Document:

Exhibit 10.23

                                OPTION AGREEMENT

                        (Bishop Powers / Hopfenspringer)

     On October 23, 2002, Bishop Powers, Ltd. ("Seller") and Kim Hopfenspringer
and Rhonda Hopfenspringer ("Purchaser") entered into an Agreement for the
Purchase and Sale of Commercial Real Estate of certain property owned by Seller
along Powers Boulevard, in Colorado Springs, CO (the "Contract"). Colorado
Department of Transportation ("CDOT") has indicated there is a possibility that,
at some undetermined time in the future, it may construct a grade-separated
interchange at Powers and Palmer Park Boulevard (the "Interchange") and if it
does so, CDOT would need to acquire some of the land Purchaser is buying from
Seller. If this occurs, it could negatively impact Purchaser's proposed business
on the site. In order to address these concerns, and in partial consideration
for Purchaser closing pursuant to the Contract, Seller hereby grants Purchaser
the exclusive option to purchase additional land from Seller (the "Option") on
the following terms:

     1. Condition to Exercise. The Option Property may only be purchased if CDOT
acquires portions of Purchaser's land being sold by Seller, and such acquisition
has a material adverse impact on Purchaser's business in Purchaser's reasonable
opinion. Exercise of the Option must occur within 6 months after CDOT's notice
of intent to acquire Purchaser's lands and must be in writing, delivered to
Seller.

     2. Property Subject to Option. The property subject to the Option is
generally depicted on Exhibit A hereto (the "Option Property"). However, the
parties acknowledge that CDOT has made no determination as to the configuration
of the proposed Interchange. Consequently, the parties will adjust the
configuration of the Option Property once CDOT has made a final determination of
the portion of Purchaser's property it will be acquiring so that Purchaser's
property will be functionally equivalent to its original configuration
(including maintaining parking ratios and access from the interior drives).

     3. Price. The price for the Option Property will be the amount of
condemnation award Purchaser receives from CDOT for any property CDOT acquires,
and will be payable at the closing of the Option in cash.

     4. Title. The Option Property will be conveyed to Purchaser subject only to
those matters which Purchaser's original property was subject to when it is
conveyed pursuant to the Contract. Seller, at its expense, will provide
Purchaser with a standard owner's title insurance policy. Real property taxes
for the Option Property will be pro-rated based on the most recent assessment
and mill levy.

     5. Term of Option. This Option will automatically expire ten (10) years
after the "Effective Date," which is April 29, 2003, if not exercised by then.
However, if prior to that date, CDOT has appropriated funds for construction of
the Interchange, then Purchaser may elect to extend the Option for an additional
5 years by delivering written notice of such election to Seller prior to
expiration of the initial 5 year term.

<PAGE>

     6. Contract Closing. This Option is conditioned upon the purchase pursuant
to the Contract closing. If such closing has not occurred by May 21, 2003, then
this Option will automatically terminate and be of no further effect.

                                            SELLER
                                            ------

                                            Bishop Powers, Ltd.
                                            By:  Bishop Capital Corporation,
                                                 General partner

                                            By:  /s/  Sherry Moore
                                               --------------------------------
                                                      Sherry Moore
                                                      Secretary

                                            PURCHASER
                                            ---------

                                            /s/  Kim Hopfenspringer
                                            -----------------------------------
                                                 Kim Hopfenspringer

                                            /s/  Rhonda Hopfenspringer
                                            -----------------------------------
                                                 Rhonda Hopfenspringer

                                            Dated:     5-1-03
                                                  -----------------------------

                                       2SECURITIES PURCHASE

                                    AGREEMENT

                           DATED AS OF AUGUST 21, 2003

                                      AMONG

                           AXIOM PHARMACEUTICALS, INC.

                                       AND

                       THE PURCHASERS LISTED ON EXHIBIT A

<PAGE>

<TABLE>

<CAPTION>

                                TABLE OF CONTENTS

                                                                                                PAGE
                                                                                                ----
<S>                                                                             <C>             <C>

ARTICLE I      Purchase and Sale of Preferred Stock and Warrants...................................1
         Section 1.1       Purchase and Sale of Preferred Stock and Warrants.......................1
         Section 1.2       Purchase Price and Closing..............................................1
         Section 1.3       Warrants................................................................2
         Section 1.4       Conversion Shares and Warrant Shares....................................2

ARTICLE II     Representations and Warranties......................................................2

         Section 2.1       Representations and Warranties of the Company...........................2
         Section 2.2       Representations and Warranties of the Purchasers.......................12

ARTICLE III    Covenants..........................................................................14

         Section 3.1       Disclosure of Transactions and Other Material Information..............14
         Section 3.2       Registration and Listing...............................................15
         Section 3.3       Inspection Rights......................................................15
         Section 3.4       Complaince with Laws...................................................15
         Section 3.5       Keeping of Records and Books of Account................................15
         Section 3.6       Other Agreements.......................................................16
         Section 3.7       Reservation of Shares..................................................16
         Section 3.8       Non-public Information.................................................16
         Section 3.9       Premptive Rights.......................................................16
         Section 3.10      Lock-Up................................................................18

ARTICLE IV     Conditions.........................................................................18

         Section 4.1       Conditions Precedent to the Obligation of the Company to
                           Close and to Sell the Shares and Warrants..............................18
         Section 4.2       Conditions Precedent to the Obligation of the Purchasers to
                           Close and to Purchase the Shares and Warrants..........................19

ARTICLE V      Certificate of Legend..............................................................21

         Section 5.1       Legend.................................................................21

ARTICLE VI     Termination........................................................................22

         Section 6.1       Termination by Mutual Consent..........................................22
         Section 6.2       Effect of Termination..................................................22

ARTICLE VII    Indemnification....................................................................23

         Section 7.1       General Indemnity......................................................23

                                      -i-
<PAGE>

                               Table of Contents
                               -----------------
                                  (continued)

                                                                                               PAGE
                                                                                               ----

         Section 7.2       Indemnification Procedure..............................................23

ARTICLE VIII   Miscellaneous......................................................................24

         Section 8.1       Fees and Expenses......................................................24
         Section 8.2       Specific Enforcement; Consent to Jurisdiction..........................24
         Section 8.3       Entire Agreement; Amendment............................................25
         Section 8.4       Notices................................................................25
         Section 8.5       Waivers................................................................26
         Section 8.6       Headings...............................................................26
         Section 8.7       Successors and Assigns.................................................26
         Section 8.8       No Third Party Beneficiaries...........................................26
         Section 8.9       Governing Law..........................................................26
         Section 8.10      Survival...............................................................27
         Section 8.11      Counterparts...........................................................27
         Section 8.12      Publicity..............................................................27
         Section 8.13      Severability...........................................................27
         Section 8.14.     Further Assurances.....................................................27

</TABLE>

                                       ii
<PAGE>

                          SECURITIES PURCHASE AGREEMENT

         This  SECURITIES  PURCHASE  AGREEMENT this  ("Agreement"),  dated as of
August 21, 2003, by and among Axiom Pharmaceuticals,  Inc., a Nevada corporation
(the "Company"), and the entities listed on Exhibit A hereto (each a "Purchaser"
and collectively, the "Purchasers"), for the purchase and sale to the Purchasers
of shares of the Company's Series A Convertible Preferred Stock, par value $.001
per share (the  "Preferred  Stock"),  and  warrants  to  purchase  shares of the
Company's common stock, par value $.001 per share (the "Common Stock").

         The parties hereto agree as follows:

                                   ARTICLE I

                PURCHASE AND SALE OF PREFERRED STOCK AND WARRANTS

         Section  1.1   Purchase and Sale of Preferred Stock and Warrants.  Upon
the  following  terms and  conditions,  the Company  shall issue and sell to the
Purchasers, and the Purchasers shall purchase from the Company, 1,000,000 shares
of Preferred Stock (the "Shares") at a price per share of $2.00 for an aggregate
purchase price of $2,000,000  (the "Purchase  Price"),  and warrants to purchase
shares of Common Stock, in  substantially  the form attached hereto as Exhibit B
(the  "Warrants").  The Company and the  Purchasers are executing and delivering
this  Agreement  in  accordance  with and in reliance  upon the  exemption  from
securities  registration  afforded by Section 4(2) of the U.S. Securities Act of
1933, as amended,  and the rules and  regulations  promulgated  thereunder  (the
"Securities  Act"),  including  Regulation D ("Regulation  D"), and/or upon such
other exemption from the registration  requirements of the Securities Act as may
be available with respect to any or all of the investments to be made hereunder.
The  Preferred  Stock shall have such powers,  preferences  and rights,  and the
qualifications,  limitations  or  restrictions  thereof,  as  set  forth  in the
Certificate of Designation of Rights and Preferences of Series A Preferred Stock
attached hereto as Exhibit D, subject to the applicable  terms and conditions of
this Agreement and the Registration Rights Agreement (as defined below).

         Section  1.2   Purchase Price and Closing.  The Company agrees to issue
and sell to the Purchasers and, in consideration of and in express reliance upon
the  representations,  warranties,  covenants,  terms  and  conditions  of  this
Agreement,  the  Purchasers,  severally  but not jointly,  agree to purchase the
number of Shares and  Warrants  set forth  opposite  their  respective  names on
Exhibit A. The closing of the purchase and sale of the Shares and Warrants to be
acquired by the  Purchasers  from the Company  under this  Agreement  shall take
place at the offices of the Company  located at 8324 Delgany  Avenue,  Playa del
Rey,  California  90293 (the  "Closing")  at 10:00 a.m.,  Pacific Time (i) on or
before  August  22,  2003,  provided,  that all of the  conditions  set forth in
Article IV hereof and  applicable  to the Closing  shall have been  fulfilled or
waived in accordance  herewith,  or (ii) at such other time and place or on such
date as the Purchasers and the Company may agree upon (the "Closing Date").

                                       1
<PAGE>

         Section 1.3    Warrants.  At the Closing, the  Company shall  issue  to
the Purchasers  Warrants to purchase an aggregate of 1,000,000  shares of Common
Stock.  The Warrants  shall be  exercisable  for five (5) years from the date of
issuance and shall have an exercise price equal to $3.00 per share.

         Section  1.4   Conversion  Shares and Warrant Shares.  The Company  has
authorized and reserved and covenants to continue to reserve, free of preemptive
rights  and  other  similar  contractual  rights  of  stockholders,  out  of its
authorized  but unissued  Common  Stock or its Common Stock held in treasury,  a
number  of shares of Common  Stock  equal to the  aggregate  number of shares of
Common Stock  necessary to effect the  conversion of the Shares and the exercise
of the Warrants.  The Company shall,  from time to time, in accordance  with the
Nevada Corporation Law, increase the authorized amount of its Common Stock if at
any time the authorized amount of its Common Stock remaining  unissued shall not
be  sufficient to permit the  conversion of all Shares at the time  outstanding,
subject,  however,  to  stockholder  approval.  If any  shares of  Common  Stock
required to be reserved for issuance  upon  conversion of the Shares or exercise
of  the  Warrants  hereunder  require  registration  with  or  approval  of  any
governmental  authority  under any federal or state law before the shares may be
issued, the Company will cause the shares to be so registered and approved.  All
shares of Common Stock  delivered  upon  conversion of the Shares or exercise of
the Warrants shall, upon delivery,  be duly authorized and validly issued, fully
paid and  nonassessable,  free from all taxes, liens and charges with respect to
the issue thereof.  Any shares of Common Stock  issuable upon  conversion of the
Shares (and such shares when issued) are herein  referred to as the  "Conversion
Shares".  Any shares of Common Stock issuable upon exercise of the Warrants (and
such shares when  issued) are herein  referred to as the "Warrant  Shares".  The
Shares, the Conversion Shares, the Warrants and the Warrant Shares are sometimes
collectively referred to herein as the "Securities".

