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                                                                     Exhibit 4.1

                          SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of June 15,
2001, among InKine Pharmaceutical Company, Inc., a corporation organized under
the laws of the State of New York (the "Company"), and the investors set forth
on the signature pages hereto (the "Purchasers").

         WHEREAS:

         A. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act") or Section 4(2) of the Securities
Act.

         B. The Company desires to sell, and the Purchasers desire to purchase,
upon the terms and conditions stated in this Agreement, (i) convertible notes of
the Company in the aggregate principal amount of Ten Million Dollars
($10,000,000), in the form attached hereto as Exhibit A (the "Notes"),
convertible into shares of the Company's common stock, par value $.0001 per
share (the "Common Stock"), and (ii) warrants (the "Warrants"), in the form
attached hereto as Exhibit B, to acquire an aggregate of 265,487 shares of
Common Stock. The shares of Common Stock issuable upon conversion of or
otherwise pursuant to the Notes are referred to herein as the "Conversion
Shares" and the shares of Common Stock issuable upon exercise of or otherwise
pursuant to the Warrants are referred to herein as the "Warrant Shares." The
Notes, the Warrants, the Conversion Shares and the Warrant Shares are
collectively referred to herein as the "Securities" and each of them may
individually be referred to herein as a "Security."

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

         D. All references herein to monetary denominations shall refer to
lawful money of the United States of America.

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

         1.  PURCHASE AND SALE OF NOTES AND WARRANTS.

             (a) Purchase of Notes and Warrants. On the Closing Date (as defined
below), subject to the satisfaction (or waiver) of the conditions set forth in
Section 6 and Section 7 below, the Company shall issue and sell to the

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Purchasers, and the Purchasers severally agree to purchase from the Company, the
Notes and the Warrants for an aggregate purchase price of Ten Million Dollars
($10,000,000) (the "Purchase Price").

             (b) Form of Payment. On the Closing Date, the Purchasers shall pay
the Purchase Price by wire transfer to the Company, in accordance with the
Company's written wiring instructions, against delivery of the duly executed
Notes and Warrants and the Company shall deliver the Notes and Warrants against
delivery of the Purchase Price.

             (c) Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 6 and Section 7 below, the date and time
of the issuance and sale of the Notes and Warrants pursuant to this Agreement
(the "Closing") shall be 12:00 noon, New York City time, on June 15, 2001,
subject to a two business day grace period at either party's option, but in any
event not later than June 17, 2001, or such other time as may be mutually agreed
upon by the Company and the Purchasers (the "Closing Date"). The Closing shall
occur at the offices of Klehr, Harrison, Harvey, Branzburg & Ellers LLP, 260 S.
Broad Street, Philadelphia, Pennsylvania 19103.

         2.  PURCHASERS' REPRESENTATIONS AND WARRANTIES

             The Purchasers represent and warrant, severally and not jointly, to
the Company as follows:

             (a) Purchase for Own Account, Etc.. The Purchasers are purchasing
the Securities for the Purchasers' own account for investment purposes only and
not with a present view towards the public sale or distribution thereof, except
pursuant to sales that are exempt from the registration requirements of the
Securities Act and/or sales registered under the Securities Act. The Purchasers
understand that the Purchasers must bear the economic risk of this investment
indefinitely, unless the Securities are registered pursuant to the Securities
Act and any applicable state securities or blue sky laws or an exemption from
such registration is available, and that the Company has no present intention of
registering the resale of any such Securities other than as contemplated by the
Registration Rights Agreement. Notwithstanding anything in this Section 2(a) to
the contrary, by making the representations herein, the Purchasers do not agree
to hold the Securities for any minimum or other specific term and reserve the
right to dispose of the Securities at any time in accordance with or pursuant to
a registration statement or an exemption from the registration requirements
under the Securities Act.

             (b) Accredited Investor Status. Each Purchaser is an "Accredited
Investor" as that term is defined in Rule 501(a) of Regulation D.

             (c) Reliance on Exemptions. The Purchasers understand that the
Securities are being offered and sold to the Purchasers in reliance upon
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying upon the truth and
accuracy of, and the Purchasers' compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchasers set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchasers to acquire the Securities.

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             (d) Information. The Purchasers and their counsel, if any, have
been furnished all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been specifically requested by the Purchasers or their counsel. The
Purchasers and their counsel have been afforded the opportunity to ask questions
of the Company and have received what the Purchasers believe to be satisfactory
answers to any such inquiries. Neither such inquiries nor any other
investigation conducted by the Purchasers or their counsel or any of their
representatives shall modify, amend or affect the Purchasers' right to rely on
the Company's representations and warranties contained in Section 3 below. The
Purchasers understand that the Purchasers' investment in the Securities involves
a high degree of risk.

             (e) Governmental Review. The Purchasers understand that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.

             (f) Transfer or Resale. The Purchasers understand that (i) except
as provided in the Registration Rights Agreement, the sale or resale of the
Securities have not been and are not being registered under the Securities Act
or any state securities laws, and the Securities may not be transferred unless
(a) the resale of the Securities has been registered thereunder; or (b) the
Purchasers shall have delivered to the Company an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions and reasonably acceptable to the Company's counsel)
to the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; or (c) sold under
and in compliance with Rule 144 promulgated under the Securities Act (or a
successor rule) ("Rule 144"); or (d) sold or transferred to an affiliate of a
Purchaser who agrees to sell or otherwise transfer the Securities only in
accordance with the provisions of this Section 2(f) and who is an Accredited
Investor; and (ii) neither the Company nor any other person is under any
obligation to register such Securities under the Securities Act or any state
securities laws (other than pursuant to the terms of the Registration Rights
Agreement). Notwithstanding the foregoing or anything else contained herein to
the contrary, the Securities may be pledged as collateral in connection with a
bona fide margin account or other lending arrangement, provided such pledge is
consistent with applicable laws, rules and regulations.

             (g) Legends. The Purchasers understand that the Notes and Warrants
and, until such time as the Conversion Shares and Warrant Shares have been
registered under the Securities Act (including registration pursuant to Rule 416
thereunder) as contemplated by the Registration Rights Agreement or otherwise
may be sold by the Purchasers under Rule 144, the certificates for the
Conversion Shares and Warrant Shares may bear a restrictive legend in
substantially the following form:

             The securities represented by this certificate have not been
             registered under the Securities Act of 1933, as amended, or the
             securities laws of any state of the United States or in any other
             jurisdiction. The securities represented hereby may not be offered,
             sold or transferred in the absence of an effective registration
             statement for the securities under applicable securities laws
             unless offered, sold or transferred pursuant to an available
             exemption from the registration requirements of those laws.

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             The Company agrees that it shall, immediately upon the Registration
Statement (as defined in the Registration Rights Agreement) being declared
effective, deliver to its transfer agent an opinion letter of counsel,
confirming that the Registration Statement is effective, and opining that, so
long as the Registration Statement is effective, the transfer agent shall issue,
in connection with the issuance of the Conversion Shares and Warrant Shares,
certificates representing such Conversion Shares and Warrant Shares without the
restrictive legend above, provided such Conversion Shares and Warrant Shares are
to be sold pursuant to the prospectus contained in the Registration Statement.
Upon receipt of such opinion, the Company shall use its best efforts to cause
the transfer agent to confirm, for the benefit of the holders, that no further
opinion of counsel is required at the time of transfer in order to issue such
shares without such restrictive legend.

             The legend set forth above shall be removed and the Company shall
issue a certificate without such legend to the holder of any Security upon which
it is stamped, if, unless otherwise required by state securities laws, (a) the
sale of such Security is registered under the Securities Act (including
registration pursuant to Rule 416 thereunder) as contemplated by the
Registration Rights Agreement; (b) such holder provides the Company with an
opinion of counsel, in form, substance and scope customary for opinions of
counsel in comparable transactions and reasonably acceptable to the Company's
counsel, to the effect that a public sale or transfer of such Security may be
made without registration under the Securities Act; or (c) such holder provides
the Company with reasonable assurances that such Security can be sold under Rule
144. In the event the above legend is removed from any Security and thereafter
the effectiveness of a registration statement covering such Security is
suspended or the Company determines that a supplement or amendment thereto is
required by applicable securities laws, then upon reasonable advance written
notice to the Purchasers the Company may require that the above legend be placed
on any such Security that cannot then be sold pursuant to an effective
registration statement or under Rule 144 and the Purchasers shall cooperate in
the replacement of such legend. Such legend shall thereafter be removed when
such Security may again be sold pursuant to an effective registration statement
or under Rule 144.

             (h) Authorization; Enforcement. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of the Purchasers and are valid and binding agreements of the
Purchasers enforceable against the Purchasers in accordance with their terms.

             (i) Residency. Each Purchaser is a resident of the jurisdiction set
forth under such Purchaser's name on the execution page hereto.

             The Purchasers' representations and warranties made in this Article
2 are made solely for the purpose of permitting the Company to make a
determination that the offer and sale of the Notes and Warrants pursuant to this
Agreement complies with applicable U.S. federal and state securities laws and
not for any other purpose. Accordingly, the Company should not rely on such
representations and warranties for any other purpose.

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         3.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

             The Company represents and warrants to each Purchaser as follows:

             (a) Organization and Qualification. The Company and each of its
subsidiaries is a corporation duly organized and existing in good standing under
the laws of the jurisdiction in which it is incorporated, and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted. The Company and each of its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary and where the failure so to qualify would have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on (i) the
Securities, (ii) the ability of the Company to perform its obligations hereunder
or under the Notes, the Warrants or the Registration Rights Agreement or (iii)
the business, operations, properties, prospects or financial condition of the
Company and its subsidiaries, taken as a whole.

