Document:

Securities Purchase Agreement

 Exhibit 10.1 
 EXECUTION COPY 
 SECURITIES PURCHASE AGREEMENT 
 This Securities Purchase Agreement (this “Agreement”) is dated as of October 21, 2008, among DARA BioSciences, Inc., a Delaware
corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively the “Purchasers”). 
 WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, that aggregate number of Units (as hereinafter defined)
set forth on such Purchaser’s signature page to this Agreement (which aggregate amount for all Purchasers together shall be not more than 8,500,000 Units). Each “Unit” shall consist of (i) one share of Common Stock, (ii) one
Class A Warrant, and (iii) one Class B Warrant (in each case, as defined below); 
 WHEREAS, subject to the terms and conditions
set forth in this Agreement, up to an aggregate number of 5,500,000 Units (the “Initial Units”) will be issued and sold to the Purchasers on the First Closing Date and, if applicable, the Second Closing Date (as defined below) at a price
of $1.00 per Unit, for an aggregate purchase price of up to $5,500,000 (the “Initial Purchase Price”); and 
 WHEREAS, subject to
the terms and conditions set forth in this Agreement, an amount up to the difference between the total number of Units and the aggregate number of Initial Units sold on the First Closing Date and the Second Closing Date (the “Remaining
Units”) may be issued and sold to the Purchasers on the Third Closing Date (as defined below) for an aggregate purchase price equal to $1.00 times the number of Remaining Units issued and sold to the Purchasers on the Third Closing Date (the
“Remaining Purchase Price”). 
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other
good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser, severally and not jointly, agree as follows: 
 ARTICLE I. 
 DEFINITIONS 
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1: 
 “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under
common control with a Person as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser. 

 “Aggregate Purchase Price” means, as to each Purchaser, the aggregate amount to be paid
for Units purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Aggregate Purchase Price”, in United States Dollars and in immediately available funds.

 “Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States
or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. 
 “Class A Warrants” means collectively the Common Stock purchase warrants, in the form of Exhibit A attached hereto and delivered to the Purchasers at a Closing in accordance with Section 2 hereof, which Warrants
shall be exercisable beginning on the date that is 6 months after the date hereof and have a term of exercise equal to 5 years. 
 “Class A Warrant First Closing Price” has the meaning ascribed to such term in Section 2.2(a)(ii). 
 “Class A Warrant Second Closing Price” has the meaning ascribed to such term in Section 2.2(c)(ii). 
 “Class B Warrants” means collectively the Common Stock purchase warrants, in the form of Exhibit B attached hereto and delivered to the Purchasers at a Closing in accordance with Section 2 hereof, which Warrants
shall be exercisable beginning on the date that is 12 months and one day after the date hereof and have a term of exercise equal to 5 years. 
 “Closing” means either the First Closing, the Second Closing or the Third Closing. 
 “Closing
Date” means either the First Closing Date, the Second Closing Date or the Third Closing Date. 
 “Commission” means
the Securities and Exchange Commission. 
 “Common Stock” means the common stock of the Company, par value $.01 per share.

 “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof
to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock. 
 “Company’s Counsel” means K&L Gates, LLP, having an office at 4350 Lassiter at
North Hills Avenue, Suite 300, Raleigh, North Carolina 27609. 
 “Discussion Time” has the meaning ascribed to such term in
Section 3.2(d). 
 “DWAC” has the meaning ascribed to such term in Section 2.2(a)(i). 
 “Escrow Account” has the meaning ascribed to such term in Section 2.1(d). 
  

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 “Escrow Agent” means Corporate Stock Transfer, Inc. 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 

“First Closing” has the meaning ascribed to such term in Section 2.1(a). 
 “First Closing Date” has the meaning ascribed to such term in Section 2.1(a). 
 “Initial Purchase Price” has the meaning ascribed to such term in the recitals to this Agreement. 
 “Initial Units” has the meaning ascribed to such term in the recitals to this Agreement. 
 “Intellectual Property” has the meaning ascribed to such term in Section 3.1(k). 
 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. 

“Material Adverse Effect” has the meaning ascribed to such term in Section 3.1(a). 
 “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 
 “Placement
Agent” has the meaning ascribed to such term in Section 2.1(d). 
 “Prospectus” means the final prospectus
filed for the Registration Statement. 
 “Prospectus Supplement” means a supplement to the Prospectus complying with Rule
424(b) of the Securities Act that is filed with the Commission prior to the opening of the Trading Market on the Trading Day immediately following each Closing Date and delivered by the Company to each Purchaser at such time. 
 “Purchaser Party” has the meaning ascribed to such term in Section 4.6. 
 “Registration Statement” means the Company’s registration statement on Form S-3 on file with Commission, file No. 333-150150,
which registers the sale of the Shares, the Warrants and the Warrant Shares to the Purchasers. 
 “Remaining Purchase Price”
has the meaning ascribed to such term in the recitals to this Agreement. 
 “Remaining Units” has the meaning ascribed to
such term in the recitals to this Agreement. 
 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
  

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 “SEC Reports” has the meaning ascribed to such term in Section 3.1. 
 “Second Closing” has the meaning ascribed to such term in Section 2.1(b). 
 “Second Closing Date” has the meaning ascribed to such term in Section 2.1(b). 
 “Securities” means the Shares, the Warrants and the Warrant Shares. 
 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 
 “Shares” means shares of the Company’s Common Stock. 
 “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares
of Common Stock). 
 “Stockholder Approval Condition” has the meaning ascribed to such term in Section 2.4(c).

 “Stockholder Approval Termination Date” has the meaning ascribed to such term in Section 4.12. 
 “Subsidiary” has the meaning ascribed to such term in Section 3.1(a). 
 “Third Closing” has the meaning ascribed to such term in Section 2.1(c). 
 “Third Closing Date” has the meaning ascribed to such term in Section 2.1(c). 
 “Trading Day” means a day on which the Common Stock is traded on a Trading Market. 
 “Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in
question: the Nasdaq Capital Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market, the Nasdaq Global Select Market or the OTC Bulletin Board. 
 “Transaction Agreements” means this Agreement, the Warrants and any other agreements executed in connection with the transactions
contemplated hereunder. 
 “Unit” has the meaning ascribed to such term in the recitals to this Agreement. 
 “VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is
then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the Common Stock is not then quoted for trading on a Trading Market and if prices for the Common Stock are then reported in the
“Pink Sheets” 

  

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published by Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of
the Common Stock so reported; or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchaser and reasonably acceptable to the Company. 
 “Warrants” means collectively the Class A Warrants and the Class B Warrants. 
 “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants. 
 ARTICLE II. 
 PURCHASE AND SALE 
 2.1 Purchase and Sale of Units. Subject to the terms and conditions of this Agreement, each Purchaser, severally and not jointly, agrees to
purchase, and the Company agrees to sell and issue to each of the Purchasers, such number of Units set forth on such Purchaser’s signature page to this Agreement. Subject to the terms and conditions of this Agreement, such purchases and sales
shall take place at the First Closing, the Second Closing (if applicable) and/or the Third Closing (if applicable) in the order of the dates on which Purchasers deliver to the Company their executed signature pages to this Agreement and deposit
funds in the Escrow Account pursuant to Section 2.1(d); provided, however, if one or more signature pages are received by the Company and related Escrow Account fundings occur on the same date, and if the Units represented thereby would result
in the total number of Units to be purchased under this Agreement exceeding 5,500,000, then the Company shall allocate such Units between Initial Units (to be purchased and sold at the First Closing and/or Second Closing subject to the terms and
conditions of this Agreement) and Remaining Units (to be purchased and sold at the Third Closing subject to the terms and conditions of this Agreement) in its sole discretion. By their signatures to this Agreement, the Purchasers expressly
acknowledge and agree that there is no minimum number of Units required to be sold at any Closing under this Agreement. No investment should be made in the Company pursuant to this Agreement based on any assumption or expectation by any Purchaser
that any minimum number of Units will be sold hereunder. 
 (a) First Closing. The first closing of the purchase and sale of the
Initial Units (the “First Closing”) shall be held at the offices of the Company’s Counsel, on October 15, 2008 at 11:00 a.m., New York time, or at such other time (on or prior to November 15, 2008) and place designated by
the Company and the Placement Agent (the “First Closing Date”). 
 (b) Second Closing. In the event that all of the Initial
Units are not sold in the First Closing, a second closing of the purchase and sale of Initial Units (the “Second Closing”) may be held at the offices of the Company’s Counsel, which Second Closing would be held on October 31,
2008 at 11:00 a.m. New York time, or at such other time (on or prior to November 30, 2008) and place designated by the Company and the Placement Agent (the “Second Closing Date”); provided, that in no event shall the number of Initial
Units sold pursuant to the First Closing and the Second Closing exceed 5,500,000 Units in the aggregate. 
  

