
foreign governmental or regulatory authority exercising comparable authority, or
any Institutional Review Board or comparable authority requiring the
termination, suspension, clinical hold, material delay or material modification
of any tests, studies or trials, which termination, suspension, clinical hold,
material delay or material modification would have a Material Adverse Effect.

 

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(v) 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.

(w) 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) and Company-Associated
Parties, 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,
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) None of the Company, the Subsidiary nor, to the Knowledge of the Company,
any Company Associated Party is a party to any corporate integrity agreements,
monitoring agreements, consent decrees, settlement orders, or similar agreements
with or imposed by any governmental entity.

(x) 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 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

 

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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).

(y) 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.

(z) Statistical and Market-Related Data. Any statistical and market-related data
included in the SEC Reports are based on or derived from sources that the
Company believes to be reliable.

(aa) 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.

(bb) Margin Rules. Neither the issuance, sale and delivery of the Securities 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.

(cc) 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.

(dd) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, 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.

(ee) 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

 

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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.

(ff) 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.

(gg) 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, other than the Placement Agent with respect
to the offer and sale of the Securities (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 (u) 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.

(hh) 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 Securities by the
Company to the Purchasers under the Transaction Documents. The issuance and sale
of the Securities hereunder does not contravene the rules and regulations of the
Principal Trading Market.

(ii) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares and Warrants, 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.

 

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(jj) 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.

(kk) 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 Securities and the Purchasers’ ownership of the Securities.

(ll) Disclosure. Except for information (i) provided to a Purchaser in
connection with such Purchaser’s request and (ii) relating to the Company’s
financing strategy (such information covered under (i) and (ii) collectively
referred to as the “Potentially Disclosed Information”), the Company confirms
that it has not provided, and to the Company’s Knowledge, none of its officers
or directors nor any other Person acting on its or their behalf has provided,
and it has not authorized the Placement Agent to provide, 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, other than the Potentially Disclosed
Information, will be disclosed by the Company in the Press Release as
contemplated by Section 4.6 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.

(mm) 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 Securities as contemplated hereby or
(ii) cause the offering of the Securities 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.

(nn) 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

 

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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.

(oo) 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.

(pp) 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 Securities by any form of general solicitation or general advertising.

(qq) 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.

(rr) 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.

(ss) Acknowledgment Regarding Purchasers’ Purchase of Securities. 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

 

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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
Securities. 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.

(tt) 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 Securities, (ii) sold, bid for, purchased, or, paid any compensation
for soliciting purchases of, any of the Securities 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 Placement Agent in connection with the placement of the Shares and Warrants.

(uu) 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.

(vv) 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.

(ww) 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.

(xx) 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.

(yy) 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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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 and the Placement Agent 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 and Warrants
and, upon exercise of the Warrants, will acquire the Warrant Shares issuable
upon exercise thereof as principal for its own account and not with a view to,
or for distributing or reselling such Securities 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 Purchaser
does not agree to hold any of the Securities 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 Securities 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 Securities 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 Securities (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 and
Warrants, it was, and at the date hereof it is, and on each date on which it
exercises the Warrants it will be, an “accredited investor” as defined in Rule
501(a) under the Securities Act.

 

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(e) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities 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 Securities, 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 Securities 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 Securities and the merits and risks of investing in the
Securities; (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 Securities.

(h) Certain Trading Activities. Other than with respect to the transactions
contemplated herein, since the time that such Purchaser was first contacted by
the Company, the Placement Agent or any other Person regarding the transactions
contemplated hereby, neither the Purchaser nor any Affiliate of such Purchaser
which (x) had knowledge of the transactions contemplated hereby, (y) has or
shares discretion relating to such Purchaser’s investments or trading or
information concerning such Purchaser’s investments, including in respect of the
Securities, and (z) is subject to such Purchaser’s review or input concerning
such Affiliate’s investments or trading (collectively, “Trading Affiliates”) has
directly or indirectly, nor has any Person acting on behalf of or pursuant to
any understanding with such Purchaser or Trading Affiliate, effected or agreed
to effect any purchases or sales of the securities of the Company (including,
without limitation, any Short Sales involving the Company’s securities).
Notwithstanding the foregoing, in the case of a Purchaser and/or Trading
Affiliate that is, individually or collectively, a multi-managed investment bank
or vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s or Trading Affiliate’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s or Trading Affiliate’s assets, the
representation set forth above shall apply only with respect to the portion of
assets managed by the portfolio manager that have knowledge about the financing
transaction contemplated by this Agreement. Other than to other Persons party to
this Agreement, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, for
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect
short sales or similar transactions in the future.

