Exhibit 10.1
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                               STOCK AND WARRANT
                             SUBSCRIPTION AGREEMENT

         THIS STOCK AND WARRANT SUBSCRIPTION AGREEMENT (the "Agreement") is
made as of May 10, 2006 by and between Neurologix, Inc., a Delaware corporation
(the "Company"), and the investors set forth on Exhibit A hereto (individually,
an "Investor" and collectively, the "Investors") and, solely with respect to
Sections 3.2 and 3.3, (i) Martin J. Kaplitt, M. D., (ii) Palisade Private
Holdings LLC ("Palisade") and (iii) Auckland Technology Enabling Corporation
Limited ((i) - (iii) together, the "Holders").

                                  WITNESSETH:

         WHEREAS, the Company desires to issue and sell to each of the
Investors and each of the Investors desires to purchase from the Company the
number of shares (the "Purchased Shares") of Series C Convertible Preferred
Stock, par value $0.10 per share, of the Company (the "Series C Preferred
Stock") set forth opposite such Investor's name on Exhibit A hereto at a price
per share of $35.00 (the "Purchase Price") and warrants (the "Warrants")
substantially in the form of Exhibit D attached hereto the "Warrant
Certificate") to purchase up to the number of shares of Common Stock set forth
on Exhibit A hereto (such number of shares, as adjusted in accordance with the
Warrants, the "Warrant Shares"), for the "Total Purchase Price" set forth
opposite such Investor's name on Exhibit A, pursuant to the terms of this
Agreement; the Warrant Shares, the Purchased Shares, the shares of the
Company's common stock, par value $0.001 per share (the "Common Stock")
issuable upon conversion of the Purchased Shares (the "Purchased Conversion
Shares"), the shares of the Company's Series C Preferred Stock issued as
dividends paid in kind (the "PIK Dividend Shares") and the shares of Common
Stock issuable upon the conversion of the PIK Dividend Shares (the "PIK
Dividend Conversion Shares", and together with the Purchased Conversion Shares,
the "Conversion Shares") are referred to herein together as the "Shares";

         WHEREAS, the parties hereto desire to enter into this Agreement for
the purpose of setting forth certain representations, warranties and covenants
made by each to the other as an inducement to the execution and delivery of
this Agreement and the conditions precedent to the consummation of the
transactions set forth in this Agreement.

         NOW, THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

                                   ARTICLE I

                  PURCHASE AND SALE OF THE SHARES AND WARRANTS

         1.1 Authorization and Sale of the Purchased Shares and Warrants.
Subject to the terms and conditions set forth in this Agreement, the Company
has authorized the issuance and sale of up to 342,857 shares of Series C
Preferred Stock and Warrants to purchase up to 2,224,719 Warrant Shares.

         1.2 Agreement to Sell and Purchase the Purchased Shares and Warrants.
Subject to the terms and conditions of this Agreement, each Investor, severally
and not jointly, agrees to purchase at the Closing (as such term is defined in
Section 1.3) for the total purchase price set forth opposite such Investor's
name on Exhibit A (reflecting the Total Purchase Price), that number of
Purchased Shares and Warrants set forth opposite such Investor's name on
Exhibit A.

         1.3 Delivery of the Purchased Shares and Warrants at Closing.

             (a) Except as set forth in this Section 1.3, the completion of the
purchase and sale of the Purchased Shares and Warrants (the "Closing") shall
occur on May 10, 2006 (the "Closing Date"), at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 4 Times Square, New York, New York 10036 at 10:00 AM
Eastern time, or at such other time and place as may be mutually agreed upon by
the Company and the Investors. At the Closing, the Company shall deliver the
Warrants to the Investors and either

                (i) deliver to the Investors one or more stock certificates
       representing the number of Purchased Shares set forth on Exhibit A, each
       such certificate to be registered in the name of each Investor or, if so
       indicated on Exhibit A of this Agreement, in the name of a nominee
       designated by such Investor; or

                (ii) direct its transfer agent to deliver such certificates to
       the Investors (at the address of each Investor set forth on Exhibit A
       hereto) or to the Investors' designated custodian (at such address as is
       provided to the Company prior to the Closing Date) within three business
       days after the Closing Date.

             (b) The Company's obligation to issue the Purchased Shares and
Warrants to the Investors shall be subject to the following conditions, any one
or more of which may be waived by the Company in writing at any time in its
sole discretion:

                (i) the Company shall have received one or more wire transfers
       of funds to the account designated by the Company in Exhibit E in the
       full amount of the purchase price for all of the Purchased Shares and
       Warrants being purchased hereunder as set forth on Exhibit A (the "Wire
       Transfer"); and

                (ii) the representations and warranties of the Investors set
       forth herein shall be true and correct in all respects as of the Closing
       Date (except for representations and warranties that speak as of a
       specific date, which representations and warranties shall be true and
       correct in as of such date) and the undertakings of the Investors set
       forth herein shall have been satisfied and fulfilled on or prior to the
       Closing Date as set forth herein.

             (c) The Investors' obligations to purchase the Purchased Shares
and Warrants shall be subject to the following conditions, any one or more of
which may be waived by the written consent of a majority-in-interest of the
Investors at any time:

                (i) the representations and warranties of the Company set forth
       herein shall be true and correct as of the Closing Date in all respects
       (except for representations and warranties that speak as of a specific
       date, which representations and warranties shall be true and correct as
       of such date); and

                (ii) the Investors shall have received an opinion of Company
       counsel substantially in the form attached as Exhibit B hereto and such
       other documents as shall have been reasonably requested from the Company
       for the purpose of enabling them to pass upon the issuance and sale of
       the Purchased Shares and Warrants as contemplated herein, or to evidence
       the accuracy of any representations and warranties or the satisfaction
       of any of the conditions or agreements contained herein.

             (d) Funds received from each Investor in the Wire Transfer shall
be held in escrow by the Company for the benefit of the Investor and may only
be released to the Company at such time as the Company has received one or more
wire transfers from the Investors for the purchase price for the Purchased
Shares and Warrants totaling at least $10,000,000.

                                  ARTICLE II

                 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         Except as disclosed by the Company in a written Disclosure Schedule
provided by the Company to the Investors (the "Disclosure Schedule"), the
Company hereby represents, warrants and covenants to the Investors as of the
Closing Date, as follows:

         2.1 Organization. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to own, operate and
occupy its properties and to conduct its business as presently conducted and,
as described in the documents filed by the Company under the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act") since January 1, 2005 through the date hereof,
including, without limitation, its most recent report on Form 10-KSB (the
"Exchange Act Documents"), and is registered or qualified to do business and is
in good standing in each jurisdiction in which the nature of the business
conducted by it or the location of the properties owned or leased by it
requires such qualification, except where the failure to be so authorized,
qualified or in good standing would not be reasonably likely to have a Material
Adverse Effect (as defined below). No proceeding to which the Company is a
party has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification. The Company has designated the terms of the Series C Preferred
Stock by filing the Certificate of Designation to the Certificate of
Incorporation in substantially the form set forth in Exhibit C with the
Secretary of State of the State of Delaware. The Company is an operating
company within the meaning of the Department of Labor Regulation 2510.3-101.
The Company has no subsidiaries as defined in Rule 405 under the Securities Act
of 1933, as amended (the "Securities Act").

             (a) For purposes of this Agreement:

                (i) "Person" shall mean an individual, corporation, limited
       liability company, joint venture, partnership, trust, unincorporated
       organization, government or any agency or political subdivision thereof
       or any other entity that may be treated as a person under applicable
       law.

                (ii) "Material Adverse Effect" shall mean any material adverse
       effect , or any development that could reasonably be expected to result
       in a material adverse effect, on the business or business prospects,
       properties, assets, operations, results of operations or condition
       (financial or otherwise), of the Company or on the transactions
       contemplated hereby or by the Warrant (collectively, "Transaction
       Documents").

         2.2 Due Authorization and Valid Issuance. The Company has all
requisite corporate power and authority to execute, deliver and perform its
obligations under the Transaction Documents, and the Transaction Documents have
been duly authorized and validly executed and delivered by the Company and
constitute the legal, valid and binding agreement of the Company enforceable
against the Company in accordance with their respective terms, except (i) as
rights to indemnity and contribution which may be limited by state or federal
securities laws, or (ii) as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
The issuance, sale and delivery of the Purchased Shares and Warrants in
accordance with this Agreement, and the issuance of the Conversion Shares
issuable upon conversion of the Purchased Shares and the Warrant Shares
issuable upon exercise of the Warrants, have been duly authorized and reserved
for issuance, as the case may be, by all necessary corporate action on the part
of the Company. The Purchased Shares and Warrants when so issued, sold and
delivered against payment therefor in accordance with the provisions of this
Agreement, and the Conversion Shares and Warrant Shares, when issued pursuant
to the terms of the Purchased Shares and Warrants, will be duly and validly
issued, fully paid and non-assessable.

         2.3 Non-Contravention. The execution and delivery of the Transaction
Documents, the issuance and sale of the Shares under the Transaction Documents,
the fulfillment of the terms of the Transaction Documents and the consummation
of the transactions contemplated thereby do not and will not (A) conflict with
or constitute a violation of, or default (with the passage of time or
otherwise) (including any covenant, restriction or provision with respect to
financial ratios or tests or any aspect of the financial condition or results
of operations of the Company) under, (i) any bond, debenture, note or other
evidence of indebtedness, lease, contract, indenture, mortgage, deed of trust,
loan agreement, joint venture or other agreement or instrument to which the
Company is a party or by which it or its properties are bound, (ii) the
certificate of incorporation, by-laws or other organizational documents of the
Company, or (iii) any law, administrative regulation, ordinance or order of any
court or governmental agency, arbitration panel or authority or the rules of
the OTC Bulletin Board ("OTC BB") applicable to the Company or its properties
(collectively, the "Applicable Law"), except in the case of clauses (i) and
(iii) for any such conflicts, violations or defaults which are not reasonably
likely to have a Material Adverse Effect or (B) result in the creation or
imposition of any lien, encumbrance, claim, security interest or restriction
whatsoever upon any of the properties or assets of the Company or an
acceleration of indebtedness pursuant to any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of indebtedness or
any indenture, mortgage, deed of trust or any other agreement or instrument to
which the Company is a party or by which it is bound or to which any of the
property or assets of the Company is subject, except to the extent that such
acceleration would not have a Material Adverse Effect. No consent, approval,
authorization or other order of, or registration, qualification or filing with,
any regulatory body, administrative agency, or other governmental body or any
other person is required for the execution and delivery of the Transaction
Documents by the Company, the valid issuance and sale of the Shares to be sold
pursuant to the Transaction Documents and the performance by the Company of its
other obligations thereunder, other than such as have been made or obtained,
and except for any post-closing securities filings or notifications required to
be made under federal or state securities laws.