             (b) Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform its obligations under
this Agreement, the Notes, the Warrants and the Registration Rights Agreement,
to issue and sell the Notes and the Warrants in accordance with the terms
hereof, to issue the Conversion Shares upon conversion of the Notes in
accordance with the terms thereof and to issue the Warrant Shares upon exercise
of the Warrants in accordance with the terms thereof; (ii) the execution,
delivery and performance of this Agreement, the Notes, the Warrants and the
Registration Rights Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Notes and the Warrants and the issuance and reservation for
issuance of the Conversion Shares and Warrant Shares) have been duly authorized
by the Company's Board of Directors and no further consent or authorization of
the Company, its Board of Directors, any or committee of the Board of Directors
is required, and (iii) this Agreement constitutes, and, upon execution and
delivery by the Company of the Registration Rights Agreement, the Notes and the
Warrants, such agreements will constitute, valid and binding obligations of the
Company enforceable against the Company in accordance with their terms.

             (c) Stockholder Authorization. Except as provided in Section 4(p)
hereof, neither the execution, delivery or performance by the Company of its
obligations under this Agreement, the Notes, the Warrants or the Registration
Rights Agreement, nor the consummation by it of the transactions contemplated
hereby or thereby (including, without limitation, the issuance of the Notes or
the Warrants or the issuance or reservation for issuance of the Conversion
Shares or Warrant Shares) requires any consent or authorization of the Company's
stockholders, including but not limited to consent under Rule 4460(i)
promulgated by the National Association of Securities Dealers, Inc. (the "NASD")
or any similar rule.

             (d) Capitalization. The capitalization of the Company as of the
date hereof, including the authorized capital stock, the number of shares issued
and outstanding, the number of shares issuable and reserved for issuance
pursuant to the Company's stock option plans, the number of shares issuable and
reserved for issuance pursuant to securities (other than the Notes and the
Warrants) exercisable or exchangeable for, or convertible into, any shares of
capital stock and the number of shares to be reserved for issuance upon
conversion of the Notes and exercise of the Warrants is set forth on Schedule

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3(d). All of such outstanding shares of capital stock have been, or upon
issuance, will be, validly issued, fully paid and non-assessable. No shares of
capital stock of the Company (including the Conversion Shares and the Warrant
Shares) are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances. Except for the
Securities and as set forth on Schedule 3(d), as of the date of this Agreement,
(i) there are no outstanding options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exercisable or exchangeable for, any shares of
capital stock of the Company or any of its subsidiaries, or arrangements by
which the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries,
nor are any such issuances or arrangements contemplated, and (ii) there are no
agreements or arrangements under which the Company or any of its subsidiaries is
obligated to register the sale of any of its or their securities under the
Securities Act (except the Registration Rights Agreement). Schedule 3(d) sets
forth all of the Company issued securities or instruments containing
antidilution or similar provisions that will be triggered by, and all of the
resulting adjustments that will be made to such securities and instruments as a
result of, the issuance of the Securities in accordance with the terms of this
Agreement, the Notes or the Warrants. The Company has furnished to the
Purchasers true and correct copies of the Company's Certificate of Incorporation
as in effect on the date hereof ("Certificate of Incorporation"), the Company's
By-laws as in effect on the date hereof (the "By-laws"), and all other
instruments and agreements governing securities convertible into or exercisable
or exchangeable for capital stock of the Company.

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

             (f) No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Notes and the Warrants by the
Company, and the consummation by the Company of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and reservation
for issuance, as applicable, of the Notes, the Warrants, the Conversion Shares
and Warrant Shares) will not (i) result in a violation of the Certificate of
Incorporation or By-laws or (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment (including, without
limitation, the triggering of any anti-dilution provisions), acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities laws and regulations and rules or regulations of any self-regulatory
organizations to which either the Company or its securities are subject)
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or affected (except,
with respect to clause (ii), for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations that would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its subsidiaries is in violation of its Certificate of

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Incorporation, By-laws or other organizational documents and neither the Company
nor any of its subsidiaries is in default (and no event has occurred which, with
notice or lapse of time or both, would put the Company or any of its
subsidiaries in default) under, nor has there occurred any event giving others
(with notice or lapse of time or both) any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party, except for actual or possible
violations, defaults or rights that would not, individually or in the aggregate,
have a Material Adverse Effect. The businesses of the Company and its
subsidiaries are not being conducted, and shall not be conducted so long as the
Purchasers owns any of the Securities, in violation of any law, ordinance or
regulation of any governmental entity, except for possible violations the
sanctions for which either singly or in the aggregate would not have a Material
Adverse Effect. Except as specifically contemplated by this Agreement and the
Registration Rights Agreement, the Company is not required to obtain any
consent, approval, authorization or order of, or make any filing or registration
with, any court or governmental agency or any regulatory or self regulatory
agency or other third party in order for it to execute, deliver or perform any
of its obligations under this Agreement, the Registration Rights Agreement, the
Notes or the Warrants, in each case in accordance with the terms hereof or
thereof. The Company is not in violation of the listing requirements of the
NASDAQ National Market ("NNM") and does not reasonably anticipate that the
Common Stock will be delisted by NNM for the foreseeable future. The Company has
not received any notice regarding the possible delisting of the Common Stock
from NNM.

             (g) SEC Documents, Financial Statements. Since January 1, 1998, the
Company has timely filed (within applicable extension periods) all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of Sections 13, 14 and 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (all of the
foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to herein as the "SEC Documents").
The Company has made available to the Purchasers true and complete copies of the
SEC Documents. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Exchange Act or the Securities
Act, as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the statements
made in any such SEC Documents is, or has been, required to be amended or
updated under applicable law (except for such statements as have been amended or
updated in subsequent filings made prior to the date hereof). As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
applicable with respect thereto. Such financial statements have been prepared in
accordance with U.S. generally accepted accounting principles ("GAAP"),
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the consolidated financial position of the Company and its

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consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to immaterial year-end audit adjustments). Except
as set forth in the financial statements of the Company included in the SEC
Documents filed prior to the date hereof, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to the date of such financial statements and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under GAAP to be reflected in such financial
statements and (iii) liabilities incurred as a result of the transaction
contemplated hereby, which liabilities and obligations referred to in clauses
(i) and (ii), individually or in the aggregate, are not material to the
financial condition or operating results of the Company.

             (h) Absence of Certain Changes. Since December 31, 2000, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole, except as disclosed in
the SEC Documents filed prior to the date hereof.

             (i) Absence of Litigation. Except as disclosed in the SEC Documents
filed prior to the date hereof, there is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body, including, without limitation, the SEC or
NNM, pending or, to the best knowledge of the Company or any of its
subsidiaries, threatened against the Company, any of its subsidiaries, or any of
their respective directors or officers in their capacities as such. To the best
knowledge of the Company, after reasonable investigation, there are no facts
which, if known by a potential claimant or governmental authority, could give
rise to a claim or proceeding which, if asserted or concluded with results
unfavorable to the Company or any of its subsidiaries, could reasonably be
expected to have a Material Adverse Effect.

             (j) Intellectual Property. Except as set forth on Schedule 3(j),
each of the Company and its subsidiaries owns or is licensed to use all patents,
patent applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, licenses, permits, inventions,
discoveries, processes, scientific, technical, engineering and marketing data,
object and source codes, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) and other similar rights and proprietary knowledge necessary for the
conduct of its business as now being conducted (collectively, "Intangibles").
Except as set forth on Schedule 3(j), to the best knowledge of the Company,
neither the Company nor any subsidiary of the Company infringes or is in
conflict with any right of any other person with respect to any Intangibles
which, if the subject of an unfavorable decision, ruling or finding, would have
a Material Adverse Effect. Except as set forth on Schedule 3(j), neither the
Company nor any of its subsidiaries has received written notice of any pending
conflict with or infringement upon such third party Intangibles. Neither the
Company nor any of its subsidiaries has entered into any consent agreement,
indemnification agreement, forbearance to sue or settlement agreement with
respect to the validity of the Company's or its subsidiaries' ownership or right
to use its Intangibles and, to the best knowledge of the Company, there is no
reasonable basis for any such claim to be successful. Except as set forth on
Schedule 3(j), the Intangibles are valid and enforceable and no registration
relating thereto has lapsed, expired or been abandoned or canceled or is the

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subject of cancellation or other adversarial proceedings, and all applications
therefor are pending and in good standing. The Company and its subsidiaries have
complied, in all material respects, with their respective contractual
obligations relating to the protection of the Intangibles used pursuant to
licenses. To the best knowledge of the Company, no person is infringing on or
violating the Intangibles owned or used by the Company or its subsidiaries.

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

             (l) Disclosure. All information relating to or concerning the
Company set forth in this Agreement or provided to the Purchasers pursuant to
Section 2(d) hereof or otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects and the Company
has not omitted to state any material fact necessary in order to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading.

             (m) Acknowledgment Regarding Purchasers' Purchase of the
Securities. The Company acknowledges and agrees that no Purchaser is acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement or the transactions contemplated hereby, the
relationship between the Company and each Purchaser is "arms-length" and any
statement made by any Purchaser or any of its representatives or agents in
connection with this Agreement and the transactions contemplated hereby is
merely incidental to such Purchaser's purchase of the Securities and has not
been relied upon by the Company, its officers or directors in any way. The
Company further acknowledges that the Company's decision to enter into this
Agreement has been based solely on an independent evaluation by the Company and
its representatives.

