ex101.htm

Exhibit 10.1


    


    


    NOTE
PURCHASE AGREEMENT

    


    


    


    


    Dated
as of January 9, 2009

    


    


    


    


    by
and among

    


    


    


    


    URIGEN
PHARMACEUTICALS, INC.

    


    


    and

    


    


    


    THE
PURCHASERS LISTED ON EXHIBIT A

    



    
      
         


      

      
        1

        
          

        

      

      
         


        
          TABLE OF
CONTENTS

          


          Page


        

      

    

     

    
      	
               
      

            	
              NOTE
      PURCHASE AGREEMENT1

            


    

     

    
      	
               
      

            	
              ARTICLE
      I PURCHASE AND SALE OF NOTES 1

            


    

    
      
        	 	
                Section
      1.1

              	
                Purchase and Sale of
      Notes.

              	
                1

              
	 	Section
      1.2 	Purchase
      Price and Closing.	
                1

              
	 	Section
      1.3 	Conversion
      Shares.	

                2

              
	 	Section
      1.4 	Certain
      Adjustments.	

                2

              


      

       

    

    
      	
               
      

            	
              ARTICLE
      II REPRESENTATIONS AND WARRANTIES 2

            


    

    
      
        	 	
                Section
      2.1

              	Representations
      and Warranties of the Company.	
                2

              
	 	Section
      2.2 	Representations and Warranties of the Purchasers.	
                13

              


      

       

    

    
      	
               
      

            	
              ARTICLE
      III COVENANTS 15

            


    

    
      
        	 	
                Section
      3.1

              	Securities
      Compliance.	
                15

              
	 	Section
      3.2 	Registration
      and Listing.	
                15

              
	 	Section
      3.3 	Inspection
      Rights 	

                15

              
	 	Section
      3.4 	Compliance
      with Laws.	

                16

              
	 	Section
      3.5 	Keeping of
      Records and Books of Account.	

                16

              
	 	Section
      3.6	Reporting
      Requirements.	
                16

              
	 	Section
      3.7	
                Other
      Agreements

              	

                16

              
	 	Section
      3.8 	Use of
      Proceeds	
                17

              
	 	Section
      3.9 	Reporting
      Status.	

                17

              
	 	Section
      3.10 	Disclosure
      of Transaction.	
                17

              
	 	Section
      3.11	Disclosure
      of Material Information.	
                17

              
	 	Section
      3.12	Pledge of
      Securities.	
                18

              
	 	Section
      3.13 	Amendments	
                18

              
	 	Section
      3.14 	Distributions.	
                18

              
	 	Section
      3.15 	Reservation of Shares.	

                18

              
	 	Section
      3.16 	Transfer
      Agent Instructions.	

                18

              
	 	Section
      3.17	Opinions.	
                19

              
	 	Section
      3.18 	Acquisition of Assets.	

                19

              
	 	Section
      3.19	Subsequent
      Financings.	
                19

              
	 	Section
      3.20 	Variable
      Rate Securities.	
                21

              
	 	Section
      3.21	Registration Rights	
                21

              


      

    

     

    
      	
               
      

            	
              ARTICLE
      IV CONDITIONS 22

            


    

    
      
        	 	
                Section
      4.1

              	Conditions
      Precedent to the Obligation of the Company to Close and to Sell the
      Securities	
                22

              
	 	Section
      4.2 	Conditions Precedent
      to the Obligation of the Purchasers to Close and to Purchase the
      Securities.	
                23

              


      

       

    

    
      	
               
      

            	
              ARTICLE
      V CERTIFICATE LEGEND 25

            


    

    
      
        	 	
                Section
      5.1

              	Legend
    	
                23

              


      

       

    

    
      	
               
      

            	
              ARTICLE
      VI INDEMNIFICATION 25

            


    

    
      
        	 	
                Section
      6.1

              	General
      Indemnity.	
                25

              
	 	Section
      6.2 	Indemnification
      Procedure.	
                25

              


      

       

    

    
      	
               
      

            	
              ARTICLE
      VII MISCELLANEOUS 27

            


    

    
      
        	 	
                Section
      3.1

              	
                Fees and
      Expenses.

              	
                27

              
	 	Section
      3.2 	
                Specific Performance;
      Consent to Jurisdiction; Venue.

              	
                27

              
	 	Section
      3.3 	
                Entire Agreement;
      Amendment.

              	

                27

              
	 	Section
      3.4 	
                Notices.

              	

                28

              
	 	Section
      3.5 	
                Waivers.

              	

                29

              
	 	Section
      3.6	
                Headings.

              	
                29

              
	 	Section
      3.7	
                Successors and
      Assigns.

              	

                29

              
	 	Section
      3.8 	
                No Third Party
      Beneficiaries.

              	
                29

              
	 	Section
      3.9 	
                Governing
      Law.

              	
                29

              
	 	Section
      3.10 	
                Survival.

              	
                30

              
	 	Section
      3.11	
                Counterparts.

              	
                30

              
	 	Section
      3.12	
                Publicity.

              	
                30

              
	 	Section
      3.13 	Severability.	
                30

              
	 	Section
      3.14 	Further Assurances.	
                30

              
	 	Section
      3.15 	Collateral Agent.	
                30

              
	 	Section
      3.16 	Representation of Lead Purchaser.	

                33

              


      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    


    NOTE
PURCHASE AGREEMENT

    


    This NOTE
PURCHASE AGREEMENT dated as of January 9, 2009 (this “Agreement”) by and
among Urigen Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and each
of the purchasers of the senior secured convertible promissory notes of the
Company whose names are set forth on Exhibit A attached
hereto (each a “Purchaser” and
collectively, the “Purchasers”).

    


    The
parties hereto agree as follows:

     

    ARTICLE
I

     

     

    PURCHASE
AND SALE OF NOTES

     

    Section
1.1 Purchase and Sale of
Notes.

     

    Upon the
following terms and conditions, the Company shall issue and sell to the
Purchasers, and the Purchasers shall purchase from the Company, (i) 10% senior
secured convertible promissory notes in the aggregate principal amount of up to
$257,000, convertible into shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”), in
substantially the form attached hereto as Exhibit B (the “Notes”).  The
Company and the Purchasers are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Section 4(2) of the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the “Securities Act”),
including Regulation D (“Regulation D”),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
to be made hereunder.

    


    Section
1.2 Purchase Price and
Closing.

     

    Subject
to the terms and conditions hereof, the Company agrees to issue and sell to the
Purchasers and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchasers, severally but not jointly, agree to purchase the Notes for an
aggregate cash purchase price of up to $257,000 (the “Purchase
Price”).  The closing under this Agreement (the “Closing”) shall take
place on or before January 9, 2009 (the “Closing
Date”).  The closing of the purchase and sale of the Notes to
be acquired by the Purchasers from the Company under this Agreement shall take
place at the offices of Platinum-Montaur Life Sciences, LLC (the “Lead Purchaser”), 152
West 57th Street,
54th
Floor, New York, 10:00 a.m. New York time; provided, that all of
the conditions set forth in Article IV hereof and applicable to the Closing
shall have been fulfilled or waived in accordance herewith.  Subject
to the terms and conditions of this Agreement, at the Closing the Company shall
deliver or cause to be delivered to each Purchaser Notes for the principal
amount set forth opposite the name of such Purchaser on Exhibit A
hereto.  At the Closing, each Purchaser shall deliver its Purchase
Price by wire transfer of immediately available funds to the
Company.

     

    
      
        
        

      

      
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    Section
1.3 Conversion
Shares.  

    


    The
Company has authorized and has reserved and covenants to continue to reserve,
free of preemptive rights and other similar contractual rights of stockholders,
a number of its authorized but unissued shares of Common Stock equal to one
hundred twenty percent (120%) of the aggregate number of shares of Common Stock
to effect the conversion of the Notes.  Any shares of Common Stock
issuable upon conversion of the Notes are herein referred to as the “Conversion
Shares”.  The Notes and the Conversion Shares are sometimes
collectively referred to herein as the “Securities”.

    


    Section
1.4 Certain
Adjustments.

     

    The
Company acknowledges that the issuance of the Notes will cause adjustments to
the Conversion Price of the Series B Convertible Preferred Stock, par value
$.001 per share, of the Company (the “Preferred Stock”)
issued to the Lead Purchaser pursuant to the terms of the Preferred Stock, so
that the conversion price therein shall be reduced to $.10 per share, subject to
further adjustment as set forth therein.  The Lead Purchaser has
agreed to waive, in part, the adjustments to the Series A Warrant to Purchase
Common Stock that the Company issued to the Lead Purchaser on August 1, 2007
(the “Series A
Warrant”) that would otherwise be triggered by the sale of the Notes
hereunder, so that the “Warrant Price” set forth in the Series A Warrant shall
be reduced to $.125, subject to further adjustment as set forth
therein.  Further, the Lead Purchaser hereby agrees that, so long as
no Event of Default has occurred and is continuing under the Notes, any
adjustment to the Warrant Price of the Series A Warrant that would otherwise be
triggered by the issuance of any Permitted Subordinated Indebtedness (as defined
in the Note) is hereby waived prospectively.

     

    ARTICLE
II

     

     

    REPRESENTATIONS
AND WARRANTIES

     

    Section
2.1 Representations and
Warranties of the Company.

     

    The
Company hereby represents and warrants to the Purchasers, as of the date hereof
and the Closing Date (except as set forth on the Schedule of Exceptions attached
hereto with each numbered Schedule corresponding to the section number herein),
as follows:

    


    (a) Organization, Good Standing
and Power.  Each of the Company and each Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power to own,
lease and operate its properties and assets and to conduct its business as it is
now being conducted.  The Company does not have any direct or indirect
Subsidiaries (as defined in Section 2.1(g)) or own securities of any kind in any
other entity except as set forth on Schedule 2.1(g)
hereto.  The Company and each such Subsidiary (as defined in Section
2.1(g)) is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary except for any
jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect.  For the purposes
of this Agreement, “Material Adverse
Effect” means any material adverse effect on the business, operations,
properties, prospects, or financial condition of the Company and its
Subsidiaries and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to
perform any of its obligations under this Agreement or any of the Transaction
Documents in any material respect.

