Document:

EXHIBIT 10.10

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of May 31, 2002, by
and among Roanoke Technology Corp., a Florida corporation, with headquarters
located at 539 Becker Drive, Roanoke Rapids, North Carolina 27870 (the
“Company”), and each of
the purchasers set forth on the signature pages hereto (the
“Buyers”).

WHEREAS:

A.         The Company and the Buyers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”);

B.               Buyers desire to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement (i) 12% convertible debentures of the Company, in the form attached hereto as Exhibit “A”, in the aggregate principal amount of up to Six Hundred Thousand Dollars ($600,000) (together with any debenture(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Debentures”), convertible into shares of. common stock, par value $.0001 per share, of the Company (the “Common Stock”), upon the terms and
subject to the limitations and conditions set forth in such Debentures and (ii) warrants, in the form attached hereto as Exhibit “B”, to purchase up to One Million Eight Hundred Thousand (1,800,000) shares of Common Stock (the “Warrants”);

C.               Each Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Debentures and number of Warrants as is set forth immediately below its name on the signature pages hereto; and

D.               Contemporaneous with the execution and delivery of this Agreement, the parties hereto are executing and delivering a Registration Rights Agreement, in the form attached hereto as Exhibit “C” (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration rights under the 1933 Act and the rules and regulations promulgated thereunder, and applicable state securities laws.

NOW THEREFORE, the Company and each of the Buyers severally (and not jointly) hereby agree as follows:

	
            1.
 	
            PURCHASE AND SALE OF DEBENTURES AND WARRANTS.
 

a.          Purchase of Debentures and Warrants. On the Closing Date (as defined below), the Company shall issue and sell to each Buyer and each Buyer severally agrees to purchase from the Company such principal amount of Debentures and number of Warrants as is set forth immediately below such Buyer’s name on the signature pages hereto, for an aggregate of One Hundred Thousand Dollars ($100,000) principal amount 

 

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of Debentures and Warrants to purchase an aggregate of 300,000 shares of Common Stock.

b.          Form of Payment. On the Closing Date (as defined below), (i) each Buyer shall pay the purchase price for the Debentures and the Warrants to be issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Debentures in the principal amount equal to the Purchase Price and the number of Warrants as is set forth immediately below such Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver suet Debentures and Warrants duly executed on behalf of the Company, to such Buyer, against delivery of such Purchase Price.

c.          Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Debentures and the Warrants pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on November. 18, 2002 or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

2.          BUYERS’ REPRESENTATIONS AND WARRANTIES. Each Buyer severally (and not jointly) represents and warrants to the Company solely as to such Buyer that:

a.          Investment Purpose. As of the date hereof, the Buyer is purchasing the Debentures and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Debentures (including, without limitation, such additional. shares of Common Stock, if any, as are issuable (i) on account of interest on the Debentures, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Debentures and Section 2(c) of the Registration Rights Agreement or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion Shares”) and the Warrants and the shares of
Common Stock issuable upon exercise thereof (the “Warrant Shares” and, collectively with the Debentures, Warrants and Conversion Shares, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from. registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific terra and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

b.          Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

c.          Reliance on Exemptions. The Buyer 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 

 

	
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relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein. in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

d.          Information. The Buyer and its advisors, if any, have been, and for so long as the Debentures and Warrants remain outstanding will continue to be, 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 which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been., and for so long as the Debentures and Warrants remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly
following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk¬

e.          Governmental Review. The Buyer 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.

f.           Transfer or Re-sale. The Buyer understands that (i) except as provided in the Registration Rights Agreement, the sale or re-,sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective  registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company an  opinion of counsel that shall. be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such. registration, which opinion shall be accepted by the Company,
(c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (c) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion. shall be accepted by the Company; (ii) any We of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such
securities under circumstances in which the seller (or the person through whom the sale is made) way be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder, and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to 

 

	
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comply with the terms and conditions of any exemption thereunder (in each case, other than. pursuant to the Registration Rights Agreement). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral. in connection with a bona fide margin account or other lending arrangement. in the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S (provided that such opinion is correct and complies with all applicable rules and regulations), within three (3) business days of delivery of the opinion to the Company, the Company shall pay to the Buyer liquidated damages of three percent (3%) of the outstanding amount of the Debentures per month plus accrued and unpaid interest on the
Debentures, prorated for partial months, in cash or shares at the option of the Buyer (“Standard Liquidated Damages Amount”). If the Buyer elects to be paid the Standard Liquidated Damages Amount in shares of Common Stock, such shares shall be issued at the Conversion Price at the time of payment of the Standard Liquidated Damages Amount.

g.          Legends. The Buyer understands that the Debentures and the Warrants and, until such time as the Conversion Shares and Warrant Shares have been registered under the 1933 Act as contemplated by the Registration Rights Agreement or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Conversion Shares and Warrant Shares way bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended. The securities may not be sold, transferred or assigned in the absence of an effective registration statement for the securities under said Act, or an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, that registration is not required under said Act or unless sold pursuant to Rule 144 or. Regulation. S under said Act.”

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (c) such holder
provides the Company with reasonable assurances that such Security can be sold pursuant to Rule 144 or Regulation S. The Buyer agrees to sell. All 

 

	
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Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.

h.          Authorization: Enforcement.  This Agreement and the Registration Rights Agreement have been duly and validly authorized. This Agreement has been. duly executed and delivered on behalf of the Buyer, and this Agreement constitutes, and upon execution and delivery by the Buyer of the Registration Rights Agreement, such agreement will constitute, valid and binding agreements of the Buyer enforceable in accordance with their terms.

i.           Residency. The Buyer is a resident of the jurisdiction set forth immediately below such Buyer’s name on the signature pages hereto.

3.          REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each Buyer that:

a.          Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with. full power and authority (corporate and other) to own, Lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business
conducted by it manes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as. a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

b.          Authorization, Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Registration Rights Agreement, the Debentures and the Warrants and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Registration Rights Agreement, the Debentures and the Warrants by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Debentures and the Warrants and the issuance and reservation for issuance of the Conversion. Shares and Warrant Shares issuable. upon conversion or exercise thereof)
have been duly authorized by the Company’s Board of Directors and no further consent or authorization. of the Company, its Board of Directors, or its stockholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other 

 

	
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documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Registration Rights Agreement, the Debentures and the Warrants, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

c.          Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 50,000,000 shares of Common Stock, of which 38,038,112 shares are issued and outstanding, 1,290,000 shares are reserved for issuance pursuant to the Company’s stock option plans, 2,000,000 shares are reserved for issuance pursuant to a settlement of a lawsuit, and 50,000 shares are reserved for issuance upon conversion of the Debentures and exercise of the Warrants (subject to adjustment pursuant to the Company’s covenant set forth in. Section 4(h) below); and (ii) 10,000,000 shares of preferred stock, of which no shares are issued and outstanding. All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly
issued, fully paid and nonassessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the stockholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in Schedule 3(c), as of the effective date of this Agreement, (i.) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or
any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act (except the Registration Rights Agreement) and (iii) 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) that will be triggered by the issuance of the Debentures, the Warrants, the Conversion Shares or Warrant Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “Bylaws” ), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall
provide the Buyer with a written update of this representation signed by the Company’s Chief Executive or Chief Financial Officer on behalf of the Company as of the Closing Date.

d.          Issuance of Shares. The Conversion Shares and Warrant Shares are duly authorized and reserved for issuance and, upon conversion of the Debentures and exercise of the Warrants in accordance with their respective terms, will be validly issued, fully paid and. non-assessable, and free from. all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of stockholders of the Company and will not impose personal liability upon the holder thereof.

 

 

	
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e.          Acknowledgement of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares and Warrant Shares upon conversion of the Debenture or exercise of the Warrants. The Company further acknowledges that its obligation to issue Conversion Shares and Warrant Shares upon conversion of the Debentures or exercise of the Warrants in accordance with this Agreement, the Debentures and the Warrants is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other stockholders of the Company.

f.           No Conflicts. The execution, delivery and performance of this Agreement, the Registration Rights Agreement, the Debentures and the Warrants by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares and Warrant Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a patty, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put
the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as a Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or
order of, or make any filing or registration with., any court, governmental agency, regulatory agency, self-regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Registration Rights Agreement, the Debentures or the Warrants in accordance with the terms hereof or thereof or to issue and sell the Debentures and Warrants in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Debentures and the Warrant Shares upon 

 

	
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exercise of the Warrants. Except as disclosed in Schedule 3(f), all consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof: The Company is not in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. 

g.          SEC Documents, Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein; as the “SEC Documents”). The Company has delivered to each Buyer true and complete copies of the SEC Documents, except for such exhibits and
incorporated documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, 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 light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material. respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii.) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material. respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to October 31, 2001 and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company.

h.          Absence of Certain Changes. Since October 31, 2001, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations or prospects of the Company or any of its Subsidiaries.

 

 

	
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i.           Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material. Adverse Effect_ Schedule 3(i) contains a complete list and summary description of any pending or threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any
of the foregoing.

	
            j.
 	
            Patents, Copyrights, etc.
 

(i)         The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated (and, except as set forth in Schedule 3(j) hereof, to the best of the Company’s knowledge, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual
Property necessary to enable it to conduct its business as now operated (and, except as set forth in Schedule 3(j) hereof., to the best of the Company’s knowledge, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security Measures to protect the secrecy, confidentiality and value of their Intellectual Property.

(ii)         All of the Company’s computer software and computer hardware, and other similar or related items of automated, computerized or software systems that are used or relied on by the Company in the conduct of its business or that were, or currently are being, sold or licensed by the Company to customers (collectively, “Information Technology”), are Year 2000 Compliant. For purposes of this Agreement, the term “Year 2000 Compliant” means, with respect to the Company’s Information Technology, that the Information Technology is designed to be used prior to, during and after the calendar Year 2000, and the Information Technology used daring each such time period will accurately receive, provide and process date
      and time data (including, but not limited to, calculating, comparing and sequencing) from, into and between the 20th and 2151 centuries, including the years 1999 and 2000, and leap-year calculations, and will not malfunction, cease to function, or provide invalid or incorrect results as a result of the date or time data, to the extent that other information technology, used in combination with the information Technology, properly exchanges date and time data with. it. The Company has delivered to the Buyers true and correct copies of all analyses, reports, studies and similar written information, whether prepared by the Company or another party, relating to whether the Information Technology is Year 2000 Compliant, if any.

 

 

	
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k.          No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company’s officers bas or is expected to have a Material Adverse Effect.

l.           Tax Status. Except as set forth on Schedule 3(l.), the Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent
to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local. tax. Except as set forth on Schedule 3(1), none of the Company’s tax returns is presently being audited by any taxing authority.

m.         Certain Transactions. Except as set forth on Schedule 3(m) and except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including 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 corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

n.          Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Buyers pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order to snake the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, 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 (assuming for this purpose that the Company’s reports filed under the 1934 Act 

 

	
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are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

o.          Acknowledgment Regarding Buyers’ Purchase of Securities. The Company acknowledges and agrees that the Buyers are acting solely in the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that no Buyer. is acting as a financial advisor or fiduciary of the Company (or in. any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by any Buyer or any of their respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Buyers’ purchase of the Securities. The Company further represents to each
Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.

p.          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 in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyers. The issuance of the Securities to the Buyers will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any stockholder approval        provisions applicable to the Company or its securities.

q.          No Brokers. The Company has, taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

r.          Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions; consents, certificates, approvals and orders necessary-to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “Company permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation or any of the Company Permits, except for any such conflicts, defaults or violations which, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since October 31, 2001, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

	
            s.
 	
            Environmental Matters.
 

(i)         Except as set forth in Schedule 3(s), there are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined 

 

	
            - 11 -
 

 

 

below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental Lawns” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

(ii)         Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are  contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s or any of its Subsidiaries’ business.

