10KSB

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 10-KSB

þ	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2007
OR
o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from          to

Commission file number 0-935

CYTOCORE, INC.

(Name of small business issuer in its charter)

Delaware	36-4296006
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
414 N. Orleans St., Suite 502, Chicago, IL	60610
(Address of principal executive offices)	(Zip Code)

(312) 222-9550

(Issuer’s Telephone Number)

Securities registered under Section 12(b) of the Exchange Act:

Title of Each Class	Name of Each Exchange on Which Registered
None	Not Applicable

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value

(Title of class)

Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.  o

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 þ     No o

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o      No þ

The Company’s revenues for the fiscal year ended December 31, 2007 were $83,000.

The aggregate market value of the common stock held by non-affiliates of the Company as of March 28, 2008 was $95,843,534, based upon the closing price of shares of the Company’s common stock, $0.001 par value per share, of $2.70 as reported on the Over-the-Counter Bulletin Board on such date.

The number of shares of common stock outstanding as of March 28, 2008 was 40,575,556.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Definitive Proxy Statement to be filed no later than 120 days after the end of the fiscal year ended December 31, 2007 in connection with the Registrant’s 2008 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format (Check one):  Yes o     No þ

CYTOCORE, INC.

Annual Report on Form 10-KSB

December 31, 2007

TABLE OF CONTENTS

			Page
PART I
	Item 1.	Description of Business		1
		Overview		1
		Recent Developments		1
		Information About Industry Segments		2
		Description of Business		2
		Products		2
		The CytoCore Solutionstm System		2
		The SoftPAPtm Cervical Cell Collector		3
		Biochemical Assays and Slide-Based Tests		4
		Automated Imaging Proteomic System or AIPStm		5
		Drug Delivery System		6
		Product Development		7
		Markets and Marketing Objectives		7
		Sales and Distribution		9
		Government Regulation, Clinical Studies and Regulatory Strategy		9
		Cost and Reimbursement		12
		Competition		13
		Operations		14
		Intellectual Property		14
		Research and Development Expenditures		15
		Components and Raw Materials		16
		Working Capital Practices		16
		Employees		16
		Financial Information About Foreign and Domestic Operations and Export Sales		17
		Risk Factors		17
	Item 2.	Description of Property		25
	Item 3.	Legal Proceedings		25
	Item 4.	Submission of Matters to a Vote of Security Holders		26
PART II
	Item 5.	Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities		27
		Market Information		27
		Holders		27
		Dividends		27
		Stock Transfer Agent		27
		Securities Authorized for Issuance under Equity Compensation Plans		28
		Recent Sales of Unregistered Securities and Use of Proceeds from Registered Securities		29
		Issuance of Securities		29
		Bridge and other Note Conversions		31
		Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers		31

			Page
	Item 6.	Management’s Discussion and Analysis or Plan of Operation		32
		Forward-Looking Statements		32
		Overview		32
		Critical Accounting Policies and Significant Judgments and Estimates		33
		Results of Operations		34
		Revenue		34
		Costs and Expenses		34
		Cost of Revenues		34
		Research and Development		34
		Selling, General and Administrative		34
		Other Income and Expense		35
		Interest Income		35
		Interest Expense		35
		Restructuring Settlements		35
		Net Loss		35
		Liquidity and Capital Resources		35
		Off-Balance Sheet Arrangements		36
	Item 7.	Financial Statements		36
	Item 8.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		36
		Dismissal of Auditors		36
		Resignation of Auditors		37
	Item 8A.	Controls and Procedures		38
		Evaluation of Disclosure Controls and Procedures		38
		Management Report on Internal Control over Financial Reporting		38
		Changes in Internal Controls over Financial Reporting		38
	Item 8B.	Other Information		38
PART III
	Item 9.	Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act		39
		Code of Ethics		39
	Item 10.	Executive Compensation		39
	Item 11.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		39
	Item 12.	Certain Relationships and Related Transactions, and Director Independence		40
	Item 13.	Exhibits		40
	Item 14.	Principal Accountant Fees and Services		45
Signatures				46
Certificate of Amendment to Certificate of Incorporation
Common Stock Purchase Warrant in Favor of Azimuth Corporation
Common Stock Purchase Warrant in Favor of Cadmus Corporation
Form of Common Stock Purchase Warrant Issued in 2006 and 2007 to Vendors
Registration Rights Agreement
Form of Warrant
Common Stock Purchase Warrant Issued to Augusto Ocana
Common Stock Purchase Warrant Issued to Robert McCullough Jr.
Form of Common Stock Purchase Warrants Issued to Richard A. Domanik
Form of Common Stock Purchase Warrants Issued to Non-Executive Employees
Distribution Agreement with M.O.S.S. S.r.L.
Distribution Agreement with MUNDITER - Intercambio Mundial de Comercio, S. A.
Distribution Agreement with Palex Medical S.A.
Distribution Agreement with CoMedical, Inc.
Distribution Agreement with HT Hospital Technologies GmbH
Exclusive License Agreement with University Hospitals of Cleveland
Amendment to Employment Agreement with Augusto Ocana
Second Amendment to Employment Agreement with Augusto Ocana
Form of Subscription Agreement and Letter of Investment Intent
Purchase Agreement
Subsidiaries
Consent of L. J. Soldinger Associates
Consent of Amper, Politziner & Mattia, P.C.
Certification of the CEO and CFO Pursuant to Section 302
Certification of the CEO and CFO Pursuant to Section 906

Index to Financial Statements
Reports of Independent Registered Public Accounting Firms	F-1 - F-2
Consolidated Balance Sheets at December 31, 2007 and 2006	F-3
Consolidated Statements of Operations for each of the two years ended December 31, 2007 and 2006	F-4
Consolidated Statements of Cash Flows for each of the two years ended December 31, 2007 and 2006	F-5
Consolidated Statements of Stockholder’s Deficit for each of the two years ended December 31, 2007 and 2006	F-6 - F-7
Notes to Consolidated Financial Statements	F-8

PART I

Item 1.   Description of Business

Overview

CytoCore, Inc. (“CCI” or the “Company”), formerly Molecular Diagnostics, Inc., is a clinical diagnostics company engaged in the design, development and commercialization of screening and diagnostic products, as well as therapeutic - delivery products, in women’s healthcare. CCI is currently focused on the design and development of screening and diagnostic system that can detect certain types of cancer, including endometrial and cervical cancer, affecting a woman’s reproductive tract. CCI’s initial product, the SoftPAP^tm cervical cell collector, a component of the CytoCore Solutions^tm System, was approved by the U.S. Food and Drug Administration for sale in the United States in February 2008, and the first commercial shipment of the product to one of the company’s European distributors was made at the end of the fourth quarter of the 2007 fiscal year.

The SoftPAP^tm is a cell collection device intended to replace the spatula and brush currently used to collect patient cytology samples. It constitutes the cell collection component of the Company’s CytoCore Solutions^tm System, a family of products that can be used together or separately for the screening, diagnosis and treatment of cancer related diseases. Critical to the design of the system is its ability to be used near the point of care, whether in a laboratory, a clinic or a doctor’s office. The other components of the system include certain biochemical assays and slide-based tests, the Company’s next generation specialized system for computer-assisted cytology — the Automated Image Proteomic Systems or “AIPS”^tm — and a drug delivery system. The Company believes the CytoCore Solutions^tm System will provide better treatment of cancer and cancer-related diseases through improved specimen quality and accuracy of test results, both in terms of a lower incidence of false negatives and fewer inadequate collections of samples. CytoCore also believes the system, because it can be used near the point of care, will expand the number of women who can be tested, thereby increasing detection and diagnosis rates.

CCI was incorporated in Delaware in December 1998 as the successor to Bell National Corporation, a company incorporated in California in 1958. In December 1998, Bell National, which was then a shell corporation without any business activity, acquired InPath, LLC, a development stage company engaged in the design and development of products used in screening for cervical and other types of cancer. For accounting purposes, the acquisition was treated as if InPath had acquired Bell National. However, Bell National continued as the legal entity and the registrant for Securities and Exchange Commission filing purposes. Bell National merged into Ampersand Medical Corporation, its wholly-owned subsidiary, in May 1999 in order to change the state of incorporation of the company to Delaware.