     

    
      
        
        

      

      
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    (b) Authorization;
Enforcement.  The Company and each Subsidiary has the requisite
corporate power and authority to enter into and perform this Agreement, the
Notes, the Security Agreement by and among the Company and its wholly owned
subsidiaries, on the one hand, and the Agent (as defined in the Security
Agreement), on the other hand, dated as of the date hereof, substantially in the
form of Exhibit
C attached hereto (the “Security Agreement”),
the Patent, Trademark and Copyright Security Agreement by and among the Company
and its wholly owned subsidiaries, on the one hand, and the Agent (as defined in
the IP Security Agreement), on the other hand, dated as of the date hereof,
substantially in the form of Exhibit D attached
hereto (the “IP
Security Agreement”), the Guarantee to be delivered by each of the
Subsidiaries, dated as of the date hereof, substantially in the form of Exhibit E attached
hereto (the “Guarantee”), the
Officer’s Certificate to be delivered by Urigen Pharmaceuticals, Inc., dated as
of the Closing Date, substantially in the form of Exhibit F attached
hereto (the “Officer’s
Certificate”) and the Irrevocable Transfer Agent Instructions (as defined
in Section 3.16 hereof) (collectively, the “Transaction
Documents”) and to issue and sell the Securities in accordance with the
terms hereof.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action, and, except as set forth on Schedule 2.1(b), no
further consent or authorization of the Company, its Board of Directors or
stockholders is required.  When executed and delivered by the Company
and the Subsidiaries, each of the Transaction Documents shall constitute a valid
and binding obligation of the Company and the Subsidiaries party thereto
enforceable against the Company and the Subsidiaries party thereto in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general
application.

    


    (c) Capitalization.  The
authorized capital stock and the issued and outstanding shares of capital stock
of the Company as of the Closing Date is set forth on Schedule 2.1(c)
hereto.  All of the outstanding shares of the Common Stock and any
other outstanding security of the Company have been duly and validly
authorized.  Except as set forth in this Agreement or as set forth on
Schedule 2.1(c)
hereto, no shares of Common Stock or any other security of the Company are
entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the
Company.  Furthermore, except as set forth in this Agreement and as
set forth on Schedule
2.1(c) hereto, there are no contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the Company.  Except for
customary transfer restrictions contained in agreements entered into by the
Company in order to sell restricted securities or as provided on Schedule 2.1(c)
hereto, the Company is not a party to or bound by any agreement or understanding
granting registration or anti-dilution rights to any person with respect to any
of its equity or debt securities.  Except as set forth on Schedule 2.1(c), the
Company is not a party to, and it has no knowledge of, any agreement or
understanding restricting the voting or transfer of any shares of the capital
stock of the Company.

     

    
      
        
        

      

      
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    (d) Issuance of
Securities.  The Notes to be issued at the Closing have been
duly authorized by all necessary corporate action and, when paid for or issued
in accordance with the terms hereof, the Notes shall be validly issued and
outstanding, free and clear of all liens, encumbrances and rights of refusal of
any kind.  When the Conversion Shares are issued and paid for in
accordance with the terms of this Agreement and as set forth in the Notes, such
shares will be duly authorized by all necessary corporate action and validly
issued and outstanding, fully paid and nonassessable, free and clear of all
liens, encumbrances and rights of refusal of any kind and the holders shall be
entitled to all rights accorded to a holder of Common Stock.

     

    (e) No
Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the Subsidiaries, the performance by
the Company of its obligations under the Notes and the consummation by the
Company and the Subsidiaries of the transactions contemplated hereby and
thereby, and the issuance of the Securities as contemplated hereby, do not and
will not (i) violate or conflict with any provision of the Company’s Articles of
Incorporation (the “Articles”) or Bylaws
(the “Bylaws”),
each as amended to date, or any Subsidiary’s comparable charter documents, (ii)
conflict with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
mortgage, deed of trust, indenture, note, bond, license, lease agreement,
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries’ respective properties
or assets are bound, (iii) result in a violation of any federal, state, local or
foreign statute, rule, regulation, order, judgment or decree (including federal
and state securities laws and regulations) applicable to the Company or any of
its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected, or (iv) create or impose a lien, mortgage,
security interest, charge or encumbrance of any nature on any property or asset
of the Company or its Subsidiaries under any agreement or any commitment to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or by which any of their respective
properties or assets are bound, except, in all cases, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect
(other than violations pursuant to clauses (i) or (iii) (with respect to federal
and state securities laws)).  Neither the Company nor any of its
Subsidiaries is required under federal, state, foreign or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents or issue and sell the Securities in accordance with the terms hereof
(other than any filings, consents and approvals which may be required to be made
by the Company under applicable state and federal securities laws, rules or
regulations).  The business of the Company and its Subsidiaries is not
being conducted in violation of any laws, ordinances or regulations of any
governmental entity.

     

    
      
        
        

      

      
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    (f) Commission Documents,
Financial Statements.  The Common Stock of the Company is
registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act (all of the foregoing including
filings incorporated by reference therein being referred to herein as the “Commission
Documents”).  At the times of their respective filings, the
Form 10-Q for the fiscal quarters ended September 30, 2007, December 31, 2007
and March 31, 2008 (collectively, the “Form 10-Q”) and the
Form 10-K for the fiscal year ended June 30, 2008 (the “Form 10-KSB”)
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission promulgated thereunder and other
federal, state and local laws, rules and regulations applicable to such
documents, and the Form 10-Q and Form 10-K did not contain any untrue statement
of a material fact or omit 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.  As of their
respective dates, the financial statements of the Company included in the
Commission Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission or other applicable rules and regulations with respect
thereto.  Such financial statements have been prepared in accordance
with generally accepted accounting principles (“GAAP”) applied on a
consistent basis during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements), and fairly present in all material
respects the financial position of the Company and its Subsidiaries as of 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).


    (g) Subsidiaries. Schedule 2.1(g)
hereto sets forth each Subsidiary of the Company, showing the jurisdiction of
its incorporation or organization and showing the percentage of each person’s
ownership of the outstanding stock or other interests of such
Subsidiary.  For the purposes of this Agreement, “Subsidiary” shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries.  All of the outstanding shares
of capital stock of each Subsidiary have been duly authorized and validly
issued, and are fully paid and nonassessable.  Except as set forth on
Schedule 2.1(g)
hereto, there are no outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or binding upon any
Subsidiary for the purchase or acquisition of any shares of capital stock of any
Subsidiary or any other securities convertible into, exchangeable for or
evidencing the rights to subscribe for any shares of such capital
stock.  Neither the Company nor any Subsidiary is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in the preceding
sentence except as set forth on Schedule 2.1(g)
hereto.  Neither the Company nor any Subsidiary is party to, nor has
any knowledge of, any agreement restricting the voting or transfer of any shares
of the capital stock of any Subsidiary.

     

    
      
        
        

      

      
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    (h) No Material Adverse
Change.  Since June 30, 2008, the Company has not experienced
or suffered any Material Adverse Effect, except as disclosed on Schedule 2.1(h)
hereto.

    


    (i) No Undisclosed
Liabilities.  Except as disclosed on Schedule 2.1(i)
hereto, neither the Company nor any of its Subsidiaries has incurred any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) other than
those incurred in the ordinary course of the Company’s or its Subsidiaries
respective businesses or which, individually or in the aggregate, are not
reasonably likely to have a Material Adverse Effect.

    


    (j) No Undisclosed Events or
Circumstances.  Since June 30, 2008, except as disclosed on
Schedule 2.1(j)
hereto, no event or circumstance has occurred or exists with respect to the
Company or its Subsidiaries or their respective businesses, properties,
prospects, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.

    


    (k) Indebtedness.  Schedule 2.1(k)
hereto sets forth as of the date hereof all outstanding secured and unsecured
Indebtedness of the Company or any Subsidiary, or for which the Company or any
Subsidiary has commitments.  For the purposes of this Agreement,
“Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed
in excess of $10,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the same are or
should be reflected in the Company’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $10,000 due under leases
required to be capitalized in accordance with GAAP.  Neither the
Company nor any Subsidiary is in default with respect to any
Indebtedness.

    


    (l) Title to
Assets.  Each of the Company and the Subsidiaries has good and
valid title to all of its real and personal property reflected in the Commission
Documents, free and clear of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except for those indicated on Schedule 2.1(l)
hereto or such that, individually or in the aggregate, do not cause a Material
Adverse Effect.  Any leases of the Company and each of its
Subsidiaries are valid and subsisting and in full force and effect.

     

    (m) Actions
Pending.  There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary which questions the validity of this Agreement or any of the other
Transaction Documents or any of the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto.  Except
as set forth in the Commission Documents or on Schedule 2.1(m)
hereto, there is no action, suit, claim, investigation, arbitration, alternate
dispute resolution proceeding or other proceeding pending or, to the knowledge
of the Company, threatened against or involving the Company, any Subsidiary or
any of their respective properties or assets, which individually or in the
aggregate, would reasonably be expected, if adversely determined, to have a
Material Adverse Effect.  There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any Subsidiary or any officers or
directors of the Company or Subsidiary in their capacities as such, which
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

     

    
      
        
        

      

      
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    (n) Compliance with
Law.  The business of the Company and the Subsidiaries has been
and is presently being conducted in accordance with all applicable federal,
state and local governmental laws, rules, regulations and ordinances, except
such that, individually or in the aggregate, the noncompliance therewith could
not reasonably be expected to have a Material Adverse Effect.  The
Company and each of its Subsidiaries have all franchises, permits, licenses,
consents and other governmental or regulatory authorizations and approvals
necessary for the conduct of its business as now being conducted by it unless
the failure to possess such franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.