                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

         Section 2.1    Representations and Warranties of the Company.  In order
to induce the Purchasers to enter into this Agreement and to purchase the Shares
and  Warrants,  the  Company  hereby  makes the  following  representations  and
warranties to the Purchasers:

         (a)     Organization,  Good  Standing  and  Power.  The  Company  is  a
corporation duly  incorporated,  validly existing and in good standing under the
laws of the State of Nevada and has the requisite  corporate power to own, lease
and operate its  properties  and assets and to conduct its business as it is now
being  conducted.  The  Company  does not have any  Subsidiaries  (as defined in
Section 2.1(g)) or own securities of any kind in any other entity, except as set
forth  on  Schedule  2.1(g)  hereto  or in  that  certain  Confidential  Private
Placement  Memorandum of the Company  dated July 8, 2003,  copy number AS04 (the
"PPM").  The Company and each such  Subsidiary  is duly  qualified  as a foreign
corporation  to do business  and is in good  standing in every  jurisdiction  in
which the nature of the business  conducted  or property  owned by it makes such
qualification  necessary,  except  for  any  jurisdiction(s)  (alone  or in  the
aggregate)  in which the  failure  to be so  qualified  will not have a Material
Adverse Effect.  For the purposes of this Agreement,  "Material  Adverse Effect"
means any adverse  effect on the  business,  operations,  assets,  prospects  or

                                       2
<PAGE>

financial  condition of the Company or its Subsidiaries and which is material to
such entity or other  entities  controlling  or controlled by such entity or the
Company or which is likely to materially  hinder the  performance by the Company
of its  obligations  hereunder  and under the other  Transaction  Documents  (as
defined in Section 2.1(b) hereof).

         (b)     Authorization;  Enforcement.  The  Company  has  the  requisite
corporate  power and  authority  to enter into and perform this  Agreement,  the
Registration  Rights  Agreement,  the  Warrants,  and the other  agreements  and
documents  contemplated  hereby and  thereby  and  executed by the Company or to
which the Company is party (collectively,  the "Transaction Documents"),  and to
issue and sell the Shares and the Warrants in accordance  with the terms hereof.
The  execution,  delivery and  performance of the  Transaction  Documents by the
Company and the consummation by it of the transactions contemplated thereby have
been duly and validly authorized by all necessary  corporate action, and, except
as set forth in Schedule  2.1(b) or disclosed in the PPM, no further  consent or
authorization  of the  Company  or its Board of  Directors  or  stockholders  is
required.  This  Agreement  has been duly executed and delivered by the Company.
The other  Transaction  Documents  will have been duly executed and delivered by
the Company at the Closing.  Each of the Transaction Documents  constitutes,  or
shall constitute when executed and delivered,  a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,  reorganization,
moratorium, liquidation, conservatorship,  receivership or similar laws relating
to, or affecting generally the enforcement of, creditor's rights and remedies or
by equitable principles or remedies of general application.

         (c)     Capitalization. The authorized capital stock of the Company and
the shares thereof currently issued and outstanding as of August 1, 2003 are set
forth on Schedule 2.1(c) hereto.  All of the outstanding shares of the Company's
Common  Stock and any other  security of the Company  have been duly and validly
authorized.  Except as set forth on Schedule  2.1(c)  hereto or disclosed in the
PPM, no shares of Common Stock or any other security of the Company are entitled
to  preemptive  rights or  registration  rights  and  there  are no  outstanding
options,  warrants,  scrip,  rights to subscribe to, call or  commitments of any
character  whatsoever relating to, or securities or rights convertible into, any
shares of  capital  stock of the  Company.  Furthermore,  except as set forth on
Schedule  2.1(c) hereto or disclosed in the PPM or in any  Commission  Documents
(as defined in Section 2.1(f) below) and except for the  Transaction  Documents,
there are no contracts,  commitments,  understandings,  or arrangements by which
the  Company is or may become  bound to issue  additional  shares of the capital
stock of the Company or options, securities or rights convertible into shares of
capital  stock  of the  Company.  Except  for  customary  transfer  restrictions
contained in agreements  entered into by the Company in order to sell restricted
securities  or as provided on Schedule  2.1(c) hereto and except as disclosed in
the PPM or in any Commission  Documents,  the Company is not a party to or bound
by any agreement or understanding  granting registration or anti-dilution rights
to any person with  respect to any of its equity or debt  securities.  Except as
set  forth on  Schedule  2.1(c)  or  disclosed  in the PPM or in any  Commission
Documents,  the  Company  is not a party to,  and it has no  knowledge  of,  any
agreement or  understanding  restricting the voting or transfer of any shares of
the capital stock of the Company.  Except as set forth on Schedule 2.1(c) hereto
or disclosed in the PPM or in any  Commission  Documents,  the offer and sale of
all capital stock,  convertible securities,  rights, warrants, or options of the
Company  issued prior to the Closing  complied with all  applicable  federal and

                                       3
<PAGE>

state  securities  laws, and to the best knowledge of the Company,  no holder of
such  securities  has a right of  rescission or has made or threatened to make a
claim for rescission or damages with respect thereto which could have a Material
Adverse  Effect.  The Company has furnished or made  available to the Purchasers
true and correct  copies of the Company's  Certificate  of  Incorporation  as in
effect on the date hereof (the  "Certificate"),  and the Company's  Bylaws as in
effect on the date hereof (the "Bylaws").

         (d)     Issuance of Securities.  The Shares  and  the  Warrants  to  be
issued at the  Closing  have been duly  authorized  by all  necessary  corporate
action and,  when paid for or issued in accordance  with the terms  hereof,  the
Shares shall be validly issued and outstanding, fully paid and nonassessable and
free and clear of all liens,  encumbrances  and  rights of first  refusal of any
kind and the holders  shall be  entitled  to all rights  accorded to a holder of
Preferred  Stock.  When the Conversion  Shares are issued in accordance with the
terms  of the  Preferred  Stock,  such  shares  will be duly  authorized  by all
necessary  corporate action and validly issued and  outstanding,  fully paid and
nonassessable,  free and clear of all  liens,  encumbrances  and rights of first
refusal of any kind and the holders shall be entitled to all rights  accorded to
a holder of Common  Stock.  When the  Warrant  Shares are issued and paid for in
accordance  with the terms of this  Agreement  and as set forth in the Warrants,
such  shares  will be duly  authorized  by all  necessary  corporate  action and
validly issued and outstanding, fully paid and nonassessable,  free and clear of
all liens,  encumbrances and rights of first refusal of any kind and the holders
shall be entitled to all rights accorded to a holder of Common Stock.

         (e)      No Conflicts.  The execution, delivery and performance of  the
Transaction  Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) violate any
provision of the Certificate or Bylaws or any  Subsidiary's  comparable  charter
documents,  (ii) conflict  with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of  termination,  amendment,  acceleration  or  cancellation  of, any
agreement,  mortgage,  deed of trust,  indenture,  note,  bond,  license,  lease
agreement,  instrument  or  obligation  to  which  the  Company  or  any  of its
Subsidiaries  is a party or by which  the  Company  or any of its  Subsidiaries'
respective  properties  or  assets  are  bound,  (iii)  create or impose a lien,
mortgage, security interest, charge or encumbrance of any nature on any property
or asset of the Company or any of its  Subsidiaries  under any  agreement or any
commitment  to which the  Company  or any of its  Subsidiaries  is a party or by
which the Company or any of its  Subsidiaries  is bound or by which any of their
respective  properties or assets are bound, or (iv) result in a violation of any
federal,  state, local or foreign statute, rule, regulation,  order, judgment or
decree (including federal and state securities laws and regulations)  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,  in all
cases other than  violations  pursuant  to clauses (i) or (iv) (with  respect to
federal  and  state  securities  laws)  above,  for  such  conflicts,  defaults,
terminations,  amendments,  acceleration,  cancellations and violations as would
not,  individually  or in the aggregate,  have a Material  Adverse  Effect.  The
business of the Company and its Subsidiaries is not being conducted in violation
of any laws,  ordinances or regulations of any governmental  entity,  except for
possible  violations  which  singularly  or in the aggregate do not and will not
have a Material Adverse Effect.  Neither the Company nor any of its Subsidiaries
is required  under federal,  state,  foreign or local law, rule or regulation to
obtain  any  consent,   authorization  or  order  of,  or  make  any  filing  or

                                       4
<PAGE>

registration with, any court or governmental  agency in order for it to execute,
deliver or perform any of its  obligations  under the  Transaction  Documents or
issue and sell the Shares,  the Conversion  Shares,  the Warrants or the Warrant
Shares in  accordance  with the terms hereof or thereof  (other than any filings
which may be required to be made by the Company with the Securities and Exchange
Commission (the "Commission") or state securities  administrators  subsequent to
the Closing, or any registration statement which may be filed pursuant hereto or
thereto).

         (f)     Commission Documents; Commission Filings; Financial Statements.
The Common Stock is not currently  registered pursuant to Section 12(b) or 12(g)
of the Securities  Exchange Act of 1934, as amended (the "Exchange  Act"),  but,
except as  disclosed  on Schedule  2.1(f)  hereto or in the PPM, the Company has
timely filed all  reports,  schedules,  forms,  statements  and other  documents
required  to be  filed  by it with  the  Commission  pursuant  to the  reporting
requirements of the Exchange Act,  including  material filed pursuant to Section
13(a) or 15(d) of the  Exchange  Act (all of the  foregoing,  including  filings
incorporated by reference  therein,  being referred to herein as the "Commission
Documents").  The  Company  has not  provided  to the  Purchasers  any  material
non-public  information or other information which, according to applicable law,
rule or regulation, should have been disclosed publicly by the Company but which
has  not  been  so  disclosed,  other  than  with  respect  to the  transactions
contemplated  by this Agreement.  At the time of its filing,  the Company's Form
10-QSB for the fiscal quarter ended June 30, 2003 (the "Form 10-Q")  complied in
all material  respects with the  requirements  of the Exchange Act and the rules
and  regulations  of the  Commission  promulgated  thereunder and other federal,
state and local laws,  rules and regulations  applicable to such documents,  and
the Form 10-Q did not contain 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. At the time of its filing, the Company's Form 10-KSB/A for
the fiscal year ended June 30, 2002 (the "Form  10-K")  complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission  promulgated  thereunder  and other  federal,  state and local
laws, rules and regulations applicable to such documents,  and the Form 10-K did
not  contain  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.  As of their respective  dates, the financial  statements of the
Company included in the Commission Documents complied as to form in all material
respects with  applicable  accounting  requirements  and the published rules and
regulations of the Commission or other  applicable  rules and  regulations  with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting  principles ("GAAP") applied on a consistent basis
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  financial  position  of the Company  and its  Subsidiaries  as of the dates
thereof and the results of operations  and cash flows for the periods then ended
(subject,  in the  case  of  unaudited  statements,  to  normal  year-end  audit
adjustments).

