CYTOGEN CORP
COMMON STOCK PURCHASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>COMMON STOCK PURCHASE AGREEMENT
<TEXT>



                         COMMON STOCK PURCHASE AGREEMENT

                           Dated as of October 4, 2000

                                 by and between

                               CYTOGEN CORPORATION

                                       and

                                ACQUA WELLINGTON
                       NORTH AMERICAN EQUITIES FUND, LTD.


<PAGE>


                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

ARTICLE I        Definitions.................................................1

    Section 1.1  Definitions.................................................1

ARTICLE II       Purchase and Sale of Common Stock...........................3

    Section 2.1  Purchase and Sale of Stock..................................3
    Section 2.2  The Shares..................................................3
    Section 2.3  Purchase Price and Closing..................................3

ARTICLE III      Representations and Warranties..............................4

    Section 3.1  Representation and Warranties of the Company................4
    Section 3.2  Representation and Warranties of the Purchaser.............10

ARTICLE IV       Covenants..................................................12

    Section 4.1  Securities.................................................12
    Section 4.2  Registration and Listing...................................12
    Section 4.3  Registration Statement.....................................12
    Section 4.4  Compliance with Laws.......................................12
    Section 4.5  Keeping of Records and Books of Account....................13
    Section 4.6  Reporting Requirements.....................................13
    Section 4.7  Non-public Information.....................................13
    Section 4.8  Effective Registration Statement...........................13
    Section 4.9  No Stop Orders.............................................13
    Section 4.10 Amendments to the Registration Statement...................14
    Section 4.11 Prospectus Delivery........................................14
    Section 4.12 Other Financing............................................14
    Section 4.13 Notice.....................................................15

ARTICLE V        Conditions to Closing, Draw Downs and Call Options.........15

    Section 5.1  Conditions Precedent to the Obligation of the
                   Company to Issue a Draw Down Notice or Grant
                   a Call Option and Sell the Shares........................15
    Section 5.2  Conditions Precedent to the Obligation of the
                   Purchaser to Close.......................................16
    Section 5.3  Conditions Precedent to the Obligation of the
                   Purchaser to Accept a Draw Down or Call
                   Option Grant and Purchase the Shares.....................17

ARTICLE VI       Draw Down Terms; Call Option...............................18


                                      -i-

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    Section 6.1  Draw Down Terms............................................18
    Section 6.2  Purchaser's Call Option....................................20

ARTICLE VII      Termination................................................21

    Section 7.1  Termination by Mutual Consent..............................21
    Section 7.2  Other Termination..........................................21
    Section 7.3  Effect of Termination......................................21

ARTICLE VIII     Indemnification............................................22

    Section 8.1  General Indemnity..........................................22
    Section 8.2  Indemnification Procedures.................................23

ARTICLE IX       Miscellaneous..............................................24

    Section 9.1  Fees and Expenses..........................................24
    Section 9.2  Specific Enforcement, Consent to Jurisdiction..............25
    Section 9.3  Entire Agreement; Amendment................................25
    Section 9.4  Notices....................................................25
    Section 9.5  Waivers....................................................26
    Section 9.6  Headings...................................................26
    Section 9.7  Successors and Assigns.....................................26
    Section 9.8  Governing Law..............................................27
    Section 9.9  Survival...................................................27
    Section 9.10 Counterparts...............................................27
    Section 9.11 Publicity..................................................27
    Section 9.12 Severability...............................................27
    Section 9.13 Further Assurances.........................................27


                                      -ii-

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                         COMMON STOCK PURCHASE AGREEMENT

      This COMMON STOCK PURCHASE  AGREEMENT  (this  "Agreement")  is dated as of
October 4, 2000 by and between Cytogen Corporation,  a Delaware corporation (the
"Company"),  and Acqua Wellington North American  Equities Fund, Ltd., a limited
liability  company  organized under the laws of the  Commonwealth of The Bahamas
(the "Purchaser").

      The parties hereto agree as follows:



                                   ARTICLE I

                                   Definitions

Section 1.1   Definitions.
--------------------------

      (a)  "Alternate  Market"  shall  mean the  Nasdaq  Small Cap  Market,  the
American Stock Exchange,  the New York Stock Exchange or the OTC Bulletin Board,
whichever is at the time the principal trading exchange or market for the Common
Stock.

      (b) "Call Option" shall have the meaning  assigned to such term in Section
6.2(a) hereof.

      (c)  "Commission"  shall have the meaning assigned to such term in Section
2.3 hereof.

      (d) "Commission Documents" shall have the meaning assigned to such term in
Section 3.1(f) hereof.

      (e) "Commission Filings" means the Company's Form 10-K for the fiscal year
ended  December 31, 1999,  the Company's  2000 Proxy  Statement,  filed with the
Commission on April 18, 2000, Forms 10-Q for the periods ended June 30, 2000 and
March 31, 2000, Registration Statement on Form S-3, No. 333-33436 and Forms 8-K,
dated July 14 and  September  7, 2000 and all other  filings made by the Company
after the date hereof pursuant to the Securities Exchange Act of 1934.

      (f) "Common Stock" shall have the meaning assigned to such term in Section
2.1 hereof.

      (g) "Draw Down" means the  exercise by the Company of its right to request
the purchase of shares of Common Stock by the Purchaser.

      (h) "Draw Down Amount" means the dollar amount  requested to be drawn down
by the Company pursuant to a Draw Down Notice.


                                      -1-

<PAGE>

      (i) "Draw Down Discount Percentage" means 93%, provided, however, that for
every $75,000,000 increase in the Market Capitalization above $300,000,000,  the
draw down discount percentage shall be increased by .625%, incrementally,  up to
a maximum draw down discount percentage of 96%.

      (j) "Draw Down Exercise Date" shall have the meaning assigned to such term
in Section 5.1 hereof.

      (k) "Draw Down  Notice"  shall have the  meaning  assigned to such term in
Section 6.1(i) hereof.

      (l)  "Draw  Down  Pricing  Period"  shall  mean a period  of  twenty  (20)
consecutive  Trading  Days  following a Draw Down  Notice,  or such other period
mutually agreed upon by the Purchaser and the Company.

      (m) "Effective  Date" shall mean June 14, 2000, the date the  Registration
Statement  of the Company  covering the Shares  being  subscribed  for hereby is
declared effective.

      (n)  "Investment  Period" shall have the meaning  assigned to such term in
Section 7.1 hereof.

      (o)  "Market  Capitalization"  shall  mean the  amount  determined  on the
Trading Day immediately preceding the commencement date of the Draw Down Pricing
Period and shall equal the product of (i) the VWAP of the Common  Stock and (ii)
the  Company's  outstanding  shares  of  Common  Stock  on  such  date,  each as
determined  by  Bloomberg  Financial  LP  using  the DES and HP  Functions.

      (p)  Material  Adverse  Effect"  shall  mean any  effect on the  business,
results of  operations,  assets or  financial  condition  of the Company that is
material and adverse to the Company and its subsidiaries  and affiliates,  taken
as a whole and/or any condition,  circumstance, or situation that would prohibit
the Company from entering into and performing any of its obligations  under this
Agreement in any material respect.

      (q) "Material  Change in Ownership"  shall mean that, as of any particular
measurement  date, the officers and directors of the Company shall  beneficially
own in the  aggregate  less than 4.75% of the  outstanding  Common  Stock of the
Company,  except that for purposes of making any such calculation,  Common Stock
issued to the Purchaser pursuant to this Agreement shall not be included in such
calculation.

      (r)  "Prospectus"  as used in this  Agreement  means the prospectus in the
form included in the Registration  Statement,  as supplemented by any prospectus
supplement filed with the Commission  pursuant to Rule 424(b).

      (s) "Registration Statement" shall mean the registration statement on Form
S-3,  Commission File Number  333-33436 under the Securities Act, filed with the
Securities and Exchange  Commission for the registration of the Shares,  as such
Registration  Statement may be amended from time to time.


                                      -2-

<PAGE>


      (t)  "Securities  Act" shall mean the  Securities Act of 1933, as amended,
and the rules and  regulations of the  Commission  thereunder.

      (u)  "Settlement  Date"  shall have the  meaning  assigned to such term in
Section 6.1(d) hereof.

      (v) "Shares" shall mean the shares of Common Stock of the Company that may
be purchased hereunder.

      (w) "Threshold  Price" is the lowest price the Company may set in the Draw
Down Notice to sell Shares  during a Draw Down  Pricing  Period (not taking into
account the Draw Down Discount Percentage during such Draw Down Pricing Period).

      (x) "Trading  Day" shall mean a day on which the Common Stock is traded on
the Nasdaq National Market or an Alternate Market.

      (y) "VWAP" shall mean the daily volume weighted  average price (based on a
Trading Day from 9:30 a.m. to 4:00 p.m.,  eastern  time) of the Common  Stock of
the Company on the NASDAQ National Market or an Alternate  Market as reported by
Bloomberg Financial LP using the AQR function.



                                   ARTICLE II

                        Purchase and Sale of Common Stock

      SECTION  2.1  PURCHASE  AND  SALE  OF  STOCK.  Subject  to the  terms  and
conditions of this Agreement,  the Company shall issue and sell to the Purchaser
and the  Purchaser  shall  purchase  from the Company up to  $70,000,000  of the
Company's  common stock,  $0.01 par value per share (the "Common  Stock").  Such
sale and purchase  shall be made (i) pursuant to Draw Downs,  subject to Section
6.1 hereof,  and/or  (ii) Call  Options,  subject to Section  6.2  hereof.  Call
Options may be granted to the Purchaser in  connection  with any Draw Down up to
the Draw Down  Amount  as the  Company  in its sole  discretion  may  determine.


      SECTION 2.2 THE SHARES.  The Company has  authorized  and has reserved and
covenants  to continue to reserve,  subject to Section  4.4(b)  hereof,  free of
preemptive  rights  and other  similar  contractual  rights of  stockholders,  a
sufficient  number of its authorized but unissued  shares of its Common Stock to
cover  the  Shares  to be  issued  in  connection  with any Draw  Downs and Call
Options.

      SECTION 2.3 CLOSING. The Company agrees to issue and sell to the Purchaser
and,  in  consideration  of and in express  reliance  upon the  representations,
warranties,  covenants,  terms and conditions of this Agreement,  the Purchaser,
agrees to  purchase  that number of the Shares to be issued in  connection  with
each Draw Down and each Call Option  exercised by the Purchaser.  The closing of
the execution and delivery of this Agreement  shall take place at the offices of
Parker Chapin LLP, The Chrysler  Building,  405 Lexington  Avenue,  New York, NY
10174 (the  "Closing")  at 10:00 a.m.,  eastern time, on (i) October 4, 2000, or
(ii) such other time


                                      -3-

<PAGE>


and place or on such date as the  Purchaser and the Company
may agree upon (the "Closing  Date").  Each party shall  deliver all  documents,
instruments and writings required to be delivered by such party pursuant to this
Agreement at or prior to the Closing.