(iii)        Except as set forth in Schedule 3(s), there are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law.

t.           Title to Property. The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the-business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

u.          Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary 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 as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. The Company has provided to Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage,
errors and omissions coverage, and commercial general liability coverage.

 

 

	
            - 12 -
 

 

 

 

v.          Internal Accounting, Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, 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.

w.         Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

x.          Solvency. The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e, its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company did not receive a qualified opinion from its auditors with respect to its
most recent fiscal year end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year.

y.          No Investment Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company” ). The Company is not controlled by an Investment Company.

z.          Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyers pursuant to this Agreement, the Company shall pay to the Buyer the Standard Liquidated Damages Amount in cash or in shares of Common Stock at the option of the Buyer, until such breach is cured. If the 

 

	
            - 13 -
 

 

 

Buyers elect to be paid the Standard Liquidated Damages Amounts in shares of Common Stock, such shares shall be issued at the Conversion Price at the time of payment.

	
            4.
 	
            COVENANT’S.
 

a.          Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.

b.          Form Da Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to each Buyer 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 sale to the Buyers at the applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to each Buyer on or prior to the Closing Date.

c.          Reporting _Status: eligibility to Use Form S-3, SB-2 or Form S-1. The Company’s Common Stock is registered under Section 12(g) of the 1934 Act. The Company represents and warrants that it meets the requirements for the use of Form S-3 (or if the Company is not eligible for the use of form S-3 as of the Filing bate (as defined in the Registration Rights Agreement), the Company may use the form of registration for which it is eligible at that time) for registration of the sale by the Buyer of the Registrable Securities (as defined in the Registration Rights Agreement). So long as the Buyer beneficially owns any of the Securities, the Company shall timely file all reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not
terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination. The Company further agrees to file all reports required to be filed by the Company with the SEC in a timely manner so as to become eligible, and thereafter to maintain its eligibility, for the use of Form S-3. The Company shall issue a press release describing the materials terms of the transaction contemplated hereby as soon as practicable following the Closing Date but in no event more than two (2) business days of the Closing Date, which press release shall be subject to prior review by the Buyers. The Company agrees that such press release shall not disclose the name of the Buyers unless expressly consented to in writing by the Buyers or unless required by applicable law or regulation, and then only to the extent of such requirement.

d.          Use of Proceeds. The Company shall use the proceeds from the sale of the Debentures and the Warrants in the manner set forth in Schedule 4(d) attached hereto and made a part hereof and shall not, directly or indirectly, use such proceeds for any loan to or investment in any other corporation, partnership, enterprise or other person (except in connection with its currently existing direct or indirect Subsidiaries) 

e.          Future Offerings. Subject to the exceptions described below, the Company will not, without the prior written consent of a majority-in-interest of the Buyers, not to be unreasonably withheld, negotiate or contract with any party to obtain additional equity financing (including debt financing with an equity component) that 

 

	
            - 14 -
 

 

 

involves (A) the issuance of Common Stock at a discount to the market price of the Common Stock on the date of issuance (taking into account the value of any warrants or options to acquire Common Stock issued in connection therewith) or (B) the issuance of convertible securities that are convertible into an indeterminate number of shares of Common Stock or (C) the issuance of warrants during the period (the “Lock -up Period”) beginning on the Closing Date and ending on the later of (i) two hundred seventy (270) days from the Closing Date and (ii) one hundred eighty (180) days from the date the Registration Statement (as defined in the Registration Rights Agreement) is declared effective (plus any days in which sales cannot be made thereunder). In addition, subject to the exceptions described below, the Company will not conduct any
equity financing (including debt with an equity component) (“Future Offerings”) during the period beginning on the Closing Date and ending two (2) years after the end of the Lock up Period unless it shall have first delivered to each Buyer, at least twenty (20) business days prior to the closing of such Future Offering, written notice describing the proposed Future Offering, including the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith, and providing each Buyer an option during the fifteen (15) day period following delivery of such notice to purchase its pro rata share (based on the ratio that the aggregate principal amount of Debentures purchased by it hereunder bears to the aggregate principal amount of Debentures purchased hereunder) of the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations
referred to in this sentence and the preceding sentence are collectively referred to as the “Capital Raising Limitations”). In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyers concerning the proposed Future Offering, the Company shall deliver a new notice to each Buyer describing the amended terms and conditions of the proposed Future Offering and each Buyer thereafter shall have an option during the fifteen (15) day period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering. The Capital Raising Limitations shall not apply to any transaction involving (i) issuances of securities in a firm commitment
underwritten public offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as consideration for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Company. The Capital Raising Limitations also shall not apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date hereof or to the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan approved by the stockholders of the Company. In the event that the Company completes a Future Offering on terms more favorable to another investor than the transaction contemplated hereby, the terms
of the Debentures and the Warrants will be amended to reflect such more favorable terms.

f.           Expenses. At the Closing, the Company shall reimburse Buyers for expenses incurred by them in connection with the negotiation, preparation, execution, 

 

	
            - 15 -
 

 

 

delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”), including, without limitation, attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Documents. When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for reimbursement to the Buyers for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice by the Buyer. If the Company fails to reimburse the Buyer in full within
five (5) business days of the written notice or submission of invoice by the Buyer, the Company shall pay interest on the total amount of fees to be reimbursed at a rate of 15% per annum.

g.          Financial Information. The Company agrees to send the following reports to each Buyer until such Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the stockholders of the Company, copies of any notices or other information the Company makes available or gives to such stockholders.

h.          Authorization and Reservation of Shares. The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of shares of Common Stock to provide for the full conversion or exercise of the outstanding Debentures and Warrants and issuance of the Conversion Shares and Warrant Shares in connection therewith (based on the Conversion Price of the Debentures or Exercise Price of the Warrants in effect from time to time) and as otherwise required by the Debentures. The Company shall not reduce the number of shares of Common Stock reserved for issuance upon conversion of Debentures and exercise of the Warrants without the consent of each Buyer. The Company shall at all times maintain the number of shares of Common Stock so
reserved for issuance at an amount (“Reserved Amount”) equal to no less than two (2) times the number that is then actually issuable upon full conversion of the Debentures and Additional Debentures and upon exercise of the Warrants and the Additional Warrants (based on the Conversion Price of the Debentures or the Exercise Price of the Warrants in effect from time to time). If at any time the number of shares of Common Stock authorized and reserved for issuance (“Authorized and Reserved Shares”) is below the Reserved Amount, the Company will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares ~ meet the Company’s obligations under this Section 4(h), in the case of an insufficient number of authorized shares,
obtain stockholder approval of an increase in such authorized number of shares, and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the Reserved Amount. If the Company fails to obtain such stockholder approval within thirty (30) days following the date on which the number of Authorized and Reserved Shares exceeds the Reserved Amount, the Company 

 

	
            - 16 -
 

 

 

shall pay to the Borrower the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the option of the Buyer. If the Buyer elects to                  be paid the Standard Liquidated Damages Amount in shares of Common Stock, such shares shall be issued at the Conversion Price at the time of payment. In order to ensure that the Company has authorized a sufficient amount of shares to meet the Reserved Amount at all times, the Company must deliver to the Buyer at the end of every month a list detailing (1) the current amount of shares authorized by the Company and reserved for the Buyer, and (2) amount of shares issuable upon conversion of the Debentures and upon exercise of the Warrants and as payment of interest accrued on the Debentures for one
year. If the Company fails to provide such list within five (5) business days of the end of each month, the Company shall pay the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the option of the Buyer, until the list is delivered. If the Buyer elects to be paid the Standard Liquidated. Damages Amount in shares of Common Stock, such shares shall be issued at the Conversion Price at the time of payment.

i.           Listing. The Company shall promptly secure any required listing of the conversion shares and Warrant Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as any Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares and Warrant Shares from time to time issuable upon conversion of the Debentures or exercise of the Warrants. The Company will obtain and, so long as any Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), or the American Stock Exchange (“AMEV”) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers (“NASD”) and such exchanges, as applicable. The Company shall promptly provide to each Buyer copies of any notices it receives from the OTCBB and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.

j.           Corporate Existence. So long as a Buyer beneficially owns any Debentures or Warrants, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

k.          No Integration. The Company shall not make any offers or sales of any security (other than the Securities) under circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its securities.

 

 

	
            - 17 -
 

 

 

 

l.           Breach of Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyers pursuant to this Agreement, the Company shall pay to the Buyers the Standard Liquidated Damages Amount, in cash or in shares of Common Stock at the option of the Buyer, until such breach is cured. If the Buyers elect to be paid the Standard Liquidated Damages Amount in shares, such shares shall be issued at the Conversion Price at the time of payment.

5.          TRANSFER AGENT INSTRUCTIONS. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the name of each Buyer or its nominee, for the Conversion Shares and Warrant Shares in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Debentures or exercise of the Warrants in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). Prior to registration of the Conversion Shares and Warrant Shares under the 1933 Act or the date on which the Conversion Shares and Warrant Shares maybe sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately
sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares and Warrant Shares, prior to registration of the Conversion Shares and Warrant Shares under the 1933 Act or the date on which the Conversion Shares and Warrant Sham may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Registration Rights Agreement. Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set forth in
Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If a Buyer provides the Company with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares and Warrant Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by such Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyers, by vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyers shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

6.          CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. The obligation of the Company hereunder to issue and sell the Debentures and Warrants to a Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following 

 

	
            - 18 -
 

 

 

conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

a.          The applicable Buyer shall have executed this Agreement and the Registration Rights Agreement, and delivered the same to the Company.

b.          The applicable Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

c.          The representations and warranties of the applicable Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the applicable Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the applicable Buyer at or prior to the Closing Date.

d.          No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the scatters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

7.          CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE. The obligation of each Buyer hereunder to purchase the Debentures and Warrants at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for such Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion:

a.          The Company shall have executed this Agreement and the Registration Rights Agreement, and delivered the same to the Buyer.

b.          The Company shall have delivered to such Buyer duly executed Debentures (in such denominations as the Buyer shall request) and Warrants in accordance with Section 1(b) above.

c.          The Irrevocable Transfer Agent instructions shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.

d.          The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or--complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer 

 

	
            - 19 -
 

 

 

including, but not limited to certificates with respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to the transactions contemplated hereby.

e.          No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

f.           No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company.

g.          The Buyer shall have received an opinion of the Company’s counsel, dated as of the Closing Date, in form, scope and substance reasonably satisfactory to the Buyer and in substantially the same form as Exhibit “D” attached hereto.

h.          The Buyer shall have received an officer’s certificate described in Section 3(c) above, dated as of the Closing Date.

	
            8.
 	
            GOVERNING LAW; MISCELLANEOUS.
 

a.          Governing Law. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION Or THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN
ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER, THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH DISPUTE.

b.          Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all 

 

	
            - 20 -
 

 

 

of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

c.          Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

d.          Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of lave. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof

e.          Entire Agreement; _Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

f.           Notices. Any notices required or permitted to be given under the terms of this Agreement shall be sent by certified or registered mail (return receipt requested) or delivered personally or by courier (including a recognized overnight delivery service) or by facsimile and shall be effective five days after being placed in the mail, if mailed by regular United States mail, or upon receipt, if delivered personally or by courier (including a recognized overnight delivery service) or by facsimile, in such communications shall be:

	
            If to the Company:
 

Roanoke Technology Corp 

539 Becker Drive

Roanoke Rapids, North Carolina 27870 Attention: David L. Smith, Jr.

Telephone: 252-537-9222 ext. 333 or 334 Facsimile: 252--537-3125

Email: dsmith@top-l0.com

 

With copies to:

Anslow & Jaclin, LLP

4400 Route 9, 2nd Floor

Freehold, New Jersey 07728

Attention: Richard Anslow, Esq. 

 

 

	
            - 21 -
 

 

 

 

Telephone: 732-409-1212

Facsimile: 732-577-1188

Email: ramlow@anslowlaw.com

 

If to a Buyer: To the address set forth immediately below such Buyer’s name on the signature pages hereto.

