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                                                                     EXHIBIT 4.1

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                          SECURITIES PURCHASE AGREEMENT

                                 3,333 SHARES OF
                      SERIES B CONVERTIBLE PREFERRED STOCK,
                          SERIES B WARRANTS TO PURCHASE
                    3,333,000 SHARES OF CLASS A COMMON STOCK.
           AMENDMENT AND RESTATEMENT OF SERIES A WARRANTS TO PURCHASE
                    6,000,000 SHARES OF CLASS A COMMON STOCK
                                       AND
                           REVENUE PARTICIPATION NOTES
                                       OF

                       AMERICAN BIOGENETIC SCIENCES, INC.

                              AS OF AUGUST 23, 2001

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                                TABLE OF CONTENTS

                                                                            PAGE

ARTICLE I - ISSUANCE OF SECURITIES..........................................  2

   1.1   AUTHORIZATION OF SECURITIES........................................  2
   1.2   PURCHASE AND SALE SECURITIES.......................................  2

ARTICLE II - CLOSING........................................................  2

   2.1   CLOSING............................................................  2
   2.2   LEGEND.............................................................  3

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................  3

   3.1   ORGANIZATION AND STANDING OF THE COMPANY...........................  3
   3.2   CAPITALIZATION.....................................................  3
   3.3   VALIDITY AGREEMENT.................................................  4
   3.4   GOVERNMENTAL CONSENT, ETC..........................................  5
   3.5   VALID ISSUANCE OF SECURITIES AND FIRST PRIORITY LIEN...............  5
   3.6   FINANCIAL STATEMENTS...............................................  5
   3.7   ACCURACY AND COMPLETENESS OF INFORMATION...........................  6
   3.8   ADVERSE CHANGES....................................................  6
   3.9   NO VIOLATION.......................................................  6
   3.10  ALL NECESSARY PERMITS..............................................  6
   3.11  TITLE TO PROPERTIES................................................  6
   3.12  SECURITIES LAWS....................................................  7
   3.13  ACCURACY OF RECITALS...............................................  7

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE INVESTORS................  7

   4.1   AUTHORITY OF INVESTORS, VALIDITY OF THIS AGREEMENT.................  7
   4.2   INVESTMENT REPRESENTATIONS.........................................  7

ARTICLE V - CONDITIONS TO INVESTORS' OBLIGATIONS............................  8

   5.1   CONDITIONS TO CLOSING ON CLOSING DATE..............................  8

ARTICLE VI - CONDITIONS TO THE COMPANY'S OBLIGATIONS.......................  10

   6.1   CONDITIONS TO CLOSING.............................................  10

ARTICLE VII - COVENANTS OF THE COMPANY.....................................  11

   7.1   FURNISHING OF INFORMATION.........................................  11
   7.2   INFORMATION WITH RESPECT TO THE SECURITIES........................  11
   7.3   LICENSE AGREEMENT.................................................  11
   7.4   INVESTOR'S RIGHTS.................................................  11
   7.5   EXCHANGE OR MARKET LISTINGS.......................................  12

ARTICLE VIII - PRE-EMPTIVE RIGHTS ON COMPANY ISSUANCES.....................  12

   8.1   PARTICIPATION IN FUTURE OFFERINGS.................................  12
   8.2   NOTICE............................................................  12
   8.3   ACCEPTANCE........................................................  12
   8.4   PERCENTAGE INTEREST...............................................  12
   8.5   NO ACCUMULATION...................................................  13

ARTICLE IX - SURVIVAL AND INDEMNIFICATION..................................  13

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   9.1   SURVIVAL..........................................................  13
   9.2   INDEMNIFICATION...................................................  13

ARTICLE X - MISCELLANEOUS..................................................  14

   10.1  NOTICES...........................................................  14
   10.2  ENTIRE AGREEMENT..................................................  15
   10.3  AMENDMENTS........................................................  15
   10.4  ASSIGNMENT........................................................  16
   10.5  BENEFIT...........................................................  16
   10.6  GOVERNING LAW.....................................................  16
   10.7  SEVERABILITY......................................................  16
   10.8  HEADINGS AND CAPTIONS.............................................  16
   10.9  NO WAIVER OF RIGHTS, POWERS AND REMEDIES..........................  17
   10.10 EXPENSES..........................................................  17
   10.11 BROKERS...........................................................  17
   10.12 CONFIDENTIALITY...................................................  17
   10.13 COUNTERPARTS......................................................  17
   10.14 FURTHER ASSURANCES................................................  18

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                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), is made as of
this 23rd day of August, 2001, by and among AMERICAN BIOGENETIC SCIENCES, INC.,
a Delaware corporation (the "Company"), the investors listed on EXHIBIT A hereto
(collectively, the "Investors"), and certain holders of its previously issued
Series A Convertible Preferred Stock and related Warrants listed on Exhibit A
(the "Series A Holders").

                              W I T N E S S E T H:

         WHEREAS, Company has previously issued to the Series A Holders, 6,000
shares of its Series A Convertible Preferred Stock ("Series A Preferred Stock")
and in conjunction therewith Warrants (each, a "Series A Warrant" and
collectively, the "Series A Warrants") to purchase up to 6,000,000 shares (the
"Series A Warrant Shares") of the Company's Class A Common Stock, par value
$.001 per share (the "Common Stock"); and

         WHEREAS, the Company intends to amend its Restated Certificate of
Incorporation to (i) change the terms of the presently outstanding Series A
Preferred Stock and (ii) designate, out of its authorized but previously
undesignated Preferred Stock, $.001 per share (the "Preferred Stock"), 3,333
shares as the Series B Convertible Preferred Stock (the "Series B Preferred
Stock"), so that the Series A Preferred Stock and the Series B Preferred Stock
shall have the designations, powers, preferences, and other terms set forth on
EXHIBIT B hereto; and

         WHEREAS, the Company and the Series A Holders have agreed to amend the
terms of the Series A Warrants to be substantially in the form of EXHIBIT C
hereto; and

         WHEREAS, the Investors wish to purchase all 3,333 shares of the Series
B Convertible Preferred Stock ( the "Series B Preferred Shares") and the
Company's Series B common stock purchase warrants substantially in the form of
EXHIBIT D hereto (each, a "Series B Warrant" and collectively, the "Series B
Warrants"), entitling the holders to purchase 3,333,000 shares of the Common
Stock (the "Series B Warrant Shares"); and

         WHEREAS, the Company has further agreed to issue to the Investors and
the Series A Holders certain Revenue Participation Notes substantially in the
form of EXHIBIT E hereto, under which a portion of any royalty payments received
by the Company under a certain Exclusive License Agreement with Abbott
Laboratories, an Illinois corporation ("Abbott"), dated January 27, 2000 (the
"Abbott License Agreement") will be paid to the Investors pursuant to the terms
thereof; and

         WHEREAS, the Company has agreed to grant the holders of the Revenue
Participation Notes a first priority security interest in 25% of the royalties
payments received by the Company under the Abbott License Agreement under a
Security Agreement substantially in the form of EXHIBIT F hereto (the "Security
Agreement"); and

         WHEREAS, the Company, the Series A Holders and the Investors have
agreed to provide for the redemption of the Series A Preferred Shares, Series B
Preferred Shares, Amended Series

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A Warrants (as defined in Section 1.1) and Series B Warrants pursuant to the
terms of a Call Option Agreement substantially in the form of EXHIBIT H hereto
(the "Call Option Agreement"); and

         WHEREAS, the Company and the Investors desire to set forth certain
matters to which they have agreed relating to the foregoing;

         NOW THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement and other good and valuable consideration,
the parties agree as follows:

ARTICLE I.        ISSUANCE OF SECURITIES

1.1      AUTHORIZATION OF SECURITIES.

         Subject to the terms and conditions of this Agreement, the Company has
authorized, or prior to the Closing (as hereinafter defined) will have
authorized, the issuance of each of (i) the Series B Preferred Shares, (ii) the
Common Stock issuable upon conversion of Series B Preferred Shares, (iii) the
Series B Warrants, (iv) the Series B Warrant Shares, and (v) the Revenue
Participation Notes and has further authorized the amendment and restatement of
the Series A Warrants ("Amended Series A Warrants").

1.2      PURCHASE AND SALE OF SECURITIES.

Subject to the terms and conditions of this Agreement and in reliance upon the
representations and warranties of the Company contained herein, for an aggregate
purchase price of two million forty-one thousand six hundred sixty-two dollars
and fifty cents ($2,041,662.50) ("Purchase Price"), the Investors agree to
purchase from the Company and the Company agrees to sell to the Investors on the
Closing Date (as hereinafter defined): (i) the number of Series B Preferred
Shares set forth opposite each Investor's name on EXHIBIT A attached hereto,
aggregating 3,333 Series B Preferred Shares; (ii) the number of Series B
Warrants set forth opposite each Investor's name on EXHIBIT A attached hereto,
aggregating Warrants to purchase 3,333,000 Series B Warrant Shares; and (iii)
the Revenue Participation Notes in the maximum principal amounts set forth
opposite each Investor's name on EXHIBIT A attached hereto, aggregating in
principal amount up to $25,000,000, subject to adjustment, and to the amendment
and restatement of the Series A Warrants. Notwithstanding the foregoing, the
Investors, by written notice to the Company may reallocate the portion of the
securities to be purchased by any of them, provided that the total amount does
not change.

ARTICLE II.       CLOSING

2.1      CLOSING.

         Subject to the satisfaction of the conditions set forth in Articles VI
and VII hereof, the closing (the "Closing") shall take place at a place and time
(the "Closing Date") mutually agreed by the Company and the Investors, but in
any event no later than five business days after the date hereof. At the
Closing, in consideration of payment of the Purchase Price and other good and
valuable consideration: (i) the Company shall deliver to the Investors one or
more stock

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certificates registered in their names for an aggregate of 3,333 Series B
Preferred Shares; (ii) the Company shall deliver to the Investors one or more
Series B Warrants registered in their names to purchase an aggregate of
3,333,000 Series B Warrant Shares; (iii) the Series A Holders shall receive new
warrant certificates reflecting the amended terms of the Amended Series A
Warrants in exchange for the surrender of their old warrant certificates; and
(iv) the Company shall deliver to the Investors, one or more the Revenue
Participation Notes pursuant to the Revenue Participation Agreement.

2.2      LEGEND.

         The certificates representing the securities being sold and the Revenue
Participation Note shall be subject to a legend restricting transfer under the
Securities Act of 1933, as amended (the "Securities Act"), such legend to be
substantially as follows:

                "THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
                THE SECURITIES ACT OF 1933. THESE SECURITIES MAY NOT BE SOLD OR
                OTHERWISE TRANSFERRED BY ANY PERSON UNLESS (1) EITHER (A) A
                REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES SHALL BE
                EFFECTIVE UNDER THE SECURITIES ACT OF 1933 ("ACT"), OR (B) THE
                COMPANY SHALL HAVE REASONABLY REQUESTED AND RECEIVED AN OPINION
                OF COUNSEL SATISFACTORY TO IT THAT AN EXEMPTION FROM
                REGISTRATION UNDER SUCH ACT IS THEN AVAILABLE, AND (2) THERE
                SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES
                LAWS."

ARTICLE III.      REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         The Company hereby represents and warrants to the Investors and the
Series A Holders that, as of the date of this Agreement, the following are true
and correct:

3.1      ORGANIZATION AND STANDING OF THE COMPANY.

         The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. The Company has full
corporate power and authority to enter into, deliver, and perform its
obligations and undertakings under this Agreement. The Company is duly
authorized to conduct its business and is in good standing under the laws of
each jurisdiction where such qualification is required, except where the lack of
such qualification would not have a material adverse effect on the business,
financial condition, operations, results of operations, or future prospects of
the Company. The Company has full corporate power and authority to carry on the
business in which it is engaged and to own and use the properties owned and as
used by it.

3.2      CAPITALIZATION.

         The Company's entire authorized capital stock consists of: (i)
150,000,000 shares of Class A Common Stock, par value $.001 per share, of which
41,413,909 shares are validly issued

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and outstanding; (ii) 3,000,000 shares of Class B Common Stock, par value $.001
per share (the "Class B Common Stock"), all of which are validly issued and
outstanding; and (iii) 10,000,000 shares of the Preferred Stock par value $.001
per share, of which 7,000 have been designated as Series A Preferred Stock and
are validly issued and outstanding. On or before the Closing, the Company will
file a Certificate of Amendment to its Restated Certificate of Incorporation to
(i) amend the preferences, voting powers, qualifications and special or relative
rights or privileges of the existing Series A Preferred Stock, and (ii)
designate 3,333 shares of the Preferred Stock as Series B Convertible Preferred
Stock and establish the preferences, voting powers, qualifications and special
or relative rights or privileges of such Series B Preferred Stock, both as set
forth in EXHIBIT B (the "Charter Amendment"). The issuance of all presently
issued and outstanding securities was duly authorized, and all such securities
are fully paid and non-assessable. All such issued and outstanding securities
have the preferences, voting powers, qualifications and special or relative
rights or privileges set forth in the Company's Restated Certificate of
Incorporation, as amended as in effect on the date hereof or in the Series A
Warrants, and as of the Closing Date the Series A Preferred Stock and Series B
Preferred Stock will have the preferences, voting powers, qualifications and
special or relative rights or privileges set forth in EXHIBIT B and the Amended
Series A Warrants and Series B Warrants will have the rights set forth in
EXHIBIT C and EXHIBIT D hereto. Other than as indicated on SCHEDULE 3.2 hereto
or in the SEC Reports (as hereinafter defined), the Company does not have
outstanding any option, warrant, purchase right, subscription right, stock
appreciation right, phantom stock right, profit participation right, agreement
or other commitment to issue or to acquire any shares of its capital stock, or
any securities or obligations convertible into or exchangeable for its capital
stock, and the Company has not given any person any right to acquire from the
Company or sell to the Company any shares of its capital stock. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Company.

