**Exhibit4.11**

 

**SECURITIESPURCHASE AGREEMENT**

 

**THIS SECURITIES PURCHASE AGREEMENT**(the or this “**Agreement**”) dated asof April 14 2004 is entered into by and among IMCOR Pharmaceutical Co., aNevada corporation (the “**Company**”), and the purchasers identified onthe signature pages hereto (each a “**Purchaser**”and collectively, the “**Purchasers”).**

 

**WHEREAS,** theCompany and the Purchasers are executing and delivering this Agreement inreliance upon the exemption from securities registration afforded by theprovisions of Regulation D (“**Regulation D**”), as promulgated by the U.S.Securities and Exchange Commission (the “**SEC**”) under the Securities Act of 1933, asamended (the “**1933 Act**”); and

 

**WHEREAS,** thePurchasers wish to purchase from the Company, and the Company wishes to selland issue to the Purchasers, shares of Common Stock of the Company, $0.001 parvalue per share (the “**Common Stock**”), together with Warrants (the“**Warrants**”) to purchase CommonStock, upon the terms and conditions set forth in this Agreement;

 

**NOW, THEREFORE,** inconsideration of the mutual promises and covenants contained in this Agreement,and for other good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, intending to be legally bound by the terms andconditions of this Agreement, the parties hereto hereby agree as follows.

 

# **1.**             Purchaseand Sale of Securities.

 

**1.1.****         Offering. **Subject to the terms and conditions ofthis Agreement, the Company shall sell and issue to each of the Purchasers, andeach of the Purchasers shall severally, and not jointly, purchase from theCompany, the aggregate number of shares of Common Stock (the “**Shares**”)equal to the investment amount set forth opposite the Purchaser’s name on ScheduleI divided by $0.75 per share (the “**PerShare Purchase Price**”) plus the Warrants set forth opposite suchPurchaser’s name (50% Warrant coverage). The Shares, the Warrants and the Common Stock issuable upon exercise ofthe Warrants are collectively referred to as the “**Securities**.” Additional investors may be added by the Company to Schedule I atthe discretion of the Company following the First Closing and prior to thefiling of a Registration Statement (as defined in the Registration RightsAgreement, defined below), and upon execution by such additional investors of acounterpart signature page to this Agreement, such additional investors shallbe deemed a Purchaser hereunder and shall be subject to and may rely upon therepresentations, warranties, terms and conditions contained herein; provided,that such investors may only acquire Securities at the Second Closing.

 

**1.2.****         Proceeds. **Net proceeds from the sale of theSecurities will be used for the following purposes and appropriately relatedadministrative costs, subject to changes authorized by a majority of theCompany’s Board of Directors (the **“Board”**):

 

•      manufacturing,marketing and continued development of Imagent;

 

•      researchand development of PH-50;

 

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•      researchand development of N1177;

 

•      paymentof commissions and other fees associated with the transactions in thisAgreement;

 

•      paymentof obligations to vendors of goods or services and other creditors (except asdescribed in the last sentence of this Section 1.2) not to exceed the amountsset forth in the Disclosure Schedule; and

 

•      workingcapital and general corporate purposes.

 

Pending use of theproceeds in accordance with the preceding sentence, the proceeds will beinvested in securities issued or guaranteed by the United States, national bankrepurchase agreements secured by such securities or such other types ofinvestments as may be approved by a majority of the Company’s Board ofDirectors, but in no event in such a manner that would cause the Company to bedeemed an Investment Company as defined in the Investment Company Act of 1940,as amended.  The Company shall not useany portion of the net proceeds to redeem any capital stock of the Company orto repay indebtedness described in Section 5.3.14 below.

 

**2.****             Delivery of the Sharesat the Closings.**

 

## **2.1.**         Initial Closing. The initial closing (the “Initial Closing”) shall take place at the offices of Grippo & Elden, LLC, 227 W.Monroe Street, Chicago, Illinois  60606on the second business day following the date on which the applicableconditions set forth in Section 5.3 (excluding Section 5.3.9) and Section 6shall have been satisfied or waived by the appropriate parties, or at suchother time, date and place as are mutually agreeable to the Company and thePurchasers subscribing for a majority of the Shares.  At the Initial Closing:

 

(a)           inaccordance with the terms of the Escrow Agreement (as defined inSection 3.2), the Escrow Agent shall disburse to the Company by wire transfer of immediately availablefunds payment of the purchase price of the Securities delivered to thePurchasers at the Initial Closing (which shall not exceed 19.9% of theCompany’s outstanding Common Stock), as set forth on Schedule I hereto;and

 

(b)           theCompany shall deliver to the Purchasers certificates for the number ofSecurities to be delivered at the Initial Closing, as set forth opposite theirrespective names on Schedule I hereto, registered in the name of suchPurchasers.

 

## **2.2.**         Second Closing. The second closing (the “Second Closing”) shalltake place at the offices of Grippo & Elden LLC, 227 W. Monroe Street,Chicago, Illinois  60606 on the secondbusiness day following the date on which the applicable conditions set forth inSection 5.3 (including Section 5.3.9) and Section 6.  At the Second Closing:

 

(a)           inaccordance with the terms of the Escrow Agreement, the Escrow Agent, shalldisburse to the Company the purchase price of the Securities, together with anyinterest accrued thereon, to be delivered to the Purchasers at the SecondClosing, as set forth on Schedule I hereto; and

 

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(b)           theCompany shall deliver to the Purchasers certificates for the number ofSecurities to be delivered at the Second Closing, as set forth opposite theirrespective names on Schedule I hereto, registered in the name of suchPurchasers.

 

The Initial Closing and the Second Closing are collectively referred toherein as the **“Closings”** and individually as a **“Closing.”**  The date on which the Closings occur arereferred to herein as a **“Closing Date.”**

 

## **2.3.**         Termination.  If by the applicabledates set forth in Section 5.3.13 the conditions set forth in Section 5.3 thatapply to the applicable Closing shall not have been fulfilled by the Company,then each Purchaser to receive Securities at such Closing shall, at itselection, be relieved of all of its obligations under this Agreement as to suchClosing without thereby waiving any other right it may have by reason of suchfailure or such non-fulfillment.  Inconnection therewith, such Purchaser shall have the right to require the EscrowAgent to disburse to such Purchasers the funds delivered by such Purchaser tothe Escrow Account in respect of the applicable Closing (plus any interestthereon).  If by the applicable date setforth in Section 6.5, any of the conditions set forth in Section 6 of thisAgreement that apply to the applicable Closing shall not have been fulfilled byany Purchaser, the Company shall, at its election, be relieved of all of itsobligations to such Purchaser under this Agreement as to such Closing withoutthereby waiving any other right it may have by reason of such failure or suchnon-fulfillment.

 

**3.****             Representations andWarranties of the Company. **Exceptas disclosed in the Disclosure Schedule attached hereto (which DisclosureSchedule makes explicit reference to, and shall only modify, the particularSection containing the representation or warranty as to which exception istaken), the Company hereby represents and warrants to the Purchasers as follows:

 

**3.1.****         Organization; AmendedArticles. **The Company is acorporation duly organized, validly existing and in corporate good standingunder the laws of the State of Nevada and is qualified to do business as aforeign corporation in each jurisdiction in which such qualification isrequired, except where the failure to be so qualified would not have, eitherindividually or in the aggregate, a material adverse effect on the business,operations, financial condition, assets, prospects, liabilities or contractualrights of the Company, whether individually or taken as a whole (a “**MaterialAdverse Effect**”).  TheCompany has, or prior to each Closing will have, duly authorized the sale andissuance, pursuant to the terms of this Agreement an adequate number shares ofits Common Stock authorized and available for purchase hereunder and uponexercise of the Warrants issuable at such Closing, having the rights,restrictions, privileges and preferences set forth in the Amended and RestatedCertificate of Incorporation (the “**Amended Articles**”).