With copy to:

Ballard Spahr Andrews & :Ingersoll, LLP 

1735 Market Street

51st Floor

Philadelphia, Pennsylvania 19103 

Attention: Gerald J. Guarcini, Esq. 

Telephone: 215-864-8625

Facsimile: 215-864-8999

Email:
 guareini@ballardspahr.com

 

Each party shall provide notice to the other party of any change in address.

g.          Successors and Assigns. This Agreement shall be binding, upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor any Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), any Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from a Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.

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

i.           Survival. The representations and warranties of the Company and the agreements and covenants set forth in Sections 3, 4, 5 and 8 shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyers- Each party hereto agrees to indemnify and hold harmless each of the other parties hereto and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by such party of any of its representations, warranties and covenants set forth in Sections 2, 3 and 4 hereof or any of its covenants and obligations under this Agreement or the Registration Rights Agreement, including advancement of expenses as they are incurred.

j.           Publicity. The Company and each of the Buyers shall have the right to review a reasonable period of time before issuance of any press releases, SEC, OTCBB or NASD filings, or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of each of the Buyers, to make any press release or SEC, O’TCBB (or other applicable trading market) or NASD filings-with respect to such transactions as is required by applicable law and regulations (although each of the Buyers shall be 

 

	
            - 22 -
 

 

 

consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).

k.          Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

l.           No Strict Construction. 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.

m.         Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyers by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyers shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of
showing economic loss and without any bond or other security being required.

IN WITNESS WHEREOF, the undersigned Buyers and the Company have caused this Agreement to be duly executed as of the date first above written.

 

	
            ROANOKE TECHNOLOGY CORP.

 

 

 

David L. Smith, Jr.

Chief Executive Officer

 
 	
             
 
	
            AJW PARTNERS, LLC

By:  SMS Group, LLC

 

 

 

 

Corey S. Ribotsky

Manager
 	
             
 

 

RESIDENCE: Delaware

 

 

	
            - 23 -
 

 

 

 

 

	
            ADDRESS:
 	
            1044 Northern Boulevard
 

Suite 302

Roslyn, New York 11576 

Facsimile: (516) 739-7115 

Telephone: (516) 739-7110

 

AGGREGATE SUBSCRIPTION AMOUNT:

	
            Aggregate Principal Amount of Debentures:
 	
            $35,000
 
	
            Number of warrants:
 	
            105,000
 
	
            Aggregate Purchase Price:
 	
            $35,000
 

 

 

	
            AJW OFFSHORE, LTD.

By:  First Street Manager II, LLC

 

 

 

 

Corey S. Ribotsky

Manager
 	
             
 

 

	
            RESIDENCE:
 	
            New York
 

 

	
            ADDRESS:
 	
            1044 Northern Boulevard
 

Suite 302

Roslyn, New York 11576 

Facsimile: (516) 739-7115 

Telephone: (516) 739-7110

 

 

AGGREGATE SUBSCRIPTION AMOUNT:

	
            Aggregate Principal Amount of Debentures:
 	
            $65,000
 
	
            Number of warrants:
 	
            195,000
 
	
            Aggregate Purchase Price:
 	
            $65,000
 

 

 

 

 

	
            - 24 -
 

 

 

 

 

	
            AJW QUALIFIED PARTNERS, LLC

By:  AJW Manager, LLC

 

 

 

 

Corey S. Ribotsky

Manager
 	
             
 

 

	
            RESIDENCE:
 	
            New York
 

 

	
            ADDRESS:
 	
            1044 Northern Boulevard
 

Suite 302

Roslyn, New York 11576 

Facsimile: (516) 739-7115 

Telephone: (516) 739-7110

 

AGGREGATE SUBSCRIPTION AMOUNT:

	
            Aggregate Principal Amount of Debentures:
 	
            $65,000
 
	
            Number of warrants:
 	
            195,000
 
	
            Aggregate Purchase Price:
 	
            $65,000
 

 

 

 

	
            - 25 -
 

 

 

 

AMENDMENT No. 2 TO SECURITIES PURCHASE AGREEMENT

This Amendment No. 2 to Securities Purchase Agreement, dated as of March 31, 2003, shall serve to amend the Securities Purchase Agreement, dated as of November. 18, 2002, as amended by Amendment No. I to Securities Purchase Agreement, dated as of January 3, 2003 (as amended, the “Agreement”), by and among Roanoke Technology Corp., a Florida corporation, with its headquarters located at 539 Becker Drive, Roanoke Rapids, North Carolina 27870, and each of the Buyers set forth in the Agreement.

1.          The undersigned parties hereby agree to amend the Agreement to provide that, as of the date hereof, New Millennium Capital Partners M LLC shall be a Buyer (as defined in the Agreement) and shall have all of the rights and obligations of the other Buyers.

2.          All other provisions of the, Agreement shall remain in full force and effect.

 

 

[Signature Page Follows]

 

	
            - 26 -
 

 

 

 

 

	
            ACCEPTED AND AGREED:

 

 
 	
             
 
	
            ROANOKE TECHNOLOGY CORP.

 

 

 

By:                                                                                                                                                                                                                                                                                            

David L. Smith, Jr.

Chief Executive Officer
 	
             
 
	
             
 	
             
 
	
            AJW PARTNERS, LLC

By:  SMS Group, LLC

 

 

 

By:                                                                                                                                                                                                                                                                                            

Corey S. Ribotsky

Manager
 	
             
 
	
             
 	
             
 
	
            NEW MILLENNIUM CAPITAL PARTNERS, LLC

By:  First Street Manager II, LLC

 

 

 

By:                                                                                                                                                                                                                                                                                            

Corey S. Ribotsky

Manager
 	
             
 
	
             
 	
             
 
	
            AJW OFFSHORE, LTD.

By:  First Street Manager II, LLC

 

 

 

By:                                                                                                                                                                                                                                                                                            

Corey S. Ribotsky

Manager
 	
             
 
	
             
 	
             
 

 

 

 

	
            - 27 -
 

 

 

 

 

	
            AJW QUALIFIED PARTNERS, LLC

 

 

 

By:                                                                                                                                                                                                                                                                                            

Corey S. Ribotsky

Manager
 	
             
 
	
             
 	
             
 

 

 

 

	
            - 28 -EXHIBIT 10.8

                          EXCLUSIVE LICENSE AGREEMENT

                                 by and between

                  ALPHA RESEARCH GROUP, LLC and JODI A. NELSON

                                      and

                                PATHOGENICS, INC.

                                      dated

                                  May 25, 2005

<PAGE>

     THIS  LICENSE AGREEMENT effective as of May 25, 2005 ("Effective Date"), by
and between ALPHA RESEARCH GROUP, LLC, a limited liability corporation organized
and  existing  under  the laws of Nevada and having its principal office at 9550
Gateway  Drive,  Reno,  Nevada 89511 together with Jodi A. Nelson, an individual
residing at 1717 Valentia Street, Denver, CO 80220 ("NELSON," ALPHA RESEARCH and
NELSON referred to together as "LICENSORS"), and PATHOGENICS, INC. a corporation
organized  and  existing  under the laws of the State of Delaware and having its
principal  office  at  99  Derby  Street,  Hingham, Massachusetts, 02043, United
States  of  America  ("PATHOGENICS"  or  "LICENSEE").

                              W I T N E S S E T H:

     WHEREAS, ALPHA RESEARCH has been assigned from NELSON certain Patent Assets
and  Know-How  pursuant  to  the  NELSON  Assignments  and  is  the owner of the
Intellectual  Property,  all  as  defined  herein  and;

     WHEREAS,  PATHOGENICS  desires  to  obtain exclusive license rights, with a
right  to grant sublicenses, under the Intellectual Property, and ALPHA RESEARCH
and  NELSON  desire  to  grant  such  license to PATHOGENICS, upon the terms and
conditions  set  forth  herein  and;

     WHEREAS,  PATHOGENICS  in  consideration for an exclusive license and other
rights  as  set  forth  herein  agrees to provide sufficient funding for (i) the
protection  of  ALPHA  RESEARCH  Intellectual  Property  and  (ii) the continued
clinical  development  of  products  stemming  from  the  Intellectual Property.

     NOW,  THEREFORE,  in consideration of the foregoing premises and the mutual
covenants  herein  contained, and for other good and valuable consideration, the
receipt  and  sufficiency  of  which are hereby acknowledged, the Parties hereby
agree  as  follows:

                                    ARTICLE I
                                   DEFINITIONS

     Unless  specifically set forth to the contrary herein, the following terms,
where  used  in  the  singular or plural, shall have the respective meanings set
forth  below:

1.1.     "Act" shall mean the Federal Food Drug and Cosmetic Act of 1934, and
          ---
the rules and regulations promulgated thereunder, or any successor act, as the
same shall be in effect from time to time.

1.2.     "Affiliate" shall mean (i) any corporation or business entity of which
          ---------
more than fifty percent (50%) of the securities or other ownership interests
representing the equity, the voting stock or general partnership interest are
owned, controlled or held, directly or indirectly, by a Party; (ii) any
corporation or business entity which, directly or indirectly, owns, controls or
holds more than fifty percent (50%) (or the maximum ownership interest permitted
by law) of the securities or other ownership interests representing the equity,
voting stock or general partnership interest of a Party or (iii) any corporation
or business entity of which a Party has the right to acquire, directly or
indirectly, at least fifty percent (50%) of the securities or other ownership
interests representing the equity, voting stock or general partnership interest
thereof.

<PAGE>

1.3.     "Business Day(s)" means any day that is not a Saturday or a Sunday or a
          ---------------
day on which the New York Stock Exchange is closed.

1.4.     "Calendar Quarter" shall mean the respective periods of three (3)
          ----------------
consecutive calendar months ending on March 31, June 30, September 30 and
December 31.

1.5.     "Calendar Year" shall mean each successive period of twelve (12) months
          -------------
commencing on January 1 and ending on December 31.

1.6.     "cGMP" shall mean current applicable good manufacturing practices as
          ----
defined in regulations promulgated by the FDA under the Act relating to the
formulation, manufacture, testing prior to delivery, storage and delivery of the
Product.

1.7.     "Centralized Procedure" shall mean the European Community Centralized
          ---------------------
Procedure for marketing authorization in accordance with Council Regulation EEC
(2309-93) or any successor regulations.

1.8.     "CFR" shall mean the United States Code of Federal Regulations.
          ---

1.9.     "Effective Date" shall mean the date first above written.
          --------------

1.10.     "FDA"  shall  mean  the United States Food and Drug Administration and
           ---
any  successor  agency  having  substantially  the  same  functions,  and  any
corresponding or successor regulatory authority in Europe or having jurisdiction
over  the  Centralized  Procedure  if  the  context  so  indicates.

1.11.     "Field-of-Use"  shall  mean  the  treatment  or  prevention  of  any
neurological,  psychiatric,  psychological or nervous system indication, disease
or  disorder  or  their  symptoms  including,  but  not  limited  to:

-    the treatment of Parkinson Disorders; the prevention and/or
     symptomatic treatment of:

     o    Idiopathic Parkinson's Disease

     o    Parkinson's Plus Disorders

     o    Atypical Parkinsonianism conditions, such as:

          -    Progressive Supra Nuclear Palsy

          -    Multiple Symptom Atrophy

          -    other neurodegenerative disorders of the basal ganglia

<PAGE>

     o    the  prevention  and/or  treatment  of  syndromes  and  complications
          associated  with the long term use of levodopa and dopaminergic agents
          and; including, but not limited to:

          -    levodopa induced dyskinesias

          -    "freezing"

          -    ON/OFF motor fluctuations

     o    the  prevention  and/or  treatment  of  "Run-Away"  dyskinesias  that
          manifest  in  15%-30%  of Parkinson's Disease patients receiving fetal
          nigral and/or stem cell transplant procedures

-    the  treatment  of  schizophrenia,  including  the  prevention or treatment
     of negative symptoms

-    catatonia and/or secondary movement disorders

     o    Parkinsonianism

     o    Tardive Dyskinesia

     o    Dopamine  related  disorders  including  reactions  to  long  term
          dopamine antagonist pharmacotherapy

-    Autoimmune  disorders

-    Rheumatoid  Arthritis

-    Lupus

-    Multiple  Sclerosis

-    Alzheimer's  Disease

-    Neurological  Events

     o    Cerebral Vascular Accident (CVA)

     o    Stroke

     o    Aneurysm

     o    Ischemic Events

     o    Neural trauma induced by traumatic brain injury

-    Movement  Disorders

Notwithstanding  anything  to  the  contrary  above,  the Field-of-Use shall not
include  any oncological disease even if it manifests itself as a disease of the
nervous  system.