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 (c) Third Closing. If applicable, a closing of the purchase and sale of the Remaining Units (the
“Third Closing”) may be held at the offices of the Company’s Counsel, which Third Closing would be held no later than three Trading Days following the satisfaction of the Stockholder Approval Condition (as hereinafter defined) (the
“Third Closing Date”). 
 (d) Payments. Immediately upon a Purchaser’s execution of this Agreement, such Purchaser
shall deposit the full Aggregate Purchase Price, as set forth on such Purchaser’s signature page to this Agreement, into an account established by the Company with the Escrow Agent and designated in writing to such Purchaser by the Company (the
“Escrow Account”). Such deposit shall be made in United States dollars and in immediately available funds by wire transfer. Upon written instruction by the Company and Gilford Securities Incorporated (the “Placement Agent”) to
the Escrow Agent, the Escrow Agent shall release funds from the Escrow Account to the Company at the First Closing and, if applicable, at the Second Closing and, if applicable, at the Third Closing. Such funds shall be paid by the Escrow Agent to
the Company in United States dollars and in immediately available funds by wire transfer to an account established by the Company and designated in writing to the Escrow Agent by the Company. If any funds remain in the Escrow Account at 6:00 p.m.
New York time on the Stockholder Approval Termination Date, the Escrow Agent shall, on the next Trading Day, return those funds, without interest, to those Purchasers whose payment(s) hereunder have not been used to purchase Units. 
 2.2 First Closing Deliveries and Second Closing Deliveries. 
 (a) At the First Closing, the Company shall deliver or cause to be delivered to each Purchaser the following: 
 (i) a copy of the irrevocable instructions to the Company’s transfer agent instructing the transfer agent to deliver via the Depository Trust Company Deposit Withdrawal Agent Commission System (“DWAC”)
Shares equal to such number of Shares included in the Initial Units purchased by such Purchaser at the First Closing, registered in the name of such Purchaser and bearing no restrictive legend under the Securities Act or otherwise; 
 (ii) a Class A Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of
such Purchaser’s Initial Units actually purchased hereunder at the First Closing, with an exercise price per share equal to the greater of (a) the consolidated closing bid price on the Nasdaq Capital Market (trading symbol
“DARA”) on the Trading Day immediately preceding the First Closing Date plus $.01, or (b) $1.30, in either case subject to adjustment therein (the “Class A Warrant First Closing Price”) (such Warrant certificate may be
delivered within three Trading Days of the First Closing Date); 
 (iii) a Class B Warrant registered in the name of such
Purchaser to purchase up to a number of shares of Common Stock equal to 50% of such Purchaser’s Initial Units actually purchased hereunder at the First Closing (rounded up to the nearest whole Share), with an exercise price per share equal to
$2.25, subject to adjustment therein (such Warrant certificate may be delivered within three Trading Days of the First Closing Date); 
  

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 (iv) the Prospectus and Prospectus Supplement (which may be delivered in accordance with
Rule 172 under the Securities Act), which Prospectus Supplement shall be filed with the Commission prior to the opening of the Trading Market on the Trading Day immediately following the First Closing Date and delivered by the Company to each
Purchaser at such time; and 
 (v) a legal opinion from the Company’s Counsel addressed to the Purchasers in the form
attached hereto as Exhibit C. 
 (b) At the First Closing, the Initial Purchase Price for the Units purchased at the First Closing
shall be delivered to the Company from the Escrow Account in accordance with Section 2.1(d). 
 (c) At the Second Closing (if
applicable), the Company shall deliver or cause to be delivered to each Purchaser the following: 
 (i) a copy of the
irrevocable instructions to the Company’s transfer agent instructing the transfer agent to deliver via DWAC Shares equal to such number of Shares included in the Initial Units purchased by such Purchaser at the Second Closing, registered in the
name of such Purchaser and bearing no restrictive legend under the Securities Act or otherwise; 
 (ii) a Class A Warrant
registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of such Purchaser’s Initial Units actually purchased hereunder at the Second Closing, with an exercise price per share equal to the
greater of (a) the Class A Warrant First Closing Price, or (b) the consolidated closing bid price on the Nasdaq Capital Market (trading symbol “DARA”) on the Trading Day immediately preceding the Second Closing Date plus
$.01, in either case subject to adjustment therein (the “Class A Warrant Second Closing Price”) (such Warrant certificate may be delivered within three Trading Days of the Second Closing Date); 
 (iii) a Class B Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 50% of such
Purchaser’s Initial Units actually purchased hereunder at the First Closing (rounded up to the nearest whole Share), with an exercise price per share equal to $2.25, subject to adjustment therein (such Warrant certificate may be delivered
within three Trading Days of the First Closing Date); 
 (iv) the Prospectus and Prospectus Supplement (which may be delivered
in accordance with Rule 172 under the Securities Act), which Prospectus Supplement shall have been filed with the Commission prior to the opening of the Trading Market on the Trading Day immediately following the First Closing Date and delivered by
the Company to each Purchaser at such time on or prior to the Second Closing Date; and 
 (v) a legal opinion from the
Company’s Counsel addressed to the Purchasers in the form attached hereto as Exhibit C. 
  

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 (d) At the Second Closing (if applicable), the Initial Purchase Price for the Units purchased at the
Second Closing shall be delivered to the Company from the Escrow Account in accordance with Section 2.1(d). 
 2.3 Third Closing
Deliveries. 
 (a) At the Third Closing (if applicable), the Company shall deliver or cause to be delivered to each Purchaser the
following: 
 (i) a copy of the irrevocable instructions to the Company’s transfer agent instructing the transfer agent
to deliver via DWAC Shares equal to such number of Shares included in the Remaining Units purchased by such Purchaser at the Third Closing, registered in the name of such Purchaser and bearing no restrictive legend under the Securities Act or
otherwise; 
 (ii) a Class A Warrant registered in the name of such Purchaser to purchase up to a number of shares of
Common Stock equal to 100% of such Purchaser’s Remaining Units actually purchased hereunder at the Third Closing, with an exercise price per share equal to the greater of (a) the Class A Warrant Second Closing Price, or (b) the
consolidated closing bid price on the Nasdaq Capital Market (trading symbol “DARA”) on the Trading Day immediately preceding the Third Closing Date plus $.01, in either case subject to adjustment therein (such Warrant certificate may be
delivered within three Trading Days of the Third Closing Date); 
 (iii) a Class B Warrant registered in the name of such
Purchaser to purchase up to a number of shares of Common Stock equal to 50% of such Purchaser’s Remaining Units actually purchased hereunder at the Third Closing (rounded up the nearest whole share), with an exercise price per share equal to
$2.25, subject to adjustment therein (such Warrant certificate may be delivered within three Trading Days of the Third Closing Date); 
 (iv) the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act), which Prospectus Supplement shall have been filed with the Commission prior to the opening
of the Trading Market on the Trading Day immediately following the First Closing Date and delivered by the Company to each Purchaser at such time on or prior to the Third Closing Date; and 
 (v) a legal opinion from the Company’s Counsel addressed to the Purchasers in the form attached hereto as Exhibit C.

 (b) At the Third Closing (if applicable), the Remaining Purchase Price for the Units purchased at the Third Closing shall be delivered to
the Company from the Escrow Account in accordance with Section 2.1(d). 
 2.4 Closing Conditions. 
 (a) Conditions Precedent to the Obligations of the Purchasers at the Closings. The obligation of each Purchaser to acquire the Initial Units at the
First Closing and/or the Second 

  

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Closing (if applicable) and the Remaining Units at the Third Closing (if applicable) is subject to the satisfaction or waiver by such Purchaser, at or before
the First Closing, Second Closing or the Third Closing, as applicable, of each of the following conditions: 
 (i)
Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the First Closing Date, the Second Closing Date or the
Third Closing, as applicable, as though made on and as of such date; provided, however, that those representations and warranties qualified by materiality shall be true and correct in all respects as of the date when made and as of the
First Closing Date, the Second Closing or the Third Closing Date, as applicable, as though made on and as of such date. 
 (ii) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Agreements to be performed, satisfied or complied with by
it at or prior to the First Closing, the Second Closing or the Third Closing, as applicable. 
 (iii) No Suspensions of
Trading in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the Commission at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for
trading on a Trading Market (other than the OTC Bulletin Board). 
 (iv) Absence of Litigation. No action, suit or
proceeding by or before any court or any governmental body or authority, against the Company or pertaining to the transactions contemplated by this Agreement or their consummation, shall have been instituted, or to the Company’s knowledge,
threatened, on or before the First Closing Date, the Second Closing Date or the Third Closing Date, as applicable, which action, suit or proceeding would reasonably be expected to have a Material Adverse Effect. 
 (b) Conditions Precedent to the Obligations of the Company at the Closings. The obligation of the Company to sell the Initial Units to a Purchaser
at the First Closing and/or the Second Closing (if applicable) and the Remaining Units at the Third Closing (if applicable) is subject to the satisfaction or waiver by the Company, at or before the First Closing, the Second Closing or the Third
Closing, as applicable, of each of the following conditions: 
 (i) Representations and Warranties. The representations
and warranties of such Purchaser contained herein shall be true and correct in all material respects as of the date when made and as of the First Closing Date, the Second Closing Date or the Third Closing Date, as applicable, as though made on and
as of such date; provided, however, that those representations and warranties qualified by materiality shall be true and correct in all respects as of the date when made and as of the First Closing Date, the Second Closing Date or the
Third Closing Date, as applicable, as though made on and as of such date. 
 (ii) Performance. Such Purchaser shall
have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the 

  

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Transaction Agreements to be performed, satisfied or complied with by such Purchaser at or prior to the First Closing, the Second Closing or the Third
Closing, as applicable. 
 (iii) Company Acceptance. The Company shall have accepted such Purchaser’s commitment
to purchase Units as set forth on such Purchaser’s signature page, as evidenced by the countersignature of a Company officer on such signature page where indicated. 
 (c) Additional Conditions to the Third Closing. The obligations of each Purchaser to accept delivery of, and the Company’s obligation to sell and issue, the Remaining Units are subject to the
Company’s receipt and effectiveness of stockholder approval for the issuance of the Remaining Units as, and to the extent, required pursuant to the rules and regulations of the Nasdaq Stock Market, the Commission or otherwise (the
“Stockholder Approval Condition”). If and to the extent applicable, upon the satisfaction of the foregoing condition, the Company will issue to the Purchasers the Remaining Units and shall instruct the Escrow Agent to remit, and the Escrow
Agent shall remit, payment of the aggregate Remaining Purchase Price to the Company pursuant to Section 2.1(d). 
 ARTICLE III.

