<PAGE>

                                                                    EXHIBIT 10.9

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











                                 UROGEN CORP.

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

                      Note and Warrant Purchase Agreement

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


                                 July 8, 1998











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<PAGE>

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                         Page
                                                                         ----
<S>                                                                      <C>
ARTICLE I - Purchase of Notes and Warrants ..............................  1
     1.1  Notes .........................................................  1
     1.2  Warrants ......................................................  1
     1.3  Allocation of Purchase Price ..................................  1
     1.4  Obligations of Investors ......................................  1

ARTICLE II - Closing and Delivery .......................................  2
     2.1  Place and Date of Closing .....................................  2
     2.2  Subsequent Closings ...........................................  2
     2.3  Delivery ......................................................  2

ARTICLE III - Representations and Warranties of the Company .............  2
     3.1  Organization and Standing .....................................  2
     3.2  Corporate Power ...............................................  2
     3.3  Authorization .................................................  3
     3.4  Capitalization ................................................  3
     3.5  Validity of Securities; Reservation of Shares .................  4
     3.6  Governmental Consent, etc. ....................................  4
     3.7  SEC Documents; Parent Financial Statements ....................  4
     3.8  No Material Adverse Change ....................................  5
     3.9  Litigation ....................................................  5

ARTICLE IV - Representations and Warranties of the Investors ............  5
     4.1  Authorization .................................................  5
     4.2  Experience/Risk ...............................................  5
     4.3  Investment ....................................................  6
     4.4  Restricted Securities .........................................  6
     4.5  Limited Public Market .........................................  6
     4.6  Access to Data ................................................  6
     4.7  Accredited Investor Status ....................................  6
     4.8  Government Consents ...........................................  6
     4.9  Legends .......................................................  6

ARTICLE V - Transfer Restrictions; Rights as Stockholder ................  7
     5.1  Restrictions on Transfer ......................................  7
     5.2  No Rights or Liability as a Stockholder .......................  8

ARTICLE VI - Registration Rights ........................................  8
     6.1  Registrable Securities ......................................... 8
     6.2  Registration ..................................................  8
     6.3  Company Obligations ...........................................  8
     6.4  Underwriting ..................................................  9
</TABLE>
<PAGE>

                              TABLE OF CONTENTS
                                  (continued)
<TABLE>
<CAPTION>
                                                                         Page
                                                                         ----
     <S>  <C>                                                            <C>
     6.5  Selling Procedures ............................................  10
     6.6  Expenses ......................................................  11
     6.7  Indemnification ...............................................  11

ARTICLE VII - Miscellaneous .............................................  12
     7.1  Waivers and Amendments ........................................  12
     7.2  Governing Law .................................................  12
     7.3  Survival ......................................................  12
     7.4. Successors and Assigns ........................................  12
     7.5  Entire Agreement ..............................................  12
     7.6  Severability ..................................................  12
     7.7  California Corporate Securities Law ............................ 13
     7.8  Titles and Subtitles ..........................................  13
     7.9  Delays or Omissions ...........................................  13
     7.10 Notices .......................................................  13
     7.11 Counterparts ..................................................  13
</TABLE>

EXHIBITS

   A   Schedule of Investors
   B   Form of Convertible Promissory Note
   C   Form of Warrant
   D   Schedule of Exceptions

<PAGE>

                                 UROGEN CORP.

                      NOTE AND WARRANT PURCHASE AGREEMENT

     THIS NOTE AND WARRANT PURCHASE AGREEMENT (the "Agreement") is made as of
July 8, 1998 by and among Urogen Corp., a Delaware corporation (the "Company"),
with its principal office at 10835 Altman Row, Suite A, San Diego, California
92121 and the investors whose names appear on the Schedule of Investors attached
hereto as Exhibit A (the "Investors").
          ---------

                                   ARTICLE I

                        Purchase of Notes and Warrants

     1.1  Notes. Subject to the terms and conditions hereof, the Company will
          -----
issue and sell to the Investors, and the Investors will each purchase from the
Company, subordinated unsecured convertible promissory notes in substantially
the form attached hereto as Exhibit B (each, a "Note," and collectively, the
                            ---------
"Notes") ia the principal amount set forth opposite each Investor's name on the
Schedule of Investors. Each Note shall be convertible into shares of Company's
Common Stock (such shares, the "Conversion Shares") on the terms set forth
therein.