         2.4 Capitalization. The authorized capital stock of the Company
consists of 60,000,000 shares of Common Stock and 5,000,000 shares of preferred
stock, par value $0.10 per share, of which 300,000 shares have been designated
Series A Preferred Stock and 4,000,000 shares have been designated Series B
Preferred Stock. As of March 24, 2006, 26,543,569 shares were issued and
outstanding, consisting of 26,542,924 shares of Common Stock, 645 shares of
Series A Preferred Stock and no shares of Series B Preferred Stock. The Company
has not issued any capital stock since the date above other than pursuant to
(i) employee benefit plans disclosed in the Exchange Act Documents, or (ii)
outstanding warrants, options or other securities disclosed in the Exchange Act
Documents. The outstanding shares of capital stock of the Company have been
duly and validly issued and are fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and were not issued
in violation of any preemptive rights or similar rights to subscribe for or
purchase securities. Except as set forth in or contemplated by the Exchange Act
Documents, there are no outstanding rights (including, without limitation,
preemptive rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any unissued shares of capital stock or other equity
interest in the Company or any contract, commitment, agreement, understanding
or arrangement of any kind to which the Company is a party or of which the
Company has knowledge and relating to the issuance or sale of any capital stock
of the Company, any such convertible or exchangeable securities or any such
rights, warrants or options. Without limiting the foregoing and except as
provided herein or as disclosed in the Exchange Act Documents, no preemptive
right, co-sale right, right of first refusal, registration right, or other
similar right exists with respect to the Purchased Shares or Warrants or the
issuance and sale thereof. No further approval or authorization of any
stockholder, the Board of Directors of the Company or others is required for
the issuance and sale of the Purchased Shares or Warrants. Except as disclosed
in the Exchange Act Documents, there are no stockholders agreements, voting
agreements or other similar agreements with respect to the Common Stock to
which the Company is a party or, to the knowledge of the Company, between or
among any of the Company's stockholders.

         2.5 Legal Proceedings. There is no material legal or governmental
proceeding pending or, to the knowledge of the Company, threatened to which the
Company is a party or of which the business or property of the Company is
subject that is not disclosed in the Exchange Act Documents.

         2.6 No Violations. The Company is not in violation of (i) its
certificate of incorporation, bylaws, or other organizational document; (ii) in
violation of any law, administrative regulation, ordinance or order of any
court or governmental agency, arbitration panel or authority applicable to the
Company, which violation, individually or in the aggregate, would be reasonably
likely to have a Material Adverse Effect; or (iii) is in default (and there
exists no condition which, with the passage of time or otherwise, would
constitute a default) in the performance of any bond, debenture, note or any
other evidence of indebtedness in any indenture, mortgage, deed of trust or any
other agreement or instrument to which the Company is a party or by which the
Company is bound or by which the properties of the Company is bound, which
default, individually or in the aggregate, would be reasonably likely to have a
Material Adverse Effect.

         2.7 Governmental Permits, Etc. With the exception of the matters which
are dealt with separately in Sections 2.1 (Organization), 2.12 (Exchange Act
Compliance), and 2.13 (Reporting Status), the Company has all necessary
franchises, licenses, certificates and other authorizations from any foreign,
federal, state or local government or governmental agency, department, or body
that are currently necessary for the operation of the business of the Company
as currently conducted and as described in the Exchange Act Documents except
where the failure to currently possess could not reasonably be expected to have
a Material Adverse Effect.

         2.8 Intellectual Property.

             (a) The Company owns or has valid, binding and enforceable
licenses or other rights to use the patents and patent applications,
copyrights, trademarks, trade names, service marks, service names, and know-how
(including trade secrets and other unpatented proprietary intellectual property
rights) that are necessary to conduct its business in the manner in which it is
presently conducted or contemplated to be conducted (such rights are referred
to herein collectively as the "Company Intellectual Property"), except where
the failure to have such ownership, exercise or right to use would not,
individually or in the aggregate, have a Material Adverse Effect.

             (b) Section 2.8(b) of the Disclosure Schedule lists all (i)
patents of the Company, (ii) owned patent applications of the Company and (iii)
license agreements to use patents or patent applications by the Company. To the
knowledge of the Company, there are no present or threatened infringements of
any patents or patent applications owned by the Company or licensed to the
Company (the "Company Patents") by any third party, except, in either case, for
such infringements which would not, individually or in the aggregate, have a
Material Adverse Effect. The Company has complied with the required duty of
candor and good faith in dealing with the United States Patent and Trademark
Office (the "PTO") with respect to the Company Patents, and to the Company's
knowledge, all individuals to whom the duty of candor and good faith applies
with respect to the Company Patents have complied with such duty, including the
duty to disclose to the PTO all information believed to be material to the
patentability of the Company Patents. The Company is not aware of any
publication, disclosure, public use, or offer for sale by any of its employees
or consultants of subject matter prior to the filing date of any one of the
Company Patents that negatively impacts the patentability of any claim of such
patent. There are no legal or governmental proceedings pending relating to
Company Patents other than proceedings in the PTO, or foreign patent office
review of pending applications for patents, and, other than PTO (or patent
offices in other jurisdictions) review of pending applications for patents, to
the Company's knowledge, no such proceedings are threatened or contemplated by
governmental authorities.

             (c) To the Company's knowledge, there are no pending, nor has
there been any notice of any third-party patents or threatened actions, suits,
proceedings, claims or allegations by others that the Company, including
through use of the Company Patents, is or will be infringing any patent, trade
secret, trademark, service mark, copyright or other proprietary intellectual
property rights.

             (d) The Company is not in breach of, and has complied in all
respects with all terms of, any of the license agreements under which the
Company licenses a patent or patent application that covers technology
necessary to conduct or used in the conduct of the Company's business in the
manner in which it is currently conducted; except as would not, individually or
in the aggregate, have a Material Adverse Effect.

             (e) The Company is not aware of any obligation of any of its
employees under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of such
employee's best efforts to promote the interest of the Company or that would
conflict with the Company's business; and to the Company's knowledge, it is not
and will not be necessary to use any inventions, trade secrets or proprietary
information of any of its consultants, or its employees (or persons it
currently intends to hire) made prior to their employment by the Company,
except for technology that is licensed to or owned by the Company. All
employees of the Company have executed and delivered to and in favor of the
Company an agreement regarding the protection of confidential and proprietary
information and the assignment to the Company of all intellectual property
rights arising from the services performed for the Company by such persons.

         2.9 Financial Statements; Solvency; Obligations to Related Parties.

             (a) The financial statements of the Company and the related notes
contained in the Exchange Act Documents present fairly, in accordance with
generally accepted accounting principles, the financial position of the Company
and its Subsidiaries as of the dates indicated, and the results of its
operations and cash flows for the periods therein specified consistent with the
books and records of the Company and its Subsidiaries except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which are not expected to be material in amount except as
otherwise described in the Exchange Act Documents. Such financial statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified, except as may be disclosed in the notes to such
financial statements, or in the case of unaudited statements, as may be
permitted by the Securities and Exchange Commission (the "SEC") and except as
disclosed in the Exchange Act Documents. The other financial information
contained in the Exchange Act Documents has been prepared on a basis consistent
with the financial statements of the Company.

             (b) Except as set forth in the Exchange Act Documents, the Company
has no knowledge of any facts or circumstances which lead it to believe that it
will be required to file for reorganization or liquidation under the bankruptcy
or reorganization laws of any jurisdiction, and has no present intention to so
file.

             (c) Except as set forth in any Exchange Act Documents, there are
no obligations of Company to officers, directors, stockholders or employees of
Company other than:

                (i) for payment of salary for services rendered and for bonus
       payments;

                (ii) reimbursements for reasonable expenses incurred on behalf
       of Company;

                (iii) for other standard employee benefits made generally
       available to all employees (including stock option agreements
       outstanding under any stock option plan approved by the Board of
       Directors of Company);

                (iv) obligations listed in Company's financial statements; and

                (v) under applicable laws.

Except as described above or in any Exchange Act Documents, (i) none of the
officers, directors or, to the best of the Company's knowledge, key employees
or stockholders of Company or any members of their immediate families, are
indebted to the Company, individually or in the aggregate, in excess of
$60,000; and (ii) none of the officers, directors or, to the best of the
Company's knowledge, key employees have any direct or indirect ownership
interest in any firm or corporation with which the Company is affiliated or
with which the Company has a business relationship, or any firm or corporation
which competes with the Company, other than passive investments in publicly
traded companies (representing less than one percent (1%) of such company)
which may compete with the Company. Except as described above or as set forth
in the Exchange Act Documents, no officer, director, or any member of their
immediate families, is, directly or indirectly, interested in any material
contract with the Company and no agreements, understandings or proposed
transactions are contemplated between the Company and any such person. Except
as set forth in any Exchange Act Documents, the Company is not a guarantor or
indemnitor of any indebtedness of any other person, firm or corporation.

         2.10 No Material Adverse Change. Except as disclosed in the Exchange
Act Documents, since January 1, 2006, there has not been (i) any material
adverse change in the financial condition or results of operations of the
Company (ii) any event affecting the Company which has had or could reasonably
be expected to have a Material Adverse Effect, (iii) any obligation, direct or
contingent, that is material to the Company, incurred by the Company, except
obligations incurred in the ordinary course of business or with respect to the
transactions contemplated by the Transaction Documents or (iv) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company

         2.11 Disclosure. The representations and warranties of the Company
contained in this Article II as of the date hereof and as of the Closing Date,
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Company understands and confirms that the Investors will rely
on the foregoing representations in purchasing the Purchased Shares and
Warrants.

         2.12 Exchange Act Compliance. The Company's Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is quoted on the OTC BB, and
the Company has taken no action designed to, or likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or
removal from quotation of the Common Stock from the OTC BB, nor has the Company
received any notification that the SEC, the OTC BB or the National Association
of Securities Dealers, Inc. ("NASD") is contemplating terminating such
registration or quotation.

         2.13 Reporting Status. Since January 1, 2005, the Company has filed or
furnished with the SEC in a timely manner all of the documents that the Company
was required to file or furnish under the Exchange Act. As of the date of
filing thereof, each Exchange Act Document complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC promulgated thereunder applicable to such Exchange Act Document. None of
the Exchange Act Documents, as of the date filed, contained any untrue
statement of material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.

         2.14 No Manipulation of Stock. The Company has not taken, in violation
of applicable law, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.

         2.15 Company Not an "Investment Company". The Company has been advised
of the rules and requirements under the Investment Company Act of 1940, as
amended (the "Investment Company Act"). The Company is not, and immediately
after receipt of payment for the Purchased Shares and Warrants will not be, an
"investment company" within the meaning of the Investment Company Act.

         2.16 Embargoed Person. The Company has no foreign operations. None of
the funds or other assets of the Company constitute or shall constitute
property of, or shall be beneficially owned, directly or indirectly, by any
person with whom U.S. persons are restricted from engaging in financial or
other transactions under United States law, including, but not limited to, the
International Emergency Economic Powers Act, 50 U.S.C. ss. 1701 et seq., The
Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any executive orders
or regulations promulgated under any such United States laws (each, an
"Embargoed Person"), with the result that the investments evidenced by the
Purchased Shares or the Warrants are or would be in violation of law; (ii) no
Embargoed Person has or shall have any interest of any nature whatsoever in the
Company with the result that the investments evidenced by the Purchased Shares
and Warrants are or would be in violation of law; and (iii) none of the funds
of the Company are or shall be derived from any unlawful activity with the
result that the investments evidenced by the Purchased Shares or the Warrants
are or would be in violation of law; provided, that with respect to the
covenants contained in this Section 2.17(b), the Company may assume that the
Investors are not Embargoed Persons. Company certifies that, to the Company's
knowledge, Company has not been designated, and is not owned or controlled, by
an Embargoed Person.

