Document:

Exhibit 10.14

CONFIDENTIAL

July 12, 2005

Bob Albo

Dear Bob:

It has been a real
pleasure discussing the opportunities ahead for Raining Data Corporation.  We believe that you have the background and
experience that we need to help us grow in our new directions, and we are
pleased to offer you a position with Raining Data Corporation (the “Company”)
as its Vice President, Business Solutions. 
In that regard, the following are the details of this offer of
employment:

Title

Your title will be
Vice President, Business Solutions.  In
this position, you will report directly to me.

Base Compensation

Your initial annual base salary
will be $175,000, paid in accordance with the Company’s normal payroll
procedures.  Your base salary shall be
subject to review at the end of each year of your employment, and any
adjustment will be a function of performance, which I will evaluate and may be
subject to approval of the Compensation of the Board of Directors.

Incentive Bonus

Additionally, you
will be entitled to an incentive bonus of up to fifty percent (50%) of your
base salary based on your meeting certain Sales Targets and Management Business
Objectives (MBOs) as are mutually agreed upon.

Stock Options

At a Compensation
Committee Meeting (or sub-committee meeting) that will be held on your actual
start date, you will be granted a stock option, which shall be, to the extent
possible under the rule of Section 422(d) of the Internal Revenue Code of 1986,
as amended (the “Code”), an “incentive stock option” (as defined in Section 422
of the Code) to purchase 250,000 shares of the Company’s Common Stock, at an
exercise price equal to the then NASDAQ market price as of the close of the
markets on the day of that meeting.

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Twenty-five percent
(25%) of the shares subject to the above option shall vest one year after your
start date and 1/36th of the remaining shares subject to the option
shall vest monthly thereafter, so that the option shall be fully vested and
exercisable four years from your start date, subject to your continued service
to the Company on the relevant vesting dates. 
In all other respects the option shall be subject to the terms,
definitions and provisions of the Company’s Stock Plan and the stock option
agreement by and between you and the Company, both of which documents are
incorporated herein by reference.

Change of Control,
Additional Accelerated Vesting and Related Items

In addition to the
vesting schedule as set forth above, in the event you are terminated as a
result of an Involuntary Termination other than for Cause or Disability within
12 months after a Change of Control, one hundred percent (100%) of the Shares
subject to the above option shall be vested upon the date of such termination,
provided that you sign a general release in
a commercially customary form prescribed by the Company, which releases
and discharges all known and unknown claims that you may have against the
Company or persons and entities affiliated with the Company, and a covenant not
to sue or prosecute any legal action or proceeding based upon such claims.  For the purposes of this paragraph, the
following terms shall have the following meanings:

A)           “Cause” shall mean

(i)                                     Gross
and willful failure to perform services:

(ii)                                  Conviction
of, or a plea of “guilty” or “no contest” to, a felony under the laws of the
United States or any state thereof, if such felony either is work-related or
materially impairs your ability to perform services for the Company:

(iii)                               A
material breach of fiduciary duty, including fraud, embezzlement, dishonesty or
any intentional action that materially injures the Company as determined in
good faith by the Company’s Board of Directors;

(iv)                              Death;

(v)                                 A
material breach of the Confidential Information Agreement.

In all of the foregoing
cases, the Company shall provide written notice to you indicating in reasonable
detail the event or circumstances that constitute Cause under this Agreement
and the Company will provide you with forty-five days to cure such breach or
failure prior to termination for Cause. 
During such 45-day cure period, the Company may place you on unpaid
leave.

B)             “Change in Control”
shall mean (i) any “person” (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) who
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the total voting power represented by the Company’s then
outstanding voting securities, provided, however, that Change in Control shall
not include any change resulting from any capital financings of the Company; or
(ii) the consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets; or (iii) the consummation of a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation which would result in the voting securities of the
company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such surviving
entity or its parent outstanding immediately after such merger or
consolidation.

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C)             “Disability” shall
mean that you physically or mentally are unable regularly to perform your
duties hereunder for a period in excess of sixty (60) consecutive days or more
than ninety (90) days in any consecutive twelve (12) month period.  The Company shall make a good faith
determination of whether you are physically or mentally unable to regularly
perform your duties subject to its review and consideration of any physical
and/or mental health information provided to it by you.

D)            “Involuntary
Termination” shall mean (i) without your express written consent, the
substantial reduction your duties or responsibilities relative to your duties
or responsibilities in effect immediately prior to such reduction; provided,
however, that a reduction in duties or responsibilities solely by virtue of the
Company being acquired and made part of a larger entity (as, for example, when
the Vice President of Company remains as such following a Change of Control and
is not made the Vice President of the acquiring corporation)  shall not constitute an “Involuntary
Termination”; (iii) without your express written consent, a material reduction
by the Company in your base compensation as in effect immediately prior to such
reduction; (iv) a material reduction by the Company in the kind or level of
employee benefits package is significantly reduced; (v) your relocation to a
facility or a location more than 50 miles from your then present location,
without your express written consent; (vi) any purported termination of you by
the Company which is not effected for death or Disability or for Cause; or
(vii) the failure of the Company to obtain the assumption of this agreement by
any successors.

Benefit Plans

You shall be entitled to participate, to the extent
permitted by law, in the medical insurance plans and other benefits offered by
the Company.  You should note that the
Company reserves the right to cancel or change the benefit plans and programs
it offers to its employees at any time.

Vacation

You shall also be
eligible to receive three weeks of paid time-off per year, which, if unused,
shall accrue in accordance with the Company’s standard benefit policies.

Start Date

We hope that you will be able to start with the
Company as soon as possible.  However, in
any case your start date will be on or prior to July 22, 2005.

The Company is
excited about your joining and looks forward to a beneficial and fruitful
relationship.  Nevertheless, you should
be aware that your employment with the Company is for no specific period and
constitutes at-will employment.  As a
result, you are free to resign at any time, for any reason or for no reason.  Similarly, the Company is free to conclude
its employment relationship with you at any time, with or without cause and
with at least one-month notice.  We
request that, in the event of resignation, you give the Company at least one
month’s notice.  You understand and agree
that neither your job performance nor promotions, commendations, bonuses or the
like from the Company give rise to or in any way serve as the basis for
modification, amendment, or extension, by implication or otherwise, of your
employment with the Company.

Miscellaneous

For purpose of
federal immigration law, you will be required to provide to the Company
documentary evidence of your identity and eligibility for employment in the
United States.  Such documentation must
be provided to the Company within three (3) business days of your date of hire,
or our employment relationship with you may be terminated.

This Agreement and
all benefits due you hereunder shall inure to the benefit of, and be
enforceable by, your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.

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We also ask that,
if you have not already done so, you disclose to the Company any and all
agreements relating to your prior employment that may affect your eligibility
to be employed by the Company or limit the manner in which you may be
employed.  It is the Company’s
understanding that any such agreements will not prevent you from performing the
duties of your position and you represent that such is the case.

You agree that you
will not enter into any agreements with another entity that requires you to be
an employee or consultant, in name or duties, during your employment with the
Company.  Moreover, you agree that,
during the term of your employment with the Company, you will not engage in any
other employment, occupation, consulting or other business activity directly
related to the business in which the Company is now involved or become involved
during the term of your employment, nor will you engage in any other activities
that conflict with your obligations to the Company.  Similarly, you agree not to bring any third
party confidential information to the Company, including that of your former
employer, and that in performing your duties for the Company you will not in
any way utilize any such information.

