SECURITIES PURCHASE AGREEMENT
 
This Securities Purchase Agreement (this “Agreement”) is dated as of December
16, 2008, by and between Neuralstem, Inc., a Delaware corporation (the
“Company”), and Seaside 88, LP, a Florida limited partnership (such investor,
including its successors and assigns, “Seaside”).
 
WHEREAS, subject to the terms and conditions set forth in this Agreement, the
Company desires to issue and sell to Seaside, and Seaside desires to purchase
from the Company, $2,000,000 of shares of Common Stock on the Closing Date
pursuant to an effective Registration Statement on Form S-3, file no.
333-153387;
 
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 Seaside agree as
follows:
 
ARTICLE I.
DEFINITIONS
 
1.1 Definitions.  In addition to the terms defined elsewhere in this Agreement,
for all purposes of this Agreement, the following terms have the meanings
indicated in this Section 1.1:
 
“Action” shall have the meaning ascribed to such term in Section 3.1(j).
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person as such terms are used in and construed under Rule 144.
 
“Closing” means the closing of the purchase and sale of the Common Stock
pursuant to Section 2.1.
 
 “Closing Date” means December 16, 2008 or such later date when all of the
Transaction Documents have been executed and delivered by the applicable parties
thereto, and all conditions precedent to (i) Seaside’s obligations to pay the
Subscription Amount and (ii) the Company’s obligations to deliver the Securities
have been satisfied or waived.
 
 “Commission” means the Securities and Exchange Commission.
 
“Common Stock” means the common stock of the Company, par value $.01 per share,
and any securities into which such common stock may hereafter be reclassified.
 
“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries 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.
 
“Company Counsel” means The Law Offices of Raul Silvestre & Associates, APLC.
 
 
 

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“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.
 
“Effective Date” means the date that the Registration Statement was first
declared effective by the Commission.
 
“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(l).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers, directors or consultants of the Company pursuant to any
stock or option plan duly adopted by a majority of the non-employee members of
the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, (b) securities
upon the exercise of or conversion of any Securities issued hereunder or
convertible securities, options or warrants issued and outstanding on the date
of this Agreement, provided that the terms of such securities have not been
amended since the date of this Agreement to increase the number of such
securities or to decrease the exercise or conversion price of any such
securities, and (c) securities issued pursuant to acquisitions or strategic
transactions, provided 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.
 
 “GAAP” shall have the meaning ascribed to such term in Section 3.1(h).
 
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.
 
 “Material Adverse Effect” shall have the meaning ascribed to such term in
Section 3.1(b).
 
“Per Share Purchase Price” equals $1.25.
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
“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.
 
“Prospectus Supplement” means the supplement to the base prospectus contained in
the Registration Statement to be filed in connection with the sale to Seaside of
the Securities.

 
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 “Registration Statement” means the registration statement of the Company,
Commission File No. 333-153387, as amended, covering the sale to Seaside of the
Securities.
 
 “Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).
 
“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.
 
“Seaside Party” shall have the meaning ascribed to such term in Section 4.6.
 
“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).
 
“Securities” means the Shares.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Shares” means the shares of Common Stock issued or issuable to Seaside pursuant
to this Agreement.
 
“Short Sales” shall include, without limitation, all “short sales” as defined in
Rule 200 of Regulation SHO of the Exchange Act, but does not include any
reservation or location of borrowable shares.
 
“Subscription Amount” means, as to Seaside, the amounts set forth below such
Seaside’s signature block on the signature page hereto, in United States dollars
and in immediately available funds.
 
“Subsidiary” shall mean the subsidiaries of the Company, if any, set forth on
Schedule 3.1(a).
 
 “Trading Day” means a day on which the Common Stock is traded on a Trading
Market.
 
“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question:  the NYSE
Alternext Exchange, the New York Stock Exchange, the Nasdaq Capital Market, the
Nasdaq Global Market, the Nasdaq Global Select Market or the Over-the Counter
Bulletin Board.
 
“Transaction Documents” means this Agreement and any other documents or
agreements executed in connection with the transactions contemplated hereunder.

 
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ARTICLE II.
PURCHASE AND SALE
 
2.1 Closing.  On the Closing Date, Seaside shall purchase from the Company, and
the Company shall issue and sell to Seaside, a number of Shares equal to
$2,000,000 divided by the Per Share Purchase Price.  Upon satisfaction of the
conditions set forth in Sections 2.2, 2.3 and 2.4, the Closing shall occur at
the offices of White White & Van Etten PC, 55 Cambridge Parkway, Cambridge, MA
02142, or such other location as the parties shall mutually agree.
 