    


    (o) Taxes.  The
Company and each of the Subsidiaries has accurately prepared and filed all
federal, state and other tax returns required by law to be filed by it, has paid
or made provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are reflected in
the financial statements of the Company and the Subsidiaries for all current
taxes and other charges to which the Company or any Subsidiary is subject and
which are not currently due and payable.  Except as disclosed on Schedule 2.1(o)
hereto or in the Commission Documents, none of the federal income tax returns of
the Company or any Subsidiary have been audited by the Internal Revenue
Service.  The Company has no knowledge of any additional assessments,
adjustments or contingent tax liability (whether federal or state) of any nature
whatsoever, whether pending or threatened against the Company or any Subsidiary
for any period, nor of any basis for any such assessment, adjustment or
contingency.

    


    (p) Certain
Fees.  The Company has not employed any broker or finder or
incurred any liability for any brokerage or investment banking fees,
commissions, finders’ structuring fees, financial advisory fees or other similar
fees in connection with the Transaction Documents.

    


    (q) Disclosure.  Except
for the transactions contemplated by this Agreement, the Company confirms that
neither it nor any other person acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that constitutes or
might constitute material, nonpublic information.  To the best of the
Company’s knowledge, neither this Agreement or the Schedules hereto nor any
other documents, certificates or instruments furnished to the Purchasers by or
on behalf of the Company or any Subsidiary in connection with the transactions
contemplated by this Agreement contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements made
herein or therein, in the light of the circumstances under which they were made
herein or therein, not misleading.

     

    (r) Operation of
Business.  Except as set forth on Schedule 2.1(r)
hereto, the Company and each of the Subsidiaries owns or possesses the rights to
all patents, trademarks, domain names (whether or not registered) and any
patentable improvements or copyrightable derivative works thereof, websites and
intellectual property rights relating thereto, service marks, trade names,
copyrights, licenses and authorizations which are necessary for the conduct of
its business as now conducted without infringement or any conflict with the
rights of others.

     

    
      
        
        

      

      
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    (s) Environmental
Compliance.  The Company and each of its Subsidiaries have
obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under
any  Environmental Laws.  “Environmental Laws” shall mean
all applicable laws relating to the protection of the environment including,
without limitation, all requirements pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions, discharges,
releases or threatened releases of hazardous substances, chemical substances,
pollutants, contaminants or toxic substances, materials or wastes, whether
solid, liquid or gaseous in nature, into the air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, material or wastes,
whether solid, liquid or gaseous in nature.  The Company has all
necessary governmental approvals required under all Environmental Laws as
necessary for the Company’s business or the business of any of its
subsidiaries.  To the best of the Company’s knowledge, the Company and
each of its subsidiaries are also in compliance with all other limitations,
restrictions, conditions, standards, requirements, schedules and timetables
required or imposed under all Environmental Laws.  Except for such
instances as would not individually or in the aggregate have a Material Adverse
Effect, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
or its Subsidiaries that violate or may violate any Environmental Law after the
Closing Date or that may give rise to any environmental liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or related to
the manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any hazardous
substance.

    


    (t) Books and Records; Internal
Accounting Controls.  The records and documents of the Company
and its Subsidiaries accurately reflect in all material respects the information
relating to the business of the Company and the Subsidiaries, the location and
collection of their assets, and the nature of all transactions giving rise to
the obligations or accounts receivable of the Company or any Subsidiary. 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 and its
subsidiary maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with 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
information required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms. The
Company’s certifying officers have evaluated the effectiveness of the Company’s
disclosure controls and procedures as of the end of the period covered by the
Company’s 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 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 control over financial reporting (as
such term is defined in the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

     

    
      
        
        

      

      
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    (u) Material
Agreements.  Except as disclosed in the Commission Documents or
as set forth on Schedule 2.1(u)
hereto, or as would not be reasonably likely to have a Material Adverse Effect,
(i) the Company and each of its Subsidiaries have performed all obligations
required to be performed by them to date under any written or oral contract,
instrument, agreement, commitment, obligation, plan or arrangement, filed or
required to be filed with the Commission (the “Material
Agreements”), (ii) neither the Company nor any of its Subsidiaries has
received any notice of default under any Material Agreement and, (iii) to the
best of the Company’s knowledge, neither the Company nor any of its Subsidiaries
is in default under any Material Agreement now in effect.

     

    (v) Transactions with
Affiliates.  Except as set forth on Schedule 2.1(v)
hereto or in the Commission Documents, there are no loans, leases, agreements,
contracts, royalty agreements, management contracts or arrangements or other
continuing transactions between (a) the Company, any Subsidiary or any of their
respective customers or suppliers on the one hand, and (b) on the other hand,
any officer, employee, consultant or director of the Company, or any of its
Subsidiaries, or any person owning at least 5% of the outstanding capital stock
of the Company or any Subsidiary or any member of the immediate family of such
officer, employee, consultant, director or stockholder or any corporation or
other entity controlled by such officer, employee, consultant, director or
stockholder, or a member of the immediate family of such officer, employee,
consultant, director or stockholder which, in each case, is required to be
disclosed in the Commission Documents or in the Company’s most recently filed
definitive proxy statement on Schedule 14A, that is not so disclosed in the
Commission Documents or in such proxy statement.

    


    (w) Securities Act of
1933.  The Company has complied and will comply with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Securities hereunder.  Neither the Company
nor anyone acting on its behalf, directly or indirectly, has or will sell, offer
to sell or solicit offers to buy any of the Securities or similar securities to,
or solicit offers with respect thereto from, or enter into any negotiations
relating thereto with, any person, or has taken or will take any action so as to
bring the issuance and sale of any of the Securities under the registration
provisions of the Securities Act and applicable state securities laws, and
neither the Company nor any of its affiliates, nor any person acting on its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of any of the Securities.  The
Company is not, and has never been, a company described in Rule 144(i)(1) under
the Securities Act, and is a “reporting issuer” as described in Rule 144(c)(1)
under the Securities Act.   Neither the Company, nor any of its
directors, officers or controlling persons, has taken or will, in violation of
applicable law, take, any action designed to or that might reasonably be
expected to cause or result in, or which has constituted, stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the securities issued or issuable in connection with the transactions
contemplated hereunder.

     

    
      
        
        

      

      
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    (x) Employees.  Neither
the Company nor any Subsidiary has any collective bargaining arrangements or
agreements covering any of its employees, except as set forth on Schedule 2.1(x)
hereto.  Except as set forth on Schedule 2.1(x)
hereto or in the Commission Documents, neither the Company nor any Subsidiary
has any employment contract, agreement regarding proprietary information,
non-competition agreement, non-solicitation agreement, confidentiality
agreement, or any other similar contract or restrictive covenant, relating to
the right of any officer, employee or consultant to be employed or engaged by
the Company or such Subsidiary required to be disclosed in the Commission
Documents that is not so disclosed.  No officer, consultant or key
employee of the Company or any Subsidiary whose termination, either individually
or in the aggregate, would be reasonably likely to have a Material Adverse
Effect, has terminated or, to the knowledge of the Company, has any present
intention of terminating his or her employment or engagement with the Company or
any Subsidiary.

     

    (y) Absence of Certain
Developments.  Except as set forth in the Commission Documents
or provided on Schedule 2.1(y)
hereto, since June 30, 2008, neither the Company nor any Subsidiary
has:

    


    (i) issued
any stock, bonds or other corporate securities or any right, options or warrants
with respect thereto;

    


    (ii) borrowed
any amount in excess of $100,000 or incurred or become subject to any other
liabilities in excess of $100,000 (absolute or contingent) except current
liabilities incurred in the ordinary course of business which are comparable in
nature and amount to the current liabilities incurred in the ordinary course of
business during the comparable portion of its prior fiscal year, as adjusted to
reflect the current nature and volume of the business of the Company and its
Subsidiaries;

    


    (iii) discharged
or satisfied any lien or encumbrance in excess of $100,000 or paid any
obligation or liability (absolute or contingent) in excess of $100,000, other
than current liabilities paid in the ordinary course of business;

    


    (iv) declared
or made any payment or distribution of cash or other property to stockholders
with respect to its stock, or purchased or redeemed, or made any agreements so
to purchase or redeem, any shares of its capital stock, in each case in excess
of $50,000 individually or $100,000 in the aggregate;

     

    
      
        
        

      

      
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    (v) sold,
assigned or transferred any other tangible assets, or canceled any debts or
claims, in each case in excess of $100,000, except in the ordinary course of
business;

    


    (vi) sold,
assigned or transferred any patent rights, trademarks, trade names, copyrights,
trade secrets or other intangible assets or intellectual property rights in
excess of $100,000, or disclosed any proprietary confidential information to any
person except to customers in the ordinary course of business or to the
Purchasers or their representatives;

    


    (vii) suffered
any material losses or waived any rights of material value, whether or not in
the ordinary course of business, or suffered the loss of any material amount of
prospective business;

    


    (viii) made any
changes in employee compensation except in the ordinary course of business and
consistent with past practices;

    


    (ix) made
capital expenditures or commitments therefor that aggregate in excess of
$100,000;

     

    (x) entered
into any material transaction, whether or not in the ordinary course of
business;

    


    (xi) made
charitable contributions or pledges in excess of $10,000;

    


    (xii) suffered
any material damage, destruction or casualty loss, whether or not covered by
insurance;

    


    (xiii) experienced
any material problems with labor or management in connection with the terms and
conditions of their employment; or

    


    (xiv) entered
into an agreement, written or otherwise, to take any of the foregoing
actions.

    


    (z) Investment Company Act
Status.  The Company is not, and as a result of and immediately
upon the Closing will not be, an “investment company” or a company “controlled”
by an “investment company,” within the meaning of the Investment Company Act of
1940, as amended.

