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                                                                     EXHIBIT 4.4

                          SECURITIES PURCHASE AGREEMENT

        This Securities Purchase Agreement (this "Agreement") is dated as of
January 21, 2004, by and among CardioGenesis Corporation, a California
corporation (the "Company"), and each of the purchasers identified on the
signature pages hereto (each a "Purchaser" and collectively the "Purchasers").

        WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule
506 promulgated thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company in the aggregate, shares of Common Stock and Warrants to
purchase shares of Common Stock as set forth herein. The maximum aggregate of
Subscription Amounts which the Company will accept is $2,700,000.

        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 agree
as follows:

                                    ARTICLE I.
                                   DEFINITIONS

        1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings indicated in this Section 1.1:

                "Action" shall have the meaning ascribed to such term in Section
        3.1(j).

               "Affiliate" means any Person that, directly or indirectly through
        one or more intermediaries, controls or is controlled by or is under
        common control with a Person as such terms are used in and construed
        under Rule 144.

               "Business Day" means any day except Saturday, Sunday and any day
        which shall be a federal legal holiday or a day on which banking
        institutions in the State of New York are authorized or required by law
        or other governmental action to close.

               "Closing" means the closing of the purchase and sale of the
        Shares and the Warrants pursuant to Section 2.1.

                "Closing Date" means the date of the Closing, which shall be the
        date hereof.

                "Closing Price" means on any particular date (a) the last
        reported closing bid price per share of Common Stock on such date on the
        Trading Market (as reported by Bloomberg L.P. at 4:15 PM (New York time)
        as the last reported closing bid price for regular session trading on
        such day), or (b) if there is no such price on such date, then the
        closing bid price on the Trading Market on the date nearest preceding
        such date (as reported by Bloomberg L.P. at 4:15 PM (New York time) as
        the closing bid price for regular session trading on such day), or (c)
        if the Common Stock is not then listed or


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        quoted on the Trading Market and if prices for the Common Stock are
        quoted on the OTC Bulletin Board then the last reported closing bid
        price per share of Common Stock on such date on the OTC Bulletin Board
        (as reported by Bloomberg L.P. at 4:15 PM (New York time) as the last
        reported closing bid price for regular session trading on such day), or
        (d) if there is no such price on such date, then the closing bid price
        on the OTC Bulletin Board on the date nearest preceding such date (as
        reported by Bloomberg L.P. at 4:15 PM (New York time) as the closing bid
        price for regular session trading on such day), or if the Common Stock
        is not then listed or quoted on the Trading Market or the OTC Bulletin
        Board and if prices for the Common Stock are then reported in the "pink
        sheets" published by the Pink Sheets LLC (formerly the National
        Quotation Bureau Incorporated) (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 (e) if the shares of
        Common Stock are not then publicly traded the fair market value of a
        share of Common Stock as determined by an appraiser selected in good
        faith by the Purchasers of a majority in interest of the Shares and
        reasonably acceptable to the Company.

               "Commission" means the Securities and Exchange Commission.

               "Common Stock" means the common stock of the Company, no par
        value per share, and any securities into which such common stock may
        hereafter be reclassified.

               "Common Stock Equivalents" means any securities of the Company or
        any of its Subsidiaries which would entitle the holder thereof to
        acquire at any time Common Stock, including without limitation, any
        debt, preferred stock, rights, options, warrants or other instrument
        that is at any time convertible into or exchangeable for, or otherwise
        entitles the holder thereof to receive, Common Stock.

               "Company Counsel" means Weil, Gotshal & Manges LLP.

                "Disclosure Schedules" means the Disclosure Schedules attached
        as Annex I hereto.

               "Effective Date" means the date that the Registration Statement
        is first declared effective by the Commission.

                "Exchange Act" means the Securities Exchange Act of 1934, as
        amended.

               "Intellectual Property Rights" shall have the meaning ascribed to
        such term in Section 3.1(o).

               "Liens" means all liens, charges, security interests,
        encumbrances, rights of first refusal and other restrictions.

               "Majority Purchasers" means the original Purchasers on the
        Closing Date holding, on the date of determination, at least a majority
        of the Shares then held by such Purchasers.

               "Material Adverse Effect" shall have the meaning ascribed to such
        term in Section 3.1(b).


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                "Material Permits" shall have the meaning ascribed to such term
        in Section 3.1(m).

               "Per Unit Purchase Price" equals $0.86, subject to adjustment for
        reverse and forward stock splits, stock dividends, stock combinations
        and other similar transactions of the Common Stock that occur after the
        date of this Agreement and before the Closing.

               "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.

               "Registration Statement" means a registration statement meeting
        the requirements set forth in the Registration Rights Agreement and
        covering the resale by the Purchasers of the Shares and the Warrant
        Shares.

               "Registration Rights Agreement" means the Registration Rights
        Agreement, dated as of the date of this Agreement, among the Company and
        each Purchaser, in the form of Exhibit A hereto.

               "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.

                "SEC Reports" shall have the meaning ascribed to such term in
        Section 3.1(h).

                "Securities" means the Shares, the Warrants and the Warrant
        Shares.

                "Securities Act" means the Securities Act of 1933, as amended.

                "Shares" means an aggregate of up to 3,139,535 shares of Common
        Stock, which are being issued and sold by the Company to the Purchasers
        at the Closing.

                "Subscription Amount" means, as to each Purchaser and the
        Closing, the amount set forth below such Purchaser's signature block on
        the signature page hereto, in United States dollars and in immediately
        available funds.

                "Subsidiary" means any Person in which the Company, directly or
        indirectly, owns capital stock or holds an equity or similar interest.

                "Trading Day" means (i) a day on which the Common Stock is
        traded on a Trading Market, or (ii) if the Common Stock is not listed on
        a Trading Market, a day on which the Common Stock is traded on the
        over-the-counter market, as reported by the OTC Bulletin Board, or (iii)
        if the Common Stock is not traded on a Trading Market or quoted on the
        OTC Bulletin Board, a day on which the Common Stock is quoted in the
        "pink sheets" published by the Pink Sheets LLC (formerly the National
        Quotation Bureau Incorporated) (or any similar organization or agency
        succeeding to its functions of reporting prices); provided, that in the
        event that the Common Stock is not listed or


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        quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day
        shall mean a Business Day.

                "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 American Stock Exchange, the New York Stock Exchange, the
        Nasdaq National Market or the Nasdaq SmallCap Market.

                "Transaction Documents" means this Agreement, the Registration
        Rights Agreement, the A Warrants, the B Warrants and any other documents
        or agreements executed in connection with the transactions contemplated
        hereunder.

                "Unit" means one (1) Share, one (1) A Warrant to purchase one
        share of Common Stock and one half (1/2) B Warrant to purchase one share
        of Common Stock.

                "A Warrant" means one (1) Common Stock purchase warrant, in the
        form of Exhibit B, issuable to the Purchasers at Closing, which warrant
        shall be exercisable immediately and have an exercise price equal to
        $1.37 and a term of exercise of 5 years.