2.2 Deliveries by the Company.  On the Closing Date, the Company shall deliver
or cause to be delivered to Seaside the following:
 
(a) the receipt by Seaside, via the DTC DWAC system, as specified on the
signature pages hereto, of the number of Shares equal to $2,000,000 divided by
the Per Share Purchase Price, registered in the name of Seaside;
 
(b) an officer’s certificate of the Company’s Chief Executive Officer or Chief
Financial Officer, in form reasonably acceptable to Seaside, certifying the
accuracy of the Company’s representations and warranties made in this Agreement
as of the Closing Date and the Company’s performance of the covenants to be
performed by it pursuant to this Agreement at or prior to Closing;  and
 
(c) a legal opinion of Company Counsel, in the form of Exhibit A attached
hereto.
 
2.3 Deliveries by Seaside.   On the Closing Date, Seaside shall deliver or cause
to be delivered to the Company $2,000,000 by wire transfer to the account as
specified in writing by the Company.  The Company agrees that Seaside may deduct
from such wire transfer the amount due Seaside for reimbursement of its expenses
as described in Section 5.2 hereof.
 
2.4 Closing Conditions.
 
(a)           The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met:
 
(i)         the accuracy in all material respects when made and on the Closing
Date of the representations and warranties of Seaside contained herein;
 
(ii)        all obligations, covenants and agreements of Seaside required to be
performed at or prior to the Closing Date shall have been performed; and
 
(iii)       the delivery by Seaside of the items set forth in Section 2.3 of
this Agreement.
 
(b) The respective obligations of Seaside hereunder in connection with the
Closing are subject to the following conditions being met:
 
(i)         the accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained herein;
 
(ii)        all obligations, covenants and agreements of the Company required to
be performed at or prior to the Closing Date shall have been performed;

 
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(iii)       the delivery by the Company of the items set forth in Section 2.2 of
this Agreement;
 
(iv)       there shall have been no Material Adverse Effect with respect to the
Company since the date hereof, that has not been cured by the Company; and
 
(v)        from the date hereof to the Closing Date, trading in the Common Stock
shall not have been suspended by the Commission (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the Closing), and, at any time prior to the Closing Date,
trading in securities generally as reported by Bloomberg Financial Markets shall
not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of Seaside, makes it impracticable or inadvisable to purchase the
Shares at the Closing.
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
 
3.1           Representations and Warranties of the Company.  Except as set
forth under the corresponding section of the Disclosure Schedules, which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to Seaside:
 
(a) Subsidiaries.  All of the direct and indirect subsidiaries of the Company
are set forth on Schedule 3.1(a) (each a “Subsidiary”).  The Company owns,
directly or indirectly, all of the capital stock or other equity interests of
each Subsidiary free and clear of any Liens, and all the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.  If the Company has no subsidiaries, then references in
the Transaction Documents to the Subsidiaries will be disregarded.
 
(b)           Organization and Qualification.  The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the Company nor any Subsidiary is in violation
or default of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.  Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or financial condition of the Company
and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on
the Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 
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(c) Authorization; Enforcement.  The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
each of the Transaction Documents and otherwise to carry out its obligations
thereunder.  The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated thereby
have been duly authorized by all necessary action on the part of the Company and
its stockholders and no further action is required by the Company or its
stockholders in connection therewith other than in connection with the Required
Approvals.  Each Transaction Document has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (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 of the Transaction
Documents by the Company, the issuance and sale of the Shares and the
consummation by the Company of the other transactions contemplated thereby do
not and will not (i) conflict with or violate any provision of the Company’s or
any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, violate or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, 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 the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.
 
(e) Filings, Consents and Approvals.  The Company is not required to obtain any
consent, waiver, 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, the Trading Market or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than the filing of the Prospectus supplement and any notice
filings as are required to be made following the Closing Date under applicable
federal and state securities laws or under applicable rules and regulations of
the Trading Market (collectively, the “Required Approvals”).