 REPRESENTATIONS AND WARRANTIES 
 3.1 Representations, Warranties and Covenants of the Company. Except as otherwise described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, the Company’s Quarterly Report on Form 10-Q
for the quarter ended June 30, 2008, the Registration Statement, the Prospectus and any of the Company’s Current Reports on Form 8-K filed since the filing date of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007 (all collectively, the “SEC Reports”), the Company hereby represents and warrants to, and covenants with, each Purchaser as of the date hereof and as of each Closing Date, as follows: 
 (a) Organization. The Company is duly incorporated and validly existing in good standing under the laws of the State of Delaware. The Company has
full power and authority to own, operate and occupy its properties and to conduct its business as currently conducted and is registered or qualified to do business and in good standing in each jurisdiction in which it owns property or transacts
business and where the failure to be so qualified would have a material adverse effect upon: (i) the Company and its Subsidiaries as a whole, (ii) the business, financial condition, properties, operations or assets of the Company and its
Subsidiaries as a whole, or (iii) the Company’s ability to perform its obligations under the Transaction Agreements in all material respects (each, a “Material Adverse Effect”). No proceeding has been instituted, or to the
Company’s knowledge, threatened, in any such jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. Except as set forth in the SEC Reports, the Company does not
currently own, directly or indirectly, a majority of the stock or other equity interests in any entity (each, a “Subsidiary”). Except for matters which are not reasonably likely to have a Material Adverse Effect, each Subsidiary of the
Company has been duly incorporated, formed, or organized, and is validly existing, in good standing under the laws of the jurisdiction of its incorporation, formation, or organization, with full power and authority to own its properties and conduct
its business as 

  

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currently conducted. Except for matters which are not reasonably likely to have a Material Adverse Effect, all of the issued and outstanding capital stock of
each Subsidiary of the Company has been duly authorized and validly issued and is fully paid and non-assessable and, except as disclosed in the SEC Reports, is owned of record by the Company, or a Subsidiary of the Company. 
 (b) Due Authorization. The Company has all requisite power and authority to execute, deliver and perform its obligations under the Transaction
Agreements. The execution and delivery of the Transaction Agreements, and the consummation by the Company of the transactions contemplated thereby, have been duly authorized by all necessary corporate action. The Transaction Agreements that require
execution by the Company have been validly executed and delivered by the Company and constitute legal, valid and binding agreements of the Company enforceable against the Company in accordance with their terms, except to the extent (i) rights
to indemnity and contribution may be limited by state or federal securities laws or the public policy underlying such laws; (ii) such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors’ and contracting parties’ rights generally and (iii) such enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 (c) No Conflict or Default. The execution and delivery of the Transaction Agreements, the issuance and sale of the Securities to be
sold by the Company under the Transaction Agreements, the fulfillment of the terms of the Transaction Agreements and the consummation of the transactions contemplated thereby will not: (A) result in a conflict with or constitute a violation of,
or default (with the passage of time or otherwise) under, (i) any bond, debenture, note, loan agreement or other evidence of indebtedness, or any indenture, lease, mortgage, deed of trust or any other agreement or instrument to which the
Company is a party or by which it is bound or to which any of the property or assets of the Company is subject, (ii) any stockholders agreement, voting agreement or similar agreement concerning the voting rights of stockholders, (iii) the
Certificate of Incorporation, bylaws or other organizational documents of the Company, as amended, or (iv) with respect to the issuance and sale of the Securities, assuming the accuracy of the representations and warranties and the performance
and satisfaction of the covenants and agreements, of the Purchasers pursuant to the Transaction Agreements, any law, rule, ordinance, statute, regulation, or existing order of any court or governmental agency, or other authority binding upon the
Company or the Company’s respective properties; or (B) result in the creation or imposition of any Lien upon any of the material assets of the Company or an acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any material bond, debenture, note, loan agreement or other evidence of indebtedness, or any material indenture, lease, mortgage, deed of trust or any other agreement or instrument to which the Company is a party or by which it is bound
or to which any of the property or assets of the Company is subject. No consent, approval, authorization or other order of, or registration, qualification or filing with, any regulatory body, administrative agency, or other governmental body is
required for the execution and delivery of the Transaction Agreements by the Company and the valid issuance or sale of the Securities by the Company pursuant to the Transaction Agreements, other than such as have been made or obtained, and except
for any filings required to be made under federal or state securities laws. 
  

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 (d) Capitalization. The authorized capital stock of the Company consists of 75,000,000 shares of
Common Stock, par value $0.01 per share, and 1,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”). As of June 30, 2008, there were issued and outstanding 27,590,366 shares of Common Stock and no
shares of Preferred Stock. As of June 30, 2008, no shares of the Company’s Common Stock were reserved for issuance, except (a) up to 8,282,131 shares of Common Stock reserved for issuance pursuant to the Company’s employee and
director incentive stock plans, (b) up to 2,376,461 shares of Common Stock reserved for issuance pursuant to outstanding stock options, and (c) up to 698,064 shares of Common Stock reserved for issuance pursuant to outstanding warrants.
All outstanding stock options have been appropriately issued, dated and authorized under the Company’s employee and director incentive stock plans. Since June 30, 2008, the Company has not issued any shares of Common Stock or any
securities convertible into or exercisable for any shares of its Common Stock, other than pursuant to its employee and director incentive stock plans and upon the exercise of outstanding stock options, and other than 220,000 shares of Common Stock
issued to Lyons Capital, LLC. There are not any outstanding preemptive rights or rights of first refusal that would provide for the issuance or sale of any Common Stock of the Company to any Person as a result of the transactions contemplated by
this Agreement. The capital stock and other securities of the Company conform in all material respects to all statements relating thereto contained in the Registration Statement and Prospectus. 
 (e) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Agreements, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Agreements. The Company has reserved from its duly authorized capital stock the maximum number of shares of Common
Stock issuable pursuant to this Agreement and the Warrants. None of the Company, its Subsidiaries, any of their Affiliates, or any person acting on any of 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 transactions contemplated by this Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable shareholder
approval provisions. None of the Company, its Subsidiaries, their Affiliates or any person acting on any of their behalf will take any action or steps referred to in the preceding sentence that would cause the transactions contemplated by this
Agreement to be integrated with other offerings. 
 (f) Legal Proceedings. There is no legal, administrative, regulatory or
governmental proceeding pending, or to the knowledge of the Company, threatened, to which the Company or any Subsidiary is a party or of which the business or property of the Company is subject, that is reasonably likely to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries are subject to any injunction, judgment, decree or order of any court, regulatory body, administrative agency or other government body that is reasonably likely to have a Material Adverse
Effect. 
  

 12 

 (g) SEC Reports. The SEC Reports, including copies of all the exhibits included or referenced
therein, as of their respective dates (or, if amended or superseded by a filing prior to the date of this Agreement, then on the date of such amendment or superseding filing): (i) have been prepared and filed in compliance in all material
respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder; and (ii) did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Registration Statement and the Prospectus (x) have been, and the Prospectus Supplement will be, prepared and
filed in compliance in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder; and (y) did not when filed, and will not, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 
 (h) No Violations. The Company is not in violation of its Certificate of Incorporation or bylaws, as amended. To the knowledge of the Company, it
is not in violation of any law, rule, ordinance, statute, regulation or order of any court or governmental agency, arbitration panel or authority applicable to the Company, which violation, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect. The Company is not in default (and there exists no condition which, with the passage of time or otherwise, would constitute a default) in the performance of any bond, debenture, note or any other evidence of
indebtedness or any indenture, mortgage, deed of trust or any other material agreement or instrument to which the Company is a party or by which the Company is bound, which such default is reasonably likely to have a Material Adverse Effect.

 (i) Governmental Permits, Etc. The Company and each of its Subsidiaries have all necessary franchises, licenses, certificates and
other authorizations from any foreign, federal, state or local government or governmental agency, department or body that are currently necessary for the operation of the business of the Company and its Subsidiaries as currently conducted, except
where the failure to currently possess such franchises, licenses, certificates and other authorizations is not reasonably likely to have a Material Adverse Effect. 
 (j) Good and Marketable Title to Property. The Company and its Subsidiaries have good and marketable title to, or a valid, subsisting and enforceable interest in, all real properties and all other properties
and assets owned or leased by them that are material to the operation of the Company’s business. 
 (k) Intellectual Property.
Except for matters which are not reasonably likely to have a Material Adverse Effect, (i) the Company or a Subsidiary has ownership of, or a license or other legal right to use, all patents, copyrights, trade secrets, trademarks, trade names,
customer lists, designs, manufacturing or other processes, computer software, systems, data compilation, research results or other proprietary rights used in the business of the Company (collectively, “Intellectual Property”) and
(ii) the Company or a Subsidiary owns and has the right to use the same, free and clear of any claim or conflict with the rights of others (subject to the provisions of any applicable license agreement). To the Company’s knowledge, its use
of its 

  

 13 

 
Intellectual Property does not infringe the intellectual property rights of any third party which could reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate. 
 (l) Financial Statements. The financial statements of the Company and the related notes
contained in the SEC Reports present fairly and accurately in all material respects the financial position of the Company on a consolidated basis as of the dates therein indicated, and the consolidated results of its operations, cash flows and the
changes in stockholders’ equity for the periods therein specified, subject, in the case of unaudited financial statements for interim periods, to normal year-end audit adjustments. Such financial statements (including the related notes) have
been prepared in accordance with generally accepted accounting principles applied on a consistent basis at the times and throughout the periods therein specified, except that unaudited financial statements may not contain all footnotes required by
generally accepted accounting principles. The Company has no off-balance sheet arrangements. The Company’s internal accounting controls and procedures are sufficient to cause the Company and each Subsidiary to prepare financial statements that
comply in all material respects with generally accepted accounting principles and the rules and regulations of the Commission on a consistent basis during the periods involved. Since December 31, 2007, nothing has been brought to the attention
of the Company’s management that would result in any reportable condition relating to the Company’s internal accounting procedures, weaknesses or controls. The Company’s and each of its Subsidiary’s internal accounting controls
and procedures are sufficient to cause each of them to comply in all material respects with the Foreign Corrupt Practices Act of 1977, the Sarbanes-Oxley Act of 2002, and the rules and regulations of the Commission, each as in effect as of the date
hereof. 
 (m) Tax Returns. Except for matters which are not reasonably likely to have a Material Adverse Effect, the Company and its
Subsidiaries have made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which they are subject and have paid or accrued all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and declarations. 
 (n) No Material
Adverse Change. There has not been since December 31, 2007 any event, circumstance or change that has had or is reasonably likely to have a Material Adverse Effect. 
 (o) Disclosure of Information. Except for the terms of the Transaction Agreements and the fact that the Company is considering consummating the
transactions contemplated therein, the Company confirms that neither the Company nor, to its knowledge, any other Person acting on its behalf, has provided any of the Purchasers or their agents or counsel with any information that constitutes
material, non-public information. 
 (p) Contracts. Except for matters which are not reasonably likely to have a Material Adverse
Effect and those contracts that are substantially or fully performed or expired by their terms, the contracts listed as exhibits to or described in the SEC Reports that are material to the Company and all amendments thereto, are in full force and
effect on the date hereof, and neither the Company nor, to the Company’s knowledge, any other party to such contracts is in 