 

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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 Securities 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 Securities 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 Securities. Such Purchaser understands that the Placement Agent
have acted solely as the agents of the Company in this placement of the Shares
and Warrants and such Purchaser has not relied on the business, legal or tax
advice of the Placement Agent or any of their agents, counsel or Affiliates in
making its investment decision hereunder, and confirms that none of such Persons
has made any representations or warranties to such Purchaser in connection with
the transactions contemplated by the Transaction Documents.

(k) Reliance on Exemptions. Such Purchaser understands that the Securities 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 Securities.

(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 Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

(m) Regulation M. Such Purchaser is aware that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of Common Stock and other
activities with respect to the Common Stock by the Purchasers, and agrees to
comply with such rules.

(n) Beneficial Ownership. The purchase by such Purchaser of the Shares and
Warrants 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.

 

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

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 Securities 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 Securities
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 Securities 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 Securities.

(b) Legends. Certificates evidencing the Securities 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):

[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED] [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

 

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SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE 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 Securities 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
Securities. 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 Securities 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 Securities may
reasonably request in connection with a pledge or transfer of the Securities,
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 Securities 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 Securities 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 Securities are registered
for resale under the Securities Act (provided that, if the Purchaser is selling
pursuant to the effective registration statement registering the Securities for
resale, the Purchaser agrees to only sell such Securities during such time that
such registration statement is effective and not withdrawn or suspended, and
only as permitted by such registration statement), (ii) such Securities are sold
or transferred pursuant to Rule 144 (if the transferor is not an Affiliate of
the Company), or (iii) such Securities 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 Securities,
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

 

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certificate representing the applicable Shares or issue a certificate
representing the applicable Warrant Shares without legend upon receipt by the
Transfer Agent of the legended certificates for such 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 Securities, 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
(i) a legended certificate representing Shares or Warrant Shares (endorsed or
with stock powers attached, signatures guaranteed, and otherwise in form
necessary to affect the reissuance and/or transfer) or (ii) an Exercise Notice
in the manner stated in the Warrants to effect the exercise of such Warrant in
accordance with its terms, 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 Securities 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 or Warrant
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.

(d) Irrevocable Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, in form
acceptable to the Purchasers (the “Irrevocable Transfer Agent Instructions”).
The Company represents and warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 4.1(d) (or
instructions that are consistent therewith) will be given by the Company to its
transfer agent in connection with this Agreement, and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the other Transaction Documents and
applicable law. The Company acknowledges that a breach by it of its obligations
under this Section 4.1(d) will cause irreparable harm to a Purchaser.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 4.1(d) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 4.1(d), that a Purchaser shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

(e) Acknowledgement. Each Purchaser, severally but not jointly, acknowledges its
primary responsibilities under the Securities Act and accordingly will not sell
or otherwise transfer the Securities or any interest therein without complying
with the requirements of the Securities Act. While the Registration Statement
remains effective, each Purchaser may sell the Shares and Warrant Shares in
accordance with the plan of distribution contained in the Registration Statement
and if it does so it will comply therewith and with the related prospectus
delivery requirements unless an exemption therefrom is available. Each
Purchaser, severally and not jointly with the other Purchasers, agrees that if
it is notified by the Company in writing at any time that the Registration
Statement registering the resale of the Shares or the Warrant Shares is not
effective or that the prospectus included in such Registration Statement no
longer complies with the requirements of Section 10 of the Securities Act, such
Purchaser will refrain from selling such Shares and Warrant Shares until such
time as such Purchaser is notified by the Company that such Registration
Statement is effective or such prospectus is compliant with Section 10 of the
Securities Act, unless such Purchaser is able to, and does, sell such Shares or
Warrant Shares pursuant to an available exemption from the registration
requirements of Section 5 of the Securities Act. Both the Company and its

 

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Transfer Agent, and their respective directors, officers, employees and agents,
may rely on this Section 4.1(e) and each Purchaser, severally but not jointly,
will indemnify and hold harmless each of such persons from any breaches or
violations of this Section 4.1(e).