In September 2001, we acquired 100% of the outstanding stock of AccuMed International, Inc. by means of a merger of AccuMed into a wholly-owned subsidiary of the Company. Shortly after the AccuMed merger we changed our corporate name to Molecular Diagnostics, Inc. The name change was effected by the merger of our wholly-owned subsidiary, Molecular Diagnostics, Inc., with and into Ampersand. In 2006, our shareholders approved a proposal to change the Company’s corporate name from Molecular Diagnostics, Inc. to CytoCore, Inc., which change was effected in Delaware in June 2006. Except where the context requires or as otherwise noted, “CCI,” the “Company,” “we” and “our” refers to CytoCore, Inc. and our subsidiaries and predecessors.

Recent Developments

During the 2007 fiscal year, CCI commenced patient clinical trials on the SoftPAP^tm cervical cell collector and a research trial of a slide-based test, the EndoScan, for endometrial cancer. During the first quarter of 2008, the Company decided to suspend the research trial for the EndoScan product because of questions regarding the commercial viability of a tissue-based product. The Company intends to continue developing a cell-based test for endometrial cancer.

In November 2007, CCI executed three distribution agreements for the SoftPAP^tm device for distribution into Italy, Portugal and Spain.

In December 2007, the Company completed its first commercial shipment of the SoftPAP^tm device to its distributor in Italy.

In February 2008, the Company announced that the FDA approved the company’s 510(k) submission to sell CytoCore’s SoftPAP^tm cervical cell collector in the United States.

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In March 2008, the Company executed its first distribution agreement with a U.S. distributor, CoMedical, Inc. CoMedical will act as CCI’s exclusive distributor of the SoftPAP^tm collector in Alaska, Washington, Idaho, Montana and Oregon. It also announced a fourth international distribution agreement for sales into Switzerland.

Also in March 2008, the Company completed a financing in which it raised aggregate gross proceeds of $9.4 million from the sale of units to accredited and foreign investors. Each unit consisted of two shares of the Company’s common stock, $.001 par value, and a warrant to purchase one share of common stock. Bathgate Capital Partners LLP, a registered broker-dealer, assisted CCI with a portion of the offering.

Information About Industry Segments

We operate in one industry segment involving medical screening devices, diagnostics, and supplies. All of our operations during the reporting period were conducted and managed within this segment, with a single management team that reports directly to our Chief Executive Officer.

Description of Business

CCI is a clinical diagnostics company engaged in the design, development and commercialization of cost-effective screening systems to assist in the early detection and treatment of cancer. CCI is currently focused on the production and sale of the SoftPAP^tm cervical collection device and the design and development of its AIPS image analysis-based screening system for cervical, endometrial, bladder and other cancers. The AIPS system provides for automated slide screening of the P2X7 and other biomarkers from cytological specimens. The CytoCore Solutions^tm System and its components are intended to screen for cancer and eventually treat cancer through the administration of an FDA approved therapeutic agent from CCI’s drug delivery system. We believe the CytoCore Solutions^tm System or its components may be used in a laboratory, clinic or doctor’s office.

The science of medical diagnostics has advanced significantly during the past decade. Much of this advance has come as a result of new knowledge of the human genome and related proteins, which form the foundation of cell biology and the functioning of the human body. Our goal is to utilize this research as a base to develop screening and diagnostic testing products for cancer and cancer-related diseases. Our biological marker, P2X7, and other markers in conjunction with the AIPS system are being tested in screening assays for various cancers. The P2X7 is the lead marker in the assay Cocktail-CVX^tm and Cocktail-GCI^tm. We believe that the success of these products will improve patient care through more accurate test performance, wider product availability and more cost-effective service delivery. We have developed an FDA-cleared sample collection device, and are developing and testing the cocktail assay markers for use with the AIPS system to screen for various cancers. We look to begin the product development of the drug delivery system in 2008 for the therapeutic treatment of various cancers with FDA approved agents.

Our strategy is to develop products through internal development processes, strategic partnerships, licenses and acquisitions. This strategy has required and will continue to require additional capital. As a result, we will incur substantial operating losses until we are able to successfully market some, or all, of our products.

Products

The CytoCore Solutions^tm System

We are currently developing and testing a family of products for use in cancer screening and diagnosis, with the initial focus on endometrial and cervical cancer. We call this family of products the CytoCore Solutions^tm System. The core of the system is a combination of reagents that detect and highlight abnormal cancerous cells in a rapid and objective fashion. This technology will be primarily based on our automated imaging platform, which is a fully-automated microscope platform designed to screen and analyze cells, and detect cancerous cells. In the future, we hope to use different combinations of our reagents to detect and diagnose other types of cancer and other cancer-related diseases.

The initial applications of the CytoCore Solutions^tm System are designed to provide a noninvasive screening test for the detection of endometrial and uterine cancer, and to enhance the current cervical cancer screening process performed in laboratories, commonly referred to as the Pap test. Our ultimate goal is to perform this screening test

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more accurately and in less time, preferably at or near the point of service, whether in a laboratory, doctor’s office, clinic or mobile medical vehicle. The CytoCore Solutions^tm System includes the following components:

•  The SoftPAP^tm cervical cell collection device: The SoftPAP^tm collector is a sample collection device approved by the FDA for sale and consists of a small disposable balloon that is shaped to fit the cervix. The device is intended to replace the spatula and brush currently used to collect patient cytology samples.

•  Biochemical assays and slide-based tests: CytoCore’s Cocktail-CVX^tm and Cocktail-GCI^tm are biochemical assays used to identify suspicious and abnormal cells. In the laboratory version of the system, these biochemical assays are applied to sample cells released from a collection device into a liquid preservative and deposited on a glass slide. The Company is currently working on two slide-based tests, one to screen women for endometrial cancer and another to screen for cervical cancer.

•  The Automated Imaging Proteomic System or AIPS Workstation: The AIPS^tm instrument, a highly-integrated and fully-automated microscopy platform, performs an automated analysis of the sample collected by the collection device and deposited on the glass slide. The analysis is performed by means of an optical scan that detects spectral tags that are attached to certain components used in the Cocktail-CVX^tm and Cocktail-GCI^tm biochemical assays. Custom-designed image analysis software then analyzes the captured images to determine whether abnormal cells are present on the specimen slide.

•  Drug delivery system: The Company’s drug delivery system is comprised of an applicator handle and drug-delivery modality in the form of a patch that provides a timed release of a therapeutic agent directly to the surface of the cervix, designed initially to treat cervical lesions.

Research shows that the most effective means of fighting cancer is early detection and diagnosis, when treatment is most likely to be effective. In the case of cervical and endometrial cancer, early molecular changes can be detected and treated before they develop into cancer. CytoCore believes its CytoCore Solutions^tm System and related technologies are diagnostic tools possessing the potential to extend the applications for pre-cancer screening by reducing human error, providing patients with test results in a more timely fashion, and improving the accuracy of such test results.

The SoftPAP^tm Cervical Cell Collector

CytoCore believes its SoftPAP^tm cervical cell collector offers an improvement over today’s conventional collection methods for the Pap test. The Pap test is a medical screening method, invented by Georgios Papanikolaou, designed to detect abnormalities in the female genital tract and is the leading test for cervical cancer in women. According to the National Cancer Institute, there are approximately 55 million annual Pap tests given in the United States. Worldwide, approximately 180 million tests are given and approximately 1.5 to 1.8 billion women require annual Pap testing. Cervical cancer is one of the most common malignancies found in women after breast cancer and worldwide affects between 300,000 and 400,000 annually. If detected in the precancerous stage, a vast majority of cervical cancer cases are preventable.