                                  ARTICLE III

                         Representations and Warranties

      SECTION 3.1  REPRESENTATIONS  AND  WARRANTIES OF THE COMPANY.  The Company
hereby makes the following representations and warranties to the Purchaser:

      (a)  Organization,  Good Standing and Power.  The Company is a corporation
duly  incorporated,  validly  existing  and in good  standing  under the laws of
Delaware and has the  requisite  corporate  power to own,  lease and operate its
properties and assets and to conduct its business as it is now being  conducted.
As of the date hereof, the Company does not have any subsidiaries (as defined in
Section  3.1(g))  except as set forth in the  Registration  Statement and in the
Company's most recent Form 10-K, including the accompanying financial statements
(the "Form 10-K"),  or in the Company's most recent Form 10-Q (the "Form 10-Q"),
or on Schedule 3.1(a) attached  hereto.  The Company and each such subsidiary is
duly  qualified as a foreign  corporation to do business and is in good standing
in every  jurisdiction in which the nature of the business conducted or property
owned by it makes such  qualification  necessary  except for any jurisdiction in
which the failure to be so qualified will not have a Material Adverse Effect.

      (b) Authorization;  Enforcement.  The Company has the requisite  corporate
power and  authority to enter into and perform this  Agreement  and to issue and
sell the Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and the  consummation  by it of the
transactions  contemplated  hereby have been duly and validly  authorized by all
necessary  corporate  action,  and, except as contemplated by Section 4.4(b), no
further  consent or  authorization  of the Company or its Board of  Directors or
stockholders is required. This Agreement has been duly executed and delivered by
the Company. This Agreement  constitutes,  or shall constitute when executed and
delivered, a valid and binding obligation of the Company enforceable against the
Company in  accordance  with its  terms,  except as such  enforceability  may be
limited  by  applicable  bankruptcy,  insolvency,  reorganization,   moratorium,
liquidation,  conservatorship,  receivership  or similar  laws  relating  to, or
affecting  generally the  enforcement of,  creditor's  rights and remedies or by
other equitable principles of general application.

      (c)  Capitalization.  The authorized  capital stock of the Company and the
shares thereof issued and  outstanding as of the date hereof are as set forth in
the Commission Documents.  All of the outstanding shares of the Company's Common
Stock  have  been  duly  and  validly   authorized,   and  are  fully  paid  and
non-assessable.  Except  as set  forth in this  Agreement  or in the  Commission
Documents,  as of the date  hereof no shares of  Common  Stock are  entitled  to
preemptive rights or registration  rights and there are no outstanding  options,
warrants,  scrip,  rights to subscribe to, call or  commitments of any character
whatsoever  relating to, or securities or rights convertible into, any shares of
capital stock of the Company. Furthermore, except as set forth in this Agreement
or in the  Commission  Documents,  as of the date hereof there are no


                                      -4-

<PAGE>


contracts, commitments,  understandings, or arrangements by which the Company is
or may  become  bound to issue  additional  shares of the  capital  stock of the
Company or  options,  securities  or rights  convertible  into shares of capital
stock of the Company.  Except for customary transfer  restrictions  contained in
agreements entered into by the Company in order to sell restricted securities or
as set forth in the Commission Documents,  as of the date hereof, the Company is
not a party to any  agreement  granting  registration  rights to any person with
respect to any of its equity or debt securities.  The Company is not a party to,
and it has no knowledge of, any agreement  restricting the voting or transfer of
any  shares  of the  capital  stock of the  Company.  The  offer and sale of all
capital  stock,  convertible  securities,  rights,  warrants,  or options of the
Company  issued prior to the Closing  complied with all  applicable  federal and
state  securities  laws, and no stockholder has a right of rescission or damages
with respect thereto which would have a Material Adverse Effect. The Company has
furnished or made  available  to the  Purchaser  true and correct  copies of the
Company's Restated  Certificate of Incorporation as in effect on the date hereof
(the "Charter"),  and the Company's  Amended and Restated Bylaws as in effect on
the date hereof (the "Bylaws").

      (d) Issuance of Shares.  The Shares to be issued under this Agreement have
been duly  authorized by all necessary  corporate  action and, when paid for and
issued in accordance  with the terms hereof,  the Shares shall be validly issued
and  outstanding,  fully paid and  non-assessable,  and the  Purchaser  shall be
entitled to all rights accorded to a holder of Common Stock.

      (e)  No  Conflicts.  The  execution,  delivery  and  performance  of  this
Agreement by the Company and the consummation by the Company of the transactions
contemplated herein do not (i) violate any provision of the Company's Charter or
Bylaws,  (ii)  conflict  with,  or  constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of  termination,  amendment,  acceleration  or  cancellation  of, any
material agreement,  mortgage,  deed of trust,  indenture,  note, bond, license,
lease agreement, instrument or obligation to which the Company is a party, (iii)
create or impose a lien,  charge or  encumbrance  on any property of the Company
under any  agreement  or any  commitment  to which the  Company is a party or by
which the  Company  is bound or by which  any of its  respective  properties  or
assets are bound, or (iv) result in a violation of any federal,  state, local or
foreign statute, rule, regulation,  order, judgment or decree (including federal
and state securities laws and  regulations)  applicable to the Company or any of
its  subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected,  except, in all cases (other than violations
pursuant to clauses (i) and (iv) (to the extent of federal  securities law), for
such conflicts, defaults, terminations, amendments, acceleration,  cancellations
and violations as would not,  individually or in the aggregate,  have a Material
Adverse Effect.  The Company is not required under federal,  state or local law,
rule or regulation to obtain any consent, authorization or order of, or make any
filing or registration with, any court or governmental agency in order for it to
execute,  deliver or perform any of its  obligations  under this  Agreement,  or
issue and sell the Shares in  accordance  with the terms hereof  (other than any
filings which may be required to be made by the Company with the Commission,  or
the Nasdaq  National  Market  subsequent to the Closing,  and, any  registration
statement which may be filed pursuant hereto); provided that, for purpose of the
representation  made in this sentence,  the Company is assuming and relying upon
the accuracy of the relevant  representations  and  agreements  of the Purchaser
herein.


                                      -5-

<PAGE>


      (f) Commission Documents,  Financial  Statements.  The Common Stock of the
Company  is  registered  pursuant  to Section  12(b) or 12(g) of the  Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  and the Company has
timely filed all  reports,  schedules,  forms,  statements  and other  documents
required  to be  filed  by it with  the  Commission  pursuant  to the  reporting
requirements of the Exchange Act,  including  material filed pursuant to Section
13(a) or 15(d) of the  Exchange  Act  (all of the  foregoing  including  filings
incorporated  by reference  therein being referred to herein as the  "Commission
Documents").  The Company has delivered or made  available to the Purchaser true
and complete copies of the Commission  Documents filed with the Commission since
December 31, 1999 and prior to the Closing Date. The Company has not provided to
the  Purchaser  any  information  which,  according to  applicable  law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed,  other than with respect to the transactions  contemplated by
this  Agreement.  The Form 10-K for the year ended December 31, 1999 complied in
all material  respects with the  requirements  of the Exchange Act and the rules
and  regulations  of the  Commission  promulgated  thereunder and other federal,
state and local laws,  rules and regulations  applicable to such documents,  and
the said Form 10-K did not contain any untrue  statement  of a material  fact or
omit to state a material  fact  required to be stated  therein or  necessary  in
order to make the statements  therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the  Commission  Documents  comply as to form in all material  respects  with
applicable  accounting  requirements  and the published rules and regulations of
the Commission or other  applicable  rules and regulations with respect thereto.
Such  financial  statements  have been  prepared in  accordance  with  generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods  involved  (except (i) as may be otherwise  indicated in such  financial
statements  or the  notes  thereto  or (ii) in the  case  of  unaudited  interim
statements,  to the extent they may not include footnotes or may be condensed or
summary  statements),  and fairly present in all material respects the financial
position  of the Company and its  subsidiaries  as of the dates  thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).

      (g)  Subsidiaries.  The  Commission  Documents  set  forth  each  material
subsidiary of the Company as of the date hereof, showing the jurisdiction of its
incorporation  or  organization  and showing  the  percentage  of each  person's
ownership of the outstanding  stock or other interests of such  subsidiary.  For
the purposes of this Agreement, "subsidiary" shall mean any corporation or other
entity  of  which at  least a  majority  of the  securities  or other  ownership
interest  having  ordinary  voting power  (absolutely or  contingently)  for the
election of directors or other persons  performing  similar functions are at the
time  owned  directly  or  indirectly  by the  Company  and/or  any of its other
subsidiaries.  Except as set forth in the Commission Documents or the Commission
Filings,  none of such subsidiaries is a "significant  subsidiary" as defined in
Regulation S-X.

      (h) No Material  Adverse Effect.  Since June 30, 2000, the Company has not
experienced  or  suffered  any  Material  Adverse  Effect.

      (i)  No  Undisclosed   Liabilities.   The  Company  has  no   liabilities,
obligations,  claims or losses (whether  liquidated or unliquidated,  secured or
unsecured, absolute, accrued, contingent or otherwise) that would be required to
be disclosed on a balance sheet of the


                                      -6-

<PAGE>


Company or any subsidiary  (including the notes thereto) in conformity with GAAP
not  disclosed in the  Commission  Documents,  other than those  incurred in the
ordinary course of the Company's or its subsidiaries respective businesses since
June 30, 2000 and which,  individually or in the aggregate,  do not or would not
have a Material Adverse Effect.

      (j) No Undisclosed  Events or Circumstances.  No event or circumstance has
occurred or exists  with  respect to the  Company or its  subsidiaries  or their
respective businesses, properties, prospects, operations or financial condition,
which,  under applicable law, rule or regulation,  requires public disclosure or
announcement  by the  Company but which has not been so  publicly  announced  or
disclosed and which,  individually or in the aggregate, do not or would not have
a Material Adverse Effect.

      (k)  Indebtedness.  The  Commission  Documents  set  forth  as of the date
thereof,  all material  outstanding  secured and unsecured  Indebtedness  of the
Company,  or for which the Company or any  subsidiary has  commitments.  For the
purposes of this  Agreement,  "Indebtedness"  shall mean (a) any liabilities for
borrowed money or amounts owed other than trade accounts payable incurred in the
ordinary  course  of  business,  (b)  all  guaranties,  endorsements  and  other
contingent  obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected  in the  Company's  balance  sheet (or the notes
thereto), except guaranties by endorsement of negotiable instruments for deposit
or collection or similar  transactions in the ordinary  course of business;  and
(c) the present  value of any lease  payments  due under  leases  required to be
capitalized in accordance with GAAP. Neither the Company or any subsidiary is in
default  with  respect to any  Indebtedness.

      (l) Title to Assets.  Each of the Company and its  subsidiary has good and
marketable  title to all of its  real and  personal  property  reflected  in the
Commission Documents,  free of any mortgages,  pledges, charges, liens, security
interests or other  encumbrances,  except for those  indicated in the Commission
Documents  and the  Commission  Filings  or such that  could not  reasonably  be
expected to cause a Material Adverse Effect.  All said leases of the Company and
each of its  subsidiaries  are valid and subsisting and in full force and effect
in all material respects.

      (m) Actions Pending.  There is no action,  suit,  claim,  investigation or
proceeding  pending or, to the knowledge of the Company,  threatened against the
Company  which  questions  the validity of this  Agreement  or the  transactions
contemplated  hereby  or any  action  taken or to be taken  pursuant  hereto  or
thereto.  There is no action,  suit, claim,  investigation or proceeding pending
or, to the  knowledge  of the  Company,  threatened,  against or  involving  the
Company  or any  subsidiary,  or any of their  respective  properties  or assets
which,  if adversely  determined,  is reasonably  likely to result in a Material
Adverse Effect.