  

 14 

 
breach of or default under any of such contracts, which breach or default is reasonably likely to result in a Material Adverse Effect. The Company maintains
insurance in scope and amount which is reasonable and customary in the businesses in which the Company and the Subsidiaries are engaged. 
 (q) Investment Company. The Company is not an “investment company” or an “affiliated person” of an investment company, within the meaning of the Investment Company Act of 1940, as amended, and will not be deemed
an “investment company” as a result of the transactions contemplated by this Agreement. 
 (r) Certain Fees. Except for the
fees payable to the Placement Agent, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by the Transaction Agreements. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated by the Transaction Agreements. 
 (s) Employees. The Company
and each of its Subsidiaries is in compliance in all material respects with all laws and regulations respecting the employment of its employees and employment practices, terms and conditions of employment and wages and hours relating thereto. There
are no pending investigations involving the Company or any of its Subsidiaries by any governmental agency responsible for the enforcement of such laws and regulations. There is no unfair labor practice charge or complaint against the Company or any
of its Subsidiaries pending before any governmental agency or body or any strike, picketing, boycott, dispute, slowdown or stoppage pending, or to the knowledge of the Company, threatened, against or involving the Company or any of its Subsidiaries
or any predecessor entity. No question concerning representation exists respecting the employees of the Company or any of its Subsidiaries and no collective bargaining agreement or modification thereof is currently being negotiated by the Company or
any of its Subsidiaries. No grievance or arbitration proceeding is pending under any expired or existing collective bargaining agreements of the Company or any of its Subsidiaries, if any. 
 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants as of
the date hereof and as of each Closing Date to the Company as follows: 
 (a) Organization; Authority. Such Purchaser is either
(i) an individual or (ii) an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate
the transactions contemplated by the Transaction Agreements and otherwise to carry out its obligations hereunder and thereunder. If the Purchaser is an entity, the execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Agreement to which it is a party has been duly executed by such Purchaser, and when delivered by
such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in 

  

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accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law. 
 (b) Purchaser Status. At the time such Purchaser was
offered the Securities, it was, and at the date hereof it is, and on each date on which it exercises any Warrants, it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act; or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.

 (c) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is
able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. 
 (d) Short Sales and Confidentiality Prior To The Date Hereof. Other than the transaction contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding
with such Purchaser, executed any disposition, including Short Sales, in the securities of the Company during the period commencing from the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person
setting forth the material terms of the transactions contemplated hereunder until the date hereof (“Discussion Time”). Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Units covered by this Agreement. Other than to other Persons party to this
Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). 
 (e) No Conflict or Default. The execution and delivery of the Transaction Agreements, the fulfillment of the terms of the Transaction
Agreements and the consummation of the transactions contemplated thereby will not: (A) result in a conflict with or constitute a material violation of, or material default (with the passage of time or otherwise) under, (i) any material
bond, debenture, note, loan agreement or other evidence of indebtedness, or any material indenture, lease, mortgage, deed of trust or any other agreement or instrument to which the Purchaser is a party or by which it is bound or to which any of the
property or assets of the Purchaser is subject, (ii) the Certificate of Incorporation, bylaws or other organizational documents of the Purchaser, as amended (if applicable), or (iii) any law, administrative regulation, or existing order of
any court or governmental agency, or other authority binding 

  

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upon the Purchaser or the Purchaser’s respective properties; or (B) result in the creation or imposition of any lien, encumbrance, claim, or
security interest upon any of the material assets of the Purchaser or an acceleration of indebtedness pursuant to any obligation, agreement or condition contained in any material bond, debenture, note, loan agreement or other evidence of
indebtedness, or any material indenture, lease, mortgage, deed of trust or any other agreement or instrument to which the Purchaser is a party or by which it is bound or to which any of the property or assets of the Purchaser is subject. Assuming
the accuracy of the representations and warranties, and the performance and satisfaction of the covenants and agreements, of the Company pursuant to the Transaction Agreements, no consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative agency, or other governmental body is required for the execution and delivery of the Transaction Agreement by the Purchaser, other than such as have been made or obtained, and except
for any filings required to be made under federal or state securities laws. 
 (f) No Investment, Tax or Legal Advice. The Purchaser
understands that nothing in the SEC Reports, any Transaction Agreement, or any other materials presented to the Purchaser in connection with the purchase and sale of the Units constitutes legal, tax or investment advice. The Purchaser has consulted
such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Units. 
 (g) Additional Acknowledgement. The Purchaser has thoroughly reviewed the SEC Reports prior to making this investment. The Purchaser has been granted a reasonable time prior to the date hereof during which it
has had the opportunity to obtain such additional information as the Purchaser deems necessary to permit the Purchaser to make an informed decision with respect to the purchase of the Units. After examination of the SEC Reports and other information
available, the Purchaser is fully aware of the business, financial condition, risks associated with investment and the operating history relating to the Company, and therefore in subscribing for the purchase of the Units, the Purchaser is not
relying upon any information other than information contained in the SEC Reports. The Purchaser acknowledges that it has independently evaluated the merits of the transactions contemplated by the Transaction Agreements, that it has independently
determined to enter into the transactions contemplated thereby, that it is not relying on any advice from or evaluation by any other Purchaser, and that it is not acting in concert with any other Purchaser in making its purchase of the Units
hereunder. The Purchaser acknowledges that the Purchaser has not, either individually or collectively with any other Purchasers, taken any actions that would deem the Purchasers to be members of a “group” for purposes of Section 13(d)
of the Exchange Act with respect to the Company. 
 ARTICLE IV. 
 OTHER AGREEMENTS OF THE PARTIES 
 4.1 Transfer Restrictions. If all or any portion of a Warrant is
exercised at a time when there is an effective registration statement to cover the issuance of the Warrant Shares, such Warrant Shares shall be issued free of all legends. 
 4.2 Furnishing of Information. As long as any Purchaser owns any Securities, the Company covenants to timely file (or obtain extensions in respect
thereof and file within the 

  

 17 

 
applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act and the rules and regulations of
the Trading Market. As long as any Purchaser owns any Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c)
such information as is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to
time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144. 
 4.3 Securities Laws Disclosure; Publicity. The Company shall, by 9:30 a.m. (New York City time) on the Trading Day immediately following the First Closing Date, issue a Current Report on Form 8-K, disclosing
the material terms of the transactions contemplated hereby, and shall attach the Transaction Agreements thereto. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without
the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly
provide the other party with prior notice of such public statement or communication. The Company shall not need the prior consent of any Purchaser to issue the press release with respect to the transactions contemplated hereby as required by this
Section 4.3. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior
written consent of such Purchaser, except (i) as required by federal securities law in connection with the filing of final Transaction Agreements (including signature pages thereto) with the Commission and (ii) to the extent such
disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this subclause (ii).  
 4.4 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Agreements, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that 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. 
 4.5 Use of Proceeds. The Company shall use the net proceeds from the sale of the Units hereunder for
working capital purposes. 
 4.6 Indemnification of Purchasers. Subject to the provisions of this Section 4.6, the Company will
indemnify, defend and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a 

  

 18 

 
functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such
Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to
(a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Agreements or (b) any action instituted against a Purchaser, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Agreements (unless such action is based upon a breach of such
Purchaser’s representations, warranties or covenants under the Transaction Agreements or any agreements or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws
or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right
to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been
specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate
counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate
counsel. The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed or
(ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Agreements. 
 4.7 Reservation of Common Stock. As of the date hereof, the Company has reserved
and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Shares pursuant to this Agreement and Warrant Shares
pursuant to any exercise of the Warrants. 
 4.8 Listing of Common Stock. The Company hereby agrees to use commercially reasonable
efforts to maintain the listing of the Common Stock on the Nasdaq Capital Market, and to list all of the Shares and Warrant Shares on the Nasdaq Capital Market at the time of the issuance thereof. The Company further agrees, if the Company applies
to have the Common 

  

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Stock traded on any other Trading Market, it will include in such application all of the Shares and Warrant Shares, and will take such other action as is
necessary to cause all of the Shares and Warrant Shares to be listed on such other Trading Market as promptly as possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading
Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. 
 4.9 Short Sales and Confidentiality After The Date Hereof. Each Purchaser severally and not jointly with the other Purchasers covenants that neither it nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any Short Sales during the period commencing at the Discussion Time and ending at the time that the transactions contemplated by this Agreement are first publicly announced as described in Section 4.3. Each
Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.3, such Purchaser will maintain
the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, no Purchaser makes any representation, warranty or covenant hereby that it
will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced as described in Section 4.3. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement. 
 4.10 Delivery of Securities After Closing. The Company shall deliver, or cause to be delivered, the
respective Securities purchased by each Purchaser at a Closing to such Purchaser within three Trading Days of the applicable Closing Date. 
 4.11 Effectiveness of Registration Statement. The Company shall maintain the effectiveness of the Registration Statement for a period of at least 24 months after the latest Closing Date hereunder. If at the time of exercise of either
the Class A Warrants or the Class B Warrants there is no effective Registration Statement registering the issuance of the Warrant Shares, the Warrants may be exercised on a cashless basis as set forth in the Warrants. 
 4.12 Stockholder Approval Event. If the Company agrees to sell and the Purchasers agree to purchase any Remaining Units hereunder, and if, and to
the extent, the Company determines, in its reasonable discretion, that stockholder approval is required for the issuance of such Remaining Units pursuant to the rules and regulations of the Nasdaq Stock Market, the Commission or otherwise, the
Company shall prepare and file with the Commission either (i) a proxy statement pursuant to Section 14(a) of the Exchange Act or (ii) an information statement pursuant to Section 14(c) of the Exchange Act. In the event of such
filing, the Company shall use its commercially reasonable efforts to satisfy the Stockholder Approval Condition within seventy-five (75) days of the First Closing Date (such date being the “Stockholder Approval 

  