The United States has a relatively low incidence of cervical cancer due to widespread use of cervical cancer screening methods and significant expenditures on screening infrastructure, which includes sophisticated laboratory facilities, highly trained cytotechnologists and extensive regulatory oversight. Nonetheless, a significant number of women in the United States die annually of this preventable disease. Outside the United States, limited resources and underdeveloped or non-standardized testing infrastructure often lead to underdiagnosis of cervical disease, resulting in a significantly higher incidence of cervical cancer.

Pap tests have been the principal method for cervical cancer screening since their invention. Although the use of Pap tests has been successful in reducing the incidence of death due to cervical cancer, there are significant limitations of the test, including results leading to false negative diagnoses, limited predictive value, and inability to detect the presence of the human papillomavirus (HPV), the primary cause of cervical cancer.

The largest single source of errors in Pap tests is attributed to inadequate or incomplete sampling of the cervix, which is believed to be a chief if not the predominant factor in the false negative rate in cervical cancer screening. It has been estimated that upwards of 50% of false-negative Pap tests collected using conventional spatula and/or

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brush techniques are “inadequate” collections. This is due to limitations in the brush and spatula design, and issues of skill and technique employed during the test. False negative results are of major concern to patients and the medical community because they represent cases of cancer that are not detected.

Conventional cervical specimen collection is a two-step process: first, a spatula is used to harvest cells from the outer cervix (ectocervix); second, a brush is used to harvest cells from the less accessible cervical canal (endocervix). This second step is most critical in achieving an “adequate” Pap test, and is in large part dependent on the skill of the individual conducting the test and the technique used. Failure to harvest endocervical cells can result in an “inadequate” specimen diagnosis. Furthermore, because cervical cancer and its precursors have a tendency to begin proliferation from the junction between the cervix and endocervix, early detection of this preventable disease is predicated on identifying its presence before it reaches the ectocervix.

An accurate Pap test is achieved only when the brush and spatula are precisely placed and maneuvered to scrape the entire cervix including in between folds of tissue, which is difficult given the anatomy of the area, and therefore are reliant in large part on the individual administering the test. Yet it has been reported that in an effort to minimize collection time and improve patient comfort, 30% of physicians do not use both devices.

CytoCore believes that its SoftPAP^tm cervical cell collector offers a quicker, more accurate specimen collection and improved specimen quality with minimal possibility of user error. It is designed to consistently sample the entire cervix in a single-step using an inflatable balloon collector. The patented single-use silicon balloon is a mirror image of the surfaces of the ectocervix and endocervix. During collection, the balloon is slightly inflated by pressing a button on the collector handle. The volume of air is fixed and controlled so no over-inflation or under-inflation can occur. When the balloon inflates, its surface comes into contact with all walls of the entire cervix in a single step. Cells are collected from 360 degrees around the ectocervix, and from within the endocervix, resulting in a more comprehensive collection specimen. No rotation is necessary, and the need for any special skill or technique is reduced. Results include greater cellularity for analysis, fewer inadequate specimens, ease of use for the physician, and greater patient comfort.

CytoCore believes that the SoftPAP^tm device acquires better cell samples for more accurate Pap tests. CytoCore believes that the SoftPAP^tm cervical cell collector also reduces trauma to the cervix initiated by conventional brush and spatula scraping techniques. The collector employs a soft balloon that causes cells to adhere using controlled inflation to provide a more comfortable process for the patient while reducing incidence of post-collection bleeding or cramping. This method also reduces the number of Pap tests that are deemed inadequate due to obscuring blood.

More accurate testing is even more critical today given that vaccination against the most cancer-causing types of HPV is now possible. HPV is considered the most significant causative agent for cervical cancer, and studies have shown a link between infection with certain types of HPV and cervical cancer and its precursors. Infection with HPV can cause changes in cervical cells that can be detected through Pap testing. A wider availability of testing, and greater accuracy of such testing, can therefore be an important tool in the fight against cervical disease along with adjunctive HPV tests. SoftPAP^tm is presently being evaluated in a clinical trial that is intended to demonstrate its suitability for collecting samples for HPV testing.

Biochemical Assays and Slide-Based Tests

Assays are comprised of reagents and procedures that, when used together, create a contrast between features of interest in a specimen and their surroundings. It is this contrast that is detected and interpreted by the AIPS system, described below, to identify the presence of abnormal cells in a specimen.

Cells that transform into cancer cells usually display two distinctive characteristics: rapid, uninhibited proliferation, and a slowing of the natural programmed cell death (apoptosis). Traditional biomarker technology has typically focused on proteins associated with cell proliferation. CytoCore has licensed recently discovered biotechnology related to a unique biomarker that is involved in the apoptotic pathway of human epithelial cells, and combined it with proliferation and other biomarkers to create a new assay, the Cocktail-GCI^tm. This assay adds to CytoCore’s existing Cocktail-CVX^tm assay, which is intended for detection of cervical precancerous and cancer cells.

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The Cocktail-GCI^tm assay will employ a combination of the proliferation, apoptosis and other biomarkers to differentiate precancerous and cancer cells from corresponding normal cells. For example, the proliferation biomarker, EGFR, tags abnormal cells by targeting and binding to cell-surface proteins involved in cell proliferation. On precancerous and cancerous cells the population of this protein is significantly increased, correlating with the uninhibited cell growth. The apoptosis biomarker, P2X7, tags normal cells by targeting and binding to cell-surface proteins involved in cell death. On precancerous and cancerous cells this protein has been significantly reduced, which may explain the slowing of cell death. Both biomarkers contain a fluorescent component that enables visual identification of a normal or cancer cell to which each respectively attaches. The Cocktail-GCI^tm assay can be applied to both tissue and cellular samples. Initial lab results showed excellent sensitivity and specificity (measures of biomarker accuracy) in detecting both cervical and endometrial (uterine) cancers. We believe this may be a significant opportunity in the area of endometrial cancer detection because an effective screening test for endometrial cancer currently does not exist. Invasive biopsy followed by histological evaluation by a pathologist has traditionally been the only option for women being tested for endometrial cancer. The Cocktail-GCI^tm assay could therefore potentially be used as a screening method for endometrial cancer in women.

Preliminary studies indicate apoptosis combined with proliferation biomarkers effectively detect endometrial cancer using either a protein or nucleic acid-based test. Preliminary studies also suggest that the combination of these biomarkers accurately identifies apoptotic deficiencies in other types of epithelial cells. This, used in conjunction with proliferation markers, raises the possibility of creating new assays to detect other forms of cancer. CytoCore expects that it will be testing its existing cocktail formulations to see if they can also be used to identify skin, bladder, breast, prostate and lung cancers.

The Cocktail-CVX^tm and Cocktail-GCI^tm biochemical assays will form the basis of the CytoCore Solutions^tm System slide based test (“SBT”). The Company anticipates that the first SBT to be offered will use the Cocktail-GCI^tm to enable women to be screened for endometrial cancer. As noted above, at present there is no non-invasive, early-stage screening test for endometrial cancer. A biopsy and pathological examination is the only option for women who are at risk of the disease (e.g., diabetic, hypertensive or obese) or who exhibit symptoms such as abnormal bleeding. CytoCore’s SBT for endometrial cancer may be the first such test of its kind. A Phase I research clinical trial of the endometrial cancer SBT was begun during the first half of 2007. During the first quarter of 2008, the Company decided to suspend the research trial for the EndoScan product because of questions regarding the commercial viability of a tissue-based product. The Company intends to continue developing a cell-based test for endometrial cancer.

Another SBT that the Company plans to develop will use the Cocktail-CVX^tm to screen for cervical cancer. This test is designed to enhance the currently-used Pap test in countries where it is now performed and provide an accurate and low-cost method of cervical cancer screening in areas where Pap tests are not presently available. In the laboratory version of the cervical SBT, the Cocktail-CVX^tm assay is applied to sample cells released from a collection device into a liquid preservative and deposited on a glass slide. The slide is then analyzed using the AIPS^tm platform to detect suspicious cells.