(f) Buy-In. If the Company shall fail for any reason or for no reason to issue
to a Purchaser unlegended certificates within three Trading Days after receipt
of all documents necessary for the removal of the legend set forth above (the
“Deadline Date”), then, in addition to all other remedies available to such
Purchaser, if on or after the Trading Day immediately following such three
Trading Day period, such Purchaser purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
holder of shares of Common Stock that such Purchaser anticipated receiving from
the Company without any restrictive legend (a “Buy-In”), then the Company shall,
within three Trading Days after such Purchaser’s request and in such Purchaser’s
sole discretion, either (i) pay cash to such Purchaser in an amount equal to
such Purchaser’s total purchase price (including brokerage commissions, if any)
for the shares of Common Stock so purchased (the “Buy-In Price”), at which point
the Company’s obligation to deliver such certificate (and to issue such shares
of Common Stock) shall terminate, or (ii) promptly honor its obligation to
deliver to such Purchaser a certificate or certificates representing such shares
of Common Stock and pay cash to the Purchaser in an amount equal to the excess
(if any) of the Buy-In Price over the product of (a) such number of shares of
Common Stock, times (b) the Closing Bid Price on the Deadline Date.

4.2 Reservation of Common Stock. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance from and
after the Closing Date, the number of shares of Common Stock issuable upon
exercise of the Warrants issued at the Closing (without taking into account any
limitations on exercise of the Warrants set forth in the Warrants).

4.3 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 and the Warrant
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.

4.4 Furnishing of Information. In order to enable the Purchasers to sell the
Securities under Rule 144, until the date that the Securities 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 Securities under Rule
144.

4.5 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 Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities to the Purchasers, or that will be integrated with the offer
or sale of the Securities for

 

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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.

4.6 Securities Laws Disclosure; Publicity. By 9:00 a.m., New York City time, on
the Trading Day immediately following the date hereof, the Company shall issue a
press release (the “Press Release”) reasonably acceptable to the Placement
Agent, disclosing all material terms of the transactions contemplated hereby. On
or before 5:30 p.m., New York City time, on the fourth Trading 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 limitation, this
Agreement and the Registration Rights Agreement)). Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser or
an Affiliate of any Purchaser, or include the name of any Purchaser or an
Affiliate of any Purchaser in any press release or filing with the Commission
(other than the Registration Statement) or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except (i) as
required by federal securities law in connection with (A) any registration
statement contemplated by the Registration Rights Agreement and (B) the filing
of final Transaction Documents (including signature pages thereto) with the
Commission and (ii) to the extent such disclosure is required by law, request of
the Staff of the Commission or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior written notice of such
disclosure permitted under this subclause (ii). From and after the issuance of
the Press Release, no Purchaser shall be in possession of any material,
non-public information, other than the Potentially Disclosed 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 4.6, 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).

4.7 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 Securities 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 Securities hereunder.

4.8 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

 

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foregoing, the terms of this Section 4.8 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.

4.9 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Shares and Warrants hereunder for working capital and general corporate
purposes.

4.10 Indemnification of Purchasers. Subject to the provisions of this
Section 4.10, 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 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 4.10, 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

 

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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.

4.11 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
Warrant Shares and shall take all steps necessary to cause all of the Shares and
Warrant Shares to be approved for listing on the Principal Trading Market as
promptly as possible thereafter.

4.12 Form D; Blue Sky. The Company agrees to timely file a Form D with respect
to the Securities 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
Securities 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.