 20 

 
Termination Date”). The Stockholder Approval Termination Date may be extended by the Company upon written notice to the Purchasers for up to an
additional thirty (30) days. 
 ARTICLE V. 
 MISCELLANEOUS 
 5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder with respect to any future Closings only and without any effect whatsoever on the obligations between the Company and the other Purchasers or on Units purchased hereunder by such Purchaser at a prior Closing,
by written notice to the other parties, if (i) the First Closing has not been consummated on or before November 15, 2008, (ii) the Second Closing (if applicable) has not been consummated on or before November 30, 2008, or
(iii) the Third Closing (if applicable) has not been consummated on or before January 31, 2009; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties). Upon such
termination, the terminating Purchaser shall be entitled to receive a full refund of such Purchaser’s Aggregate Purchase Price that has not already been applied to the purchase of Units hereunder at a Closing hereunder. 
 5.2 Fees and Expenses. Except as expressly set forth in the Transaction Agreements to the contrary, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent
fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers. 
 5.3 Entire
Agreement. The Transaction Agreements, together with the exhibits and schedules thereto, the Prospectus and the Prospectus Supplement contain the entire understanding of the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 
 5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not
a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party
to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 
 5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and 

  

 21 

 
Purchaser(s) holding 51% or more of the then outstanding Securities sold pursuant to this Agreement, or, in the case of a waiver, by the party against whom
enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. 
 5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. 
 5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of
its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction
Agreements that apply to the “Purchasers”. 
 5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.6. 
 5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Agreements shall be
governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. The parties hereby waive all rights to a trial by jury. 
 5.10 Survival. The representations and warranties contained herein shall survive until the 18 month anniversary of the date hereof. 
 5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective with respect to each Purchaser when counterparts have been signed by such Purchaser and the Company and delivered by each to the other, it being understood that both parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. 
 5.12
Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve 

  

 22 

 
the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 
 5.13 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance
of such replacement Securities. 
 5.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Agreements. The parties agree that monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in the Transaction Agreements and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 
 5.15 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Agreement are several
and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or nonperformance of the obligations of any other Purchaser under any Transaction Agreement. Nothing contained herein or
in any other Transaction Agreement, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Agreements. 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 Agreements, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has
been represented by its own separate legal counsel in their review and negotiation of the Transaction Agreements. Company has elected to provide all Purchasers with the same terms and Transaction Agreements for the convenience of the Company and not
because it was required or requested to do so by the Purchasers. 
 5.16 Construction. The parties agree that each of them and/or
their respective counsel has reviewed and had an opportunity to revise the Transaction Agreements and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Agreements or any amendments hereto. 
 (Signature Pages Follow) 
  

 23 

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

							
	DARA BIOSCIENCES, INC.	 		  	 8601 Six Forks Road, Suite 160
 Raleigh, NC
27615
 Attn: John Didsbury

	By:	 	  
	 		  	Fax: 919-861-0239
	Name:	 	John Didsbury	 		  	e-mail: JDidsbury@darabiosciences.com
	Title:	 	President	 		  	

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGE FOR PURCHASER FOLLOWS] 

 [PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
  

			
	Name of Purchaser:	 	  

			
		
	Signature of Authorized Signatory of Purchaser:	  	  

			
		
	Name of Authorized Signatory:	  	  

			
		
	Title of Authorized Signatory (if Purchaser is an entity):	  	  

			
		
	Date of Signature and Deposit of Funds in Escrow Account:	  	  

			
		
	Email Address of Purchaser:	  	  

			
		
	Fax Number of Purchaser:	  	  

			
		
	Address for Notice of Purchaser:	  	
	
	  

	
	  

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

	
	  

			
		
	EIN Number:	  	  

					
		
	Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the securities are maintained):	 	  

			
		
	DTC Participant Number:	 	  

			
	
	Name of Account at DTC Participant Being Credited with the Securities:
	
	  

			
	
	Account Number at DTC Participant Being Credited with the Securities:
	
	  

			
		
	Total Number of Units:	 	  

			
		
	Aggregate Purchase Price: $	 	  

			
		
	Approval of this Purchaser’s Signature Page by Company:	 	  

			
		 	John Didsbury

			
		 	PresidentPlacement Agent Agreement

 Exhibit 10.2 
 DARA BIOSCIENCES, INC. 
 8601 Six Forks Road, Suite 160 
 Raleigh, North Carolina 27615 
 October 21, 2008 
 Gilford Securities Incorporated 
 777 Third Avenue, 17th Floor 
 New York, NY 10017 
 Attention: Robert A. Maley

 Ladies and Gentlemen: 
 The undersigned, DARA
BioSciences, Inc., a Delaware corporation (the “Company”), proposes to offer for sale to certain “institutional” and “accredited investors” through Gilford Securities Incorporated, a New York corporation, as
placement agent (“Gilford” or the “Placement Agent”), pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Act”), up to 8,500,000 units (each, a
“Unit” and collectively, the “Units”) at a purchase price of $1.00 per Unit on a “best efforts” basis (the “Offering”). Each “Unit” shall consist of (i) one share of common
stock (“Common Share”), par value $0.01 per share, of the Company (“Common Stock”), (ii) one Class A common stock purchase warrant (“Class A Warrant”), and (iii) one Class B common
stock purchase warrant (“Class B Warrant”, and together with the Class A Warrants, the “Warrants”). Each Class A Warrant shall be exercisable for a period of five years, commencing on the date that is six
months from the date of issuance, and entitles the holder to purchase one share of Common Stock at an exercise price equal to the greater of: (a) with respect to Class A Warrants issued at the First Closing (as defined hereinafter),
(i) $0.01 above the closing bid price of the Common Stock on the trading day immediately preceding the First Closing (as reflected on the Nasdaq Capital Market, trading symbol “DARA”), and (ii) $1.30 (subject to customary
adjustments for stock splits, dividends, reorganizations and other capital events) (the “Class A Warrant First Closing Price”); (b) with respect to the Class A Warrants issued at the Second Closing (as defined
hereinafter), if necessary, (i) $0.01 above the closing bid price of the Common Stock on the trading day immediately preceding the Second Closing, and (ii) the Class A Warrant First Closing Price (subject to customary adjustments for
stock splits, dividends, reorganizations and other capital events) (the “Class A Warrant Second Closing Price”); and (c) with respect to the Class A Warrants issued at the Third Closing (as defined hereinafter), if
necessary, (i) $0.01 above the closing bid price of the Common Stock on the trading day immediately preceding the Third Closing, and (ii) the Class A Warrant Second Closing Price (subject to customary adjustments for stock splits,
dividends, reorganizations and other capital events) (the “Class A Warrant Third Closing Price”) (collectively, the “Class A Warrant Shares”). Each Class B Warrant shall be exercisable for a period of five years,
commencing on the date that is 12 months and one day after the date of issuance, and entitles the holder to purchase one-half share of Common Stock at 

 
an exercise price of $2.25 per share (subject to customary adjustments for stock splits, dividends, reorganizations and other capital events) (the
“Class B Warrant Shares”, and together with the Class A Warrant Shares, the “Warrant Shares”). 
 The
Offering will be made pursuant to a prospectus supplement (the “Prospectus Supplement”) to the existing effective registration statement of the Company, file No. 333-150150 (“Registration Statement”), on file
with the Securities and Exchange Commission (the “Commission”) registering the issuance of the Common Shares, the Warrants and the Warrant Shares. 
 The Units will be offered pursuant to the terms and conditions set forth in a Securities Purchase Agreement among the Company and each purchaser (“Purchaser”) identified on the signature pages thereto
(the “Securities Purchase Agreement”), the Class A Warrant attached as Exhibit A thereto, and the Class B Warrant attached as Exhibit B thereto, and pursuant to the Registration Statement and Prospectus Supplement
(collectively, with the annexes and appendices thereto, the “Offering Documents”). 
 There is no minimum Unit subscription
amount for Purchasers or minimum Offering amount. 
 Capitalized terms used herein, unless otherwise defined or unless the context otherwise
indicates, shall have the meanings set forth in the Securities Purchase Agreement. 
 1. Appointment of Placement Agent. Gilford is
hereby appointed the Placement Agent of the Company during the offering period herein specified (the “Offering Period”) for the purposes of assisting the Company on a “best efforts” basis in finding qualified Purchasers
for the purchase of Units in the Offering. The Offering Period shall commence effective October 1, 2008 (the “Commencement Date”) and shall continue until the Stockholder Approval Termination Date, unless extended by mutual
written agreement of the Company and Gilford (the “Termination Date”). Gilford hereby accepts such agency and agrees to assist the Company on a “best efforts” basis in finding qualified Purchasers for the purchase of Units
in connection with the Offering. Gilford’s agency hereunder is not terminable by the Company except upon termination of the Offering. 
 As part of the Placement Agent’s representation of the Company with respect to the Offering, the Placement Agent shall assist the Company in identifying potential investors on behalf of the Company and contact such potential investors
and other potential investors as the Company may designate. In addition, the Placement Agent shall assist the Company in structuring, negotiating and effectuating the Offering. 
 2. Representations, Warranties and Covenants of the Company. Except as set forth in the SEC Reports, the Company represents, warrants and
covenants to the Placement Agent, that as of the date hereof, and as of the First Closing Date, the Second Closing Date and the Third Closing Date, as follows: 
  