    


    (aa) [Reserved]

     

    
      
        
        

      

      
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    (bb) Independent Nature of
Purchasers.  The Company acknowledges that the obligations of
each Purchaser under the Transaction Documents are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under the
Transaction Documents.  The Company acknowledges that the decision of
each Purchaser to purchase Securities pursuant to this Agreement has been made
by such Purchaser independently of any other purchase and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or of its Subsidiaries
which may have made or given by any other Purchaser or by any agent or employee
of any other Purchaser, and no Purchaser or any of its agents or employees shall
have any liability to any Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions.  The
Company acknowledges that nothing contained herein, or in any Transaction
Document, and no action taken by any Purchaser pursuant hereto or thereto, shall
be deemed to constitute the Purchasers as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that the Purchasers
are in any way acting in concert or as a group with respect to such obligations
or the transactions contemplated by the Transaction Documents.  The
Company acknowledges that for reasons of administrative convenience only, the
Transaction Documents have been prepared by counsel for one of the Purchasers
and such counsel does not represent all of the Purchasers but only such
Purchaser and the other Purchasers have retained their own individual counsel
with respect to the transactions contemplated hereby.  The Company
acknowledges that it has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.  The Company
acknowledges that such procedure with respect to the Transaction Documents in no
way creates a presumption that the Purchasers are in any way acting in concert
or as a group with respect to the Transaction Documents or the transactions
contemplated hereby or thereby.  The Company acknowledges that each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.

     

    (cc) No Integrated
Offering.  Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales of any security or solicited any offers to buy any security
under circumstances that would cause the offering of the Securities pursuant to
this Agreement to be integrated with prior offerings by the Company for purposes
of the Securities Act which would prevent the Company from selling the
Securities pursuant to Regulation D and Rule 506 thereof under the Securities
Act, or any applicable exchange-related stockholder approval provisions, nor
will the Company or any of its affiliates or subsidiaries take any action or
steps that would cause the offering of the Securities to be integrated with
other offerings.  The Company does not have any registration statement
pending before the Commission or currently under the Commission’s review and
except as set forth on Schedule 2.1(cc)
hereto, since January 1, 2008, the Company has not offered or sold any of its
equity securities or debt securities convertible into shares of Common
Stock.

    


    (dd) Dilutive
Effect.  The Company understands and acknowledges that its
obligation to issue Conversion Shares upon conversion of the Notes in accordance
with this Agreement and the Notes, is absolute and unconditional regardless of
the dilutive effect that such issuance may have on the ownership interest of
other stockholders of the Company.

    


    (ee) DTC
Status.   Except as set forth on Schedule 2.1(ee)
hereto, the Company’s transfer agent is a participant in and the Common Stock is
eligible for transfer pursuant to the Depository Trust Company Automated
Securities Transfer Program.  The name, address, telephone number, fax
number, contact person and email of the Company transfer agent is set forth on
Schedule
2.1(ee) hereto.

     

    
      
        
        

      

      
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    (ff) Governmental
Approvals.  Except for the filing of any notice prior or
subsequent to the Closing that may be required under applicable state and/or
federal securities laws (which if required, shall be filed on a timely basis),
no authorization, consent, approval, license, exemption of, filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, is or will be necessary
for, or in connection with, the execution or delivery of the Notes, or for the
performance by the Company of its obligations under the Transaction
Documents.

    


    Section
2.2 Representations and
Warranties of the Purchasers.

     

    Each of
the Purchasers hereby represents and warrants to the Company with respect solely
to itself and not with respect to any other Purchaser as follows as of the date
hereof and as of the Closing Date:

    


    (a) Organization and Standing of
the Purchasers.  If the Purchaser is an entity, such Purchaser
is a corporation, limited liability company or partnership duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

    


    (b) Authorization and
Power.  Each Purchaser has the requisite power and authority to
enter into and perform the Transaction Documents and to purchase the Securities
being sold to it hereunder.  The execution, delivery and performance
of the Transaction Documents by each Purchaser and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate or partnership action, and no further consent or authorization of such
Purchaser or its Board of Directors, stockholders, or partners, as the case may
be, is required.  When executed and delivered by the Purchasers, the
other Transaction Documents shall constitute valid and binding obligations of
each Purchaser enforceable against such Purchaser in accordance with their
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general
application.

    


    (c) Acquisition for
Investment.  Each Purchaser is purchasing the Securities solely
for its own account and not with a view to or for sale in connection with
distribution.  Each Purchaser does not have a present intention to
sell any of the Securities, nor a present arrangement (whether or not legally
binding) or intention to effect any distribution of any of the Securities to or
through any person or entity; provided, however, that by
making the representations herein, such Purchaser does not agree to hold the
Securities for any minimum or other specific term and reserves the right to
dispose of the Securities at any time in accordance with Federal and state
securities laws applicable to such disposition.  Each Purchaser
acknowledges that it (i) has such knowledge and experience in financial and
business matters such that Purchaser is capable of evaluating the merits and
risks of Purchaser’s investment in the Company, (ii) is able to bear the
financial risks associated with an investment in the Securities and (iii) has
been given full access to such records of the Company and the Subsidiaries and
to the officers of the Company and the Subsidiaries as it has deemed necessary
or appropriate to conduct its due diligence investigation.

     

    
      
        
        

      

      
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    (d) Rule
144.  Each Purchaser understands that the Securities must be
held indefinitely unless such Securities are registered under the Securities Act
or an exemption from registration is available.  Each Purchaser
acknowledges that such person is familiar with Rule 144 of the rules and
regulations of the Commission, as amended, promulgated pursuant to the
Securities Act (“Rule
144”), and that such Purchaser has been advised that Rule 144 permits
resales only under certain circumstances.  Each Purchaser understands
that to the extent that Rule 144 is not available, such Purchaser will be unable
to sell any Securities without either registration under the Securities Act or
the existence of another exemption from such registration
requirement.

    


    (e) General.  Each
Purchaser understands that the Securities are being offered and sold in reliance
on a transactional exemption from the registration requirements of federal and
state securities laws and the Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the applicability of
such exemptions and the suitability of such Purchaser to acquire the
Securities.  Each Purchaser understands that no United States federal
or state agency or any government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.

    


    (f) No General
Solicitation.  Each Purchaser acknowledges that the Securities
were not offered to such Purchaser by means of any form of general or public
solicitation or general advertising, or publicly disseminated advertisements or
sales literature, including (i) any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media, or
broadcast over television or radio, or (ii) any seminar or meeting to which such
Purchaser was invited by any of the foregoing means of
communications.  Each Purchaser, in making the decision to purchase
the Securities, has relied upon independent investigation made by it and has not
relied on any information or representations made by third parties.

    


    (g) Accredited
Investor.  Each Purchaser is an “accredited investor” (as
defined in Rule 501 of Regulation D), and such Purchaser has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in the Securities.  Such Purchaser is not
required to be registered as a broker-dealer under Section 15 of the Exchange
Act and such Purchaser is not a broker-dealer.  Each Purchaser
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk.

    


    (h) Certain
Fees.  The Purchasers have not employed any broker or finder or
incurred any liability for any brokerage or investment banking fees,
commissions, finders’ structuring fees, financial advisory fees or other similar
fees in connection with the Transaction Documents.

    


    (i) Independent
Investment.  No Purchaser has agreed to act with any other
Purchaser for the purpose of acquiring, holding, voting or disposing of the
Securities purchased hereunder for purposes of Section 13(d) under the Exchange
Act, and each Purchaser is acting independently with respect to its investment
in the Securities.

     

    
      
        
        

      

      
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    ARTICLE
III

     

     

    COVENANTS

     

    The
Company covenants with each Purchaser as follows, which covenants are for the
benefit of each Purchaser and their respective permitted assignees.

     

    Section
3.1 Securities
Compliance.

     

    The
Company shall notify the Commission in accordance with its rules and
regulations, of the transactions contemplated by any of the Transaction
Documents and shall take all other necessary action and proceedings as may be
required and permitted by applicable law, rule and regulation, for the legal and
valid issuance of the Securities to the Purchasers, or their respective
subsequent holders.

    


    Section
3.2 Registration and
Listing.

     

    The
Company shall cause its Common Stock to continue to be registered under Sections
12(b) or 12(g) of the Exchange Act, to comply in all respects with its reporting
and filing obligations under the Exchange Act, to comply with all requirements
related to any registration statement registering any of the Securities for
resale, and to not take any action or file any document (whether or not
permitted by the Securities Act or the rules promulgated thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act.  The
Company will take all action necessary to continue the listing or trading of its
Common Stock on the OTC Bulletin Board or other Trading Market (as defined in
the Notes).  If required, the Company will promptly file the “Listing
Application” for, or in connection with, the issuance and delivery of the
Conversion Shares.   Subject to the terms of the Transaction
Documents, the Company further covenants that it will take such further action
as the Purchasers may reasonably request, all to the extent required from time
to time to enable the Purchasers to sell the Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 promulgated under the Securities Act.  Upon the request of
the Purchasers, the Company shall deliver to the Purchasers a written
certification of a duly authorized officer as to whether it has complied with
such requirements.

    


    Section
3.3 Inspection
Rights

     

    Provided
same would not be in violation of Regulation FD, the Company shall permit,
during normal business hours and upon reasonable request and reasonable notice,
each Purchaser or any employees, agents or representatives thereof, so long as
such Purchaser shall be obligated hereunder to purchase the Notes or shall
beneficially own any Conversion Shares, for purposes reasonably related to such
Purchaser’s interests as a stockholder, to examine the publicly available,
non-confidential records and books of account of, and visit and inspect the
properties, assets, operations and business of the Company and any Subsidiary,
and to discuss the publicly available, non-confidential affairs, finances and
accounts of the Company and any Subsidiary with any of its officers,
consultants, directors, and key employees.

     

    
      
        
        

      

      
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    Section
3.4 Compliance with
Laws.