1.12.     "First Commercial Sale" shall mean the first sale of Product in any
           ---------------------
country by PATHOGENICS, its Affiliate or its sublicensee(s), for end use or
consumption, after all required Regulatory Approvals have been granted by the
governing health authority of such country.

1.13.     "GAAP" means generally accepted accounting principles in the United
           ----
States.

1.14.     "Improvement"  shall  mean  any and all improvements and enhancements,
           -----------
patentable  or  otherwise,  related  to the Technology or Product for use in the
Field-of-Use  and  the  Territory  including,  without  limitation,  in  the
manufacture,  formulation,  ingredients,  preparation,  presentation,  means  of
delivery  or  administration,  dosage,  indication,  use  or  packaging  of  the
Technology  or  Product.

<PAGE>

1.15.     "Intellectual  Property"  shall  mean  the Patent Assets and Know-How.
           ----------------------

1.16.     "Know-How"  shall  mean  all  factual  and  proprietary  knowledge,
           --------
information, expertise and materials pertaining to the Technology or Product for
use in the Field-of-Use and the Territory, and used or useful in the development
of  the  Product  of  a nature normally held in the industry as trade secrets or
otherwise  as  confidential  information,  including,  without  limitation,
discoveries,  information,  Improvements,  processes,  formulas,  data,  and
inventions,  patentable or otherwise, whether or not capable of precise separate
definition,  which

     (a)  relate to the Technology or Product; and

     (b)  are  owned  by  LICENSORS  or  are  in  LICENSORS'  possession  or
          control,  have  been  assigned  to  ALPHA  RESEARCH  by  NELSON or are
          otherwise  subject  to the NELSON Assignments and/or as to which ALPHA
          RESEARCH has the right to license or sublicense to Third Parties.

Such  know-how  shall include, without limitation, all chemical, pharmaceutical,
toxicological,  preclinical,  clinical, assay control, regulatory, and any other
information  used or useful for the development, manufacturing and/or regulatory
approval of the Technology or Product, including such rights which LICENSORS may
have  to  information  developed  by  Third  Parties.

1.17.     "Net Sales" shall mean the actual gross amount invoiced by PATHOGENICS
           ---------
and  its Affiliates for commercial sales of Product in the Territory, commencing
upon  the  date  of  First  Commercial Sale, after deducting, in accordance with
GAAP,  the  following  :

     (i)  trade, cash and quantity discounts;

     (ii) recalls,  credits  and  allowances  on  account  of  returned  or
          rejected Product, including allowance for breakage or spoilage;

     (iii) rebates and chargebacks;

     (iv) retroactive price reductions;

     (v)  sales  or  excise  taxes,  VAT  or other taxes, and transportation and
          insurance  charges  and  additional  special  transportation,  custom
          duties, and other governmental charges; and

     (vi) rebates  or  similar  payments  paid  in  connection  with  sales  of
          Product  to any governmental or regulatory authority in respect of any
          state or federal Medicare, Medicaid or similar programs in any country
          of the Territory.

<PAGE>

Sales or other transfers between PATHOGENICS and its Affiliates shall be
excluded from the computation of Net Sales and no payments will be payable on
such sales or transfers except where such Affiliates are end users, but Net
Sales shall include the subsequent sales to Third Parties by such Affiliates.

1.18.     "Party"  shall  mean  ALPHA  RESEARCH,  NELSON  or  PATHOGENICS.
           -----

1.19.     "Patent Assets" shall mean the patents and patent applications which
           -------------
as of the Effective Date or at any time during the term of this Agreement
(excluding the U.S. Provisional Application entitled "ATM Activators For Cancer
Treatment", filed on October 26, 2004)

     (a)  are owned by LICENSORS or which ALPHA RESEARCH through the NELSON
          Assignments or any other license or otherwise has or acquires rights
          from a Third Party, and

     (b)  relate to the Technology, Product or any Improvement for use in
          the Field-of-Use and the Territory, including but not limited to
          methods of their development, manufacture, or use, or otherwise relate
          to LICENSORS' Know-How, including all certificates of invention and
          applications for certificates of invention, substitutions, divisions,
          continuations, continuations-in-part, patents issuing thereon or
          reissues or reexaminations thereof and any and all foreign patents and
          patent applications corresponding thereto, supplementary protection
          certificates or the like of any such patents and current and future
          patent applications, including but not limited to the patents and
          patent applications listed on Schedule 1.19 hereto and the patents and
                                        -------------
          patent applications included in the definition of Patent Rights under
          the NELSON Assignments, and any counterparts thereof which have been
          or may be filed in other countries.

1.20.     "Product"  shall  mean  any  product in final form for commercial sale
           -------
which  contains  the  Technology  for use in the Field-of-Use and the Territory.

1.21.     "Proprietary Information" shall mean any and all scientific, clinical,
           -----------------------
regulatory, marketing, financial and commercial information or data, whether
communicated in writing, orally or by any other means, which is owned and under
the protection of one Party and is being provided by that Party to the other
Party in connection with this Agreement.

1.22.     "Regulatory Approval" means all approvals (including pricing and
          ---------------------
reimbursement approvals required for marketing authorization), product and/or
establishment licenses, registrations or authorizations of all regional,
federal, state or local regulatory agencies, departments, bureaus or other
governmental entities, necessary for the manufacture, use, storage, import,
export, transport and sale of Product in a regulatory jurisdiction.

1.23.     "Royalty Year" shall mean each successive twelve (12) month period
           ------------
commencing with the first day of the first month in which occurs the First
Commercial Sale.

<PAGE>

1.24.     "NELSON Assignments" shall mean the Assignments by and between ALPHA
           ------------------
RESEARCH and NELSON, complete copies of which are attached hereto as Exhibit
                                                                     -------
1.24.
----

1.25.     "Sublicense Payments" shall mean any payments received by PATHOGENICS
           -------------------
from sublicensees of rights granted by LICENSORS to PATHOGENICS under Section
2.1 of this Agreement, as consideration for the grant of such sublicense,
including without limitation, license fees, milestone payments, license
maintenance fees, and royalty payments based on net sales of Product by such
sublicensee, but excluding amounts received by PATHOGENICS (i) in connection
with or as a result of amounts or payments to fund or reimburse PATHOGENICS'
research and development in connection with the Technology or Product or (ii) in
connection with or as a result of amounts or payments made as consideration for
a sublicensee's purchase of securities of PATHOGENICS.

1.26.     "Technology" shall mean any novel therapeutic use or formulation of
           ----------
Chloroquine and any of its derivatives or analogs, and including any other
technologies disclosed or covered in the Patent Assets and Know-How and any
derivative, or analog of any of the foregoing.

1.27.     "Territory" shall mean all of the countries in the world.
           ---------

1.28.     "Third Party(ies)" shall mean a person or entity who or which is
           ----------------
neither a Party nor an Affiliate of a Party.

1.29.      "Valid Claim" means a claim of an issued and unexpired patent
            -----------
included within the Patent Assets, which has not been revoked or held
unenforceable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, and which has not been disclaimed or surrendered
through reissue or disclaimer.

                                   ARTICLE II
                              LICENSE; SUBLICENSES

2.1.     License Grant.  ALPHA RESEARCH and NELSON hereby grant to PATHOGENICS
         -------------
and its Affiliates an exclusive (even as to LICENSORS) license under the Patent
Assets and the Know-How, including the right to grant sublicenses, to develop,
make, have made, use, import, offer for sale, market, commercialize, distribute
and sell and otherwise dispose of the Technology and Product for use in the
Field-of-Use and the Territory.  Notwithstanding the aforementioned, ALPHA
RESEARCH shall retain all rights to license the Patent Assets for applications
not in the Field of Use.

2.2.     Improvements by PATHOGENICS.  All rights and title to and interest in
         ---------------------------
any Improvement developed or discovered solely by PATHOGENICS in connection with
the license granted under Section 2.1 above or PATHOGENICS' activities hereunder
shall be vested solely in PATHOGENICS.

<PAGE>

2.3.     Sublicenses. PATHOGENICS shall have the right to grant sublicenses to
         ------------
any Third Party to develop, make, have made, use, import, offer for sale,
market, commercialize, distribute and sell and otherwise dispose of the
Technology or Product for use in the Field-of-Use and the Territory; provided,
however that any such sublicense shall be consistent with the terms of this
Agreement. In the event that PATHOGENICS proposes to grant a sublicense to any
Third Party, PATHOGENICS shall give ALPHA RESEARCH a written notice prior to
entering into the sublicense describing the proposed sublicense, including the
specific rights proposed to be sublicensed and the material commercial and
professional terms of the proposed sublicense.  PATHOGENICS shall also provide
ALPHA RESEARCH with a copy of any sublicense agreements. Upon any termination of
this Agreement pursuant to Section 8.3.1 (a) by ALPHA RESEARCH for an uncured
material breach by PATHOGENICS, ALPHA RESEARCH may elect to have any existing
sublicense agreement(s) survive and assigned by PATHOGENICS to ALPHA RESEARCH
provided that (i) the sublicensee is not in breach of its sublicense agreement
at the time of such termination of this Agreement, and (ii) any sublicensee who
desires its sublicense to survive shall promptly agree in writing to be bound by
the applicable terms of and assume all obligations of PATHOGENICS under this
Agreement.  In the event of a sublicense by PATHOGENICS to a Third Party, the
provisions of Section 5.1.2 of this Agreement shall be applicable.

                                   ARTICLE III
                        DEVELOPMENT AND COMMERCIALIZATION

3.1.     Exchange of Information.  Within ten (10) days after execution of this
         -----------------------
Agreement, LICENSORS shall disclose to PATHOGENICS in English and in writing all
LICENSORS' Intellectual Property not previously available or made available to
PATHOGENICS in electronic format, where available, and hard copies (or, upon
PATHOGENICS' request and at PATHOGENICS' cost, certified copies of originals).
Throughout the term of this Agreement, and in addition to the other
communications required under this Agreement, LICENSORS shall also promptly
disclose to PATHOGENICS in English and in writing on an ongoing basis all
LICENSORS' Intellectual Property, and any and all additions or revisions
thereto.

3.2     Diligence;  Development  and  Commercialization.  PATHOGENICS  shall use
        -----------------------------------------------
commercially  reasonable  efforts  to  develop and commercialize the Product. As
used  herein, "commercially reasonable efforts" shall mean efforts and resources
normally  used  by  PATHOGENICS  for  a  product  owned by it or to which it has
exclusive rights, which is of similar market potential at a similar stage in its
development  or product life, taking into account issues of safety and efficacy,
product  profile,  the  competitiveness  of  the  marketplace,  the  proprietary
position  of  the  Technology  or  Product,  the  regulatory  and  reimbursement
structure  involved,  the  profitability  of  the applicable products, and other
relevant  factors.  The  obligations set forth in this Section 3.2 are expressly
conditioned upon the absence of any serious adverse conditions or event relating
to  the safety or efficacy of the Technology or Product including the absence of
any  action  by  any  regulatory  authority  limiting  the  development  or
commercialization  of the Technology or Product.  LICENSORS shall cooperate with
PATHOGENICS in connection with efforts to develop and commercialize the Product.