3.3      VALIDITY OF AGREEMENT.

         Subject to approval by the holders of Series A Preferred Stock and
filing of the Charter Amendment; (a) the execution and delivery by the Company
of this Agreement and the performance by the Company of its obligations under
this Agreement, the amendment of the Series A Warrants, and the issuance, sale
and delivery of the Series B Preferred Shares, the Common Stock issuable upon
conversion of the Series B Preferred Shares, the Series B Warrants, and the
Series B Warrant Shares, the Revenue Participation Notes and the Security
Agreement have been duly authorized and approved by all necessary corporate
action; (b) this Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable in
accordance with its terms; and (c) the execution and delivery by the Company of
this Agreement and the performance by the Company of its obligations under this
Agreement, the amendment of the terms of the Series A Warrants, and the
issuance, sale and delivery of the Series B Preferred Shares, the Common Stock
issuable upon conversion of the Series B Preferred Shares, the Series B
Warrants, the Series B Warrant Shares, the Revenue Participation Notes and the
Security Agreement will not (i) conflict with, or result in any breach of any of
the terms of, or constitute a default under, the Restated Certificate of
Incorporation when the same will have been amended by filing of the Charter
Amendment, or By-laws of the Company, (ii) conflict with, result in a breach of
or violation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or any of its subsidiaries pursuant to, constitute a
default under, result in the acceleration of, create in any

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party the right to accelerate, terminate, modify, or cancel, or require any
notice under, any agreement, instrument, covenant or other restriction or
arrangement to which the Company is a party or by which it or any of its
properties or assets is bound or any statute law, rule, regulation, judgment,
order or decree applicable to the Company or any of its subsidiaries of any
court, regulatory body, administrative agency, governmental body, arbitrator or
other authority having jurisdiction over the Company or any of its subsidiaries
or any of its or their properties.

3.4      GOVERNMENTAL CONSENT, ETC.

         Except for the filing of the Charter Amendment and such other filings,
consents, permits, approvals and authorizations which will be obtained by the
Company prior to the Closing and which are set forth in SCHEDULE 3.4, no
consent, approval, authorization or other order of, action by, filing with, or
notification to any governmental authority is required under existing law or
regulation in connection with the execution, delivery and performance of the
Agreement, the amendment of the Series A Warrants or the offer, issuance, sale
or delivery of the Series B Preferred Shares, the Common Stock issuable upon
conversion of the Series B Preferred Shares, the Series B Warrants, and the
Series B Warrant Shares pursuant to the Agreement or the consummation of any
other transactions contemplated thereby.

3.5      VALID ISSUANCE OF SECURITIES AND FIRST PRIORITY LIEN.

         When issued and delivered against payment therefor in accordance with
the terms and conditions of this Agreement and the Charter Amendment, the
Amended Series A Warrants, the Series A Warrant Shares, the Series B Preferred
Shares, the Common Stock issuable upon conversion of the Series B Preferred
Shares, the Series B Warrants, and the Series B Warrant Shares shall be (i) duly
authorized and validly issued, fully paid and non-assessable and (ii) not
subject to any preemptive rights, liens, claims or encumbrances, or other
restrictions on transfer or other agreements or understandings with respect to
the voting of the Common Stock or the Series B Warrant Shares, except as set
forth in this Agreement or the Charter Amendment. The Revenue Participation
Notes have been duly authorized and, when issued and delivered pursuant to this
Agreement, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms. At the Closing, the
Investors shall have received a first priority security interest in 25% of the
royalty payments received by the Company under the Abbott License Agreement.

3.6      FINANCIAL STATEMENTS.

         The audited financial statements of the Company contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000,
including the notes relating thereto, and the unaudited financial statements of
the Company contained in the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2001 and June 30, 2001, including the notes thereto,
disclose all material liabilities of the Company as of such dates, except as set
forth on SCHEDULE 3.6 hereto. Such financial statements, including the notes
relating thereto, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved. Said
financial statements and related notes fairly present the financial position and
the results of operations and cash flow of Company as of the respective dates
thereof and for the periods indicated.

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3.7      ACCURACY AND COMPLETENESS OF INFORMATION.

         The Common Stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Copies of all
reports filed by the Company with the United States Securities and Exchange
Commission (the "Commission") pursuant to the Exchange Act during the period
from December 31, 1999 to the date of this Agreement (the "Furnished SEC
Reports") have been furnished to the Investors. Since January 1, 1998, the
Company has filed each statement, annual, quarterly, and other report,
registration statement and definitive proxy statement required to be filed
(other than preliminary material) by the Company with the Commission (the "SEC
Reports"). As of their respective filing dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act or the Exchange
Act, as the case may be, and none of the SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.

3.8      ADVERSE CHANGES.

         Since June 30, 2001, except as set forth on SCHEDULE 3.8 hereto, there
has not been any Material Adverse Change. For purposes of this Agreement, a
"Material Adverse Change" means a material adverse change in the business,
earnings, financial condition, results of operations, assets, employee
relations, or customer or supplier relations (in each case whether or not
arising in the ordinary course of business) or presently foreseeable prospects
of the Company and its subsidiaries on an aggregate basis.

3.9      NO VIOLATION.

         Neither the execution and delivery by the Company of this Agreement,
nor the consummation of the transactions contemplated hereby, will violate any
constitution, statute, rule, injunction, judgment, order, decree, ruling, charge
or other restriction of any government, governmental agency, or court known to
the Company to which the Company is subject or, after filing of the Charter
Amendment, any provision of its Restated Certificate of Incorporation or
By-Laws.

3.10     ALL NECESSARY PERMITS, ETC.

         The Company and each subsidiary possesses such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies as are necessary to conduct their
respective businesses, and neither the Company nor any subsidiary has received
any notice of proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization or permit which, singly
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Change.

3.11     TITLE TO PROPERTIES.

         The Company and each of its subsidiaries has good and marketable title
to all the properties and assets reflected as owned by it in the financial
statements referred to in Section

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3.6, in each case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except (i) as set forth on
SCHEDULE 3.11, or (ii) such as do not materially and adversely affect the value
of such property and do not materially interfere with the use made or proposed
to be made of such property by the Company or such subsidiary. The real
property, improvements, equipment and personal property held under lease by the
Company or any subsidiary are held under valid and enforceable leases, with such
exceptions as are not material and do not materially interfere with the use made
or proposed to be made of such real property, improvements, equipment or
personal property by the Company or such subsidiary.

3.12     SECURITIES LAWS.

         All notices, filings, registrations or qualifications under state
securities or "blue sky" laws which are required in connection with the
amendment of the Series A Warrants and the offer, issue and delivery of the
Series B Preferred Shares, the Common Stock into which such Series B Preferred
Shares are convertible, the Series B Warrants, the Series B Warrant Shares and
the Revenue Participation Note pursuant to this Agreement have been or will be
timely completed by the Company.

3.13     ACCURACY OF RECITALS.  The recitals hereto are true and accurate.

ARTICLE IV.       REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

         Each of the Investors hereby acknowledges, represents, warrants and
agrees as follows:

4.1      AUTHORITY OF INVESTORS, VALIDITY OF THIS AGREEMENT.

         Each of the Investors has all requisite power and authority to enter
into this Agreement and perform its obligations hereunder. The execution,
delivery and performance by each of the Investors of this Agreement, and the
purchase of the Series B Preferred Shares and Series B Warrants pursuant hereto
have been duly authorized and approved by all necessary corporate action. This
Agreement has been duly executed and delivered and constitutes a valid and
binding obligation of each of the Investors, enforceable in accordance with its
terms. The execution, delivery and performance of this Agreement and the
purchase of the Series B Preferred Shares, Series B Warrants and Revenue
Participation Notes will not conflict with, or result in a material breach of
any of the terms of, or constitute a material default under, any its
organizational documents or agreement, instrument, covenant or other restriction
to which any of the Investors is a party or by which it or any of its properties
or assets is bound.

4.2      INVESTMENT REPRESENTATIONS.

         Each of the Investors hereby acknowledges, represents, warrants and
agrees as follows:

         (a) Each of the Investors has had the opportunity to review the
Furnished SEC Reports and the financial statements contained therein. Each of
the Investors acknowledges that the Company has made available to the Investors
documents and information that it has requested relating to the Company and has
provided answers to the Investors' questions

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concerning the Company, the Series B Preferred Shares, Series B Warrants and
Revenue Participation Notes.

         (b) Each of the Investors is an "accredited investor" as defined in
Rule 501(a)(3) of the Securities Act.

         (c) Each of the Investors understands that the offering of the Series B
Preferred Shares, Series B Warrants and Revenue Participation Notes has not been
registered under the Securities Act or the securities laws of any state or other
jurisdiction and that such Series B Preferred Shares, Series B Warrants and
Revenue Participation Notes must be held indefinitely unless an exemption from
registration is available. Each of the Investors understands that the offering
and sale of the Series B Preferred Shares, Series B Warrants and Revenue
Participation Notes is intended to be exempt from registration under the
Securities Act based, in part, upon the representations, warranties and
agreements of the Investors contained in this Section 4.2, and the Company may
rely on such representations, warranties and agreements in connection therewith.
Each of the Investors covenants that it will not transfer the Series B Preferred
Shares, Series B Warrants and Revenue Participation Notes in violation of the
provisions of any applicable Federal or state securities statute.

         (d) Subject to the Investors' registration rights relating to the
Common Stock underlying their Series B Preferred Shares and Series B Warrants
under the Registration Rights Agreement referred to in Section 5.1 hereof, each
of the Investors is acquiring the Series B Preferred Shares, Series B Warrants
and Revenue Participation Notes for investment, and not with a view to the
resale or distribution thereof, and it has no present intention of selling,
negotiating, or otherwise disposing of the Series B Preferred Shares, Series B
Warrants and Revenue Participation Notes. Each of the Investors' financial
condition and investments are such that it is in a financial position to hold
the Series B Preferred Shares, Series B Warrants and Revenue Participation Notes
for an indefinite period of time and to bear the economic risk of, and withstand
a complete loss of, such Series B Preferred Shares, Series B Warrants and
Revenue Participation Notes. In addition, by virtue of its expertise, the advice
available to it, and its previous investment experience, each of the Investors
has sufficient knowledge and experience in financial and business matters,
investments, securities, and private placements and the capability to evaluate
the merits and risks of the transactions contemplated by this Agreement.

ARTICLE V.        CONDITIONS TO INVESTORS' OBLIGATIONS

5.1      CONDITIONS TO CLOSING ON CLOSING DATE.

         The obligation of the Investors to purchase and pay for the Series B
Preferred Shares, the Series B Warrants and the Revenue Participation Note and
the obligation of the Series A Holders to amend their Series A Warrants on the
Closing Date is subject to the following:

         (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Company made herein shall be true, correct and complete on and as of the
Closing Date with the same force and effect as if they had been made on and as
of the Closing Date.

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         (b) PERFORMANCE. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company on or prior to
the Closing Date shall have been performed or complied with.

         (c) OPINION OF COMPANY'S COUNSEL. The Investors shall have received an
opinion of Brown,  Rudnick,  Freed & Gesmer,  counsel for the Company, in form
and substance reasonably satisfactory to the Investors.

         (d) CORPORATE PROCEEDINGS, CONSENTS, ETC. All corporate and other
proceedings to be taken and all waivers and consents to be obtained in
connection with the transactions contemplated by this Agreement shall have been
taken or obtained and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Investors and their counsel, each of
whom shall have received all such originals or certified or other copies of such
documents as each may reasonably request.

         (e) CHARTER AMENDMENT. The Charter Amendment to change the terms of the
Series A Preferred Stock and to designate and fix the terms of the Series B
Preferred Stock so that they have the terms set forth on EXHIBIT B hereto shall
have been filed with the Secretary of State of the State of Delaware.

         (f) NO PROCEEDING. No action, suit, investigation or proceeding shall
be pending or threatened before any court or governmental agency to restrain,
prohibit, collect damages as a result of or otherwise challenge this Agreement
or any transaction contemplated hereby or thereby.

         (g) NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Series B Preferred Shares, the Common Stock into which the
Series B Preferred Shares are convertible, the Series B Warrants, Series B
Warrant Shares and Revenue Participation Notes.