      (n)  Compliance  with Law.  The  business  of the  Company has been and is
presently being conducted in accordance with all applicable  federal,  state and
local governmental laws, rules, regulations and ordinances,  except as such that
do not cause a Material  Adverse Effect.  Each of the Company and its subsidiary
has all  franchises,  permits,  licenses,  consents  and other  governmental  or
regulatory  authorizations  and  approvals  necessary  for  the  conduct  of its
business as now being conducted  unless the failure to possess such  franchises,
permits, licenses,  consents and other governmental or regulatory authorizations
and  approvals,


                                      -7-

<PAGE>


individually  or in the  aggregate,  could not  reasonably be expected to have a
Material Adverse Effect.

      (o)  Certain  Fees.  No brokers,  finders or  financial  advisory  fees or
commissions  will be payable by the  Company  with  respect to the  transactions
contemplated by this Agreement.

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

      (q)  Operation of Business.  The Company or its  subsidiary  owns or has a
valid  right  to use  all  patents,  trademarks,  service  marks,  trade  names,
copyrights, licenses and authorizations as set forth in the Commission Documents
and all  rights  with  respect to the  foregoing,  which are  necessary  for the
conduct of its business as now conducted without any conflict with the rights of
others,  except to the extent set forth in the  Commission  Documents  or that a
Material  Adverse  Effect could not  reasonably  be expected to result from such
conflict.

(r) Environmental Compliance. Except as disclosed in the Commission Filings, the
Company has  obtained  all  approvals,  authorization,  certificates,  consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws.  "Environmental  Laws"  shall mean all  applicable  laws  relating  to the
protection of the environment  including,  without limitation,  all requirements
pertaining to reporting, licensing,  permitting,  controlling,  investigating or
remediating emissions,  discharges, releases or threatened releases of hazardous
substances, chemical substances,  pollutants,  contaminants or toxic substances,
materials or wastes,  whether solid,  liquid or gaseous in nature, into the air,
surface water, groundwater or land, or relating to the manufacture,  processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
hazardous  substances,  chemical substances,  pollutants,  contaminants or toxic
substances,  material  or wastes,  whether  solid,  liquid or gaseous in nature.
Except for such instances as would not  individually  or in the aggregate have a
Material Adverse Effect,  to the best of the Company's  knowledge,  there are no
past  or  present  events,  conditions,  circumstances,  incidents,  actions  or
omissions  relating to or in any way affecting the Company that violate or could
reasonably  be expected to violate  any  Environmental  Law after the Closing or
that could reasonably be expected to give rise to any  environmental  liability,
or otherwise  form the basis of any claim,  action,  demand,  suit,  proceeding,
hearing,  study or investigation (i) under any Environmental  Law, or (ii) based
on or related to the  manufacture,  processing,  distribution,  use,  treatment,
storage  (including  without limitation  underground  storage tanks),  disposal,
transport or handling, or the emission, discharge, release or threatened release
of any hazardous substance.

      (s) Material  Agreements.  Except as set forth in the Commission Documents
and this Agreement,  the Company is not a party to any written or oral contract,
instrument,  agreement,  commitment,  obligation, plan or arrangement, a copy of
which  would be  required  to be filed  with the  Commission  as an exhibit to a
registration  statement on Form S-3 or applicable


                                      -8-

<PAGE>


form  (collectively,  "Material  Agreements")  if the  Company  was  registering
securities  under the Securities  Act. The Company has in all material  respects
performed  all the  obligations  required  to be  performed  to date  under  the
foregoing agreements,  has received no notice of default and, to the best of the
Company's  knowledge  is not in  default  under any  Material  Agreement  now in
effect,  the result of which  could  reasonably  be expected to cause a Material
Adverse Effect.

      (t) Transactions  with  Affiliates.  Except as disclosed in the Commission
Filings, there are no loans, leases, agreements,  contracts, royalty agreements,
management contracts or arrangements or other continuing  transactions exceeding
$100,000 between (a) the Company, or any of its customers (excluding  agreements
related to the purchase or lease of the Company's  products) or suppliers on the
one hand,  and (b) on the other  hand,  any  officer,  employee,  consultant  or
director  of the  Company,  or any person who would be covered by Item 404(a) of
Regulation S-K or any  corporation  or other entity  controlled by such officer,
employee, consultant, director or person.

      (u)  Securities  Act of 1933.  The  Company has  complied in all  material
respects with all  applicable  federal and state  securities  laws in connection
with the offer,  issuance and sale of the Shares hereunder.

            (i) Each Prospectus  included as part of the Registration  Statement
      as originally filed or as part of any amendment or supplement  thereto, or
      filed  pursuant to Rule 424 under the  Securities  Act,  complied  when so
      filed in all material  respects with the provisions of the Securities Act.
      The Commission  has not issued any order  preventing or suspending the use
      of any Prospectus.

            (ii) The  Company  meets  the  requirements  for the use of Form S-3
      under the Securities Act. The Registration  Statement in the form in which
      it  became  effective  and  also  in  such  form  as it  may be  when  any
      post-effective  amendment  thereto became effective and the Prospectus and
      any supplement or amendment  thereto when filed with the Commission  under
      Rule 424(b) under the Securities  Act,  complied in all material  respects
      with the  provisions of the  Securities  Act and did not at any such times
      contain an 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 (in the case of the Prospectus,  in the light of the circumstances
      under which they made) not misleading, except that this representation and
      warranty  does  not  apply  to   statements  in  or  omissions   from  the
      Registration  Statement  or the  Prospectus  made in reliance  upon and in
      conformity  with  information  relating to the Purchaser  furnished to the
      Company in writing by or on behalf of the Purchaser  through you expressly
      for use therein.

            (iii) The Company has not  distributed  and, prior to the completion
      of the  sale of the  Shares  to the  Purchaser,  will not  distribute  any
      offering  material in connection  with the offering and sale of the Shares
      other than the Registration Statement,  the Prospectus or other materials,
      if any, permitted by the Securities Act.

      (v)  Employees.  As of the date  hereof,  the  Company  has no  collective
bargaining  arrangements or agreements covering any of its employees.  Except as
required to be set forth in the Commission Documents,  as of the date hereof the
Company has no employment  contract or any other similar contract or restrictive
covenant,  relating to the right of any officer,


                                      -9-

<PAGE>


employee or  consultant  to be employed or engaged by the  Company.  Each of the
Company and its  subsidiary  requires  its  officers,  technical  employees  and
certain consultants to enter into agreements regarding  proprietary  information
and assignment of inventions, or other similar agreements containing restrictive
covenants.  As of  the  date  hereof,  since  December  31,  1999,  no  officer,
consultant or key employee of the Company whose termination, either individually
or in the  aggregate,  could  reasonably be expected to have a Material  Adverse
Effect,  has  terminated  or, to the  knowledge of the Company,  has any present
intention of terminating his or her employment or engagement with the Company.

      (w) Use of Proceeds. The proceeds from the sale of the Shares will be used
by the Company and its subsidiary  for general  corporate  purposes.

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

      (y) ERISA.  No liability to the Pension Benefit  Guaranty  Corporation has
been  incurred  with respect to any Plan by the Company which is or would have a
Material  Adverse  Effect.  The execution and delivery of this Agreement and the
issue and sale of the Shares will not involve any  transaction  which is subject
to the  prohibitions  of Section 406 of ERISA or in connection  with which a tax
could be imposed  pursuant to Section 4975 of the Internal Revenue Code of 1986,
as amended, provided that, if any of the Purchaser, or any person or entity that
owns a beneficial  interest in any of the  Purchaser,  is an  "employee  pension
benefit  plan"  (within  the meaning of Section  3(2) of ERISA) with  respect to
which the Company is a "party in interest"  (within the meaning of Section 3(14)
of ERISA),  the  requirements  of  Sections  407(d)(5)  and 408(e) of ERISA,  if
applicable,  are met. As used in this Section 3.1(y), the term "Plan" shall mean
an "employee  pension  benefit plan" (as defined in Section 3 of ERISA) which is
or has been  established or maintained,  or to which  contributions  are or have
been  made,  by  the  Company  or by  any  trade  or  business,  whether  or not
incorporated,  which,  together with the Company,  is under common  control,  as
described in Section  414(b) or (c) of the Code.

      (z) Acknowledgment  Regarding  Purchaser's Purchase of Shares. The Company
acknowledges  and agrees that the  Purchaser is acting solely in the capacity of
arm's length  purchaser  with  respect to this  Agreement  and the  transactions
contemplated  hereunder.  The Company further acknowledges that the Purchaser is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity)  with  respect to this  Agreement  and the  transactions  contemplated
hereunder and any advice given by the Purchaser or any of its representatives or
agents in  connection  with this  Agreement  and the  transactions  contemplated
hereunder is merely incidental to the Purchaser's purchase of the Shares.

      SECTION 3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
hereby makes the following  representations  and warranties to the Company:


                                      -10-

<PAGE>


      (a) Organization and Standing of the Purchaser. The Purchaser is a limited
liability  company duly organized,  validly  existing and in good standing under
the laws of the Commonwealth of The Bahamas.

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

      (c)  No  Conflicts.  The  execution,  delivery  and  performance  of  this
Agreement and the consummation by the Purchaser of the transactions contemplated
hereby  and  thereby  or  relating  hereto  do not and will not (i)  result in a
violation of such Purchaser's charter documents or bylaws or (ii) conflict with,
or  constitute a default (or an event which with notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,
amendment,  acceleration or cancellation  of any material  agreement,  mortgage,
deed of trust,  indenture,  note, bond, license, lease agreement,  instrument or
obligation  to which the  Purchaser is a party,  (iii) create or impose or lien,
charge or  encumbrance  on any property of the Purchaser  under any agreement or
any  commitment  to which the Purchaser is party or by which the Purchaser is on
or by which any of its respective  properties or assets are bound or (iv) result
in a violation of any law, rule, or regulation, or any order, judgment or decree
of  any  court  or  governmental  agency  applicable  to  the  Purchaser  or its
properties,  except for such  conflicts,  defaults and  violations as would not,
individually  or in the  aggregate,  prohibit or  otherwise  interfere  with the
ability of the  Purchaser to enter into and perform its  obligations  under this
Agreement in any material  respect.  The Purchaser is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute,  deliver or perform any
of its obligations  under this Agreement or to purchase the Shares in accordance
with the terms hereof,  provided that for purposes of the representation made in
this  sentence,  the  Purchaser is assuming and relying upon the accuracy of the
relevant  representations and agreements of the Company herein.

      (d)  Information.  The  Purchaser  and its  advisors,  if any,  have  been
furnished with all materials  relating to the business,  finances and operations
of the Company and materials  relating to the offer and sale of the Shares which
have been  requested by the Purchaser.  The Purchaser and its advisors,  if any,
have  been  afforded  the  opportunity  to ask  questions  of the  Company.  The
Purchaser has sought such accounting,  legal and tax advice as it has considered
necessary  to  make  an  informed   investment  decision  with  respect  to  its
acquisition of the Shares.  Purchaser  understands that it (and not the Company)
shall be responsible for its own tax  liabilities  that may arise as a result of
this investment or the transactions contemplated by this Agreement.


                                      -11-

<PAGE>


      (e) Selling Restriction. The Purchaser has the right to sell shares of the
Company's  Common Stock during the Investment  Period.  The Purchaser  covenants
that prior to and during the Investment Period, neither the Purchaser nor any of
its  affiliates nor any entity managed by the Purchaser will ever sell shares of
Common Stock of the Company  other than what the Purchaser  has  accumulated  to
purchase  under the  terms of this  Agreement  or in any  accounts  directly  or
indirectly  managed by the  Purchaser or any  affiliate of the  Purchaser or any
entity managed by the Purchaser.