             (n) Listing. Promptly after the Closing Date, the Company will
secure the listing of the Conversion Shares and Warrant Shares upon each
national securities exchange or automated quotation system upon which shares of
Common Stock are currently listed (subject, if applicable, to official notice of
issuance).

             (o) Form S-3 Eligibility. The Company is eligible to register the
resale of its Common Stock on a registration statement on Form S-3 under the
Securities Act. There exist no facts or circumstances known to the Company that
would prohibit or delay the preparation and filing of a registration statement
on Form S-3 with respect to the Registrable Securities (as defined in the
Registration Rights Agreement). The Company has no basis to believe that its
past or present independent public auditors will withhold their consent to the
inclusion, or incorporation by reference, of their audit opinion concerning the
Company's financial statements which are included in the Registration Statement
required to be filed pursuant to the Registration Rights Agreement.

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             (p) No General Solicitation. Neither the Company nor any
distributor participating on the Company's behalf in the transactions
contemplated hereby (if any) nor any person acting for the Company, or any such
distributor, has conducted any "general solicitation," as such term is defined
in Regulation D, with respect to any of the Securities being offered hereby.

             (q) No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would require registration of the
Securities being offered hereby under the Securities Act or cause this offering
of Securities to be integrated with any prior offering of securities of the
Company for purposes of the Securities Act, the result of such integration which
would require registration under the Securities Act, or any applicable
stockholder approval provisions, including, without limitation, Rule 4460(i) of
the NASD or any similar rule.

             (r) No Brokers. Except as set forth on Schedule 3(r), the Company
has taken no action that would give rise to any claim by any person for
brokerage commissions, finder's fees or similar payments by any Purchaser
relating to this Agreement or the transactions contemplated hereby.

             (s) Acknowledgment Regarding Securities. The Company's Chief
Executive Officer and Chief Financial Officer have studied and fully understand
the nature of the Securities being sold hereunder. The Company acknowledges that
its obligation to issue Conversion Shares upon conversion of the Notes in
accordance with the terms of the Notes is absolute and unconditional, regardless
of the dilution that such issuance may have on the ownership interests of other
stockholders. Taking the foregoing into account, the Company's Board of
Directors has determined in its good faith business judgment that the issuance
of the Notes and Warrants hereunder and the consummation of the other
transactions contemplated hereby are in the best interests of the Company and
its stockholders.

             (t) Title. The Company and its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them that is material to the business of
the Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company and its subsidiaries. Any real property
and facilities held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as are
not material and do not materially interfere with the use made and proposed to
be made of such property and buildings by the Company and its subsidiaries.

             (u) Tax Status. Except as set forth in the SEC Documents, the
Company and each of its subsidiaries has made or filed all foreign, U.S.
federal, state and local income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its subsidiaries has set aside

                                       10
<PAGE>

on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provisions reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, of which the Company has
received written notice, and the officers of the Company know of no basis for
any such claim. The Company has not executed a waiver with respect to any
statute of limitations relating to the assessment or collection of any federal,
state or local tax. To the Company's knowledge, none of the Company's tax
returns is presently being audited by any taxing authority.

             (v) Key Employees. Each of the Company's directors, officers and
any Key Employee (as defined below) is currently serving the Company in the
capacity disclosed in the SEC Documents. No Key Employee, to the best of the
knowledge of the Company and its subsidiaries, is in violation of any material
term of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant with the Company, and, to the Company's
knowledge, the continued employment of each Key Employee does not subject the
Company or any of its subsidiaries to any material liability with respect to any
of the foregoing matters. No Key Employee has, to the best of the knowledge of
the Company and its subsidiaries, any intention to terminate or limit his
employment with, or services to, the Company or any of its subsidiaries, nor, to
the Company's knowledge, is any such Key Employee subject to any constraints
which would cause such employee to be unable to devote his full time and
attention to such employment or services. "Key Employee" means the persons
listed on Schedule 3(v) and any individual who assumes or performs any of the
duties of a Key Employee.

             (w) Insurance. The Company has in force fire, casualty, product
liability and other insurance policies, with extended coverage, sufficient in
amount to allow it to replace any of its material properties or assets which
might be damaged or destroyed or sufficient to cover liabilities to which the
Company may reasonably become subject, and such types and amounts of other
insurance with respect to its business and properties, on both a per occurrence
and an aggregate basis, as are customarily carried by persons engaged in the
same or similar business as the Company. No default or event has occurred that
could give rise to a default under any such policy.

             (x) Environmental Matters. There is no environmental litigation or
other environmental proceeding pending or, to the Company's knowledge,
threatened by any governmental regulatory authority or others with respect to
the current or any former business of the Company or any partnership or joint
venture currently or at any time affiliated with the Company. No state of facts
exists as to environmental matters or Hazardous Substances (as defined below)
that involves the reasonable likelihood of a material capital expenditure by the
Company or that may otherwise have a Material Adverse Effect. No Hazardous
Substances have been treated, stored or disposed of, or otherwise deposited, in
or on the properties owned or leased by the Company (solely with respect to the
portion of such leased properties occupied by the Company) or by any partnership
or joint venture currently or at any time affiliated with the Company in
violation of any applicable environmental laws. The environmental compliance

                                       11
<PAGE>

programs of the Company comply in all material respects with all environmental
laws, whether federal, state or local, currently in effect. As used herein,
"Hazardous Substances" means any substance, waste, contaminant, pollutant or
material that has been determined by any governmental authority to be capable of
posing a risk of injury to health, safety, property or the environment.

             (y) Regulatory Permits. The Company possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities which are material to the conduct to its business, and
the Company has not received any written notice of proceeding relating to the
revocation or modification of any such certificate, authorization or permit.

         4.  COVENANTS.

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

             (b) Form D: Blue Sky Laws. The Company shall file with the SEC a
Form D with respect to the Securities as required under Regulation D and provide
a copy thereof to the Purchasers promptly after such filing if the Company
elects to rely on the exemption from registration pursuant to Regulation D. The
Company shall, on or before the Closing Date, take such action as the Company
shall reasonably determine is necessary to qualify the Securities for sale to
the Purchasers pursuant to this Agreement under applicable securities or "blue
sky" laws of the states of the United States or obtain exemption therefrom, and
shall provide evidence of any such action so taken to the Purchasers on or prior
to the Closing Date. Within ten (10) days after the Closing Date, the Company
shall file a Form 8-K concerning this Agreement and the transactions
contemplated hereby, which Form 8-K shall attach this Agreement and its Exhibits
as exhibits to such Form 8-K.

             (c) Reporting Status. So long as any Purchaser beneficially owns
any of the Notes and unexercised Warrants, the Company shall timely file all
reports required to be filed with the SEC pursuant to the Exchange Act, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination. In addition, the Company shall take
all actions necessary to meet the "registrant eligibility" requirements set
forth in the general instructions to Form S-3 or any successor form thereto, to
continue to be eligible to register the resale of its Common Stock on a
registration statement on Form S-3 under the Securities Act.

             (d) Use of Proceeds. The Company shall use the proceeds from the
sale of the Notes and Warrants as set forth in Schedule 4(d).

             (e) Participation Right. Subject to the terms and conditions
specified in this Section 4(e), for a period of one year after the date that the
registration statement (as defined in the Registration Rights Agreement) the
Company is required to file pursuant to Section 2(a) of the Registration Rights
Agreement is declared effective, the Purchasers shall have a right to
participate with respect to (i) future equity or equity-linked securities, or
(ii) debt which is convertible into equity or in which there is an equity
component ("Additional Securities") on the same terms and conditions as offered

                                       12
<PAGE>

by the Company to the other purchasers of such Additional Securities. Each time
the Company proposes to offer any Additional Securities, the Company shall make
an offering of such Additional Securities to each Purchaser in accordance with
the following provisions:

                 (i) the Company shall deliver a notice (the "Notice") to the
Purchasers stating (i) its bona fide intention to offer such Additional
Securities, (ii) the number of such Additional Securities to be offered, (iii)
the price and terms, if any, upon which it proposes to offer such Additional
Securities, and (iv) the anticipated closing date of the sale of such Additional
Securities.

                 (ii) by written notification received by the Company, within
seven (7) days after giving of the Notice, any Purchaser may elect to purchase
or obtain, at the price and on the terms specified in the Notice, up to that
portion of such Additional Securities which equals the proportion that the
number of shares of Common Stock purchased by such Purchaser pursuant to the
terms hereof bears to the total number of shares of Common Stock then
outstanding (assuming full conversion and exercise of all convertible or
exercisable securities then outstanding). The Company shall promptly, in
writing, inform each Purchaser which elects to purchase all of the Additional
Shares available to it ("Fully-Exercising Purchaser") of any other Purchaser's
failure to do likewise. During the five-day period commencing after such
information is given, each Fully-Exercising Purchaser shall be entitled to
obtain that portion of the Additional Securities for which the Purchasers were
entitled to subscribe but which were not subscribed for by the Purchasers which
is equal to the proportion that the number of shares of Common Stock held by
such Fully-Exercising Purchaser bears to the total number of shares of Common
Stock held by all Fully-Exercising Purchasers who wish to purchase some of the
unsubscribed shares;

                 (iii) if all Additional Securities which the Purchasers are
entitled to obtain pursuant to subsection 4(e)(ii) are not elected to be
obtained as provided in subsection 4(e)(ii) hereof, the Company may, during the
60-day period following the expiration of the period provided in subsection
4(e)(ii) hereof, offer the remaining unsubscribed portion of such Additional
Securities to any person or persons at a price not less than, and upon terms no
more favorable to the offeree than those specified in the Notice. If the Company
does not consummate the sale of such Additional Securities within such period,
the right provided hereunder shall be deemed to be revived and such Additional
Securities shall not be offered or sold unless first reoffered to the Purchasers
in accordance herewith;

                 (iv) the participation right in this Section 4(e) shall not be
applicable to (i) the issuance or sale of shares of Common Stock (or options
therefor) to employees, officers, directors, or consultants of the Company for
the primary purpose of soliciting or retaining their employment or service
pursuant to a stock option plan (or similar equity incentive plan) approved by
the Board of Directors, (ii) the issuance of securities in connection with a
bona fide underwritten public offering that results in total proceeds to the
Company of at least $25,000,000, (iii) the issuance or sale of the Notes, or
(iv) the issuance of securities in connection with mergers, acquisitions,
strategic business partnerships or joint ventures (the primary purpose of which,
in the reasonable judgment of the Board of Directors, is not to raise additional
capital).

