CYTOGEN CORP, 10-Q, 1998-11-13

CYTOGEN CORP
10-Q, 1998-11-13
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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SECURITIES AND EXCHANGE COMMISSION Conformed
Washington, D.C. 20549 Copy

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the quarterly period ended September 30, 1998
------------------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the transition period from to
----------- ----------

Commission file number 333-02015
---------

CYTOGEN Corporation
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)

Delaware 22-2322400
- ------------------------------- ----------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)

600 College Road East, CN 5308, Princeton, NJ 08540-5308
--------------------------------------------------------
(Address of Principal Executive Offices and Zip Code)

Registrant's telephone number, including area code (609) 987-8200

Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days: Yes X No .
---

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date:

Class Outstanding at October 26, 1998
- ---------------------------- -------------------------------
Common Stock, $.01 par value 58,604,950

<PAGE>

PART I - FINANCIAL INFORMATION
- ------------------------------
Item I: Consolidated Financial Statements

CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except share data)
(Unaudited)

<TABLE>
<CAPTION>
September 30, December 31,
ASSETS: 1998 1997
------------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 3,027 $ 7,401
Accounts receivable, net 1,196 4,064
Inventories 127 443
Other current assets 469 258
---------- ----------

Total current assets 4,819 12,166
---------- ----------

Property and Equipment:
Leasehold improvements 10,128 10,126
Equipment and furniture 7,803 7,696
---------- ----------
17,931 17,822

Less- Accumulated depreciation and amortization (14,884) (13,910)
---------- ----------

Net property and equipment 3,047 3,912
---------- -----------

Investment in Targon Subsidiary - 10,343
Other Assets 1,014 1,134
---------- -----------
$ 8,880 $ 27,555
========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT):
Current Liabilities:
Accounts payable and accrued liabilities $ 7,472 $ 5,662
Current portion of long-term liabilities 1,836 1,739
---------- -----------

Total current liabilities 9,308 7,401
---------- -----------

Long-Term Liabilities 2,141 10,171
---------- -----------

Stockholders' Equity (Deficit):
Preferred stock, $.01 par value, 5,400,000 shares authorized -
Series A Convertible and Exchangeable Preferred Stock, $.01 par value,
1,000 shares authorized, 0 and 1,000 shares issued and outstanding
in 1998 and 1997, respectively - -
Series B Convertible Preferred Stock, $.01 par value,
750 shares authorized, 0 and 750 shares issued and outstanding
in 1998 and 1997, respectively - -
Series C Junior Participating Preferred Stock, $.01 par value,
200,000 shares authorized, 0 issued and outstanding - -
Common stock, $.01 par value, 89,600,000 shares authorized,
58,603,000 and 51,170,000 shares issued and outstanding
in 1998 and 1997, respectively 586 512
Additional paid-in capital 298,371 298,212
Accumulated deficit (301,526) (288,741)
--------- ---------
Total stockholders' equity (deficit) (2,569) 9,983
--------- ---------
$ 8,880 $ 27,555
========= =========
</TABLE>

The accompanying notes are an integral part of these statements.

2
<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except per share data)
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1998 1997 1998 1997
------------- ----------- ------------- -----------

<S> <C> <C> <C> <C>
Revenues:
Product Related:
Product Sales
ProstaScint $ 1,597 $ 1,178 $ 4,593 $ 2,779
Quadramet 735 - 955 -
Others 228 350 696 929
---------- ---------- ---------- ----------
Product Sales 2,560 1,528 6,244 3,708

Quadramet Royalty - 1,631 1,664 1,652
---------- ---------- ---------- ----------
Total Product Related 2,560 3,159 7,908 5,360

License and Contract 210 1,013 1,456 4,834
---------- ---------- ---------- ----------

Total Revenues 2,770 4,172 9,364 10,194
---------- ---------- ---------- ----------

Operating Expenses:
Cost of Product Related and
Contract Manufacturing Revenues 2,255 1,595 6,090 4,604
Research and Development 2,579 3,468 8,341 14,739
Equity Loss in Targon Subsidiary - 7,969 1,020 8,709
Selling and Marketing 1,247 1,215 3,581 3,782
General and Administrative 3,212 1,858 5,833 4,760
---------- ---------- ---------- ----------

Total Operating Expenses 9,293 16,105 24,865 36,594
---------- ---------- ---------- ----------

Operating Loss (6,523) (11,933) (15,501) (26,400)

Gain on Sale of Targon Subsidiary 2,833 - 2,833 -
Interest Income 109 82 537 527
Interest Expense (97) (73) (535) (219)
---------- ---------- ---------- ----------

Net Loss (3,678) (11,924) (12,666) (26,092)
Dividends on Series B Preferred Stock - - (119) -
---------- ---------- ---------- ----------

Net Loss to Common Stockholders $ (3,678) $ (11,924) $ (12,785) $ (26,092)
========== ========== =========== ==========
Basic and Diluted Net Loss
per Common Share $ (0.06) $ (0.23) $ (0.23) $ (0.51)
========== ========== =========== ==========

Basic and Diluted Weighted Average
Common Shares Outstanding 58,149 51,152 55,426 51,124
========== ========== =========== ==========

</TABLE>
The accompanying notes are an integral part of these statements.

<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
(Unaudited)

<TABLE>
<CAPTION>
Nine Months Ended September 30,
1998 1997
---------- ----------

<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (12,666) $ (26,092)
----------- ------------
Adjustments to Reconcile Net Loss to Cash Used for
Operating Activities:
Depreciation and Amortization 974 1,139
Imputed Interest 81 195
Stock Grants 32 42
Equity Loss in Targon Subsidiary 1,020 8,709
Gain on Sale of Targon Subsidiary (2,833) -
Changes in Assets and Liabilities:
Accounts receivable, net 2,868 (2,660)
Inventories 316 152
Other assets (91) (218)
Accounts payable and accrued liabilities 2,010 748
Other liabilities 87 58
----------- -----------

Total adjustments 4,464 8,165
----------- -----------

Net cash used for operating activities (8,202) (17,927)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Redemption of Short Term Investments - 4,474
Investment in Targon Subsidiary - (10,000)
Proceed from Sale of Targon Subsidiary 2,000 -
Purchases of Property and Equipment (109) (520)
----------- -----------

Net cash provided by (used for) investing activities 1,891 (6,046)
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Issuance of Notes Payable 2,000 10,000
Payment of Note Payable - (1,600)
Principal Payment of Capital Lease Obligations (100) (81)
Proceeds from Issuance of Common Stock 37 231
----------- -----------

Net cash provided by financing activities 1,937 8,550
----------- -----------

Net Decrease in Cash and Cash Equivalents (4,374) (15,423)

Cash and Cash Equivalents, Beginning of Period 7,401 20,296
----------- -----------

Cash and Cash Equivalents, End of Period $ 3,027 $ 4,873
=========== ===========

</TABLE>

The accompanying notes are an integral part of these statements.

<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

The Company

CYTOGEN Corporation ("CYTOGEN" or the "Company") is a biopharmaceutical
company engaged in the development, commercialization and marketing of products
to improve diagnosis and treatment of cancer and other disease. In March 1997,
CYTOGEN received approval from U.S. Food and Drug Administration ("FDA") to
market Quadramet , CYTOGEN's product for the relief of pain due to cancers
that have spread to the skeleton and that can be visualized on a bone scan.
In October 1996, CYTOGEN received marketing approval from FDA for the
ProstaScint imaging agent, CYTOGEN's prostate cancer diagnostic imaging
product. In December 1992, FDA approved OncoScint CR/OV imaging agent,
CYTOGEN's colorectal and ovarian cancer specific diagnostic imaging product,
for single administration per patient. In November 1995, FDA approved an
expanded indication allowing for repeat administration of OncoScint CR/OV.
All three products are currently available in the market place. Operations
of the Company are subject to certain risks and uncertainties including,
but not limited to uncertainties related to access to capital, product
market acceptance, product efficacy and clinical trials, technological
uncertainty, uncertainties of future profitability, dependence on
collaborative relationships and key personnel. The Company has
incurred losses since its inception and expects to incur operating losses
in the near future. There can be no assurance that the Company will ever be
able to commercialize successfully its products or that profitability
will ever be achieved.

The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business. During the third quarter
of 1998, management implemented a restructuring plan including operating
expense reductions. Management believes the Company's existing capital
resources together with decreased operating costs, the $750,000 proceeds
from the term loan (see Note 5), the $4 million net receipt from Berlex
Laboratories ("Berlex") anticipated in the fourth quarter of 1998 (see Note
2), but exclusive of the Equity Line Agreement (see Note 6) will be adequate
to fund the Company's operations into 1999. Management believes the addition of
the Equity Line Agreement will provide the Company with adequate cash flow to
sustain operations into 2000. Based on the Company's historical ability to
raise capital and current market conditions, the Company believes other
financing alternatives (including accounts receivable financing) are
available. There can be no assurance that the Equity Line Agreement or
other financial alternatives will be available when needed or at terms
commercially acceptable to the Company.

Basis of Consolidation

The consolidated financial statements include the accounts of CYTOGEN and
its wholly-owned subsidiaries, AxCell Biosciences Corporation ("AxCell")
and Cellcor, Inc. ("Cellcor"). The financial statements also include the
investment results of Targon Corporation ("Targon"), which were accounted
for on the equity method (see Investment in Targon Subsidiary). Intercompany
balances and transactions have been eliminated in consolidation.

<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)

As of September 30, 1998, the Cellcor and Targon subsidiaries were
closed and sold, respectively.

Basis of Presentation

The consolidated financial statements of CYTOGEN Corporation are
unaudited and include all adjustments which, in the opinion of management,
are necessary to present fairly the financial condition and results of
operations as of and for the periods set forth in the Consolidated Balance
Sheets, Consolidated Statements of Operations and Consolidated Statements of
Cash Flows. All such accounting adjustments are of a normal, recurring nature.
The consolidated financial statements do not include all of the information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles and should be read
in conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K/A, filed with the
Securities and Exchange Commission, which includes financial statements as
of and for the year ended December 31, 1997. The results of the Company's
operations for any interim period are not necessarily indicative of the
results of the Company's operations for any other interim period or for a
full year.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash in banks and all
highly-liquid investments with a maturity of three months or less at the
time of purchase.

Cost of Product Related and Contract Manufacturing Revenues

Beginning in 1997, the Company began providing contract manufacturing
services to third parties, and its second product ProstaScint was approved
resulting in significantly higher product sales. Prior to 1997, product
sales were minimal and no revenues derived from contract manufacturing,
therefore cost of product sales was immaterial.

Investment in Targon Subsidiary

As a result of the 1998 reduction of CYTOGEN's ownership interest in
Targon, the Company began accounting for its investment in Targon using the
equity method. In addition, the Company retroactively adopted Emerging
Issues Task Force (EITF) 96-16. Under the equity method, the Company
recognized 100% of Targon's losses through March 31, 1998 in its consolidated
statement of operations as "Equity Loss in Targon Subsidiary" with a
corresponding reduction in the carrying amount of its investment. The
Company did not recognize Targon's losses after March 31, 1998 based on the
completion of the sale of Targon (see Note 3).

As a result of the adoption of EITF 96-16 and the equity method,
approximately $461,000 and $1.4 million of research and development expenses
recorded in the third quarter and year-to-date periods ended September 30,
1997, respectively, and $7.5 million of acquisition of product rights expense
recorded in the third quarter of 1997, were reclassified to "Equity Loss in

6
<PAGE>

CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)

Targon Subsidiary". The primary effect on the December 31, 1997 balance sheet
was the reclassification of Restricted Cash to "Investment in Targon
Subsidiary". All other changes were immaterial.

On August 12, 1998 the Company sold its remaining ownership interest in
Targon to Elan Corporation, plc ("Elan") for $2.0 million (see Note 3). As a
result, the Company recorded a gain of approximately $2.8 million in the
statement of operations in the third quarter of 1998.

Net Loss Per Share

Basic net loss per common share is based upon the weighted average common
shares outstanding during each period. Diluted net loss per common share is
the same as basic net loss per common share, as the inclusion of common stock
equivalents would be antidilutive.

Reclassifications

Certain reclassifications have been reflected in the 1997 financial
statements to conform with the 1998 presentation.

New Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 130, which establishes standards for
reporting and disclosure of comprehensive income. SFAS No. 130 is effective
for interim and annual periods beginning after December 15, 1997. SFAS No. 130
requires additional disclosures in the Company's consolidated financial
statements, but does not have any impact on the Company's financial position or
consolidated results of operations. The Company has reviewed SFAS No. 130 and
determined that for the third quarter and year-to-date periods ended
September 30, 1998 and 1997, no items meeting the definition of comprehensive
income as specified in SFAS No. 130 existed in the financial statements.
As a result, no disclosure is necessary to comply with SFAS No. 130.

2. QUADRAMET RELATED REVENUES/EXPENSES:

In March 1997, the Company received marketing approval from FDA for
Quadramet. As a result of the approval CYTOGEN recorded a milestone payment
of $2.0 million from The DuPont Pharmaceutical Company, formerly the
Radiopharmaceutical Division of The DuPont Merck Pharmaceutical Company
("DuPont"), for manufacturing and marketing rights to Quadramet, and
also recorded a $4.0 million milestone payment to The Dow Chemical Company
("Dow") for the exclusive license to Quadramet. From the time of product
launch in the second quarter of 1997 up to June 3, 1998, CYTOGEN
recorded royalty revenues from DuPont based on minimum contractual
payments, which were in excess of actual sales. On June 3, 1998,
pursuant to an agreement between CYTOGEN and DuPont, the minimum
royalty arrangement was discontinued and CYTOGEN reclaimed the
marketing rights to Quadramet. Subsequent to June 3, 1998,
CYTOGEN has recorded product revenues from Quadramet based on
actual sales. For the third quarter and year-to-date periods ended

7
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)

September 30, 1998, CYTOGEN recognized $735,000 and $2.6 million,
respectively, in sales and royalties from Quadramet compared to
$1.6 million and $1.7 million, respectively, in each of the
comparable periods of the prior year.

On October 29, 1998 CYTOGEN announced an exclusive license and
marketing agreement ("Berlex Agreement") with Berlex for the
manufacture and sale of Quadramet. CYTOGEN and Berlex are jointly
finalizing a long-term supply agreement with DuPont, the current
contract manufacturer of Quadramet. Under the terms of the Berlex
Agreement, CYTOGEN will receive an $8 million up front payment
upon completion of the supply agreement with DuPont, of which $4
million will be paid to DuPont upon completion of the supply
agreement with DuPont to secure a long-term manufacturing commitment.
Berlex will pay CYTOGEN royalties on net sales of Quadramet,
as well as milestone payments based on achievement of certain sales
levels. In connection with the Berlex Agreement, CYTOGEN granted
Berlex a warrant to purchase 1 million shares of CYTOGEN common
stock at an exercise price of $1.002 per share through October 2003
and exercisable after the earlier of one year or the achievement of
defined sales levels.

CYTOGEN has also paid royalty expenses to Dow since the product
launch in 1997. The royalty expenses are based on a percentage of
sales of Quadramet or guaranteed contractual minimum royalty
payments, whichever is greater. For the third quarter and year-to-date
periods ended September 30, 1998, CYTOGEN recorded $125,000
and $375,000, respectively, in royalty expenses compared to
$161,000 and $189,000, respectively, recorded in each of the
comparable periods of 1997.

3. SALE OF TARGON CORPORATION:

Targon was established in September 1996 pursuant to agreements
between CYTOGEN and Elan, and was a majority-owned (99.75%)
subsidiary of CYTOGEN. On March 31, 1998, Elan exchanged its
shares of the Company's Series A Convertible Preferred Stock for
50% of CYTOGEN's interest in Targon. On August 12, 1998, CYTOGEN
sold its remaining 49.875% interest in Targon to Elan for $2.0
million (see Note 1). As a result of the sale, the warrant to
purchase up to 1 million shares of CYTOGEN common stock previously
granted to Elan and all notes among CYTOGEN, Elan and Targon were
canceled. In addition to the sale of Targon, on August 14, 1998,
CYTOGEN received $2.0 million from Elan in exchange for a convertible
promissory note. See Note 5.

4. CONVERSION OF CYTOGEN'S SERIES B PREFERRED STOCK:

During the third quarter and year-to-date periods of 1998, the
aggregate face amounts of $1.0 million and $7.5 million, respectively,
of the Company's Series B Preferred Stock ("Series B")
issued in December 1997 were converted into common stock resulting
in the issuance of 1,796,745 and 7,377,054 shares, respectively, of
CYTOGEN common stock for both the conversion and accrued dividends.
At September 30, 1998, all of Series B was converted and therefore,
none was outstanding.

8
<PAGE>
CYTOGEN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont'd)

5. LONG TERM DEBT:

On August 14, 1998, CYTOGEN received $2.0 million from Elan in
exchange for a convertible promissory note. The note is convertible
into CYTOGEN common shares at $2.80 per share, subject to
adjustments and matures in seven years. The note bears interest of
7% compounded semi-annually, however, such interest is not payable
in cash but be added to the principal for the first 24 months;
thereafter, interest will be payable in cash.

On October 19, 1998, the Company entered into a $750,000 term
loan agreement with The CIT Group/Credit Finance Inc., using the
Company's tangible assets as collateral. The note bears interest
at prime plus 3%. The note is payable over 35 monthly principal
payments of $12,500 plus interest with the remaining balance due
October 2001.

6. COMMON STOCK:

On October 23, 1998, the Company entered into an agreement (the
"Equity Line Agreement") with an institutional investor (the
"Investor") for a $12 million common stock equity line. Pursuant
to the Equity Line Agreement, the Company, subject to the satisfaction
of certain conditions including the effective registration of
such shares, was granted the right to issue and sell to the
Investor, and the Investor would be obligated to purchase up to $12
million of CYTOGEN common stock from time to time (collectively,
the "Put Rights") over a two year period at a purchase price per
share equal to 85% of the average of lowest trade prices of CYTOGEN
common stock during five designated trading days as determined
under the Equity Line Agreement. The Company can exercise the Put
Rights every 20 trading days in the amounts ranging from $150,000
to $1 million, subject to the satisfaction of minimum trading
volume, market price of CYTOGEN common stock and registration of
the shares of common stock under the Securities Act of 1933, as
amended. The Company is required to exercise Put Rights with
respect to a minimum of $3 million over the life of the Equity Line
Agreement. In addition, the Company granted to the Investor a
warrant to purchase up to 200,000 shares of CYTOGEN common stock at
an exercise price of $1.016 per share through April 2002.

<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations

From time to time, as used herein, the term "Company" may
include CYTOGEN and its subsidiaries AxCell, Targon, and Cellcor,
taken as a whole, where appropriate.

Results of Operations

Background. To date, the Company's revenues have resulted
primarily from (i) sales and royalties from ProstaScint, Quadramet
and OncoScint CR/OV, (ii) payments received from contract
manufacturing and research services pursuant to agreements, (iii)
fees generated from the licensing of its technology and marketing
rights to its products, and (iv) milestone payments received when
events stipulated in the collaborative agreements with third
parties have been achieved.

On October 29, 1998 CYTOGEN announced an exclusive license
agreement with Berlex for the manufacture and sale of Quadramet.
CYTOGEN and Berlex are jointly finalizing a long-term supply
agreement with DuPont, the current contract manufacturer of
Quadramet. Under the terms of the Berlex Agreement, CYTOGEN will
receive an $8 million up front payment upon completion of the
supply agreement with DuPont, of which $4 million will be paid to
DuPont upon the completion of the supply agreement with DuPont to
secure a long-term manufacturing commitment. Berlex will pay
CYTOGEN royalties on net sales of Quadramet, as well as milestone
payments based on achievement of certain sales levels. See Note 2
to the Consolidated Financial Statements.

Quadramet was previously marketed in the United States by
DuPont. Under this arrangement, CYTOGEN recorded royalty revenues
based on a percentage of sales of Quadramet or guaranteed contractual
minimum royalty payments, whichever was greater. Actual sales
were substantially less than the minimum royalties. On June 3,
1998, pursuant to an agreement (the "Termination Agreement")
between CYTOGEN and DuPont, CYTOGEN reclaimed marketing rights to
Quadramet and the minimum royalty arrangement was terminated. All
terms of the Termination Agreement have been met. As a result,
near-term royalty revenues were adversely affected and Quadramet
revenues are now based on actual sales.

On September 15, 1998, CYTOGEN implemented a restructuring plan
including operating expense reductions with the closure of Cellcor
subsidiary and corporate downsizing. As a result, significant
aspects of the Company's operations were scaled back or eliminated
to increase its focus on marketing of its products, Quadramet,
ProstaScint and OncoScint CR/OV. In conjunction with this
restructuring plan, CYTOGEN recorded a charge of $1.7 million in
the third quarter of 1998 to its general and administrative
expenses for severances, other closure related expenses and costs
to implement the turn-around plan.

On August 12, 1998, CYTOGEN completed the sale of its remaining
49.875% ownership interest of Targon to Elan for $2.0 million As
a result, the Company recognized a non-operating gain of approximately
$2.8 million in the third quarter of 1998. All previous
notes among CYTOGEN, Targon and Elan were canceled. Also on August
14, 1998, CYTOGEN received $2.0 million from Elan in exchange for
a convertible promissory note. See Notes 3 and 5 to The Consolidated
Financial Statements.

<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

Third quarter ended September 30, 1998 and 1997

Revenues. Total revenues for the third quarter in 1998 and
1997 were $2.8 million and $4.2 million, respectively. The product
related revenues, which included product sales and royalties,
accounted for 92% of total revenues in 1998 versus 76% from the
same period of 1997. License and contract revenues accounted for
the remainder of revenues.

Product related revenues for the third quarter in 1998 and 1997
were $2.6 million and $3.2 million, respectively. ProstaScint
accounted for 62% and 37% of product related revenues in the third
quarter of 1998 and 1997, respectively, while revenues from
Quadramet accounted for 29% and 52% of product related revenues for
the comparable periods in 1998 and 1997, respectively (see Note 2
to The Consolidated Financial Statements). ProstaScint and
Quadramet were introduced to the market in 1997. The increase of
ProstaScint sales over prior year period was attributable to the
increased market acceptance of the product, as well as to the
increased number of accredited nuclear imaging centers, or Partners
in Excellence (" PIETM") sites, which are qualified to offer
ProstaScint scans. Each PIE site receives rigorous training,
undergoes proficiency testing and is certified as proficient in the
interpretation of ProstaScint scan. The increase in PIE sites has
included a number of major cancer centers across the country.
Sales of ProstaScint were $1.6 million in the third quarter of 1998
compared to $1.2 million in the third quarter of 1997. Revenues
from Quadramet decreased to $735,000 in the third quarter of 1998
from $1.6 million in the third quarter of 1997. During the interim
period until the re-launch of Quadramet by Berlex in the first
quarter of 1999, the Company does not expect Quadramet sales to be
significant. Although CYTOGEN believes that Berlex is the
appropriate marketing partner since they have a strategic focus in
oncology and are actively involved in patient and disease management
program, there can be no assurance that Quadramet, after the
re-launch, will achieve market acceptance on a timely basis or at
all to result in significant increases in revenues for CYTOGEN.

Other Revenues, including sales from OncoScint CR/OV and
autolymphocyte therapy ("ALT") treatments, were $228,000 in 1998
compared to $350,000 recorded in the comparable period of 1997.
The decrease from the prior year is due to the discontinuation of
the ALT treatment program pending the closure of Cellcor. As a
result, there will be no revenue from ALT treatments after
September 15, 1998.

License and contract revenues for the third quarter in 1998 and
1997 were $210,000 and $1.0 million, respectively. The third
quarter 1998 license and contract revenues consisted primarily of
contract manufacturing revenues. The third quarter 1997 revenues
included $365,000 and $278,000 in research revenues from DuPont for
continued clinical development of Quadramet and from Elan,
respectively, and $371,000 in contract manufacturing revenues.
License and contract revenues have fluctuated in the past and may
fluctuate in the future.

Operating Expenses. Total operating expenses were $9.3 million
and $16.1 million for the third quarter of 1998 and 1997, respectively.
The 1998 expenses included $1.2 million of restructuring
costs associated with the closure of Cellcor and corporate
downsizing, as well as approximately $500,000 in costs related to

<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

the implementation of a turn-around plan. An additional $500,000
for miscellaneous charges including unusually high costs associated
with legal matters, a milestone payment to Dow for Canadian
approval of Quadramet, and a write-down on property were also
recorded in the third quarter. With the dissolution of DuPont
marketing agreement, expenses associated with Quadramet manufacturing
and distribution also increased. The Company expects these
expenses will be eliminated with the re-launch of the product by
Berlex in the first quarter of 1999. The third quarter of 1997
operating expenses included $7.5 million of product acquisition
costs and operating expenses for Targon.

Cost of product related and contract manufacturing revenues for
the third quarter of 1998 were $2.3 million compared to $1.6
million recorded in the same period of the prior year. The
increase from the prior year period is due primarily to increased
manufacturing costs associated with increased revenues in 1998 and
to expenses related to Quadramet including royalty, manufacturing
and distribution costs (see Note 2 to the Consolidated Financial
Statements).

Research and development expenses for the third quarter of 1998
were $2.6 million compared to $3.5 million recorded in the same
period of 1997. These expenses principally reflect product
development efforts and support of clinical trials. The 1998
expenses also included a $150,000 milestone payment to Dow for
Canadian approval of Quadramet. The 1998 decrease from the prior
year period is due to various savings including the scale back of
the genetic diversified library ("GDL") program and the product
development efforts by AxCell subsidiary.

The Company did not recognize Targon's losses after March 31,
1998, based on the completion of the sale of Targon to Elan (see
Note 3 to the Consolidated Financial Statements). For the third
quarter of 1997, the Company recorded $8.0 million in equity loss
in Targon subsidiary which included a one-time $7.5 million product
acquisition charge.

Selling and marketing expenses were $1.2 million for each of the third
quarter of 1998 and 1997. These expenses reflected the marketing efforts for
ProstaScint product and expenses to establish and maintain PIE sites.

General and administrative expenses for the third quarter of 1998 were
$3.2 million which included a $1.2 million of restructuring costs associated
with the closure of Cellcor subsidiary and reduction of work force,
approximately $500,000 in cost related to the implementation of a
turn-around plan, and $350,000 for increased legal costs and a writedown
of property. For the third quarter in 1997, general and administrative
expenses were $1.9 million.

Gain on sale of Targon subsidiary was $2.8 million recorded in the third
quarter of 1998 resulted from a sale of CYTOGEN's ownership interest in
Targon to Elan (see Note 3 to the Consolidated Financial Statements).

<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

Interest Income/Expense. Interest income for the third quarter in 1998
was $109,000 compared to $82,000 realized in the same period of 1997 and
included interest income realized from the $10.0 million note due to CYTOGEN
from Targon. The $10.0 million note was canceled as a result of a sale to
Elan of CYTOGEN's ownership in Targon on August 12, 1998.

Interest expense for the third quarter of 1998 was $97,000
compared to $73,000 recorded in the same period of 1997 and
included interest expense associated with the $10.0 million note
due to Elan, which was canceled as a result of a sale to Elan of
CYTOGEN's ownership in Targon on August 12, 1998.

Net Loss. Net loss to common stockholders for the third quarter
in 1998 was $3.7 million compared to a net loss of $11.9 million
incurred in the same period of 1997. The loss per common share was
$0.06 on 58.1 million average common shares outstanding compared to
$0.23 on 51.2 million average common shares outstanding for the
same period in 1997. The 1997 net loss to common stockholders
included a one-time $7.5 million charge or a $0.15 per share loss
for the product acquisition.

Year-to-date periods ended September 30, 1998 and 1997

Revenues. Total revenues for the year-to-date periods of 1998
and 1997 were $9.4 million and $10.2 million, respectively. The
product related revenues accounted for 84% of total revenues in
1998 versus 53% from the same period of the prior year. License
and contract revenues accounted for the remainder of revenues with
16% and 47% of total revenues recorded in the year-to-date periods
of 1998 and 1997, respectively.

Product related revenues for the year-to-date periods in 1998
and 1997 were $7.9 million and $5.4 million, respectively.
ProstaScint accounted for 58% and 52% of product related revenues
in 1998 and 1997, respectively, while Quadramet royalty and sales
revenue accounted for 33% and 31% of product related revenues in
1998 and 1997, respectively (see Note 2 to The Consolidated
Financial Statements). Sales from ProstaScint were $4.6 million in
the year-to-date period of 1998 compared to $2.8 million in the
comparable period of 1997. Royalty and sales revenues from
Quadramet were $2.6 million and $1.7 million in 1998 and 1997,
respectively. Other Revenues, including sales from OncoScint
CR/OV and ALT treatments, were $696,000 in 1998 compared to
$929,000 recorded in the comparable period of 1997.

License and contract revenues for the year-to-date periods in
1998 and 1997 were $1.5 million and $4.8 million, respectively.
The 1998 license and contract revenues included $1.1 million in
contract manufacturing revenues from eleven customers, $127,000
from Boston Life Sciences for clinical services and $100,000
license fee from Antisoma. The 1997 revenues included a $2.0
million milestone payment from DuPont, $1.1 million and $810,000 in
research revenues from DuPont for continued clinical development of
Quadramet and from Elan, respectively, and $781,000 in contract
manufacturing revenues from eleven customers.

<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

Operating Expenses. The current year operating expenses reflect
the Company's continued efforts to control spending. For the year-to-date
period in 1998, operating expenses were $24.9 million compared to $36.6
million recorded in the same period of 1997. The decrease from the prior
year period is due to the overall savings from cost containment efforts in
1998, a one-time $4.0 million milestone payment to Dow recorded in the first
quarter of 1997 upon the approval of Quadramet by FDA, and a one-time $7.5
million charge recorded in the third quarter of 1997 for product acquisition
by Targon. The decrease is partially offset $1.5 million increase in costs
of sales, and $1.7 million in restructuring charge and in costs related to
the implementation of a turn-around plan recorded in the third quarter of 1998.

Cost of product related and contract manufacturing revenues for
the year-to-date period in 1998 were $6.1 million compared to $4.6
million recorded in the same period of 1997. The increase from the
prior period is due primarily to increased manufacturing costs
associated with increased revenues in 1998, and to expenses related
to Quadramet including royalty, manufacturing and distribution
costs (see Note 2 to the Consolidated Financial Statements).

Research and development expenses for the year-to-date period
in 1998 were $8.3 million compared to $14.7 million recorded in
the same period of 1997. These expenses principally reflect
product development efforts and support of clinical trials. The
decrease from the prior year period is due to the aforementioned
$4.0 million milestone payment to Dow in the first quarter of 1997
combined with various savings from the Company's product development
efforts in 1998 including the scale back of the GDL program and AxCell
subsidiary.

Equity loss in Targon subsidiary for the year-to date period in
1998 was $1.0 million reflecting Targon's product development and
clinical trials programs. The Company did not recognize Targon's
losses after March 31, 1998, based on the completion of the sale of
Targon. For the comparable period in 1997, the Company recorded
$8.7 million for equity loss in Targon subsidiary which included a
one-time charge of $7.5 million recorded in the third quarter of
1997 for a product acquisition

Selling and marketing expenses were $3.6 million and $3.8
million for the year-to-date periods of 1998 and 1997, respectively.
The 1998 expenses reflected the marketing efforts to increase ProstaScint
sales and expenses to establish and maintain PIE sites. The 1997 expenses
included costs associated with ProstaScint launch and PIE program.

General and administrative expenses for year-to-date period in
1998 were $5.8 million which included a $1.2 million of restructuring
costs associated with the closure of Cellcor and work force
reduction and $500,000 of expenses related to the implementation
of a corporate turn-around plan. Excluding the aforementioned
charges, the 1998 general and administrative expenses were lower
than the $4.8 million recorded in the comparable period of 1997
reflecting cost containment efforts.

Gain on sale of Targon subsidiary was $2.8 million recorded in the
third quarter of 1998, a result of a sale of CYTOGEN's ownership interest
in Targon to Elan (see Note 3 to the Consolidated Financial Statements).

14
<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

Interest Income/Expense. Interest income for the year-to-date
period in 1998 was $537,000 compared to $527,000 realized in the
same period in 1997. The increase from the prior year period is
due to the $410,000 interest income realized in 1998 from the $10.0
million note due to CYTOGEN from Targon, partially offset by lower
investment income due to lower cash and short term investment
balances for the periods. As mentioned above, the note was canceled
as a result of a sale of Targon to Elan.

Interest expense for the year-to-date period in 1998 was $535,000
compared to $219,000 recorded in the same period of 1997. The increase
from the prior year period is due to the 1998 interest expense of
$410,000 associated with the $10.0 million note due to Elan which was canceled
as a result of a sale of Targon to Elan in August 1998.

Net Loss. Net loss to common stockholders for the year-to-date period
of 1998 was $12.8 million compared to a net loss of $26.1 million incurred
in the same period of 1997. The loss per common share was $0.23 on 55.4
million average common shares outstanding compared to $0.51 on 51.1 million
average common shares outstanding for the same period in 1997. The 1998 net
loss to common stockholders included $119,000 of accrued dividends on the
Series B Preferred Stock. The 1997 net loss to common stockholders included
a one-time $7.5 million charge or a $0.15 per share loss for the product
acquisition.

Liquidity and Capital Resources

The Company's cash and cash equivalents were $3.0 million as of
September 30, 1998, compared to $7.4 million as of December 31, 1997 and
$3.0 million as of June 30, 1998. The cash used for operating activities
for the year -to-date period ended September 30, 1998 was $8.2 million
compared to $17.9 million in the same period of 1997. The decrease in
cash usage for operating activities from the prior year period was primarily
due to lower research and development spendings and to the receipts of
revenues generated by sales and royalties from Quadramet and ProstaScint.

Historically, the Company's primary sources of cash have been proceeds
from the issuance and sale of its stock through public offerings and private
placements, product related revenues, revenues from contract manufacturing
and research services, fees paid under its license agreements and
interest earned on its cash and short term investments.

<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

the shares of common stock under the Securities Act of 1933, as
amended. The Company is required to exercise Put Rights with
respect to a minimum of $3 million over the life of the Equity Line
Agreement. In addition, the Company granted to the Investor a
warrant to purchase up to 200,000 shares of CYTOGEN common stock at
an exercise price of $1.016 per share through April 2002.

On August 14, 1998, CYTOGEN received $4.0 million from Elan consisting
of $2.0 million for the sale of CYTOGEN's remaining interest in Targon and
$2.0 million in exchange for a convertible promissory note. The note is
convertible into CYTOGEN common shares at $2.80 per share, subject to
adjustments, and matures in seven years. The note bears interest of 7%
compounded semi-annually, however, such interest is not payable in cash
but be added to the principal for the first 24 months; thereafter, interest
will be payable in cash.

Quadramet. On October 29, 1998 CYTOGEN announced an exclusive
license agreement with Berlex for the manufacture and sale of
Quadramet. Under the terms of the Berlex Agreement, CYTOGEN will
receive an $8 million up front payment, of which $4 million will be
paid to DuPont, upon completion of the supply agreement with DuPont
to secure a long-term manufacturing commitment. Berlex will pay
CYTOGEN royalties on net sales of Quadramet, as well as milestone
payments based on achievement of certain sales levels (see Note 2
to the Consolidated Financial Statements). In connection with the
Berlex Agreement, CYTOGEN granted Berlex a warrant to purchase 1
million shares of CYTOGEN common stock at an exercise price of
$1.002 per share through October 2003 and exercisable after the
earlier of one year or the achievement of defined sales levels.

CYTOGEN acquired an exclusive license to Quadramet in the U.S., Canada
and Latin America from Dow. The agreement requires the Company to pay Dow
royalties based on a percentage of net sales of Quadramet, or guaranteed
contractual minimum payments, whichever is greater, and future payments
upon achievement of certain milestones. Minimum royalties due Dow for 1998
are $500,000. For the year-to-date periods ended September 30, 1998 and 1997,
the Company recorded $375,000 and $189,000 in royalty expenses for Quadramet.

ProstaScint. ProstaScint was launched in February 1997. Significant
cash will be required to support the Company's marketing program and
expansion and maintenance of the PIE program.

In 1996, CYTOGEN entered into an agreement with Bard (the "Co-Promotion
Agreement") to market and promote ProstaScint, pursuant to which Bard
will make payments upon the occurrence of certain milestones, which include
expansion of co-marketing rights in selected countries outside the U.S.
During the term of the Co-Promotion Agreement, Bard will receive
performance-based compensation for its services. For the year-to-date
periods in 1998 and 1997, the Company recorded $550,000 and $393,000,
respectively, for Bard commissions.

16
<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

OncoScint CR/OV. To date, sales of OncoScint CR/OV have not been
material. In 1994, the Company reacquired all U.S. marketing rights to
OncoScint from Knoll Pharmaceuticals Company ("Knoll") and is required to
pay Knoll $1.7 million on or before December 15, 1998 in addition to accrued
interest from July 1, 1998 (the original due date) through the date of payment
at the prevailing prime rate of interest as of such date. The Company will
fund this payment from product related revenues and other sources.

The Company's capital and operating requirements may change depending
upon various factors, including:(i) the success of the Company and its
strategic partners in manufacturing, marketing and commercialization of
its other products; (ii) the amount of resources which the Company devotes
to clinical evaluations and the expansion of marketing and sales capabilities;
(iii) results of preclinical testing, clinical trials and research and
development activities; and (iv) competitive and technological developments.

The Company's financial objectives are to meet its capital and operating
requirements through revenues from existing products, contract manufacturing,
license and research contracts, and control of spending. To achieve its
strategic objectives, the Company may enter into research and development
partnerships and acquire, in-license and develop other technologies, products or
services. Certain of these strategies may require payments by the Company in
either cash or stock in addition to the costs associated with developing and
marketing a product or technology. The Company currently has no commitments
or specific plans for acquisitions or strategic alliances. However, the
Company believes that, if successful, such strategies may increase long term
revenues. There can be no assurance as to the success of such strategies or
that resulting funds will be sufficient to meet cash requirements until
product revenues are sufficient to cover operating expenses. To fund
these strategic and operating activities, the Company may sell equity and debt
securities as market conditions permit or enter into credit facilities.

The Company has incurred negative cash flows from operations since its
inception, and has expended, and expects to continue to expend in the future,
substantial funds to complete its planned product development efforts,
including acquisition of products and complementary technologies, research
and development, clinical studies and regulatory activities, and to further
expand its marketing and sales. The Company expects that its existing capital
resources, together with decreased operating costs, $750,000 proceeds from the
term loan, the anticipated $4.0 million net cash receipt from Berlex, but
exclusive of the Equity Line Agreement, will be adequate to fund the
Company's operations into 1999. Management believes the addition of the
Equity Line Agreement will provide the Company with adequate cash flow to
sustain operations into 2000. No assurance can be given that the Company will
not consume a significant amount of its available resources before that time.
In addition, the Company expects that it will have additional requirements
for debt or equity capital, irrespective of whether and when it reaches
profitability, for further development of products, product and
technology acquisition costs, and working capital. The Company's future
capital requirements and the adequacy of available funds will depend on
numerous factors, including the successful commercialization of its products,
the costs associated with the acquisition of complementary products and
technologies, progress in its product development efforts, the magnitude and
scope of such efforts, progress with preclinical studies and clinical trials,
progress with regulatory affairs

17
<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

activities, the cost of filing, prosecuting, defending and enforcing patent
claims and other intellectual property rights, competing technological and
market developments, and the expansion of strategic alliances for the sales,
marketing, manufacturing and distribution of its products. To the extent
that the currently available funds and revenues including the Equity Line
Agreement, $750,000 proceeds from the term loan, and the anticipated $4.0
million net cash receipt from Berlex are insufficient to meet current or
planned operating requirements, the Company will be required to obtain
additional funds through equity or debt financing, strategic alliances with
corporate partners and others, or through other sources. Based on the
Company's historical ability to raise capital and current market conditions,
the Company believes other financing alternatives are available. There can
be no assurance that the financing commitments described above or other
financial alternatives will be available when needed or at terms commercially
acceptable to the Company. If adequate funds are not available, the Company
may be required to delay, scale back or eliminate certain aspects of its
operations or attempt to obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies, product candidates, products or potential markets. If
adequate funds are not available, the Company's business, financial condition
and results of operations will be materially and adversely affected.

Year 2000 Compliance

The "Year 2000 problem" describes the concern that certain computer
applications, which use two digits rather than four to represent dates, will
interpret the year 2000 as 1900 and malfunction on January 1, 2000.

CYTOGEN's Internal Systems. The efficient operation of the Company's
business is dependent in part on its computer software programs and operating
systems (collectively, Programs and Systems). These Programs and Systems
are used in several key areas of the Company's business, including clinical,
purchasing, inventory management, sales, shipping, and financial reporting, as
well as in various administrative functions. The Company has completed its
evaluation of the Program and Systems to identify any potential year 2000
compliance problem. Based on present information, the Company believes that
it will be able to achieve year 2000 compliance through combination of
modification of some existing Programs and Systems and replacement of others
with new Programs and Systems that are already year 2000 compliant. The
majority of the Company internal systems have been replaced with fully
compliant new systems. The remaining is expected to be completed by
February 28, 1999. The total future cost is estimated at $40,000.

Readiness of Third Parties. The Company is also working with its
processing banks and network providers to ensure their systems are year 2000
compliant. All these costs will be borne by the processors, network and
software companies. In the event some of the processors are unable to
convert their systems appropriately, the Company will switch merchant accounts
to those that are able to perform the processing.

18
<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Cont'd)

Risks Associated with the Year 2000. The Company is not aware, at this
time, of any Year 2000 non-compliance that will not be fixed by the Year 2000
and that will materially affect the Company. However, some risks that the
Company faces include: the failure of internal information systems, defects
in its work environment, a slow down in customer's ability to make payments.

Contingency Plans. The Company is in the process of developing contingency
plans to address a worst case year 2000 scenario. This contingency plan is
expected to be completed by February 28, 1999.

==========================

Cautionary Statement

The foregoing discussion contains historical information as well as
forward looking statements that involve a number of risks and uncertainties.
In addition to the risks discussed above, among other factors that could
cause actual results to differ materially from expected results are the
following: (i) the Company's ability to continue as a going concern if the
Company is unable to raise sufficient funds or generate sufficient cash flows
from operations to cover the cost of its operations; (ii) the Company's
ability to access the capital markets in the near term and in the future for
continued funding of existing projects and for the pursuit of new projects;
(iii) the timing and results of clinical studies; (iv) market acceptance of
the Company's products, including programs designed to facilitate use of
the products, such as the PIE Program; (v) the decision by the majority of
public and private insurance carriers on whether to reimburse patients for
the Company's products; (vi) the profitability of its products; (vii) the
ability to attract, and the ultimate success of strategic partnering
arrangements, collaborations, and acquisition candidates; (viii) the ability
to attract additional contract manufacturing customers; (ix) the ability of
the Company and its partners to identify new products as a result of those
collaborations that are capable of achieving FDA approval, that are
cost-effective alternatives to existing products and that are ultimately
accepted by the key users of the product; and (x) the success of the
Company's marketing partners in obtaining marketing approvals in Canada and
in European countries, in achieving milestones and achieving sales of products
resulting in royalties.

<PAGE>

PART II - OTHER INFORMATION
- -----------------------------

Item 5 - Other Information.
- ------

The Company's Common Stock (the "Common Stock") is listed on the Nasdaq
National Market (NNM"). The continued listing of the Common Stock on
the NNM is conditioned upon the Company's compliance with certain
quantitative criteria related to the market price of the Common Stock,
net tangible assets, market capitalization and certain other requirements
set forth by the NNM. At September 30, 1998, the Company's net tangible
assets were below NNM maintenance standards. The Company has been in
discussions with NNM on this subject. The Company is also taking steps
toward achieving compliance; however, there can be no assurance that
the Company will be able to maintain the listing of its securities on
the NNM. In the event that the Common Stock is delisted from the NNM,
the Company could apply to have the Common Stock listed on the Nasdaq
SmallCap Market. If, however, the Company did not meet the requirements
of the Nasdaq SmallCap Market, trading of the Common Stock could be
conducted on an electronic bulletin board established for securities
that do not meet the Nasdaq SmallCap Market listing requirements or in
what is commonly referred to as the "pink sheets." Such delisting of
the Common Stock could make it difficult for the Company to obtain future
financing. In addition, any such delisting may restrict investors'
interest in the Common Stock and materially adversely affect the trading
in and price of the Common Stock.

Item 6 - Exhibits and Reports on Form 8-K
- ------

(a) Exhibits:

1. Amended and Restated Rights Agreement, dated as of October 19, 1998
between CYTOGEN Corporation and Chase Mellon Shareholder Services,
L.L.C., as Rights Agent. The Amended and Restated Rights Agreement
includes the Form of Certificate of Designations of Series C Junior
Preferred Stock as Exhibit A, the form of Rights Certificate as
Exhibit B and the Summary of Rights as Exhibit C. Filed herewith.

10.1 Employment agreement effective as of August 20, 1998 between CYTOGEN
Corporation and H. Joseph Reiser. Filed herewith.

10.2 Loan and Security Agreement, dated as of October 19, 1998 between
CYTOGEN Corporation and the CIT Group/Credit Finance, Inc.
Filed herewith.

10.3 Private Equity Line Agreement by and between Kingsbridge Capital
Limited and CYTOGEN Corporation dated as of October 23, 1998.
Filed herewith.

10.4 License Agreement by and between Berlex Laboratories, Inc. and
CYTOGEN Corporation dated as of October 28, 1998. Filed herewith.*

10.5 Addendum to the Letter Agreement effective as of October 29, 1998
between CYTOGEN Corporation and DuPont Pharmaceuticals Company.
Filed herewith.

<PAGE>

27 Financial Data Schedule (Submitted to SEC only in electronic format).

* CYTOGEN Corporation has requested confidential treatment of certain
provisions contained in this exhibit. The copy filed as an exhibit
omits the information subject to the confidentiality request.

(b) Reports on Form 8-K:

During the third quarter of 1998, the Company filed a Form 8-K dated
August 24, 1998 to report on "Item 5. Other Events" regarding the
appointment of H. Joseph Reiser as the Company's President and Chief
Executive Officer and as a member of the board of directors.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

CYTOGEN CORPORATION

Date November 13, 1998 By /s/ Jane M. Maida
----------------- ------------------------
Jane M. Maida
Chief Accounting Officer
(Authorized Accounting Officer)

CYTOGEN CORPORATION

And

CHASEMELLON SHAREHOLDER SERVICES, L.L.C.

As Rights Agent

____________

Amended and Restated Rights Agreement

Dated as of October __, 1998

<PAGE>

TABLE OF CONTENTS

Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . . .1
Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . . .4
Section 3. Issue of Right Certificates. . . . . . . . . . . . . . . . . .5
Section 4. Form of Right Certificates . . . . . . . . . . . . . . . . . .6
Section 5. Countersignature and Registration. . . . . . . . . . . . . . .6
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right
Certificates. . . . . . .. . . . . . . . . . . . . . . . . . .7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.8
Section 8. Cancellation and Destruction of Right Certificates . . . . . .9
Section 9. Availability of Preferred Shares . . . . . . . . . . . . . . .9
Section 10. Preferred Shares Record Date . . . . . . . . . . . . . . . . .9
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights . . . . . . . . . . . . . . . . . . . . . . .10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares . .16
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. . . . . . . . . . . . . . . . . . . . . . . . .16
Section 14. Fractional Rights and Fractional Shares. . . . . . . . . . . .17
Section 15. Rights of Action . . . . . . . . . . . . . . . . . . . . . . .18
Section 16. Agreement of Right Holders . . . . . . . . . . . . . . . . . .19
Section 17. Right Certificate Holder Not Deemed a Stockholder. . . . . . .19
Section 18. Concerning the Rights Agent. . . . . . . . . . . . . . . . . .19
Section 19. Merger or Consolidation or Change of Name of Rights Agent. . .20
Section 20. Duties of Rights Agent . . . . . . . . . . . . . . . . . . . .21
Section 21. Change of Rights Agent . . . . . . . . . . . . . . . . . . . .22
Section 22. Issuance of New Right Certificates . . . . . . . . . . . . . .23
Section 23. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . .23
Section 24. Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 25. Notice of Certain Events . . . . . . . . . . . . . . . . . . .25
Section 26. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 27. Supplements and Amendments . . . . . . . . . . . . . . . . . .27
Section 28. Successors . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 29. Benefits of this Rights Agreement. . . . . . . . . . . . . . .27
Section 30. Severability . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 31. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . .27
Section 32. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 33. Descriptive Headings . . . . . . . . . . . . . . . . . . . . .28

Exhibit A- Form of Certificate of Designations
Exhibit B- Form of Right Certificate
Exhibit C- Summary of Rights to Purchase Preferred Shares

<PAGE>
Amended and Restated Rights Agreement

Rights Agreement, dated as of October 19, 1998,
between Cytogen Corporation, a Delaware corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agent").

On June 19, 1998, the Board of Directors of the
Company approved and adopted a Rights Agreement, dated as of
such date, by and between the Company and the Rights Agent
(the "Original Rights Agreement") and, as contemplated by the
Original Rights Agreement, such Board of Directors authorized
and declared a dividend of one preferred share purchase right
(a "Right") for each Common Share of the Company outstanding
on June 30, 1998 (the "Record Date"), each Right representing
the right to purchase one one-thousandth of a Preferred Share,
upon the terms and subject to the conditions set forth in the
Certificate of Designation relating to the Preferred Shares,
and further authorized and directed the issuance of one Right
with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Expiration
Date.

On October 19, 1998, the Board of Directors of the
Company determined to amend and restate the Original Rights
Agreement in order to eliminate provisions thereof relating to
Continuing Directors (as such term is defined in the Original
Rights Agreement).

Accordingly, in consideration of the premises and
the mutual agreements herein set forth, the parties hereby
agree as follows:

Section 1. Certain Definitions. For purposes of this Rights
Agreement, the following terms have the meanings indicated:

(a) "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such
Person, shall be the Beneficial Owner of 20% or more of the
Common Shares then outstanding, but shall not include (i) the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or
any entity holding Common Shares for or pursuant to the terms
of any such plan, (ii) any person who becomes the Beneficial
Owner of 20% or more of the Common Shares then outstanding as
the result of a reduction in the outstanding Common Shares
resulting from acquisition of Common Shares by the Company
approved by the Board of Directors, unless and until such
Person become the Beneficial Owner of any additional Common
Shares, (iii) any person who becomes the Beneficial Owner of
20% or more of the Common Shares then outstanding pursuant to
any action or transaction or series of related actions or
transactions approved by the Board of Directors before such
person otherwise becomes an Acquiring Person or (iv) any
Person who or which the Board of Directors of the Company
determines, in good faith, became an Acquiring Person
inadvertently, if such Person divests as promptly as

<PAGE>

practicable a sufficient number of Common Shares so that such
Person would no longer be an Acquiring Person.

(b) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 under
the Exchange Act.

(i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, as determined
pursuant to Rule 13d-3 under the Exchange Act;

(ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether
such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and
between underwriters and selling group members with respect to
a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise,
provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, securities
tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for
purchase or exchange or (B) the right to vote pursuant to any
agreement, arrangement or understanding, provided, however,
that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (1) arises
solely from a revocable proxy or consent given to such Person
in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not
also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report) or

(iii) which are beneficially owned,
directly or indirectly, by any other Person with which such
Person or any of such Person's Affiliates or Associates has
any agreement, arrangement or understanding (other than
customary agreements with and between underwriters and selling
group members with respect to a bona fide public offering of
securities) for the purpose of acquiring, holding, voting
(except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.

Notwithstanding anything in this definition of Beneficial
Ownership to the contrary, the phrase "then outstanding," when
used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of such
securities then issued and outstanding together with the
number of such securities not then actually issued and
outstanding which such Person would be deemed to Beneficially
Own hereunder.

2
<PAGE>

(d) "Business Day" shall mean any day other than
a Saturday, a Sunday, or a day on which banking institutions
in New York are authorized or obligated by law or executive
order to close.

(e) "Close of Business" on any given date shall
mean 5:00 p.m., New York City time, on such date, provided,
however, that, if such date is not a Business Day, it shall
mean 5:00 p.m., New York City time, on the next succeeding
Business Day.

(f) "Common Shares" shall mean the shares of common
stock, par value $.01 per share, of the Company, except that
"Common Shares" when used with reference to any Person other
than the Company shall mean the capital stock (or equity
interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person,
the Person or Persons which ultimately control such first-mentioned Person.

(g) "Company" shall have the meaning set forth in
the preamble hereof.

(h) "current per share market price" shall have
the meaning set forth in Section 11(d) hereof.

(i) "Distribution Date" shall have the meaning set
forth in Section 3(a) hereof.

(j) "equivalent preferred shares" shall have the
meaning set forth in Section 11(b) hereof.

(k) "Exchange Act" shall mean the Securities
Exchange Act of 1934.

(l) "Exchange Ratio" shall have the meaning set
forth in Section 24(a) hereof.

(m) "Expiration Date" shall mean the Close of
Business on June 19, 2008.

(n) "NASDAQ" shall mean the National Association of
Securities Dealers, Inc. Automated Quotation System.