                "B Warrant" means one (1) Common Stock purchase warrant, in the
        form of Exhibit C, issuable to the Purchasers at Closing, which warrant
        shall be exercisable upon the Registration Statement becoming effective
        and available for sale of Registrable Securities as defined in the
        Registration Rights Agreement and have an exercise price equal to $1.00
        and a term of exercise ending on the 129th Trading Day upon which the
        Registration Statement has been effective and available for sale of such
        Registrable Securities.

                "Warrant" means an A Warrant or a B Warrant.

                "Warrants" means an aggregate of up to 3,139,535 A Warrants and
        1,569,768 B Warrants.

                "Warrant Shares" means the shares of Common Stock issuable upon
        exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

        2.1 Closing. At the Closing, each Purchaser shall purchase, severally
and not jointly, and the Company shall issue and sell, to each Purchaser such
number of Units set forth opposite such Purchaser's name on Schedule A hereto at
the Per Unit Purchase Price. Upon satisfaction of the conditions set forth in
Section 2.2, the Closing shall occur at the offices of the Company, or such
other location as the parties shall mutually agree. Notwithstanding the
foregoing, in no event will the Closing occur unless and until the Company has
received an aggregate Subscription Amount of $2,700,000 in accordance with
Section 2.2(b)(ii).

                2.2 Closing Conditions. (a) At the Closing the Company shall
        deliver or cause to be delivered to each Purchaser (except as otherwise
        provided below):


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                        (i) this Agreement duly executed by the Company;

                        (ii) one or more stock certificates, registered in the
                name of such Purchaser free and clear of all restrictive and
                other legends (except as expressly provided in Section 4.1(b)
                hereof), evidencing such number of Shares equal to the number
                Units set forth opposite such Purchaser's name on Schedule A
                hereto, registered in the name of such Purchaser;

                        (iii) an A Warrant, registered in the name of such
                Purchaser, pursuant to which such Purchaser shall have the right
                to acquire up to the number of shares of Common Stock equal to
                the number of Units set forth opposite such Purchaser's name on
                Schedule A hereto;

                        (iv) a B Warrant , registered in the name of such
                Purchaser, pursuant to which such Purchaser shall have the right
                to acquire up to one half of the number of shares of Common
                Stock equal to the number of Units set forth opposite such
                Purchaser's name on Schedule A hereto;

                        (v) the Registration Rights Agreement duly executed by
                the Company;

                        (vi) a legal opinion of Company Counsel, in
                substantially the form of Exhibit D attached hereto; and

                        (vii) A copy of an amendment to the Rights Agreement
                dated as of August 27, 2001, between the Company and EquiServe
                Trust Company, N.A. as Rights Agent, as amended (the "Rights
                Plan") excluding the Purchasers from the definition of Acquiring
                Person under the Rights Plan, in substantially the form of
                Exhibit E attached hereto.

                (b) At the Closing each Purchaser shall deliver or cause to be
        delivered to the Company the following:

                        (i) this Agreement duly executed by such Purchaser;

                        (ii) such Purchaser's Subscription Amount by wire
                transfer to the account of the Company as provided to the
                Purchasers in writing on the Company's letterhead prior to the
                Closing Date; and

                        (iii) the Registration Rights Agreement duly executed by
                such Purchaser.

                (c) It is a closing condition of each party's obligations to
        close under this agreement that all representations and warranties of
        the other parties contained herein shall remain true and correct as of
        the Closing Date (except for representations and warranties that speak
        as of a specific date, which representations and warranties must be
        correct as of such date), and that each other party shall have performed
        and complied in all material respects with the covenants and conditions
        required by this Agreement to be performed or complied with by the other
        party at or prior to the Closing.


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                (d) It is a condition of each Purchaser's obligation to close
        under this agreement that as of the Closing Date, there shall have been
        no Material Adverse Effect with respect to the Company since the date
        hereof.

                (e) It is a condition of each Purchaser's obligation to close
        under this agreement that from the date hereof to the Closing Date,
        trading in the Common Stock shall not have been suspended by the
        Commission, and, at no time prior to the Closing Date, shall trading in
        securities generally as reported by Bloomberg Financial Markets have
        been suspended or limited, nor shall minimum prices have been
        established on securities whose trades are reported by such service, or
        on any Trading Market, nor shall a banking moratorium have been declared
        either by the United States or New York State authorities.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

        3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules delivered
concurrently herewith, the Company hereby makes the following representations
and warranties as of the date hereof and as of the Closing Date to each
Purchaser:

                (a) Subsidiaries. The Company has no direct or indirect
        Subsidiaries other than those listed on Schedule 3.1(a). The Company
        owns, directly or indirectly, all of the capital stock or comparable
        equity interests of each Subsidiary free and clear of any Liens, and all
        the issued and outstanding shares of capital stock or comparable equity
        interest of each Subsidiary are validly issued and are fully paid,
        non-assessable and free of preemptive and similar rights.

                (b) Organization and Qualification. Each of the Company and its
        Subsidiaries is an entity duly incorporated or otherwise organized,
        validly existing and in good standing under the laws of the jurisdiction
        of its incorporation or organization (as applicable), with the requisite
        corporate power and authority to own and use its properties and assets
        and to carry on its business as currently conducted. Neither the Company
        nor any Subsidiary is in violation of any of the provisions of its
        respective certificate or articles of incorporation, bylaws or other
        organizational or charter documents. Each of the Company and its
        Subsidiaries is duly qualified to conduct business and is in good
        standing as a foreign corporation or other entity in each jurisdiction
        in which the nature of the business conducted or property owned by it
        makes such qualification necessary, except where the failure to be so
        qualified or in good standing, as the case may be, would not have or
        reasonably be expected to result in (i) a material adverse effect on the
        legality, validity or enforceability of any Transaction Document, (ii) a
        material adverse effect on the results of operations, assets, prospects,
        business or condition (financial or otherwise) of the Company and its
        Subsidiaries, taken as a whole, or (iii) adversely impair the Company's
        ability to perform fully on a timely basis its obligations under any
        Transaction Document (any of (i), (ii) or (iii), a "Material Adverse
        Effect").

                (c) Authorization; Enforcement. The Company has the requisite
        corporate power and authority to enter into and to consummate the
        transactions contemplated by each of the Transaction Documents and
        otherwise to carry out its obligations hereunder and thereunder. The
        execution and delivery of each of the Transaction Documents by the


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        Company and the consummation by it of the transactions contemplated
        hereby and thereby have been duly authorized by all necessary corporate
        action on the part of the Company and no further consent or action is
        required by the Company, its Board of Directors or its stockholders.
        Each Transaction Document has been (or upon delivery will have been)
        duly executed by the Company and, when delivered in accordance with the
        terms hereof, will constitute the valid and binding obligation of the
        Company, enforceable against the Company in accordance with its terms,
        subject to the effect of any applicable bankruptcy, insolvency,
        reorganization, or moratorium or similar laws affecting the rights of
        creditors generally and the application of general principles of equity.