                                       13
<PAGE>

                 (v) the participation right set forth in this Section 4(e) may
not be assigned or transferred, except that such right is assignable by each
Purchaser to any wholly-owned subsidiary or parent of, or to any corporation or
entity that is, within the meaning of the Securities Act, controlling,
controlled by or under common control with, any such Purchaser.

             (f) Expenses. The Company shall pay to the Purchasers at the
Closing, reimbursement for the out-of-pocket expenses reasonably incurred by the
Purchasers directly in connection with the negotiation, preparation, execution
and delivery of this Agreement and the other agreements to be executed in
connection herewith, including, without limitation, the Purchasers' reasonable
due diligence and attorneys' fees and expenses, including, but not limited to, a
$12,000 documentation preparation fee (the "Expenses").

             (g) Financial Information. The Company shall send (via electronic
transmission or otherwise) the following reports to the Purchasers until the
Purchasers transfer, assign or sell all of their Notes and Warrants: (i) within
ten (10) days after the filing with the SEC, a copy of its Annual Report on Form
10-K, its Quarterly Reports on Form 10-Q, its proxy statements and any Current
Reports on Form 8-K; and (ii) within one (1) day after release, copies of all
press releases issued by the Company or any of its subsidiaries.

             (h) Reservation of Shares. The Company currently has authorized and
reserved for the purpose of issuance 2,700,000 shares of Common Stock to provide
for the full conversion of the Notes and issuance of the Conversion Shares in
connection therewith, the payment of interest on the Notes and the issuance of
Common Stock in connection therewith, the full exercise of the Warrants and the
issuance of the Warrant Shares in connection therewith and as otherwise required
by the Notes and the Warrants (collectively, the "Issuance Obligations"). In the
event such number of shares becomes insufficient to satisfy the Issuance
Obligations, the Company shall take all necessary action to authorize and
reserve such additional shares of Common Stock necessary to satisfy the Issuance
Obligations.

             (i) Listing. The Company shall maintain, so long as the Purchasers
(or any of its affiliates) owns any Securities, the listing of all Conversion
Shares and Warrant Shares from time to time issuable upon conversion of the
Notes and exercise of the Warrants on each national securities exchange or
automated quotation system on which shares of Common Stock are currently listed.
The Company will use its best efforts to continue the listing and trading of its
Common Stock on NNM, the New York Stock Exchange ("NYSE") or the American Stock
Exchange ("AMEX") and will comply in all respects with the reporting, filing and
other obligations under the bylaws or rules of the NASD and such exchanges, as
applicable. So long as the Purchasers own any Securities, the Company shall
promptly provide to the Purchasers copies of any notices it receives regarding
the continued eligibility of the Common Stock for trading on the NNM or, if
applicable, any securities exchange or automated quotation system on which
securities of the same class or series issued by the Company are then listed or
quoted, if any.

             (j) Corporate Existence. So long as any Purchaser beneficially owns
any Notes, the Company shall maintain its corporate existence, and in the event
of a merger, consolidation or sale of all or substantially all of the Company's
assets, the Company shall ensure that the surviving or successor entity in such

                                       14
<PAGE>

transaction (i) assumes the Company's obligations hereunder and under the
Registration Rights Agreement, the Notes and the Warrants and the agreements and
instruments entered into in connection herewith and therewith regardless of
whether or not the Company would have had a sufficient number of shares of
Common Stock authorized and available for issuance in order to effect the
conversion of all the Notes and exercise in full of all Warrants outstanding as
of the date of such transaction and (ii) except in the event of a merger,
consolidation of the Company into any other corporation, or the sale or
conveyance of all or substantially all of the assets of the Company where the
consideration consists solely of cash, the surviving or successor entity is a
publicly traded corporation whose common stock is listed for trading on the NNM,
NYSE or AMEX.

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

             (l) Legal Compliance. The Company shall conduct its business and
the business of its subsidiaries in compliance with all laws, ordinances or
regulations of governmental entities applicable to such businesses, except where
the failure to do so would not have a Material Adverse Effect.

             (m) Redemptions and Dividends. So long as any Purchaser
beneficially owns any Notes, the Company shall not, without first obtaining the
written approval of the Purchasers, repurchase, redeem, or declare or pay any
cash dividend or distribution on, any shares of capital stock of the Company,
except for repurchases of stock held by employees or former employees of the
Company.

             (n) Trading Restrictions. No Purchaser shall be permitted to sell,
transfer or otherwise dispose of, during any 45 trading day period, more than
4.99% of the least number of shares of Common Stock issued and outstanding
during such 45 trading day period (other than dispositions to the Company). The
restriction contained in this Section 4(n) may not be altered, amended, deleted
or changed in any manner whatsoever unless the holders of a majority of the
outstanding shares of Common Stock and the holders of the Notes and Warrants
shall approve, in writing, such alteration, amendment, deletion or change.

             (o) NASD Rule 4350(i). Notwithstanding any term contained in this
Agreement, the Notes or the Warrants, in no event shall the Company issue to the
Purchasers (under any circumstance, including but not limited to upon conversion
of any Note, as payment on interest under any Note, upon an event of default
under any Note, or upon exercise of any Warrant) an amount of Common Stock which
would exceed 19.9% of the Company's issued and outstanding shares of Common
Stock on the date hereof. The Company shall, in lieu of affecting any issuance
which would violate the foregoing restriction, make a cash payment to the
holders of the Notes in accordance with Article V.A. of the Notes.

                                       15
<PAGE>

         5.  TRANSFER AGENT INSTRUCTIONS.

             (a) The Company shall instruct its transfer agent to issue
certificates, registered in the name of each Purchaser or its nominee, for the
Conversion Shares and the Warrant Shares in such amounts as specified from time
to time by the Purchasers to the Company upon conversion of the Notes or
exercise of the Warrants, as applicable. To the extent and during the periods
provided in Sections 2(f) and 2(g) of this Agreement, all such certificates
shall bear the restrictive legend specified in Section 2(g) of this Agreement.

             (b) The Company warrants that no instruction other than such
instructions referred to in this Section 5, and stop transfer instructions to
give effect to Section 2(f) hereof in the case of the transfer of the Conversion
Shares or Warrant Shares prior to registration of the Conversion Shares and
Warrant Shares under the Securities Act or without an exemption therefrom, will
be given by the Company to its transfer agent and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the Registration Rights Agreement.
Nothing in this Section shall affect in any way the Purchasers' obligations and
agreement set forth in Section 2(g) hereof to resell the Securities pursuant to
an effective registration statement or under an exemption from the registration
requirements of applicable securities law.

             (c) If the Purchasers provide the Company and the transfer agent
with an opinion of counsel, which opinion of counsel shall be in form, substance
and scope customary for opinions of counsel in comparable transactions and
reasonably acceptable to the Company's counsel, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from registration, or the Purchasers provide the Company with
reasonable assurances that such Securities may be sold under Rule 144, the
Company shall permit the transfer and, in the case of the Conversion Shares and
Warrant Shares, promptly instruct its transfer agent to issue one or more
certificates in such name and in such denominations as specified by the
Purchasers.

         6.  CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

             The obligation of the Company hereunder to issue and sell the Notes
and Warrants to the Purchasers hereunder is subject to the satisfaction, at or
before the Closing, of each of the following conditions thereto, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:

             (a) Each Purchaser shall have delivered the Purchase Price in
accordance with Section 1(b) above.

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

                                       16
<PAGE>

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

         7.  CONDITIONS TO THE PURCHASERS' OBLIGATION TO PURCHASE.

             The obligation of the Purchasers hereunder to purchase the Notes
and Warrants from the Company hereunder is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that such
conditions are for each Purchaser's sole benefit and may be waived by each
Purchaser at any time in such Purchaser's sole discretion:

             (a) The Company shall have executed this Agreement, the Notes, the
Warrants and the Registration Rights Agreement, and delivered executed original
copies of the same to each Purchaser.

             (b) The Company shall have delivered to each Purchaser duly
executed Notes and Warrants (each in such denominations as such Purchaser shall
request but in no event less than $250,000 increments) in accordance with
Section 1(b) above.

             (c) The Common Stock shall be listed on NNM and trading in the
Common Stock (or NNM generally) shall not have been suspended by the SEC or NNM.