<PAGE>

3.3     Regulatory  Matters.
        -------------------

(a)  PATHOGENICS shall own, control and retain primary legal responsibility
     for the preparation, filing and prosecution of all filings and regulatory
     applications required to obtain authorization to commercially develop, sell
     and use Product for use in the Field-of-Use and the Territory and
     Field-of-Use. PATHOGENICS shall promptly notify ALPHA RESEARCH upon the
     receipt of Regulatory Approvals and of the date of First Commercial Sale.

(b)  LICENSORS shall allow PATHOGENICS to cross reference any regulatory
     filings relating to the Technology or Product owned or controlled by
     LICENSORS. LICENSORS shall cooperate with PATHOGENICS in connection with
     obtaining regulatory approval of Product.

3.4.     Trademark.  PATHOGENICS  shall  select, own and maintain trademarks for
         ----------
the  Technology  or  Product  for  use  in  the  Field-of-Use and the Territory.

3.5.     Agreements.  Attached  hereto  as  Schedule  3.5  is  a  list  of  all
         -----------
contracts,  agreements  and other arrangements between LICENSORS and any and all
Third  Parties relating to the research, development or commercialization of the
Technology  or  Product (other than the NELSON Assignments which are attached as
Exhibit  1.24).  PATHOGENICS  shall  not  be  responsible  for  any  contractual
obligations  relating  to  the  Technology  or  Product  incurred  by LICENSORS.

                                   ARTICLE IV
                          CONFIDENTIALITY AND PUBLICITY

4.1.     Non-Disclosure and Non-Use Obligations.  All Proprietary Information
         --------------------------------------
disclosed by one Party to the other Party hereunder shall be maintained in
confidence and shall not be disclosed to any Third Party or used for any purpose
except as expressly permitted herein without the prior written consent of the
Party that disclosed the Proprietary Information to the other Party during the
term of this Agreement and for a period of five years thereafter.  The foregoing
non-disclosure and non-use obligations shall not apply to the extent that such
Proprietary Information:

     (a)  is known by the receiving Party at the time of its receipt, and
          not through a prior disclosure by the disclosing Party, as documented
          by business records;

     (b)  is or becomes properly in the public domain or knowledge;

<PAGE>

     (c)  is subsequently disclosed to a receiving Party by a Third Party
          who may lawfully do so and is not under an obligation of
          confidentiality to the disclosing Party; or

     (d)  is developed by the receiving Party independently of Proprietary
          Information received from the other Party, as documented by research
          and development records.

4.2.     Permitted Disclosure of Proprietary Information.  Notwithstanding
         -----------------------------------------------
Section 4.1, a Party receiving Proprietary Information of another Party may
disclose such Proprietary Information:

     (a)  to governmental or other regulatory agencies in order to obtain
          patents pursuant to this Agreement, or to gain approval to conduct
          clinical trials or to market Product, but such disclosure may be only
          to the extent reasonably necessary to obtain such patents or
          authorizations;

     (b)  by each of PATHOGENICS or LICENSORS to their respective agents,
          consultants, Affiliates, PATHOGENICS' sublicensees and/or other Third
          Parties for the research and development, manufacturing and/or
          marketing of the /or Product (or for such parties to determine their
          interests in performing such activities) on the condition that such
          Third Parties agree to be bound by the confidentiality obligations
          consistent with this Agreement; or

     (c)  if required to be disclosed by law or court order, provided that
          notice is promptly delivered to the non-disclosing Party in order to
          provide an opportunity to challenge or limit the disclosure
          obligations; provided, however, without limiting any of the foregoing,
          it is understood that the Parties or their Affiliates may make
          disclosure of this Agreement and the terms hereof in any filings
          required by the SEC, may file this Agreement as an exhibit to any
          filing with the SEC and may distribute any such filing in the ordinary
          course of its business, provided, however, that to the maximum extent
          allowable by SEC rules and regulations, the Parties shall be obligated
          to maintain the confidentiality obligations set forth herein and shall
          redact any confidential information set forth in such filings.

4.3.     Publication     In the event LICENSORS or any Affiliate of or
         -----------
consultant to LICENSORS wishes to make a publication relating to Technology or
Product, it shall deliver to PATHOGENICS a copy of the proposed publication or
an outline of the oral disclosure at least sixty (60) Business Days prior to
submission or presentation, such that any issue of patent protection can be
resolved in accordance with the terms of this Agreement.

                                    ARTICLE V
                         PAYMENTS; ROYALTIES AND REPORTS

5.1.     Royalties  and  Other  Payments.
         --------------------------------

<PAGE>

     5.1.1. Royalties Payable By PATHOGENICS.

     (i)  Subject to the terms and conditions of this Agreement, and in
          further consideration of the rights granted by ALPHA RESEARCH and
          NELSON hereunder, PATHOGENICS shall pay to ALPHA RESEARCH royalties in
          an amount equal to four percent (4%) of Net Sales in each Royalty Year
          by PATHOGENICS or its Affiliates in the Territory if the manufacture,
          use or sale of such Product would, absent the license granted
          hereunder, infringe one or more Valid Claims of the Patent Assets in
          the Territory.

     (ii) Royalties on Net Sales at the rates set forth in (i) above shall
          accrue as of the date of First Commercial Sale of Product in the
          applicable country and shall continue and accrue on Net Sales on a
          country-by-country basis until the expiration of the last to expire
          Patent Asset in such country. Thereafter, PATHOGENICS shall be
          relieved of any royalty payment under this Section 5.1.

     (iii) As further consideration for the license and other rights
          granted to PATHOGENICS hereunder, (a) PATHOGENICS shall pay to ALPHA
          RESEARCH a milestone payment of One Hundred Thousand Dollars
          ($100,000) payable in cash or registered stock of the LICENSEE upon
          successful completion of a Phase II clinical trial for each licensed
          Product, (b) PATHOGENICS shall pay to ALPHA RESEARCH a milestone
          payment of Two Hundred and Fifty Thousand Dollars ($250,000) payable
          in cash or registered stock of the LICENSEE upon successful completion
          of a Phase III clinical trial for each licensed Product, and (c)
          PATHOGENICS shall pay to ALPHA RESEARCH a milestone payment of One
          Million Dollars ($1,000,000) payable in cash or registered stock of
          the LICENSEE upon receiving new drug approval for each licensed
          Product.

     (iv) The payment of royalties set forth above shall be subject to the
          following conditions:

          (A)  only one payment shall be due with respect to the same unit
               of Product;

          (B)  no royalties shall accrue on the disposition of Product by
               PATHOGENICS, Affiliates or sublicensees as samples (promotion or
               otherwise) or as donations (for example, to non-profit
               institutions or government agencies) or to clinical trials; and

          (C)  LICENSORS shall be responsible for payment of any royalties
               or other obligations owed by LICENSORS to any Third Party,
               including without limitation, pursuant to the NELSON Assignments.

<PAGE>

     5.1.2.    Payments in the Event of Sublicense. In the event PATHOGENICS
               -----------------------------------
               enters into a sublicense with a Third Party or Third Parties
               under Section 2.3 of this Agreement and ceases the manufacture,
               use, and sale of Product, then as of the effective date of the
               sublicense PATHOGENICS' obligation to pay ALPHA RESEARCH any
               royalties or milestone payments under Section 5.1.1 above shall
               terminate and, in lieu thereof, ALPHA RESEARCH shall be entitled
               to twenty percent (20%) of Sublicense Payments received by
               PATHOGENICS.

     5.1.3.    Affiliate Sales. In the event that PATHOGENICS transfers the
               ---------------
               Technology (for conversion to Product) or Product to one of its
               Affiliates, there shall be no royalty due at the time of
               transfer. Subsequent sales of Product by the Affiliate to end
               users such as patients, hospitals, medical institutions, health
               plans or funds, wholesalers (which are not sublicensees),
               pharmacies or other retailers, shall be reported as Net Sales
               hereunder by PATHOGENICS.

     5.1.4.    Compulsory Licenses. If a compulsory license is granted to a
               -------------------
               Third Party with respect to Product in any country in the
               Territory with a royalty rate lower than the royalty rate
               provided by Section 5.1.1, then the royalty rate to be paid by
               PATHOGENICS on Net Sales in that country under Section 5.1.1
               shall be reduced to the rate paid by the compulsory Third Party
               licensee.

     5.1.5.    Third Party Licenses. If one or more licenses from a Third Party
               --------------------
               or Third Parties are obtained by PATHOGENICS in order to develop,
               make, have made, use, sell or import the Technology or Product in
               a particular country, any royalties or other payments paid under
               such Third Party patent licenses by PATHOGENICS in such country
               for such Calendar Quarter shall be creditable against up to
               one-half (1/2) the royalty or other payments payable to ALPHA
               RESEARCH by PATHOGENICS in such country.

     5.1.6.    Combination Product. Notwithstanding the provisions of Section
               -------------------
               5.1.1, in the event a Product is sold as a combination product
               with other products, Net Sales, for purposes of royalty payments
               on the combination product, shall be calculated by multiplying
               the Net Sales of that combination product by the fraction A/B,
               where A is the gross selling price of the Product sold separately
               and B is the gross selling price of the combination product. If
               no such separate sales are made by PATHOGENICS or its Affiliates,
               Net Sales for royalty determination shall be calculated by
               multiplying Net Sales of the combination product by the fraction
               C/(C+D), where C (excluding the fully allocated cost of the other
               product in question) is the fully allocated cost of the Product
               and D is the fully allocated cost of such other products.

5.2.     Reports; Payment of Royalty.  During the term of the Agreement for so
         ---------------------------
long as royalty or other payments are due, PATHOGENICS shall furnish to ALPHA
RESEARCH a quarterly written report for the Calendar Quarter showing the Net
Sales of all Products subject to royalty payments sold by PATHOGENICS and its
Affiliates (or, if sales of Product were made by an PATHOGENICS sublicensee, the
Sublicense Payments received from such sublicensee as a result of such sales)
during the reporting period and the royalties or other payments payable to ALPHA
RESEARCH under this Agreement.  Reports shall be due on the thirtieth (30th) day
following the completion and/or filing of its quarterly or annual report.
Royalties or other payments shown to have accrued by each royalty report, if
any, shall be due and payable on the date such report is due.  PATHOGENICS shall
keep complete and accurate records in sufficient detail to enable the royalties
or other payments hereunder to be determined.  If no royalties or other payments
are due to ALPHA RESEARCH for any reporting period, then no written report shall
be required.

<PAGE>

5.3.     Audits. Upon the written request of ALPHA RESEARCH and not more than
         ------
once in each Calendar Year, PATHOGENICS shall permit an independent certified
public accounting firm selected by ALPHA RESEARCH and reasonably acceptable to
PATHOGENICS to have access during normal business hours, upon ten-days notice to
PATHOGENICS, to review the records of PATHOGENICS as may be reasonably necessary
to verify the accuracy of the royalty reports hereunder for any Royalty Year
ending not more than twenty-four (24) months prior to the date of such request.
The accounting firm shall disclose to ALPHA RESEARCH only whether the royalty
reports are correct or incorrect and the specific details concerning any
discrepancies.