     1.2  Warrants. In consideration of the Investors purchasing the Notes,
          --------
subject to the terms and conditions hereof, the Company will issue to each
Investor, and each Investor will acquire, severally and not jointly, from the
Company, a warrant or warrants in substantially the form attached hereto as
Exhibit C (each, a "Warrant," and collectively, the "Warrants") exercisable for
---------
that number of shares of the Company's Common Stock (such shares, the "Warrant
Shares") set forth opposite such Investor's name on the Schedule of Investors.

     1.3  Allocation of Purchase Price. The purchase price payable by each
          ----------------------------
Investor for the Note and Warrant to be purchased hereunder (the "Purchase
Price") shall be equal to the principal amount of the Note set forth opposite
such Investor's name on the Schedule of Purchasers. The Purchase Price paid by
each Investor shall be allocated as follows: (i) ninety-nine percent (99%) of
the Purchase Price shall be allocated to the Note received by such Investor, and
(ii) one percent (1%) of the Purchase Price shall be allocated to the Warrant
received by such Investor.

     1.4  Obligations of Investors. The obligations of the Investors hereunder
          ------------------------
are several and not joint.
<PAGE>

                                  ARTICLE II

                             Closing and Delivery

     2.1  Place and Date of Closing. The initial closing of the transactions
          -------------------------
provided for herein (the "Closing") will be held at the offices of Wilson
Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304 at
10:00 a.m. on July 8, 1998 (the "Closing Date") or at such other time and place
as the parties shall mutually agree.

     2.2  Subsequent Closings. The Company may, at its option, schedule
          -------------------
additional closings (the "Additional Closings") after the first Closing has
been completed on such date or dates as the Company may determine, but not later
than July 30, 1998. The date of each Additional Closing is hereinafter referred
to as an "Additional Closing Date." The first Closing and each Additional
Closing are sometimes referred to herein individually as a "Closing" and the
first Closing Date and each Additional Closing Date are sometimes referred to
herein individually as a "Closing Date." At each Additional Closing, the Company
shall prepare a revised Schedule of Investors to include any additional
Investors, and each such additional Investor shall execute a signature page to
this Agreement.

     2.3  Delivery. At the Closing, the Company will deliver to each Investor
          --------
(i) a Note in the principal amount set forth opposite such Investor's name on
the Schedule of Investors and (ii) a Warrant to purchase the number of Warrant
Shares set forth opposite such Investor's name on the Schedule of Investors.
Each Investor shall deliver to the Company the principal amount set forth
opposite such Investor's name on the Schedule of Investors by check or by wire
transfer.

                                  ARTICLE III

                 Representations and Warranties of the Company

     The Company hereby represents and warrants to each Investor as follows:

     3.1  Organization and Standing. The Company is a corporation duly organized
          -------------------------
and validly existing under, and by virtue of, the laws of the State of Delaware
and is in good standing under such laws. The Company has the requisite corporate
power to own and operate its properties and assets, and to carry on its business
as presently conducted and as proposed to be conducted.

     3.2  Corporate Power. The Company will have at the Closing all requisite
          ---------------
legal and corporate power to execute and deliver this Agreement, to issue the
Notes, the Warrants, the Conversion Shares and the Warrant Shares and to carry
out and perform its obligations under the terms of this Agreement.