Automated Imaging Proteomic System or AIPS^tm

The AIPS Workstation is a computer-assisted microscopy system for the evaluation of cytology specimens that the Company expects to introduce in early 2009. The AIPS platform includes a computer-controlled microscope, automated slide handling capabilities, advanced image analysis software, and a data management interface. The design of the workstation has been optimized for applications that require high volume analysis of cytological specimen slides. The system can be used either as an automatic slide-scanning instrument or as an independent review workstation, which we believe enhances overall throughput and productivity. The platform is also capable of performing image acquisition using either transmitted visible light or fluorescent illumination. Switching from transmitted-visible light to fluorescent illumination is controlled automatically.

An innovative feature of the AIPS platform is that it can be customized with an appropriate software module to analyze specimen slides prepared using a wide variety of biomarkers. Image analysis and specimen classification can be performed either quantitatively or qualitatively based on the requirements of the particular biomarker. The platform also includes comprehensive data management software for specimen review, patient record management,

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and electronic data transfer. Finally, the extensible software architecture of the AIPS will enable it to support network-oriented applications such as telepathology, virtual slide, and service-oriented applications using a web browser.

AIPS is differentiated from competing systems in several ways. AIPS is specifically targeted to the needs of small to intermediate sized hospitals and reference laboratories rather than the research laboratories and very large reference laboratories that are targeted by competing systems. This targeting strategy was chosen because small to intermediate sized laboratories comprise a significant, if not dominant, market segment in almost all countries including the United States and because of the lack of organized competition in this segment. A second point of differentiation is that AIPS is an integrated system rather than, as in many competing systems, a collection of components that must be integrated and validated by the user. Third, AIPS is a semi-open system that supports a broad range of assays based upon multiple detection technologies, whereas most competing integrated systems are restricted to a single test — the cervical Pap screen — based upon a single technology and process flow. This open system concept is intended to allow the CytoCore assay menu to be extended to include all significant cytological assays. We believe this flexibility makes AIPS particularly suited to the small and intermediate sized laboratories where, unlike in the large reference laboratories, volumes do not justify dedicating an instrument to a single test. Most importantly, the compact, low cost design of AIPS is intended to facilitate its deployment at or in proximity to the point of care.

Drug Delivery System

The cervical Drug Delivery System (“DDS”) is comprised of an applicator handle and drug-delivery modality in the form of a patch that provides a timed release of a therapeutic agent directly to the surface of the cervix. The first drug delivery product is intended to deliver a local anesthetic as an adjunct to cervical biopsy procedures. The DDS is designed to allow a physician also to apply a wide range of chemotherapy and antiviral drugs to the cervix to treat cervical lesions detected by a standard Pap or other test, providing a non-surgical option for the treatment and management of such lesions.

Because of the rounded shape and location of the cervix, to date it has been difficult for a physician to provide any form of localized medical therapeutic treatment for a detected cervical lesion. The physician’s only choice of treatment has been surgery. If the lesion is not in an advanced stage, the patient is typically sent home with the recommendation that she come back in three to six months to check if the lesion has developed further toward cancer, so it can then be surgically treated. CytoCore believes this limited form of treatment has significant drawbacks.

The key component of the DDS is a patch that contains a formulary drug. The patch is designed such that it will adhere to the tissue and the drug released off the patch will be applied directly onto the surface of the cervix where the lesion is located. It is expected that this will provide targeted drug delivery in terms of the direction of the application and the amount of drug absorbed into the tissue. Although the current DDS deals with the application of a drug onto the cervix, the Company believes that the technology can be generalized to other body surfaces and can deliver more than one type of drug.

The DDS is based on the technology used in the SoftPAP^tm collector. The applicator can present the drug-saturated polymer patch when in a collapsed state that will enable the physician to easily introduce the instrument through a standard gynecological speculum. The modified handle is designed to quickly, safely, and effectively deposit a drug treatment patch onto the cervix.

We believe that the DDS enables us to offer the only complete end-to-end system for cervical cancer detection and treatment: a physician that uses the SoftPAP^tm collector will gather a better cell sample, the Cocktail-CVX^tm and Cocktail-GCI^tm assays will tag or label any cancerous cells, the AIPS platform will screen for the presence of cancer cells, and the DDS will give the physician a therapeutic treatment option for any detected dysplasia or lesions.

AcCell^tm

In November 2001, Ventana Medical Systems, Inc. agreed to purchase and distribute AcCell instruments with their image analysis software. The AcCell product consisted of a computer-aided automated microscopy instrument

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designed to help medical specialists examine and diagnose specimens of human cells. During 2002, we agreed that Ventana would assume responsibility for manufacturing the AcCell 2500 instruments directly, rather than purchasing them from us. CCI subsequently elected not to develop the 2500 model and, in November 2003, CCI and Ventana entered into a settlement agreement providing for a non-exclusive, royalty-free license from CCI to Ventana to the source code for the AcCell 2500 for Ventana’s internal use or in the creation of executable code for its customers. In addition, as part of the settlement, CCI agreed to provide two workstations valued at $49,500 and issued a promissory note for approximately $63,000 in return for forgiveness of approximately $375,000 of advances against future sales. As of December 31, 2007, CCI still owed Ventana approximately $21,000 of principal under the note.

In October 2004, CCI agreed to settle an arbitration proceeding instituted by MonoGen, Inc. against the Company through the transfer to MonoGen of certain patents, patent applications and other intellectual property rights relating to the AcCell technology as well as inventory and an unsecured installment note in the principal amount of $305,000. MonoGen granted CCI a non-exclusive license agreement for the use of the patent rights and technology as they relate to cervical and ovarian cancer in exchange for a three percent royalty on all gross sales of licensed products. During the year ended December 31, 2007, MonoGen accepted payment of $325,000 and transfer of the AcCell and Savant trademark ownership rights as settlement of all outstanding principal and interest. In addition, MonoGen transferred certain intellectual property patent rights back to CytoCore in 2008.

Product Development

Our core product development strategy is to develop the CytoCore Solutions^tm System and its component products, enhance such products, and develop new and innovative diagnostic and screening devices for the early detection of various types of cancer. To implement this strategy, we have and will continue to utilize internal resources, sponsored and collaborative agreements with medical institutions, strategic partnerships with commercial entities, and licenses and acquisitions of intellectual property.

In January 2006, the Company entered into a clinical study agreement with University Hospitals of Cleveland (“UHC”). Under the professional guidance of Dr. George Gorodeski, UHC performs core research for various disorders and cancers involving epithelial cells, such as cervical dysplasia and cervical cancer, bladder cancer and uterine cancer. This agreement provides CCI with what it believes are significant opportunities, such as:

•  Assisting the expansion of the company’s product offerings to include not only screening products but diagnostic products;

•  Positioning CCI to develop commercial products based on the new P2XY apoptosis biomarker;

•  Granting CCI rights to commercialize the drug delivery system to apply FDA-approved drugs to cervical lesions; and

•  Leveraging CCI technology previously developed for the SoftPAP^tm collector handle for use in other applications.

In the future, CytoCore anticipates expanding its portfolio to include other cytological assays and tests, tests for sexually-transmitted diseases, including HPV, and other markers of vaginal health, and medicinal products related to the treatment of diseases of the female reproductive system. The CytoCore product pipeline calls for the introduction of an automated cytology screening system and endometrial cancer and cervical cancer assays in 2009, and delivery device applications in 2010.

Markets and Marketing Objectives

Diagnostic Focus

Our immediate chief objective is to achieve broad market acceptance of the SoftPAP^tm collection device and the CytoCore Solutions^tm System as a new screening and diagnostic tool for cervical cancer screening, offering an alternative to the current Pap test methods. It is estimated that there are approximately 55 million annual Pap tests given in the United States. Worldwide, approximately 180 million tests are given and approximately 1.5 to 1.8 billion women require annual Pap testing. Many studies have shown that between 70 and 80% of a person’s

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entire healthcare expenditures over their whole life occur in the last four to six months of life. As a result, more and more attention is being given to catching a disease or condition early before it gets out of hand and becomes a potentially fatal illness. As part of this shift in emphasis, the FDA has recently announced that 60% of its approvals in the coming period would be for “diagnostic related products.” Bio-molecular screening, diagnostic, and treatment products consequently are being developed to catch disease states early so they can be dealt with before they become life threatening and expensive to treat. CytoCore is designing and developing its products to satisfy this paradigm shift and focus more on diagnostic methods and tools for early detection.

