Exhibit
4.11


 


SECURITIES
PURCHASE AGREEMENT


 


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


 


WHEREAS, the
Company and the Purchasers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by the
provisions of Regulation D (“Regulation D”), as promulgated by the U.S.
Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as
amended (the “1933 Act”); and


 


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


 


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


 


1.             Purchase
and Sale of Securities.


 


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


 


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


 


•      manufacturing,
marketing and continued development of Imagent;


 


•      research
and development of PH-50;


 


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•      research
and development of N1177;


 


•      payment
of commissions and other fees associated with the transactions in this
Agreement;


 


•      payment
of obligations to vendors of goods or services and other creditors (except as
described in the last sentence of this Section 1.2) not to exceed the amounts
set forth in the Disclosure Schedule; and


 


•      working
capital and general corporate purposes.


 


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


 


2.             Delivery of the Shares
at the Closings.


 


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


 


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


 


(b)           the
Company shall deliver to the Purchasers certificates for the number of
Securities to be delivered at the Initial Closing, as set forth opposite their
respective names on Schedule I hereto, registered in the name of such
Purchasers.


 


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


 


(a)           in
accordance with the terms of the Escrow Agreement, the Escrow Agent, shall
disburse to the Company the purchase price of the Securities, together with any
interest accrued thereon, to be delivered to the Purchasers at the Second
Closing, as set forth on Schedule I hereto; and


 


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(b)           the
Company shall deliver to the Purchasers certificates for the number of
Securities to be delivered at the Second Closing, as set forth opposite their
respective names on Schedule I hereto, registered in the name of such
Purchasers.


 


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


 


2.3.         Termination.  If by the applicable
dates set forth in Section 5.3.13 the conditions set forth in Section 5.3 that
apply to the applicable Closing shall not have been fulfilled by the Company,
then each Purchaser to receive Securities at such Closing shall, at its
election, be relieved of all of its obligations under this Agreement as to such
Closing without thereby waiving any other right it may have by reason of such
failure or such non-fulfillment.  In
connection therewith, such Purchaser shall have the right to require the Escrow
Agent to disburse to such Purchasers the funds delivered by such Purchaser to
the Escrow Account in respect of the applicable Closing (plus any interest
thereon).  If by the applicable date set
forth in Section 6.5, any of the conditions set forth in Section 6 of this
Agreement that apply to the applicable Closing shall not have been fulfilled by
any Purchaser, the Company shall, at its election, be relieved of all of its
obligations to such Purchaser under this Agreement as to such Closing without
thereby waiving any other right it may have by reason of such failure or such
non-fulfillment.


 


3.             Representations and
Warranties of the Company.  Except
as disclosed in the Disclosure Schedule attached hereto (which Disclosure
Schedule makes explicit reference to, and shall only modify, the particular
Section containing the representation or warranty as to which exception is
taken), the Company hereby represents and warrants to the Purchasers as follows:


 


3.1.         Organization; Amended
Articles.  The Company is a
corporation duly organized, validly existing and in corporate good standing
under the laws of the State of Nevada and is qualified to do business as a
foreign corporation in each jurisdiction in which such qualification is
required, except where the failure to be so qualified would not have, either
individually or in the aggregate, a material adverse effect on the business,
operations, financial condition, assets, prospects, liabilities or contractual
rights of the Company, whether individually or taken as a whole (a “Material
Adverse Effect”).  The
Company has, or prior to each Closing will have, duly authorized the sale and
issuance, pursuant to the terms of this Agreement an adequate number shares of
its Common Stock authorized and available for purchase hereunder and upon
exercise of the Warrants issuable at such Closing, having the rights,
restrictions, privileges and preferences set forth in the Amended and Restated
Certificate of Incorporation (the “Amended Articles”).


 


3.2.         Corporate Power.  The Company has all required corporate power
and authority to own its property, to carry on its business as presently
conducted or contemplated, to enter into and perform this Agreement, the Escrow
Agreement, in the form attached as Exhibit A  (the “Escrow Agreement”), the
Warrant Agreements by and between the Company and each of the Purchasers, each
in the form attached as Exhibit B (the “Warrant Agreement”), the Registration Rights Agreement by and
among the Company and the Purchasers in the form attached as Exhibit C
(the “Registration Rights Agreement”),
the Voting Agreement (as defined in Section 5.15), and the other agreements,
documents and instruments contemplated hereby (collectively with this Agreement,
the “Financing
Documents”), and to carry out the transactions contemplated
hereby.  The copies of the Amended
Articles and Bylaws of the Company, as amended to date, which have been
furnished by the Company to counsel for the Purchasers, are correct and
complete at the date hereof.  The
Company is not in violation of any term of its Amended Articles or Bylaws, each
as amended, or in violation of any term of any agreement, instrument, judgment,
decree,


 


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order, statute, rule or
government regulation applicable to the Company or to which the Company is a
party, where any violation, noncompliance or default would result in a Material
Adverse Effect.