         2.17 Accountants. To the Company's knowledge, J.H. Cohn LLP, which has
expressed its opinion with respect to the financial statements included in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2005,
are independent accountants as required by the Securities Act and the rules and
regulations promulgated thereunder.

         2.18 Contracts. The contracts filed as exhibits to the Exchange Act
Documents are in full force and effect on the date hereof, and the Company is
not in breach of or default under any of such contracts, except as would not
have a Material Adverse Effect. The Company has filed with the SEC all
contracts and agreements required to be filed by the Exchange Act.

         2.19 Taxes. The Company has filed all material federal, state and
foreign income and franchise tax returns due to be filed as of the date hereof,
taking into account all extensions, and has paid or accrued all taxes shown as
due thereon, and the Company has no knowledge of a tax deficiency which has
been or might be asserted or threatened against it which would have a Material
Adverse Effect.

2.20 Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income taxes) which are required to be paid in connection with the
sale and transfer of the Purchased Shares and the Warrants to be sold to the
Investors hereunder will be, or will have been, fully paid or provided for by
the Company and all laws imposing such taxes will be or will have been fully
complied with.

         2.21 Private Offering. Assuming the correctness of the representations
and warranties of the Investors set forth in Article IV hereof, the offer and
sale of the Purchased Shares and Warrants hereunder, and the issuance of the
Warrant Shares pursuant to the Warrants, shall be exempt from registration
under the Securities Act. The Company has not in the past nor will it hereafter
take any action to sell, offer for sale or solicit offers to buy any securities
of the Company which would bring the offer, issuance or sale of the Purchased
Shares or the Warrants as contemplated by this Agreement or the Warrant Shares
under the Warrants, within the provisions of Section 5 of the Securities Act,
unless such offer, issuance or sale was or shall be within the exemptions of
Section 4 of the Securities Act. Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Purchased Shares or
Warrants by any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act).

         2.22 Controls and Procedures. The Company is in material compliance
with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to
it as of the Closing Date. Except as provided in the Exchange Act Documents,
the Company maintains a system of internal control over financial reporting (as
such term is defined in the Exchange Act) sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company's certifying officers are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act)
for the Company and they have (a) designed such disclosure controls and
procedures, or caused such disclosure controls and procedures to be designed
under their supervision, to ensure that material information relating to the
Company, including its Subsidiaries, is made known to the certifying officers
by others within those entities, particularly during the periods in which the
Exchange Act Documents have been prepared; (b) to the extent required by the
Exchange Act, evaluated the effectiveness of the Company's disclosure controls
and procedures and presented in the Exchange Act Documents their conclusions
about the effectiveness of the disclosure controls and procedures, as of the
end of the periods covered by the Exchange Act Documents based on such
evaluation; and (c) since the last evaluation date referred to in (b) above,
there have been no material changes in the Company's internal control over
financial reporting (as such term is defined in the Exchange Act) or, to the
Company's knowledge, in other factors that could significantly affect the
Company's internal control over financial reporting.

         2.23 Real Property Holding Corporation. Since its date of
incorporation, the Company has not been, and as of the Closing Date shall not
be, a "United States real property holding corporation," as defined in Section
897(c)(2) of the Internal Revenue Code of 1986 (the "Code"), and in Section
1.897 2(b) of the Treasury Regulations issued thereunder. The Company has no
current plans or intentions which would cause the Company to become a "United
States real property holding corporation," and the Company has filed with the
IRS all statements, if any, with its United States income tax returns which are
required under Section 1.897 2(h) of the Treasury Regulations. The shares of
the Company do not derive their value principally from real property, and the
property of the Company does not and will not consist principally of real
property

         2.24 Relationship with General Electric Company or its Affiliates. The
Company does not have any equity, creditor or similar relationship (including,
without limitation, any investment in (or right to acquire an investment in),
or any debtor, revolving credit, leasing or creditor relationship, but
excluding any vendor or vendee relationship) with General Electric Company or
any subsidiary or affiliate thereof, other than Palisade or any of its
affiliates. The Company is not a party-in-interest, as defined in Section 3(14)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
with respect to General Electric Pension Trust.

         2.25 Relationship with DaimlerChrysler Corporation or its Affiliates.
The Company does not have any equity, creditor or similar relationship
(including, without limitation, any investment in (or right to acquire an
investment in), or any debtor, revolving credit, leasing or creditor
relationship, but excluding any vendor or vendee relationship) with
DaimlerChrysler Corporation or any subsidiary or affiliate thereof, other than
Palisade or any of its affiliates. The Company is not a party-in-interest, as
defined in Section 3(14) of ERISA, with respect to DaimlerChrysler Corporation
Master Retirement Trust.

         2.26 Clinical Trials. The preclinical tests and clinical trials that
are described in, or the results of which are referred to in, the Exchange Act
Documents, were and, if still pending, are being conducted in all material
respects in accordance with protocols filed with the appropriate regulatory
authorities for each such test or trial, as the case may be. The description of
the results of such tests and trials contained in the Exchange Act Documents
are accurate and complete in all material respects, and the Company has no
knowledge of any other studies or tests the results of which are inconsistent
with, or otherwise call into question, the results described or referred to in
the Exchange Act Documents. The Company has not received any notices or other
correspondence from the United States Food and Drug Administration (the "FDA")
or from any other U.S. or foreign government agency requiring the termination,
suspension or modification of any clinical trials that are described or
referred to in the Exchange Act Documents, and the Company has operated and
currently is in compliance in all material respects with all applicable rules,
regulations and policies of the FDA.

                                  ARTICLE III

                      AFFIRMATIVE COVENANTS OF THE COMPANY

         The Company hereby covenants as follows:

         3.1 Right of First Refusal.

             (a) Right of First Refusal. The Company shall not issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or
set aside for issuance, sale or exchange, in a transaction not involving a
public offering, any (i) shares of Common Stock, (ii) any other equity security
of the Company, including without limitation, preferred shares, (iii) any debt
security of the Company (other than debt with no equity feature) including
without limitation, any debt security which by its terms is convertible into or
exchangeable for any equity security of the Company, (iv) any security of the
Company that is a combination of debt and equity, or (v) any option, warrant or
other right to subscribe for, purchase or otherwise acquire any such equity
security or any such debt security of the Company, unless in each case the
Company shall have first offered to sell such securities (the "Offered
Securities") to the Investors (each an "Offeree" and collectively, the
"Offerees") as follows: Each Offeree shall have the right to purchase (x) that
portion of the Offered Securities as the number of shares of Common Stock held
by such Offeree including shares then issuable upon the exercise on conversion
of outstanding exercisable or convertible equity securities) bears to the
number of shares of common stock held by all Offerees including shares then
issuable upon the exercise on conversion of outstanding exercisable or
convertible equity securities) (the "Basic Amount"), and (y) such additional
portion of the Offered Securities as such Offeree shall indicate it will
purchase should the other Offerees subscribe for less than their Basic Amounts
(the "Undersubscription Amount"), at a price and on such other terms as shall
have been specified by the Company in writing delivered to such Offeree (the
"Offer"), which Offer by its terms shall remain open and irrevocable for a
period of fifteen (15) days from receipt of the Offer.

             (b) Notice of Acceptance. Notice of each Offeree's intention to
accept, in whole or in part, any Offer made shall be evidenced by a writing
signed by such Offeree and delivered to the Company prior to the end of the
fifteen (15)-day period of such Offer, setting forth such of the Offeree's
Basic Amount as such Offeree elects to purchase and, if such Offeree shall
elect to purchase all of its Basic Amount, such Undersubscription Amount as
such Offeree shall elect to purchase (the "Notice of Acceptance"). If the Basic
Amounts subscribed for by all Offerees are less than the total Offered
Securities, then each Offeree who has set forth Undersubscription Amounts in
its Notice of Acceptance shall be entitled to purchase, in addition to the
Basic Amounts subscribed for, all Undersubscription Amounts it has subscribed
for; provided, however, that should the Undersubscription Amounts subscribed
for exceed the difference between the Offered Securities and the Basic Amounts
subscribed for (the "Available Undersubscription Amount"), each Offeree who has
subscribed for any Undersubscription Amount shall be entitled to purchase only
that portion of the Available Undersubscription Amount as the Undersubscription
Amount subscribed for by such Offeree bears to the total Undersubscription
Amounts subscribed for by all Offerees, subject to rounding by the Company to
the extent it reasonably deems necessary. The purchase by the Offerees of any
Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and the Offerees of a purchase agreement relating to
such Offered Securities reasonably satisfactory in form and substance to the
Company and the Offerees and their respective counsel.

             (c) Conditions to Acceptances and Purchase.

                (i) Permitted Sales of Refused Securities. In the event that
       Notices of Acceptance are not given by the Offerees in respect of all
       the Offered Securities, the Company shall have forty five (45) days from
       the expiration of the fifteen (15) day period set forth above to close
       the sale of all or any part of such Offered Securities as to which a
       Notice of Acceptance has not been given by the Offerees (the "Refused
       Securities") to the Person or Persons specified in the Offer, but only
       for cash and otherwise in all respects upon terms and conditions,
       including, without limitation, unit price and interest rates, which are
       no more favorable, in the aggregate, to the purchasers or less favorable
       to the Company than those set forth in the Offer.

                (ii) Closing. Upon the closing, which shall include full
       payment to the Company for the sale to such other person or persons of
       all or less than all the Refused Securities, the Offerees shall purchase
       from the Company and the Company shall sell to the Offerees, the number
       of Offered Securities specified in the Notices of Acceptance upon the
       terms and conditions specified in the Offer.

             (d) Further Sale. In each case, any Offered Securities not
purchased by the Offerees or other person or persons in accordance with Section
3.1(c)(ii) above may not be sold or otherwise disposed of until they are again
offered to the Offerees under the procedures specified in Section 3.1(a)-(c)
above.

             (e) Exceptions. The rights of the Offerees under this Section 3.1
shall not apply to:

                (i) any Common Stock issued as a stock dividend to holders of
       Common Stock or upon any subdivision or combination of shares of Common
       Stock;

                (ii) any capital stock or derivative thereof granted to an
       employee, director or consultant under a stock plan approved by the
       Board of Directors of the Company and its stockholders;

                (iii) any securities issued as consideration for the
       acquisition of another entity by the Company by merger or share exchange
       (whereby the Company owns no less than fifty one percent (51%) of the
       voting power of the surviving entity) or purchase of substantially all
       of such entity's stock or assets, if such acquisition is approved by the
       Board of Directors;

                (iv) any securities issued in connection with a strategic
       partnership, joint venture or other similar arrangement, provided that
       the purpose of such arrangement is not primarily the raising of capital
       and that such arrangement is approved by two-thirds of the members of
       the Board of Directors;

                (v) any securities issued to a financial institution in
       connection with a bank loan or lease with such financial institution
       provided that such issuance is approved by two-thirds of the members of
       the Board of Directors; and

                (vi) any securities issuable upon the exercise or conversion of
       options, warrants or other convertible or exercisable securities
       outstanding on the Closing Date.