 

**3.2.****         Corporate Power.**  The Company has all required corporate powerand authority to own its property, to carry on its business as presentlyconducted or contemplated, to enter into and perform this Agreement, the EscrowAgreement, in the form attached as Exhibit A****(the **“Escrow Agreement”**), theWarrant Agreements by and between the Company and each of the Purchasers, eachin the form attached as Exhibit B (the “**Warrant Agreement**”), the Registration Rights Agreement by andamong the Company and the Purchasers in the form attached as Exhibit C(the “**Registration Rights Agreement**”),the Voting Agreement (as defined in Section 5.15), and the other agreements,documents and instruments contemplated hereby (collectively with this Agreement,the “**FinancingDocuments**”), and to carry out the transactions contemplatedhereby.  The copies of the AmendedArticles and Bylaws of the Company, as amended to date, which have beenfurnished by the Company to counsel for the Purchasers, are correct andcomplete at the date hereof.  TheCompany is not in violation of any term of its Amended Articles or Bylaws, eachas amended, or in violation of any term of any agreement, instrument, judgment,decree,

 

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order, statute, rule orgovernment regulation applicable to the Company or to which the Company is aparty, where any violation, noncompliance or default would result in a MaterialAdverse Effect.

 

**3.3.****         Authorization.**  The Financing Documents are valid andbinding obligations of the Company, enforceable in accordance with theirterms.  The execution, delivery andperformance of the Financing Documents have been duly authorized by allnecessary corporate or other action of the Company.  Subject to obtaining stockholder approval for the issuance ofmore than 20% of the Company’s Common Stock pursuant to Nasdaq Marketplace Rule4350 with respect to Securities to be issued at the Second Closing, theissuance, sale and delivery of the Securities in accordance with this Agreementor the Warrant Agreement have been, or will be prior to each Closing, dulyauthorized by all necessary corporate action on the part of the Company.  The Securities when so issued, sold anddelivered against payment therefor in accordance with the provisions of thisAgreement or the Warrant Agreement will be duly and validly issued, fully paidand non-assessable.  No consent,approval or authorization of, or designation, declaration or filing with, anygovernmental authority or any other person or entity is required of the Companyin connection with the execution and delivery of the Financing Documents, orthe issuance, sale and delivery of the Securities in accordance with the termsof this Agreement or the Warrants, or the consummation of any other transactioncontemplated hereby or by the other Financing Documents, except (i) the filingwith the SEC of one or more Registration Statements in accordance with therequirements Registration Rights Agreement and the filing of a Form D with theSEC, (ii) any filings required by state securities laws, (iii) the filingsrequired in accordance with Section 8.12, (iv) the filing of the ProxyStatement in accordance with Section 5.1.4, and (v) those that have been madeor obtained prior to or as of the date of this Agreement.

 

**3.4.****         Capitalization.**  The authorized capital stock of the Companyconsists of Series A Preferred Stock, $0.001 par value per share, of which12,856 shares are authorized, issued and outstanding as of December 31, 2003,and 150,000,000 shares of Common Stock, $0.001 par value per share, of which21,541,476 shares are issued and outstanding as of March 31, 2004.  All of the issued and outstanding shares ofthe Company’s capital stock have been duly authorized and validly issued and arefully paid and non-assessable.  TheCompany will have reserved, immediately prior to the First Closing, a total of6,068,740 shares of its Common Stock for issuance pursuant to the Option Plans(defined below).  Except as contemplatedby this Agreement, the other Financing Documents, the Amended Articles,(i) no subscription, warrant, option, convertible security or other right(contingent or otherwise) to purchase or acquire any shares of capital stock ofthe Company is authorized or outstanding, (ii) there is not any commitmentor offer of the Company to issue any subscription, warrant, option, convertiblesecurity or other such right or to issue or distribute to holders of any sharesof its capital stock any evidences of indebtedness or assets of the Company,(iii) the Company has no obligation (contingent or otherwise) to purchase,redeem or otherwise acquire any shares of its capital stock or any interesttherein or to pay any dividend or make any other distribution in respectthereof, and (iv) there are no restrictions on the transfer of the Company’scapital stock other than those arising from securities laws or contemplated bythis Agreement and the other Financing Documents.  There are no voting trusts or agreements, stockholders’agreements, pledge agreements, buy-sell agreements, rights of first refusal,preemptive rights or proxies relating to any securities of the Company to whichthe Company is a party.  All of theoutstanding securities of the Company were issued in compliance with allapplicable federal and state securities laws. Set forth in the Disclosure Schedule is a capitalization table for theCompany showing (i) the capitalization of the Company on a fully dilutedbasis immediately prior to the issuance of the Shares; and (ii) the capitalizationof the Company on a fully diluted basis giving effect to the issuance of theShares.  For the purposes of thisAgreement, the term “on a fully diluted basis” means that for purposes ofcalculating the percentage interest of the Company’s capital stock representedby a specified number of shares, there shall be deemed outstanding (i) allshares of Common Stock, $0.001 per value

 

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per share, of the Companycurrently outstanding; (ii) all shares of Common Stock issuable pursuant to theexercise of options granted and capable of being granted under the Company’s1998 Long Term Incentive Compensation Plan, 2000 Long Term IncentiveCompensation Plan, and Senior Executive Long Term Incentive Compensation Plan(the “**OptionPlans**”); and (iii) all shares of Common Stock issuable pursuant toother existing options, warrants, convertible debt securities and otherinstruments and agreements whatsoever. The issue and sale of the Securities will not, immediately or with thepassage of time, obligate the Company to issue shares of Common Stock or othersecurities to any Person and will not result in a right of any holder ofCompany securities to adjust the exercise, conversion, exchange or reset priceunder such securities.

 

**3.5.****         Subsidiaries. **Except for Sentigen Ltd., the Companydoes not control, directly or indirectly, any other entity (a “**Subsidiary**”)and does not own of record or beneficially, directly or indirectly, any sharesof capital stock or securities convertible into capital stock of any othercorporation, or any participating interest in any partnership, joint venture orother non-corporate business enterprise.

 

**3.6.****         SEC Filings; Business.**  The Company has filed all reports requiredto be filed by it under the 1933 Act and the Securities Exchange Act of 1934,as amended (the “**1934 Act**”), including pursuant to Section 13(a) or 15(d)thereof, for the twelve months preceding the date hereof (or such shorterperiod as the Company was required by law to file such reports) (collectively,the “**SECFilings**”) on a timely basis or has timely filed a valid extension ofsuch time of filing and has filed any such SEC Filings prior to the expirationof any such extension..  The SEC Filingsare the only filings required of the Company pursuant to the 1934 Act for suchperiod.  At the time of filing thereof,the SEC Filings complied as to form in all material respects with therequirements of the 1934 Act and did not contain any untrue statement of amaterial fact or omit to state any material fact necessary in order to make thestatements made therein, in the light of the circumstances under which theywere made, not misleading.  During thepreceding two years, each registration statement and any amendment theretofiled by the Company pursuant to the 1933 Act and the rules and regulationsthereunder, as of the date such statement or amendment became effective,complied as to form in all material respects with the 1933 Act and did notcontain any untrue statement of a material fact or omit to state any materialfact required to be stated therein or necessary in order to make the statementsmade therein, in light of the circumstances under which they were made, notmisleading; and each prospectus filed pursuant to Rule 424(b) under the 1933Act, as of its issue date and as of the closing of any sale of securitiespursuant thereto did not contain any untrue statement of a material fact oromit to state any material fact required to be stated therein or necessary inorder to make the statements made therein, in the light of the circumstancesunder which they were made, not misleading. The Company and its Subsidiaries are engaged only in the businessdescribed in the SEC Filings and the SEC Filings contain a complete and accuratedescription in all material respects of the business of the Company and itsSubsidiaries, taken as a whole, as required to be disclosed.