 


3.3.         Authorization.  The Financing Documents are valid and
binding obligations of the Company, enforceable in accordance with their
terms.  The execution, delivery and
performance of the Financing Documents have been duly authorized by all
necessary corporate or other action of the Company.  Subject to obtaining stockholder approval for the issuance of
more than 20% of the Company’s Common Stock pursuant to Nasdaq Marketplace Rule
4350 with respect to Securities to be issued at the Second Closing, the
issuance, sale and delivery of the Securities in accordance with this Agreement
or the Warrant Agreement have been, or will be prior to each Closing, duly
authorized by all necessary corporate action on the part of the Company.  The Securities when so issued, sold and
delivered against payment therefor in accordance with the provisions of this
Agreement or the Warrant Agreement will be duly and validly issued, fully paid
and non-assessable.  No consent,
approval or authorization of, or designation, declaration or filing with, any
governmental authority or any other person or entity is required of the Company
in connection with the execution and delivery of the Financing Documents, or
the issuance, sale and delivery of the Securities in accordance with the terms
of this Agreement or the Warrants, or the consummation of any other transaction
contemplated hereby or by the other Financing Documents, except (i) the filing
with the SEC of one or more Registration Statements in accordance with the
requirements Registration Rights Agreement and the filing of a Form D with the
SEC, (ii) any filings required by state securities laws, (iii) the filings
required in accordance with Section 8.12, (iv) the filing of the Proxy
Statement in accordance with Section 5.1.4, and (v) those that have been made
or obtained prior to or as of the date of this Agreement.


 


3.4.         Capitalization.  The authorized capital stock of the Company
consists of Series A Preferred Stock, $0.001 par value per share, of which
12,856 shares are authorized, issued and outstanding as of December 31, 2003,
and 150,000,000 shares of Common Stock, $0.001 par value per share, of which
21,541,476 shares are issued and outstanding as of March 31, 2004.  All of the issued and outstanding shares of
the Company’s capital stock have been duly authorized and validly issued and are
fully paid and non-assessable.  The
Company will have reserved, immediately prior to the First Closing, a total of
6,068,740 shares of its Common Stock for issuance pursuant to the Option Plans
(defined below).  Except as contemplated
by this Agreement, the other Financing Documents, the Amended Articles,
(i) no subscription, warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any shares of capital stock of
the Company is authorized or outstanding, (ii) there is not any commitment
or offer of the Company to issue any subscription, warrant, option, convertible
security or other such right or to issue or distribute to holders of any shares
of its capital stock any evidences of indebtedness or assets of the Company,
(iii) the Company has no obligation (contingent or otherwise) to purchase,
redeem or otherwise acquire any shares of its capital stock or any interest
therein or to pay any dividend or make any other distribution in respect
thereof, and (iv) there are no restrictions on the transfer of the Company’s
capital stock other than those arising from securities laws or contemplated by
this Agreement and the other Financing Documents.  There are no voting trusts or agreements, stockholders’
agreements, pledge agreements, buy-sell agreements, rights of first refusal,
preemptive rights or proxies relating to any securities of the Company to which
the Company is a party.  All of the
outstanding securities of the Company were issued in compliance with all
applicable federal and state securities laws. 
Set forth in the Disclosure Schedule is a capitalization table for the
Company showing (i) the capitalization of the Company on a fully diluted
basis immediately prior to the issuance of the Shares; and (ii) the capitalization
of the Company on a fully diluted basis giving effect to the issuance of the
Shares.  For the purposes of this
Agreement, the term “on a fully diluted basis” means that for purposes of
calculating the percentage interest of the Company’s capital stock represented
by a specified number of shares, there shall be deemed outstanding (i) all
shares of Common Stock, $0.001 per value


 


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per share, of the Company
currently outstanding; (ii) all shares of Common Stock issuable pursuant to the
exercise of options granted and capable of being granted under the Company’s
1998 Long Term Incentive Compensation Plan, 2000 Long Term Incentive
Compensation Plan, and Senior Executive Long Term Incentive Compensation Plan
(the “Option
Plans”); and (iii) all shares of Common Stock issuable pursuant to
other existing options, warrants, convertible debt securities and other
instruments and agreements whatsoever. 
The issue and sale of the Securities will not, immediately or with the
passage of time, obligate the Company to issue shares of Common Stock or other
securities to any Person 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.