             (d) The representations and warranties of the Company shall be true
and correct as of the date when made and as of the Closing Date as though made
at that time (except for representations and warranties that speak as of a
specific date, which representations and warranties shall be true and correct as
of such date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. The Purchasers shall have received a certificate,
executed by the Chief Executive Officer of the Company after reasonable
investigation, dated as of the Closing Date to the foregoing effect.

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

             (f) The Purchasers shall have received an opinion of the Company's
counsel, dated as of the Closing Date, in form, scope and substance reasonably
satisfactory to the Purchasers and in substantially the form of Exhibit D
attached hereto.

             (g) There shall have been no material adverse changes and no
material adverse developments in the business, properties, operations, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole, since the date hereof.

                                       17
<PAGE>

             (h) The Purchasers shall have received a copy of resolutions, duly
adopted by the Board of Directors of the Company or a committee thereof, which
shall be in full force and effect at the time of the Closing, authorizing the
execution, delivery and performance by the Company of this Agreement, the
Registration Rights Agreement, the Notes and the Warrants and the consummation
by the Company of the transactions contemplated hereby and thereby, certified as
such by the Secretary or Assistant Secretary of the Company.

         8.  GOVERNING LAW; MISCELLANEOUS.

             (a) Governing Law; Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed in the State of New York. The Company and
the Purchasers irrevocably consent to the jurisdiction of the United States
federal courts and the state courts located in the County of New York, State of
New York in any suit or proceeding based on or arising under this Agreement and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. The Company irrevocably waives the defense of an
inconvenient forum to the maintenance of such suit or proceeding. The Company
further agrees that service of process upon the Company mailed by first class
mail shall be deemed in every respect effective service of process upon the
Company in any such suit or proceeding. Nothing herein shall affect the right of
the Purchasers to serve process in any other manner permitted by law. The
Company agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.

             (b) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
In the event any signature is delivered by facsimile transmission, the party
using such means of delivery shall cause the manually executed Execution Page(s)
hereof to be physically delivered to the other party within five (5) days of the
execution hereof, provided that the failure to so deliver any manually executed
Execution Page shall not affect the validity or enforceability of this
Agreement.

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

             (d) Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction.

             (e) Entire Agreement; Amendments. This Agreement and the
instruments referenced herein contain the entire understanding of the
Purchasers, the Company, their affiliates and persons acting on their behalf
with respect to the matters covered herein and therein and, except as
specifically set forth herein or therein, neither the Company nor the Purchasers

                                       18
<PAGE>

makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived other than by an
instrument in writing signed by the party to be charged with enforcement and no
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Purchasers.

             (f) Notices. Any notices required or permitted to be given under
the terms of this Agreement shall be sent by certified or registered mail
(return receipt requested) or delivered personally, by responsible overnight
carrier or by confirmed facsimile, and shall be effective five (5) days after
being placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by responsible overnight carrier or confirmed facsimile,
in each case addressed to a party. The addresses for such communications shall
be:

                 If to the Company:

                 InKine Pharmaceutical Company, Inc.
                 1787 Sentry Parkway West
                 Building 18, Suite 440
                 Blue Bell, Pennsylvania  19422
                 Telephone: (215) 283-6850
                 Facsimile: (215) 283-4600
                 Attn: Chief Executive Officer and Chief Financial Officer

                 with a copy simultaneously transmitted by like means to:

                 Saul Ewing LLP
                 Centre Square West, 38th Floor
                 1500 Market Street
                 Philadelphia, Pennsylvania  19102-2186
                 Telephone: (215) 972-7777
                 Facsimile: (215) 972-1934
                 Attn: Charles C. Zall, Esq.

             If to the Purchasers, to the address set forth under the
Purchasers' name on the execution page hereto, with a copy simultaneously
transmitted by like means to:

                 Klehr, Harrison, Harvey, Branzburg & Ellers, LLP
                 260 S. Broad Street
                 Philadelphia, Pennsylvania  19102
                 Telephone: (215) 568-6060
                 Facsimile: (215) 568-6603
                 Attn: Stephen T. Burdumy, Esq.

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

             (g) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns. Except
as provided herein or therein, neither the Company nor the Purchasers shall
assign this Agreement or any rights or obligations hereunder. Notwithstanding

                                       19
<PAGE>

the foregoing, each Purchaser may assign its rights hereunder to any of its
"affiliates," as that term is defined under the Exchange Act, without the
consent of the Company or to any other person or entity with the consent of the
Company, which consent shall not be unreasonably withheld. This provision shall
not limit any Purchaser's right to transfer the Securities pursuant to the terms
of the Notes, the Warrants and this Agreement or to assign the Purchaser's
rights hereunder or thereunder to any such transferee. In addition, and
notwithstanding anything to the contrary contained in this Agreement, the
Registration Rights Agreement, the Notes or the Warrants, the Securities may be
pledged and all rights of the Purchasers under this Agreement or any other
agreement or document related to the transactions contemplated hereby may be
assigned, without further consent of the Company, to a bona fide pledgee in
connection with the Purchasers' margin or brokerage account.

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

             (i) Survival. The representations and warranties of the Company and
the agreements and covenants set forth in Sections 3, 4, 5 and 8 hereof shall
survive for two (2) years following the Closing notwithstanding any due
diligence investigation conducted by or on behalf of the Purchasers. Moreover,
none of the representations and warranties made by the Company herein shall act
as a waiver of any rights or remedies the Purchasers may have under applicable
U.S. federal or state securities laws. The Company shall indemnify and hold
harmless the Purchasers and each Purchaser's officers, directors, employees,
partners, members, agents and affiliates for all losses or damages arising as a
result of or related to any breach or alleged breach by the Company of any of
its representations or covenants set forth herein, including advancement of
expenses as they are incurred.

             (j) Publicity. The Company and the Purchasers shall have the right
to approve before issuance any press releases, or any other public statements
with respect to the transactions contemplated hereby; provided, however, that
the Company shall be entitled, without the prior approval of the Purchasers, to
make any press release with respect to such transactions as is required by
applicable law and regulations (although the Purchasers shall be provided with a
copy thereof by the Company in connection with any such press release prior to
its release.

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

             (l) Termination. In the event that the Closing shall not have
occurred on or before June 17, 2001, unless the parties agree otherwise, this
Agreement shall terminate at the close of business on such date. Notwithstanding
any termination of this Agreement, any party not in breach of this Agreement
shall preserve all rights and remedies it may have against another party hereto
for a breach of this Agreement prior to or relating to the termination hereof.

                                       20
<PAGE>

             (m) Joint Participation in Drafting. Each party to this Agreement
has participated in the negotiation and drafting of this Agreement, the Notes,
the Warrants and the Registration Rights Agreement. As such, the language used
herein and therein shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction will
be applied against any party to this Agreement.

             (n) Equitable Relief. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Purchasers by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations hereunder (including, but not limited to, its obligations pursuant
to Section 5 hereof) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement (including,
but not limited to, its obligations pursuant to Section 5 hereof), that the
Purchasers shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate issuance and transfer
of the Securities, without the necessity of showing economic loss and without
any bond or other security being required.

             (o) Knowledge. As used in this Agreement, the term "knowledge" of
any person or entity shall mean and include (i) actual knowledge and (ii) that
knowledge which a reasonable prudent business person could have obtained in the
management of his or her business affairs after making due inquiry and
exercising due diligence which a prudent business person should have made or
exercised, as applicable, with respect thereto.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       21
<PAGE>

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

<TABLE>
<CAPTION>
<S>                                            <C>
INKINE PHARMACEUTICAL COMPANY, INC.

    By: /S/
       -------------------------------------
    Name:
         -----------------------------------
    Title:
          ----------------------------------

PURCHASERS:

S.A.C. CAPITAL ASSOCIATES, LLC                 ROYAL BANK OF CANADA
                                               by its agent RBC Dominion
    By: /S/                                    Securities Corporation
       -------------------------------------
    Name:                                      By: /S/
         -----------------------------------      -------------------------------------
    Title:                                     Name:
          ----------------------------------        -----------------------------------
                                               Title:
RESIDENCE: Anguila                                   ----------------------------------
                                               By: /S/
                                                  -------------------------------------
ADDRESS:   c/o S.A.C. Capital Advisors LLC     Name:
           ---------------------------------        -----------------------------------
           777 Long Ridge Road                 Title:
           ---------------------------------         ----------------------------------
           Stanford, CT 06902
           ---------------------------------   RESIDENCE: Toronto, Canada
Telephone: (203) 614 2000                                 -----------------------------
           ---------------------------------
Telecopy:  (203) 614 2393
           ---------------------------------   ADDRESS:   One Liberty Plaza
Attention: General Counsel                                -----------------------------
           ---------------------------------              165 Broadway, 2nd Floor
                                                          -----------------------------
                                                          New York, New York 10006-1404
                                                          -----------------------------
                                               Telephone: (212) 858-7200
CONVERTIBLE NOTES: $8,000,000                             -----------------------------
                                               Telecopy:  (212) 858-7437
WARRANTS:          212,390 shares                         -----------------------------
                                               Attention: Daniel J. Glusker, Esq.
                                                          -----------------------------

                                               CONVERTIBLE NOTES:         $2,000,000
                                               WARRANTS:                  53,097 shares

</TABLE>

                                       22<PAGE>

                                                                     Exhibit 4.2

                          REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of June 15,
2001, by and among InKine Pharmaceutical Company, Inc., a corporation organized
under the laws of the State of New York (the "Company"), and the undersigned
(together with their affiliates, the "Initial Investors").