(o) "Person" shall mean any individual, firm,
corporation, partnership or other entity, and shall include
any successor (by merger or otherwise) of such entity.

(p) "Preferred Shares" shall mean shares of Series
C Junior Participating Preferred Stock, $.01 par value, of the
Company having the rights and preferences set forth in the
Form of Certificate of Designations attached to this Amended
and Restated Rights Agreement as Exhibit A.

3
<PAGE>

(q) "Purchase Price" shall initially be $20 for
each one one-thousandth of a Preferred Share purchasable
pursuant to the exercise of a Right, and shall be subject to
adjustment from time to time as provided in Section 11 or 13
hereof.

(r) "Record Date" shall have the meaning set forth
in the second paragraph hereof.

(s) "Redemption Date" shall mean the time at which
the Rights are redeemed as provided in Section 23 hereof.

(t) "Redemption Price" shall have the meaning set
forth in Section 23(a) hereof.

(u) "Right" shall have the meaning set forth in the
second paragraph hereof.

(v) "Right Certificate" shall have the meaning set
forth in Section 3(a) hereof.

(w) "Rights Agent" shall have the meaning set forth
in the preamble hereof.

(x) "Security" shall have the meaning set forth in
Section 11(d)(i) hereof.

(y) "Stock Acquisition Date" shall mean the first
date of public announcement (including, without limitation, by
a filing under the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such or
such earlier date as a majority of the Board of Directors
shall become aware of the existence of an Acquiring Person.

(z) "Subsidiary" of any Person shall mean any
corporation or other entity of which a majority of the voting
power of the voting equity securities or equity interest is
owned or otherwise controlled, directly or indirectly, by such
Person.

(aa) "Trading Day" shall have the meaning set forth
in Section 11(d)(i) hereof.

Section 2. Appointment of Rights Agent. The Company hereby appoints
the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.

<PAGE>

Section 3. Issue of Right Certificates. (a) Until the earlier of
the Close of Business on (i) the Stock Acquisition Date or (ii) such date,
if any, as may be determined by action of the Board of Directors of the
Company after the date of the commencement by any Person (other than
the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) of, or of the first public
announcement of the intention of any Person (other than the
Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company or any
entity holding Common Shares for or pursuant to the terms of
any such plan) to commence, a tender or exchange offer the
consummation of which would result in any Person becoming an
Acquiring Person (including any such date which is after the
date of this Rights Agreement and prior to the issuance of the
Rights; the earlier of such dates being herein referred to as
the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be
Right Certificates) and not by separate Right Certificates and
(y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent
(and the Rights Agent will, if requested, send) by first-class,
insured, postage-prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution
Date, at the address of such holder shown on the records of
the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right
for each Common Share so held. As of the Distribution Date,
the Rights will be evidenced solely by such Right
Certificates.

(b) The Company will make available, as promptly as
practicable following the Record Date, a Summary of Rights to
Purchase Preferred Shares, in substantially the form of
Exhibit C hereto, to any holder of Rights who may so request
from time to time prior to the Expiration Date. With respect
to certificates for Common Shares outstanding as of the Record
Date, until the Distribution Date, the Rights will be
evidenced by such certificates and the registered holders of
the Common Shares shall also be the registered holders of the
associated Rights. Until the Distribution Date (or the earlier
of the Redemption Date or the Expiration Date), the surrender
for transfer of any certificate for Common Shares in respect
of which Rights have been issued shall also constitute the
transfer of the Rights associated with such Common Shares.

(c) Rights shall be issued in respect of all
Common Shares which are issued (whether originally issued or
from the Company's treasury) after the Record Date but prior
to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date. Certificates representing such Common
Shares shall bear the following legend:

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE
HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A
RIGHTS AGREEMENT BETWEEN CYTOGEN CORPORATION (THE
"COMPANY") AND THE RIGHTS AGENT THEREUNDER (THE

<PAGE>

"RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY
INCORPORATED HEREIN BY REFERENCE AND A COPY OF
WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE
COMPANY. UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH
IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE
EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. THE
COMPANY WILL MAIL TO THE HOLDER OF THIS CERTIFICATE
A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER
RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER
CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS
AGREEMENT, RIGHTS ISSUED TO ANY PERSON WHO BECOMES
AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS
AGREEMENT), INCLUDING SUCH RIGHTS HELD BY A
SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

With respect to such certificates containing the
foregoing legend, until the Distribution Date, the Rights
associated with the Common Shares represented by such
certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall
also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the
Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed cancelled
and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which
are no longer outstanding.

Section 4. Form of Right Certificates. The Right Certificates
(and the forms of election to purchase Preferred Shares and of
assignment to be printed on the reverse thereof) shall be substantially
the same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Rights Agreement,
or as may be required to comply with any applicable law or
with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or automated
quotation system on which the Rights may from time to time be
listed, or to conform to usage. Subject to the provisions of
Sections 11 and 22 hereof, the Right Certificates shall
entitle the holders thereof to purchase such number of one
one-thousandths of a Preferred Share as shall be set forth
therein at the price per one one-thousandth of a Preferred
Share set forth therein, but the number of one one-thousandths
of a Preferred Share and the Purchase Price shall be subject
to adjustment as provided herein.

Section 5. Countersignature and Registration. (a) The
Right Certificates shall be executed on behalf of
the Company by its Chairman of the Board, its Chief Executive
Officer, its President, any of its Vice Presidents, or its
Treasurer, either manually or by facsimile signature, shall
have affixed thereto the Company's seal or a facsimile
thereof, and shall be attested by the Secretary or an
Assistant Secretary of the Company, either manually or by

<PAGE>

facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent, either manually or by
facsimile signature, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company
who shall have signed any of the Right Certificates shall
cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery
by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the
Person who signed such Right Certificates had not ceased to be
such officer of the Company; and any Right Certificate may be
signed on behalf of the Company by any Person who, at the
actual date of the execution of such Right Certificate, shall
be a proper officer of the Company to sign such Right
Certificate although at the date of the execution of this
Rights Agreement any such Person was not such an officer.

(b) Following the Distribution Date, the
Rights Agent will keep or cause to be kept, at its principal
office, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names
and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by
each of the Right Certificates and the date of each of the
Right Certificates.

Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates; Mutilated, Destroyed, Lost or
Stolen Right Certificates.

(a) Subject to the provisions of Section 14 hereof,
at any time after the Close of Business on the Distribution
Date, and at or prior to the Close of Business on the earlier
of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates (other than Right
Certificates representing Rights that have become void
pursuant to Section 11(a)(ii) hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Right Certificate
or Right Certificates entitling the registered holder to
purchase a like number of one one-thousandths of a Preferred
Share as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or
exchange any Right Certificate or Right Certificates shall
make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent.
Thereupon the Rights Agent shall countersign and deliver to
the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company
may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right
Certificates.

(b) Upon receipt by the Company and the Rights
Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Right Certificate, and,
in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the
Company's request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto, and upon

7
<PAGE>

surrender to the Rights Agent and cancellation of the Right
Certificate if mutilated, the Company will make and deliver a
new Right Certificate of like tenor to the Rights Agent for
delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.

Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights.

(a) The registered holder of any Right Certificate
may exercise the Rights evidenced thereby (except as otherwise
provided herein), in whole or in part, at any time after the
Distribution Date, upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal
office of the Rights Agent, together with payment of the
Purchase Price for each one one-thousandth of a Preferred
Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Expiration Date, (ii) the Redemption Date
or (iii) the time at which such Rights are exchanged as
provided in Section 24 hereof.

(b) The Purchase Price shall be payable in lawful
money of the United States of America in accordance with
paragraph (c) below.

(c) Upon receipt of a Right Certificate
representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the Purchase
Price for the shares to be purchased and an amount equal to
any applicable transfer tax required to be paid by the holder
of such Right Certificate in accordance with Section 9 hereof
by certified check, cashier's check or money order payable to
the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the
Preferred Shares certificates for the number of Preferred
Shares to be purchased and the Company hereby irrevocably
authorizes any such transfer agent to comply with all such
requests, or (B) requisition from the depositary agent
depositary receipts representing such number of one one-thousandths
of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent of
the Preferred Shares with such depositary agent) and the
Company hereby directs such depositary agent to comply with
such request; (ii) when appropriate, requisition from the
Company the amount of cash to be paid in lieu of issuance of
fractional shares in accordance with Section 14 hereof; (iii)
promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order
of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder; and
(iv) when appropriate, after receipt, promptly deliver such
cash to or upon the order of the registered holder of such
Right Certificate.

(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the
provisions of Section 14 hereof.

8
<PAGE>

Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose of
exercise, transfer, split up, combination or exchange shall,
if surrendered to the Company or to any of its agents, be
delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be
cancelled by it, and no Right Certificates shall be issued in
lieu thereof except as expressly permitted by any of the
provisions of this Rights Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the
Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company, or shall, at
the written request of the Company, destroy such cancelled
Right Certificates, and, in such case, shall deliver a
certificate of destruction thereof to the Company.

Section 9. Availability of Preferred Shares.

(a) The Company covenants and agrees that it will
cause to be reserved and kept available out of its authorized
and unissued Preferred Shares or any Preferred Shares held in
its treasury, the number of Preferred Shares that will be
sufficient to permit the exercise in full of all outstanding
Rights in accordance with Section 7. The Company covenants and
agrees that it will take all such action as may be necessary
to ensure that all securities delivered upon exercise of
Rights shall, at the time of delivery of the certificates for
such securities (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and
nonassessable.

(b) The Company further covenants and agrees
that it will pay when due and payable any and all federal and
state transfer taxes and charges which may be payable in
respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights. The
Company shall not, however, be required to pay any transfer
tax which may be payable in respect of any transfer or
delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts
for the Preferred Shares in a name other than that of, the
registered holder of the Right Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any
certificates or depositary receipts for Preferred Shares upon
the exercise of any Rights until any such tax shall have been
paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been
established to the Company's reasonable satisfaction that no
such tax is due.

(c) The Company will use its best efforts to ensure
that any securities issued pursuant hereto are issued in
compliance with all applicable laws.

Section 10. Preferred Shares Record Date. Each Person
in whose name any certificate for Preferred
Shares is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the
Preferred Shares represented thereby on, and such certificate
shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the

9
<PAGE>

Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Shares transfer
books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day
on which the Preferred Shares transfer books of the Company
are open. Prior to the exercise of the Rights evidenced
thereby, the holder of a Right Certificate shall not be
entitled to any rights of a holder of Preferred Shares for
which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of
the Company, except as provided herein.

Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the
number of Preferred Shares covered by each Right and the
number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.

(a) (i) In the event the Company shall at any time
after the date of this Rights Agreement (A) declare a dividend
on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital stock
in a reclassification of the Preferred Shares (including any
such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect at the time of the record
date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number
and kind of shares of capital stock issuable on such date,
shall be proportionately adjusted so that the holder of any
Right exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock
which, if such Right had been exercised immediately prior to
such date and at a time when the Preferred Shares transfer
books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification;
provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the
Company issuable upon exercise of one Right.

(ii) Subject to Section 24 of this Rights
Agreement, in the event any Person becomes an Acquiring
Person, each holder of a Right shall thereafter have a right
to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-thousandths
of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Rights
Agreement and in lieu of Preferred Shares, such number of
Common Shares as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of
one one-thousandths of a Preferred Share for which a Right is
then exercisable and dividing that product by (B) 50% of the
then current per share market price of the Company's Common
Shares (determined pursuant to Section 11(d) hereof) on the

10
<PAGE>

date of the occurrence of such event. In the event that any
Person shall become an Acquiring Person and the Rights shall
then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be
afforded by the Rights.

Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of such event, any
Rights that are or were acquired or Beneficially Owned by any
Acquiring Person (or any Associate or Affiliate of such
Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under
any provision of this Rights Agreement. No Right Certificate
shall be issued pursuant to Section 3 that represents Rights
Beneficially Owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or
Affiliate thereof; no Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person
whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right
Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the
preceding sentence shall be cancelled.

(iii) If there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii), the Company
shall take all such action as may be necessary to authorize
additional Common Shares for issuance upon exercise of the
Rights. If the Company shall, after good faith effort, be
unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be
issuable upon exercise of a Right, a number of Preferred
Shares or fraction thereof (or a security with substantially
similar rights, privileges, preferences, voting power and
economic rights) such that the current per share market price
of one Preferred Share (or such other security) multiplied by
such number or fraction is equal to the current per share
market price of one Common Share as of the date of issuance of
such Preferred Shares or fraction thereof (or other security).

(b) In case the Company shall fix a record date for
the issuance of rights, options or warrants to all holders of
Preferred Shares entitling them (for a period expiring within
45 calendar days after such record date) to subscribe for or
purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible
into Preferred Shares or equivalent preferred shares at a
price per Preferred Share or equivalent preferred share (or
having a conversion price per share, if a security convertible
into Preferred Shares or equivalent preferred shares) less
than the then current per share market price of the Preferred
Shares on such record date, the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price
of the total number of Preferred Shares and/or equivalent

11
<PAGE>

preferred shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to
be offered) would purchase at such current market price and
the denominator of which shall be the number of Preferred
Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares
to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially
convertible); provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital
stock of the Company issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights.] Preferred Shares owned by or held for
the account of the Company shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be
made successively whenever such arecord date is fixed; and in
the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record
date had not been fixed.

(c) In case the Company shall fix a record date for
the making of a distribution to all holders of the Preferred
Shares (including any such distribution made in connection
with a consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash
dividend or a dividend payable in Preferred Shares) or
subscription rights or warrants (excluding those referred to
in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then
current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and
holders of the Rights) of the portion of the assets or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one Preferred
Share and the denominator of which shall be such current per
share market price of the Preferred Shares; provided, however,
that in no event shall the consideration to be paid upon the
exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company to be issued upon
exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the
event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which
would then be in effect if such record date had not been
fixed.

(d) (i) For the purpose of any computation
hereunder, the "current per share market price" of any
security (a "Security" for the purpose of this Section
11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30
consecutive Trading Days immediately prior to such date;
provided, however, that in the event that the current per
share market price of the Security is determined during a

12
<PAGE>

period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security
payable in shares of such Security or securities convertible
into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration
of 30 Trading Days after the ex-dividend date for such
dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in
each such case, the current per share market price shall be
appropriately adjusted to reflect the current market price per
share equivalent of such Security. The closing price for each
day shall be the last sale price, regular way, or, in case no
such sale takes place on such day, the average of the closing
bid and asked prices, regular way, in either case, as reported
in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on
the New York Stock Exchange or, if the Security is not listed
or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal
national securities exchange on which the Security is listed
or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market,
as reported by the NASDAQ or such other system then in use,
or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security
is listed or admitted to trading is open for the transaction
of business or, if the Security is not listed or admitted to
trading on any national securities exchange, a Business Day.

(ii) For the purpose of any computation
hereunder, the "current per share market price" of the
Preferred Shares shall be determined in accordance with the
method set forth in Section 11(d)(i). If the Preferred Shares
are not publicly traded, the "current per share market price"
of the Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by
one thousand. If neither the Common Shares nor the Preferred
Shares are publicly held or so listed or traded, "current per
share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent.

(e) No adjustment in the Purchase Price shall be
required unless such adjustment would require an increase or
decrease of at least 1% in the Purchase Price; provided,
however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the
nearest cent or to the nearest one-millionth of a Preferred
Share or one ten-thousandth of any other share or security as
the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years

13
<PAGE>

from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to
exercise any Rights.

(f) If, as a result of an adjustment made pursuant
to Section 11(a) hereof, the holder of any Right thereafter
exercised shall become entitled to receive any shares of
capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred
Shares contained in Section 11(a) through (c), inclusive, and
the provisions of Sections 7, 9, 10 and 13 with respect to the
Preferred Shares shall apply on like terms to any such other
shares.

(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price
hereunder shall evidence the right to purchase, at the
adjusted Purchase Price, the number of one one-thousandths of
a Preferred Share purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as
provided herein.

(h) Unless the Company shall have exercised its
election as provided in Section 11(i), upon each adjustment of
the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase
Price, that number of one one-thousandths of a Preferred Share
(calculated to the nearest one millionth of a Preferred Share)
obtained by (A) multiplying (x) the number of one one-thousandths
of a share covered by a Right immediately prior to
this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and
(B) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of
any adjustment of the Purchase Price to adjust the number of
Rights in substitution for any adjustment in the number of one
one-thousandths of a Preferred Share purchasable upon the
exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for
the number of one one-thousandths of a Preferred Share for
which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment
of the number of Rights shall become that number of Rights
(calculated to the nearest one millionth) obtained by dividing
the Purchase Price in effect immediately prior to adjustment
of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on
which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at
least 10 days later than the date of the public announcement.
If Right Certificates have been issued, upon each adjustment
of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such

14
<PAGE>

record date Right Certificates evidencing, subject to Section
14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option
of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right
Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the
Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.
Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein
and shall be registered in the names of the holders of record
of Right Certificates on the record date specified in the
public announcement.

(j) Irrespective of any adjustment or change in the
Purchase Price or the number of one one-thousandths of a
Preferred Share issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one
one-thousandths of a Preferred Share which were expressed in
the initial Right Certificates issued hereunder.

(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below one one-thousandth
of the then par value, if any, of the Preferred
Shares issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable Preferred
Shares at such adjusted Purchase Price.

(l) In any case in which this Section 11 shall
require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event
the issuing to the holder of any Right exercised after such
record date of the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
over and above the Preferred Shares and other capital stock or
securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such
adjustment; provided, however, that the Company shall deliver
to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such
adjustment.

(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to
the extent that, it, in its sole discretion, shall determine
to be advisable in order that any consolidation or subdivision
of the Preferred Shares, issuance wholly for cash of any
Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities
which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in
Preferred Shares or issuance of rights, options or warrants
referred to hereinabove in Section 11(b), hereafter made by
the Company to holders of its Preferred Shares shall not be
taxable to such stockholders.

15
<PAGE>

(n) In the event that at any time after the date of
this Rights Agreement and prior to the Distribution Date, the
Company shall (i) declare or pay any dividend on the Common
Shares payable in Common Shares or (ii) effect a subdivision,
combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in
Common Shares) into a greater or lesser number of Common
Shares, then in any such case (A) the number of one one-thousandths
of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by
multiplying the number of one one-thousandths of a Preferred
Share so purchasable immediately prior to such event by a
fraction, the numerator of which is the number of Common
Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common
Share outstanding immediately after such event shall have
issued with respect to it that number of Rights which each
Common Share outstanding immediately prior to such event had
issued with respect to it. The adjustments provided for in
this Section 11(n) shall be made successively whenever such a
dividend is declared or paid or such a subdivision,
combination or consolidation is effected.

Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided
in Sections 11 or 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment, and a brief
statement of the facts accounting for such adjustment, (b)
file with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred Shares a copy of such
certificate and (c) if a Distribution Date has occurred, mail
a brief summary thereof to each holder of a Right Certificate
in accordance with Section 25 hereof.

Section 13. Consolidation, Merger or Sale or Transfer
of Assets or Earning Power. In the event, directly or
indirectly, at any time after a Person has become an Acquiring
Person, (a) the Company shall consolidate with, or merge
with and into, any other Person,
(b) any Person shall consolidate with the Company, or merge
with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in
connection with such merger, all or part of the Common Shares
shall be changed into or exchanged for stock or other
securities of any other Person (or the Company) or cash or any
other property or (c) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or
earning power aggregating 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole)
to any other Person other than the Company or one or more of
its wholly-owned Subsidiaries, then, and in each such case,
proper provision shall be made so that

(i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Rights
Agreement and in lieu of Preferred Shares, such number of
Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation) as shall

16
<PAGE>

equal the result obtained by (A) multiplying the then current
Purchase Price by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share
market price of the Common Shares of such other Person
(determined pursuant to Section 11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer;

(ii) the issuer of such Common Shares shall
thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations
and duties of the Company pursuant to this Rights Agreement;

(iii) the term "Company" shall thereafter
be deemed to refer to such issuer; and

(iv) such issuer shall take such steps
(including, but not limited to, the reservation of a
sufficient number of its Common Shares in accordance with
Section 9 hereof) in connection with such consummation as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to the Common Shares thereafter deliverable upon the
exercise of the Rights.

The Company shall not consummate any such consolidation,
merger, sale or transfer unless prior thereto the Company and
such issuer shall have executed and delivered to the Rights
Agent a supplemental agreement so providing. The Company shall
not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any
rights, warrants, instruments or securities outstanding or any
agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by
the Rights. The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales or
other transfers.

Section 14. Fractional Rights and Fractional Shares.

(a) The Company shall not be required to issue
fractions of Rights or to distribute Right Certificates which
evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same
fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a
whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price,
regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way,
in either case, as reported in the principal consolidated
transaction reporting system with respect to securities listed
or admitted to trading on the New York Stock Exchange or, if
the Rights are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed

17
<PAGE>

on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are
not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system
then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker
making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market
maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board
of Directors of the Company shall be used.

(b) The Company shall not be required to issue
fractions of Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share)
upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than
fractions which are integral multiples of one one-thousandth
of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one one-thousandth of a Preferred Share
may, at the election of the Company, be evidenced by
depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it; provided
that such agreement shall provide that the holders of such
depositary receipts shall have all the rights, privileges and
preferences to which they are entitled as Beneficial Owners of
the Preferred Shares represented by such depositary receipts.
In lieu of fractional Preferred Shares that are not integral
multiples of one one-thousandth of a Preferred Share, the
Company shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein
provided an amount in cash equal to the same fraction of the
current market value of one Preferred Share. For the purposes
of this Section 14(b), the current market value of a Preferred
Share shall be the closing price of a Preferred Share (as
determined pursuant to the second sentence of Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of
such exercise.

(c) The holder of a Right by the acceptance of the
Right expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right
(except as expressly provided above).

Section 15. Rights of Action. All rights of action in
respect of this Rights Agreement,
except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered
holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common
Shares); and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of
any other Right Certificate (or, prior to the Distribution
Date, of the Common Shares), may, in his own behalf and for
his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in
such Right Certificate and in this Rights Agreement. Without
limiting the foregoing or any remedies available to the

18
<PAGE>

holders of Rights, it is specifically acknowledged that the
holders of Rights would not have an adequate remedy at law for
any breach of this Rights Agreement and will be entitled to
specific performance of the obligations under, and injunctive
relief against actual or threatened violations of the
obligations of any Person subject to, this Rights Agreement.

Section 16. Agreement of Right Holders. Every holder
of a Right, by accepting the same, consents and
agrees with the Company and the Rights Agent and with every
other holder of a Right that:

(a) prior to the Distribution Date, the Rights will
be transferable only in connection with the transfer of the
Common Shares;

(b) after the Distribution Date, the Right
Certificates are transferable only on the registry books of
the Rights Agent if surrendered at the principal office of the
Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and

(c) the Company and the Rights Agent may deem and
treat the Person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Shares
certificate) is registered as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations
of ownership or writing on the Right Certificate or the
associated Common Shares certificate made by anyone other than
the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected
by any notice to the contrary.

Section 17. Right Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Right Certificate shall be
entitled to vote, receive dividends or be deemed for any
purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on
the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate,
as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to
give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by such Right Certificate shall
have been exercised in accordance with the provisions hereof.

Section 18. Concerning the Rights Agent.

(a) The Company agrees to pay to the Rights Agent
reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights
Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of
this Rights Agreement and the exercise and performance of its

19
<PAGE>

duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss,
liability or expense incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Rights
Agreement, including the costs and expenses of defending
against any claim of liability in the premises.

(b) The Rights Agent shall be protected and shall
incur no liability for, or in respect of any action taken,
suffered or omitted by it in connection with, its
administration of this Rights Agreement in reliance upon any
Right Certificate or certificate for the Preferred Shares or
Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by
it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or
Persons, or otherwise upon the advice of counsel as set forth
in Section 20 hereof.

Section 19. Merger or Consolidation or Change of Name
of Rights Agent.

(a) Any corporation into which the Rights Agent or
any successor Rights Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger
or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding
to the stock transfer or corporate trust powers of the Rights
Agent or any successor Rights Agent, shall be the successor to
the Rights Agent under this Rights Agreement without the
execution or filing of any paper or any further act on the
part of any of the parties hereto; provided that such
corporation would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In
case at the time such successor Rights Agent shall succeed to
the agency created by this Rights Agreement, any of the Right
Certificates shall have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and, in case at that time any
of the Right Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all
such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights
Agreement.

(b) In case at any time the name of the Rights
Agent shall be changed and at such time any of the Right
Certificates shall have been countersigned but not delivered,
the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall
not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates
and in this Rights Agreement.

20
<PAGE>

Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations
imposed by this Rights Agreement upon the following terms and
conditions, by all of which the Company and the holders of
Right Certificates, by their acceptance thereof, shall be
bound:
(a) The Rights Agent may consult with legal counsel
(who may be legal counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.

(b) Whenever in the performance of its duties under
this Rights Agreement the Rights Agent shall deem it necessary
or desirable that any fact or matter be proved or established
by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board,
the Chief Executive Officer, the President, any Vice
President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Rights Agreement in reliance upon such certificate.

(c) The Rights Agent shall be liable hereunder to
the Company and any other Person only for its own negligence,
bad faith or willful misconduct. Anything to the contrary
notwithstanding, the Rights Agent shall not be liable for
special, indirect, incidental or consequential loss or damage
of any kind whatsoever.

(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained
in this Rights Agreement or in the Right Certificates (except
its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be
deemed to have been made by the Company only.

(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Rights
Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained
in this Rights Agreement or in any Right Certificate; nor
shall it be responsible for any change in the exercisability
of the Rights (including the Rights becoming void pursuant to
Section 11(a)(ii) hereof) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof)
provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any
such change or adjustment (except with respect to the exercise
of Rights evidenced by Right Certificates after actual notice
that such change or adjustment is required); nor shall it by
any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any

21
<PAGE>

Preferred Shares to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any
Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.

(f) The Company agrees that it will perform,
execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this
Rights Agreement.

(g) The Rights Agent is hereby authorized and
directed to accept instructions with respect to the
performance of its duties hereunder from any one of the
Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary or the Treasurer
of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not
be liable for any action taken or suffered by it in good faith
in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions.

(h) The Rights Agent and any stockholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Rights Agreement. Nothing
herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.

(i) The Rights Agent may execute and exercise any
of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and
continued employment thereof.

Section 21. Change of Rights Agent. The Rights Agent
or any successor Rights Agent may resign
and be discharged from its duties under this Rights Agreement
upon 30-days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares or Preferred Shares
by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30-days'
notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent
of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates
by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of
30 days after giving notice of such removal or after it has
been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder

22
<PAGE>

of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the
registered holder of any Right Certificate may apply to any
court of competent jurisdiction for the appointment of a new
Rights Agent. Any successor Rights Agent, whether appointed by
the Company or by such a court, shall be either (a) a
corporation organized and doing business under the laws of the
United States or of the State of New York (or of any other
state of the United States so long as such corporation is
authorized to do business as a banking institution in the
State of New York, in good standing, having an office in the
State of New York), which is authorized under such laws to
exercise corporate trust or stock transfer powers and is
subject to supervision or examination by federal or state
authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50
million, or (b) an affiliate of such corporation. After
appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it
had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common
Shares or Preerred Shares, and mail a notice thereof in
writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent
or the appointment of the successor Rights Agent, as the case
may be.

Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Rights
Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by the Board of Directors of
the Company to reflect any adjustment or change in the
Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this
Rights Agreement.

Section 23. Redemption. (a) The Board of Directors of
the Company may, at its option, at any time prior to such
time as any Person becomes
an Acquiring Person, redeem all but not less than all the then
outstanding Rights at a redemption price of $.01 per Right,
appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as
the "Redemption Price"). The redemption of the Rights by the
Board of Directors of the Company may be made effective at
such time, on such basis and with such conditions as the Board
of Directors of the Company, in its sole discretion, may
establish. The Company may, at its option, pay the
Redemption Price in cash, Common Shares (based on the current
market price at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.

<PAGE>

(b) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights
pursuant to paragraph (a) of this Section 23, and without any
further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such
redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity
of such redemption. Within 10 days after such action of the
Board of Directors of the Company ordering the redemption of
the Rights, the Company shall mail a notice of redemption to
all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights
Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice
which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each
such notice of redemption will state the method by which the
payment of the Redemption Price will be made. Neither the
Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any
manner other than that specifically set forth in this Section
23 or in Section 24 hereof, and other than in connection with
the purchase of Common Shares prior to the Distribution Date.

Section 24. Exchange. (a) The Board of Directors
of the Company may, at its
option, at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have
become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common
Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the
foregoing, the Board of Directors of the Company shall not be
empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or any such Subsidiary,
or any entity holding Common Shares for or pursuant to the
terms of any such plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50%
or more of the Common Shares then outstanding.

(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to paragraph (a) of this Section 24 and without any
further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of
Common Shares equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as
they appear upon the registry books of the Rights Agent. Any
notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which
the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of

24
<PAGE>

Rights which will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of
Section 11(a)(ii) hereof) held by each holder of Rights.

(c) In the event that there shall not be sufficient
Common Shares issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in
accordance with this Section 24, the Company shall take all
such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights. In the event
the Company shall, after good faith effort, be unable to take
all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute, for
each Common Share that would otherwise be issuable upon
exchange of a Right, a number of Preferred Shares or fraction
thereof (or a security with substantially similar rights,
privileges, preferences, voting power and economic rights)
such that the current per share market price of one Preferred
Share (or other such security) multiplied by such number or
fraction is equal to the current per share market price of one
Common Share as of the date of issuance of such Preferred
Shares or fraction thereof (or other such security).

(d) The Company shall not be required to issue
fractions of Common Shares or to distribute certificates which
evidence fractional Common Shares. In lieu of such fractional
Common Shares, the Company shall pay to the registered holders
of the Right Certificates with regard to which such fractional
Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a
whole Common Share. For the purposes of this paragraph (d),
the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading
Day immediately prior to the date of exchange pursuant to this
Section 24.

Section 25. Notice of Certain Events. (a) In case
the Company shall propose (i) to pay any
dividend payable in stock of any class to the holders of its
Preferred Shares or to make any other distribution to the
holders of its Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its
Preferred Shares rights or warrants to subscribe for or to
purchase any additional Preferred Shares or shares of stock of
any class or any other securities, rights or options, (iii) to
effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of
outstanding Preferred Shares), (iv) to effect any
consolidation or merger into or with, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any
dividend on the Common Shares payable in Common Shares or to
effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such
case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of
such proposed action, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights

25
<PAGE>

or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares
and/or Preferred Shares, if any such date is to be fixed, and
such notice shall be so given in the case of any action
covered by clause (i) or (ii) above at least 10 days prior to
the record date for determining holders of the Preferred
Shares for purposes of such action, and in the ase of any such
other action, at least 10 days prior to the date of the taking
of such proposed action or the date of participation therein
by the holders of the Common Shares and/or Preferred Shares,
whichever shall be the earlier.

(b) In case the event set forth in Section
11(a)(ii) hereof shall occur, then the Company shall as soon
as practicable thereafter give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such
event and the consequences of such event to holders of Rights
under Section 11(a)(ii) hereof.

Section 26. Notices. Notices or demands
authorized by this Rights Agreement to be
given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the
Rights Agent) as follows:

Cytogen Corporation
600 College Road East
CN5308
Princeton, New Jersey 08540-5308
Attention: Corporate Secretary

Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Rights Agreement to be
given or made by the Company or by the holder of any Right
Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the
Company) as follows:

ChaseMellon Shareholder Services, L.L.C.
Overpeck Centre
85 Challenger Road
Ridgefield Park, New Jersey 07660

Notices or demands authorized by this Rights Agreement to
be given or made by the Company or the Rights Agent to the
holder of any Right Certificate shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed
to such holder at the address of such holder as shown on the
registry books of the Company.

26
<PAGE>

Section 27. Supplements and Amendments. The Company may
from time to time supplement or amend this
Rights Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or
to make any other provisions with respect to the Rights which
the Company may deem necessary or desirable, any such
supplement or amendment to be evidenced by a writing signed by
the Company and the Rights Agent, provided, however, after any
Person becomes an Acquiring Person, this Rights Agreement
shall not be amended in any manner which would adversely
affect the interests of the holders of Rights (other than an
Acquiring Person or Affiliate or Associate thereof).

Section 28. Successors. All the covenants and provisions
of this Rights Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.

Section 29. Benefits of this Rights Agreement. Nothing
in this Rights Agreement shall be construed to give
to any Person, other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior
to the Distribution Date, the Common Shares) any legal or
equitable right, remedy or claim under this Rights Agreement;
but this Rights Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares).

Section 30. Severability. If any term, provision, covenant
or restriction of this Rights Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Rights Agreement shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated.

Section 31. Governing Law. This Rights Agreement
and each Right Certificate issued hereunder shall be
deemed to be a contract made under the laws
of the State of New York and for all purposes shall be
governed by and construed in accordance with the laws of such
State applicable to contracts to be made and performed
entirely within such State.

Section 32. Counterparts. This Rights Agreement
may be executed in any number of counterparts and each of
such counterparts shall for all
purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.

27
<PAGE>

Section 33. Descriptive Headings. Descriptive headings
of the several Sections of this Rights Agreement are inserted
for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.

28
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this
Rights Agreement to be duly executed and attested, all as of
the day and year first above written.

CYTOGEN CORPORATION

By: /s/ Donald F. Crane
Name: Donald F. Crane
Title: Vice President General Counsel and
Corporate Secretary

CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.

By: /s/ Barry A. Shapiro
Name: Barry A. Shapiro
Title: Vice President

29
<PAGE>

Exhibit A

FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES C JUNIOR PARTICIPATING PREFERRED STOCK
of
CYTOGEN CORPORATION

(Pursuant to Section 151 of the
Delaware General Corporation Law)

-------------------------------

Cytogen Corporation, a corporation organized and existing
under the General Corporation Law of the State of Delaware
(hereinafter called the "Corporation"), hereby certifies that
the following resolution was adopted by the Board of Directors
of the Corporation as required by Section 151 of the General
Corporation Law at a meeting duly called and held on June 17,
1998:

RESOLVED, that pursuant to the authority granted to and
vested in the Board of Directors of this Corporation
(hereinafter called the "Board of Directors" or the "Board")
in accordance with the provisions of the Certificate of
Incorporation, the Board of Directors hereby creates a series
of Preferred Stock of the Corporation, par value $.01 per
share (the "Preferred Stock"), and hereby states the
designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:

Series C Junior Participating Preferred Stock:

Section 1. Designation and Amount. The shares of
such series shall be designated as "Series C Junior
Participating Preferred Stock" (the "Series C Preferred
Stock") and the number of shares constituting the Series C
Preferred Stock shall be 200,000. Such number of shares may be
increased or decreased by resolution of the Board of
Directors; provided that no decrease shall reduce the number
of shares of Series C Preferred Stock to a number less than
the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible
into Series C Preferred Stock.

Section 2. Dividends and Distributions.

(A) Subject to the rights of the holders of any shares of
any series of Preferred Stock (or any similar stock) ranking
prior and superior to the Series C Preferred Stock with
respect to dividends, the holders of shares of Series C
Preferred Stock, in preference to the holders of Common Stock,

A-1
<PAGE>

par value $.01 per share (the "Common Stock"), of the
Corporation, and of any other junior stock, shall be entitled
to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June,
September and December in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series
C Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $10 or (b) subject
to the provision for adjustment hereinafter set forth, 1,000
times the aggregate per share amount of all cash dividends,
and 1,000 times the aggregate per share amount (payable in
kind) of all non- cash dividends or other distributions, other
than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment
Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a
share of Series C Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of
shares of Series C Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

(B) The Corporation shall declare a dividend or
distribution on the Series C Preferred Stock as provided in
paragraph (A) of this Section immediately after it declares a
dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $10 per share on the
Series C Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of
issue of such shares, unless the date of issue of such shares
is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of
holders of shares of Series C Preferred Stock entitled to
receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. Accrued but unpaid dividends
shall not bear interest. Dividends paid on the shares of
Series C Preferred Stock in an amount less than the total
amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share

A-2
<PAGE>

basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of
holders of shares of Series C Preferred Stock entitled to
receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.

Section 3. Voting Rights. The holders of shares of
Series C Preferred Stock shall have the following voting
rights:

(A) Subject to the provision for adjustment hereinafter
set forth, each share of Series C Preferred Stock shall
entitle the holder thereof to 1000 votes on all matters
submitted to a vote of the stockholders of the Corporation. In
the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to
which holders of shares of Series C Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which
is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.

(B) Except as otherwise provided herein, in any other
Certificate of Designations creating a series of Preferred
Stock or any similar stock, or by law, the holders of shares
of Series C Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class
on all matters submitted to a vote of stockholders of the
Corporation.

(C) Except as set forth herein, or as otherwise provided
by law, holders of Series C Preferred Stock shall have no
special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any corporate
action.

Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series C Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series C Preferred Stock outstanding
shall have been paid in full, the Corporation shall not:

(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series C Preferred Stock;

(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or

A-3
<PAGE>

winding up) with the Series C Preferred Stock, except
dividends paid ratably on the Series C Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;

(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series C Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series C
Preferred Stock; or

(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series C Preferred Stock, or any
shares of stock ranking on a parity with the Series C
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective Series Cnd classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of
the Corporation to purchase or otherwise acquire for
consideration any shares of stock of the Corporation unless
the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in
such manner.

Section 5. Reacquired Shares. Any shares of Series
C Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part
of a new series of Preferred Stock subject to the conditions
and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of
Designations creating a series of Preferred Stock or any
similar stock or as otherwise required by law.

Section 6. Liquidation, Dissolution or Winding Up.
Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders
of shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series C
Preferred Stock unless, prior thereto, the holders of shares
of Series C Preferred Stock shall have received $1000 per
share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the
date of such payment, provided that the holders of shares of
Series C Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 1000 times the
aggregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of
stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C
Preferred Stock, except distributions made ratably on the
Series C Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all

A-4
<PAGE>

such shares are entitled upon such liquidation, dissolution or
winding up. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series C Preferred Stock
were entitled immediately prior to such event under the
proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were
outstanding immediately prior tosuch event.

Section 7. Consolidation, Merger, etc. In case the
Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common
Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such
case each share of Series C Preferred Stock shall at the same
time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter set
forth, equal to 1000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of
shares of Series C Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which
is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding
immediately prior to such event.

Section 8. No Redemption. The shares of Series C
Preferred Stock shall not be redeemable.

Section 9. Rank. The Series C Preferred Stock shall
rank, with respect to the payment of dividends and the
distribution of assets, junior to all series of any other
class of the Corporation's Preferred Stock.

Section 10. Amendment. The Certificate of
Incorporation of the Corporation shall not be amended in any
manner which would materially alter or change the powers,
preferences or special rights of the Series C Preferred Stock
so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares
of Series C Preferred Stock, voting together as a single
class.

A-5
<PAGE>

IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its President and
attested by its Secretary this the 19th day of June, 1998.

CYTOGEN CORPORATION

By:_______________________

Attest:

By:_______________________

A-6
<PAGE>

Exhibit B

Form of Right Certificate

Certificate No. R-

_________ Rights

NOT EXERCISABLE AFTER JUNE 19, 2008 OR EARLIER IF REDEMPTION
OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT
$.01 PER RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.

Rights Certificate

CYTOGEN CORPORATION

This certifies that __________, or registered assigns, is
the registered owner of the number of Rights set forth above,
each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Amended and Restated
Rights Agreement, dated as of October __, 1998 (the "Rights
Agreement"), between Cytogen Corporation, a Delaware
corporation (the "Company"), and ChaseMellon Shareholder
Services, L.L.C. (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term
is defined in the Rights Agreement) and prior to 5:00 p.m.,
New York time, on June 19, 2008 at the principal office of the
Rights Agent, or at the office of its successor as Rights
Agent, one one-thousandth of a fully paid non-assessable share
of Series C Junior Participating Preferred Stock of the
Company, par value $.01 per share (the "Preferred Shares"), at
a purchase price of $20 per one one-thousandth of a Preferred
Share (the "Purchase Price"), upon presentation and surrender
of this Right Certificate with the Form of Election to
Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise hereof)
set forth above, and the Purchase Price set forth above, are
the number and Purchase Price as of _________, based on the
Preferred Shares as constituted at such date. As provided in
the Rights Agreement, the Purchase Price and the number of one
one-thousandths of a Preferred Share which may be purchased
upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon
the happening of certain events.

This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which
terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights
Agreement are on file at the principal executive offices of
the Company and the offices of the Rights Agent.

B-1
<PAGE>

This Right Certificate, with or without other Right
Certificates, upon surrender at the principal office of the
Rights Agent, may be exchanged for another Right Certificate
or Right Certificates of like tenor and date evidencing Rights
entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate
shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or
Right Certificates for the number of whole Rights not
exercised.

Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Right Certificate (i) may be redeemed
by the Company at a redemption price of $.01 per Right or (ii)
may be exchanged, in whole or in part, for Preferred Shares or
shares of the Company's Common Stock, par value $.01 per
share.

No fractional Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than
fractions which are integral multiples of one one-thousandth
of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts), but in, lieu
thereof, a cash payment will be made, as provided in the
Rights Agreement.

No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the
holder of the Preferred Shares or of any other securities of
the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement
or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have
been exercised as provided in the Rights Agreement.

This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.

B-2
<PAGE>

WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal.

Dated as of ___________.

CYTOGEN CORPORATION

By:_______________________
Name:
Title:

COUNTERSIGNED:

By_______________________________
Name:
Title:

B-3
<PAGE>

[Form of Reverse Side of Right Certificate]

FORM OF ASSIGNMENT

(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)

FOR VALUE RECEIVED
___________________________________________
hereby sells, assigns and transfers
unto________________________________________
_______________________________________________________________________
(Please print name and address of transferee)

this Right Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and
appoint ________________ Attorney, to transfer the within
Right Certificate on the books of the within-named Company,
with full power of substitution.

Dated: _______________________

Signature _________________________

Signature Guaranteed:

Signatures must be guaranteed by a member firm of a
registered national securities exchange, a member of the
National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or
correspondent in the United States.

Certificate

The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement). After due inquiry and
to the best knowledge of the undersigned, the Rights evidenced
by this Right Certificate were not acquired or beneficially
owned by an Acquiring Person or an Affiliate or Associate
thereof.

Dated:____________________________

Signature _________________________

The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or
enlargement or any change whatsoever.

B-4
<PAGE>

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)

To: CYTOGEN CORPORATION

The undersigned hereby irrevocably elects to exercise
______ Rights represented by this Right Certificate to
purchase the Preferred Shares issuable upon the exercise of
such Rights and requests that certificates for such Preferred
Shares be issued in the name of:

Please insert social security
or other identifying
number:_________________________________________________

_________________________________________
(Please print name and address)

__________________________________________

If such number of Rights shall not be all the Rights evidenced
by this Right Certificate, a new Right Certificate for the
balance remaining of such Rights shall be registered in the
name of and delivered to:

Please insert social security
or other identifying
number:_________________________________________________

__________________________________________
(Please print name and address)

__________________________________________

Dated:_______________________________

Signature_____________________________

Signature Guaranteed:

B-5

<PAGE>

Certificate

The undersigned hereby certifies that the Rights
evidenced by this Right Certificate are not beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof
(as defined in the Rights Agreement). After due inquiry and to
the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned
by an Acquiring Person or an Affiliate or Associate thereof.

Dated:_______________________________

Signature_____________________________

The signature in the Form of Assignment or Form of
Election to Purchase, as the case may be, must conform to the
name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any
change whatsoever.

In the event the certification set forth above in the
Form of Assignment or the Form of Election to Purchase, as the
case may be, is not completed, the Company and the Rights
Agent will deem the beneficial owner of the Rights evidenced
by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights
Agreement) and such Assignment or Election to Purchase will
not be honored.

B-6
<PAGE>

Exhibit C

SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES

On June 17, 1998, the Board of Directors of Cytogen
Corporation (the "Company") declared a dividend of one
preferred share purchase right (a "Right") for each
outstanding share of common stock, par value $.01 per share
(the "Common Shares"), of the Company. The dividend is
payable on June 30, 1998 (the "Record Date") to the
stockholders of record on that date. Each Right entitles the
registered holder to purchase from the Company one one-thousandth
of a share of Series C Junior Participating
Preferred Stock of the Company, par value $.01 per share (the
"Preferred Shares"), at a price of $20 per one one-thousandth
of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set
forth in an Amended and Restated Rights Agreement (the "Rights
Agreement") dated as of October ___, 1998, between the Company
and ChaseMellon Shareholder Services, L.L.C. as Rights Agent
(the "Rights Agent").

Initially, the Rights will be attached to all Common
Share certificates and no separate Rights certificates will be
issued. Separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the earlier to
occur of (i) a public announcement that a person or group of
affiliated or associated persons (an "Acquiring Person") have
acquired beneficial ownership of 20% or more of the
outstanding Common Shares or (ii) such date as may be
determined by action of the Board of Directors of the Company,
(as defined below), following the commencement of, or
announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the
beneficial ownership by a person or group of 20% or more of
the outstanding Common Shares (the earlier of such dates being
the "Distribution Date").

The Rights Agreement provides that, until the
Distribution Date (or earlier redemption or expiration of the
Rights), (i) the Rights will be transferred with and only with
the Common Shares, (ii) new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common
Shares will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of
any certificates for Common Shares outstanding as of the
Record Date will also constitute the transfer of the Rights
associated with the Common Shares represented by such
certificate.

The Rights are not exercisable until the Distribution
Date. The Rights will expire on June 19, 2008 (the "Expiration
Date"), unless the Expiration Date is extended or unless the
Rights are earlier redeemed or exchanged by the Company, in
each case, as described below.

If a person or group becomes an Acquiring Person, each
holder of a Right will thereafter have the right to receive,
upon exercise, Common Shares (or, in certain circumstances,

C-1
<PAGE>

Preferred Shares or other similar securities of the Company)
having a value equal to two times the exercise price of the
Right. Notwithstanding any of the foregoing, following the
existence of an Acquiring Person, all Rights that are, or
(under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person
will be null and void.

For example, at an exercise price of $20 per Right, each
Right not owned by an Acquiring Person following an event set
forth in the preceding paragraph would entitle its holder to
purchase $40 worth of Common Shares (or other consideration,
as noted above) for $20. Assuming a value of $10 per Common
Share at such time, the holder of each valid Right would be
entitled to purchase four Common Shares for $20.

In the event that the Company is acquired in a merger or
other business combination transaction or 50% or more of its
consolidated assets or earning power are sold after a person
or group has become an Acquiring Person, proper provision will
be made so that each holder of a Right will thereafter have
the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of
common stock of the acquiring company which at the time of
such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or
group becomes an Acquiring Person, proper provision shall be
made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will
thereafter be void), will thereafter have the right to receive
upon exercise that number of Common Shares having a market
value of two times the exercise price of the Right.

At any time after any person or group becomes an
Acquiring Person and prior to the acquisition by such person
or group of 50% or more of the outstanding Common Shares, the
Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will
have become void), in whole or in part, at an exchange ratio
of one Common Share, or one one-thousandth of a Preferred
Share (or of a share of a class or series of the Company's
preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).

At any time prior to the existence of an Acquiring
Person, the Board of Directors of the Company may redeem the
Rights, in whole but not in part, at a price of $.01 per Right
(the "Redemption Price"). The redemption of the Rights may be
made effective at such time on such basis with such conditions
as the Board of Directors, in its sole discretion, may
establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right
of the holders of Rights will be to receive the Redemption
Price.

The terms of the Rights may be amended by the Board of
Directors of the Company without the consent of the holders of
the Rights, except that from and after the existence of an
Acquiring Person no such amendment may adversely affect the
interests of the holders of the Rights (other than the
Acquiring Person).

The number of outstanding Rights and the number of one
one-thousandths of a Preferred Share issuable upon exercise of
each Right are subject to adjustment under certain
circumstances.

C-2
<PAGE>

Because of the nature of the Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-thousandth
interest in a Preferred Share purchasable upon
exercise of each Right should approximate the value of one
Common Share.

Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive
dividends.

A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a
Registration Statement on Form 8-A/A dated October __, 1998.
A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is hereby
incorporated herein by reference.

C-3

August 19, 1998

H. Joseph Reiser, Ph.D.
6 Thackery Lane
Mendham, NJ 07945

Dear Dr. Reiser:

CYTOGEN Corporation is pleased to offer you the position of
President and Chief Executive Officer.

This employment agreement will remain in force for an 18-
month period following your date of hire. It is renewable
for subsequent 12 month periods, with a 90-day written
notice period preceding each renewal date for the Company to
specify its intentions regarding the renewal of the
agreement.

In this position, your annual salary will be $275,000,
effective on your date of hire, August 24, 1998. You will
be eligible to participate in the CYTOGEN bonus plan as
approved by the Board of Directors for each performance
year. Your targeted bonus opportunity for 1998 will be
$50,000, depending on the level of achievement of
performance objectives. The target bonus opportunity for
subsequent years will be approximately 35% of base salary,
also depending on the achievement of performance objectives.

You will also be granted a sign-on bonus in the amount of
$50,000, less taxes, payable upon commencement of
employment.

As discussed, you have been granted options to purchase
2,250,000 shares of CYTOGEN Common Stock, conditioned on
your commencement of employment. The option vesting periods
will begin on the following schedule of milestones to be
achieved, with each tranche to vest in equal annual
increments over a three year period from the date of the
achievement of the related milestones:

- - 900,000 shares upon hire

- - 450,000 shares upon completion of a CYTOGEN Business
Plan, to the satisfaction of the Board of Directors

- - 450,000 shares upon the completion of securing adequate
financing for CYTOGEN and staffing the senior executive
positions to the satisfaction of the Board of Directors,
each in accordance with the Business Plan.

- - 450,000 shares upon the achievement of CYTOGEN's
profitability, which is defined as the first calendar
quarter where the Company shows an "operating profit" as
reported in the CYTOGEN's Exchange Act Reports.

<PAGE>
Dr. H. Reiser
August 19, 1998
Page 2

The exercise price for these stock options will be the
market price (the average of the low and high prices) of
CYTOGEN Corporation stock on August 18, 1998, $1.0937.

A copy of your Option Agreement, evidencing these and other
terms of your option grants, will be provided to you during
your first week of employment.

In the event your employment is terminated by the Company
for reasons other than Cause, you shall receive twelve
months of base pay and group medical and dental insurance.
You will also receive base pay, benefits and bonus for any
remaining months (if applicable) of the employment
agreement. The base pay shall be payable, at the sole
discretion of the Company, in monthly or bi-weekly
installments, or in a lump sum. You will also be entitled to
receive, on a pro rata basis, such portion of a short term
incentive award as earned based on performance, if any,
through the date of termination. The final decision
regarding the amount of such bonus payment will be
determined by the Board of Directors.

"Cause" shall mean material refusal or failure to perform
and discharge duties and responsibilities to the Company in
accordance with the terms of your employment, or willful
action or inaction that is materially inconsistent with the
terms of your employment; or material breach of your
fiduciary duties as an officer of the Company or any
subsidiary or affiliate of the Company; or conviction of a
felony; or conviction of any other crime involving personal
dishonestly or moral turpitude.

As a CYTOGEN employee, you are entitled to comprehensive
medical, dental, life, AD&D, long-term disability, and
travel and accident coverage. Dependent medical and dental
coverage is also available. Employees contribute 20%
towards the cost of the premiums for medical and dental
benefits. This amount is deducted through payroll on a pre-
tax basis. The insurance benefit package becomes effective
on the first day of your date of employment. Your vacation
benefit will be 4 weeks per year, in accordance with the
accrual schedule of the Company. You will also be eligible
to participate in the Cytogen Retirement Investment Savings
Plan.

The Company will pay you a monthly car allowance of $750.00.
Other benefits may apply as defined by the Company executive
benefits program.

These benefits, as with all benefits programs, are subject
to change at the discretion of the Board of Directors.

You will also have the option to relocate, in accordance
with the CYTOGEN Corporation Relocation Policy, within two
years from your date of hire.

<PAGE>
Dr. H. Reiser
August 19, 1998
Page 3

Enclosed you will find a variety of new hire documents for
you to review and complete prior to your employment date.
Federal law requires the completion of the enclosed I-9 form
and our examination of original documentation from either
list A or from both lists B and C. Please bring this
necessary supporting documentation, as well as the new
hire paperwork, with you when you commence employment.

You will be required to schedule a pre-employment drug
screen. Please contact Jill Searing, Director, Human
Resources at 609-987-8260 to set up a mutually agreeable
time for your appointment

This offer of employment is contingent on the results of the
drug screening test and verification of your references and
academic credentials.

Please indicate your acceptance of this offer letter by
signing below and returning the original to me.

We look forward to your joining CYTOGEN and leading the
organization forward.

Sincerely,

/s/ James A. Grigsby
James A. Grigsby
Chairman

cc: Dr. Bagalay
Dr. Brenner
Mr. Crane
Mr. Hendrickson
Ms. Searing

ACCEPTED AND AGREED TO THIS 20th DAY OF August, 1998
---- ------

BY: /s/ H Joseph Reiser, Ph.D.
-----------------------------------------
H. Joseph Reiser, Ph.D.