 

**3.7.****         No Material AdverseChange.**  Since December 31, 2002,except as identified and described in the SEC Filings, there has not been:

 

(a)           any change in theconsolidated assets, liabilities, financial condition or operating results ofthe Company from that reflected in the financial statements included in the2002 10-K, except for changes in the ordinary course of business which have notand could not reasonably be expected to have a Material Adverse Effect,individually or in the aggregate;

 

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(b)           any declaration orpayment of any dividend, or any authorization or payment of any distribution,on any of the capital stock of the Company, or any redemption or repurchase ofany securities of the Company;

 

(c)           any material damage,destruction or loss, whether or not covered by insurance to any assets orproperties of the Company;

 

(d)           any waiver, not in theordinary course of business, by the Company or any Subsidiary of a materialright or of a material debt owed to it;

 

(e)           any satisfaction ordischarge of any lien, claim or encumbrance or payment of any obligation by theCompany or a Subsidiary, except in the ordinary course of business and which isnot material to the assets, properties, financial condition, operating resultsor business of the Company and its Subsidiaries taken as a whole (as suchbusiness is presently conducted and as it is proposed to be conducted);

 

(f)            any change oramendment to the Company’s Amended Articles or Bylaws, or material change toany material contract or arrangement by which the Company or any Subsidiary isbound or to which any of their respective assets or properties is subject;

 

(g)           any material labordifficulties or labor union organizing activities with respect to employees ofthe Company or any Subsidiary;

 

(h)           any transaction enteredinto by the Company or a Subsidiary other than in the ordinary course ofbusiness;

 

(i)            any loss of theservices of any key employee, or material change in the composition or dutiesof the senior management of the Company or any Subsidiary;

 

(j)            any loss or threatenedloss of any customer which has had or could reasonably be expected to have aMaterial Adverse Effect; or

 

(k)           any other event orcondition of any character that has had or could reasonably be expected to havea Material Adverse Effect.

 

**3.8.****         Financial Statements.**  The financial statements included in eachSEC Filing present fairly, in all material respects, the consolidated financialposition of the Company as of the dates shown and its consolidated results ofoperations and cash flows for the periods shown, and such financial statementshave been prepared in conformity with United States generally acceptedaccounting principles applied on a consistent basis (except as may be disclosedtherein or in the notes thereto, and, in the case of quarterly financialstatements, as permitted by Form 10-Q or Form 10-QSB, as applicable, under the1934 Act).  Except as set forth in thefinancial statements of the Company included in the SEC Filings filed prior tothe date hereof, neither the Company nor any of its Subsidiaries has incurredany liabilities, contingent or otherwise, except those incurred in the ordinarycourse of business, consistent (as to amount and nature) with past practicessince the date of such financial statements, none of which, individually or inthe aggregate, have had or could reasonably be expected to have a MaterialAdverse Effect.

 

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**3.9.****         Contracts andCommitments. ** Except as identified and described in the SECFilings, the Company (i) is not a party to any oral or written contract,obligation, instrument, corporate restriction or commitment which involves apotential obligation or liability in excess of $25,000 and which is otherwisematerial and not entered into in the ordinary course of business, (ii) does nothave any oral or written employment contracts, financing agreements, licenses,distributor or sales representative agreements, agreements with officers,directors, employees or shareholders of the Company or persons or organizationsrelated to or affiliated with any such persons, leases, agreements relating toproduct development; and (iii) does not have any pension, profit sharing,retirement or stock option plans other than the Option Plans and the Company’s401(k) Plan.

 

**3.10.****       Proprietary Rights,Employee Restrictions. **

(a)           The Company owns or hasthe right to use all copyrights, copyright registrations and copyrightapplications, trademark registrations and applications for registration,patents and patent applications, trademarks, service marks, trade names, orother proprietary rights (collectively, “**Intellectual Property Rights**”) as describedin the SEC Filings used or useful in the Company’s business as presentlyconducted or currently contemplated to be conducted and all licenses,assignments and releases of Intellectual Property Rights of others in materialworks embodied in the Company’s products. All Intellectual Property Rights held by any employee, officer orconsultant have been assigned to the Company. The Company has exclusive ownership of, or exclusive license to use, allIntellectual Property Rights.  TheCompany has obtained any licenses, releases or assignments necessary to use allthird parties’ Intellectual Property Rights in works embodied in its products.  All such licenses, releases and assignmentsare specifically identified in the Disclosure Schedule.  To the Company’s knowledge, neither thepresent nor currently contemplated business activities or products of theCompany infringe any Intellectual Property Rights of others.  The Company has not received any notice orother written claim from any person asserting that any of the Company’s presentor currently contemplated activities infringe or may infringe any IntellectualProperty Rights of such person.  The Companyhas the right to use, free and clear of known or asserted claims or rights ofothers, all trade secrets, customer lists, hardware designs, programmingprocesses, software and other information required for or incident to itsproducts or its business as presently conducted or contemplated to beconducted, except for claims which would not have a Material AdverseEffect.  The Company has taken allreasonable measures to protect and preserve the security, confidentiality andvalue of its Intellectual Property Rights, including its trade secrets andother confidential information.  TheCompany is not aware of any infringement by others of its copyrights or otherIntellectual Proprietary Rights in any of its products, technology or services,or any violation of the confidentiality of any of its proprietaryinformation.  The activities of theCompany’s employees on behalf of the Company do not violate any agreements orarrangements known to the Company which any such employees have with formeremployers or any other entity to whom such employees may have renderedconsulting services.  For the purposesof this Section 3.10, Intellectual Property Rights also includes any andall material licenses, databases, computer programs and other computer softwareuser interfaces (other than those generally available to the public), know-how,trade secrets, customer lists, proprietary technology, processes and formulae,source code, object code, algorithms, architecture, structure, display screens,layouts, development tools, instructions, templates, marketing materials,inventions, trade dress, logos and designs and all documentation and mediaconstituting, describing or relating to the foregoing.

 

(b)           All key employees,including all consultants (contract or otherwise), of or to the Company haveexecuted and delivered to and in favor of the Company an agreement regardingthe protection of confidential and proprietary information and the assignmentto the Company of all Intellectual Property Rights arising from the servicesperformed for the Company by such Persons.

 

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**3.11.****       Litigation; Compliance withLaw. **There is no (i) action,suit, claim, proceeding or investigation pending or, to the best of theCompany’s knowledge, threatened against or affecting the Company, at law or inequity, or before or by any federal, state, municipal or other governmentaldepartment, commission, board, bureau, agency or instrumentality, domestic orforeign, (ii) arbitration or mediation proceeding relating to the Company,pending or, to the best of the Company’s knowledge, threatened, or(iii) governmental inquiry pending or, to the best of the Company’sknowledge, threatened against or affecting the Company (including withoutlimitation any inquiry as to the qualification of the Company to hold orreceive any license or permit).  TheCompany has not received any opinion or memorandum or legal advice from legalcounsel to the effect that it is exposed, from a legal standpoint, to anyliability which may have a Material Adverse Effect.  The Company is not in default with respect to any order, writ,injunction or decree known to or served upon the Company of any court or of anyfederal, state, municipal or other governmental department, commission, board,bureau, agency or instrumentality, domestic or foreign.  There is no action or suit by the Company,and to the best of the Company’s knowledge, pending, threatened or contemplatedagainst others.  To the best of theCompany’s knowledge, the Company has complied and will continue to comply, inall material respects, with all laws, rules, regulations and orders applicableto its present and contemplated business, operations, properties, assets,products and services.  The Company hasall necessary permits, licenses and other authorizations required to conductits business as conducted and as proposed to be conducted, except where thefailure to obtain such permits, licenses or authorization would not have aMaterial Adverse Effect, and the Company has been and will continue to beoperating its business pursuant to and in compliance with the terms of all suchpermits, licenses and other authorizations, except where the failure to sooperate the business would not have a Material Adverse Effect.  The Company has all franchises, permits,licenses and other rights and privileges necessary to permit it to own itsproperty and to conduct its business as it is presently conducted or proposedto be conducted.  The Company is notsubject to any pending or threatened investigation, inquiry or proceeding bythe SEC, any state securities commission or any other federal, state, municipalor other governmental department, commission, board, bureau, agency orinstrumentality, domestic or foreign, or any securities exchange or securitiesmarket, with respect to any matter.  TheCompany is in compliance with all effective requirements of the Sarbanes-OxleyAct of 2002, as amended, and the rules and regulations thereunder, that areapplicable to it, except where such noncompliance could not have or reasonablybe expected to result in a Material Adverse Effect.