     

    The
Company shall comply, and cause each Subsidiary to comply, with all applicable
laws, rules, regulations and orders, noncompliance with which would be
reasonably likely to have a Material Adverse Effect.

    


    Section
3.5 Keeping of Records and Books
of Account.

     

    The
Company shall keep and cause each Subsidiary to keep adequate records and books
of account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and
its Subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

    


    Section
3.6 Reporting
Requirements.

     

    If the
Company ceases to file its periodic reports with the Commission, or if the
Commission ceases making these periodic reports available via the Internet
without charge, then the Company shall furnish the following to each Purchaser
so long as such Purchaser shall be obligated hereunder to purchase the
Securities or shall beneficially own Securities:

    


    (a) Quarterly
Reports filed with the Commission on Form 10-Q as soon as practical after the
document is or would have been required to be filed with the
Commission;

    


    (b) Annual
Reports filed with the Commission on Form 10-KSB as soon as practical after the
document is or would have been required to be filed with the Commission;
and

    


    (c) Copies of
all notices, information and proxy statements in connection with any meetings,
that are, in each case, provided to holders of shares of Common Stock,
contemporaneously with the delivery of such notices or information to such
holders of Common Stock.

    


    Section
3.7 Other
Agreements.

     

    The
Company shall not enter into any agreement in which the terms of such agreement
would restrict or impair the right or ability to perform of the Company or any
Subsidiary under any Transaction Document.  If the Company shall
create any subsidiary after the date hereof (it being understood that such
creating is permitted only in accordance with the terms of the Transaction
Documents), such subsidiary shall execute a guarantee in substantially the form
of the Guarantee.

     

    
      
        
        

      

      
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    Section
3.8 Use of
Proceeds.

    


    The
proceeds from the sale of the Securities hereunder shall be used for general
working capital.   In no event shall the proceeds be used to
redeem any Common Stock or securities convertible, exercisable or exchangeable
into Common Stock or to settle any outstanding litigation.

    


    Section
3.9 Reporting
Status.

    


    So long
as a Purchaser beneficially owns any of the Securities, the Company shall timely
file all reports required to be filed with the Commission pursuant to the
Exchange Act and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would permit such termination.

    


    Section
3.10 Disclosure of
Transaction.

     

    The
Company shall issue a press release describing the material terms of the
transactions contemplated hereby (the “Press Release”) on
the day of the Closing but in no event later than one hour after the Closing;
provided, however, that if such
Closing occurs after 4:00 P.M. Eastern Time on any Trading Day, the Company
shall issue the Press Release no later than 9:00 A.M. Eastern Time on the first
Trading Day following the Closing Date.  The Company shall also file
with the Commission a Current Report on Form 8-K (the “Form 8-K”) describing
the material terms of the transactions contemplated hereby as soon as
practicable following the Closing Date but in no event more than four (4)
Trading Days following the Closing Date, which Press Release and Form 8-K shall
be subject to prior review and comment by the Purchasers.  “Trading Day” means
any day during which the principal exchange on which the Common Stock is traded
shall be open for trading.

    


    Section
3.11 Disclosure of Material
Information.

     

    The
Company covenants and agrees that neither it nor any other person acting on its
behalf has provided or will provide any Purchaser or its agents or counsel with
any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information.  The
Company understands and confirms that each Purchaser shall be relying on the
foregoing representations in effecting transactions in securities of the
Company.  In the event of a breach of the foregoing covenant by the
Company, or any of its Subsidiaries, or any of its or their respective officers,
directors, employees and agents, in addition to any other remedy provided herein
or in the Transaction Documents, the Company shall publicly disclose any
material, non-public information in a Form 8-K within four (4) Business Days of
the date that it discloses such information to any Purchaser.  In the
event that the Company discloses any material, non-public information to a
Purchaser and fails to publicly file a Form 8-K in accordance with the above, a
Purchaser shall have the right to make a public disclosure, in the form of a
press release, public advertisement or otherwise, of such material, nonpublic
information without the prior approval by the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees or
agents.  No Purchaser shall have any liability to the Company, its
Subsidiaries, or any of its or their respective officers, directors, employees,
stockholders or agents, for any such disclosure.

     

    
      
        
        

      

      
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    Section
3.12 Pledge of
Securities.

     

    The
Company acknowledges that the Securities may be pledged by a Purchaser in
connection with a bona fide margin agreement
or other loan or financing arrangement that is secured by the
Securities.  The pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and no Purchaser
effecting a pledge of the Securities shall be required to provide the Company
with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or any other Transaction Document; provided that a Purchaser
and its pledgee shall be required to comply with the provisions of Article V
hereof in order to effect a sale, transfer or assignment of Securities to such
pledgee. At the Purchasers’ expense, the Company hereby agrees to execute and
deliver such documentation as a pledgee of the Securities may reasonably request
in connection with a pledge of the Securities to such pledgee by a
Purchaser.

    


    Section
3.13 Amendments.  

     

    The
Company shall not amend or waive any provision of the Articles or Bylaws of the
Company in any way that would adversely affect exercise rights, voting rights,
conversion rights, prepayment rights or redemption rights of the holder of the
Notes.

    


    Section
3.14 Distributions.

     

    So long
as any Notes remain outstanding, the Company agrees that it shall not, and shall
not permit any Subsidiary to, (i) declare or pay any dividends or make any
distributions to any holder(s) of Common Stock (or security convertible into or
exercisable for Common Stock) or (ii) purchase or otherwise acquire for value,
directly or indirectly, any Common Stock or other equity security of the
Company.

    


    Section
3.15 Reservation of
Shares.

     

    So long
as any of the Notes remain outstanding, on and after the Amendment Date, the
Company shall take all action necessary to at all times have authorized and
reserved for the purpose of issuance, one hundred twenty percent (120%) of the
aggregate number of shares of Common Stock needed to provide for the issuance of
the Conversion Shares.

    


    Section
3.16 Transfer Agent
Instructions.  

     

    The
Company shall issue irrevocable instructions to its transfer agent, and any
subsequent transfer agent, to issue certificates, registered in the name of each
Purchaser or its respective nominee(s), for the Conversion Shares in such
amounts as specified from time to time by each Purchaser to the Company upon
conversion of the Notes in the form of Exhibit G attached
hereto (the “Irrevocable Transfer Agent
Instructions”).   The Company warrants that the Conversion
Shares shall otherwise be freely transferable on the books and records of the
Company, subject to the requirements of applicable law.  Nothing in
this Section 3.16 shall affect in any way each Purchaser’s obligations and
agreements set forth in Section 5.1 to comply with all applicable prospectus
delivery requirements, if any, or other exemption from registration upon resale
of the Conversion Shares.  If a Purchaser provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that a public
sale, assignment or transfer of the Conversion Shares may be made without
registration under the Securities Act or the Purchaser provides the Company with
reasonable assurances that the Conversion Shares can be sold pursuant to Rule
144 without any restriction as to the number of securities acquired as of a
particular date that can then be immediately sold, the Company shall permit the
transfer, and, in the case of the Conversion Shares, promptly instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by such Purchaser and without any restrictive
legend.  The Company acknowledges that a breach by it of its
obligations under this Section 3.16 will cause irreparable harm to the
Purchasers by vitiating the intent and purpose of the transaction contemplated
hereby.  Accordingly, the Company acknowledges that the remedy at law
for a breach of its obligations under this Section 3.16 will be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 3.16, that the Purchasers shall be entitled, in
addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

     

    
      
        
        

      

      
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    Section
3.17 Opinions. 

     

    The
Company will provide, at the Company’s expense, such legal opinions in the
future as are reasonably necessary for the issuance and resale of the Common
Stock issuable upon conversion of the Notes pursuant to an effective
registration statement, Rule 144 or an exemption from
registration.  In the event that Common Stock is sold in a manner that
complies with an exemption from registration, the Company will promptly instruct
its counsel (at its expense) to issue to the transfer agent an opinion
permitting removal of the legend (indefinitely, if more than one year has
elapsed from the Closing Date, or to permit sale of the shares if pursuant to
the other provisions of Rule 144).

    


    Section
3.18 Acquisition of
Assets.

     

    In the
event the Company or any Subsidiary acquires any assets or other properties,
such assets or properties shall constitute a part of the Collateral (as defined
in the Security Agreement) and the Company shall take all action necessary to
perfect the Purchasers’ security interest in such assets or properties pursuant
to the Security Agreement.

    


    Section
3.19 Subsequent
Financings.

     

    
      
        
        

      

      
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    (a) For so
long as the Notes remain outstanding, the Company covenants and agrees to
promptly notify (in no event later than five (5) days after making or receiving
an applicable offer) in writing (a “Rights Notice”) the
Purchasers of the terms and conditions of any proposed offer or sale to, or
exchange with (or other type of distribution to) any third party  (a
“Subsequent
Financing”), of Common Stock or any securities convertible, exercisable
or exchangeable into Common Stock, including convertible debt securities
(collectively, the “Financing
Securities”).  The Rights Notice shall describe, in reasonable
detail, the proposed Subsequent Financing, the names and investment amounts of
all investors participating in the Subsequent Financing, the proposed closing
date of the Subsequent Financing, which shall be within ten (10) calendar days
from the date of the Rights Notice, and all of the terms and conditions thereof
and proposed definitive documentation to be entered into in connection
therewith.  The Rights Notice shall provide each Purchaser an option
(the “Rights
Option”) during the three (3) Trading Days following delivery of the
Rights Notice (the “Option Period”) to
inform the Company whether such Purchaser will purchase securities in such
Subsequent Financing, up to its pro rata portion (as described below) of the
securities being offered in such Subsequent Financing on the same, absolute
terms and conditions as contemplated by such Subsequent Financing.  If
any Purchaser elects not to participate in such Subsequent Financing, the other
Purchasers may participate on a pro-rata basis.  For purposes of this
Section, all references to “pro rata” means, for any Purchaser electing to
participate in such Subsequent Financing, the percentage obtained by dividing
(x) the principal amount of the Notes purchased by such Purchaser at the Closing
by (y) the total principal amount of all of the Notes purchased by all of the
participating Purchasers at the Closing.  Delivery of any Rights
Notice constitutes a representation and warranty by the Company that there are
no other material terms and conditions, arrangements, agreements or otherwise
except for those disclosed in the Rights Notice, to provide additional
compensation to any party participating in any proposed Subsequent Financing,
including, but not limited to, additional compensation based on changes in the
Purchase Price or any type of reset or adjustment of a purchase or conversion
price or to issue additional securities at any time after the closing date of a
Subsequent Financing.  If the Company does not receive notice of
exercise of the Rights Option from the Purchasers within the Option Period, the
Company shall have the right to close the Subsequent Financing on the scheduled
closing date with a third party; provided that all of
the material terms and conditions of the closing are substantially the same as
those provided to the Purchasers in the Rights Notice.  If the closing
of the proposed Subsequent Financing does not occur on that date, any closing of
the contemplated Subsequent Financing or any other Subsequent Financing shall be
subject to all of the provisions of this Section 3.19(a), including, without
limitation, the delivery of a new Rights Notice.  The provisions of
this Section 3.19(a) shall not apply to issuances of securities in a Permitted
Financing or with respect to any Purchaser that holds less than 10% of the Notes
issued to it upon the Closing.