         3.2 Right of First Refusal on Dispositions by the Holders.

             (a) If at any time any of the Holders wishes to sell, assign,
transfer or otherwise dispose of or encumber, other than in a transaction
involving a public offering, any equity security of the Company or any option,
warrant or other right to subscribe for, purchase or otherwise acquire any such
equity security, whether presently held or hereafter acquired (collectively,
the "Restricted Shares") by such Holder, such Holder shall submit a written
offer to sell such Restricted Shares to the Investors on terms and conditions,
including price, not less favorable to the Investors than those on which such
Holder proposes to sell such Restricted Shares to a third party (the "Offer").
The Offer shall disclose the Restricted Shares proposed to be sold or
transferred, the agreed terms of the sale or transfer, including price, and any
other material facts relating to the sale or transfer. Within fifteen (15) days
after receipt of the Offer, each of the Investors shall have the right to
purchase, on the same terms and conditions set forth in the Offer, that portion
of the offered Restricted Shares (the "Offered Restricted Shares") to be
determined in the manner set forth herein. Each Investor shall have the right
to purchase that number of the Offered Restricted Shares as shall be equal to
the aggregate Offered Restricted Shares multiplied by a fraction, the numerator
of which is the number of shares of Common Stock then held by such Investor
(including shares then issuable upon the exercise or conversion of outstanding
exercisable or convertible securities) and the denominator of which is the
aggregate number of shares of such Common Stock then held by all the Investors
(including shares then issuable upon the exercise or conversion of outstanding
exercisable or convertible securities). The amount of Offered Restricted Shares
each Investor or Qualified Transferee, as that term is defined below, is
entitled to purchase under this Section 3.2 shall be referred to as such
Investor's "Pro Rata Fraction." Each Investor shall have the right to transfer
his right to any Pro Rata Fraction or part thereof to any Qualified Transferee.
In the event an Investor does not wish to purchase or to transfer his right to
purchase his Pro Rata Fraction, then any Investors who so elect shall have the
right to purchase, on a pro rata basis with any other Investors who so elect,
any Pro Rata Fraction not purchased by an Investor or Qualified Transferee.
Subject to such proration, each Investor shall have the right to accept the
Offer as to all or part of the Offered Restricted Shares offered thereby. In
the event that an Investor shall elect to purchase all or part of the Offered
Restricted Shares covered by the Offer, said Investor shall individually
communicate in writing such election to purchase to whichever of the Holders
has made the Offer, which communication shall be delivered by hand or mailed to
such Holder at the address set forth on Exhibit A hereto and shall, when taken
in conjunction with the Offer be deemed to constitute a valid, legally binding
and enforceable agreement for the sale and purchase of the Restricted Shares
covered thereby. In the event that the Investors do not purchase all of the
Offered Restricted Shares pursuant to and within forty-five (45) days after the
Offer, each such agreement to purchase the Offered Restricted Shares shall be
deemed null and void, and such Holder shall have the right to sell such Shares
at any time within ninety (90) days after the expiration of the Offer, but
subject to the provisions of Section 3.3 below. Any such sale shall be at a
price not less than the price, and upon other terms and conditions, if any, not
more favorable to the purchaser than those specified in the Offer. Any Shares
not sold within such ninety (90)-day period shall continue to be subject to the
requirements of a prior offer and re-sale pursuant to this Section. For
purposes of this Section 3.2, a "Qualified Transferee" of an Investor shall
mean any person (i) who is an Investor, (ii) who is an "affiliated person" of
an Investor, as that term is defined in the Investment Company Act of 1940, or
(iii) who is a member, partner or shareholder of an Investor.

             (b) Anything herein to the contrary notwithstanding, the
provisions of this Section 3.2 and Section 3.3 shall not apply to: (i) any
transfer of Restricted Shares by a Holder by gift or bequest or through
inheritance to, or for the benefit of, any member or members of his or her
family (which shall include any spouse, lineal ancestor or descendant or
sibling) or to a trust, partnership or limited liability company for the
benefit of such members; (ii) any transfer of Restricted Shares by a Holder to
a trust in respect of which he or she serves as trustee, provided that the
trust instrument governing said trust shall provide that such Holder, as
trustee, shall retain sole and exclusive control over the voting and
disposition of said shares until the termination of this Agreement; (iii) any
repurchase of shares of Common Stock from officers, employees, directors or
consultants of the Company which are subject to restrictive stock purchase
agreements under which the Company has the option to repurchase such shares
upon the occurrence of certain events, including termination of employment;
(iv) any transfer of Restricted Shares of Palisade to any directors, managers,
officers, shareholders, members, or partners of Palisade or any of its
affiliates; and (v) any transfer of Restricted Securities in connection with a
merger, consolidation or other similar transaction of the Company whereby the
shareholders of the Company immediately prior to such transaction own less than
a majority of the surviving entity immediately following such transaction. In
the event of any such transfer, other than pursuant to subsection (iii), (iv)
or (v) above, the transferee of the Restricted Shares shall hold the Restricted
Shares so acquired with all the rights conferred by, and subject to all the
restrictions imposed by this Agreement, and as a condition to such transfer,
each such transferee shall execute and deliver an instrument of accession in
form and substance reasonably satisfactory to the Investors agreeing to be
bound by the provisions of this Agreement.

         3.3 Right of Participation in Sales by Holders. If at any time any
Holder wishes to sell, assign, transfer or otherwise dispose of any Restricted
Shares owned by such Holder in a transaction which is subject to the provisions
of Section 3.2 hereof and, subject to the exercise of rights under such Section
3.2, each Investor shall have the right to require, as a condition to such sale
or disposition, that the Person acquiring Restricted Shares (the "Purchaser")
purchase from said Investor at the same price per share and on the same terms
and conditions as involved in such sale or disposition by the Holder the same
percentage of shares of Common Stock (including shares then issuable upon the
exercise or conversion of outstanding exercisable or convertible securities)
held by such Investor as such sale or disposition represents with respect to
said Restricted Shares then owned by the Holder that is selling. Each Investor
wishing so to participate in any such sale or disposition shall notify the
selling Holder of such intention as soon as practicable after receipt of the
Offer made pursuant to Section 3.2, and in all events within twenty (20) days
after receipt thereof, which twenty (20) day period shall run concurrently with
the fifteen (15) day period set forth in Section 3.2(a). In the event that an
Investor shall elect to participate in such sale or disposition, said Investor
shall individually communicate such election to the selling Holder, which
communication shall be delivered by hand or mailed to such Holder at the
address set forth on Exhibit A hereto. The Holder and/or each participating
Investor shall sell to the Purchaser all, or at the option of the Purchaser,
any part of the Common Stock proposed to be sold by them at not less than the
price and upon other terms and conditions, if any, not more favorable to the
Purchaser than those originally offered; provided, however, that any purchase
of less than all of such Common Stock by the Purchaser shall be made from the
Holder and/or each participating Investor based upon a fraction, the numerator
of which is the number of shares of Common Stock of the Company then owned by
the Holder or such participating Investor (including shares then issuable upon
the exercise or conversion of outstanding exercisable or convertible
securities) and the denominator of which is the aggregate number of shares of
such Common Stock held by the Holder and all of the participating Investors
(including shares then issuable upon the exercise or conversion of outstanding
exercisable or convertible securities). The selling Holder shall use his or its
reasonable best efforts to obtain the agreement of the Purchaser to the
participation of the participating Investors in the contemplated sale, and
shall not sell any Restricted Shares to such Purchaser if such Purchaser
declines to permit the participating Investors to participate pursuant to the
terms of this Section 3.3. The provisions of this Section 3.3 shall not apply
to the sale of any Restricted Shares by a Holder to an Investor pursuant to an
Offer under Section 3.2. The rights of the parties under this Section 3.3 and
Section 3.2 above are unique and, accordingly, the Investors shall, in addition
to such other remedies as may be available to any of them at law or in equity,
have the right to enforce their rights hereunder by actions for specific
performance to the extent permitted by law.

         3.4 Further Assurances. The Company hereby agrees to take all further
actions, execute all further documents and perform all further things necessary
to give effect to the provisions of this Agreement.

         3.5 Removal of Legends. Upon the earlier of (i) registration of the
Shares for sale pursuant to Section 3.9 or (ii) Rule 144(k) becoming available
with respect to an Investor's Shares, the Company shall, upon an Investor's
written request (which in the case of clause (i) shall be accompanied by a
written certification by the Investor that (A) the Investor has a present
intention to dispose of Shares covered by such Registration Statement pursuant
to the plan of distribution included in a currently available final prospectus
related thereto, and (B) the Investor will comply with the prospectus delivery
requirements applicable to such disposition, and which, in the case of clause
(ii), shall be accompanied by such reasonable and appropriate customary
representations as may be reasonably requested by the Company), promptly cause
certificates evidencing such Shares to be replaced with certificates which do
not bear the restrictive legend described in Section 4.7. When the Company is
required to cause unlegended certificates to replace previously issued legended
certificates, if unlegended certificates are not delivered to an Investor
within ten (10) business days of submission by that Investor of legended stock
certificate(s) to the Company's transfer agent together with a representation
letter in customary form, the Company shall be liable to the Investor for a
penalty equal to 1% of the aggregate purchase price of the Shares (or in the
case of the Conversion Shares, the purchase price of the Purchased Shares
pursuant to which such Conversion Shares were issued) evidenced by such
certificate(s) for each thirty (30) day period (or portion thereof) beyond such
ten (10) days that the unlegended certificates have not been so delivered. The
liquidated damages set forth in the prior sentence shall apply to the issuance
of the PIK Dividend Shares and PIK Dividend Conversion Shares.

         3.6 Use of Proceeds. The Company shall use the proceeds from the sale
of the Purchased Shares and the Warrants for working capital and general
corporate purposes.

         3.7 Section 203 Exemption. The Board of Directors has adopted this
Agreement and the transactions contemplated hereby and thereby in such manner
as is sufficient to render the restrictions of Section 203 of the Delaware
General Corporations Law inapplicable to the Agreements and all transactions
contemplated hereby and thereby.

         3.8 Rule 144. The Company covenants that it will timely file the
reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if the
Company is not required to file such reports, it will, upon the request of an
Investor if such request is made after the first anniversary of the Closing
Date, make publicly available such information as necessary to permit sales
pursuant to Rule 144 under the Securities Act), and it will take such further
action as any such Investor may reasonably request, all to the extent required
from time to time to enable such Investor to sell Shares purchased hereunder
without registration under the Securities Act within the limitation of the
exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (b) any similar rule or regulation hereafter
adopted by the SEC. Upon request, the Company will provide to the Investor
written certification of its compliance with the provisions of this Section 3.8.

         3.9 Registration of the Shares; Compliance with the Securities Act.

             (a) Registration Upon Request.