 

**3.12.****       Leasehold Interests.**  Each lease or agreement to which the Companyis a party under which it is a lessee of any property, real or personal,is a valid and subsisting agreement, duly authorized and entered into, withoutany default of the Company thereunder and, to the best of the Company’sknowledge, without any default thereunder of any other party thereto.  No event has occurred and is continuingwhich, with due notice or lapse of time or both, would constitute a default orevent of default by the Company under any such lease or agreement or, to thebest of the Company’s knowledge, by any other party thereto.  The Company’s possession of such propertyhas not been disturbed and, to the best of the Company’s knowledge, no claimhas been asserted against the Company adverse to its rights in such leaseholdinterests.

 

**3.13.****       Insurance.**  The Company and each Subsidiary maintain infull force and effect insurance coverage that is customary for comparablysituated companies for the business being conducted and properties owned orleased by the Company and each Subsidiary, and the Company reasonably believessuch insurance coverage to be adequate against all liabilities, claims andrisks against which it is customary for comparably situated companies toinsure.

 

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**3.14.****       Loans and Advances.**  The Company does not have any outstandingloans or advances to any person and is not obligated to make any such loans oradvances.

 

**3.15.****       Assumptions, Guaranties,Etc. of Indebtedness of Other Persons.** The Company has not assumed, guaranteed, endorsed or otherwise becomedirectly or contingently liable on any indebtedness of any other person(including, without limitation, liability by way of agreement, contingent orotherwise, to purchase, to provide funds for payment, to supply funds to orotherwise invest in the debtor, or otherwise to assure the creditor againstloss), except for guaranties by endorsement of negotiable instruments fordeposit or collection in the ordinary course of business.

 

**3.16.****       Governmental Approvals.**  Subject to the accuracy of therepresentations and warranties of the Purchasers set forth in Section 4, noregistration or filing with, or consent or approval of or other action by, anyfederal, state or other governmental agency or instrumentality is or will benecessary for the valid execution, delivery and performance by the Company ofany of the Financing Documents, the issuance, sale and delivery of the Sharesother than filings pursuant to federal and state securities laws (all of whichfilings have been made by the Company, other than those which are required tobe made after the Closing and which will be duly made on a timely basis) inconnection with the sale of the Shares.

 

**3.17.****       Tax Matters.**  Each of the Company and each Subsidiary hastimely prepared and filed all tax returns required to have been filed by theCompany or such Subsidiary with all appropriate governmental agencies andtimely paid all taxes shown thereon or otherwise owed by it.  The charges, accruals and reserves on thebooks of the Company in respect of taxes for all fiscal periods are adequate inall material respects, and there are no material unpaid assessments against theCompany or any Subsidiary nor any basis for the assessment of any additionaltaxes, penalties or interest for any fiscal period or audits by any federal,state or local taxing authority except for any assessment which is not materialto the Company and its Subsidiaries, taken as a whole.  All taxes and other assessments and leviesthat the Company or any Subsidiary is required to withhold or to collect forpayment have been duly withheld and collected and paid to the proper governmentalentity or third party when due.  Thereare no tax liens or claims pending or threatened against the Company or anySubsidiary or any of their respective assets or property.  There are no outstanding tax sharingagreements or other such arrangements between the Company and any Subsidiary orother corporation or entity.

 

**3.18.****       Title to Properties.**  The Company and each Subsidiary has good andmarketable title to all real properties and all other properties and assetsowned by it, in each case free and clear from any and all liens, securityinterests, encumbrances and defects, and the Company and each Subsidiary holdsany leased real or personal property under valid and enforceable leases with noexceptions that would materially interfere with the use made or currentlyplanned to be made thereof by them.

 

**3.19.****       No Labor Disputes**.  No material labor dispute with the employeesof the Company or any Subsidiary exists or is imminent.

 

**3.20.****       Environmental Matters.**  Neither the Company nor any Subsidiary is inviolation of any statute, rule, regulation, decision or order of anygovernmental agency or body or any court, domestic or foreign, relating to theuse, disposal or release of hazardous or toxic substances or relating to theprotection or restoration of the environment or human exposure to hazardous ortoxic substances (collectively, “**Environmental Laws**”), owns or operates anyreal property contaminated with any substance that is subject to anyEnvironmental Laws, is liable for any off-site disposal or contaminationpursuant to any Environmental Laws, and is subject to any claim relating to anyEnvironmental Laws,

 

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which violation,contamination, liability or claim has had or could reasonably be expected tohave a Material Adverse Effect, individually or in the aggregate; and there isno pending or threatened investigation that might lead to such a claim.

 

**3.21.****       Compliance with NasdaqContinued Listing Requirements. **TheCompany is in compliance with applicable Nasdaq SmallCap Market continuedlisting requirements.  There are noproceedings pending or threatened against the Company relating to the continuedlisting of the Company’s Common Stock on the Nasdaq SmallCap Market and theCompany has not received any notice of, nor is there any basis for, thedelisting of the Common Stock from the Nasdaq SmallCap Market.

 

**3.22.****       Brokers. **The Company has no contract, arrangementor understanding with any broker, finder or similar agent with respect to thetransactions contemplated by this Agreement.  No person or entity will have, as a result of the transactionscontemplated by this Agreement, any right, interest or claim against or uponthe Company, any Subsidiary or a Purchaser for any commission, fee or othercompensation pursuant to any agreement, arrangement or understanding enteredinto by or on behalf of the Company.

 

**3.23.****       Certain RegistrationMatters.**  Assuming the accuracy ofthe Purchaser’ representations and warranties set forth in Section 4.1-4.5, noregistration under the Securities Act is required for the offer and sale of theSecurities by the Company to the Purchaser under the Financing Documents.  The Company has not granted or agreed togrant to any Person any rights (including “piggy-back” registration rights) tohave any securities of the Company registered with the SEC or any othergovernmental authority that have not been satisfied or deferred during theperiod between the date hereof and the date the Company’s registrationstatement pursuant to the Registration Rights Agreement is declaredeffective.  Other than the RegistrationStatement (as defined in the Registration Rights Agreement), prior to the datethat a Registration Statement is first declared effective by the SEC, theCompany may not file any registration statement (other than on Form S-8) withthe SEC with respect to any securities of the Company.

 

**3.24.****       Transactions WithAffiliates.**  Except as identifiedand described in the SEC Filings, no director, officer, employee or stockholderof the Company, or member of the family of any such person, or any corporation,partnership, trust or other entity in which any such person, or any member ofthe family of any such person, has a substantial interest or is an officer,director, trustee, partner or holder of more than 5% of the outstanding capitalstock thereof, is a party to any transaction with the Company, including anycontract, agreement or other arrangement providing for the employment of,furnishing of services by, rental of real or personal property from orotherwise requiring payments to any such person or firm, other thanemployment-at-will arrangements in the ordinary course of business.

 

**3.25.****       Questionable Payments.**  Neither the Company nor any of itsSubsidiaries nor any of their respective current or former shareholders,directors, officers, employees, agents or other persons or entities acting onbehalf of the Company or any Subsidiary, has on behalf of the Company or anySubsidiary or in connection with their respective businesses: (a) used anycorporate funds for unlawful contributions, gifts, entertainment or otherunlawful expenses relating to political activity; (b) made any direct orindirect unlawful payments to any governmental officials or employees fromcorporate funds; (c) established or maintained any unlawful or unrecorded fundof corporate monies or other assets; (d) made any false or fictitious entrieson the books and records of the Company or any Subsidiary; or (e) made anyunlawful bribe, rebate, payoff, influence payment, kickback or other unlawful paymentof any nature.