                (d) No Conflicts. The execution, delivery and performance of the
        Transaction Documents by the Company and the consummation by the Company
        of the transactions contemplated hereby and thereby do not and will not
        (i) conflict with or violate any provision of the Company's or any
        Subsidiary's certificate or articles of incorporation, bylaws or other
        organizational or charter documents, or (ii) conflict with, or
        constitute a default (or an event that with notice or lapse of time or
        both would become a default) under, or give to others any rights of
        termination, amendment, acceleration or cancellation (with or without
        notice, lapse of time or both) of, any agreement, credit facility, debt
        or other instrument (evidencing a Company or Subsidiary debt) or other
        understanding to which the Company or any Subsidiary is a party or by
        which any property or asset of the Company or any Subsidiary is bound or
        affected, or (iii) result in a violation of any law, rule, regulation,
        order, judgment, injunction, decree or other restriction of any court or
        governmental authority to which the Company or a Subsidiary is subject
        (including federal and state securities laws and regulations), or by
        which any property or asset of the Company or a Subsidiary is bound or
        affected; except in the case of each of clauses (ii) and (iii), such as
        would not have or reasonably be expected to result in a Material Adverse
        Effect.

                (e) Filings, Consents and Approvals. The Company is not required
        to obtain any consent, waiver, authorization or order of, give any
        notice to, or make any filing or registration with, any court or other
        federal, state, local or other governmental authority any regulatory or
        self-regulatory agency or any or other Person in connection with the
        execution, delivery and performance by the Company of the Transaction
        Documents, other than (a) the filing with the Commission of the
        Registration Statement and a Form D and (b) applicable Blue Sky filings.

                (f) Issuance of the Securities. The Securities are duly
        authorized and, the Shares and Warrant Shares, when issued and paid for
        in accordance with the Transaction Documents, will be duly and validly
        issued, fully paid and nonassessable, free and clear of all Liens and
        shall not be subject to preemptive rights or similar rights of
        stockholders. 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.

                (g) Capitalization. The authorized capital stock of the Company
        consists of (a) fifty million (50,000,000) shares of Common Stock, no
        par value, of which, as of January 16, 2004, thirty-eight million
        ninety-eight thousand six hundred forty-eight (38,098,648) shares were
        outstanding and the related rights under the Rights Plan, and (b) five
        million


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        (5,000,000) shares of preferred stock, none of which shares are
        currently outstanding. Except as disclosed in the SEC Reports there are
        no outstanding warrants, options, convertible securities or other
        rights, agreements or arrangements of any character under which the
        Company is or may be obligated to issue any equity securities of any
        kind (whether or not presently convertible into or exercisable or
        exchangeable for shares of capital stock of the Company). All
        outstanding shares of capital stock are duly authorized, validly issued,
        fully paid and nonassessable and have been issued in compliance with all
        applicable securities laws. Except as disclosed in Schedule 3.1(g),
        there are no outstanding options, warrants, script rights to subscribe
        to, calls or commitments of any character whatsoever relating to, or
        securities, rights or obligations convertible into or exercisable or
        exchangeable for, or giving any Person any right to subscribe for or
        acquire, any shares of Common Stock, or contracts, commitments,
        understandings or arrangements by which the Company is or may become
        bound to issue additional shares of Common Stock, or securities or
        rights convertible or exchangeable into shares of Common Stock. Except
        as set forth on Schedule 3.1(g), there are no anti-dilution or price
        adjustment provisions contained in any security issued by the Company
        (or in any agreement providing rights to security holders) and the issue
        and sale of the Securities will not obligate the Company to issue shares
        of Common Stock or other securities to any Person (other than the
        Purchasers) and will not result in a right of any holder of Company
        securities to adjust the exercise, conversion, exchange or reset price
        under such securities. To the knowledge of the Company, except as
        specifically disclosed in Schedule 3.1(g), no Person or group of related
        Persons beneficially owns (as determined pursuant to Rule 13d-3 under
        the Exchange Act), or has the right to acquire, by agreement with or by
        obligation binding upon the Company, beneficial ownership of in excess
        of 5% of the outstanding Common Stock, ignoring for such purposes any
        limitation on the number of shares of Common Stock that may be owned at
        any single time.

                (h) SEC Reports; Financial Statements. The Company has filed all
        reports required to be filed by it under the Securities Act and the
        Exchange Act, including pursuant to Section 13(a) or 15(d) of the
        Exchange Act, for the two years preceding the date hereof (or such
        shorter period as the Company was required by law to file such material)
        (the foregoing materials, including the exhibits thereto (together with
        any materials filed by the Company under the Exchange Act, whether or
        not required), being collectively referred to herein as the "SEC
        Reports" and, together with this Agreement and the Disclosure Schedules
        to this Agreement, the "Disclosure Materials") on a timely basis or has
        received a valid extension of such time of filing and has filed any such
        SEC Reports prior to the expiration of any such extension. As of their
        respective dates, the SEC Reports complied in all material respects with
        the requirements of the Securities Act and the Exchange Act and the
        rules and regulations of the Commission promulgated thereunder, as
        applicable, and none of the SEC Reports, when filed (and if amended or
        superceded by a filing prior to the date of this Agreement, then on the
        date of giving effect to such amending or superceding filing), contained
        any untrue statement of a material fact or omitted to state a material
        fact required to be stated therein or necessary in order to make the
        statements therein, in the light of the circumstances under which they
        were made, not misleading. The financial statements of the Company
        included in the SEC Reports comply in all material respects with
        applicable accounting requirements and the rules and regulations of the
        Commission with respect thereto as in effect at the


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        time of filing. Such financial statements have been prepared in
        accordance with United States generally accepted accounting principles
        applied on a consistent basis during the periods involved ("GAAP"),
        except as may be otherwise specified in such financial statements or the
        notes thereto and except that unaudited financial statements may not
        contain all footnotes required by GAAP or may be condensed or summary
        statements, and such financial statements fairly present in all material
        respects the financial position of the Company and its consolidated
        subsidiaries as of and for the dates thereof and the results of
        operations and cash flows for the periods then ended, subject, in the
        case of unaudited statements, to normal, immaterial, year-end audit
        adjustments. All material agreements to which the Company is a party or
        to which the property or assets of the Company are subject are included
        as part of the SEC Reports.

                (i) Material Changes. Since the date of the latest audited
        financial statements included within the SEC Reports, except as
        disclosed in the SEC Reports, (i) there has been no event, occurrence or
        development that has had or that could reasonably be expected to result
        in a Material Adverse Effect, (ii) the Company has not incurred any
        liabilities (contingent or otherwise) other than (A) trade payables and
        accrued expenses incurred in the ordinary course of business consistent
        with past practice and (B) liabilities not required to be reflected in
        the Company's financial statements pursuant to GAAP or required to be
        disclosed in filings made with the Commission, (iii) the Company has not
        altered its method of accounting or the identity of its auditors, (iv)
        the Company has not declared or made any dividend or distribution of
        cash or other property to its stockholders or purchased, redeemed or
        made any agreements to purchase or redeem any shares of its capital
        stock and (v) the Company has not issued any equity securities to any
        officer, director or Affiliate, except pursuant to existing Company
        stock option plans. The Company does not have pending before the
        Commission any request for confidential treatment of information.