                 (i) (x) At any time after the Closing Date, until such time at
       which the Company is eligible to file and maintain the effectiveness of,
       a registration statement on Form S-3 or any successor form thereto for a
       public offering of shares held by the Investors (such period of S-3
       eligibility, the "S-3 Eligibility Period"), upon the request of any
       Investor or Investors holding Registrable Securities (as defined below)
       constituting at least forty percent (40%) in interest of all Registrable
       Securities then outstanding, the Company shall use its reasonable best
       efforts to register under the Securities Act all or any portion of the
       Registrable Securities held by such requesting Investor or Investors for
       sale in the manner specified in such notice, provided that the
       reasonably anticipated aggregate price to the public of such offering
       shall exceed $1,000,000. At any time other than an S-3 Eligibility
       Period or in the event the Company ceases to be S-3 eligible following
       the S-3 Eligibility Period, the Company shall prepare a registration
       statement (a "Demand Registration Statement") on Form S-1, Form SB-1 or
       such other appropriate or available registration form of the SEC,
       utilizing Rule 415 under the Securities Act if so requested, with
       respect to any Demand Registration Statement. The Company shall not be
       required to effect more than three Demand Registration Statements in the
       aggregate, provided, however that if the number of shares requested by
       any Investor to be included in all prior Demand Registration Statements
       has been reduced by twenty-five percent (25)% or more pursuant to
       Section 3.9(a)(v) hereof, the Company shall be required to effect one
       additional Demand Registration Statement if so requested in accordance
       with this clause (x), provided, further, that in the case of any such
       reduction, the Company shall not be required to effect more than four
       (4) Demand Registration Statements in the aggregate.

                     (y) For the purposes of this Agreement, "Registrable
       Securities" shall mean the Purchased Conversion Shares, the Warrant
       Shares and the PIK Dividend Conversion Shares, provided that such
       securities shall cease to be Registrable Securities when (i) a
       registration statement registering such Registrable Securities under the
       Securities Act has been declared or becomes effective and such
       Registrable Securities have been sold or otherwise transferred by the
       holder thereof pursuant to such effective registration statement; (ii)
       such Registrable Securities are sold pursuant to Rule 144 under
       circumstances in which any legend borne by such Registrable Securities
       relating to restrictions on the transferability thereof, under the
       Securities Act or otherwise, is removed by the Company; or (iii) such
       Registrable Securities shall cease to be outstanding. Registrable
       Securities shall not include the Purchased Shares or the Warrants. In
       participating in any registration pursuant to this Section 3.9, each
       Investor agrees to convert to Common Stock any and all Purchased Shares
       and PIK Dividend Shares to be sold by such Investor prior to or in
       connection with any sale pursuant to the applicable Registration
       Statement.

                (ii) During the S-3 Eligibility Period, upon the request of an
       Investor or Investors holding Registrable Securities, the Company shall
       use its reasonable best efforts to prepare a registration statement (a
       "Shelf Registration Statement") on Form S-3 or any successor form
       thereto to register under the Securities Act (utilizing Rule 415, if so
       requested), for public sale in accordance with the method of disposition
       specified in such notice, the number of Registrable Securities specified
       in such notice provided that the value of such Registrable Securities is
       at least $500,000. There shall be no limit on the number of Shelf
       Registration Statements that the Investors may require the Company to
       effect pursuant to this Section 3.9; provided, however, that no Investor
       shall have the right to demand, on more than two occasions, a Shelf
       Registration Statement with respect to Registrable Securities that are
       eligible to be sold pursuant to paragraph (k) of Rule 144 under the
       Securities Act.

                 (iii) Following receipt of any notice under paragraph (i) or
       (ii) above, the Company shall immediately notify all Investors from whom
       notice has not been received and such Investors shall then be entitled
       within twenty (20) days thereafter to request the Company to include in
       the requested registration all or any portion of their Registrable
       Securities. The Company may also register for sale for its own account
       or that of other security holders such additional Shares of the
       Company's stock as it shall desire, subject to paragraph (v) below.

                 (iv) In connection with any registration pursuant to this
       Section 3.9(a), if and when the Company is required by the provisions of
       paragraphs (i) or (ii) to register Registrable Securities, the Company
       shall:

                     (x) subject to receipt of necessary information from the
       Investors after prompt request from the Company to the Investors to
       provide such information (provided that failure on the part of one
       Investor to provide the necessary information requested shall not
       relieve the Company from its obligation to use reasonable best efforts
       with respect to complying Investors), prepare and file with the SEC,
       within forty-five (45) days (sixty (60) days in the case of a Demand
       Registration Statement) after receiving appropriate notice from the
       relevant Investors as provided for in (i) or (ii) above, a Demand
       Registration Statement or a Shelf Registration Statement, as
       appropriate, to enable the resale of the Registrable Securities by the
       Investors; provided, that if the terms of the underwriting agreement
       executed in connection with any registration pursuant to Section 3.9(a)
       or 3.9(b) prohibit the Company from filing any Demand Registration
       Statement or Shelf Registration Statement, as the case may be, the
       Company shall have the right to delay such filing for the required
       period, which period shall not exceed ninety (90) days;

                     (y) use its reasonable best efforts (provided that failure
       on the part of one Investor to provide the necessary information
       requested shall not relieve the Company from its obligation to use
       reasonable best efforts with respect to complying Investors), to cause
       the Demand Registration Statement or Shelf Registration Statement, as
       the case may be, to become effective as promptly as practicable after
       the initial filing thereof with the SEC (the date such registration
       statement is initially declared effective by the SEC, the "Effective
       Date"), such efforts to include, without limiting the generality of the
       foregoing, preparing and filing with the SEC in such period any
       financial statements that are required to be filed prior to the
       effectiveness of such registration statement; and

                     (z) use its reasonable best efforts to prepare and file
       with the SEC such amendments and supplements to such Shelf Registration
       Statement or Demand Registration Statement, as appropriate, and the
       prospectus used in connection therewith as may be necessary to keep such
       Shelf Registration Statement or Demand Registration Statement, as
       appropriate, current, effective and free from any material misstatement
       or omission to state a material fact for a period not exceeding, with
       respect to each Investor's Registrable Securities purchased hereunder,
       the earliest of (x) the date on which such Investor may sell all
       Registrable Securities then held by the Investor without restriction by
       the volume limitations of Rule 144(e) of the Securities Act, (y) the
       second anniversary of the effective date of such Shelf Registration
       Statement or Demand Registration Statement, as appropriate, or (z) the
       date on which there cease to be any Registrable Securities outstanding.

                 (v) In connection with any registration pursuant to this
       Section 3.9(a), the Investors may elect to sell Registrable Securities
       in an underwritten offering in accordance with the conditions set forth
       in this paragraph (v). In any such underwritten offering, the investment
       bank that will manage the offering will be selected by, and the
       underwriting arrangements with respect thereto will be approved by, the
       Investors holding a majority of the Registrable Securities to be sold
       pursuant to such offering, subject, in each case, to the consent of the
       Company, which consent will not be unreasonably withheld. No Investor
       may participate in any underwritten offering hereunder unless such
       Investor (x) agrees to sell such Investor's Registrable Securities on
       the basis provided in any underwriting arrangements approved pursuant
       hereto and (y) completes and executes all other customary
       questionnaires, powers of attorney, indemnities, underwriting agreements
       and other documents required under the terms of such underwriting
       arrangements. In the case of any such underwritten offering, the
       managing underwriter for such offering advises the Company in writing
       that in their good faith opinion the amount of securities requested to
       be included therein exceeds the amount of securities that can be sold in
       such offering such that the inclusion of such Registrable Securities
       would adversely affect marketing of the securities to be sold pursuant
       to the offering, the Registrable Securities held by Investors who elect
       to participate in such offering and other holders of the Company's
       securities exercising similar demand registration rights shall have
       priority over any securities to be sold by the Company or any additional
       holders of the Company's securities, and the number of shares to be
       included by the Investors and such other holders exercising similar
       demand registration rights shall be reduced pro rata on the basis of the
       percentage of the then outstanding Registrable Securities held by each
       such Investor and the registrable securities held by all other holders
       exercising similar demand registration rights. The Company shall not be
       obligated to arrange for more than two underwritten offerings pursuant
       to the Shelf Registration Statement.

                 (vi) If the majority of Investors participating in a
       registration pursuant to this Section 3.9(a) determine, prior to the
       effectiveness of the Demand Registration Statement or the Shelf
       Registration Statement, as the case may be, not to sell Registrable
       Securities pursuant to such registration statement, such Investors shall
       provide written notice to the Company and the Company shall cease all
       efforts in connection with such registration statement; provided,
       however, that, except where such notice of withdrawal is provided within
       thirty (30) days of the occurrence of an event or circumstance that
       results, or could reasonably be expected to result, in a Material
       Adverse Effect, such Investors shall bear the costs and expenses
       incurred prior to such withdrawal and such requesting Investors shall
       pay in full to the Company, within thirty (30) days after presentation
       of an invoice by the Company therefor, all reasonable costs and expenses
       incurred by the Company in connection with such withdrawal, provided,
       however, that to the extent that the Company and other holders
       exercising similar registration demand registration rights include any
       shares of Common Stock in such registration, the Company and such other
       holders shall pay their pro rata share of any such expenses, on the
       basis of the shares being offered thereby.

             (b) Piggyback Registration.

                 (i) If the Company at any time proposes to register any of its
       equity securities under the Securities Act for sale to the public,
       whether for its own account or for the account of other security holders
       or both on any registration form (other than Forms S-4, S-8 or another
       form not available for registering the Shares for sale to the public)
       which permits the inclusion of Registrable Securities held by any
       Investor (a "Piggyback Registration"), then each such time the Company
       will give written notice to all Investors of its intention so to do.
       Upon the written request of any such Investor, received by the Company
       within twenty (20) days after the giving of any such notice by the
       Company, to register any of such Investor's Registrable Securities, the
       Company will use its reasonable best efforts to cause the Registrable
       Securities as to which registration shall have been so requested to be
       included in the securities to be covered by the registration statement
       proposed to be filed by the Company, all to the extent requisite to
       permit the sale or other disposition by the holder of such Registrable
       Securities so registered.

                 (ii) The Company shall have the right to select the managing
       underwriter(s) for any underwritten Piggyback Registration. All
       Investors proposing to sell their Registrable Securities in such
       underwritten offering shall (together with the Company) enter into an
       underwriting agreement in customary form. If such proposed Piggyback
       Registration is an underwritten offering and the managing underwriter
       for such offering advises the Company that the securities requested to
       be included therein exceed the amount of securities that can be sold in
       such offering such that the inclusion of such Registrable Securities
       would adversely affect marketing of the securities to be sold by the
       Company, any securities to be sold by the Company shall have priority
       over any Registrable Securities held by Investors, and the number of
       shares to be included by any Investor and other holders of the Company's
       securities exercising similar piggyback registration rights as the
       Investors shall be reduced pro rata on the basis of the percentage of
       the then outstanding Registrable Securities held by each such Investor
       and all such other holders exercising similar piggyback registration
       rights. Notwithstanding the provisions of this Section 3.9, the Company
       shall have the right at any time after it shall have given written
       notice to the Investors pursuant to Section 3.1 (irrespective of whether
       a written request for inclusion of any such securities shall have been
       made) to elect not to file any such proposed registration statement, or
       to withdraw the same after filing, but prior to effectiveness.