 

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**3.26.****       Information Supplied toPurchasers.**  Neither this Agreement,the Disclosure Schedule and Exhibits attached hereto, the Private PlacementMemorandum of the Company, dated as of April 1, 2004 (the **“PrivatePlacement Memorandum”**), nor any other Financing Documents furnishedto the Purchasers by or on behalf of the Company contains any untrue statementof a material fact, and none of this Agreement, the Disclosure Schedule andExhibits attached hereto, or such other Financing Documents omits to state amaterial fact necessary in order to make the statements contained herein ortherein not misleading.  None of thematters described on the Disclosure Schedules have had, or could reasonably beexpected to have, a Material Adverse Effect, individually or in the aggregate.

 

**3.27.****       Internal AccountingControls.**  The Company and theSubsidiaries maintain a system of internal accounting controls sufficient toprovide reasonable assurance that (i) transactions are executed in accordancewith management’s general or specific authorizations, (ii) transactions arerecorded as necessary to permit preparation of financial statements inconformity with generally accepted accounting principles and to maintain assetaccountability, (iii) access to assets is permitted only in accordance withmanagement’s general or specific authorization, and (iv) the recordedaccountability for assets is compared with the existing assets at reasonableintervals and appropriate action is taken with respect to any differences.  The Company has established disclosurecontrols and procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) forthe Company and designed such disclosure controls and procedures to ensure thatmaterial information relating to the Company, including its Subsidiaries, ismade known to the certifying officers by others within those entities,particularly during the period in which the Company’s Form 10-KSB or 10-QSB, asthe case may be, is being prepared.

 

## **3.28.**       No Additional Agreements.  The Company does not have any agreement or understandingwith any Purchaser with respect to the transactions contemplated by theFinancing Documents other than as specified in the Financing Documents.

 

**3.29.****       Disclosure.**  The Company confirms that neither it nor anyperson acting on its behalf has provided any Purchaser or its respective agentsor counsel with any information that the Company believes constitutes material,non-public information except insofar as the existence and terms of theproposed transactions hereunder may constitute such information. The Companyunderstands and confirms that the Purchasers will rely on the foregoingrepresentations and covenants in effecting transactions in securities of the Company.

 

**4.****             Representations ofthe Purchasers.**  Each of thePurchasers represents and warrants to the Company as to itself and no otherPurchaser as follows:

 

**4.1.****         Validity.**  Assuming the due execution and delivery bythe Company of this Agreement and the Financing Documents, this Agreement andthe Financing Documents to which such Purchaser is a party constitute legal,valid and binding obligations of the Purchaser, enforceable against suchPurchaser in accordance with their respective terms.

 

**4.2.****         Investor Status.**  Such Purchaser is an “accredited investor”as such term is defined in Regulation D under the 1933 Act.  . Such Investor is not a registered broker-dealer under Section 15 of the1934 Act.

 

**4.3.****         Investment.**  The Securities to be received by such Purchaserhereunder will be acquired for the Purchaser’s own account, not as nominee oragent, and not with a view to the resale or distribution of any part thereof inviolation of the 1933 Act, and the Purchaser has no intention of selling,

 

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granting anyparticipation in, or otherwise distributing the same in violation of the 1933Act.  Such Purchaser is acquiring theSecurities hereunder in the ordinary course of its business. Such Purchaserdoes not have any agreement or understanding, directly or indirectly, with anyPerson to distribute any of the Securities.

 

**4.4.****         Investment Experience.**  Such Purchaser acknowledges that it can bearthe economic risk and complete loss of its investment in the Securities and hassuch knowledge and experience in financial or business matters that it iscapable of evaluating the merits and risks of the investment contemplatedhereby.

 

**4.5.****         Restricted Securities.**  Such Purchaser understands that theSecurities are characterized as “restricted securities” under the U.S. federalsecurities laws inasmuch as they are being acquired from the Company in atransaction not involving a public offering and that under such laws andapplicable regulations such securities may be resold without registration underthe 1933 Act only in certain limited circumstances.

 

**4.6.****         Access to Management.**  Such Purchaser has had an opportunity toreceive additional information related to the Company requested by it and toask questions of and receive answers from the Company regarding the Company,its business and the terms and conditions of the offering of theSecurities.  Neither such inquiries norany other investigation conducted by or on behalf of such Purchaser or itsrepresentatives or counsel shall modify, amend or affect such Purchaser’s rightto rely on the truth, accuracy and completeness of the Company’srepresentations and warranties contained in the Financing Documents and uponthe Private Placement Memorandum.  SuchPurchaser has reviewed the SEC Filings and acknowledges that, as of the date ofexecution of this Agreement, the Company has not filed its Annual Report onForm 10-KSB for the fiscal-year ended December 31, 2003.

 

**4.7.****         No General Solicitation**.  Such Purchaser did not learn of the investmentin the Securities as a result of any public advertising or generalsolicitation.

 

**4.8.****         Limited Ownership. **The purchase by such Purchaser of theSecurities issuable to it at each Closing will not immediately upon suchClosing result in such Purchaser (individually or together with other Personswith whom such Purchaser has identified, or will have identified, itself aspart of a “group” in a public filing made with the Commission involving theCompany’s securities), acquiring, or obtaining the right to acquire, in excessof 19.999% of the Common Stock or the voting power of the Company on a posttransaction basis that assumes that such Closing shall have occurred.  Such Purchaser does not currently intend to,alone or together with others, make a public filing with the Commission todisclose that it has (or that it together with such other Persons have)acquired, or obtained the right to acquire, as a result of a Closing (whenadded to any other securities of the Company that it or they then own or havethe right to acquire), in excess of 19.999% of the Common Stock or the votingpower of the Company on a post transaction basis that assumes that such Closingshall have occurred.

 

**4.9.****         Independent InvestmentDecision.**  Such Purchaser hasindependently evaluated the merits of its decision to purchase Securitiespursuant to this Agreement, such decision has been independently made by suchPurchaser and such Purchaser confirms that it has only relied on the advice ofits own business and/or legal counsel (which such Purchaser acknowledges is notBryan Cave LLP) and not on the advice of any other Purchaser’s business orlegal counsel nor upon any investment banker, placement agent, or theirrespective counsel in making such decision.

 

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**5.****             Pre-ClosingCovenants; Conditions to the Obligations of the Purchasers.**

 

**5.1.****         Pre-Closing Covenants.**  The parties covenant and agree that theywill perform and observe the following covenants and provisions until the SecondClosing Date, as applicable.

 

**5.1.1.****      Dealings with Affiliates.**  Except as contemplated herein, the Companywill not enter into any transaction, including, without limitation, any loans,leases, extension of credit or royalty agreements with any employee, officer ordirector of the Company****or holderof ten percent (10%) or more of any class of capital stock of the Company, orany member of their respective immediate families or any corporation or otherentity directly or indirectly controlled by one or more of such employees,officers, directors or stockholders or members of their immediate families.

 

**5.1.2.****      Distributions.** Except as contemplated herein, the Companywill not declare or pay any dividends, purchase, redeem, retire, or otherwiseacquire for value any of its capital stock (or rights, options or warrants topurchase such shares) now or hereafter outstanding, return any capital to itsstockholders as such, or make any distribution of assets to its stockholders assuch, or pay into or set aside a sinking fund for such purpose (suchtransactions being hereinafter referred to as “**Distributions**”); provided,however, that nothing herein contained shall prevent the Company from:

 

(i)            complying with anyspecific provision of the terms of this Agreement;

 

(ii)           redeeming any stock ofa deceased stockholder out of insurance held by the Company on thatstockholder’s life; or

 

(iii)          repurchasing any stockof an officer, employee or consultant subject to a stock repurchase agreementunder which the Company has the right or obligation to repurchase such sharesin the event of termination of employment or of a consulting arrangement.