 


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


 


3.6.         SEC Filings; Business.  The Company has filed all reports required
to be filed by it under the 1933 Act and the Securities Exchange Act of 1934,
as amended (the “1934 Act”), including pursuant to Section 13(a) or 15(d)
thereof, for the twelve months preceding the date hereof (or such shorter
period as the Company was required by law to file such reports) (collectively,
the “SEC
Filings”) on a timely basis or has timely filed a valid extension of
such time of filing and has filed any such SEC Filings prior to the expiration
of any such extension..  The SEC Filings
are the only filings required of the Company pursuant to the 1934 Act for such
period.  At the time of filing thereof,
the SEC Filings complied as to form in all material respects with the
requirements of the 1934 Act and did 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.  During the
preceding two years, each registration statement and any amendment thereto
filed by the Company pursuant to the 1933 Act and the rules and regulations
thereunder, as of the date such statement or amendment became effective,
complied as to form in all material respects with the 1933 Act and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading; and each prospectus filed pursuant to Rule 424(b) under the 1933
Act, as of its issue date and as of the closing of any sale of securities
pursuant thereto did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. 
The Company and its Subsidiaries are engaged only in the business
described in the SEC Filings and the SEC Filings contain a complete and accurate
description in all material respects of the business of the Company and its
Subsidiaries, taken as a whole, as required to be disclosed.


 


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


 


(a)           any change in the
consolidated assets, liabilities, financial condition or operating results of
the Company from that reflected in the financial statements included in the
2002 10-K, except for changes in the ordinary course of business which have not
and could not reasonably be expected to have a Material Adverse Effect,
individually or in the aggregate;


 


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


 


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


 


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


 


(e)           any satisfaction or
discharge of any lien, claim or encumbrance or payment of any obligation by the
Company or a Subsidiary, except in the ordinary course of business and which is
not material to the assets, properties, financial condition, operating results
or business of the Company and its Subsidiaries taken as a whole (as such
business is presently conducted and as it is proposed to be conducted);


 


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


 


(g)           any material labor
difficulties or labor union organizing activities with respect to employees of
the Company or any Subsidiary;


 


(h)           any transaction entered
into by the Company or a Subsidiary other than in the ordinary course of
business;


 


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


 


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


 


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


 


3.8.         Financial Statements.  The financial statements included in each
SEC Filing present fairly, in all material respects, the consolidated financial
position of the Company as of the dates shown and its consolidated results of
operations and cash flows for the periods shown, and such financial statements
have been prepared in conformity with United States generally accepted
accounting principles applied on a consistent basis (except as may be disclosed
therein or in the notes thereto, and, in the case of quarterly financial
statements, as permitted by Form 10-Q or Form 10-QSB, as applicable, under the
1934 Act).  Except as set forth in the
financial statements of the Company included in the SEC Filings filed prior to
the date hereof, neither the Company nor any of its Subsidiaries has incurred
any liabilities, contingent or otherwise, except those incurred in the ordinary
course of business, consistent (as to amount and nature) with past practices
since the date of such financial statements, none of which, individually or in
the aggregate, have had or could reasonably be expected to have a Material
Adverse Effect.


 


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


 


3.10.       Proprietary Rights,
Employee Restrictions.  


(a)           The Company owns or has
the right to use all copyrights, copyright registrations and copyright
applications, trademark registrations and applications for registration,
patents and patent applications, trademarks, service marks, trade names, or
other proprietary rights (collectively, “Intellectual Property Rights”) as described
in the SEC Filings used or useful in the Company’s business as presently
conducted or currently contemplated to be conducted and all licenses,
assignments and releases of Intellectual Property Rights of others in material
works embodied in the Company’s products. 
All Intellectual Property Rights held by any employee, officer or
consultant have been assigned to the Company. 
The Company has exclusive ownership of, or exclusive license to use, all
Intellectual Property Rights.  The
Company has obtained any licenses, releases or assignments necessary to use all
third parties’ Intellectual Property Rights in works embodied in its products.  All such licenses, releases and assignments
are specifically identified in the Disclosure Schedule.  To the Company’s knowledge, neither the
present nor currently contemplated business activities or products of the
Company infringe any Intellectual Property Rights of others.  The Company has not received any notice or
other written claim from any person asserting that any of the Company’s present
or currently contemplated activities infringe or may infringe any Intellectual
Property Rights of such person.  The Company
has the right to use, free and clear of known or asserted claims or rights of
others, all trade secrets, customer lists, hardware designs, programming
processes, software and other information required for or incident to its
products or its business as presently conducted or contemplated to be
conducted, except for claims which would not have a Material Adverse
Effect.  The Company has taken all
reasonable measures to protect and preserve the security, confidentiality and
value of its Intellectual Property Rights, including its trade secrets and
other confidential information.  The
Company is not aware of any infringement by others of its copyrights or other
Intellectual Proprietary Rights in any of its products, technology or services,
or any violation of the confidentiality of any of its proprietary
information.  The activities of the
Company’s employees on behalf of the Company do not violate any agreements or
arrangements known to the Company which any such employees have with former
employers or any other entity to whom such employees may have rendered
consulting services.  For the purposes
of this Section 3.10, Intellectual Property Rights also includes any and
all material licenses, databases, computer programs and other computer software
user interfaces (other than those generally available to the public), know-how,
trade secrets, customer lists, proprietary technology, processes and formulae,
source code, object code, algorithms, architecture, structure, display screens,
layouts, development tools, instructions, templates, marketing materials,
inventions, trade dress, logos and designs and all documentation and media
constituting, describing or relating to the foregoing.