             (c) Registration Procedures and Other Matters. If and when the
Company is required by the provisions of paragraphs (a) or (b) to register
Registrable Securities, the Company shall use its reasonable best efforts to:

                 (i) furnish to the Investors with respect to the Registrable
       Securities registered under any registration statement filed by the
       Company pursuant to Sections 3.9(a) or (b) hereof (a "Registration
       Statement") such number of copies of the Registration Statement,
       prospectuses and preliminary prospectuses in conformity with the
       requirements of the Securities Act and such other documents as the
       Investors may reasonably request, in order to facilitate the public sale
       or other disposition of all or any of the Registrable Securities by the
       Investors;

                 (ii) file documents required for compliance with blue sky laws
       in states specified in writing by any Investor and use its reasonable
       best efforts to maintain such blue sky qualifications during the period
       the Company is required to maintain the effectiveness of such Demand
       Registration Statement or Shelf Registration Statement, as appropriate,
       pursuant to Section 3.9(a) hereof; provided, however, that the Company
       shall not be required to qualify to do business or consent to service of
       process in any jurisdiction in which it is not now so qualified or has
       not so consented;

                 (iii) bear all reasonable expenses in connection with the
       procedures in this Section 3.9 and the registration of the Registrable
       Securities pursuant to the Registration Statement;

                 (iv) advise the Investors, promptly after it shall receive
       notice or obtain knowledge of the issuance of any stop order by the SEC
       delaying or suspending the effectiveness of the Registration Statement
       or of the initiation or threat of any proceeding for that purpose; and
       promptly use its reasonable best efforts to prevent the issuance of any
       stop order or to obtain its withdrawal at the earliest possible moment
       if such stop order should be issued; and

                 (v) provide a "Plan of Distribution" section of the
       Registration Statement substantially in a form reasonably acceptable to
       the Investors (subject to the comments of the SEC).

             (d) The Company understands that the Investors disclaim any
classification as an underwriter; provided, however, that the fact of any
Investor being classified as an underwriter by the SEC shall not relieve the
Company of any obligations it has hereunder.

             (e) Within three (3) business days of the effective date of the
Registration Statement, the Company shall advise its transfer agent that the
Registrable Securities covered by such Registration Statement are subject to an
effective registration statement and can be reissued free of restrictive legend
upon notice of a sale by an Investor and confirmation by such Investor that it
has complied with the prospectus delivery requirements; provided that the
Company has not advised the transfer agent orally or in writing that such
Registration Statement has been suspended; provided, further, that in the event
the Company's transfer agent requires an opinion of counsel to the Company for
any such reissuance, the Company shall cause its counsel to issue an opinion to
the transfer agent stating the foregoing within three business days after any
such request for an opinion by the transfer agent.

             (f) Transfer of Shares After Registration; Suspension.

                 (i) Each Investor, severally and not jointly, agrees that it
       will not effect any disposition of the Shares or its right to purchase
       the Shares that would constitute a sale within the meaning of the
       Securities Act except as contemplated in Sections 3.9(a) and (b) or as
       otherwise permitted by law, and that it will promptly notify the Company
       of any material changes in the information set forth in the Registration
       Statement regarding the Investor or its plan of distribution.

                 (ii) Except in the event that Section 3.9(b) or paragraph (iii)
       below applies, the Company shall (x) if deemed necessary by the Company,
       prepare and file from time to time with the SEC a post-effective
       amendment to the Registration Statement or a supplement to the related
       prospectus or a supplement or amendment to any document incorporated
       therein by reference or file any other required document so that such
       Registration Statement will not contain any untrue statement of material
       fact or omit to state a material fact required to be stated therein or
       necessary to make the statements therein not misleading, and so that, as
       thereafter delivered to purchasers of the Registrable Securities being
       sold thereunder, such prospectus will not contain any untrue statement
       of material fact or omit to state a material fact required to be stated
       therein or necessary to make the statements therein, in light of the
       circumstances under which they were made, not misleading; (y) provide
       the Investors copies of any documents filed pursuant to clause (x)
       above; and (z) inform each Investor that the Company has complied with
       its obligations in clause (x) above (or that, if the Company has filed a
       post-effective amendment to the Registration Statement which has not yet
       been declared effective, the Company will notify the Investor to that
       effect, will use its reasonable best efforts to secure the effectiveness
       of such post-effective amendment as promptly as possible and will
       promptly notify the Investor pursuant to clause (x) above when the
       amendment has become effective).

                 (iii) Except to the extent that Section 3.9(b) applies, and
       subject to paragraph (iv) below, in the event (w) of any request by the
       SEC or any other federal or state governmental authority during the
       period of effectiveness of the Registration Statement for amendments or
       supplements to a Registration Statement or related prospectus or for
       additional information; (x) of the issuance by the SEC or any other
       federal or state governmental authority of any stop order suspending the
       effectiveness of a Registration Statement or the initiation of any
       proceedings for that purpose; (y) of the receipt by the Company of any
       notification with respect to the suspension of the qualification or
       exemption from qualification of any of the Registrable Securities for
       sale in any jurisdiction or the initiation or threatening of any
       proceeding for such purpose; or (z) of any event or circumstance which,
       upon the advice of its counsel, necessitates the making of any changes
       in the Registration Statement or prospectus, or any document
       incorporated or deemed to be incorporated therein by reference, so that,
       in the case of the Registration Statement, it will not contain any
       untrue statement of a material fact or any omission to state a material
       fact required to be stated therein or necessary to make the statements
       therein not misleading, and that in the case of the prospectus, it will
       not contain any untrue statement of a material fact or any omission to
       state a material fact required to be stated therein or necessary to make
       the statements therein, in the light of the circumstances under which
       they were made, not misleading; then the Company shall deliver a notice
       in writing to each Investor (the "Suspension Notice") to the effect of
       the foregoing and, upon receipt of such Suspension Notice, the Investor
       will refrain from selling any Shares pursuant to the Registration
       Statement (a "Suspension") until the Investor's receipt of copies of a
       supplemented or amended prospectus prepared and filed by the Company, or
       until the Investor is advised in writing by the Company that the current
       prospectus may be used, and the Investor has received copies of any
       additional or supplemental filings that are incorporated or deemed
       incorporated by reference in any such prospectus. In the event of any
       Suspension, the Company will use its reasonable best efforts to cause
       the use of the prospectus so suspended to be resumed within thirty (30)
       days after delivery of a Suspension Notice to the Investors. In addition
       to and without limiting any other remedies (including, without
       limitation, remedies available under applicable law or in equity)
       available to the Investors, each Investor shall be entitled to specific
       performance in the event that the Company fails to comply with the
       provisions of this Section 3.9(f)(iii).

                 (iv) The Company may require each Investor participating in any
       registration to furnish to the Company such information regarding such
       Investor as required under applicable law and such Investor's intended
       method of distribution of such Registrable Securities as the Company may
       from time to time reasonably request in writing. Each such Investor
       agrees to promptly notify the Company of any inaccuracy or change in
       information previously furnished by such Investor to the Company or of
       the occurrence of any event in either case as a result of which any
       prospectus relating to such registration contains or would contain an
       untrue statement of a material fact regarding such Investor or such
       Investor's intended method of distribution of such Registrable
       Securities or omits to state any material fact regarding such Investor
       or such Investor's intended method of distribution of such Registrable
       Securities required to be stated therein or necessary to make the
       statements therein not misleading in light of the circumstances then
       existing, and promptly to furnish information so required so that such
       prospectus shall not contain, with respect to such Investor or the
       distribution of such Registrable Securities, 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 not misleading in
       light of the circumstances then existing.

                 (v) Notwithstanding the foregoing paragraphs of this Section
       3.9(f), the Investors shall not be prohibited from selling Shares
       covered by a Registration Statement initiated pursuant to Section 3.9(a)
       as a result of Suspensions on more than two occasions of not more than
       30 days each in any twelve (12) month period, unless, in the good faith
       judgment of the Company's Board of Directors, upon the advice of
       counsel, the sale of Registrable Securities under the Registration
       Statement in reliance on this Section 3.9(f)(v) would be reasonably
       likely to cause a violation of the Securities Act or, the Exchange Act
       or other applicable law.

                 (vi) Provided that a Suspension is not then in effect, any
       Investor may sell Registrable Securities under the Registration
       Statement, provided that it arranges for delivery of a current
       prospectus to the transferee of such Registrable Securities in
       compliance with applicable law. Upon receipt of a request therefor, the
       Company has agreed to provide an adequate number of current prospectuses
       to the Investors and to supply copies to any other parties requiring
       such prospectuses.

             (g) Indemnification. For the purpose of this Section 3.9(g):

                     (x) the term "Selling Stockholder" shall include each
       Investor and any affiliate of such Investor;

                     (y) the term "Registration Statement" shall include the
       prospectus in the form filed as part of the Registration Statement at
       the time of effectiveness (or, in the case of an underwritten offering,
       at the time immediately prior to the pricing of the offering), and each
       exhibit, supplement (including any free writing prospectus as defined
       under Rule 405 of the Securities Act) or amendment included in or
       relating to such Registration Statement; and

                     (z) the term "untrue statement" shall include any untrue
       statement or alleged untrue statement of material fact, or any omission
       or alleged omission to state in the Registration Statement a material
       fact required to be stated therein or necessary to make the statements
       therein, in light of the circumstances under which they were made, not
       misleading.

                 (i) The Company agrees to indemnify and hold harmless each
       Selling Stockholder from and against any losses, claims, damages or
       liabilities to which such Selling Stockholder may become subject (under
       the Securities Act or otherwise) insofar as such losses, claims, damages
       or liabilities (or actions or proceedings in respect thereof) arise out
       of, or are based upon (x) any breach of the representations or
       warranties of the Company contained in this Section 3.9 or failure to
       comply with the covenants and agreements of the Company contained in
       this Section 3.9, (y) any untrue statement contained in the Registration
       Statement, as amended at the time of effectiveness, or (z) any failure
       by the Company to fulfill any undertaking included in the Registration
       Statement as amended at the time of effectiveness. The Company will
       reimburse such Selling Stockholder for any reasonable legal or other
       expenses reasonably incurred in investigating, defending or preparing to
       defend any such action, proceeding or claim; provided, -------- however,
       that the Company shall not be liable in any such case to the extent that
       such loss, claim, damage or liability arises out of, or is based upon,
       any untrue statement made in such Registration Statement in reliance
       upon and in conformity with written information furnished to the Company
       by or on behalf of any Selling Stockholder specifically for use in
       preparation of the Registration Statement or the failure of such Selling
       Stockholder to comply with its covenants and agreements contained in
       this Section 3.9 respecting the sale of the Registrable Securities or
       any untrue statement in any prospectus that is corrected in any
       subsequent prospectus that was delivered to the Selling Stockholder
       prior to the pertinent sale or sales by the Selling Stockholder. The
       Company shall reimburse each Selling Stockholder for the amounts
       provided for herein on demand as such expenses are incurred.