                (j) Litigation. Except as disclosed in the SEC Reports, there is
        no action, suit, inquiry, notice of violation, proceeding or
        investigation pending or, to the knowledge of the Company, threatened
        against or affecting the Company, any Subsidiary or any of their
        respective properties before or by any court, arbitrator, governmental
        or administrative agency or regulatory or self-regulatory authority
        (federal, state, county, local or foreign) (collectively, an "Action")
        which (i) adversely affects or challenges the legality, validity or
        enforceability of any of the Transaction Documents or the Securities or
        (ii) could, if there were an unfavorable decision, have or reasonably be
        expected to result in a Material Adverse Effect. Neither the Company nor
        any Subsidiary, nor, to the knowledge of the Company, any director or
        officer thereof, is or has been the subject of any Action involving a
        claim of violation of or liability under federal or state securities
        laws or a claim of breach of fiduciary duty. There has not been, and to
        the knowledge of the Company, there is not pending or contemplated, any
        investigation by the Commission involving the Company or any current or
        former director or officer of the Company relating to such individual's
        employment by, or service to, the Company. The Commission has not issued
        any stop order or other order suspending the effectiveness of any
        registration statement filed by the Company or any Subsidiary under the
        Exchange Act or the Securities Act.


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                (k) Labor Relations. No material labor dispute exists or, to the
        knowledge of the Company, is imminent with respect to any of the
        employees of the Company which could reasonably be expected to result in
        a Material Adverse Effect.

                (l) Compliance. Except as disclosed in the SEC Reports, neither
        the Company nor any Subsidiary (i) is in default under or in violation
        of (and no event has occurred that, with notice or lapse of time or
        both, would result in a default by the Company or any Subsidiary under),
        nor has the Company or any Subsidiary received notice of a claim that it
        is in default under or that it is in violation of, any indenture, loan
        or credit agreement or any other agreement or instrument to which it is
        a party or by which it or any of its properties is bound (whether or not
        such default or violation has been waived), (ii) is in violation of any
        order of any court, arbitrator or governmental body, or (iii) is or has
        been in violation of any statute, rule or regulation of any governmental
        authority, including without limitation all foreign, federal, state and
        local laws applicable to its business, except in the case of clauses
        (i), (ii) and (iii) as would not have or reasonably be expected to
        result in a Material Adverse Effect.

                (m) Regulatory Permits. The Company and its Subsidiaries possess
        all certificates, authorizations and permits issued by the appropriate
        federal, state, local or foreign regulatory or self-regulatory
        authorities necessary to conduct their respective businesses as
        described in the SEC Reports, except where the failure to possess such
        permits would not have or reasonably be expected to result in a Material
        Adverse Effect ("Material Permits"), and neither the Company nor any
        Subsidiary has received any notice of proceedings relating to the
        revocation or modification of any Material Permit.

                (n) Title to Assets. The Company and its Subsidiaries have good
        and marketable title in fee simple to all real property owned by them
        and good and marketable title in all personal property owned by them, in
        each case free and clear of all Liens, except for such Liens as do not
        materially affect the value of such property and do not materially
        interfere with the use made or proposed to be made of such property by
        the Company and its Subsidiaries and Liens for the payment of federal,
        state or other taxes, the payment of which is neither delinquent nor
        subject to penalties. To the knowledge of the Company, all real property
        and facilities held under lease by the Company and its Subsidiaries are
        held by them under valid, subsisting and enforceable leases with which
        the Company and its Subsidiaries are in material compliance.

                (o) Patents and Trademarks. The Company and its Subsidiaries
        have, or have rights to use, all patents, patent applications,
        trademarks, trademark applications, service marks, trade names,
        copyrights, licenses and other similar rights that are necessary or
        material for use in connection with their respective businesses as
        described in the SEC Reports and which the failure to so have could have
        or reasonably be expected to result in a Material Adverse Effect
        (collectively, the "Intellectual Property Rights"). Neither the Company
        nor any Subsidiary has received a written notice that the Intellectual
        Property Rights used by the Company or any Subsidiary violate or
        infringe the rights of any Person. To the knowledge of the Company, all
        such Intellectual Property Rights are enforceable and there is no
        existing infringement by another Person of any of the Intellectual
        Property Rights.


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<PAGE>

                (p) Insurance. The Company and its Subsidiaries are insured by
        insurers of recognized financial responsibility against such losses and
        risks and in such amounts as are prudent and customary in the businesses
        in which the Company and its Subsidiaries are engaged. Neither the
        Company nor any of its Subsidiaries has any reason to believe that it
        will not be able to renew its existing insurance coverage as and when
        such coverage expires or to obtain similar coverage from similar
        insurers.

                (q) Transactions with Affiliates and Employees. Except as set
        forth in the SEC Reports, none of the officers or directors of the
        Company and, to the knowledge of the Company, none of the employees of
        the Company is presently a party to any transaction with the Company or
        any Subsidiary (other than for services as employees, officers and
        directors), including, without limitation, any contract, agreement or
        other arrangement providing for the furnishing of services to or by,
        providing for rental of real or personal property to or from, or
        otherwise requiring payments to or from any officer, director or such
        employee or, to the knowledge of the Company, any entity in which any
        officer, director, or any such employee has a substantial interest or is
        an officer, director, trustee or partner.

                (r) Internal Accounting Controls. The Company and its
        Subsidiaries maintain a system of internal accounting controls
        sufficient to provide reasonable assurance that (i) transactions are
        executed in accordance with management's general or specific
        authorizations, (ii) transactions are recorded as necessary to permit
        preparation of financial statements in conformity with GAAP and to
        maintain asset accountability, (iii) access to assets is permitted only
        in accordance with management's general or specific authorization, and
        (iv) the recorded accountability for assets is compared with the
        existing assets at reasonable intervals and appropriate action is taken
        with respect to any differences. The Company has established disclosure
        controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
        15d-15(e)) for the Company and designed such disclosure controls and
        procedures to ensure that material information relating to the Company,
        including its subsidiaries, is timely made known to the certifying
        officers by others within those entities, particularly during the period
        in which the Company's Form 10-K or 10-Q, as the case may be, is being
        prepared. The Company's certifying officers have evaluated the
        effectiveness of the Company's controls and procedures as of September
        30, 2003 (such date, the "Evaluation Date"). The Company presented in
        its Form 10-Q for the quarter ended September 30, 2003 the conclusions
        of the certifying officers about the effectiveness of the disclosure
        controls and procedures based on their evaluations as of the Evaluation
        Date. Since the Evaluation Date, there have been no significant changes
        in the Company's internal controls (as such term is defined in Item
        307(b) of Regulation S-K under the Exchange Act) or, to the knowledge of
        the Company, in any factors that could significantly affect the
        Company's internal controls.

                (s) Certain Fees. Except for the fees described on Schedule
        3.1(s), 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 this Agreement. 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 this Agreement.


                                       11
<PAGE>

                (t) Private Placement. Assuming the accuracy of the Purchasers
        representations and warranties set forth in Section 3.2, no registration
        under the Securities Act is required for the offer and sale of the
        Securities by the Company to the Purchasers as contemplated hereby. The
        issuance and sale of the Securities hereunder does not contravene the
        rules and regulations of the Trading Market. Neither the Company nor any
        Person acting on the Company's behalf has sold or offered to sell or
        solicited any offer to buy the Securities by means of any form of
        general solicitation or advertising.

                (u) Investment Company. The Company is not, and is not an
        Affiliate of, an "investment company" within the meaning of the
        Investment Company Act of 1940, as amended.