                                       5
<PAGE>

         (g)     Subsidiaries. Schedule 2.1(g) hereto sets forth each Subsidiary
of the Company,  showing the  jurisdiction of its  incorporation or organization
and showing the percentage of each person's  ownership of the outstanding  stock
or other  interests  of such  Subsidiary.  For the  purposes of this  Agreement,
"Subsidiary"  shall  mean any  corporation  or other  entity of which at least a
majority of the securities or other  ownership  interest  having ordinary voting
power  (absolutely  or  contingently)  for the  election of  directors  or other
persons  performing  similar  functions  are  at  the  time  owned  directly  or
indirectly  by the  Company  and/or  any of its other  Subsidiaries.  All of the
outstanding shares of capital stock of each Subsidiary have been duly authorized
and  validly  issued,  and  are  fully  paid  and  nonassessable.  There  are no
outstanding  preemptive,  conversion  or  other  rights,  options,  warrants  or
agreements  granted or issued by or binding upon any Subsidiary for the purchase
or  acquisition  of any shares of capital  stock of any  Subsidiary or any other
securities  convertible  into,  exchangeable  for or  evidencing  the  rights to
subscribe  for any shares of such  capital  stock.  Neither  the Company nor any
Subsidiary is subject to any obligation  (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of the capital stock of any Subsidiary
or any convertible securities, rights, warrants or options of the type described
in the  preceding  sentence  except as set forth on  Schedule  2.1(g)  hereto or
disclosed in the PPM. Except as set forth on Schedule 2.1(g) hereto or disclosed
in the PPM,  neither  the Company  nor any  Subsidiary  is party to, nor has any
knowledge of, any agreement  restricting the voting or transfer of any shares of
the capital stock of any Subsidiary.

         (h)     No Material Adverse Change.  Since  June 30, 2003, the  Company
has not experienced or suffered any Material Adverse Effect, except as disclosed
on Schedule 2.1(h) hereto or in the PPM.

         (i)     No Undisclosed  Liabilities.  Except as disclosed  on  Schedule
2.1(i) hereto or in the PPM, neither the Company nor any of its Subsidiaries has
any  liabilities,   obligations,   claims  or  losses  (whether   liquidated  or
unliquidated,  secured or unsecured, absolute, accrued, contingent or otherwise)
other than those set forth on the  balance  sheet  included  in the Form 10-Q or
incurred in the ordinary course of the Company's or its Subsidiaries  respective
businesses since June 30, 2003, and which,  individually or in the aggregate, do
not  or  would  not  have a  Material  Adverse  Effect  on  the  Company  or its
Subsidiaries.

         (j)     No Undisclosed  Events or  Circumstances.  Since June 30, 2003,
except  as  disclosed  on  Schedule  2.1(j)  hereto  or in the PPM,  no event or
circumstance  has  occurred  or  exists  with  respect  to  the  Company  or its
Subsidiaries or their respective businesses,  properties,  prospects, operations
or  financial  condition,  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.

         (k)     Indebtedness.  Schedule 2.1(k) hereto sets forth as of the date
hereof all outstanding secured and unsecured  Indebtedness of the Company or any
Subsidiary,  or for which the Company or any Subsidiary has  commitments,  which
Indebtedness is not disclosed in any Commission  Documents.  For the purposes of
this Agreement, "Indebtedness" shall mean (i) any liabilities for borrowed money
in excess of  $100,000  (other  than  trade  accounts  payable  incurred  in the
ordinary  course  of  business),  (ii) all  guaranties,  endorsements  and other

                                       6
<PAGE>

contingent  obligations  in  respect  of  Indebtedness  of  others  in excess of
$100,000,  whether or not the same are or should be reflected  in the  Company's
balance  sheet (or the Notes  thereto),  except  guaranties  by  endorsement  of
negotiable  instruments for deposit or collection or similar transactions in the
ordinary  course of business,  and (iii) the present value of any lease payments
in excess of $100,000 due under leases  required to be capitalized in accordance
with  GAAP.  Except  as  disclosed  on  Schedule  2.1(k) or in the PPM or in any
Commission Documents,  neither the Company nor any Subsidiary is in default with
respect to any Indebtedness.

         (l)     Title to Assets.  Each of the Company and the Subsidiaries  has
good and  marketable  title to all of its real and personal  property,  free and
clear of any mortgages,  pledges,  charges,  liens,  security interests or other
encumbrances  of any nature  whatsoever,  except for those indicated on Schedule
2.1(l)  hereto or  disclosed in the PPM or in any  Commission  Documents or such
that,  individually or in the aggregate,  do not have a Material Adverse Effect.
All material  leases of the Company and each of its  Subsidiaries  are valid and
subsisting and in full force and effect.

         (m)    Actions Pending. Except as set forth in the Commission Documents
or Schedule  2.1(m)  hereto or disclosed in the PPM,  there is no action,  suit,
claim,  investigation,  arbitration,  alternate dispute resolution proceeding or
other proceeding pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary  which questions the validity of this Agreement or
any of the other Transaction  Documents or any of the transactions  contemplated
hereby or thereby or any action taken or to be taken pursuant hereto or thereto.
Except as set forth in any Commission  Document or on Schedule  2.1(m) hereto or
disclosed  in the PPM:  (i)  there is no  action,  suit,  claim,  investigation,
arbitration, alternate dispute resolution proceeding or other proceeding pending
or, to the  knowledge  of the  Company,  threatened  against  or  involving  the
Company,  any Subsidiary or any of their respective  properties or assets, which
individually or in the aggregate, would have a Material Adverse Effect, and (ii)
there are no outstanding orders,  judgments,  injunctions,  awards or decrees of
any court,  arbitrator or governmental or regulatory body against the Company or
any  Subsidiary or any officers or directors of the Company or any Subsidiary in
their capacities as such, which individually,  or in the aggregate, would have a
Material Adverse Effect.

         (n)     Compliance  with Law.  The business  of  the  Company  and  the
Subsidiaries  has been and is presently  being  conducted in accordance with all
applicable  federal,  state and local governmental laws, rules,  regulations and
ordinances,  except  as set forth in the  Commission  Documents  or on  Schedule
2.1(n)  hereto or  disclosed  in the PPM or such  that,  individually  or in the
aggregate, the noncompliance therewith would not have a Material Adverse Effect.
The Company and each of its Subsidiaries have all franchises, permits, licenses,
consents and other  governmental  or  regulatory  authorizations  and  approvals
necessary  for the conduct of its  business as now being  conducted by it unless
the failure to possess such franchises,  permits,  licenses,  consents and other
governmental or regulatory authorizations and approvals,  individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

         (o)     Taxes.  Except  as  set  forth  on  Schedule 2.1(o)  hereto  or
disclosed in the PPM or in the Commission Documents, the Company and each of the
Subsidiaries has accurately prepared and filed all federal,  state and other tax

                                       7
<PAGE>

returns  required by law to be filed by it, has paid or made  provisions for the
payment  of all  taxes  shown  to be due and  all  additional  assessments,  and
adequate  provisions have been and are reflected in the financial  statements of
the Company and the  Subsidiaries  for all  current  taxes and other  charges to
which the Company or any  Subsidiary  is subject and which are not currently due
and payable.  Except as disclosed on Schedule  2.1(o) hereto or in the PPM, none
of the federal  income tax returns of the  Company or any  Subsidiary  have been
audited by the Internal Revenue  Service.  Except as disclosed in the Commission
Documents,   the  Company  has  no  knowledge  of  any  additional  assessments,
adjustments or contingent tax liability (whether federal or state) of any nature
whatsoever,  whether pending or threatened against the Company or any Subsidiary
for  any  period,  nor of any  basis  for any  such  assessment,  adjustment  or
contingency.

         (p)     Certain Fees.  Except as set forth on Schedule 2.1(p) hereto or
disclosed  in the PPM,  the  Company  has not  employed  any broker or finder or
incurred  any  liability   for  any   brokerage  or  investment   banking  fees,
commissions, finders' structuring fees, financial advisory fees or other similar
fees in connection with the Transaction Documents.

         (q)     Disclosure.  To the  best of  the  Company's knowledge, neither
this Agreement nor any other documents, certificates or instruments furnished to
the  Purchasers  by or on behalf of the Company or any  Subsidiary in connection
with  the  transactions  contemplated  by this  Agreement  contains  any  untrue
statement  of a material  fact or omits to state a material  fact  necessary  in
order to make  the  statements  made  herein  or  therein,  in the  light of the
circumstances under which they were made herein or therein, not misleading.

         (r)     Intellectual Property. Schedule 2.1(r) contains a  complete and
correct  list  of  all  patents,  trademarks,   domain  names  (whether  or  not
registered) and any patentable  improvements or  copyrightable  derivative works
thereof,  websites and intellectual  property rights relating  thereto,  service
marks, trade names, copyrights, licenses and authorizations, and all rights with
respect  to the  foregoing  held  by  the  Company  or  any of its  Subsidiaries
(collectively,   the  "Proprietary   Rights").  The  Company  and  each  of  the
Subsidiaries  owns or possesses all the  Proprietary  Rights which are necessary
for the conduct of its business as now  conducted  without any conflict with the
rights of others.  Except as disclosed in the Commission Documents or in the PPM
or Schedule  2.1(r) hereto,  (i) as of the date of this  Agreement,  neither the
Company nor any of its  Subsidiaries  has received  any written  notice that any
Proprietary Rights have been declared  unenforceable or otherwise invalid by any
court or governmental  agency, and (ii) as of the date of this Agreement,  there
is, to the knowledge of the Company, no material existing  infringement,  misuse
or  misappropriation  of any  Proprietary  Rights by others  that  could  have a
Material  Adverse  Effect.  From June 30, 2003,  to the date of this  Agreement,
neither the Company nor any of its  Subsidiaries has received any written notice
alleging  that  the  operation  of the  business  of the  Company  or any of its
Subsidiaries  infringes in any material respect upon the  intellectual  property
rights of others.

         (s)    Environmental Compliance. Except as disclosed on Schedule 2.1(s)
hereto or the  Commission  Documents  or in the PPM, the Company and each of its
Subsidiaries have obtained all material approvals, authorization,  certificates,
consents,  licenses,  orders and permits or other similar  authorizations of all
governmental authorities,  or from any other person, that are required under any

                                       8
<PAGE>

Environmental  Laws.  Schedule  2.1(s)  hereto sets forth all material  permits,
licenses and other  authorizations  issued under any  Environmental  Laws to the
Company or its Subsidiaries. "Environmental Laws" shall mean all U.S. Federal or
state laws applicable to the Company or any of its Subsidiaries  relating to the
protection of the environment  including,  without limitation,  all requirements
pertaining to reporting, licensing,  permitting,  controlling,  investigating or
remediating emissions,  discharges, releases or threatened releases of hazardous
substances, chemical substances,  pollutants,  contaminants or toxic substances,
materials or wastes,  whether solid,  liquid or gaseous in nature, into the air,
surface water, groundwater or land, or relating to the manufacture,  processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
hazardous  substances,  chemical substances,  pollutants,  contaminants or toxic
substances,  material  or wastes,  whether  solid,  liquid or gaseous in nature.
Except as set forth on  Schedule  2.1(s)  hereto or  disclosed  in the PPM,  the
Company  has  all   necessary   governmental   approvals   required   under  all
Environmental  Laws and used in its  business  or in the  business of any of its
Subsidiaries,  except for such  instances  as would not  individually  or in the
aggregate  have  a  Material  Adverse  Effect.  The  Company  and  each  of  its
Subsidiaries  are also in compliance with all other  limitations,  restrictions,
conditions,  standards,  requirements,  schedules  and  timetables  required  or
imposed under all Environmental Laws where  non-compliance could have a Material
Adverse  Effect.  Except for such instances as would not  individually or in the
aggregate  have a Material  Adverse  Effect or as  disclosed  in the  Commission
Documents,  there  are no past or  present  events,  conditions,  circumstances,
incidents,  actions or omissions relating to or in any way affecting the Company
or its Subsidiaries  that violate or may violate any Environmental Law after the
Closing or that may give rise to any  Environmental  Liabilities,  or  otherwise
form the basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation  (i) under any  Environmental  Law, or (ii) based on or related to
the manufacture,  processing,  distribution, use, treatment, storage (including,
without limitation, underground storage tanks), disposal, transport or handling,
or the  emission,  discharge,  release or  threatened  release of any  hazardous
substance.  "Environmental  Liabilities"  means  all  liabilities  of  a  person
(whether such  liabilities are owed by such person to governmental  authorities,
third  parties or  otherwise)  currently in existence or arising  hereafter  and
which arise under or relate to any Environmental Law.