         (h) OFFICER'S CERTIFICATE DELIVERED BY COMPANY. The Company shall have
delivered to the Investors a certificate, dated the Closing Date and signed by
the Chief Executive Officer or the President of the Company, to the effect that
each of the conditions to be satisfied by the Company pursuant to this Section
5.1 on or before the Closing Date has been duly satisfied.

         (i) REVENUE PARTICIPATION NOTES. The Company shall have authorized,
issued, executed and delivered the Revenue Participation Notes in the form of
EXHIBIT E.

         (j) SECURITY AGREEMENT. The Company, the Investors, and the Series A
Holders shall have executed and delivered a Security Agreement in the form of
EXHIBIT F hereto.

         (k) REGISTRATION RIGHTS AGREEMENT. The Company, the Investors, and the
Series A Holders shall have executed and delivered a Registration Rights
Agreement in the form of EXHIBIT G hereto.

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         (l) CALL OPTION AGREEMENT. The Company, the Investors, and the Series A
Holders shall have executed and delivered a Call Option Agreement in the form of
EXHIBIT H hereto.

         (m) NO MATERIAL ADVERSE CHANGE. There shall have been no Material
Adverse Change in the Company since the date of signing of this Agreement.

         (n) LEGAL MATTERS. All material matters of a legal nature which pertain
to this Agreement and the transactions contemplated hereby shall have been
reasonably approved by counsel to the Investors.

ARTICLE VI.       CONDITIONS TO THE COMPANY'S OBLIGATIONS

6.1      CONDITIONS TO CLOSING.

         The obligation of the Company to issue the Series B Preferred Shares,
Series B Warrants, to amend the Series A Warrants and issue the Revenue
Participation Notes on the Closing Date is subject to the following:

         (a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Investors made herein shall be true, correct and complete in all respects
on and as of the Closing Date with the same force and effect as if they had been
made on and as of the Closing Date.

         (b) NO PROCEEDING. No action, suit, investigation or proceeding shall
be pending or threatened before any court or governmental agency to restrain,
prohibit, collect damages as a result of or otherwise challenge this Agreement
or any transaction contemplated hereby or thereby.

         (c) NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not be in
effect any law, rule or regulation prohibiting or restricting such sale, or
requiring any consent or approval of any person which shall not have been
obtained to issue the Series B Preferred Shares, Series B Warrants and Revenue
Participation Notes.

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ARTICLE VII.      COVENANTS OF THE COMPANY

         For so long as the Series B Preferred Shares are outstanding, the
Company hereby covenants to such Investors as follows:

7.1      FURNISHING OF INFORMATION.

         The Company covenants to timely file (or obtain extensions in respect
thereof) all reports required to be filed by the Company after the date hereof
pursuant to Section 13(a) or 15(d) of the Exchange Act and to promptly furnish
the Investors with true and complete copies of all such filings. If the Company
is not at the time required to file reports pursuant to such sections, it will
prepare and furnish to the Investors annual and quarterly reports comparable to
those required by Section 13(a) or 15(d) of the Exchange Act in the time period
that such filings would have been required to have been made under the Exchange
Act.

7.2      INFORMATION WITH RESPECT TO THE SECURITIES.

         The Company covenants to provide such information as is reasonably
requested by any of the Investors related to the terms of the Series B Preferred
Shares, the Common Stock issuable upon conversion of Series B Preferred Stock,
Series B Warrants, Series B Warrant Shares, or Revenue Participation Notes.

7.3      LICENSE AGREEMENT.

         The Company covenants that it will not (i) amend the Abbott License
Agreement in any way or manner which would change the amount, timing or other
provisions of such agreement regarding the royalties payable by Abbott
Laboratories to or for the benefit of the Company under the Abbott License
Agreement in any significant way, or (ii) other than as hereafter provided,
agree to any assignment, transfer, conveyance or other disposition by the
Company of any beneficial interest of any nature under the Abbott License
Agreement, in either case without the consent of holders of two-thirds of the
Fractional Percentage held by all Holders of Revenue Participation Notes in any
significant way. However, nothing in the preceding sentence shall prohibit the
Company from (i) granting to any other one or more persons participation
interests in the royalties payable under the Abbott License Agreement, provided
that all such other participation interests cannot in the aggregate entitle such
persons to more than 75% of the royalties payable under the Abbott License
Agreement, or (ii) granting or permitting the creation of a security interest in
any such other participation interest, provided that it is expressly subject to
the prior security interest of the Holders in their Royalty Participation
created by the Security Agreement.

7.4      INVESTOR'S RIGHTS.

         Notwithstanding anything to the contrary in the foregoing, the
Investors shall be entitled to such information, privileges, rights and benefits
accorded to them as holders of the Series B Preferred Shares under applicable
law and under the Company's Restated Articles of Incorporation, as amended, and
By-laws.

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7.5      EXCHANGE OR MARKET LISTINGS

         The Company will use its commercially reasonable efforts to maintain
its listing of the Series A Common Stock on one of the following: any national
exchange in the United States; the Nasdaq National Market; the Nasdaq Smallcap
Market or the OTC Bulletin Board.

ARTICLE VIII.     PRE-EMPTIVE RIGHTS ON COMPANY ISSUANCES

8.1      PARTICIPATION IN FUTURE OFFERINGS.

         Subject to the terms hereof, the Company hereby agrees to offer to each
Investor the opportunity to acquire any equity securities, rights to acquire
equity securities, or securities convertible into equity securities of the
Company which may be offered by the Company from time to time after the date of
this Agreement to unaffiliated investors for capital raising purposes (any such
securities being herein referred to as "New Securities"), all pursuant to the
terms and conditions of this Article.

8.2      NOTICE.

         (a) Each time the Company proposes to offer New Securities, the Company
shall deliver written notice (the "Participation Notice") to each Investor of
the terms and conditions of each transaction pursuant to which the Company
intends to issue New Securities. Such notice shall (i) be delivered to each
Investor at least 48 hours prior to the time at which any such transaction is
scheduled to be consummated, (ii) shall be accompanied by copies of the
documentation for the investment in substantially final form, and (iii) shall
constitute an offer to sell to the Investor the applicable amount of New
Securities calculated pursuant to Section 8.4 upon the same terms and conditions
as the New Securities are being sold to other persons.

         (b) If the Company does not consummate the sale of the New Securities
within forty-five (45) days of delivery of the Participation Notice, or if the
terms and conditions of the proposed investment are materially modified after
delivery of the Participation Notice, the right provided hereunder shall be
deemed to be revived and the Company shall deliver a new Participation Notice to
the Investors, explaining the modifications, and a new 48 hour acceptance period
shall commence upon delivery of the updating notice.

8.3      ACCEPTANCE.

         By written notification delivered to the Company within the 48 hour
acceptance period under Section 8.2, the Investor may elect to accept any such
offer of the New Securities, in whole or in part, at the price and on the terms
specified in the Participation Notice.

8.4      PERCENTAGE INTEREST.

         (a) The amount of New Securities to be offered to each Investor for
purchase pursuant to this Article shall, with respect to each transaction
subject hereto, be calculated by multiplying (i) the aggregate number of New
Securities to be offered, times (ii) that Investor's Percentage Interest.

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         (b) If any Investor fails to exercise its participation rights under
this Article, each other Investor which did elect to participate shall have the
right to purchase up to all the New Securities to which any non-participating
Investor would be entitled, and if more than one participating Investor desires
to purchase such New Securities not purchased by other Investors, those New
Securities shall be allocated among the participating Investors wishing to
purchase them in proportion to their respective Percentage Interests.

(c) For purposes of this Agreement, a person's Percentage Interest shall mean
its percentage ownership of the entire equity capital of the Company, calculated
assuming exercise by that Investor and all other holders of all outstanding
rights, warrants or options for Common Stock, and conversion of all securities
convertible into Common Stock.

8.5      NO ACCUMULATION.

         Each transaction or proposed issuance under this Article is a separate
transaction. The failure of any Investor to exercise in whole or in part any
prior offer shall not affect its rights with respect to any future transaction
subject hereto; and the rights of any Investor under this Article with respect
to any transaction are reduced pro rata to the extent that that Investor
acquires securities of the Company by participating directly in such
transaction.

ARTICLE IX.       SURVIVAL AND INDEMNIFICATION

9.1      SURVIVAL.

         Notwithstanding any examination made by or on behalf of any party
hereto, the knowledge of any party or the acceptance by any party of any
certificate or opinion, each representation, warranty and covenant contained
herein shall survive the Closing for the period that any Series B Preferred
Shares remain outstanding.

9.2      INDEMNIFICATION.

         (a) The Company shall indemnify and hold harmless each Investor, its
shareholders, officers, directors, employees, agents and representatives against
any damage, claim, loss, liability and expense (including reasonable counsel
fees and expenses) which may be suffered or incurred by any of them as a result
of a breach of any representation or warranty or covenant made by the Company in
this Agreement.

         (b) The Investors, jointly and severally, agree to indemnify the
Company and its shareholders, officers, directors, employees, agents and
representatives against any damages, claims, losses, liabilities and expenses
(including reasonable counsel fees and other expenses) which may be suffered or
incurred by it as a result of any breach of any representation, warranty, or
covenant made by the Investors in this Agreement.

         (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to this Section, such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing of the occurrence of the facts and
circumstances giving rise to such claim. The failure of any person to deliver
the notice

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required by this paragraph shall not in any way affect the indemnifying
party's indemnification obligation hereunder except and only to the extent
that the indemnifying party is actually prejudiced thereby. In case any
such proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party and
shall pay as incurred the fees and expenses of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the right
to retain its own counsel or pay its own expenses. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred the fees and expenses of
the counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceedings (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment and the indemnifying party shall obtain a full release of
the indemnified party.

ARTICLE X.        MISCELLANEOUS

10.1     NOTICES.

         All notices, requests, consents and other communications hereunder
shall be in writing, shall be addressed to the receiving party's address set
forth below or to such other address as a party may designate by notice
hereunder, and shall be either (i) delivered by hand, (ii) made by telecopy or
facsimile transmission, (iii) sent by recognized national overnight courier
service, or (iv) sent by registered mail, return receipt requested, postage
prepaid.

If to the
Investors:                 c/o BVF Partners, L.P.
                           One Sansome Street, 39th Floor
                           San Francisco, CA 94104
                           Attn: Mr.  Mark Lampert
                           Fax: (415) 288-2394

With a copy to:   Pillsbury Winthrop LLP
                           50 Fremont Street, 8th Floor
                           San Francisco, CA  94105
                           Attn:  Jonathan D. Joseph, Esq.
                           Fax: (415) 983-1200

If to Alfred J. Roach:     c/o American Biogenetic Sciences, Inc.
                           1375 Akron Street
                           Copiague, New York 11726
                           Attn: Chief Executive Officer

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                           Fax: (516) 789-1661

With a copy to:            Brown, Rudnick, Freed & Gesmer
                           One Financial Center
                           Boston, Massachusetts 02111
                           Attn: David H. Murphree, Esq.
                           Fax: (617) 856-8201

If to the Company:         American Biogenetic Sciences, Inc.
                           1375 Akron Street
                           Copiague, New York 11726
                           Attn: Chief Executive Officer
                           Fax: (516) 789-1661

With a copy to:            Brown, Rudnick, Freed & Gesmer
                           One Financial Center
                           Boston, Massachusetts 02111
                           Attn: David H. Murphree, Esq.
                           Fax: (617) 856-8201

All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if made by telecopy or facsimile transmission, on the next business day
after the time that receipt thereof has been acknowledged by electronic
confirmation or otherwise, (iii) if sent by overnight courier, on the next
business day following the day such notice is delivered to the courier service,
or (iv) if sent by registered mail, on the fifth business day following the day
such mailing is made.

10.2     ENTIRE AGREEMENT.

         This Agreement, including exhibits, or other documents referred to
herein, embodies the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior oral
or written agreements and understandings relating to the subject matter hereof.
No statement, representation, warranty, covenant or agreement of any kind not
expressly set forth in this Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Agreement.

10.3     AMENDMENTS.

         On or prior to the Closing Date, the terms and provisions of the
Agreement may be modified, amended or waived, or consent for the departure
therefrom granted, only by written agreement of the Company, the Investors
holding a majority of the Percentage Interest of the Investors, and a majority
in interest of the Series A Holders. After the Closing Date, the terms and
provisions of the Agreement may be modified, amended or waived, or consent for
the departure therefrom granted, only by written agreement of the Company,
Alfred J. Roach, Investors holding a majority of the Percentage Interest of the
Investors, and a majority in interest of the Series A Holders. No such waiver or
consent, in either case, shall be deemed to be or shall

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constitute a waiver or consent with respect to any other terms or
provisions of this Agreement, whether or not similar. Each such waiver or
consent, in either case, shall be effective only in the specific instance and
for the purpose for which it was given, and shall not constitute a continuing
waiver or consent.