         WHEREAS:

         A. In connection with the Securities Purchase Agreement of even date
herewith by and among the Company and the Initial Investors (the "Securities
Purchase Agreement"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to the Initial Investors (i)
Convertible Notes (the "Notes") that are convertible into shares of the
Company's common stock, par value $.0001 per share (the "Common Stock"), and
(ii) warrants (the "Warrants") to acquire shares of Common Stock. The shares of
Common Stock issuable upon conversion of or otherwise pursuant to the Notes are
referred to herein as the "Conversion Shares" and the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants are referred to
herein as the "Warrant Shares".

         B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), and applicable state securities laws.

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

         1. DEFINITIONS.

            (a) As used in this Agreement, the following terms shall have the
following meanings:

                (i)   "Investors" means the Initial Investors and any
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.

                (ii)  "register," "registered," and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").

                (iii) "Registrable Securities" means (a) the Conversion Shares,
(b) the Warrant Shares, (c) any shares of Common Stock issued as interest

<PAGE>

payments or otherwise under the Notes and (d) any shares of capital stock issued
or issuable, from time to time (with any adjustments), as a distribution on or
in exchange for or otherwise with respect to any of the foregoing, whether as
default payments or otherwise.

                (iv) "Registration Statement" means a registration statement of
the Company under the Securities Act.

            (b) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.

         2. REGISTRATION.

            (a) Mandatory Registration. The Company shall prepare promptly and
file with the SEC as soon as practicable, but in no event later than the
thirtieth (30th) day following the Closing Date (the "Filing Date"), a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of the
Initial Investors) covering the resale of at least 2,700,000 Registrable
Securities. The Registration Statement filed hereunder, to the extent allowable
under the Securities Act and the Rules promulgated thereunder (including Rule
416), shall state that such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon conversion of the Notes and exercise of the Warrants to prevent dilution
resulting from stock splits, stock dividends or similar transactions. The
Registrable Securities included in the Registration Statement shall be allocated
to the Investors as set forth in Section 11(k) hereof. The Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided to (and subject to the
approval of) the Initial Investors and their counsel prior to its filing or
other submission. The Initial Investors shall provide their approval of (or
comments to) such Registration Statement within the earlier of five (5) days and
three (3) business days after their receipt of such Registration Statement.

            (b) Payments by the Company. The Company shall use its best efforts
to cause the Registration Statement required to be filed pursuant to Section
2(a) hereof to become effective as soon as practicable, but in no event later
than the one hundred twentieth (120th) day following the Closing Date. At the
time of effectiveness, the Company shall ensure such Registration Statement
covers at least 111% of the Registrable Securities issuable pursuant to the
Notes and Warrants (including, if necessary, by filing an amendment prior to the
effective date of the Registration Statement to increase the number of shares
covered thereby). If (i) (A) the Registration Statement required to be filed by
the Company pursuant to Section 2(a) hereof is not filed with the SEC prior to
the Filing Date or (B) such Registration Statement covering all of the
Registrable Securities is not declared effective by the SEC on or before the one
hundred and twentieth (120th) day following the Closing Date (the "Registration
Deadline") or (ii) if, after such Registration Statement has been declared
effective by the SEC, sales of any of the Registrable Securities required to be
covered by such Registration Statement cannot be made pursuant to such
Registration Statement (by reason of a stop order or otherwise the Registration
Statement contains misstatements or omissions by reason of the Company's failure
to update the Registration Statement or for any other reason outside the control
of the Investors) or (iii) the Common Stock is not listed or included for
quotation on the Nasdaq National Market ("NNM"), the Nasdaq SmallCap Market

                                        2
<PAGE>

("SmallCap"), the New York Stock Exchange (the "NYSE") or the American Stock
Exchange (the "AMEX") at any time after the Registration Deadline hereunder,
then the Company will make payments to the Investors in such amounts and at such
times as shall be determined pursuant to this Section 2(c) as partial relief for
the damages to the Investors by reason of any such delay in or reduction of
their ability to sell the Registrable Securities (which remedy shall not be
exclusive of any other remedies available at law or in equity). Notwithstanding
the foregoing, the Registration Deadline shall be extended by one (1) day for
each day after the earlier of five (5) days and three (3) business days that the
Initial Investors fail to provide their approval of (or comments to) the
Registration Statement pursuant to Section 2(a). The Company shall pay to each
Investor an amount equal to the product of (i) the aggregate Purchase Price of
the Notes and Warrants held by such Investor (including, without limitation,
Notes that have been converted into Conversion Shares and Warrants that have
been exercised for Warrant Shares then held by such Investor) (the "Aggregate
Share Price"), multiplied by (ii) fifteen thousandths (.015), for each thirty
(30) day period (or portion thereof) (A) after the Filing Date and prior to the
date the Registration Statement is filed with the SEC pursuant to Section 2(a),
(B) after the Registration Deadline and prior to the date the Registration
Statement covering all of the Registrable Securities is declared effective by
the SEC, and (C) during which sales of any Registrable Securities cannot be made
pursuant to any such Registration Statement after the Registration Statement has
been declared effective or the Common Stock is not listed or included for
quotation on the NNM, SmallCap, NYSE or AMEX; provided, however, that there
shall be excluded from each such period any delays which are solely attributable
to changes (other than corrections of Company mistakes with respect to
information previously provided by the Investors) required by the Investors in
the Registration Statement with respect to information relating to the
Investors, including, without limitation, changes to the plan of distribution.
(For example, if the Registration Statement covering all of the Registrable
Securities is not effective by the Registration Deadline, the Company would pay
$15,000 for each thirty (30) day period thereafter with respect to each
$1,000,000 of Aggregate Share Price until the Registration Statement becomes
effective.) Such amounts shall be paid in cash or, at each Investor's option,
may be convertible into Common Stock at the "Conversion Price" (as defined in
the Notes) then in effect. Any shares of Common Stock issued upon conversion of
such amounts shall be Registrable Securities. If the Investor desires to convert
the amounts due hereunder into Registrable Securities it shall so notify the
Company in writing within two (2) business days after the date on which such
amounts are first payable in cash and such amounts shall be so convertible
(pursuant to the mechanics set forth under Article III of the Notes), beginning
on the last day upon which the cash amount would otherwise be due in accordance
with the following sentence. Payments of cash pursuant hereto shall be made
within five (5) days after the end of each period that gives rise to such
obligation, provided that, if any such period extends for more than thirty (30)
days, interim payments shall be made for each such thirty (30) day period.

            (c) Piggy-Back Registrations. If at any time prior to the expiration
of the Registration Period (as hereinafter defined) and during a period in which
the Registration Statement required to be filed pursuant to Section 2(a) is not
effective, the Company shall file with the SEC a Registration Statement relating
to an offering for its own account or the account of others under the Securities
Act of any of its equity securities (other than on Form S-4 or Form S-8 or their
then equivalents relating to equity securities to be issued solely in connection
with any acquisition of any entity or business or equity securities issuable in

                                        3
<PAGE>

connection with stock option or other employee benefit plans), the Company shall
send to each Investor written notice of such filing and, if within fifteen (15)
days after the date of such notice, such Investor shall so request in writing,
the Company shall include in such Registration Statement all or any part of the
Registrable Securities such Investor requests to be registered, except that if,
in connection with any underwritten public offering, the managing underwriter(s)
thereof shall impose a limitation on the number of shares of Common Stock which
may be included in the Registration Statement because, in such underwriter(s)'
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to include
in such Registration Statement only such limited portion of the Registrable
Securities with respect to which such Investor has requested inclusion hereunder
as the underwriter shall permit. Any exclusion of Registrable Securities shall
be made pro rata among the Investors seeking to include Registrable Securities,
in proportion to the number of Registrable Securities sought to be included by
such Investors; provided, however, that the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding
securities, the holders of which are not contractually entitled to inclusion of
such securities in such Registration Statement or are not contractually entitled
to pro rata inclusion with the Registrable Securities; and provided, further,
however, that, after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with holders of other
securities having the contractual right to include such securities in the
Registration Statement other than holders of securities contractually entitled
to inclusion of their securities in such Registration Statement by reason of
demand registration rights. Notwithstanding the foregoing, no such reduction
shall reduce the amount of Registrable Securities included in the registration
below twenty-five (25%) of the total amount of securities included in such
registration. No right to registration of Registrable Securities under this
Section 2(d) shall be construed to limit any registration required under Section
2(a) hereof. If an offering in connection with which an Investor is entitled to
registration under this Section 2(d) is an underwritten offering, then each
Investor whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.

            (d) Eligibility for Form S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration of the
sale by the Initial Investors and any other Investors of the Registrable
Securities and the Company shall file all reports and statements required to be
filed by the Company with the SEC in a timely manner so as to thereafter
maintain such eligibility for the use of Form S-3.

            (e) Rule 416; Notice of Registration Trigger Date. The Company and
the Investors each acknowledge that an indeterminate number of Registrable
Securities shall be registered pursuant to Rule 416 under the Securities Act so
as to include in such Registration Statement any and all Registrable Securities
which may become issuable to prevent dilution resulting from stock splits, stock
dividends or similar transactions (collectively, the "Rule 416 Securities"). In
this regard, the Company agrees to take all steps necessary to ensure that all
Rule 416 Securities are registered pursuant to Rule 416 under the Securities Act
in the Registration Statement and, absent guidance from the SEC or other
definitive authority to the contrary, the Company shall affirmatively support
and not take any action adverse to the position that the Registration Statements

                                        4
<PAGE>

filed hereunder cover all of the Rule 416 Securities. If the Company determines
that the Registration Statement(s) filed hereunder do not cover all of the Rule
416 Securities, the Company shall immediately provide to each Investor written
notice (a "Rule 416 Notice") setting forth the basis for the Company's position
and the authority therefor. In the event that a Registration Trigger Date (as
defined below) occurs, the Company shall provide each Investor written notice of
such Registration Trigger Date within three (3) business days thereafter.