Point of Care for All Populations

We also believe we are well positioned to capitalize on trends affecting the world’s population. The female population of the world is approximately 3 billion, of which 2 billion fall in the range where reproductive healthcare monitoring is necessary and effective. This group falls into two sub-groups: (1) females in the United States and other countries where healthcare is available to most, and where healthcare is more or less effective (estimated at between 300 and 400 million women), and (2) the remainder of the female world population, where healthcare is limited or non-existent. CytoCore believes its products can address the needs of both of these groups, since the principal requirements for both groups — minimal cost, near point of care delivery, ease of use, and reduced reliance on highly-trained and skilled professionals — are the same. CytoCore is developing its initial products to serve the needs of females in developed nations and economies, but anticipates subsequent deployment of such products to less well-developed countries.

Within both developed and developing economies, there are macro trend drivers that are not specific to female healthcare needs, including:

•  Increasing life spans, driving the demand for healthcare services up and increasing the emphasis on developing screening tests for the early detection of diseases;

•  Limited infrastructure and the fact that a significant portion of the world population lives in locations where the infrastructure does not support the classical laboratory-based model of healthcare delivery, putting a premium on point of care diagnostic testing;

•  An increasingly mobile population, which has increased the pressure to minimize the time between when a patient is tested and when the test result is available and delivered;

•  Increasing worldwide shortage of physicians and laboratory professionals who have the skills and training needed to perform and interpret screening and diagnostic tests, increasing the need for tests that can be performed and interpreted by technicians and para-professionals; and

•  Constrained funds available for healthcare, driving the need to reduce healthcare costs.

These trends are set against the major advances that are occurring in many areas related to healthcare. These advances range from a better and more nuanced understanding of disease states to the movement of genomics, proteomics and bioinformatics out of the research laboratory and into routine medical practice. These are supported by rapid advances in information and optical and software technology. This combination is making it possible to perform increasing numbers of screening and diagnostic tests at or near the point of care. CytoCore is focused upon utilizing these advances to provide products that address the needs of these worldwide markets.

Sizes of Target Markets	US		Rest of World		Total
SoftPAPtm Cervical Collector	$	300M	$	600M	$	900M
Automated Imaging Proteomic System
Endometrial Cancer Scan	$	1.5B	$	3B	$	4.5B
Cervical Cancer Scan	$	900M	$	1.8B	$	2.7B
Drug Delivery System	$	100M	$	250M	$	350M
CytoCore Solutionstm System	$	2.80B	$	5.65B	$	8.45B

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Sales and Distribution

The SoftPAP^tm is initially being targeted to the premium segment of the cervical cytology sampling market. This premium segment comprises almost the entire cervical sampling market except for public health programs and research hospitals. The Company expects that the SoftPAP^tm will be primarily delivered to these customers through local and regional distributors who specialize in the value-added OB/GYN market. During the last quarter of fiscal 2007, the Company entered into three distribution agreements with distributors in Italy, Spain and Portugal. Each of these distributors agreed to act as the Company’s exclusive distributor in their respective territories. All of the agreements provide for certain annual minimum purchase requirements for the products, ranging from 300,000 to 1 million units in the first 12-month period to 1 million to 2.5 million units in the third 12-month period. Following the FDA’s approval of the SoftPAP^tm in February 2008, the Company entered into its first U.S. distribution agreement for specified states within the United States. The Company also entered into a fourth international distribution agreement in March 2008 for sales into Switzerland.

The AIPS workstation will be marketed to small and medium-sized hospitals and reference laboratories. The compact, low cost design of AIPS is intended to facilitate its deployment at or in proximity to the point of care. Once the AIPS workstation has been successfully established in the laboratory market, our strategy is to form alliances with these laboratories and other medical products distribution companies and utilize their sales forces to broaden sales of the system to other markets, including hospitals, clinics, managed care organizations and office-based physician groups. Our marketing strategy to these organizations will vary depending upon the applicable cancer screening test.

Government Regulation, Clinical Studies and Regulatory Strategy

The development, manufacture, sale, and distribution of medical devices intended for commercial use are subject to extensive governmental regulation in the United States by the U.S. Food and Drug Administration and comparable authorities in certain states and foreign countries. In the United States, the Food, Drug and Cosmetic Act (the “FD&C Act”) and related regulations apply to some of our products. These products cannot be shipped in interstate commerce without prior authorization from the FDA.

Medical devices may be authorized by the FDA for marketing in the United States either pursuant to a pre-market notification under Section 510(k) of the FD&C Act, commonly referred to as a “510(k) notification,” or a pre-market approval application or “PMA”. The process of obtaining FDA marketing clearance and approval from other applicable regulatory authorities is both lengthy and costly and there can be no guarantee that the process will be successful. The 510(k) notifications and PMAs typically require preliminary internal studies, field studies, and/or clinical trials, in addition to the submission of other design and manufacturing documentation. In addition, a PMA supplement or clearance of a new 501(k) may be required for certain changes to a product if they affect the safety, efficacy or substantial equivalence of the product. We manage the regulatory process through the use of consultants and clinical research organizations.

A 510(k) notification, among other things, requires an applicant to show that its products are “substantially equivalent” in terms of safety and effectiveness to an existing FDA-cleared predicate product. An applicant may only market a product submitted through a 510(k) notification after the FDA has issued a written notification determining the product has been found to be substantially equivalent. The predecessor to the SoftPAP^tm collector, the e² Collector, was approved for marketing by the FDA on May 31, 2002 under the 510(k) notification process. The SoftPAP^tm collection device received FDA approval under the 501(k) notification process in February 2008.

To obtain PMA approval for a device, an applicant must demonstrate, independent of other similar devices, that the device in question is safe and effective for its intended uses. A PMA must be supported by extensive data, including pre-clinical and clinical trial data, as well as extensive literature and design and manufacturing documentation to prove the safety and effectiveness of the device. The PMA process is substantially longer than the 510(k) notification process. During the review period, the FDA may conduct in-depth reviews of clinical trial center documentation and manufacturing facilities and processes or those of strategic partners. In addition, the FDA may request additional information and clarifications and convene a medical advisory panel to assist in its determination.

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The FD&C Act generally bars advertising, promoting, or other marketing of medical devices that the FDA has not approved or cleared. Moreover, FDA enforcement policy strictly prohibits the promotion of known or approved medical devices for non-approved or “off-label” uses. In addition, the FDA may withdraw product clearances or approvals for failure to comply with regulatory standards.

Our prospective foreign operations are also subject to government regulation, which varies from country to country. Many countries, directly or indirectly through reimbursement limitations, control the price of most healthcare products. Developing countries put restrictions on the importation of finished products, which may delay such importation. European directives establish the requirements for medical devices in the European Union. The specific directives are the Medical Device Directive and the In-Vitro Diagnostics Device Directive. The International Organization for Standardization establishes standards for compliance with these directives, particularly for quality system requirements. The Company announced in August 2007 that it had completed the process of demonstrating the conformity of the cell collection device to the requirements of the Medical Device Directive for sales into the European Union.

The FDA has adopted regulations governing the design and manufacture of medical devices that are, for the most part, harmonized with the good manufacturing practices and ISO quality system standards for medical devices. The FDA’s adoption of the ISO’s approach to regulation and other changes to the manner in which the FDA regulates medical devices will increase the cost of compliance with those regulations.