 


(b)           All key employees,
including all consultants (contract or otherwise), of or to the Company have
executed and delivered to and in favor of the Company an agreement regarding
the protection of confidential and proprietary information and the assignment
to the Company of all Intellectual Property Rights arising from the services
performed for the Company by such Persons.


 


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3.11.       Litigation; Compliance with
Law.  There is no (i) action,
suit, claim, proceeding or investigation pending or, to the best of the
Company’s knowledge, threatened against or affecting the Company, at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (ii) arbitration or mediation proceeding relating to the Company,
pending or, to the best of the Company’s knowledge, threatened, or
(iii) governmental inquiry pending or, to the best of the Company’s
knowledge, threatened against or affecting the Company (including without
limitation any inquiry as to the qualification of the Company to hold or
receive any license or permit).  The
Company has not received any opinion or memorandum or legal advice from legal
counsel to the effect that it is exposed, from a legal standpoint, to any
liability which may have a Material Adverse Effect.  The Company is not in default with respect to any order, writ,
injunction or decree known to or served upon the Company of any court or of any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign.  There is no action or suit by the Company,
and to the best of the Company’s knowledge, pending, threatened or contemplated
against others.  To the best of the
Company’s knowledge, the Company has complied and will continue to comply, in
all material respects, with all laws, rules, regulations and orders applicable
to its present and contemplated business, operations, properties, assets,
products and services.  The Company has
all necessary permits, licenses and other authorizations required to conduct
its business as conducted and as proposed to be conducted, except where the
failure to obtain such permits, licenses or authorization would not have a
Material Adverse Effect, and the Company has been and will continue to be
operating its business pursuant to and in compliance with the terms of all such
permits, licenses and other authorizations, except where the failure to so
operate the business would not have a Material Adverse Effect.  The Company has all franchises, permits,
licenses and other rights and privileges necessary to permit it to own its
property and to conduct its business as it is presently conducted or proposed
to be conducted.  The Company is not
subject to any pending or threatened investigation, inquiry or proceeding by
the SEC, any state securities commission or any other federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any securities exchange or securities
market, with respect to any matter.  The
Company is in compliance with all effective requirements of the Sarbanes-Oxley
Act of 2002, as amended, and the rules and regulations thereunder, that are
applicable to it, except where such noncompliance could not have or reasonably
be expected to result in a Material Adverse Effect.


 


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


 


3.13.       Insurance.  The Company and each Subsidiary maintain in
full force and effect insurance coverage that is customary for comparably
situated companies for the business being conducted and properties owned or
leased by the Company and each Subsidiary, and the Company reasonably believes
such insurance coverage to be adequate against all liabilities, claims and
risks against which it is customary for comparably situated companies to
insure.


 


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


 


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


 


3.16.       Governmental Approvals.  Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Section 4, no
registration or filing with, or consent or approval of or other action by, any
federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance by the Company of
any of the Financing Documents, the issuance, sale and delivery of the Shares
other than filings pursuant to federal and state securities laws (all of which
filings have been made by the Company, other than those which are required to
be made after the Closing and which will be duly made on a timely basis) in
connection with the sale of the Shares.


 


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


 


3.18.       Title to Properties.  The Company and each Subsidiary has good and
marketable title to all real properties and all other properties and assets
owned by it, in each case free and clear from any and all liens, security
interests, encumbrances and defects, and the Company and each Subsidiary holds
any leased real or personal property under valid and enforceable leases with no
exceptions that would materially interfere with the use made or currently
planned to be made thereof by them.


 


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


 


3.20.       Environmental Matters.  Neither the Company nor any Subsidiary is in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or operates any
real property contaminated with any substance that is subject to any
Environmental Laws, is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, and is subject to any claim relating to any
Environmental Laws,


 


9

















 


which violation,
contamination, liability or claim has had or could reasonably be expected to
have a Material Adverse Effect, individually or in the aggregate; and there is
no pending or threatened investigation that might lead to such a claim.


 


3.21.       Compliance with Nasdaq
Continued Listing Requirements.  The
Company is in compliance with applicable Nasdaq SmallCap Market continued
listing requirements.  There are no
proceedings pending or threatened against the Company relating to the continued
listing of the Company’s Common Stock on the Nasdaq SmallCap Market and the
Company has not received any notice of, nor is there any basis for, the
delisting of the Common Stock from the Nasdaq SmallCap Market.