                                      -2-
<PAGE>

     3.3  Authorization. All corporate action on the part of the Company, its
          -------------
officers, directors and stockholders that is necessary for the authorization,
execution and delivery of this Agreement by the Company, for the performance of
the Company's obligations hereunder, and for the authorization, issuance and
delivery of the Notes, the Warrants, the Conversion Shares and the Warrant
Shares, has been taken or will be taken prior to the Closing. This Agreement,
the Notes and the Warrants, when executed and delivered, shall constitute the
legal and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to judicial principles
respecting election of remedies or limiting the availability of specific
performance, injunctive relief, and other equitable remedies, and bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect generally relating to or affecting creditors' rights.

     3.4  Capitalization. As of the date hereof, the authorized capital stock of
          --------------
the Company consists of 40,000,000 shares of common stock ("Common Stock"), of
which 7,537,319 shares will be issued and outstanding immediately prior to the
first Closing, and 5,000,000 shares of preferred stock ("Preferred Stock'), of
which no shares are issued. All such issued and outstanding shares of Common
Stock have been duly authorized, validly issued and fully paid and non-
assessable and have been issued in accordance with the registration and
qualification provisions of the Securities Act of 1933, as amended (the
"Securities Act"), and relevant state securities laws, or pursuant to valid
exemptions therefrom. As of the date hereof, the Company has reserved 1,017,382
shares of Common Stock for issuance to employees, officers, directors and
consultants of the Company as may be determined by the Company's Board of
Directors from time to time under the Company's 1995 Stock Plan, as amended
("Option Plan"). There are no outstanding rights, options, warrants, preemptive
rights, conversion rights, rights of first refusal or similar rights or
agreements, oral or written, for the purchase or acquisition from the Company of
any shares of its capital stock or any other securities, except for outstanding
options under the Option Plan and the following warrants: (i) in connection with
a License Agreement with an unaffiliated company (the "Third Party"), the
Company issued a warrant to the Third Party which permits the Third Party to
maintain a fully-diluted ownership interest of two percent (2%) or to increase
its ownership interest to three percent (3%) at a price ranging from $0.03 to
$0.04 per share; this warrant expires in March 1999; (ii) in 1997, the Company
issued a warrant to purchase 200,000 shares of Common Stock at $0.05 per share
to an officer of the Company; this warrant expires in July 2001. In addition, on
July 16, 1998, the Board of Directors approved new non-qualified options to Paul
D. Quadros, Robert E. Sobol, M.D., and William Raschke, Ph.D. as well as a
group of consultants currently employed by the Company's potential corporate
partner. A total of 804,472 options for shares of common stock were granted to
the current management team and a total of 1,465,254 options for shares of
common stock were granted to the consultants. All of the option grants are
contingent on shareholder approval of a proposed 1998 Stock Option Plan. In
addition, the grants awarded to the outside consultants are also contingent upon
the execution of consulting agreements on mutually agreeable terms. All of the
grants are subject to four year vesting.

                                      -3-

<PAGE>

     3.5  Validity of Securities: Reservation of Shares. The Notes and
          ---------------------------------------------
Warrants, when issued, sold and delivered in accordance with the terms of this
Agreement, the Conversion Shares, when issued, sold and delivered in accordance
with the terms of the Notes, and the Warrant Shares, when issued, sold and
delivered in accordance with the terms of the Warrants, will be duly
authorized, validly issued, fully paid and nonassessable and will be free and
clear of any liens or encumbrances; provided, however, that any of the Notes,
                                    --------  -------
the Warrants, the Conversion Shares or the Warrant Shares may be subject to
restrictions on transfer to the extent provided herein or under state and/or
federal securities laws. Based in part upon the representations of the Investors
in this Agreement, the offer, sale and issuance of the Notes and the Warrants
(and the Conversion Shares and Warrant Shares) will be issued in compliance with
all applicable federal and state securities laws. The Company has reserved
1,080,000 and 515,000 shares of Common Stock, respectively, for issuance upon
conversion of the Notes and exercise of the Warrants issued hereunder. The
Company covenants that, so long as any Notes or Warrants remain outstanding, it
will at all times reserve and keep available, solely for issuance to the holders
of the Notes and Warrants in accordance with this Agreement, shares of Common
Stock issuable upon conversion of the Notes and exercise of the Warrants. If at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the issuances contemplated by this Agreement, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purpose.