10.4     ASSIGNMENT.

         Neither this Agreement nor any or all of the rights and obligations of
a party hereunder shall be assigned, delegated, sold, transferred or otherwise
disposed of by operation of law or otherwise, to any third person without the
prior written consent of the other party, and any attempted assignment,
delegation, sale, transfer, or other disposition, by operation of law or
otherwise, of this Agreement or of any rights or obligations hereunder contrary
to this Section shall be void and without force or effect. Each party shall be
responsible for the compliance by its Affiliates with the terms and conditions
of this Agreement.

10.5     BENEFIT.

         All statements, representations, warranties, covenants and agreements
in this Agreement shall be binding on the parties hereto and shall inure to the
benefit of the respective successors and permitted assigns of each party hereto.
Nothing in this Agreement shall be construed to create any rights or obligations
except among the parties hereto, and no person or entity shall be regarded as a
third-party beneficiary of this Agreement.

10.6     GOVERNING LAW.

         This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the substantive laws of
the State of New York exclusive of choice of law provisions.

10.7     SEVERABILITY.

         In the event that any court of competent jurisdiction shall determine
that any provision, or any portion thereof, contained in this Agreement shall be
unreasonable or unenforceable in any respect, then such provision shall be
deemed limited to the extent that such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall be interpreted
as if such provision were so excluded and shall nevertheless remain in full
force and effect.

10.8     HEADINGS AND CAPTIONS.

         The headings and captions of the various subdivisions of this Agreement
are for convenience of reference only and shall in no way modify, or affect the
meaning or construction of any of the terms or provisions hereof.

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10.9     NO WAIVER OF RIGHTS, POWERS AND REMEDIES.

         No failure or delay by a party hereto in exercising any right, power or
remedy under this Agreement, and no course of dealing between the parties
hereto, shall operate as a waiver of any such right, power or remedy of the
party. No single or partial exercise of any right, power or remedy under this
Agreement by a party hereto, nor any abandonment or discontinuance of steps to
enforce any such right, power or remedy, shall preclude such party from any
other or further exercise thereof or the exercise of any other right, power or
remedy hereunder. The election of any remedy by a party hereto shall not
constitute a waiver of the right of such party to pursue other available
remedies. No notice to or demand on a party not expressly required under this
Agreement shall entitle the party receiving such notice or demand to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the party giving such notice or demand to any other or
further action in any circumstances without such notice or demand.

10.10    EXPENSES.

         Except as provided in Section 9.2, each of the parties shall pay its
own fees and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) in connection with this Agreement
and the transactions contemplated hereby whether or not the transactions
contemplated hereby are consummated; provided, that, the Company shall pay such
fees and expenses (including attorney's fees of Pillsbury Winthrop LLP) of the
Investors in an amount agreed upon, in good faith, by the Company and the
Investors.

10.11    BROKERS.

         Each of the parties hereto represents and warrants to the other that no
broker, finder or financial consultant has acted on its behalf in connection
with this Agreement or the transactions contemplated hereby in such a way as to
create any liability on the other. Each of the parties hereto agrees to
indemnify and save the other harmless from any claim or demand for commission or
other compensation by any other broker, finder, financial consultant or similar
agent claiming to have been employed by or on behalf of such party and to bear
the cost of legal expenses incurred in defending against any such claim.

10.12    CONFIDENTIALITY.

         The Investors acknowledge and agree that any information or data they
have acquired from the Company, which is clearly designated in writing as
confidential and is not otherwise properly in the public domain, was received in
confidence. Each of the Investors agrees not to divulge, communicate or
disclose, except as may be required by law or upon the advice of its counsel or
for the performance of this Agreement, or use to the detriment of the Company or
for the benefit of any other person or persons, or misuse in any way, any
confidential information of the Company.

10.13    COUNTERPARTS.

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         This Agreement may be executed in one or more counterparts, and by
different parties hereto on separate counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.

10.14    FURTHER ASSURANCES.

         In case at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, the Company and the
Investors will take such further action as the other party may reasonably
request, all at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under Article IX).

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         IN WITNESS WHEREOF, the undersigned have executed this Securities
Purchase Agreement as of this __ day of August, 2001.

                                       AMERICAN BIOGENETIC SCIENCES, INC.

                                       By:
                                          --------------------------------------
                                          Name:    Josef C. Schoell
                                          Title:   President, COO and CFO

                                      SERIES A HOLDERS:

                                      BIOTECHNOLOGY VALUE FUND, L.P.

                                      By: BVF PARTNERS L.P., its General Partner

                                          By: BVF, INC., its General Partner

                                              By : _____________________________
                                                   Mark N. Lampert
                                                   President

                                      BIOTECHNOLOGY VALUE FUND II, L.P.

                                      By: BVF PARTNERS L.P., its General Partner

                                          By: BVF, INC., its General Partner

                                              By:  _____________________________
                                                   Mark N. Lampert
                                                   President

                                      INVESTMENT 10 L.L.C.

                                      By: BVF PARTNERS, L.P., its Investment
                                          Advisor

                                          By: BVF, INC., its General Partner

                                              By:  _____________________________
                                                   Mark N. Lampert
                                                   President

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                                      SERIES B INVESTORS:

                                      BIOTECHNOLOGY VALUE FUND, L.P.

                                      By: BVF PARTNERS L.P., its General Partner

                                          By: BVF, INC., its General Partner

                                              By: ______________________________
                                                  Mark N. Lampert
                                                  President

                                      BIOTECHNOLOGY VALUE FUND II, L.P.

                                      By: BVF PARTNERS L.P., its General Partner

                                          By: BVF, INC., its General Partner

                                              By: ______________________________
                                                  Mark N. Lampert
                                                  President

                                      INVESTMENT 10 L.L.C.

                                      By: BVF PARTNERS, L.P., its Investment
                                          Advisor

                                          By: BVF, INC., its General Partner

                                              By: ______________________________
                                                  Mark N. Lampert
                                                  President

                                      BVF INVESTMENTS, L.L.C.

                                      By: BVF PARTNERS, L.P., its Investment
                                          Advisor

                                          By: BVF, INC., its General Partner

                                              By: ______________________________
                                                  Mark N. Lampert
                                                  President

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<PAGE>   24

                                LIST OF EXHIBITS

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EXHIBIT A                  LIST OF INVESTORS AND SERIES A HOLDERS
--------------------------------------------------------------------------------
EXHIBIT B                  TERMS OF PREFERRED STOCK
--------------------------------------------------------------------------------
EXHIBIT C                  FORM OF AMENDED AND RESTATED SERIES A WARRANT
--------------------------------------------------------------------------------
EXHIBIT D                  FORM OF SERIES B WARRANT
--------------------------------------------------------------------------------
EXHIBIT E                  FORM OF REVENUE PARTICIPATION NOTE
--------------------------------------------------------------------------------
EXHIBIT F                  FORM OF SECURITY AGREEMENT
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EXHIBIT G                  FORM OF REGISTRATION RIGHTS AGREEMENT
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EXHIBIT H                  FORM OF CALL OPTION AGREEMENT
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                                    EXHIBIT A
                                       TO
                          SECURITIES PURCHASE AGREEMENT

                                   INVESTORS:

--------------------------------------------------------------------------------
                                       NO. OF                        REVENUE
                                     SHARES OF                    PARTICIPATION
                                     SERIES B        NO. OF       NOTE PRINCIPAL
       NAME AND ADDRESS              PREFERRED      WARRANTS           AMOUNT
--------------------------------------------------------------------------------

SERIES B INVESTORS:

BIOTECHNOLOGY VALUE FUND, L.P.         1,167       1,167,000       $8,751,205.40
BIOTECHNOLOGY VALUE FUND II, L.P.        600         600,000      $11,250,401.80
INVESTMENT 10 L.L.C.                     166         166,000       $1,248,258.87
BVF INVESTMENTS, L.L.C.                1,400       1,400,000       $3,750,133.93
Total                                  3,333       3,333,000         $25,000,000

                                SERIES A HOLDERS:

--------------------------------------------------------------------------------
                               NAME AND ADDRESS         NO. OF AMENDED SERIES A
                                                               WARRANTS
--------------------------------------------------------------------------------

SERIES A HOLDERS:

BIOTECHNOLOGY VALUE FUND, L.P.                                   2,100

BIOTECHNOLOGY VALUE FUND II, L.P.                                3,600

INVESTMENT 10 L.L.C.                                               300

Total                                                            6,000

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                                    EXHIBIT B
                                       TO
                          SECURITIES PURCHASE AGREEMENT

                            TERMS OF PREFERRED STOCK

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                                    EXHIBIT C
                                       TO
                          SECURITIES PURCHASE AGREEMENT

                        FORM OF AMENDED SERIES A WARRANT

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                                    EXHIBIT D
                                       TO
                          SECURITIES PURCHASE AGREEMENT

                            FORM OF SERIES B WARRANT

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                                    EXHIBIT E
                                       TO
                          SECURITIES PURCHASE AGREEMENT

                     FORM OF REVENUE PARTICIPATION AGREEMENT

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                                    EXHIBIT F
                                       TO
                          SECURITIES PURCHASE AGREEMENT

                               SECURITY AGREEMENT

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                                    EXHIBIT G
                                       TO
                          SECURITIES PURCHASE AGREEMENT

                          REGISTRATION RIGHTS AGREEMENT

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                                    EXHIBIT H
                                       TO
                          SECURITIES PURCHASE AGREEMENT

                              CALL OPTION AGREEMENT

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                                                                     EXHIBIT 4.2

                           CERTIFICATE OF AMENDMENT TO
            THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF
                                       OF
                       AMERICAN BIOGENETIC SCIENCES, INC.

                 FOR THE PURPOSE OF AMENDING THE VOTING POWERS,
                 PREFERENCES AND RIGHTS OF THE EXISTING SERIES A
                                 PREFERRED STOCK
                                       AND
                         DESIGNATING THE VOTING POWERS,
                    PREFERENCES AND RIGHTS OF A NEW SERIES OF
                                 PREFERRED STOCK
                                TO BE DESIGNATED
                      SERIES B CONVERTIBLE PREFERRED STOCK

         American Biogenetic Sciences, Inc., a Delaware corporation (the
"Corporation"), in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware, certifies that:

         1. Pursuant to authority conferred on the Board of Directors of the
Corporation by the Restated Certificate of Incorporation, the Board of Directors
of the Corporation, by written consent dated August 17, 2001, duly adopted the
following resolution providing for the amendment of the preferences and rights
of the Corporation's Series A Convertible Preferred Stock previously established
by Certificate of Designation filed on March 3, 2000, and providing for the
establishment and issuance of a series of Preferred Stock to be designated
"Series B Convertible Preferred Stock" and to consist of 3,333 shares, as
follows:

RESOLVED:     that upon approval of the proposed amendment to the Restated
              Certificate of Incorporation by the Affected Stockholders, and
              filing of the same with the Secretary of State of the State of
              Delaware, the Board of Directors does hereby (i) amend the powers,
              preferences and rights, qualifications, limitations and
              restrictions of the existing Series A Preferred Stock and (ii)
              designate 3,333 shares of the Preferred Stock as Series B
              Convertible Preferred Stock, having the designations, powers,
              preferences and rights and the qualifications, limitations or
              restrictions, in each case, as set forth in the Amendment to the
              Restated Certificate of Incorporation substantially in the form
              set forth in EXHIBIT A attached hereto

Terms of Preferred Stock
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<PAGE>   2

              (the "Certificate of Designation"); and that the Authorized
              Officers be, and each of them acting singly hereby is, authorized
              to execute and file with the Secretary of State of the State of
              Delaware the Certificate of Designation, with such changes therein
              as the officer executing the same deems necessary or appropriate
              in the best interests of the Company, such officer's execution and
              delivery thereof to be conclusive evidence of such officer's
              approval thereof and authority hereunder;

         2. The foregoing Amendment to the Restated Certificate of Incorporation
(as amended by the Certificate of Designation of the Series A Preferred Stock)
was unanimously adopted by the stockholders entitled to vote thereon (the
holders of outstanding Series A Preferred Stock) by written consent dated August
28, 2001 in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.

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                                       2
<PAGE>   3

         IN WITNESS WHEREOF, the corporation has caused its corporate seal to be
affixed hereto and this Certificate of Amendment to be signed by its Chairman of
the Board and attested to by its Secretary this __ day of August, 2001.

                                           AMERICAN BIOGENETIC SCIENCES, INC.

                                           By:
                                               ---------------------------------
                                               Alfred J. Roach
                                               Chairman of the Board and
                                               Chief Executive Officer

ATTEST:

---------------------------------
Timothy J. Roach
Secretary

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                                       3
<PAGE>   4

                                  EXHIBIT A TO

                        RESOLUTIONS OF BOARD OF DIRECTORS

         Article 4 of the Corporation's Restated Certificate of Incorporation,
as previously amended by the Certificate of Amendment and the Certificate of
Designation related to the Series A Convertible Stock both filed March 3, 2000,
is hereby amended as follows:

         1. The description of the voting powers, preferences and relative
participating, optional and other special rights, qualifications, limitations or
restrictions of the Series A Preferred Stock as established by the Certificate
of Designation filed March 3, 2000 are superceded in their entirety by the
provisions set forth below with respect to the Series A Convertible Preferred
Stock and the newly designated Series B Convertible Preferred Stock.