 


3.22.       Brokers.  The Company has no contract, arrangement
or understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.  
No person or entity will have, as a result of the transactions
contemplated by this Agreement, any right, interest or claim against or upon
the Company, any Subsidiary or a Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company.


 


3.23.       Certain Registration
Matters.  Assuming the accuracy of
the Purchaser’ representations and warranties set forth in Section 4.1-4.5, no
registration under the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchaser under the Financing Documents.  The Company has not granted or agreed to
grant to any Person any rights (including “piggy-back” registration rights) to
have any securities of the Company registered with the SEC or any other
governmental authority that have not been satisfied or deferred during the
period between the date hereof and the date the Company’s registration
statement pursuant to the Registration Rights Agreement is declared
effective.  Other than the Registration
Statement (as defined in the Registration Rights Agreement), prior to the date
that a Registration Statement is first declared effective by the SEC, the
Company may not file any registration statement (other than on Form S-8) with
the SEC with respect to any securities of the Company.


 


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


 


3.25.       Questionable Payments.  Neither the Company nor any of its
Subsidiaries nor any of their respective current or former shareholders,
directors, officers, employees, agents or other persons or entities acting on
behalf of the Company or any Subsidiary, has on behalf of the Company or any
Subsidiary or in connection with their respective 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 from
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 any Subsidiary; or (e) made any
unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment
of any nature.


 


10

















 


3.26.       Information Supplied to
Purchasers.  Neither this Agreement,
the Disclosure Schedule and Exhibits attached hereto, the Private Placement
Memorandum of the Company, dated as of April 1, 2004 (the “Private
Placement Memorandum”), nor any other Financing Documents furnished
to the Purchasers by or on behalf of the Company contains any untrue statement
of a material fact, and none of this Agreement, the Disclosure Schedule and
Exhibits attached hereto, or such other Financing Documents omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading.  None of the
matters described on the Disclosure Schedules have had, or could reasonably be
expected to have, a Material Adverse Effect, individually or in the aggregate.


 


3.27.       Internal Accounting
Controls.  The Company and the
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 generally accepted accounting principles 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 1934 Act Rules 13a-14 and 15d-14) for
the Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s Form 10-KSB or 10-QSB, as
the case may be, is being prepared.


 


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


 


3.29.       Disclosure.  The Company confirms that neither it nor any
person acting on its behalf has provided any Purchaser or its respective agents
or counsel with any information that the Company believes constitutes material,
non-public information except insofar as the existence and terms of the
proposed transactions hereunder may constitute such 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.


 


4.             Representations of
the Purchasers.  Each of the
Purchasers represents and warrants to the Company as to itself and no other
Purchaser as follows:


 


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


 


4.2.         Investor Status.  Such Purchaser is an “accredited investor”
as such term is defined in Regulation D under the 1933 Act.  . 
Such Investor is not a registered broker-dealer under Section 15 of the
1934 Act.


 


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


 


11

















 


granting any
participation in, or otherwise distributing the same in violation of the 1933
Act.  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.


 


4.4.         Investment Experience.  Such Purchaser acknowledges that it can bear
the economic risk and complete loss of its investment in the Securities and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.


 


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


 


4.6.         Access to Management.  Such Purchaser has had an opportunity to
receive additional information related to the Company requested by it and to
ask questions of and receive answers from the Company regarding the Company,
its business and the terms and conditions of the offering of the
Securities.  Neither such inquiries nor
any other investigation conducted by or on behalf of such Purchaser or its
representatives or counsel shall modify, amend or affect such Purchaser’s right
to rely on the truth, accuracy and completeness of the Company’s
representations and warranties contained in the Financing Documents and upon
the Private Placement Memorandum.  Such
Purchaser has reviewed the SEC Filings and acknowledges that, as of the date of
execution of this Agreement, the Company has not filed its Annual Report on
Form 10-KSB for the fiscal-year ended December 31, 2003.


 


4.7.         No General Solicitation.  Such Purchaser did not learn of the investment
in the Securities as a result of any public advertising or general
solicitation.


 


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


 


4.9.         Independent Investment
Decision.  Such Purchaser has
independently evaluated the merits of its decision to purchase Securities
pursuant to this Agreement, such decision has been independently made by such
Purchaser and such Purchaser confirms that it has only relied on the advice of
its own business and/or legal counsel (which such Purchaser acknowledges is not
Bryan Cave LLP) and not on the advice of any other Purchaser’s business or
legal counsel nor upon any investment banker, placement agent, or their
respective counsel in making such decision.