4.13 Delivery of Shares and Warrants After Closing. The Company shall deliver,
or cause to be delivered, the respective Shares and Warrants purchased by each
Purchaser to such Purchaser within three Trading Days of the Closing Date.

4.14 Dispositions and Confidentiality After The Date Hereof. Such Purchaser
shall not, and shall cause its Trading Affiliates not to, engage, directly or
indirectly, in any transactions in the Company’s securities (including, without
limitation, any Short Sales involving the Company’s securities) during the
period from the date hereof until the earlier of such time as (i) the
transactions contemplated by this Agreement are first required to be publicly
announced as described in Section 4.6 or (ii) this Agreement is terminated in
full pursuant to Section 6.18. 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 4.6, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information included in the
Transaction Documents. Notwithstanding the foregoing, no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in Short
Sales in the securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced as described in
Section 4.6; provided, however, each Purchaser agrees, severally and not jointly
with any Purchasers, that they will not enter into any Net Short Sales (as
hereinafter defined) from the period commencing on the Closing Date and ending
on the earliest of (x) the Effective Date of the initial Registration Statement,
(y) the 24 month anniversary of the Closing Date or (z) the date that such
Purchaser no longer holds any Securities. For purposes of this Section 4.14, a
“Net Short Sale” by any Purchaser shall mean a sale of Common Stock by such
Purchaser that is marked as a short sale and that is made at a time when there
is no equivalent offsetting long position in Common Stock held by such
Purchaser. For purposes of determining whether there is an equivalent offsetting
position in Common Stock held by a Purchaser, Warrant Shares that have not yet
been issued pursuant to the exercise of Warrants shall be deemed to be held long
by such Purchaser, and the amount of shares of Common Stock held in a long
position shall be all Shares and unexercised Warrant Shares (ignoring any
exercise limitations included therein)

 

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issuable to such Purchaser on such date, plus any shares of Common Stock or
Common Stock Equivalents otherwise then held by such Purchaser. Notwithstanding
the foregoing, in the event that a Purchaser is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s assets and the portfolio managers have no direct knowledge of the
investment decisions made by the portfolio managers managing other portions of
such Purchaser’s assets, the representation set forth above shall apply only
with respect to the portion of assets managed by the portfolio manager that have
knowledge about the financing transaction contemplated by this Agreement.
Moreover, notwithstanding the foregoing, in the event that a Purchaser has sold
Securities pursuant to Rule 144 prior to the Effective Date of the initial
Registration Statement and the Company has failed to deliver certificates
without legends prior to the settlement date for such sale (assuming that such
certificates meet the requirements set forth in Section 4.1(c) for the removal
of legends), the provisions of this Section 4.14 shall not prohibit the
Purchaser from entering into Net Short Sales for the purpose of delivering
shares of Common Stock in settlement of such sale.

4.15 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 4.15 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 and Warrant Shares. Notwithstanding the
foregoing, in no event shall this Section 4.15 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) upon the exercise of the Warrants, provided
they are not amended after the date hereof (iv) to employees, directors or
consultants pursuant to any stock option or equity incentive or employee stock
purchase plan, (v) in connection with any debt financings entered into with
banks, financial institutions or venture lenders, which debt financings have
been disclosed to the Purchasers prior to the date hereof, or (vi) 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 and Warrants 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

 

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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.

(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 Securities 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.

(f) Listing. The NASDAQ Global Market shall have approved the listing of
additional shares application for the Shares and Warrant 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 nor shall suspension
by the Commission or the Principal Trading Market have been threatened, as of
the Closing Date, either (A) in writing by the Commission or the Principal
Trading Market or (B) by falling below the minimum listing maintenance
requirements of 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 F.

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

 

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5.2 Conditions Precedent to the Obligations of the Company to sell Securities.
The Company’s obligation to sell and issue the Shares and Warrants 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.

(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 Securities, 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 and Warrant 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. Except as otherwise expressly set forth in the Company’s
engagement letter with the Placement Agent, 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 Securities 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

 

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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:

 

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 and the
Warrant Shares on a fully-diluted basis 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

 

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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
Securities.

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.