 2 

 (a) Registration Statement; Prospectus Supplement. A Registration Statement of the Company
relating to the Offering, a copy of which is available through the Commission’s website, has been prepared in conformity in all material respects with the requirements of the Act and the rules and regulations (the “Rules and
Regulations”) of the Commission promulgated thereunder. Prior to the opening of the Trading Market on the Trading Day immediately following the First Closing Date, the Company will file a Prospectus Supplement covering the sale of the
Common Shares, the Warrants, the Placement Agent Warrant (as defined hereafter) and the Reserve Shares (as defined hereafter), with such changes or insertions as are required by Rule 430A under the Act or permitted by Rule 424(b) under the Act. As
used in this Agreement, the term “Registration Statement” means such registration statement, as amended at the time when it was or is declared effective under the Act, including all financial schedules and exhibits thereto and including
any information omitted therefrom pursuant to Rule 430A under the Act and included in the Prospectus (as hereinafter defined); the term “Preliminary Prospectus” means each prospectus subject to completion filed with such registration
statement or any amendment thereto (including the prospectus subject to completion, if any, included in the Registration Statement or any amendment thereto at the time it was or is declared effective) under the Act; and the term
“Prospectus” means the prospectus first filed with the Commission pursuant to Rule 424(b) under the Act, or if no prospectus is required to be filed pursuant to Rule 424(b), such term means the prospectus included in the Registration
Statement; except that upon filing of an amendment to the registration statement or prospectus or a supplement to the prospectus after the date hereof and prior to each Closing Date (as hereinafter defined), the term “Registration
Statement” shall include such registration statement as so amended, and the term “Prospectus” shall include the prospectus as so amended or supplemented. 
 (b) No Stop Orders. The Commission has not issued any order preventing or suspending the use of the Registration Statement or the Prospectus Supplement. At the time the Registration Statement became effective
and at all times subsequent thereto up to and on each Closing Date: (i) the Registration Statement and the Prospectus Supplement will in all material respects conform to the requirements of the Act and the Rules and Regulations; and
(ii) neither the Registration Statement nor the Prospectus Supplement will include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make statements therein not misleading
(in light of the circumstances under which they were made). 
 (c) Company Representations and Warranties. The representations and
warranties made by the Company to the Purchasers in the Securities Purchase Agreement are incorporated herein and have the same force and effect as if such representations and warranties are made herein in their entirety. 
 (d) Due Authorization. The Company has all requisite power and authority to execute and deliver this Agreement and to carry out the transactions
contemplated by this Agreement. 
 (e) No Distributions or Obligations. The Company has no obligation (contingent or otherwise) to pay
any distribution in respect of its Common Stock or preferred stock. There exists no voting trusts or agreements, shareholders’ agreements, pledge agreements, buy-sell 

  

 3 

 
agreements, rights of first refusal or proxies relating to any securities of the Company. The Company has no obligation (contingent or otherwise) to
repurchase, redeem or otherwise acquire any shares of Common Stock or preferred stock. 
 (f) Rights and Preferences of Securities;
Commitments. The designations, powers, preferences, rights, privileges, qualifications, limitations and restrictions in respect of the Company’s capital stock are as set forth in the Company’s Certificate of Incorporation and Bylaws,
as amended (the “Charter Documents”), attached to the Company’s current report on Form 8-K filed on February 12, 2008, and all such designations, powers, preferences, rights, privileges, qualifications, limitations and
restrictions are valid, binding and enforceable in accordance with all applicable laws (subject, as to enforcement, to the discretion of the courts in awarding equitable relief and to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting the rights of creditors generally). Except for the Common Shares, Warrants and Warrant Shares being offered in the Offering, and the outstanding options and warrants disclosed in the Prospectus Supplement described in
Section 2(a) above, there is no commitment by the Company to issue shares of Common Stock, subscriptions, warrants, options, preemptive rights, convertible securities or other such rights or to distribute to holders of any of its equity
securities any evidence of indebtedness or asset, other than the warrants to be issued to the Placement Agent, in the form attached hereto as Exhibit A (the “Placement Agent Warrants”). 
 (g) Keeping of Records and Books of Account. The Company has maintained and shall continue to maintain adequate records and books of account, in
which complete entries will be made in accordance with generally accepted accounting principles, consistently applied, reflecting all financial transactions of the Company 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. The records and books of account of the Company are in good order and have been properly maintained in all material respects.

 (h) Access to Corporate Documents. The minute books of the Company have been made available to the Placement Agent and contain a
complete summary of all meetings and actions of the directors and shareholders of the Company since the time of the Company’s incorporation and reflect all transactions referred to in such minutes accurately in all material respects.

 (i) Absence of Undisclosed Liabilities. The Company has no material outstanding claims, liabilities, obligations or indebtedness,
contingent or otherwise, whether asserted or unasserted, except as set forth in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2008 (the “Latest 10-Q”) and except those expenses incurred or to be
incurred after June 30, 2008. All liabilities of the Company incurred subsequent to June 30, 2008 have been incurred in the ordinary course of business and do not involve borrowings that individually exceed $50,000 and which do not exceed
$100,000 in the aggregate. The Company is not in default in respect of the terms or conditions of any indebtedness. 
  

 4 

 (j) Condition of Equipment, Machinery and Fixtures. The equipment, machinery and fixtures utilized
by the Company in the conduct of its business are generally in good repair and operating condition and are fit for their intended purpose. 
 (k) No Defaults; Non-Contravention. Except for events that would not have a Material Adverse Effect, neither the Company nor any subsidiary is in violation, breach or default of or under, and consummation of the transactions herein
contemplated and the fulfillment of the terms of this Agreement and the Offering Documents will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or assets of the Company or any subsidiary pursuant to the terms of any material agreement, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries may be bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such action result in
any violation of the provisions of the Charter Documents of the Company or any of its subsidiaries, or any statute or any order, rule or regulation applicable to the Company or any of its subsidiaries, of any court or of any regulatory authority or
other governmental body having jurisdiction over the Company or any of its subsidiaries. 
 (l) Compliance with Laws; Environmental
Matters, Licenses, Etc. The Company has not received any notice of any violation of, or noncompliance with, any federal, state, local or foreign laws, ordinances, regulations or orders (including, without limitation, those relating to all
applicable federal, state and local insurance laws, rules and regulations, environmental protection, occupational safety and health and other labor laws, ERISA, federal drug laws, federal securities laws, equal employment opportunity, consumer
protection, credit reporting, “truth-in-lending,” and warranties and trade practices) applicable to its business, the violation of, or noncompliance with which, would have a Material Adverse Effect, and the Company knows of no facts or set
of circumstances which would give rise to such a notice. The Company has all licenses and permits and other governmental certificates, authorizations and permits and approvals (collectively, “Licenses”) required by every federal,
state and local government or regulatory body for the operation of its business and the use of its properties. The Licenses are in full force and effect and no violations are or have been recorded in respect of any License and no proceeding is
pending or threatened to revoke or limit any thereof. The Company has not received any written opinion or memorandum from legal counsel providing that it has taken any action that has resulted in, or is reasonably likely to result in, the Company
incurring any liability that may be material to its business, prospects, financial condition, operations, property or affairs. 
 (m)
Authorization of Agreement, Etc. Each of the Offering Documents and all other agreements or documents required to be executed and delivered by the Company in connection with the Offering (collectively the “Ancillary
Documents”) has been or will be duly executed and delivered by the Company and the execution, delivery and performance by the Company of the Offering Documents and the Ancillary Documents has been duly authorized by all requisite corporate
action by the Company and constitutes, or will constitute, the legal, valid and binding 

  

 5 

 
obligation of the Company, as the case may be, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally, and general equitable principles. The execution, delivery and performance of this Agreement and the issuance, sale and
delivery of the Units, the Common Shares, the Warrants, the Placement Agent Warrants, and the issuance and delivery of the Common Stock issuable upon conversion of the Warrants and the Placement Agent Warrants (the “Reserved
Shares”) will not (i) violate any provision of law or statute or any order of any court or other agency of government binding on the Company; or (ii) conflict with or result in any breach of any of the terms, conditions or
provisions of, or constitute (with due notice or lapse of time or both) a default under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company under the Charter Documents
of the Company or any indenture, mortgage, lease agreement or other agreement or instrument to which the Company is a party or by which it or any of its property is bound or affected, except for such conflict, breach or default as to which requisite
waivers or consents shall have been obtained by the Company and delivered to the Placement Agent by the time of Closing. 
 (n)
Authorization of Units, Common Shares, Warrants, Placement Agent Warrants and Reserved Shares. The issuance, sale and delivery of the Units, the Common Shares, the Warrants, the Placement Agent Warrants and the Reserved Shares have been duly
authorized by all requisite corporate action of the Company, and when so issued, sold and delivered pursuant to this Agreement and, in the case of the Reserved Shares, the Warrants, the Placement Agent Warrants and the Charter Documents,
(i) the Units, the Common Shares and the Reserved Shares will be validly issued and outstanding, free and clear of all liens, charges, claims and encumbrances, restrictions or preemptive or any other similar rights and the Company shall have
paid all taxes, if any, in respect of the issuance thereof; (ii) the Warrants and the Placement Agent Warrants will constitute valid and binding obligations of the Company, enforceable as to the Company in accordance with their terms, in each
case subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and general equitable principles; and (iii) no person has any
preemptive or other similar rights to acquire any securities of the Company as a result of the issuance of the Units, the Common Shares, the Warrants, the Placement Agent Warrants or the Reserved Shares. The offer and sale of the Units, the Common
Shares, the Warrants, the Placement Agent Warrants and the Reserved Shares are and will be in compliance with all applicable federal and state securities laws. 
 (o) Insurance. All insurable assets and properties of the Company are insured against all risks usually insured against by persons owning or operating similar assets and properties in the localities where such
assets and properties are located, through insurance policies all of which are in full force and effect. The Company will be insured against all claims relating to its services to the same extent that the risks of such claims are usually insured
against by persons providing similar services. Each of the insurance policies referred to in this section has been issued by an insurer of recognized responsibility. The Company will provide to the Placement 

  