         (t)     Books and  Records; Internal  Accounting  Controls.  The books,
records and documents of the Company and its Subsidiaries  accurately reflect in
all material  respects the  information  relating to the business of the Company
and the  Subsidiaries,  the location and  collection  of their  assets,  and the
nature of all transactions giving rise to the obligations or accounts receivable
of the  Company or any  Subsidiary.  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 GAAP and to maintain
asset  accountability,  (iii) access to assets is permitted  only in  accordance
with  management's  general or  specific  authorization,  and (iv) the  recorded
accountability  for assets is compared  with the existing  assets at  reasonable
intervals and appropriate actions are taken with respect to any differences.

                                       9
<PAGE>

         (u)    Material Agreements.  Except for the Transaction Documents or as
set forth on Schedule  2.1(u)  hereto or disclosed in the PPM, or those that are
included as exhibits to the  Commission  Documents,  neither the Company nor any
Subsidiary is a party to any written or oral  contract,  instrument,  agreement,
commitment,  obligation,  plan or arrangement, a copy of which would be required
to be  filed  with  the  Commission  if  the  Company  or  any  Subsidiary  were
registering  securities  under  the  Securities  Act  (collectively,   "Material
Agreements").  Except as set forth in the  Commission  Documents  or on Schedule
2.1(u)  hereto or disclosed in the PPM, the Company and each  Subsidiary  has in
all material respects performed all the obligations  required to be performed by
them to date under the foregoing agreements,  have received no notice of default
and,  to the best of the  Company's  knowledge,  are not in  default  under  any
Material  Agreement  now in effect,  the result of which  could cause a Material
Adverse Effect. No written or oral contract,  instrument,  agreement (other than
the  Certificate  of  Designation  with  respect to the  Preferred  Stock,  this
Agreement or any other Transaction Document(s)),  commitment,  obligation (other
than any obligation imposed by state law), plan or arrangement of the Company or
of any  Subsidiary  limits or shall limit the payment of dividends on its Common
Stock.

         (v)     Transactions with Affiliates.  Except as set forth on  Schedule
2.1(v)  hereto or  disclosed in any of the  Commission  Documents or in the PPM,
there  are  no  loans,  leases,  agreements,   contracts,   royalty  agreements,
management  contracts or arrangements or other continuing  transactions  between
(i) the Company,  any  Subsidiary  or any of their  respective  its customers or
suppliers,  on the one hand, and (ii) on the other hand, any officer,  employee,
consultant or director of the Company, or any of its Subsidiaries, or any person
owning any capital  stock of the Company or any  Subsidiary or any member of the
immediate family of such officer, employee, consultant,  director or stockholder
or any  corporation  or  other  entity  controlled  by such  officer,  employee,
consultant, director or stockholder.

         (w)     Securities Act of 1933.  Assuming the accuracy and completeness
of the  representations,  warranties and covenants of the  Purchasers  contained
herein, the Company has complied and will comply with all applicable federal and
state  securities  laws in connection  with the offer,  issuance and sale of the
Shares,  the Conversion  Shares,  the Warrants and the Warrant Shares hereunder.
Neither the Company nor anyone acting on its behalf, directly or indirectly, has
or will sell,  offer to sell or solicit offers to buy any of the Securities,  or
similar  securities  to, or solicit  offers with respect  thereto from, or enter
into any preliminary  conversations  or negotiations  relating thereto with, any
person,  or has taken or will take any action so as to require  registration  of
the issuance and sale of any of the Securities under the registration provisions
of the Securities Act and applicable state securities laws.  Neither the Company
nor any of its  affiliates,  nor any person acting on its or their  behalf,  has
engaged in any form of general  solicitation or general  advertising (within the
meaning of Regulation D under the Securities  Act) in connection  with the offer
or sale of any of the Securities.

         (x)     Governmental Approvals.  Except as set forth on Schedule 2.1(x)
hereto or disclosed in the PPM, and except for the filing of any notice prior or
subsequent  to the Closing that may be required  under  applicable  state and/or
federal  securities laws (which if required,  shall be filed on a timely basis),
no  authorization,   consent,   approval,   license,  exemption  of,  filing  or
registration  with any  court or  governmental  department,  commission,  board,
bureau, agency or instrumentality,  domestic or foreign, is or will be necessary

                                       10
<PAGE>

for, or in  connection  with,  the  execution  or delivery of the Shares and the
Warrants,  or,  except as set forth in this  Agreement or any other  Transaction
Document,  for the  performance  by the  Company  of its  obligations  under the
Transaction Documents.

         (y)     Employees.  Neither  the  Company  nor  any Subsidiary  has any
collective bargaining  arrangements or agreements covering any of its employees.
Except as set forth in the Commission  Documents or on Schedule 2.1(y) hereto or
disclosed in the PPM,  neither the Company nor any Subsidiary has any employment
contract,   agreement   regarding   proprietary   information,   non-competition
agreement,  non-solicitation agreement,  confidentiality agreement, or any other
similar contract or restrictive covenant,  relating to the right of any officer,
employee  or  consultant  to be  employed  or  engaged  by the  Company  or such
Subsidiary.  Since June 30, 2003, no officer,  consultant or key employee of the
Company or any  Subsidiary  whose  termination,  either  individually  or in the
aggregate,  could have a Material  Adverse  Effect,  has  terminated  or, to the
knowledge of the Company,  has any present  intention of terminating  his or her
employment or engagement with the Company or any Subsidiary.

         (z)     Absence of Certain  Developments.  Except as  set forth  in the
Commission Documents or on Schedule 2.1(z) hereto or disclosed in the PPM, since
June 30, 2003, neither the Company nor any Subsidiary has:

                    (i) issued any stock, bonds or other corporate securities or
any rights, options or warrants with respect thereto;

                    (ii)  borrowed  any amount or incurred or become  subject to
any liabilities  (absolute or contingent) except current liabilities incurred in
the ordinary course of business which are comparable in nature and amount to the
current  liabilities  incurred in the  ordinary  course of  business  during the
comparable  portion of its prior fiscal year, as adjusted to reflect the current
nature and volume of the Company's or such Subsidiary's business;

                    (iii)   discharged   or  satisfied   any  material  lien  or
encumbrance or paid a material  amount of any obligation or liability  (absolute
or contingent),  other than current  liabilities  paid in the ordinary course of
business;

                    (iv) declared or made any payment or distribution of cash or
other  property to  stockholders  with  respect to its stock,  or  purchased  or
redeemed,  or made any  agreements  so to purchase or redeem,  any shares of its
capital stock;

                    (v) sold, assigned or transferred any other tangible assets,
or canceled any debts or claims, except in the ordinary course of business;

                    (vi)  sold,  assigned  or  transferred  any  patent  rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual  property  rights,  which sale,  assignment  or transfer  has had a
Material Adverse Effect, or disclosed any proprietary  confidential  information
to any person except in the ordinary  course of business or to the Purchasers or
their representatives;

                                       11
<PAGE>

                    (vii) suffered any  substantial  losses or waived any rights
of  material  value,  whether  or not in the  ordinary  course of  business,  or
suffered the loss of any material amount of prospective business;

                    (viii) made any changes in employee  compensation  except in
the ordinary course of business and consistent with past practices;

                    (ix) made capital  expenditures or commitments therefor that
aggregate in excess of $25,000;

                    (x)  entered  into any other  transaction  other than in the
ordinary  course of business,  or entered into any other  material  transaction,
whether or not in the ordinary course of business;

                    (xi) made charitable  contributions  or pledges in excess of
$25,000;

                    (xii) suffered any material damage,  destruction or casualty
loss, whether or not covered by insurance;

                    (xiii)  experienced  any  material  problems  with  labor or
management in connection with the terms and conditions of their  employment;  or
(xiv)  entered  into an  agreement,  written  or  otherwise,  to take any of the
foregoing actions.

         (aa)    Use of Proceeds.  Except  as  set forth on  Schedule 2.1(aa) or
disclosed in the PPM, the proceeds  from the sale of the Shares and the Warrants
will be used by the Company  for working  capital  purposes  and,  except as set
forth on Schedule  2.1(aa) or disclosed  in the PPM,  shall not be used to repay
any outstanding Indebtedness or any loans to any officer, director, affiliate or
insider of the Company.

         (bb)    Public Utility Holding Company Act and Investment  Company  Act
Status.  The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public  Utility  Holding  Company Act of 1935,  as
amended.  The Company is not,  and as a result of and  immediately  upon Closing
will not be, an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as amended.

         (cc)    ERISA. No liability to the Pension Benefit Guaranty Corporation
has  been  incurred  with  respect  to any  Plan  by the  Company  or any of its
Subsidiaries  which is or would cause a Material  Adverse Effect.  The execution
and  delivery  of this  Agreement  and the issue and sale of the  Shares and the
Warrants will not involve any transaction  which is subject to the  prohibitions
of  Section  406 of ERISA or in  connection  with  which a tax could be  imposed
pursuant to Section 4975 of the Internal  Revenue Code of 1986,  as amended (the
"Code");  provided that, if any  Purchaser,  or any person or entity that owns a
beneficial  interest in any  Purchaser,  is an "employee  pension  benefit plan"
(within the meaning of Section  3(2) of ERISA) with respect to which the Company
is a "party in  interest"  (within the meaning of Section  3(14) of ERISA),  the

                                       12
<PAGE>

requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable,  are met.
As used in this Section 2.1(cc), the term "Plan" shall mean an "employee pension
benefit  plan"  (as  defined  in  Section  3 of  ERISA)  which  is or  has  been
established or maintained,  or to which  contributions are or have been made, by
the  Company  or any  Subsidiary  or by any trade or  business,  whether  or not
incorporated,  which,  together  with the  Company or any  Subsidiary,  is under
common control, as described in Section 414(b) or (c) of the Code.

         Section  2.2   Representations and Warranties of the  Purchasers.  Each
of the Purchasers hereby makes the following  representations  and warranties to
the  Company  with  respect  solely to itself and not with  respect to any other
Purchaser:

         (a)     Organization and Standing of  the Purchasers.  If the Purchaser
is an entity,  such Purchaser is a  corporation,  limited  liability  company or
partnership  duly  incorporated  or  organized,  validly  existing  and in  good
standing  under  the  laws  of  the   jurisdiction  of  its   incorporation   or
organization.

         (b)     Authorization and Power. Each Purchaser has the requisite
power and authority to enter into and perform this Agreement,  the  Registration
Rights  Agreement,   the  Warrants,  and  the  other  agreements  and  documents
contemplated  hereby and thereby and  executed by the  Purchaser or to which the
Purchaser is party (collectively,  the "Purchaser Transaction Documents") and to
purchase  the Shares and Warrants  being sold to it  hereunder.  The  execution,
delivery  and  performance  of  the  Purchaser  Transaction  Documents  by  each
Purchaser and the  consummation by it of the  transactions  contemplated  hereby
have been duly authorized by all necessary  corporate or partnership action, and
no further consent or authorization of such Purchaser or its Board of Directors,
stockholders,  or partners, as the case may be, is required.  This Agreement has
been duly  authorized,  executed and  delivered by each  Purchaser.  Each of the
Purchaser Transaction Documents  constitutes,  or shall constitute when executed
and  delivered,  valid and binding  obligations  of each  Purchaser  enforceable
against  such   Purchaser  in  accordance   with  its  terms,   except  as  such
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  liquidation,  conservatorship,   receivership  or
similar laws relating to, or affecting  generally the enforcement of, creditor's
rights  and  remedies  or  by  equitable   principles  or  remedies  of  general
application.