         2. The other provisions of Article 4, as amended by the Certificate of
Amendment dated March 3, 2001, remain in effect.

                            TERMS OF PREFERRED STOCK

         Of the 10,000,000 shares of preferred stock authorized hereunder: (i)
7,000 shares have previously been designated as Series A Convertible Preferred
Stock (the "Series A Preferred Stock"), (ii) 3,333 shares are hereby designated
as Series B Convertible Preferred Stock (the "Series B Preferred Stock"), and
(iii) 9,989,667 remain undesignated as to series. The voting powers, preferences
and relative participating, optional or other special rights, and
qualifications, limitations or restrictions of the Series A Preferred Stock and
the Series B Preferred Stock are hereby established as follows:

         PART A.  PROVISIONS APPLICABLE TO SERIES A PREFERRED STOCK AND SERIES B
PREFERRED STOCK.

         SECTION 1.  DEFINITIONS.  For the purposes hereof, the following
definitions shall apply:

         "Abbott License Agreement" means the Exclusive License Agreement for
ABS 103, dated January 27, 2000 between the Corporation and Abbott Laboratories.

         "Additional Shares of Common Stock" means, for purposes of determining
certain anti-dilution adjustments under Part B, Section 4 and Part C, Section 4,
all shares of Common Stock

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                                       4
<PAGE>   5

or Junior Shares issued (or, pursuant to Part B, Section 4 and Part C, Section
4, deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock or Junior Shares issued or issuable:

         (a)  upon conversion of shares of Series A Preferred Stock or Series B
         Preferred Stock; or

         (b)  as a dividend or distribution on Series A Preferred Stock or
         Series B Preferred Stock; or

         (c) by way of a dividend or other distribution on shares of Common
         Stock excluded from the definition of Additional Shares of Common Stock
         by the foregoing clauses (a), (b) or this clause (c); or

         (d) upon exercise of the Warrants; or

         (e) to directors, officers, employees or consultants of the Corporation
         as bona fide compensation for services or pursuant to any employee
         stock benefit, option, purchase or similar plan approved by the Board
         of Directors; or

         (f) to investment banking firms in payment for investment banking
         services rendered (but not securities issued for distribution to
         purchasers); or

         (g) in consideration for the acquisition (whether by merger, purchase
         of assets, purchase or stock, or otherwise) by the Corporation of a
         business, provided such business transaction is an arm's length
         transaction with an unaffiliated person; or

         (h) to unaffiliated creditors as payment for goods or services
         actually received; or

         (i) solely in consideration for the grant by the Corporation or to the
         Corporation of marketing rights, distribution rights, license rights or
         similar rights granted by or to the Corporation in consideration of the
         exchange of proprietary technology, whether of the Corporation or any
         other entity, provided that such transaction is an arm's length
         transaction with an unaffiliated person;

provided, that no more than an aggregate of 1,500,000 shares of Common Stock
issued or deemed issued under clauses (e) - (i) hereof shall be excluded from
the definition of Additional Shares of Common Stock, of which not more than
1,000,000 shares shall be excluded under clause (e).

         "Adjusted Volume" means the sum of trading volume for a period of 20
consecutive trading days ending on the trading day preceding the date of
determination; provided, however, that the day with the highest volume and the
day with the lowest volume shall be eliminated and only the remaining 18 days
summed.

         "Board of Directors" means the Board of Directors of the Corporation.

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                                       5
<PAGE>   6

         "Common Stock" means the Class A Common Stock of the Corporation.

         "Call Option Agreement" means that certain Call Option Agreement dated
August __, 2001 among the Corporation and certain holders of its Series A
Preferred Stock and Series B Preferred Stock.

         "Conversion Price" means with respect to the Series A Preferred Stock,
the amount set forth in Part B, Section 3(a), as adjusted pursuant to Part B,
Section 4, and with respect to the Series B Preferred Stock, the amount set
forth in Part C, Section 3, as adjusted pursuant to such Part C, Section 4.

         "Convertible Securities" means any evidences of indebtedness, equity
securities (other than Common Stock, the Series A Preferred Stock, Series B
Preferred Stock or Revenue Participation Notes) or other securities convertible
into or exchangeable for Common Stock.

         "Corporation" means American Biogenetic Sciences, Inc., a Delaware
corporation.

         "Junior Shares" means all shares of Common Stock or Convertible
Securities or any other stock of the Corporation ranking junior to the Series A
Preferred Stock and Series B Preferred Stock in dividends or liquidation rights.

         "Market Price" means for any particular date, the closing bid price of
the Class A Common Stock on any national securities exchange, the Nasdaq
National Market, Small Cap Market or OTC Bulletin Board if then traded on said
exchange or market, on that date.

         "Options" means rights, options or warrants to subscribe for, purchase
or otherwise acquire either Common Stock or Convertible Securities.

         "Original Issue Date" means for each series of Preferred Stock the date
on which a share of that series is first issued.

         "Original Purchase Price" means with respect to the Series A Preferred
Stock $500.00 per share and with respect to the Series B Preferred Stock $600.06
per share.

         "Preferred Stock" means the Series A Preferred Stock and the Series B
Preferred Stock.

         "Revenue Participation Note" means any one of the series of Revenue
Participation Notes issued by the Corporation to certain holders of Series A
Preferred Stock or of Series B Preferred Stock pursuant to the Securities
Purchase Agreement.

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

         "Series B Securities Purchase Agreement" means that certain Securities
Purchase Agreement dated as of August 23, 2001 among the Corporation and certain
holders of the Series A and the Series B Preferred Stock.

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                                       6
<PAGE>   7

         "Warrants" means the Warrants to purchase an aggregate of 10,333,000
shares of Common Stock issued or to be issued in conjunction with the issuance
of the Series A Preferred Stock and the Series B Preferred Stock; and "Series A
Warrants" means the 7,000,000 Warrants issued in conjunction with issuance of
Series A Preferred Stock, as amended, and "Series B Warrants" means the
3,333,000 Warrants issued in conjunction with issuance of Series B Preferred
Stock.

         SECTION 2.  VOTING RIGHTS OF PREFERRED STOCK.

         (a) GENERAL. Except as expressly set forth in this Section and except
as otherwise required by law, the Preferred Stock shall have no voting rights.
With respect to matters as to which the Preferred Stock shall have the right to
vote, each share of Preferred Stock shall vote that number of votes equal to the
number of shares of Common Stock issuable upon conversion of the Preferred Stock
on the record date of the vote.

         (b) MATTERS AFFECTING PREFERRED STOCK. So long as any Preferred Stock
shall be outstanding, the Corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less than a majority
of the votes of Preferred Stock, voting together as a single class and separate
from Common Stock, take any of the following actions:

                  (i)      amend or repeal any provision of, or add any
                           provision to, the Corporation's Restated Certificate
                           of Incorporation, as amended, or By-laws if such
                           action would alter or change the preferences, rights,
                           privileges or powers of, or the restrictions provided
                           for the benefit of, such Preferred Stock; or

                  (ii)     authorize or issue shares of any class of stock
                           having any preference or priority as to dividends or
                           assets superior to or on a parity with any such
                           preference or priority of the Preferred Stock;
                           provided, however, that the Corporation may issue new
                           shares of preferred stock (other than the Preferred
                           Stock) which are pari passu with the Preferred Stock
                           as to dividends and liquidation without consent of
                           the holders of the Preferred Stock; and further
                           provided that with respect to any matters affecting
                           the Preferred Stock which require the vote of the
                           holders of the Preferred Stock, the holders of such
                           new shares of preferred stock that were issued by the
                           Corporation without the vote of the holders of
                           Preferred Stock shall either have no voting rights or
                           not vote together with the Preferred Stock or any
                           matter; or

                  (iii)    reclassify any Junior Shares into shares having any
                           preference or priority as to dividends or assets
                           superior to or on a parity with any such preference
                           or priority of the Preferred Stock; or

                  (iv)     declare any dividend or distribution upon any class
                           of its stock (other than a stock split or reverse
                           stock split of the Common Stock into a greater or
                           lesser number of shares of the same class), whether
                           in cash, property, stock

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                                       7
<PAGE>   8

                           or other securities, whether or not a regular cash
                           dividend and whether or not out of earnings or
                           earned surplus; or

                  (v)      repurchase or redeem any class of its stock (other
                           than the Series A Preferred Stock or Series B
                           Preferred Stock as expressly contemplated herein);
                           or

                  (vi)     liquidate, dissolve or wind up if the assets of the
                           Corporation then available for distribution to its
                           stockholders shall be insufficient to pay the holders
                           of Preferred Stock the full amount to which they are
                           entitled upon such liquidation, dissolution or
                           winding up; or

                   (vii)   agree to any merger, consolidation, acquisition,
                           recapitalization, reorganization or similar
                           transaction of the Corporation with one or more other
                           entities or persons in which the shareholders of the
                           Corporation immediately prior to such transaction, or
                           series of transactions, would hold stock representing
                           less than a majority of the outstanding capital stock
                           (calculated on a fully converted basis) of the
                           surviving entity immediately after such transaction
                           or series of transactions, unless after that
                           transaction or series of transactions (i) the holders
                           of Preferred Stock continue to possess equivalent
                           rights, preferences, privileges, and restrictions in
                           the surviving entity, (ii) the surviving entity
                           assumes the Corporation's obligations under the
                           Revenue Participation Notes, and (iii) the Abbott
                           License Agreement remains substantively unchanged and
                           in effect; or

                  (viii)   sell all or substantially all the Corporation's
                           assets; or

                  (ix)     agree to any assignment, transfer, conveyance or
                           other disposition of any beneficial interest of any
                           nature in the Abbott License Agreement; or

                  (x)      amend or modify the Abbott License Agreement in any
                           way or manner which changes the amount, timing or
                           other provision regarding the royalties to be
                           received by Corporation under the Abbott License
                           Agreement or the interests of the holders of
                           Preferred Stock under the Revenue Participation Notes
                           in any significant way (other than in connection with
                           the grant of a junior security interest in connection
                           with a financing by a financial or investment
                           institution); or

                  (xi)     adopt, or amend in such manner as to materially
                           increase the number of shares issuable under, any
                           Corporation stock option plan.

         SECTION 3. RIGHTS OF PARTICIPATION. In the event that the Corporation
offers to an unrelated party any type of equity security for conventional
financing purposes, then each holder of Series B Preferred Stock shall have the
right, pursuant to the Series B Securities Purchase Agreement, to participate in
such purchase on the same price and terms and conditions as the Corporation
offers to any other potential investor.

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                                       8
<PAGE>   9

         SECTION 4. NOTICES. Except as otherwise expressly provided herein, any
notices or other communications required to be given hereunder to the holders of
Preferred Stock or the Corporation may be given by (i) hand delivery, (ii) by
facsimile transmission in the manner provided in Section 232 of the Delaware
General Corporation Law, (iii) by nationally recognized overnight courier
service, or (iv) by registered mail. Such notice shall be deemed to have been
duly given if given (i) if by hand, at the time of the delivery thereof to the
receiving party at the address of such party set forth above, (ii) if by
facsimile transmission, one business day after the time that receipt thereof has
been acknowledged by electronic confirmation or otherwise, (iii) if by
nationally recognized overnight courier, on the next business day following the
day such notice is delivered to the courier service, or (iv) if by registered
mail, on the fifth business day following the day such mailing is made.

         PART B.  RIGHTS OF SERIES A PREFERRED STOCK

         SECTION 1. DIVIDEND RIGHTS FOR SERIES A PREFERRED STOCK. The holders of
shares of Series A Preferred Stock shall be entitled to receive, out of funds
legally available therefor, if, as and when declared by the Board of Directors,
but before any dividends are paid on or set aside for Junior Shares and pari
passu with dividends paid on or set aside for the Series B Preferred Stock and
any other series of preferred stock ranking on parity with the Series A
Preferred Stock, dividends equal to the product of (a) the per share amount, if
any, of the dividend declared, paid or set aside for the Junior Shares,
multiplied by (b) the number of shares of Common Stock into which each such
share of Series A Preferred Stock is then convertible.

         SECTION 2.  SERIES A PREFERRED STOCK LIQUIDATION PREFERENCE.