     5.3.1.    If such accounting firm concludes that additional royalties were
               owed during such Royalty Year, PATHOGENICS shall pay the
               additional royalties within sixty (60) days of the date ALPHA
               RESEARCH delivers to PATHOGENICS such accounting firm's written
               report so concluding; provided however, that, in the event that
               PATHOGENICS shall not be in agreement with the conclusion of such
               report (a) PATHOGENICS shall not be required to pay such
               additional royalties and (b) such matter shall be resolved
               pursuant to the provisions of Section 9.5 herein. In the event
               such accounting firm or, if the matter is resolved in accordance
               with Section 9.5 herein, any arbitration award concludes that
               amounts were overpaid by PATHOGENICS during such period, ALPHA
               RESEARCH shall repay PATHOGENICS the amount of such overpayment
               within sixty (60) days of the date ALPHA RESEARCH delivers to
               PATHOGENICS such accounting firm's written report so concluding.
               The fees charged by such accounting firm shall be paid by ALPHA
               RESEARCH; provided, however, that if an error is in favor of
                         --------  -------
               ALPHA RESEARCH of more than the greater of (i) $10,000 or (ii)
               ten percent (10%) of the royalties due hereunder for the period
               being reviewed is discovered, then the fees and expenses of the
               accounting firm shall be paid by PATHOGENICS.

     5.3.2.    Upon the expiration of twenty-four (24) months following the end
               of any Royalty Year the calculation of royalties payable with
               respect to such year shall be binding and conclusive upon ALPHA
               RESEARCH, and PATHOGENICS shall be released from any liability or
               accountability with respect to royalties for such year.

     5.3.3.    ALPHA RESEARCH shall treat all financial information subject to
               review under this Section 5.3 in accordance with the
               confidentiality provisions of this Agreement.

<PAGE>

5.4.     Tax Withholding.  If laws, rules or regulations require withholding of
         ---------------
income taxes or other taxes imposed upon payments set forth in this Article V,
ALPHA RESEARCH shall provide PATHOGENICS, prior to any such payment, once each
Royalty Year or more frequently if required, with all forms or documentation
required by any applicable taxation laws, treaties or agreements to such
withholding or as necessary to claim a benefit thereunder and PATHOGENICS shall
make such withholding payments as required and subtract such withholding
payments from the payments set forth in this Article V. PATHOGENICS will use
commercially reasonable efforts consistent with its usual business practices and
cooperate with ALPHA RESEARCH to ensure that any withholding taxes imposed are
reduced as far as possible under the provisions of the current or any future
taxation treaties or agreements between foreign countries.

5.5.     Exchange Controls. Notwithstanding any other provision of this
         -----------------
Agreement, if at any time legal restrictions prevent the prompt remittance of
part or all of the royalties with respect to Net Sales in any country, payment
shall be made through such lawful means or methods as PATHOGENICS may determine.
When in any country the law or regulations prohibit both the transmittal and
deposit of royalties on sales in such a country, royalty payments shall be
suspended for as long as such prohibition is in effect (and such suspended
payments shall not accrue interest), and promptly after such prohibition ceases
to be in effect, all royalties or other payments that PATHOGENICS or its
Affiliates would have been obligated to transmit or deposit, but for the
prohibition, shall be deposited or transmitted, as the case may be, to the
extent allowable (with any interest earned on such suspended royalties which
were placed in an interest-bearing bank account in that country, less any
reasonable transactional costs).  If the royalty rate specified in this
Agreement should exceed the permissible rate established in any country, the
royalty rate for sales in such country shall be adjusted to the highest legally
permissible or government-approved rate.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

6.1.     ALPHA RESEARCH and NELSON Representations and Warranties.  ALPHA
         --------------------------------------------------------
RESEARCH and NELSON represent and warrant to PATHOGENICS that as of the
Effective Date:

     (a)  the issued patents included in the Patent Assets are valid and
          enforceable over any references or prior art known to ALPHA RESEARCH
          or its agents, including NELSON, taken alone or in combination;

     (b)  this Agreement has been duly executed and delivered by ALPHA
          RESEARCH and NELSON and constitutes legal, valid, and binding
          obligations enforceable against ALPHA RESEARCH and NELSON in
          accordance with its terms, except as enforceability is limited by (A)
          any applicable bankruptcy, insolvency, reorganization, moratorium or
          similar law affecting creditor's rights generally, or (B) general
          principals of equity, whether considered in a proceeding in equity or
          at law;

<PAGE>

     (c)  no approval, authorization, consent, or other order or action of
          or filing with any court, administrative agency or other governmental
          authority is required for the execution and delivery by ALPHA RESEARCH
          and NELSON of this Agreement or the consummation by ALPHA RESEARCH and
          NELSON of the transactions contemplated hereby;

     (d)  ALPHA RESEARCH and NELSON have the full corporate power and
          authority to enter into and deliver this Agreement, to perform and to
          grant the licenses granted under Article II hereof and to consummate
          the transactions contemplated hereby; all corporate acts and other
          proceedings required to be taken to authorize such execution,
          delivery, and consummation have been duly and properly taken and
          obtained;

     (e)  ALPHA RESEARCH and NELSON have not previously assigned,
          transferred, conveyed or otherwise encumbered its right, title and
          interest in the Intellectual Property for use in the Field-of-Use in
          the Territory or entered into any agreement with any Third Party which
          is in conflict with the rights granted to PATHOGENICS pursuant to this
          Agreement;

     (f)  ALPHA RESEARCH and NELSON are the sole owner or exclusive
          licensee under the Intellectual Property, all of which are free and
          clear of any liens, charges and encumbrances, no other person,
          corporate or other private entity, or governmental or university
          entity or subdivision thereof has any claim of ownership or rights
          with respect to the ALPHA RESEARCH and NELSON Intellectual Property,
          whatsoever;

     (g)  ALPHA RESEARCH and NELSON have disclosed to PATHOGENICS the
          complete texts of all Patent Assets as well as all information
          received by ALPHA RESEARCH and NELSON concerning the institution or
          possible institution of any interference, opposition, re-examination,
          reissue, revocation, nullification, or any official proceeding
          involving a Patent Asset, and that it will continue such disclosure
          with respect to new events during the term of the Agreement;

     (h)  to the best of ALPHA RESEARCH's and NELSON's knowledge, the
          development, manufacture, use and sale of Products would not infringe
          any patent rights owned or possessed by any Third Party;

     (i)  Schedule 1.19 is a complete and accurate list of all patents and
          patent applications in the Territory relating to the Technology or
          Product owned or exclusively licensed by ALPHA RESEARCH or NELSON or
          to which ALPHA RESEARCH or NELSON have the right to license;

     (j)  there are no claims, judgments or settlements against or owed by
          ALPHA RESEARCH or NELSON relating to the Patent Assets or pending or,
          to the best of ALPHA RESEARCH's and NELSON's knowledge, threatened
          claims or litigation against ALPHA RESEARCH or NELSON relating to the
          Patent Assets;

<PAGE>

     (k)  ALPHA RESEARCH and NELSON have disclosed to PATHOGENICS all
          relevant information known by them regarding the ALPHA RESEARCH and
          NELSON Intellectual Property reasonably related to the activities
          contemplated under this Agreement;

     (l)  attached as Exhibit 1.24 are true and complete copies of the
          NELSON Assignments, including all supplements thereto and
          modifications or amendments thereof. ALPHA RESEARCH is not, and to the
          best of ALPHA RESEARCH's knowledge, NELSON is not, in default under or
          in breach of any terms or provisions of the NELSON Assignments and
          such agreements are in full force and effect as of the date hereof.
          During the term of this Agreement, ALPHA RESEARCH shall not amend,
          modify, terminate or cause a default under the NELSON Assignments, or
          reject the NELSON Assignments pursuant to a bankruptcy proceeding
          (including 11 U.S.C. 365);

     (m)  EXCEPT AS SPECIFICALLY PROVIDED HEREIN, ALPHA RESEARCH AND NELSON
          DO NOT MAKE, AND EXPRESSLY DISCLAIM ANY WARRANTIES, EITHER EXPRESS OR
          IMPLIED, ORAL OR WRITTEN, AS TO ANY MATTER WHATSOEVER, INCLUDING,
          INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF
          MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE CONCERNING THE
          PATENT ASSETS.

6.2.     PATHOGENICS Representations and Warranties.  PATHOGENICS represents and
         ------------------------------------------
warrants  to  ALPHA  RESEARCH  that  as  of  the  Effective  Date:

     (a)  this Agreement has been duly executed and delivered by it and
          constitutes legal, valid, and binding obligations enforceable against
          it in accordance with its terms;

     (b)  PATHOGENICS has full corporate power and authority to execute and
          deliver this Agreement and to consummate the transactions contemplated
          hereby. All corporate acts and other proceedings required to be taken
          to authorize such execution, delivery, and consummation have been duly
          and properly taken and obtained;

     (c)  no approval, authorization, consent, or other order or action of
          or filing with any court, administrative agency or other governmental
          authority is required for the execution and delivery by it of this
          Agreement or the consummation by it of the transactions contemplated
          hereby.

     (d)  EXCEPT AS SPECIFICALLY PROVIDED HEREIN, PATHOGENICS DOES NOT
          MAKE, AND EXPRESSLY DISCLAIM ANY WARRANTIES, EITHER EXPRESS OR
          IMPLIED, ORAL OR WRITTEN, AS TO ANY MATTER WHATSOEVER, INCLUDING,
          INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF
          MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

<PAGE>

                                   ARTICLE VII
                                 PATENT MATTERS

7.1.     Filing, Prosecution and Maintenance of Patent Applications or Patents.
         ---------------------------------------------------------------------
PATHOGENICS shall have the first right to file, prosecute and maintain the
Patent Assets in the Field-of-Use and the Territory in ALPHA RESEARCH's or
NELSON's name and shall be responsible for the payment of all patent prosecution
and maintenance costs incurred after the Effective Date, subject to the
remainder of this paragraph. Pathogenics shall also be responsible for
previously unpaid patent costs incurred before the Effective Date and related to
the Patent Assets as described in Schedule 7.1 hereto, and agrees to pay such
costs upon completion of its first public offering of stock.  If LICENSORS
license any of the Patent Assets to a Third Party for use outside the
Field-of-Use, then PATHOGENICS shall be reimbursed or credited a pro-rata
portion (i.e., in the event there is one other Third Party Licensee -
PATHOGENICS receives 50% reimbursement; two Third Party Licensee's - PATHOGENICS
receives 67% reimbursement, etc.) of all patent prosecution and maintenance
costs.  If PATHOGENICS elects not to file, prosecute or maintain a patent
application or patent included in the Patent Assets in any particular country,
it shall provide ALPHA RESEARCH with written advance notice sufficient to avoid
any loss or forfeiture, and ALPHA RESEARCH shall have the right, but not the
obligation, at its sole expense, to file, prosecute or maintain such patent
application or patent in such country in ALPHA RESEARCH's or NELSON's name.
Thereafter, PATHOGENICS' License Grant per Section 2.1 and all other license
rights and royalty obligations per this Agreement related to that Patent Asset
in such country shall terminate and such patent or patent application in such
country shall no longer be deemed a Patent Asset. The termination of License
Grant or other license rights shall not affect any other rights or obligations
accrued by either Party prior to the effective date of such termination. Upon
PATHOGENICS' request, the Parties shall reasonably cooperate in the filing,
prosecution or maintenance of any patent application or patent included in the
Patent Assets.

7.2.     Patent Office and Court Proceedings.  Each Party shall inform the other
         -----------------------------------
Party  of  any Third Party request for, filing, or declaration of any proceeding
before a patent office seeking to protest, oppose, cancel, reexamine, declare an
interference  proceeding,  initiate a conflicts proceeding, or analogous process
involving  a  patent  application or patent included in the Patent Assets, or of
the  filing of an action in a court of competent jurisdiction seeking a judgment
that  a  patent included in the Patent Assets is either invalid or unenforceable
or  both.  Each  Party  thereafter  shall  cooperate  fully  with the other with
respect  to any such patent office or court proceeding.  Each Party will provide
the other with any information or assistance that is reasonable. Notwithstanding
the  foregoing  or the provisions of Section 7.3 below, in the event of any such
action  or  proceeding,  LICENSORS  shall indemnify and hold PATHOGENICS and its
Affiliates  harmless  from  and  against any and all claims, damages, judgments,
liabilities,  costs  and  expenses  including,  without  limitation  reasonable
litigation  costs  and  legal fees and expenses, that may be incurred by, levied
upon  or are payable by PATHOGENICS or any of its Affiliates as a result of such
Third  Party  action  or  proceeding  and  due  to  the  direct  breach of ALPHA
RESEARCH's  or NELSON's representations and warranties under Section 6.1 of this
Agreement.