EXHIBIT 10.2

CYTOGEN CORPORATION
LOAN AND SECURITY AGREEMENT
This Agreement is between the undersigned Borrower and
the undersigned Lender concerning loans to be made by Lender to
Borrower.

SECTION 1. PARTIES

1.1 The "Borrower" is identified in Section 10.6(c)
and its successors and assigns. If more than one Borrower is
specified in Section 10.6(c), all references to Borrower shall
mean each of them, jointly and severally, individually and
collectively, and the successors and assigns of each.

1.2 The "Lender" is The CIT Group/Credit Finance,
Inc. and its agents, designees, representatives, successors and
assigns.

SECTION 2. TERM LOANS

Lender shall make term loans to Borrower on the terms
and conditions set forth in Section 10.2. ("Term Loan"). Such
Term Loan shall be evidenced by a promissory note (the
"Promissory Note") delivered by Borrower to Lender and shall be
repaid, together with interest and other amounts, in accordance
with this Agreement and the Promissory Note.

SECTION 3. INTEREST AND FEES

3.1 Interest.
(a) Interest on the Term Loans shall be payable by
Borrower on the first day of each month, calculated upon the
closing daily balances in the loan account of Borrower for each
day during the immediately preceding month, at the per annum
rate set forth as the Interest Rate in Section 10.4(a). The
Interest Rate shall increase or decrease by an amount equal to
each increase or decrease, respectively, in the Prime Rate (as
defined below), effective as of the date of each such change.
On and after any Event of Default or termination or non-renewal
hereof, interest on all unpaid Obligations shall accrue at a
rate equal to two percent (2%) per annum in excess of the
Interest Rate otherwise payable until such time as all
Obligations are indefeasibly paid in full (notwithstanding entry
of any judgment against Borrower or the exercise of any other
right or remedy by Lender), and all such interest shall be
payable on demand. In no event shall charges constituting
interest exceed the rate permitted under any applicable law or
regulation, and if any provision of this Agreement is in
contravention of any such law or regulation, such provision
shall be deemed amended to conform thereto.
(b) The "Prime Rate" is the rate of interest publicly
announced by The Chase Manhattan Bank in New York, New York, or
its successors and assigns, from time to time as its prime rate.
3.2 Closing Fees. Borrower shall pay to Lender at
closing a Closing Fee in the amount set forth in Section
10.4(c).

<PAGE>

SECTION 4. GRANT OF SECURITY INTEREST

4.1 Grant of Security Interest. To secure the
payment and performance in full of all Obligations, Borrower
hereby grants to Lender a continuing security interest in and
lien upon, and a right of setoff against, and Borrower hereby
assigns and pledges to Lender, all of the Collateral.

4.2 "Obligations" shall mean any and all Term Loans,
revolving loans, accommodations and all other indebtedness,
liabilities and obligations of every kind, nature and
description owing by Borrower to Lender and/or its affiliates,
including principal, interest, charges, fees and expenses,
however evidenced, whether as principal, surety, endorser,
guarantor or otherwise, whether arising under this Agreement or
otherwise, whether now existing or hereafter arising, whether
arising before, during or after the Term or after the
commencement of any case with respect to Borrower under the
United States Bankruptcy Code or any similar statute, whether
direct or indirect, absolute or contingent, joint or several,
due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, original, renewed or
extended and whether arising directly or howsoever acquired by
Lender including from any other entity outright, conditionally
or as collateral security, by assignment, merger with any other
entity, participations or interests of Lender in the obligations
of Borrower to others, assumption, operation of law, subrogation
or otherwise and shall also include all amounts chargeable to
Borrower under this Agreement or in connection with any of the
foregoing.

4.3 "Collateral" shall mean all of the following
property of Borrower:

(a) All now owned and hereafter acquired right, title
and interest of Borrower in, to and in respect of all: accounts,
interests in goods represented by accounts, returned, reclaimed
or repossessed goods with respect thereto and rights as an
unpaid vendor; contract rights (except contract rights in which
the granting of a security interest would result in a default or
impermissible assignment under the related contract); chattel
paper; investment property; documents; instruments; letters of
credit, bankers' acceptances or guaranties; cash moneys,
deposits, securities, bank accounts, deposit accounts, credits
and other property now or hereafter held in any capacity by
Lender, its affiliates or any entity which, at any time,
participates in Lender's financing of Borrower or at any other
depository or other institution; agreements or property securing
or relating to any of the items referred to above;

(b) All now owned and hereafter acquired right, title
and interest of Borrower in, to and in respect of goods,
including, but not limited to:

(i) All inventory, wherever located, whether now
owned or hereafter acquired, of whatever kind, nature
or description, including all raw materials, work-in-
process, finished goods, and materials to be used or
consumed in Borrower's business; and all names or
marks affixed to or to be affixed thereto for purposes
of selling same by the seller, manufacturer, lessor or
licensor thereof and all inventory which may be
returned to Borrower by its customers or repossessed
by Borrower and all of Borrower's right, title and
interest in and to the foregoing (including all of
Borrower's rights as a seller of goods);

<PAGE>

(ii) All equipment and fixtures, wherever
located, whether now owned or hereafter acquired,
including, without limitation, all machinery,
equipment, motor vehicles, furniture and fixtures, and
any and all additions, substitutions, replacements
(including spare parts), and accessions thereof and
thereto (including, but not limited to Borrower's
rights to acquire any of the foregoing, whether by
exercise of a purchase option or otherwise);

(iii) All consumer goods, farm products,
crops, timber, minerals or the like (including oil and
gas), wherever located, whether now owned or hereafter
acquired, of whatever kind, nature or description;

(c) All now owned and hereafter acquired right, title
and interests of Borrower in, to and in respect of any personal
property in or upon which Borrower has or may hereafter have a
security interest, lien or right of setoff;

(d) All present and future books and records relating
to any of the above including, without limitation, all computer
programs, printed output and computer readable data in the
possession or control of the Borrower, any computer service
bureau or other third party; and

(e) All products and proceeds of the foregoing in
whatever form and wherever located, including, without
limitation, all insurance proceeds and all claims against third
parties for loss or destruction of or damage to any of the
foregoing.

3
<PAGE>

SECTION 5. COLLECTION AND ADMINISTRATION

5.1 Collections. Borrower will, at its expense as
Lender requests, direct that all remittances and all other
proceeds of accounts and other Collateral be sent to a lock box
designated by Lender, and deposited into a bank account selected
by Lender under arrangements with the bank providing that all
funds deposited in the bank account are to be transferred solely
to Lender. Borrower shall bear all risk of loss of any funds
deposited into such account. In connection therewith, Borrower
shall execute such lock box and bank account agreements as
Lender shall specify. Any collections or other proceeds
received by Borrower shall be held in trust for Lender and
immediately remitted to Lender in kind.

5.2 Charges to Loan Account. At Lender's option, all
payments of principal, interest, fees, costs, expenses and other
charges provided for in this Agreement, or in any other
agreement now or hereafter existing between Lender and Borrower,
may be charged on the date when due, as principal to any loan
account of Borrower maintained by Lender. Interest and any other
amounts payable by Borrower to Lender based on a per annum rate
shall be calculated on the basis of actual days elapsed over a
360-day year.

5.3 Payments. All Obligations shall be payable at
Lender's office set forth in Section 10.6(a) or at Lender's bank
designated in Section 10.6(b) or at such other bank or place as
Lender may expressly designate from time to time for purposes of
this Section.

5.4 Loan Account Statements. To the extent that
Lender renders to Borrower loan account statements, such
statements shall be considered correct and binding upon Borrower
as an account stated, except to the extent that Lender receives,
within sixty (60) days after the mailing of such statements,
written notice from Borrower of any specific exceptions by
Borrower to that statement.

5.5 Direct Collections. Lender may, at any time, (a)
notify any account debtor that the accounts and other Collateral
which includes a monetary obligation have been assigned to
Lender by Borrower and that payment thereof is to be made to the
order of and directly to Lender, (b) send, or cause to be sent
by its designee, requests (which may identify the sender by a
pseudonym) for verification by telephone, in writing or
otherwise of accounts and other Collateral directly to any
account debtor or any other obligor or any bailee with respect
thereto, (c) demand, collect or enforce payment of any accounts
or such other Collateral, but without any duty to do so, and
Lender shall not be liable for any failure to collect or enforce
payment thereof, (d) take or bring, in the name of Lender or
Borrower, all steps, actions, suits or proceedings deemed by
Lender necessary or desirable to effect collection of or other
realization upon the accounts and other Collateral, (e) after an
Event of Default, change the address for delivery of mail to
Borrower and to receive and open mail addressed to Borrower, and
(f) after an Event of Default, extend the time of payment of,
compromise or settle for cash, credit, return of merchandise,
and upon any terms or conditions, any and all accounts or other
Collateral which includes a monetary obligation and discharge or
release the account debtor or other obligor, without affecting
any of the Obligations. Lender shall use its good faith efforts
to provide Borrower with contemporaneous notice of Lender's
exercise of its rights set forth in clause (a) of this Section
5.5, provided however, that Lender's failure to provide such
contemporaneous notice, or any notice, shall not be deemed a
breach by Lender of its obligations to Borrower and Borrower

<PAGE>

shall have no right or remedy as a result thereof. At Lender's
request, all invoices and statements sent to any account debtor,
other obligor or bailee, shall state that the accounts and such
other Collateral have been assigned to Lender and are payable
directly and only to Lender.

5.6 Attorney-in-Fact. Borrower hereby irrevocably
appoints Lender as Borrower's attorney-in-fact and authorizes
Lender at Borrower's sole expense, to exercise at any time in
Lender's discretion all or any of the powers necessary for
Lender to obtain information about the Collateral or to enforce
Lender's rights.

5.7 Liability. Borrower hereby releases and
exculpates Lender, its officers and employees, from any
liability arising from any acts under this Agreement or in
furtherance thereof, except for gross negligence or willful
misconduct. Lender will not have any liability to Borrower for
lost profits or other special, exemplary, punitive, or
consequential damages.

5.8 Administration of Accounts. After written notice
by Lender to Borrower or without notice after an Event of
Default, Borrower shall not, (a) amend, modify, settle or
compromise any of the accounts or any other Collateral which
includes a monetary obligation, (b) release in whole or in part
any account debtor or other person liable for the payment of any
of the accounts or any such other Collateral, or (c) grant any
credits, discounts, allowances, deductions, return
authorizations or the like with respect to any of the accounts
or any such other Collateral.

5.9 Documents. Borrower shall deliver to Lender, as
Lender may request, all documents, schedules, invoices, proofs
of delivery, purchase orders, statements, contracts and all
other information evidencing or relating to the Collateral, in
form and substance satisfactory to Lender and duly executed by
Borrower. Without limiting the provisions of Section 5.5,
Borrower's granting of credits, discounts, allowances,
deductions, return authorizations or the like will be promptly
reported to Lender in writing. In no event shall any schedule
or confirmatory assignment (or the absence thereof or omission
of any of the accounts or other Collateral therefrom) limit or
in any way be construed as a waiver, limitation or modification
of the security interests or rights of Lender or the warranties,
representations and covenants of Borrower under this Agreement.
Any documents, schedules, invoices or other paper delivered to
Lender by Borrower may be destroyed or otherwise disposed of by
Lender six (6) months after receipt by Lender, unless Borrower
requests their return in writing in advance and makes prior
arrangements for their return at Borrower's expense.

5.10 Access. Lender shall have access, prior to an
Event of Default during reasonable business hours and on or
after an Event of Default at any time, to all of the premises
where Collateral is located for the purposes of inspecting or
copying the Collateral, and all Borrower's books and records.
Lender may, at no charge, use such of Borrower's personnel,
equipment, including computer equipment, programs, printed
output and computer readable media, supplies and premises for
the collection of accounts and realization on other Collateral
as Lender, in its sole discretion, deems appropriate. Borrower
hereby irrevocably authorizes all accountants and third parties
to disclose and deliver to Lender at Borrower's expense all
financial information, books and records, work papers,
management reports and other information in their possession
regarding Borrower. Lender shall use its good faith efforts to
provide Borrower with contemporaneous notice of Lender's
visit(s) to any such accountants or third parties, provided

<PAGE>

however, that Lender's failure to provide such contemporaneous
notice, or any notice, shall not be deemed a breach by Lender of
its obligations to Borrower and Borrower shall have no right or
remedy as a result thereof.

5.11 Environmental Audits. From time to time, but not
more frequently than semi-annually (provided Borrower is not in
default) as requested by Lender, at the sole expense of
Borrower, Borrower shall provide Lender complete access to all
of Borrower's facilities for the purpose of conducting an
environmental audit of such facilities as Lender may deem
necessary.

SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND
COVENANTS

Borrower hereby represents, warrants and covenants to
Lender the following, (all of such representations, warranties,
and covenants being continuing in nature so long as any of the
Obligations are outstanding):

6.1 Financial and Other Reports. Borrower shall keep
and maintain its books and records in accordance with generally
accepted accounting principles, consistently applied ("GAAP").
Borrower shall, at its expense, (a) on or before the fifteenth
(15th) day of each month, deliver to Lender true and complete
monthly agings of its accounts receivable and accounts payable,
and (b) on or before the twenty fifth (25th) day of each month,
deliver to Lender true and complete monthly internally prepared
interim financial statements, all in such form, and together
with such other information with respect to the business of
Borrower or any guarantor, as Lender may request, which shall
present fairly, in all material respects, the financial position
of Borrower as of the end of each such period and the results of
its operations and cash flows during such period, all in
accordance with GAAP, and certified by the treasurer or chief
financial officer of Borrower. Annually as soon as available,
but not later than ninety (90) days after the end of each fiscal
year of Borrower, Borrower shall deliver to Lender audited
financial statements of Borrower prepared by and accompanied by
the unqualified report and opinion thereon of an independent
certified public accountant acceptable to Lender; provided,
however, that such report may be qualified only by those events
and circumstances referenced in Borrower's December 31, 1997
audited financial statements .

6.2 Trade Names. Borrower may from time to time
render invoices under its trade names set forth in Section
10.6(g), and Borrower represents that: (a) each trade name does
not refer to another corporation or other legal entity, (b) all
accounts and proceeds thereof (including any returned
merchandise) invoiced under any such trade names are owned
exclusively by Borrower, and (c) Lender may receive, endorse and
deposit to any loan account of Borrower maintained by Lender all
checks or other remittances made payable to any trade name of
Borrower representing payment with respect to such sales or
services.

6.3 Losses. Borrower shall promptly notify Lender in
writing of any loss, damage, investigation, action, suit,
proceeding or claim relating to a material portion of the
Collateral or which may result in any material adverse change in
Borrower's business, assets, liabilities or condition, financial
or otherwise.

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<PAGE>

6.4 Books and Records. Borrower's books and records
concerning accounts and its chief executive office are and shall
be maintained only at the address set forth in Section 10.6(d).
Borrower's only other places of business and the only other
locations of Collateral, if any, are and shall be the addresses
set forth in Sections 10.6(e) and (f) hereof, except Borrower
may change such locations or open a new place of business after
thirty (30) days' prior written notice to Lender. Borrower
shall execute and deliver or cause to be executed and delivered
to Lender such financing statements, amendments, financing
documents and security and other agreements as Lender may
reasonably require.

6.5 Title. Borrower has and at all times will
continue to have good and marketable title to all of the
Collateral, free and clear of all liens, security interests,
claims or encumbrances of any kind except in favor of Lender and
except, if any, those set forth on Schedule A hereto ("Permitted
Liens").

6.6 Disposition of Assets. Borrower shall not,
directly or indirectly: (a) sell, lease, transfer, assign,
abandon or otherwise dispose of any part of the Collateral or
any material portion of its other assets (other than (i) sales
of inventory to buyers in the ordinary course of business, and
(ii) sales, leases, transfers, assignments or other disposition
of Collateral pursuant to Borrower's strategic restructuring
objectives in effect as of the date hereof including, without
limitation, the spin-off its wholly-owned subsidiary, Axcel
Biosciences ("Axcel"), so long as and to the extent that (X)
Borrower is not and would otherwise not be in default of any of
its obligations under this Agreement, and (Y) if any such
Collateral being sold, leased, transferred, assigned or disposed
of consists of machinery and equipment referenced in that
certain appraisal dated September 14, 1998 conducted by Daley
Hodkin Appraisal Corporation for Lender (the "Appraisal"), such
machinery and equipment is no longer useful in the ordinary
course of Borrower's business and the net proceeds received by
Borrower upon the sale of such machinery and equipment shall be
paid to Lender and applied as a prepayment against the Term Loan
together with such additional amount as is necessary so that the
total amount paid by Borrower against the Term Loan equals or
exceeds the appraised value of such machinery and equipment, as
set forth on the Appraisal, or (b) consolidate with or merge
with or into any other entity, or permit any other entity to
consolidate with or merge with or into Borrower, or (c) form or
acquire any interest in any firm, corporation or other entity,
or (d) change its corporate name or trade name or otherwise
conduct business under any assumed or fictitious name, other
than as set forth in Section 10.6(g).

6.7 Insurance. Borrower shall at all times maintain,
with financially sound and reputable insurers, adequate
insurance (including, without limitation, at the option of
Lender, earthquake and flood insurance) with respect to the
Collateral and other assets. All such insurance policies shall
be in such form, substance, amounts and coverage as may be
satisfactory to Lender and shall provide for thirty (30) days'
prior written notice to Lender of cancellation or reduction of
coverage. Lender may obtain, at Borrower's expense, any such
insurance should Borrower fail to do so and adjust or settle any
claim or other matter under or arising pursuant to such
insurance or amend or cancel such insurance. Borrower shall
provide evidence of such insurance and a lender's loss payable
endorsement satisfactory to Lender. Borrower shall deliver to
Lender, in kind, all instruments representing proceeds of
insurance received by Borrower. Lender may apply any insurance
proceeds received at any time to the cost of repairs to or

7
<PAGE>

replacement of any portion of the Collateral and/or, at Lender's
option, to payment of or as security for any of the Obligations
in any order or manner as Lender determines.

6.8 Compliance With Laws. Borrower is and at all
times will continue to be in compliance with the requirements of
all material laws, rules, regulations and orders of any
governmental authority relating to its business (including laws,
rules, regulations and orders relating to income, withholding,
excise, property and social security taxes, minimum wages,
employer and employee contributions and similar items,
securities, employee retirement and welfare benefits, employee
health and safety, or environmental matters) and all material
agreements or other instruments binding on Borrower or its
property. Borrower shall pay and discharge all taxes,
assessments and governmental charges against Borrower or any
Collateral when due unless the same are being contested in good
faith. Lender may establish reserves for the amount contested
and penalties which may accrue thereon.

6.9 Accounts. All statements made and all unpaid
balances and other information appearing in the invoices,
agreements, proofs of rendition of services and delivery of
goods and other documentation relating to the accounts, and all
confirmatory assignments, schedules, statements of account and
books and records with respect thereto, are true and correct and
in all respects what they purport to be.

6.10 Equipment. With respect to Borrower's equipment,
Borrower shall keep the equipment in good order and repair and
in running and marketable condition, ordinary wear and tear
excepted.

6.11 Intentionally Left Blank.

6.12 Affiliated Transactions. Borrower will not,
directly or indirectly: (a) lend or advance money or property
to, guarantee or assume indebtedness of, or invest (by capital
contribution or otherwise) in any person, firm, corporation or
other entity; or (b) declare, pay or make any dividend,
redemption or other distribution of capital on account of any
shares of any class of stock of Borrower now or hereafter
outstanding; provided, however, that Borrower may declare and
pay dividends on certain preferred stock that it may issue, so
long and to the extent that (i) the payment of any such dividend
does not violate applicable state law, and (ii) Borrower is not
and would otherwise not be in default of any of its obligations
under this Agreement, or (c) make any payment of the principal
amount of or interest on any indebtedness owing to any officer,
director, shareholder, or affiliate of Borrower; or (d) make any
loans or advances to any officer, director, employee,
shareholder or affiliate of Borrower; or (e) enter into any
sale, lease or other transaction with any officer, director,
employee, shareholder or affiliate of Borrower on terms that are
less favorable to Borrower than those which might be obtained at
the time from persons who are not an officer, director,
employee, shareholder or affiliate of Borrower. In connection
with clauses (a) and (d) of this Section 6.12, Borrower may make
advances or contribute additional capital to Axcel in connection
with Borrower's spin-off of Axcel, so long as and to the extent
that Borrower is not and would otherwise not be in default of
any of its obligations under this Agreement.

6.13 Fees and Expenses. Borrower shall pay, on
Lender's demand, all costs, expenses, filing fees and taxes
payable in connection with the preparation, execution, delivery,

8
<PAGE>

recording, administration, collection, liquidation, enforcement
and defense of the Obligations, Lender's rights in the
Collateral, this Agreement and all other existing and future
agreements or documents contemplated herein or related hereto,
including any amendments, waivers, supplements or consents which
may hereafter be made or entered into in respect hereof, or in
any way involving claims or defenses asserted by Lender or
claims or defenses against Lender asserted by Borrower, any
guarantor or any third party directly or indirectly arising out
of or related to the relationship between Borrower and Lender or
any guarantor and Lender, including, but not limited to the
following, whether incurred before, during or after the Term or
after the commencement of any case with respect to Borrower or
any guarantor under the United States Bankruptcy Code or any
similar statute: (a) all costs and expenses of filing or
recording (including Uniform Commercial Code financing statement
filing taxes and fees, documentary taxes, intangibles taxes and
mortgage recording taxes and fees, if applicable); (b) all title
insurance and other insurance premiums, appraisal fees, fees
incurred in connection with any environmental report, audit or
survey and search fees; (c) all fees as then in effect relating
to the wire transfer of loan proceeds and other funds and fees
then in effect for returned checks and credit reports; (d) all
expenses and costs heretofore and from time to time hereafter
incurred by Lender during the course of periodic field
examinations of the Collateral and Borrower's operations
including, without limitation, field examiner, travel, food and
lodging, plus a per diem charge at the rate set forth in Section
10.4(d) for Lender's examiners in the field and office; and (e)
the costs, fees and disbursements of in-house and outside
counsel to Lender, including but not limited to such costs, fees
and disbursements incurred as a result of a workout,
restructuring, reorganization, liquidation, insolvency
proceeding or litigation between the parties hereto, any third
party and in any appeals arising therefrom.

6.14 Further Assurances. At the request of Lender,
at any time and from time to time, at Borrower's sole expense,
Borrower shall execute and deliver or cause to be executed and
delivered to Lender, such agreements, documents and instruments,
including waivers, consents and subordination agreements from
mortgagees or other holders of security interests or liens,
landlords or bailees, and do or cause to be done such further
acts as Lender, in its discretion, deems necessary or desirable
to create, preserve, perfect or validate any security interest
of Lender or the priority thereof in the Collateral and
otherwise to effectuate the provisions and purposes of this
Agreement. Borrower hereby authorizes Lender to file financing
statements or amendments against Borrower in favor of Lender
with respect to the Collateral, without Borrower's signature and
to file as financing statements any carbon, photographic or
other reproductions of this Agreement or any financing
statements signed by Borrower.

6.15 Environmental Condition. None of Borrower's
properties or assets has ever been designated or identified in
any manner pursuant to any statute, regulations, ordinances,
laws or orders pertaining to environmental matters
(collectively, "Environmental Laws") as a hazardous waste or
hazardous substance disposal site, or a candidate for closure
pursuant to any Environmental Laws. No lien arising under or in
connection with any Environmental Laws has attached to any
revenues or to any real or personal property owned by Borrower.
Borrower has not received a summons, citation, notice, or
directive or other communication from the Environmental
Protection Agency or any other federal or state governmental
agency concerning any action or omission by Borrower resulting
in the releasing, or otherwise exposing of hazardous waste or
hazardous substances into the environment. Borrower is and will
continue to be in compliance (in all material respects) with all

9
<PAGE>

Environmental Laws and other legal requirements pertaining to
the production, storage, handling, treatment, release,
transportation or disposal of any hazardous waste or hazardous
substance.

6.16 Year 2000 Compliance. The Borrower shall take
all action necessary to assure that its computer-based systems
are able to effectively process data including dates and date
sensitive functions. The Borrower represents and warrants that
the Year 2000 problem will not result in a material adverse
effect on the Borrower's business condition. Upon request, the
Borrower shall provide assurance acceptable to the Lender that
the Borrower's computer systems and software are or will be Year
2000 compliant on a timely basis. The Borrower shall
immediately advise Lender in writing of any material changes in
the Borrower's Year 2000 plan, timetable or budget.

6.17 Organization and Qualification. Borrower is a
business corporation, duly organized, validly existing and in
good standing under the laws of the State set forth in Schedule
D-1 hereto and will (i) do or cause to be done all things
necessary to keep in full force and effect its existence and its
qualification to do business and good standing in such State and
any other jurisdiction(s) in which such qualification is
necessary for the proper conduct of its business or wherein it
owns or leases any property, a schedule of which is attached
hereto as Schedule D-2, and conduct and operate its business in
substantially the manner in which same is presently conducted
and operated; (ii) at all times maintain, preserve and protect
all material patents, franchises, trademarks, trade names,
copyrights and other general intangibles; and (iii) comply with
all material agreements to which it is subject.

6.18 Indemnification.

(a) Borrower hereby indemnifies and agrees to
protect, defend and hold harmless Lender and Lender's directors,
officers, employees, agents, attorneys and shareholders from and
against any and all losses, damages, expenses or liabilities of
any kind or nature and from any suits, claims, or demands,
including all reasonable counsel fees incurred in investigating,
evaluating or defending such suits, claims or demands suffered
by any of them and caused by, relating to, arising out of,
resulting from, or in any way connected with this Agreement, or
any other collateral document, and any transaction contemplated
herein or therein (other than actions arising out of the gross
negligence or willful misconduct of Lender), including but not
limited to, suits, claims or demands based upon any act or
failure to act by Lender in connection with this Agreement or
any other collateral document, and any transaction contemplated
herein or therein. If Borrower shall have knowledge of any
claim or liability hereby indemnified against, it shall give
prompt written notice thereof to Lender. This covenant shall
survive payment of the Obligations.

(b) Lender shall give Borrower prompt notice of all
suits, actions or proceedings instituted against Lender with
respect to which Borrower has indemnified Lender, and Borrower
shall have the right to participate in any such suit, action or
proceeding. Lender shall also have the right, at the sole
expense of Borrower, to participate in, or at Lender's election,
assume the defense or prosecution of such suit, action, or
proceeding, and in the latter event the Borrower may employ
counsel and participate therein. Lender shall have the right to
adjust, settle, or compromise any claim, suit, or judgment after
notice to Borrower, unless Borrower desires to litigate such

10
<PAGE>

claim, defend such suit, or appeal such judgment and
simultaneously therewith deposit with Lender additional
collateral security sufficient to pay any judgment rendered,
with interest, costs, and expenses; and the right of Lender to
indemnification under this Agreement shall extend to any money
paid by Lender in settlement or compromise of any such claims,
suits, and judgments in good faith, after notice to Borrower.

(c) If any suit, action, or proceeding is brought by
Lender against Borrower for breach of this covenant of
indemnity, separate suits may be brought as causes of action
accrue, without prejudice or bar to the bringing of subsequent
suits on any other cause of action, whether theretofore or
thereafter accruing.

6.19 Authority and Subsidiaries. Borrower has the
lawful power to own its properties and to engage in the
businesses it conducts; and has no subsidiaries or joint venture
partners other than as set forth on Schedule B hereto.

6.20 Litigation. Except as described on Schedule C
attached hereto, Borrower is not a party to or, to its best
knowledge, threatened with, any litigation, suit, action,
investigation (whether civil or criminal), proceedings or
controversy before any Court, administrative agency or other
governmental authority and Borrower is not in violation of or in
default with respect to any judgment, order, writ, injunction,
decree or rule of any court, administrative agency or
governmental instrumentality or in any material respect under
any regulation of any administrative agency or governmental
instrumentality.

6.21 Patents and Trademarks. Borrower holds no
United States or foreign patents and has no United States or
foreign patent applications pending and has no federally
registered trademarks or trade names and operates under no
fictitious names, other than as disclosed in Section 10.6(g)
below.

SECTION 7. EVENTS OF DEFAULT AND REMEDIES

7.1 Events of Default. All Obligations shall be
immediately due and payable, without notice or demand, upon the
termination of this Agreement or, at Lender's option, upon or at
any time after the occurrence or existence of any one or more of
the following "Events of Default":

(a) Borrower fails to pay when due any of the
Obligations or fails to perform any of the terms of this
Agreement or any other existing or future financing, security or
other agreement between Borrower and Lender or any affiliate of
Lender;

(b) Any representation, warranty or statement of fact
made by Borrower to Lender in this Agreement or any other
agreement, schedule, confirmatory assignment or otherwise, or to
any affiliate of Lender, shall prove inaccurate or misleading in
any material respect;

(c) Any guarantor revokes, terminates or fails to
perform any of the terms of any guaranty, endorsement or other
agreement of such party in favor of Lender or any affiliate of
Lender;

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<PAGE>

(d) Any judgment or judgments aggregating in excess
of the amount set forth in Section 10.6(h) or any injunction or
attachment is obtained against Borrower or any guarantor which
remains unstayed or undischarged for a period of ten (10) days
or is enforced;

(e) The usual business of Borrower or any guarantor
ceases or is suspended;

(f) Any change in the chief executive officer, chief
operating officer, or controlling ownership of Borrower;

(g) Borrower or any guarantor is unable to pay its
debts as they become due, makes an assignment for the benefit of
creditors, makes or sends notice of a bulk transfer or calls a
general meeting of its creditors or principal creditors;

(h) Any petition or application for any relief under
the bankruptcy laws of the United States now or hereafter in
effect or under any insolvency, reorganization, receivership,
readjustment of debt, dissolution or liquidation law or statute
of any jurisdiction now or hereafter in effect (whether at law
or in equity) is filed by or against Borrower or any guarantor;

(i) The indictment or threatened indictment of
Borrower or any guarantor under any criminal statute, or
commencement or threatened commencement of criminal or civil
proceedings against Borrower or any guarantor pursuant to which
statute or proceedings the penalties or remedies sought or
available include forfeiture of any of the property of Borrower
or such guarantor which Lender believes may have a material
adverse effect on the Collateral or Borrower's business;

(j) Any default or event of default occurs on the
part of Borrower under any material agreement, document or
instrument to which Borrower is a party or by which Borrower or
any of its property is bound.

(k) Lender in good faith believes that either (i) the
prospect of payment or performance of the Obligations is
impaired or (ii) the Collateral is not sufficient to secure
fully the Obligations; or

(l) Any material change occurs in the nature or
conduct of Borrower's business.

7.2 Remedies. Upon the occurrence of an Event of
Default and at any time thereafter, Lender shall have all rights
and remedies provided in this Agreement, any other agreements
between Borrower and Lender, the Uniform Commercial Code and
other applicable law, all of which rights and remedies may be
exercised without notice to Borrower, all such notices being
hereby waived, except such notice as is expressly provided for
hereunder or is not waivable under applicable law. All rights
and remedies of Lender are cumulative and not exclusive and are
enforceable, in Lender's discretion, alternatively,
successively, or concurrently on any one or more occasions and
in any order Lender may determine. Without limiting the
foregoing, Lender may (a) accelerate the payment of all
Obligations and demand immediate payment thereof to Lender, (b)
with or without judicial process or the aid or assistance of
others, enter upon any premises on or in which any of the
Collateral may be located and take possession of the Collateral
or complete processing, manufacturing and repair of all or any

12
<PAGE>

portion of the Collateral, (c) require Borrower, at Borrower's
expense, to assemble and make available to Lender any part or
all of the Collateral at any place and time designated by
Lender, (d) collect, foreclose, receive, appropriate, setoff and
realize upon any and all Collateral, (e) sell, lease, transfer,
assign, deliver or otherwise dispose of any and all Collateral
(including, without limitation, entering into contracts with
respect thereto, by public or private sales at any exchange,
broker's board, any office of Lender or elsewhere) at such
prices or terms as Lender may deem reasonable, for cash, upon
credit or for future delivery, with the Lender having the right
to purchase the whole or any part of the Collateral at any such
public sale, all of the foregoing being free from any right or
equity of redemption of Borrower, which right or equity of
redemption is hereby expressly waived and released by Borrower.
If any of the Collateral is sold or leased by Lender upon credit
terms or for future delivery, the Obligations shall not be
reduced as a result thereof until payment therefor is finally
collected by Lender. If notice of disposition of Collateral is
required by law, ten (10) days' prior notice by Lender to
Borrower designating the time and place of any public sale or
the time after which any private sale or other intended
disposition of Collateral is to be made, shall be deemed to be
reasonable notice thereof and Borrower waives any other notice.
In the event Lender institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of
prejudgment remedy, Borrower waives the posting of any bond
which might otherwise be required.

7.3 Application of Proceeds. Lender may apply the
cash proceeds of Collateral (other than accounts) actually
received by Lender from any sale, lease, foreclosure or other
disposition of the Collateral to payment of any of the
Obligations, in whole or in part and in such order as Lender may
elect, whether or not then due. Borrower shall remain liable to
Lender for the payment of any deficiency together with interest
at the highest rate provided for herein and all costs and
expenses of collection or enforcement, including reasonable
attorneys' fees and legal expenses.

7.4 Lender's Cure of Third Party Agreement Default.
Lender may, at its option, cure any default by Borrower under
any agreement with a third party or pay or bond on appeal any
judgment entered against Borrower, discharge taxes, liens,
security interests or other encumbrances at any time levied on
or existing with respect to the Collateral and pay any amount,
incur any expense or perform any act which, in Lender's sole
judgment, is necessary or appropriate to preserve, protect,
insure, maintain, or realize upon the Collateral. Lender may
charge Borrower's loan account for any amounts so expended, such
amounts to be repayable by Borrower on demand. Lender shall be
under no obligation to effect such cure, payment, bonding or
discharge, and shall not, by doing so, be deemed to have assumed
any obligation or liability of Borrower.

SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND
CONSENTS

8.1 JURY TRIAL WAIVER. BORROWER AND LENDER EACH
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
INSTITUTED BY EITHER OF THEM AGAINST THE OTHER WHICH PERTAINS
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE OBLIGATIONS, THE
COLLATERAL, ANY ALLEGED TORTIOUS CONDUCT BY BORROWER OR LENDER,
OR, IN ANY WAY, DIRECTLY OR INDIRECTLY, ARISES OUT OF OR RELATES
TO THE RELATIONSHIP BETWEEN BORROWER AND LENDER. IN NO EVENT

13
<PAGE>

WILL LENDER BE LIABLE FOR LOST PROFITS OR OTHER SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

8.2 Counterclaims. Borrower waives all rights to
interpose any claims, deductions, setoffs or counterclaims of
any kind, nature or description in any action or proceeding
instituted by Lender with respect to this Agreement, the
Obligations, the Collateral or any matter arising therefrom or
relating thereto, except compulsory counterclaims.

8.3 Jurisdiction. Borrower hereby irrevocably
submits and consents to the nonexclusive jurisdiction of the
State and Federal Courts located in the State in which the
office of Lender designated in Section 10.6(a) is located and
any other State where any Collateral is located with respect to
any action or proceeding arising out of this Agreement, the
Obligations, the Collateral or any matter arising therefrom or
relating thereto. In any such action or proceeding, Borrower
waives personal service of the summons and complaint or other
process and papers therein and agrees that the service thereof
may be made by mail directed to Borrower at its chief executive
office set forth in Section 10.6(d) or other address thereof of
which Lender has received notice as provided herein, service to
be deemed complete five (5) days after mailing, or as permitted
under the rules of said Courts. Any such action or proceeding
commenced by Borrower against Lender will be litigated only in a
Federal Court located in the district, or a State Court in the
State and County, in which the office of Lender designated in
Section 10.6(a) is located and Borrower waives any objections
based on forum non conveniens or venue in connection therewith.
8.4 No Waiver by Lender. Lender shall not, by any
act, delay, omission or otherwise be deemed to have expressly or
impliedly waived any of its rights or remedies unless such
waiver shall be in writing and signed by an authorized officer
of Lender. A waiver by Lender of any right or remedy on any one
occasion shall not be construed as a bar to or waiver of any
such right or remedy which Lender would otherwise have on any
future occasion, whether similar in kind or otherwise.

SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS

9.1 Term. This Agreement shall only become
effective upon execution and delivery by Borrower and Lender and
shall continue in full force and effect for a term set forth in
Section 10.7 from the date hereof ("Term").

9.2 Early Termination. Borrower may also terminate
this Agreement without penalty by giving Lender at least thirty
(30) days' prior written notice and payment in full of all of
the Obligations as provided herein. Thirty (30) days after
receipt by Lender of such notice, Lender shall not be obligated
to make any further loans, advances or other accommodations to
or for the benefit of Borrower. Lender shall also have the
right to terminate this Agreement at any time upon or after the
occurrence of an Event of Default. If Lender terminates this
Agreement upon or after the occurrence of an Event of Default,
or if Borrower shall terminate this Agreement as permitted
herein effective prior to the end of the then-current Term,
Borrower shall pay to Lender on the effective date of
termination, in full, all Obligations

14
<PAGE>

9.3 Termination Indemnity Deposit. Upon termination
of this Agreement by Borrower, as permitted herein, in addition
to payment of all Obligations which are not contingent, Borrower
shall deposit such amount of cash collateral as Lender
determines is necessary to secure Lender from loss, cost, damage
or expense, including reasonable attorneys' fees, in connection
with any open accommodations or remittance items or other
payments provisionally credited to the Obligations and/or to
which Lender has not yet received final and indefeasible
payment.

9.4 Notices. Except as otherwise provided, all
notices, requests and demands hereunder shall be (a) made to
Lender at its address set forth in Section 10.6(a) and to
Borrower at its chief executive office set forth in Section
10.6(d), or to such other address as either party may designate
by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if by
hand, immediately upon delivery; if by telex, telegram or
telecopy (fax), immediately upon receipt; if by overnight
delivery service, one day after dispatch; and if by first class
or certified mail, three (3) days after mailing.

9.5 Severability. If any provision of this Agreement
is held to be invalid or unenforceable, such provision shall not
affect this Agreement as a whole, but this Agreement shall be
construed as though it did not contain the particular provision
held to be invalid or unenforceable.

9.6 Entire Agreement; Amendments; Assignments. This
Agreement and the Promissory Note referred to in Section 2,
contain the entire agreement of the parties as to the subject
matter hereof, all prior commitments, proposals and negotiations
concerning the subject matter hereof being merged herein.
Neither this Agreement nor any provision hereof shall be
amended, modified or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer
of Lender. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and their respective
successors and assigns, except that any obligation of Lender
under this Agreement shall not be assignable nor inure to the
successors and assigns of Borrower.

9.7 Discharge of Borrower. No termination of this
Agreement shall relieve or discharge Borrower of its
Obligations, grants of Collateral, duties and covenants
hereunder or otherwise until such time as all Obligations to
Lender have been indefeasibly paid and satisfied in full,
including, without limitation, the continuation and survival in
full force and effect of all security interests and liens of
Lender in and upon all then-existing and thereafter-arising or
acquired Collateral and all warranties and waivers of Borrower.

9.8 Usage. All terms used herein which are defined
in the Uniform Commercial Code shall have the meanings given
therein unless otherwise defined in this Agreement and all
references to the singular or plural herein shall also mean the
plural or singular, respectively.

9.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State in
which the office of Lender set forth in Section 10.6(a) below is
located (the "Applicable State") (without regard to the
Applicable State's conflicts of laws principles) except that
Borrower specifically consents to the applicability of New

15
<PAGE>

Jersey law (without regard to New Jersey conflicts of laws
principles) with respect to Lender's exercise and enforcement of
the remedy of confession of judgment by warrant of attorney set
forth in the Warrant of Attorney to Confess Judgment executed
contemporaneously herewith and Borrower expressly waives any
defense which Borrower may have against the enforcement by
Lender of the confession of judgment remedy, based upon any
theory of law or equitable principle whatsoever, including,
without limitation, any claim by Borrower that the governing
laws of the Applicable State may not permit the entry of
judgment by confession.

SECTION 10. ADDITIONAL DEFINITIONS AND TERMS

10.1 Intentionally Left Blank
10.2 Term Loan:

$750,000.00, payable in thirty-five (35) equal
consecutive monthly principal installments of
$12,500.00 and one final installment of the
entire unpaid principal balance thereof, as more
fully set forth in the Promissory Note.

10.3 Intentionally Left Blank

10.4 Interest, Fees & Charges:
(a) Interest Rate: Prime Rate plus three
percent (3%) per annum.

(b) Intentionally Left Blank

(d) Field Examination per diem charge per
examiner: $650.00

10.5 Intentionally Left Blank

10.6 (a) Lender's Office:

10 South LaSalle Street
Chicago, Illinois 60603

(b) Lender's Bank:

Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697

16
<PAGE>

(d) Borrower's Chief Executive Office:

600 College Road East
Princeton, NJ 08540

(e) Intentionally Left Blank

(f) Borrower's Other Offices and Locations of
Collateral:

201 College Road East
Princeton, NJ 08540

[storage location] [to be completed by
Borrower]

(g) Borrower's Trade Names for Invoicing:
[insert trade names, if any] [to be
completed by Borrower]

(h) Judgment Amount: $25,000.00

10.7 Term: Three (3) years

IN WITNESS WHEREOF, and intending to be legally bound,
Borrower and Lender have duly executed this Agreement this _20th__
day of October, 1998.

THE CIT GROUP/CREDIT FINANCE, INC.

By: _/s/ Richard A. Simons
Name: Richard A. Simons
Title: Senior Vice President

CYTOGEN CORPORATION

By: _/s/ H. Joseph Reiser
H. Joseph Reiser, President

SCHEDULE A

Permitted Liens

1. Liens created under this Loan and Security
Agreement and related documents in favor of the Lender.

2. Liens upon equipment and machinery granted in
connection with the acquisition of such equipment and machinery
by Borrower after the date hereof (including, without
limitation, pursuant to leases and installment sale contracts),
provided that:

(i) each such lien attaches only to the
equipment and machinery acquired with the debt secured thereby,
and

(ii) the principal amount of the indebtedness
secured by any item of equipment or machinery shall not exceed
100% of the cost thereof (excluding labor).

__________________________________
SCHEDULE B

Subsidiaries and Joint Venture Partners

Axcell Biosciences Corporation

The above does not include dormant subsidiaries
___________________________

SCHEDULE C

Litigation and Violations

1. The Company has been served with a complaint, denominated as
a class action complaint, relating to its adoption of a
shareholder rights plan in June, 1998. The lawsuit claims
primarily that (in a case unrelated to Cytogen) the Delaware
chancery court has indicated that a particular provision in the
rights plan may be held inconsistent with Delaware law, that the
Company's rights plan should be revised, and that the plaintiff
and his counsel are entitled to an award of aKomeys' fees to the
extent that it prompted this change. The provision at issue is
common to rights plans adopted by Delaware corporations, and
Cytogen is advised that virtually identical suits have been
filed against a number of Delaware corporations. Cytogen has
advised the plaintiff s counsel that it believes that the
provision has not been held invalid; that to the extent the
provision is held invalid, the rights plan automatically severs
it from the plan; and that the lawsuit will not benefit the
stockholders. The plaintiff s counsel has agreed to dismiss the
lawsuit with no application for fees if the Company revises its
rights plan. The Board of Directors of the Company will take
this maker up at its meeting on October. 19, 1998.

18
<PAGE>

2. The Company has received a notice from a third parry that it
believes that the Company's ProstaScint product infringes that
party's patent related to location of intracellular markers. The
Company has reviewed the patent claim, does not believe that
infringement is present, and believes, based on advice of
counsel, that the third party patent is invalid. An opinion of
outside patent counsel was obtained during the period of
development of ProstaScint to the effect that such other patent
was invalid by reason of fraud The third party patent expires in
November, 1999. The Company is in discussions with this third
party toward resolving these issues and does not believe that
this claim is likely to have a significant adverse effect on the
Company's financial position or results of operations.

______________________________________

SCHEDULE D-1

Jurisdiction of Borrower's Incorporation

Delaware
_______________________________________

SCHEDULE D-2

Jurisdictions where Borrower is Required to be Qualified

Arkansas
California
Colorado
Delaware
Florida
Georgia
Illinois
Maryland
Massachusetts
Michigan
New Jersey
New York
Ohio
Pennsylvania
Rhode Island
Texas
Washington
Wisconsin

19
<PAGE>

CYTOGEN CORPORATION
TERM PROMISSORY NOTE

$750,000.00 October 19, 1998

For value received and intending to be legally bound,
CYTOGEN CORPORATION ("Maker"), a Delaware corporation, hereby
promises to pay, without set-off or defalcation, to the order of
THE CIT GROUP/CREDIT FINANCE, INC. ("Payee"), a Delaware
corporation, at its offices at 10 South LaSalle Street, Chicago,
Illinois 60603, or such other place as Payee may designate to
Maker in writing, the principal sum of Seven Hundred and Fifty
Thousand Dollars ($750,000.00) in lawful money of the United
States of America, together with interest on the outstanding
balance thereof at the floating rate per annum set forth below.
All interest shall be calculated based upon a 360-day year and
the actual number of days elapsed.

The principal amount of this Note shall be repaid in
thirty-five (35) equal consecutive monthly installments of
Twelve Thousand Five Hundred Dollars ($12,500.00) each, due and
payable on the first day of each month, commencing on November
1, 1998 and continuing on the first day of each succeeding
month. One final installment of Three Hundred Twelve Thousand
Five Hundred Dollars ($312,500.00), plus any other unpaid
principal and accrued and unpaid interest, costs, fees and
expenses shall be due and payable on October 1, 2001. All
principal payments hereunder shall be subject to acceleration
and payment in full upon the occurrence of an Event of Default
(as hereinafter defined).

This Note shall bear interest on the principal balance
remaining unpaid from time to time at a floating rate equal to
the Prime Rate plus three percent (3.00%) per annum (the
"Interest Rate"). For purposes hereof, the term "Prime Rate"
means the interest rate per annum publicly announced by The
Chase Manhattan Bank in New York, New York from time to time as
its prime rate, whether or not such announced rate is the best
rate available at such bank. The Interest Rate under this Note
shall be increased or decreased as and when the Prime Rate
changes. Installments of interest shall be due and payable,
concurrently with each payment of principal, on the first day of
each month commencing November 1, 1998 and continuing thereafter
until the principal amount of this Note and all accrued interest
is paid in full.

At the time any payment is due hereunder, Payee may,
at its option, charge the amount thereof to any account of Maker
maintained by Payee or any affiliate of Payee.
The indebtedness evidenced by this Note represents
advances made by Payee pursuant to Section 2 of a Loan
and Security Agreement of even date herewith entered into by and
between Maker and Payee (the "Loan Agreement"). All capitalized
terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Loan Agreement.

20
<PAGE>

Payment of this Note is secured by a first priority
lien on and security interest in the Collateral. Payee shall
not be required to resort to the Collateral for payment, but may
proceed against Maker and/or any guarantors in such order and
manner as Payee may choose.

If any payment of principal or interest due hereunder
shall not be paid on or before the due date thereof, interest
shall accrue on such overdue amount from the date such payment
is due at an annual rate equal to the Interest Rate plus two
percent (2%) ("Default Rate").
Each of the following events (each an "Event of
Default") shall constitute an event of default hereunder:

(a) Maker shall fail to pay principal and/or interest
as aforesaid on or before the date on which it shall fall due
hereunder or shall fail to perform any of the other terms of
this Note or any other existing or future financing, security or
other agreement between Maker and Payee or any affiliate of
Payee (hereinafter collectively referred to as the "Loan
Documents").

(b) The occurrence of an "Event of Default" under the
Loan Agreement or the other Loan Documents or if the Loan
Agreement shall expire by its terms, or be terminated or not
renewed for any reason whatsoever.
Upon the occurrence of an Event of Default, in
addition to all rights and remedies of Payee under the Loan
Agreement or other documents executed in connection therewith,
the entire unpaid principal balance of this Note together with
interest accrued thereon at the rate hereinbefore specified, and
all other sums due by Maker hereunder and under the Loan
Agreement or the other Loan Documents shall, at the option of
Payee and without notice to Maker, become due and payable
immediately and payment of the same may be enforced and
recovered in whole or in part at any time by one or more of the
remedies provided to Payee in this Note, in the Loan Agreement,
or the other Loan Documents; and in such case the Payee may also
recover all costs of suit and other expenses in connection
therewith, together with reasonable attorneys' fees for
collection.

The remedies of Payee as provided herein, in the Loan
Agreement, or in the other Loan Documents shall be cumulative
and concurrent and may be pursued singly, successively or
together against the Maker and/or any other obligor and/or
against the Collateral and/or any other property pledged or
assigned to Payee as security for this Note, at the sole
discretion of Payee, and such remedies shall not be exhausted by
any exercise thereof but may be exercised as often as occasion
therefor shall occur.

Payee shall not by any act or omission to act be
deemed to have waived any of its rights or remedies hereunder
unless such waiver is in writing and signed by Payee, and then
only to the extent specifically set forth therein. A waiver of
one event shall not be construed as continuing or as a bar to or
waiver of any right or remedy on a subsequent event.

Maker hereby waives and releases all errors, defects
and imperfections in any proceedings instituted by Payee under
the terms of this Note, the Loan Agreement, the other Loan
Documents or in connection with the Collateral, as well as all
benefit that might accrue to Maker by virtue of any present or

<PAGE>

future laws exempting any of the property comprising the
Collateral or any other property, real or personal, or any part
of the proceeds arising from any sale of such property, from
attachment, levy or sale under execution, or providing for any
stay of execution, exemption from civil process or extension of
time for payment, as well as the right of inquisition on any
real property that may be levied upon under a judgment obtained
by virtue hereof, and Maker hereby voluntarily condemns the same
and authorizes the entry of such voluntary condemnation on any
writ of execution issued thereon, and agrees that such real
property may be sold upon any such writ in whole or in part in
any order desired by Payee.

Maker hereby waives presentment for payment, demand,
notice of nonpayment, notice of protest and protest of this
Note, and all other notices in connection with the delivery,
acceptance, performance, default or enforcement of the payment
of this Note, and agrees that the liability of Maker shall be
unconditional without regard to the liability of any other party
and shall not be in any manner affected by any indulgence,
extension of time, renewal, waiver or modification granted or
consented to by Payee; and Maker hereby consents to any and all
extensions of time, renewals, waivers or modifications that may
be granted by Payee with respect to the payment or other
provisions of this Note, and to the release of the Collateral,
or any part thereof, with or without substitution, and agrees
that Maker's endorsers, guarantors or sureties may become
parties hereto without notice to Maker or affecting the Maker's
liability hereunder.

Notwithstanding anything to the contrary herein
contained, the total liability of Maker for payment of interest
pursuant hereto shall not exceed the maximum amount, if any, of
such interest permitted by applicable law to be contracted for,
charged or received, and if payments by Maker to Payee include
interest in excess of such maximum amount, Payee shall apply
such excess to the reduction of the unpaid principal amount due
pursuant hereto, or if none is due, such excess shall be
refunded to Maker. Any such application or refund shall not
cure or waive any Event of Default. In determining whether or
not any interest payable under this Note or the Loan Agreement
or with respect to the Collateral exceeds the highest rate
permitted by law, any non-principal payment (except payments
specifically stated in this Note to be "interest"), including
without limitation prepayment premiums and late charges, shall
be deemed, to the extent permitted by applicable law, to be an
expense, fee, premium or penalty rather than interest.

If any provision hereof is found by a court of
competent jurisdiction to be prohibited or unenforceable, it
shall be ineffective only to the extent of such prohibition or
unenforceability, and such prohibition or unenforceability shall
not invalidate the balance of such provision to the extent it is
not prohibited or unenforceable, nor invalidate the other
provisions hereof, all of which shall be liberally construed in
favor of Payee in order to effect the provisions of this Note.

As used herein, the words "Payee" and "Maker" shall be
deemed and construed to include the respective successors and
assigns of Payee and the respective successors and permitted
assigns of Maker. This Note shall be construed and enforced in
accordance with and governed by the laws of the State of
Illinois (without regard to Illinois' conflicts of laws
principles) except that Maker specifically consents to the
applicability of New Jersey law (without regard to New Jersey's
conflicts of laws principles) with respect to Payee's exercise
and enforcement of the remedy of confession of judgment by
warrant of attorney set forth in the Warrant of Attorney to

22
<PAGE>

Confess Judgment executed contemporaneously herewith and Maker
expressly waives any defense which Maker may have against the
enforcement by Payee of the confession of judgment remedy, based
upon any theory of law or equitable principle whatsoever,
including, without limitation, any claim by Maker that the
governing laws of Illinois may not permit the entry of judgment
by confession.

IN WITNESS WHEREOF, Maker has duly executed this Note
as of the day and year first above written.