As a Company employee,
you will be expected to abide by Company rules and standards.  You will be specifically required to sign an
acknowledgment that you have read and that you understand the Company’s rules
of conduct with are included in the Company Handbook. As a condition of your
employment, you are also required to sign and comply with an Employment,
Confidential Information, Invention Assignment and Arbitration Agreement which
requires, among other provisions, the assignment of patent rights to any
invention made during your employment at the Company, and non-disclosure of
Company proprietary information.  In the
event of any dispute or claim relating to or arising out of your employment
relationship, you and the Company agree that (i) any and all disputes between you
and the Company shall be fully and finally resolved by binding arbitration,
(ii) you are waiving any and all rights to a jury trial but all court remedies
will be available in arbitration, (iii) all disputes shall be resolved by a
neutral arbitrator who shall issue a written opinion, (iv) the arbitration
shall provide for adequate discovery, and (v) the Company shall pay all
arbitration fees, excluding attorneys fees and legal costs.  Please note that we must receive your signed
Agreement before your first day of employment.

This letter shall
be governed by the internal substantive laws, but not the choice of law rules,
of the State of California.

In the event that
any provision hereof becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable, or void, this letter shall continue
in full force and effect without such provision.  In the event that there is any conflict
between this offer letter and your Stock Option Plan or Stock Option Agreement,
this offer letter will govern.

To indicate your acceptance of the Company’s offer,
please sign and date this letter in the space provided below.  A duplicate original is enclosed for your
records.  This letter, along with any
agreements relating to proprietary rights between you and the Company, sets
forth the terms of your employment with the Company and supersedes any prior
representations or agreements including, but not limited to, any representation
made during your recruitment, interviews or pre employment negotiations,
whether written or oral.  This letter,
including, but not limited to, its at-will employment provision, may not be
modified or amended except by a written agreement signed by the Company’s Chief
Executive Officer and you.  This offer of
employment will terminate if it is not accepted, signed and returned by July
15, 2004, or unless otherwise withdrawn by the Company prior to your
acceptance.

Bob, we all look forward to working with you at
Raining Data, and believe that your contributions will be significant in moving
the Company into its new market opportunities.

Best regards,

Carlton H. Baab

President & CEO

Raining Data
Corporation

 

	
  AGREED AND ACCEPTED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bob Albo

  	
   

  	
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  Start Date

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

 4Exhibit 10.1

SECURITIES
PURCHASE AGREEMENT

This Securities Purchase
Agreement (this “Agreement”) is dated as of June 28, 2007, between
Cytogen Corporation, a Delaware corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and collectively the “Purchasers”).

WHEREAS, subject to the
terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 promulgated thereunder, the Company desires to issue
and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

NOW, THEREFORE, in
consideration of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

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

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

“Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or
is under common control with a Person as such terms are used in and construed
under Rule 405 under the Securities Act. 
With respect to a Purchaser, any investment fund or managed account that
is managed on a discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such Purchaser.

“Board of Directors”  means the board of directors of the Company.

“Business Day” means any day except any
Saturday, any Sunday, any day which is a federal legal holiday in the United
States or any day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and
sale of the Securities pursuant to Section 2.1.

“Closing Date” means the Trading Day when all
of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchasers’
obligations to pay the Subscription Amount and (ii) the Company’s
obligations to deliver the Securities have been satisfied or waived.

 

“Closing Price” means on any particular date
(a) the last reported closing bid price per share of Common Stock on such
date on the Trading Market (as reported by Bloomberg L.P. at 4:15 p.m. (New
York City time)), or (b) if there is no such price on such date, then the
closing bid price on the Trading Market on the date nearest preceding such date
(as reported by Bloomberg L.P. at 4:15 p.m. (New York City time)), or (c) 
if the Common Stock is not then listed or quoted on a Trading Market and if
prices for the Common Stock are then reported in the “pink sheets” published by
Pink Sheets, LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of the
Common Stock so reported, or (d) if the shares of Common Stock are not
then publicly traded the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Purchasers
of a majority in interest of the Shares then outstanding and reasonably
acceptable to the Company, the fees and expense of which shall be paid by the
Company.

“Commission” means the Securities and Exchange
Commission.

“Common Stock” means the common stock of the
Company, par value $0.01 per share, and any other class of securities into
which such securities may hereafter be reclassified or changed into.

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

“Company Counsel” means Morgan, Lewis &
Bockius LLP, with offices located at 502 Carnegie Center, Princeton, New
Jersey 08540.

“Disclosure Schedules” means the Disclosure
Schedules of the Company delivered concurrently herewith.

“Effective Date” means the date that the
Registration Statement filed by the Company pursuant to the Registration Rights
Agreement is first declared effective by the Commission.

“Evaluation Date” shall have the meaning
ascribed to such term in Section 3.1(r).

“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Exempt
Issuance” means the issuance of (a) shares of Common Stock or options
to employees, officers or directors of the Company pursuant to any stock or
option plan duly adopted, by a majority of the non-employee members of the
Board of Directors or a majority of the members of a committee of non-employee
directors established for such purpose, (b) securities upon the exercise
or exchange of or conversion of any Securities issued hereunder and/or other
securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the date of this Agreement,

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provided that such
securities have not been amended since the date of this Agreement to increase
the number of such securities or to decrease the exercise, exchange or
conversion price of such securities, (c) securities issued pursuant to
acquisitions, strategic transactions, equipment financings or non-convertible
debt financings approved by a majority of the disinterested directors of the
Company, provided that any such issuance shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities, and
(d) a firm commitment underwritten public offering of Common Stock of the
Company.

“FWS” means Feldman Weinstein & Smith LLP
with offices located at 420 Lexington Avenue, Suite 2620, New York, New York
10170-0002.

“GAAP” shall have the meaning ascribed to such
term in Section 3.1(h).

“Indebtedness” shall have the meaning ascribed
to such term in Section 3.1(z).

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

“Legend Removal Date” shall have the meaning
ascribed to such term in Section 4.1(c).

“Liens” means a lien, charge, security
interest, encumbrance, right of first refusal, preemptive right or other
restriction.

“Material Adverse Effect” shall have the
meaning assigned to such term in 3.1(a).

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

“Per Share Purchase Price” equals $1.737,
subject to adjustment for reverse and forward stock splits, stock dividends,
stock combinations and other similar transactions of the Common Stock that
occur after the date of this Agreement.

“Person” means an individual or corporation,
partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

“Proceeding” means an action, claim, suit,
investigation or proceeding (including, without limitation, an informal
investigation or partial proceeding, such as a deposition), whether commenced
or threatened.

“Purchaser Party” shall have the meaning
ascribed to such term in Section 4.8.

“Registration Rights Agreement” means the
Registration Rights Agreement, dated the date hereof, among the Company and the
Purchasers, in the form of Exhibit A attached hereto.

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

“Required Approvals” shall have the meaning
ascribed to such term in Section 3.1(e).

“Rule 144” means Rule 144 promulgated
by the Commission pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same effect as such Rule.

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

“Securities” means the Shares, the Warrants and
the Warrant Shares.

“Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.

“Shares” means the shares of Common Stock
issued or issuable to each Purchaser pursuant to this Agreement.

“Short Sales” means all “short sales” as
defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares
of Common Stock).

“Subscription Amount” means, as to each
Purchaser, the aggregate amount to be paid for Shares and Warrants purchased
hereunder as specified below such Purchaser’s name on the signature page of
this Agreement and next to the heading “Subscription Amount,” in United States
dollars and in immediately available funds.

“Subsidiary” means any subsidiary of the
Company as set forth on Schedule 3.1(a), and shall, where
applicable, include any subsidiary of the Company formed or acquired after the
date hereof.

“Trading Day” means a day on which the New York
Stock Exchange is open for trading.

“Trading Market” means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the American Stock

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Exchange, the Nasdaq Capital Market, the Nasdaq Global
Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC
Bulletin Board.

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

“Transfer Agent” means American Stock Transfer
& Trust Company, the current transfer agent of the Company, with a mailing
address of 6201 15th Avenue, Brooklyn, New York 11219 and a facsimile
number of (718) 921-8327, and any successor transfer agent of the
Company.

“VWAP” means, for any date, the price
determined by the first of the following clauses that applies: (a) if the
Common Stock is then listed or quoted on a Trading Market, the daily volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted for trading as reported by Bloomberg L.P. (based on a Trading Day
from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time);
(b)  if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not
then quoted for trading on the OTC Bulletin Board and if prices for the Common
Stock are then reported in the “Pink Sheets” published by Pink Sheets, LLC (or
a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Common Stock so reported;
or (d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by the
Purchasers of a majority in interest of the Shares then outstanding and
reasonably acceptable to the Company, the fees and expenses of which shall be
paid by the Company.

“Warrants” means, collectively, the Common
Stock purchase warrants delivered to the Purchasers at the Closing in
accordance with Section 2.2(a) hereof, which Warrants shall be exercisable
only after six (6) months after the date of issuance and have a term of
exercise equal to five (5) years, in the form of Exhibit C attached
hereto.

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

ARTICLE II.

PURCHASE AND SALE

2.1   Closing.  On the Closing Date, upon the terms and
subject to the conditions set forth herein, concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and each Purchaser agrees to purchase in the aggregate, severally and not
jointly, up to an aggregate of 5,814,600 Shares plus Warrants to purchase up to
2,907,301 Warrant Shares.  Each Purchaser
shall deliver to the Company, via wire transfer or a certified check,
immediately available funds equal to its Subscription Amount and the Company
shall deliver to each Purchaser their respective Shares and a Warrant as
determined pursuant to

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Section 2.2(a)(iv), and the Company and
each Purchaser shall deliver the other items set forth in Section 2.2
deliverable at the Closing.  Upon
satisfaction of the covenants and conditions set forth in Sections 2.2 and
2.3, the Closing shall occur at the offices of FWS or such other location as
the parties shall mutually agree.

2.2   Deliveries.

(a)   On or prior to the Closing
Date, the Company shall deliver or cause to be delivered to each Purchaser the
following:

(i)            this Agreement duly
executed by the Company;

(ii)           a legal opinion of
Company Counsel, substantially in the form of Exhibit B attached
hereto;

(iii)          a copy of the
irrevocable instructions to the Transfer Agent instructing the Transfer Agent
to deliver, on an expedited basis, a certificate evidencing a number of Shares
equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase
Price, registered in the name of such Purchaser, and a copy of such Purchaser’s
stock certificate from the Transfer Agent;

(iv)          a Warrant registered
in the name of such Purchaser to purchase up to a number of shares of Common
Stock equal to 50% of such Purchaser’s Subscription Amount divided by the Per
Share Purchase Price, with an exercise price equal to $2.231, subject to
adjustment therein; and

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

(b)   On or prior to the Closing
Date, each Purchaser shall deliver or cause to be delivered to the Company the
following:

(i)            this Agreement duly
executed by such Purchaser;

(ii)           such Purchaser’s
Subscription Amount by wire transfer to the account as specified in writing by
the Company; and

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

2.3   Closing
Conditions.

(a)           The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

(i)            the accuracy in all material respects on the Closing
Date of the representations and warranties of the Purchasers contained herein;

(ii)           all obligations,
covenants and agreements of each Purchaser required to be performed at or prior
to the Closing Date shall have been performed in all material respects; and

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(iii)          the delivery by each Purchaser of the items set forth
in Section 2.2(b) of this Agreement.

(b)   The respective obligations of the Purchasers hereunder in connection with
the Closing are subject to the following conditions being met:

(i)            the accuracy in all material respects on the Closing
Date of the representations and warranties of the Company contained herein;

(ii)           all obligations,
covenants and agreements of the Company required to be performed at or prior to
the Closing Date shall have been performed in all material respects;

(iii)          the delivery by the Company of the items set forth in
Section 2.2(a) of this Agreement;

(iv)          there shall have been no Material Adverse Effect with
respect to the Company since the date hereof; and

(v)           from the date hereof
to the Closing Date, trading in the Common Stock shall not have been suspended
by the Commission or the Company’s principal Trading Market (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 L.P.
shall not have been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared either by the
United States or New York State authorities nor shall there have occurred any
material outbreak or escalation of hostilities or other national or
international calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the reasonable
judgment of each Purchaser, makes it impracticable or inadvisable to purchase
the Securities at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1   Representations and Warranties of the Company.  Except as set forth in the Disclosure
Schedules, which Disclosure Schedules shall be deemed a part hereof and shall
qualify any representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure Schedules,
the Company hereby makes the following representations and warranties to each
Purchaser:

(a)   Subsidiaries.  All of the direct and indirect subsidiaries
of the Company are set forth on Exhibit 3.1(a) of the Company’s Disclosure
Schedules.  The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully
paid, non-assessable and free of

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preemptive and
similar rights to subscribe for or purchase securities.  If the Company has no subsidiaries, then references
to the Subsidiaries in the Transaction Documents shall be disregarded.

(b)   Organization and
Qualification.  The Company and each
of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.  Neither the
Company nor any Subsidiary is in violation or default of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. 
Except with respect to the Company in the State of New Jersey, each of
the Company and the Subsidiaries is duly qualified to conduct business and is
in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so qualified or in
good standing, as the case may be, could not have or reasonably be expected to
result in (i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse effect
on the results of operations, assets, business or financial condition of the
Company and the Subsidiaries, taken as a whole, or (iii) a material
adverse effect on the Company’s ability to perform in any material respect on a
timely basis its obligations under any Transaction Document (any of (i),
(ii) or (iii), a “Material Adverse Effect”) and no Proceeding has
been instituted in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or qualification.

(c)   Authorization;
Enforcement.  The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required
by the Company, the Board of Directors or the Company’s stockholders in
connection therewith other than in connection with the Required Approvals.  Each Transaction Document has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

(d)   No Conflicts.  The execution, delivery and performance of
the Transaction Documents by the Company, the issuance and sale of the
Securities and the consummation by the Company of the other transactions
contemplated hereby and thereby do not and will not (i) conflict with or
violate any provision of the Company’s or

 8
 

any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a material default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or any Subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other instrument (evidencing
a Company or Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any
property or asset of the Company or a Subsidiary is bound or affected; except
in the case of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse Effect.