     3.6  Governmental Consent. etc. No consent, approval or authorization of or
          -------------------------
designation, declaration or filing with any state or federal governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement or the offer, sale or issuance of the
Notes and Warrants (and the Conversion Shares and Warrant Shares), or the
consummation of any other transaction contemplated hereby, except the
qualification (or the taking of such action as may he necessary to secure an
exemption from qualification, if available) under the California Corporate
Securities Law and other applicable Blue Sky laws, of the offer and sale of the
Notes and Warrants (and the Conversion Shares and Warrant Shares), which filing
and qualification, if required, will be accomplished in a timely manner prior to
or promptly upon completion of the Closing.

     3.7  SEC Documents: Parent Financial Statements. The Company has furnished
          ------------------------------------------
or made available to the Investors true and complete copies of all reports or
registration statements filed by it with the U.S. Securities and Exchange
Commission (the "SEC") under the Securities Act or the Securities Exchange Act
of 1934 (the "Exchange Act") since January 1, 1996, all in the form so filed
(all of the foregoing being collectively referred to as the "SEC Documents"),
which are all the documents (other than preliminary materials) that the Company
was required to file with the SEC since such date. As of their respective filing
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Act or the Exchange Act, as the case may be, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the

                                      -4-
<PAGE>

extent corrected by a document subsequently filed with the SEC. The financial
statements of the Company, including the notes thereto, included in the SEC
Documents (the "Financial Statements") comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles consistently applied
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) and present fairly the
consolidated financial position of the Company at the dates thereof and the
consolidated results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal audit adjustments).
There has been no change in the Company's accounting policies except as
described in the notes in the Financial Statements.

     3.8  No Material Adverse Change. Since the date of the balance sheet
          --------------------------
included in the Company's most recently filed report on Form 10-Q or Form 10-K,
the Company has conducted its business in the ordinary course and there has not
occurred: (a) any material adverse change in the financial condition,
liabilities, assets or business of the Company; (b) any amendment or change in
the Certificate of Incorporation or Bylaws of the Company; or (c) any damage to,
destruction or loss of any assets of the Company (whether or not covered by
insurance) that materially and adversely affects the financial condition or
business of the Company.

     3.9  Litigation. There is no action, suit, proceeding, claim, arbitration
          ----------
or investigation pending, or as to which the Company has received any notice of
assertion against the Company, which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
by this Agreement.

                                  ARTICLE IV

                Representations and Warranties of the Investors

     Each Investor represents and warrants to the Company, as of the Closing
Date and upon conversion of any Notes or exercise of any Warrants, as follows
(the Notes, the Warrants, the Conversion Shares and the Warrant Shares are
collectively referred to as the "Securities"):

     4.1  Authorization. All action on the part of the Investor for the
          -------------
authorization, execution, delivery and performance by the Investor of this
Agreement has been taken, and this Agreement constitutes a valid and binding
obligation of the Investor, enforceable in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, or similar
laws relating to or affecting the enforcement of creditors' rights.

     4.2  Experience/Risk. The Investor is experienced in evaluating and
          ---------------
investing in new companies such as the Company. The Investor is a sophisticated
investor with such knowledge and experience in financial and business matters so
as to be capable of evaluating the merits and

                                      -5-
<PAGE>

risks of a prospective investment in the Securities and who is capable of
bearing the economic risks of such investment.

     4.3  Investment. The Investor is acquiring the Securities for investment
          ----------
for its own account and not with a view to, or for resale in connection with,
any distribution. The Investor understands that the Securities to be acquired
have not been registered under the Securities Act, by reason of a specific
exemption from the registration provisions of the Securities Act which depends
upon, among other things, the bona fide nature of the investment intent as
expressed herein.