                                   ARTICLE IV

                                    Covenants

      The Company  covenants with the Purchaser as follows,  which covenants are
for the benefit of the Purchaser and its  permitted  assignees,  that during the
term of this Agreement and the Investment Period:

      SECTION 4.1  SECURITIES.  The Company shall notify the  Commission and the
Nasdaq National Market or an Alternate Market, if applicable, in accordance with
their rules and regulations, of the transactions contemplated by this Agreement,
and shall take all other necessary action and proceedings as may be required and
permitted  by  applicable  law,  rule and  regulation,  for the  legal and valid
issuance  of the Shares to the  Purchaser  or  subsequent  holders.

      SECTION 4.2  REGISTRATION  AND  LISTING.  The Company will take all action
necessary to cause its Common Stock to continue to be registered  under Sections
12(b) or  12(g) of the  Exchange  Act,  will  comply  in all  respects  with its
reporting and filing  obligations  under the Exchange Act, and will not take any
action or file any document  (whether or not permitted by the  Securities Act or
the rules  promulgated  thereunder) to terminate or suspend such registration or
to terminate or suspend its reporting and filing  obligations under the Exchange
Act or Securities  Act,  except as permitted  herein.  The Company will take all
action  necessary to continue the listing or trading of its Common Stock and the
listing of the Shares  purchased by Purchaser  hereunder on the Nasdaq  National
Market  or any  Alternate  Market  and  will  comply  in all  respects  with the
Company's  reporting,  filing and other obligations under the bylaws or rules of
the Nasdaq National Market or any Alternate Market.

      SECTION 4.3 REGISTRATION STATEMENT.  Before the Company shall issue a Draw
Down  Notice,  the Company  shall have caused a  sufficient  number of shares of
Common Stock to be authorized and registered to cover the Shares to be issued in
connection with such Draw Down Notice.

      SECTION 4.4 COMPLIANCE WITH LAWS.

      (a) The Company shall comply with all applicable laws, rules,  regulations
and orders,  noncompliance  with which could have a Material Adverse Effect.

      (b) The Company will not be obligated to issue and the Purchaser  will not
be obligated to purchase  any shares of the  Company's  Common Stock which would
result  in  the


                                      -12-

<PAGE>


issuance  under this  Agreement of more than  nineteen and  nine-tenths  percent
(19.9%) of the issued and outstanding shares of the Company's Common Stock.

      SECTION 4.5 KEEPING OF RECORDS  AND BOOKS OF  ACCOUNT.  The Company  shall
keep adequate  records and books of account,  in which complete  entries will be
made in accordance  with GAAP  consistently  applied,  reflecting  all financial
transactions of the Company and its subsidiaries,  and in which, for each fiscal
year,   all  proper   reserves  for   depreciation,   depletion,   obsolescence,
amortization,  taxes,  bad debts  and  other  purposes  in  connection  with its
business shall be made.

      SECTION 4.6  REPORTING  REQUIREMENTS.  Upon  request,  the  Company  shall
furnish  the  following  to the  Purchaser  so long as such  Purchaser  shall be
obligated hereunder to purchase Shares:

      (a) Quarterly  Reports  filed with the  Commission on Form 10-Q as soon as
available, and in any event within forty-five (45) days after the end of each of
the first three fiscal  quarters of the Company;  and

      (b)  Annual  Reports  filed  with the  Commission  on Form 10-K as soon as
available, and in any event within ninety (90) days after the end of each fiscal
year of the Company.

      SECTION  4.7  NON-PUBLIC  INFORMATION.  Neither the Company nor any of its
officers or agents shall disclose any material non-public  information about the
Company to the Purchaser  and neither the  Purchaser nor any of its  affiliates,
officers or agents will solicit any  material  non-public  information  from the
Company.

      SECTION 4.8 EFFECTIVE REGISTRATION  STATEMENT.  If it is necessary for the
Registration  Statement  or a  post-effective  amendment  thereto to be declared
effective  before the  offering of the Shares may  commence,  the  Company  will
endeavor to cause the Registration Statement or such post-effective amendment to
become effective as soon as reasonably practicable and will advise the Purchaser
promptly  and,  if  requested  by the  Purchaser,  will  confirm  such advice in
writing,  when it  receives  notice  that  the  Registration  Statement  or such
post-effective amendment has become effective.

      SECTION 4.9 NO STOP ORDERS. The Company will advise the Purchaser promptly
and, if requested by the Purchaser,  will confirm such advice in writing: (i) of
the Company's  receipt of notice of any request by the  Commission for amendment
of or a  supplement  to  the  Registration  Statement,  any  Prospectus  or  for
additional information;  (ii) of the Company's receipt of notice of the issuance
by  the  Commission  of any  stop  order  suspending  the  effectiveness  of the
Registration  Statement or of the suspension of  qualification of the Shares for
offering or sale in any  jurisdiction  or the  initiation of any  proceeding for
such purpose;  and (iii) of the Company's becoming aware of the happening of any
event,  which makes any  statement of a material  fact made in the  Registration
Statement or the  Prospectus (as then amended or  supplemented)  untrue or which
requires the making of any additions to or changes in the Registration Statement
or the Prospectus (as then amended or supplemented) in order to state a material
fact required by the Securities Act or the  regulations  thereunder to be stated
therein or


                                      -13-

<PAGE>


necessary  in order to make the  statements  therein not  misleading,  or of the
necessity  to  amend  or  supplement   the   Prospectus   (as  then  amended  or
supplemented) to comply with the Securities Act or any other law. If at any time
the Commission  shall issue any stop order  suspending the  effectiveness of the
Registration  Statement,  the Company will make all reasonable efforts to obtain
the withdrawal of such order at the earliest possible time.

      SECTION 4.10 AMENDMENTS TO THE  REGISTRATION  STATEMENT.  The Company will
not (i) file any amendment to the  Registration  Statement or make any amendment
or supplement to the Prospectus of which the Purchaser shall not previously have
been  advised or (ii) so long as, in the  reasonable  opinion of counsel for the
Purchaser,  a Prospectus is required to be delivered in connection with sales by
any Purchaser or dealer, file any information,  documents or reports pursuant to
the Exchange Act without  delivering  a copy of such  information,  documents or
reports to the Purchaser, promptly following such filing.

      SECTION  4.11  PROSPECTUS  DELIVERY.  The Company  shall file a prospectus
supplement to its  Registration  Statement one Trading Day immediately  prior to
each Settlement Date, and will deliver to the Purchaser, without charge, in such
quantities  as  reasonably  requested by the  Purchaser,  copies of each form of
Prospectus  and  prospectus  supplement  on each  Settlement  Date.  The Company
consents  to the use of the  Prospectus  (and  of any  amendment  or  supplement
thereto) in accordance  with the  provisions of the  Securities Act and with the
securities or Blue Sky laws of the jurisdictions in which the Shares may be sold
by the Purchaser, in connection with the offering and sale of the Shares and for
such period of time  thereafter as the  Prospectus is required by the Securities
Act to be  delivered  in  connection  with sales of the  Shares.  If during such
period of time any event shall  occur that in the  judgment of the Company or in
the  opinion of counsel  for the  Purchaser  is  required to be set forth in the
Prospectus (as then amended or  supplemented)  or should be set forth therein in
order to make the statements  therein,  in the light of the circumstances  under
which they were made,  not  misleading,  or if it is necessary to  supplement or
amend the  Prospectus  to comply with the  Securities  Act or any other law, the
Company will  forthwith  prepare and,  subject to the provisions of Section 4.10
above, file with the Commission an appropriate  supplement or amendment thereto,
and will  expeditiously  furnish to the Purchaser a reasonable  number of copies
thereof.

      SECTION  4.12  OTHER  FINANCING.  If the  Company  enters  into any  other
financing  agreement,  the primary  purpose of which  would be to obtain  equity
financing  for the  Company,  during  a Draw  Down  Pricing  Period  (an  "Other
Financing"),  the Company  shall  promptly  notify the  Purchaser  of such Other
Financing and the Purchaser  shall have the options set forth in Section  6.1(k)
hereof. As used herein, "Other Financing" shall not include: (A) the Company (i)
entering  into a  loan,  credit  or  lease  facility  with a bank  or  financing
institution  (including any equity  component  thereof),  (ii)  establishing  an
employee  stock  option plan or agreement  or finance the  acquisition  of other
companies, equipment, technologies or lines of business, (iii) issuing shares of
Common Stock in connection with the Company's  current option plans (as the same
may be amended from time to time), stock purchase plans, rights plans, currently
outstanding  warrants or options,  or  increase  the number of shares  available
under any such plans (the primary purpose of which is not to raise equity),  and
(iv) issuing shares of Common Stock and/or  preferred  stock in connection  with
the  formation and  maintenance  of strategic


                                      -14-

<PAGE>


partnerships,   alliances  or  joint  ventures  and  the  acquisition  of  other
companies,  products,  licenses  or  other  assets;  or (B) any  financing  by a
subsidiary of the Company (each a "Permitted Transaction").

      SECTION 4.13 NOTICE.  The Company shall  immediately  notify the Purchaser
that (i) a Material  Adverse Effect or Material Change in Ownership has occurred
or (ii) the Company has entered into an Other  Financing  (as defined in Section
4.12 hereof).



                                   ARTICLE V

               Conditions to Closing, Draw Downs and Call Options

      SECTION 5.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO ISSUE
A DRAW DOWN NOTICE OR GRANT A CALL OPTION AND SELL THE  SHARES.  The  obligation
hereunder  of the Company to issue a Draw Down Notice or grant a Call Option and
sell the Shares to the Purchaser is subject to the satisfaction or waiver, at or
before each Draw Down or Call Option request (the "Draw Down Exercise Date") and
at or before each  Settlement  Date, of each of the  conditions set forth below.
These  conditions  are for the  Company's  sole benefit and may be waived by the
Company at any time in its sole discretion.

      (a)  Accuracy  of the  Purchaser's  Representations  and  Warranties.  The
representations  and warranties of the Purchaser in this Agreement shall be true
and  correct in all  material  respects  as of the date when made and as of each
Draw Down  Exercise Date and each  Settlement  Date as though made at that time,
except  for  representations  and  warranties  that are  expressly  made as of a
particular date.

      (b) Registration Statement. The Company shall have Shares registered under
the  Registration  Statement  equal to or in  excess  of the  number  of  Shares
issuable  pursuant to such Draw Down  Notice or Call  Option.  The  Registration
Statement  registering the offer and sale of the Shares shall have been declared
effective  by the  Commission  and shall have been amended or  supplemented,  as
required,  to disclose the sale of the Shares prior to each Settlement  Date, as
applicable.

      (c)  Performance by the  Purchaser.  The Purchaser  shall have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser at or prior to each Settlement Date.

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

      (e) No Suspension,  Etc.  Trading in the Company's  Common Stock shall not
have been  suspended  by the  Commission  or the  Nasdaq  National  Market or an
Alternate  Market  (except  for any  suspension  of trading of limited  duration
agreed to by the Company,  which


                                      -15-

<PAGE>


suspension  shall  be  terminated  prior to such  Draw  Down  Exercise  Date and
applicable  Settlement  Date), and, at any time prior to each Draw Down Exercise
Date, trading in securities  generally as reported on the Nasdaq National Market
or an  Alternate  Market shall not have been  suspended  or limited,  or minimum
prices shall not have been  established on securities  whose trades are reported
by the  Nasdaq  National  Market  or an  Alternate  Market,  nor shall a banking
moratorium  have been  declared  either by the  United  States or New York State
authorities,  nor shall there have occurred any material  outbreak or escalation
of  hostilities or other  national or  international  calamity or crisis of such
magnitude  in its effect on, or any  material  adverse  change in any  financial
market  which,  in  each  case,  in  the  judgment  of  the  Company,  makes  it
impracticable or inadvisable to issue the Shares.