<PAGE>

7.3.     Enforcement  and  Defense.
         -------------------------

     (a)  Each Party shall promptly give the other Party notice of any
          infringement in the Territory of any patent application or patent
          included in the Patent Assets that comes to such Party's attention.
          The Parties will thereafter consult and cooperate fully to determine a
          course of action, including, without limitation, the commencement of
          legal action by any Party. However, PATHOGENICS shall have the first
          right to initiate and prosecute such legal action at its own expense
          and in the name of ALPHA RESEARCH, NELSON and PATHOGENICS, or to
          control the defense of any declaratory judgment action relating to
          Patent Assets. PATHOGENICS shall promptly inform ALPHA RESEARCH if
          PATHOGENICS elects not to exercise such first right, and ALPHA
          RESEARCH thereafter shall have the right either to initiate and
          prosecute such action or to control the defense of such declaratory
          judgment action in the name of ALPHA RESEARCH, NELSON and, if
          necessary, PATHOGENICS. In no event shall ALPHA RESEARCH or NELSON be
          obligated to enforce or defend any of the Patent Assets.

     (b)  If either Party elects not to initiate and prosecute an
          infringement or defend a declaratory judgment action in any country in
          the Territory as provided in Subsection 7.3(a), and the other Party
          elects to do so, the cost of any agreed-upon course of action,
          including the costs of any legal action commenced or any declaratory
          judgment action defended, shall be borne solely by the electing Party.

     (c)  For any such legal action or defense, in the event that any Party
          is unable to initiate, prosecute, or defend such action solely in its
          own name, the other Party will join such action voluntarily and will
          execute all documents necessary for the Party to prosecute, defend and
          maintain such action. In connection with any such action, the Parties
          will cooperate fully and will provide each other with any information
          or assistance that either reasonably may request.

     (d)  Any recovery obtained by PATHOGENICS or ALPHA RESEARCH shall be
          shared as follows:

          (i)  the Party that initiated and prosecuted, or maintained the
               defense of, the action shall recoup all of its costs and expenses
               (including reasonable attorneys' fees) incurred in connection
               with the action, whether the recovery is by settlement or
               otherwise;

          (ii) the other Party then shall, to the extent possible, recover
               its costs and expenses (including reasonable attorneys' fees)
               incurred in connection with the action;

          (iii) if ALPHA RESEARCH initiated and prosecuted, or maintained
               the defense of, the action, the amount of any recovery remaining
               then shall be retained by ALPHA RESEARCH; and

<PAGE>

          (iv) if PATHOGENICS initiated and prosecuted, or maintained the
               defense of, the action, the amount of any recovery remaining
               shall be retained by PATHOGENICS, except that ALPHA RESEARCH
               shall receive a portion equivalent to the royalties it would have
               received in accordance with the terms of this Agreement if such
               amount were deemed Net Sales.

7.4.     Patent  Term  Extensions  or  Restorations  and Supplemental Protection
         -----------------------------------------------------------------------
Certificates.  The  Parties  shall cooperate with each other in obtaining patent
------------
term extensions or restorations or supplemental protection certificates or their
equivalents in any country in the Territory where applicable and where desired
by PATHOGENICS. If elections with respect to obtaining such extension or
supplemental protection certificates are to be made, PATHOGENICS shall have the
right to make the election and ALPHA RESEARCH and NELSON shall abide by such
election. ALPHA RESEARCH and NELSON shall notify PATHOGENICS of (a) the issuance
of each U.S. patent included within the Patent Assets, giving the date of issue
and patent number for each such patent, and (b) each notice pertaining to any
patent included within the Patent Assets pursuant to the United States Drug
Price Competition and Patent Term Restoration Act of 1984 (hereinafter called
the " 1984 Act"), including notices pursuant to 101 and 103 of the 1984 Act from
persons who have filed an abbreviated NDA ("ANDA"). Such notices shall be given
promptly, but in any event within ten (10) calendar days of each such patent's
date of issue or receipt of each such notice pursuant to the Act, whichever is
applicable. ALPHA RESEARCH and NELSON shall notify PATHOGENICS of each filing
for patent term extension or restoration under the 1984 Act, any allegations of
failure to show due diligence and all awards of patent term restoration
(extensions) with respect to the Patent Assets. Likewise, ALPHA RESEARCH and
NELSON shall inform PATHOGENICS of patent extensions in the rest of the world
regarding the Technology or Product.

7.5     Security  Interest.  Within  thirty  (30)  days from the Effective Date,
        -------------------
ALPHA RESEARCH and NELSON shall grant to PATHOGENICS a first priority security
interest, senior to any and all other liens and encumbrances, in all of the
ALPHA RESEARCH and NELSON Patent Assets, whether now owned or hereafter acquired
by ALPHA RESEARCH and NELSON and in all of ALPHA RESEARCH's and NELSON's rights
in and to all ALPHA RESEARCH and NELSON Patent Assets controlled by ALPHA
RESEARCH and NELSON (collectively, the "Collateral"). The grant of the security
interest will secure the performance when due of the obligations of ALPHA
RESEARCH and NELSON owed to PATHOGENICS under this Agreement. ALPHA RESEARCH and
NELSON shall execute and deliver such agreements, instru-ments, documents or
notices (including without limitation financing statements or amendments
thereto), and take such other actions, as PATHOGENICS may reasonably deem
necessary in order to perfect, protect and preserve any lien granted or
purported to be granted by such security interest and to enable PATHOGENICS to
exercise and enforce any of its rights and remedies hereunder with respect to
any Collateral. PATHOGENICS shall be responsible for any costs associated with
the grant of this security interest.

<PAGE>

                                  ARTICLE VIII
                              TERM AND TERMINATION

8.1.     Term  and  Expiration.  This  Agreement  shall  be  effective as of the
         ---------------------
Effective Date and unless terminated earlier pursuant to Section 8.2 and 8.3
below, the term of this Agreement shall continue in effect on a
country-by-country basis until the expiration of the last to expire Patent Asset
in such country.

8.2.     Termination  by  Notice.  Notwithstanding  anything contained herein to
         -----------------------
the contrary, PATHOGENICS shall have the right to terminate this Agreement at
any time by giving thirty (30) days advance written notice to ALPHA RESEARCH.
Except as set forth in this Agreement, in the event of such termination, (i) the
rights and obligations hereunder, excluding any payment obligation that has
accrued as of the termination date and excluding rights and obligations relating
to confidentiality, shall terminate immediately, and (ii) the provisions of
Section 8.4 shall be applicable.

8.3.     Termination.
         -----------

     8.3.1     Termination for Cause. Either Party may terminate this Agreement
               by notice to the other Party at any time during the term of this
               Agreement as follows:

               (a)  if the other Party is in breach of any material
                    obligation hereunder by causes and reasons within its
                    control, or has breached, in any material respect, any
                    representations or warranties set forth in Article VI, and
                    has not cured such breach within ninety (90) days after
                    notice requesting cure of the breach, provided, however,
                    that if the breach is not capable of being cured within
                    ninety (90) days of such written notice, the Agreement may
                    not be terminated sooner than one hundred twenty (120) days
                    of such written notice so long as the breaching Party
                    commences and is taking commercially reasonable actions to
                    cure such breach as promptly as practicable; or (b) upon the
                    filing or institution of bankruptcy, reorganization,
                    liquidation or receivership proceedings, or upon an
                    assignment of a substantial portion of the assets for the
                    benefit of creditors by the other Party; provided, however,
                    in the case of any involuntary bankruptcy, reorganization,
                    liquidation, receivership or assignment proceeding such
                    right to terminate shall only become effective if the Party
                    consents to the involuntary proceeding or such proceeding is
                    not dismissed within ninety (90) days after the filing
                    thereof.

     8.3.2     LICENSEE Rights Not Affected.
               ----------------------------

               (a)  In the event PATHOGENICS terminates this Agreement
                    under Section 8.3.1(b), or this Agreement is otherwise
                    terminated under Section 8.3.1(b), or ALPHA RESEARCH or
                    NELSON are debtors in a bankruptcy proceeding, whether
                    voluntary or involuntary, all rights and licenses granted
                    pursuant to this Agreement are, and shall otherwise be
                    deemed to be, for purposes of Section 365(n) of 11 U.S.C.
                    101 et seq. (the "Bankruptcy Code"), licenses of rights to
                    "intellectual property" as defined under Section 101(35A) of
                    the Bankruptcy Code. The Parties agree that PATHOGENICS,
                    ALPHA RESEARCH and NELSON shall retain and may fully
                    exercise all of their respective rights, remedies and
                    elections under the Bankruptcy Code. The Parties further
                    agree that, in the event of the commencement of a bankruptcy
                    proceeding by or against ALPHA RESEARCH or NELSON under the
                    Bankruptcy Code, PATHOGENICS shall be entitled to all
                    applicable rights under Section 365 of the Bankruptcy Code,
                    including but not limited to, entitled to a complete
                    duplicate of (or complete access to, as appropriate) any
                    such intellectual property and all embodiments of such
                    intellectual property upon written request therefore by
                    PATHOGENICS.

<PAGE>

               (b)  In the event PATHOGENICS is a debtor in a bankruptcy
                    proceeding, whether voluntary or involuntary, all rights and
                    licenses granted pursuant to this Agreement are, and shall
                    otherwise be deemed to be, for purposes of Section 365 of
                    the Bankruptcy Code, executory contracts. The Parties agree
                    that applicable law does not excuse ALPHA RESEARCH or NELSON
                    from accepting performance by, or rendering performance
                    under this Agreement and all rights and licenses granted
                    hereunder to, a person or entity other than PATHOGENICS.

8.4.     Effect of Expiration or Termination.  Expiration or termination of this
         -----------------------------------
Agreement shall not relieve the Parties of any obligation accruing prior to such
expiration or termination. PATHOGENICS and its Affiliates and sublicensees shall
have  the right to sell or otherwise dispose of the stock of any Product subject
to this Agreement then on hand or in process of manufacture.  In addition to any
other  provisions  of  this  Agreement  which  by their terms continue after the
expiration  of  this  Agreement,  the provisions of Article IV shall survive the
expiration  or  termination  of  this Agreement and shall continue in effect for
five  (5)  years  from  the date of expiration or termination.  In addition, any
other  provision  required  to  interpret  and  enforce  the Parties' rights and
obligations  under  this  Agreement  shall  also survive, but only to the extent
required  for  the  full  observation  and  performance  of  this Agreement. Any
expiration  or early termination of this Agreement shall be without prejudice to
the  rights  of  any  Party  against  the  other  accrued or accruing under this
Agreement prior to termination. Except as expressly set forth herein, the rights
to  terminate  as  set forth herein shall be in addition to all other rights and
remedies  available  under  this  Agreement, at law, or in equity, or otherwise.
Upon  termination  of this Agreement pursuant to Section 8.2 or upon termination
by ALPHA RESEARCH pursuant to Section 8.3.1(a),  PATHOGENICS shall, if requested
to  do so in writing by ALPHA RESEARCH, negotiate a license to ALPHA RESEARCH of
Improvements  or  Know-How  relating to the manufacture or sale of Technology or
Product  that was developed by PATHOGENICS during the Term of this Agreement and
is  owned  and  controlled  by  PATHOGENICS  at  the  time  of  termination,  on
commercially  reasonable  terms  to  be  negotiated  in  good  faith between the
Parties.