We may be subject to certain registration, record-keeping and medical device reporting requirements of the FDA. Our manufacturing facilities, or those of our strategic partners, may be obligated to follow the FDA’s Quality System Regulation and be subject to periodic FDA inspections. Any failure to comply with the FDA’s Quality System Regulation or any other FDA or other government regulations could have a material adverse effect on our future operations. In addition, separate state and local laws relating to such matters as safe working conditions, manufacturing practices and environmental protection may apply, which may impose additional costs and risks.

Various federal and state laws pertaining to healthcare fraud and abuse, including federal and state anti-kickback laws and the federal Foreign Corrupt Practices Act, make it illegal for an entity to solicit, offer, receive or pay remuneration or anything of value in exchange for, or to induce, the referral of business or the purchasing, leasing or ordering of any item or service paid for by Medicare, Medicaid or certain other federal healthcare programs. These statutes have been broadly defined to prohibit a wide array of practices, and our activities may subject the company and its partners to scrutiny under such laws. Violations may be punishable by criminal and/or civil sanctions, including fines, as well as the exclusion from participation in government-funded healthcare programs.

The CytoCore Solutions^tm System also may be subject to regulation in the United States under the Clinical Laboratory Improvement Act (“CLIA”). CLIA establishes quality standards for laboratories conducting testing to ensure the accuracy, reliability and timeliness of patient test results, regardless of where the test is performed. The requirements for laboratories vary depending on the complexity of the tests performed. Thus, the more complicated the test, the more stringent the requirement. Tests are categorized as high complexity, moderate complexity (including the category of provider-performed microscopy) and waived tests. CLIA specifies quality standards for laboratory proficiency testing, patient test management, quality control, personnel qualifications and quality assurance, as applicable.

The FDA is responsible for the categorization of commercially-marketed laboratory tests. The Centers for Disease Control is responsible for categorization of laboratory procedures such as provider-performed microscopy. For commercially-marketed tests, the FDA now determines the appropriate complexity category as it reviews pre-market submissions for clinical laboratory devices. Manufacturers are notified of the assigned complexity through routine FDA correspondence. Categorization is effective as of the date of the written notification to the manufacturer.

We are developing the CytoCore Solutions^tm System, and in particular the AIPS workstation, to be user-friendly, require minimum operator training, and have safety and operating checks built into the functionality of the instruments. We believe that our efforts may result in receiving the lowest possible classification for the system. If,

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however, these products are classified into a higher category, it may have a significant impact on our ability to market the products in the United States.

A follow-up clinical trial for the SoftPAP^tm product with 650 patients is in process and is expected to be completed in the first half of 2008. We believe SoftPAP^tm will demonstrate superior sensitivity in detecting high-grade cervical disease and cancer. In addition, we believe the results will demonstrate that the system produces more accurate results than the current PAP test.

In a presentation of results of the 2000 clinical trial of the collection device, data showed that the cytology reports on samples collected with the device were at least as accurate as those collected with the conventional brush/spatula method. The collector also proved to be more comfortable for the patient, provided less blood and mucus, and required only one device to collect both endocervical and ectocervical cells.

We believe the results of these studies support the continued development of the CytoCore Solutions^tm System, as did earlier test results of the e² Collector, the predecessor of the SoftPAP^tm. We moved ahead with additional studies and clinical trials in late 2001 and others began in 2002 following the initial test results from the e² Collector. Due to capital limitations we were forced to suspend all of our ongoing studies during the last half of 2002. From 2004 to the present, CCI has continued to refine and optimize the SoftPAP^tm collection device, the Cocktail-CVX^tm and Cocktail-GCI^tm assays and develop the AIPS platform as a screening device for various cancers. We received FDA clearance to market the SoftPAP^tm collector in February 2008.

We plan to pursue regulatory approval of the CytoCore Solutions^tm System products through a series of submissions and, in some cases, using data from a single clinical study. This tiered approach is designed to accelerate revenue opportunities for the CytoCore Solutions^tm System in the short term and to drive adoption of our innovative products over the long term, while minimizing the expense and time involved in undertaking the appropriate study.

Our overall strategy involves the continuing study of the CytoCore Solutions^tm System and Cocktail-CVX^tm and Cocktail-GCI^tm assays and SBTs, as described above. This research will determine whether the CytoCore Solutions^tm System is able to eliminate true negative samples from further review for cervical cancer. We believe the system could also become a primary screening device for cervical, endometrial and bladder cancer. We will also submit the data to foreign regulatory authorities that have jurisdiction over these products. Subsequently, we will continue to collect and submit data for the CytoCore Solutions^tm System point of care test.

If the submissions for the various CytoCore Solutions^tm System products are cleared by the FDA for sale in the U.S. market or approved for sale by foreign regulatory agencies, we intend to sell the cleared products in their respective clinical markets.

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CytoCore Solutions^tm System Product Introduction Timelines

Product	Process	Timeline
SoftPAPtm	Clinical trials	Completed
	Initial regulatory submission & review	September 2001
	Initial regulatory clearance	May 2002
	Follow-up clinical trials	Q2 2007 - Q2 2008
	Sales (European)	Q4 2007
	Follow-up regulatory clearance	February 2008
	Sales (United States)	Q2 2008
Cocktail-CVXtmand Cocktail-GCItm	Clinical trials(1)	2008
	Regulatory submission & review(1)	Q3 2009
	Regulatory clearance projected(1)	Q4 2009
	U.S. Sales(1)	Q4 2009
	International Sales(1)	Q3 2009
	Product development and clinical trials(2, 3)	Q2 2008 - Q4 2009
AIPS	Product development and pre-production mfg(2)	Q3 - Q4 2008
	Sales(2)	Q3 2009
Drug Delivery System	Instrument development	Q2 2008 - Q3 2009
	Patient trials	Q1 - Q3 2010
	Regulatory submission & review	Q1 2010
	Regulatory clearance projected(1)	Q1 2011
	Sales	Q2 2012

(1)	All of the above target dates pertain to the EndoScan test for uterine/ endometrial cancer.
(2)	Sales would pertain to the EndoScan cell based test for endometrial cancer in 2009 and 2010. Base product development and pre-production manufacturing would apply to all cancer recognition imaging software. Trials for bladder and cervical cancer would occur in 2009 and 2010 with expected FDA approval in late 2010-2011 time frame.
(3)	If trial and development expenses are not funded through SoftPAPtm and EndoScan sales, additional capital will be required.

Cost and Reimbursement

The cost of the Pap test varies widely from country to country. Outside of the United States, most healthcare services are provided by governmental organizations. Healthcare in many of these countries is managed by governmental agencies, often at the local level, making the precise cost and number of tests performed difficult to validate. In developing countries where healthcare, especially cancer screening, may be minimal, non-profit organizations often supplement government health programs. We intend to distribute the CytoCore Solutions^tm System worldwide pursuant to any statutory regulatory approvals we receive.

In the United States, laboratory customers bill most insurers (including Medicare) for screening and diagnostic tests such as the Pap test. Insurers, such a private healthcare insurance or managed care payers, in addition to Medicare, reimburse for the testing, with a majority of these insurers using the annually-set Medicare reimbursement amounts as a benchmark in setting their reimbursement policies and rates. Other private payers do not follow the Medicare rates and may reimburse for only a portion of the testing or not at all. Outside of the United States,

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healthcare providers and/or facilities are generally reimbursed through numerous payment systems designed by governmental agencies, such as the National Health Service in the United Kingdom, the Servicio Sanitaris Nazionale in Italy and the Spanish National Health System, as well as private insurance companies and managed care programs. The manner and level of reimbursement will depend on the procedures performed, the final diagnosis, the devices and/or drugs utilized, or any combination of these factors, with coverage and payment levels determined in the payer’s discretion.