         (c)     Acquisition for Investment.  Each  Purchaser  is purchasing the
Shares and acquiring the Warrants  solely for its own account for the purpose of
investment  and  not  with  a  view  to or  for  sale  in  connection  with  any
distribution  thereof.  Each Purchaser does not have a present intention to sell
any of  the  Securities,  nor a  present  arrangement  (whether  or not  legally
binding) or intention to effect any  distribution of any of the Securities to or
through  any  person  or  entity;   provided,   however,   that  by  making  the
representations  herein and subject to Section 2.2(e) below, each Purchaser does
not agree to hold any of the  Securities  for any minimum or other specific term
and  reserves  the  right to  dispose  of any of the  Securities  at any time in
accordance with federal and state securities laws applicable to such disposition
provided that the Company  receives an opinion of its counsel to the effect that
such disposition  complies with such laws. Each Purchaser  acknowledges  that it
(i) has such  knowledge and  experience  in financial and business  matters such
that such  Purchaser  is  capable  of  evaluating  the  merits  and risks of its
investment in the Company,  (ii) is able to bear the financial risks  associated

                                       13
<PAGE>

with an  investment in the  Securities,  and (iii) has been given full access to
such  records of the Company  and the  Subsidiaries  and to the  officers of the
Company  and the  Subsidiaries  as it has deemed  necessary  or  appropriate  to
conduct its due diligence investigation.

         (d)     Rule 144.  Each Purchaser understands that the Securities  must
be held indefinitely  unless such Securities are registered under the Securities
Act or an exemption from registration is available.  Each Purchaser acknowledges
that  it is  familiar  with  Rule  144  of  the  rules  and  regulations  of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such  Purchaser  has been  advised  that Rule 144 permits  resales only
under certain circumstances.  Each Purchaser understands that to the extent that
Rule 144 is not available,  such Purchaser will be unable to sell any Securities
without either registration under the Securities Act or the existence of another
exemption from such registration requirement, provided that the Company receives
an opinion  of its  counsel  to the  effect  that such sale is exempt  from such
registration requirement.

         (e)     General.  Each Purchaser understands  that  the  Securities are
being  offered  and  sold in  reliance  on a  transactional  exemption  from the
registration  requirements of federal and state  securities laws and the Company
is relying upon the truth,  accuracy and  completeness  of the  representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth  herein  and in the  other  Purchaser  Transaction  Documents  in order to
determine the  applicability  of such  exemptions  and the  suitability  of such
Purchaser to acquire the Securities.  Each Purchaser  understands that no United
States  federal or state agency or any  government  or  governmental  agency has
passed upon or made any recommendation or endorsement with respect to any of the
Securities.

         (f)     Opportunities  for  Additional  Information.   Each   Purchaser
acknowledges that such Purchaser has had the opportunity to ask questions of and
receive  answers  from, or obtain  additional  information  from,  the executive
officers  of the  Company  concerning  the  financial  and other  affairs of the
Company,  and to the extent deemed  necessary by such Purchaser in light of such
Purchaser's  personal  knowledge of the Company's  affairs,  such  Purchaser has
asked such  questions  and  received  answers to the full  satisfaction  of such
Purchaser, and such Purchaser desires to invest in the Company.

         (g)     No General Solicitation.  Each Purchaser acknowledges  that the
Securities were not offered to such Purchaser by means of any form of general or
public   solicitation   or  general   advertising,   or  publicly   disseminated
advertisements or sales literature,  including (i) any  advertisement,  article,
notice or other communication  published in any newspaper,  magazine, or similar
media,  or broadcast over television or radio, or (ii) any seminar or meeting to
which  such   Purchaser   was  invited  by  any  of  the   foregoing   means  of
communications.

         (h)     Accredited Investor.  Each Purchaser is an  accredited investor
(as defined in Rule 501 of Regulation D), and such Purchaser has such experience
in business and financial  matters that it is capable of  evaluating  the merits
and risks of an investment in the Securities.  Each Purchaser  acknowledges that
an investment in the  Securities  is  speculative  and involves a high degree of
risk.

                                       14
<PAGE>

                                   ARTICLE III
                                    COVENANTS

         The parties  covenant with one another as follows,  which covenants are
for the  benefit of each  respective  covenantee  and its  respective  permitted
assignees.

         Section 3.1  Disclosure of Transactions and Other Material Information.
On or before 8:30 a.m.,  New York City time,  on the  business  day  immediately
following the Closing Date,  the Company shall file a Current Report on Form 8-K
with the Commission describing the terms of the transactions contemplated by the
Transaction  Documents and including as exhibits to such Current  Report on Form
8-K this Agreement,  the Warrants and the Registration Rights Agreement, and the
schedules hereto and thereto in the form required by the Exchange Act (including
all attachments, the "8-K Filing").  The Company shall not, and shall cause each
of its Subsidiaries and its and each of their  respective  officers,  directors,
employees and agents not to, provide the Purchaser with any material,  nonpublic
information  regarding the Company or any of its Subsidiaries from and after the
filing of the 8-K Filing with the Commission without the express written consent
of the  Purchaser.  Neither the Company nor the Purchaser  shall issue any press
releases  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 the Purchaser,  to make any press release or other
public   disclosure  with  respect  to  such  transactions  (i)  in  substantial
conformity with the 8-K Filing and contemporaneously  therewith,  and (ii) as is
required by applicable law and regulations  (provided that in the case of clause
(i) above, the Purchaser shall be consulted by the Company (although the consent
of the  Purchaser  shall not be  required)  in  connection  with any such  press
release or other public disclosure prior to its release).

         Section  3.2   Registration  and  Listing.  The  Company will  use  its
commercially reasonable efforts to cause its Common Stock to be registered under
Section 12(b) or 12(g) of the Exchange Act, will comply in all respects with its
reporting  and filing  obligations  under the Exchange Act, will comply with all
requirements  related  to any  registration  statement  filed  pursuant  to this
Agreement,  and will not take any action or file any  document  (whether  or not
permitted  by the  Securities  Act  or  the  rules  promulgated  thereunder)  to
terminate or suspend such  registration or to terminate or suspend its reporting
and filing  obligations  under the Exchange  Act or  Securities  Act,  except as
permitted herein. The Company will promptly file the "Listing  Application" for,
or in connection  with, the issuance and delivery of the  Conversion  Shares and
the Warrant Shares.

         Section  3.3   Inspection  Rights.  In   the  event  the   Registration
Statement (as defined in the  Registration  Rights  Agreement) is not effective,
has been  suspended  or is  otherwise  no longer  effective,  the Company  shall
permit,  during normal business hours and upon reasonable request and reasonable
notice, a Purchaser or any employees, agents or representatives thereof that are
parties  to  an  effective   confidentiality   agreement  with  the  Company  of
appropriate  scope,  so long as a  Purchaser  shall be  obligated  hereunder  to
purchase the Shares or shall  beneficially own the Shares or Conversion  Shares,
or shall own Warrant Shares or the Warrants which,  in the aggregate,  represent
more than two  percent  (2%) of the total  combined  voting  power of all voting
securities  then  outstanding,  to  examine  and make  reasonable  copies of and
extracts from the records and books of account of, and visit and inspect, during

                                       15
<PAGE>

the term of the Warrants, the properties, assets, operations and business of the
Company and any Subsidiary, and to discuss the affairs, finances and accounts of
the Company and any Subsidiary with any of its officers, consultants, directors,
and key employees.

         Section  3.4   Compliance with Laws.  The  Company  shall  comply,  and
cause each Subsidiary to comply,  with all applicable laws,  rules,  regulations
and orders, the noncompliance with which could have a Material Adverse Effect.

         Section 3.5    Keeping of  Records  and Books  of Account.  The Company
shall keep and cause  each  Subsidiary  to keep  adequate  records  and books of
account,  in  which  complete  entries  will  be made in  accordance  with  GAAP
consistently applied.

         Section 3.6    Other Agreements.  The Company shall not enter  into any
agreement  containing  any provision that would violate the terms of, or cause a
default under, any material term of any Transaction Document.

        Section 3.7     Reservation of Shares. So long as the Shares or Warrants
remain outstanding,  the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, the maximum number of
shares of Common Stock to effect the  conversion  of the Shares and the exercise
of the Warrants.

         Section 3.8    Non-public Information.  Neither the  Company nor any of
its officers or agents shall disclose any material non-public  information about
the  Company to the  Purchasers,  and neither  the  Purchasers  nor any of their
affiliates,  officers or agents will solicit any material non-public information
from the Company.

         Section 3.9    Preemptive Rights.

         (a)     Until the first anniversary of the Closing Date and for so long
as any  Purchaser or its assigns shall own any Shares (any  Purchaser,  for such
purpose,  an "Eligible  Purchaser"),  the Company hereby grants to each Eligible
Purchaser a right (the  "Preemptive  Right") to purchase all or any part of such
Eligible  Purchaser's  pro rata  share of any "New  Securities"  (as  defined in
Section  3.9(b))  that the Company may,  from time to time,  propose to sell and
issue.  The pro rata share for each  Eligible  Purchaser,  for  purposes  of the
Preemptive  Right, is the ratio of (x) the number of shares of Common Stock then
held by such  Eligible  Purchaser  immediately  prior to the issuance of the New
Securities  (assuming the full conversion of the Shares and the full exercise of
the Warrants),  to (y) the total number of shares of Common Stock of the Company
outstanding  immediately  prior to the  issuance  of the New  Securities  (after
giving effect to the full  conversion of the Shares and the full exercise of the
Warrants).

         (b)     For purposes of this Section 3.9, "New  Securities" shall  mean
any Common Stock or Preferred Stock of the Company, whether or not authorized on
the date  hereof,  and rights,  options or warrants to purchase  Common Stock or
Preferred  Stock and securities of any type  whatsoever that are, or may become,
convertible into Common Stock or Preferred Stock;  provided,  however, that "New
Securities"  does not include the following:

                    (i) shares of capital  stock of the  Company  issuable  upon
conversion  or exercise of any currently  outstanding  securities or any Shares,
Warrants or New Securities  issued in accordance with this Agreement  (including
the Warrant Shares);

                    (ii) shares or options or warrants for Common Stock  granted
to  officers,  directors  and  employees  of, and  consultants  to, the  Company
pursuant to stock  option or  purchase  plans or other  compensatory  agreements
approved by the Compensation Committee of the Board of Directors;

                    (iii) shares of Common  Stock or  Preferred  Stock issued in
connection  with any pro rata stock  split or stock  dividend  in respect of any
series or class of  capital  stock of the  Company  or  recapitalization  by the
Company;

                    (iv)  shares of capital  stock,  or options or  warrants  to
purchase  capital  stock,  issued to a strategic  investor in connection  with a
strategic commercial agreement as determined by the Board of Directors;

                    (v) shares of capital  stock,  or  options  or  warrants  to
purchase capital stock, issued pursuant to commercial borrowing, secured lending
or lease financing transaction approved by the Board of Directors;

                    (vi)  shares of capital  stock,  or options or  warrants  to
purchase   capital  stock,   issued  pursuant  to  the  acquisition  of  another
corporation or entity by the Company by consolidation,  merger,  purchase of all
or substantially all of the assets, or other reorganization in which the Company
acquires,  in a single  transaction  or series of related  transactions,  all or
substantially  all of the  assets of such other  corporation  or entity or fifty
percent (50%) or more of the voting power of such other corporation or entity or
fifty percent (50%) or more of the equity ownership of such other corporation or
entity;

                    (vii)  shares of  capital  stock  issued in an  underwritten
public securities offering pursuant to a registration  statement filed under the
Securities Act;

                    (viii)  shares of capital  stock,  or options or warrants to
purchase capital stock, issued to current or prospective  customers or suppliers
of  the  Company   approved  by  the  Board  of  Directors  as  compensation  or
accommodation  in lieu of other payment,  compensation or  accommodation to such
customer or supplier;

                    (ix)  shares of  capital  stock,  or  warrants  to  purchase
capital  stock,  issued to any person or entity  that  provides  services to the
Company as compensation  therefor pursuant to an agreement approved by the Board
of Directors;

                    (x) shares of capital  stock,  or  options  or  warrants  to
purchase  capital  stock,  offered  in a  transaction  where  purchase  of  such
securities by any Purchaser would cause such  transaction to fail to comply with
applicable  federal  or  state  securities  laws or would  cause  an  applicable
registration or qualification  exemption to fail to be available to the Company;
provided,  however,  that this clause (x) shall apply only to the  Purchaser  or
Purchasers  who  would  cause  any  such  failure,  and not to any of the  other
Purchasers;

                                       17
<PAGE>

                    (xi) securities  issuable upon conversion or exercise of the
securities set forth in paragraphs (i) - (x) above.