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 66 2/3% of the Shares and Warrant Shares on a
fully-diluted basis 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 Securities in compliance with the Transaction Documents
and applicable law, provided such transferee shall agree in writing to be bound,
with respect to the transferred Securities, 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 (i) the Placement Agent are intended third party beneficiaries of
Article III hereof and (ii) each Purchaser Party is an intended third party
beneficiary of Section 4.10.

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.

 

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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 Securities.

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.

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
Securities 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 Securities. If a replacement certificate or
instrument evidencing any Securities 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.

 

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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.

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 Securities
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 Securities 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. For reasons of administrative convenience only, Purchasers and their
respective counsels have chosen to communicate with the Company through K&L
Gates LLP, counsel to the Placement Agent. Each Purchaser acknowledges that K&L
Gates LLP has rendered legal advice to the Placement Agent and not to such
Purchaser in connection with the transactions contemplated hereby, and that each
such Purchaser has relied for such matters on the advice of its own respective

 

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counsel. 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 and the Warrants 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.

[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: Anthony A. DiTonno

Title: President and Chief Executive Officer

 

Company Signature Page to Securities Purchase Agreement

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

NAME OF PURCHASER:

By:  

 

 

Name:

Title:

 

Aggregate Purchase Price

(Subscription Amount): $                    

  Number of Shares to be Acquired:               Underlying Shares Subject to
Warrant:               50% of the number of Shares to be acquired)   Tax ID
No.:                      

Address for Notice:

 

 

 

 

  Telephone No.:  

 

  Facsimile No.:  

 

  E-mail Address:  

 

  Attention:  

 

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

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NeurogesX, Inc.

Securities Purchase Agreement

Schedule per Section 3.1(g)

 

As of July 21, 2011:    Authorized      Issued      Outstanding *  

Common Stock, $0.001 par value

     100,000,000         17,943,207         17,943,207   

Warrants to acquire Common Stock

           1,265,846   

Options to acquire Common Stock

           4,298,715   

Redeemable Convertible Preferred Stock, $0.001 par value

     10,000,000         0         0   

Total

     110,000,000         17,943,207         23,507,768   

 

* 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

FORM OF WARRANT

(SEE ATTACHED)

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EXHIBIT B

REGISTRATION RIGHTS AGREEMENT

(SEE ATTACHED)

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

EXHIBIT C

ESCROW ACCOUNT

Escrow Wire Instructions:

JP MORGAN CHASE BANK

ABA #: 021 000 021

ACCT #: 937-420354

ACCT NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY LLC

AS AGENT FOR NEUROGESX INC FBO … (INSERT INVESTOR’S NAME)

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

EXHIBIT D

FORM OF LOCK-UP AGREEMENT

LEERINK SWANN LLC

One Federal Street, 37th Floor

Boston, MA 02110

 

Re: NeurogesX, Inc. – Offering of Common Stock

Dear Sirs:

In order to induce the purchasers (the “Purchasers”) to enter in to a Securities
Purchase Agreement, to which the Purchasers will be party, with NeurogesX, Inc.,
a Delaware corporation (the “Company”), with respect to the private placement of
the Company’s common stock, par value $0.001 per share (“Common Stock”), and
other securities of the Company (the “Offering”), the undersigned hereby agrees
that for a period (the “Lock-up Period”) of ninety (90) days following the date
of the closing of the Offering, the undersigned will not, without the prior
written consent of the Purchasers, directly or indirectly, (i) offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of or agree to
dispose of, any shares of Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock (including, without limitation,
shares of Common Stock or any such securities which may be deemed to be
beneficially owned by the undersigned in accordance with the rules and
regulations promulgated under the Securities Act of 1933, as the same may be
amended or supplemented from time to time (the “Securities Act”) (such shares or
securities, the “Beneficially Owned Shares”)), (ii) enter into any swap, hedge
or other agreement or arrangement that transfers, in whole or in part, the
economic benefits or risks of ownership of any Beneficially Owned Shares, Common
Stock or securities convertible into or exercisable or exchangeable for Common
Stock, (iii) engage in any short selling of any Beneficially Owned Shares,
Common Stock or securities convertible into or exercisable or exchangeable for
Common Stock, or (iv) publicly announce an intention to effect a transaction
specified in clause (i), (ii), or (iii). In addition, the undersigned hereby
waives, from the date hereof until the expiration of the thirtieth (30th) day
following the effective date of the Company’s first effective registration
statement filed in connection with the Offering, any and all rights, if any, to
request or demand registration pursuant to the Securities Act of any shares of
Common Stock or securities convertible into or exercisable or exchangeable for
Common Stock that are registered in the name of the undersigned or that are
Beneficially Owned Shares.