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

      SECTION 5.2  CONDITIONS  PRECEDENT TO THE  OBLIGATION  OF THE PURCHASER TO
CLOSE.  The  obligation  hereunder of the  Purchaser to enter this  Agreement is
subject to the satisfaction or waiver, at or before the Closing,  of each of the
conditions  set forth  below.  These  conditions  are for the  Purchaser's  sole
benefit and may be waived by the Purchaser at any time in its sole discretion.

      (a) Accuracy of the Company's Representations and Warranties.  Each of the
representations  and  warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date, as though
made at that time, except for  representations and warranties that speak as of a
particular date.

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

      (c)  Effective   Registration   Statement.   The  Registration   Statement
registering the offer and sale of the Shares shall have been declared  effective
by the Commission and shall have been amended or supplemented,  as required,  to
disclose the sale of the Shares prior to each Settlement Date, as applicable.

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

      (e) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator  or any  governmental  authority  shall have been  commenced,  and no
investigation by any governmental authority shall have been threatened,  against
the Company,  or any of the


                                      -16-

<PAGE>


officers, directors or affiliates of the Company seeking to restrain, prevent or
change the  transactions  contemplated by this Agreement,  or seeking damages in
connection with such transactions.

      (f) Opinion of Counsel,  Etc. At the  Closing,  the  Purchaser  shall have
received an opinion of counsel to the Company, dated the date of Closing, in the
form of Exhibit A hereto, a secretary's certificate,  dated the date of Closing,
in the form of Exhibit B hereto,  and such other  certificates  and documents as
the Purchaser or its counsel shall reasonably require incident to the Closing.

      SECTION 5.3  CONDITIONS  PRECEDENT TO THE  OBLIGATION  OF THE PURCHASER TO
ACCEPT A DRAW DOWN OR CALL OPTION GRANT AND PURCHASE THE SHARES.  The obligation
hereunder  of the  Purchaser  to accept a Draw Down or Call Option  grant and to
acquire  and  pay for the  Shares  on the  Settlement  Date  is  subject  to the
satisfaction  or  waiver,  at or before  each Draw Down  Exercise  Date and each
Settlement  Date, as applicable,  of each of the conditions set forth below. The
conditions  are for the  Purchaser's  sole  benefit  and  may be  waived  by the
Purchaser at any time in its sole discretion.

      (a) Accuracy of the Company's Representations and Warranties.  Each of the
representations  and  warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Draw Down Exercise Date
and  Settlement  Date, as  applicable,  as though made at that time,  except for
representations and warranties that speak as of a particular date.

      (b) Registration Statement. The Company shall have Shares registered under
the  Registration  Statement  equal to or in  excess  of the  number  of  Shares
issuable  pursuant to such Draw Down  Notice or Call  Option.  The  Registration
Statement  registering the offer and sale of the Shares shall have been declared
effective  by the  Commission  and shall have been amended or  supplemented,  as
required,  to disclose the sale of the Shares  prior to each Draw Down  Exercise
Date or each Settlement Date, as applicable.

      (c) No Suspension,  Etc.  Trading in the Company's  Common Stock shall not
have been  suspended  by the  Commission  or the  Nasdaq  National  Market or an
Alternate  Market  (except  for any  suspension  of trading of limited  duration
agreed to by the Company,  which  suspension  shall be terminated  prior to each
Draw Down Exercise Date), and, at any time prior to such Draw Down Exercise Date
or such  Settlement  Date,  trading in  securities  generally as reported by the
Nasdaq National  Market or an Alternate  Market shall not have been suspended or
limited,  or minimum prices shall not have been  established on securities whose
trades are reported by the Nasdaq  National Market or an Alternate  Market,  nor
shall a banking moratorium have been declared either by the United States or New
York State  authorities,  nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international  calamity or crisis
of such  magnitude  in its  effect  on, or any  material  adverse  change in any
financial market which, in each case, in the judgment of the Purchaser, makes it
impracticable or inadvisable to purchase the Shares.  The Common Stock shall not
have been delisted from Nasdaq or an Alternate Market.


                                      -17-

<PAGE>


      (d)  Performance  by  the  Company.  The  Company  shall  have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the  Company  at or  prior  to each  Draw  Down  Exercise  Date and each
Settlement   Date  and  shall  have   delivered   the   Compliance   Certificate
substantially  in the form attached  hereto as Exhibit C.

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

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

      (g) No Material  Adverse  Effect;  No  Material  Change in  Ownership.  No
Material Adverse Effect or Material Change in Ownership shall have occurred.



                                   ARTICLE VI

                          Draw Down Terms; Call Option

      SECTION 6.1 DRAW DOWN TERMS. Subject to the satisfaction of the conditions
set forth in this Agreement, the parties agree as follows:

      (a) The  Company,  may, in its sole  discretion,  issue a Draw Down Notice
with  respect to a Draw Down during each Draw Down  Pricing  Period of up to (i)
$5,000,000 if the Threshold Price is equal to $4.00 and (ii) up to an additional
$500,000  for every $.50  increase in the  Threshold  Price above  $4.00,  for a
maximum  Draw  Down  Amount  during  each  Draw  Down  Pricing  Period  of up to
$30,000,000;  provided,  that the Company may, in its sole  discretion,  issue a
Draw Down Notice with respect to any Draw Down Amount at any Threshold  Price or
any Draw Down Discount  Percentage pursuant to terms mutually agreed upon by the
Purchaser and the Company,  which Draw Down the  Purchaser  will be obligated to
accept.  Prior to issuing any Draw Down  Notice,  the Company  shall have Shares
registered under the Registration  Statement which are valued at an amount equal
to or in excess of the Draw Down Amount.

      (b) The  number of Shares to be issued in  connection  with each Draw Down
shall be equal to the sum of the  quotients  (for each  Trading  Day of the Draw
Down Pricing Period for which the VWAP equals or exceeds the Threshold Price) of
(x) 1/20th (or such other  fraction based on the length of the Draw Down Pricing
Period) of the Draw Down Amount divided by (y) the applicable Draw Down Discount
Percentage multiplied by the VWAP of the Common Stock for such Trading Day.


                                      -18-

<PAGE>


      (c) Only one Draw Down shall be allowed in each Draw Down Pricing  Period.


      (d) The number of Shares  purchased by the Purchaser  with respect to each
Draw Down shall be  determined  on a daily basis  during each Draw Down  Pricing
Period and settled on the second Trading Day following the end of each Draw Down
Pricing Period (the "Settlement Date").

      (e) There shall be a minimum of five (5) Trading  Days between Draw Downs,
unless otherwise mutually agreed upon between the Purchaser and the Company.

      (f) There shall be a maximum of twelve (12)  monthly Draw Downs during the
term of this Agreement.

      (g) Each Draw Down will expire on the end of the last  Trading Day of each
Draw Down Pricing  Period.

      (h) If the VWAP on a given Trading Day is less than the  Threshold  Price,
then the total amount of the Draw Down for the relevant Draw Down Pricing Period
will be reduced by 1/20th  (or such  other  fraction  based on the length of the
Draw Down Pricing  Period).  At no time shall the  Threshold  Price be set below
$4.00, unless mutually agreed upon by the Company and the Purchaser.  If trading
in the  Company's  Common Stock is suspended  for any reason for more than three
(3) hours in any Trading Day, at the Purchaser's option, the price of the Common
Stock shall be deemed to be below the  Threshold  Price for that Trading Day and
the Draw Down for the  relevant  Draw Down  Pricing  Period  shall be reduced by
1/20th (or such  other  fraction  based on the  length of the Draw Down  Pricing
Period).  Notwithstanding  anything in the foregoing to the  contrary,  for each
Trading Day during the Draw Down  Pricing  Period that the VWAP is less than the
Threshold  Price or is deemed to be below the  Threshold  Price  pursuant to the
immediately  preceding sentence,  the Purchaser may elect in its sole discretion
to purchase  Shares at a price equal to the  Threshold  Price  multiplied by the
Draw Down Discount  Percentage at the end of such Draw Down Pricing Period.  The
Purchaser will inform the Company via facsimile  transmission no later than 8:00
p.m.  (eastern time) on the last Trading Day of such Draw Down Pricing Period as
to the number of Shares,  if any, the Purchaser  chooses to purchase  under such
circumstances set forth in this Section 6.1(h).

      (i) The Company must inform the Purchaser via facsimile transmission as to
the Draw Down  Amount the  Company  wishes to exercise  before  commencement  of
trading on the first Trading Day of the Draw Down Pricing Period (the "Draw Down
Notice"), substantially in the form attached hereto as Exhibit D. In addition to
the Draw Down Amount,  the Company shall set the Threshold  Price with each Draw
Down Notice and shall  designate  the first Trading Day of the Draw Down Pricing
Period.  Notwithstanding  anything  in the  foregoing  to the  contrary,  if the
Company  wishes the date of the Draw Down Notice to be the first day of the Draw
Down Pricing Period, the Draw Down Notice must be delivered to the Purchaser and
receipt  of such  Draw  Down  Notice  confirmed  by the  Purchaser  prior to the
commencement of trading on the date of such Draw Down Notice.


                                      -19-

<PAGE>


      (j) On  each  Settlement  Date,  the  Company  shall  deliver  the  Shares
purchased by the Purchaser to the Purchaser or to The  Depositary  Trust Company
("DTC") on the Purchaser's  behalf via the Deposit  Withdrawal  Agent Commission
system  ("DWAC"),  and upon  receipt of the Shares,  the  Purchaser  shall cause
payment  therefor  to be made to the account  designated  by the Company by wire
transfer of immediately available funds provided that the Shares are received no
later than 1:00 p.m.,  eastern time,  or next day available  funds if the Shares
are received thereafter.

      (k) If during any Draw Down Pricing Period the Company shall enter into an
Other  Financing  (other than shares of Common Stock issued under this Agreement
or in connection  with a Permitted  Transaction),  the Purchaser may in its sole
discretion  (i)  purchase  the Draw Down Amount of shares of Common Stock and/or
exercise Call Options  granted during such Draw Down Pricing Period on the terms
at which the Company issued shares of Common Stock in the Other Financing during
such Draw Down Pricing  Period,  (ii) purchase the Draw Down Amount of shares of
Common Stock and/or  exercise Call Options granted during such Draw Down Pricing
Period at the applicable Draw Down Discount  Percentage  times the VWAP for such
Draw Down Pricing Period,  or (iii) elect not to purchase any Shares during such
Draw Down Pricing Period. The Purchaser shall notify the Company of its election
on the Trading Day preceding the Settlement Date.

      (l) If on the Settlement  Date, the Company fails to deliver the Shares to
be purchased by the Purchaser,  and such failure  continues for ten (10) Trading
Days,  the Company shall pay, in cash or restricted  shares of Common Stock,  at
the option of the Purchaser,  as liquidated  damages and not as a penalty to the
Purchaser  an amount  equal to two percent  (2%) of the Draw Down Amount for the
initial thirty (30) days and each additional  thirty (30) day period  thereafter
until such  failure  has been cured,  which shall be pro rated for such  periods
less than thirty (30) days (the  "Periodic  Amount").  Cash  payments to be made
pursuant to this clause (1) shall be due and payable  immediately upon demand in
immediately available cash funds.  Certificates evidencing the restricted shares
of Common Stock shall be delivered  immediately  upon demand.  The parties agree
that the Periodic  Amount  represents  a reasonable  estimate on the part of the
parties, as of the date of this Agreement,  of the amount of damages that may be
incurred  by the  Purchaser  if the  Company  fails to deliver the Shares on the
Settlement  Date.  If the  Purchaser  elects to receive  shares of Common  Stock
instead of cash, the Purchaser shall have the right to demand  registration once
within twelve (12) months of the date of issuance of such shares of Common Stock
and piggyback  registration rights if the Company files a separate  registration
statement.