         3. OBLIGATIONS OF THE COMPANY.

         In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:

            (a) The Company shall respond promptly to any and all comments made
by the staff of the SEC to the Registration Statement required by Section 2(a),
and shall submit to the SEC, before the close of business on the business day
immediately following the business day on which the Company learns (either by
telephone or in writing) that no review of such Registration Statement will be
made by the SEC or that the staff of the SEC has no further comments on such
Registration Statement, as the case may be, a request for acceleration of the
effectiveness of such Registration Statement to a time and date as soon as
practicable. The Company shall keep such Registration Statement effective
pursuant to Rule 415 at all times until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold and (ii) the date
on which all of the Registrable Securities (in the reasonable opinion of counsel
to the Initial Investors) may be immediately sold to the public without
registration or restriction pursuant to Rule 144(k) under the Securities Act or
any successor provision (the "Registration Period"), which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein and all documents incorporated by reference therein) (i) shall
comply in all material respects with the requirements of the Securities Act and
the rules and regulations of the SEC promulgated thereunder and (ii) shall not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein not
misleading. The financial statements of the Company included in the Registration
Statement or incorporated by reference therein will comply as to form in all
material respects with the applicable accounting requirements and the published
rules and regulations of the SEC applicable with respect thereto. Such financial
statements will be prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed on summary statements and fairly
present in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to immaterial year-end
adjustments).

            (b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to keep the Registration Statement effective at all times
during the Registration Period, and, during such period, comply with the
provisions of the Securities Act with respect to the disposition of all

                                        5
<PAGE>

Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement.

            (c) The Company shall furnish to each Investor whose Registrable
Securities are included in the Registration Statement and its legal counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred
to in Section 2(a), each letter written by or on behalf of the Company to the
SEC or the staff of the SEC (including, without limitation, any request to
accelerate the effectiveness of the Registration Statement or amendment
thereto), and each item of correspondence from the SEC or the staff of the SEC,
in each case relating to the Registration Statement (other than any portion, if
any, thereof which contains information for which the Company has sought
confidential treatment), (ii) on the date of effectiveness of the Registration
Statement or any amendment thereto, a notice stating that the Registration
Statement or amendment has been declared effective, and (iii) such reasonable
number of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such Investor may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

            (d) The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as each Initial Investor who holds Registrable Securities being offered
reasonably requests prior to Closing, (ii) prepare and file in those
jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (a) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), (b) subject itself
to general taxation in any such jurisdiction, (c) file a general consent to
service of process in any such jurisdiction, (d) provide any undertakings that
cause the Company undue expense or burden, or (e) make any change in its charter
or bylaws, which in each case the Board of Directors of the Company determines
to be contrary to the best interests of the Company and its stockholders.

            (e) As promptly as practical after becoming aware of an event that
results in the prospectus included in the Registration Statement, as then in
effect, to include an untrue statement of a material fact or omission of a
material fact required to be stated therein or necessary to make statements
therein not misleading, the Company shall notify each Investor by telephone and
facsimile to as to the ineffectiveness of the prospectus, and, use its best
efforts promptly to prepare a supplement or amendment to the Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Investor as such Investor may
reasonably request.

                                        6
<PAGE>

            (f) The Company shall use its best efforts (i) to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, and, if such an order is issued, to obtain the
withdrawal of such order at the earliest practicable moment (including in each
case by amending or supplementing such Registration Statement) and (ii) to
notify each Investor who holds Registrable Securities being sold of the issuance
of such order and the resolution thereof (and if such Registration Statement is
supplemented or amended, deliver such number of copies of such supplement or
amendment to each Investor as such Investor may reasonably request).

            (g) The Company shall permit a single firm of counsel designated by
the Initial Investors to review the Registration Statement and all amendments
and supplements thereto a reasonable period of time (not to exceed the earlier
of five (5) days and three (3) business days) prior to its filing with the SEC,
and not file any document in a form to which such counsel reasonably objects.

            (h) The Company shall make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a
twelve-month period beginning not later than the first day of the Company's
fiscal quarter next following the effective date of the Registration Statement.

            (i) The Company shall hold in confidence and not make any disclosure
of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, (iv) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement, or (v) such Investor
consents to the form and content of any such disclosure. The Company agrees that
it shall, upon learning that disclosure of such information concerning an
Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Investor prior
to making such disclosure, and allow the Investor, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, such information.

            (j) The Company shall use its best efforts to promptly cause all of
the Registrable Securities covered by the registration Statement to be listed on
the NNM or another national securities exchange and on each additional national
securities exchange on which securities of the same class or series issued by
the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange.

            (k) The Company shall provide a transfer agent and registrar, which
may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement.

            (l) The Company shall cooperate with the Investors who hold
Registrable Securities being offered to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing

                                        7
<PAGE>

Registrable Securities to be offered pursuant to the Registration Statement and
enable such certificates to be in such denominations or amounts, as the case may
be, or the Investors may reasonably request and registered in such names as the
managing underwriter or underwriters, if any, or the Investors may request, and,
within five (5) business days after the Registration Statement which includes
Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel selected by the Company to deliver, to
the transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement), an
opinion of such counsel in the form attached hereto as Exhibit 1.

            (m) At the request of Investors holding a majority in interest of
the Registerable Securities, the Company shall prepare and file with the SEC
such amendments (including post-effective amendments) and supplements to a
Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.

            (n) The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the Securities Exchange
Act of 1934, as amended, (the "Exchange Act")and the rules and regulations
promulgated by the SEC.)

            (o) From and after the date of this Agreement, the Company shall
not, and shall not agree to, allow the holders of any securities of the Company
to include any of their securities which are not Registrable Securities in the
Registration Statement under Section 2(a) hereof or any amendment or supplement
thereto under Section 3(b) hereof without the consent of the holders of a
majority in interest of the Registrable Securities.

         4. OBLIGATIONS OF THE INVESTORS.

         In connection with the registration of the Registrable Securities, the
Investors shall have the following obligations:

            (a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least five (5)
trading days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the information the Company
requires from each such Investor.

            (b) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from such Registration Statement.

                                        8
<PAGE>

            (c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Sections 3(f) or
3(g), such Investor will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended prospectus contemplated by Sections 3(f) or 3(g) and, if so directed by
the Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice.
Notwithstanding anything to the contrary, subject to compliance with applicable
laws, the Company shall cause the transfer agent for the Registrable Securities
to deliver unlegended shares of Common Stock to a transferee of an Investor in
accordance with the terms of the Notes and Warrants in connection with any sale
of Registrable Securities with respect to which such Investor has entered into a
contract for sale prior to receipt of such notice and for which such Investor
has not yet settled.

         5. EXPENSES OF REGISTRATION. All reasonable expenses incurred by the
Company or the Investors in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3 above, including, without
limitation, all registration, listing and qualifications fees, printers and
accounting fees, the fees and disbursements of counsel for the Company and the
fees and disbursements of one counsel selected by the Investors shall be borne
by the Company (not to exceed $7,500). In addition, the Company shall pay all of
the Investors' costs and expenses (including legal fees) incurred in connection
with the enforcement of the rights of the Investors hereunder.

         6. INDEMNIFICATION. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:

            (a) To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Investor who holds such Registrable Securities, and
(ii) the directors, officers, partners, members, employees and agents of such
Investor and each person who controls any Investor within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, if any, (each, an
"Indemnified Person"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "Claims") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any other law, including, without limitation, any state

                                        9
<PAGE>

securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities (the matters in the foregoing clauses (i)
through (iii) being, collectively, "Violations"). Subject to the restrictions
set forth in Section 6(c) with respect to the number of legal counsel, the
Company shall reimburse the Investors and each other Indemnified Person,
promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (i) shall not apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by such Indemnified Person
expressly for use in the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld; and (iii) with
respect to any preliminary prospectus, shall not inure to the benefit of any
Indemnified Person if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in the
prospectus, as then amended or supplemented, if such corrected prospectus was
timely made available by the Company pursuant to Section 3(c) hereof, and the
Indemnified Person was promptly advised in writing not to use the incorrect
prospectus prior to the use giving rise to a Violation and such Indemnified
Person, notwithstanding such advice, used it. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of the Registrable
Securities by the Investors pursuant to Section 9 hereof.

            (b) In connection with any Registration Statement in which an
Investor is participating, each such Investor agrees severally and not jointly
to indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, its employees, agents and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (collectively and together
with an Indemnified Person, an "Indemnified Party"), against any Claim to which
any of them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such Claim arises out of or is based upon any Violation,
in each case to the extent (and only to the extent) that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by such Investor expressly for use in connection with such Registration
Statement; and subject to Section 6(c) such Investor will reimburse any legal or
other expenses (promptly as such expenses are incurred and are due and payable)
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such Investor, which
consent shall not be unreasonably withheld; provided, further, however, that the
Investor shall be liable under this Agreement (including this Section 6(b) and
Section 7) for only that amount as does not exceed the net proceeds actually
received by such Investor as a result of the sale of Registrable Securities

                                       10
<PAGE>

pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Section 9 hereof. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.