     4.4  Restricted Securities. The Investor acknowledges that the Securities
          ---------------------
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. The Investor is
aware of the provisions of Rule 144 promulgated under the Securities Act which
permits limited resale of securities purchased in a private placement subject to
the satisfaction of certain conditions, including, in case the Investor has held
the Securities for less than two years or is an affiliate of the Company, among
other things: the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the Securities to be sold, the sale being through a "broker's
transaction" or in transactions directly with a "market maker" and the number
of Securities being sold during any three-month period not exceeding specified
limitations.

     4.5  Limited Public Market. The Investor understands that only an extremely
          ---------------------
limited public market now exists for the Common Stock and no public market
exists for the other Securities issued by the Company and that it is unlikely
public market for the Company's Common Stock will develop sufficiently to permit
the resale of the Securities or that any such public market will be sustained.

     4.6  Access to Data. The Investor has had an opportunity to discuss the
          --------------
Company's business, management and financial affairs with the Company's
management. The Investor understands that such discussions, as well as the
written information issued by the Company, were intended to describe the aspects
of the Company's business and prospects which it believes to be material but
were not necessarily a thorough or exhaustive description.

     4.7  Accredited Investor Status. Investor presently does and will as of the
          --------------------------
Closing Date qualify as an "accredited investor" within the meaning of
Regulation D(17 C.F.R. (S) 230.501) of the rules and regulations promulgated
under the Act.

     4.8  Government Consents. No consent, approval or authorization of or
          -------------------
designation, declaration or filing with any state, federal or foreign
governmental authority on the part of Investor is required in connection with
the valid execution and delivery of this Agreement by Investor, and the
consummation by Investor of the transactions contemplated hereby.

     4.9  Legends. Each certificate representing the Securities shall be
          -------
endorsed with the following legend (in addition to any legend required under
applicable state securities laws):

                                      -6-
<PAGE>

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
          ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
          THE SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD
          OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS
          SUCH SALE OR TRANSFER 1S EXEMPT FROM THE REGISTRATION AND
          PROSPECTUS DELIVERY REQUIREMENT OF SAID ACT. COPIES OF THE
          AGREEMENT COVERING THE ACQUISITION OF THESE SECURITIES AND
          RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
          WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
          CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
          PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.

The Company need not record a transfer of Securities, unless the conditions
specified in the foregoing legends are satisfied. The Company may also instruct
its transfer agent not to record the transfer of any of the Securities unless
the conditions specified in the foregoing legends are satisfied.

                                   ARTICLE V

                 Transfer Restrictions; Rights as Stockholder

     5.1  Restrictions on Transfer. Each Investor acknowledges that the
          ------------------------
Securities may not be transferred or assigned in whole or in part without (i)
the prior written consent of the Company and (ii) compliance with applicable
federal and state securities laws; provided, however, that the Securities may be
                                   --------  -------
transferred without the prior written consent of the Company in the following
transactions:

          (a)  A transfer of Securities in whole by a holder who is a natural
person during such holder's lifetime or on death by will or intestacy to such
holder's immediate family or to any custodian or trustee for the account of such
holder or such holder's immediate family. As used herein, "immediate family"
shall mean spouse, lineal descendant, father, mother, brother, or sister of the
holder.

          (b)  A transfer of Securities in whole to the Company or to any
stockholder of the Company.

          (c)  A transfer of Securities in whole or in part to a person who, at
the time of such transfer, is or is an affiliate of an officer or director of
the Company.

          (d)  A transfer of Securities in whole pursuant to and in accordance
with the terms of any merger, consolidation, reclassification of shares or
capital reorganization of the cor-

                                      -7-
<PAGE>

porate stockholder or pursuant to a sale of all or substantially all of the
stock or assets of a corporate stockholder.

          (e)  A transfer of Securities in accordance with Rule 144 under the
Securities Act.

          (f)  A transfer of Securities in whole by a holder which is a limited
or general partnership to any of its partners or former partners.