                (v) Registration Rights. Except as described on Schedule 3.1(v),
        no Person has any right to cause the Company to effect the registration
        under the Securities Act of any securities of the Company.

                (w) Listing and Maintenance Requirements. Except as described on
        Schedule 3.1(w), the Company has not, in the two years preceding the
        date hereof, received notice from any Trading Market on which the Common
        Stock is or has been listed or quoted or the OTC Bulletin Board to the
        effect that the Company is not in compliance with the listing or
        maintenance requirements of such Trading Market or the OTC Bulletin
        Board. The Company is, and has no reason to believe that it will not in
        the foreseeable future continue to be, in compliance with all such
        listing and maintenance requirements.

                (x) Application of Takeover Protections. The Company and its
        Board of Directors have taken all necessary action, if any, in order to
        render inapplicable any control share acquisition, business combination,
        poison pill (including any distribution under a rights agreement) or
        other similar anti-takeover provision under the Company's Articles of
        Incorporation or the laws of its state of incorporation that is or could
        become applicable to the Purchasers as a result of the Purchasers and
        the Company fulfilling their obligations or exercising their rights
        under the Transaction Documents, including, without limitation, the
        Company's issuance of the Securities and the Purchasers' ownership of
        the Securities.

                (y) No Integrated Offering. Neither the Company, nor any of its
        affiliates, nor any Person acting on its or their behalf has, directly
        or indirectly, made any offers or sales of any security or solicited any
        offers to buy any security, under circumstances that would cause this
        offering of the Securities to be integrated with prior offerings by the
        Company for purposes of the Securities Act or any applicable shareholder
        approval provisions, including, without limitation, under the rules and
        regulations of any exchange or automated quotation system on which any
        of the securities of the Company are listed or designated.

                (z) Solvency. Based on the financial condition of the Company as
        of the Closing Date, (i) the Company's fair saleable value of its assets
        exceeds the amount that will be required to be paid on or in respect of
        the Company's existing debts and other liabilities (including known
        contingent liabilities) as they mature; (ii) the Company's assets do not
        constitute unreasonably small capital to carry on its business for the
        current fiscal year as now conducted and as proposed to be conducted
        including its capital needs taking into


                                       12
<PAGE>

        account the particular capital requirements of the business conducted by
        the Company, and projected capital requirements and capital availability
        thereof, and including the anticipated proceeds of the sale of the
        Securities; and (iii) the current cash flow of the Company, together
        with the proceeds the Company would receive, were it to liquidate all of
        its assets, after taking into account all anticipated uses of the cash,
        would be sufficient to pay all amounts on or in respect of its debt when
        such amounts are required to be paid. The Company does not intend to
        incur debts beyond its ability to pay such debts as they mature (taking
        into account the timing and amounts of cash to be payable on or in
        respect of its debt).

                (aa) Acknowledgment Regarding Purchasers' Purchase of Company
        Securities. The Company acknowledges and agrees that each of the
        Purchasers is acting solely in the capacity of an arm's length purchaser
        with respect to this Agreement and the transactions contemplated hereby.
        The Company further acknowledges that no Purchaser is acting as a
        financial advisor or fiduciary of the Company or any other Purchaser (or
        in any similar capacity) with respect to the Transaction Documents and
        the transactions contemplated hereby and thereby and any advice given by
        any Purchaser or any of their respective representatives or agents in
        connection with the Transaction Document and the transactions
        contemplated hereby and thereby is merely incidental to such Purchaser's
        purchase of the Securities. The Company further represents to each
        Purchaser that the Company's decision to enter into the Transaction
        Documents has been based solely on the independent evaluation of the
        transactions contemplated hereby by the Company and its representatives.

                (bb) Questionable Payments. Neither the Company nor, to the
        knowledge of the Company, any of its current or former stockholders,
        directors, officers, employees, agents or other persons on behalf of the
        Company or any of its Subsidiaries, has on behalf of the Company or any
        of its Subsidiaries or in connection with their businesses: (a) used any
        corporate funds for unlawful contributions, gifts, entertainment or
        other unlawful expenses relating to political activity; (b) made any
        direct or indirect unlawful payments to any governmental officials or
        employees form corporate funds; (c) established or maintained any
        unlawful or unrecorded fund of corporate monies or other assets; (d)
        made any false or fictitious entries on the books and records of the
        Company; or (e) made any unlawful bribe, rebate, payoff, influence
        payment, kickback or other unlawful payment of any nature.

                (cc) Disclosure. The Company confirms that neither the Company
        nor any other Person acting on its behalf has provided any of the
        Purchasers or their agents or counsel with any information that
        constitutes or might constitute material, non-public information. The
        Company understands and confirms that the Purchasers will rely on the
        foregoing representations and covenants in effecting transactions in
        securities of the Company. All disclosure provided to the Purchasers
        regarding the Company, its business and the transactions contemplated
        hereby, including the Disclosure Schedules to this Agreement, furnished
        by or on behalf of the Company is true and correct and does not contain
        any untrue statement of a material fact or omit to state any material
        fact necessary in order to make the statements made therein, in the
        light of the circumstances under which they were made, not misleading.
        No event or circumstance has occurred or information exists with respect
        to the Company, its Subsidiaries or their respective


                                       13
<PAGE>

        businesses, properties, prospects, operations or condition (financial or
        otherwise), which, under applicable law, rule or regulation, requires
        public disclosure or announcement by the Company but which has not been
        so publicly announced or disclosed.

                (dd) Registration Statement. There exist no facts or
        circumstances that would prohibit or delay the preparation and filing of
        a registration statement with respect to the Registrable Securities (as
        defined in the Registration Rights Agreement). The Company has no basis
        to believe that its past or present independent public auditors will
        withhold their consent to the inclusion, or incorporation by reference,
        of their audit opinion concerning the Company's financial statements
        which will be included in the Registration Statement required to be
        filed pursuant to the Registration Rights Agreement.

        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 the Closing Date to the Company as follows:

                (a) Organization; Authority. Such Purchaser is 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 Documents and otherwise to
        carry out its obligations thereunder. 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 Document
        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 accordance with its terms.

                (b) Purchase for Own Account. Such Purchaser is acquiring the
        Securities as principal for its own account and not with a view to or
        for distributing or reselling such Securities or any part thereof,
        without prejudice, however, to such Purchaser's right, subject to the
        provisions of this Agreement, at all times to sell or otherwise dispose
        of all or any part of such Securities pursuant to an effective
        registration statement under the Securities Act or under an exemption
        from such registration and in compliance with applicable federal and
        state securities laws. Nothing contained herein shall be deemed a
        representation or warranty by such Purchaser to hold Securities for any
        period of time. Such Purchaser is acquiring the Securities hereunder in
        the ordinary course of its business. Such Purchaser does not have any
        agreement or understanding, directly or indirectly, with any Person to
        distribute any of the Securities.

                (c) Purchaser Status. At the time such Purchaser was offered the
        Securities, it was, and at the date hereof it is an "accredited
        investor" as defined in Rule 501(a) under the Securities Act.

                (d) 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


                                       14
<PAGE>

        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.