CYTOGEN CORPORATION

By:_/s/ H. Joseph Reiser_______
H. Joseph Reiser, President

STATE OF _NEW JERSEY____ :

COUNTY OF _MIDDLESEX_____ :

On the _19th_ day of October, 1998 before me
personally came _H. Joseph Reiser, to me known, who, being by me
duly sworn, did depose and say that he is the President of
Cytogen Corporation, the corporation described herein and which
executed the foregoing instrument; that said instrument was
signed and sealed on behalf of said corporation by authority of
its board of directors; and that they acknowledged said
instrument to be the free act and deed of said corporation.

/s/ Sally B. Hansen___________
Notary Public
My Commission Expires: SALLY B. HANSEN
Notary Public, State of New Jersey
ID No. 2217403
Qualified in Middlesex County
Commission Expires September 1, 2003

PRIVATE EQUITY LINE AGREEMENT

by and between

KINGSBRIDGE CAPITAL LIMITED

and

CYTOGEN CORPORATION

dated as of October 23, 1998

<PAGE>

TABLE OF CONTENTS

Page

ARTICLE I
CERTAIN DEFINITIONS . . . . . . . . . . 1
Section 1.1 [RESERVED] . . . . . . . . . . . . . . . . 1
Section 1.2 "Average Daily Trading Volume" . . . . . . 1
Section 1.3 "Bid Price". . . . . . . . . . . . . . . . 1
Section 1.4 "Blackout Shares". . . . . . . . . . . . . 2
Section 1.5 "Capital Shares" . . . . . . . . . . . . . 2
Section 1.6 "Closing". . . . . . . . . . . . . . . . . 2
Section 1.7 "Closing Date" . . . . . . . . . . . . . . 2
Section 1.8 "Commitment Period". . . . . . . . . . . . 2
Section 1.9 "Common Stock" . . . . . . . . . . . . . . 2
Section 1.10 "Common Stock Equivalents" . . . . . . . . 2
Section 1.11 "Condition Satisfaction Date". . . . . . . 2
Section 1.12 "Damages". . . . . . . . . . . . . . . . . 2
Section 1.13 "Discount" . . . . . . . . . . . . . . . . 2
Section 1.14 "Effective Date" . . . . . . . . . . . . . 2
Section 1.15 "Escrow Agreement" . . . . . . . . . . . . 2
Section 1.16 "Exchange Act" . . . . . . . . . . . . . . 3
Section 1.17 "Floor Price". . . . . . . . . . . . . . . 3
Section 1.18 "Investment Amount". . . . . . . . . . . . 3
Section 1.19 "Legend" . . . . . . . . . . . . . . . . . 3
Section 1.20 "Market Price" . . . . . . . . . . . . . . 3
Section 1.21 "Maximum Commitment Amount" . . . . . . . 3
Section 1.22 "Minimum Commitment Amount" . . . . . . . 3
Section 1.23 "Material Adverse Effect". . . . . . . . . 3
Section 1.24 "Maximum Put Amount" . . . . . . . . . . . 3
Section 1.25 "Minimum Put Amount" . . . . . . . . . . . 3
Section 1.26 "NASD" . . . . . . . . . . . . . . . . . . 3
Section 1.27 "Outstanding". . . . . . . . . . . . . . . 3
Section 1.28 "Person" . . . . . . . . . . . . . . . . . 3
Section 1.29 "Preferred Stock". . . . . . . . . . . . . 4
Section 1.30 "Principal Market" . . . . . . . . . . . . 4
Section 1.31 "Purchase Price" . . . . . . . . . . . . . 4
Section 1.32 "Put". . . . . . . . . . . . . . . . . . . 4
Section 1.33 "Put Date" . . . . . . . . . . . . . . . . 4
Section 1.34 "Put Notice" . . . . . . . . . . . . . . . 4
Section 1.35 "Put Shares" . . . . . . . . . . . . . . . 4
Section 1.36 "Registrable Securities" . . . . . . . . . 4
Section 1.37 "Registration Rights Agreement". . . . . . 5
Section 1.38 "Registration Statement" . . . . . . . . . 5
Section 1.39 "Regulation D" . . . . . . . . . . . . . . 5

<PAGE>
Section 1.40 "SEC". . . . . . . . . . . . . . . . . . . 5
Section 1.41 "Section 4(2)" . . . . . . . . . . . . . . 5
Section 1.42 "Securities Act" . . . . . . . . . . . . . 5
Section 1.43 "SEC Documents". . . . . . . . . . . . . . 5
Section 1.44 "Subscription Date . . . . . . . . . . . . 5
Section 1.45 "Trading Cushion". . . . . . . . . . . . . 5
Section 1.46 "Trading Day". . . . . . . . . . . . . . . 5
Section 1.47 "Underwriter" . . . . . . . . . . . . . . 5
Section 1.48 "Valuation Event". . . . . . . . . . . . . 5
Section 1.49 "Valuation Period" . . . . . . . . . . . . 6
Section 1.50 "Warrant". . . . . . . . . . . . . . . . . 6
Section 1.51 "Warrant Shares" . . . . . . . . . . . . . 7

ARTICLE II
PURCHASE AND SALE OF COMMON STOCK; TERMINATION OF
OBLIGATIONS; WARRANT; BLACKOUT SHARES. . . . . . 7
Section 2.1 Investments. . . . . . . . . . . . . . . . 7
Section 2.2 Mechanics. . . . . . . . . . . . . . . . . 7
Section 2.3 Closings . . . . . . . . . . . . . . . . . 8
Section 2.4 Termination of Investment Obligation . . . 8
Section 2.5 The Warrant. . . . . . . . . . . . . . . . 8
Section 2.6 Blackout Shares. . . . . . . . . . . . . . 8
Section 2.7 Liquidated Damages . . . . . . . . . . . . 9

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR . . . . 9
Section 3.1 Intent . . . . . . . . . . . . . . . . . . 9
Section 3.2 Sophisticated Investor . . . . . . . . . . 9
Section 3.3 Authority. . . . . . . . . . . . . . . . . 9
Section 3.4 Not an Affiliate . . . . . . . . . . . . . 9
Section 3.5 Organization and Standing. . . . . . . . . 9
Section 3.6 Absence of Conflicts . . . . . . . . . . . 10
Section 3.7 Disclosure; Access to Information. . . . . 10
Section 3.8 Manner of Sale . . . . . . . . . . . . . . 10

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . 10
Section 4.1 Organization of the Company. . . . . . . . 10
Section 4.2 Authority. . . . . . . . . . . . . . . . . 10
Section 4.3 Capitalization . . . . . . . . . . . . . . 11
Section 4.4 Common Stock . . . . . . . . . . . . . . . 11
Section 4.5 SEC Documents. . . . . . . . . . . . . . . 11
Section 4.6 Exemption from Registration; Valid
Issuances. . . . . . . . . . . . . . . . . 12
Section 4.7 No General Solicitation or Advertising in
Regard to this Transaction . . . . . . . . 12

ii
<PAGE>

Section 4.8 Corporate Documents. . . . . . . . . . . . 12
Section 4.9 No Conflicts . . . . . . . . . . . . . . . 12
Section 4.10 No Material Adverse Change . . . . . . . . 13
Section 4.11 No Undisclosed Liabilities . . . . . . . . 13
Section 4.12 No Undisclosed Events or Circumstances . . 13
Section 4.13 No Integrated Offering . . . . . . . . . . 13
Section 4.14 Litigation and Other Proceedings . . . . . 13
Section 4.15 No Misleading or Untrue Communication. . . 14
Section 4.16 Material Non-Public Information. . . . . . 14

ARTICLE V
COVENANTS OF THE INVESTOR. . . . . . . . . 14

ARTICLE VI
COVENANTS OF THE COMPANY. . . . . . . . . 15
Section 6.1 Registration Rights. . . . . . . . . . . . 15
Section 6.2 Reservation of Common Stock. . . . . . . . 15
Section 6.3 Listing of Common Stock. . . . . . . . . . 15
Section 6.4 Exchange Act Registration. . . . . . . . . 15
Section 6.5 Legends. . . . . . . . . . . . . . . . . . 16
Section 6.6 Corporate Existence. . . . . . . . . . . . 16
Section 6.7 Additional SEC Documents . . . . . . . . . 16
Section 6.8 Notice of Certain Events Affecting
Registration; Suspension of Right
to Make a Put. . . . . . . . . . . . . . . 16
Section 6.9 Expectations Regarding Put Notices . . . . 16
Section 6.10 Consolidation; Merger. . . . . . . . . . . 17
Section 6.11 Issuance of Put Shares, Warrant Shares
and Blackout Shares. . . . . . . . . . . . 17
Section 6.12 Legal Opinion on Subscription Date . . . . 17
Section 6.13 No Other Equity Lines. . . . . . . . . . . 17

ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING. . . . . . 17
Section 7.1 Conditions Precedent to the Obligation of
the Company to Issue and Sell
Common Stock . . . . . . . . . . . . . . . 17
Section 7.2 Conditions Precedent to the Right of the
Company to Deliver a Put Notice and
the Obligation of the Investor to
Purchase Put Shares. . . . . . . . . . . . 18
Section 7.3 Due Diligence Review; Non-Disclosure of
Non-Public Information . . . . . . . . . . 20

ARTICLE VIII
LEGENDS . . . . . . . . . . . . . 21
Section 8.1 Legends. . . . . . . . . . . . . . . . . . 21
Section 8.2 No Other Legend or Stock Transfer
Restrictions . . . . . . . . . . . . . . . 22

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<PAGE>

Section 8.3 Investor's Compliance. . . . . . . . . . . 23

ARTICLE IX
INDEMNIFICATION . . . . . . . . . . . 23
Section 9.1 Indemnification. . . . . . . . . . . . . . 23
Section 9.2 Method of Asserting Indemnification
Claims . . . . . . . . . . . . . . . . . . 23

ARTICLE X
MISCELLANEOUS. . . . . . . . . . . . 27
Section 10.1 Fees and Expenses. . . . . . . . . . . . . 27
Section 10.2 Reporting Entity for the Common Stock. . . 27
Section 10.3 Brokerage. . . . . . . . . . . . . . . . . 27
Section 10.4 Notices. . . . . . . . . . . . . . . . . . 28
Section 10.5 Assignment . . . . . . . . . . . . . . . . 29
Section 10.6 Amendment; No Waiver . . . . . . . . . . . 29
Section 10.7 Annexes and Exhibits; Entire Agreement . . 29
Section 10.8 Termination; Survival. . . . . . . . . . . 29
Section 10.9 Severability . . . . . . . . . . . . . . . 30
Section 10.10 Title and Subtitles. . . . . . . . . . . . 30
Section 10.11 Counterparts . . . . . . . . . . . . . . . 30
Section 10.12 Choice of Law. . . . . . . . . . . . . . . 30

PRIVATE EQUITY LINE AGREEMENT

by and between

KINGSBRIDGE CAPITAL LIMITED

and

CYTOGEN CORPORATION

dated as of October 23, 1998

This PRIVATE EQUITY LINE AGREEMENT is entered into as of the
23rd day of October, 1998 (this "Agreement"), by and between
KINGSBRIDGE CAPITAL LIMITED (the "Investor"), an entity organized
and existing under the laws of the British Virgin Islands, and
CYTOGEN CORPORATION a corporation organized and existing under the
laws of the State of Delaware (the "Company").

<PAGE>

WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue and
sell to the Investor, from time to time as provided herein, and the
Investor shall purchase, up to $12,000,000 of the Common Stock (as
defined below); and

WHEREAS, such investments will be made in reliance upon the
provisions of Section 4(2) ("Section 4(2)") and Regulation D
("Regulation D") of the United States Securities Act of 1933, as
amended and the rules and regulations promulgated thereunder (the
"Securities Act"), and/or upon such other exemption from the
registration requirements of the Securities Act as may be available
with respect to any or all of the investments in Common Stock to be
made hereunder.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I
CERTAIN DEFINITIONS

Section 1.1 [RESERVED]

Section 1.2 "Average Daily Trading Volume" shall mean, with
respect to any date, the average of the daily trading volumes for
the Common Stock on the Principal Market for twenty-six (26) of
the thirty (30) Trading Days immediately preceding such date, after
removing the Trading Days with the two (2) highest trading volumes
and the Trading Days with the two (2) lowest trading volumes.

Section 1.3 "Bid Price" shall mean, with respect to any
Trading Day, the closing bid price on such Trading Day (as reported
by Nasdaq) of the Common Stock on the Principal Market.

Section 1.4 "Blackout Shares" shall have the meaning
assigned to them in Section 2.6.

Section 1.5 "Capital Shares" shall mean the Common Stock
and any shares of any other class of common stock whether now or
hereafter authorized, having the right to participate in the
distribution of dividends (as and when declared) and assets (upon
liquidation of the Company).

Section 1.6 "Closing" shall mean one of the closings of a
purchase and sale of the Common Stock pursuant to Section 2.1.

Section 1.7 "Closing Date" shall mean, with respect to a
Closing, the fifth Trading Day following the Put Date related to
such Closing, provided all conditions to such Closing have been
satisfied on or before such Trading Day.

Section 1.8 "Commitment Period" shall mean the period
commencing on the earlier to occur of (i) the Effective Date or
(ii) such earlier date as the Company and the Investor may mutually
agree in writing, and expiring on the earlier to occur of (x) the
date on which the Investor shall have purchased Put Shares pursuant
to this Agreement for an aggregate Purchase Price equal to the
Maximum Commitment Amount, (y) the date this Agreement is

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<PAGE>

terminated pursuant to Section 2.4, or (z) the date occurring
twenty four (24) months from the date of commencement of the
Commitment Period.

Section 1.9 "Common Stock" shall mean the Company's common
stock, $0.01 par value per share.

Section 1.10 "Common Stock Equivalents" shall mean any
securities that are convertible into or exchangeable for Common
Stock or any warrants, options or other rights to subscribe for or
purchase Common Stock or any such convertible or exchangeable
securities.

Section 1.11 "Condition Satisfaction Date" shall have the
meaning set forth in Section 7.2 of this Agreement.

Section 1.12 "Damages" shall mean any loss, claim, damage,
liability, costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements and costs and expenses
of expert witnesses and investigation).

Section 1.13 "Discount" shall mean fifteen percent (15%).

Section 1.14 "Effective Date" shall mean the date on which
the SEC first declares effective a Registration Statement
registering resale of the Registrable Securities as set forth in
Section 7.2(a).

Section 1.15 "Escrow Agreement" shall mean the escrow
agreement in the form of Exhibit A entered into pursuant to Section
7.2(o) hereof.

Section 1.16 "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended and the rules and regulations
promulgated thereunder.

Section 1.17 "Floor Price" shall mean seventy-five cents
($0.75) per share.

Section 1.18 "Investment Amount" shall mean the dollar
amount (within the range specified in Section 2.2) to be invested
by the Investor to purchase Put Shares with respect to any Put
Notice as provided by the Company to the Investor in accordance
with Section 2.2 hereof.

Section 1.19 "Legend" shall have the meaning specified in
Section 8.1.

Section 1.20 "Market Price" on any given date shall mean the
average of the lowest intra-day prices of the Common Stock over the
Valuation Period. "Lowest intra-day price" shall mean the lowest
price of the Common Stock (as reported by Bloomberg L.P.) during
any Trading Day.

Section 1.21 "Maximum Commitment Amount" shall mean
$12,000,000.

Section 1.22 "Minimum Commitment Amount" shall mean
$3,000,000.

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<PAGE>

Section 1.23 "Material Adverse Effect" shall mean any effect
on the business, operations, properties or financial condition of
the Company that is material and adverse to the Company or to the
Company and such other entities controlled by the Company, taken as
a whole, and/or any condition, circumstance, or situation that
would prohibit or otherwise interfere with the ability of the
Company to enter into and perform its obligations under any of (i)
this Agreement, (ii) the Registration Rights Agreement, (iii) the
Escrow Agreement and (iv) the Warrant.

Section 1.24 "Maximum Put Amount" shall mean with respect to
any Put the amount determined in accordance with the table set
forth on Annex A hereto.

Section 1.25 "Minimum Put Amount" shall mean $150,000.

Section 1.26 "NASD" shall mean the National Association of
Securities Dealers, Inc.

Section 1.27 "Outstanding" when used with reference to
Common Shares or Capital Shares (collectively the "Shares"), shall
mean, at any date as of which the number of such Shares is to be
determined, all issued and outstanding Shares, and shall include
all such Shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in such Shares;
provided, however, that "Outstanding" shall not refer to any such
Shares then directly or indirectly owned or held by or for the
account of the Company.

Section 1.28 "Person" shall mean an individual, a
corporation, a partnership, an association, a trust or other entity
or organization, including a government or political subdivision or
an agency or instrumentality thereof.

Section 1.29 "Principal Market" shall mean the Nasdaq
National Market, the Nasdaq SmallCap Market, the American Stock
Exchange or the New York Stock Exchange, whichever is at the time
the principal trading exchange or market for the Common Stock.

Section 1.30 "Purchase Price" shall mean, with respect to a
Put, the Market Price on a the applicable Put Date (or such other
date on which the Purchase Price is calculated in accordance with
the terms and conditions of this Agreement) less the product of the
Discount and the Market Price.

Section 1.31 "Put" shall mean each occasion the Company
elects to exercise its right to tender a Put Notice requiring the
Investor to purchase a specified amount of the Company's Common
Stock, subject to the terms and conditions of this Agreement.

Section 1.32 "Put Date" shall mean the Trading Day during
the Commitment Period that a Put Notice to sell Common Stock to the
Investor is deemed delivered pursuant to Section 2.2(b) hereof.

Section 1.33 "Put Notice" shall mean a written notice to the
Investor setting forth the Investment Amount that the Company
intends to require the Investor to purchase pursuant to the terms
of this Agreement.

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<PAGE>

Section 1.34 "Put Shares" shall mean all shares of Common
Stock issued or issuable pursuant to a Put that has been exercised
or may be exercised in accordance with the terms and conditions of
this Agreement.

Section 1.35 "Registrable Securities" shall mean the (i) Put
Shares, (ii) the Warrant Shares, (iii) the Blackout Shares and (iv)
any securities issued or issuable with respect to any of the
foregoing by way of exchange, stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise. As to any
particular Registrable Securities, once issued such securities
shall cease to be Registrable Securities when (w) the Registration
Statement has been declared effective by the SEC and all
Registrable Securities have been disposed of pursuant to the
Registration Statement, (x) all Registrable Securities have been
sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force)
under the Securities Act ("Rule 144") are met, (y) such time as all
Registrable Securities have been otherwise transferred to holders
who may trade such shares without restriction under the Securities
Act, and the Company has delivered a new certificate or other
evidence of ownership for such securities not bearing a restrictive
legend or (z) in the opinion of counsel to the Company, which
counsel shall be reasonably acceptable to the Investor, all
Registrable Securities may be sold without registration or the need
for an exemption from any registration requirements and without any
time, volume or manner limitations pursuant to Rule 144(k) (or any
similar provision then in effect) under the Securities Act.

Section 1.36 "Registration Rights Agreement" shall mean the
registration rights agreement in the form of Exhibit B hereto.

Section 1.37 "Registration Statement" shall mean a
registration statement on Form S-3 (if use of such form is then
available to the Company pursuant to the rules of the SEC and, if
not, on such other form promulgated by the SEC for which the
Company then qualifies and which counsel for the Company shall deem
appropriate and which form shall be available for the resale of the
Registrable Securities to be registered thereunder in accordance
with the provisions of this Agreement, the Registration Rights
Agreement, and the Warrant and in accordance with the intended
method of distribution of such securities), for the registration of
the resale by the Investor of the Registrable Securities under the
Securities Act.

Section 1.38 "Regulation D" shall have the meaning set forth
in the recitals of this Agreement.

Section 1.39 "SEC" shall mean the Securities and Exchange
Commission.

Section 1.40 "Section 4(2)" shall have the meaning set forth
in the recitals of this Agreement.

Section 1.41 "Securities Act" shall have the meaning set
forth in the recitals of this Agreement.

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<PAGE>

Section 1.42 "SEC Documents" shall mean the Company's latest
Form 10-K as of the time in question, all Forms 10-Q and 8-K filed
thereafter, and the Proxy Statement for its latest fiscal year as
of the time in question until such time the Company no longer has
an obligation to maintain the effectiveness of a Registration
Statement as set forth in the Registration Rights Agreement.

Section 1.43 "Subscription Date" shall mean the date on
which this Agreement is executed and delivered by the parties
hereto.

Section 1.44 "Trading Cushion" shall mean the mandatory
twenty (20) Trading Days between Put Dates.

Section 1.45 "Trading Day" shall mean any day during which
the Principal Market shall be open for business.

Section 1.46 "Underwriter" shall mean any underwriter
participating in any disposition of the Registrable Securities on
behalf of the Investor pursuant to the Registration Statement.

Section 1.47 "Valuation Event" shall mean an event in which
the Company at any time during a Valuation Period takes any of the
following actions:

(a) subdivides or combines its Common Stock;

(b) pays a dividend in its Capital Stock or makes any
other distribution of its Capital Shares, except for
dividends paid or distributions made in respect of
preferred stock;

(c) issues any additional Capital Shares ("Additional
Capital Shares"), otherwise than as provided in the
foregoing Subsections (a) and (b) above, at a price per
share less, or for other consideration lower, than the
Bid Price in effect immediately prior to such issuance,
or without consideration;

(d) issues any warrants, options or other rights to
subscribe for or purchase any Additional Capital Shares
and the price per share for which Additional Capital
Shares may at any time thereafter be issuable pursuant to
such warrants, options or other rights shall be less than
the Bid Price in effect immediately prior to such
issuance;

(e) issues any securities convertible into or
exchangeable for Capital Shares and the consideration per
share for which Additional Capital Shares may at any time
thereafter be issuable pursuant to the terms of such
convertible or exchangeable securities shall be less than
the Bid Price in effect immediately prior to such
issuance;

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<PAGE>

(f) makes a distribution of its assets or evidences of
indebtedness to the holders of its Capital Shares as a
dividend in liquidation or by way of return of capital
(except for dividends paid or distributions made in
respect of preferred stock) or other than as a dividend
payable out of earnings or surplus legally available for
dividends under applicable law or any distribution to
such holders made in respect of the sale of all or
substantially all of the Company's assets (other than
under the circumstances provided for in the foregoing
subsections (a) through (e); or

(g) takes any action affecting the number of Outstanding
Capital Shares, other than an action described in any of
the foregoing Subsections (a) through (f) hereof,
inclusive, which in the opinion of the Company's Board of
Directors, determined in good faith, would have a
materially adverse effect upon the rights of the Investor
at the time of a Put or exercise of the Warrant.

Section 1.48 "Valuation Period" shall mean the period of
five (5) Trading Days during which the Purchase Price of the Common
Stock is valued, which period shall be with respect to the Purchase
Price on any Put Date, the one (1) Trading Day preceding and the
three (3) Trading Days following the Trading Day on which the
applicable Put Notice is deemed to be delivered, as well as the
Trading Day on which such notice is deemed to be delivered;
provided, however, that if a Valuation Event occurs during any
Valuation Period, a new Valuation Period shall begin on the Trading
Day immediately after the occurrence of such Valuation Event and
end on the fifth Trading Day thereafter.

Section 1.49 "Warrant" shall mean the Warrant in the form of
Exhibit C hereto issued pursuant to Section 2.5 of this Agreement.

Section 1.50 "Warrant Shares" shall mean all shares of
Common Stock issued or issuable pursuant to exercise of the
Warrant.

ARTICLE II
PURCHASE AND SALE OF COMMON STOCK; TERMINATION OF
OBLIGATIONS; WARRANT; BLACKOUT SHARES
Section 2.1 Investments.

(a) Puts. Upon the terms and conditions set forth
herein (including, without limitation, the provisions of
Article VII hereof), on any Put Date the Company may
exercise a Put by the delivery of a Put Notice. The
number of Put Shares that the Investor shall receive
pursuant to such Put shall be determined by dividing the
Investment Amount specified in the Put Notice by the
Purchase Price with respect to such Put Date.

(b) Minimum Amount of Puts. The Company shall, in
accordance with Section 2.2(a), issue and sell Put Shares
to the Investor and the Investor shall purchase Put
Shares from the Company totaling (in aggregate Purchase

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<PAGE>

Prices) at least the Minimum Commitment Amount. If the
Company for any reason fails to issue and deliver such
Put Shares during the Commitment Period, on the first
Trading Day after the expiration of the Commitment
Period, the Company shall wire to the Investor a sum in
immediately available funds equal to the product of (X)
the Minimum Commitment Amount minus the aggregate
Investment Amounts of the Put Shares delivered to the
Investor hereunder and (Y) the Discount; provided,
however, that if the Investor's obligation to purchase
Common Stock hereunder or this Agreement is terminated
pursuant to Section 2.4 hereof, the Discount shall be
increased by five (5) percentage points for the purposes
of this Section.

(c) Maximum Amount of Puts. Unless the Company obtains
the requisite approval of its shareholders in accordance
with the corporate laws of Delaware and the applicable
rules of the Principal Market (unless a waiver is
obtained therefrom), no more than 19.9% of the
Outstanding shares of Common Stock may be issued and sold
pursuant to Puts.

Section 2.2 Mechanics.

(a) Put Notice. At any time during the Commitment
Period, the Company may deliver a Put Notice to the
Investor, subject to the conditions set forth in Section
7.2; provided, however, the Investment Amount for each
Put as designated by the Company in the applicable Put
Notice shall be neither less than the Minimum Put Amount
nor more than the Maximum Put Amount.

(b) Date of Delivery of Put Notice. A Put Notice shall
be deemed delivered on (i) the Trading Day it is received
by facsimile or otherwise by the Investor if such notice
is received prior to 12:00 noon New York time, or (ii)
the immediately succeeding Trading Day if it is received
by facsimile or otherwise after 12:00 noon New York time
on a Trading Day or at any time on a day which is not a
Trading Day. No Put Notice may be deemed delivered, on a
day that is not a Trading Day.

Section 2.3 Closings. On each Closing Date for a Put, (i)
the Company shall deliver into escrow one or more certificates, at
the Investor's option, representing the Put Shares to be purchased
by the Investor pursuant to Section 2.1 herein, registered in the
name of the Investor and (ii) the Investor shall deliver into
escrow the Investment Amount specified in the Put Notice by wire
transfer of immediately available funds to the account provided for
in the Escrow Agreement. In addition, on or prior to such Closing
Date, each of the Company and the Investor shall deliver to the
other all documents, instruments and writings required to be
delivered or reasonably requested by either of them pursuant to
this Agreement in order to implement and effect the transactions
contemplated herein. Payment of the Investment Amount to the
Company and delivery of such certificate(s) to the Investor shall
occur out of escrow in accordance with the Escrow Agreement;
provided, however, that to the extent the Company has not paid the
fees, expenses and disbursements of the Investor's counsel in
accordance with Section 12.1, the amount of such fees, expenses and
disbursements shall be paid in immediately available funds, at the
direction of the Investor, to Investor's counsel with no reduction
in the number of Put Shares issuable to the Investor on such

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Closing Date; provided, further, that so long as the Investor shall
maintain professional liability, errors and omissions liability
and/or directors' and officers' liability insurance for its
activities related to the Put Shares, the Warrant Shares or the
Blackout Shares, three percent (3%) of such Investment Amount shall
be either (i) retained by the Investor in respect of such insurance
or (ii) paid in immediately available funds, at the direction of
the Investor in respect of such insurance, in either case, with no
reduction in the number of Put Shares issuable to the Investor on
such Closing Date. Notwithstanding anything to the contrary in
this Section 2.3, if the Purchase Price calculated for a Valuation
Period with respect to any Put is less than sixty-five percent
(65%) of the Bid Price on the Put Date with respect to such Put,
then either party may, upon delivery by facsimile transmission of
written notice to the other party within one (1) Trading Day after
such Valuation Period, cancel the Closing in respect of such Put
and all of the rights and obligations of the parties with respect
to such Put shall terminate effective immediately prior to such Put
Date.

Section 2.4 Termination of Investment Obligation. This
Agreement and the Investor's obligation to purchase shares of
Common Stock hereunder shall automatically terminate (including
with respect to any Put, notice of which has been given but the
applicable Closing Date has not yet occurred) and the Investor may,
at its sole discretion, terminate this Agreement in the event that
(i) the Registration Statement is not effective within ninety (90)
days following the date required therefor in the Registration
Rights Agreement; (ii) there shall occur any stop order or
suspension of the effectiveness of the Registration Statement for
an aggregate of thirty (30) Trading Days during the Commitment
Period, for any reason other than deferrals or suspension during a
Blackout Period in accordance with the Registration Rights
Agreement, as a result of corporate developments subsequent to the
Subscription Date that would require such Registration Statement to
be amended to reflect such event in order to maintain its
compliance with the disclosure requirements of the Securities Act
or (iii) the Company shall at any time fail to comply with the
requirements of Section 6.3, 6.4, 6.5 or 6.6.

Section 2.5 The Warrant. On the Subscription Date, the
Company shall issue the Warrant to the Investor. The Warrant shall
be delivered by the Company to the Investor upon execution of this
Agreement by the parties hereto. The Warrant Shares shall be
registered for resale pursuant to the Registration Rights
Agreement.

Section 2.6 Blackout Shares. In the event that, (a) within
five (5) Trading Days following any Closing Date, the Company gives
a Blackout Notice to the Investor of a Blackout Period in
accordance with the Registration Rights Agreement, and (b) the Bid
Price on the Trading Day immediately preceding such Blackout Period
("Old Bid Price") is greater than the Bid Price on the first
Trading Day following such Blackout Period that the Investor may
sell its Registrable Securities pursuant to an effective
Registration Statement ("New Bid Price"), then the Company shall
issue to the Investor the number of additional shares of
Registrable Securities (the "Blackout Shares") equal to the
difference between (X) the product of the number of Registrable
Securities held by Investor immediately prior to the Blackout
Period multiplied by the Old Bid Price, divided by the New Bid
Price, and (Y) the number of Registrable Securities held by
Investor immediately prior to the Blackout Period.

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<PAGE>

Section 2.7 Liquidated Damages. The parties hereto
acknowledge and agree that the sum payable under Section 2.1(b) and
the requirement to issue Blackout Shares under Section 2.6 above
shall give rise to liquidated damages and not penalties. The
parties further acknowledge that (a) the amount of loss or damages
likely to be incurred is incapable or is difficult to precisely
estimate, (b) the amounts specified in such Sections bear a
reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by the
Investor in connection with the failure by the Company to make Puts
with aggregate Purchase Prices totalling at least the Minimum
Commitment Amount or in connection with a Blackout Period under the
Registration Rights Agreement, and (c) the parties are
sophisticated business parties and have been represented by
sophisticated and able legal and financial counsel and negotiated
this Agreement at arm's length.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR

The Investor represents and warrants to the Company that:

Section 3.1 Intent. The Investor is entering into this
Agreement for its own account and the Investor has no present
arrangement (whether or not legally binding) at any time to sell
the Common Stock to or through any person or entity; provided,
however, that by making the representations herein, the Investor
does not agree to hold the Common Stock for any minimum or other
specific term and reserves the right to dispose of the Common Stock
at any time in accordance with federal and state securities laws
applicable to such disposition.

Section 3.2 Sophisticated Investor. The Investor is a
sophisticated investor (as described in Rule 506(b)(2)(ii) of
Regulation D) or an accredited investor (as defined in Rule 501 of
Regulation D), and Investor has such experience in business and
financial matters that it is capable of evaluating the merits and
risks of an investment in Common Stock. The Investor acknowledges
that an investment in the Common Stock is speculative and involves
a high degree of risk.

Section 3.3 Authority. Each of this Agreement, the
Registration Rights Agreement, and the Escrow Agreement has been
duly authorized by all necessary corporate action and no further
consent or authorization of the Company, or its Board of Directors
or stockholders is required. Each of this Agreement, the
Registration Rights Agreement, and the Escrow Agreement was validly
executed and delivered by the Investor and each is a valid and
binding agreement of the Investor enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
insolvency, or similar laws relating to, or affecting generally the
enforcement of, creditors' rights and remedies or by other
equitable principles of general application.

Section 3.4 Not an affiliate. The Investor is not an
officer, director or "affiliate" (as that term is defined in Rule
405 of the Securities Act) of the Company.

Section 3.5 Organization and Standing. Investor is duly
organized, validly existing, and in good standing under the laws of
the British Virgin Islands.

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Section 3.6 Absence of Conflicts. The execution and
delivery of this Agreement and any other document or instrument
contemplated hereby, and the consummation of the transactions
contemplated thereby, and compliance with the requirements thereof,
will not (a) violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Investor, or, to
the Investor's knowledge, (b) violate any provision of any
indenture, instrument or agreement to which Investor is a party or
is subject, or by which Investor or any of its assets is bound, (c)
conflict with or constitute a material default thereunder, (d)
result in the creation or imposition of any lien pursuant to the
terms of any such indenture, instrument or agreement, or constitute
a breach of any fiduciary duty owed by Investor to any third party,
or (e) require the approval of any third-party (that has not been
obtained) pursuant to any material contract to which Investor is
subject or to which any of its assets, operations or management may
be subject.

Section 3.7 Disclosure; Access to Information. Investor
has received all documents, records, books and other information
pertaining to Investor's investment in the Company that have been
requested by Investor. The Investor has reviewed or received copies
of the SEC Documents.

Section 3.8 Manner of Sale. At no time was Investor
presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form of
general solicitation or advertising.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor that:

Section 4.1 Organization of the Company. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power
and authority to own, lease and operate its properties and to carry
on its business as now being conducted. Except as set forth in the
SEC Documents, the Company does not own more than fifty percent
(50%) of the outstanding capital stock of or control any other
business entity. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, other than
those in which the failure so to qualify would not have a Material
Adverse Effect.

Section 4.2 Authority. (i) The Company has the requisite
corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights
Agreement, the Warrant and the Escrow Agreement and to issue the
Put Shares, the Warrant, the Warrant Shares and the Blackout
Shares; (ii) the execution and delivery of this Agreement and the
Registration Rights Agreement, and the execution, issuance and
delivery of the Warrant, by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action and no further consent
or authorization of the Company or its Board of Directors or
stockholders is required; and (iii) each of this Agreement and the
Registration Rights Agreement has been duly executed and delivered,

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and the Warrant has been duly executed, issued and delivered, by
the Company and constitute valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.

Section 4.3 Capitalization. As of September 30, 1998, the
authorized capital stock of the Company consisted of 89,600,000
shares of Common Stock, of which 58,603,000 shares were issued and
outstanding. Except as set forth on Schedule 4.3 hereof, there are
no options, warrants, or rights to subscribe to, securities, rights
or obligations convertible into or exchangeable for or giving any
right to subscribe for any shares of capital stock of the Company.
All of the outstanding shares of Common Stock of the Company have
been duly and validly authorized and issued and are fully paid and
nonassessable.

Section 4.4 Common Stock. The Company has registered its
Common Stock pursuant to Section 12(b) or 12(g) of the Exchange Act
and is in full compliance with all reporting requirements of the
Exchange Act, and the Company has maintained all requirements for
the continued listing or quotation of its Common Stock, and such
Common Stock is currently listed or quoted on the Principal Market.
As of the date hereof, the Principal Market is the Nasdaq National
Market ("Nasdaq").

Section 4.5 SEC Documents. The Company has delivered or
made available to the Investor true and complete copies of the SEC
Documents (including, without limitation, proxy information and
solicitation materials). The Company has not provided to the
Investor any information that, according to applicable law, rule or
regulation, should have been disclosed publicly prior to the date
hereof by the Company, but which has not been so disclosed. As of
their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and other federal, state and
local laws, rules and regulations applicable to such SEC Documents,
and none of the SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in
the SEC Documents comply as to form and substance in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the
Company as of the dates thereof and the results of operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).

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Section 4.6 Exemption from Registration; Valid Issuances.
The sale and issuance of the Warrant, the Warrant Shares, the Put
Shares and any Blackout Shares in accordance with the terms and on
the bases of the representations and warranties set forth in this
Agreement, may and shall be properly issued pursuant to Rule 4(2),
Regulation D and/or any applicable state law. When issued and paid
for as herein provided, the Put Shares, the Warrant Shares and any
Blackout Shares shall be duly and validly issued, fully paid, and
nonassessable. Neither the sales of the Put Shares, the Warrant,
the Warrant Shares or any Blackout Shares pursuant to, nor the
Company's performance of its obligations under, this Agreement, the
Registration Rights Agreement, or the Warrant shall (i) result in
the creation or imposition of any liens, charges, claims or other
encumbrances upon the Put Shares, the Warrant Shares, any Blackout
Shares or any of the assets of the Company, or (ii) entitle the
holders of Outstanding Capital Shares to preemptive or other rights
to subscribe to or acquire the Capital Shares or other securities
of the Company. The Put Shares, the Warrant Shares and any
Blackout Shares shall not subject the Investor to personal
liability by reason of the ownership thereof.

Section 4.7 No General Solicitation or Advertising in
Regard to this Transaction. Neither the Company nor any of its
affiliates nor any distributor or any person acting on its or their
behalf (i) has conducted or will conduct any general solicitation
(as that term is used in Rule 502(c) of Regulation D) or general
advertising with respect to any of the Put Shares, the Warrant, the
Warrant Shares or any Blackout Shares, or (ii) made any offers or
sales of any security or solicited any offers to buy any security
under any circumstances that would require registration of the
Common Stock under the Securities Act.

Section 4.8 Corporate Documents. The Company has furnished
or made available to the Investor true and correct copies of the
Company's Certificate of Incorporation, as amended and in effect on
the date hereof (the "Certificate"), and the Company's By-Laws, as
amended and in effect on the date hereof (the "By-Laws").

Section 4.9 No Conflicts. The execution, delivery and
performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby, including
without limitation the issuance of the Put Shares, the Warrant, the
Warrant Shares and the Blackout Shares do not and will not (i)
result in a violation of the Certificate or By-Laws or (ii)
conflict with, or constitute a material default (or an event that
with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture,
instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party,
or (iii) result in a violation of any federal, state, local or
foreign law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations) applicable to
the Company or by which any property or asset of the Company is
bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and
violations as would not, individually or in the aggregate, have a
Material Adverse Effect) nor is the Company otherwise in violation
of, conflict with or in default under any of the foregoing;
provided, however, that for purposes of the Company's
representations and warranties as to violations of foreign law,
rule or regulation referenced in clause (iii), such representations
and warranties are made only to the best of the Company's knowledge
insofar as the execution, delivery and performance of this

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Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby are or may be affected by the
status of the Investor under or pursuant to any such foreign law,
rule or regulation. The business of the Company is not being
conducted in violation of any law, ordinance or regulation of any
governmental entity, except for possible violations that either
singly or in the aggregate do not and will not have a Material
Adverse Effect. The Company is not required under federal, state
or local law, rule or regulation to obtain any consent,
authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or
issue and sell the Common Stock or the Warrant in accordance with
the terms hereof (other than any SEC, NASD or state securities
filings that may be required to be made by the Company subsequent
to any Closing, any registration statement that may be filed
pursuant hereto, and any shareholder approval required by the rules
applicable to companies whose common stock trades on Nasdaq);
provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of
the relevant representations and agreements of the Investor herein.

Section 4.10 No Material Adverse Change. Since December 31, 1997,
no event has occurred that would have a Material Adverse Effect on the
Company, except as disclosed in the SEC Documents.

Section 4.11 No Undisclosed Liabilities. The Company has no
liabilities or obligations that are material, individually or in
the aggregate, and that are not disclosed in the SEC Documents or
otherwise publicly announced, other than those incurred in the
ordinary course of the Company's businesses since December 31, 1997
and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company.

Section 4.12 No Undisclosed Events or Circumstances. Since
December 31, 1997, no event or circumstance has occurred or exists
with respect to the or its businesses, properties, operations or
financial condition, that, under applicable law, rule or regulation,
requires public disclosure or announcement prior to the date hereof
by the Company but which has not been so publicly announced or
disclosed in the SEC Documents.

Section 4.13 No Integrated Offering. Neither the Company,
nor any of its affiliates, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, other than
pursuant to this Agreement, under circumstances that would require
registration of the Common Stock under the Securities Act.

Section 4.14 Litigation and Other Proceedings. Except as
may be set forth in the SEC Documents, there are no lawsuits or
proceedings pending or to the best knowledge of the Company
threatened, against the Company, nor has the Company received any
written or oral notice of any such action, suit, proceeding or
investigation, which might have a Material Adverse Effect. Except
as set forth in the SEC Documents, no judgment, order, writ,

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injunction or decree or award has been issued by or, so far as is
known by the Company, requested of any court, arbitrator or
governmental agency which might result in a Material Adverse
Effect.

Section 4.15 No Misleading or Untrue Communication. The
Company and any duly authorized Person representing the Company in
connection with the transactions contemplated by this Agreement,
have not made, at any time, any oral communication in connection
with the offer or sale of the same which contained any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.

Section 4.16 Material Non-Public Information. The Company
is not in possession of, nor has the Company or its agents
disclosed to the Investor, any material non-public information that
(i) if disclosed, would, or could reasonably be expected to have,
a material effect on the price of the Common Stock or (ii)
according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to the date hereof but
which has not been so disclosed.

ARTICLE V
COVENANTS OF THE INVESTOR

Section 5.1 Compliance with Law. The Investor's trading
activities with respect to shares of the Company's Common Stock
will be in compliance with all applicable state and federal
securities laws, rules and regulations and the rules and
regulations of the Principal Market on which the Company's Common
Stock is listed.

Section 5.2 Limitation on Short Sales. The Investor and
its affiliates shall not engage in short sales of the Company's
Common Stock; provided, however, that the Investor may enter into
any short sale or other hedging or similar arrangement it deems
appropriate with respect to Put Shares after it receives a Put
Notice with respect to such Put Shares so long as such sales or
arrangements do not involve more than the number of such Put Shares
(as determined by the Investor as of the date of such Put Notice).

ARTICLE VI
COVENANTS OF THE COMPANY

Section 6.1 Registration Rights. The Company shall cause
the Registration Rights Agreement to remain in full force and
effect and the Company shall comply in all respects with the terms
thereof.

Section 6.2 Reservation of Common Stock. As of the date
hereof, the Company has available and the Company shall reserve and
keep available at all times, free of preemptive rights, shares of
Common Stock for the purpose of enabling the Company to satisfy any
obligation to issue the Put Shares, the Warrant Shares and the
Blackout Shares; such amount of shares of Common Stock to be
reserved shall be calculated based upon the minimum Purchase Price

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for the Put Shares under the terms and conditions of this Agreement
and the Exercise price of the Warrant and a good faith estimate by
the Company in consultation with the investor of the number of
Blackout Shares that will need to be issued. The number of shares
so reserved from time to time, as theretofore increased or reduced
as hereinafter provided, may be reduced by the number of shares
actually delivered hereunder.

Section 6.3 Listing of Common Stock. The Company shall
maintain the listing of the Common Stock on a Principal Market, and
as soon as practicable (but in any event prior to the commencement
of the Commitment Period) will cause the Put Shares and the Warrant
Shares to be listed on the Principal Market. The Company further
shall, if the Company applies to have the Common Stock traded on
any other Principal Market, include in such application the Put
Shares, the Warrant Shares and any Blackout Shares, and shall take
such other action as is necessary or desirable in the opinion of
the Investor to cause the Common Stock to be listed on such other
Principal Market as promptly as possible. The Company shall take
use its best efforts to continue the listing and trading of its
Common Stock on the Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will
comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the NASD and the
Principal Market.

Section 6.4 Exchange Act Registration. The Company shall
(i) cause its Common Stock to continue to be registered under
Section 12(g) or 12(b) of the Exchange Act, will comply in all
respects with its reporting and filing obligations under said Act,
and will not take any action or file any document (whether or not
permitted by said Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting
and filing obligations under said Act.

Section 6.5 Legends. The certificates evidencing the Put
Shares, the Warrant Shares and the Blackout Shares shall be free of
legends, except as provided for in Article VIII.

Section 6.6 Corporate Existence. The Company shall take
all steps necessary to preserve and continue the corporate
existence of the Company.

Section 6.7 Additional SEC Documents. The Company shall
deliver to the Investor, as and when the originals thereof are
submitted to the SEC for filing, copies of all SEC Documents so
furnished or submitted to the SEC.

Section 6.8 Notice of Certain Events Affecting
Registration; Suspension of Right to Make a Put. The Company shall
immediately notify the Investor upon the occurrence of any of the
following events in respect of a registration statement or related
prospectus in respect of an offering of Registrable Securities:
(i) receipt of any request for additional information by the SEC or
any other federal or state governmental authority during the period
of effectiveness of the registration statement or for amendments or
supplements to the registration statement or related prospectus;
(ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any notification

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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; (iv) the happening of any event that makes any
statement made in such Registration Statement or related prospectus
or any document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or that requires the
making of any changes in the registration statement, related
prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading,
and that in the case of the related prospectus, it will not contain
any untrue statement of a material fact or omit to state any
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; and (v) the Company's
reasonable determination that a post-effective amendment to the
registration statement would be appropriate, and the Company shall
promptly make available to the Investor any such supplement or
amendment to the related prospectus. The Company shall not deliver
to the Investor any Put Notice during the continuation of any of
the foregoing events.

Section 6.9 Expectations Regarding Put Notices. Within ten
(10) days after the commencement of each calendar quarter occurring
subsequent to the commencement of the Commitment Period, the
Company undertakes to notify the Investor as to its reasonable
expectations as to the dollar amount it intends to raise during
such calendar quarter, if any, through the issuance of Put Notices.
Such notification shall constitute only the Company's good faith
estimate with respect to such calendar quarter and shall in no way
obligate the Company to raise such amount during such calendar
quarter or otherwise limit its ability to deliver Put Notices
during such calendar quarter. The failure by the Company to comply
with this provision can be cured by the Company's notifying the
Investor at any time as to its reasonable expectations with respect
to the current calendar quarter.

Section 6.10 Consolidation; Merger. The Company shall not,
at any time after the date hereof, effect any merger or
consolidation of the Company with or into, or a transfer of all or
substantially all of the assets of the Company to, another entity
unless the resulting successor or acquiring entity (if not the
Company) assumes by written instrument the obligation to deliver to
the Investor such shares of stock and/or securities as the Investor
is entitled to receive pursuant to this Agreement and the Warrant.

Section 6.11 Issuance of Put Shares, Warrant Shares and
Blackout Shares. The sale of the Put Shares, the issuance of the
Warrant Shares pursuant to exercise of the Warrant and the issuance
of any Blackout Shares shall be made in accordance with the
provisions and requirements of Regulation D and any applicable
state law. Issuance of the Warrant Shares pursuant to exercise of
the Warrant through a cashless exercise shall be made in accordance
with the provisions and requirements of Section 3(a)(9) under the
Securities Act and any applicable state law.

Section 6.12 Legal Opinion on Subscription Date. The
Company's general or outside counsel shall deliver to the Investor
on the Subscription Date an opinion in the form of Exhibit E,
except for paragraph 6 thereof.

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Section 6.13 No Other Equity Lines. The Company shall
refrain from entering into any other agreements, arrangements or
understandings granting to the Company the right to put shares of
its securities to one or more investors through private placements.

ARTICLE VII
CONDITIONS TO DELIVERY OF
PUT NOTICES AND CONDITIONS TO CLOSING

Section 7.1 Conditions Precedent to the Obligation of the
Company to Issue and Sell Common Stock. The obligation hereunder of
the Company to issue and sell the Put Shares to the Investor
incident to each Closing is subject to the satisfaction, at or
before each such Closing, of each of the conditions set forth
below.

(a) Accuracy of the Investor's Representation and
Warranties. The representations and warranties of the
Investor shall be true and correct in all material
respects as of the date of this Agreement and as of the
date of each such Closing as though made at each such
time.

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

Section 7.2 Conditions Precedent to the Right of the
Company to Deliver a Put Notice and the Obligation of the Investor
to Purchase Put Shares. The right of the Company to deliver a Put
Notice and the obligation of the Investor hereunder to acquire and
pay for the Put Shares incident to a Closing is subject to the
satisfaction, on (i) the applicable Put Date and (ii) the
applicable Closing Date (each a "Condition Satisfaction Date"), of
each of the following conditions:

(a) Registration of the Registrable Securities with the
SEC. As set forth in the Registration Rights Agreement,
the Company shall have filed with the SEC a Registration
Statement with respect to the resale of the Registrable
Securities by the Investor that shall have been declared
effective by the SEC prior to the first Put Date, but in
no event later than ninety (90) days after Subscription
Date.

(b) Effective Registration Statement. As set forth in
the Registration Rights Agreement, the Registration
Statement shall have previously become effective and
shall remain effective on each Condition Satisfaction
Date and (i) neither the Company nor the Investor shall
have received notice that the SEC has issued or intends
to issue a stop order with respect to the Registration
Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, or intends
or has threatened to do so (unless the SEC's concerns
have been addressed and the Investor is reasonably

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satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other
suspension of the use or withdrawal of the effectiveness
of the Registration Statement or related prospectus shall
exist.

(c) Accuracy of the Company's Representations and
Warranties. The representations and warranties of the
Company shall be true and correct as of each Condition
Satisfaction Date as though made at each such time
(except for representations and warranties specifically
made as of a particular date).

(d) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with
all covenants, agreements and conditions required by this
Agreement, the Registration Rights Agreement and the
Warrant to be performed, satisfied or complied with by
the Company at or prior to each Condition Satisfaction
Date.

(e) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or adopted by any
court or governmental authority of competent jurisdiction
that prohibits the transactions contemplated by this
Agreement or otherwise has a Material Adverse Effect, and
no actions, suits or proceedings shall be in progress,
pending or threatened by any Person, that seek to enjoin
or prohibit the transactions contemplated by this
Agreement or otherwise could reasonably be expected to
have a Material Adverse Effect. For purposes of this
paragraph (e), no proceeding shall be deemed pending or
threatened unless one of the parties has received written
or oral notification thereof prior to the applicable
Closing Date.

(f) No Suspension of Trading In or Delisting of Common
Stock. The trading of the Common Stock shall not have
been suspended by the SEC, the Principal Market or the
NASD and the Common Stock shall have been approved for
listing or quotation on and shall not have been delisted
from the Principal Market (including, without limitation,
delisted to the Nasdaq Bulletin Board). The issuance of
shares of Common Stock with respect to the applicable
Closing, if any, shall not violate the shareholder
approval requirements of the Principal Market.

(g) Legal Opinion. The Company shall have caused to be
delivered to the Investor, within five (5) Trading Days
of the Effective Date, an opinion of the Company's
independent or general counsel in the form of Exhibit E
hereto, addressed to the Investor.

(h) Ten Percent Limitation. On each Closing Date, the
number of Put Shares then to be purchased by the Investor
shall not exceed the number of such shares that, when
aggregated with all other shares of Registerable
Securities then owned by the Investor beneficially or
deemed beneficially owned by the Investor, would result
in the Investor owning no more than 9.9% of all of such
Common Stock as would be outstanding on such Closing
Date, as determined in accordance with Section 16 of the

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<PAGE>

Exchange Act and the regulations promulgated thereunder.
For purposes of this Section, in the event that the
amount of Common Stock outstanding as determined in
accordance with Section 16 of the Exchange Act and the
regulations promulgated thereunder is greater on a
Closing Date than on the date upon which the Put Notice
associated with such Closing Date is given, the amount of
Common Stock outstanding on such Closing Date shall
govern for purposes of determining whether the Investor,
when aggregating all purchases of Common Stock made
pursuant to this Agreement and, if any, Warrant Shares
and Blackout Shares, would own more than 9.9% of the
Common Stock following such Closing Date.

(i) Minimum Bid Price. The Bid Price equals or exceeds
the Floor Price throughout the applicable Valuation
Period (or, with respect to any Put Date, the portion of
the Valuation Period preceding such Put Date).

(j) Minimum Average Daily Trading Volume. The Average
Daily Trading Volume for the Common Stock with respect to
the applicable Put Date and Closing Date equals or
exceeds 50,000 shares.

(k) No Knowledge. The Company shall have no knowledge
of any event more likely than not to have the effect of
causing such Registration Statement to be suspended or
otherwise ineffective (which event is more likely than
not to occur within the fifteen Trading Days following
the Trading Day on which such Notice is deemed
delivered).

(l) Trading Cushion. The Trading Cushion shall have
elapsed since the immediately preceding Put Date.

(m) Shareholder Vote. The issuance of shares of Common
Stock with respect to the applicable Closing, if any,
shall not violate the shareholder approval requirements
of the Principal Market.

(n) Escrow Agreement. The parties hereto shall have
entered into the Escrow Agreement.

(o) Other. On each Condition Satisfaction Date, the
Investor shall have received and been reasonably
satisfied with such other certificates and documents as
shall have been reasonably requested by the Investor in
order for the Investor to confirm the Company's
satisfaction of the conditions set forth in this Section
7.2., including, without limitation, a certificate in
substantially the form and substance of Exhibit F hereto,
executed in either case by an executive officer of the
Company and to the effect that all the conditions to such
Closing shall have been satisfied as at the date of each
such certificate.

Section 7.3 Due Diligence Review; Non-Disclosure of Non-Public
Information.