 


12

















 


5.             Pre-Closing
Covenants; Conditions to the Obligations of the Purchasers.


 


5.1.         Pre-Closing Covenants.  The parties covenant and agree that they
will perform and observe the following covenants and provisions until the Second
Closing Date, as applicable.


 


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


 


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


 


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


 


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


 


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


 


5.1.3.      Extraordinary Corporate
Transactions.  Except as
contemplated herein, the Company will not take any corporate action, enter into
any agreement to take such action, or obligate itself to take any such action,
if such action would:


 


(i)            cause the Company to
create, authorize or issue any class or series of capital stock with equity
features or convertible into equity ranking senior to the Common Stock with
respect to liquidation preferences, dilution protection, redemption rights, or
payment of dividends, or otherwise having terms and conditions superior to the
terms of the Common Stock, or that would impair or limit the Company’s
obligations under this Agreement;


 


(ii)           enter into any
transaction that expressly prohibits or limits the Company’s right to perform
its obligations under this Agreement;


 


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


 


13

















 


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


 


(v)           change the principal
business of the Company, enter new lines of business, or exit its current and
proposed line of business;


 


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


 


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


 


5.1.4.      Proxy Statement.  The Company shall (a) prepare and file with
the SEC, promptly after the date hereof and in any event by the 10th
business day following the Initial Closing, preliminary proxy materials with
respect to a meeting of the Company’s stockholders for the purpose of approving
the issuance of the Securities to be issued at the Second Closing, as
contemplated by this Agreement.  Promptly
after comments are received from the SEC with respect to the preliminary proxy
materials and after the furnishing by the Company of all information required
to be contained therein, the Company shall file with the SEC the definitive
proxy statement and (b) acting through the Company’s Board of Directors,
(i)  call a meeting of the holders of
the Common Stock for the purpose of approving the issuance of the Securities to
be issued at the Second Closing as contemplated by this Agreement and (ii)
include in the proxy statement the recommendation of its Board of Directors
that holders of the Common Stock approve such issuance as contemplated by this
Agreement.


 


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


 


5.2.         Funding of Escrow Account for Second Closing.  Concurrently with their respective execution
and delivery of this Agreement, each Purchaser will deliver to the Escrow Agent
for deposit into the escrow account (the “Escrow Account”) established pursuant to the terms
and conditions of the Escrow Agreement, the full amount of such Purchaser’s
investment amount as listed on Schedule I hereto for each of the Initial
Closing and the Second Closing, by wire transfer of immediately available
funds.


 


5.3.         Conditions to the
Obligations of the Purchasers.  The
obligations of the Purchasers under this Agreement are subject to the
fulfillment, or the waiver by the Purchasers, of the conditions set forth in
this Section 5.3 on or before each Closing Date. All such documents and actions
shall be satisfactory in form and substance to such Purchaser and its counsel.


 


5.3.1.      Accuracy of Representations
and Warranties; Performance.  Each
representation and warranty of the Company contained in this Agreement shall be
true and correct in all material respects on and as of each Closing Date, with
the same effect as though such representation and warranty had been made on and
as of that date.  The Company shall have
performed in all material respects all agreements and covenants required to be
performed by it under the Financing Documents prior to such Closing Date.


 


14

















 


5.3.2.      Consents.  The Company shall have obtained any and all
consents, permits, approvals, registrations and waivers necessary or
appropriate for consummation of the purchase and sale of the Securities to be
offered and sold at such Closing.  No
judgment, writ, order, injunction, award or decree of or by any court, or
judge, justice or magistrate, including any bankruptcy court or judge, or any
order of or by any governmental authority, shall have been issued, and no
action or proceeding shall have been instituted by any governmental authority,
enjoining or preventing the consummation of the transactions contemplated
hereby or in the other Financing Documents.


 


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


 


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


 


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


 


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


 


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


 


5.3.5.      SEC Approvals; Effective
Registration; Blue Sky.  Any SEC
approval required to consummate the transactions contemplated by the Financing
Documents (other than the effectiveness of registration statements) shall have
been obtained.


 


5.3.6.      Registration Rights
Agreement.  The Company shall have
executed and delivered to the Purchasers the Registration Rights Agreement.


 


5.3.7.      Warrant Agreements.  The Company shall have executed
and delivered to the Purchasers the Warrant Agreements.


 


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


 


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


 


5.3.10.    Nasdaq Listing. 
The Nasdaq Stock Market shall have waived application of the 15 day
prior notice contained in NASD Marketplace Rule 4310(c)(17)(D) or such
timeframe shall have expired without objection.  Trading in the Common Stock shall not have been suspended by the
SEC or the Nasdaq Stock Market (except for any suspensions of trading of not
more than one trading day solely to permit dissemination of material
information regarding the Company) at any time since the date of execution of
this Agreement, and the Common Stock shall have been at all times since such
date listed for trading on the Nasdaq Small Cap Market or Nasdaq National
Market.