                (e) Reliance on Exemptions. Such Purchaser understands that the
        Securities are being offered and sold to it in reliance upon specific
        exemptions from the registration requirements of United States federal
        and state securities laws and that the Company is relying upon the truth
        and accuracy of, and the Purchaser's compliance with, the
        representations, warranties, agreements, acknowledgments and
        understandings of the Purchaser set forth herein in order to determine
        the availability of such exemptions and the eligibility of the Purchaser
        to acquire the Securities.

                (f) Information. Such Purchaser and its advisors, if any, have
        been furnished with all materials relating to the business, finances and
        operations of the Company, and materials relating to the offer and sale
        of the Securities, that have been requested by the Purchaser or its
        advisors, if any. The Purchaser and its advisors, if any, have been
        afforded the opportunity to ask questions of the Company. The Purchaser
        acknowledges and understands that its investment in the Securities
        involves a significant degree of risk.

                (g) Governmental Review. Such Purchaser understands that no
        United States federal or state agency or any other government or
        governmental agency has passed upon or made any recommendation or
        endorsement of the Securities or an investment therein.

                (h) Residency. Such Purchaser is a resident of (or, if an
        entity, has its principal place of business in) the jurisdiction set
        forth immediately below such Purchaser's name on the signature pages
        hereto.

                (i) Certain Fees. The Company shall have no obligation with
        respect to any brokerage or finder's fees or commissions that may be due
        from such Purchaser in connection with the transactions contemplated by
        this Agreement.

        The Company acknowledges and agrees that each Purchaser does not make
and has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
Section 3.2 and that the representations set forth in this Section 3.2(b)
through Section 3.2(h) are made solely for the purpose of permitting the Company
to make a determination that the offer and sale of the Units pursuant to this
Agreement comply with applicable U.S. federal and state securities laws and not
for any other purpose.

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

        4.1 Transfer Restrictions. (a) The Securities may only be disposed of
        pursuant to an effective registration statement under the Securities Act
        or pursuant to an available exemption from the registration requirements
        of the Securities Act, and in compliance with any applicable state
        securities laws. In connection with any transfer of Securities other
        than pursuant to an effective registration statement or pursuant to Rule
        144(k), to the Company, to an Affiliate of a Purchaser or in connection
        with a pledge as contemplated in Section 4.1(b), the Company may require
        the transferor thereof to provide to the Company an opinion of counsel
        selected by the transferor, the form and substance customary for
        opinions of counsel in comparable transactions, to the effect that


                                       15
<PAGE>

        such transfer does not require registration of such transferred
        Securities under the Securities Act. The Company hereby consents to and
        agrees to register on the books of the Company and with its transfer
        agent, without any such legal opinion (unless otherwise required by its
        transfer agent), any transfer of Securities by a Purchaser to an
        Affiliate of such Purchaser, provided that the transferee agrees to be
        bound by all of the applicable provisions of the Transaction Documents,
        including the representations of the Purchaser, and certifies to the
        Company that it is an "accredited investor" as defined in Rule 501(a)
        under the Securities Act.

                (b) The Purchasers agree to the imprinting, so long as is
        required by this Section 4.1(b), of a legend on any of the Securities in
        the following form:

                THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES
                AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
                STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
                SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
                ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
                EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
                PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
                SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
                NOTWITHSTANDING THE FOREGOING, THESE SECURITIES MAY BE PLEDGED
                IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
                FINANCING ARRANGEMENT SECURED BY THESE SECURITIES.

                The Company acknowledges and agrees that a Purchaser may from
        time to time pledge or grant a security interest in some or all of the
        Securities in connection with a bona fide margin agreement or other loan
        or financing agreement secured by the Securities and, if required under
        the terms of such arrangement, such Purchaser may transfer pledged or
        secured Securities to the pledgees or secured parties. Such a pledge or
        transfer would not be subject to approval of the Company and no legal
        opinion of legal counsel of the pledgee, secured party or pledgor shall
        be required in connection therewith. Further, no notice shall be
        required of such pledge or transfer. At the applicable Purchaser's
        expense, the Company will execute and deliver such reasonable
        documentation as a pledgee or secured party of Securities may reasonably
        request in connection with a pledge or transfer of the Securities,
        including the preparation and filing of any required prospectus
        supplement under Rule 424(b)(3) under the Securities Act or other
        applicable provision of the Securities Act to appropriately amend the
        list of selling stockholders thereunder.

                (c) Certificates evidencing the Shares and Warrant Shares shall
        not contain any legend (including the legend set forth in Section
        4.1(b)), and the Company shall remove any existing legend and issue
        shares via DWAC (if available) if requested by any Purchaser (i)
        following any sale of such Shares or Warrant Shares pursuant to Rule
        144, or (ii) if such Shares or Warrant Shares are eligible for sale
        under Rule 144(k), or (iii) if such legend is not required under
        applicable requirements of the Securities Act (including judicial
        interpretations and pronouncements issued by the Staff of the
        Commission) or


                                       16
<PAGE>

        applicable State law. The Company agrees that at such time as such
        legend is no longer required under this Section 4.1(c), it will, no
        later than three Business Days following the delivery by a Purchaser to
        the Company or the Company's transfer agent of a certificate
        representing Shares or Warrant Shares, as the case may be, issued with a
        restrictive legend, deliver or cause to be delivered to such Purchaser a
        certificate representing such Securities that is free from all
        restrictive and other legends. The Company may not make any notation on
        its records or give instructions to any transfer agent of the Company
        that enlarge the restrictions on transfer set forth in this Section 4.1.

                (d) In addition to such Purchaser's other available remedies,
        the Company shall pay to a Purchaser, in cash, as liquidated damages and
        not as a penalty, for each $1,000 of Shares or Warrant Shares submitted
        pursuant to Section 4.1(c)(based on the Closing Price of the Common
        Stock on the date such Securities are received by the Company's transfer
        agent) subject to Section 4.1(c), $10 per Trading Day (increasing to $20
        per Trading Day ten (10) Trading Days after such damages have begun to
        accrue) for each Trading Day after such third Business Day until the
        certificates free from all restrictive and other legends are delivered.
        Nothing herein shall limit such Purchaser's right to pursue actual
        damages for the Company's failure to deliver certificates representing
        any Securities as required by the Transaction Documents, and such
        Purchaser shall have the right to pursue all remedies available to it at
        law or in equity including, without limitation, a decree of specific
        performance and/or injunctive relief.

        4.2 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. Upon the request
of any such holder of Securities, the Company shall deliver to such holder a
written certification of a duly authorized officer as to whether it has complied
with the preceding sentence. As long as any Purchaser owns 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, all to the
extent required from time to time to enable such Person to sell such Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144.

        4.3 Integration. The Company shall not, and shall ensure that no
Affiliate thereof shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.

        4.4 Subsequent Placements

                (a) From the date hereof until 90 Trading Days after the
        Effective Date, the Company will not, directly or indirectly, offer,
        sell, grant any option to purchase, or otherwise dispose of (or announce
        any offer, sale, grant or any option to purchase or other disposition
        of) any of its equity or equity equivalent securities, including without


                                       17
<PAGE>

        limitation any debt, preferred stock or other instrument or security
        that is, at any time during its life and under any circumstances,
        convertible into or exchangeable or exercisable for Common Stock.