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(a) The Company shall make available for inspection and
review by the Investor, advisors to and representatives
of the Investor (who may or may not be affiliated with
the Investor and who are reasonably acceptable to the
Company), any Underwriter, any Registration Statement or
amendment or supplement thereto or any blue sky, NASD or
other filing, all financial and other records, all SEC
Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may
be reasonably necessary for the purpose of such review,
and cause the Company's officers, directors and employees
to supply all such information reasonably requested by
the Investor or any such representative, advisor or
Underwriter in connection with such Registration
Statement (including, without limitation, in response to
all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time
after the filing and effectiveness of the Registration
Statement for the sole purpose of enabling the Investor
and such representatives, advisors and Underwriters and
their respective accountants and attorneys to conduct
initial and ongoing due diligence with respect to the
Company and the accuracy of the Registration Statement.

(b) Each of the Company, its officers, directors,
employees and agents shall in no event disclose non-public
information to the Investor, advisors to or
representatives of the Investor unless prior to
disclosure of such information the Company identifies
such information as being non-public information and
provides the Investor, such advisors and representatives
with the opportunity to accept or refuse to accept such
non-public information for review. The Company may, as a
condition to disclosing any non-public information
hereunder, require the Investor's advisors and
representatives to enter into a confidentiality agreement
in form reasonably satisfactory to the Company and the
Investor.

(c) Nothing herein shall require the Company to disclose
non-public information to the Investor or its advisors or
representatives, and the Company represents that it does
not disseminate non-public information to any investors
who purchase stock in the Company in a public offering,
to money managers or to securities analysts; provided,
however, that notwithstanding anything herein to the
contrary, the Company shall, as hereinabove provided,
immediately notify the advisors and representatives of
the Investor and any Underwriters of any event or the
existence of any circumstance (without any obligation to
disclose the specific event or circumstance) of which it
becomes aware, constituting non-public information
(whether or not requested of the Company specifically or
generally during the course of due diligence by such
persons or entities), which, if not disclosed in the
prospectus included in the Registration Statement would
cause such prospectus to include a material misstatement
or to omit a material fact required to be stated therein
in order to make the statements, therein, in light of the
circumstances in which they were made, not misleading.
Nothing contained in this Section 7.3 shall be construed
to mean that such persons or entities other than the
Investor (without the written consent of the Investor
prior to disclosure of such information) may not obtain
non-public information in the course of conducting due

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<PAGE>

diligence in accordance with the terms and conditions of
this Agreement and nothing herein shall prevent any such
persons or entities from notifying the Company of their
opinion that based on such due diligence by such persons
or entities, that the Registration Statement contains an
untrue statement of a material fact or omits a material
fact required to be stated in the Registration Statement
or necessary to make the statements contained therein,
in light of the circumstances in which they were made,
not misleading.

ARTICLE VIII
LEGENDS

Section 8.1 Legends. Each of the Warrant and, unless
otherwise provided below, each certificate representing Registrable
Securities will bear the following legend (the "Legend"):

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN
RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR
OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT
SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN OBLIGATIONS OF
THE COMPANY SET FORTH IN A PRIVATE EQUITY LINE AGREEMENT
BETWEEN CYTOGEN CORPORATION AND KINGSBRIDGE CAPITAL
LIMITED DATED AS OF OCTOBER 23, 1998. A COPY OF THE
PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM THE COMPANY'S EXECUTIVE
OFFICES.

As soon as practicable after the execution and delivery
hereof, but in any event within 5 Trading Days hereafter, the
Company shall issue to the transfer agent for its Common Stock (and
to any substitute or replacement transfer agent for its Common
Stock upon the Company's appointment of any such substitute or
replacement transfer agent) instructions in substantially the form
of Exhibit G hereto, with a copy to the Investor. Such
instructions shall be irrevocable by the Company from and after the
date hereof or from and after the issuance thereof to any such
substitute or replacement transfer agent, as the case may be,
except as otherwise expressly provided in the Registration Rights
Agreement. It is the intent and purpose of such instructions, as

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provided therein, to require the transfer agent for the Common
Stock from time to time upon transfer of Registrable Securities by
the Investor to issue certificates evidencing such Registrable
Securities free of the Legend during the following periods and
under the following circumstances and without consultation by the
transfer agent with the Company or its counsel and without the need
for any further advice or instruction or documentation to the
transfer agent by or from the Company or its counsel or the
Investor:

(a) At any time after the Effective Date, upon surrender
of one or more certificates evidencing Common Stock that
bear the Legend, to the extent accompanied by a notice
requesting the issuance of new certificates free of the
Legend to replace those surrendered; provided that (i)
the Registration Statement shall then be effective and
(ii) if reasonably requested by the transfer agent the
Investor confirms to the transfer agent that the Investor
has complied with the prospectus delivery requirement.

(b) At any time upon any surrender of one or more
certificates evidencing Registrable Securities that bear
the Legend, to the extent accompanied by a notice
requesting the issuance of new certificates free of the
Legend to replace those surrendered and containing
representations that (i) the Investor is permitted to
dispose of such Registrable Securities without limitation
as to amount or manner of sale pursuant to Rule 144(k)
under the Securities Act or (ii) the Investor has sold,
pledged or otherwise transferred or agreed to sell,
pledge or otherwise transfer such Registrable Securities
in a manner other than pursuant to an effective
registration statement, to a transferee who shall upon
such transfer be entitled to freely tradeable securities.

Section 8.2 No Other Legend or Stock Transfer Restrictions.
No legend other than the one specified in Section 8.1 has been or
shall be placed on the share certificates representing the Common
Stock and no instructions or "stop transfers orders," so called,
"stock transfer restrictions," or other restrictions have been or
shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Article VIII.

Section 8.3 Investor's Compliance. Nothing in this Article
VIII shall affect in any way the Investor's obligations under any
agreement to comply with all applicable securities laws upon resale
of the Common Stock.

ARTICLE IX
INDEMNIFICATION

Section 9.1 Indemnification. (i) The Company agrees to
indemnify and hold harmless the Investor, its partners, affiliates,
officers, directors, employees, and duly authorized agents, and
each Person or entity, if any, who controls the Investor within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, together with the Controlling Persons (as defined in
the Registration Rights Agreement) from and against any Damages,
joint or several, and any action in respect thereof to which the
Investor, its partners, affiliates, officers, directors, employees,
and duly authorized agents, and any such Controlling Person becomes
subject to, resulting from, arising out of or relating to any
misrepresentation, breach of warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of Company
contained in this Agreement, as such Damages are incurred, except
to the extent that such damages result solely from the Investor's
failure to perform any covenant or agreement contained in this
Agreement, provided, however, that the Company shall not be liable
in any such case to the extent that any such Damages arise out of
or are based upon information furnished to the Company by or on
behalf of the Investor in writing and (ii) the Investor agrees to
indemnify and hold harmless the Company, its partners, affiliates,
officers, directors, employees and duly authorized agents and its
Controlling Persons (as defined in the Registration Rights
Agreement) from and against any Damages, joint or several, and any
action in respect thereof to which the Company, its partners,
affiliates, officers, directors, employees, and duly authorized
agents, and any such Controlling Person becomes subject to,
resulting from, arising out of or relating to any

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<PAGE>

misrepresentation, breach of warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of
Investor contained in this Agreement; provided, however, that the
indemnification obligation of the Investor under this Section 9.1
shall not exceed an aggregate maximum amount of $280,000.

Section 9.2 Method of Asserting Indemnification Claims.
All claims for indemnification by any Indemnified Party (as defined
below) under Section 9.1 shall be asserted and resolved as follows:

(a) In the event any claim or demand in respect of which
any person claiming indemnification under any provision
of Section 9.1 (an "Indemnified Party") might seek
indemnity under Section 9.1 is asserted against or sought
to be collected from such Indemnified Party by a person
other than the Company, the Investor or any affiliate of
the Company or (a "Third Party Claim"), the Indemnified
Party shall deliver a written notification, enclosing a
copy of all papers served, if any, and specifying the
nature of and basis for such Third Party Claim and for
the Indemnified Party's claim for indemnification that is
being asserted under any provision of Section 12.2
against any person (the "Indemnifying Party"), together
with the amount or, if not then reasonably ascertainable,
the estimated amount, determined in good faith, of such
Third Party Claim (a "Claim Notice") with reasonable
promptness to the Indemnifying Party. If the Indemnified
Party fails to provide the Claim Notice with reasonable
promptness after the Indemnified Party receives notice of
such Third Party Claim, the Indemnifying Party shall not
be obligated to indemnify the Indemnified Party with
respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been
irreparably prejudiced by such failure of the Indemnified
Party. The Indemnifying Party shall notify the In-
demnified Party as soon as practicable within the period
ending thirty (30) calendar days following receipt by the
Indemnifying Party of either a Claim Notice or an
Indemnity Notice (as defined below) (the "Dispute
Period") whether the Indemnifying Party disputes its
liability or the amount of its liability to the
Indemnified Party under Section 9.1 and whether the
Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party
Claim.

xxvii
<PAGE>

(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that
the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party
Claim pursuant to this Section 9.2(a), then the
Indemnifying Party shall have the right to defend,
with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of
the Indemnifying Party, such Third Party Claim by
all appropriate proceedings, which proceedings
shall be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or
will be settled at the discretion of the
Indemnifying Party (but only with the consent of
the Indemnified Party in the case of any settlement
that provides for any relief other than the payment
of monetary damages or that provides for the
payment of monetary damages as to which the
Indemnified Party shall not be indemnified in full
pursuant to Section 9.1). The Indemnifying Party
shall have full control of such defense and
proceedings, including any compromise or settlement
thereof; provided, however, that the Indemnified
Party may, at the sole cost and expense of the
Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice
referred to in the first sentence of this
clause (i), file any motion, answer or other
pleadings or take any other action that the
Indemnified Party reasonably believes to be
necessary or appropriate to protect its interests;
and provided further, that if requested by the
Indemnifying Party, the Indemnified Party will, at
the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnifying Party in contesting any Third Party
Claim that the Indemnifying Party elects to
contest. The Indemnified Party may participate in,
but not control, any defense or settlement of any
Third Party Claim controlled by the Indemnifying
Party pursuant to this clause (i), and except as
provided in the preceding sentence, the Indemnified
Party shall bear its own costs and expenses with
respect to such participation. Notwithstanding the
foregoing, the Indemnified Party may take over the
control of the defense or settlement of a Third
Party Claim at any time if it irrevocably waives
its right to indemnity under Section 9.1 with
respect to such Third Party Claim.

(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that
the Indemnifying Party desires to defend the Third
Party Claim pursuant to Section 9.2(a), or if the
Indemnifying Party gives such notice but fails to
prosecute vigorously and diligently or settle the
Third Party Claim, or if the Indemnifying Party
fails to give any notice whatsoever within the
Dispute Period, then the Indemnified Party shall
have the right to defend, at the sole cost and
expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which
proceedings shall be prosecuted by the Indemnified
Party in a reasonable manner and in good faith or
will be settled at the discretion of the
Indemnified Party (with the consent of the
Indemnifying Party, which consent will not be
unreasonably withheld). The Indemnified Party will

xxviii
<PAGE>

have full control of such defense and proceedings,
including any compromise or settlement thereof;
provided, however, that if requested by the
Indemnified Party, the Indemnifying Party will, at
the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the
Indemnified Party and its counsel in contesting any
Third Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing
provisions of this clause (ii), if the Indemnifying
Party has notified the Indemnified Party within the
Dispute Period that the Indemnifying Party disputes
its liability or the amount of its liability
hereunder to the Indemnified Party with respect to
such Third Party Claim and if such dispute is
resolved in favor of the Indemnifying Party in the
manner provided in clause (iii) below, the
Indemnifying Party will not be required to bear the
costs and expenses of the Indemnified Party's
defense pursuant to this clause (ii) or of the
Indemnifying Party's participation therein at the
Indemnified Party's request, and the Indemnified
Party shall reimburse the Indemnifying Party in
full for all reasonable costs and expenses incurred
by the Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate
in, but not control, any defense or settlement
controlled by the Indemnified Party pursuant to
this clause (ii), and the Indemnifying Party shall
bear its own costs and expenses with respect to
such participation.

(iii) If the Indemnifying Party notifies the
Indemnified Party that it does not dispute its
liability or the amount of its liability to the
Indemnified Party with respect to the Third Party
Claim under Section 9.1 or fails to notify the
Indemnified Party within the Dispute Period whether
the Indemnifying Party disputes its liability or
the amount of its liability to the Indemnified
Party with respect to such Third Party Claim, the
Loss in the amount specified in the Claim Notice
shall be conclusively deemed a liability of the
Indemnifying Party under Section 9.1 and the
Indemnifying Party shall pay the amount of such
Loss to the Indemnified Party on demand. If the
Indemnifying Party has timely disputed its
liability or the amount of its liability with
respect to such claim, the Indemnifying Party and
the Indemnified Party shall proceed in good faith
to negotiate a resolution of such dispute, and if
not resolved through negotiations within the
Resolution Period, such dispute shall be resolved
by arbitration in accordance with paragraph (c) of
this Section 9.2.

(b) In the event any Indemnified Party should have a
claim under Section 9.1 against the Indemnifying Party
that does not involve a Third Party Claim, the
Indemnified Party shall deliver to the Indemnifying Party
a written notification of a claim for indemnity under
Section 9.1 specifying the nature of and basis for such
claim, together with the amount or, if not then
reasonably ascertainable, the estimated amount,
determined in good faith, of such claim (an "Indemnity
Notice") with reasonable promptness to the Indemnifying

xxix
<PAGE>

Party. The failure by any Indemnified Party to give the
Indemnity Notice shall not impair such party's rights
hereunder except to the extent that the Indemnifying
Party demonstrates that it has been irreparably
prejudiced thereby. If the Indemnifying Party notifies
the Indemnified Party that it does not dispute the claim
or the amount of the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within
the Dispute Period whether the Indemnifying Party
disputes the claim or the amount of the claim described
in such Indemnity Notice, the Loss in the amount
specified in the Indemnity Notice will be conclusively
deemed a liability of the Indemnifying Party under
Section 9.1 and the Indemnifying Party shall pay the
amount of such Loss to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its
liability or the amount of its liability with respect to
such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a
resolution of such dispute, and if not resolved through
negotiations within the Resolution Period, such dispute
shall be resolved by arbitration in accordance with
paragraph (c) of this Section 9.2.

(c) Any dispute under this Agreement or the Warrant
shall be submitted to arbitration (including, without
limitation, pursuant to this Section 12.3) and shall be
finally and conclusively determined by the decision of a
board of arbitration consisting of three (3) members (the
"Board of Arbitration") selected as hereinafter provided.
Each of the Indemnified Party and the Indemnifying Party
shall select one (1) member and the third member shall be
selected by mutual agreement of the other members, or if
the other members fail to reach agreement on a third
member within twenty (20) days after their selection,
such third member shall thereafter be selected by the
American Arbitration Association upon application made to
it for such purpose by the Indemnified Party. The Board
of Arbitration shall meet on consecutive business days in
New York County, New York or such other place as a
majority of the members of the Board of Arbitration
determines more appropriate, and shall reach and render
a decision in writing (concurred in by a majority of the
members of the Board of Arbitration) with respect to the

xxx
<PAGE>

amount, if any, which the Indemnifying Party is required
to pay to the Indemnified Party in respect of a claim
filed by the Indemnified Party. In connection with
rendering its decisions, the Board of Arbitration shall
adopt and follow such rules and procedures as a majority
of the members of the Board of Arbitration deems
necessary or appropriate. To the extent practical,
decisions of the Board of Arbitration shall be rendered
no more than thirty (30) calendar days following
commencement of proceedings with respect thereto. The
Board of Arbitration shall cause its written decision to
be delivered to the Indemnified Party and the
Indemnifying Party. Any decision made by the Board of
Arbitration (either prior to or after the expiration of
such thirty (30) calendar day period) shall be final,
binding and conclusive on the Indemnified Party and the
Indemnifying Party and entitled to be enforced to the
fullest extent permitted by law and entered in any court
of competent jurisdiction. Each party to any arbitration
shall bear its own expense in relation thereto, including
but not limited to such party's attorneys' fees, if any,
and the expenses and fees of the Board of Arbitration
shall be divided between the Indemnifying Party and the
Indemnified Party in the same proportion as the portion
of the related claim determined by the Board of
Arbitration to be payable to the Indemnified Party bears
to the portion of such claim determined not to be so
payable.

ARTICLE X
MISCELLANEOUS

Section 10.1 Fees and Expenses. Each of the Company and the
Investor agrees to pay its own expenses incident to the performance
of its obligations hereunder, except that the Company shall pay the
fees, expenses and disbursements of the Investor's counsel in an
amount not to exceed $25,000 for the preparation, negotiation,
execution and delivery of this Agreement, the Registration Rights
Agreement, the Escrow Agreement and the Warrant.

Section 10.2 Reporting Entity for the Common Stock. The
reporting entity relied upon for the determination of the trading
price or trading volume of the Common Stock on any given Trading
Day for the purposes of this Agreement shall be Nasdaq or any
successor thereto. The written mutual consent of the Investor and
the Company shall be required to employ any other reporting entity.

Section 10.3 Brokerage. Each of the parties hereto
represents that it has had no dealings in connection with this
transaction with any finder or broker who will demand payment of
any fee or commission from the other party. The Company on the one
hand, and the Investor, on the other hand, agree to indemnify the
other against and hold the other harmless from any and all
liabilities to any persons claiming brokerage commissions or
finder's fees on account of services purported to have been
rendered on behalf of the indemnifying party in connection with
this Agreement or the transactions contemplated hereby.

Section 10.4 Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or
facsimile, addressed as set forth below or to such other address as
such party shall have specified most recently by written notice
given in accordance herewith. Any notice or other communication
required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business
day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such
communications shall be:

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If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200
Facsimile: (609) 951-9298

with a copy to:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

if to the Investor:

Adam Gurney
Kingsbridge Capital Limited
c/o Kingsbridge Corporate Services Limited
Main Street
Kilcullen, County Kildare
Republic of Ireland
Telephone: 011-353-45-481-811
Facsimile: 011-353-45-482-003

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

Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Keith M. Andruschak, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375

Either party hereto may from time to time change its address or
facsimile number for notices under this Section by giving at least
ten (10) days' prior written notice of such changed address or
facsimile number to the other party hereto.

Section 10.5 Assignment. Neither this Agreement nor any
rights of the Investor or the Company hereunder may be assigned by
either party to any other person. Notwithstanding the foregoing,

xxxii
<PAGE>

(a) the provisions of this Agreement shall inure to the benefit of,
and be enforceable by, any transferee of any of the Common Stock
purchased or acquired by the Investor hereunder with respect to the
Common Stock held by such person, and (b) the Investor's interest
in this Agreement may be assigned at any time, in whole or in part,
to any other person or entity (including any affiliate of the
Investor) upon the prior written consent of the Company, which
consent shall not to be unreasonably withheld.

Section 10.6 Amendment; No Waiver. No party shall be liable
or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth in
this Agreement or therein. Except as expressly provided in this
Agreement, neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written
instrument signed by both parties hereto. The failure of the
either party to insist on strict compliance with this Agreement, or
to exercise any right or remedy under this Agreement, shall not
constitute a waiver of any rights provided under this Agreement,
nor estop the parties from thereafter demanding full and complete
compliance nor prevent the parties from exercising such a right or
remedy in the future.

Section 10.7 Annexes and Exhibits; Entire Agreement. All
annexes and exhibits to this Agreement are incorporated herein by
reference and shall constitute part of this Agreement. This
Agreement, the Warrant, the Registration Rights Agreement and the
Escrow Agreement set forth the entire agreement and understanding
of the parties relating to the subject matter hereof and thereof
and supersede all prior and contemporaneous agreements,
negotiations and understandings between the parties, both oral and
written, relating to the subject matter hereof.

Section 10.8 Termination; Survival. This Agreement shall
terminate on the earlier of (i) twenty four (24) months after the
commencement of the Commitment Period (ii) such date that the
Investor terminates this Agreement pursuant to Section 2.4 hereof
and (iii) the date on which the Company has made Puts with an
aggregate Investment Amount equal to the Maximum Commitment Amount;
provided, however, that the provisions of Articles VI, VIII, IX and
X, and of Section 2.1(b) and Section 7.3, shall survive the
termination of this Agreement.

Section 10.9 Severability. In the event that any provision
of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision;
provided that such severability shall be ineffective if it
materially changes the economic benefit of this Agreement to any
party.

Section 10.10 Title and Subtitles. The titles and subtitles
used in this Agreement are used for the convenience of reference
and are not to be considered in construing or interpreting this
Agreement.

Section 10.11 Counterparts. This Agreement may be executed in
multiple counterparts, each of which may be executed by less than
all of the parties and shall be deemed to be an original instrument
which shall be enforceable against the parties actually executing
such counterparts and all of which together shall constitute one
and the same instrument.

xxxiii
<PAGE>

Section 10.12 Choice of Law. This Agreement shall be
construed under the laws of the State of New York.

xxxiv

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this
Private Equity Line Agreement to be executed by the undersigned,
thereunto duly authorized, as of the date first set forth above.

KINGSBRIDGE CAPITAL LIMITED

By: /s/ Valentine O'Donoghue
------------------------
Valentine O'Donoghue
Director

CYTOGEN CORPORATION

By: /s/ H. Joseph Reiser
-------------------------
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

<PAGE>

ANNEX A
MAXIMUM PUT AMOUNT

The Maximum Put Amount with respect to a Put shall be
determined based upon the Average Daily Trading Volume of shares of
Common Stock with respect to the relevant Put Date and the Market
Price as of such Put Date of shares of Common Stock on such Put
Date as follows:

Average Daily Trading Volume

Market Price ($ 125,001-
per share) 50,000-75,000 75,001-125,000 200,000 200,001-Above
- ----------------------------------------------------------------------------
0.75-1.00 $150,000 $250,000 $325,000 $400,000
- ----------------------------------------------------------------------------
1.01-1.50 $225,000 $350,000 $375,000 $500,000
- ----------------------------------------------------------------------------
1.51-1.75 $300,000 $400,000 $450,000 $550,000
- ----------------------------------------------------------------------------
1.76-2.00 $400,000 $450,000 $500,000 $600,000
- ----------------------------------------------------------------------------
2.01-2.50 $500,000 $550,000 $600,000 $750,000
- ----------------------------------------------------------------------------
2.51-3.00 $550,000 $600,000 $700,000 $800,000
- ----------------------------------------------------------------------------
3.01-3.50 $550,000 $650,000 $700,000 $850,000
- ----------------------------------------------------------------------------
3.51-Above $600,000 $750,000 $850,000 $1,000,000
- ----------------------------------------------------------------------------

<PAGE>

EXHIBIT A

FORM OF ESCROW AGREEMENT

ESCROW AGREEMENT

ESCROW AGREEMENT, dated as of October 23, 1998 among CYTOGEN
CORPORATION a Delaware corporation, as escrow agent (the "Escrow Agent"),
CYTOGEN CORPORATION a Delaware corporation (the "Company"), and KINGSBRIDGE
CAPITAL LIMITED, a British Virgin Islands entity ("Investor"). Any capitalized
terms not defined herein shall have the meanings ascribed to them in the Private
Equity Line Agreement by and between the Company and the Investor, dated as of
October 23, 1998 (the "Equity Line Agreement").

WHEREAS, Investor and the Company have entered into the Equity Line
Agreement whereby Investor agreed to purchase capital stock of the Company upon
certain Puts made by the Company, subject to the terms and conditions of the
Equity Line Agreement;

WHEREAS, pursuant to Section 7.2(o) of the Equity Line Agreement,
Investor and the Company agreed to enter into this Agreement with Escrow Agent
in order for Escrow Agent to hold the Investment Amount with respect to a Put
(as delivered to Escrow Agent by Investor) and the certificates representing
the Put Shares with respect to such Put (as delivered to Escrow Agentby the
Company) for release to the Company and Investor, respectively, in
accordance with this Agreement; and

NOW, THEREFORE, Investor, the Company and the Escrow Agent hereby
agree as follows:

a. Appointment of the Escrow Agent; Deposit of Escrow Amount and
Share Certificate. The Company and Investor hereby constitute and appoint the
Escrow Agent as, and the Escrow Agent hereby agrees to assume and perform the
duties of, the escrow agent under and pursuant to this Agreement. The Escrow
Agent acknowledges that it will, with respect to any Put made by the Company
in accordance with the Equity Line Agreement, (i) receive from the Investor
the Investment Amount with respect to such Put (the "Escrow Fund") as provided
in Article II of the Equity Line Agreement and (ii) receive from the Company
certificate(s) representing all the Put Shares corresponding to such
Investment Amount and Put (collectively, the "Share Certificate"), as provided
in Article II of the Equity Line Agreement.

b. Escrow Fund; Share Certificate. The Escrow Fund shall be held
by the Escrow Agent in a separate account maintained for the purpose of
effecting the Closings, on the terms and subject to the conditions of this
Agreement. The Escrow Agent shall hold in escrow the Share Certificate
separately from the Escrow Fund and agrees that the Share Certificate shall
be held on the terms and subject to the conditions set forth herein. The Share
Certificate and the Escrow Fund shall not be subject to lien or attachment by

<PAGE>

any creditor of any party hereto and shall be used solely for the purpose set
forth in this Agreement. The Share Certificate and the Escrow Fund shall not
be available to, and shall not be used by, the Escrow Agent to set off any
obligations of either Investor or the Company owing to the Escrow Agent in
any capacity.

(c) Deliveries to Effect Closing. Upon the receipt by the Escrow
Agent of a certificate in substantially the form of Annex I attached hereto
("Mutual Closing Certificate"), jointly executed by the Company and Investor,
Investor and the Company irrevocably instruct the Escrow Agent (i) to release
the Share Certificate to Investor, and simultaneously (ii) to pay over to
Investor's counsel, in immediately available funds to a bank account of the
Investor's counsel's designation, the portion of the Escrow Fund representing
any reduction in the Investment Amount due to fees, expenses and
disbursements owing to the Investor's counsel as provided for in Section 2.3 of
the Equity Line Agreement and (iii) to pay over to the Company the
remaining portion of the Escrow Fund, in immediately available funds to a
bank account of the Company's designation.

(d) Release of Escrow Fund and Share Certificate upon Failure to
Close. If, upon the expiration of two (2) Trading Days after any Closing Date,
the Escrow Agent has not received a Mutual Closing Certificate with respect
to such Closing Date, the Investor and the Company irrevocably instruct the
Escrow Agent to release the Share Certificate to the Company and to pay
over to Investor all amounts of the Escrow Fund, in immediately available
funds, to a bank account of Investor's designation.

(e) Duties and Obligations of the Escrow Agent. The duties and
obligations of the Escrow Agent are purely ministerial and shall be limited to
and determined solely by the provisions of this Agreement. The Escrow Agent
is not charged with knowledge of or any duties or responsibilities in
respect of any other agreement or document. In furtherance and not in
limitation of the foregoing:

(i) the Escrow Agent shall not be liable for any loss of
interest sustained as a result of investments made hereunder in accordance
with the terms hereof, including any liquidation of any investment of the
Escrow Fund prior to its maturity effected in order to make a payment
required by the terms of this Agreement;

(ii) the Escrow Agent shall be fully protected in relying
in good faith upon any written certification, notice, direction, request,
waiver, consent, receipt or other document that the Escrow Agent
reasonably believes to be genuine and duly authorized, executed and
delivered;

(iii) the Escrow Agent shall not be liable for any error of
judgment, or for any act done or omitted by it, or for any mistake in
fact or law, or for anything that it may do or refrain from doing in
connection herewith; provided, however, that notwithstanding any other
provision in this Agreement, the Escrow Agent shall be liable for its
willful misconduct or gross negligence or breach of this Agreement;

(iv) the Escrow Agent may seek the advice of legal counsel
selected with reasonable care in the event of any dispute or question as

<PAGE>

to the construction of any of the provisions of this Agreement or its
duties hereunder, and it shall incur no liability and shall be fully
protected in respect of any action taken, omitted or suffered by it in
good faith in accordance with the opinion of such counsel;

(v) in the event that the Escrow Agent shall in any
instance, after seeking the advice of legal counsel pursuant to the
immediately preceding clause, in good faith be uncertain as to its
duties or rights hereunder, it shall be entitled to refrain from taking
any action in that instance and its sole obligation, in addition to
those of its duties hereunder as to which there is no such uncertainty,
shall be to keep safely all property held in the Escrow Fund until it
shall be directed otherwise in writing by each of the parties hereto
or by a final, nonappealable order of a court of competent jurisdiction;
provided, however, in the event that the Escrow Agent has not received
such written direction or court order within one hundred eighty (180)
calendar days after requesting the same, it shall have the right to
interplead Investor and the Company in any court of competent jurisdiction
and request that such court determine its rights and duties hereunder; and

(vi) the Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either
directly or by or through agents or attorneys selected with reasonable care,
nothing in this Agreement shall be deemed to impose upon the Escrow Agent any
duty to qualify to do business or to act as fiduciary or otherwise in any
jurisdiction other than the State of New York and the Escrow Agent shall not be
responsible for and shall not be under a duty to examine into or pass upon
the validity, binding effect, execution or sufficiency of this Agreement or
of any agreement amendatory or supplemental hereto.

(f) Cooperation. Investor and the Company shall provide to the
Escrow Agent all instruments and documents within their respective powers to
provide that are necessary for the Escrow Agent to perform its duties and
responsibilities hereunder.

(g) Expenses; Indemnity. The Company hereby agrees to pay or
reimburse the Escrow Agent upon request for all expenses, disbursement and
advances, including reasonable attorney's fees, incurred or made by it in
connection with the preparation, execution, performance, delivery,
modification and termination of this Agreement; provided that Investor shall
bear all expenses of the investment and reinvestment of the Escrow Fund. The
Company hereby agrees to indemnify the Escrow Agent for, and to hold it
harmless against, any loss, liability or expense arising out of or in
connection with this Agreement and carrying out its duties hereunder,
including the costs and expenses of defending itself against any claim of
liability, except in those cases where the Escrow Agent has been guilty of
gross negligence, willful misconduct or in breach of this Agreement.
Anything in this Agreement to the contrary notwithstanding, in no event
shall the Escrow Agent be liable for special, indirect or consequential loss
or damage of any kind whatsoever (including but not limited to lost profits),
even if the Escrow Agent has been advised of the likelihood of such loss or
damage and regardless of the form of action. The provisions of this Section
shall survive any termination of this Agreement, whether by disbursement of
the collateral held, resignation of the Escrow Agent, or otherwise.

v
<PAGE>

(h) Resignation and Removal of the Escrow Agent.

(a) The Escrow Agent may resign as such thirty (30) calendar days
following the giving of prior written notice thereof to the Company and
Investor. In addition, the Escrow Agent may be removed and replaced on a
date designated in a written instrument signed by the Company and Investor
and delivered to the Escrow Agent. Notwithstanding the foregoing, no
such resignation r removal shall be effective until a successor escrow agent
has acknowledged its appointment as such as provided in paragraph (c) below.
In either event, upon the effective date of such resignation or removal,
the Escrow Agent shall deliver the property comprising the Escrow Fund and
the Stock Certificate to such successor escrow agent, together with such
records maintained by the Escrow Agent in connection with its duties
hereunder and other information with respect to the Escrow Fund
as such successor may reasonably request.

(b) If a successor escrow agent shall not have acknowledged its
appointment as such as provided in paragraph (c) below, in the case of a
resignation, prior to the expiration of thirty (30) calendar days following
the date of a notice of resignation or, in the case of a removal, on the date
designated for the Escrow Agent's removal, as the case may be, because the
Company and Investor are unable to agree on a successor escrow agent, or for
any other reason, the Escrow Agent may select a successor escrow agent and
any such resulting appointment shall be binding upon all of the parties to
this Agreement, provided that any such successor selected by the Escrow
Agent shall be a depository institution or trust company that is designated
in writing by the Investor and is incorporated under the laws of the United
States of America, any State thereof or the District of Columbia and has
total assets in excess of U.S. $500 million.

(c) Upon written acknowledgment by a successor escrow agent
appointed in accordance with the foregoing provisions of this Section of its
agreement to serve as escrow agent hereunder and the receipt of the property
then comprising the Escrow Fund and the Stock Certificate, the Escrow Agent
shall be fully released and relieved of all duties, responsibilities and
obligations under this Agreement, subject to the proviso contained in clause
(iii) of Section 5, and such successor escrow agent shall for all purposes
hereof be the Escrow Agent.

(i) Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given if
delivered personally or by facsimile transmission (with confirmation
generated by the sending machine) or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:

If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200
Facsimile: (609) 951-9298

vi
<PAGE>

with a copy to:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

if to the Investor:

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

Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Keith M. Andruschak, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375

and if to the Escrow Agent:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, be deemed given upon receipt, and (iii)
if delivered by mail in the manner described above to the address as provided
in this Section, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this
Section). Any party from time to time may change its address, facsimile

vii
<PAGE>

number or other information for the purpose of notices to that party by giving
notice specifying such change to the other parties hereto.

(j) Amendments, etc.. This Agreement may be amended or modified,
and any of the terms hereof may be waived, only by a written instrument duly
executed by or on behalf of Investor and the Company and, with respect to any
amendment that would adversely affect the Escrow Agent, the Escrow Agent.
No waiver by any party of any term or condition contained of this Agreement,
in any one or more instances, shall be deemed to be or construed as a waiver
of the same or any other term or condition of this Agreement on any future
occasion.

(k) Governing Law. This Agreement shall be construed under the
laws of the State of New York.

(l) Business Day. For all purposes of this Agreement, the term
"business day" shall mean a day other than Saturday, Sunday or any day on
which banks located in the State of New York are authorized or obligated to
close.

(m) Entire Agreement. It is understood and agreed that this
Escrow Agreement supersedes all understandings and agreements heretofore had
between the parties hereto with respect to the subject matter hereof, and
contains the sole and entire agreement between the parties with
respect to the subject matter hereof.

(n) Assignment. Neither this Agreement nor any right, interest
or obligation hereunder may be assigned by any party without the prior written
consent of the other parties and any attempt to do so will be void, except
that Investor may assign all of its rights, interests and obligations
hereunder at any time, in whole or in part, to any other person or entity
(including any affiliate of the Investor) upon the prior written consent of the
Company, which consent shall not to be unreasonably withheld. Investor and
the Company shall provide to the Escrow Agent written notice of such an
assignment by Investor.

(o) Miscellaneous. This Agreement is binding upon and will inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof. This Escrow Agreement may be signed by facsimile copy (followed by
originals) and, in addition, may be executed in several counterparts, each
of which shall be deemed an original but all of which shall constitute one
instrument.

viii
<PAGE>

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

KINGSBRIDGE CAPITAL LIMITED:

By: /s/ Valentine O'Donoghue
--------------------------
Valentine O'Donoghue
Director

CYTOGEN CORPORATION

By: /s/ H. Joseph Reiser
_____________________________
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

CYTOGEN CORPORATION, as Escrow Agent

By: /s/ Donald F. Crane
-----------------------------------
Name: Donald F. Crane, Jr.
Title: Vice President General Counsel and
Corporate Secretary

1
<PAGE>

ANNEX I

MUTUAL CLOSING CERTIFICATE

CYTOGEN CORPORATION

as Escrow Agent

The undersigned, KINGSBRIDGE CAPITAL LIMITED, a British Virgin
Islands entity ("Investor"), and CYTOGEN CORPORATION, a Delaware corporation
("the Company"), pursuant to Section 3 of the Escrow Agreement dated as of
October 23, 1998 among Investor, the Company and you (terms defined in said
Escrow Agreement have the same meanings when used herein), hereby instruct
you:

(i) to deliver to Investor the Share Certificate,

(ii) to pay to May Davis Group the amount of $_________, by wire transfer
of immediately available funds to an account at Chase Manhattan Bank, New
York, New York, (Account # 140082322865; ABA # 021 000 021),

[(iii) to pay to Investor's counsel from the Escrow Fund, the amount
of $_________, by wire transfer of immediately available funds to
Investor's counsel's account at __________________, _________, _________
(Account No.:_________).]

(iii) to pay to the Company from the Escrow Fund, all amounts remaining,
by wire transfer of immediately available funds to the Company's account
at __________________, _________, _________ (Account No.:_________),

KINGSBRIDGE CAPITAL LIMITED

By:________________________________
Name:
Title:

Dated:____________, ____

CYTOGEN CORPORATION

By:________________________________
Name:
Title:

Dated:____________, ____

<PAGE>

EXHIBIT B

FORM OF REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of October
23, 1998 is made and entered into by and between CYTOGEN CORPORATION, a Delaware
corporation (the "Company"), and KINGSBRIDGE CAPITAL LIMITED (the "Investor").

WHEREAS, the Company and the Investor have entered into that certain
Private Equity Line Agreement, dated as of the date hereof (the "Equity Line
Agreement"), pursuant to which the Company will issue, from time to time, to
the Investor up to $12,000,000 worth of shares of Common Stock, par value $.01
per share, of the Company (the "Common Stock");

WHEREAS, pursuant to the terms of, and in partial consideration for, the
Investor entering into the Investment Agreement, the Company has issued to
the Investor a warrant dated as of the date hereof, exercisable from time to
time within three (3) years following the six-month anniversary
of the date of issuance (the "Warrant") for the purchase of an aggregate
of up to 200,000 shares of Common Stock at a price specified in such Warrant;

WHEREAS, pursuant to the terms of, and in partial consideration for,
the Investor's agreement to enter into the Investment Agreement, the Company
has agreed to provide the Investor with certain registration rights with
respect to the Registrable Securities;

NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein, in the Warrant, and in
the Investment Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, intending to be
legally bound hereby, the parties hereto agree as follows (capitalized
terms used herein and not defined herein shall have the respective meanings
ascribed to them in the Investment Agreement):

ARTICLE XI
REGISTRATION RIGHTS

Section 11.1. REGISTRATION STATEMENTS.

(a) Filing of Registration Statement. Subject to the terms and
conditions of this Agreement, the Company shall file with the SEC within
forty-five (45) days following the Subscription Date a registration statement
on Form S-3 under the Securities Act or such other form as the SEC deems

<PAGE>

appropriate (the "Registration Statement") for the registration of the resale
by the Investor of the Registrable Securities.

(b) Effectiveness of the Registration Statement. The Company shall
use its best efforts to have the Registration Statement declared effective by
the SEC by no later than ninety (90) days after Subscription Date and to
ensure that the Registration Statement remains in effect throughout the term
of this Agreement as set forth in Section 4.2, subject to the terms and
conditions of this Agreement.

(c) Failure to Obtain Effectiveness of Registration Statement. In
the event the Company fails for any reason to obtain the effectiveness of a
Registration Statement within the time period set forth in Section 1.1(b),
the Company shall pay to the Investor, within three (3) Trading Days of the
date by which such Registration Statement was required to have been declared
effective, $15,000 in immediately available funds into an account designated
by the Investor; provided, however, that such amount shall not be payable
with respect to the postponement of the effectiveness of a Registration
Statement (or use of the underlying prospectus) pursuant to Section 1.1(e).
Such payment shall be made by wire transfer of immediately available funds to
an account designated by the Investor.

(d) Failure to Maintain Effectiveness of Registration Statement.
In the event the Company fails to maintain the effectiveness of a Registration
Statement (or the underlying prospectus) throughout the period set forth in
Section 4.2, other than temporary suspensions as set forth in Section 1.1(e),
and the Investor holds any Registrable Securities at any time during the
period of such ineffectiveness (an "Ineffective Period"), the Company shall
pay to the Investor in immediately available funds into an account designated
by the Investor an amount equal to one percent (1%) of the aggregate Purchase
Price of all of the Registrable Securities then held by the Investor for
the each of the seven-calendar-day periods (or portion thereof) of an
Ineffective Period. Such amounts shall not be payable with respect to
suspensions of the effectiveness of a Registration Statement (or use of the
underlying prospectus), in accordance with Section 1.1(e). Such payments
shall be made on the first Trading Day after the earliest to occur of (i) the
expiration of the Commitment Period, (ii) the expiration of an Ineffective
Period, (iii) the expiration of the first twenty-eight calendar days of an
Ineffective Period and (iv) the expiration of each additional twenty-eight
calendar-day period during an Ineffective Period.

(e) Deferral or Suspension During a Blackout Period. Sections 1.1
(c) and (d) notwithstanding, if the Company shall furnish to the Investor
notice signed by the President and Chief Executive Officer of the Company
stating that the Board of Directors of the Company has, by duly authorized
resolution, determined in good faith that it would be seriously detrimental
to the Company and its shareholders for the Registration Statement to be filed
(or remain in effect) and it is therefore essential to defer the filing of
such Registration Statement (or temporarily suspend the effectiveness of
such Registration Statement or use of the related prospectus) (a "Blackout
Notice"), the Company shall have the right (i) immediately to defer such filing
for a period of not more than thirty (30) days beyond the date by which such
Registration Statement was otherwise required hereunder to be filed or (ii)
suspend such effectiveness for a period of not more than thirty (30) (any
such deferral or suspension period of up to thirty days, a "Blackout Period").
The Investor acknowledges that it would be seriously detrimental to the Company

<PAGE>

and its shareholders for such Registration Statement to be filed (or remain in
effect) during a Blackout Period and therefore essential to defer such filing
(or suspend such effectiveness) during such Blackout Period and agrees
to cease any disposition of the Registrable Securities during such Blackout
Period. The Company may not utilize any of its rights under this Section
1.1(e) to defer the filing of a Registration Statement (or suspend its
effectiveness) more than twice in any twelve (12) month period.
Following such deferral or suspension, the Investor shall be entitled to
such additional number of shares of Common Stock as set forth in Section 2.6
of the Investment Agreement.

(f) Liquidated Damages. The Company and the Investor hereto
acknowledge and agree that the sums payable under subsections 1(c) or 1(d)
above shall constitute liquidated damages and not penalties. The parties
further acknowledge that (i) the amount of loss or damages likely to be
incurred is incapable or is difficult to precisely estimate, (ii) the amounts
specified in such subsections bear a reasonable proportion and are not
plainly or grossly disproportionate to the probable loss likely to be
incurred in connection with any failure by the Company to obtain or maintain
the effectiveness of a Registration Statement, (iii) one of the reasons for
the Company and the Investor reaching an agreement as to such amounts was
the uncertainty and cost of litigation regarding the question of actual
damages, and (iv) the Company and the Investor are sophisticated
business parties and have been represented by sophisticated and able legal
and financial counsel and negotiated this Agreement at arm's length.

ARTICLE XII
REGISTRATION PROCEDURES

Section 12.1 FILINGS; INFORMATION. The Company will effect the registration
and sale of such Registrable Securities in accordance with the intended
methods of disposition thereof. Without limiting the foregoing, the Company
in each such case will do the following as expeditiously as possible, but in
no event later than the deadline, if any, prescribed therefor in this Agreement:

(a) The Company shall (i) prepare and file with the SEC a
Registration Statement on Form S-3 (if use of such form is then available to
the Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company then qualifies, that counsel
for the Company shall deem appropriate and which form shall be available for
the sale of the Registrable Securities to be registered thereunder in accordance
with the provisions of this Agreement and in accordance with the intended
method of distribution of such Registrable Securities); (ii) use reasonable
best efforts to cause such filed Registration Statement to become and remain
effective (pursuant to Rule 415 under the Securities Act or otherwise); (iii)
prepare and file with the SEC such amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as
may be necessary to keep such Registration Statement effective for the time
period prescribed by Section 1.1(b); and (iv) comply with the provisions of
the Securities Act with respect to the disposition of all securities covered
by such Registration Statement during such period in accordance with the
intended methods of disposition by the Investor set forth in such
Registration Statement.

<PAGE>
(b) The Company shall file all necessary amendments to the
Registration Statement in order to effectuate the purpose of this Agreement,
the Investment Agreement, and the Warrant.

(c) If so requested by the managing underwriters, if any, or the
holders of a majority in aggregate principal amount of the Registrable
Securities being sold in connection with the filing of a Registration
Statement under the Securities Act for the offering on a continuous or
delayed basis in the future of all of the Registrable Securities (a "Shelf
Registration"), the Company shall (i) promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, and such holders agree should be included therein,
and (ii) make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment; provided, however, that
the Company shall not be required to take any action pursuant to this Section
2.1(c)(ii) that would, in the opinion of counsel for the Company, violate
applicable law.

(d) In connection with the filing of a Shelf Registration, the
Company shall enter into such agreements and take all such other reasonable
actions in connection therewith (including those reasonably requested by the
managing underwriters, if any, or the holders of a majority in aggregate
principal amount of the Registrable Securities being sold) in order to
expedite or facilitate the disposition of such Registrable Securities, and in
such connection, whether or not an underwriting agreement is entered into
and whether or not the registration is an underwritten registration, the
Company shall (i) make such representations and warranties to the holders of
such Registrable Securities and the underwriters, if any, with respect to the
business of the Company (including with respect to businesses or assets
acquired or to be acquired by the Company), and the Registration Statement,
prospectus and documents, if any, incorporated or deemed to be incorporated
by reference therein, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in underwritten offerings, and
confirm such representations and warranties if and when requested; (ii) if
an underwriting agreement is entered into, it shall contain indemnification
provision and procedures no less favorable to the selling holders of such
Registrable Securities and the underwriters, if any, than those set forth
herein (or such other provisions and procedures acceptable to the holders of
a majority in aggregate principal amount of Registrable Securities covered
by such Registration Statement and the managing underwriters, if any); and
(iii) deliver such documents and certificates as may be reasonably requested
by the holders of a majority in aggregate principal amount of the Registrable
Securities being sold, their counsel and the managing underwriters, if any,
to evidence the continued validity of their representations and warranties made
pursuant to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company.

(e) Five (5) Trading Days prior to filing the Registration Statement
or prospectus, or any amendment or supplement thereto (excluding amendments
deemed to result from the filing of documents incorporated by reference
therein), the Company shall deliver to the Investor and one firm of counsel
representing the Investor, in accordance with the notice provisions of
Section 4.8, copies of the Registration Statement as proposed to be filed,
together with exhibits thereto, which documents will be subject to review by
the Investor and such counsel, and thereafter deliver to the Investor and
such counsel, in accordance with the notice provisions of Section 4.8, such

<PAGE>

number of copies of the Registration Statement, each amendment and supplement
thereto (in each case including all exhibits thereto), the prospectus included
in the Registration Statement (including each preliminary prospectus) and such
other documents or information as the Investor or counsel may reasonably
request in order to facilitate the disposition of the Registrable Securities.

(f) The Company shall deliver, in accordance with the notice
provisions of Section 4.8, to each seller of Registrable Securities covered by
the Registration Statement such number of conformed copies of the Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in the Registration Statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
seller's Registrable Securities, and such other documents, as such seller
may reasonably request to facilitate the disposition of its Registrable
Securities.

(g) After the filing of the Registration Statement, the Company shall
promptly notify the Investor of any stop order issued or threatened by the SEC
in connection therewith and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.

(h) The Company shall use its reasonable best efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as the Investor may
reasonably (in light of its intended plan of distribution) request, and (ii)
cause the Registrable Securities to be registered with or approved by such
other governmental agencies or authorities in the United States as may be
necessary by virtue of the business and operations of the Company and do any
and all other acts and things that may be reasonably necessary or advisable
to enable the Investor to consummate the disposition of the Registrable
Securities; provided, however, that the Company will not be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph (h), subject
itself to taxation in any such jurisdiction, or consent or subject itself to
general service of process in any such jurisdiction.

(i) The Company shall immediately notify the Investor upon the
occurrence of any of the following events in respect of the Registration
Statement or related prospectus in respect of an offering of Registrable
Securities: (i) receipt of any request by the SEC or any other federal
or state governmental authority for additional information, amendments or
supplements to the Registration Statement or related prospectus; (ii) the
issuance by the SEC or any other federal or state governmental authority of
any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii) receipt
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; (iv) the happening of any event that makes any statement
made in the Registration Statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case
of the Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated

<PAGE>

therein or necessary to make the statements therein not misleading, and that in
the case of the related prospectus, it will not contain any untrue statement
of a material fact or omit to state any 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; and (v) the
Company's reasonable determination that a post-effective amendment to the
Registration Statement would be appropriate, and the Company will promptly
make available to the Investor any such supplement or amendment to the related
prospectus.

(j) The Company shall enter into customary agreements and take such
other actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities (whereupon the Investor may, at its
option, require that any or all of the representations, warranties and covenants
of the Company also be made to and for the benefit of the Investor).

(k) The Company shall make available to the Investor (and will
deliver to Investor's counsel), subject to restrictions imposed by the United
States federal government or any agency or instrumentality thereof, copies of
all correspondence between the SEC and the Company, its counsel or its
auditors concerning the Registration Statement and will also make available for
inspection by the Investor and any attorney, accountant or other professional
retained by the Investor (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers and employees to supply all information reasonably requested by any
Inspectors in connection with the Registration Statement. Records that the
Company determines, in good faith, to be confidential and that it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the Registration Statement or (ii) the disclosure
or release of such Records is requested or required pursuant to oral questions,
interrogatories, requests for information or documents or a subpoena or
other order from a court of competent jurisdiction or other process; provided,
however, that prior to any disclosure or release pursuant to clause (ii), the
Inspectors shall provide the Company with prompt notice of any such request
or requirement so that the Company may seek an appropriate protective order
or waive such Inspectors' obligation not to disclose such Records; and,
provided, further, that if failing the entry of a protective order or the
waiver by the Company permitting the disclosure or release of such Records,
the Inspectors, upon advice of counsel, are compelled to disclose such Records,
the Inspectors may disclose that portion of the Records that counsel has advised
the Inspectors that the Inspectors are compelled to disclose. The Investor
agrees that information obtained by it solely as a result of such inspections
(not including any information obtained from a third party who, insofar as is
known to the Investor after reasonable inquiry, is not prohibited from
providing such information by a contractual, legal or fiduciary obligation
to the Company) shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Company or
its affiliates unless and until such information is made generally available
to the public. The Investor further agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of the Records deemed confidential.

(l) To the extent required by law or reasonably necessary to effect
a sale of Registrable Securities in accordance with prevailing business
practices at the time of any sale of Registrable Securities pursuant to a
Registration Statement, the Company shall deliver to the Investor a signed

<PAGE>

counterpart, addressed to the Investor, of (1) an opinion or opinions of
counsel to the Company, and (2) a comfort letter or comfort letters from the
Company's independent publicaccountants, each in customary form and covering
such matters of the type customarily covered by opinions or comfort letters,
as the case may be, as the Investor therefor reasonably requests.

(m) The Company shall otherwise comply with all applicable rules
and regulations of the SEC, including, without limitation, compliance with
applicable reporting requirements under the Exchange Act.

(n) The Company shall appoint a transfer agent and registrar for
all of the Registrable Securities covered by such Registration Statement not
later than the effective date of such Registration Statement.

(o) The Company may require the Investor to promptly furnish in
writing to the Company such information as may be legally required in
connection with such registration including, without limitation, all such
information as may be requested by the SEC or the National Association of
Securities Dealers. The Investor agrees to provide such information requested
in connection with such registration within ten (10) business days after
receiving such written request and the Company shall not be responsible for
any delays in obtaining or maintaining the effectiveness of the Registration
Statement caused by the Investor's failure to timely provide such information.

Section 12.2 REGISTRATION EXPENSES. In connection with each Registration
Statement, the Company shall pay all registration expenses incurred in
connection with the registration thereunder (the "Registration Expenses"),
including, without limitation: (i) all registration, filing, securities
exchange listing and fees required by the National Association of Securities
Dealers, (ii) all registration, filing, qualification and other fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications
of the Registrable Securities), (iii) all word processing, duplicating,
printing, messenger and delivery expenses, (iv) the Company's internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), (v) the fees and expenses
incurred by the Company in connection with the listing of the Registrable
Securities, (vi) reasonable fees and disbursements of counsel for the Company
and customary fees and expenses for independent certified public accountants
retained by the Company (including the expenses of any special audits or
comfort letters or costs associated with the delivery by independent certified
public accountants of such special audit(s) or comfort letter(s) requested
pursuant to Section 2.1(l) hereof), (vii) the fees and expenses of any special
experts retained by the Company in connection with such registration, (viii)
all reasonable fees and expenses of one firm of counsel for the Investor
retained as the Investor's counsel with respect to such Registration
Statement up to an amount of $5,000, unless a greater amount is required due
the nature of the review performed by Investor's counsel (an estimate of such
greater fees and expenses of such firm of counsel to be provided to the Company
prior to the undertaking of such counsel's review), (ix) premiums and other
costs of policies of insurance against liabilities arising out of any public
offering of the Registrable Securities being registered, and (x) any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting fees, discounts, transfer taxes or
commissions, if any, attributable to the sale of Registrable Securities,

<PAGE>

which shall be payable by each holder of Registrable Securities pro rata on
the basis of the number of Registrable Securities of each such holder that
are included in a registration under this Agreement.