      SECTION 6.2 PURCHASER'S CALL OPTION.

      (a)  During  each Draw  Down  Pricing  Period,  the  Company,  at its sole
discretion,  may grant to the  Purchaser  the right to  exercise  multiple  call
options of in the  aggregate of up to the  applicable  Draw Down Amount (a "Call
Option").  The  amount  of the Call  Option  shall be set forth in the Draw Down
Notice.  For each Trading Day during a Draw Down Pricing  Period,  the Purchaser
may exercise a Call Option by providing notice to the Company of the exercise of
a Call Option (the "Call Option  Notice"),  substantially  in the form  attached
hereto as Exhibit E. The total amount of Call Options exercised by the Purchaser
shall not exceed  $35,000,000.


                                      -20-

<PAGE>


      (b) The number of shares of Common Stock to be issued in  connection  with
each Call Option  shall equal the  quotient of (i) the amount of the Call Option
exercised and (ii) the product of the applicable  Draw Down Discount  Percentage
and the  greater of (A) the VWAP for the Common  Stock on the day the  Purchaser
issues its Call Option Notice and (B) the Threshold Price.

      (c)  Each  Call  Option  exercised  shall  be  settled  on the  applicable
Settlement Date.

      (d) The Threshold Price  designated by the Company in its Draw Down Notice
shall apply to each Call Option.

      (e) For each Call Option  that the  Purchaser  exercises  pursuant to this
Section 6.2, the Purchaser  must issue via facsimile a Call Option Notice to the
Company no later than 8:00 p.m.  (eastern  time) on the day such Call  Option is
exercised.  If the  Purchaser  does not  exercise  a Call  Option  by 8:00  p.m.
(eastern time) on the last day of the applicable Draw Down Pricing  Period,  the
Purchaser's  Call Options  with  respect to that Draw Down Pricing  Period shall
terminate.



                                  ARTICLE VII

                                   Termination

      SECTION 7.1  TERMINATION  BY MUTUAL  CONSENT.  The term of this  Agreement
shall be the earlier of (i) twenty (20)  months  from the date of  execution  of
this Agreement (the "Investment  Period"),  (ii) the date that all of the shares
registered under the Registration  Statement have been issued and sold and (iii)
the date that the Purchaser has purchased in the aggregate  $70,000,000 pursuant
to all Draw Downs issued and Call Options granted and exercised.  This Agreement
may be terminated at any time by mutual consent of the parties.

      SECTION 7.2 OTHER TERMINATION. The Company shall inform the Purchaser, and
the  Purchaser  shall  have the right to  terminate  this  Agreement  within the
subsequent  thirty (30) days (the "Event Period"),  if (x) the Company,  without
the prior consent of the Purchaser, enters into an Other Financing (other than a
Permitted  Transaction)  which  provides for (i) the issuance of Common Stock or
securities  convertible,  exercisable  or  exchangeable  into Common  Stock at a
discount to the then current market price of the Common Stock,  (ii) a mechanism
for the  reset of the  purchase  price  of the  Common  Stock to below  the then
current market price of the Common Stock,  or (iii) the issuance of Common Stock
with warrants, which have an exercise price such that together with the price of
the Common Stock would result in the issuance of shares of Common Stock at a per
share price below the then current  market price of the Common Stock,  or (y) an
event resulting in a Material Adverse Effect or Material Change in Ownership has
occurred.  The Purchaser may terminate  this Agreement upon one (1) day's notice
during the Event Period.

      SECTION  7.3 EFFECT OF  TERMINATION.  In the event of  termination  by the
Company or the Purchaser, written notice thereof shall forthwith be given to the
other  party  and the  transactions  contemplated  by this  Agreement  shall  be
terminated  without  further  action  by  either


                                      -21-


<PAGE>


party. If this Agreement is terminated as provided in Section 7.1 or 7.2 herein,
this Agreement  shall become void and of no further force and effect,  except as
provided in Section 9.9 hereof.  Nothing in this  Section 7.3 shall be deemed to
release the Company or the  Purchaser  from any  liability  for any breach under
this  Agreement,  or to impair the rights of the  Company and the  Purchaser  to
compel  specific  performance by the other party of its  obligations  under this
Agreement.



                                  ARTICLE VIII

                                 Indemnification

      SECTION 8.1 GENERAL INDEMNITY.

      (a)  Indemnification  by the Company.  The Company will indemnify and hold
harmless the Purchaser,  each of its directors,  fund managers and officers, and
each person, if any, who controls the Purchaser within the meaning of Section 15
of the  Securities Act or Section 20(a) of the Exchange Act from and against any
losses, claims, damages, liabilities and expenses (including reasonable costs of
defense and investigation and all attorneys' fees) to which the Purchaser,  each
of its  directors,  fund  managers and  officers,  and each person,  if any, who
controls  the  Purchaser  may  become  subject,  under  the  Securities  Act  or
otherwise, insofar as such losses, claims, damages, liabilities and expenses (or
actions  in  respect  thereof)  arise out of or are based  upon,  (i) any untrue
statement  or  alleged  untrue  statement  of  a  material  fact  contained,  or
incorporated  by reference,  in the  Registration  Statement  relating to Common
Stock being sold to the Purchaser (including the any prospectus supplement filed
in connection  with the  transactions  contemplated  hereunder (the  "Prospectus
Supplement")  which are a part of it), or any  amendment or supplement to it, or
(ii) the omission or alleged omission to state in that Registration Statement or
any document incorporated by reference in the Registration Statement, a material
fact required to be stated therein or necessary to make the  statements  therein
not misleading, provided that the Company shall not be liable under this Section
8.1(a)  to  the  extent  that a  court  of  competent  jurisdiction  shall  have
determined  by a final  judgment  (with no  appeals  available)  that such loss,
claim,  damage,  liability  or action  resulted  directly  from any such acts or
failures  to act,  undertaken  or omitted to be taken by the  Purchaser  or such
person through its bad faith or willful misconduct;  provided, however, that the
foregoing  indemnity shall not apply to any loss,  claim,  damage,  liability or
expense to the extent, but only to the extent,  arising out of or based upon any
untrue  statement or alleged  untrue  statement or omission or alleged  omission
made in reliance upon and in conformity  with written  information  furnished to
the Company by the Purchaser  expressly for use in the  Registration  Statement,
any  preliminary  prospectus or the  Prospectus  (or any amendment or supplement
thereto);  and  provided,  further,  that with  respect to the  Prospectus,  the
foregoing  indemnity shall not inure to the benefit of the Purchaser or any such
person from whom the person  asserting  any loss,  claim,  damage,  liability or
expense  purchased  Common  Stock,  if  copies  of the  Prospectus  were  timely
delivered to the Purchaser pursuant hereto and a copy of the Prospectus (as then
amended or  supplemented  if the Company shall have  furnished any amendments or
supplements  thereto) was not sent or given by or on behalf of the  Purchaser or
any such person to such person, if required by law so to have been delivered, at
or prior to the  written  confirmation  of the sale of the Common  Stock to such
person,


                                      -22-

<PAGE>


and if the  Prospectus  (as so  amended  or  supplemented)  would have cured the
defect giving rise to such loss, claim, damage, liability or expense.

      The Company will reimburse the Purchaser and each such controlling  person
promptly  upon  demand  for any  legal or other  costs  or  expenses  reasonably
incurred by the Purchaser or any controlling person in investigating,  defending
against,  or  preparing  to  defend  against  any such  claim,  action,  suit or
proceeding,  except that the Company will not be liable to the extent a claim or
action which results in a loss, claim,  damage,  liability or expense arises out
of, or is based upon, an untrue statement, alleged untrue statement, omission or
alleged  omission,  included in any  Prospectus or Prospectus  Supplement or any
amendment or supplement to the  Prospectus or Prospectus  Supplement in reliance
upon, and in conformity with, written information  furnished by the Purchaser to
the Company for inclusion in the Prospectus or Prospectus Supplement.

      (b)  Indemnification  by the  Purchaser.  The Purchaser will indemnify and
hold harmless the Company, each of its directors and officers,  and each person,
if any,  who  controls  the  Company  within  the  meaning  of Section 15 of the
Securities  Act or  Section  20(a) of the  Exchange  Act from  and  against  any
expenses  (including  reasonable  costs of  defense  and  investigation  and all
attorneys' fees) to which the Company and each director,  officer and person, if
any, who controls the Company may become  subject,  under the  Securities Act or
otherwise, insofar as such losses, claims, damages, liabilities and expenses (or
actions  in  respect  thereof)  arise out of or are based  upon,  (i) any untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
Prospectus or Prospectus Supplement or any amendment or supplement to it or (ii)
the  omission  or alleged  omission  to state in any  Prospectus  or  Prospectus
Supplement  or any  amendment or supplement to it a material fact required to be
stated therein or necessary to make the statements  therein not  misleading,  to
the  extent,  but only to the  extent,  the  untrue  statement,  alleged  untrue
statement,  omission  or alleged  omission  was made in  reliance  upon,  and in
conformity with, written  information  furnished by the Purchaser to the Company
for  inclusion in the  Prospectus  or  Prospectus  Supplement or an amendment or
supplement  to it, and the  Purchaser  will  reimburse the Company and each such
director,  officer or controlling  person  promptly upon demand for any legal or
other costs or expenses  reasonably  incurred by the Company or the other person
in  investigating,  defending  against,  or preparing to defend against any such
claim,  action,  suit or  proceeding.

      SECTION 8.2 INDEMNIFICATION  PROCEDURES.  Promptly after a person receives
notice of a claim or the  commencement of an action for which the person intends
to seek  indemnification  under  paragraph (a) or (b) of Section 8.1, the person
will notify the  indemnifying  party in writing of the claim or  commencement of
the action,  suit or proceeding,  but failure to notify the  indemnifying  party
will not relieve the  indemnifying  party from liability  under paragraph (a) or
(b) of Section 8.1,  except to the extent it has been  materially  prejudiced by
the  failure  to  give  notice.  The  indemnifying  party  will be  entitled  to
participate in the defense of any claim,  action, suit or proceeding as to which
indemnification  is being sought,  and if the indemnifying party acknowledges in
writing the  obligation  to indemnify the party against whom the claim or action
is brought,  the indemnifying party may (but will not be required to) assume the
defense against the claim,  action, suit or proceeding with counsel satisfactory
to it.  After an  indemnifying  party  notifies  an  indemnified  party that the
indemnifying  party  wishes to assume the  defense of a claim,  action,  suit or
proceeding  the  indemnifying  party  will not be liable  for any


                                      -23-

<PAGE>


legal or other expenses incurred by the indemnified party in connection with the
defense  against the claim,  action,  suit or proceeding  except that if, in the
opinion of counsel to the  indemnifying  party,  one or more of the  indemnified
parties  should be separately  represented in connection  with a claim,  action,
suit or  proceeding  the  indemnifying  party will pay the  reasonable  fees and
expenses of one separate counsel for the indemnified  parties.  Each indemnified
party, as a condition to receiving  indemnification as provided in Paragraph (a)
or (b) or Section  8.1,  will  cooperate  in all  reasonable  respects  with the
indemnifying  party  in  the  defense  of  any  action  or  claim  as  to  which
indemnification  is  sought.  No  indemnifying  party  will  be  liable  for any
settlement  of any  action  effected  without  its  prior  written  consent.  No
indemnifying  party will,  without the prior written  consent of the indemnified
party,  effect any  settlement  of a pending or  threatened  action with respect
which an  indemnified  party is, or is informed that it may be, made a party and
for  which  it would be  entitled  to  indemnification,  unless  the  settlement
includes an  unconditional  release of the indemnified  party from all liability
and claims which are the subject matter of the pending or threatened action.