In the  event  that  the  Company  proposes  to  undertake  an  issuance  of New
Securities,  it shall give each Eligible Purchaser written notice (the "Notice")
of its intention,  describing  the type of New  Securities,  the price,  and the
general terms upon which the Company  proposes to issue the same.  Each Eligible
Purchaser  shall have twenty (20)  Business Days after receipt of such notice to
agree  to  purchase  all or any  portion  of its pro  rata  share  of  such  New
Securities  at the price and upon the terms  specified  in the  notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased.  In the event that any New Securities subject to the Preemptive
Right are not  purchased  by the  Eligible  Purchaser  within  the  twenty  (20)
Business Day period  specified  above,  the Company  shall have ninety (90) days
thereafter to sell (or enter into an agreement pursuant to which the sale of New
Securities that had been subject to the Preemptive Right shall be closed,  if at
all,  within sixty (60) days from the date of said agreement) the New Securities
with respect to which the rights of the Purchaser  were not exercised at a price
and upon terms, including manner of payment, no more favorable to the purchasers
thereof than specified in the Notice.  In the event the Company has not sold all
offered  New  Securities  within such ninety (90) day period (or sold and issued
New Securities in accordance with the foregoing  within sixty (60) days from the
date of such agreement),  the Company shall not thereafter issue or sell any New
Securities,  without first complying again with the procedures set forth in this
Section 3.9.

         Section 3.10   Lock-Up. Each Purchaser agrees to sell, in each calendar
month during the one-year  period  beginning on the Closing Date,  not more than
1/12 of the aggregate number of Conversion Shares and Warrant Shares issuable to
such Purchaser pursuant to the Transaction  Documents;  provided,  however, that
the number of such  Conversion  Shares and Warrant Shares that can be sold shall
be  cumulative  and shall begin to  accumulate  on the day following the Closing
Date;  and,  provided  further  that the  number of such  Conversion  Shares and
Warrant  Shares that may be sold in any calendar  month shall increase to 1/6 of
such aggregate  number of Conversion  Shares and Warrant Shares  issuable to the
undersigned  in the event that the average  daily  trading  volume in the Common
Stock is equal to or greater  than  200,000  shares per day in the  previous  20
trading days. The Company shall use its commercially reasonable efforts to cause
each of its  officers,  directors  and  affiliates  to enter  into an  agreement
containing  covenants  substantially  similar to those set forth in this Section
3.10.

                                   ARTICLE IV

                                   CONDITIONS

         Section  4.1   Conditions Precedent to the Obligation of the Company to
Close and to Sell the Shares  and  Warrants.  The  obligation  hereunder  of the
Company  to close  and  issue  and  sell  the  Shares  and the  Warrants  to the
Purchasers on the Closing Date is subject to the  satisfaction or waiver,  at or
before the Closing,  of the conditions set forth below. These conditions are for
the  Company's  sole benefit and may be waived by the Company at any time in its
sole discretion.

                                       18
<PAGE>

         (a)    Accuracy of the Purchasers' Representations and Warranties.  The
representations and warranties of each Purchaser  Transaction Documents 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 are expressly made as of a particular  date, which shall be true
and correct in all material respects as of such date.

         (b)    Performance  by  the  Purchasers.   Each  Purchaser  shall  have
performed,  satisfied and complied in all material  respects with all covenants,
agreements and conditions required by this Agreement to be performed,  satisfied
or complied with by the Purchasers at or prior to the Closing Date.

         (c)    No Injunction.  No statute, rule, regulation,  executive  order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

         (d)    Delivery of Purchase Price.  The Purchase Price for  the  Shares
and Warrants shall have been delivered to the Company at the Closing.

         (e)    Delivery  of  Purchaser  Transaction  Documents.  The  Purchaser
Transaction  Documents  shall  have  been duly  executed  and  delivered  by the
Purchasers to the Company.

         Section 4.2    Conditions Precedent to the Obligation of the Purchasers
to Close and to Purchase the Shares and Warrants.  The  obligation  hereunder of
the   Purchasers  to  purchase  the  Shares  and  Warrants  and  consummate  the
transactions  contemplated  by this Agreement is subject to the  satisfaction or
waiver,  at or before the Closing,  of each of the  conditions  set forth below.
These  conditions are for the Purchasers'  sole benefit and may be waived by the
Purchasers at any time in their sole discretion.

         (a)    Accuracy of the Company's Representations and  Warranties.  Each
of the  representations  and  warranties of the Company in this Agreement and in
each of the  Transaction  Documents  shall be true and  correct in all  material
respects as of the Closing Date, except for  representations and warranties that
are expressly made as of a particular  date,  which shall be true and correct in
all material respects as of such date.

         (b)    Performance by the Company.  The Company  shall  have performed,
satisfied  and  complied in all  respects  with all  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.

         (c)    No Suspension, Etc. Trading in the Company's Common Stock  shall
not have been suspended by the Commission  (except for any suspension of trading
of  limited  duration  agreed  to by the  Company,  which  suspension  shall  be
terminated  prior to the  Closing),  and, at any time prior to the Closing Date,
trading in  securities  generally  as reported by  Bloomberg  Financial  Markets
("Bloomberg")  shall not have been suspended or limited, or minimum prices shall
not have been  established on securities whose trades are reported by Bloomberg,

                                       19
<PAGE>

nor shall a banking moratorium have been declared either by the United States or
Nevada  State  authorities,  nor shall  there  have  occurred  any  national  or
international  calamity  or  crisis  of  such  magnitude  in its  effect  on any
financial  market  which,  in  each  case,  in the  reasonable  judgment  of the
Purchasers, makes it impracticable or inadvisable to purchase the Shares.

         (d)    No Injunction.  No statute,  rule,  regulation, executive order,
decree,  ruling or injunction shall have been enacted,  entered,  promulgated or
endorsed by any court or governmental  authority of competent jurisdiction which
prohibits  the  consummation  of any of the  transactions  contemplated  by this
Agreement.

         (e)    No Proceedings or Litigation.  No  action,  suit  or  proceeding
before any arbitrator or any  governmental  authority shall have been commenced,
and no investigation  by any governmental  authority shall have been threatened,
against the Company or any  Subsidiary,  or any of the  officers,  directors  or
affiliates  of the Company or any  Subsidiary,  seeking to restrain,  prevent or
change the  transactions  contemplated by this Agreement,  or seeking damages in
connection with such transactions.

         (f)    Opinion of Counsel, Etc.  The Purchasers shall have received  an
opinion of counsel to the Company, dated the Closing Date,  substantially in the
form of  Exhibit C hereto,  and such other  certificates  and  documents  as the
Purchasers or their counsel shall reasonably require incident to the Closing.

         (g)    Warrants and Shares.  The Company shall have  delivered  to  the
Purchasers  the  originally  executed  Warrants (in such  denominations  as each
Purchaser  may  request but in no event in  denominations  of less than 100) and
shall have delivered certificates representing the Shares (in such denominations
as each Purchaser may request) being acquired by the Purchasers at the Closing.

         (h)    Resolutions.  The Board of Directors of  the Company  shall have
adopted  resolutions  consistent with Section 2.1(b) hereof in a form reasonably
acceptable to the Purchasers (the "Resolutions").

         (i)    Certificate of Designations. As of the Closing Date, the Company
shall have filed with the Nevada Secretary of State a Certificate of Designation
authorizing the Preferred Stock in substantially  the Form of Exhibit D attached
hereto.

         (j)    Reservation of Shares. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Preferred Stock, solely for the
purpose of effecting the issuance of the Shares, a number of shares of Preferred
Stock equal to the aggregate  number of the Shares.  As of the Closing Date, the
Company shall have  reserved out of its  authorized  and unissued  Common Stock,
solely  for the  purpose  of  effecting  the  conversion  of the  Shares and the
exercise of the Warrants, a number of shares of Common Stock equal to the number
of Conversion  Shares and the number of Warrant Shares  issuable upon conversion
of the Preferred Stock and the exercise of the Warrants, respectively,  assuming
the  Warrants  are  exercised  and the Shares are  converted on the Closing Date

                                       20
<PAGE>

(assuming the Warrants are fully exercisable and the Shares fully convertible on
such date  regardless of any limitation on the timing or amount of such exercise
or conversion).

         (k)    Secretary's Certificate. The Company shall have delivered to the
Purchasers a  secretary's  certificate,  dated as of the Closing Date, as to (i)
the Resolutions,  (ii) the Certificate,  (iii) the Bylaws,  each as in effect at
the  Closing,  and (iv) the  authority  and  incumbency  of the  officers of the
Company executing the Transaction  Documents and any other documents required to
be executed or delivered in connection therewith.

         (l)    Officer's  Certificate.  On the Closing Date, the  Company shall
have delivered to the  Purchasers a certificate  of an executive  officer of the
Company,  dated as of the Closing Date, confirming the accuracy of the Company's
representations,  warranties and covenants  contained  herein and in each of the
other Transaction Documents as of the Closing Date and confirming the compliance
by the Company with the conditions precedent set forth in this Section 4.2 as of
the Closing Date.

         (m)    Fees and Expenses. As of the Closing Date, all fees and expenses
required  to be  paid  by  the  Company  in  connection  with  the  transactions
contemplated by this Agreement shall have been, or authorized to be, paid by the
Company.

         (n)    Registration Rights Agreement.  As  of  the  Closing  Date,  the
parties shall have entered into the Registration Rights Agreement in the Form of
Exhibit E attached hereto.

(o) Material Adverse Effect. No Material Adverse Effect shall have occurred.

                                   ARTICLE V

                               CERTIFICATE LEGEND

         Section 5.1    Legend. Each certificate representing  the  Shares,  the
Conversion  Shares,  the  Warrants  and the Warrant  Shares  shall be stamped or
otherwise  imprinted  with a  legend  substantially  in the  following  form (in
addition to any legend  required by  applicable  state  securities or "blue sky"
laws):

         THE SECURITIES  REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
         NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
         "SECURITIES  ACT") OR ANY  STATE  SECURITIES  LAWS AND MAY NOT BE SOLD,
         TRANSFERRED  OR  OTHERWISE  DISPOSED  OF  UNLESS  REGISTERED  UNDER THE
         SECURITIES  ACT AND UNDER  APPLICABLE  STATE  SECURITIES  LAWS OR AXIOM
         PHARMACEUTICALS,  INC.  SHALL HAVE  RECEIVED  AN OPINION OF ITS COUNSEL
         THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER
         THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

                                       21
<PAGE>

         Each  certificate  representing  any  Shares  shall  also be stamped or
otherwise imprinted with a legend substantially in the following form:

         AXIOM PHARMACEUTICALS, INC. WILL FURNISH TO EACH HOLDER OF ITS SERIES A
         CONVERTIBLE  PREFERRED  STOCK WHO SO REQUESTS  WITHOUT CHARGE A COPY OF
         THE CERTIFICATE OF DESIGNATION SETTING FORTH THE POWERS,  DESIGNATIONS,
         PREFERENCES  AND  RELATIVE,  PARTICIPATING,  OPTIONAL OR OTHER  SPECIAL
         RIGHTS  OF SUCH  STOCK AND ANY OTHER  CLASS OR SERIES  THEREOF  AND THE
         QUALIFICATIONS,  LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR
         RIGHTS.