Our ability to successfully commercialize the CytoCore Solutions^tm System and future products will depend, in part, on the extent to which coverage and reimbursement for such products will be available from third-party payers in the United States such as Medicare, Medicaid, health maintenance organizations and health insurers, and other public and private payers in foreign jurisdictions. The coverage policies and reimbursement levels of these third-party payers may impact the decisions of healthcare providers and facilities regarding which medical products they purchase and the prices they are willing to pay for those products. If we succeed in bringing products to the market, we cannot be assured that third-party payers will pay for such products or establish and maintain price levels sufficient for realization of an appropriate return on our investment in product development. Additionally, we expect many payers to continue to explore cost-containment strategies (e.g., competitive bidding for clinical laboratory services within the Medicare program, so-called “pay-for-performance” programs implemented by various public and private payers, etc.) that could potentially impact coverage and/or payment levels for current or future CytoCore products.

Competition

Historically, competition in the healthcare industry has been characterized by the search for technological innovations and efforts to market such innovations, and technological advances have accelerated the pace of change in recent years. The cost of healthcare delivery has always been a significant factor in markets outside of the United States. In recent years, the U.S. market has also become much more cost conscious. We believe technological innovations incorporated into certain of our products offer cost-effective benefits that address this particular market opportunity.

Competitors may introduce new products that compete with ours, or those that we are developing. We believe the portion of our research and development efforts devoted to continued refinement and cost reduction of our products will permit us to remain or become competitive in the markets in which we presently distribute or intend to distribute our products.

The market for our cancer screening and diagnostic product line is significant, but highly competitive. We are currently not aware of any other company that is duplicating our efforts to develop a fully-automated, objective analysis and diagnostic system for female reproductive-tract cancer screening that can be used at the point of care. Nonetheless, we compete with several large and well-established medical device companies, including companies with financial, marketing, and research and development resources substantially greater than ours. There can be no assurance that our technological innovations will provide us with a competitive advantage.

There are several companies that produce automated and quantitative microscopy instruments. In the past, the market for these instruments has been primarily limited to research applications. However, as a result of recent advances in the area of molecular diagnostics, we believe the market for such instruments and applications will increase over the next several years. We believe our instruments are the most versatile and cost-effective platforms available in the current market whether as an outright purchase or a fee-for-use application.

In general, we believe that our products must compete primarily on the basis of clinical performance, accuracy, functionality, quality, product features and effectiveness of the product in standard medical applications. We also believe that cost control and cost effectiveness are additional key factors in achieving or maintaining a competitive advantage. We focus a significant amount of product development effort on producing systems and tests that will not add to overall healthcare cost.

Specifically, there are several companies whose technologies are similar, adjunctive to, or may overlap with that of CCI. These include manufacturers of liquid-based Pap tests and screening systems such as Cytyc (a Hologic company), Becton, Dickinson and Company (which acquired Tripath Imaging Inc. in late 2006), and MonoGen,

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Inc.; Digene Corporation, which manufacturers the leading HPV test and merged with Qiagen in July 2007; Ventana Medical Systems, Inc., an instrument and reagent manufacturer; and Clarient, Inc. and Applied Imaging Corp. (which was purchased by Genetix in late 2006), which provide cancer and genetic diagnostic and screening products and services, respectively. However, as noted above, we do not believe any of these companies have developed the fully-integrated solution necessary to deliver a fully-automated, proteomic-based solution. To develop fully-automated solutions, companies must have technologies that fully integrate microscopy instruments, imaging software and cancer-detecting biochemistry. It is difficult to assess our competitive position in the market since we are not sufficiently aware of the development stages of any of competitors’ products.

Operations

We conduct research and development work for the CytoCore Solutions^tm System using a combination of our full-time and part-time employees and independent consultants in our Chicago, Illinois location and contracted researchers operating through University Hospitals of Cleveland and elsewhere.

We do not intend to invest capital to develop our own distribution and sales organizations, or construct and maintain a medical-products manufacturing facility and all its related quality systems requirements. Our strategy is to utilize the operations, quality systems and facilities of a contract manufacturer specializing in medical products manufacturing to meet our current and future needs in the United States and international markets. This strategy covers manufacturing requirements related to the CytoCore Solutions^tm System’s chemical components, plastic and silicone parts for the SoftPAP^tm, and the instruments and other components of the AIPS workstation.

To this end, we have agreements, including for design and development work, with contract manufacturers of medical devices to supply commercial quantities of the SoftPAP^tm sample collection device. These manufacturers began delivering commercial product to CCI in 2007 and have the capacity to handle high volume production through facilities in both the United States and several foreign countries.

Intellectual Property

We rely on a combination of patents, licenses, trade names, trademarks, know-how, proprietary technology, trade secrets and policies and procedures to protect our intellectual property. We consider such security and protection a very important aspect of the successful development and marketing of our products in the U.S. and foreign markets.

In the United States, we follow the practice of filing a provisional patent application for an invention as soon as it has been determined that the invention meets the minimum standards for patentability. While a provisional patent application does not provide any formal rights or protections, it does establish an official priority date for the invention that carries over to any utility patent applications that are derived from the provisional application within the next 12 months. A utility patent application begins the process that can culminate in the issuance of a U.S. patent. We convert each outstanding provisional patent application into some number of utility patent applications within this 12-month period. In most cases each provisional application results in one utility filing. However, in some cases a single provisional application has generated two independent utility filings or multiple (up to five) provisional applications have been consolidated into a single utility application. During the examination of a utility application, the U.S. Patent and Trademark Office may require us to divide the application into two or more separate applications or we may file a continuation-in-part patent application that expands upon the technology disclosed in an earlier patent application and which has the potential of superseding the disclosure of the earlier application. For these reasons, estimating the number of patents that are likely to be issued based upon the number of provisional and utility applications filed is difficult.

Prior to filing a utility application in the United States, we review the application to determine whether obtaining patent coverage for the invention outside of the United States is necessary or desirable to support our business model. If so, a patent application is filed under the Patent Cooperation Treaty (“PCT”) at the same time that the U.S. filing is made. Depending upon the nature of the invention and business considerations, we typically nationalize PCT applications in three to six countries.

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As of December 2007, we had filed 11 U.S. utility patent applications. Three of the U.S. utility applications have been issued as U.S. patents and seven have been abandoned. One Chinese patent had been issued and one European case has been abandoned. One U.S. and five foreign patent applications are filed and pending. In order to reduce the expenses related to patent prosecution, we are currently taking only those actions needed to keep them in effect. This group of patents and patent applications covers all aspects of the CytoCore Solutions^tm System including, but not limited to, the point of service instrument, the personal and physicians’ collectors, and the slide-based test. As a result of the acquisition of AccuMed, we acquired 33 issued U.S. patents, one U.S. patent application, and nine foreign patents, of which a combined total of 17 were transferred to a third party under a license agreement. Twenty-four additional foreign patent applications primarily covering the AcCell and AcCell Savant technology and related software were also acquired. We have recently recovered the AcCell-related patents and patent applications from the third party.

We intend to prepare additional patent applications for processes and inventions arising from our research and development process. The protections provided by a patent are determined by the claims that are allowed by the patent office that is processing the application. During the patent prosecution process it is not unusual for the claims made in the initial application to be modified or deleted or for new claims to be added to the application. For this reason, it is not possible to know the exact extent of protection provided by a patent until it issues.

Patent applications filed prior to November 29, 2000 in the United States are maintained in secrecy until any resulting patent is issued. As there have been examples of U.S. patent applications that have remained “in prosecution” and, therefore, secret for decades, it is not possible to know with certainty that any U.S. patent that we may own, file for or have issued to us will not be pre-empted or impaired by patents filed before ours and that subsequently are issued to others. Utility patent applications filed in the United States after November 29, 2000 are published 18 months after the earliest applicable filing date. As this revised standard takes full effect, the chances that such a “submarine” patent will impair our intellectual property portfolio are significantly reduced. Foreign patent applications are automatically published 18 months after filing. As the time required to prosecute a foreign utility patent application generally exceeds 18 months and the foreign patents use a “first to file” rather than a “first to invent” standard, we do not consider submarine patents to be a significant consideration in our patent protection outside of the United States.

Our products are or may be sold worldwide under trademarks that we consider to be important to our business. We own the trademarks SoftPAP^tm, CytoCore, CytoCore Solutions^tm and Cocktail-CVX^tm. We may file additional U.S. and foreign trademark applications in the future.