     5.2  No Rights or Liability as a Stockholder. Neither the Notes nor the
          ---------------------------------------
Warrants shall entitle the holder thereof to any voting rights or other rights
as a stockholder of the Company. No provisions of the Notes or the Warrants, in
the absence of affirmative action by the holder thereof to purchase Conversion
Shares and/or Warrant Shares, and no enumeration herein of the rights or
privileges of the holder hereof, shall give rise to any liability of such holder
as a stockholder of the Company.

                                   ARTICLE VI

                              Registration Rights

     6.1  Registrable Securities. The shares of Common Stock issued or issuable
          ----------------------
upon conversion of the Notes and exercise of the Warrants shall be deemed
"Registrable Securities" and the holders of such shares (the "Holders") shall be
entitled to registration rights with respect thereto as set forth in this
Article VI.

     6.2  Registration. The Company shall use its commercially reasonable
          ------------
efforts to cause the Registrable Securities to be held by each Holder to be
registered under the Securities Act so as to permit the resale thereof, and in
connection therewith shall use all commercially reasonable efforts to prepare
and file with the Securities and Exchange Commission (the "SEC") on or before
December 31, 1998, and shall use its commercially reasonable efforts to cause to
become effective as soon as practicable thereafter, a registration statement
under the Securities Act covering the Registrable Securities; provided, however,
                                                              --------  -------
that each Holder shall provide all such information and materials to the Company
and take all such action as may be required in order to permit the Company to
comply with all applicable requirements of the SEC and to obtain any desired
acceleration of the effective date of such registration statement. Such
provision of information and materials is a condition precedent to the
obligations of the Company to such Holder pursuant to this Article VI. The
Company shall not be required to effect more than one (1) registration under
this Article VI.

     6.3  Company Obligations. The Company shall (i) keep the registration
          -------------------
statement filed in accordance with Section 6.2 hereof effective until the
earlier of (A) One Hundred Eighty (180) days after the registration statement is
declared effective by the SEC or (B) such time as all

                                      -8-
<PAGE>

Registrable Securities included in such registration have been sold thereunder;
(ii) forthwith prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities proposed to be
registered in such registration statement; (iii) furnish to each Holder such
number of copies of any prospectus (including any preliminary prospectus and any
amended or supplemented prospectus) in conformity with the requirements of the
Securities Act, and such other documents, as each Holder may reasonably request
in order to effect the offering and sale of the shares of the Registrable
Securities to be offered and sold, but only while the Company shall be required
under the provisions hereof to cause the registration statement to remain
current; (iv) provide a CUSIP number, transfer agent and registrar for all
Registrable Securities; and (v) use its commercially reasonable efforts to
register or qualify the shares of the Registrable Securities covered by such
registration statement under the securities or blue sky laws of such
jurisdictions as each Holder shall reasonably request (provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such jurisdiction where it has not been qualified).

     6.4  Underwriting. If the distribution of the Registrable Securities
          ------------
covered by a registration pursuant to this Article VI is to be effected by means
of a firm commitment underwriting, the right of any Holder to include
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.

          (a) The Company (together with all Holders proposing to distribute
their securities through such underwriting) shall enter into an underwriting
agreement in customary form with a managing underwriter of nationally recognized
standing selected for such underwriting by the Company but subject to the
approval of a majority in interest of the Holders, which approval shall not
unreasonably be withheld. Notwithstanding any other provision of this Article
VI, if the managing underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, then the underwriters may
limit the number of shares of Registrable Securities that may be included in the
registration and underwriting, provided that no shares other than Registrable
Securities are included in such registration and underwriting. The shares so
limited shall be allocated among Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the managing
underwriter's marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of the underwriting, such person may elect
to withdraw therefrom by written notice to the Company and the managing
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from registration; provided,
                                                                  --------
however, that if by the withdrawal of such Registrable Securities a greater
-------
number of Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional

                                      -9-
<PAGE>

Registrable Securities in the same proportion used in determining the
underwriter limitation as set forth above.