 
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(f) Issuance of the Securities.  The Shares are duly authorized and, when issued
and paid for in accordance with the Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents or applicable federal and state securities laws.  The
Company has reserved from its duly authorized capital stock the maximum number
of shares of Common Stock issuable pursuant to this Agreement.  The issuance by
the Company of the Shares has been registered under the Securities Act and all
of the Shares when delivered will be freely transferable and tradable on the
Trading Market by Seaside without restriction (other than any restrictions
arising solely from an act or omission of a Seaside). The Registration Statement
is effective and available for the issuance of the Shares thereunder and the
Company has not received any notice that the Commission has issued or intends to
issue a stop-order with respect to the Registration Statement or that the
Commission otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, or intends or has
threatened in writing to do so.  The “Plan of Distribution” section under the
Registration Statement permits the issuance and sale of the Shares
hereunder.  The Shares constitute less than 10% of the issued and outstanding
shares of Common Stock.
 
(g) Capitalization.  The capitalization of the Company is as set forth in its
most recently filed periodic report under the Exchange Act.  The Company has not
issued any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of employee stock options
under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plan and pursuant
to the conversion or exercise of outstanding Common Stock Equivalents.  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.  Except as disclosed in the SEC Reports or Schedule
3.1(g), there are no outstanding options, warrants, script rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exchangeable for, or giving any Person
any right to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents. Except as disclosed in the SEC Reports or Schedule
3.1(g), the issue and sale of the Securities will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than
Seaside) and will not result in a right of any holder of Company securities to
adjust the exercise, conversion, exchange or reset price under such
securities.  All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in material
compliance with all federal and state securities laws and requirements of the
Trading Market, 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 or the
Board of Directors of the Company is required for the issuance and sale of the
Shares.  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 knowledge of the Company, between or among any of
the Company’s stockholders.

 
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(h) SEC Reports; Financial Statements.  The Company has filed or furnished all
reports, schedules, forms, statements and other documents required to be filed
or furnished by it under the Securities Act and the Exchange Act (including all
required exhibits thereto), including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (or such shorter period as
the Company was required by law 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”) and any notices,
reports or other filings pursuant to requirements of the Trading Market 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.  As of
their respective dates, 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 light of the circumstances under which
they were made, not misleading.  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.  Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), 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,
year-end audit adjustments.
 
(i) Material Changes.  Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in the SEC
Reports, (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect, except
as has been reasonably cured by the Company (ii) the Company has not incurred
any 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
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not 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 and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option and
incentive plans.  The Company does not have pending before the Commission any
request for confidential treatment of information.

 
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(j) Litigation.  Except as disclosed in the SEC Reports, there is no action,
suit, notice of violation, or proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the Securities or (ii) could, if there were an unfavorable decision, have or
reasonably be expected to result in a Material Adverse Effect.  Neither the
Company nor any Subsidiary, nor, to the knowledge of the Company, 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 knowledge of the
Company, there is not currently 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 or any Subsidiary under the Exchange Act or the Securities Act and, to
the Company’s knowledge, no proceeding for such purpose is pending before or
threatened by the Commission.
 
(k) Compliance.  Neither the Company nor any Subsidiary (i) is 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, could reasonably be expected to result in
a default by the Company or any Subsidiary under), nor has the Company or any
Subsidiary received notice of a claim that it is in default under or that it is
in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is in violation of any statute, rule or regulation of any governmental authority
or the Trading Market, including without limitation all foreign, federal, state
and local laws applicable to its business, except in each case as would not have
a Material Adverse Effect.
 
(l) Sarbanes-Oxley; Internal Accounting Controls.  The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are
applicable to it as of the Closing Date.  The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed periodic report under the Exchange Act,
as the case may be, is being prepared.  The Company’s certifying officers have
evaluated the effectiveness of the Company’s disclosure controls and procedures
as of a date prior to the filing date of the most recently filed periodic report
under the Exchange Act (such date, the “Evaluation Date”).  The Company
presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the Company’s
disclosure controls and procedures based on their evaluations as of the
Evaluation Date.  Since the Evaluation Date, there have been no changes in the
Company’s internal controls over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
controls over financial reporting.

 
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(m) Listing and Maintenance Requirements.  The Company’s Common Stock is
registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration.  The Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and immediately after the consummation of
the transactions contemplated hereby will be, in compliance with all such
listing and maintenance requirements.
 
(n) Application of Takeover Protections.  The Company and its 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 Certificate of Incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
Seaside as a result of Seaside 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 Seaside’s ownership of
the Securities.
 