 

**5.1.3.****      Extraordinary CorporateTransactions.** Except ascontemplated herein, the Company will not take any corporate action, enter intoany agreement to take such action, or obligate itself to take any such action,if such action would:

 

(i)            cause the Company tocreate, authorize or issue any class or series of capital stock with equityfeatures or convertible into equity ranking senior to the Common Stock withrespect to liquidation preferences, dilution protection, redemption rights, orpayment of dividends, or otherwise having terms and conditions superior to theterms of the Common Stock, or that would impair or limit the Company’sobligations under this Agreement;

 

(ii)           enter into anytransaction that expressly prohibits or limits the Company’s right to performits obligations under this Agreement;

 

(iii)          cause or authorize anytransaction, whether by consolidation or merger of the Company, which resultsin the holders of the Company’s capital stock holding less than 50% of thevoting securities of the resulting or surviving entity, or a sale of all orsubstantially all of the capital stock or assets of the Company, or any other formof business combination or acquisition in which the Company is the object ofthe acquisition and in which control of the voting securities or assets of theCorporation are transferred in any way;

 

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(iv)          create or incur anyadditional indebtedness (other than replacement of existing indebtedness forborrowed money) for money borrowed which is secured by assets of the Company orany subsidiary or otherwise mortgage or pledge, or create a security interest inall or substantially all of the property of the Company;

 

(v)           change the principalbusiness of the Company, enter new lines of business, or exit its current andproposed line of business;

 

(vi)          make investments in, orloans to, any third parties other than for employee travel or relocation; or

 

(vii)         make any single capitalexpenditure in excess of $50,000.

 

**5.1.4.****      Proxy Statement**.  The Company shall (a) prepare and file withthe SEC, promptly after the date hereof and in any event by the 10thbusiness day following the Initial Closing, preliminary proxy materials withrespect to a meeting of the Company’s stockholders for the purpose of approvingthe issuance of the Securities to be issued at the Second Closing, ascontemplated by this Agreement.  Promptlyafter comments are received from the SEC with respect to the preliminary proxymaterials and after the furnishing by the Company of all information requiredto be contained therein, the Company shall file with the SEC the definitiveproxy statement and (b) acting through the Company’s Board of Directors,(i)  call a meeting of the holders ofthe Common Stock for the purpose of approving the issuance of the Securities tobe issued at the Second Closing as contemplated by this Agreement and (ii)include in the proxy statement the recommendation of its Board of Directorsthat holders of the Common Stock approve such issuance as contemplated by thisAgreement.

 

## **5.1.5.**      Stockholders Agreement.  The Company shall obtain on or before thedate of the Initial Closing, a duly executed and delivered Voting Agreement(the “VotingAgreement”) among the holders of at least 50% of the Common Stock to approve theissuance of the Securities at the Second Closing as contemplated by thisAgreement.  The parties agree and understandthat Purchasers may not vote their respective Shares or the shares of CommonStock issuable upon exercise of their respective Warrants in any such vote.

 

## **5.2.**         Funding of Escrow Account for Second Closing.  Concurrently with their respective executionand delivery of this Agreement, each Purchaser will deliver to the Escrow Agentfor deposit into the escrow account (the “Escrow Account”) established pursuant to the termsand conditions of the Escrow Agreement, the full amount of such Purchaser’sinvestment amount as listed on Schedule I hereto for each of the InitialClosing and the Second Closing, by wire transfer of immediately availablefunds.

 

**5.3.****         Conditions to theObligations of the Purchasers. **Theobligations of the Purchasers under this Agreement are subject to thefulfillment, or the waiver by the Purchasers, of the conditions set forth inthis Section 5.3 on or before each Closing Date. All such documents and actionsshall be satisfactory in form and substance to such Purchaser and its counsel.

 

**5.3.1.****      Accuracy of Representationsand Warranties; Performance.**  Eachrepresentation and warranty of the Company contained in this Agreement shall betrue and correct in all material respects on and as of each Closing Date, withthe same effect as though such representation and warranty had been made on andas of that date.  The Company shall haveperformed in all material respects all agreements and covenants required to beperformed by it under the Financing Documents prior to such Closing Date.

 

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**5.3.2.****      Consents.**  The Company shall have obtained any and allconsents, permits, approvals, registrations and waivers necessary orappropriate for consummation of the purchase and sale of the Securities to beoffered and sold at such Closing.  Nojudgment, writ, order, injunction, award or decree of or by any court, orjudge, justice or magistrate, including any bankruptcy court or judge, or anyorder of or by any governmental authority, shall have been issued, and noaction or proceeding shall have been instituted by any governmental authority,enjoining or preventing the consummation of the transactions contemplatedhereby or in the other Financing Documents.

 

**5.3.3.****      Certificates and Documents.**  The Company shall have delivered to counselto the Purchasers:

 

(a)           the Amended Articles,certified by the Secretary of State of the State of Nevada;

 

(b)           a certificate, as ofthe most recent practicable date, of the Secretary of State of the State ofNevada as to the Company’s legal existence and corporate good standing;

 

(c)           the Bylaws of theCompany in effect on and as of the First Closing Date; and

 

**5.3.4.****      Opinion.**  The Company shall have delivered to counselto the Purchasers an original opinion from Grippo & Elden LLC, counsel tothe Company, dated as of the Closing Date, addressed to the Purchasers, and inthe form attached hereto as Exhibit D.

 

**5.3.5.****      SEC Approvals; EffectiveRegistration; Blue Sky.**  Any SECapproval required to consummate the transactions contemplated by the FinancingDocuments (other than the effectiveness of registration statements) shall havebeen obtained.

 

**5.3.6.****      Registration RightsAgreement.**  The Company shall haveexecuted and delivered to the Purchasers the Registration Rights Agreement.

 

## **5.3.7.**      Warrant Agreements.  The Company shall have executedand delivered to the Purchasers the Warrant Agreements.

 

## **5.3.8.**      Voting Agreement.  The Company shall have delivered to thePurchasers a copy of the duly executed and delivered Voting Agreement.

 

## **5.3.9.**      Stockholder Approval.  With respect to the Second Closing, on orbefore July 19, 2004 the Company’s stockholders shall have approved theissuance of the Securities at the Second Closing, as contemplated by thisAgreement and the conversion of the demand notes issued to three Companystockholders (Oxford Bioscience Partners IV L.P., Mi3 L.P. and MRNA Fund IIL.P.) (the “Demand Notes”) into Common Stock at $0.75 per share.

 

## **5.3.10.**    Nasdaq Listing. The Nasdaq Stock Market shall have waived application of the 15 dayprior notice contained in NASD Marketplace Rule 4310(c)(17)(D) or suchtimeframe shall have expired without objection.  Trading in the Common Stock shall not have been suspended by theSEC or the Nasdaq Stock Market (except for any suspensions of trading of notmore than one trading day solely to permit dissemination of materialinformation regarding the Company) at any time since the date of execution ofthis Agreement, and the Common Stock shall have been at all times since suchdate listed for trading on the Nasdaq Small Cap Market or Nasdaq NationalMarket.

 

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## **5.3.11.**    No Adverse Changes. Between the execution of this Agreement and such Closing, no event orseries of events (other than stock price fluctuations) shall have occurredwhich reasonably would be expected to have or result in a material adverseeffect on the results of operations, assets, prospects, business or condition(financial or otherwise) of the Company and the Subsidiaries, taken as a whole.

 

## **5.3.12.**    Minimum Subscriptions.  The aggregate of all Purchaser investment amounts deliveredto the Escrow Account in accordance with Section 5.2 shall not be less than$10,000,000 (provided, that such Purchaser shall have complied withSection 5.2).

 

## **5.3.13.**    Timing.  The Initial Closingshall have occurred no later than April 19th, 2004.  The Second Closing shall have occurred no later than July 19,2004.

 

## **5.3.14.**    Conversion of Outstanding Notes.  Between the date of execution ofthis Agreement and the Initial Closing Date, the holders of the Company’sRevolving Convertible Senior Secured Promissory Note in the aggregate principalamount of $4,160,000 have converted all principal and interest due thereunderinto Common Stock at $0.75 per share and shall have agreed in writing toconvert all Demand Notes into Common Stock at $0.75 per share at or before theSecond Closing and in any event, the Demand Notes shall automatically convertupon approval of the stockholders to issue 20% or more of the Company’s stock.