            (c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to made against any indemnifying
party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that such indemnifying party shall not be entitled to assume such
defense and an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses to be paid by the indemnifying
party, if, in the reasonable opinion of counsel retained by the indemnifying
party, the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and the
indemnifying party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for the Indemnified Persons or the Indemnified
Parties, as applicable, and such legal counsel shall be selected by Investors
holding a majority-in-interest of the Registrable Securities included in the
Registration Statement to which the Claim relates (with the approval of the
Initial Investor if it holds Registrable Securities included in such
Registration Statement), if the Investors are entitled to indemnification
hereunder, or by the Company, if the Company is entitled to indemnification
hereunder, as applicable. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.

         7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law as is appropriate
to reflect the relative fault of the indemnifying party, on the one hand, and
the Indemnified Person or Indemnified Party, as the case may be, on the other
hand, with respect to the Violation giving rise to the applicable Claim;
provided, however, that (i) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under the fault
standards set forth in Section 6, (ii) no person guilty of fraudulent

                                       11
<PAGE>

misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any seller of Registrable Securities who
was not guilty of such fraudulent misrepresentation, and (iii) contribution
(together with any indemnification or other obligations under this Agreement) by
any seller of Registrable Securities shall be limited in amount to the net
amount of proceeds received by such seller from the sale of such Registrable
Securities.

         8. REPORTS UNDER THE EXCHANGE ACT. With a view to making available to
the Investors the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:

            (a) file with the SEC in a timely manner and make and keep available
all reports and other documents required of the Company under the Securities Act
and the Exchange Act so long as the Company remains subject to such requirements
(it being understood that nothing herein shall limit the Company's obligations
under Section 4(c) of the Securities Purchase Agreement) and the filing and
availability of such reports and other documents is required for the applicable
provisions of Rule 144; and

            (b) furnish to each Investor so long as such Investor holds any
Notes or Warrants, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit such Investor to sell such securities under Rule 144 without
registration.

         9. ASSIGNMENT OF REGISTRATION RIGHTS. The rights of the Investors
hereunder, including the right to have the Company register Registrable
Securities pursuant to this Agreement, shall be automatically assignable by each
Investor to any transferee of all or any portion of the Notes, the Warrants or
the Registrable Securities if: (i) the Investor agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company after such assignment, (ii) the Company is furnished
with written notice of (a) the name and address of such transferee or assignee,
and (b) the securities with respect to which such registration rights are being
transferred or assigned, (iii) following such transfer or assignment, the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, (iv)
the transferee or assignee agrees in writing for the benefit of the Company to
be bound by all of the provisions contained herein, and (v) such transfer shall
have been made in accordance with the applicable requirements of the Securities
Purchase Agreement, the Notes and the Warrants, as applicable. In addition, and
notwithstanding anything to the contrary contained in this Agreement, the
Securities Purchase Agreement, the Notes or the Warrants, the Securities (as
defined in the Securities Purchase Agreement) may be pledged, and all rights of
the Investors under this Agreement or any other agreement or document related to
the transactions contemplated hereby may be assigned, without further consent of
the Company, to a bona fide pledgee in connection with an Investor's margin or
brokerage account.

                                       12
<PAGE>

         10. AMENDMENT OF REGISTRATION RIGHTS. Provisions of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with
written consent of the Company, the Initial Investors (to the extent the Initial
Investors still owns Notes, Warrants or Registrable Securities) and Investors
who hold a majority in interest of the Registrable Securities or, in the case of
a waiver, with the written consent of the party charged with the enforcement of
any such provision; provided, however, that no amendment hereto which restricts
the ability of an Investor to elect not to participate in an underwritten
offering shall be effective against any Investor which does not consent in
writing to such amendment; provided, further, however, that no consideration
shall be paid to an Investor by the Company in connection with an amendment
hereto unless each Investor similarly affected by such amendment receives a
pro-rata amount of consideration from the Company. Unless an Investor otherwise
agrees, each amendment hereto must similarly affect each Investor. Any amendment
or waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.

         11. MISCELLANEOUS.

            (a) A person or entity is deemed to be a holder of Registrable
Securities whenever such person or entity owns of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more persons or entities with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such Registrable
Securities.

            (b) Any notices required or permitted to be given under the terms of
this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:

                       If to the Company:

                       InKine Pharmaceutical Company, Inc.
                       1787 Sentry Parkway West
                       Building 18, Suite 440
                       Blue Bell, Pennsylvania 19422
                       Telephone:  215-283-6850
                       Fax:  215-283-4600
                       Telephone:  (215) 283-6850
                       Attn: Chief Executive Officer and Chief Financial Officer

                                       13
<PAGE>

                       with a copy simultaneously transmitted by like means to::

                       Saul Ewing LLP
                       Centre Square West, 38th Floor
                       1500 Market Street
                       Philadelphia, Pennsylvania  19102
                       Telephone:  (215) 972-7777
                       Fax:  (215) 972-1934
                       Telephone:  (215) 972-7701
                       Attn:  Charles L. Zall, Esq.

and if to any Investor, at such address as such Investor shall have provided in
writing to the Company, or at such other address as each such party furnishes by
notice given in accordance with this Section 11(b).

            (c) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

            (d) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The Company irrevocably consents to the
jurisdiction of the United States federal courts and the state courts located in
the County of New York, State of New York in any suit or proceeding based on or
arising under this Agreement and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The Company further agrees that service of process upon
the Company, mailed by first class mail shall be deemed in every respect
effective service of process upon the Company in any such suit or proceeding.
Nothing herein shall affect the Investors' right to serve process in any other
manner permitted by law. The Company agrees that a final non-appealable judgment
in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.

            (e) This Agreement, the Securities Purchase Agreement (including all
schedules and exhibits thereto), the Notes and the Warrants constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement, the Securities Purchase Agreement, the Notes and the Warrants
supersede all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof and thereof.

            (f) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.

            (g) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

                                       14
<PAGE>

            (h) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

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

            (j) All consents, approvals and other determinations to be made by
the Investors pursuant to this Agreement shall be made by the Investors holding
a majority in interest of the Registrable Securities (determined as if all Notes
and Warrants then outstanding had been converted into or exercised for
Registrable Securities) held by all Investors.

            (k) The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be allocated pro rata among the Investors based on the
number of Registrable Securities held by each Investor at the time of such
establishment or increase, as the case may be. In the event an Investor shall
sell or otherwise transfer any of such holder's Registrable Securities, each
transferee shall be allocated a pro rata portion of the number of Registrable
Securities included on a Registration Statement for such transferor. Any shares
of Common Stock included on a Registration Statement and which remain allocated
to any person or entity which does not hold any Registrable Securities shall be
allocated to the remaining Investors, pro rata based on the number of shares of
Registrable Securities then held by such Investors. For the avoidance of doubt,
the number of Registrable Securities held by any Investor shall be determined as
if all Notes and Warrants then outstanding were converted into or exercised for
Registrable Securities.

            (l) Each party to this Agreement has participated in the negotiation
and drafting of this Agreement. As such, the language used herein shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party to
this Agreement.

            (m) For purposes of this Agreement, the term "business day" means
any day other than a Saturday or Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law, regulation or
executive order to close, and the term "trading day" means any day on which NNM
or, if the Common Stock is not then traded on NNM, the principal securities
exchange or trading market where the Common Stock is then listed or traded, is
open for trading.

                                       15
<PAGE>

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

                                            INKINE PHARMACEUTICAL COMPANY, INC.

                                            By: /S/_____________________________
                                                   Name:________________________
                                                   Its:_________________________

                                            INITIAL INVESTORS:

                                            S.A.C. CAPITAL ASSOCIATES, LLC

                                            By:/S/______________________________
                                                  Name:_________________________
                                                  Its:__________________________

                                            ROYAL BANK OF CANADA
                                            by its agent RBC Dominion Securities
                                              Corporation

                                            By: /S/_____________________________
                                                   Name:________________________
                                                   Its:_________________________

                                            By: /S/_____________________________
                                                   Name:________________________
                                                   Its:_________________________

                                       16
<PAGE>

                                                                          [Date]
[Name and address
of transfer agent]

         RE:      Sale of Stock by Certain Holders of Common Stock of
                  INKINE PHARMACEUTICAL COMPANY, INC.

Ladies and Gentlemen:

         We are counsel to InKine Pharmaceutical Company, Inc., a corporation
organized under the laws of the State of New York (the "Company"). The Schedule
of Holders, attached hereto and incorporated herein, identifies certain persons
(the "Holder") who have purchased from the Company: (i) Convertible Notes that
are convertible into shares of the Company's common stock, par value $.0001 per
share (the "Shares"), and (ii) warrants to acquire additional Shares.

         On __________, 2001, the Company filed a Registration Statement on Form
S-3 (File No. 333- _____________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC") relating to the Shares. The
Registration Statement names the Holder as a selling stockholder thereunder. The
SEC declared the Registration Statement effective on ___________, 2001.

         We hereby confirm that, unless and until you are instructed by us or
the Company to the contrary, you may, upon receipt of a letter from a Holder
requesting a transfer of Shares, effect a transfer of any number of such Shares
without restriction; provided that each such request letter must confirm that
(i) the Shares were sold pursuant to the Company's Prospectus dated ___________,
2001 and (ii) the selling Holder delivered a copy of the Prospectus to the
purchaser. We are of the opinion that the foregoing is permissible under the
Securities Act of 1933, as amended.

                                                         Very truly yours,

cc:      The Holder listed on the Schedule of Holders
         Leonard S. Jacob, M.D., Ph.D.
         Mr. Robert F. Apple

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