(o) Disclosure. The Company confirms that, neither the Company nor any officer,
director or employee of the Company acting on its behalf has provided Seaside or
its agents or counsel with any information that constitutes or might constitute
material, non-public information.  The Company understands and confirms that
Seaside will rely on the foregoing representations and covenants in effecting
transactions in securities of the Company.  All disclosure provided to Seaside
regarding the Company, its business and the transactions contemplated hereby
furnished by or on behalf of the Company with respect to the representations and
warranties made herein are true and correct with respect to such representations
and warranties and do 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 Seaside does not make and
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in Section 3.2
hereof.
 
(p) Effective Registration Statement.  The Registration Statement has been
declared effective by the Commission and the Company knows of no reason why the
Registration Statement will not continue to remain effective for the foreseeable
future.  The Company is eligible to use Form S-3 registration statements for the
issuance of securities.
 
(q) Acknowledgment Regarding Seaside’s Purchase of Shares.  The Company
acknowledges and agrees that Seaside is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby.  The Company further acknowledges that Seaside
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any advice given by Seaside or any of its respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to Seaside’s purchase of the
Shares.  The Company further represents to Seaside that the Company’s decision
to enter into this Agreement has been based solely on the independent evaluation
of the transactions contemplated hereby by the Company and its representatives.

 
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(r) Approvals.  The issuance and listing on the Trading Market of the Shares
requires no further approvals, including but not limited to, the approval of
shareholders.
 
(s) Intellectual Property.  The Company possesses such right, title and interest
in and to, patents, patent rights, trade secrets, inventions, know-how,
trademarks, trade names, copyrights, service marks and other proprietary rights
(“Intellectual Property”) material to the conduct of the Company’s business
except Intellectual Property the failure to possess of which would not have a
Material Adverse Effect. Except as disclosed in the SEC Reports, the Company has
not received any notice of infringement, misappropriation of conflict from any
third party as to such that has not been resolved or disposed of, which
infringement, misappropriation or conflict would if adversely decided
individually or in the aggregate have a Material Adverse Effect.  To the
Company’s knowledge, it has not infringed, misappropriated, or otherwise
conflicted with Intellectual Property of any third parties, which infringement,
misappropriation of conflict would individually or in the aggregate have a
Material Adverse Effect.
 
(t) Permits.  The Company has made all filings, applications and submissions
required by, and possesses all approvals, licenses, certificates,
certifications, clearances, consents, exemptions, marks, notifications, orders,
permits and other authorizations issued by, the appropriate federal, state or
foreign regulatory authorities (including, without limitation, the U.S. Food and
Drug Administration of the Department of Health and Human Services (the “FDA”),
and any other foreign, federal, state or local government or regulatory
authorities performing functions similar to those performed by the FDA, not
including Required Approvals) necessary to own or lease its properties or to
conduct its businesses (collectively, “Permits”), except for such Permits the
failure of which to possess, obtain or make the same would not reasonably be
expected to have a Material Adverse Effect; and the Company has not received any
written notice of proceedings relating to the limitation, revocation,
cancellation, suspension, modification or non-renewal of any such Permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect, and has no reason to believe that
any such license, certificate, permit or authorization will not be renewed in
the ordinary course.
 
(u) Clinical Studies.  The clinical, pre-clinical and other studies and tests
conducted by or on behalf of or sponsored by the Company were and, if still
pending, are being conducted in accordance in all material respects with all
statutes, laws, rules and regulations, as applicable (including, without
limitation, those administered by the FDA or by any foreign, federal, state or
local governmental or regulatory authority performing functions similar to those
performed by the FDA) except as would not have a Material Adverse Effect.   The
Company has not received any notices or other correspondence from the FDA or any
other foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA with respect to any
ongoing clinical or pre-clinical studies or tests requiring the termination or
suspension of such studies or tests, except as would not have a Material Adverse
Effect.

 
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Seaside acknowledge and agree that the Company does not make or has not made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.1.
 
3.2 Representations and Warranties of Seaside.  Seaside represents and warrants
as of the date hereof and as of the Closing Date to the Company as follows:
 
(a) Organization; Authority.  Seaside is a limited partnership duly otherwise
organized, validly existing and in good standing under the laws of the state of
Florida, with full right, power and authority to own and use its properties and
assets and to carry on its business as currently conducted and to enter into and
to consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution, delivery and
performance by Seaside of the transactions contemplated by this Agreement and
each other Transaction Document have been duly authorized by all necessary
action on the part of Seaside and no such further action is required.  Each
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by Seaside, and, when delivered by Seaside in accordance
with the terms thereof, will constitute the valid and legally binding obligation
of Seaside, enforceable against it in accordance with its terms, except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (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.
 