 

**6.****             Conditions to theObligations of the Company.**  Theobligations of the Company under this Agreement are subject to the fulfillment,or the waiver in writing by the Company, of the conditions set forth in thisSection 6 on or before each Closing Date.

 

**6.1.****         Accuracy ofRepresentations and Warranties.**  Therepresentations and warranties of the Purchasers contained in Section 4 shallbe true and correct in all material respects on and as of each Closing Date,with the same effect as though such representations and warranties had beenmade on and as of that date.

 

**6.2.****         Performance.**  The Purchasers shall have performed andcomplied with all agreements contained in this Agreement required to beperformed and complied with by it prior to or at the Closing.

 

## **6.3.**         Stockholder Approval.  With respect to the Second Closing, the Company’s stockholders shall have approvedthe issuance of the Securities at the Second Closing, as contemplated by thisAgreement.

 

## **6.4.**         NasdaqListing.  The Nasdaq Stock Market shall havewaived application of the 15 day prior notice contained in NASD MarketplaceRule 4310(c)(17)(D) or such timeframe shall have expired without objection.

 

## **6.5.**         Timing.  The Initial Closingshall have occurred no later than April 19th, 2004.  The Second Closing shall have occurred no later than July 19,2004.

 

## **6.6.**         Minimum Subscriptions.  The aggregate of all Purchaser investment amounts deliveredto the Escrow Account in accordance with Section 5.2 shall not be less than$10,000,000.

 

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# **7.**             Post Closing Covenants.

 

**7.1.****         No Integration.** Neither the Company nor any of itsaffiliates, nor any person or entity acting on its or their behalf will makeany offers or sales of any Company security or solicit any offers to buy anysecurity, under circumstances that would adversely affect reliance by theCompany on Section 4(2) of the 1933 Act for the exemption from registration forthe transactions contemplated hereby or would require registration of theShares under the 1933 Act.

 

**7.2.****         Non-Contravention.**  The Company will not take any action, enterinto any agreement or make any commitment that would conflict or interfere withthe obligations to the Purchasers under the Financing Documents.

 

**7.3.****         Listing of Shares.**The Company shall take such action as may be required to cause the Shares to belisted on the Nasdaq SmallCap Market no later than the date required under therules and regulations thereof.  Further,if the Company applies to have its Common Stock or other securities traded onany other principal stock exchange or market, it shall include the Shares insuch application and will take such other action as is necessary to cause suchCommon Stock to be so listed.  TheCompany will use reasonable best efforts to continue the listing and trading ofits Common Stock on The Nasdaq SmallCap Market or on the Nasdaq National Marketand, in accordance, therewith, will use its best efforts to comply in allrespects with the Company’s reporting, filing and other obligations under thebylaws or rules of such exchange, as applicable.

 

## **7.4.**         Non-Public Information.  The Company covenants and agrees that neither it nor anyother Person acting on its behalf will provide any Purchaser or its agents orcounsel with any information that the Company believes constitutes materialnon-public information, unless prior thereto such Purchaser shall have executeda written agreement regarding the confidentiality and use of such information.  The Company understands and confirms thateach Purchaser shall be relying on the foregoing representations in effectingtransactions in securities of the Company.

 

# **8.**             General.

 

**8.1.****         Successors and Assigns.**  The provisions of this Agreement shall bindand inure to the benefit of the respective successors, assigns, heirs,executors, and administrators of the parties hereto, including but not limitedto assigns of the Purchasers pursuant to Section 1.1 of this Agreement.

 

**8.2.****         Survival ofRepresentations and Warranties.**  Allrepresentations and warranties shall survive and remain in full force andeffect after the Closing with respect to the Company.

 

**8.3.****         Indemnification.**  The Company agrees to indemnify and holdharmless each Purchaser and its affiliates and their respective directors, officers,employees and agents from and against any and all losses, claims, damages,liabilities and expenses (including without limitation reasonable attorney feesand disbursements and other expenses incurred in connection with investigating,preparing or defending any action, claim or proceeding, pending or threatenedand the costs of enforcement hereof) to which such person or entity may becomesubject as a result of and will reimburse any such person or entity for allsuch amounts as they are incurred by such person or entity as a result of anybreach of representation, warranty, covenant or agreement made by or to beperformed on the part of the Company under the Financing Documents.

 

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**8.4.****         Conduct of IndemnificationProceedings.**  Promptly after receiptby any person or entity (the “**Indemnified Person**”) of notice of anydemand, claim or circumstances which would or might give rise to a claim or thecommencement of any action, proceeding or investigation by a third party inrespect of which indemnity may be sought pursuant to Section 8.3 hereof, suchIndemnified Person shall promptly notify the Company in writing and the Companyshall assume the defense thereof, including the employment of counsel reasonablysatisfactory to such Indemnified Person, and shall assume the payment of allfees and expenses; provided, however, that the failure of any IndemnifiedPerson so to notify the Company shall not relieve the Company of itsobligations hereunder except to the extent that the Company is materiallyprejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right toretain its own counsel, but the fees and expenses of such counsel shall be atthe expense of such Indemnified Person unless: (i) the Company and theIndemnified Person shall have mutually agreed to the retention of such counsel;or (ii) in the reasonable judgment of counsel to such Indemnified Personrepresentation of both parties by the same counsel would be inappropriate dueto actual or potential differing interests between them.  The Company shall not be liable for anysettlement of any proceeding effected without its written consent, whichconsent shall not be unreasonably withheld, but if settled with such consent,or if there be a final judgment for the plaintiff, the Company shall indemnifyand hold harmless such Indemnified Person from and against any loss orliability (to the extent stated above) by reason of such settlement orjudgment.  Without the prior writtenconsent of the Indemnified Person, which consent shall not be unreasonablywithheld, the Company shall not effect any settlement of any pending orthreatened proceeding in respect of which any Indemnified Person is or couldhave been a party and indemnity could have been sought hereunder by suchIndemnified Party, unless such settlement includes an unconditional release ofsuch Indemnified Person from all liability arising out of such proceeding.

 

**8.5.****         Notices.**  All notices, requests, consents and othercommunications under this Agreement shall be in writing and shall be deliveredby hand, by telecopier, by express overnight courier service or mailed by firstclass mail, postage prepaid, to the respective addresses set forth on thesignature pages of this Agreement, as such addresses may be modified by noticegiven pursuant to this Section 8.5, with copies provided simultaneously tocounsel as set forth on the signature pages of this Agreement.  Notices provided in accordance with thisSection 8.5 shall be deemed delivered upon personal delivery, receipt bytelecopy or overnight mail, or 48 hours after deposit in the mail in accordancewith the above.

 

**8.6.****         Entire Agreement.**  This Agreement, together with theinstruments and other documents hereby contemplated to be executed anddelivered in connection herewith, contains the entire agreement andunderstanding of the parties hereto, and supersedes any prior agreements orunderstandings between or among them, with respect to the subject matter hereof.  Except as expressly set forth in thisAgreement, the Disclosure Schedule and the Exhibits attached hereto, thePrivate Placement Memorandum and the Financing Documents, the Company makes norepresentation or warranty, express or implied, with respect to thetransactions contemplated by this Agreement or the other Financing Documents,the business of the Company, the Company, the Company’s assets or its futureprospects.  No party is relying on anyunderstandings, agreements or representations other than those expresslycontained this Agreement, the Disclosure Schedule and the Exhibits attachedhereto, the Private Placement Memorandum, the SEC Filings and the FinancingDocuments.

 

**8.7.****         Amendments andWaivers. **No provision of thisAgreement may be waived or amended except in a written instrument signed by theCompany and the Purchasers holding a majority of the Shares.  No waiver of any default with respect to anyprovision, condition or requirement of this Agreement shall be deemed to be acontinuing waiver in the future or a waiver of any subsequent default or awaiver of any other provision, condition or requirement hereof, nor shall anydelay or omission of

 

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either party to exerciseany right hereunder in any manner impair the exercise of any such right.  No consideration shall be offered or paid toany Investor to amend or consent to a waiver or modification of any provisionof any Financing Document unless the same consideration is also offered to allInvestors who then hold Shares.