ARTICLE XIII
INDEMNIFICATION AND CONTRIBUTION

Section 13.1 INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless the Investor, its partners, Affiliates, officers, directors,
employees and duly authorized agents, and each Person or entity, if any, who
controls the Investor within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, together with the partners, Affiliates,
officers, directors, employees and duly authorized agents of such controlling
Person or entity (collectively, the "Controlling Persons"), from and against
any loss, claim, damage, liability, costs and expenses (including, without
limitation, reasonable attorneys' fees and disbursements and costs and expenses
of investigating and defending any such claim) (collectively, "Damages"), joint
or several, and any action or proceeding in respect thereof to which the
Investor, its partners, affiliates, officers, directors, employees and duly
authorized agents, and any Controlling Person, may become subject under the
Securities Act or otherwise, as incurred, insofar as such Damages (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, or in any preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement relating to the Registrable
Securities or arises out of, or are based upon, any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse
the Investor, its partners, affiliates, officers, directors, employees
and duly authorized agents, and each such Controlling Person, for any legal
and other expenses reasonably incurred by the Investor, its partners,
affiliates, officers, directors, employees and duly authorized agents, or
any such Controlling Person, as incurred, in investigating or defending or
preparing to defend against any such Damages or actions or proceedings;
provided, however, that the Company shall not be liable to the extent that
any such Damages arise out of the Investor's failure to send or give a copy
of the final prospectus or supplement to the persons asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to
such person if such statement or omission was corrected in such final
prospectus or supplement; provided, further, that the Company shall not be
liable to the extent that any such Damages arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, or any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and
in conformity with written information furnished to the Company by the
Investor or any other person who participates as an underwriter in the
offering or sale of such securities, in either case, specifically stating that
it is for use in the preparation thereof.

Section 13.2 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly after receipt
by any person or entity in respect of which indemnity may be sought pursuant to
Section 3.1 (an "Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified Party shall, if a claim in respect thereof is to
be made against the person or entity against whom such indemnity may be sought
(the "Indemnifying Party"), notify the Indemnifying Party in writing of the

<PAGE>

claim or the commencement of such action. In the event an Indemnified Party
shall fail to give such notice as provided in this Section 3.2 and the
Indemnifying Party to whom notice was not given was unaware of the proceeding
to which such notice would have related and was materially prejudiced by the
failure to give such notice, the indemnification provided for in Section 3.1
shall be reduced to the extent of any actual prejudice resulting from such
failure to so notify the Indemnifying Party; provided, however, that the failure
to notify the Indemnifying Party shall not relieve the Indemnifying Party
from any liability that it may have to an Indemnified Party otherwise
than under Section 3.1. If any such claim or action shall be brought against
an Indemnified Party, and it shall notify the Indemnifying Party thereof, the
Indemnifying Party shall be entitled to participate therein, and, to the
extent that it wishes, jointly with any other similarly notified Indemnifying
Party, to assume the defense thereof with counsel reasonably satisfactory to
the Indemnified Party. After notice from the Indemnifying Party to the
Indemnified Party of its election to assume the defense of such claim or
action, the Indemnifying Party shall not be liable to the Indemnified Party
for any legal or other expenses subsequently incurred by the Indemnified Party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Indemnified Party shall have the
right to employ separate counsel to represent the Indemnified Party and its
Controlling Persons who may be subject to liability arising out of any
claim in respect of which indemnity may be sought by the Indemnified Party
against the Indemnifying Party, but the fees and expenses of such counsel shall
be for the account of such Indemnified Party, unless (i) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) in the reasonable judgment of the Company and such
Indemnified Party, representation of both parties by the same counsel would
be inappropriate due to actual or potential conflicts of interest between them,
it being understood, however, that the Indemnifying Party shall not, in
connection with any one such claim or action or separate but substantially
similar or related claims or actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of
any claim or pending or threatened proceeding in respect of which the
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.

Section 13.3 OTHER INDEMNIFICATION. Indemnification similar to that specified
in the preceding paragraphs of this Article 3 (with appropriate modifications)
shall be given by the Company with respect to any required registration or other
qualification of securities under any federal or state law or regulation of
any governmental authority other than the Securities Act. The provisions of
this Article III shall be in addition to any other rights to indemnification,
contribution or other remedies which an Indemnified Party may have pursuant to
law, equity, contract or otherwise.

Section 13.4 CONTRIBUTION. If the indemnification and reimbursement
obligations provided for in any section of this Article III is unavailable or
insufficient to hold harmless the Indemnified Parties in respect of any

<PAGE>

Damages referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the
one hand and the Investor on the other, in such proportion as is appropriate to
reflect the relative fault of the Company and of the Investor in connection
with such statements or omissions, as well as other equitable considerations.
The relative fault of the Company on the one hand and of the Investor on the
other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
such party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

The Company and the Investor agree that it would not be just and equitable if
contribution pursuant to this Section 3.4 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Party as a result of the Damages referred
to in the immediately preceding paragraph shall be deemed to include, subject
to the limitations set forth above, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 3.4, the Investor shall in no event be required to contribute any amount
in excess of the amount by which the total price at which the Registrable
Securities of the Investor were sold to the public (less underwriting discounts
and commissions) exceeds the amount of any damages which the Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. 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.

ARTICLE XIV
MISCELLANEOUS

Section 14.1 NO OUTSTANDING REGISTRATION RIGHTS. The Company represents and
warrants to the Investor that, except as disclosed in the SEC Documents, there
is not in effect on the date hereof any agreement by the Company pursuant to
which any holders of securities of the Company have a right to cause the
Company to register or qualify such securities under the Securities Act or
any securities or blue sky laws of any jurisdiction.

Section 14.2 TERM. The registration rights provided to the holders of
Registrable Securities hereunder shall terminate at such time as all Registrable
Securities have been issued and have ceased to be Registrable Securities.
Notwithstanding the foregoing, paragraphs (c) and (d) of Section 1.1, Article
III, Section 4.8, and Section 4.9 shall survive the termination of this
Agreement.

Section 14.3 RULE 144. The Company will file in a timely manner, information,
documents and reports in compliance with the Securities Act and the Exchange
Act and will, at its expense,promptly take such further action as holders of
Registrable Securities may reasonably request to enable such holders of
Registrable Securities to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by

<PAGE>

(a) Rule 144 under the Securities Act ("Rule 144"), as such Rule may be amended
from time to time, or (b) any similar rule or regulation hereafter adopted by
the SEC. If at any time the Company is not required to file such reports, it
will, at its expense, forthwith upon the written request of any holder of
Registrable Securities , make available adequate current public information
with respect to the Company within the meaning of paragraph (c)(2) of Rule 144
or such other information as necessary to permit sales pursuant to Rule 144.
Upon the request of the Investor, the Company will deliver to the Investor a
written statement, signed by the Company's principal financial officer, as to
whether it has complied with such requirements.

Section 14.4 CERTIFICATE. The Company will, at its expense, forthwith upon
the request of any holder of Registrable Securities, deliver to such holder
a certificate, signed by the Company's principal financial officer, stating
(a) the Company's name, address and telephone number (including area code),
(b) the Company's Internal Revenue Service identification number, (c) the
Company's Commission file number, (d) the number of shares of each class of
Stock outstanding as shown by the most recent report or statement published
by the Company, and (e) whether the Company has filed the reports required to
be filed under the Exchange Act for a period of at least ninety (90) days prior
to the date of such certificate and in addition has filed the most recent
annual report required to be filed thereunder.

Section 14.5 AMENDMENT AND MODIFICATION. Any provision of this Agreement
may be waived, provided that such waiver is set forth in a writing executed by
both parties to this Agreement. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of the holders of a
majority of the then outstanding Registrable Securities. Notwithstanding the
foregoing, the waiver of any provision hereof with respect to a matter that
relates exclusively to the rights of holders of Registrable Securities whose
securities are being sold pursuant to a Registration Statement and does not
directly or indirectly affect the rights of other holders of Registrable
Securities may be given by holders of at least a majority of the Registrable
Securities being sold by such holders; provided that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence. No course of dealing
between or among any Person having any interest in this Agreement will be
deemed effective to modify, amend or discharge any part of this Agreement or
any rights or obligations of any person under or by reason of this Agreement.

Section 14.6 SUCCESSORS AND ASSIGNS; ENTIRE AGREEMENT. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The Investor may
assign its rights under this Agreement to any subsequent holder the Registrable
Securities, provided that the Company shall have the right to require any holder
of Registrable Securities to execute a counterpart of this Agreement as a
condition to such holder's claim to any rights hereunder. This Agreement,
together with the Investment Agreement and the Warrant(s) sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.

<PAGE>

Section 14.7 SEPARABILITY. In the event that any provision of this Agreement
or the application of any provision hereof is declared to be illegal, invalid
or otherwise unenforceable by a court of competent jurisdiction, the remainder
of this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.

Section 14.8 NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and shall be (i) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (ii) delivered by reputable air courier service with
charges prepaid, or (iii) transmitted by hand delivery, telegram or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile, with accurate confirmation generated by
the transmitting facsimile machine, at the address or number designated below
(if delivered on a business day during normal business hours where such notice
is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The
addresses for such communications shall be:

If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200
Facsimile: (609) 951-9298

with a copy to:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

<PAGE>

if to the Investor:

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

Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Keith M. Andruschak, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375

Either party hereto may from time to time change its address or facsimile
number for notices under this Section 4.8 by giving at least ten (10) days'
prior written notice of such changed address or facsimile number to the other
party hereto.

Section 14.9 GOVERNING LAW. This Agreement shall be construed under the
laws of the State of Delaware, without giving effect to provisions regarding
conflicts of law or choice of law.

Section 14.10 HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall
they affect their meaning, construction or effect.

Section 14.11 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original instrument and
all of which together shall constitute one and the same instrument.

Section 14.12 FURTHER ASSURANCES. Each party shall cooperate and take such
action as may be reasonably requested by another party in order to carry out
the provisions and purposes of this Agreement and the transactions contemplated
hereby.

Section 14.13 ABSENCE OF PRESUMPTION. This Agreement shall be construed
without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.

Section 14.14 REMEDIES. In the event of a breach or a threatened breach by
any party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach will be entitled to specific performance

<PAGE>

of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.

CYTOGEN CORPORATION

By:
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

KINGSBRIDGE CAPITAL LIMITED

By:
Valentine O'Donoghue
Director

<PAGE>

EXHIBIT C

FORM OF WARRANT

WARRANT

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE
BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED,
HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO,
SUCH REGISTRATION. THE HOLDER OF THIS CERTIFICATE IS THE
BENEFICIARY OF CERTAIN OBLIGATIONS OF THE COMPANY SET FORTH IN A
PRIVATE EQUITY LINE AGREEMENT, DATED AS OF OCTOBER 23, 1998,
BETWEEN CYTOGEN CORPORATION AND KINGSBRIDGE CAPITAL LIMITED. A
COPY OF THE PORTION OF THE AFORESAID AGREEMENT EVIDENCING SUCH
OBLIGATIONS MAY BE OBTAINED FROM CYTOGEN CORPORATION'S EXECUTIVE
OFFICES.

OCTOBER 23, 1998

Warrant to Purchase up to 200,000 Shares of Common Stock of
Cytogen Corporation.

Cytogen Corporation, a Delaware corporation (the "Company"),
hereby agrees that Kingsbridge Capital Limited (the "Investor") or
any other Warrant Holder is entitled, on the terms and conditions
set forth below, to purchase from the Company at any time during
the Exercise Period up to 200,000 fully paid and nonassessable
shares of Common Stock, par value $.01 per share, of the Company
(the "Common Stock"), as the same may be adjusted from time to time
pursuant to Section 6 hereof, at the Exercise Price (hereinafter
defined), as the same may be adjusted pursuant to Section 6 hereof.
The resale of the shares of Common Stock or other securities
issuable upon exercise or exchange of this Warrant is subject to
the provisions of the Registration Rights Agreement (as defined
below).

Section 1. Definitions.

"Agreement" shall mean the Private Equity Line Agreement,
dated the date hereof, between the Company and the Investor.

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<PAGE>

"Capital Shares" shall mean the Common Stock and any
shares of any other class of common stock whether now or hereafter
authorized, having the right to participate in the distribution of
earnings and assets of the Company.

"Date of Exercise" shall mean the date that the advance
copy of the Exercise Form is sent by facsimile to the Company,
provided that the original Warrant and Exercise Form are received
by the Company within reasonable time thereafter. If the Warrant
Holder has not sent advance notice by facsimile, the Date of
Exercise shall be the date the original Exercise Form is received
by the Company.

"Exercise Period" shall mean that period beginning on the
181st day after the Subscription Date and continuing until the
expiration of the three-year period thereafter; provided that such
period shall be extended one day for each day after such 181st day
after the Subscription Date, that a Registration Statement is not
effective during the period such Registration Statement is required
to be effective pursuant to the Registration Rights Agreement.

"Exercise Price" as of the date hereof shall mean one
hundred twenty five percent (125%) of the average of the lowest
intra-day prices per share of Common Stock for the five (5) days
preceeding the Subscription Date and shall hereafter be subject to
the adjustments provided for in Section 6 of this Warrant. "Lowest
intra-day price" shall mean the lowest price of the Common Stock
(as reported by Bloomberg L.P.) during any Trading Day.

"Per Share Warrant Value" shall mean the difference
resulting from subtracting the Exercise Price from the Bid Price of
one share of Common Stock on the Trading Day next preceding the
Date of Exercise.

"Registration Rights Agreement" shall mean the
registration rights agreement, dated the date hereof between the
Company and the Investor.

"Subscription Date" shall mean the date on which the
Agreement is executed and delivered by the parties hereto.

"Warrant Holder" shall mean the Investor or any assignee
or transferee of all or any portion of this Warrant; and

other capitalized terms used but not defined herein shall
have their respective meanings set forth in the Agreement.

Section 2. Exercise; Cashless Exercise.

a. Method of Exercise. This Warrant may be
exercised in whole or in part (but not as to a fractional share of
Common Stock), at any time and from time to time during the
Exercise Period, by the Warrant Holder by (i) surrender of this
Warrant, with the form of exercise attached hereto as Exhibit A
duly executed by the Warrant Holder (the "Exercise Notice"), to the
Company at the address set forth in Section 13 hereof, accompanied
by payment of the Exercise Price multiplied by the number of shares
of Common Stock for which this Warrant is being exercised (the

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<PAGE>

"Aggregate Exercise Price") or (ii) telecopying an executed and
completed Exercise Notice to the Company and delivering to the
Company within three business days thereafter the original Exercise
Notice, this Warrant and the Aggregate Exercise Price. Each date
on which an Exercise Notice is received by the Company in
accordance with clause (i) and each date on which the Exercise
Notice is telecopied to the Company in accordance with clause (ii)
above shall be deemed an "Exercise Date".

b. Payment of Aggregate Exercise Price. Subject to
paragraph (c) below, payment of the Aggregate Exercise Price shall
be made by check or bank draft payable to the order of the Company
or by wire transfer to an account designated by the Company. If
the amount of the payment received by the Company is less than the
Aggregate Exercise Price, the Warrant Holder will be notified of
the deficiency and shall make payment in that amount within five
(5) business days. In the event the payment exceeds the Aggregate
Exercise Price, the Company will refund the excess to the Warrant
Holder within three (3) business days of receipt.

c. Cashless Exercise. If a Registration Statement
is not effective for the resale of the Warrant Shares by the
Warrant Holder, as an alternative to payment of the Aggregate
Exercise Price in accordance with paragraph (b) above, the Warrant
Holder may elect to effect a cashless exercise by so indicating on
the Exercise Notice and including a calculation of the number of
shares of Common Stock to be issued upon such exercise in
accordance with the terms hereof (a "Cashless Exercise"). In the
event of a Cashless Exercise, the Warrant Holder shall surrender
this Warrant for that number of shares of Common Stock determined
by (i) multiplying the number of Warrant Shares for which this
Warrant is being exercised by the Per Share Warrant Value and (ii)
dividing the product by the Bid Price of one share of the Common
Stock on the Trading Day next preceding the Date of Exercise.

d. Replacement Warrant. In the event that the
Warrant is not exercised in full, the number of Warrant Shares
shall be reduced by the number of such Warrant Shares for which
this Warrant is exercised, and the Company, at its expense, shall
forthwith issue and deliver to or upon the order of the Warrant
Holder a new Warrant of like tenor in the name of the Warrant
Holder or as the Warrant Holder may request, reflecting such
adjusted number of Warrant Shares.

Section 3. Ten Percent Limitation. The Warrant
Holder may not exercise this Warrant such that the number of
Warrant Shares to be received pursuant to such exercise aggregated
with all other shares of Common Stock then owned by the Warrant
Holder beneficially or deemed beneficially owned by the Warrant
Holder would result in the Warrant Holder owning more than 9.9% of
all of such Common Stock as would be outstanding on such Closing
Date, as determined in accordance with Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder. As of
any date prior to the Date of Exercise, the aggregate number of
shares of Common Stock into which this Warrant is exercisable,
together with all other shares of Common Stock then beneficially
owned (as such term is defined in Rule 16a-1 under the Exchange
Act) by such Warrant Holder and its affiliates, shall not exceed
9.9% of the total outstanding shares of Common Stock as of such
date.

20
<PAGE>

Section 4. Delivery of Stock Certificates.

a. Subject to the terms and conditions of this Warrant,
as soon as practicable after the exercise of this Warrant in full
or in part, and in any event within three (3) Trading Days
thereafter, the Company at its expense (including, without
limitation, the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Warrant
Holder, or as the Warrant Holder may lawfully direct, a certificate
or certificates for the number of validly issued, fully paid and
non-assessable Warrant Shares to which the Warrant Holder shall be
entitled on such exercise, together with any other stock or other
securities or property (including cash, where applicable) to which
the Warrant Holder is entitled upon such exercise in accordance
with the provisions hereof; provided, however, that any such
delivery to a location outside of the United States shall be made
within five (5) Trading Days after the exercise of this Warrant in
full or in part.

b. This Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this
Warrant, in full or in part, would result in the issuance of any
fractional share of Common Stock, then in such event the Warrant
Holder shall receive in cash an amount equal to the Bid Price of
such fractional share within three (3) Trading Days.

Section 5. Representations, Warranties and Covenants
of the Company.

a. The Company shall take all necessary action and
proceedings as may be required and permitted by applicable law,
rule and regulation for the legal and valid issuance of this
Warrant and the Warrant Shares to the Warrant Holder.

b. From the date hereof through the last date on which
this Warrant is exercisable, the Company shall take all steps
reasonably necessary and within its control to insure that the
Common Stock remains listed or quoted on the Principal Market.

c. The Warrant Shares, when issued in accordance with
the terms hereof, will be duly authorized and, when paid for or
issued in accordance with the terms hereof, shall be validly
issued, fully paid and non-assessable.

d. The Company has authorized and reserved for issuance
to the Warrant Holder the requisite number of shares of Common
Stock to be issued pursuant to this Warrant. The Company shall at
all times reserve and keep available, solely for issuance and
delivery as Warrant Shares hereunder, such shares of Common Stock
as shall from time to time be issuable as Warrant Shares.

Section 6. Adjustment of the Exercise Price. The
Exercise Price and, accordingly, the number of Warrant Shares
issuable upon exercise of the Warrant, shall be subject to
adjustment from time to time upon the happening of certain events
as follows; provided, however, that nothing contained in this
Section 6 shall be construed to require such adjustment to the
exercise price of this Warrant for the payment of any placement
agent, in Capital Stock or otherwise, in consideration of the
transactions contemplated by the Agreement:

<PAGE>

a. Reclassification, Consolidation, Merger or Mandatory
Share Exchange. If the Company, at any time while this Warrant is
unexpired and not exercised in full, (i) reclassifies or changes
its Outstanding Capital Shares (other than a change in par value,
or from par value to no par value per share, or from no par value
per share to par value or as a result of a subdivision or
combination of outstanding securities issuable upon exercise of the
Warrant) or (ii) consolidates, merges or effects a mandatory share
exchange with or into another corporation (other than a merger or
mandatory share exchange with another corporation in which the
Company is a continuing corporation and that does not result in any
reclassification or change, other than a change in par value, or
from par value to no par value per share, or from no par value per
share to par value, or as a result of a subdivision or combination
of Outstanding Capital Shares issuable upon exercise of the
Warrant) at any time while this Warrant is unexpired and not
exercised in full, then in any such event the Company, or such
successor or purchasing corporation, as the case may be, shall,
without payment of any additional consideration therefore, amend
this Warrant or issue a new Warrant providing that the Warrant
Holder shall have rights not less favorable to the holder than
those then applicable to this Warrant and to receive upon exercise
under such amendment of this Warrant or new Warrant, in lieu of
each share of Common Stock theretofore issuable upon exercise of
the Warrant hereunder, the kind and amount of shares of stock,
other securities, money or property receivable upon such
reclassification, change, consolidation, merger, mandatory share
exchange, sale or transfer by the holder of one share of Common
Stock issuable upon exercise of the Warrant had the Warrant been
exercised immediately prior to such reclassification, change,
consolidation, merger, mandatory share exchange or sale or
transfer. Such amended Warrant shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 6.1. The provisions of
this subsection (a) shall similarly apply to successive
reclassifications, changes, consolidations, mergers, mandatory
share exchanges and sales and transfers.

b. Subdivision or Combination of Shares. If the
Company, at any time while this Warrant is unexpired and not
exercised in full, shall subdivide its Common Stock, the Exercise
Price shall be proportionately reduced as of the effective date of
such subdivision, or, if the Company shall take a record of holders
of its Common Stock for the purpose of so subdividing, as of such
record date, whichever is earlier. If the Company, at any time
while this Warrant is unexpired and not exercised in full, shall
combine its Common Stock, the Exercise Price shall be
proportionately increased as of the effective date of such
combination, or, if the Company shall take a record of holders of
its Common Stock for the purpose of so combining, as of such record
date, whichever is earlier.

c. Stock Dividends. If the Company, at any time while
this Warrant is unexpired and not exercised in full, shall pay a
dividend in its Capital Shares, or make any other distribution of
its Capital Shares, then the Exercise Price shall be adjusted, as
of the date the Company shall take a record of the holders of its
Capital Shares for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by
multiplying the Exercise Price in effect immediately prior to such
payment or other distribution by a fraction:

1. the numerator of which shall be the total number of
Outstanding Capital Shares immediately prior to such dividend or
distribution, and

22
<PAGE>

2. the denominator of which shall be the total number
of Outstanding Capital Shares immediately after such dividend or
distribution. The provisions of this subsection (c) shall not
apply under any of the circumstances for which an adjustment is
provided in subsections (a) or (b).

d. Issuance of Additional Capital Shares. If the Company,
at any time while this Warrant is unexpired and not exercised in
full, shall issue any additional Capital Shares ("Additional
Capital Shares"), otherwise than as provided in the foregoing
subsections (a) through (c) above, at a price per share less, or
for other consideration lower, than the Bid Price in effect
immediately prior to such issuance, or without consideration, then
upon such issuance the Exercise Price shall be reduced to that
price determined by multiplying the Exercise Price in effect
immediately prior to such event by a fraction:

1. the numerator of which shall be the number of
Outstanding Capital Shares immediately prior to the issuance of the
Additional Capital Shares plus the number of Capital Shares that
the aggregate consideration for the total number of such Additional
Capital Shares so issued would purchase at the then effective Bid
Price, and

2. the denominator of which shall be the number of
Outstanding Capital Shares immediately after the issuance of the
Additional Capital Shares. The provisions of this subsection (d)
shall not apply under any of the circumstances for which an
adjustment is provided in subsections (a), (b) or (c).

The provisions of this subsection (d) shall not apply to the
issuance of any Additional Capital Shares that are issued pursuant
to the exercise of any warrants, options or other subscription or
purchase rights or pursuant to the exercise of any conversion or
exchange rights in any convertible or exchangeable securities.

e. Issuance of Warrants, Options or Other Rights. If
the Company, at any time while this Warrant is unexpired and not
exercised in full, shall issue any warrants, options or other
rights to subscribe for or purchase any Additional Capital Shares,
other than employee stock option and stock purchase plans granted
in the ordinary course of business, and the price per share for
which Additional Capital Shares may at any time thereafter be
issuable pursuant to such warrants, options or other rights shall
be less than the Bid Price in effect immediately prior to such
issuance, then, upon the issuance of such warrants, options or
other rights, the Exercise Price shall be adjusted as provided in
subsection (d) hereof on the basis that:

1. the maximum number of Additional Capital Shares
issuable on the date of determination (subject to adjustment on the
date(s) of exercise) pursuant to all such warrants, options or
other rights shall be deemed to have been issued as of the date of
actual issuance of such warrants, options or other rights, and

2. the aggregate consideration for such maximum number
of Additional Capital Shares issuable pursuant to such warrants,
options or other rights, shall be deemed to be the consideration
received by the Company for the issuance of such warrants, options,

23
<PAGE>

or other rights plus the minimum consideration to be received by
the Company for the issuance of Additional Capital Shares pursuant
to such warrants, options, or other rights.

f. Issuance of Convertible or Exchangeable Securities.
If the Company, at any time while this Warrant is unexpired and not
exercised in full, shall issue any securities convertible into or
exchangeable for Capital Shares and the consideration per share for
which Additional Capital Shares may at any time thereafter be
issuable pursuant to the terms of such convertible or exchangeable
securities shall be less than the Bid Price in effect immediately
prior to such issuance, then, upon the issuance of such convertible
or exchangeable securities, the Exercise Price shall be adjusted as
provided in subsection (d) hereof on the basis that:

1. the maximum number of Additional Capital Shares
necessary on the date of determination (subject to adjustment on
the date(s) of conversion or exchange) to effect the conversion or
exchange of all such convertible or exchangeable securities shall
be deemed to have been issued as of the date of issuance of such
convertible or exchangeable securities, and

2. the aggregate consideration for such maximum number
of Additional Capital Shares shall be deemed to be the
consideration received by the Company for the issuance of such
convertible or exchangeable securities plus the minimum
consideration received by the Company for the issuance of such
Additional Capital Shares pursuant to the terms of such convertible
or exchangeable securities.

No adjustment of the Exercise Price shall be made under this
subsection (f) upon the issuance of any convertible or exchangeable
securities that are issued pursuant to the exercise of any
warrants, options or other subscription or purchase rights
therefor, if the issuance of such warrants, options or other rights
was subject to subsection (e) hereof.

g. Adjustment of Number of Shares. Upon each
adjustment of the Exercise Price pursuant to any provisions of this
Section 6.1, the number of Warrant Shares issuable hereunder at the
option of the Warrant Holder shall be calculated, to the nearest
one hundredth of a whole share, multiplying the number of Warrant
Shares issuable prior to an adjustment by a fraction:

1. the numerator of which shall be the Exercise Price
before any adjustment pursuant to this Section 6.1; and

2. the denominator of which shall be the Exercise Price
after such adjustment.

h. Liquidating Dividends, Etc. If the Company, at any
while this Warrant is unexpired and not exercised in full, makes a
distribution of its assets or evidences of indebtedness to the
holders of its Capital Shares as a dividend in liquidation or by
way of return of capital (other than dividends paid or
distributions made in respect of preferred stock) or other than as
a dividend payable out of earnings or surplus legally available for
dividends under applicable law or any distribution to such holders
made in respect of the sale of all or substantially all of the
Company's assets (other than under the circumstances provided for
in the foregoing subsections (a) through (g)) while an exercise is
pending, then the Warrant Holder shall be entitled to receive upon

<PAGE>

such exercise of the Warrant in addition to the Warrant Shares
receivable in connection therewith, and without payment of any
consideration other than the Exercise Price, an amount in cash
equal to the value of such distribution per Capital Share
multiplied by the number of Warrant Shares that, on the record date
for such distribution, are issuable upon such exercise of the
Warrant (with no further adjustment being made following any event
which causes a subsequent adjustment in the number of Warrant
Shares issuable), and an appropriate provision therefor shall be
made a part of any such distribution. The value of a distribution
that is paid in other than cash shall be determined in good faith
by the Board of Directors of the Company.

i. Other Provisions Applicable to Adjustments Under
this Section. The following provisions will be applicable to the
making of adjustments in any Exercise Price hereinabove provided in
this Section 6.1:

1. Computation of Consideration. To the extent that
any Additional Capital Shares or any convertible or exchangeable
securities or any warrants, options or other rights to subscribe
for or purchase any Additional Capital Shares or any convertible or
exchangeable securities shall be issued for a cash consideration,
the consideration received by the Company therefor shall be deemed
to be the amount of the cash received by the Company therefor, or,
if such Additional Capital Shares or convertible or exchangeable
securities are offered by the Company for subscription, the
subscription price, or, if such Additional Capital Shares or
convertible or exchangeable securities are sold to or through
underwriters or dealers for public offering without a subscription
offering, the initial public offering price, in any such case
excluding any amounts paid or incurred by the Company for and in
the underwriting of, or otherwise in connection with the issue
thereof. To the extent that such issuance shall be for a
consideration other than cash, then, the amount of such
consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good
faith by the Company's Board of Directors. The consideration for
any Additional Capital Shares issuable pursuant to any warrants,
options or other rights to subscribe for or purchase the same shall
be the consideration received by the Company for issuing such
warrants, options or other rights, plus the additional
consideration payable to the Company upon the exercise of such
warrants, options or other rights. The consideration for any
Additional Capital Shares issuable pursuant to the terms of any
convertible or exchangeable securities shall be the consideration
paid or payable to the Company in respect of the subscription for
or purchase of such convertible or exchangeable securities, plus
the additional consideration, if any, payable to the Company upon
the exercise of the right of conversion or exchange in such
convertible or exchangeable securities. In case of the issuance at
any time of any Additional Capital Shares or convertible or
exchangeable securities in payment or satisfaction of any dividend
upon any class of stock preferred as to dividends in a fixed
amount, the Company shall be deemed to have received for such
Additional Capital Shares or convertible or exchangeable securities
a consideration equal to the amount of such dividend so paid or
satisfied.

2. Readjustment of Exercise Price. Upon the expiration
of the right to convert or exchange any convertible or exchangeable
securities, or upon the expiration of any rights, options or
warrants, the issuance of which convertible or exchangeable
securities, rights, options or warrants effected an adjustment in
Exercise Price, if any such convertible or exchangeable securities
shall not have been converted or exchanged, or if any such rights,

<PAGE>

options or warrants shall not have been exercised, the number of
Capital Shares deemed to be issued and Outstanding by reason of the
fact that they were issuable upon conversion or exchange of any
such convertible or exchangeable securities or upon exercise of any
such rights, options, or warrants shall no longer be computed as
set forth above, and such Exercise Price shall forthwith be
readjusted and thereafter be the price that it would have been (but
reflecting any other adjustments in the Exercise Price made
pursuant to the provisions of this Section 6.1 after the issuance
of such convertible or exchangeable securities, rights, options or
warrants) had the adjustment of the Exercise Price made upon the
issuance or sale of such convertible or exchangeable securities or
issuance of rights, options or warrants been made on the basis of
the issuance only of the number of Additional Capital Shares
actually issued upon conversion or exchange of such convertible or
exchangeable securities, or upon the exercise of such rights,
options or warrants, and thereupon only the number of Additional
Capital Shares actually so issued, if any, shall be deemed to have
been issued and only the consideration actually received by the
Company (computed as set forth in sub-subsection (1. hereof) shall
be deemed to have been received by the Company. If the purchase
price provided for in any rights, options or warrants, or the
additional consideration (if any) payable upon the conversion or
exchange of any convertible or exchangeable securities, or the rate
at which any convertible or exchangeable securities are convertible
into or exchangeable for Capital Shares changes at any time (other
than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of the change
shall be adjusted to the Exercise Price that would have been in
effect at such time had such rights, options, warrants or
convertible or exchangeable securities still outstanding provided
for such changed purchase price, additional consideration or
conversion rate, as the case may be, at the time initially granted,
issued or sold.

j. In the event the Company shall, at a time while the
Warrant is unexpired and outstanding, take any action which
pursuant to subsections (a) through (h) of this Section 6.1 may
result in an adjustment of the Exercise Price, the Company shall
give to the Warrant Holder at its last address known to the Company
written notice of such action ten (10) days in advance of its
effective date in order to afford to the Warrant Holder an
opportunity to exercise the Warrant prior to such action becoming
effective.

Section 6.1 Notice of Adjustments. Whenever the
Exercise Price or number of Warrant Shares shall be adjusted
pursuant to Section 6.1 hereof, the Company shall promptly make a
certificate signed by its President or a Vice President and by its
Treasurer or Assistant Treasurer or its Secretary or Assistant
Secretary, setting forth in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which
such adjustment was calculated (including a description of the
basis on which the Company's Board of Directors made any
determination hereunder), and the Exercise Price and number of
Warrant Shares purchasable at that Exercise Price after giving
effect to such adjustment, and shall promptly cause copies of such
certificate to be mailed (by first class and postage prepaid) to
the Holder of the Warrant. In the event the Company shall, at a
time while the Warrant is unexpired and not exercised in full, take
any action that pursuant to subsections (a) through (g) of Section
6.1 may result in an adjustment of the Exercise Price, the Company
shall give to the Holder of the Warrant at its last address known
to the Company written notice of such action ten (10) days in
advance of its effective date in order to afford to the Holder of
the Warrant an opportunity to exercise the Warrant prior to such
action becoming effective.

26
<PAGE>

Section 7. No Impairment. The Company will not, by
amendment of its Articles of Incorporation or By-Laws or through
any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such action as may be necessary or appropriate in order to
protect the rights of the Warrant Holder against impairment.
Without limiting the generality of the foregoing, the Company
(a) will not increase the par value of any Warrant Shares above the
amount payable therefor on such exercise, and (b) will take all
such action as may be reasonably necessary or appropriate in order
that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares on the exercise of this Warrant.

Section 8. Rights As Stockholder. Prior to exercise
of this Warrant, the Warrant Holder shall not be entitled to any
rights as a stockholder of the Company with respect to the Warrant
Shares, including (without limitation) the right to vote such
shares, receive dividends or other distributions thereon or be
notified of stockholder meetings. However, in the event of any
taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend)
or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company
shall mail to each Warrant Holder, at least ten (10) days prior to
the date specified therein, a notice specifying the date on which
any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such
dividend, distribution or right.

Section 9. Replacement of Warrant. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of the Warrant and, in the case of any
such loss, theft or destruction of the Warrant, upon delivery of an
indemnity agreement or security reasonably satisfactory in form and
amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of
like tenor.

Section 10. Choice of Law. This Agreement shall be
construed under the laws of the State of New York.

Section 11. Entire Agreement; Amendments. This
Warrant, the Registration Rights Agreement, and the Agreement
contain the entire understanding of the parties with respect to the
matters covered hereby and thereby. No provision of this Warrant
may be waived or amended other than by a written instrument signed
by the party against whom enforcement of any such amendment or
waiver is sought.

Section 12. Restricted Securities.

a. Registration or Exemption Required. This Warrant has
been issued in a transaction exempt from the registration
requirements of the Securities Act in reliance upon the provisions
of Section 4(2) promulgated by the SEC under the Securities Act.

<PAGE>

This Warrant and the Warrant Shares issuable upon exercise of this
Warrant may not be resold except pursuant to an effective
registration statement or an exemption to the registration
requirements of the Securities Act and applicable state laws.

b. Legend. Any replacement Warrants issued pursuant to
Section 2 hereof and any Warrant Shares issued upon exercise
hereof, shall bear the following legend:

"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN
ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF,
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO A
TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT
TO, SUCH REGISTRATION. THE HOLDER OF THIS
CERTIFICATE IS THE BENEFICIARY OF CERTAIN
OBLIGATIONS OF THE COMPANY SET FORTH IN A PRIVATE
EQUITY LINE AGREEMENT, DATED AS OF OCTOBER 23,
1998, BETWEEN CYTOGEN CORPORATION AND KINGSBRIDGE
CAPITAL LIMITED. A COPY OF THE PORTION OF THE
AFORESAID AGREEMENT EVIDENCING SUCH OBLIGATIONS MAY
BE OBTAINED FROM THE COMPANY'S EXECUTIVE OFFICES."

Removal of such legend shall be in accordance with the legend
removal provisions in the Agreement.

c. No Other Legend or Stock Transfer Restrictions. No
legend other than the one specified in Section 12(b) has been or
shall be placed on the share certificates representing the Warrant
Shares and no instructions or "stop transfer orders," so called,
"stock transfer restrictions" or other restrictions have been or
shall be given to the Company's transfer agent with respect thereto
other than as expressly set forth in this Section 12.

d. Assignment. Assuming the conditions of Section
12(a) above regarding registration or exemption have been
satisfied, the Warrant Holder may sell, transfer, assign, pledge or
otherwise dispose of this Warrant, in whole or in part. The
Warrant Holder shall deliver a written notice to Company,
substantially in the form of the Assignment attached hereto as
Exhibit B, indicating the person or persons to whom the Warrant
shall be assigned and the respective number of warrants to be
assigned to each assignee. The Company shall effect the assignment
within ten (10) days, and shall deliver to the assignee(s)
designated by the Warrant Holder a Warrant or Warrants of like
tenor and terms for the appropriate number of shares.

28
<PAGE>

e. Investor's Compliance. Nothing in this Section 12
shall affect in any way the Investor's obligations under any
agreement to comply with all applicable securities laws upon resale
of the Common Stock.

Section 13. Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and shall be (i) personally served,
(ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (iii) delivered by reputable air
courier service with charges prepaid, or (iv) transmitted by hand
delivery, telegram or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by facsimile (with accurate confirmation
generated by the transmitting facsimile machine) at the address or
number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than
on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications
shall be:

If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200
Facsimile: (609) 951-9298

with a copy to:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: Donald F. Crane, Jr., Esq.
Telephone: (609) 520-3062
Facsimile: (609) 987-1229

if to the Investor:

29
<PAGE>

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

Rogers & Wells LLP
200 Park Avenue, 52nd Floor
New York, NY 10166
Attention: Keith M. Andruschak, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375

Either party hereto may from time to time change its address or
facsimile number for notices under this Section 13 by giving at
least ten (10) days' prior written notice of such changed address
or facsimile number to the other party hereto.

Section 14. Miscellaneous. This Warrant and any term
hereof may be changed, waived, discharged or terminated only by an
instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. The
headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no
way affect the validity or enforceability of any other provision.

<PAGE>

IN WITNESS WHEREOF, this Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set
forth above.

CYTOGEN CORPORATION

By:
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

Attested:

By:
Donald F. Crane, Jr., Esq.
Vice President, General Counsel and Secretary

<PAGE>

EXHIBIT A TO THE WARRANT

EXERCISE FORM

CYTOGEN CORPORATION

The undersigned hereby irrevocably exercises the right to
purchase __________________ shares of Common Stock of Cytogen
Corporation, a Delaware corporation, evidenced by the attached
Warrant, and herewith makes payment of the Exercise Price with
respect to such shares in full in the form of [cash or certified
check in the amount of $___________], [______] Warrant Shares,
which represent the amount of Warrant Shares as provided in the
attached Warrant to be canceled in connection with such exercise],
all in accordance with the conditions and provisions of said
Warrant.

The undersigned requests that stock certificates for such
Warrant Shares be issued, and a Warrant representing any
unexercised portion hereof be issued, pursuant to this Warrant in
the name of the registered Holder and delivered to the undersigned
at the address set forth below.

Dated:_______________________________________
_____________________________________________
Signature of Registered Holder
Name of Registered Holder (Print)

_____________________________________________
Address

<PAGE>

NOTICE

The signature to the foregoing Exercise Form must correspond
to the name as written upon the face of the attached Warrant in
every particular, without alteration or enlargement or any change
whatsoever.

A-ii

<PAGE>

EXHIBIT B TO THE WARRANT

ASSIGNMENT

(To be executed by the registered Warrant Holder desiring to
transfer the Warrant)

FOR VALUED RECEIVED, the undersigned Warrant Holder of the
attached Warrant hereby sells, assigns and transfers unto the
persons below named the right to purchase ______________ shares of
the Common Stock of Cytogen Corporation evidenced by the attached
Warrant and does hereby irrevocably constitute and appoint
______________________ attorney to transfer the said Warrant on the
books of the Company, with full power of substitution in the
premises.

Dated:
______________________________
Signature

<PAGE>

Fill in for new Registration of Warrant:

_________________________________________
Name

_________________________________________
Address

_________________________________________
Please print name and address of assignee
(including zip code number)

<PAGE>

NOTICE

The signature to the foregoing Assignment must correspond to
the name as written upon the face of the attached Warrant in every
particular, without alteration or enlargement or any change
whatsoever.

B-iii

<PAGE>

EXHIBIT D

[RESERVED]

<PAGE>

EXHIBIT E

FORM OF OPINION OF THE COMPANY'S INDEPENDENT COUNSEL

[Date]

Kingsbridge Capital Limited
Main Street
Kilcullen, County Kildare
Republic of Ireland

Re: Private Equity Line Agreement Between Kingsbridge Capital
Limited and CYTOGEN Corporation

Ladies and Gentlemen:

This opinion is furnished to you pursuant to Section [6.12]
[7.2(g)] of the Private Equity Line Agreement by and between
Kingsbridge Capital Limited, a British Virgin Islands entity (the
"Investor") and Cytogen Corporation, a Delaware corporation (the
"Company"), dated as of October 23, 1998 (the "Equity Line
Agreement"), which provides for the issuance and sale by the
Company of up to an indeterminate number of shares of Common
Stock of the Company (the "Put Shares"), certain additional
shares upon the occurrence of certain events as set forth in
Section 2.6 thereof (the "Blackout Shares"), and a warrant
to purchase 200,000 shares of Common Stock of the Company (the
"Warrant", and the shares of Common Stock issued or issuable
pursuant to exercise of the Warrant, the "Warrant Shares").
All terms used herein have the meanings defined for them in
the Equity Line Agreement unless otherwise defined herein.

I have acted as counsel for the Company in connection with
the negotiation of the Equity Line Agreement, the Warrant, the
Registration Rights Agreement between the Investor and the Company,
dated as of October 23, 1998 (the "Registration Rights Agreement"),
and the Escrow Agreement between the Investor, the Company and myself,
as escrow Agent, dated as of October 23, 1998 (the "Escrow
Agreement", and together with the Equity Line Agreement and the
Registration Rights Agreement, the "Agreements"). As counsel, I
have made such legal and factual examinations and inquires as I
have deemed advisable or necessary for the purpose of rendering
this opinion. In addition, I have examined, among other things,
originals or copies of such corporate records of the Company,
certificates of public officials and such other documents and
questions of law that I consider necessary or advisable for the
purpose of rendering this opinion. In such examination I have
assumed the genuineness of all signatures on original documents,
the authenticity and completeness of all documents submitted to me
as originals, the conformity to original documents of all copies
submitted to me as copies thereof, the legal capacity of natural
persons, and the due execution and delivery of all documents
(except as to due execution and delivery by the Company) where due
execution and delivery are a prerequisite to the effectiveness
thereof. With respect to certain factual matters, I have relied,
without independent investigation on the facts stated in the
representations and warranties contained in the Equity Line Agreement
and the schedules therto and the SEC documents (other than in each case
conclusion of law).

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Page ii

As used in this opinion, the expression "to my knowledge"
refers to my current actual knowledge.

For purposes of this opinion, I have assumed that you have
all requisite power and authority, and have taken any and all
necessary corporate action, to execute and deliver the Agreements,
and I am assuming that the representations and warranties made by
the Investor in the Agreements and pursuant thereto are true and
correct.

Based upon and subject to the foregoing, I am of the opinion
that:

1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority (corporate and
other) to carry on its business and to own, lease and operate its
properties and assets as described in the Company's SEC Documents.
To our knowledge, the Company does not own more than fifty percent
(50%) of the outstanding capital stock of or control any other
business entity, except for subsidiaries of the Company, namely, AxCell
BioSciences, Inc., Cellcor, Inc., and CytoRad, Inc. The Company
is duly qualified as a foreign corporation to do business and is
in good standing in every jurisdiction in which the Company owns or
leases property, other than those in which the failure so to qualify
would not have a Material Adverse Effect.

2. The Company has the requisite corporate power and
authority to enter into and perform its obligations under the
Agreements and the Warrant and to issue the Put Shares, the
Warrant, the Warrant Shares and the Blackout Shares. The execution
and delivery of the Agreements, and the execution, issuance and
delivery of the Warrant, by the Company and the consummation by it
of the transactions contemplated thereby have been duly authorized
by all necessary corporate action and no further consent or
authorization of the Company or its Board of Directors or
stockholders is required. Each of the Agreements has been duly
executed and delivered, and the Warrant has been duly executed,
issued and delivered, by the Company and each of the Agreements and
the Warrant constitutes valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws relating to, or
affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application.

3. The execution, delivery and performance of the Agreements
and the Warrant by the Company and the consummation by the Company
of the transactions contemplated thereby, including without

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Page iii

limitation the issuance of the Put Shares, the Warrant, the Warrant
Shares and the Blackout Shares, do not and will not (i) result in
a violation of the Company's Articles or By-Laws; (ii) to my
knowledge, conflict with, or constitute a material default (or an
event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any material agreement,
indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company is a party,
except for such conflicts, defaults, terminations, amendments,
accelerations and cancellations as would not, individually or in
the aggregate, have a Material Adverse Effect; or (iii) result in
a violation of any federal or state law, rule or regulation
applicable to the Company or by which any property or asset of the
Company is bound or affected, except for such violations as would
not, individually or in the aggregate, have a Material Adverse
Effect. To my knowledge, the Company is not in violation of any
terms of its Articles or Bylaws.

4. The issuance of the Put Shares, the Warrant and the
Blackout Shares in accordance with the Equity Line Agreement, and
the issuance of the Warrant Shares in accordance with the Warrant,
will be exempt from registration under the Securities Act of 1933
and will be in compliance with applicable state securities laws. When
so issued, the Put Shares, the Blackout Shares and the Warrant
Shares will be duly and validly issued, fully paid and
nonassessable, and free of any liens, encumbrances and preemptive
or similar rights contained in the Company's Articles of
Incorporation (the "Articles") or Bylaws or, to my knowledge, in
any agreement to which the Company is party.

5. To my knowledge, except as disclosed in the SEC
Documents, there are no claims, actions, suits, proceedings or
investigations that are pending against the Company or its
properties, or against any officer or director of the Company in
his or her capacity as such, nor has the Company received any
written threat of any such claims, actions, suits, proceedings, or
investigations which are required to be and have not been disclosed
in the SEC Documents and which are reasonably likely to have a material adverse
affect upon the Company's financial position or results of operations.

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Page iv

This opinion is furnished to the Purchaser solely for its
benefit in connection with the transactions described above and may
not be relied upon by any other person or for any other purpose
without my prior written consent.

Very truly yours,

/s/ Donald F. Crane
Donald F. Crane, Jr.
Vice President General Counsel and
Corporate Secretary

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Page v

EXHIBIT F

COMPLIANCE CERTIFICATE
CYTOGEN CORPORATION

The undersigned, H. Joseph Reiser, Ph.D., hereby certifies,
with respect to shares of common stock of Cytogen Corporation (the
"Company") issuable in connection with the Put Notice, dated
_____________ (the "Notice"), delivered pursuant to Article II of
the Private Equity Line Agreement, dated as of October 23, 1998, by
and between the Company and Kingsbridge Capital Limited (the
"Agreement"), as follows:

1. The undersigned is the duly elected President and Chief
Executive Officer of the Company.

2. The representations and warranties of the Company set
forth in Article V of the Agreement are true and correct in all
material respects as though made on and as of the date hereof.

3. The Company has performed in all material respects all
covenants and agreements to be performed by the Company on or prior
to the Closing Date related to the Notice and has complied in all
material respects with all obligations and conditions contained in
Article VII of the Agreement.

The undersigned has executed this Certificate this ____ day of
________, 199_.

____________________________________
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

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Page i

EXHIBIT G

INSTRUCTIONS TO TRANSFER AGENT
CYTOGEN CORPORATION

October ___, 1998

[Name, address and phone and facsimile number of Transfer Agent]

Dear Sirs:

Reference is made to the Private Equity Line Agreement (the
"Agreement"), dated as of October 23, 1998 between Kingsbridge
Capital Limited (the "Investor") and Cytogen Corporation(the
"Company"). Pursuant to the Agreement, subject to the terms and
conditions set forth in the Agreement the Investor has agreed to
purchase from the Company and the Company has agreed to sell to the
Investor from time to time during the term of the Agreement shares
of Common Stock of the Company, $.01 par value per share (the
"Common Stock"). As a condition to the effectiveness of the
Agreement, the Company has agreed to issue to you, as the transfer
agent for the Common Stock (the "Transfer Agent"), these
instructions relating to the Common Stock to be issued to the
Investor (or a permitted assignee) pursuant to the Agreement. All
terms used herein and not otherwise defined shall have the meaning
set forth in the Agreement.

1. ISSUANCE OF COMMON STOCK WITHOUT THE LEGEND

Pursuant to the Agreement, the Company is required to prepare
and file with the Commission, and maintain the effectiveness of, a
registration statement or registration statements registering the
resale of the Common Stock to be acquired by the Investor under the
Agreement. The Company will advise the Transfer Agent in writing
of the effectiveness of any such registration statement promptly
upon its being declared effective. The Transfer Agent shall be
entitled to rely on such advice and shall assume that the
effectiveness of such registration statement remains in effect
unless the Transfer Agent is otherwise advised in writing by the
Company and shall not be required to independently confirm the
continued effectiveness of such registration statement. In the
circumstances set forth in the following two paragraphs, the
Transfer Agent shall deliver to the Investor certificates
representing Common Stock not bearing the Legend without requiring
further advice or instruction or additional documentation from the

<PAGE>

Company or its counsel or the Investor or its counsel or any other
party (other than as described in such paragraphs).

At any time after the effective date of the applicable
registration statement (provided that the Company has not informed
the Transfer Agent in writing that such registration statement is
not effective) upon any surrender of one or more certificates
evidencing Common Stock which bear the Legend, to the extent
accompanied by a notice requesting the issuance of new certificates
free of the Legend to replace those surrendered, the Transfer Agent
shall deliver to the Investor the certificates representing the
Common Stock not bearing the Legend, in such names and
denominations as the Investor shall request, provided that:

(15) in connection with such event, if so requested by the
Transfer Agent, the Investor (or its permitted assignee) shall
confirm in writing to the Transfer Agent that the Investor has
complied with the prospectus delivery requirement under the
Securities Act;

(16) if so requested by the Transfer Agent, the Investor (or
its permitted assignee) shall represent that it is permitted
to dispose thereof with limitation as to amount of manner of
sale pursuant to Rule 144(k) under the Securities Act; or

(17) the Investor, its permitted assignee, or either of their
brokers confirms to the transfer agent that (i) the Investor
has held the shares of Common Stock for at least one year,
(ii) counting the shares surrendered as being sold upon the
date the unlegended Certificates would be delivered to the
Investor (or the Trading Day immediately following if such
date is not a Trading Day), the Investor will not have sold
more than the greater of (a) ____ percent (___%) of the total
number of outstanding shares of Common Stock or (b) the
average weekly trading volume of the Common Stock for the
preceding four weeks during the three months ending upon such
delivery date (or the Trading Day immediately following if
such date is not a Trading Day), and (iii) the Investor has
complied with the manner of sale and notice requirements of
Rule 144 under the Securities Act.

Any advice, notice or instructions to the Transfer Agent
required or permitted to be given hereunder may be transmitted via
facsimile to the Transfer Agent's facsimile number of (___)-___-____.

2. MECHANICS OF DELIVERY OF CERTIFICATES
REPRESENTING COMMON STOCK

In connection with any Closing pursuant to which the Investor
acquires Common Stock under the Agreement, the Transfer Agent shall
deliver certificates representing Common Stock (with or without the

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Page iii

Legend, as appropriate) as promptly as practicable, but in no event
later than three business days, after such Closing.

3. FEES OF TRANSFER AGENT; INDEMNIFICATION

The Company agrees to pay the Transfer Agent for all fees
incurred in connection with these Irrevocable Instructions. The
Company agrees to indemnify the Transfer Agent and its officers,
employees and agents, against any losses, claims, damages or
liabilities, joint or several, to which it or they become subject
based upon the performance by the Transfer Agent of its duties in
accordance with the Irrevocable Instructions.

4. THIRD PARTY BENEFICIARY

The Company and the Transfer Agent acknowledge and agree that
the Investor is an express third party beneficiary of these
Irrevocable Instructions and shall be entitled to rely upon, and
enforce, the provisions hereof.

CYTOGEN CORPORATION

By:____________________________________
Name
Title

AGREED:

[NAME OF TRANSFER AGENT]

By:__________________________
Name:
Title:

<PAGE>

LICENSE AGREEMENT

BY AND BETWEEN

CYTOGEN CORPORATION

AND

BERLEX LABORATORIES, INC.

<PAGE>
TABLE OF CONTENTS
-----------------

SECTION PAGE
- ------- ----

Recitals 3
Article I - Definitions 4
Article II - Payments 7
Article III - Warrant 8
Article IV - Obligations of the Parties 8
Article V -Manufacture 15
Article VI - Grant of license 15
Article VII - Royalty Payments 16
Article VIII - Indemnification 19
Article IX - Confidentiality 20
Article X - Trademarks 22
Article XI - Inventions and Patents 22
Article XII - Infringement 23
Article XIII - Representations and Warranties 25
Article XIV - Expiration and Termination 27
Article XV - Miscellaneous Provisions 31
Schedule A - Patents and Patent Applications 38
Schedule B - FLUDARA Label 39
Schedule C - FDA Letter 40
Attachment A - Warrant 41

LICENSE AGREEMENT
-----------------

THIS AGREEMENT (the "Agreement") is made and is effective the
28th day of October, 1998 (the "Effective Date") by and
between CYTOGEN CORPORATION, a Delaware corporation having its
principal place of business at 600 College Road East,
Princeton, New Jersey 08540-5308 ("Cytogen"); and BERLEX
LABORATORIES, INC., a Delaware corporation having its
principal place of business at 340 Changebridge Road,
Montville, New Jersey 07045-1000 ("Berlex").