     

    (b) For
purposes of this Agreement, a Permitted Financing (as defined hereinafter) shall
not be considered a Subsequent Financing.  A “Permitted Financing”
shall mean any financing described in Section 3.5(c) of the Notes as in effect
on the date hereof.

    


    (c) So long
as the Notes are outstanding, if the Company enters into any Subsequent
Financing on terms more favorable than the terms governing the Notes, then each
Purchaser in its sole discretion may exchange its Note, valued at their stated
value, together with accrued but unpaid interest (which interest payments shall
be payable, at the sole option of such Purchaser, in cash or in the form of the
new securities to be issued in the Subsequent Financing), for the securities
issued or to be issued in the Subsequent Financing.  The Company
covenants and agrees to promptly notify in writing the Purchasers of the terms
and conditions of any such proposed Subsequent Financing.

     

    
      
        
        

      

      
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    Section
3.20 Variable Rate
Securities.

     

    For so
long as any Notes have not been paid in full or converted in full,
notwithstanding whether or not an issuance of securities is an Permitted
Financing, the Company shall not issue or sell, or agree to issue or sell
Variable Equity Securities (as defined below) (the “Variable Equity Securities
Lock-Up”), without obtaining the prior written approval of each of the
Purchasers, with the exception of any such agreements or transactions that (x)
exist as of the date hereof and (y) are not amended or modified after the date
hereof.  For purposes hereof, the following shall be collectively
referred to herein as, the “Variable Equity
Securities”: (A) any debt or equity securities which are convertible
into, exercisable or exchangeable for, or carry the right to receive additional
shares of Common Stock either (1) at any conversion, exercise or exchange rate
or other price that is based upon and/or varies with the trading prices of or
quotations for Common Stock at any time after the initial issuance of such debt
or equity security, or (2) with a fixed conversion, exercise or exchange price
that is subject to being reset at some future date at any time after the initial
issuance of such debt or equity security due to a change in the market price of
the Company’s Common Stock since date of initial issuance, or (B) any amortizing
convertible security which amortizes prior to its maturity date, where the
Company is required to or has the option to (or the investor in such transaction
has the option to require the Company to) make such amortization payments in
shares of Common Stock (whether or not such payments in stock are subject to
certain equity conditions), or (C) any transaction involving a written agreement
between the Company and an investor or underwriter whereby the Company has the
right to “put” its securities to the investor or underwriter over an agreed
period of time and at an agreed price or price formula (each, an “Equity Line”
transaction).   It is expressly agreed and understood that the
Variable Equity Securities Lock-Up shall apply in respect of a Permitted
Financing and that no issuance of Variable Equity Securities shall be a
Permitted Financing.

    


    Section
3.21 Registration
Rights.

     

    If the
Company shall determine to prepare and file with the Commission a registration
statement (a “Registration
Statement”) relating to an offering for its own account or the account of
others under the Securities Act of any of its equity securities, other than on
Form S-4 or Form S-8 (each as promulgated under the Securities Act), or their
then equivalents, relating to equity securities to be issued solely in
connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans, then
the Company shall send to the Purchasers a written notice of such determination
and, if within ten days after the date of such notice, a Purchaser shall so
request in writing, the Company shall include in such Registration Statement all
or any part of the Conversion Shares as such Purchaser requests to be registered
so long as such Conversion Shares are proposed to be disposed in the same manner
as those set forth in the Registration Statement; provided, however, that if the
number of Conversion Shares offered for participation in the proposed offering
is greater than, in the reasonable opinion of the managing underwriter (if any)
of the proposed offering, can be accommodated without adversely affecting the
proposed offering, then the number of shares of Common Stock included in such
registration shall be subject to reduction to a number deemed satisfactory by
the managing underwriter, which reduction shall be allocated pro rata among all
parties offering securities pursuant to such Registration
Statement.  The Company shall use its best efforts to cause any
Registration Statement to be declared effective by the Commission as promptly as
is possible following it being filed with the Commission and to remain effective
until all Conversion Shares subject thereto have been sold or may be sold
without limitations as to volume or the availability of current public
information under Rule 144.  All fees and expenses incident to the
performance of or compliance with this Section 3.21 by the Company shall be
borne by the Company whether or not any Conversion Shares are sold pursuant to
the Registration Statement.  The Company shall indemnify and hold
harmless each Purchaser, the officers, directors, members, partners, agents,
brokers, investment advisors and employees of each of them, each person who
controls each Purchaser (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act), and the officers, directors, members,
shareholders, partners, agents and employees of each such controlling person, to
the fullest extent permitted by applicable law, from and against any and all
losses, claims, damages, liabilities, costs (including, without limitation,
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
prospectus included therein or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading or (2) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act or any
state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Section 3.21, except, with respect
to a Purchaser, to the extent, but only to the extent, that such untrue
statements or omissions referred to in (1) above are based solely upon
information regarding such Purchaser furnished in writing to the Company by such
Purchaser expressly for use therein.

     

    
      
        
        

      

      
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    ARTICLE
IV

     

     

    CONDITIONS

     

    Section
4.1 Conditions Precedent to the
Obligation of the Company to Close and to Sell the
Securities.

     

    The
obligation hereunder of the Company to close and issue and sell the Securities
to the Purchasers at the Closing is subject to the satisfaction or waiver, at or
before the Closing of the conditions set forth below.  These
conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion.

    


    (a) Accuracy
of the Purchasers’ Representations and Warranties.  The
representations and warranties of each Purchaser shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time, except for representations and warranties that are
expressly made as of a particular date, which shall be true and correct in all
material respects as of such date.

    


    (b) Performance by the
Purchasers.  Each Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Purchasers at or prior to the Closing Date.

    


    
      
        
        

      

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

    


    (d) Delivery
of Purchase Price.

    The
Purchase Price for the Securities shall have been delivered to the Company on
the Closing Date.

    


    (e) Delivery of Transaction
Documents.  The Transaction Documents shall have been duly
executed and delivered by the Purchasers to the Company.

    


    Section
4.2 Conditions Precedent to the
Obligation of the Purchasers to Close and to Purchase the
Securities.

     

    The
obligation hereunder of the Purchasers to purchase the Securities and consummate
the transactions contemplated by this Agreement is subject to the satisfaction
or waiver, at or before the Closing, of each of the conditions set forth
below.  These conditions are for the Purchasers’ sole benefit and may
be waived by the Purchasers at any time in their sole discretion.

    


    (a) Accuracy of the Company’s
Representations and Warranties.  Each of the representations
and warranties of the Company in this Agreement and the other Transaction
Documents shall be true and correct in all material respects as of the Closing
Date, except for representations and warranties that speak as of a particular
date, which shall be true and correct in all material respects as of such
date.

    


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

    


    (c) No Suspension,
Etc.  Trading in the Common Stock shall not have been suspended
by the Commission or the OTC Bulletin Board, and, at any time prior to the
Closing Date, trading in securities generally as reported by Bloomberg Financial
Markets (“Bloomberg”) shall not
have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by Bloomberg, or on the New
York Stock Exchange, 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 or crisis of such magnitude in its effect on, or any
material adverse change in any financial market which, in each case, in the
judgment of such Purchaser, makes it impracticable or inadvisable to purchase
the Securities.

    


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

     

    
      
        
        

      

      
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    (e) No Proceedings or
Litigation.  No action, suit or proceeding before any
arbitrator or any governmental authority shall have been commenced, and no
investigation by any governmental authority shall have been threatened, against
the Company or any Subsidiary, or any of the officers, directors or affiliates
of the Company or any Subsidiary seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.

    


    (f) Opinion of
Counsel.  The Purchasers shall have received an opinion of
counsel to the Company, dated the date of the Closing, substantially in the form
of Exhibit H
hereto, with such exceptions and limitations as shall be reasonably acceptable
to counsel to the Purchasers.

    


    (g) Notes;
Guarantees.  At or prior to the Closing, the Company shall have
delivered to the Purchasers the Notes (in such denominations as each Purchaser
may request), and the Subsidiaries shall have delivered the
Guarantees.

    


    (h) Secretary’s
Certificate.  The Company shall have delivered to the
Purchasers a secretary’s certificate, dated as of the Closing Date, as to (i)
the resolutions adopted by the Board of Directors approving the transactions
contemplated hereby, (ii) the Articles, (iii) the Bylaws, each as in effect at
the Closing, and (iv) the authority and incumbency of the officers of the
Company executing the Transaction Documents and any other documents required to
be executed or delivered in connection therewith.