(e)   Filings, Consents and
Approvals.  The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than (i) filings required pursuant to Section 4.4 of
this Agreement, (ii) the filing with the Commission of the Registration
Statement, (iii) application(s) to each applicable Trading Market for the
listing of the Securities for trading thereon in the time and manner required
thereby, and (iv) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws (collectively,
the “Required Approvals”).

(f)    Issuance of the
Securities.  The Securities are duly
authorized and, when issued and paid for in accordance with the applicable
Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents.  The Warrant Shares, when issued in accordance
with the terms of the Transaction Documents, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents.  The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement and the Warrants.

(g)   Capitalization.  Except as other wise disclosed on Schedule
3.1(g) of the Disclosure Schedules, the capitalization of the Company is as
set forth in the Company’s SEC Reports. The Company has not issued any capital
stock since its most recently filed periodic
report under the Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock option plan, the issuance of
shares of Common Stock to employees pursuant to the Company’s employee stock
purchase plans and pursuant to the conversion or exercise of Common Stock
Equivalents.  No Person has any

 9
 

right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.  Except as a result of the purchase and sale
of the Securities and except as set forth in the SEC Reports, there are no
outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire, any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents.  The issuance
and sale of the Securities will not obligate the Company to issue shares of
Common Stock or other securities to any Person (other than the Purchasers) and
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under any of such securities. All
of the outstanding shares of capital stock of the Company are validly issued,
fully paid and nonassessable, have been issued in compliance with all federal
and state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities.  No further approval
or authorization of any stockholder, the Board of Directors or others is
required for the issuance and sale of the Securities.  There are no stockholders agreements, voting
agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company,
between or among any of the Company’s stockholders.

(h)   SEC Reports; Financial
Statements.  The Company has filed
all reports, schedules, forms, statements and other documents required to be
filed by the Company under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two (2) years
preceding the date hereof (or such shorter period as the Company was required
by law or regulation to file such material) (the foregoing materials, including
the exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports”) on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Reports prior to the expiration of any such extension.  As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.  The financial statements of
the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof

 10
 

and the
results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, immaterial, year-end audit
adjustments.

(i)    Material Changes;
Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (a) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past
practice and (b) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.  Except for the issuance of the Securities
contemplated by this Agreement or as set forth on Schedule 3.1(i) of the
Disclosure Schedules, no event, liability or development has occurred or exists
with respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed one (1) Trading Day
prior to the date that this representation is made.

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

(k)   Labor Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of the
Company which could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and
the Company and its

 11
 

Subsidiaries
believe that their relationships with their employees are good.  No executive officer, to the knowledge of the
Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company or any
of its Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its Subsidiaries
are in compliance with all U.S. federal, state, local and foreign laws and
regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

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

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

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

 12
 

(o)   Patents and Trademarks.  The Company and the Subsidiaries have, or
have rights to use, all issued patents, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights, licenses and
other similar intellectual property rights necessary or material for use in
connection with their respective businesses as described in the SEC Reports and
which the failure to so have could have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”).  Neither the Company nor any Subsidiary has
received a notice (written or otherwise) that any of the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person, none of which individually or in the aggregate would be
likely to cause a Material Adverse Effect.. 
To the knowledge of the Company, all such Intellectual Property Rights
are enforceable and there is no existing infringement by another Person of any
of the Intellectual Property Rights of others. 
The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their intellectual
properties, except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

(p)   Insurance.  The Company and the Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses in
which the Company and the Subsidiaries are engaged, including, but not limited
to, directors and officers insurance coverage at least equal to the aggregate
Subscription Amount.  Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.

(q)   Transactions With
Affiliates and Employees.  Except as
set forth in the SEC Reports, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company or any Subsidiary (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or
from, or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any entity in which any officer,
director, or any such employee has a substantial interest or is an officer,
director, trustee or partner, other than for (i) payment of salary or
consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits,
including stock option agreements under any stock option plan of the Company.

(r)    Sarbanes-Oxley; Internal
Accounting Controls.  The Company is
in material compliance with all provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it as of the Closing Date.  The Company
and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability,

 13
 

(iii) access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that material information required
to be disclosed by the Company in the reports it files or submits under the
Exchange Act is accumulated, recorded, processed, summarized and reported,
within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have
evaluated the effectiveness of the Company’s disclosure controls and procedures
as of the end of the fiscal quarter covered by the Company’s most recently filed
periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently
filed periodic report under the Exchange Act the conclusions of the certifying
officers about the effectiveness of the disclosure controls and procedures
based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no
material changes in the Company’s internal control over financial reporting (as
such term is defined in the Exchange Act) that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.

(s)   Certain Fees.  Except as otherwise disclosed on Schedule
3.1(s) of the Disclosure Schedules and for Rodman & Renshaw, LLC and Roth Capital
Partners, LLC, no brokerage or finder’s fees or commissions are or will be
payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the
transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with
respect to any fees or with respect to any claims made by or on behalf of other
Persons for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by the Transaction Documents.

(t)    Private Placement.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, no registration under the Securities Act is required
for the offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.

(u)   Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt
of payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended.  The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act of 1940, as amended.

(v)   Registration Rights.  Except as set forth on Schedule 3.1(v) of the
Disclosure Schedules and except for each of the Purchasers, no Person has any
right to cause the Company to effect the registration under the Securities Act
of any securities of the Company.

 14

 

(w)  Listing and Maintenance
Requirements.  The Company’s Common
Stock is registered pursuant to Section 12(b) of the Exchange Act, and the
Company has taken no action designed to, or which is likely to have the effect
of and is not aware of any facts or circumstances that could result in,
terminating the registration of the Common Stock under the Exchange Act or
delisting the Common Stock from a Trading Market nor has the Company received
any notification that the Commission is contemplating terminating such
registration.  The Company has not, in
the twelve (12) months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in
compliance in all material respects with all such listing and maintenance
requirements.

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

(y)   Disclosure.  Except with respect to material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any information
that constitutes or might constitute material, non-public information.   The Company understands and confirms that
the Purchasers will rely on the foregoing representations, warranties and covenants
in effecting transactions in securities of the Company.  All disclosure furnished by or on behalf of
the Company to the Purchasers regarding the Company, its business and the
transactions contemplated hereby, including the Disclosure Schedules, is true
and correct in all material respects with respect to such representations and
warranties and does not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The press releases disseminated by the Company during the twelve
months preceding the date of this Agreement taken as a whole do not contain any
untrue statement of a material fact or omit 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 and when made, not
misleading.  The Company acknowledges and
agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2 hereof.

(z)    No Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, neither the Company, nor any of its Affiliates, nor
any Person acting on its or their behalf has, directly or indirectly, made 

 15
 

any offers or
sales of any security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to be integrated
with prior offerings by the Company for purposes of the Securities Act which
would cause this offering not to be exempt from (i) requirements of
Section 5 of the Securities Act, the registration of any such securities
under the Securities Act and (ii) to the knowledge of the Company, any
applicable shareholder approval provisions of any Trading Market on which the
Common Stock is listed or designated.  