(b) Seaside Representation.  Seaside does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities. Seaside is not required to be registered as a broker-dealer under
Section 15 of the Exchange Act or otherwise.
 
(c) Experience of Seaside.  Seaside, 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.  Seaside 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.
 
(d) Short Sales.  Seaside has not directly or indirectly executed any Short
Sales in the securities of the Company through the date hereof.
 
The Company acknowledges and agrees that Seaside does not make or has not made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.
 
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
 
4.1 No Transfer Restrictions. Certificates evidencing the Shares shall not
contain any legend restricting their transferability by Seaside.  The Company
shall cause its counsel to issue a legal opinion to the Company’s transfer agent
if required by the Company’s transfer agent to effect a transfer of any of the
Securities; such opinion shall be provided by the Company’s counsel at no
expense to Seaside.

 
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4.2 Furnishing of Information. As long as Seaside owns Securities, the Company
covenants to use best efforts to 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.  As
long as Seaside owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to Seaside and make
publicly available in accordance with Rule 144(c) such information as is
required for Seaside to sell the Securities under Rule 144.  The Company further
covenants that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable such
Person to sell such Securities without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144.  If at any time
from the Closing Date until 360 days thereafter, the Company fails to remain
current in its SEC reporting requirements, then in addition to Seaside’s other
available remedies, for each 30 day period or portion thereof in which the
Company is not in compliance with its SEC reporting requirements, the Company
shall pay to Seaside such number of shares of Common Stock equal to 10% of the
number of Shares then held by Seaside.  Nothing herein shall limit Seaside’s
right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.
 
4.3 Securities Laws Disclosure; Publicity.  The Company shall, by 9:00 a.m.
Eastern time on the Trading Day following the date hereof file a Current Report
on Form 8-K which attaches as exhibits all agreements relating to this
transaction, in each case reasonably acceptable to Seaside, if Seaside is
readily available to review such Form 8-K in a timely manner, disclosing the
material terms of the transactions contemplated hereby.
 
4.4 Shareholders Rights Plan.  No claim will be made or enforced by the Company
or, to the knowledge of the Company, any other Person that Seaside is an
“Acquiring Person” under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that Seaside could
be deemed to trigger the provisions of any such plan or arrangement, by virtue
of receiving Securities under the Transaction Documents or under any other
agreement between the Company and Seaside.  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.
 
4.5 Non-Public Information.  The Company covenants and agrees that neither it
nor any other Person acting on its behalf will provide Seaside or its agents or
counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto Seaside shall have executed a
written agreement regarding the confidentiality and use of such
information.  The Company understands and confirms that Seaside shall be relying
on the foregoing representations in effecting transactions in securities of the
Company.

 
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4.6 Indemnification of Seaside.   Subject to the provisions of this Section 4.6,
the Company will indemnify and hold Seaside, Seaside’s Affiliates and their
respective directors, officers, shareholders, partners, members, employees and
agents (each, a “Seaside 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 reasonably incurred in connection with defending
or investigating any suit or action in respect thereof to which any Seaside
Party may become a party under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses arise out of or are based on (a) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus Supplement, or (b) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided that the
Company will not be liable in any such case to the extent that any such
liability, obligation, claim, contingency, damage, cost or expense arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Company by and regarding Seaside expressly for
inclusion therein.  If any action shall be brought against any Seaside Party in
respect of which indemnity may be sought pursuant to this Agreement, such
Seaside Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing.  Any Seaside Party shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Seaside Party except to
the extent that (i) the employment thereof has been specifically authorized by
the Company in writing, (ii) the Company has failed after a reasonable period of
time to assume such defense and to employ counsel or (iii) in such action there
is, in the reasonable opinion of such separate counsel, a material conflict on
any material issue between the position of the Company and the position of such
Seaside Party.  The Company will not be liable to any Seaside Party under this
Agreement (i) for any settlement by a Seaside Party effected without the
Company’s prior written consent, which consent shall not be unreasonably
withheld or delayed; or (ii) to the extent, but only to the extent, that a loss,
claim, damage or liability is attributable to any Seaside Party’s breach of any
of the representations, warranties, covenants or agreements made by Seaside in
this Agreement or in the other Transaction Documents.
 
4.7 Listing of Common Stock.  The Company hereby agrees to use best efforts to
maintain the listing of the Common Stock on a Trading Market.  The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, it will include in such application all of the Shares and
will take such other action as is necessary to cause all of the Shares to be
listed on such other Trading Market as promptly as possible.  The Company will
take all action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Trading Market.
 