    


    (i) Officer’s
Certificate.  On the Closing Date, the Company shall have
delivered to the Purchasers a certificate signed by an executive officer on
behalf of the Company, dated as of the Closing Date, confirming the accuracy of
the Company’s representations, warranties and covenants as of such Closing Date
and confirming the compliance by the Company with the conditions precedent set
forth in paragraphs (a)-(e) and (k) of this Section 4.2 as of the Closing Date
(provided that, with respect to the matters in paragraphs (d) and (e) of this
Section 4.2, such confirmation shall be based on the knowledge of the executive
officer after due inquiry).

    


    (j) Material Adverse
Effect.  No Material Adverse Effect shall have
occurred.

    Transfer Agent
Instructions.  The Irrevocable Transfer Agent Instructions, in
the form of Exhibit
J attached hereto, shall have been delivered to and executed by the
Company’s transfer agent, and delivered to the Lead Purchaser’s counsel to be
held in escrow pending the Closing.

     

    (k) Security
Agreement.  At the Closing, the Company shall have executed and
delivered the Security Agreement and the IP Security Agreement to each
Purchaser.

    


    (l) UCC Financing
Statements.  The Company and the Subsidiaries shall have
authorized the filing of all UCC financing statements in form and substance
satisfactory to the Purchasers at the appropriate offices to create a valid and
perfected security interest in the Collateral (as defined in the Security
Agreement), which filings are to be made promptly following
Closing.

     

    
      
        
        

      

      
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    ARTICLE
V

     

     

    CERTIFICATE
LEGEND

     

    Section
5.1 Legend.

     

    Each
certificate representing the Securities shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to any legend
required by applicable state securities or “blue sky” laws):

    


    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR URIGEN PHARMACEUTICALS, INC. SHALL HAVE RECEIVED AN
OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.

     

    The
Company agrees to issue or reissue certificates representing any of the
Conversion Shares, without the legend set forth above if at such time, prior to
making any transfer of any such Conversion Shares, such holder thereof shall
give written notice to the Company describing the manner and terms of such
transfer and removal as the Company may reasonably request, and (x) such
Conversion Shares have been registered for sale under the Securities Act and the
holder is selling such shares and is complying with its prospectus delivery
requirement under the Securities Act, (y) the holder is selling such Conversion
Shares in compliance with the provisions of Rule 144 or (z) the provisions of
paragraph (b)(1)(i) of Rule 144 apply to such Shares.

     

     

    ARTICLE
VI

     

     

    INDEMNIFICATION

     

    Section
6.1 General
Indemnity.

     

    The
Company agrees to indemnify and hold harmless the Purchasers (and their
respective directors, officers, affiliates, agents, successors and assigns) from
and against any and all losses, liabilities, deficiencies, costs, damages and
expenses (including, without limitation, reasonable attorneys’ fees, charges and
disbursements) incurred by the Purchasers as a result of any inaccuracy in or
breach of the representations, warranties or covenants made by the Company
herein.

    


    Section
6.2 Indemnification
Procedure.

     

    
      
        
        

      

      
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    Any party
entitled to indemnification under this Article VI (an “indemnified party”) will
give written notice to the indemnifying party of any matter giving rise to a
claim for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice.  In case any such action, proceeding or claim is brought
against an indemnified party in respect of which indemnification is sought
hereunder, the indemnifying party shall be entitled to participate in and,
unless in the reasonable judgment of the indemnifying party a conflict of
interest between it and the indemnified party exists with respect to such
action, proceeding or claim (in which case the indemnifying party shall be
responsible for the reasonable fees and expenses of one separate counsel for the
indemnified parties), to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party.  In the event that the
indemnifying party advises an indemnified party that it will contest such a
claim for indemnification hereunder, or fails, within thirty (30) days of
receipt of any indemnification notice to notify, in writing, such person of its
election to defend, settle or compromise, at its sole cost and expense, any
action, proceeding or claim (or discontinues its defense at any time after it
commences such defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim.  In any
event, unless and until the indemnifying party elects in writing to assume and
does so assume the defense of any such claim, proceeding or action, the
indemnified party’s costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder.  The indemnified party shall cooperate
fully with the indemnifying party in connection with any negotiation or defense
of any such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the indemnified party
which relates to such action or claim.  The indemnifying party shall
keep the indemnified party fully apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto.  If the
indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense.  The indemnifying party
shall not be liable for any settlement of any action, claim or proceeding
effected without its prior written consent.  Notwithstanding anything
in this Article VI to the contrary, the indemnifying party shall not, without
the indemnified party’s prior written consent, settle or compromise any claim or
consent to entry of any judgment in respect thereof which imposes any future
obligation on the indemnified party or which does not include, as an
unconditional term thereof, the giving by the claimant or the plaintiff to the
indemnified party of a release from all liability in respect of such
claim.  The indemnification obligations to defend the indemnified
party required by this Article VI shall be made by periodic payments of the
amount thereof during the course of investigation or defense, as and when bills
are received or expense, loss, damage or liability is incurred, so long as the
indemnified party shall refund such moneys if it is ultimately determined by a
court of competent jurisdiction that such party was not entitled to
indemnification.  The indemnity agreements contained herein shall be
in addition to (a) any cause of action or similar rights of the indemnified
party against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.

     

    
      
        
        

      

      
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    ARTICLE
VII

     

     

    MISCELLANEOUS

     

    Section
7.1 Fees and
Expenses.

     

    Each
party shall pay the fees and expenses of its advisors, 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; provided, however, that the
Company shall pay all actual attorneys’ fees and expenses (including
disbursements and out-of-pocket expenses) incurred by the Lead Purchasers in
connection with (i) the preparation, negotiation, execution and delivery of the
Transaction Documents and the transactions contemplated thereunder, which
payment shall be made at Closing and shall not exceed $7,000 (plus disbursements
and out-of-pocket expenses) (which payment may be withheld from the amount
delivered to the Company by the Lead Purchaser on Closing), and (ii) any
amendments, modifications or waivers of this Agreement or any of the other
Transaction Documents.  In addition, the Company shall pay all
reasonable fees and expenses incurred by the Purchasers in connection with the
enforcement of this Agreement or any of the other Transaction Documents,
including, without limitation, all reasonable attorneys’ fees and
expenses.

    


    Section
7.2 Specific Performance;
Consent to Jurisdiction; Venue.

     

    (a) The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement or the other
Transaction Documents were not performed in accordance with their specific terms
or were otherwise breached.  It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Agreement or the other Transaction Documents and to
enforce specifically the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled by law or
equity.

    


    (b) The
parties agree that venue for any dispute arising under this Agreement will lie
exclusively in the state or federal courts located in New York County, New York,
and the parties irrevocably waive any right to raise forum non conveniens or any
other argument that New York is not the proper venue.  The parties
irrevocably consent to personal jurisdiction in the state and federal courts of
the state of New York.  The Company and each Purchaser consent to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing in this Section 7.2
shall affect or limit any right to serve process in any other manner permitted
by law.  The Company and the Purchasers hereby agree that the
prevailing party in any suit, action or proceeding arising out of or relating to
the Securities, this Agreement or the other Transaction Documents, shall be
entitled to reimbursement for reasonable legal fees from the non-prevailing
party.  The parties hereby waive all rights to a trial by
jury.

    


    Section
7.3 Entire Agreement;
Amendment.

     

    This
Agreement and the Transaction Documents contain the entire understanding and
agreement of the parties with respect to the matters covered hereby and, except
as specifically set forth herein or in the other Transaction Documents, neither
the Company nor any Purchaser make any representation, warranty, covenant or
undertaking with respect to such matters, and they supersede all prior
understandings and agreements with respect to said subject matter, all of which
are merged herein.  No provision of this Agreement may be waived or
amended other than by a written instrument signed by the Company and the
Purchasers holding at least a majority of the principal amount of the Notes then
held by the Purchasers.  Any amendment or waiver effected in
accordance with this Section 7.3 shall be binding upon each Purchaser (and their
permitted assigns) and the Company.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    


    Section
7.4 Notices.

     

    Any
notice, demand, request, waiver or other communication required or permitted to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery by telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.  The
addresses for such communications shall be:

     

    
      	If to the
      Company:	Urigen
      Pharmaceuticals, Inc.	 
	 	27 Maiden Lane,
      Suite 595	 
	 	San Francisco,
      California 94108	 
	 	Tel. No.: (650)
      259-0239	 
	 	Fax No.: (650)
      259-0901 and (866) 816-1107	 
	 	 	 
	
              with
      copies (which copies

              shall not
      constitute notice

              to the Company) to:  

            	Sichenzia Ross
      Friedman Ference LLP	 
	 	61 Broadway, 32nd
      Floor	 
	 	New York, New York
      10006	 
	 	Tel:  (212)
      930-9700	 
	 	Fax: (212)
      930-9725	 
	 	 	 
	If
      to any Purchaser:	

              At
      the address of such Purchaser set forth on Exhibit A to
      this Agreement, with copies to Purchaser’s counsel as set forth on Exhibit A or as
      specified in writing by such Purchaser with copies to:

            
	 	 	 
	 	Shane W. McCormack,
      Esq.	 
	 	Burak Anderson &
      Melloni, PLC	 
	 	30 Main Street, PO
      Box 787	 
	 	Burlington, VT
      05402-0787	 
	 	Tel:  (802)
      862-0500	 
	 	Fax: (802)
      862-8176	 


    

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

    Any party
hereto may from time to time change its address for notices by giving written
notice of such changed address to the other party hereto.

     

    Section
7.5 Waivers.

     

    No waiver
by either party 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 other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.  No consideration shall be offered or paid to any
Purchaser to amend or consent to a waiver or modification of any provision of
any of the Transaction Documents unless the same consideration is also offered
to all of the parties to the Transaction Documents.  This provision
constitutes a separate right granted to each Purchaser by the Company and shall
not in any way be construed as the Purchasers acting in concert or as a group
with respect to the purchase, disposition or voting of Securities or
otherwise.

    


    Section
7.6 Headings.