         The  Company  agrees to reissue  certificates  representing  any of the
Securities, without the legend set forth above, if at such time, prior to making
any  transfer of any such  Securities,  such holder  thereof  shall give written
notice to the  Company  describing  the  manner and terms of such  transfer  and
removal as the Company may reasonably  request.  Such proposed transfer will not
be effected  until:  (a) the Company has notified such holder that either (i) in
the opinion of Company counsel,  the registration of the Shares,  the Conversion
Shares,  Warrants or Warrant  Shares under the Securities Act is not required in
connection with such proposed transfer,  or (ii) a registration  statement under
the  Securities  Act covering  such proposed  disposition  has been filed by the
Company with the Commission and has become  effective  under the Securities Act;
and (b) the Company has  notified  such holder that either (i) in the opinion of
Company counsel, the registration or qualification under the securities or "blue
sky"  laws of any  state  is not  required  in  connection  with  such  proposed
disposition,  or (ii) compliance with applicable  state securities or "blue sky"
laws has been effected.  The Company will use its best efforts to respond to any
such notice  from a holder  within  five (5) days.  In the case of any  proposed
transfer  under this Section 5.1,  the Company  will use  reasonable  efforts to
comply with any such applicable  state  securities or "blue sky" laws, but shall
in no event be required, in connection  therewith,  to qualify to do business in
any  state  where it is not then  qualified  or to take any  action  that  would
subject it to tax or to the general  service of process in any state where it is
not then subject.  The  restrictions  on transfer  contained in this Section 5.1
shall be in addition to, and not by way of limitation of, any other restrictions
on transfer contained in any other section of this Agreement.

                                   ARTICLE VI

                                   TERMINATION

         Section  6.1   Termination  by Mutual Consent.  This  Agreement  may be
terminated at any time prior to the Closing Date by the mutual  written  consent
of the Company and the Purchasers.

         Section  6.2   Effect of Termination.  In the event of  termination  by
the Company or the  Purchasers,  written notice thereof shall forthwith be given
to the other party and the transactions  contemplated by this Agreement shall be
terminated  without further action by any party. If this Agreement is terminated
as provided in Section 6.1 herein,  this  Agreement  shall become void and of no
further  force and  effect,  except for  Sections  8.1 and 8.2,  and Article VII
herein.  Nothing in this  Section  6.2 shall be deemed to release the Company or

                                       22
<PAGE>

any  Purchaser  from any liability  for any breach under this  Agreement,  or to
impair  the  rights  of  the  Company  or  such  Purchaser  to  compel  specific
performance by the other party of its obligations under this Agreement.

                                  ARTICLE VII

                                 INDEMNIFICATION

         Section  7.1   General Indemnity.  The Company agrees to indemnify  and
hold harmless each Purchaser (and its respective directors, officers, employees,
affiliates, agents, successors and assigns) from and against any and all losses,
liabilities,  deficiencies,  costs,  damages and  expenses  (including,  without
limitation,  reasonable attorneys' fees, charges and disbursements)  incurred by
each  Purchaser or any such person as a result of any inaccuracy in or breach of
the  representations,  warranties or covenants made by the Company  herein.  The
Purchasers  severally  but not jointly  agree to indemnify and hold harmless the
Company and its directors,  officers, employees,  affiliates, agents, successors
and assigns  from and against  any and all  losses,  liabilities,  deficiencies,
costs,   damages  and  expenses  (including,   without  limitation,   reasonable
attorneys' fees, charges and disbursements) incurred by the Company as result of
any inaccuracy in or breach of the representations, warranties or covenants made
by the Purchasers herein.

         Section 7.2    Indemnification Procedure.  Any  party   entitled     to
indemnification  under  this  Article  VII (an  "indemnified  party")  will give
written notice to the  indemnifying  party of any matters giving rise to a claim
for  indemnification;  provided,  that the  failure  of any  party  entitled  to
indemnification  hereunder  to give notice as provided  herein shall not relieve
the indemnifying  party of its obligations  under this Article VII except to the
extent that the  indemnifying  party is actually  prejudiced  by such failure to
give  notice.  In case any  action,  proceeding  or claim is brought  against an
indemnified party in respect of which  indemnification is sought hereunder,  the
indemnifying  party  shall be  entitled  to  participate  in and,  unless in the
reasonable  judgment of the indemnified  party a conflict of interest between it
and the indemnifying party may exist with respect to such action,  proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified  party.  In  the  event  that  the  indemnifying  party  advises  an
indemnified  party  that  it  will  contest  such a  claim  for  indemnification
hereunder,  or fails,  within thirty (30) days of receipt of any indemnification
notice to notify such person in writing of the indemnifying  party's election to
defend,  settle  or  compromise,  at its sole  cost  and  expense,  any  action,
proceeding or claim (or  discontinues its defense at any time after it commences
such defense),  then the indemnified party may, at its option, defend, settle or
otherwise compromise or pay such action or claim. In any event, unless and until
the  indemnifying  party  elects in  writing  to assume  and does so assume  the
defense of any such claim,  proceeding or action, the indemnified  party's costs
and expenses  arising out of the defense,  settlement  or compromise of any such
action,   claim  or  proceeding  shall  be  losses  subject  to  indemnification
hereunder.  The indemnified  party shall  cooperate fully with the  indemnifying
party in connection  with any negotiation or defense of any such action or claim
by the  indemnifying  party  and shall  furnish  to the  indemnifying  party all
information  reasonably available to the indemnified party which relates to such
action or claim. The indemnifying  party shall keep the indemnified  party fully
apprised  at  all  times  as to the  status  of the  defense  or any  settlement

                                       23
<PAGE>

negotiations  with respect thereto.  If the indemnifying  party elects to defend
any such  action or claim,  then the  indemnified  party  shall be  entitled  to
participate  in such  defense  with  counsel  of its choice at its sole cost and
expense.  The  indemnifying  party shall not be liable for any settlement of any
action,  claim  or  proceeding  effected  without  its  prior  written  consent.
Notwithstanding  anything in this Article VII to the contrary,  the indemnifying
party shall not, without the indemnified  party's prior written  consent,  which
consent may not be  unreasonably  withheld,  settle or  compromise  any claim or
consent to entry of any  judgment in respect  thereof  which  imposes any future
obligation  on  the  indemnified  party  or  which  does  not  include,   as  an
unconditional  term thereof,  the giving by the claimant or the plaintiff to the
indemnified  party of a release from all liability in respect of such claim.  If
the  indemnifying  party fails or refuses to promptly  assume the defense of any
such claim,  proceeding  or action,  then the  indemnification  required by this
Article VII shall be made by periodic  payments of the amount thereof during the
course of investigation  or defense,  as and when bills are received or expense,
loss,  damage  or  liability  is  incurred,  so  long as the  indemnified  party
irrevocably  agrees to refund such moneys if it is  ultimately  determined  by a
court  of   competent   jurisdiction   that  such  party  was  not  entitled  to
indemnification.  The indemnity agreements contained herein shall be in addition
to (a) any cause of action or similar  rights of the  indemnified  party against
the indemnifying party or others, and (b) any liabilities the indemnifying party
may be subject to pursuant to applicable law.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         Section  8.1   Fees and Expenses.  Each party  shall  pay  the fees and
expenses of its advisors,  counsel,  accountants and other experts,  if any, and
all  other  expenses,  incurred  by  such  party  incident  to the  negotiation,
preparation,  execution,  delivery and performance of this Agreement;  provided,
however,  that the Company  shall pay $10,000 to Gryphon  Master  Fund,  L.P. to
reimburse it for the fees and expenses (including  attorneys' fees and expenses)
incurred by it in connection  with its due  diligence  review of the Company and
the  preparation,  negotiation,  execution,  delivery  and  performance  of this
Agreement and the other Transaction Documents and the transactions  contemplated
thereunder (including its counsel's review of the Registration  Statement),  the
full amount of which  shall be due and  payable in cash at Closing  (but only if
the Closing occurs). In addition,  the Company shall pay all reasonable fees and
expenses   incurred  by  each  Purchaser  in  connection  with  any  amendments,
modifications  or  waivers  of this  Agreement  or any of the other  Transaction
Documents or incurred in connection  with the  enforcement of this Agreement and
any of the other  Transaction  Documents,  including,  without  limitation,  all
reasonable attorneys' fees, disbursements and expenses.

         Section 8.2    Specific Enforcement; Consent to Jurisdiction.

         (a)    The Company and the Purchasers  acknowledge and agree that
irreparable  damage would occur in the event that any of the  provisions of this
Agreement or the other  Transaction  Documents  were not performed in accordance
with their specific terms or were otherwise  breached.  It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent or
cure  breaches of the  provisions  of this  Agreement  or the other  Transaction

                                       24
<PAGE>

Documents  and to  enforce  specifically  the  terms  and  provisions  hereof or
thereof,  this being in addition to any other remedy to which any of them may be
entitled by law or equity.

         (b)    The Company and each Purchaser (i) hereby irrevocably  submit to
the exclusive  jurisdiction  of the United States  District Court sitting in the
Northern  District  of Texas and the  courts of the  State of Texas  located  in
Dallas County for the purposes of any suit, action or proceeding  arising out of
or relating to this Agreement or any of the other  Transaction  Documents or the
transactions  contemplated  hereby or thereby,  and (ii) hereby waive, and agree
not to assert in any such suit,  action or proceeding,  any claim that it is not
personally subject to the jurisdiction of each such court, that the suit, action
or proceeding is brought in an inconvenient forum or that the venue of the suit,
action or  proceeding  is improper.  The Company and each  Purchaser  consent to
process  being served in any such suit,  action or  proceeding by mailing a copy
thereof  to such party at the  address  in effect  for  notices to it under this
Agreement  and agrees that such service  shall  constitute  good and  sufficient
service of process and notice thereof.  Nothing in this Section 8.2 shall affect
or limit any right to serve  process in any other  manner  permitted by law. The
Company and the Purchasers  hereby agree that the prevailing  party in any suit,
action or proceeding  arising out of or relating to the Shares,  this Agreement,
the  Registration  Rights  Agreement  or the  Warrants,  shall  be  entitled  to
reimbursement for reasonable legal fees from the non-prevailing party.

         Section  8.3   Entire   Agreement;   Amendment.   This  Agreement,  the
Transaction Documents and the Purchaser Transaction Documents contain the entire
understanding  and agreement of the parties with respect to the matters  covered
hereby and, except as specifically set forth herein or in any of the Transaction
Documents  or  Purchaser  Transaction  Documents,  neither  the  Company nor any
Purchaser  make any  representation,  warranty,  covenant  or  undertaking  with
respect to such  matters.  This  Agreement,  the  Transaction  Documents and the
Purchaser   Transaction   Documents  supersede  all  prior   understandings  and
agreements with respect to said subject matter,  all of which are merged herein.
No provision of this  Agreement may be waived or amended other than by a written
instrument  signed by the Company and the Purchasers and their permitted assigns
owning of record at least a majority in interest of the then-outstanding Shares,
and no provision hereof may be waived other than by a written  instrument signed
by the party against whom enforcement of any such waiver is sought. No amendment
to this Agreement  shall be effective to the extent that it applies to less than
all of the holders of the Shares then  outstanding  or violates any provision of
the Nevada  Corporation  Law. No  consideration  shall be offered or paid to any
person to amend or consent to a waiver or  modification  of any provision of any
of the Transaction  Documents  unless the same  consideration is also offered to
all of the parties to the  Transaction  Documents  or holders of Shares,  as the
case may be.