                (b) From the 90th Trading Day after the Effective Date until 12
        months following the Effective Date, the Company shall not effect a
        financing of its Common Stock or Common Stock Equivalents (a "Subsequent
        Financing") unless (i) the Company delivers to each of the Purchasers
        hereunder a written notice at least 5 Trading Days prior to the closing
        of such Subsequent Financing (the "Subsequent Financing Notice") of its
        intention to effect such Subsequent Financing, which Subsequent
        Financing Notice shall describe in reasonable detail the proposed terms
        of such Subsequent Financing, the amount of proceeds intended to be
        raised thereunder, the Person with whom such Subsequent Financing is
        proposed to be effected, and attached to which shall be a term sheet or
        similar document relating thereto and offer to each Purchaser the
        opportunity to provide (or cause its designee to provide) up to an
        amount equal to such Purchaser's Subscription Amount at the Closing on
        the same terms set forth in the Subsequent Financing Notice and (ii)
        such Purchaser shall not have notified the Company by 6:30 p.m. (New
        York City time) on the fifth (5th) Trading Day after its receipt of the
        Subsequent Financing Notice of its willingness to provide (or to cause
        its designee to provide), subject to completion of mutually acceptable
        documentation, up to an amount equal to the proportion of the aggregate
        Subscription Amounts represented by such Purchaser's Subscription Amount
        at the Closing on the same terms set forth in the Subsequent Financing
        Notice. If one or more Purchasers shall fail to so notify the Company of
        their willingness to participate in the Subsequent Financing, the
        Company must provide the other Purchasers with a second Subsequent
        Financing Notice, and those Purchasers will again have the right to
        participate, subject to completion of mutually acceptable documentation,
        up to an amount equal to their proportions of the Subscription Amounts
        of participating Purchasers. If the Subsequent Financing subject to the
        initial Subsequent Financing Notice is not consummated for any reason on
        the terms set forth in such Subsequent Financing Notice within 60
        Trading Days after the date of the initial Subsequent Financing Notice
        with the Person identified in the Subsequent Financing Notice, the
        Company must provide another initial Financing Note prior to any
        subsequent financing, until 12 months following the Effective Date.

                (c) Notwithstanding anything to the contrary herein, this
        Section 4.4 shall not apply to the following: (i) the granting of
        options or restricted stock to employees, officers, directors and key
        consultants of the Company pursuant to any stock option plan or
        agreement duly adopted by the Company's board of directors by vote of a
        majority of the independent members of the board or a committee of
        independent directors established for such purpose, or (ii) the exercise
        of any security issued by the Company in connection with the offer and
        sale of the Company's securities pursuant to this Agreement, or (iii)
        the exercise of or conversion of any convertible securities, options or
        warrants issued and outstanding on the date hereof, provided such
        securities have not been amended since the date hereof, or (iv) the
        issuance of securities in connection with a joint venture or development
        agreement or strategic partnership or similar agreement approved by the
        Company's board of directors, no significant purpose of which is to
        raise equity capital, or (v) the issuance of securities in connection
        with an equipment lease financing transaction or a bank


                                       18
<PAGE>

        financing transaction approved by the Company's board of directors, no
        significant purpose of which is to raise equity capital; or (vi) the
        exercise of or conversion of any convertible securities, options or
        warrants issued and outstanding pursuant to subclauses (i), (iv) and (v)
        above.

        4.5 No Borrowings under Equity Line of Credit. During the period
beginning on the date of this Agreement and ending nine months after the
Effective Date of the Registration Statement, the Company covenants and agrees
that it will not issue any securities under, borrow any money under or otherwise
obtain any financing pursuant to any of the agreements between Laurus Master
Fund, Ltd. and the Company.

        4.6 Securities Laws Disclosure; Publicity. The Company shall, by 8:30
a.m., Eastern Daylight Time on January 23, 2004 issue a press release reasonably
acceptable to each of the Purchasers disclosing all material terms of the
transactions contemplated by the Transaction Documents, to the extent permitted
by applicable law. 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, 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. 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 Form 8-K to be filed following the Closing
Date and the Registration Statement contemplated by the Registration Rights
Agreement and (ii) to the extent such disclosure is required by law or Trading
Market regulations, in which case the Company shall provide each Purchaser with
prior notice of such disclosure permitted under subclause (i) or (ii).

        4.7 Shareholders Rights Plan. No claim will be made or enforced by the
Company that any Purchaser is an "Acquiring Person" under any shareholders
rights plan or similar plan or arrangement in effect or hereafter adopted by the
Company, including, without limitation, the Rights Plan or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, in
connection with the initial issuance of the Securities under the Transaction
Documents. Solely for purposes of this Section 4.7 and Section 3.1(x), Purchaser
shall include only the initial Purchasers, Capital Ventures International,
Castle Creek Healthcare Partners LLC and CC LifeScience, Ltd., and not their
assignees or transferees.

        4.8 Non-Public Information. Except as otherwise provided in Section
4.4(b) which information each Purchaser agrees to keep confidential (unless, as
to a Purchaser, such Purchaser declines to accept such information when offered
by the Company), 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 the Company believes constitutes material non-public
information, and, in any event, the Company hereby agrees that no Purchaser
shall have any duty of confidentiality with respect to any such information if
any such disclosure occurs.


                                       19
<PAGE>

The Company understands and confirms that each Purchaser shall be relying on the
foregoing representations in effecting transactions in securities of the
Company.

        4.9 Use of Proceeds. Except as set forth on Schedule 4.9 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and not for the satisfaction of any
portion of the Company's debt (other than payment of trade payables in the
ordinary course of the Company's business and prior practices), to redeem any
Company equity or equity-equivalent securities or to settle any outstanding
litigation.

        4.10 Indemnification of Purchasers. The Company will indemnify and hold
the Purchasers, the Purchasers' Affiliates, and their respective directors,
officers, shareholders, partners, employees and agents (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 misrepresentation, breach or inaccuracy, or any
allegation by a third party that, if true, would constitute a breach or
inaccuracy, of any of the representations, warranties, covenants or agreements
made by the Company in this Agreement or in the other Transaction Documents; or
(b) any cause of action, suit or claim brought or made against such Purchaser
Party and arising out of or resulting from the execution, delivery, performance
or enforcement of this Agreement or any of the other Transaction Documents. The
Company will reimburse each Purchaser Party for its reasonable outside legal and
other out-of-pocket expenses (including the cost of any investigation,
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred.

        4.11 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 all Shares required to be
issued pursuant to this Agreement and all Warrant Shares required to be issued
pursuant to the Warrants.

        4.12 Listing of Common Stock. The Company hereby agrees to use
commercially reasonable efforts to obtain the listing of the Common Stock on a
Trading Market, and, unless completed prior to the Closing, to list the
applicable Shares and Warrant Shares on a Trading Market as soon as reasonably
practicable following the Closing. The Company further agrees, if the Company
applies to have the Common Stock traded on any Trading Market, it will include
in such application the Shares and Warrant Shares, and will take such other
action as is necessary or desirable in the opinion of the Purchasers to cause
the Shares and Warrant Shares to be listed on such 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 the OTC Bulletin, or if the Common
Stock is listed on a Trading Market, on that 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.