         (a) PREFERENCE. In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, voluntarily or involuntarily, the holders
of each share of Series A Preferred Stock, prior to any distribution to the
holders of Junior Shares, but pari passu with the holders of Series B Preferred
Stock, shall be entitled to receive pro rata a preferential amount equal to
$500.00 per share (adjusted to reflect any stock split, stock dividend,
combination, recapitalization or reorganization) of Series A Preferred Stock
held by them, plus an amount equal to five percent (5%) per annum simple
interest on the Series A Preferred Stock Original Purchase Price, plus any
declared and unpaid dividends (the "Series A Preferred Stock Liquidation
Preference"). After payment or setting apart for payment of the Series A
Preferred Stock Liquidation Preference and the Series B Preferred Stock
Liquidation Preference, the remaining assets of the Corporation, if any, shall
be distributed among the holders of the Junior Shares. If, upon such
liquidation, dissolution or winding up, the assets of the Corporation are
insufficient (after payment of the liquidation preference of any class of
preferred stock ranking senior on liquidation to the Series A Preferred Stock)
to provide for the payment in full of the Series A Preferred Stock Liquidation
Preference and Series B Preferred Stock Liquidation Preference for each share of
Series A Preferred Stock and Series B Preferred Stock outstanding, such assets
as are available shall be paid out pro rata among the shares of Series A
Preferred Stock and Series B Preferred Stock in proportion to the dollar amount
owed to each.

         (b) MERGER OR ACQUISITION. A merger or consolidation of the Corporation
with or into another corporation or entity (whether or not the Corporation is
the surviving entity if, after the

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                                       9
<PAGE>   10

merger or consolidation, more than 50% of the voting stock of the surviving
corporation is owned by persons who were not holders of voting stock of the
Corporation immediately prior to the merger or consolidation), or the sale of
all or substantially all the assets of the Corporation, shall be deemed to be a
liquidation, dissolution or winding up the Corporation for purposes of this Part
B, Section 3 if the holders of at least a majority of the then outstanding
shares of Series A Preferred Stock and outstanding Series B Preferred Stock,
voting together as a single class, so elect by giving written notice thereof to
the Corporation at least three days before the effective date of such event. If
no such notice is given by said holders, the provisions of Part B, Section 3(c)
shall apply. The amount deemed distributed to the holders of Series A Preferred
Stock upon any such merger or consolidation shall be the cash or the value of
the property, rights or other securities received in the merger or consolidation
which shall be determined in good faith by the Board of Directors of the
Corporation.

         SECTION 3.  CONVERSION OF SERIES A PREFERRED STOCK.

         The Series A Preferred Stock shall be convertible in accordance with
the following provisions:

         (a) RIGHT TO CONVERT. Each share of Series A Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
time after the date of issuance of such share, at the office of the Corporation
or any transfer agent for such stock, into such number of fully paid and
non-assessable shares of Class A Common Stock as is determined by dividing $500
(the "Original Series A Issue Price") by the Series A Conversion Price,
determined and adjusted as hereafter provided, in effect at the time of
conversion and multiplying the result by the number of shares of Series A
Preferred Stock that are being converted. The initial Series A Conversion Price
shall be $0.50 per share, and it shall be subject to adjustment upon certain
events as provided in Part B, Section 4.

         (b) STOCKHOLDER RIGHT TO CONVERT AND CONVERSION PRICE. If the holders
of at least a majority of the Preferred Stock so elect at any time after the
Original Issue Date, all shares Series A Preferred Stock shall be converted, at
the office of the Corporation or any transfer agent for the Series A Preferred
Stock, into such number of fully paid and non-assessable shares of Class A
Common Stock as is determined by dividing the Original Series A Issue Price by
the Series A Conversion Price in effect at the time of conversion, and
multiplying the result by the number of shares of Series A Preferred Stock that
are being converted.

         (c) CORPORATION RIGHT TO REQUIRE MANDATORY CONVERSION. Subject to
paragraph (d), if the numeric average of the Market Price of Class A Common
Stock for 20 consecutive trading days at any time exceeds $5.00 (adjusted to
reflect any stock split, stock dividend, combination, recapitalization or
reorganization), the Corporation may, at its option exercised at any time within
15 calendar days after such time, elect to require shares of Series A Preferred
Stock to be automatically converted into shares of Class A Common Stock at the
then effective Conversion Price by giving written notice of such election to all
holders of record of shares of Series A Preferred Stock (the "Mandatory
Conversion Notice"), indicating the number of shares of Series A Preferred Stock
so converted and of the date and place for surrender of certificates
representing Series A Preferred Stock in exchange for the number of shares of
Class A Common Stock to

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                                       10
<PAGE>   11

which such holder is entitled. All conversions under this Section 3(b) shall be
made ratably among the holders of Series A Preferred Stock, based upon the
number of shares of Series A Preferred Stock held by each holder on the date of
the Mandatory Conversion Notice. Such Mandatory Conversion Notice shall be sent
to each record holder of Series A Preferred Stock at such holder's address
appearing on the stock register of the Corporation. On or before the date fixed,
each holder of shares of Series A Preferred Stock shall surrender such holder's
certificate or certificates for all such shares to the Corporation at the place
designated in exchange for the number of shares of Class A Common Stock to which
such holder is entitled. Except as otherwise expressly provided herein, the
other provisions relating to conversion of Series A Preferred Stock into Class A
Common Stock and payments in lieu of fractions set forth elsewhere in this Part
B, Section 3 shall apply to the mandatory conversion of the Series A Preferred
Stock.

         (d)      LIMITATIONS ON CORPORATION'S MANDATORY CONVERSION RIGHT. The
Corporation's rights to force conversion under paragraph (c) above shall be
subject to the following limitations:

                  (i)      The maximum number of shares of Preferred Stock which
                           the Corporation can elect to convert into shares of
                           Class A Common Stock under any Mandatory Conversion
                           Notice shall be the lesser of (A) 20% of the Adjusted
                           Volume, or (B) 1,866,600 shares (adjusted to reflect
                           any stock split, stock dividend, combination,
                           recapitalization or reorganization).

                  (ii)     All shares of Series A Preferred Stock then
                           outstanding shall be converted under this Section
                           before any shares of Series B Preferred Stock are
                           converted under this Section.

                  (iii)    The Corporation may not make another election to
                           force conversion of any Preferred Stock (or
                           repurchase of any Warrants under the corresponding
                           provisions of the Warrants) unless all shares of
                           Common Stock issued or issuable as a result of any
                           prior mandatory conversion under this Section (and
                           all shares issuable upon exercise of the Warrants in
                           response to a mandatory repurchase notice) have been
                           registered under the Securities Act and such
                           registration is then effective.

                  (iv)     After it has once converted shares under paragraph
                           (c) above, the Corporation may not make a second
                           election and give another Mandatory Conversion Notice
                           until such time as the numeric average of the Market
                           Price of Common Stock for 20 consecutive trading days
                           again exceeds $5.00, where the trading days included
                           in the second election do not include any trading
                           days prior to the first day after the date of the
                           last Mandatory Conversion Notice.

         (e) EFFECT OF ACQUISITION ON SERIES A PREFERRED STOCK. In the event of
a merger or consolidation of the Corporation with or into another corporation or
entity or a sale by the Corporation of all or substantially all of its assets,
and in the case of successive such mergers, consolidations or sales except for
any such transactions as are treated as a liquidation under Part

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                                       11
<PAGE>   12

B, Section 2(b) hereof, thereafter the shares of Series A Preferred Stock then
outstanding shall be convertible into the number and kind of securities of the
acquiring or surviving corporation (or such other entity whose securities are
delivered in exchange for the Class A Common Stock of the Corporation) to which
the holders of the Series A Preferred Stock would have been entitled if such
holders had converted their Series A Preferred Stock into Class A Common Stock
or the common stock of any successor to the Corporation upon the consummation of
such sale, merger or consolidation; and, in such case, appropriate adjustment
(as determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Part B, Sections 3 and 4 with respect to
the rights and interest thereafter of the holders of the Series A Preferred
Stock, to the end that the provisions set forth in such sections (including the
provisions with respect to changes and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the conversion of the Series A Preferred Stock.

         (f) MECHANICS OF CONVERSION. No fractional shares of Class A Common
Stock shall be issued upon conversion of Series A Preferred Stock. All shares of
Common Stock, including fractions thereof, issuable upon conversion of more than
one share of Series A Preferred Stock by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of any fractional share to which a holder
of Series A Preferred Stock would otherwise be entitled, pay cash equal to such
fraction multiplied by the then effective Conversion Price. Before any holder of
Series A Preferred Stock shall be entitled to convert the same into full shares
of Class A Common Stock, the holder shall surrender the certificate or
certificates therefor, duly endorsed for transfer, at the office of the
Corporation or of any transfer agent for the Series A Preferred Stock, and shall
give written notice to the Corporation at such office that he elects to convert
the same and shall state therein the number of shares to be converted and the
name or names in which he wishes the certificate or certificates for shares of
Common Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series A
Preferred Stock a certificate or certificates for the number of shares of Class
A Common Stock to which such holder shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable in order to
avoid a conversion into fractional shares of Class A Common Stock. Except as
provided in paragraphs (b) and (d), such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of Series A Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Class A Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such shares of Class A Common Stock on such date.

         (g) NO IMPAIRMENT. The Corporation will not, by amendment of its
Restated Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the Corporation, but
will at all times in good faith assist in the carrying out of all the provisions
of this Part B, Sections 3 and 4, and in the taking of all such action as may be

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                                       12
<PAGE>   13

necessary or appropriate in order to protect the conversion rights of the
holders of the Series A Preferred Stock against impairment.

         (h)      NOTICES OF RECORD DATE, ETC.  In the event that the
Corporation shall propose at any time:

                  (i)      to declare any dividend or distribution upon its
                           Common Stock or other Junior Shares, whether in cash,
                           property, stock or other securities, whether or not a
                           regular cash dividend and whether or not out of
                           earnings or earned surplus;

                  (ii)     to offer for subscription pro rata to the holders of
                           any class or series of its stock any additional
                           shares of stock of any class or series or other
                           rights;

                  (iii)    to subdivide or combine its outstanding Common Stock
                           or other Junior Shares;

                  (iv)     to effect any reclassification or recapitalization
                           of its Junior Shares outstanding involving a change
                           in the Junior Shares; or

                  (v)      to merge or consolidate with or into any other
                           entity, or sell, lease or convey all or substantially
                           all its property or business, or to liquidate,
                           dissolve or wind up;

then, in connection with each such event, the Corporation shall send to the
holders of the Series A Preferred Stock:

                           (A)      at least 20 days' prior written notice of
                                    the date on which a record shall be taken
                                    for such dividend, distribution,
                                    subscription rights, subdivision or
                                    combination (and specifying the date on
                                    which the holders of Common Stock shall be
                                    entitled thereto) or for determining rights
                                    to vote in respect of the matters referred
                                    to in clauses (iv) and (v) above; and

                           (B)      in the case of the matters referred to in
                                    clauses (iv) and (v) above, at least 20
                                    days' prior written notice of the date when
                                    the same shall take place (specifying the
                                    date on which the holders of Common Stock
                                    shall be entitled to exchange their Common
                                    Stock for securities or other property
                                    deliverable upon the occurrence of such
                                    event).

         Each such written notice shall be given to the holders of Series A
Preferred Stock at the address for each such holder as shown on the books of the
Corporation.

         (h) RESERVATION OF COMMON STOCK. The Corporation shall, at all times
when the Series A Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, for the purpose of effecting
the conversion of the Series A Preferred Stock, such

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                                       13
<PAGE>   14

number of its duly authorized shares of Class A Common Stock as shall from time
to time be sufficient to effect the conversion of all outstanding Series A
Preferred Stock. Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value of the shares of Class A
Common Stock issuable upon conversion of the Series A Preferred Stock, the
Corporation will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully paid and nonassessable shares of such Class A Common Stock at such
adjusted Series A Conversion Price.

         (i) CANCELLATION OF SERIES A PREFERRED STOCK. All shares of Series A
Preferred Stock which shall have been surrendered for conversion as herein
provided or redeemed or repurchased shall no longer be deemed to be outstanding
and all rights with respect to such shares, including the rights, if any, to
receive notices and to vote, shall forthwith cease and terminate except only the
right of the holders thereof to receive shares of Class A Common Stock in
exchange therefor and payment of any accrued and unpaid dividends thereon. Any
shares of Series A Preferred Stock so converted or redeemed or repurchased shall
be retired and cancelled, and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to reduce the
authorized Series A Preferred Stock accordingly.

         SECTION 4.  ADJUSTMENT OF CONVERSION PRICE.

         (a) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price on Series A
Preferred Stock shall be adjusted as set forth in this Part B, Section 4 with
the intent that the rights of holders of such Series A Preferred Stock to
convert shall not be impaired.

         (b) SITUATIONS WHERE NO ADJUSTMENT REQUIRED. No adjustment in the
Conversion Price of a particular share of Series A Preferred Stock shall be made
in respect of the issuance of Additional Shares of Common Stock unless the
consideration per share for an Additional Share of Common Stock issued or deemed
to be issued by the Corporation is less than the Series A Conversion Price in
effect on the date of, and immediately prior to, such issue.

         (c) ADJUSTMENT FOR COMBINATION OR CONSOLIDATION OF COMMON STOCK. In the
event the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, the Series A Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.

         (d) ADJUSTMENT FOR STOCK DIVIDEND OR SUBDIVISION. In the event the
Corporation at any time or from time to time after the Original Issue Date of
the Series B Preferred Stock shall declare or pay any dividend on the Common
Stock payable in Common Stock (or in any right to acquire Common Stock), or
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock by reclassification or otherwise than by
payment of a dividend in Common Stock, then and in any such event, the Series A
Conversion Price in effect immediately prior to such subdivision or stock
dividend shall forthwith be proportionately reduced.