 6 

 
Agent a list of all insurance coverage carried by the Company, the carrier and the terms and amount of coverage. 
 (p) Confidential Arrangements. The Company has taken reasonable precautions in protecting the confidentiality, privacy and security of the
business contacts identified by the Placement Agent by taking appropriate administrative and managerial action, and to use its best efforts to prevent disclosure of such proprietary information to any and all persons and entities. The Company will
hold completely confidential the name, address, telephone, facsimile number, account or other business number of such contact as may be introduced by the Placement Agent. The above restrictions apply to any subsequent follow up, repeated or extended
or renegotiation transactions related to the Offering regardless of the results of the Offering. 
 (q) No other Registration Rights.
Except as provided for in the Offering Documents, no holder of any securities of the Company has the right to include such securities in the Registration Statement or the Prospectus Supplement. 
 (r) Manipulation or Stabilization of Price. Neither the Company, nor, to the Company’s knowledge, any of its officers, directors, employees
or stockholders, has taken or will take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of any of the
securities of the Company. 
 (s) Affiliation with FINRA. No officer, director or five percent or greater stockholder of the Company
has any direct or indirect affiliation or association with any member of the Financial Industry Regulatory Authority (“FINRA”) and no beneficial owner of the Company’s unregistered securities has any direct or indirect
affiliation or association with any FINRA member. The Company will advise the Placement Agent and FINRA if, to its knowledge, any five percent or greater stockholder of the Company is or becomes an affiliate or associated person of a FINRA member
participating in the Offering. 
 (t) No Integration with Prior Offerings. None of the Company, its subsidiaries, any of their
affiliates, or any person acting on any of 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 to be integrated with prior
offerings by the Company for purposes of the Act or any applicable stockholder approval provisions. None of the Company, its subsidiaries, their affiliates or any person acting on any of their behalf will take any action or steps referred to in the
preceding sentence that would cause the Offering to be integrated with other offerings. 
 (u) No Anti-Takeover Provisions. The
Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Charter Documents, stock option plan, or the laws of Delaware that is or could become applicable as a result of the transactions 

  

 7 

 
contemplated by this Agreement including, without limitation, the Company’s issuance of the Common Shares, the Warrants, the Placement Agent Warrants
and the Reserve Shares. 
 3. Representations, Warranties and Covenants of the Placement Agent. The Placement Agent represents,
warrants and covenants as follows: 
 (a) Authorization of Agreement, Etc. This Agreement has been duly and validly authorized,
executed and delivered by or on behalf of the Placement Agent. 
 (b) Compliance with Applicable Law. The Placement Agent will not
knowingly take any action that will result in the Units being offered or sold in a manner that does not comply with applicable law, including, without limitation, the provisions of the Act, or the rules and regulations of the Commission, any Trading
Market or FINRA. Without limiting the foregoing, the Placement Agent will not be entitled to any fees or compensation under this Agreement without first receiving approval from FINRA of its fee application dated
                    , 2008, which fee application accurately describes such fees and compensation. 
 (c) Compliance with Offering Documents. The Placement Agent will offer the Units in accordance with the Offering Documents and will deliver the
Offering Documents to each Purchaser before accepting a signed copy of the Offering Documents or payment for any Units. 
 (d) Compliance
with Laws of Jurisdictions. The Placement Agent will offer the Units only in those jurisdictions in which it is permitted to sell the Units pursuant to the laws of said jurisdiction, and the Placement Agent may arrange for the Units to be
offered by a broker/dealer properly licensed to do so in the state where any such offer is made. 
 4. Closing; Placement and Fees.

 (a) Closings. Upon receipt of executed Securities Purchase Agreements from the Purchasers, in a form acceptable to the Company and
the Placement Agent, and the delivery by each Purchaser of the appropriate purchase price to Corporate Stock Transfer for deposit in the Escrow Account and the Company’s acceptance thereof as described in the Securities Purchase Agreement, the
first closing of the purchase and sale of up to an aggregate of 5,500,000 Units (the “Initial Units”) shall take place at the offices of the Company’s counsel, K&L Gates, LLP, having an office at 4350 Lassiter at North
Hills Avenue, Suite 300, Raleigh, North Carolina 27609 (the “Company’s Counsel”), on October 21, 2008, at 11:00 a.m., New York time, or at such other time and date agreed upon between the Placement Agent and the Company
(the “First Closing”). At the First Closing, at the direction of the Company and the Placement Agent, payment for the Initial Units being purchased shall be delivered to the Company from the Escrow Account and made against delivery
of certificates representing the number of Common Shares, Class A Warrants and Class B Warrants equal to the number of Initial Units sold to such Purchaser in the First Closing. If less than all of the Initial Units are sold in the First
Closing, the remaining Initial Units may be sold pursuant to a second closing, which shall take place at the offices of the Company’s Counsel on October 31, 2008 at 11:00 a.m., New York time, or at such other time and date agreed upon
between the Placement Agent and the Company (the “Second Closing”). If applicable, a third closing of the purchase and sale of the “Remaining Units” (equal 

  

 8 

 
to the number of the 8,500,000 Units remaining after subtracting the number of Initial Units sold in the First Closing and the Second Closing) shall be held
at the offices of the Company’s Counsel no later than three Trading Days following the satisfaction of the Stockholder Approval Condition (the “Third Closing”). Following the First Closing, and Second Closing, if applicable,
the Placement Agent will continue to assist the Company in locating qualified Purchasers during the remainder of the Offering Period. All purchase price amounts received from Purchasers will continue to be deposited in the Escrow Account, pending
satisfaction of the conditions preceding the Second Closing and the Third Closing. The Second Closing and Third Closing, if any, will be made on the same terms as the First Closing, as set forth in this Section 4(a). If the First Closing does
not occur on or prior to November 15, 2008, the Second Closing (if applicable) does not occur on or prior to November 30, 2008, or the Third Closing (if applicable) does not take place on or before the Stockholder Approval Termination
Date, the Placement Agent will return any funds then remaining in the Escrow Account to the Purchasers, without deduction or interest thereon. 
 (b) Procedures at each Closing: 
 (i) Upon the First Closing, the Second Closing and the Third Closing, as applicable, the
Placement Agent shall receive certificates from the Company, signed by the President or a Vice President thereof, certifying (A) that the representations and warranties contained in Section 2 hereof are true and accurate in all material
respects as of the date of that Closing with the same effect as though expressly made at that Closing; and (B) that attached thereto are (1) true and correct copies of resolutions adopted by the Board of Directors of the Company
authorizing (i) the execution, delivery and performance of this Agreement and the Ancillary Documents, and (ii) the issuance of the Common Shares, the Warrants, the Placement Agent Warrants and the Reserved Shares, and certifying that such
resolutions have not been modified, rescinded or amended and are in full force and effect; and (2) a true and correct copy of a resolution adopted by the Company’s Board of Directors, authorizing the execution, delivery and performance of
each document to which it is a party, and that such resolutions have not been modified, rescinded or amended and are in full force and effect. 
 (ii) The Company shall file the Prospectus Supplement with the Commission prior to the opening of the Trading Market on the first Trading Day following the First Closing Date. 
 (iii) There shall be delivered on behalf of each Purchaser purchasing Units at that Closing copies of the Securities Purchase Agreement signed by such
Purchaser. 
 (iv) The Placement Agent shall have received a certificate of good standing of the Company, dated as of a recent date, from the
Secretary of State of Delaware. 
 (v) Upon each of the First, Second and Third Closings, the Placement Agent shall receive the Placement
Agent Fee from the Escrow Account as set forth in accordance with Section 4(c) of this Agreement. 
  

 9 

 (c) Placement Agent Fee and Expenses. At each Closing as provided in paragraph 4(a) above, the
Company shall pay to the Placement Agent a cash transaction fee equal to 10% of the purchase price of the Units sold to Purchasers first introduced to the Company by the Placement Agent subject to that Closing. The Company shall also pay the
Placement Agent a commission equal to 6% of the cash proceeds actually received by the Company upon exercise of the Warrants issued to Purchasers first introduced to the Company by the Placement Agent; provided that the aggregate commission payable
upon exercise of the Class A Warrants shall not exceed $1,147,500. The Company will pay up to $20,000 in legal fees to the Placement Agent’s legal counsel, of which $5,000 has been paid and $15,000 will be paid at the First Closing, and,
in addition, the Company shall reimburse the Placement Agent for its reasonable out-of-pocket expenses (other than legal fees and expenses) incurred in connection with this Agreement on an accountable basis. 
 (d) Issuance of Placement Agent Warrants. On each Closing Date, the Company will issue to the Placement Agent or its designee Placement Agent
Warrants to purchase such number of shares of Common Stock equal to 10% of the number of Units sold to Purchasers first introduced to the Company by the Placement Agent in the First Closing, the Second Closing or the Third Closing, as applicable, at
an exercise price of $1.00 per share. The Placement Agent Warrants shall be in the form attached hereto as Exhibit A. 
 5.
Covenants of the Company. 
 (a) Amendments and Supplements. The Company covenants and agrees that, until the Offering
contemplated by the Offering Documents has been completed or terminated, if there shall occur any event relating to or affecting, among other things, the Company, or the proposed operations of the Company as described in the Offering Documents, as a
result of which it is necessary, in the opinion of the Placement Agent and its counsel or the Company and the Company’s Counsel, to amend or supplement the Offering Documents in order that the Offering Documents not contain an untrue statement
of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company shall immediately prepare and furnish to the Placement
Agent a reasonable number of copies of an appropriate amendment of or supplement to the Offering Documents, in form and substance satisfactory to the Placement Agent and its counsel. 
 (b) Use of Proceeds. The net proceeds of the Offering of the Units will be used by the Company for the purposes set forth in the Offering
Documents. 
 (c) Expenses of Offering. The Company shall be responsible for, and shall bear all expenses directly and necessarily
incurred in connection with the Offering, including, but not limited to, the costs of preparing, printing and filing the Offering Documents to be used in connection with the Offering contemplated hereby and all amendments and supplements thereto;
preparing, printing and delivering exhibits to the Offering Documents; and preparing, printing and delivering all selling documents, and Blue Sky fees and filing fees. The Company also shall pay for the costs and expenses in connection with the
establishment and maintenance of the 

  

 10 

 
Escrow Account referred to in Section 4 of this Agreement, and all other costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section 5(c). 
 6. Indemnification. 
 (a) By the Company. The Company agrees to indemnify and hold harmless the Placement Agent and its agents, shareholders, officers and directors,
and each person, if any, who controls the Placement Agent, as follows: 
 (i) against any and all loss, liability, claim, damage and expense
whatsoever in connection with performing its obligations hereunder or arising out of any untrue statement of a material fact contained in the Offering Documents and the Ancillary Documents, or the omission of a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were made, not misleading, unless such untrue statement or omission was made in the Offering Documents or the Ancillary Documents in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by the Placement Agent expressly for use therein; 
 (ii) against any
and all loss, liability, claim, damage and expense whatsoever to the extent of the aggregate amount paid in settlement of any litigation, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission; and