(aa)        Solvency.  Based on the financial condition of the
Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder, (i) the
fair saleable value of the Company’s assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature,
(ii) the Company’s assets do not constitute unreasonably small capital to
carry on its business for the current fiscal year as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof, and
(iii) the current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets, after taking
into account all anticipated uses of the cash, would be sufficient to pay all
amounts on or in respect of its liabilities when such amounts are required to
be paid.  The Company does not intend to
incur debts beyond its ability to pay such debts as they mature (taking into
account the timing and amounts of cash to be payable on or in respect of its
debt).  The Company has no knowledge of
any facts or circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or reorganization laws of
any jurisdiction within one (1) year from the Closing Date.  The SEC Reports set forth as of the date
thereof all outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has
commitments.  For the purposes of this
Agreement, “Indebtedness” means (a) any liabilities for borrowed
money or amounts owed in excess of $50,000 (other than trade accounts payable
incurred in the ordinary course of business), (b) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of
others, 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 (c) the present value of any lease
payments in excess of $50,000 due under leases required to be capitalized in
accordance with GAAP.  Neither the
Company nor any Subsidiary is in default with respect to any Indebtedness.

(bb)       Tax Status.  Except for matters that would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and each Subsidiary has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid or accrued all taxes shown as due thereon, and the Company has no
knowledge of a tax deficiency which has been asserted or threatened against the
Company or any Subsidiary.

(cc)        No General
Solicitation.  Neither the Company
nor to its knowledge any person acting on behalf of the Company has offered or
sold any of the Securities by any 

 16
 

form of
general solicitation or general advertising. 
To the knowledge of the Company, no person acting on behalf of the
Company has offered the Securities for sale other than to the Purchasers and
certain other “accredited investors” within the meaning of Rule 501 under
the Securities Act.

(dd)       Foreign Corrupt
Practices.  Neither the Company, nor
to the knowledge of the Company, any agent or other person acting on behalf of
the Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

(ee)        Accountants.  The Company’s current accounting firm is set
forth in the SEC Reports.  To the
knowledge and belief of the Company, such accounting firm (i) is a
registered public accounting firm as required by the Exchange Act and
(ii) shall express its opinion with respect to the financial statements to
be included in the Company’s Annual Report on Form 10-K for the year
ending December 31, 2007.

(ff)         No Disagreements
with Accountants and Lawyers.  There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers
presently employed by the Company which could reasonably affect the Company’s
ability to perform any of its obligations under any of the Transaction
Documents, and the Company is current with respect to any fees owed to its
accountants and lawyers.

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

(hh)       Acknowledgement
Regarding Purchaser’s Trading Activity. 
Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Sections 3.2(f) and 4.12 hereof), it is
understood and acknowledged by the Company (i) that none of the Purchasers
have been asked by the Company to agree, nor has any Purchaser agreed, to
desist from purchasing or selling, long and/or short, securities of the 

 17
 

Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities
for any specified term; (ii) that past or future open market or other
transactions by any Purchaser, specifically including, without limitation,
Short Sales or “derivative” transactions, before or after the closing of this
or future private placement transactions, may negatively impact the market
price of the Company’s publicly-traded securities; (iii) that any
Purchaser, and counter-parties in “derivative” transactions to which any such
Purchaser is a party, directly or indirectly, presently may have a “short”
position in the Common Stock, and (iv) that each Purchaser shall not be
deemed to have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction. 
The Company further understands and acknowledges that (a) one or
more Purchasers may engage in hedging activities at various times during the
period that the Securities are outstanding and (b) such hedging activities
(if any) could reduce the value of the existing stockholders’ equity interests
in the Company at and after the time that the hedging activities are being
conducted.  The
Company acknowledges that such aforementioned hedging activities do not
constitute a breach of any of the Transaction Documents.

(ii)          Regulation M
Compliance.  The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities (other than for the placement
agents’ placement of the Securities), or (iii) paid or agreed to pay to
any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and
(iii), compensation paid to the Company’s placement agent in connection with
the placement of the Securities.

(jj)          FDA.  As to each product subject to the jurisdiction of the U.S. Food
and Drug Administration (“FDA”) under the Federal Food, Drug and Cosmetic Act, as amended, and
the regulations thereunder (“FDCA”) that is manufactured, packaged, labeled, tested, distributed,
sold, and/or marketed by the Company or any of its Subsidiaries (each such
product, a “Pharmaceutical Product”), such Pharmaceutical Product is,
to the knowledge of the Company, being manufactured, packaged, labeled, tested,
distributed, sold and/or marketed by the Company in compliance in all material
respects with all applicable requirements under FDCA and similar laws, rules
and regulations relating to registration, investigational use, premarket
clearance, licensure, or application approval, good manufacturing practices,
good laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse Effect.  There is no pending, completed or, to the
Company’s knowledge, threatened, action (including any lawsuit, arbitration, or
legal or administrative or regulatory proceeding, charge, complaint, or
investigation) against the Company or any of its Subsidiaries, and none of the
Company or any of its Subsidiaries has received any notice, warning letter or
other communication from the FDA or any other governmental entity, which : (A)
(i) contests the premarket clearance, licensure, registration, or approval
of, the uses of, the distribution of, the manufacturing or packaging of, the
testing 

 18
 

of, the sale of, or the labeling and
promotion of any Pharmaceutical Product, (ii) withdraws its approval of,
requests the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating to, any Pharmaceutical
Product, (iii) imposes a clinical hold on any clinical investigation by
the Company or any of its Subsidiaries, (iv) enjoins production at any
facility of the Company or any of its Subsidiaries, (v) enters or proposes to
enter into a consent decree of permanent injunction with the Company or any of
its Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules or
regulations by the Company or any of its Subsidiaries; and which (B), either
individually or in the aggregate, would have a Material Adverse Effect.  The
properties, business and operations of the Company have been and are being
conducted in all material respects in accordance with all applicable laws,
rules and regulations of the FDA.  The
Company has not been informed by the FDA that the FDA will prohibit the
marketing, sale, license or use in the United States of any product produced or
marketed by the Company nor, except as set forth in the SEC Reports, has the
FDA expressed any concern in writing as to approving or clearing for marketing
any product being developed by the Company.

(kk)         Form S-3
Eligibility.  The Company is eligible
to register the resale of the Securities for resale by the Purchaser on Form
S-3 promulgated under the Securities Act.

3.2   Representations and Warranties of the Purchasers.  Each Purchaser hereby, for itself and for no
other Purchaser, represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:

(a)   Organization; Authority.  Such Purchaser is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate or similar action on the part
of such Purchaser.  Each Transaction
Document to which it is a party has been duly executed by such Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (i) as limited
by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

(b)   Own Account.  Such Purchaser understands that the
Securities are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the
Securities as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities
Act or any applicable 

 19
 

state
securities law and has no direct or indirect arrangement or understandings with
any other persons to distribute or regarding the distribution of such
Securities (this representation and warranty not limiting such Purchaser’s
right to sell the Securities pursuant to the Registration Statement or
otherwise in compliance with applicable federal and state securities laws) in
violation of the Securities Act or any applicable state securities law.  Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business.

(c)   Purchaser Status.  At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises any Warrants, it will be either: (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the
Securities Act or (ii) a “qualified institutional buyer” as defined in
Rule 144A(a) under the Securities Act.  Such Purchaser is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act and all
of the SEC Reports have been made available to the Purchaser.