         Section 8.4    Notices.  Any notice, demand, request, waiver  or  other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be deemed  given and  received  (a) upon hand  delivery or delivery by
telecopy or facsimile at the address or number designated below (if delivered on
a  business  day  during  normal  business  hours  where  such  notice  is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal  business  hours where such notice is to be
received),  or (b) on the second  business day  following the date of mailing by

                                       25
<PAGE>

express  courier  service,  fully  prepaid,  addressed to such address,  or upon
actual receipt of such mailing,  whichever shall first occur.  The addresses for
such communications shall be:

If to the Company:                  Axiom Pharmaceuticals, Inc.
                                    8324 Delgany Avenue
                                    Playa del Rey, California  90293
                                    Attention:  That Ngo, President
                                    Telecopier:  (310) 301-7748
                                    Telephone:  (310) 301-7728

with copies (which copies
shall not constitute notice
to the Company) to:                 Law Offices of Louis E. Taubman, P.C.
                                    225 Broadway, Suite 1200
                                    New York, New York  10007
                                    Attention:  Louis E. Taubman, Esq.
                                    Telecopier:  (212) 202-6380
                                    Telephone:  (212) 732-7184

If to any Purchaser:                At the address of such Purchaser set forth
                                    on Exhibit A to this Agreement.

         Any party  hereto may from time to time  change its address for notices
by giving at least ten (10) days written  notice of such changed  address to the
other party or parties hereto in accordance  with the provisions of this Section
8.4.

         Section  8.5   Waivers.  No waiver by any  party  of any  default  with
respect to any provision,  condition or  requirement of this Agreement  shall be
deemed  to be a  continuing  waiver  in the  future  or a  waiver  of any  other
provision,  condition or requirement  hereof, nor shall any delay or omission of
any party to exercise any right  hereunder in any manner  impair the exercise of
any such right accruing to it thereafter.

         Section 8.6    Headings.  The article, section and subsection  headings
in this  Agreement are for  convenience  only and shall not constitute a part of
this  Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof.

         Section 8.7    Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of the parties and their  successors and permitted
assigns.  After the Closing,  the assignment by a party to this Agreement of any
rights  hereunder  shall not affect  the  obligations  of such party  under this
Agreement.

         Section 8.8    No 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 (other than indemnified  parties,  as contemplated
by Article VII).

                                       26
<PAGE>

         Section 8.9    Governing Law.  This Agreement shall be governed  by and
construed in accordance  with the internal laws of the State of Nevada,  without
giving  effect to the  choice of law  provisions.  This  Agreement  shall not be
interpreted  or construed  with any  presumption  against the party causing this
Agreement to be drafted.

         Section 8.10   Survival.  The  representations  and  warranties  of the
Company  contained  in  Sections  2.1(o)  and  2.1(s)  shall  survive  until the
expiration of the applicable  statutes of  limitations,  and those  contained in
Article II, with the exception of Sections 2.1(o) and 2.1(s),  shall survive the
execution and delivery  hereof and the Closing until the date two (2) years from
the Closing Date, and the agreements and covenants set forth in Articles I, III,
V, VII and VIII of this  Agreement  shall  survive the  execution  and  delivery
hereof and the Closing hereunder.

         Section 8.11   Counterparts.  This Agreement  may  be  executed  in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto,  it being  understood that
all parties need not sign the same counterpart.

         Section 8.12   Publicity. The Company agrees that it will not disclose,
and will not  include in any public  announcement,  the names of the  Purchasers
without the consent of the  Purchasers  in  accordance  with Section 8.3,  which
consent shall not be unreasonably  withheld or delayed, or unless and until such
disclosure is required by law, rule or applicable  regulation,  and then only to
the extent of such requirement.

         Section 8.13   Severability.  The  provisions  of  this  Agreement  are
severable  and,  in the event  that any court of  competent  jurisdiction  shall
determine  that  any  one or more of the  provisions  or part of the  provisions
contained  in this  Agreement  shall,  for any  reason,  be held to be  invalid,
illegal  or  unenforceable  in  any  respect,  such  invalidity,  illegality  or
unenforceability  shall not affect any other provision or part of a provision of
this  Agreement  and this  Agreement  shall be reformed and construed as if such
invalid or illegal or unenforceable  provision,  or part of such provision,  had
never been contained herein,  so that such provisions would be valid,  legal and
enforceable to the maximum extent possible.

         Section 8.14   Further Assurances.  From and  after  the date  of  this
Agreement,  upon the request of the  Purchasers or the Company,  the Company and
each Purchaser shall execute and deliver such  instruments,  documents and other
writings as may be  reasonably  necessary  or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement,  the Warrants
and the Registration Rights Agreement.

                  [Remainder of page intentionally left blank.]

                                       27
<PAGE>

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

                                       AXIOM PHARMACEUTICALS, INC.

                                       By:
                                           --------------------------
                                             Name: That Ngo
                                             Title:   President

                                       GRYPHON MASTER FUND, L.P.

                                       By:  Gryphon Partners, L.P.,
                                            its General Partner

                                       By:  Gryphon Management Partners, L.P.,
                                            its General Partner

                                       By:  Gryphon Advisors, LLC,
                                            its General Partner

                                       By:
                                           --------------------------
                                            Warren W. Garden, Authorized Agent

                                       28

<PAGE>

<TABLE>

<CAPTION>

                                    EXHIBIT A
                               LIST OF PURCHASERS

NAMES AND ADDRESSES OF            NUMBER OF SHARES      NUMBER OF WARRANTS      DOLLAR AMOUNT
PURCHASERS                          PURCHASED               PURCHASED           OF INVESTMENT
----------                          ---------               ---------           -------------
<S>                               <C>                   <C>                     <C>

Gryphon Master Fund, L.P.            1,000,000               1,000,000          $2,000,000
500 Crescent Court
Suite 270
Dallas, Texas  75201
Attn:  Ryan R. Wolters
Telecopier: (214) 871-6909
Telephone: (214) 871-6783

with copies to:

Warren W. Garden, P.C.
500 Crescent Court
Suite 270
Dallas, Texas  75201
Attn:  Warren W. Garden, Esq.
Telecopier: (214) 871-6711
Telephone: (214) 871-6710

</TABLE>

                                      A-1

<PAGE>

                                    EXHIBIT B
                                 FORM OF WARRANT

                                       B-1
<PAGE>

                                    EXHIBIT C
                                 FORM OF OPINION

         1.    The Company is a corporation duly incorporated, validly  existing
and in good standing under the laws of the State of Nevada and has the requisite
corporate  power to own,  lease and operate its  properties  and assets,  and to
carry on its business as presently conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the failure to so qualify would have a Material Adverse Effect.

         2.    The Company has the requisite corporate power  and  authority  to
enter into and perform its obligations  under the  Transaction  Documents and to
issue the Shares,  the Conversion  Shares,  the Warrants and the Warrant Shares.
The execution,  delivery and performance of each of the Transaction Documents by
the Company and the consummation by it of the transactions  contemplated thereby
have been duly and validly  authorized by all necessary  corporate action and no
further  consent or  authorization  of the Company or its Board of  Directors is
required.  Each  of the  Transaction  Documents  have  been  duly  executed  and
delivered,  and the Shares and the Warrants have been duly executed,  issued and
delivered by the Company and each of the  Transaction  Documents  constitutes  a
legal,  valid and  binding  obligation  of the Company  enforceable  against the
Company in accordance  with its  respective  terms.  The Shares,  the Conversion
Shares and the Warrant Shares are not subject to any preemptive rights under the
Certificate or the Bylaws.

         3.    The Shares have been duly authorized and, when delivered  against
payment in full as provided in the Purchase  Agreement,  will be validly issued,
fully paid and nonassessable.  The Conversion Shares,  have been duly authorized
and reserved for issuance,  and, when delivered  upon  conversion of the Shares,
will be validly issued,  fully paid and nonassessable.  The Warrant Shares, have
been duly  authorized  and reserved  for  issuance,  and,  when  delivered  upon
exercise or against payment in full as provided in the Warrants, will be validly
issued, fully paid and nonassessable.

         4.    The execution,  delivery and  performance of and compliance  with
the terms of the  Transaction  Documents  and the  issuance of the  Shares,  the
Conversion  Shares,  the Warrants and the Warrant  Shares do not (a) violate any
provision of the  Certificate  or Bylaws,  (b) conflict  with,  or  constitute a
default (or an event  which with notice or lapse of time or both would  become a
default)  under,  or  give to  others  any  rights  of  termination,  amendment,
acceleration  or  cancellation  of, any material  agreement,  mortgage,  deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company is a party and which is known to us, (c) create or impose a
lien,  charge or  encumbrance on any property of the Company under any agreement
or any  commitment  known to us to which the  Company is a party or by which the
Company  is bound or by which any of its  respective  properties  or assets  are
bound,  or (d) result in a violation  of any  Federal,  state,  local or foreign
statute,  rule,  regulation,  order,  judgment,  injunction or decree (including
Federal and state securities laws and regulations)  applicable to the Company or
by which any property or asset of the Company is bound or affected,  except,  in
all cases other than violations  pursuant to clauses (a) and (d) above, for such
conflicts, default, terminations,  amendments,  acceleration,  cancellations and
violations  as would  not,  individually  or in the  aggregate,  have a Material
Adverse Effect.

                                      C-1
<PAGE>

         5.    No  consent,  approval  or  authorization  of  or    designation,
declaration or filing with any governmental authority on the part of the Company
is required under Federal,  state or local law, rule or regulation in connection
with the valid execution, delivery and performance of the Transaction Documents,
or the offer,  sale or  issuance  of the  Shares,  the  Conversion  Shares,  the
Warrants  or the  Warrant  Shares  other  than  filings  as may be  required  by
applicable Federal and state securities laws and regulations.

         6.    To our knowledge,  there is no action, suit, claim, investigation
or  proceeding  pending or threatened  against the Company  which  questions the
validity of the Agreement or the transactions contemplated thereby or any action
taken  or to be  taken  pursuant  thereto.  There  is no  action,  suit,  claim,
investigation or proceeding pending, or to our knowledge, threatened, against or
involving the Company or any of its properties or assets and which, if adversely
determined,  is reasonably likely to result in a Material Adverse Effect.  There
are no  outstanding  orders,  judgments,  injunctions,  awards or decrees of any
court,  arbitrator or governmental or regulatory body against the Company or any
officers or directors of the Company in their capacities as such.

         7.    The offer,  issuance and sale of the Shares and the  Warrants and
the offer,  issuance and sale of the  Conversion  Shares and the Warrant  Shares
pursuant to the Agreement and the Warrants,  as applicable,  are exempt from the
registration requirements of the Securities Act of 1933, as amended.

         8.    The Company is not, and  as a  result  of  and  immediately  upon
Closing will not be, an  "investment  company" or a company  "controlled"  by an
"investment  company," within the meaning of the Investment Company Act of 1940,
as amended.

                                      C-2
<PAGE>

                                    EXHIBIT D
                                    ---------
                       FORM OF CERTIFICATE OF DESIGNATIONS

                                       D-1
<PAGE>

                                    EXHIBIT E
                                    ---------
                      FORM OF REGISTRATION RIGHTS AGREEMENT

                                      E-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]