      If for any reason the  indemnification  provided for in this  Agreement is
not available to, or is not sufficient to hold harmless, an indemnified party in
respect of any loss or liability  referred to in paragraph (a) or (b) of Section
8.1, each  indemnifying  party will,  in lieu of  indemnifying  the  indemnified
party,  contribute to the amount paid or payable by the  indemnified  party as a
result of the loss or liability,  (i) in the proportion  which is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and by the  indemnified  party on the other from the sale of stock  which is the
subject of the claim,  action,  suit or proceeding which resulted in the loss or
liability or (ii) if that allocation is not permitted by applicable law, in such
proportion as is  appropriate  to reflect not only the relative  benefits of the
sale of stock,  but also the relative  fault of the  indemnifying  party and the
indemnified  party with respect to the  statements  or  omissions  which are the
subject of the claim,  action,  suit or proceeding  that resulted in the loss or
liability, as well as any other relevant equitable considerations.



                                   ARTICLE IX

                                  Miscellaneous

      SECTION 9.1 FEES AND EXPENSES.  The Company shall pay all reasonable  fees
and  expenses  related  to the  transactions  contemplated  by  this  Agreement;
provided,  that the Company shall pay, at the Closing, all reasonable attorneys'
fees and  expenses,  exclusive  of  disbursements  and  out-of-pocket  expenses,
incurred by the Purchaser of up to $50,000 in connection  with the  preparation,
negotiation,  execution and delivery of this Agreement. In addition, the Company
shall  pay all  reasonable  fees  and  expenses  incurred  by the  Purchaser  in
connection with any amendments,  modifications or waivers of this Agreement. All
reasonable fees and expenses incurred in connection with the enforcement of this
Agreement by a party, including,  without limitation,  all reasonable attorneys'
fees and expenses, shall be paid by the defaulting party.


                                      -24-

<PAGE>


      SECTION 9.2 SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION.

      (a) The Company and the Purchaser  acknowledge and agree that  irreparable
damage  would occur in the event that any of the  provisions  of this  Agreement
were not performed in accordance  with their  specific  terms or were  otherwise
breached.  It is  accordingly  agreed that the  parties  shall be entitled to an
injunction or  injunctions to prevent or cure breaches of the provisions of this
Agreement  and to  enforce  specifically  the  terms  and  provisions  hereof or
thereof,  this being in addition to any other remedy to which any of them may be
entitled by law or equity.

      (b) Each of the Company and the Purchaser (i) hereby  irrevocably  submits
to the  jurisdiction of the United States District Court and other courts of the
United  States  sitting in the State of New York for the  purposes  of any suit,
action or  proceeding  arising  out of or relating  to this  Agreement  and (ii)
hereby waives,  and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally  subject to the  jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient  forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the  Purchaser  consents  to process  being  served in any such suit,  action or
proceeding by overnight or registered  mail,  return receipt,  a copy thereof to
such party at the address in effect for notices to it under this  Agreement  and
agrees that such service shall constitute good and sufficient service of process
and notice  thereof.  Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.

      SECTION 9.3 ENTIRE  AGREEMENT;  AMENDMENT.  This  Agreement  contains  the
entire  understanding  of the parties with respect to the matters covered hereby
and,  except as  specifically  set forth  herein,  neither  the  Company nor the
Purchaser  makes any  representations,  warranty,  covenant or undertaking  with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written  instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.

      SECTION  9.4  NOTICES.  Any  notice,  demand,  request,  waiver  or  other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (a) upon hand  delivery,  by telex (with  correct  answer
back received),  telecopy or facsimile at the address or number designated below
(if delivered on a business day during normal  business  hours where such notice
is to be  received),  or the first  business  day  following  such  delivery (if
delivered  other than on a business day during normal  business hours where such
notice is to be received) or (b) on the second  business day  following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon  actual  receipt of such  mailing,  whichever  shall  first  occur.  The
addresses  for  such  communications  shall  be:

If  to  the  Company:     Cytogen Corporation
                          600 College Road East CN 5308
                          Princeton, New Jersey 08540-5308
                          Tel. No.: (609) 750-8200
                          Fax No.: (609) 750-8129
                          Attention: Chief Executive Officer


                                      -25-

<PAGE>


With copies to:           Buchanan Ingersoll
                          650 College Road East, 4th Floor
                          Princeton, New Jersey  08540-6615
                          Tel. No.:  (609) 987-6800
                          Fax No.:  (609) 520-0360
                          Attention: Raymond P. Thek, Esq.

If to the Purchaser:      Acqua Wellington North American Equities Fund, Ltd.
                          c/o Fortis Fund Services (Bahamas) Ltd.
                          Montague Sterling Centre
                          East Bay Street, P. O. Box SS-6238
                          Nassau, Bahamas
                          Tel. No:  (242) 394-2700
                          Fax No.:  (242) 394-9667
                          Attention:  Anthony L.M. Inder Rieden

With copies to:           Parker Chapin LLP
                          The Chrysler Building
                          405 Lexington Avenue
                          New York, NY  10174
                          Tel. No:  (212) 704-6000
                          Fax No:  (212)704-6288
                          Attention:  Christopher S. Auguste, Esq.

      Any party  hereto may from time to time  change its address for notices by
giving at least ten (10) days  written  notice of such  changed  address  to the
other party hereto.

      SECTION 9.5 WAIVERS. No waiver by either party of any default with respect
to any provision,  condition or requirement of this Agreement shall be deemed to
be a  continuing  waiver in the  future  or a waiver  of any  other  provisions,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.

      SECTION 9.6 HEADINGS. The article, section and subsection headings in this
Agreement  are for  convenience  only and  shall not  constitute  a part of this
Agreement  for any other  purpose and shall not be deemed to limit or affect any
of the provisions hereof.

      SECTION 9.7  SUCCESSORS  AND ASSIGNS.  The  Purchaser  may not assign this
Agreement to any person without the prior consent of the Company,  which consent
will not be  unreasonably  withheld.  This  Agreement  shall be binding upon and
inure to the  benefit of the  parties  and their  successors  and  assigns.  The
parties  hereto  may not amend  this  Agreement  or any  rights  or  obligations
hereunder without the prior written consent of the Company and each Purchaser to
be affected by the amendment.  After Closing,  the assignment by a party to this
Agreement of any rights hereunder shall not affect the obligations of such party
under this  Agreement.


                                      -26-

<PAGE>


      SECTION  9.8  GOVERNING  LAW.  This  Agreement  shall be  governed  by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.

      SECTION 9.9 SURVIVAL.  The  representations  and warranties of the Company
and the  Purchaser  contained  in Article  III and the  covenants  contained  in
Article IV shall survive the execution and delivery hereof and the Closing until
the termination of this Agreement, and the agreements and covenants set forth in
Article VIII of this Agreement  shall survive the execution and delivery  hereof
and the Closing hereunder.

      SECTION 9.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties  hereto,  it being  understood that all
parties  need not sign the same  counterpart.  In the  event  any  signature  is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall cause four additional executed signature pages to be physically  delivered
to the other parties within five days of the execution and delivery hereof.

      SECTION 9.11  PUBLICITY.  Except as required by law, the Company shall not
issue any press release or otherwise make any public  statement or  announcement
with respect to this Agreement or the  transactions  contemplated  hereby or the
existence of this Agreement  without the prior written consent of the Purchaser.
In the  event  the  Company  is  required  by law to  issue a press  release  or
otherwise make a public statement or announcement with respect to this Agreement
or the  transaction  contemplated  hereby,  the Company  shall  consult with the
Purchaser on the form and substance of such press release or other disclosure.

      SECTION 9.12 SEVERABILITY.  The provisions of this Agreement are severable
and, in the event that any court of competent  jurisdiction shall determine that
any one or more of the  provisions or part of the  provisions  contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement, and this Agreement
shall be reformed and  construed as if such invalid or illegal or  unenforceable
provision,  or part of such provision,  had never been contained herein, so that
such  provisions  would be valid,  legal and  enforceable  to the maximum extent
possible.

      SECTION  9.13  FURTHER  ASSURANCES.  From  and  after  the  date  of  this
Agreement, upon the request of the Purchaser or the Company, as the case may be,
each of the Company and the Purchaser shall execute and deliver such instrument,
documents  and other  writings as may be  reasonably  necessary  or desirable to
confirm and carry out and to  effectuate  fully the intent and  purposes of this
Agreement.

                                  [END OF PAGE]


                                      -27-

<PAGE>


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

                                       CYTOGEN CORPORATION

                                       By: /s/ H. Joseph Reiser
                                          -------------------------------
                                          Name: H. Joseph Reiser
                                          Title: President and Chief Executive
                                                 Officer


                                       ACQUA WELLINGTON NORTH AMERICAN
                                       EQUITIES FUND, LTD.

                                       By: /s/ Anthony L. M. Inder Rieden
                                          -------------------------------
                                          Name: Anthony L.M. Inder Rieden
                                          Title: Director


                                      -28-

<PAGE>


                                EXHIBIT A TO THE
                         COMMON STOCK PURCHASE AGREEMENT
                               OPINION OF COUNSEL

                   [LETTERHEAD OF                          ]
                                  -------------------------

                       [FORM OF COMPANY'S COUNSEL OPINION]


      1. The Company is a corporation duly incorporated, validly existing and in
good  standing  under the laws of the State of  Delaware.  The  Company  has the
requisite  corporate power to own and operate its properties and assets,  and to
carry on its  business  as  presently  conducted.  Each of the  Company  and its
subsidiaries is duly qualified to do business as a foreign corporation and is in
good  standing  in  every  jurisdiction  in which  the  nature  of the  business
conducted or property owned by it makes such qualification  necessary except for
any  jurisdiction in which the failure to be so qualified will not have Material
Adverse Effect.

      2. The Company has the  requisite  corporate  power and authority to enter
into and perform its obligations  under the Purchase  Agreement and to issue and
sell the Common Stock.  The execution,  delivery and performance of the Purchase
Agreement  by  the  Company  and  the  consummation  by it of  the  transactions
contemplated  thereby  have been duly and validly  authorized  by all  necessary
corporate  action and no further consent or  authorization of the Company or its
Board of Directors or stockholders is required.  The Purchase Agreement has been
duly  executed  and  delivered  by  the  Company  and  the  Purchase   Agreement
constitutes a legal,  valid and binding  obligation  of the Company  enforceable
against  the  Company  in  accordance  with its terms.  The Common  Stock is not
subject to preemptive rights under the Company's Charter or By-Laws.