(d)   Experience of Such
Purchaser.  Such Purchaser, either
alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.  Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

(e)   General Solicitation.  Such Purchaser is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
attended by such Purchaser.

(f)    Short Sales and
Confidentiality Prior To The Date Hereof. 
Other than the transactions contemplated hereunder, such Purchaser has
not, nor has any Person acting on behalf of or pursuant to any understanding
with such Purchaser, directly or indirectly executed any purchases or
dispositions, including Short Sales, of the securities of the Company
during the period commencing from the time that such Purchaser first received a
term sheet (written or oral) from the Company or any other Person representing
the Company setting forth the material terms of the transactions contemplated
hereunder until the date hereof (“Discussion Time”) (and with respect to
Purchasers that are entities affiliated with Arnhold and S. Bleichroeder
Advisers, LLC and accounts that it manages, such representation is made only
since the time that such Purchaser first became aware that the Offering was
contemplated).  Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment
vehicle whereby separate portfolio managers manage separate portions of such
Purchaser’s assets or a Purchaser with multiple portfolio manager who manage
assets for multiple accounts, and the portfolio managers have no direct
knowledge of the investment decisions made by the portfolio managers managing
other portions of such Purchaser’s assets, the representation set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Securities covered by
this Agreement.  Other than to other
Persons party to this Agreement, such Purchaser has 

 20
 

maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1   Transfer
Restrictions.

(a)           The Securities may
only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144 promulgated
under the Securities Act, to the Company or to an Affiliate of a Purchaser or
in connection with a pledge as contemplated in Section 4.1(b), the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the Company,
the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act.  As a condition of transfer, any such
transferee shall agree in writing to be bound by the terms of this Agreement
and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.

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

THIS SECURITY HAS NOT
BEEN  REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY, IF REQUESTED BY THE COMPANY.  THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN
RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.

The Company acknowledges and agrees that a Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to
a financial institution that is an 

 21
 

“accredited
investor” as defined in Rule 501(a) under the Securities Act and who
agrees to be bound by the provisions of this Agreement and the Registration
Rights Agreement and, if required under the terms of such arrangement, such
Purchaser may transfer pledged or secured Securities to the pledgees or secured
parties.  Such a pledge or transfer would
not be subject to approval of the Company and no legal opinion of legal counsel
of the pledgee, secured party or pledgor shall be required in connection
therewith.  Further, no notice shall be
required of such pledge.  At the
appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration pursuant to the
Registration Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or
other applicable provision of the Securities Act to appropriately amend the
list of Selling Stockholders thereunder.

(c)           Certificates
evidencing the Shares and Warrant Shares shall not contain any legend
(including the legend set forth in Section 4.1(b)), (i) while a registration
statement (including the Registration Statement) covering the resale of such
security is effective under the Securities Act, or (ii) following any sale of
such Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or
Warrant Shares are eligible for sale under Rule 144(k), or (iv) if such legend
is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the staff of the
Commission).  The Company shall cause its
general counsel to issue a legal opinion to the Transfer Agent promptly after
the Effective Date if required by the Transfer Agent to effect the removal of
the legend hereunder.  If all or any
portion of a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Warrant Shares, such Warrant
Shares shall be issued free of all legends. 
The Company agrees that following the Effective Date or at such time as
such legend is no longer required under this Section 4.1(c), it will, no later
than three Trading Days following the delivery by a Purchaser to the Company or
the Transfer Agent of a certificate representing Shares or Warrant Shares, as
the case may be, issued with a restrictive legend (such third Trading Day, the “Legend
Removal Date”), deliver or cause to be delivered to such Purchaser a
certificate representing such shares that is free from all restrictive and
other legends.  The Company may not make
any notation on its records or give instructions to the Transfer Agent that
enlarge the restrictions on transfer set forth in this Section.  Certificates for Securities subject to legend
removal hereunder shall be transmitted by the Transfer Agent to the Purchaser
by crediting the account of the Purchaser’s prime broker with the Depository
Trust Company System as directed by such Purchaser.

(d)           In addition to such
Purchaser’s other available remedies, the Company shall pay to a Purchaser, in
cash, as partial liquidated damages and not as a penalty, for each $1,000 of
Shares or Warrant Shares (based on the VWAP of the Common Stock on the date
such Securities are submitted to the Transfer Agent) delivered for removal of
the restrictive legend and subject to Section 4.1(c), $10 per Trading Day
(increasing to $20 per Trading Day five (5) Trading Days after such damages
have begun to accrue) for each Trading Day commencing two (2) Trading Days
after the Legend Removal Date 

 22
 

until such
certificate is delivered without a legend. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction Documents,
and such Purchaser shall have the right to pursue all remedies available to it
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief.

(e)   Each Purchaser, severally
and not jointly with the other Purchasers, agrees that such Purchaser will sell
any Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements, or
an exemption therefrom, and that if Securities are sold pursuant to a
Registration Statement, they will be sold in compliance with the plan of
distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing Securities as set forth in
this Section 4.1 is predicated upon the Company’s reliance upon this
understanding.

4.2   Furnishing of Information. 
As long as any Purchaser owns Securities, the Company covenants to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act. 
As long as any Purchaser owns Securities, if the Company is not required
to file reports pursuant to the Exchange Act, it will prepare and furnish to
the Purchasers and make publicly available in accordance with
Rule 144(c) such information as is required for the Purchasers to
sell the Securities under Rule 144. The Company further covenants that it
will take such further action as any holder of Securities may reasonably
request, to the extent required from time to time to enable such Person to sell
such Securities without registration under the Securities Act within the
requirements of the exemption provided by Rule 144.

4.3   Integration.  The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers or that would be integrated
with the offer or sale of the Securities to the Purchasers for purposes of the
rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent
transaction.

4.4   Securities Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m. (New York
City time) on the Trading Day immediately following the date hereof, issue a
Current Report on Form 8-K, disclosing the material terms of the transactions
contemplated hereby, and filing the Transaction Documents as exhibits thereto.  The Company and each Purchaser shall consult
with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which
case the disclosing party shall promptly provide the other party with prior
notice of such public statement or 

 23
 

communication.  Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Purchaser, or include the name of
any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except
(i) as required by federal securities law in connection with (a) any
registration statement contemplated by the Registration Rights Agreement and
(b) the filing of final Transaction Documents (including signature pages
thereto) with the Commission and (ii) to the extent such disclosure is
required by law or Trading Market regulations, in which case the Company shall
provide the Purchasers with prior notice of such disclosure permitted under
this clause (ii).

4.5   Shareholder Rights Plan. 
No claim will be made or enforced by the Company or, to the knowledge of
the Company, any other Person, that any Purchaser is an “Acquiring Person”
under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the Purchasers.

4.6   Non-Public Information. 
Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company covenants
and agrees that neither it nor any other Person acting on its behalf will
provide any Purchaser or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. 
The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in
securities of the Company.

4.7   Use of Proceeds.  The
Company shall use the net proceeds from the sale of the Securities hereunder
for research and development, sales, marketing and other working capital
purposes and shall not use such proceeds for (a) the satisfaction of any
portion of the Company’s debt (other than payment of trade payables in the
ordinary course of the Company’s business and prior practices), (b) the
redemption of any Common Stock or Common Stock Equivalents or (c) the
settlement of any outstanding litigation.