 


15

















 


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


 


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


 


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


 


5.3.14.    Conversion of Outstanding Notes.  Between the date of execution of
this Agreement and the Initial Closing Date, the holders of the Company’s
Revolving Convertible Senior Secured Promissory Note in the aggregate principal
amount of $4,160,000 have converted all principal and interest due thereunder
into Common Stock at $0.75 per share and shall have agreed in writing to
convert all Demand Notes into Common Stock at $0.75 per share at or before the
Second Closing and in any event, the Demand Notes shall automatically convert
upon approval of the stockholders to issue 20% or more of the Company’s stock.


 


6.             Conditions to the
Obligations of the Company.  The
obligations of the Company under this Agreement are subject to the fulfillment,
or the waiver in writing by the Company, of the conditions set forth in this
Section 6 on or before each Closing Date.


 


6.1.         Accuracy of
Representations and Warranties.  The
representations and warranties of the Purchasers contained in Section 4 shall
be true and correct in all material respects on and as of each Closing Date,
with the same effect as though such representations and warranties had been
made on and as of that date.


 


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


 


6.3.         Stockholder Approval.  With respect to the Second Closing, the Company’s stockholders shall have approved
the issuance of the Securities at the Second Closing, as contemplated by this
Agreement.


 


6.4.         Nasdaq
Listing.  The Nasdaq Stock Market shall have
waived application of the 15 day prior notice contained in NASD Marketplace
Rule 4310(c)(17)(D) or such timeframe shall have expired without objection.


 


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


 


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


 


16

















 


7.             Post Closing Covenants.


 


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


 


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


 


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


 


7.4.         Non-Public Information.  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, unless prior thereto such Purchaser shall have executed
a written agreement regarding the confidentiality and use of such information.  The Company understands and confirms that
each Purchaser shall be relying on the foregoing representations in effecting
transactions in securities of the Company.


 


8.             General.


 


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


 


8.2.         Survival of
Representations and Warranties.  All
representations and warranties shall survive and remain in full force and
effect after the Closing with respect to the Company.


 


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


 


17

















 


8.4.         Conduct of Indemnification
Proceedings.  Promptly after receipt
by any person or entity (the “Indemnified Person”) of notice of any
demand, claim or circumstances which would or might give rise to a claim or the
commencement of any action, proceeding or investigation by a third party in
respect of which indemnity may be sought pursuant to Section 8.3 hereof, such
Indemnified Person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses; provided, however, that the failure of any Indemnified
Person so to notify the Company shall not relieve the Company of its
obligations hereunder except to the extent that the Company is materially
prejudiced by such failure to notify. 
In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of such counsel;
or (ii) in the reasonable judgment of counsel to such Indemnified Person
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them.  The Company shall not be liable for any
settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld, but if settled with such consent,
or if there be a final judgment for the plaintiff, the Company shall indemnify
and hold harmless such Indemnified Person from and against any loss or
liability (to the extent stated above) by reason of such settlement or
judgment.  Without the prior written
consent of the Indemnified Person, which consent shall not be unreasonably
withheld, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.


 


8.5.         Notices.  All notices, requests, consents and other
communications under this Agreement shall be in writing and shall be delivered
by hand, by telecopier, by express overnight courier service or mailed by first
class mail, postage prepaid, to the respective addresses set forth on the
signature pages of this Agreement, as such addresses may be modified by notice
given pursuant to this Section 8.5, with copies provided simultaneously to
counsel as set forth on the signature pages of this Agreement.  Notices provided in accordance with this
Section 8.5 shall be deemed delivered upon personal delivery, receipt by
telecopy or overnight mail, or 48 hours after deposit in the mail in accordance
with the above.


 


8.6.         Entire Agreement.  This Agreement, together with the
instruments and other documents hereby contemplated to be executed and
delivered in connection herewith, contains the entire agreement and
understanding of the parties hereto, and supersedes any prior agreements or
understandings between or among them, with respect to the subject matter hereof.  Except as expressly set forth in this
Agreement, the Disclosure Schedule and the Exhibits attached hereto, the
Private Placement Memorandum and the Financing Documents, the Company makes no
representation or warranty, express or implied, with respect to the
transactions contemplated by this Agreement or the other Financing Documents,
the business of the Company, the Company, the Company’s assets or its future
prospects.  No party is relying on any
understandings, agreements or representations other than those expressly
contained this Agreement, the Disclosure Schedule and the Exhibits attached
hereto, the Private Placement Memorandum, the SEC Filings and the Financing
Documents.