 

**8.8.****         Counterparts.**  This Agreement may be executed in severalcounterparts, each of which shall be deemed an original, but all of whichtogether shall constitute one and the same instrument.

 

**8.9.****         Captions.**  The captions of the sections, subsectionsand paragraphs of this Agreement have been added for convenience only and shallnot be deemed to be a part of this Agreement.

 

**8.10.****       Severability.**  Each provision of this Agreement shall beinterpreted in such manner as to validate and give effect thereto to thefullest lawful extent, but if any provision of this Agreement is determined bya court of competent jurisdiction to be invalid or unenforceable underapplicable law, such provision shall be ineffective only to the extent sodetermined and such invalidity or unenforceability shall not affect theremainder of such provision or the remaining provisions of this Agreement.

 

**8.11.****       Governing Law.**  This Agreement shall be governed by andinterpreted and construed in accordance with the laws of the State of New York;provided, however, that matters relating to the authorization, issuanceand enforceability of the terms of the Securities shall be governed andinterpreted and construed in accordance with the Nevada General CorporationLaw.  The Company irrevocably submits tothe exclusive jurisdiction of the state and federal courts located in the Stateof New York  for the purpose of anysuit, action, proceeding or judgment relating to or arising out of thisAgreement and the transactions contemplated hereby.  Service of process in connection with any such suit, action orproceeding may be served on each party hereto anywhere in the world by the samemethods as are specified for the giving of notices under this Agreement.  The Company irrevocably consents to thejurisdiction of any such court in any such suit, action or proceeding and tothe laying of venue in such court. The Company irrevocably waives any objectionto the laying of venue of any such suit, action or proceeding brought in suchcourts and irrevocably waives any claim that any such suit, action orproceeding brought in any such court has been brought in an inconvenientforum.  If either party shall commencean action to enforce any provisions of a Financing Document, then theprevailing party in such action shall be reimbursed by the other party for itsreasonable attorneys’ fees and other costs and expenses incurred with theinvestigation, preparation and prosecution of such action.

 

**8.12.****       Independent Nature ofPurchasers.  **The obligations of eachPurchaser under any Financing Document are several and not joint with theobligations of any other Purchaser, and no Purchaser shall be responsible inany way for the performance of the obligations of any other Purchaser under anyFinancing Document.  The decision ofeach Purchaser to purchase Securities pursuant to the Financing Documents hasbeen made by such Purchaser independently of any other Purchaser.  Nothing contained herein or in any FinancingDocument, and no action taken by any Purchaser pursuant thereto, shall bedeemed to constitute the Purchasers as a partnership, an association, a jointventure or any other kind of entity, or create a presumption that thePurchasers are in any way acting in concert or as a group with respect to suchobligations or the transactions contemplated by the Financing Documents.  Each Purchaser acknowledges that no otherPurchaser has acted as agent for such Purchaser in connection with making itsinvestment hereunder and that no Purchaser will be acting as agent of suchPurchaser in connection with monitoring its investment in the Securities orenforcing its rights under the Financing Documents.  Each Purchaser shall be entitled to independently protect andenforce its rights, including without limitation the rights arising out of thisAgreement or out of the other Financing Documents, and it shall not benecessary for any other Purchaser to be joined as an additional party in anyproceeding for

 

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such purpose.  The Company acknowledges that each of thePurchasers has been provided with the same Financing Documents for the purposeof closing a transaction with multiple Purchasers and not because it was requiredor requested to do so by any Purchaser.

 

## **8.13.**       Securities Laws Disclosure; Publicity.  By 9:00 a.m. (New York time) on thebusiness day following the execution of this Agreement, and by 9:00 a.m. (NewYork time) on each Closing Date, the Company shall issue press releasesdisclosing the transactions contemplated hereby and each Closing.  On the business day following the executionof this Agreement the Company will file a Current Report on Form 8-K disclosingthe material terms of the Financing Documents (and attach as exhibits theretothe Financing Documents), and on each Closing Date the Company will file anadditional Current Report on Form 8-K to disclose such Closing.  In addition, the Company will make suchother filings and notices in the manner and time required by the SEC and the NasdaqStock Market.  Notwithstanding theforegoing, the Company shall not publicly disclose the name of any Purchaser,or include the name of any Purchaser in any filing with the SEC (other than theRegistration Statements and any exhibits to filings made in respect of thistransaction in accordance with periodic filing requirements under the 1934 Act)or any regulatory agency or the Nasdaq Stock Market, without the prior writtenconsent of such Purchaser, except to the extent such disclosure is required bylaw or Nasdaq Stock Market regulations.

 

## **8.14.**       Remedies. In addition to being entitled to exercise all rights provided herein orgranted by law, including recovery of damages, each of the Investors and theCompany will be entitled to specific performance under the FinancingDocuments.  The parties agree thatmonetary damages may not be adequate compensation for any loss incurred byreason of any breach of obligations described in the foregoing sentence andhereby agrees to waive in any action for specific performance of any suchobligation the defense that a remedy at law would be adequate.

 

## **8.15.**       Payment Set Aside.  To the extent that theCompany makes a payment or payments to any Purchaser pursuant to any FinancingDocument or a Purchaser enforces or exercises its rights thereunder, and suchpayment or payments or the proceeds of such enforcement or exercise or any partthereof are subsequently invalidated, declared to be fraudulent orpreferential, set aside, recovered from, disgorged by or are required to berefunded, repaid or otherwise restored to the Company, a trustee, receiver orany other person under any law (including, without limitation, any bankruptcylaw, state or federal law, common law or equitable cause of action), then tothe extent of any such restoration the obligation or part thereof originallyintended to be satisfied shall be revived and continued in full force andeffect as if such payment had not been made or such enforcement or setoff hadnot occurred.

 

## **8.16.**       Limitation of Liability. Notwithstanding anything herein to the contrary, the Companyacknowledges and agrees that the liability of a Purchaser arising directly orindirectly, under any Financing Document of any and every nature whatsoevershall be satisfied solely out of the assets of such Purchaser, and that notrustee, officer, other investment vehicle or any other Affiliate of suchPurchaser or any investor, shareholder or holder of shares of beneficialinterest of such a Purchaser shall be personally liable for any liabilities ofsuch Purchaser.

 

**[Signature Pages Follow]**

 

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**IN WITNESS WHEREOF**,the parties have executed this Securities Purchase Agreement as of the day andyear first above written.

 
|   | **IMCOR Pharmaceutical Co.** |
|--------|------------------------------|
|   |                         |
|   | By:                          |   |   |
|   |                         | Taffy J. Williams,  Ph.D., President |   |
|   |                         |
|   | Notice Address:              | 6175 Lusk Boulevard |
|   |                         | San Diego, CA  92121 |
|        |                              |  |  |  |

 

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**IN WITNESS WHEREOF**,the parties have executed this Securities Purchase Agreement as of the day andyear first above written.

 
|   | **Purchaser:**      |
|--------|---------------------|
|   |                |   |
|   |                |   |
|   | By:                 |   |   |
|   |                | Name: |
|   |                | Title: |
|   |                |
|   | Investment Amount:  | $ |   |   |
|   |                |
|   | Address for Notice: |
|        |                     |  |  |  |  |  |  |

 

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**Schedule I**

 
| **Purchaser Name** |   | **Investment  Amount** |   | **Shares to  be Issued  at Initial Closing** |   | **Warrants  to be  Issued at Initial  Closing** |   | **Shares to  be Issued  at Second Closing** |   | **Warrants  to be  Issued at Second  Closing** |
|--------------------|--------|------------------------|--------|----------------------------------------------|--------|-------------------------------------------------|--------|---------------------------------------------|--------|------------------------------------------------|
|               |   |                   |   |                                         |   |                                            |   |                                        |   |                                           |

 

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