4.8   Indemnification of Purchasers.   Subject to the provisions of this
Section 4.8, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person
who controls such Purchaser (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, shareholders, agents, members, partners or employees (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title) of such controlling
persons (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of
any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or (b) any
action instituted against a Purchaser, or any of 

 24
 

them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Purchaser, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Purchaser’s representations,
warranties or covenants under the Transaction Documents or any agreements or
understandings such Purchaser may have with any such stockholder or any
violations by the Purchaser of state or federal securities laws or any conduct
by such Purchaser which constitutes fraud, gross negligence, willful misconduct
or malfeasance).  If any action shall be
brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the
Company in writing, and the Company shall have the right to assume the defense
thereof with counsel of its own choosing reasonably acceptable to the Purchaser
Party.  Any Purchaser Party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company in writing,
(ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of such separate counsel, a material conflict on any
material issue between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for the
reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any
Purchaser Party under this Agreement (i) for any settlement by a Purchaser
Party effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (ii) to the extent, but only to the
extent that a loss, claim, damage or liability is attributable to any Purchaser
Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other
Transaction Documents.

4.9        Reservation of Common Stock. As of the date hereof,
the Company has reserved and the Company shall continue to reserve and keep
available at all times, free of preemptive rights, a sufficient number of
shares of Common Stock for the purpose of enabling the Company to issue Shares
pursuant to this Agreement and Warrant Shares pursuant to any exercise of the
Warrants.

4.10      Listing of Common Stock. 
The Company hereby agrees to use commercially reasonable efforts to
maintain the listing of the Common Stock on a Trading Market. The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, it will include in such application all of the Shares and
Warrant Shares, and will take such other action as is necessary to cause all of
the Shares and Warrant Shares to be listed on such other Trading Market as
promptly as possible.  The Company will
take all action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Trading Market.

4.11      Equal Treatment of Purchasers.  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.  For clarification purposes, this provision
constitutes a separate right granted to each Purchaser by the Company and
negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed 

 25

as the Purchasers acting in concert or as a
group with respect to the purchase, disposition or voting of Securities or
otherwise.

4.12         Short
Sales and Confidentiality After The Date Hereof.  Each Purchaser, severally and not jointly with
the other Purchasers, covenants that neither it nor any Affiliate acting on its
behalf or pursuant to any understanding with it will execute any Short Sales
during the period commencing at the Discussion Time and ending at the time that
the transactions contemplated by this Agreement are first publicly announced as
described in Section 4.4.  Each Purchaser, severally and not
jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company
as described in Section 4.4, such Purchaser will maintain the
confidentiality of all disclosure made to it in connection with this
transaction (including the existence and terms of this transaction).  Each Purchaser severally and not jointly with
any other Purchaser, understands and acknowledges, and agrees, to act in a
manner that will not violate the positions of the Commission as set forth in
Item 65, Section A, of the Manual of Publicly Available Telephone
Interpretations, dated July 1997, compiled by the Office of Chief Counsel,
Division of Corporation Finance. Notwithstanding
the foregoing, no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in Short Sales in the securities of the Company
after the time that the transactions contemplated by this Agreement are first
publicly announced as described in Section 4.4.  Notwithstanding the foregoing, in the
case of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.

4.13         Subsequent
Equity Sales.

(a)           From the date hereof
until 90 days after the Effective Date, neither the Company nor any Subsidiary
shall issue shares of Common Stock or Common Stock Equivalents.

(b)           From the date hereof
until one year from the Effective Date, the Company shall be prohibited from
effecting or entering into an agreement to effect any Subsequent Financing
involving a Variable Rate Transaction.  “Variable
Rate Transaction” means a transaction in which the Company issues or sells
(i) any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion, exercise or exchange rate or other price that
is based upon and/or varies with the trading prices of or quotations for the
shares of Common Stock at any time after the initial issuance of such debt or
equity securities, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock or (ii) enters into any agreement, including, but
not limited to, an equity line of credit, whereby the Company may sell
securities at a future determined price. 
Any Purchaser shall be entitled to obtain 

 26
 

injunctive
relief against the Company to preclude any such issuance, which remedy shall be
in addition to any right to collect damages.

(c)           Notwithstanding the
foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance,
except that no Variable Rate Transaction shall be an Exempt Issuance.

4.14         Delivery
of Securities After Closing.  The
Company shall deliver, or cause to be delivered, the respective Securities
purchased by each Purchaser to such Purchaser within five (5) Trading Days of
the Closing Date.

4.15         Form
D; Blue Sky Filings.  The Company
agrees to use commercially reasonable efforts to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall take such
action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at the Closing under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of such actions
promptly upon request of any Purchaser.

4.16         Good Standing in New Jersey.  The Company shall take all steps necessary to
regain its authority to do business as a foreign corporation in the State of
New Jersey at the earliest possible time.

ARTICLE V.

MISCELLANEOUS

5.1           Termination.  This Agreement may be terminated by any
Purchaser, as to such Purchaser’s obligations hereunder only and without any
effect whatsoever on the obligations between the Company and the other
Purchasers, by written notice to the other parties, if the Closing has not been
consummated on or before July 7, 2007; provided, however, that no such
termination will affect the right of any party to sue for any breach by the
other party (or parties).

5.2           Fees and Expenses.  Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the fees and
expenses of its advisers, 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.  The Company shall pay all Transfer Agent fees,
stamp taxes and other taxes and duties levied in connection with the delivery
of any Securities to the Purchasers.

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

 27
 

5.4           Notices.  Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached
hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party
to whom such notice is required to be given. 
The address for such notices and communications shall be as set forth on
the signature pages attached hereto.

5.5           Amendments;
Waivers.  No provision of this
Agreement may be waived or amended except in a written instrument signed, in
the case of an amendment, by the Company and the Purchasers of at least 67% of
the Shares still held by the Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

5.6           Headings.  The headings herein are for convenience only,
do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.

5.7           Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns.  The Company may not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of each Purchaser (other than by merger).  Any Purchaser may assign any or all of its
rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions of the
Transaction Documents that apply to the “Purchasers.”

5.8           No
Third-Party Beneficiaries.  This
Agreement is intended for the benefit of the parties hereto and their
respective successors and permitted assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.8.

5.9           Governing
Law.  All questions concerning the
construction, validity, enforcement and interpretation of the Transaction
Documents shall be governed by and construed and enforced in accordance with
the internal laws of the State of New York, without regard to the principles of
conflicts of law thereof.  Each party
agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of
New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of New York, borough of
Manhattan for the adjudication of any dispute hereunder or in connection 

 28
 

herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law.  If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its reasonable attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.

5.10         Survival.  The representations and warranties contained
herein shall survive the Closing for a period of three (3) years and the
delivery of the Shares and Warrant Shares.

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

5.12         Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their commercially reasonable efforts to find and
employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction.
It is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.

5.13         Rescission
and Withdrawal Right. 
Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) any of the other Transaction Documents,
whenever any Purchaser exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may
rescind or withdraw, in its sole discretion from time to time upon written
notice to the Company, any relevant notice, demand or election in whole or in
part without prejudice to its future actions and rights; provided, however, in
the case of a rescission of an exercise of a Warrant, the Purchaser shall be
required to return any shares of Common Stock delivered in connection with any
such rescinded exercise notice.