<PAGE>

                                   ARTICLE IX
                                  MISCELLANEOUS

9.1.     Force  Majeure.  Neither  Party  shall be held liable or responsible to
         --------------
the  other Party nor be deemed to have defaulted under or breached the Agreement
for  failure  or  delay  in  fulfilling  or performing any term of the Agreement
during  the  period  of  time when such failure or delay is caused by or results
from  causes  beyond the reasonable control of the affected Party including, but
not  limited to, fire, flood, embargo, war, acts of war (whether war be declared
or  not),  insurrection,  riot,  civil commotion, strike, lockout or other labor
disturbance,  act of God or act, omission or delay in acting by any governmental
authority  or  the other Party.  The affected Party shall notify the other Party
of  such  force  majeure  circumstances  as  soon  as  reasonably  practicable.

9.2.     Assignment.  The Agreement may not be assigned or otherwise transferred
         ----------
without the prior written consent of the other Party, which shall not otherwise
be unreasonably withheld; provided, however, that either Party may assign this
Agreement to an Affiliate or in connection with the transfer or sale of its
business or all or substantially all of its assets related to the Technology or
Product or in the event of a merger, consolidation, change in control or similar
corporate transaction. Any permitted assignee shall assume all obligations of
its assignor under this Agreement.

9.3.     Severability.  In  the  event  that  any of the provisions contained in
         ------------
this  Agreement  are  held invalid, illegal or unenforceable in any respect, the
validity,  legality  and  enforceability  of  the remaining provisions contained
herein  shall not in any way be affected or impaired thereby, unless the absence
of  the  invalidated provision(s) adversely affect the substantive rights of the
Parties.  In  such  event,  the  Parties  shall  replace the invalid, illegal or
unenforceable provision(s) with valid, legal and enforceable provision(s) which,
insofar  as  practical,  implement  the  purposes  of  this  Agreement.

9.4.     Notices.  All  notices  or  other  communications which are required or
         -------
permitted  hereunder shall be in writing and sufficient if delivered personally,
sent  by  facsimile  (and promptly confirmed by personal delivery, registered or
certified  mail  or  overnight courier), sent by nationally-recognized overnight
courier or sent by registered or certified mail, postage prepaid, return receipt
requested,  addressed  as  follows:

if  to  PATHOGENICS  to:

PATHOGENICS,  INC.
99  Derby  Street
Hingham,  MA  02043,  USA
Attention:  President
Tel:  781-556-1090
Fax:  781-925-8665

if  to  ALPHA  RESEARCH  to:

ALPHA  RESEARCH  GROUP,  LLC
9550  Gateway  Drive
Reno,  NV  89511,  USA
Tel:     775-853-3677
Fax:     775-853-3670

<PAGE>

if  to  JODI  A.  NELSON  to:

JODI  A.  NELSON
1717  Valentia  Street
Denver,  CO  80220
Tel:     303-322-4946
Fax:     303-322-4849

or  to  such  other  address as the Party to whom notice is to be given may have
furnished  to  the  other  Parties  in writing in accordance herewith.  Any such
communication  shall  be  deemed to have been given when delivered if personally
delivered  or  sent  by  facsimile on a Business Day, upon confirmed delivery by
nationally-recognized  overnight  courier  if  so  delivered  and  on  the third
Business  Day  following  the date of mailing if sent by registered or certified
mail.

9.5.     Applicable Law and Dispute Resolution.  The Agreement shall be governed
         -------------- ----------------------
by and construed in accordance with the laws of the United States of America and
Commonwealth  of  Massachusetts  without  reference  to any rules of conflict of
laws.

     (a)  The Parties agree to attempt initially to solve all claims,
          disputes, or controversies arising under, out of, or in connection
          with this Agreement (a "Dispute") by conducting good faith
          negotiations. Any Disputes which cannot be resolved by good faith
          negotiation within twenty (20) Business Days, shall be referred, by
          written notice from either Party to the other, to the Chief Executive
          Officer of each Party. Such Chief Executive Officers shall negotiate
          in good faith to achieve a resolution of the Dispute referred to them
          within twenty (20) Business Days after such notice is received by the
          Party to whom the notice was sent. If the Chief Executive Officers are
          unable to settle the Dispute between themselves within twenty (20)
          Business Days, they shall so report to the Parties in writing. The
          Dispute shall then be referred to mediation as set forth in the
          following subsection (b).

     (b)  Upon the Parties receiving the Chief Executive Officers' report
          that the Dispute referred to them pursuant to subsection (a) has not
          been resolved, the Dispute shall be referred to mediation by written
          notice from either Party to the other. The mediation shall be
          conducted pursuant to the Rules of the Commercial Arbitration of the
          American Arbitration Association ("AAA") procedures. The place of the
          mediation shall be in Chicago, IL. If the Parties have not reached a
          settlement within twenty (20) Business Days of the date of the notice
          of mediation, the Dispute shall be referred to arbitration pursuant to
          subsection (c) below.

<PAGE>

     (c)  If after the procedures set forth in subsections (a) and (b)
          above, the Dispute has not been resolved, a Party shall decide to
          institute arbitration proceedings, it shall give written notice to
          that effect to the other Party. The Parties shall refrain from
          instituting the arbitration proceedings for a period of sixty (60)
          days following such notice. During such period, the Parties shall
          continue to make good faith efforts to amicably resolve the dispute
          without arbitration. If the Parties have not reached a settlement
          during that period the arbitration proceedings shall go forward and be
          governed by the AAA rules then in force. Each such arbitration shall
          be conducted by a panel of three arbitrators: one arbitrator shall be
          appointed by each of ALPHA RESEARCH and PATHOGENICS and the third
          arbitrator, who shall be the Chairman of the tribunal, shall be
          appointed by the two Party-appointed arbitrators. The place of the
          arbitration shall be in Chicago, IL.

          The arbitrators shall have the authority to grant specific
          performance. Judgment upon the award so rendered may be entered in any
          court having jurisdiction or application may be made to such court for
          judicial acceptance of any award and an order of enforcement, as the
          case may be. In no event shall a demand for arbitration be made after
          the date when institution of a legal or equitable proceeding based on
          such claim, dispute or other matter in question would be barred by the
          applicable statute of limitations. Each Party shall bear its own costs
          and expenses incurred in connection with any arbitration proceeding
          and the Parties shall equally share the cost of the mediation and
          arbitration levied by the AAA.

          Any mediation or arbitration proceeding entered into pursuant to this
          Section 9.5 shall be conducted in the English language. Subject to the
          foregoing, for purposes of this Agreement, each Party consents, for
          itself and its Affiliates, to the jurisdiction of the courts of the
          state of Illinois, county of Cook and the U.S. District Court for
          Illinois.

9.6.     Entire Agreement.  This Agreement, including the exhibits and schedules
         ----------------
hereto  and  the  security interest required by Section 7.5 hereto, contains the
entire  understanding  of  the Parties with respect to the subject matter hereof
and  supersedes all previous writings and understandings.  This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by  all  Parties  hereto.

9.7.     Independent Contractors.  It is expressly agreed that the Parties shall
         -----------------------
be  independent  contractors and that the relationship between the Parties shall
not constitute a partnership, joint venture or agency.  Neither Party shall have
the  authority  to  make  any  statements, representations or commitments of any
kind,  or to take any action, which shall be binding on the other Party, without
the  prior  consent  of  such  other  Party.

9.8.     Waiver.  The  waiver  by  a  Party hereto of any right hereunder or the
         ------
failure  to perform or of a breach by another Party shall not be deemed a waiver
of  any  other  right  hereunder or of any other breach or failure by said other
Party  whether  of  a  similar  nature  or  otherwise.

9.9.     Headings.  The captions to the several Articles and Sections hereof are
         --------
not  a  part  of  the  Agreement,  but  are merely guides or labels to assist in
locating  and  reading  the  several  Articles  and  Sections  hereof.

<PAGE>

9.10.     Counterparts.  The  Agreement  may  be  executed  in  two  or  more
          ------------
counterparts,  each  of  which  shall  be  deemed  an original, but all of which
together  shall  constitute  one  and  the  same  instrument.

9.11.     Use  of Names. Except as otherwise provided in this Agreement, neither
          -------------
Party  shall  use the name of the other Party in relation to this transaction in
any  public  announcement,  press  release  or other public document without the
consent of such other Party, which consent shall not be unreasonably withheld or
delayed;  provided,  however,  that  either  Party may use the name of the other
Party  in  any document required to be filed to obtain Regulatory Approval or to
comply  with  applicable  laws,  rules  or  regulations.

9.12.      LIMITATION  OF LIABILITY.  NEITHER PARTY SHALL BE LIABLE TO THE OTHER
          -------------------------
FOR  ANY  SPECIAL,  CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF
THIS  AGREEMENT,  HOWEVER  CAUSED,  UNDER  ANY  THEORY  OF  LIABILITY.

<PAGE>

IN  WITNESS  WHEREOF,  the  Parties  have executed this Agreement as of the date
first  set  forth  above.

ALPHA RESEARCH, LLC

By:  /s/ Jodi A. Nelson
     -------------------------------
     Name: Jodi A. Nelson
     Title: Vice President

JODI  A.  NELSON

     /s/ Jodi A. Nelson
     -------------------------------
     Jodi  A.  Nelson

PATHOGENICS,  INC.

By:  /s/ Frederic P. Zotos
     -------------------------------
     Name:  Frederic  P.  Zotos,  Esq.
     Title: President  &  CEO

<PAGE>

                                  SCHEDULE1.19
                                  ------------

                                  PATENT ASSETS

<PAGE>

                                  EXHIBIT 1.24
                                  ------------

                               NELSON ASSIGNMENTS
                               ------------------

1.   US Patent Application No. 09/615,639 (Patent No. 6,417,177), Jodi A.
     Nelson (Assignor), Alpha Research Group, LLC (Assignee), 07/25/2000
     (Execution Date), 08/07/2000 (Recordation Date), 10/19/2000 (Notice Date).

2.   Corrected Notice, US Patent Application No. 09/615,639 (Patent No.
     6,417,177), Jodi A. Nelson (Assignor), Alpha Research Group, LLC
     (Assignee), 07/25/2000 (Execution Date), 08/07/2000 (Recordation Date),
     01/24/2001 (Notice Date).

3.   US Patent Application No. 10/192,414, Jodi A. Nelson (Assignor), Alpha
     Research Group, LLC (Assignee), 07/16/2002 (Execution Date), 07/30/2002
     (Recordation Date), 07/31/2002 (Notice Date).

4.   US Patent Application No. 10/616,692, Jodi A. Nelson (Assignor), Alpha
     Research Group, LLC (Assignee), 07/17/2003 (Execution Date), 12/15/2003
     (Recordation Date), 12/16/2003 (Notice Date).

<PAGE>

                                  SCHEDULE 3.5
                                  ------------

                               LIST OF AGREEMENTS
                               ------------------

1.   FUNDING AGREEMENT between Alpha Research Group, LLC and Tekquity
     Ventures, LLC (4-24-00).

2.   First Addendum the April 24, 2000 FUNDING AGREEMENT (above) (7-25-01).

3.   SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE between Alpha Research
     Group, LLC and Tekquity Neuro, LLC (5-1-03)

4.   SERVICE AND REPRESENTATION AGREEMENT with Emanus, LLC (9-16-03)

5.   First Addendum to the May 1, 2003 SETTLEMENT AGREEMENT AND MUTUAL
     GENERAL RELEASE (above) (4-6-04)

6.   First Addendum to the September 9, 2003 SERVICE AND REPRESENTATION
     AGREEMENT (above) (11-4-04).

7.   Second Addendum to the September 9, 2003 SERVICE AND REPRESENTATION
     AGREEMENT (above) (4-6-05).

<PAGE>

SCHEDULE 7.1
------------

                         PREVIOUSLY UNPAID PATENT COSTS
                         ------------------------------

     Greenlee, Winner and Sullivan, P.C., Statement for Jodi A. Nelson dated
April 6, 2005.  Statement Total is $28,408.82.

<PAGE>

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