If (i) the Company issues an earnings release or material news or a material
event relating to the Company occurs during the last seventeen (17) days of the
Lock-up Period, or (ii) prior to the expiration of the Lock-up Period, the
Company announces that it will release earnings results during the sixteen
(16)-day period beginning on the last day of the Lock-up Period, the
restrictions imposed by this Lock-Up Letter Agreement shall continue to apply
until the expiration of the eighteen (18)-day period beginning on the issuance
of the earnings release or the occurrence of the material news or material
event.

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

Notwithstanding the foregoing, the undersigned may transfer Beneficially Owned
Shares (i) as a bona fide gift or gifts, (ii) to any trust for the direct or
indirect benefit of the undersigned or the immediate family of the undersigned,
or (iii) by will or intestate succession; provided, that (A) each donee,
transferee or distributee shall execute and deliver a letter substantially in
the form hereof agreeing to be bound by the terms hereof for the remainder of
the Lock-Up Period, and (B) neither the undersigned nor any other party to the
applicable transaction shall be required to file, or voluntarily file, a report
under Section 16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), other than a filing on Form 5 made after the expiration of the
Lock-up Period. For purposes of this Lock-Up Letter Agreement, the term
“immediate family” shall mean any relationship by blood, marriage or adoption,
not more remote than first cousin. Notwithstanding the foregoing, nothing
contained in this letter agreement shall prohibit the undersigned from
(i) establishing a trading plan (a “Trading Plan”) pursuant to Rule 10b5-1 of
the Securities Exchange Act of 1934, as amended, provided that the undersigned
shall not engage in any transaction under such Trading Plan until the
termination of the restrictions imposed by this letter agreement, (ii) having
transactions carried out on the undersigned’s behalf under a Trading Plan
established prior to the date of this letter agreement or (iii) exercising any
stock option of the Company issued prior to the date of this letter agreement.

Anything contained herein to the contrary notwithstanding, any person to whom
shares of Common Stock, securities convertible into or exercisable or
exchangeable for Common Stock or Beneficially Owned Shares are transferred from
the undersigned shall be bound by the terms of this Lock-Up Letter Agreement.

In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or stop transfer orders with the
transfer agent of the Common Stock with respect to any shares of Common Stock,
securities convertible into or exercisable or exchangeable for Common Stock or
Beneficially Owned Shares.

It is understood that, if the Company notifies the Purchasers that it does not
intend to proceed with the Offering or if the Offering is not consummated by
September 30, 2011, this Lock-Up Letter Agreement shall terminate and the
undersigned will be released from his, her or its obligations hereunder.

[Signature Page Follows]

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

The undersigned hereby represents and warrants that the undersigned has full
power and authority to enter into this Lock-Up Letter Agreement and that, upon
request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.

 

By  

 

  Printed Name:   Title:

Dated:                    

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EXHIBIT E

LIST OF PERSONS EXECUTION A LOCK-UP AGREEMENT

Anthony DiTonno

Stephen Ghiglieri

Jeffrey Tobias

Keith Bley

Michael Markels

Russell Kawahata

Susan Rinne

J.J. Bienaime

Bradford Goodwin

Neil Kurtz

Gary Lyons

Robert Nelsen

Steven Nelson

John Orwin

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

EXHIBIT F

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
                    , 2011, 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                     , 2011.

 

NEUROGESX, INC. By:  

 

  Stephen Ghiglieri   Executive Vice President, Chief Operating Officer and
Chief Financial Officer