        4.13 Form D: Blue Sky Laws. The Company shall file with the Commission a
Form D with respect to the Securities as required under Regulation D and provide
a copy thereof to the Purchaser promptly after such filing. The Company shall,
on or before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Securities for


                                       20
<PAGE>

sale to the Purchaser pursuant to this Agreement under applicable securities or
"blue sky" laws of the states of the United States or obtain exemption
therefrom.

        4.14 Legal Opinion Concerning Authorized Capital. The Company hereby
agrees to use it best efforts to cause Company Counsel to render its legal
opinion with respect to the authorized capital of the Company as soon as
practicable after the Closing in the form set forth as opinion 1 in the form of
legal opinion attached hereto as Exhibit D.

                                   ARTICLE V.
                                  MISCELLANEOUS

        5.1 Termination. This Agreement may be terminated by the Company or, as
to any Purchaser and the Company, any Purchaser, by written notice to the other
parties, if the Closing has not been consummated by the third Business Day
following the date of this Agreement; provided that no such termination will
affect the right of any party to sue for any breach by the other party (or
parties).

        5.2 Fees and Expenses. The Company shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other
expenses incurred by the Company incident to the negotiation, preparation,
execution, delivery and performance of this Agreement and Heights Capital
Management, Inc.'s ("Heights Capital") reasonable out-of-pocket expenses
including, but not limited to legal and due diligence costs, regardless of
whether the Closing shall occur, provided, the Company obligation to pay such of
Heights Capital's expenses shall not exceed $20,000. If the Closing shall occur,
such of Heights Capital's expenses may be deducted from the aggregate purchase
price of the Units purchased by Heights Capital's affiliates or advisees. The
Company shall pay all stamp and other taxes and duties levied in connection with
the sale of the Securities.

        5.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

        5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified on the signature pages attached hereto prior to 6:30 p.m. (New York
City time) on a Business Day, (b) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number on the signature pages attached hereto on a day that is not a
Business Day or later than 6:30 p.m. (New York City time) on any Business Day,
(c) the Business 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 the Majority Purchasers or, in the case of a waiver, by the
party against whom enforcement


                                       21
<PAGE>

of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right. Any waiver effected in accordance with
this Section 5.5 shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding (including securities into which
such securities are convertible or exercisable), each future holder of all such
securities, and the Company.

        5.6 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

        5.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Majority Purchasers. Any Purchaser may
assign any or all of its rights under this Agreement to any Person in connection
with the transfer of the Securities, provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions
hereof 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 4.10.

        5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in The
City of New York, Borough of Manhattan. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, New York, Borough of Manhattan for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of any of
the Transaction Documents), and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is improper. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by delivering a copy thereof via overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto (including its affiliates, agents, officers, directors and


                                       22
<PAGE>

employees) hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby.

        5.10 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing and delivery and/or exercise of the
Securities, as applicable.

        5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

        5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

        5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant exercise, notice, demand or election
in whole or in part without prejudice to its future actions and rights.

        5.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity or security, if requested.

        5.15 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 Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

        5.16 Payment Set Aside. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded,


                                       23
<PAGE>

repaid or otherwise restored to the Company, a trustee, receiver or any other
person under any law (including, without limitation, any bankruptcy law, state
or federal law, common law or equitable cause of action), then to the extent of
any such restoration the obligation or part thereof originally intended to be
satisfied shall, to the extent permissible under applicable law, be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

        5.17 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of the Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, 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 any
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. The Company
has elected to provide all Purchasers with the same terms and Transaction
Documents (except for the payments to Heights Capital pursuant to Section 5.2)
for the convenience of the Company and not because it was required or requested
to do so by the Purchasers.

        5.18 Joint Participation in Drafting. Each party to this Agreement has
participated in the negotiation and drafting of the Transaction Documents. As
such, the language used herein and therein shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction will be applied against any party to this Agreement.

                            (Signature Page Follows)


                                       24
<PAGE>

               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.

CARDIOGENESIS CORPORATION                         Address for Notice:

By:/s/ Michael J. Quinn
   Name: Michael J. Quinn                         Tel: (714) 649 - 5050
   Title: President, Chief Executive Officer,     Fax: (714) 649 - 5102
          Chairman                                Attn: Chief Executive Officer

With copy to (which shall not constitute notice):

Weil, Gotshel & Manges, LLP
201 Redwood Shores Parkway
Redwood Shores, CA  94065
Attn:  Craig Adas, Esq.
Tel:  (650) 802-3020
Fax:  (650) 802-3100

                           [SIGNATURE PAGE CONTINUES]


                                       25
<PAGE>

[PURCHASER'S SIGNATURE PAGE]

Name of Investing Entity: Capital Ventures International
Signature of Authorized Signatory of Investing entity: /s/ Martin Kobinger
Name of Authorized Signatory: Martin Kobinger
Title of Authorized Signatory: Investment Manager

Address for Notice of Investing Entity:

Heights Capital Management
425 California St., Suite 1100
San Francisco, CA 94104



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

Capital Ventures International
401 City Avenue, Suite 220
Bala Cynwd, Pennsylvania 19004
Attn: Mike Mollen


Subscription Amount: $1,050,000
Shares: 1,744,186
A Warrant Shares: 1,744,186
B Warrant Shares: 872,093
EIN Number:  [you may provide this under separate cover]

                           [SIGNATURE PAGES CONTINUE]


                                       26
<PAGE>

[PURCHASER'S SIGNATURE PAGE]

Name of Investing Entity: Castle Creek Healthcare Partners LLC
Signature of Authorized Signatory of Investing entity: /s/ Thomas A. Frei
Name of Authorized Signatory: Thomas A. Frei
Title of Authorized Signatory: Managing Director of the Investment Manager

Address for Notice of Investing Entity:

Castle Creek Healthcare Partners LLC
111 W. Jackson Blvd., Suite 2020
Chicago, IL 60604


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

Subscription Amount: $900,000
Shares: 1,046,512
A Warrant Shares: 1,046,512
B Warrant Shares: 523,256
EIN Number: [you may provide this under separate cover]

                           [SIGNATURE PAGES CONTINUE]


                                       27
<PAGE>

[PURCHASER'S SIGNATURE PAGE]

Name of Investing Entity: CC Lifescience, Ltd.
Signature of Authorized Signatory of Investing entity: /s/ Thomas A. Frei
Name of Authorized Signatory: Thomas A. Frei
Title of Authorized Signatory: Authorized Individual

Address for Notice of Investing Entity:

CC Lifescience, Ltd.
c/o Castle Creek Lifescience Partners LLC
111 W. Jackson Blvd. Suite 2020
Chicago, IL

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

Subscription Amount: $300,000
Shares: 348,837
A Warrant Shares: 348,837
B Warrant Shares: 174,419
EIN Number: [you may provide this under separate cover]


                                       28
<PAGE>

                                   SCHEDULE A

         Purchaser                                      Units
         ---------                                      -----

         Capital Ventures International               1,744,186
         Castle Creek Healthcare Partners LLC         1,046,512
         CC LifeScience, Ltd.                           348,837

                               Total                  3,139,535


                                       29