4.8 Right of First Refusal.  From the date hereof until six months after the
Closing Date, neither the Company nor any Subsidiary shall issue shares of
Common Stock or Common Stock Equivalents without first offering Seaside the
right to purchase such Common Stock or Common Stock Equivalents on the same
terms proposed to be sold to any third party.
 
4.9 Approval of Subsequent Equity Sales.  The Company shall not issue shares of
Common Stock or Common Stock Equivalents if such issuance would require
shareholder approval pursuant to applicable rules of the Trading Market, unless
and until such shareholder approval is obtained.

 
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4.10 Short Sales.  Seaside covenants that neither it nor any affiliates acting
on its behalf or pursuant to any understanding with it will execute any Short
Sales during the period it owns any of the Shares.
 
4.11 Prospectus Supplement.  The Company will use its best efforts to file the
Prospectus Supplement as soon as practicable following the Closing Date, but in
any event agrees to make such filing on or before December 16, 2008.
 
ARTICLE V.
MISCELLANEOUS
 
5.1 Termination.  This Agreement may be terminated by Seaside by written notice
to the Company, if the Closing has not been consummated on or before December
17, 2008, provided however that no such termination will affect the right of any
party to sue for any breach by the other party (or parties).
 
5.2 Fees and Expenses.  Except as otherwise set forth in this Agreement and as
set forth in this Section 5.2 below, each party shall pay the fees and expenses
of its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement.  The Company shall pay
all stamp and other taxes and duties levied in connection with the delivery of
the Securities.  Notwithstanding the foregoing, at the Closing, the Company
shall reimburse Seaside for the fees and expenses of its counsel, White White &
Van Etten PC, in an amount equal to $18,000.
 
5.3 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 and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
 
5.4 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 at the facsimile number set
forth on the signature pages attached hereto prior to 5:30 p.m. (Eastern 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
set forth on the signature pages attached hereto on a day that is not a Trading
Day or later than 5:30 p.m. (Eastern time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, 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 set forth on the signature pages attached hereto.
 
5.5 Amendments; Waivers.  No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and Seaside or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought.  No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

 
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5.6 Headings.  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.
 
5.7 Successors and Assigns.  This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns.  The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of Seaside.  Seaside may assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
Company.
 
5.8 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 as otherwise set forth in Section 4.6.
 
5.9 Governing Law.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents 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.  The
parties hereby waive all rights to a trial by jury.  If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys’ fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.
 
5.10 Survival.  The representations and warranties herein shall survive the
Closing and delivery of the Shares.
 
5.11 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, 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.
 
5.12 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.

 
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5.13 Rescission and Withdrawal Right.  Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever Seaside 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 Seaside 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.
 
5.14 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 of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  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.
 
5.15 Remedies.  In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, Seaside 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 the obligations set forth herein and
hereby agree to waive in any such action for specific performance of any such
obligation the defense that a remedy at law would be adequate.
 
5.16 Payment Set Aside.  To the extent that the Company makes a payment or
payments to Seaside pursuant to any Transaction Document or Seaside 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.
 
5.17 Construction. The parties agree that each of them and/or their respective
counsel has reviewed and had an opportunity to revise the Transaction Documents
and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.
 
(Signature Pages 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.
 
Neuralstem, Inc.
 
Address for Notice:
     
By:
   
9700 Great Seneca Highway
 
Name:
Title:
 
Rockville, MD 20850
Attention:  President
     
With a copy to (which shall not constitute notice):
 
The Law Offices of Raul Silvestre
& Associates, APLC
21200 Via Colinas, Suite 200
Westlake Village, CA, 91362
Attention:  Raul Silvestre, Esq.

Seaside 88, LP
 
Address for Notice:
     
By:
   
750 Ocean Royale Way
 
Name:
Title:
 
Suite 805
North Palm Beach, FL 33408
Attention:  William J. Ritger and
Denis M. O’Donnell, M.D.
     
With a copy to (which shall not constitute notice):
 
White White & Van Etten PC
55 Cambridge Parkway
Cambridge, MA 02142
Attention:  David A. White, Esq.

Address for Delivery of Securities for Seaside (if not same as above):

DWAC Instructions for Common Stock:

DTC # - 0571 -  
Account number - G53-1348923

Subscription Amount: $2,000,000.00

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 
 

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