      3. The  Shares  have been duly  authorized  and,  when  delivered  against
payment in full as provided in the Purchase  Agreement,  will be validly issued,
fully paid and  nonassessable.  Assuming  the Shares are issued  pursuant  to an
effective registration statement and any required prospectus supplement is filed
and  delivered as required by the  Securities  Act, the issuance and sale of the
Shares to the Purchaser will not violate Section 5 of the Securities Act.

      4. The execution,  delivery and  performance  of and  compliance  with the
terms of the  Purchase  Agreement  and the  consummation  by the  Company of the
transactions  contemplated  thereby  (i) do not  violate  any  provision  of the
Company's Charter or By-Laws, (ii) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)  under,
or  give to  others  any  rights  of  termination,  amendment,  acceleration  or
cancellation of, any material  agreement,  mortgage,  deed of trust,  indenture,



<PAGE>


note,  bond,  license,  lease  agreement,  instrument or obligation to which the
Company is a party,  (iii) create or impose a lien, charge or encumbrance on any
property of the  Company  under any  agreement  or any  commitment  to which the
Company  is a party  or by which  the  Company  is bound or by which  any of its
respective  properties or assets are bound, or (iv) result in a violation of any
federal,  state or local statute,  rule,  regulation,  order, judgment or decree
(including federal securities laws and regulations) applicable to the Company or
any of its  subsidiaries or by which any property or asset of the Company or any
of its  subsidiaries  are bound or  affected,  except,  (in all cases other than
violations pursuant to clause (i) above and clause (iv) to the extent of federal
securities laws and  regulations)  for such conflicts,  defaults,  terminations,
amendments,   acceleration,   cancellations   and   violations   as  would  not,
individually or in the aggregate, have a Material Adverse Effect.

      5. There is no action, suit, claim, investigation or proceeding pending or
threatened against the Company or any subsidiary which questions the validity of
this Agreement or the transactions contemplated hereby or any action taken or to
be  taken  pursuant  hereto  or  thereto.  There  is  no  action,  suit,  claim,
investigation  or proceeding  pending or,  threatened,  against or involving the
Company,  any  subsidiary  or any of their  respective  properties or assets and
which,  if adversely  determined,  is reasonably  likely to result in a Material
Adverse Effect.

      6. No consent, approval or authorization of or designation, declaration or
filing with any governmental authority on the part of the Company is required in
connection with the valid execution and delivery of the Purchase  Agreement,  or
the  offer,  sale or  issuance  of the Shares or the  consummation  of any other
transaction contemplated by the Purchase Agreement (other than any filings which
may be required to be made by the Company with the Commission,  the Nasdaq Stock
Market subsequent to the Closing,  and, any registration  statement which may be
filed pursuant to the Purchase Agreement).

      7. The  Registration  Statement  has been  declared  effective  under  the
Securities Act and, to our knowledge, no stop order suspending its effectiveness
has been issued and no proceedings for that purpose have been, to our knowledge,
instituted  or  are  pending  or  threatened   before  or  contemplated  by  the
Commission.



<PAGE>


                                    EXHIBIT B
                     TO THE COMMON STOCK PURCHASE AGREEMENT

                             SECRETARY'S CERTIFICATE

                                        , 2000
                               ---------

      The  undersigned,                ,  Secretary  of Cytogen  Corporation,  a
Delaware  corporation (the  "Company"),  delivers this certificate in connection
with the  issuance  and sale of  shares  of common  stock of the  Company  in an
aggregate  amount of $            to Acqua  Wellington  North American  Equities
Fund, Ltd. (the  "Purchaser")  pursuant to the Common Stock Purchase  Agreement,
dated         ,  2000  (the  "Agreement"),  by and  among  the  Company  and the
Purchaser, and hereby certifies on the date hereof, that (capitalized terms used
herein without definition have the meanings assigned to them in the Agreement):

      1.  Attached  hereto as Exhibit A is a true,  complete and correct copy of
the  Restated  Certificate  of  Incorporation  of the  Company as filed with the
Secretary of State of the State of            . The Certificate of Incorporation
of the Company has not been further  amended or restated,  and no document  with
respect to any amendment to the Restated  Certificate  of  Incorporation  of the
Company has been filed in the office of the  Secretary  of State of the State of
            since            ,  2000,  the date  shown on the face of the  state
certification  relating to the Company's Restated  Certificate of Incorporation,
which is in full  force and  effect on the date  hereof,  and no action has been
taken by the Company in  contemplation of any such amendment or the dissolution,
merger or consolidation of the Company.

      2. Attached hereto as Exhibit B is a true and complete copy of the Amended
and Restated By-laws of the Company, as amended and restated through,  and as in
full force and effect on, the date hereof,  and no proposal  for any  amendment,
repeal or other  modification  to the  By-laws  of the  Company  has taken or is
currently pending before the Board of Directors or stockholders of the Company.

      3. Attached  hereto as Exhibit C is a true and correct copy of all written
actions and  resolutions  of the Board of Directors  (including  any  committees
thereof)  of the  Company  relating  to  the  transactions  contemplated  by the
Agreement;  said actions and  resolutions  have not been  amended,  rescinded or
modified since their adoption and remain in full force and effect as of the date
hereof;  said actions and  resolutions are the only  resolutions  adopted by the
Board of Directors of the Company,  or any committee thereof,  pertaining to (A)
the  offering  of the Common  Stock to be sold by the  Company  pursuant  to the
Agreement,  (B) the  execution  and delivery of the  Agreement and (C) all other
transactions in connection with the foregoing.

      4. Each person who, as an officer of the Company,  or as  attorney-in-fact
of an  officer  of the  Company,  signed the  Agreement  and any other  document
delivered prior hereto or on the date hereof in connection with the transactions
contemplated  by the Agreement,  was duly elected,  qualified and acting as such
officer or duly appointed and acting as such attorney-in-fact, and the signature
of each such person appearing on any such document is his genuine signature.



<PAGE>


      5.    The  Agreement as executed and  delivered on behalf of the Company
has been approved by the Company.

      6. The actions,  resolutions and other records of the Company  relating to
all of the  proceedings  of  the  Stockholders  of the  Company,  the  Board  of
Directors  of the Company  and any  committees  thereof  made  available  to the
Purchasers and their counsel are the true,  correct and complete copies thereof,
with respect to all  proceedings  of said  Stockholders,  Board of Directors and
committees  thereof.  Such  records  and other  documents  of the  Company  made
available  to the  Purchasers  and their  counsel  were true and complete in all
respects. There have been no material changes,  additions or alterations in said
records and other documents that have not been disclosed to the Purchasers.

      IN  WITNESS  WHEREOF,  I have  signed my name as of the date  first  above
written.

                                       By:
                                          ---------------------------
                                          Name:
                                          Title:   Secretary



      I,                   ,  Chief Executive Officer of Cytogen Corporation, do
hereby certify that                          is the duly elected,  qualified and
acting  Secretary of the above  mentioned  company,  and that the  signature set
forth above is her true and genuine signature.

      IN WITNESS  WHEREOF,  I have hereunto  signed my name as of the date first
above written.

                                       By:
                                          ---------------------------
                                          Name:
                                          Title:  Chief Executive Officer



<PAGE>


                                    EXHIBIT C
                     TO THE COMMON STOCK PURCHASE AGREEMENT

                             COMPLIANCE CERTIFICATE

      In  connection  with the  issuance  of shares of common  stock of  Cytogen
Corporation,  a Delaware corporation (the "Company"),  pursuant to the Draw Down
Notice,  dated               delivered by the Company to Acqua  Wellington North
American  Equities Fund,  Ltd. (the  "Purchaser")  pursuant to Article VI of the
Common Stock Purchase  Agreement dated                      , by and between the
Company  and  Acqua   Wellington   North  American   Equities  Fund,  Ltd.  (the
"Agreement"), the undersigned hereby certifies as follows:

      1. The undersigned is the duly elected Chief [Executive/Financial] Officer
of the Company.

      2. The  representations and warranties of the Company set forth in Section
3.1 of the  Agreement  are true and correct in all  material  respects as though
made on and as of the date hereof,  except for  representations  and  warranties
that speak as of a particular date.

      3. The Company has  performed in all material  respects all  covenants and
agreements  to be performed by the Company on or prior to the Draw Down Exercise
Date and the Settlement Date related to the Draw Down Notice and has complied in
all material  respects with all obligations and conditions  contained in Section
5.3 of the Agreement.

      Capitalized  terms used but not  otherwise  defined  herein shall have the
meanings assigned to them in the Agreement.

      The undersigned has executed this Certificate this       day of          ,
2000.

                                       By:
                                          ---------------------------

                                       Name:
                                            -------------------------

                                       Title:
                                             ------------------------



<PAGE>


                                    EXHIBIT D
                     TO THE COMMON STOCK PURCHASE AGREEMENT

                            FORM OF DRAW DOWN NOTICE

      Reference  is made to the  Common  Stock  Purchase  Agreement  dated as of
        ,        (the  "Purchase  Agreement")  between  Cytogen  Corporation,  a
Delaware  corporation  (the  "Company"),  and Acqua  Wellington  North  American
Equities  Fund,  Ltd.  Capitalized  terms used and not otherwise  defined herein
shall have the meanings given such terms in the Purchase Agreement.

      In accordance with and pursuant to Section 6.1 of the Purchase  Agreement,
the Company  hereby issues this Draw Down Notice to exercise a Draw Down request
for the Draw Down Amount indicated below.

      Draw Down Amount:
                       -------------------------------------

      Call Option Amount:
                         -----------------------------------

      Draw Down Pricing Period start date:
                                          ------------------

      Draw Down Pricing Period end date:
                                        --------------------

      Settlement Date:
                      --------------------------------------

      Threshold Price:
                      --------------------------------------

      Minimum Threshold Price:
                              ------------------------------

      Dollar Amount and/or Number of Shares
      of Common Stock Currently Unissued
      under the Registration Statement:
                                       ---------------------


Dated:
      -----------------------

                                       -----------------------------------
                                       By:
                                          --------------------------------
                                          Name:
                                          Title:

                                          Address:
                                          Facsimile No.:
                                          Wire Instructions:
                                                            --------------
                                          Contact Name:
                                                       -------------------

Receipt Acknowledged:
Acqua Wellington North American Equities Fund, Ltd.

By:
   -------------------------------
   Name:
   Title:



<PAGE>


                                    EXHIBIT E
                     TO THE COMMON STOCK PURCHASE AGREEMENT

                           FORM OF CALL OPTION NOTICE

To:
   -------------------------------
Fax #:


      Reference  is made to the  Common  Stock  Purchase  Agreement  dated as of
        ,        (the  "Purchase  Agreement")  between  Cytogen  Corporation,  a
Delaware  corporation  (the  "Company"),  and Acqua  Wellington  North  American
Equities  Fund,  Ltd.  Capitalized  terms used and not otherwise  defined herein
shall have the meanings given such terms in the Purchase Agreement.

      In accordance with and pursuant to Section 6.2 of the Purchase  Agreement,
the  Purchaser  hereby  issues this Call Option Notice to exercise a Call Option
for the Call Option Amount indicated below.

      Call Option Amount Exercised:
                                   -------------------------

      Number of Shares to be purchased:
                                       ---------------------

      VWAP on the date hereof:
                              ------------------------------

      Draw Down Discount Percentage:
                                    ------------------------

      Settlement Date:
                      --------------------------------------

      Threshold Price:
                      --------------------------------------

      Minimum Threshold Price:
                              ------------------------------


Dated:
      -----------------------

                             Acqua Wellington North American Equities Fund, Ltd.

                             By:
                                ------------------------------------
                                Name:
                                Title:



</TEXT>
</DOCUMENT>