          (b)  If the managing underwriter has not limited the number of
Registrable Securities to be underwritten in any registration requested pursuant
to Section 6.2, the Company may include securities for its own account or for
the account of others in such registration if the managing underwriter so agrees
and if the number of Registrable Securities held by Initiating Holders which
would otherwise have been included in such registration and underwriting will
not thereby be limited. The inclusion of such shares shall be on the same terms
as the registration of shares held by the Initiating Holders. In the event that
the managing underwriter excludes some of the securities to be registered in
connection with a requested registration pursuant to Section 6.2, the securities
to be sold for the account of the Company and any other holders shall be
excluded in their entirety prior to the exclusion of any Registrable Securities.

     6.5  Selling Procedures. Any sale of Registrable Securities pursuant to the
          ------------------
registration statement filed in accordance with Section 6.2 hereof shall be
subject to the following conditions and procedures:

          (a)  Updating the Prospectus. If the distribution of the Registrable
               -----------------------
Securities covered by a registration pursuant to this Article VI is not to be
effected by means of a firm commitment underwriting, and if the Company informs
the selling Holder that the registration statement or final prospectus then on
file with the SEC is not current or otherwise does not comply with the
Securities Act, the Company shall use commercially reasonable efforts to provide
to the selling Holder a current prospectus that complies with the Securities Act
on or before the date of the intended sale of the Registrable Securities;
provided, however, that no more than once during any ninety (90) day period (the
--------  -------
"Information Delay Period"), the Company shall have the right to delay the
preparation of a current prospectus that complies with the Securities Act for up
to twenty-five (25) days, if the Board of Directors of the Company or an
executive officer of the Company designated by the Board of Directors, acting in
good faith, determines that there exists material nonpublic information about
the Company which the Board or such officer does not wish to disclose in a
registration statement (due to the fact that such disclosure may not be in the
best interests of the Company's stockholders) which information would otherwise
be required by the Securities Act to be disclosed in the registration statement
to be filed pursuant to Section 6.2 above;

          (b)  General. Notwithstanding the foregoing, the Company shall notify
               -------
each Holder (A) of any request by the SEC or any other federal or state
governmental authority during the period of effectiveness of the registration
statement for amendments or supplements to the registration statement or related
prospectus or for additional information relating to the registration statement,
(B) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose, (C) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable

                                      -10-
<PAGE>

Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, or (D) of the happening of any event which makes
any statement made in the registration statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in the
registration statement or prospectus so that, in the case of the registration
statement, it will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the prospectus, it
will not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. In such event,
the Company may suspend use of the prospectus on written notice to each Holder,
in which case each Holder shall not dispose of Registrable Securities covered by
the registration statement or prospectus until copies of a supplemented or
amended prospectus are distributed to the Holders or until the Holders are
advised in writing by the Company that the use of the applicable prospectus may
be resumed. The Company shall use its commercially reasonable efforts to ensure
that the use of the prospectus may be resumed as soon as practicable. The
Company shall use its commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of the registration statement, or the
lifting of any suspension of the qualification (or exemption from qualification)
of any of the securities for sale in any jurisdiction. The Company shall, upon
the occurrence of any event contemplated by clause (D), forthwith prepare a
supplement or post-effective amendment to the registration statement or a
supplement to the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities being sold thereunder, such
prospectus will not contain as untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

     6.6  Expenses. The Company shall pay all of the out-of-pocket expenses
          --------
incurred, other than underwriting or selling discounts and commissions, in
connection with the registration of Registrable Securities pursuant to this
Article VI including, without limitation, all SEC, National Association of
Securities Dealers, Inc. and blue sky registration and filing fees, printing
expenses, transfer agents' and registrars' fees, and the reasonable fees and
disbursements of the Company's outside counsel and the Company's independent
accountants.

     6.7  Indemnification. Prior to filing of a registration statement pursuant
          ---------------
to this Article VI, the Company and any Holder wishing to sell Registrable
Securities pursuant to the registration statement shall enter into an agreement
containing customary indemnification provisions with respect to misstatements or
omissions of material fact contained in such registration statement and in any
prospectus contained therein.