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                                       14
<PAGE>   15

         (e) ADJUSTMENT UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In
the event the corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
paragraph (f) hereof but excluding any issued as a stock split or combination as
provided in paragraph (c) or upon a dividend or distribution as provided in
paragraph (d)) without consideration or for a consideration per share less than
the Series A Conversion Price in effect on the date of and immediately prior to
such issue, then and in such event, such Series A Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) equal to the consideration per share paid in connection with issuance of
such Additional Shares of Common Stock.

         (f) ADJUSTMENT UPON DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
In the event the Corporation at any time or from time to time after the Series B
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein designed to protect against anti-dilution)
of Common Stock issuable upon the exercise of such Options in accordance with
clause (ii) below, or in the case of Convertible Securities, the maximum number
of shares of Common Stock into which they are convertible or exchangeable in
accordance with clause (ii) below, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue or, in case such a record date
shall have been fixed, as of the close of business on such record date, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to paragraph (g) hereof)
of such Additional Shares of Common Stock would be less than the Series A
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:

                    (i)    except as provided in clause (ii) below, no further
                           adjustment in the Conversion Price shall be made upon
                           the subsequent issue of Convertible Securities or
                           shares of Common Stock upon the exercise of such
                           Options or conversion or exchange of such Convertible
                           Securities; and

                    (ii)   if such Options or Convertible Securities by their
                           terms provide, with the passage of time or otherwise,
                           for any increase in the consideration payable to the
                           Corporation, or for the termination of the right to
                           exercise or convert such Options or Convertible
                           Securities, or if all Options and Convertible
                           Securities issued at a certain price in fact expire
                           or are terminated unexercised, then in each such case
                           the Series A Conversion Price computed upon the
                           original issue thereof (or upon the occurrence of a
                           record date with respect thereto), and any subsequent
                           adjustments based thereon, shall, upon any such
                           increase, or termination becoming effective, be
                           recomputed to reflect such increase, or termination
                           insofar as it affects such Options or the rights of
                           conversion or exchange under such Convertible
                           Securities; provided, however, that no such
                           adjustment of the Series A Conversion Price shall
                           affect Common Stock previously issued upon conversion
                           of any such Series A Preferred Stock.

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                                       15
<PAGE>   16

         (g) DETERMINATION OF CONSIDERATION. For purposes of this Part B,
Section 4, the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:

                  (i)      CASH AND PROPERTY.  Such consideration shall:

                           (A) insofar as it consists of cash, be computed at
                           the aggregate amount of cash received by the
                           Corporation, excluding amounts paid or payable for
                           accrued interest or accrued dividends;

                           (B) insofar as it consists of property other than
                           cash, be computed at the fair value thereof at the
                           time of such issue, as determined in good faith by
                           the Board of Directors; and

                           (C) in the event Additional Shares of Common Stock
                           are issued together with other shares of securities
                           or other assets of the Corporation for consideration
                           which covers both, be the proportion of such
                           consideration so received, computed as provided in
                           sub-clauses (A) and (B) above, as determined in good
                           faith by the Board of Directors.

                  (ii)     OPTIONS AND CONVERTIBLE SECURITIES. The consideration
                           per share received by the Corporation for Additional
                           Shares of Common Stock deemed to have been issued
                           pursuant to paragraph (f), relating to Options and
                           Convertible Securities, shall be determined by
                           dividing (A) the total amount, if any, received or
                           receivable by the Corporation as consideration for
                           the issue of such Options or Convertible Securities,
                           plus the minimum aggregate amount of additional
                           consideration (as set forth in the instruments
                           relating thereto, without regard to any provision
                           contained therein designed to protect against
                           anti-dilution) payable to the Corporation upon the
                           exercise of such Options or the conversion or
                           exchange of such Convertible Securities, or in the
                           case of Options for Convertible Securities, the
                           exercise of such Options for Convertible Securities
                           and the conversion or exchange of such Convertible
                           Securities, by (B) the maximum number of shares of
                           Common Stock (as set forth in the instruments
                           relating thereto, without regard to any provision
                           contained therein designed to protect against
                           anti-dilution) issuable upon the exercise of such
                           Options or the conversion or exchange of such
                           Convertible Securities.

                  (iii)    STOCK DIVIDENDS AND STOCK SUBDIVISIONS. Any
                           Additional Shares of Common Stock deemed to have been
                           issued, relating to stock dividends on and stock
                           subdivisions of the Common Stock, shall be deemed to
                           have been issued for no consideration and the Series
                           A Conversion Price shall be adjusted in accordance
                           with paragraph (d) of this Section.

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                                       16
<PAGE>   17

         (h) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Part B,
Section 4, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each holder
of Series A Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series A Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Series A Conversion Price at the time in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of Series A
Preferred Stock.

         SECTION 5.  REDEMPTION AT OPTION OF COMPANY.

         (a) RIGHT TO REDEEM. Following any payment by the Corporation of any
royalty payment under the Abbott License Agreement, the Series A Preferred Stock
may be redeemable at the Corporation's option pursuant to the terms of the Call
Option Agreement.

         (b) RETIREMENT OF SERIES A PREFERRED STOCK. All Series A Preferred
Stock redeemed or repurchased pursuant to the Call Option Agreement shall be
retired and cancelled and shall not be reissued, and the Corporation may from
time to time take appropriate action as may be necessary to reduce the
authorized Series A Preferred Stock accordingly.

         PART C   RIGHTS OF SERIES B PREFERRED STOCK

         SECTION 1. DIVIDEND RIGHTS FOR SERIES B PREFERRED STOCK. The holders of
shares of Series B Preferred Stock shall be entitled to receive, out of funds
legally available therefor, if, as and when declared by the Board of Directors,
but before any dividends are paid on or set aside for Junior Shares and pari
passu with dividends paid on or set aside for the Series A Preferred Stock and
any other series of preferred stock ranking on parity with the Series B
Preferred Stock, dividends equal to the product of (a) the per share amount, if
any, of the dividend declared, paid or set aside for the Junior Shares,
multiplied by (b) the number of shares of Common Stock into which each such
share of Series B Preferred Stock is then convertible.

         SECTION 2.  SERIES B PREFERRED STOCK LIQUIDATION PREFERENCE.

         (a) PREFERENCE. In the event of any liquidation, dissolution or winding
up of the affairs of the Corporation, voluntarily or involuntarily, the holders
of each share of Series B Preferred Stock, prior to any distribution to the
holders of Junior Shares but pari passu with the holders of Series A Preferred
Stock, shall be entitled to receive pro rata a preferential amount equal to
$600.06 per share (adjusted to reflect any stock split, stock dividend,
combination, recapitalization or reorganization) of Series B Preferred Stock
held by them, plus an amount equal to five percent (5%) per annum simple
interest on the Original Purchase Price, plus any declared and unpaid dividends
(the "Series B Preferred Stock Liquidation Preference"). After payment or
setting apart for payment of the Series A Preferred Stock Liquidation Preference
and the Series B Preferred Stock Liquidation Preference, the remaining assets of
the Corporation, if

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                                       17
<PAGE>   18

any, shall be distributed among the holders of the Junior Shares. If, upon
such liquidation, dissolution or winding up, the assets of the Corporation
are insufficient (after payment of the liquidation preference of any class of
preferred stock ranking senior on liquidation to the Series B Preferred Stock)
to provide for the payment in full of the Series B Preferred Stock Liquidation
Preference for each share of Series B Preferred Stock outstanding, such assets
as are available shall be paid out in accordance with the last sentence of Part
B, Section 2(a).

         (b) MERGER OR ACQUISITION. A merger or consolidation of the Corporation
with or into another corporation or entity (whether or not the Corporation is
the surviving entity if, after the merger or consolidation, more than 50% of the
voting stock of the surviving corporation is owned by persons who were not
holders of voting stock of the Corporation immediately prior to the merger or
consolidation), or the sale of all or substantially all the assets of the
Corporation, shall be deemed to be a liquidation, dissolution or winding up the
Corporation for purposes of this Part C, Section 2(b) if the holders of at least
a majority of the then outstanding shares of Series A Preferred Stock and Series
B Preferred Stock, voting together as a single class, so elect by giving written
notice thereof to the Corporation at least three days before the effective date
of such event. If no such notice is given by said holders, the provisions of
Part C, Section 3(c) shall apply. The amount deemed distributed to the holders
of Series A Preferred Stock upon any such merger or consolidation shall be the
cash or the value of the property, rights or other securities received in the
merger or consolidation which shall be determined in good faith by the Board of
Directors of the Corporation.

         SECTION 3.  CONVERSION OF SERIES B PREFERRED STOCK.

         The Series B Preferred Stock shall be convertible in accordance with
the following provisions:

         (a) RIGHT TO CONVERT. Each share of Series B Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
time after the date of issuance of such share, at the office of the Corporation
or any transfer agent for such stock, into such number of fully paid and
non-assessable shares of Class A Common Stock as is determined by dividing $600
(the "Original Series B Issue Price") by the Series B Conversion Price,
determined and adjusted as hereafter provided, in effect at the time of
conversion and multiplying the result by the number of shares of Series B
Preferred Stock that are being converted. The initial Series B Conversion Price
shall be $0.60 per share, and it shall be subject to adjustment upon certain
events as provided in Part C, Section 4.

         (b) STOCKHOLDER RIGHT TO CONVERT AND CONVERSION PRICE. If the holders
of at least a majority of the Preferred Stock so elect at any time after the
Original Issue Date, all shares Series B Preferred Stock shall be converted, at
the office of the Corporation or any transfer agent for the Series B Preferred
Stock, into such number of fully paid and non-assessable shares of Class A
Common Stock as is determined by dividing the Original Series B Issue Price by
the Series B Conversion Price in effect at the time of conversion and
multiplying the result by the number of shares of Series B Preferred Stock that
are being converted.

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                                       18
<PAGE>   19

         (c) CORPORATION RIGHT TO REQUIRE MANDATORY CONVERSION. Subject to
paragraph (d), if the numeric average of the Market Price of Class A Common
Stock for 20 consecutive trading days at any time exceeds $5.00 (adjusted to
reflect any stock split, stock dividend, combination, recapitalization or
reorganization), the Corporation may, at its option exercised at any time within
15 calendar days after such time, elect to require shares of Series B Preferred
Stock to be automatically converted into shares of Class A Common Stock at the
then effective Conversion Price by giving written notice of such election to all
holders of record of shares of Series B Preferred Stock (the "Mandatory
Conversion Notice"), indicating the number of shares of Series B Preferred Stock
so converted and of the date and place for surrender of certificates
representing Series B Preferred Stock in exchange for the number of shares of
Class A Common Stock to which such holder is entitled. All conversions under
this Section 3(c) shall be made ratably among the holders of Series B Preferred
Stock, based upon the number of shares of Series B Preferred Stock held by each
holder on the date of the Mandatory Conversion Notice. Such Mandatory Conversion
Notice shall be sent to each record holder of Series B Preferred Stock at such
holder's address appearing on the stock register of the Corporation. On or
before the date so fixed, each holder of shares of Series B Preferred Stock
shall surrender such holder's certificate or certificates for all such shares to
the Corporation at the place designated in exchange for the number of shares of
Class A Common Stock to which such holder is entitled. Except to the extent
expressly provided herein, the other provisions relating to conversion of Series
B Preferred Stock into Class A Common Stock and payments in lieu of fractions
set forth elsewhere in this Part C, Section 3 shall apply to the mandatory
conversion of the Series B Preferred Stock.

         (d)      LIMITATIONS ON CORPORATION'S MANDATORY CONVERSION RIGHT. The
Corporation's right to force conversion under paragraph (c) above shall be
subject to the following limitations:

                  (i)      The maximum number of shares of Preferred Stock which
                           the Corporation can elect to convert into shares of
                           Class A Common Stock under any Mandatory Conversion
                           Notice shall be the lesser of (A) 20% of the Adjusted
                           Volume, or (B) 1,866,600 shares (adjusted to reflect
                           any stock split, stock dividend, combination,
                           recapitalization or reorganization).

                  (ii)     No shares of Series B Preferred Stock shall be
                           converted under this Section unless all then
                           outstanding shares of Series A Preferred Stock have
                           first been converted.

                  (iii)    The Corporation may not make another election to
                           force conversion of any Preferred Stock (or
                           repurchase of any Warrants under the corresponding
                           provisions of the Warrants) unless all shares of
                           Common Stock issued or issuable as a result of any
                           prior mandatory conversion under this Section ( and
                           all shares issuable upon exercise of the Warrants in
                           response to a mandatory repurchase notice) have been
                           registered under the Securities Act and such
                           registration is then effective.