 (iii) against any and all expense whatsoever incurred in investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever based upon any such untrue statement or omission, to the extent that any such expense is not paid under clause (i) or (ii) above. 
 (b) By the Placement Agent. The Placement Agent agrees to indemnify, defend and hold harmless the Company and its agents, members, officers and
directors from and against any loss, liability, claim, damage and expense whatsoever which arises out of or is based upon the gross negligence or willful misconduct of the Placement Agent with respect to the Offering as determined in a final
judgment by a court of competent jurisdiction from which no appeal can be or is taken. 
 (c) Indemnification Procedures. If any
action is brought against the Placement Agent or the Company or any of their respective officers, directors, shareholders, employees, agents, advisors, consultants and counsel or any controlling persons (each, an “Indemnified Party”
and collectively, the “Indemnified Parties”), in respect of which indemnity may be sought against the Company or the Placement Agent, respectively, pursuant to Sections 6(a) and 6(b), each such Indemnified Party shall promptly
notify the other party (the “Indemnifying Party”) in writing of the institution of such action (but the failure to so notify shall not relieve the Indemnifying Party from any liability it may have under this Section 6 unless
such failure results in the imposition of a default judgment which cannot be reopened) and the Indemnifying Party shall promptly assume the defense of such action, including the employment of counsel reasonably satisfactory to each such Indemnified
Party and payment of expenses. Each such Indemnified Party shall 

  

 11 

 
have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of each such Indemnified Party
unless the employment of such counsel shall have been authorized in writing by the Indemnifying Party in connection with the defense of such action or the Indemnifying Party shall have not have promptly employed counsel reasonably satisfactory to
each such Indemnified Party to have charge of the defense of such action or each such Indemnified Party shall have reasonably concluded that there may be one or more legal defenses available to it or them or to other Indemnified Parties which are
different from or additional to those available to one or more of the Indemnifying Parties and it would be inappropriate for the same counsel to represent both parties due to actual or potential differing interests between them, in any of which
events such fees and expenses shall be borne by the Indemnifying Party and the Indemnifying Party shall not have the right to direct the defense of such action on behalf of each Indemnified Party. Anything in this Section 6(b) to the contrary
notwithstanding, the Indemnifying Party shall not be liable for any settlement of any such claim or action effected without its written consent, which consent shall not be unreasonably withheld. Each party agrees to notify promptly the other party
of the commencement of any litigation or proceedings against such party regarding the sale of the Units or the Memorandum. 
 (d)
Contribution. In order to provide for just and equitable contribution in any case in which (i) an Indemnified Party makes a claim for indemnification pursuant to this Section 6, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case; notwithstanding the fact that the express
provisions of this Section 6 provide for indemnification in such case; or (ii) contribution under the Act may be required on the part of any Indemnified Party, then each Indemnifying Party shall contribute to the amount paid as a result of
such losses, claims, damages, expenses or liabilities (or actions in respect thereof) (A) in such proportion as is appropriate to reflect the relative benefits received by each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the Offering; or (B) if the allocation provided by clause (A) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of each of the contributing parties, on the one hand, and the party to be indemnified on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages,
expenses or liabilities, as well as any other relevant equitable considerations. In any case where the Company is a contributing party and the Placement Agent is the Indemnified Party, the relative benefits received by the Company on the one hand,
and the Placement Agent, on the other, shall be deemed to be in the same proportion as the total net proceeds from the Offering (before deducting expenses) bear to the total Placement Agent commissions received by the Placement Agent hereunder.
Relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, or
by the Placement Agent, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages, expenses or liabilities (or actions in respect thereof) referred to above in this subsection (d), shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with 

  

 12 

 
investigating, preparing or defending any such action or claim. Notwithstanding the provisions of this subsection (d), the Placement Agent shall not be
required to contribute any amount in excess of the Placement Agent commissions applicable to the Units placed by the Placement Agent hereunder. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 6, each person, if any, who controls the Company within the meaning of the Act, each officer of the Company,
and each director of the Company shall have the same rights to contribution as the Company, subject in each case to this subsection (d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect to which a claim for contribution may be made against another party or parties under this subsection (d), notify such party or parties from whom contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have hereunder or otherwise than under this subsection (d), or to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth above shall be in addition to any liabilities which any Indemnifying Party may have at common law or otherwise. 
 7. Miscellaneous. 
 (a)
General. Gilford’s obligation to proceed with the Offering is conditioned upon Gilford’s due diligence investigation of the Company. The Company shall supply Gilford with such financial statements, contracts and other corporate
records and documents as may be reasonably requested of it. In addition, Gilford shall be fully informed by the Company of any events that might have a material affect on the financial condition of the Company. 
 (b) Survival. Any termination of the Offering without consummation thereof shall be without obligation on the part of any party except that the
provisions of Section 5(c) hereof and the indemnification provisions provided in Section 6 hereof shall survive any termination and shall survive each Closing. Additionally, the Placement Agent shall be entitled to retain any accountable
expense payments to the extent it has been paid prior to the date of termination. 
 (c) Representations, Warranties and Covenants to
Survive Delivery. The representations, warranties, indemnities, agreements, covenants and other statements of the Company shall survive execution of this Agreement and delivery of the Units for a period of 18 months following the Termination
Date. 
 (d) No Other Beneficiaries. This Agreement is intended for the sole and exclusive benefit of the parties hereto and their
respective successors and controlling persons, and no other person, firm or corporation shall have any third-party beneficiary or other rights hereunder. 
 (e) Governing Law. This Agreement shall be deemed to have been made and delivered in New York City and shall be governed as to validity, interpretation, construction, effect and in all other respects by the
internal laws of the State of New York. The Company (i) agrees that any legal suit, action or proceeding arising out of or relating to this letter shall be instituted exclusively in New York State Supreme Court, County of New York, or in the
United 

  

 13 

 
States District Court for the Southern District of New York, (ii) waives any objection which the Company may have now or hereafter to the venue of any
such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New York, and the United States District Court for the Southern District of New York in any such suit, action or
proceeding. The Company further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York and agrees that service of process upon the Company mailed by certified mail to the Company’s address shall be deemed in every respect effective service of process upon the Company, in any such suit,
action or proceeding. 
 (f) Notices. All notices, requests, demands and other communications that are required or may be given under
this Agreement shall be in writing and shall be deemed to have been duly given when delivered personally, acknowledged by nationally recognized overnight courier or by facsimile. All notices shall be made to the parties at the addresses designated
above, or at such other or different addresses which a party may subsequently provide with notice thereof, and to their respective legal counsel, as follows: 
 (i) If to the Placement Agent, to: 
 Gilford Securities Incorporated 
 777 Third Avenue, 17th Floor 
 New York, New York 10017 
 Facsimile: (212) 223-1683 
 Attention:
Robert A. Maley 
 with a copy to: 
 Brownstein Hyatt Farber Schreck, LLP 
 410 Seventeenth Street, 22nd Floor 
 Denver, Colorado 80202 
 Facsimile: (303) 223-1111 
 Attention:
Adam J. Agron 
 or to such other person or address as the Placement Agent shall furnish the Company in writing. 
 (ii) If to the Company, to: 
 DARA
BioSciences, Inc. 
 8601 Six Forks Road, Suite 160 
 Raleigh, North Carolina 27615 
 Facsimile: (919) 861-0239 
 Attention: John Didsbury 
 with a copy to:

  

 14 

 K&L Gates, LLP 
 4350 Lassiter at North Hills Avenue, Suite 300 
 Raleigh, North Carolina 27609 
 Facsimile: (919) 516-2028 
 Attention:
Scott Coward 
 or to such other person or address as the Company shall furnish the Placement Agent in writing. 
 (g) Counterparts. This Agreement may be signed in counterparts with the same effect as if both parties had signed one and the same instrument.

 (h) Form of Signature. The parties hereto agree to accept a facsimile transmission copy of their respective signatures as evidence
of their respective actual signatures to this Agreement. 
 (i) Modification. This Agreement (i) constitutes the entire agreement
between the parties, (ii) shall be binding upon and inure to the benefit of both parties hereto and their respective successor and assignees, and (iii) may only be modified by a written instrument which is executed by both parties thereto.

 (j) Non-Circumvention. The Company and the Placement Agent agree that no effort shall be made to circumvent the terms and
conditions of this Agreement or gain a fee, commission, remuneration, consideration or benefit whatsoever. With respect to any attempt at circumvention of this Agreement, the injured party is entitled to seek any and all legal remedies, fees or
compensation equal to those received or committed or agreed to be paid pursuant to the terms of this Agreement as the same are due and payable to the circumvented party under the terms of this Agreement. 
 (k) Good Faith. The Company and the Placement Agent understand that this Agreement is a reciprocal and mutual one and both warrant, covenant, and
promise that it will act in good faith toward each other in the performance of this Agreement and in other matters. 
 (l) Further
Services. The Placement Agent shall, if requested by the Company, testify in, and shall prepare and assist in the preparation of testimony for, any judicial or administrative proceeding in respect of the services performed by the Placement Agent
hereunder. With respect thereto, the Company shall pay, in addition to the fees and expenses payable to the Placement Agent hereunder, for the time required to expend by the Placement Agent at its standard hourly rates as then in effect, together
with reasonable out-of-pocket expenses, but not limited to, fees and expenses of its legal counsel. 
 (m) Waiver of Breach. The
waiver by either the Placement Agent or the Company of any provision of this Agreement shall not be construed as a waiver of any subsequent breach hereof. 
  

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 [Remainder of This Page Intentionally Left Blank; Signature Page to Follow] 
  

 16 

 If you find the foregoing is in accordance with our understanding, kindly sign and return to us a
counterpart hereof, whereupon this instrument along with all counterparts will become a binding agreement between us. 
  

			
	Very truly yours,
	
	 DARA BIOSCIENCES, INC.

		
	 By:
	 	 /s/ John Didsbury

	 Name: John Didsbury

	 Title: President

 Agreed: 
  

			
	 GILFORD SECURITIES INCORPORATED

		
	 By:
	 	 /s/ Robert A. Maley

		 	Robert A. Maley
		 	President

  

 17 

 EXHIBITS 
  

			
	 Exhibit A
	  	Placement Agent Warrant

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