 


8.7.         Amendments and
Waivers.  No provision of this
Agreement may be waived or amended except in a written instrument signed by the
Company and the Purchasers holding a majority of the Shares.  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


 


18

















 


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


 


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


 


8.9.         Captions.  The captions of the sections, subsections
and paragraphs of this Agreement have been added for convenience only and shall
not be deemed to be a part of this Agreement.


 


8.10.       Severability.  Each provision of this Agreement shall be
interpreted in such manner as to validate and give effect thereto to the
fullest lawful extent, but if any provision of this Agreement is determined by
a court of competent jurisdiction to be invalid or unenforceable under
applicable law, such provision shall be ineffective only to the extent so
determined and such invalidity or unenforceability shall not affect the
remainder of such provision or the remaining provisions of this Agreement.


 


8.11.       Governing Law.  This Agreement shall be governed by and
interpreted and construed in accordance with the laws of the State of New York;
provided, however, that matters relating to the authorization, issuance
and enforceability of the terms of the Securities shall be governed and
interpreted and construed in accordance with the Nevada General Corporation
Law.  The Company irrevocably submits to
the exclusive jurisdiction of the state and federal courts located in the State
of New York  for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this
Agreement and the transactions contemplated hereby.  Service of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the world by the same
methods as are specified for the giving of notices under this Agreement.  The Company irrevocably consents to the
jurisdiction of any such court in any such suit, action or proceeding and to
the laying of venue in such court. The Company irrevocably waives any objection
to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient
forum.  If either party shall commence
an action to enforce any provisions of a Financing Document, then the
prevailing party in such action shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action.


 


8.12.       Independent Nature of
Purchasers.  The obligations of each
Purchaser under any Financing 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
Financing Document.  The decision of
each Purchaser to purchase Securities pursuant to the Financing Documents has
been made by such Purchaser independently of any other Purchaser.  Nothing contained herein or in any Financing
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 the Financing Documents.  Each Purchaser acknowledges that no other
Purchaser has acted as agent for such Purchaser in connection with making its
investment hereunder and that no Purchaser will be acting as agent of such
Purchaser in connection with monitoring its investment in the Securities or
enforcing its rights under the Financing Documents.  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 Financing Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for


 


19

















 


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


 


8.13.       Securities Laws Disclosure; Publicity.  By 9:00 a.m. (New York time) on the
business day following the execution of this Agreement, and by 9:00 a.m. (New
York time) on each Closing Date, the Company shall issue press releases
disclosing the transactions contemplated hereby and each Closing.  On the business day following the execution
of this Agreement the Company will file a Current Report on Form 8-K disclosing
the material terms of the Financing Documents (and attach as exhibits thereto
the Financing Documents), and on each Closing Date the Company will file an
additional Current Report on Form 8-K to disclose such Closing.  In addition, the Company will make such
other filings and notices in the manner and time required by the SEC and the Nasdaq
Stock Market.  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 SEC (other than the
Registration Statements and any exhibits to filings made in respect of this
transaction in accordance with periodic filing requirements under the 1934 Act)
or any regulatory agency or the Nasdaq Stock Market, without the prior written
consent of such Purchaser, except to the extent such disclosure is required by
law or Nasdaq Stock Market regulations.


 


8.14.       Remedies. 
In addition to being entitled to exercise all rights provided herein or
granted by law, including recovery of damages, each of the Investors and the
Company will be entitled to specific performance under the Financing
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.


 


8.15.       Payment Set Aside.  To the extent that the
Company makes a payment or payments to any Purchaser pursuant to any Financing
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, 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 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.


 


8.16.       Limitation of Liability. 
Notwithstanding anything herein to the contrary, the Company
acknowledges and agrees that the liability of a Purchaser arising directly or
indirectly, under any Financing Document of any and every nature whatsoever
shall be satisfied solely out of the assets of such Purchaser, and that no
trustee, officer, other investment vehicle or any other Affiliate of such
Purchaser or any investor, shareholder or holder of shares of beneficial
interest of such a Purchaser shall be personally liable for any liabilities of
such Purchaser.


 


[Signature Pages Follow]


 


20

















 


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


 


	
   

  	
  IMCOR Pharmaceutical Co.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Taffy J. Williams,
  Ph.D., President

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Address:

  	
  6175 Lusk Boulevard

  
	
   

  	
   

  	
  San Diego, CA  92121

  
					



 


21

















 


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


 


	
   

  	
  Purchaser:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Investment Amount:

  	
  $

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address for Notice:

  
								



 


22

















 


Schedule I


 


	
  Purchaser Name

  	
   

  	
  Investment
  Amount

  	
   

  	
  Shares to
  be Issued

  at Initial Closing

  	
   

  	
  Warrants
  to be

  Issued at Initial

  Closing

  	
   

  	
  Shares to
  be Issued

  at Second Closing

  	
   

  	
  Warrants
  to be

  Issued at Second

  Closing

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


1