                  (iv)     After it has once converted shares under paragraph
                           (c) above, the Corporation may not make a second
                           election and give another Mandatory

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                                       19
<PAGE>   20

                           Conversion Notice until such time as the numeric
                           average of the Market Price of Class A Common Stock
                           for 20 consecutive trading days again exceeds $5.00,
                           where the trading days included in the second
                           election do not include any trading days prior to
                           the first day after the date of the last Mandatory
                           Conversion Notice.

         (e) EFFECT OF ACQUISITION ON SERIES B PREFERRED STOCK. In the event of
a merger or consolidation of the Corporation with or into another corporation or
entity or a sale by the Corporation of all or substantially all of its assets,
and in the case of successive such mergers, consolidations or sales except for
any such transactions as are treated as a liquidation under Part C, Section 2(b)
hereof, thereafter the shares of Series B Preferred Stock then outstanding shall
be convertible into the number and kind of securities of the acquiring or
surviving corporation (or such other entity whose securities are delivered in
exchange for the Class A Common Stock of the Corporation) to which the holders
of the Series A Preferred Stock would have been entitled if such holders had
converted their Series A Preferred Stock into Class A Common Stock or the common
stock of any successor to the Corporation upon the consummation of such sale,
merger or consolidation; and, in such case, appropriate adjustment (as
determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Part C, Sections 3 and 4 with respect to
the rights and interest thereafter of the holders of the Series B Preferred
Stock, to the end that the provisions set forth in such sections (including the
provisions with respect to changes and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the conversion of the Series B Preferred Stock.

         (f) MECHANICS OF CONVERSION. No fractional shares of Class A Common
Stock shall be issued upon conversion of Series B Preferred Stock. All shares of
Common Stock, including fractions thereof, issuable upon conversion of more than
one share of Series A Preferred Stock by a holder thereof shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common
Stock, the Corporation shall, in lieu of any fractional share to which a holder
of Series B Preferred Stock would otherwise be entitled, pay cash equal to such
fraction multiplied by the then effective Conversion Price. Before any holder of
Series B Preferred Stock shall be entitled to convert the same into full shares
of Class A Common Stock, the holder shall surrender the certificate or
certificates therefor, duly endorsed for transfer, at the office of the
Corporation or of any transfer agent for the Series B Preferred Stock, and shall
give written notice to the Corporation at such office that he elects to convert
the same and shall state therein the number of shares to be converted and the
name or names in which he wishes the certificate or certificates for shares of
Common Stock to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series B
Preferred Stock a certificate or certificates for the number of shares of Class
A Common Stock to which such holder shall be entitled as aforesaid and a check
payable to the holder in the amount of any cash amounts payable in order to
avoid a conversion into fractional shares of Class A Common Stock. Except as
provided in paragraphs (b) and (d), such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender of
the shares of Series B Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Class A Common Stock issuable upon

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                                       20
<PAGE>   21

such conversion shall be treated for all purposes as the record holder or
holders of such shares of Class A Common Stock on such date.

         (g) NO IMPAIRMENT. The Corporation will not, by amendment of its
Amended Restated Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Part C, Sections 3 and 4 and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series B Preferred Stock against
impairment.

         (h) NOTICES OF RECORD DATE, ETC. In the event that the Corporation
shall propose at any time:

                  (i)      to declare any dividend or distribution upon its
                           Common Stock or other Junior Shares, whether in cash,
                           property, stock or other securities, whether or not a
                           regular cash dividend and whether or not out of
                           earnings or earned surplus;

                  (ii)     to offer for subscription pro rata to the holders of
                           any class or series of its stock any additional
                           shares of stock of any class or series or other
                           rights;

                  (iii)    to subdivide or combine its outstanding Common Stock
                           or other Junior Shares;

                  (iv)     to effect any reclassification or recapitalization
                           of its Junior Shares outstanding involving a change
                           in the Junior  Shares; or

                  (v)      to merge or consolidate with or into any other
                           entity, or sell, lease or convey all or substantially
                           all its property or business, or to liquidate,
                           dissolve or wind up;

then, in connection with each such event, the Corporation shall send to the
holders of the Series B Preferred Stock:

                           (A)      at least 20 days' prior written notice of
                                    the date on which a record shall be taken
                                    for such dividend, distribution,
                                    subscription rights, subdivision or
                                    combination (and specifying the date on
                                    which the holders of Common Stock shall be
                                    entitled thereto) or for determining rights
                                    to vote in respect of the matters referred
                                    to in clauses (iv) and (v) above; and

                           (B)      in the case of the matters referred to in
                                    clauses (iv) and (v) above, at least 20
                                    days' prior written notice of the date when
                                    the same shall take place (specifying the
                                    date on which the holders of Common Stock
                                    shall be entitled to exchange their Common
                                    Stock

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                                       21
<PAGE>   22

                                    for securities or other property
                                    deliverable upon the occurrence of such
                                    event).

         Each such written notice shall be given to the holders of Series B
Preferred Stock at the address for each such holder as shown on the books of the
Corporation.

         (h) RESERVATION OF COMMON STOCK. The Corporation shall, at all times
when the Series B Preferred Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, for the purpose of effecting
the conversion of the Series B Preferred Stock, such number of its duly
authorized shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Series B Preferred Stock.
Before taking any action which would cause an adjustment reducing the Series B
Conversion Price below the then par value of the shares of Class A Common Stock
issuable upon conversion of the Series B Preferred Stock, the Corporation will
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Corporation may validly and legally issue fully paid and
nonassessable shares of such Class A Common Stock at such adjusted Conversion
Price.

         (i) CANCELLATION OF SERIES B PREFERRED STOCK. All shares of Series B
Preferred Stock which shall have been surrendered for conversion as herein
provided or redeemed or repurchase shall no longer be deemed to be outstanding
and all rights with respect to such shares, including the rights, if any, to
receive notices and to vote, shall forthwith cease and terminate except only the
right of the holders thereof to receive shares of Class A Common Stock in
exchange therefor and payment of any accrued and unpaid dividends thereon. Any
shares of Series B Preferred Stock so converted or redeemed or repurchased shall
be retired and cancelled, and shall not be reissued, and the Corporation may
from time to time take such appropriate action as may be necessary to reduce the
authorized Series B Preferred Stock accordingly.

         SECTION 4.  ADJUSTMENT OF CONVERSION PRICE.

         (a) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price on Series B
Preferred Stock shall be adjusted as set forth in this Part C, Section 4 with
the intent that the rights of holders of such Series B Preferred Stock to
convert shall not be impaired.

         (b) SITUATIONS WHERE NO ADJUSTMENT REQUIRED. No adjustment in the
Conversion Price of a particular share of Series B Preferred Stock shall be made
in respect of the issuance of Additional Shares of Common Stock unless the
consideration per share for an Additional Share of Common Stock issued or deemed
to be issued by the Corporation is less than the Series B Conversion Price in
effect on the date of, and immediately prior to, such issue.

         (c) ADJUSTMENT FOR COMBINATION OR CONSOLIDATION OF COMMON STOCK. In the
event the outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of Common
Stock, the Series B Conversion Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.

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                                       22
<PAGE>   23

         (d) ADJUSTMENT FOR STOCK DIVIDEND OR SUBDIVISION. In the event the
Corporation at any time or from time to time after the Original Issue Date of
the Series B Preferred Stock shall declare or pay any dividend on the Common
Stock payable in Common Stock (or in any right to acquire Common Stock), or
effect a subdivision of the outstanding shares of Common Stock into a greater
number of shares of Common Stock by reclassification or otherwise than by
payment of a dividend in Common Stock, then and in any such event, the Series B
Conversion Price in effect immediately prior to such subdivision or stock
dividend shall forthwith be proportionately reduced.

         (e) ADJUSTMENT UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In
the event the Corporation shall issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to
paragraph (f) hereof but excluding any issued as a stock split or combination as
provided in paragraph (c) or upon a dividend or distribution as provided in
paragraph (d)) without consideration or for a consideration per share less than
the Series B Conversion Price in effect on the date of and immediately prior to
such issue, then and in such event, such Series B Conversion Price shall be
reduced, concurrently with such issue, to a price (calculated to the nearest
cent) equal to the consideration per share paid in connection with issuance of
such Additional Shares of Common Stock.

         (f) ADJUSTMENT UPON DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
In the event the Corporation at any time or from time to time after the Series B
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein designed to protect against anti-dilution)
of Common Stock issuable upon the exercise of such Options in accordance with
clause (ii) below or, in the case of Convertible Securities, the maximum number
of shares of Common Stock into which they are convertible or exchangeable in
accordance with clause (ii) below, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue or, in case such a record date
shall have been fixed, as of the close of business on such record date, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to paragraph (g) hereof)
of such Additional Shares of Common Stock would be less than the Series B
Conversion Price in effect on the date of and immediately prior to such issue,
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:

                  (i)      except as provided in clause (ii) below, no further
                           adjustment in the Conversion Price shall be made upon
                           the subsequent issue of Convertible Securities or
                           shares of Common Stock upon the exercise of such
                           Options or conversion or exchange of such Convertible
                           Securities; and

                  (ii)     if such Options or Convertible Securities by their
                           terms provide, with the passage of time or otherwise,
                           for any increase in the consideration payable to the
                           Corporation, or for the termination of the right to
                           exercise or convert such Options or Convertible
                           Securities, or if all Options and Convertible
                           Securities issued at, certain price in fact expire or
                           are terminated

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<PAGE>   24

                           unexercised, then in each such case the Series B
                           Conversion Price computed upon the original issue
                           thereof (or upon the occurrence of a record date with
                           respect thereto), and any subsequent adjustments
                           based thereon, shall, upon any such increase, or
                           termination becoming effective, be recomputed to
                           reflect such increase, or termination insofar as it
                           affects such Options or the rights of conversion or
                           exchange under such Convertible Securities; provided,
                           however, that no such adjustment of the Series B
                           Conversion Price shall affect Common Stock previously
                           issued upon conversion of any such Series B Preferred
                           Stock.

         (g) DETERMINATION OF CONSIDERATION. For purposes of this Part C,
Section 4, the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:

                  (i)      CASH AND PROPERTY.  Such consideration shall:

                           (A) insofar as it consists of cash, be computed at
                           the aggregate amount of cash received by the
                           Corporation, excluding amounts paid or payable for
                           accrued interest or accrued dividends;

                           (B) insofar as it consists of property other than
                           cash, be computed at the fair value thereof at the
                           time of such issue, as determined in good faith by
                           the Board of Directors; and

                           (C) in the event Additional Shares of Common Stock
                           are issued together with other shares of securities
                           or other assets of the Corporation for consideration
                           which covers both, be the proportion of such
                           consideration so received, computed as provided in
                           sub-clauses (A) and (B) above, as determined in good
                           faith by the Board of Directors.

                  (ii)     OPTIONS AND CONVERTIBLE SECURITIES. The consideration
                           per share received by the Corporation for Additional
                           Shares of Common Stock deemed to have been issued
                           pursuant to paragraph (f), relating to Options and
                           Convertible Securities, shall be determined by
                           dividing (A) the total amount, if any, received or
                           receivable by the Corporation as consideration for
                           the issue of such Options or Convertible Securities,
                           plus the minimum aggregate amount of additional
                           consideration (as set forth in the instruments
                           relating thereto, without regard to any provision
                           contained therein designed to protect against
                           anti-dilution) payable to the Corporation upon the
                           exercise of such Options or the conversion or
                           exchange of such Convertible Securities, or in the
                           case of Options for Convertible Securities, the
                           exercise of such Options for Convertible Securities
                           and the conversion or exchange of such Convertible
                           Securities, by the maximum number of shares of Common
                           Stock (as set forth in the instruments relating
                           thereto, without regard to any provision contained
                           therein designed to protect against anti-dilution)
                           issuable upon the exercise

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                                       24
<PAGE>   25

                           of such Options or the conversion or exchange of such
                           Convertible Securities.

(iii)                      STOCK DIVIDENDS AND STOCK SUBDIVISIONS. Any
                           Additional Shares of Common Stock deemed to have been
                           issued, relating to stock dividends on and stock
                           subdivisions of the Common Stock shall be deemed to
                           have been issued for no consideration and the Series
                           B Conversion Price shall be adjusted in accordance
                           with paragraph (d) of this Section.

         (h) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Part C,
Section 4, the Corporation at its expense shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and furnish to each holder
of Series B Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Series B Preferred Stock, furnish or cause to be furnished
to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Series B Conversion Price at the time in effect, and
(iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of Series B
Preferred Stock.

         SECTION 5.  REDEMPTION AT OPTION OF COMPANY.

         (a) RIGHT TO REDEEM. Following any payment by the Corporation of any
royalty payment under the Abbott License Agreement, the Series B Preferred Stock
may be redeemable at the Corporation's option pursuant to the terms of the Call
Option Agreement.

         (b) RETIREMENT OF SERIES B PREFERRED STOCK. All Series B Preferred
Stock redeemed or repurchased pursuant to the Call Option Agreement shall be
retired and cancelled and shall not be reissued, and the Corporation may from
time to time take appropriate action as may be necessary to reduce the
authorized Series B Preferred Stock accordingly.

                                      * * *
                                      -----

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                                       25

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