                 (ii) Each Investor, severally but not jointly, agrees to
       indemnify and hold harmless the Company (and each person, if any, who
       controls the Company within the meaning of Section 15 of the Securities
       Act, each officer of the Company who signs the Registration Statement
       and each director of the Company) from and against any losses, claims,
       damages or liabilities to which the Company (or any such officer,
       director or controlling person) may become subject (under the Securities
       Act or otherwise), insofar as such losses, claims, damages or
       liabilities (or actions or proceedings in respect thereof) arise out of,
       or are based upon, (x) any failure to comply with the covenants and
       agreements contained in this Section 3.9 respecting sale of the
       Registrable Securities, or (y) any untrue statement contained in the
       Registration Statement if such untrue statement was made in reliance
       upon and in conformity with written information furnished by or on
       behalf of such Investor specifically for use in preparation of the
       Registration Statement. Such Investor will reimburse the Company (or
       such officer, director or controlling person), as the case may be, for
       any reasonable legal or other expenses reasonably incurred in
       investigating, defending or preparing to defend any such action,
       proceeding or claim; provided that such Investor's obligation to
       indemnify the Company shall be limited to the amount received by such
       Investor from the sale of the Registrable Securities giving rise to such
       obligation.

                 (iii) Promptly after receipt by any indemnified person of a
       notice of a claim or the beginning of any action in respect of which
       indemnity is to be sought against an indemnifying person pursuant to
       this Section 3.9(g), such indemnified person shall notify the
       indemnifying person in writing of such claim or of the commencement of
       such action, but the omission to so notify the indemnifying person will
       not relieve such indemnifying person from any liability which it may
       have to any indemnified person under this Section 3.9(g), except to the
       extent that such omission materially and adversely affects the
       indemnifying person's ability to defend such action. Subject to the
       provisions hereinafter stated, in case any such action shall be brought
       against an indemnified person, the indemnifying person shall be entitled
       to participate therein, and, to the extent that it shall elect by
       written notice delivered to the indemnified person promptly after
       receiving the aforesaid notice from such indemnified person, shall be
       entitled to assume the defense thereof, with counsel reasonably
       satisfactory to such indemnified person. After notice from the
       indemnifying person to such indemnified person of its election to assume
       the defense thereof, such indemnifying person shall not be liable to
       such indemnified person for any legal expenses subsequently incurred by
       such indemnified person in connection with the defense thereof;
       provided, however, that if there exists or shall exist a conflict of
       interest that would make it inappropriate, in the opinion of counsel to
       the indemnified person, for the same counsel to represent both the
       indemnified person and such indemnifying person or any affiliate or
       associate thereof, the indemnified person shall be entitled to retain
       its own counsel at the reasonable expense of such indemnifying person;
       provided, however, that no indemnifying person shall be responsible for
       the fees and expenses of more than one separate counsel (together with
       appropriate local counsel) for all indemnified parties. In no event
       shall any indemnifying person be liable in respect of any amounts paid
       in settlement of any action unless the indemnifying person shall have
       approved the terms of such settlement; provided that such consent shall
       not be unreasonably withheld. No indemnifying person shall, without the
       prior written consent of the indemnified person, effect any settlement
       of any pending or threatened proceeding in respect of which any
       indemnified person is or could have been a party and indemnification
       could have been sought hereunder by such indemnified person, unless such
       settlement includes an unconditional release of such indemnified person
       from all liability on claims that are the subject matter of such
       proceeding.

                 (iv) If the indemnification provided for in this Section 3.9(g)
       is unavailable to or insufficient to hold harmless an indemnified person
       under subsection (i) or (ii) above in respect of any losses, claims,
       damages or liabilities (or actions or proceedings in respect thereof)
       referred to therein, then each indemnifying person shall contribute to
       the amount paid or payable by such indemnified person as a result of
       such losses, claims, damages or liabilities (or actions in respect
       thereof) in such proportion as is appropriate to reflect the relative
       fault of the Company, on the one hand, and the applicable Investor, as
       well as any other Selling Shareholders under such registration statement
       on the other in connection with the statements or omissions or other
       matters which resulted in such losses, claims, damages or liabilities
       (or actions in respect thereof), as well as any other relevant equitable
       considerations. The relative fault shall be determined by reference to,
       among other things, in the case of an untrue statement, whether the
       untrue statement relates to information supplied by the Company, on the
       one hand, or an Investor or other Selling Shareholder, on the other
       hand, and the parties' relative intent, knowledge, access to information
       and opportunity to correct or prevent such untrue statement. The Company
       and each Investor, severally but not jointly, agree that it would not be
       just and equitable if contribution pursuant to this subsection (iv) were
       determined by pro rata allocation (even if the Investor and other
       Selling Shareholders were treated as one entity for such purpose) or by
       any other method of allocation which does not take into account the
       equitable considerations referred to above in this subsection (iv). The
       amount paid or payable by an indemnified person as a result of the
       losses, claims, damages or liabilities (or actions in respect thereof)
       referred to above in this subsection (iv) shall be deemed to include any
       legal or other expenses reasonably incurred by such indemnified person
       in connection with investigating or defending any such action or claim.
       Notwithstanding the provisions of this subsection (iv), each Investor
       shall not be required to contribute any amount in excess of the amount
       by which the amount received by such Investor from the sale of the
       Registrable Securities to which such loss relates exceeds the amount of
       any damages which such Investor has otherwise been required to pay by
       reason of such untrue statement. No person guilty of fraudulent
       misrepresentation (within the meaning of Section 11(f) of the Securities
       Act) shall be entitled to contribution from any person who was not
       guilty of such fraudulent misrepresentation. Each Investor's obligations
       in this subsection to contribute shall be in proportion to its sale of
       Registrable Securities to which such loss relates and shall not be joint
       with any other Selling Shareholders.

                 (v) The parties to this Agreement hereby acknowledge that they
       are sophisticated business persons who were represented by counsel
       during the negotiations regarding the provisions hereof, including,
       without limitation, the provisions of this Section 3.9(g), and are fully
       informed regarding said provisions. They further acknowledge that the
       provisions of this Section 3.9(g) fairly allocate the risks in light of
       the ability of the parties to investigate the Company and its business
       in order to assure that adequate disclosure is made in the Registration
       Statement as required by the Securities Act and the Exchange Act. The
       parties are advised that federal or state public policy as interpreted
       by the courts in certain jurisdictions may be contrary to certain of the
       provisions of this Section 3.9(d), and the parties hereto hereby
       expressly waive and relinquish any right or ability to assert such
       public policy as a defense to a claim under this Section 3.9(d) and
       further agree not to attempt to assert any such defense.

             (h) Termination of Conditions and Obligations. The conditions
precedent imposed by Section 3.9 upon the transferability of the Shares shall
cease and terminate as to any particular number of the Shares when such Shares
shall have been effectively registered under the Securities Act and sold or
otherwise disposed of in accordance with the intended method of disposition set
forth in the Registration Statement covering such Shares, at the time such
Shares are eligible for sale pursuant to Rule 144(k) or at such time as an
opinion of counsel reasonably satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to
comply with the Securities Act.

             (i) Information Available. So long as the Registration Statement
is effective covering the resale of Registrable Securities owned by any
Investors, the Company will furnish to such Investors, upon the reasonable
request of any Investor, an adequate number of copies of the prospectuses to
supply to any other party requiring such prospectuses; and upon the reasonable
request of such Investor, the President or the Chief Financial Officer of the
Company (or an appropriate designee thereof) will meet with such Investor or a
representative thereof at the Company's headquarters to discuss all information
relevant for disclosure in the Registration Statement covering the Registrable
Securities and will otherwise cooperate with any Investor conducting an
investigation for the purpose of reducing or eliminating such Investor's
exposure to liability under the Securities Act, including, the reasonable
production of information at the Company's headquarters; provided, that the
Company shall not be required to disclose any confidential information to or
meet at its headquarters with any Investor until and unless the Investor shall
have entered into a confidentiality agreement in form and substance reasonably
satisfactory to the Company with the Company with respect thereto.

         3.10 Issuance and Quotation. The Company shall comply with all
requirements of the NASD and the SEC with respect to the issuance of the Shares
and the OTC BB with respect to the quotation of the Shares on the OTC BB,
including without limitation providing a CUSIP number for all Shares, to the
extent required.

         3.11 No Manipulation of Stock. The Company will not take, in violation
of applicable law, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of the Common
Stock to facilitate the sale or resale of the Shares.

         3.12 Investment Company. The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.

         3.13 Disclosure. The Company shall as soon as practicable after the
Closing Date issue a press release disclosing the material terms of the
transactions contemplated by the Transaction Documents (including at least the
Purchased Shares and Warrants sold and proceeds therefrom).

         3.14 Transactions with General Electric Company or its Affiliates.
Except for transactions with Palisade, the Company hereby covenants and agrees
that it will provide General Electric Pension Trust written notice no less than
fifteen (15) days prior to the occurrence of any of the following events: (i)
the issuance by the Company of any securities (including without limitation any
capital stock or notes, debentures or other indebtedness, whether or not
convertible into or exchangeable for capital stock) of the Company to General
Electric Company or any subsidiary, division or affiliate of General Electric
Company; or (ii) the grant by the Company or any of its subsidiaries of any
options, warrants or other rights to acquire any securities of the Company or
any of its subsidiaries to General Electric Company or any subsidiary, division
or affiliate of General Electric Company. The Company covenants and agrees that
it shall not become a party-in-interest, as defined in Section 3(14) of ERISA,
with respect to General Electric Pension Trust.

         3.15 Transactions with DaimlerChrysler Corporation. Except for
transactions with Palisade, the Company hereby covenants and agrees that it
will provide the Investment Committee of the DaimlerChrysler Corporation Master
Retirement Trust written notice no less than fifteen (15) days prior to the
occurrence of any of the following events: (i) the issuance by the Company of
any securities (including without limitation any capital stock or notes,
debentures or other indebtedness, whether or not convertible into or
exchangeable for capital stock) of the Company to DaimlerChrysler Corporation
or any subsidiary, division or affiliate of DaimlerChrysler Corporation; or
(ii) the grant by the Company or any of its subsidiaries of any options,
warrants or other rights to acquire any securities of the Company or any of its
subsidiaries to DaimlerChrysler Corporation or any subsidiary, division or
affiliate of DaimlerChrysler Corporation. The Company covenants and agrees that
it shall not become a party-in-interest, as defined in Section 3(14) of ERISA,
with respect to the DaimlerChrysler Corporation Master Retirement Trust.

         3.16 Status as an Operating Company. The Company shall maintain its
status as an operating company within the meaning of the Department of Labor
Regulation 2510.3-101.