RECITALS

1. Cytogen is engaged in the development and marketing of
products for the targeted delivery of diagnostic and
therapeutic substances directly to the sites of the
disease.

2. Cytogen has acquired from The Dow Chemical Company
("Dow") an exclusive license to make, have made, use,
sell and have sold in the Territory certain samarium-based,
radioactive complexed agents (the "Samarium
Agent"), marketed under the name Quadramet encompassed
by certain patents for both diagnostic and therapeutic
applications.

3. Berlex is engaged in the discovery, development,
marketing, distribution and sale of pharmaceuticals.

4. The Parties wish to enter into this Agreement to: (a)
grant Berlex an exclusive sub-license co-extensive with
Cytogen's license from Dow to make, have made, use and
sell the Product in the Territory, and (b) provide for
the further clinical development of the Samarium Agent as
a radiopharmaceutical for certain therapeutic uses
related to cancers which originate in or metastasize to
the bone; and (c) provide for the further clinical
development of the Samarium Agent as a
radiopharmaceutical for certain therapeutic uses related
to rheumatoid arthritis.

5. The Parties desire to have Dow and Cytogen enter into the
Dow Amendment, and to have Cytogen, Berlex, and DuPont
enter into the Manufacturing Agreement, in each case
promptly following the execution of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth the Parties agree to be
legally bound as follows:

<PAGE>

ARTICLE I - DEFINITIONS

1.1 "Additional Indications" shall mean the indications
(other than the Current Indication) for the Product, as
described in Section 4.4.

1.2 "Affiliate" shall mean any corporation or other legal
entity owning, directly or indirectly, fifty percent (50%) or
more of a Party to this Agreement; any corporation or other
legal entity of which fifty percent (50%) or more of the
voting capital shares (or equivalent control) is owned,
directly or indirectly, by a Party to this Agreement; or any
corporation or other legal entity of which fifty percent (50%)
or more of the voting capital shares (or equivalent control)
is owned, directly or indirectly, by a corporation or other
legal entity owning, directly or indirectly, fifty percent
(50%) or more of the voting capital shares of a Party to this
Agreement.

1.3 "Claim" shall mean any suit, claim, action or proceeding,
whether asserted by or required to be paid to any Third Party
or otherwise.

1.4 "Current Indication" shall mean the indication approved
in the NDA as of the Effective Date: the relief of pain in
patients with confirmed osteoblastic metastatic bone lesions
that enhance on radionuclide bone scan.

1.5 "Dow" shall mean The Dow Chemical Company, a corporation
organized and existing under the laws of the State of Delaware
and having a place of business at 2030 Willard H. Dow Center,
Abbott Road, Midland, Michigan.

1.6 "Dow Amendment" shall have the meaning set forth in
Section 15.2 (a).

1.7 "Dow License" shall mean the License Agreement between
Dow and Cytogen relating to the manufacture, use and sale of
the radioactive Samarium Agent in the Field and executed on
March 31, 1993, including amendments thereto and the Dow
Amendment.

1.8 "Dow Licensed Patent" shall mean any present or future
patent encompassed by the Dow License, including, without
limitation, the patents identified on Schedule A attached
hereto.

1.9 "DuPont" shall mean the DuPont Pharmaceuticals Company,
a corporation organized and existing under the Laws of the
State of Delaware and having a place of business at 331 Treble
Cove Road, North Billerica, Massachusetts.

1.10 "FDA" shall mean the United States Food and Drug
Administration.

1.11 "Field" shall mean (i) the definitions of "Field" and
"Expansion of Licensed Field" in the Dow License as amended by
the Dow Amendment; and (ii) all human therapeutic and
diagnostic uses of the Product which are outside of the scope

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<PAGE>

of the intellectual property licensed to Cytogen by Dow in the
Dow License.

1.12 "First Commercial Sale" shall mean the first time sales
are made of Product by Berlex to an unrelated Third Party
after January 1, 1999.

1.13 "GMP" shall mean the Current Good Manufacturing Practices
regulations promulgated by FDA and codified at 21 CFR Parts
210 and 211, as amended.

1.14 "IND" shall mean Investigational New Drug Application #
33,240, as amended or supplemented.

1.15 "Joint Committee" shall have the meaning set forth in
Section 4.8.

1.16 "Licensed Patent" shall mean any present or future patent
or patent applications and substitutions, extensions,
reissues, renewals, divisions, continuations or continuations-in-part
thereof or therefor, which is owned or controlled by or licensed to Cytogen.

1.17 "Manufacturing Agreement" shall mean a contractual
agreement among Berlex, Cytogen and DuPont providing for the
manufacture and distribution of the Product by DuPont in the
Territory.

1.18 "NDA" shall mean New Drug Application # 20-570 approval
by the FDA and held by Cytogen for the Current Indication for
the Product, as it may be supplemented from time to time
during the term of this Agreement.

1.19 "Net Sales" means the amount invoiced by a Party,
its Affiliates or its sublicensees on account of sales of a
Product to Third Parties in the Territory, less reasonable and
customary deductions applicable to the Product for [CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED]

<PAGE>

1.20 "Party" or "Parties" shall refer to Berlex and Cytogen,
as indicated by the context.

1.21 "Product" shall mean any composition or formulation of
radioactive Samarium Agent, in either its complexed or its
finished dosage form, as described in the NDA.

1.22 "Samarium Agent" shall mean Samarium-153 complexed with
ethylene diaminetetramethylene-phosphonic acid ("EDTMP")

1.23 "Sublicensee " shall mean a Third Party other than an
Affiliate granted a sublicense by Berlex under Berlex's
license under Section 6.1(b).

1.24 "Technical Information" shall mean Technology that is
owned, discovered or developed now or in the future by, or
licensed to, Cytogen, and which is involved in the
manufacture, use or sale of the Product.

1.25 "Technology" shall mean a Party's proprietary processes,
instruments, machines, materials, compositions, test
procedures, manufacturing procedures, techniques,
formulations, methodologies, data and information.

1.26 "Territory" shall mean the United States of America,
Canada, and Latin America.

(a) "United States" shall mean the United States of
America, the United States Virgin Islands, the
Commonwealth of Puerto Rico and Guam.

(b) "Canada" shall mean Canada comprising its provinces
of Alberta, British Columbia, Manitoba, New
Brunswick, Nova Scotia, Ontario, Prince Edward
Island, Quebec, Saskatchewan and Newfoundland, the
Northwest Territories and the Yukon territory.

(i) "Central America" shall mean Belize, Costa
Rica, El Salvador, Guatemala, Honduras, Mexico,
Nicaragua and Panama;

(ii) "South America" shall mean Argentina, Bolivia,
Brazil, Chile, Colombia, Ecuador, Guyana,
Paraguay, Peru, Surinam, Uruguay and Venezuela;
and

<PAGE>

(iii) "West Indies" shall mean the Anguilla,
Antigua, Aruba, Bahamas, Barbados, Bermuda,
Cayman Islands, Dominica, Dominican Republic,
Grenada, Guadeloupe, Haiti, Jamaica (including
Turks and Caicos), Martinique, Netherlands
Antilles, St. Christopher & Nevis, St. Lucia, St.
Vincent and the Grenadines, Trinidad & Tobago and
British Virgin Islands. If the embargo by the
United States against Cuba is lifted during the
term of this Agreement, then Cuba shall be
included in the Territory.

1.27 "Third Party" or "Third Parties" shall refer to a Party
other than Cytogen and Berlex, and their respective
Affiliates.

1. 28 "Trademark" shall mean the trademark Quadramet
which is owned by Dow and licensed to Cytogen.

1.29 "Valid Licensed Claim" shall mean a claim of an issued,
unexpired Licensed Patent which has not been abandoned, or
held invalid in an unappealed or unappealable final decision
rendered by a court of competent jurisdiction, which covers
the manufacture, use in the Field or sale of the Product, and
includes, without limitation, any Dow Licensed Patents from
the University of Missouri and The Fred Hutchinson Cancer
Center and Cytogen patent applications identified in Schedule
A.

ARTICLE II - PAYMENTS

2.1 Initiation Payments. Promptly following the execution
and delivery of all parties named therein of the later to be
both executed and delivered of the Manufacturing Agreement and
the Dow Amendment, each in a form acceptable to Berlex in its
sole discretion, Berlex shall pay to Cytogen $8,000,000 in
cash. Berlex acknowledges that Cytogen expects to utilize
$4,000,000 of such proceeds to secure the Manufacturing
Agreement with DuPont and to acquire from DuPont rights to
certain know-how and proprietary information related to the
manufacturing process.

2.2 Milestone Payments. Berlex shall make the following two
one-time milestone payments to Cytogen in the event that Net
Sales achieve certain levels during a calendar year. The
first time that Net Sales equal $25,000,000 in a calendar
year, Berlex shall pay to Cytogen a cash payment of $2,000,000.
The first time that Net Sales equal $50,000,000 in a calendar year,
Berlex shall pay to Cytogen a cash payment of $3,500,000. In
each case, the payment shall be paid by Berlex to Cytogen within
ten (10) business days of the achievement of the sales milestone.
For purposes of clarity the Parties recognize that the two sales
milestone payments may never become due, the $2,000,000 payment
may become due but not the $3,500,000 payment, or the payments may become due

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and payable in the same calendar year or in different calendar
years, depending on the sales performance of the Product.

ARTICLE III WARRANT

In connection with closing of this Agreement, Cytogen shall
issue to Berlex a Warrant in the form set forth in Attachment
A for the purchase of 1 million (1,000,000) registered shares
of Cytogen common stock $.01 par value (the "Common Stock"),
exercisable on the earlier of one year from the Effective Date
or the first date on which annual sales of the Product equal
or exceed $10,000,000. The warrant shall be exercisable at a
price equal to 125% of the average closing price of the Common
Stock on the Nasdaq national market for the thirty calendar
day trading period to and including October 14, 1998. The
warrant shall expire on the fifth (5th) anniversary of the
Effective Date.

ARTICLE IV - OBLIGATIONS OF THE PARTIES

4.1 Label Statements; FDA Responsibilities; Foreign
Approvals.

(a) Cytogen and Berlex shall promptly take such steps as are
necessary to change the label on primary, secondary and
tertiary packaging for the Product for the United States
and Canada to Berlex's trade dress, and to feature the
"Berlex" logo and Berlex full corporate name and address.
The Berlex trade dress for the Product shall be
substantially the same as that for the label of Berlex's
FLUDARA product. The "Berlex" logo and full corporate
name and address shall be included on the label of the
Product at least as prominently as they are included on
the label for Berlex's FLUDARA product as of the
Effective Date. Schedule B sets forth the label for
Berlex's FLUDARA product as of the Effective Date. For
countries of the Territory other than the United States
and Canada the Parties will attempt to conform the trade
dress and corporate name information to that of the
United States, but using the name of Berlex's Sublicensee
in the applicable country.

(b) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]

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(d) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]

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<PAGE>

(e) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]

(f) [CONFIDENTIAL TREATMENT HAS BEEN REQUESTED]

<PAGE>

(g) Cytogen shall be responsible for obtaining marketing
approval of the Product in each of the countries of the
Territory. For the countries of Latin America the
Parties shall agree prior to the end of the second
quarter of 1999 as to which countries in which it is
commercially feasible to seek regulatory approval.
Cytogen shall use reasonable commercial efforts to obtain
such approvals, and shall have the right to use data from
the IND and NDA for the purpose of obtaining such
approvals. If local studies or other additional studies
are needed for any such approval, Cytogen shall be
responsible for conducting such study (under a protocol
approved in advance by the Chief Medical Officer of
Berlex) and paying the costs of such study. Cytogen
shall provide to Berlex written status reports on the
progress of approvals outside the United States as may be
reasonably requested by Berlex. Promptly after
regulatory approvals are obtained in each country other
than the United States, Cytogen shall appoint Berlex or
Berlex's designee in the applicable country as Cytogen's
authorized agent for the handling of the NDA equivalent
and IND equivalent in such country. After such
appointment Berlex or its designee, as applicable, shall
be responsible for making submissions to such regulatory
authorities and for handling all interaction with
regulatory authorities in such country.

(h) For so long as Cytogen is the holder of the IND during
the term of this Agreement, Cytogen agrees to use
reasonable commercial efforts to maintain the IND in
force so long as there is a business need to do so. For
so long as Cytogen is the holder of the NDA during the
term of this Agreement, Cytogen agrees to use reasonable
commercial efforts to maintain the NDA in compliance with
applicable laws and FDA regulations.

4.2 Cytogen Phase IV Commitments. Cytogen shall be
responsible for promptly completing all clinical studies
required by FDA as a condition to its approval of the NDA. No
such study after the Effective Date shall be commenced by
Cytogen except under a protocol approved in writing by the
Chief Medical Officer of Berlex. Such studies shall be
undertaken entirely at the expense of Cytogen (including the
costs of Product). Cytogen shall provide to Berlex written
status reports of the progress of the Phase IV studies as may
be reasonably requested by Berlex. Data and final study

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<PAGE>

reports shall be turned over to Berlex for submission to FDA.

4.3 Other Cytogen Studies. Except as provided in Section
4.2, no preclinical or clinical studies of the Product shall
be undertaken by Cytogen without the advance written
permission of the Chief Medical Officer of Berlex.

4.4 Berlex Clinical Studies. Berlex shall, on a timely
basis, undertake an evaluation as to expansion of the Current
Indication and Additional Indications, and shall pursue
clinical studies for such expansion of the Current Indication
or Additional Indications unless Berlex concludes, after
consultation with Cytogen, that such expansion of the Current
Indication and/or Additional Indications, are not medically
and commercially viable for Berlex. If Berlex determines that
more than one study is medically and commercially viable for
Berlex, then Berlex shall determine development priorities.
Such studies, if undertaken, shall be undertaken at the sole
expense of Berlex. Berlex, through the Joint Committee, shall
consult with Cytogen concerning the protocols for such
studies. Berlex shall be responsible for the purchase of all
necessary materials for the conduct of such studies, including
Product. Berlex shall provide to Cytogen written status
reports on the progress of such studies as may be reasonably
requested by Cytogen. Berlex shall provide Cytogen with
copies of final study reports promptly following their
preparation. If Berlex determines to undertake any study or
studies described in this Section, then Berlex shall have the
right to conduct such study or studies under the IND, or under
a Berlex investigational new drug application (in which case
Berlex shall have the right to reference the IND and NDA in
such Berlex investigational new drug application), at Berlex's
option. In the event that Berlex determines not to go forward
with clinical studies for the Additional Indication of
rheumatoid arthritis, Berlex agrees to use reasonable
commercial efforts to sublicense such indication to a Third
Party, in which case Cytogen shall have first right to
negotiate for such sublicense.

4.5 Ownership of Data and Reports. All data and reports
resulting from the studies described in Sections 4.2, 4.3 and
4.4 shall be owned by the Party that pays for the study.

4.6 Commercialization; Timing. Berlex shall be
responsible for the commercialization and marketing of the
Product in the Territory. Sales of Product in the Territory
after the Effective Date but prior to January 1, 1999 shall be
credited to Cytogen. Sales of Product in the Territory from
and after January 1, 1999 shall be credited to Berlex.
Berlex's royalty obligations shall commence as set forth in
Section 7.1(b).

4.7 Development Support Payments. Berlex may in its sole
discretion engage Cytogen to provide support for clinical
studies and other Product development for Additional
Indications in the Field, on terms to be negotiated between
the Parties.

4.8 Joint Development and Marketing Committee. Within thirty
(30) days after execution of this Agreement, the Parties shall
establish a Joint Development and Marketing Committee (the
"Joint Committee") having a total membership of six (6), of

<PAGE>

which three (3) members shall be designated by Berlex and
three (3) by Cytogen, or as the Parties may otherwise
determine to be advisable. Berlex shall chair the Joint
Committee. The Joint Committee shall have a purely advisory
role with no decision-making authority, except with regard to
FDA issues. The Joint Committee shall be the forum in which
the Parties will discuss and resolve differences of opinion
concerning FDA issues such as regulatory strategy and
positions to take with FDA. In regard to Joint Committee
decisions concerning such FDA issues each Party shall have one
vote. In the event of a deadlock the position of Berlex shall
be the position of the Joint Committee and the Parties. The
Joint Committee shall advise on protocols submitted by the
Parties relating to the clinical studies described in Sections
4.2, 4.3 and 4.4. Berlex shall report to the Joint Committee
as to its general marketing plan and strategy for the
commercialization of the Product in the following calendar
year. The Joint Committee shall meet at times and places
mutually agreed by the Parties but shall meet at least three
times prior to the end of 1999, and at least twice a year
thereafter. The Joint Committee shall have only the powers
specifically delegated to it pursuant to this Agreement.
Notwithstanding the creation of the Joint Committee, each
Party to this Agreement shall retain the rights, powers, and
discretion granted to it hereunder, and the Joint Committee
shall not be delegated or vested with any rights, powers or
discretion unless such delegation or vesting is expressly
provided for herein, or the Parties expressly so agree in
writing. The Joint Committee shall not have the power to
amend or modify this Agreement, which may be amended or
modified only as provided in Section 15.4.

4.9 Coordination of Safety and Complaint Reporting. The
Parties agree to comply with legal obligations imposed by the
countries of the Territory concerning the collection,
investigation, and governmental reporting of adverse reactions
and complaints relating to the Product, including without
limitation with respect to the United States 21 CFR 312.32 and
21 CFR 314.80 (a). Promptly following the Effective Date the
respective departments of the Parties responsible for handling
adverse reaction monitoring and complaints will jointly
develop a written procedure to govern their communication
concerning such matters, such that each of the Parties will
have the ability to comply with its legal obligations and
contractual undertakings.

4.10 Marketing.

(a) Berlex agrees to use reasonable commercial efforts to
promote the Product in the Territory, and to maximize
sales and market penetration. Berlex shall commence
marketing and selling efforts for the Product in the
United States with reasonable promptness and in no event
later than the end of the first quarter of 1999. Berlex
shall notify Cytogen of the date upon which Berlex
commences its marketing and selling efforts. From the
Effective Date until Berlex commences its marketing and
selling efforts in the United States Berlex will use
reasonable commerical efforts to conduct preliminary
training with respect to the Product of its United States
sales force personnel assigned to oncology-related
products to enable such personnel to respond to basic
prescriber and customer inquiries concerning the Product.
Berlex shall commence marketing and selling efforts for

<PAGE>

the Product in Canada with reasonable promptness and in
no event later than the end of the second quarter of
1999, if permissible from a regulatory standpoint and
within the manufacturing and distribution capabilities of
DuPont; provided that if Berlex is unable to meet this
date for Canada and this results in a material breach of
this Agreement, then Cytogen's sole remedy shall be the
termination of this Agreement as to Canada. The
commencement of Berlex's sales and promotion efforts for
the Product shall occur in Latin America, by country, as
promptly as is reasonably possible following the date on
which regulatory approval is gained by Cytogen in any
particular country. Cytogen and Berlex shall agree
(within the time frame set forth in Section 4.1) on the
countries within Latin America in which the Product will
be marketed, recognizing the Cytogen obligations to
commercialize in Latin America in the Dow License.
Berlex and/or its Affiliates, Sublicensees or agents will
promote and market the Product to such Nuclear Medicine
specialists, Oncology, or other physician specialties
and/or managed care entities and administrators as
reasonably necessary in Berlex's sole discretion to
maximize market penetration in the Field in the
Territory. Berlex will pay all its own expenses in
marketing and promoting the Product and for any contract
selling expenses incurred.

(b) If Berlex desires to have marketing rights to the Product
in any country of the world outside the Territory, it
shall so notify Cytogen. Upon receipt of such notice
Cytogen shall use reasonable commercial efforts to have
such country or countries added to the Territory.

(c) Upon request, Cytogen shall have access to reasonable
quantities of materials produced by Berlex for use by
Berlex in promotion of the Product, in connection with
Cytogen's corporate needs such as investor relations and
other external corporate communications programs as it
might conduct.

(d) All marketing, selling and distribution expenses, except
for such expenses as incurred by Cytogen pursuant to the
co-promotion provisions under Section 6.1 (c), shall be
paid by Berlex.

(e) All order/invoicing, customer service support and
accounts receivable management shall be the
responsibility of Berlex at its sole expense.

(f) Berlex shall: (i) Maintain a sales force devoted to
the sale of oncology-related products, including the
Product, of not less than forty-five (45) competent,
trained sales force personnel not later than the end of
the second quarter of 1999; provided, however, that for
the purpose of determining whether Berlex has materially
breached this covenant, the standards set forth in
Section 14.2 (b) (i) shall control; and (ii) sell the
Product in 1st position during the first eighteen months
following the commencement of Berlex's marketing and
selling efforts (of which date Berlex shall notify
Cytogen), and not less than 2nd position for the eighteen

<PAGE>

months thereafter, and thereafter in such a position as
to actively promote the Product.

ARTICLE V - MANUFACTURE

5.1 DuPont Relationship. The Parties recognize that neither
Berlex nor Cytogen is capable of manufacturing or distributing
the Product, and that such functions must be delegated to one
or more Third Parties. As of the Effective Date these
functions are being performed by DuPont at its North
Bellarica, Massachusetts facility, pursuant to a contractual
agreement between Cytogen and DuPont. The Parties will use
reasonable commercial efforts to enter into the Manufacturing
Agreement with DuPont prior to November 30, 1998. Following
the completion of the Manufacturing Agreement, the Parties
will use reasonable commercial efforts to maintain DuPont as
a qualified manufacturer and distributor of the Product under
the NDA. Cytogen will conduct or arrange to have conducted
such GMP compliance audits of the DuPont manufacturing and
distribution facility as are customary in the pharmaceutical
industry in the United States. The costs of such audits shall
be borne by Cytogen. The results of such audits shall be
transmitted by Cytogen to Berlex.

5.2 Other Manufacturers. Berlex shall have the right to have
more than one vendor qualified as a manufacturer, and/or more
than one vendor qualified as a distributor. At the discretion
of Berlex such additional vendors may be utilized either in
place of or in addition to DuPont. Upon notice from Berlex,
Cytogen agrees to use reasonable commercial efforts to assist
Berlex in the qualification of vendors other than DuPont as
manufacturers and/or distributors of the Product under the
NDA. The GMP compliance audit obligation of Cytogen described
in Section 5.1 shall be applicable to other manufacturers and
distributors of the Product.

5.3 No Breach. The Parties recognize that Third Party
manufacturers and/or distributors of the Product are
independent entities which are not under the control of either
Party. The failure of a Third Party manufacturer or
distributor to perform the functions of manufacture or
distribution as contemplated by the Parties shall not
constitute a breach of this Agreement by either Party.

ARTICLE VI - GRANT OF LICENSE

6.1 Exclusive License.

(a) Cytogen grants to Berlex an exclusive license under
Licensed Patents and Technical Information owned or
developed by Cytogen and an exclusive sub-license under
Licensed Patents and Technical Information controlled by
or licensed to Cytogen to make, have made, use and sell
the Product in the Field in the Territory.

15
<PAGE>

(b) Berlex shall have the right to grant sublicenses of the
rights granted under Section 6. l (a) to others. The
prior consent of Cytogen, which consent shall not be
unreasonably withheld, shall be required in the event
Berlex desires to grant a sublicense for the United
States or Canada to a non-Affiliate. Other Berlex
sublicenses shall not require the consent of Cytogen.
The Parties contemplate that sublicenses by Berlex would
be granted in connection with selling efforts as to the
Product for indications prescribed by physician audiences
with which it does not have an adequate sales
relationship and/or to Affiliates or other Parties in
countries other than the United States.

(c) Berlex may request that Cytogen provide reasonable
assistance to co-promote the Product or provide
assistance with marketing and development efforts, and
Cytogen may engage in co-promotion efforts in support of
marketing, to the extent coordinated with and approved in
advance by Berlex, such approval not to be unreasonably
withheld.

ARTICLE VII - ROYALTY PAYMENTS

7.1 Royalties

(a) As partial consideration for the rights granted in
Section 6.1, Berlex shall pay to Cytogen a royalty equal
to 25% of Net Sales. In the event that any one or more
of the Additional Indications are approved by FDA for
inclusion in the labeling of the Product in the United
States, then commencing with the first day of the
calendar quarter following the calendar quarter in which
the first such approval of an Additional Indication
occurs, the royalty rate shall increase to 27% of Net
Sales throughout the Territory. Provided, however, that the
27% royalty rate shall be applicable only to the volume of
Net Sales in each calendar quarter in excess of the volume
of Net Sales for the calendar quarter immediately preceding the
calendar quarter in which FDA approval of the first
Additional Indication occurred (the "Excess Net Sales").
The initial 25% royalty rate shall continue to be applicable
to determine the royalty payable by Berlex to Cytogen with
respect to the volume of Net Sales each quarter which is not
Excess Net Sales.

(b) Berlex's obligation to pay royalties under Section 7.1
(a) to Cytogen shall commence in each country of the
Territory upon First Commercial Sale in such country and
shall continue until the expiration of the last-to-expire
Valid Licensed Claim in such country.

(c) Berlex's royalty obligations shall apply to sales to
unrelated Third Parties, excluding transfers among
Berlex, its Affiliates and Sublicensees made for the
purpose of facilitating the sale, development or
promotion of Product. When Berlex, its Affiliates, or
its Sublicensees would be considered end-use consumers by
those in the pharmaceutical industry, and such end use is

16
<PAGE>

not done in conjunction with commercially reasonable
promotion or development activities, then a royalty shall
be due based on the price normally paid by Third-Party
buyers. Product shall be deemed sold when invoiced.

7.2 Sales Reports.

(a) Within thirty (30) days after the end of each calendar
quarter, Berlex shall provide Cytogen with a written
statement with respect to such period, specifying the Net
Sales of Products during the period, and the amount of
royalty due, if any. For the United States such report
shall contain actual Net Sales figures. For the other
countries of the Territory such report shall contain
Berlex's estimate of Net Sales, with over or
underpayments being corrected in the following quarterly
report and payment. In addition, Berlex shall provide
Cytogen with a written report of monthly sales for the
United States and Canada, in such form as may be agreed,
within 20 days following the end of each month (actual
sales figures for the United States and estimated sales
figures for Canada if actual figures are not available).

(b) No statements or reports shall be required under Section
7.2(a) prior to the date of First Commercial Sale of a
Product by Berlex in the Territory.

7.3 Records and Audit Rights.

(a) Berlex shall keep complete and accurate records
pertaining to the manufacture, use and sale of Product
appropriate to determine royalties payable under Section
7.1 of this Agreement.

(b) At the request and expense of Cytogen, an independent
auditor, selected by Cytogen and acceptable to Berlex,
shall have access limited to once per calendar year, at
Berlex's principal place of business during ordinary
business hours, to such records maintained by Berlex as
may be necessary to:

(1) determine, with respect to the preceding two years
the correctness of any report or payment made under
this Agreement, or

(2) obtain information with respect to the preceding two
years as to the royalty payable in the case of
Berlex's failure to report or pay such royalty
pursuant to this Agreement. If deemed necessary or
desirable in the sole opinion of the accountant, the
accountant shall at Cytogen's expense be permitted to
consult with and obtain the assistance of consultants

17
<PAGE>

selected by the accountant and acceptable to Berlex.
Such acceptance shall not be unreasonably withheld.
Neither the accountant nor the selected consultants
shall disclose to Cytogen or any Third Parties any
information relating to the business of Berlex other
than information relating solely to the accuracy of
the reports and payments under this Agreement.

7.4 Payment of Royalty.

(a) Berlex shall make all royalty payments due under Section
7.1 for sales of Product in each calendar quarter within
thirty (30) days after the end of such quarter. Such
payment shall be based on actual and estimated sales
results as described in Section 7.2.

(b) Payments by Berlex under this Agreement shall be paid to
Cytogen in United States dollars by wire transfer of
immediately available funds to an account at a commercial
bank designed by Cytogen at least ten (10) business days
before payment is due. Where payments are based on Net
Sales in countries other than the United States, the
amount of such Net Sales expressed in the currency of
each country shall be converted first into Deutsche
Marks, or the then applicable legal currency in the
Federal Republic of Germany, and then into United States
dollars at the average exchange rate (calculated at the
average of the "bid" and "asked" exchange rate) for the
applicable quarter; provided, however, that the
conversion of the currency in question into Deutsche
Marks or the then applicable German currency prior to
conversion into United States dollars shall be for
calculation purposes only, and no additional fee or
commission will be incurred as a consequence of the
multiple currency conversions. In determining the
average exchange rate for any quarter, the standard shall
be fifty percent (50%) of the sum of (i) the rate quoted
by Reuters (or a different independent wire service
providing international spot exchange rates as agreed to
by the Parties) in Frankfurt at 1:00 p.m. on the last
Business Day of the applicable quarter (or, in the event
that the German government eliminates the Frankfurt
fixing, the successor currency fixing established by the
German government); plus (ii) the rate quoted by Reuters
(or the approved successor wire service) in Frankfurt at
1:00 p.m. on the last Business Day of the quarter
immediately preceding the applicable quarter.

(c) Any sum required under the laws of any governmental
authority to be withheld by Berlex from payment for the
account of Cytogen under Section 7.1 shall be promptly
paid by Berlex for and on behalf of Cytogen to the
appropriate tax or other governmental authorities and
Berlex shall furnish Cytogen with copies of official tax
receipts or other appropriate evidence issued by the
appropriate tax or other governmental authorities.

(d) All payments due Cytogen under this Agreement which are
received later than the due date, shall be subject to an
additional payment of one percent (1%) per month or
portion thereof as liquidated for payments received later
than the due date.

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<PAGE>

ARTICLE VIII - INDEMNIFICATION

This Article VIII shall not be applicable to patent
infringement claims brought by Third Parties, which shall be
governed by Article XII.

8.1 Indemnification of Cytogen by Berlex. Berlex shall
indemnify and hold Cytogen, its Affiliates and the officers,
directors and employees of each of them, harmless from any and
all liability, including liability for death or personal
injury, and judgments, damages, costs, losses and expenses,
including reasonable attorney's fees and expenses arising from
any Claim that results solely from (i) the material breach by
Berlex of any representation, warranty, or covenant of Berlex
contained in this Agreement; or (ii) the negligent, reckless
or willful misconduct of Berlex in connection with the
manufacture, distribution, marketing or sales of the Product.

8.2 Indemnification of Berlex by Cytogen. Cytogen shall
indemnify and hold Berlex, its Affiliates, and the officers,
directors and employees of each of them, harmless from any and
all liability, including liability for death or personal
injury, and costs, losses and expenses, including reasonable
attorney's fees and expenses arising from any Claim that
results solely from (i) the material breach by Cytogen of any
representation, warranty, or covenant of Cytogen contained in
this Agreement; or (ii) the negligent, reckless or willful
misconduct of Cytogen in connection with the research,
development, labeling, or FDA registration of the Product.

8.3 Shared Liability. In the event that a Claim involves
allegations that the negligent, reckless or willful misconduct
of each of Berlex and Cytogen contribute materially to any
such liability, cost, loss or expense stemming from the
Product, then Cytogen and Berlex each shall be responsible for
that portion of said liability, cost, loss or expense to which
such misconduct contributed.

8.4 Assertion of Claims.

(a) Each indemnified Party agrees to give the indemnifying
Party prompt written notice of any Claim or discovery of
fact upon which such indemnified Party intends to base a
request for indemnification under Sections 8.1, 8.2, or
8.3. Each Party shall furnish promptly to the other,
copies of all papers and official documents received in
respect of any Claim. With respect to any Claim relating
solely to the payment of money damages and which will not
result in the indemnified Party becoming subject to
injunctive or other relief or otherwise adversely
affecting the business of the indemnified Party in any
manner, and as to which the indemnifying Party shall have
acknowledged in writing the obligation to indemnify the
indemnified Party hereunder, the indemnifying Party shall
have the sole right to defend, settle or otherwise dispose
of such Claim, on such terms as the indemnifying Party, in
its sole discretion, shall deem appropriate. The
indemnifying Party shall obtain the written consent of the
indemnified Party, which shall not be unreasonably
withheld, prior to ceasing to defend, settling or
otherwise disposing of any Claim if as a result thereof

19
<PAGE>

the indemnified Party would become subject to injunctive
or other equitable relief or any remedy other than the
payment of money, which payment would be the
responsibility of the indemnifying Party. The
indemnifying Party shall not be liable for any settlement
or other disposition of a Claim by the indemnified Party
which is reached without the consent of the indemnifying
Party. Except as provided above, the reasonable costs and
expenses, including reasonable fees and disbursements of
counsel incurred by any indemnified Party in connection
with any Claim, shall be reimbursed on a quarterly basis
by the indemnifying Party, without prejudice to the
indemnifying Party's right to contest the indemnified
Party's right to indemnification and subject to refund in
the event the indemnifying Party is ultimately held not to
be obligated to indemnify the indemnified Party.

(b) In the event that a Claim involves allegations of shared
liability pursuant to Section 8.3, the Parties will
insofar as possible endeavor to coordinate their defense
strategies (including a joint defense agreement if
warranted by the circumstances). Expenses shall be
allocated between the Parties based on the proportion of
the loss attributable to each. If the Parties are unable
to agree on the division of expenses during the pendency
of the Claim, then each Party shall bear its own expenses,
subject to reimbursement by or of the other Party
following the conclusion of the Claim.

ARTICLE IX - CONFIDENTIALITY

9.1 Nondisclosure and Nonuse. Cytogen and Berlex shall
each retain in confidence information obtained from the other
under this Agreement and shall not disclose such information
to any Third Party except:

(i) consultants, Affiliates, Sublicensees, manufacturers
and agents who are obligated to maintain it in
confidence pursuant to written agreements which are
at least as stringent as the terms of this Article
IX.

(ii) as necessary to obtain approval from a governmental
agency in order to market the Product;

(iii) as reasonably may be required in a patent
application covering subject matter which is
encompassed within this Agreement; or

(iv) as otherwise may be required by law, regulation or
judicial order, and shall not use such information
for any purposes other than those contemplated by
this Agreement. Each Party shall take all reasonable
precautions to safeguard the confidentiality of the
information.

9.2 Exceptions.

(a) The obligations of nondisclosure and non-use of this
Article IX shall not apply to information which:

20
<PAGE>

(i) is known to the receiving Party, as evidenced by
written records maintained by the receiving Party, or
to the public, or is in the public domain, prior to
its disclosure under this Agreement;

(ii) is hereafter lawfully disclosed to the
receiving Party by a Third Party not under an
obligation of confidence to the other Party; or

(iii) subsequently enters the public domain or
becomes known to the public by some means other than
a breach of this Agreement; or

(iv) is developed by the receiving Party independently of
the disclosure by the disclosing Party, as evidenced
by the records of the receiving Party.

(b) Notwithstanding anything in this Article IX to the
contrary, Berlex shall have the right to disclose
preclinical and clinical data and results relating to the
Product to medical professionals and potential purchasers
of the Product for the purposes of selling, advertising
and promoting the Product and conducting medical
education initiatives relating to the Product.

9.3 Purpose of Article. Each Party acknowledges that the
restrictions contained in this Article IX are necessary and
reasonable to protect the legitimate interests of the Parties
and a violation of this Article by a Party may result in
irreparable harm to the other Party.

9.4 Term. The provisions of this Article IX shall survive the
expiration or termination of this Agreement and continue for
ten (10) years thereafter.

9.5 Other Agreements. Cytogen and Berlex's Affiliate
Schering AG executed a Confidentiality Agreement dated as of
October 5, 1998 (the "Confidentiality Agreement"). The
Parties agree that as to information disclosed to Berlex
pursuant to such confidentiality Agreement this Agreement
supersedes and takes place of the Confidentiality Agreement
and that all confidential information disclosed under the
Confidentiality Agreement shall be governed by this Agreement
instead.

9.6 Publications. Either Party may publish information
pertaining to its technical information provided that prior to
any such publication the proposed publication is first
submitted to the non-disclosing Party for its review and
written consent within thirty (30) days, which may not be
unreasonably withheld.

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<PAGE>

ARTICLE X- TRADEMARKS

The Product will be marketed and sold under the trademark
Quadramet , or such other trademark as to which the Parties
shall agree that shall be either owned by, or licensed
exclusively to, or assigned to Cytogen by Dow and exclusively
sub-licensed or assigned to Berlex. Cytogen will use
commercially reasonable efforts to: (i) provide Berlex with
the opportunity to review and market-test any trademarks other
than Quadramet being considered and provide recommendations to
Cytogen regarding the selection of such trademark for the
Product, and to select a trademark which is agreeable to
Berlex; provided, however, that this agreement is not
unreasonably withheld by Berlex and is not prohibited under
the Dow License. Cytogen grants to Berlex an exclusive
sublicense to use the trademark Quadramet in the Territory in
connection with the promotion and sale of the Product,
reserving to Cytogen the right to use the trademark in its
normal business communications. The trademark rights of
Berlex shall terminate on the same date as this Agreement
shall terminate. Berlex trademark rights on expiration of
this Agreement shall be as provided in Section 14.6. If and
as required or permitted by the rules or regulations of the
FDA or other applicable law or the terms of the Dow License,
the names of Cytogen, Berlex and Dow shall appear on the
product labeling. In addition, promotional, sales and
marketing literature, package inserts, and the like, will
indicate that the Product is licensed from CYTOGEN
Corporation.

ARTICLE XI - INVENTIONS AND PATENTS

11.1 Ownership and Patent Applications.

(a) All inventions made during the term of this Agreement
shall belong to the Party making the invention. Any
resulting patent applications and patents shall belong to
the Party owning the claimed inventions.

(b) In the event that there are joint inventions, Berlex and
Cytogen shall have joint rights to such intellectual
property and any resulting patents shall be jointly
owned. The Parties will consult with each other as to
the filing of patent applications relating to joint
inventions.

(c) Neither Cytogen nor Berlex shall have any right with
respect to the other's Technology, including know-how and
patents, which are not otherwise specifically provided
for in this Agreement.

(d) Solely to the extent necessary for Cytogen to exercise
its rights and perform its obligations under this
Agreement, Berlex hereby grants Cytogen a paid-up,
royalty-free nonexclusive license for any improvements to
the Product, inventions and resulting patent applications
and patents in the Territory contemplated by this Article
XI, made wholly or in part by employees, agents or

22
<PAGE>

consultants of Berlex its Affiliates and Sublicensees
which are related to Cytogen's Technology, Technical
Information or Licensed Patents disclosed to Berlex for
as long as this Agreement is in effect. To the extent
such invention, application or patent covers the use or
sale of the Product in the Field in the Territory,
Cytogen shall have a first right to negotiate for a
non-exclusive license from the moment that this Agreement
ceases to be in effect.

(e) As to Cytogen inventions and patents contemplated by this
Article XI, Berlex shall have a first right to negotiate
for a non-exclusive license to said Cytogen patents which
cover the manufacture, use or sale of the Product in the
Field in the Territory from the moment that this
Agreement ceases to be in effect.

ARTICLE XII INFRINGEMENT

12.1 Infringement of Third Party's Patent. In the event
either Party receives a claim or is advised that the
manufacturing, use or sale of the Product in the Territory
infringes a patent owned by a Third Party, not an Affiliate of
Berlex or Cytogen, then:

(a) the Party receiving the claim or advice shall promptly
notify the other Party;

(b) the Parties shall promptly meet to review and confer
regarding the matter;

(c) following such review and conference, Cytogen will notify
Dow and provide Dow with the opportunity to determine
whether it intends to defend such suit or claim at its
sole expense as provided under the Dow License;

(d) if Dow elects not to so defend or dispose such suit or
claim, then:

i) Berlex may obtain a license from the Third Party at
Berlex's expense, with Cytogen's approval; provided,
however, that such approval may not be unreasonably
withheld. In such event Berlex shall be entitled to
deduct any royalties due under the Third-Party
license on the sale of the Product from the royalties
due Cytogen in the affected country or countries;
provided, however, that in no event shall such
deduction exceed fifty percent (50%) of any royalty
otherwise due to Cytogen hereunder on such sale or
cause the royalty due to Cytogen hereunder to be less
than the royalty due from Cytogen to Dow under the
Dow License; or

(ii) Berlex may decide to defend or otherwise dispose of
such suit or claim, in which case Berlex will give
Cytogen the opportunity to participate in such
defense; or

(iii) if Berlex does not obtain a Third Party license
as provided under Section 12.1(d)(i) or defend or
dispose of such suit or claim as provided under

23
<PAGE>

Section 12.1(d)(ii), then Cytogen may defend such
suit or claim, in which case Cytogen will give Berlex
the opportunity to participate in such defense.

(e) During the period in which any such litigation is pending
and Berlex is defending against such charge of
infringement as contemplated under Section 12.1(d)(ii),
Berlex shall have the right to apply up to fifty percent
(50%) of the royalties otherwise due Cytogen hereunder in
the affected country or countries against Berlex's
litigation expenses.

(f) In the event litigation, as contemplated under Sections
12.1(d)(ii) and 12.1(d)(iii), results in a final judgment
of infringement due to the manufacture, use or sale of
the Product, Cytogen and Berlex shall each bear a
fractional share of any and all damages and litigation
expenses adjusted for any litigation expenses that Berlex
may have already deducted from royalty payments due to
Cytogen as provided under Section 12.1(e) herein, arising
from or related to such infringement of Third Party
patents by the Product. The fractional share of all such
damages and litigation expenses for each Party shall be
calculated based upon the most recent annualization of
Product revenues of each Party, and if prior to a full
year following commercialization then calculated based
upon the most recent quarter's fraction. For example, if
the royalty payable to Cytogen under Section 7.1 is 25%
in the year prior to the final judgment of a Product
related infringement action, then Cytogen shall be
responsible for payment of 25 % of such damages and
expenses and Berlex shall be responsible for payment of
75% of such damages and expenses. It shall be up to
Berlex to seek a license from the Third Party, if
required to continue manufacturing, marketing and selling
the Product, in which event Berlex shall be entitled to
deduct any royalties due under the license on the sale of
the Product from the royalties due Cytogen in the
affected country or countries; provided, however, that in
no event shall such deduction exceed fifty percent (50%)
of any royalty otherwise due to Cytogen hereunder on such
sale or cause the royalty due to Cytogen hereunder to be
less than the royalty due from Cytogen to Dow under the
Dow License.

(g) In the event that the royalty due from Berlex to a Third
Party pursuant to either Section 12.1 (d), (e), or (f)
exceeds the amount that Berlex is permitted to deduct
from the royalty due to Cytogen, then Berlex may deduct
such excess royalties from the royalty payments due to
Cytogen in future quarters if in such future quarters the
deduction would not exceed the amount which Berlex is
permitted to deduct from its royalty due to Cytogen. For
example, if Berlex takes a license from a Third Party
under a patent having a remaining term of five years, and
the quarterly royalty due to the Third Party for the five
year remaining term of the licensed patent exceeds the
amount which Berlex is permitted to deduct from the
royalty payment to Cytogen, then after the expiration of
the five year remaining term of the Third Party patent,
Berlex may commence deducting the excess royalty paid to
the Third Party from the royalty payment due to Cytogen.

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<PAGE>

12.2 Infringement of Licensed Patents by a Third Party.

(a) If either Berlex or Cytogen learns of an infringement or
threatened infringement of a Licensed Patent, such Party
shall notify the other Party within a reasonable time.

(b) The Parties shall promptly meet to decide on the course
of action to take. If the infringement is of a Dow
Licensed Patent, the Dow License provides that Dow shall
have the first right to enforce such patent. If the
infringement is of a patent that is not a Dow Licensed
Patent, or if Cytogen has the right to prosecute
infringers under the Dow License, then Cytogen may at its
own expense, take steps to prevent or terminate such
infringement, and Berlex may join in such steps at its
own expense. Should both Cytogen and Berlex join in such
steps, neither shall settle the controversy without the
consent of the other.

(c) Cytogen shall retain for itself all recovery from any
action commenced to prevent or terminate the
infringement, unless Berlex shall have joined in the
action at its own expense. Berlex agrees to cooperate
with Cytogen and provide such non-monetary assistance as
Cytogen may reasonably request in connection with such
action. Berlex may join Cytogen in any such action to
prevent or terminate the infringement, in which case any
recoveries shall be equally divided between Cytogen and
Berlex after deduction of litigation expenses not
recoverable from a Third Party such as Dow. Should both
Cytogen and Berlex join in such an action, neither shall
settle the action without the consent of the other.

(d) Should Cytogen have a right, under the Dow License, to
pursue an action as provided in Section 12.2(b) herein,
but elects to not pursue such action to prevent or
terminate an alleged infringement within thirty (30) days
following notification by Dow that Cytogen may exercise
such right, Berlex may then, at its sole expense, pursue
action to prevent or terminate the infringement, and
retain any recoveries which it shall obtain for such
infringement. Cytogen agrees to cooperate with Berlex
and provide such nonmonetary assistance as Berlex may
reasonably request in connection with any such action.

ARTICLE XIII - REPRESENTATIONS AND WARRANTIES

13.1 Berlex's Representations. Berlex hereby represents
and warrants to Cytogen as of the date of execution of this
Agreement as follows:

(a) Berlex is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Delaware. The execution and delivery of this Agreement
by Berlex and the consummation of the transactions
contemplated herein have been duly authorized and
approved by all necessary action.

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(b) Neither the execution and delivery by Berlex of this
Agreement nor the performance and consummation by Berlex
of the transactions contemplated herein will violate or
conflict with or result in a breach or a default under
any other agreement to which Berlex is a Party.

(c) Berlex represents and warrants to Cytogen that Berlex:
(i) will in the future conduct any preclinical and
clinical studies of the Product in accordance with
applicable United States law, known or published
standards of the FDA, and the scientific standards
applicable to the conduct of studies in the United
States; and (ii) will not employ (or, to the best of its
knowledge, use any contractor or consultant that employs)
any individual or entity debarred by FDA or, to the best
knowledge of Berlex, any individual or entity which is
the subject of an FDA debarment investigation or
proceeding, in the conduct of preclinical or clinical
studies of the Product. This Section 13.1 (c) shall not
be subject to Section 13.3.

13.2 Cytogen's Representations. Cytogen represents and
warrants to Berlex as of the date of execution of this
Agreement as follows:

(a) Cytogen is a corporation duly organized, validly existing
and in good standing under the laws of the State of
Delaware. The execution and delivery of this Agreement
by Cytogen and the consummation by it of the transactions
contemplated herein have been duly authorized and
approved by all necessary action.

(b) Neither the execution and delivery by Cytogen of this
Agreement nor the performance and consummation by Cytogen
of the transactions contemplated herein will violate or
conflict with or result in a breach of or default under
any other agreement to which Cytogen is a Party.

(c) Cytogen has the right to exclusively license or
sublicense the Licensed Patent rights and Technical
Information to Berlex as provided herein, free and clear
of any encumbrances or claims by Third Parties (except as
set forth in the Dow License).

(d) Cytogen represents and warrants that, as of the date of
execution of this Agreement, the Dow License remains in
full force and effect. Cytogen shall exercise
commercially reasonable efforts to maintain the Dow
License in full force and effect through the term of this
Agreement without revision or amendment, except in the
case where prior approval has been obtained from Berlex
to amend the Dow License.

(e) Cytogen represents and warrants, as of the date of
execution of this Agreement, that Cytogen, to the best of
its knowledge, information and belief, is unaware of a
reference that would overcome the presumption of validity
of at least the claims of United States Licensed Patents
that cover the Product or its method of use for the

26
<PAGE>

treatment of calcified tumors or bone pain and that
Cytogen has not received any written notice or claim to
the effect that the manufacture, use or sale of the
Product infringes the patent rights or other intellectual
property rights of a Third Party.

(f) Cytogen represents and warrants to Berlex that Cytogen
(i) has informed Berlex of all information in its
possession or control as of the Effective Date
concerning efficacy, side effects, injury, toxicity, or
sensitivity reaction and incidents or severity thereof,
associated with any clinical use, studies,
investigations, or tests with the Product (animal or
human), whether or not determined to be attributable to
the Product; (ii) has conducted or has caused its
contractors or consultants to conduct, and will in the
future conduct, the preclinical and clinical studies of
the Product in accordance with applicable United States
law, known or published standards of the FDA, and the
scientific standards applicable to the conduct of studies
in the United States; (iii) has employed and will in the
future employ individuals of appropriate education,
knowledge, and experience to conduct or oversee the
conduct of Cytogen's clinical and preclinical studies of
the Product; and (iv) has not employed (and, to the best
of its knowledge, has not used a contractor or consultant
that has employed) and in the future will not employ (or,
to the best of its knowledge, use any contractor or
consultant that employs) any individual or entity
debarred by FDA, or, to the best knowledge of Cytogen,
any individual who or entity which is the subject of an
FDA debarment investigation or proceeding, in the conduct
of the preclinical or clinical studies of the Product.
This Section 13.2 (f) shall not be subject to Section
13.3.

13.3 Accuracy and Ownership of Information Disclosed.
Information disclosed by each Party to the other shall be
accurate to the best of the disclosing Party's knowledge, but
neither Party expressly or implicitly warrants as to the
accuracy of such information. Subject to other sections of
this Agreement, all information furnished by a Party pursuant
to this Agreement shall remain the sole and exclusive property
of the disclosing Party. Either Party may refuse to disclose
or defer disclosure of information to the other Party to the
extent such information shall be either unnecessary for the
purposes of this Agreement or shall not be subject to
disclosure under this Agreement.

ARTICLE XIV- EXPIRATION AND TERMINATION

14.1 Term - Expiration. Unless terminated earlier under other
provisions of this Agreement, this Agreement will expire
twenty (20) years from the date of execution hereof, or on the
date of expiration of the last to expire Licensed Patent,
whichever is later.

14.2 Material Defaults.

(a) Cytogen may terminate this Agreement at any time upon

27
<PAGE>

Berlex's unexcused failure to make payments due to
Cytogen pursuant to this Agreement, and the continuation
of such failure for more than sixty (60) days after
delivery of written notice to Berlex of such failure. In
the case of Berlex's failure to make payments, this
termination right of Cytogen shall not be applicable if
there exists a legitimate dispute as to whether there is
a payment due form Berlex to Cytogen, or as to the amount
of any such payment (provided, however, that in the case
of a dispute as to the amount of a payment, Berlex shall
pay to Cytogen the amount that Berlex contends that it
owes to Cytogen).

(b) Cytogen may terminate this Agreement at any time upon
Berlex's failure to use reasonable commercial efforts to
commercialize and market the Product under Article IV and
upon the continuation of such failure for more than sixty
(60) days after delivery of written notice to Berlex of
such failure, except where such failure of Berlex is a
result of the failure of Cytogen or a Third Party
manufacturer or distributor to meet its obligations as
defined in this Agreement or due to circumstances beyond
the reasonable control of Berlex pursuant to Section
15.17. The following actions or inaction, without
limitation as to any other material breach, shall be
deemed to constitute failure to use reasonable commercial
efforts to develop, commercialize and market the Product:
(i) Maintaining a sales force of fewer than fourty (40)
competent, trained sales force personnel assigned to
oncology-related products after the date specified in
Section 4.10 (f). This number may include sales support
staff. The Parties recognize that from time to time
there may be temporary reductions in the number of Berlex
sales employees assigned to oncology-related products due
to resignation, reassignment, illness, leave, etc.
Berlex will endeavor to keep such temporary reductions to
a minimum, but such temporary reductions which result in
less than 40 sales employees assigned to the Product
shall not be a breach of this Agreement; (ii) Failure to
position the Product during sales details as required
under Section 4.10 (f), and thereafter, in a position as
to actively promote the Product; and (iii) Marketing in
the United States by Berlex of a pharmaceutical product
that directly competes with the Product on the basis of
FDA approved labeled indications.

(c) Berlex may terminate this Agreement on written notice to
Cytogen if (i) a Manufacturing Agreement with DuPont
acceptable to Berlex in its sole discretion is not
executed and delivered by DuPont, Cytogen and Berlex on
or before November 30, 1998; or (ii) The Dow Amendment in
a form acceptable to Berlex in its sole discretion is not
executed and delivered by both Cytogen and Dow on or
before November 30, 1998.

(d) Berlex may terminate this Agreement effective any time
after twenty-four months following the date upon which
Berlex commences its marketing and selling efforts, upon
nine months prior notice to Cytogen. For example, at the
end of fifteen months following Berlex's commencement of
marketing and selling efforts, Berlex can provide Cytogen
with a notice terminating the Agreement effective twenty-four
months following the commencement of Berlex's marketing and

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<PAGE>

selling efforts.

(e) With respect to countries of the Territory other than the
United States, Berlex shall have the right to terminate
this Agreement on a country-by-country basis, by
providing Cytogen six months advance written notice each
time this Agreement is terminated as to a particular
country.