 29
 

5.14         Replacement
of Securities.  If any certificate or
instrument evidencing any Securities is mutilated, lost, stolen or destroyed,
the Company shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof (in the case of mutilation), or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt
of evidence reasonably satisfactory to the Company of such loss, theft or
destruction.  The applicant for a new
certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with
the issuance of such replacement Securities.

5.15         Remedies.  In addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, each
of the Purchasers and the Company will be entitled to specific performance
under the Transaction Documents.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in any
action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

5.16         Payment
Set Aside.  To the extent that the
Company makes a payment or payments to any Purchaser pursuant to any
Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a
trustee, receiver or any other person under any law (including, without
limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.

5.17         Independent
Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any
Transaction Document are several and not joint with the obligations of any
other Purchaser, and no Purchaser shall be responsible in any way for the
performance or non-performance of the obligations of any other Purchaser under
any Transaction Document.  Nothing contained
herein or in any other Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by
the Transaction Documents.  Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out
of the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.  Each Purchaser has been represented
by its own separate legal counsel in their review and negotiation of the
Transaction Documents.  For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with Rodman & Renshaw LLC and Roth Capital Partners,
LLC, who has acted as placement agents to the transaction and the Company
through FWS.  FWS does not represent the
Purchasers but only Rodman & Renshaw LLC. 
The Company has elected to provide all Purchasers with the same terms
and Transaction Documents 

 30
 

for the convenience of the Company and not because it was required or
requested to do so by the Purchasers.

5.18         Liquidated
Damages.  The Company’s obligations
to pay any partial liquidated damages or other amounts owing under the
Transaction Documents is a continuing obligation of the Company and shall not
terminate until all unpaid partial liquidated damages and other amounts have
been paid notwithstanding the fact that the instrument or security pursuant to
which such partial liquidated damages or other amounts are due and payable
shall have been canceled.

5.19         Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

5.20         Construction. The parties agree
that each of them and/or their respective counsel has reviewed and had an
opportunity to revise the Transaction Documents and, therefore, the normal rule
of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of the
Transaction Documents or any amendments hereto.

5.21         Waiver of Jury Trial.  In any action, suit or proceeding in any
jurisdiction brought by any party against any other party, the parties each
knowingly and intentionally, to the greatest extent permitted by applicable
law, hereby absolutely, unconditionally, irrevocably and expressly waives
forever trial by jury.

(Signature
Pages Follow)

 31

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

 

	
  CYTOGEN CORPORATION

  	
  Address for Notice:

  
	
   

  	
  650 College Road East, Suite 3100, 

  
	
   

  	
  Princeton, New Jersey 08540

  
	
   

  	
  Fax: (609) 452-2434

  
	
  By:

  	
  /s/ Kevin J.
  Bratton

  	
   

  	
   

  
	
   

  	
  Name: Kevin J. Bratton 

  	
   

  
	
   

  	
  Title: Senior Vice President, Finance 

  	
   

  
	
  And Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
  With a copy to (which shall not constitute notice):

  	
   

  
	
   

  	
   

  
	
  Emilio Ragosa, Esq. 

  	
   

  
	
  Morgan, Lewis & Bockius LLP 

  	
   

  
	
  502 Carnegie Center 

  	
   

  
	
  Princeton, New Jersey 08540 

  	
   

  
	
  Fax: (609) 919-6701

  	
   

  
				

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR
PURCHASER FOLLOWS]

 32
 

[PURCHASER SIGNATURE PAGES
TO CYTO

SECURITIES PURCHASE AGREEMENT]

IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

	
  Name of Purchaser:

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Authorized Signatory of Purchaser:

  	
   

  
	
   

  	
   

  	
   

  
	
  Name of Authorized Signatory:

  	
   

  
	
   

  	
   

  	
   

  
	
  Title of Authorized Signatory:

  	
   

  
	
   

  	
   

  	
   

  
	
  Email Address of Purchaser:

  	
   

  
	
   

  	
   

  	
   

  
	
  Fax Number of Purchaser:

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notice of Purchaser:

  
											

 

 

 

Address for Delivery of
Securities for Purchaser (if not same as address for notice):

 

	
  Subscription Amount: $

  
	
   

  	
   

  	
   

  
	
  Shares:

  
	
   

  	
   

  	
   

  
	
  Warrant Shares:

  
	
   

  	
   

  	
   

  
							

EIN Number:  [PROVIDE THIS UNDER
SEPARATE COVER]

[SIGNATURE PAGES CONTINUE]

 33

Schedule of Purchasers

	
  Name

  	
   

  	
  Number of Shares

  	
   

  	
  Number of Warrants

  	
   

  	
  Purchase Price

  	
   

  
	
  Hudson Bay Fund LP

  	
   

  	
  247,553

  	
   

  	
  123,777

  	
   

  	
  $

  	
  429,999.82

  	
   

  
	
  Hudson Bay Overseas
  Fund LTD

  	
   

  	
  328,152

  	
   

  	
  164,076

  	
   

  	
  $

  	
  569,999.76

  	
   

  
	
  Fort Mason Master, L.P.

  	
   

  	
  675,806

  	
   

  	
  337,903

  	
   

  	
  $

  	
  1,173,875.02

  	
   

  
	
  Fort Mason Partners,
  L.P.

  	
   

  	
  43,826

  	
   

  	
  21,913

  	
   

  	
  $

  	
  76,125.76

  	
   

  
	
  J.P. Morgan Ventures
  Corporation

  	
   

  	
  2,000,000

  	
   

  	
  1,000,000

  	
   

  	
  $

  	
  3,474,000.00

  	
   

  
	
  Capital Ventures
  International by Heights Capital Management, Inc.

  	
   

  	
  580,000

  	
   

  	
  290,000

  	
   

  	
  $

  	
  1,007,460.00

  	
   

  
	
  Radcliffe SPC, Ltd. for
  and on behalf of the Class A Segregated Portfolio

  	
   

  	
  575,705

  	
   

  	
  287,853

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  
	
  First Eagle Value in
  Biotechnology Master Fund, Ltd

  	
   

  	
  569,948

  	
   

  	
  284,974

  	
   

  	
  $

  	
  990,000.00

  	
   

  
	
  First Eagle Value in
  Biotechnology Fund, LP

  	
   

  	
  164,076

  	
   

  	
  82,038

  	
   

  	
  $

  	
  285,000.00

  	
   

  
	
  First Eagle Contrarian
  Value Master Fund, Ltd

  	
   

  	
  129,534

  	
   

  	
  64,767

  	
   

  	
  $

  	
  225,000.00

  	
   

  
	
  Caduceus Capital Master
  Fund Limited

  	
   

  	
  190,000

  	
   

  	
  95,000

  	
   

  	
  $

  	
  330,030.00

  	
   

  
	
  Caduceus Capital II,
  L.P.

  	
   

  	
  125,000

  	
   

  	
  62,500

  	
   

  	
  $

  	
  217,125.00

  	
   

  
	
  Summer Street Life Sciences Hedge Fund

  	
   

  	
  185,000

  	
   

  	
  92,500

  	
   

  	
  $

  	
  321,345.00

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