                                      -11-
<PAGE>

                                  ARTICLE VII

                                 Miscellaneous

     7.1  Waivers and Amendments. With the written consent of the holders of a
          ----------------------
majority of the Conversion Shares issued or issuable upon conversion of all
outstanding Notes, the obligations of the Company and the rights of the holders
of the Securities under this Agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its board of directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement,
the Notes or the Warrants; provided, however, that (i) all persons affected by
                           --------  -------
such waiver or supplemental agreement are treated in the same manner, unless the
record or beneficial holders of all of the Securities consent to such amendment
or supplemental agreement, and (ii) no such waiver or supplemental agreement
shall reduce the above percentage of holders of Conversion Shares which is
required to consent to any waiver or supplemental agreement, without the consent
of the record or beneficial holders of all of the Securities. Upon the
effectuation of each such waiver, consent, agreement, amendment or modification
the Company shall promptly give written notice thereof to the record holders of
the Securities who have not previously consented thereto in writing. Neither
this Agreement nor any provisions hereof may be changed, waived, discharged or
terminated orally, but only by a signed statement in writing.

     7.2  Governing Law. This Agreement shall be governed in all respects by the
          -------------
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within
California.

     7.3  Survival. The representations, warranties, covenants and agreements
          --------
made herein shall survive the execution and delivery of this Agreement and the
sale of the Notes and Warrants.

     7.4  Successors and Assigns. Except as otherwise expressly provided herein,
          ----------------------
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.

     7.5  Entire Agreement. This Agreement and the other documents delivered
          ----------------
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.

     7.6  Severability. In case any provision of this Agreement shall be
          ------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

                                      -12-
<PAGE>

     7.7  California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
          -----------------------------------
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

     7.8  Titles and Subtitles. The titles of the paragraphs and subparagraphs
          --------------------
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

     7.9  Delays or Omissions. It is agreed that no delay or omission to
          -------------------
exercise any right, power or remedy accruing to the Investor, upon any breach or
default of the Company under this Agreement, the Notes or the Warrants, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach or default, or any acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. It is further agreed that any waiver,
permit, consent or approval of any kind or character by the Investor of any
breach or default under this Agreement, or any waiver by the Investor of any
provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in writing and that all
remedies, either under this Agreement, or by law or otherwise afforded to the
Investor, shall be cumulative and not alternative.

     7.10 Notices. Any notice or report required in this Agreement or permitted
          -------
to be given shall be given by depositing the same in the United States mail,
postage prepaid and addressed to the parties as follows: (i) if to the Company,
to the attention of the President at the Company's principal address set forth
on the first page hereof, with a copy to Herbert P. Fockler, Wilson Sonsini
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, and (ii) if
to an Investor, to such Investor at such Investor's address as set forth on the
Schedule of Investors.

     7.11 Counterparts. This Agreement may be executed in any number of
          ------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

                     [This space intentionally left blank]

                                      -13-
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Note and Warrant Purchase
Agreement to be duly executed and delivered as of the date first written above.

THE COMPANY:                                   UROGEN CORP.


                                               By: /s/ Paul D. Quadros
                                                  ------------------------
                                                  Paul D. Quadros
                                                  Chief Executive Officer


THE INVESTORS:                                 INVESTOR



                                               By: /s/ Paul D. Quadros
                                                  ------------------------
                                                  Name: Paul D. Quadros
                                                        ------------------
                                                  Title:__________________

                                      -14-
<PAGE>

     IN WITNESS WHEREOF. the parties have caused this Note and Warrant Purchase
Agreement to be duly executed and delivered as of the date first written above.

THE COMPANY:                              UROGEN CORP.


                                          By: ________________________________
                                              Paul D. Quadros
                                              Chief Executive Officer

THE INVESTORS:                            INVESTOR

                                          By: /s/ [SIGNATURE ILLEGIBLE]
                                              --------------------------------
                                              Name: /s/ [SIGNATURE ILLEGIBLE]
                                                    --------------------------
                                              Title:__________________________