(f) Either Party may terminate this Agreement upon ninety
(90) days prior written notice in the event of the other
Party's breach of any other material provision of this
Agreement, if such default or breach is not remedied
within ninety (90) days from the date of such notice,
except where such default or breach is due to
circumstances beyond the reasonable control of the other
Party pursuant to Section 15.17.

(g) Any failure to terminate shall not be construed as a
waiver by the aggrieved Party of its right to terminate
for future defaults or breaches.

14.3 Bankruptcy. If, during the term of this Agreement,
either Cytogen or Berlex makes an assignment of this Agreement
or generally, for the benefit of creditors, or becomes
insolvent or seeks protection under any bankruptcy,
receivership, trust deed, creditor's arrangement or
composition, or if any comparable proceeding is instituted
against the other Party and is not dismissed within ninety
(90) days of such institution, then any licenses granted by
such Party under this Agreement shall become irrevocable, and
all right, title and interest in all regulatory filings held
by such Party in the United States relating to the Product
(INDs, NDAs, DMFs, etc.) shall be transferred to the other
Party. In addition, the other Party may terminate this
Agreement immediately upon delivery of written notice thereof.
The Parties acknowledge that certain rights of the Parties may
be determined under certain circumstances by applicable
provisions of the United States Bankruptcy Code (15 USC 101-1330).

14.4 Surviving Rights. The provisions of Article VIII
(Indemnification) Article IX (Confidentiality), Section 11.1
(Ownership and Patent Applications), Section 13.3 (Accuracy
and Ownership of Information Disclosed), and Section 15.7
(Governing Law) of this Agreement shall survive the expiration
or termination of this Agreement.

14.5 Effects of Termination.

(a) Upon termination of this Agreement, each Party shall upon
the request of the other Party return all books, records,
documents and data which it shall have received from the
other Party pursuant to this Agreement; provided,
however, that a single copy may be retained for legal
archival purposes by each Party. If a termination by
Berlex relates only to one or more countries but not the
entire Territory, then this Section shall be applicable
only in the countries so terminated.

(b) Termination of this Agreement by either Party shall not
prejudice the right of Cytogen to recover any royalty or

29
<PAGE>

other payments due at the time of termination, or which
become due after termination pursuant to Sections 14.5(c)
and 14.5(d) herein and shall not prejudice any cause of
action or claim of Cytogen or Berlex accruing under this
Agreement prior to termination.

(c) Berlex shall not make, have made, use or sell the Product
following termination of this Agreement where such
manufacture, use or sale would infringe a Valid Licensed
Claim.

(d) Upon termination of this Agreement, Cytogen shall be free
to use the Technical Information and Licensed Patents,
and data, test results and information related or
directed to the Product. All rights to any inventions,
patents and patent applications of Berlex under Section
11.1(a), herein, shall be retained by Berlex upon
termination or expiration of this Agreement. Cytogen
shall retain a first right to negotiate for a non-exclusive
license of any of Berlex patents pursuant to
Section 11.1(d) for a period of ninety (90) days
following termination of this Agreement. Berlex shall
retain no right, title, interest or license to any of
Cytogen's Technical Information or Licensed Patents
following termination of this Agreement.

(e) Upon termination of this Agreement, Berlex, its
Sublicensees and Affiliates may assign or cause to be
assigned for consideration (to be negotiated) to Cytogen
all regulatory applications and approvals that it owns
relating to the marketing, experimental use or sales of
the Product in the Field, including any INDS, NDAs or
filed with the FDA. All records, files, customer lists,
promotional materials or all proprietary information
relating to the Product may also be delivered by Berlex
to Cytogen for consideration following termination of
this Agreement.

(f) Upon termination of this Agreement for any reason, Berlex
shall take such steps, at the option of Cytogen, to
assign any contracts relating to manufacturing solely of
the Product to Cytogen and at the expense of Cytogen to
take such reasonable actions as may be requested by
Cytogen to facilitate a transition and ensure continuity
of manufacture and distribution of the Product for the
benefit of Cytogen.

14.6 Effect of Expiration. In the event that this Agreement
expires by its terms as set forth in Section 14.1, then Berlex
shall thereafter have a fully paid up license under all
Technical Information controlled by or licensed to Cytogen to
make, have made and use the Product anywhere in the world,
and to make, have made, use, and sell the Product anywhere in
the Territory for any indication. Promptly following the
expiration of this Agreement Cytogen shall grant to Berlex a
perpetual license or sublicense, as the case may be, to all of
Cytogen's right, title and interest in and to all trademark
registrations for the trademark "Quadramet" (and any other
trademark owned by Cytogen under which Berlex has marketed the
Product under this Agreement in any country of the Territory)
in all of the countries of the Territory.

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<PAGE>

ARTICLE XV- MISCELLANEOUS PROVISIONS

15.1 Product Patent Markings. The Parties shall agree on a
plan to cause the Product to be marked on some conspicuous
part of a durable label firmly attached to the Product or to
the package for the Product made or sold under this Agreement,
in a manner which is easily seen and read and not easily
defaceable, either:

(i) if a patent shall have been granted, the patent
number applicable to such Licensed Patent; or

(ii) if a patent shall not have been granted, words
indicating that letters patent have been applied for,
if applicable.

15.2 Dow License.

(a) Berlex acknowledges that this Agreement shall be
consistent with the Dow License and subject to the terms
therein. This Agreement is to be interpreted to avoid
material inconsistency with the Dow License wherever
appropriate. As promptly as possible after the Effective
Date, Cytogen will use reasonable commercial efforts to
enter into an amendment to the Dow License with Dow
clarifying and expanding the scope of the definitions of
the terms "Field" and "Expansion of Licensed Field" in
the Dow License (the "Dow Amendment") in a form
acceptable to Berlex in its sole discretion.

(b) Cytogen shall be responsible for any payments due to Dow
under the Dow License.

15.3 Entire Understanding. This Agreement sets forth the
entire understanding between Cytogen and Berlex pertaining to
its subject matter and supersedes and replaces all prior oral
or written agreements between Cytogen and Berlex pertaining to
such subject matter.

15.4 Amendment. This Agreement may not be amended,
supplemented or otherwise modified except by an instrument in
writing signed by both Parties.

15.5 Assignment. Neither Party may assign this Agreement
without the prior written approval of the other Party except
in connection with the sale or merger of the entire business
of such Party. Such approval shall not be unreasonably
withheld. Notwithstanding such approval, the assigning Party
shall be responsible to the other Party jointly or severally,
with the assignee for any obligations under this Agreement.
Notwithstanding the first sentence of this Section, Berlex
shall have the right to assign its rights under this Agreement
and delegate its obligations under this Agreement to one or
more Affiliates without the approval of Cytogen.

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<PAGE>

15.6 Waiver. No provision of this Agreement shall be waived
by any act, omission or knowledge of a Party or its agents or
employees, except by an instrument in writing expressly
waiving such provision and signed by the waiving Party.

15.7 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of New Jersey, without
regard to conflict of laws principles.

15.8 Restriction of Distribution of This Agreement. This
Agreement shall not be distributed to persons other than those
personnel of Cytogen and Berlex who shall have a need to know
its contents and to those whose knowledge of its contents will
facilitate performance of the obligations of the Parties under
this Agreement, except as may be required by law, regulation
or judicial order.

15.9 Publicity. Neither Party shall make any press
release or other similar public disclosure or announcement
concerning this Agreement, without the prior written consent
of the non-disclosing Party, except as otherwise required by
law. Consent will be deemed granted if no response is
received from the non-disclosing Party within fifteen (15)
business days of its confirmed written request for approval
from the disclosing Party. Notwithstanding the foregoing, in
the event such disclosure or public announcement is required
to be made on a more immediate basis in order to comply with
applicable state or federal securities laws, then approval
will be deemed granted if no response is received from the
non-disclosing Party within the time frames required by law;
provided, however, that the disclosing Party provides the
non-disclosing Party with notice of the legally required time
frame for approval of the disclosure at the time of providing
a copy of the proposed disclosure or announcement.

15.10 Consents Not Unreasonably Withheld or Delayed.
Whenever provision is made in this Agreement for either Party
to secure the consent or approval of the other, such consent
or approval shall not be unreasonably withheld or delayed.

15.11 Construction. The captions appearing in this
Agreement are for reference purposes only and shall not be
considered for the purposes of interpreting or construing this
Agreement. The plural shall be substituted for singular
numbers in any place in which the context may require such
substitution.

15.12 Severability. If any term, covenant or condition of
this Agreement or the application thereof to any Party or
circumstances shall, to any extent or in any country, be held
to be invalid or unenforceable, then (i) the remainder of this
Agreement, or the application of such term, covenant or
condition to Parties or circumstances other than those as to
which it is held invalid or unenforceable, shall not be
affected thereby and each term, covenant or condition of this
Agreement shall be valid and be enforced to the fullest extent
permitted by law; and (ii) the Parties hereto covenant and
agree to renegotiate any such term, covenant or application
thereof in good faith in order to provide a reasonably

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<PAGE>

acceptable alternative to the term, covenant or condition of
this Agreement or the application thereof that is invalid or
unenforceable, it being the intent of the Parties that the
basic purposes of this Agreement are to be effectuated.

15.13 Affiliates. Each Party shall be responsible for all
actions of its Affiliates and Sublicensees and such actions
shall be deemed actions by each Party, its Sublicensees,
Affiliates and each Party shall be jointly severally liable
for obligations and actions under this Agreement and Party
shall be responsible for the Affiliates' and Sublicensees'
compliance with all terms and conditions of this Agreement.

15.14 Notices. Any notice or report required or permitted
hereunder shall be given in writing by personal delivery or by
registered or certified mail, return receipt requested,
postage prepaid, and shall be effective upon delivery to the
following addresses:

As to Cytogen:

Cytogen Corporation
600 College Road East CN 5308
Princeton, New Jersey 08540-5308

Attention: Chief Executive Officer

As to Berlex:

Berlex Laboratories, Inc.
340 Changebridge Road
P.O. Box 1000
Montville, New Jersey 07045-1000
(address for courier service:
340 Changebridge road
Pine Brook, New Jersey 07058-9714)

Attention: Chief Financial Officer

With a copy to:

Berlex Laboratories, Inc.
300 Fairfield Road
Wayne, New Jersey 07470-7358

Attention: General Counsel

or such other addresses as a Party may designate by prior
written notice to the other Party.

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<PAGE>

15.15 Use of Schering Name. Cytogen agrees not to use the
name "Schering" in reference to Berlex's Affiliate Schering AG
in any public document without the written approval of
Schering AG (such approval not to be unreasonably withheld or
delayed).

15.16 Payment Method. All payments by Berlex to Cytogen
under this Agreement shall be by wire transfer of same day
funds to Cytogen's bank account. Cytogen shall supply Berlex
with the bank, routing and account information needed for such
a wire transfer.

15.17 Force Majeure. Neither Party shall be liable to the
other Party for loss or damages, nor shall either Party have
any right to terminate this Agreement, for any default or
delay attributable to any act of God, flood, fire, explosion,
strike, lockout, labor dispute, shortage of raw materials,
casualty or accident, war, revolution, civil commotion, act of
public enemies, blockage or embargo, injunction, law, order,
proclamation, regulation, ordinance, demand or requirement of
any government or subdivisions, authority or representative of
any such government, or any other cause beyond the reasonable
control of the defaulting Party, if the Party affected shall
give prompt notice of any such cause to the other Party.

15.18 Dispute Resolution. Any claim of material breach of
this Agreement by or between the Parties hereto arising from
or relating to (i) this Agreement or any transaction
contemplated hereby; (ii) the validity, construction, meaning,
enforceability of performance of the Agreement or any of its
provisions; (iii) the validity or infringement of any patents;
or (iv) the coverage of any product made, used or sold
hereunder by any patent licensed hereunder, shall, by notice
as provided for in Section 15.14, be referred first to the
President and Chief Executive Officer of Cytogen and the Chief
Executive Officer of Berlex, for consideration. The Chief
Executive Officers of the Parties shall be required to meet to
discuss such matters no more than twenty (20) days after
receipt of such notice. If such matter is not resolved to the
satisfaction of all Parties within ten (10) business days
after such a meeting, then either Party may, by notice as
provided for in Section 15.14, submit the matter to binding
arbitration in the State of New Jersey under the Commercial
Arbitration Rules of the American Arbitration Association. In
the course of such arbitration the following procedures shall
be observed.

(a) The arbitration panel shall be composed of three
arbitrators, one of whom shall be chosen by Berlex, one
by Cytogen and the third by the two arbitrators so
chosen. If both or either of Cytogen or Berlex fails to
choose an arbitrator or arbitrators within fourteen (14)
days after receiving notice of commencement of
arbitration or if the two arbitrators fail to choose a
third arbitrator within fourteen (14) days after their
appointment, then the President of the New Jersey office
of the American Arbitration Association shall, upon the
request of both or either of the Parties to the
arbitration, appoint the arbitrator or arbitrators
required to complete the board.

(b) Within ten (10) days of the appointment of the full
arbitration panel, the Parties shall exchange documents

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<PAGE>

setting forth their final detailed proposals for
resolution of the matter in dispute, together with a
brief or other written memorandum supporting the merits
of their final proposal. The arbitration panel shall
promptly convene a hearing in New Jersey, at which time
each Party shall have an agreed upon time to argue and
present witnesses in support of its final proposal.

(c) The authority of the arbitration panel shall be limited
to the specific question of determining whether a
material breach shall have occurred or been cured, and
notwithstanding any additional matters that may be set
forth in either Party's proposal, the arbitration panel
shall not be empowered to make any other decision or
award any relief or remedy. In the event that the
arbitration panel shall determine that such material
breach shall have occurred the breaching Party shall be
entitled to cure such material breach within sixty (60)
days following the arbitration panel's decision and if
not so cured within the applicable time period, the
non-breaching Party shall be entitled to terminate this
Agreement.

(d) In the event the arbitrators seek the guidance of the
law, the law of the State of New Jersey shall govern,
without regard to its conflicts of laws provisions.

(e) The arbitrators shall make their decision known to both
Parties as quickly as possible by delivering written
notice of their decision to both Parties. The Parties
shall agree in writing to comply with the proposal
selected by the arbitration panel within five (5) days of
receipt of such selection. The decision of the
arbitrators shall be final and binding on the Parties,
and may be enforced by any court of competent
jurisdiction.

(f) The Parties shall bear their own costs in preparing for
the arbitration. The costs of the arbitrators shall be
equally divided between the Parties.

15.19 Rights and Remedies Cumulative. Except as expressly
provided herein, the rights and remedies provided in this
Agreement shall be cumulative and not exclusive of any other
rights and remedies provided by law or otherwise.

15.20 Counterparts. This Agreement may be executed in
counterparts with the same force and effect as if each of the
signatories had executed the same instrument.

15.21 No Partnership. This Agreement is not intended to
create a partnership between Cytogen and Berlex for Federal
income tax purposes (as defined in Section 761 of the Internal
Revenue Code) or for any state or local jurisdiction.
Therefore, there is no requirement to file Form 1065, United
States Partnership Return of Income, or any similar state or
local income tax return, in regard to the contractual
relationship described in this Agreement.

15.22 No Third Party Beneficiaries. Nothing in this
Agreement is intended to benefit and shall not be deemed to
benefit any person or entity that is not a Party hereto, or

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create any Third Party beneficiary rights.

15.23 Independent Contractors. The relationship of Cytogen
and Berlex established by this Agreement is that of
independent contractors, and nothing contained in this
Agreement shall be construed to give either Party the power to
direct and control the day-to-day activities of the other or
allow one Party to create or assume any obligation on behalf
of the other for any purpose whatsoever. All financial
obligations associated with Berlex's business are the sole
responsibility of Berlex. All sales and other agreements
between Berlex and Berlex's customers are Berlex's exclusive
responsibility and shall have no effect on Berlex's
obligations under this Agreement. All financial obligations
associated with Cytogen's business are the sole responsibility
of Cytogen. All sales and other agreements between Cytogen
and Cytogen's customers are Cytogen's exclusive responsibility
and shall have no effect on Cytogen's obligations under this
Agreement.

15.24 Ambiguities. Ambiguities, if any, in this Agreement
shall not be construed against any Party, irrespective of
which Party may be deemed to have authored the ambiguous
provision.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

36
<PAGE>

IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed in duplicate by their duly authorized
representatives as of the Effective Date.

BERLEX LABORATORIES, INC. CYTOGEN CORPORATION

By: /s/ Wolfgang Kunze By: /s/ H. Joseph Reiser
--------------------- ---------------------
Wolfgang Kunze H. Joseph Reiser, Ph.D.
Vice President & CFO President & CEO

37
<PAGE>
SCHEDULE A

PATENTS AND PATENT APPLICATIONS

USA Patent-Number Expiration Date* Serial Number Filing Date
- ----------------- ---------------- ------------- -----------

4,898,724 2/6/07 50,263 5/14/87
N/A N/A 538,871a 6/18/90
N/A N/A 133,806b 10/7/93
N/A N/A 763,849** 9/23/91
4,937,333 6/26/07 389,441 8/4/89
N/A N/A 65,963c 5/6/93
N/A N/A 145,591 11/4/93

*Extension is possible
**Dow/ Fred Hutchinson Cancer Research Center, now abandoned
Abandoned for 37 CFR 1.62 continuation
Pending, 37 CFR 1.62 continuation
Pending
N/A = Not available

38
<PAGE>
SCHEDULE B

FLUDARA LABEL

NDC 50419-511-06
Fludara
(fludarabine phosphate)
For injection
50 mg
Single Dose Vial
For intravenous Use Only
Dosage: See Package insert.

Store under refrigeration, between 2 degrees - 8 degrees C
(36 degrees - 46 degrees F)
Reconstitue with 2 mL Sterile Water for Injeection USP,
resulting in a solution containing 25 mg/mL fludarabine phosphate.
Use within 8 hours of reconstitution. Mfd by Ben Venue Laboratories, Inc.
Bedford, OH 44146
Mfd for Berlex Laboratories
Richmond, CA 94806
Caution: Federal law prohibits dispensing without prescription.

[BERLEX LOGO]

39
<PAGE>

SCHEDULE C

FORM OF LETTER TO FDA

As to the NDA:

[Appropriate FDA Address]

Dear:

Reference is made to NDA # 20-570 for Quadramet (generic
name) approved ______________________.

On _____________ the ownership of this NDA and all rights to
this application were transferred to Berlex Laboratories, Inc.

Berlex has been provided with a complete copy of the approved
application.

As to the IND:

[Appropriate FDA Address]

Dear:

Reference is made to IND # _____________ submitted
________________.

Cytogen Corporation transfers all rights and responsibilities
for the referenced IND to Berlex Laboratories, Inc., effective
______________.

Berlex Laboratories has received a complete copy of the IND
and all submissions made by Cytogen Corporation to such IND.

40
<PAGE>

ATTACHMENT A

WARRANT

THIS WARRANT IS VOID AFTER 5:00 PM NEW YORK TIME ON OCTOBER 28, 2003

OCTOBER 28, 1998

Warrant to Purchase up to 1,000,000 Shares of Common Stock of
Cytogen Corporation.

Cytogen Corporation, a Delaware corporation (the "Company"), hereby
agrees that Berlex Laboratories, Inc. ("Berlex") is entitled, on the
terms and conditions set forth below, to purchase from the Company at
any time during the Exercise Period up to 1,000,000 fully paid and
nonassessable shares of Common Stock, par value $.01 per share, of the
Company (the "Common Stock"), at the Exercise Price (hereinafter
defined), all as may be adjusted pursuant to Section 5 hereof.

Section 1. Definitions.

"Agreement" shall mean the License Agreement by and
between the Company and Berlex, dated the date hereof.

"Closing Price" shall mean the closing price of the
Common Stock on any particular day on the Nasdaq National Market or
other principle market on which the Common Stock is traded.

"Exercise Period" shall mean the period beginning on
the date which is the earlier of one year from the date of this Warrant
or the date in any calendar year on which sales of the Product first
equal or exceed $10,000,000, and ending at 5:00 p.m. on the date which

1
<PAGE>

is five years from the date of this Warrant.

"Exercise Price" shall mean $1.001625 per share.

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

"Holder" or "Warrant Holder" shall mean any holder of
this Warrant and each holder of Warrant Shares.

"Warrant" or "Warrants" shall mean this Warrant and
any and all warrants issued in full or partial substitution of this
Warrant upon any full or partial exercise or transfer of this Warrant.

"Warrant Shares" shall mean the shares of Common Stock
purchased or purchasable by a Holder upon the exercise hereof.

Other capitalized terms used but not defined herein
shall have the meaning set forth in the Agreement.

Section 2. Exercise.

(a) Method of Exercise. This Warrant may be
exercised in whole or in part (but not as to a fractional share of
Common Stock), at any time and from time to time during the Exercise
Period, by the Warrant Holder by surrender of this Warrant, with the
form of exercise attached hereto as Exhibit A duly executed by the
Warrant Holder (the "Exercise Notice"), to the Company at the address
set forth in Section 12 hereof, accompanied by payment of the Exercise
Price multiplied by the number of shares of Common Stock for which this
Warrant is being exercised (the "Aggregate Exercise Price"). Each date
on which an Exercise Notice is received by the Company shall be deemed
an "Exercise Date".

(b) Payment of Aggregate Exercise Price. Payment of
the Aggregate Exercise Price shall be made by check or bank draft
payable to the order of the Company or by wire transfer to an account
designated by the Company. If the amount of the payment received by the
Company is less than the Aggregate Exercise Price, the Warrant Holder
will be notified of the deficiency and shall make payment in that amount
within three (3) business days. In the event the payment exceeds the
Aggregate Exercise Price, the Company will refund the excess to the
Warrant Holder within three (3) business days of receipt.

(c) Replacement Warrant. In the event that the
Warrant is not exercised in full, the number of Warrant Shares shall be
reduced by the number of such Warrant Shares for which this Warrant is
exercised, and the Company, at its expense, shall forthwith issue and
deliver to or upon the order of the Warrant Holder a new Warrant of like

<PAGE>

tenor in the name of the Warrant Holder or as the Warrant Holder may
request, reflecting such adjusted number of Warrant Shares.

Section 3. Delivery of Stock Certificates.

(a) Subject to the terms and conditions of this Warrant,
as soon as practicable after the exercise of this Warrant in full or in
part, and in any event within three (3) trading days thereafter, the
Company, at its expense, will cause to be issued in the name of and
delivered to the Warrant Holder, or as the Warrant Holder may lawfully
direct, a certificate or certificates for the number of validly issued,
fully paid and non-assessable Warrant Shares to which the Warrant Holder
shall be entitled on such exercise, to which the Warrant Holder is
entitled upon such exercise in accordance with the provisions hereof;
provided, however, that any such delivery to a location outside of the
United States shall be made within five (5) trading days after the
exercise of this Warrant in full or in part.

(b) This Warrant may not be exercised as to fractional
shares of Common Stock. In the event that the exercise of this Warrant,
in full or in part, would result in the issuance of any fractional share
of Common Stock, then in such event the Warrant Holder shall receive in
cash an amount equal to the Closing Price on the Exercise Date of such
fractional share within three (3) trading days therefrom.

Section 4. Character of Warrant Shares. The Warrant
Shares, when issued in accordance with the terms hereof, will be duly
authorized and, when paid for or issued in accordance with the terms
hereof, shall be validly issued, fully paid and non-assessable and free
from all taxes, liens and charges with respect to the issuance thereof.

Section 5. Adjustment of the Exercise Price.

(a) Adjustment for Dividends in Other Stock, Property.
In case at any time or from time to time, the holders of Common Stock
shall have received, or (on or after the record date fixed for the
determination of shareholders eligible to receive) shall have become
entitled to receive, without payment therefor, (i) other or additional
stock or other securities or property (other than cash) by way of
dividend, or (ii) other or additional stock or other securities or
property (including cash) by way of spin-off, split-up,
reclassification, recapitalization, combination of shares or similar
corporate rearrangement, or other or additional stock or (iii) other
securities or property (including cash) by way of spin-off, split-up,
recapitalization, combination of shares or similar corporate
rearrangement, (other than additional shares of Common Stock issued as a
stock dividend or in a stock-split (adjustments in respect of which are
provided for in Section 5(d)), then and in each such case the Holder of
this Warrant, on the exercise hereof as provided in Section 2, shall be
entitled to receive the amount of stock and other securities and
property (including cash in the cases referred to in clauses (ii) and
(iii) of this Section 5(a) which such Holder would hold on the date of
such exercise if on the date immediately prior to such event it had been
the holder of record of the number of shares of Common Stock to which it

3
<PAGE>

would be entitled on such date under the terms of this Warrant and had
thereafter, during the period from the date hereof to and including the
date of such exercise, retained such shares and all such other or
additional stock and other securities and property (including cash in
the cases referred to in clauses (ii) and (iii) of this Section 5(a))
receivable by it as aforesaid during such period, giving effect to all
adjustments called for during such period by this Section 5.

(b) Adjustment for Reorganization, Consolidation or
Merger. In case at any time or from time to time, the Company shall (i)
effect a recapitalization, reclassification or reorganization or other
change of outstanding shares of Common Stock, (ii) consolidate with or
merge with or into any other Person and the Company is not the surviving
entity, or (iii) transfer or otherwise convey all or substantially all
of its properties or assets to any other Person or under any plan or
arrangement contemplating the dissolution of the Company, then, in each
such case, except as otherwise provided in Section 5(c), the Holder of
this Warrant, on the exercise hereof as provided in Section 2 at any
time prior to the termination of this Warrant shall receive, in lieu of
the Common Stock issuable on such exercise prior to such consummation or
such effective date, the stock and other securities and property
(including cash) to which such Holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be,
if such Holder had so exercised this Warrant, immediately prior thereto,
all subject to further adjustment thereafter as provided in this
Sections 5.

(c) Continuation of Terms. Except as otherwise
hereinafter provided, upon any recapitalization, reclassification,
reorganization, consolidation, merger or transfer (and any dissolution
following any transfer or other conveyance) referred to in this Section
5, this Warrant shall continue in full force and effect and the terms
hereof shall be applicable to the shares of stock and other securities
and property receivable on the exercise of this Warrant after the
consummation of such recapitalization, reclassification, reorganization,
consolidation or merger or the effective date of dissolution following
any such transfer or other conveyance, as the case may be, and shall be
binding upon the issuer of any such stock or other securities,
including, in the case of any such transfer or other conveyance, the
person or entity acquiring all or substantially all of the properties or
assets of the Company, whether or not such person or entity shall have
expressly assumed the terms of this Warrant as provided herein.

(d) Adjustment for Extraordinary Events. In the event
that the Company shall (i) issue additional shares of Common Stock as a
dividend or other distribution on outstanding Common Stock, (ii)
subdivide its outstanding shares of Common Stock, or (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock (each an "Extraordinary Event"), then, in each such
Extraordinary Event, the Exercise Price shall, simultaneously with the
happening of such event, be adjusted by multiplying the then Exercise
Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event, and the product so obtained
shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive Extraordinary Event(s). The Holder of this

4
<PAGE>

Warrant shall thereafter, on the exercise hereof as provided in
Section 2, be entitled to receive that number of shares of Common Stock
determined by multiplying the number of shares of Common Stock which
would otherwise (but for the provisions of this Section 5(d)) be
issuable on such exercise by a fraction of which (A) the numerator is
the Exercise Price which would otherwise (but for the provisions of this
Section 5(d)) be in effect, and (B) the denominator is the Exercise
Price in effect on the date of such exercise.

(e) No Dilution or Impairment; etc. The Company shall
not, by amendment of its charter, by-laws or other governing instrument
or through any recapitalization, reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against dilution or
other impairment prohibited by this Warrant. Without limiting the
generality of the foregoing, the Company (i) shall not increase the par
value of any shares of stock receivable on the exercise of this Warrant
above the amount payable therefor on such exercise, (ii) shall take all
such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and non-assessable shares of
stock on the exercise of hereof from time to time outstanding, and (iii)
shall assist and cooperate with the Holder hereof or any permitted
assignee thereof required to make any governmental filings or obtain any
governmental approvals prior to or in connection with any exercise of
this Warrant. Notwithstanding any other provision hereof, if an exercise
of any portion of this Warrant is to be made in connection with a public
offering or sale of the Company, the exercise of any portion of this
Warrant may, at the election of the Holder hereof, be conditioned upon
the consummation of the public offering or sale of the Company in which
case such exercise shall not be deemed to be effective until the
consummation of such transaction.

(f) Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock issuable on the
exercise of this Warrant, the Company, at its expense, will promptly
cause its Treasurer, Chief Financial Officer, or Chief Accounting
Officer to compute such adjustment or readjustment in accordance with
the terms of this Warrant and prepare a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which
such adjustment or readjustment is based, including, among other things,
(i) the consideration received or receivable by the Company for any
additional shares of Common Stock issued or sold or deemed to have been
issued or sold, (ii) the number of shares of Common Stock outstanding or
deemed to be outstanding, and (iii) the Exercise Price and the number of
shares of Common Stock to be received upon exercise of this Warrant, in
effect immediately prior to such issue or sale and as adjusted and
readjusted as provided in this Warrant. The Company will forthwith mail
a copy of each such certificate to the Holder of this Warrant, and will,
on the written request at any time of such Holder, furnish to such
Holder a like certificate setting forth the Exercise Price at the time
in effect and showing how it was calculated.

(g) Notices of Record Date, etc. In the event of:

5
<PAGE>

(i) any taking by the Company of a record of the holders of
any class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities
or property, or to receive any other right, or

(ii) any recapitalization or reorganization of the Company,
any recapitalization or reorganization of the capital stock of the
Company or any transfer of all or substantially all the assets of
the Company or consolidation or merger of the Company with or into
any other Person, or any voluntary or involuntary dissolution,
liquidation or winding-up of the Company,

then and in each such event the Company will mail or cause to be mailed
to the Holder of this Warrant a notice specifying (A) the date on which
any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such
dividend, distribution or right, (B) the date on which any such
recapitalization, reorganization, transfer, conveyance, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the
date the time, if any, is to be fixed, as of which the holders of record
of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other property deliverable on such
recapitalization, reorganization, transfer, conveyance, consolidation,
merger, dissolution, liquidation or winding up, and (3) the amount and
character of any stock or other securities, or rights or options with
respect thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made. Such notice shall be
mailed at least twenty (20) days prior to the date specified in such
notice on which any such action is to be taken.

Section 6. Rights As Stockholder. Prior to exercise of
this Warrant, the Warrant Holder shall not be entitled to any rights as
a stockholder of the Company with respect to the Warrant Shares,
including (without limitation) the right to vote such shares, receive
dividends or other distributions thereon or be notified of stockholder
meetings.

Section 7. Replacement of Warrant. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of the Warrant and, in the case of any such
loss, theft or destruction of the Warrant, upon delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute
and deliver, in lieu thereof, a new Warrant of like tenor.

Section 8. Choice of Law. This Warrant shall be construed
under the laws of the State of Delaware.

Section 9. Entire Agreement; Amendments. This Warrant and
the Agreement contain the entire understanding of the parties with
respect to the matters covered hereby and thereby. No provision of this

6
<PAGE>

Warrant may be waived or amended other than by a written instrument
signed by the party against whom enforcement of any such amendment or
waiver is sought.

Section 10. Restricted Securities.

(a) Registration or Exemption Required. This Warrant has
been issued in a transaction exempt from the registration requirements
of the Securities Act in reliance upon the provisions of Section 4(2)
promulgated by the U.S. Securities and Exchange Commission under the
Securities Act. This Warrant and the Warrant Shares issuable upon
exercise of this Warrant may not be resold except pursuant to an
effective registration statement or an exemption to the registration
requirements of the Securities Act and applicable state laws.

(b) Legend. Any replacement Warrants issued and any
Warrant Shares issued upon exercise hereof, shall bear the following
legend:

Section 11. Transfer and Registration.

(a) Notice of Intention to Exercise; Restrictions on
Transfer. Notwithstanding any provisions contained in this Warrant to the
contrary, no transfer of this Warrant or the related Warrant Shares
shall be made except upon the conditions specified in this Section 11,
which conditions are intended, among other things, to ensure compliance
with the provisions of the Securities Act in respect of the exercise or
transfer of such Warrant or transfer of such Warrant Shares. The Holder
of this Warrant agrees that it will not transfer this Warrant or
transfer any Warrant Shares acquired on any exercise hereof prior to
delivery to the Company of an opinion of counsel reasonably satisfactory
to the Company to the effect that such transfer will not violate the
Securities Act, unless a registration statement under the Securities Act
with respect to the securities to be transferred is in effect at the
time of the transfer.

(b) Defined Terms. As used in this Section 11 the

7
<PAGE>

following terms shall have the following respective meanings:

(i) "Commission" shall mean the Securities and
Exchange Commission, or any other federal agency at the time
administering the securities laws;

(ii) "Prospectus" shall mean any preliminary
prospectus and final prospectus (as such may be amended or supplemented)
which constitutes Part I of a Registration Statement filed with the
Commission;

(iii) "Registration Expenses" shall mean all expenses
arising out of or related to the preparation, filing, amendment(s) and
supplementing(s) of a Registration Statement, provided, however, that
Registration Expenses shall not include underwriting commission, fees
and discounts, if any, attributable solely to the inclusion of the
Warrant Holder's shares in such Registration Statement, and any legal
fees and disbursements for counsel to the Warrant Holder;

(iv) "Registration Statement" shall mean a regis-
tration statement filed by the Company with the Commission for a public
offering and sale of securities of the Company.

(c) Initial Registration. The Company agrees that at the
Company's sole expense, the Company shall, (i) use its commercially
reasonably efforts to file, on or prior to nine months from the date of
this Warrant, on its behalf and on behalf of the Warrant Holder with
respect to the Warrant Shares a Registration Statement in accordance
with the Securities Act; and (ii) use its commercially reasonable
efforts to cause such Registration Statement to be declared effective by
the Commission as soon thereafter as reasonably practicable, but in all
events use its commercially reasonable efforts to cause such
Registration Statement to be declared effective not later thanone year
from the date of this Warrant.

(d) Demand Registration. The Company agrees that at the
Company's sole expense, Company shall, (i) no later than thirty (30)
days following a written demand from the Warrant Holder or the holder of
Warrant Shares for registration, file on its behalf and on behalf of the
Warrant Holder or the holder of Warrant Shares with respect to the
Warrant Shares specified in such demand a Registration Statement in
accordance with the Securities Act; and (ii) use its commercially
reasonable efforts to cause such Registration Statement to be declared
effective by the Commission as soon thereafter as reasonably
practicable. The Company shall be obligated to prepare, file and cause
to become effective only one (1) Registration Statement pursuant to this
Section 11(d) (which Registration Statement shall be in addition to any
filed under Section 11(c)). The registration required to be effected by
the Company pursuant to Section 11(c) or this Section 11(d) shall not be
deemed to have been effected even though a Registration Statement with
respect thereto has become effective (1) if, after it has become
effective, such registration is interfered with by any stop order,
injunction, or other order or requirement of the Commission or other
governmental agency or court, for any reason not attributable to the
Warrant Holder with respect to such Registration Statement, and has not
thereafter become effective or (2) if the conditions to closing
specified in the underwriting agreement, if any, entered into in

8
<PAGE>

connection with such registration are not satisfied or waived, other
than by reason of a failure on the part of the Warrant Holder with
respect to such Registration Statement; provided, that this the Warrant
Holder or the holder of Warrant Shares may not be able to make a demand
for registration under this Section 5(d) (A) unless and until a
registration statement filed pursuant to Section 5(a) shall have expired
or become ineffective or (B) to the extent that sales may be reasonably
made pursuant to Rule 144 under the Securities Act b the Warrant Holder.

(e) "Black-out Period". Notwithstanding the foregoing,
the Company shall, upon a determination that a material development has
occurred with respect to the Company the disclosure of which is not
otherwise then required the disclosure of which could at such time have
an adverse effect on the Company be permitted to notify the Warrant
Holder or any holders of Warrant Shares that the registration statement
may not be utilized for resale of Warrant Shares at such time. The
Company shall have a reasonable amount of time to make such disclosure,
consistent with significant business needs determined in good faith, but
not longer than ninety (90) days, upon which such Black-out Period shall
conclude.
(f) Registration Procedures. With respect to the Company's
obligations under this Section 11, if the Company is required to use its
commercially reasonable efforts to effect and/or continue the
registration of the Warrant Shares under the Securities Act,the Company
shall:

(i) As expeditiously as possible prepare and file
with the Commission any amendments and supplements to the Registration
Statement and the prospectus included in the Registration Statement as
may be necessary to keep the Registration Statement effective for a
period of not less than (A) the time period until the Warrant Holder
disposes of all of its Warrant Shares, if any, in the case of the
Registration Statement filed pursuant to this Section 5, or (B) two (2)
years plus any delay described in Section 11(e), plus a period equal to
the Delay Period (as herein defined), in the case of any other
Registration Statement.

(ii) As expeditiously as possible furnish to the
Warrant Holder such reasonable numbers of copies of the Prospectus,
including a preliminary prospectus, in conformity with the requirements
of the Securities Act, and such other documents as the Warrant Holder
may reasonably request in order to facilitate the sale or other
disposition of the Warrant Shares owned by the Warrant Holder.

(iii) As expeditiously as possible use its best
efforts to register or qualify the Warrant Shares covered by the
Registration Statement under the securities or Blue Sky laws of such
states or jurisdictions as the Warrant Holder or the managing
underwriter (or sole underwriter, as appropriate) deems appropriate, and
do any and all other acts and things that may be necessary or desirable
to enable the Warrant Holder to consummate the public sale or other
disposition in such jurisdictions of the Warrant Shares owned by the
Warrant Holder (including, without limitation, causing all Warrant
Shares to be listed on NASDAQ or on each securities exchange on which
similar securities issued by the Company are then listed); provided,

9
<PAGE>

however, that the Company shall not be required in connection with this
Subsection 11(f)(iii) to qualify as a foreign corporation or execute a
general consent to service of process in any jurisdiction.

(iv) Enter into an underwriting agreement with the
underwriters designated pursuant to this Section 11 containing customary
terms including representations, covenants, indemnifications and
contribution provisions.

If The Company has delivered a Prospectus to the Warrant
Holder and after having done so such Prospectus must be amended or
supplemented to comply with the requirements of the Securities Act, the
Company shall promptly notify the Warrant Holder, and the Warrant Holder
agrees to cease making offers of Warrant Shares immediately upon such
request and to return all copies of such Prospectus in its possession to
the Company. The Company shall promptly provide the Warrant Holder with
a revised Prospectus and, following receipt of the revised Prospectus,
the Warrant Holder shall be free to resume making offers of Warrant
Shares. Prior to the filing of any documents with the Commission from
time to time pursuant to this Section 11 that names the Warrant Holder,
the Warrant Holder shall have the right to review and comment on those
sections of the Registration Statement, Prospectus and other documents
in which the Warrant Holder is named. Except as provided in the next
preceding sentence and except with respect to any written information
furnished to the Company by the Warrant Holder or its underwriter or its
controlling person specifically for use in preparation thereof, the
Company shall cause the Registration Statement, any Prospectuses, all
other documents filed with the Commission relating thereto to or
otherwise in connection therewith, and all amendments and/or supplements
to any of the foregoing to comply with the Securities Act and all other
applicable laws.

(g) Conditions to Registration. The following provisions
shall also apply to the registration of the Warrant Shares:

(i) The Warrant Holder shall select, subject to the
approval of the Company, which approval shall not be unreasonably
withheld or delayed, the underwriter or underwriters, if any, who are to
undertake the sale and distribution of the Warrant Shares to be included
in a Registration Statement filed in connection with any registration
under the provisions of this Section 11.

(ii) In connection with any request for registration
and the filing of a Registration Statement, the Warrant Holder shall be
required to furnish the Company with all relevant information concerning

10
<PAGE>

the proposed method of sale or other disposition of the Warrant Shares,
the identity and compensation to be paid to any proposed underwriters,
if any, to be employed at the election of the Warrant Holder in
connection therewith, and such other information as may be reasonably
required by the Company to properly prepare and file such Registration
Statement in accordance with applicable provisions of the Securities Act
(which includes the rules and regulations thereunder). Upon the request
of the Company, such information shall be furnished by the Warrant
Holder in writing.

(h) Expenses. In connection with or otherwise relating to
registrations on behalf of the Warrant Holder of any Warrant Shares
under the Securities Act pursuant to this Section 11, the Company shall
pay all Registration Expenses; provided, however, that the Warrant
Holder shall be required to bear that portion of the underwriting
commissions, fees and discounts, if any, attributable solely to the
inclusion of Warrant Shares in any Registration Statement relating
thereto and the inclusion of Warrant Shares in the related filings under
state securities or Blue Sky laws; and further provided that the Warrant
Holder shall pay the legal fees and disbursements of counsel to the
Warrant Holder in connection therewith.

(i) Indemnification.

(i) In connection with or otherwise relating to the
registration of any Warrant Shares under the Securities Act pursuant to
the provisions of this Section 11, the Company agrees to indemnify and
hold harmless and defend the Warrant Holder, each underwriter, if any,
of such Warrant Shares, each other person who controls the Warrant
Holder or any such underwriter within the meaning of the Securities Act,
and the Warrant Holder's officers, directors and counsel from and
against any and all losses, claims, damages, liabilities, joint or
several, to which the Warrant Holder, such underwriter, such controlling
person or such officers, directors and counsel of the Warrant Holder may
become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration
Statement under which such Warrant Shares were registered under the
Securities Act or any Prospectus contained therein or related thereto,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; and will reimburse the
Warrant Holder, such underwriter, such controlling person or such
officers, directors and counsel of the Warrant Holder for any legal or
any other fees or expenses reasonably incurred by the Warrant such
Holder, underwriter, such controlling person or the Warrant Holder's
officers, directors and counsel in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or
is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such Registration Statement or such
Prospectus in reliance upon and in conformity with written information
furnished to the Company by the party seeking indemnification.

11
<PAGE>

(ii) In connection with or otherwise relating to the
registration of any Warrant Shares under the Securities Act pursuant to
the provisions hereof, the Warrant Holder agrees to indemnify and hold
harmless the Company, each person who controls the Company within the
meaning of the Securities Act, and each officer and director of the
Company from and against any losses, claims, damages or liabilities,
joint or several, to which the Company, such controlling person or such
officer or director or counsel of the Company may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in any Registration Statement under which such Warrant
Shares were registered under the Securities Act or any Prospectus
contained therein, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
which untrue statement or alleged untrue statement or omission or
alleged omission was made therein in reliance upon and in conformity
with written information furnished to the Company by the Warrant Holder,
any person who controls the Warrant Holder or any officer, director or
counsel of the Warrant Holder specifically for use in connection with
the preparation thereof; and will reimburse the Company, each such
controlling person and each such officer or director for any legal or
any other fees and expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability
or action.

(iii) Each person entitled to indemnification
hereunder (the "Indemnified Party") agrees, as soon as is reasonably
practicable after the receipt of notice of any claim or action against
it, to notify the party from whom indemnity may be sought hereunder (the
"Indemnifying Party") in writing; provided that any failure to promptly
provide such notice shall not excuse the Indemnifying Party from its
obligations hereunder except to the extent the Indemnifying Party is
actually prejudiced thereby. The Indemnifying Party shall assume the
defense of any such claim or action (and the cost thereof) by counsel of
the Indemnifying Party's own choosing, who shall be reasonably
satisfactory to the Indemnified Party. Each Indemnified Party shall
have the right to employ separate counsel in connection with any such
claim or action and to participate in the handling or defense thereof,
but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless the employment of such counsel has been
specifically authorized by the Indemnifying Party or the Indemnifying
Party shall not have employed counsel to have charge of the defense of
such action or claim or such Indemnified Party shall have reasonably
concluded that there may be defenses available to the Indemnified Party
(in which case the Indemnifying Party shall not have the right to direct
the defense of such action on behalf of such Indemnified Party), in any
of which events such fees and expenses shall be borne by the
Indemnifying Party. The Indemnifying Party shall be free to settle any
claims or actions in respect to which indemnity may be sought against it
pursuant to this Section 11(i); provided, however, that the Indemnifying
Party shall not settle any such claim or action if such settlement would
result in the imposition against Indemnified Party of a judgement,
decree or order in the nature of equitable relief or otherwise require
an acknowledgment of wrongdoing unless the Indemnifying Party has
obtained the prior written consent of such Indemnified Party (which
consent shall not be unreasonably withheld).

12
<PAGE>

(j) Compliance with Rule 144. The Company shall take such
actions pursuant to or otherwise in connection with Rule 144 as is
necessary to enable the Warrant Holder to sell Warrant Shares pursuant
to that Rule.

(k) Assignment. Notwithstanding the provisions of
Sectioon 14, the Warrant Holder's rights under this Section 11 may be
assigned by the Warrant Holder to a transferee or assignee of any of the
Warrant Shares; provided that the Company is given written notice of
such assignment at the time of or within a reasonable time after the
assignment, stating the name and address of the transferee or assignee
and identifying the number of Warrant Shares with respect to which such
rights of the Warrant Holder are being assigned.

(l) Contribution. If the indemnification provided for in
Section 11(i) from the Indemnifying Party is unavailable to the
Indemnified Party in respect to any losses, claims, damages, liabilities
or expenses referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid
or payable by such Indemnified Party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and Indemnified
Parties in connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Parties, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or
payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or proceeding.

The Company and the Holders agree that it would not be just and
equitable if contribution pursuant to this Section 11(l) were determined
by pro rata allocation or by any other method of allocation which does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. 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.

If indemnification is available under Section 11(i), the Indemnifying
Parties shall indemnify each Indemnified Party to the full extent
provided in Section 11(i) without regard to the relative fault of the
Indemnifying Party or Indemnified Party or any other equitable
consideration provided for in this Section 11(l).

13
<PAGE>

Section 12. Notices. All notices, demands, requests,
consents, approvals, and other communications required or permitted
hereunder shall be in writing and shall be (i) personally delivered,
(ii) deposited in the mail, registered or certified, return receipt
requested, postage prepaid, (iii) delivered by reputable overnight
courier service with charges prepaid, addressed as set forth below or to
such other address as such party shall have specified most recently by
written notice. Any notice or other communication required or permitted
to be given hereunder shall be deemed effective (a) upon hand delivery
at the address designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of
mailing by registered or certified mail, fully prepaid, addressed to
such address, or upon actual receipt of such mailing, whichever shall
first occur or (c) on the first business day following the date of
delivery to a reputable overnight courier service. The addresses for
such communications shall be:

If to the Company:

Cytogen Corporation
600 College Road East CN5308
Princeton, New Jersey 08540
Attention: H. Joseph Reiser, Ph.D.
Telephone: (609) 987-8200

if to the Warrant Holder:

Berlex Laboratories, Inc.
300 Fairfiel Road
Wayne, Ner Jersey 07470
Attention: Frank Curtis, Esq.
Telephone: (973) 305-5049

Either party hereto may from time to time change its address or
facsimile number for notices under this Section 12 by giving at least
ten (10) days' prior written notice of such changed address to the other
party hereto.

Section 13. Miscellaneous. This Warrant and any term hereof
may be changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such change,
waiver, discharge or termination is sought. The headings in this
Warrant are for purposes of reference only, and shall not limit or
otherwise affect any of the terms hereof. The invalidity or

14
<PAGE>

unenforceability of any provision hereof shall in no way affect the
validity or enforceability of any other provision.

Section 14. Assignment. This Warrant shall not be
assignable by any Holder without the prior written consent of the
Company, which consent shall be at the reasonable discretion of the
Company; provided, that Berlex may assign this Warrant to its Affiliates
upon notice to the Company.

Section 15. Reservation of Stock Issuable on Exercise of
Warrant. The Company will at all times reserve and keep available,
solely for issuance and delivery on the exercise of this Warrant, all
shares of Common Stock from time to time issuable on the exercise of
this Warrant.

IN WITNESS WHEREOF, this Warrant was duly executed by the
undersigned, thereunto duly authorized, as of the date first set forth
above.

CYTOGEN CORPORATION

By:
H. Joseph Reiser, Ph.D.
President and Chief Executive Officer

Attested:

By:
Donald F. Crane, Jr., Esq.
Vice President, General Counsel and Secretary

<PAGE>

EXHIBIT A TO THE WARRANT

EXERCISE FORM

CYTOGEN CORPORATION

The undersigned hereby irrevocably exercises the right to purchase
__________________ shares of Common Stock of Cytogen Corporation, a
Delaware corporation, evidenced by the attached Warrant, and herewith
makes payment of the Exercise Price with respect to such shares in full
in the form of [cash check, bank draft or wire transfer in the amount of
$___________], which represent the amount of Warrant Shares as provided
in the attached Warrant to be canceled in connection with such
exercise], all in accordance with the conditions and provisions of said
Warrant.

The undersigned requests that stock certificates for such Warrant
Shares be issued, and a Warrant representing any unexercised portion
hereof be issued, pursuant to this Warrant in the name set forth below
and delivered to the address set forth below.

Dated:_______________________________________
_____________________________________________
Signature of Registered Holder
Name of Registered Holder (Print)

Name of Holder of Warrant Shares

_____________________________________________
Address of Holder of Warrant Shares

William J. DeLorbe, Ph.D.
Executive Vice President
Medical Imaging

[DuPont Logo]
Life Sciences Enterprise
DuPont Pharmaceuticals Company

October 29, 1998

H. Joseph Reiser, Ph.D.
President & CEO
Cytogen Corporation
600 College Road East
Princeton, NJ 08540-5308

Dear Joe:

This Addendum To The Letter Agreement ("Addendum"), effective on
the date just shown above, is intended to confirm our mutual
agreement to modify the Letter Agreement between our companies
dated June 3, 1998, which Letter Agreement was modified pursuant
to a letter signed by both parties dated October 2, 1998
(together, the "Letter Agreement"). The parties hereto agree to
modify the Letter Agreement as follows:

1. Term. The term of the Letter Agreement shall continue until
the earlier of December 31, 1998 or the commencement of
marketing of Quadramet by Berlex.

2. Manufacture of Quadramet . From November 1, 1998 and
continuing for the term hereof, DuPont shall continue to
manufacture, distribute and provide technical support for
Quadramet at the same level and in the same manner as it
has since the effective date of the Letter Agreement. As
consideration for DuPont's efforts hereunder Cytogen shall
pay DuPont (i) the first $205,000 of revenue received from
sales of Quadramet in each month and (ii) fifty percent
(50%) of revenue from sales exceeding $410,000. For
example, if sales of Quadramet during the month of November
are $245,000, then Cytogen will pay DuPont $205,000 and
retain $40,000. As further example, if sales are $450,000,
then Cytogen will pay DuPont $205,000 + $20,000 = $225,0000
and retain $205,000 + $20,000 = $225,0000 for itself.
Payments under this Section 2 will be due within fifteen
(15) days following the end of each month during the term
hereof.

3. Payment. As consideration for DuPont's activities under
Section 2(b) of the Letter Agreement, and as full accord and
satisfaction of the payment due DuPont under Section 3(b) of
the Letter Agreement, Cytogen shall pay DuPont four million
dollars ($4,000,000) as follows:

(i) three million dollars ($3,000,000) on the signing of a
Manufacturing and Distribution Agreement by Berlex, Cytogen
and DuPont and;

(ii) one million dollars ($1,000,000) on February 15, 1999.

<PAGE>

H. Joseph Reiser, Ph.D
October 29, 1998
Page -2-

4. Indemnification. Cytogen hereby agrees to indemnify and
hold harmless DuPont, its officers, agents, and employees,
from and against any and all loss, damage, claim, injury,
cost or expense, including reasonable attorneys' fees and
expenses of litigation ("Claims"), which results from any
sale, use or disposition of Product, including, Claims
arising in connection with patent infringement, trademark
infringement, product liability theories, or any illness or
personal injury, including death, or property damage. The
parties agree that this Article 4 shall be effective and in
force from June 3, 1998.

If the foregoing is in accordance with your understanding, please
indicate your agreement by signing in the space provided in the
enclosed copy of this letter and promptly return it to us.

Very truly yours,

DUPONT PHARMACEUTICALS COMPANY

By: /s/ William J. DeLorbe
----------------------

Accepted and Agreed:

CYTOGEN CORPORATION

By: /s/ H. Joseph Reiser
--------------------

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1998 AND THE CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 3,027,000
<SECURITIES> 0
<RECEIVABLES> 1,246,000
<ALLOWANCES> (50,000)
<INVENTORY> 127,000
<CURRENT-ASSETS> 469,000
<PP&E> 17,931,000
<DEPRECIATION> (14,884,000)
<TOTAL-ASSETS> 8,880,000
<CURRENT-LIABILITIES> 9,308,000
<BONDS> 0
0
0
<COMMON> 586,000
<OTHER-SE> (3,155,000)
<TOTAL-LIABILITY-AND-EQUITY> 8,880,000
<SALES> 6,244,000
<TOTAL-REVENUES> 9,364,000
<CGS> 6,090,000
<TOTAL-COSTS> 9,671,000
<OTHER-EXPENSES> 15,194,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 535,000
<INCOME-PRETAX> (12,785,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,785,000)
<EPS-PRIMARY> (0.23)
<EPS-DILUTED> (0.23)

</TABLE>