                                  ARTICLE IV

           REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTORS

         Each Investor, severally and not jointly, represents and warrants to,
and covenants with, the Company that:

         4.1 Due Authorization. The Investor has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement.
The execution of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of such Investor and this Agreement has been duly executed and delivered
and constitutes the valid and binding obligation of the Investor enforceable in
accordance with its terms, except as rights to indemnity and contribution may
be limited by state or federal securities laws or the public policy underlying
such laws, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors' and
contracting parties' rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

         4.2 Purchase Entirely for Own Account. The Shares to be purchased by
the Investor will be acquired for investment only for the Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof in violation of the Securities Act, and such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. Such Investor does not have any contract,
undertaking, agreement, or arrangement with any person to sell, transfer, or
grant participation to any person with respect to any of the Shares. Nothing
contained herein shall be deemed a representation or warranty by such Investor
to hold the Shares for any period of time.

         4.3 Disclosure of Information. The Investor acknowledges that it has
received all the information that it has requested relating to the Company and
the purchase of the Shares. The Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares. The Investor recognizes
that an investment in the Shares involves a high degree of risk, including the
risk of total loss of the Investor's investment. The Investor has knowledge and
experience in the financial and business matters such that it is capable of
evaluating the risks of the investment in the Shares. The foregoing, however,
does not limit or modify the representations and warranties of the Company in
this Agreement or the right of the Investor to rely thereon.

         4.4 Accredited Investor. The Investor is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, as presently in effect and the Investor is also knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions
with respect to the transactions contemplated hereby.

         4.5 Restricted Securities. The Investor understands that the Shares
that it is purchasing are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering, and that under such laws and
applicable regulations the Shares may be resold without registration under the
Securities Act, only in certain limited circumstances. In this connection, the
Investor represents that it is familiar with Rule 144, as presently in effect,
and understands the resale limitations imposed thereby and by the Securities
Act.

         4.6 Disclosures to the Company. The Investor understands that the
Company is relying on the statements contained herein to establish an exemption
from registration under federal and state securities laws.

         4.7 Legends. It is understood that the certificates evidencing the
Shares shall bear a legend, reading substantially as follows:

              "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
              REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
              "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND ARE SUBJECT
              TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
              CERTIFICATE. THE SECURITIES REPRESENTED HEREBY MAY NOT BE
              SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED, OR
              OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
              REGISTRATION STATEMENT WITH RESPECT THERETO UNDER THE ACT OR
              UNLESS SUCH SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION
              OR OTHER DISPOSITION IS OTHERWISE EXEMPT FROM REGISTRATION
              AND ANY APPLICABLE STATE SECURITIES LAWS EXCEPT PURSUANT TO
              RULE 144(K) OR PURSUANT TO AN OPINION OF COUNSEL, REASONABLY
              ACCEPTABLE TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT THE
              PROPOSED SALE, TRANSFER ASSIGNMENT, PLEDGE, HYPOTHECATION OR
              OTHER DISPOSITION MAY BE EFFECTUATED WITHOUT REGISTRATION
              UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS."

         4.8 General Electric Pension Trust. Notwithstanding anything to the
contrary in the Transaction Documents, neither General Electric Pension Trust
nor DaimlerChrysler Corporation Master Retirement Trust shall be obligated to
sell any Shares to any Person under this Agreement if such sale would
constitute a non-exempt prohibited transaction under ERISA.

                                   ARTICLE V

                              SURVIVAL; INDEMNITY

         5.1 Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company
herein shall survive the execution of this Agreement, the delivery to the
Investors of the Purchased Shares and Warrants being purchased and the payment
therefor; provided, that the representations and warranties of the parties
hereunder shall only survive for a period of one (1) year following the Closing
Date.

         5.2 Indemnity.

             (a) Company agrees to indemnify and hold each Investor, and its
respective directors, managers, officers, shareholders, members, partners,
affiliates, employees, attorneys and agents (each, an "Indemnified Person"),
harmless from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses of any kind or nature whatsoever
(including attorneys' fees and disbursements and other costs of investigation
or defense, including those incurred upon any appeal) which may be instituted
or asserted against or incurred by any such indemnified Person with respect to
any breach (or alleged breach) of any representation, warranty or covenant of
the Company contained in this Agreement or with respect to the execution,
delivery, enforcement, performance and administration of, or in any other way
arising out of or relating to, this Agreement or the transactions contemplated
by or referred to herein and any actions or failures to act with respect to any
of the foregoing, except to the extent that any such indemnified liability is
finally determined by a court of competent jurisdiction to have resulted from
such Indemnified Person's gross negligence or willful misconduct. The Company
shall reimburse each Investor for amounts provided for herein on demand as such
expenses are incurred. THE COMPANY SHALL NOT BE RESPONSIBLE OR LIABLE TO ANY
INDEMNIFIED PERSON OR TO ANY OTHER PARTY OR TO ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH
SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH
MAY BE ALLEGED AS A RESULT OF THEIR INVESTMENT IN THE SHARES UNDER THIS
AGREEMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED HEREUNDER.

                                  ARTICLE VI

                                 MISCELLANEOUS

         6.1 Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (a) if within the United States
by first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (b) if
delivered from outside the United States, by International Federal Express or
facsimile, and shall be deemed given and received (i) if delivered by
first-class registered or certified mail, three business days after so mailed,
(ii) if delivered by nationally recognized overnight carrier, one business day
after so mailed, (iii) if delivered by International Federal Express, two
business days after so mailed, (iv) if delivered by facsimile, upon electronic
confirmation of receipt and shall be delivered as addressed as follows:

                  (A)    if to the Company, to:

                         Neurologix, Inc.
                         One Bridge Plaza
                         Fort Lee, NJ 07024
                         Attention: Marc Panoff
                         Fax: (201) 592-0366

                  (B)    if to the Investors, at their respective addresses on
Exhibit A hereto, or at such other address or addresses as may have been
furnished to the Company in writing, with a copy to: counsel set forth on
Exhibit A hereto.

                  (C)    if to the Holders, at their respective addresses on
Exhibit A hereto, or at such other address or addresses as may have been
furnished to the Company in writing.

         6.2 Changes. This Agreement may not be modified, waived or amended
except pursuant to an instrument in writing signed by the Company and at least
seventy percent (70%) in interest of the Investors; provided that any Investor
may waive by written consent any provision that is intended for its benefit;
provided further, however, that any such modification, waiver or amendment that
adversely or disproportionately affects any Investor shall require the prior
consent of such Investor. Notwithstanding the foregoing, any amendment to
Sections 3.2 or 3.3 shall also require the prior written consent of the
Holders.

         6.3 Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.

         6.4 Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

         6.5 Governing Law; Consent to Jurisdiction; Waiver of Jury Trial;
Currency. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York, without regard to the choice
of law principles thereof. Each of the parties hereto irrevocably submits to
the exclusive jurisdiction of the courts of the State of New York located in
New York County and the United States District Court for the Southern District
of New York for the purpose of any suit, action, proceeding or judgment
relating to or arising out of this Agreement and the transactions contemplated
hereby. Each of the parties hereto irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of
venue in such court. Each party hereto irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. EACH OF
THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.

         6.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other parties.

         6.7 Prior Agreements. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
(including without limitation oral agreements) concerning the purchase and sale
of the Shares.

         6.8 Costs, Expenses and Taxes. The Company agrees to pay the
reasonable out-of-pocket costs and expenses of the Investors incurred in
connection with the transactions contemplated by this Agreement, including the
reasonable fees and expenses of Debevoise & Plimpton, LLP, special counsel for
DaimlerChrysler Corporation Master Retirement Trust, and the reasonable fees
and expenses of Goodwin Procter LLP, special counsel for GE Asset Management
Incorporated, as well as the reasonable fees and out- of-pocket expenses of
legal counsel, independent public accountants, technical professionals and
other outside experts retained by the Investors in connection with the
amendment or enforcement of this Agreement.

         6.9 Transfer of Rights. All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Shares), whether so expressed
or not; provided, however, that rights conferred to the Investors may be
transferred to a transferee of Shares only if the Company has been given
written notice thereof, such transfer complies with the requirements of
applicable law and the NASD and the SEC and such transferee is (i) a partner or
retired partner of any Investor which is a partnership; (ii) a member or
retired member of any Investor which is a limited liability company or (iii)
any purchaser of Shares from an Investor representing at least five percent
(5%) of the Purchased Shares. Notwithstanding the foregoing, the rights set
forth in Sections 3.1, 3.2 and 3.3 shall only apply to transferees who purchase
at least fifty percent (50%) of the Shares held by the transferor (on an
as-converted to Common Stock basis).

         6.10 Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under this Agreement are several and not joint
with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under this Agreement. Nothing contained herein or in any other
document, and no action taken by any Investor pursuant thereto, shall be deemed
to constitute the Investors as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Investors are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement. Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation, the
rights arising out of this Agreement or out of the other related documents, and
it shall not be necessary for any other Investor to be joined as an additional
party in any proceeding for such purpose. Each Investor has been represented by
its own separate legal counsel in their review and negotiation of this
Agreement.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]




         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

NEUROLOGIX, INC.


By:   /s/ Marc Panoff
     ------------------------------
     Name:   Marc L. Panoff
     Title:  Chief Financial Officer


THE INVESTORS

GENERAL ELECTRIC PENSION TRUST


By:  GE Asset Management Incorporated, its Invesment Manager


By:    /s/ David W. Wiederecht
     ------------------------------
     Name:  David W. Wiederecht
     Title: Vice President


State Street Bank as directed Trustee of
the Daimler-Chrysler Corporation Master
Retirement Trust


By:  /s/  Rosemary McDonald
     ------------------------------
     Name:  Rosemary McDonald
     Title: Vice President


PROMED PARTNERS, LP


By:  /s/ David B. Musket
     ------------------------------
     Name:  David B. Musket
     Title: General Partner


PROMED PARTNERS II, LP



By:  /s/ David B. Musket
     ------------------------------
     Name:  David B. Musket
     Title: General Partner





PROMED OFFSHORE FUND LTD.



By:  /s/ David B. Musket
     ------------------------------
     Name:  David B. Musket
     Title: General Partner


PROMED OFFSHORE FUND II, LTD.



By:  /s/ David B. Musket
     ------------------------------
     Name:  David B. Musket
     Title: General Partner


/s/ Paul Scharfer
-----------------
Name: Paul Scharfer


/s/  David Musket
-----------------
Name: David Musket


THE HOLDERS
[FOR PURPOSES OF SECTION 3.2 AND SECTION 3.3]:


/s/  Martin J. Kaplitt, M.D.
------------------------------------
Martin J. Kaplitt, M.D.
Address:  Neurologix, Inc.
          One Bridge
          Plaza, Fort Lee, NJ 07024


PALISADE PRIVATE PARTNERSHIP, L.P.
By: Palisade Private Holdings, LLC, General Partner


By:  /s/ Steven E. Berman
     ------------------------------
     Name:  Steven E. Berman
     Title: Member
     Address: One Bridge Plaza
              Fort Lee, NJ 07024






AUCKLAND TECHNOLOGY ENABLING
CORPORATION LIMITED


By: /s/  Warwick Greenwood
     ------------------------------
     Name:   Warwick Greenwood
     Title:  Director
     Address:  P.O. Box 10-359, Lumley House
               93 The Terrace
               Wellington, New Zealand