     

    The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose and
shall not be deemed to limit or affect any of the provisions
hereof.

    


    Section
7.7 Successors and
Assigns.

     

    This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns.  After the Closing, the assignment by a
party to this Agreement of any rights hereunder shall not affect the obligations
of such party under this Agreement.  The Purchasers may assign the
Securities and its rights under this Agreement and the other Transaction
Documents and any other rights hereto and thereto without the consent of the
Company.

    


    Section
7.8 No Third Party
Beneficiaries.

     

    This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.

    


    Section
7.9 Governing
Law.

     

    This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York, without giving effect to any of the conflicts of
law principles which would result in the application of the substantive law of
another jurisdiction.  This Agreement shall not be interpreted or
construed with any presumption against the party causing this Agreement to be
drafted.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

    


    Section
7.10 Survival.

     

    The
representations and warranties of the Company and the Purchasers shall survive
the execution and delivery hereof and the Closing until the third anniversary of
the Closing Date, except the agreements and covenants set forth in Articles I,
III, V, VI and VII of this Agreement shall survive the execution and delivery
hereof and such Closing hereunder.

    


    Section
7.11 Counterparts.

     

    This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.

    


    Section
7.12 Publicity.

     

    The
Company agrees that it will not disclose, and will not include in any public
announcement, the names of the Purchasers without the consent of the Purchasers,
which consent shall not be unreasonably withheld or delayed, or unless and until
such disclosure is required by law, rule or applicable regulation, and then only
to the extent of such requirement.

    


    Section
7.13 Severability.

     

    The
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any one or more of the provisions or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.

    


    Section
7.14 Further
Assurances.

     

    From and
after the date of this Agreement, upon the request of the Purchasers or the
Company, the Company and each Purchaser shall execute and deliver such
instruments, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement and the other Transaction Documents

    


    Section
7.15 Collateral
Agent.

     

    (a) Appointment.  Each
Purchaser hereby appoints the Lead Purchaser as the Collateral Agent under the
Security Agreement, the IP Security Agreement and any related agreements
granting to the Agent or the Purchasers a security interest to secure the
Company’s obligations under the Transaction Documents (collectively, the “Security Documents”)
and each Purchaser authorizes the Collateral Agent to take such action as agent
on its behalf and to exercise such powers under the Security Documents as are
delegated to the Collateral Agent under such agreements and to exercise such
powers as are reasonably incidental thereto.  Without limiting the
foregoing, each Secured Party hereby authorizes the Collateral Agent to execute
and deliver, and to perform its obligations under, each of the documents to
which the Collateral Agent is a party relating to security for the obligations
under the Notes, to exercise all rights, powers and remedies that the Collateral
Agent may have under such Security Documents and, in the case of the Security
Documents, to act as agent for the Purchasers under such Transaction
Documents.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    


    (b) Instructions of
Purchasers.  The Collateral Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Purchasers holding at least 51% of the
aggregate amount of the Notes then outstanding, and such instructions shall be
binding upon all Purchasers; provided, however, that the
Collateral Agent shall not be required to take any action that (i) the
Collateral Agent in good faith believes exposes it to personal liability unless
the Collateral Agent receives an indemnification satisfactory to it from the
Purchasers with respect to such action or (ii) is contrary to this Agreement or
applicable law.

    


    (c) Duties are Administrative in
Nature.  In performing its functions and duties under the
Security Documents and the other documents required to be executed or delivered
in connection therewith, the Collateral Agent is acting solely on behalf of the
Purchasers and its duties are entirely administrative in nature.  The
Collateral Agent does not assume and shall not be deemed to have assumed any
obligation other than as expressly set forth herein.  The Collateral
Agent may perform any of its duties under any Security Document by or through
its agents or employees.

    


    (d) No
Liability.  None of the Collateral Agent, any of its affiliates
or any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it, him, her or them under
or in connection with the Security Documents, except for its, his, her or their
own gross negligence or willful misconduct.

    


    (e) Investigation.  Each
Secured Party acknowledges that it shall, independently and without reliance
upon the Collateral Agent or any other Secured Party conduct its own independent
investigation of the financial condition and affairs of the Company and its
Subsidiaries in connection with the issuance of the Securities.  Each
Secured Party also acknowledges that it shall, independently and without
reliance upon the Collateral Agent or any other Secured Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and other Transaction Documents.

    


    (f) Indemnification.  Each
Purchaser agrees to indemnify the Collateral Agent and each of its affiliates,
and each of their respective directors, officers, employees, agents and advisors
(to the extent not reimbursed by the Company), from any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements (including fees, expenses and disbursements of
financial and legal advisors) of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against, the Collateral Agent or any of its
affiliates, directors, officers, employees, agents and advisors in any way
relating to or arising out of the Security Documents or any action taken or
omitted by the Collateral Agent under the Security Documents or the document
related thereto; provided, however, that no
Purchaser shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Collateral Agent’s or such Affiliate’s gross
negligence or willful misconduct.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    


    (g) Resignation.                                The
Collateral Agent may resign at any time by giving written notice thereof to the
Purchasers and the Company.  Upon any such resignation, the Purchasers
shall have the right to appoint a successor Collateral Agent.  If no
successor Collateral Agent shall have been so appointed by the Purchasers, and
shall have accepted such appointment, within 30 days after the retiring
Collateral Agent’s giving of notice of resignation, then the retiring Collateral
Agent may, on behalf of the Purchasers, appoint a successor Collateral Agent,
selected from among the Purchasers.  Upon the acceptance of any
appointment as Collateral Agent by a successor Collateral Agent, such successor
Collateral Agent shall succeed to, and become vested with, all the rights,
powers, privileges and duties of the retiring Collateral Agent, and the retiring
Collateral Agent shall be discharged from its duties and obligations under this
Agreement, the Transaction Documents and any other documents required to be
executed or delivered in connection therewith.  Prior to any retiring
Collateral Agent’s resignation hereunder as Collateral Agent, the retiring
Collateral Agent shall take such action as may be reasonably necessary to assign
to the successor Collateral Agent its rights as Collateral Agent under the
Transaction Documents.  After such resignation, the retiring
Collateral Agent shall continue to have the benefit of this Agreement as to any
actions taken or omitted to be taken by it while it was Collateral Agent under
this Agreement, the Security Documents and any other documents required to be
executed or delivered in connection therewith.

    


    (h) Binding.  Each
Purchaser agrees that any action taken by the Collateral Agent in accordance
with the provisions of this Agreement or of the other document relating thereto,
and the exercise by the Collateral Agent or the Purchasers of the powers set
forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the
Purchasers.

    


    (i) Releases.  Each
of the Purchasers hereby directs, in accordance with the terms hereof, the
Collateral Agent to release (or in the case of clause (ii) below, release or
subordinate) any Lien held by the Collateral Agent for the benefit of the
Purchasers against any of the following: (i) all of the Collateral upon payment
and satisfaction in full of all obligations under the Notes and all other
obligations under the Transaction Documents that the Collateral Agent has been
notified in writing are then due and payable; (ii) any assets that are subject
to a Lien; and (iii) any part of the Collateral sold or disposed of by the
Company or any Subsidiary if such sale or disposition is permitted by this
Agreement and the other Transaction Documents (or permitted pursuant to a waiver
or consent of a transaction otherwise prohibited by this Agreement and the other
Transaction Documents).  Each of the Purchasers hereby directs the
Collateral Agent to execute and deliver or file such termination and partial
release statements and do such other things as are necessary to release Liens to
be released pursuant to this Section 7.15 promptly upon the effectiveness of any
such release.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    


    Section
7.16 Representation of Lead
Purchaser.

     

    It is
acknowledged by each Purchaser that the Lead Purchaser has retained Burak
Anderson & Melloni, PLC to act as its counsel in connection with the
transactions contemplated by the Transaction Documents and that Burak Anderson
& Melloni, PLC has not acted as counsel for any Purchaser, other than the
Lead Purchaser, in connection with the transactions contemplated by the
Transaction Documents and that none of such Purchasers has the status of a
client for conflict of interest or any other purposes as a result
thereof.

    


    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

     

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

     

     

    
      
        	 	

                URIGEN
      PHARMACEUTICALS, INC.

              	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ William J. Garner,
      M.D	 
	 	 	Name:
      William J. Garner, M.D.	 
	 	 	Title:
      Chief Executive Officer	 
	 	 	 	 


      


      
        	 	PLATINUM-MONTAUR
      LIFE SCIENCES, LLC	 
	 	 	 	 
	 	
                By:
      

              	/s/ Michael M.
      Goldberg	 
	 	 	Name:  Michael
      M. Goldberg	 
	 	 	Title:  Portfolio
      Manager	 
	 	 	 	 


      

    

    


     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
A

    LIST
OF PURCHASERS

    


    
      
      

    

    
 

    
      	
              Names and Addresses of
      Purchasers

            	 
      	
              Investment
      Amount and Principal Amount of Notes
      Purchased

            
	
              Platinum-Montaur
      Life Sciences, LLC

              152
      West 57th
      Street, 54th
      Floor, New York, NY 10019

            	 
      	
              $257,000
      Investment

            
	 
      	 
      	
              $257,000
      Principal Amount of Note (Legal Fees of $7,000 to be deducted from amount
      wired to Company at Closing)

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      


    

     

     

    
 

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

    FORM
OF 10% NOTE

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
C

    FORM
OF SECURITY AGREEMENT

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
        

      

      
        39

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
D

    FORM
OF IP SECURITY AGREEMENT

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    


    EXHIBIT
E

    FORM
OF GUARANTEE

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
F

    FORM
OF OFFICER’S CERTIFICATE

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        42

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
G

    FORM
OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        43

        
          

        

      

      
        
        

      

    

     

     

    EXHIBIT
H

    OPINION
OF COUNSEL TO COMPANY

    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    


    
 

    
      
        
        

      

      
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    SCHEDULES

    


     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    45