Our future technology acquisition efforts will be focused toward those technologies that have strong patent or trade secret protection.

We cannot be sure that patents or trademarks issued or which may be issued in the future will provide us with any significant competitive advantages. We cannot be sure any of our patent applications will be granted or that their validity or enforceability will not be successfully challenged. The cost of any patent-related litigation could be substantial even if we were to prevail. In addition, we cannot be sure that someone will not independently develop similar technologies or products, duplicate our technology or design around the patented aspects of our products. The protection provided by patents depends upon a variety of factors, which may severely limit the value of the patent protection, particularly in foreign countries. We intend to protect much of our core technology as trade secrets, either because patent protection is not possible or, in our opinion, would be less effective than maintaining secrecy. However, we cannot be sure that our efforts to maintain secrecy will be successful or that third parties will not be able to develop the technology independently.

Research and Development Expenditures

Our research and development efforts are focused on introducing new products as well as enhancing our existing product line. We utilize both in-house and contracted research and development personnel, including in collaboration with universities, medical centers and other entities. All of our research and development activities are conducted in the United States.

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We believe research and development is critical to the success of our business strategy. During the 2007 and 2006 fiscal years, our research and development expenditures were approximately $2,806,000 and $1,196,000 respectively, all of which were charged to expense in our consolidated statement of operations. Settlements to vendors related to research and development activities for less than the recorded amounts totaling $207,000 and $342,000 for the fiscal years 2007 and 2006, respectively, were credited to expenses.

Our research work in the area of chemical and biological components will continue for the foreseeable future as we seek to refine the current process and add additional capabilities to our analysis procedure, including the detection of other forms of cancer and precursors to cancer.

We anticipate the need to invest a substantial amount of capital in the research and development process, including the cost of clinical trials, required to complete the development and use of the CytoCore Solutions^tm System and bring it to market.

Components and Raw Materials

Low-cost products are a key component of our business strategy. We designed the SoftPAP^tm collection device using widely available and inexpensive silicone and plastic materials. These materials are available from numerous sources and can be fabricated into finished devices by a variety of worldwide manufacturers based on our proprietary designs. Currently, we manufacture the SoftPAP^tm collection device in Wisconsin and China, with quality assurance occurring in our Chicago facility.

The instrument components of the laboratory version of the CytoCore Solutions^tm System are also available from a number of sources. Computers, cameras, automated slide-staining instruments and automated slide-preparation instruments are currently available from several large manufacturers. We currently have an adequate supply of workstations used in the CytoCore Solutions^tm System and have contracted for the design and manufacture of the next generation of the workstation platform.

Due to certain regulatory requirements regarding the supply and manufacture of certain products, we may not be able to establish additional or replacement sources for certain components or materials. In the event we are unable to obtain sufficient quantities of raw materials or components on commercially reasonable terms or in a timely manner, we would not be able to manufacture our products on a timely and cost-competitive basis, which may have a material adverse effect on our business and financial condition.

Working Capital Practices

During the year ended December 31, 2006, we did not sell any CytoCore Solutions^tm System products. In 2007 we made our first shipment of product. Based on certain settlement agreements, we have given up all our rights to sell the AcCell instrument platforms. CCI has instead elected to proceed with the development of its new fully-integrated AIPS workstation and all the CytoCore Solutions^tm System applications. We have financed our U.S. operations and research and development efforts by raising funds through the sale of debt or equity securities. We will continue to use these methods to fund our operations until such time as we are able to generate adequate revenues and profits from the sale of some or all of our products.

We believe that future sales of the CytoCore Solutions^tm System or other products into foreign markets may result in collection periods that may be longer than those expected for domestic sales of these products. Our strategy will be to use down payments, letters of credit or other secured forms of payment, whenever possible, in sales of products in foreign markets.

Employees

As of March 31, 2008, we employed a total of 11 full-time employees and one part-time employee. We also utilize independent consultants in the United States on an as-needed basis.

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Financial Information About Foreign and Domestic Operations and Export Sales

Markets outside of North America are an important factor in our business strategy. Any business that operates on a worldwide basis and conducts its business in one or more local currencies is subject to the risk of fluctuations in the value of those currencies against the dollar, as well as foreign economic conditions. Such businesses are also subject to changing political climates, differences in culture and the local practices of doing business, as well as North American and foreign government actions such as export and import rules, tariffs, duties, embargoes and trade sanctions. We do not regard these risks, however, as a significant deterrent to our strategy to introduce our CytoCore Solutions^tm System to foreign markets in the future. As we begin to market and sell our CytoCore Solutions^tm System, we will closely review our foreign operational practices. We will attempt to adopt strategies to minimize the risks of changing economic and political conditions within foreign countries.

During the fiscal year ended December 31, 2007, the Company did not have any foreign operations, but entered into distribution agreements to sell our products in Italy, Spain and Portugal. As of December 31, 2007, we had made one product shipment to Italy, which sale accounted for 12% of our revenues for the 2007 fiscal year.

Risk Factors

You should carefully consider the following risk factors that affect our business. Such risk factors could cause our actual results to differ materially from those that are expressed or implied by forward-looking statements contained herein. Some of the risks described relate principally to our business and the industry in which we operate. Others relate principally to the securities market and ownership of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks are described elsewhere in this report under the Item 1 — Description of Business and Item 3 — Legal Proceedings sections, among others. Other risks and uncertainties that we are unaware of, or that we currently deem immaterial, also may become important factors that affect us. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks, and the trading price of our common stock could decline. The discussion of our risk factors should be read in conjunction with the financial statements and notes thereto included herein.

Risks Related to Our Business

We have a history of operating losses and there are doubts as to our ability to continue as a going concern.

Our expenses have exceeded our revenues since our inception, and our accumulated deficit at December 31, 2007 was $85,413,000. We have sold only a very limited amount of our CytoCore Solutions System products to date and cannot be certain as to when sales of the Company’s products might occur in the future.

Our losses have resulted from research and development costs, sales and marketing expenses and other general operating expenses. We expect to continue to devote resources for marketing, product development and other research and development activities, including expenses associated with additional and larger clinical trials for our product candidates. Although we expect to generate revenue in the future from the sale of the SoftPAP collection device and the CytoCore Solutions System, we cannot predict when revenues will be sufficient to fund our operations. We therefore expect to continue to incur significant losses in the near future.

Due to the substantial losses we have incurred and our current limited financial resources, our independent registered public accounting firm has noted in their report on our financial statements that these conditions raise substantial doubt as to our ability to continue as a going concern. Our financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that may result from the outcome of this uncertainty. Moreover, the going concern explanatory paragraph may make obtaining additional financing more difficult or costly.

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We have limited financial resources and we are not certain we will be able to obtain additional financing to maintain operations and fund the development of future products.

In March 2008, the Company raised gross proceeds of $6.2 million from the sale of Units, each consisting of two shares of our common stock ($.001 par value) and a warrant to purchase one share of common stock. For the three months ended March 31, 2008, we had raised $9.4 million from the sale of our securities. We expect to use the proceeds of such financings for equipment and machinery and working capital requirements, and believe that at March 31, 2008 we have the necessary capital to fund operations for the next 12 months. However, unforeseen circumstances or events may drain our resources and the sale and marketing of our current products, as well as product development activities (including preclinical and clinical trials and regulatory approvals), will be costly. Until such time as our products achieve market acceptance and generate sufficient revenues, we may continue raising funds for operating purposes primarily from the sale of securities of the Company. Any such sale of Company securities would have a dilutive effect on the holdings of our stockholders and the value of our common stock. We cannot be certain what level of dilution, if any, may occur or if we will be able to complete any such sales of common stock or other securities in the future. Lack of funding may affect our overall ability to operate our business, including the ability to employ adequate staff and conduct ongoing studies and clinical trials of our products. Failure to raise adequate capital to meet our business needs could materially jeopardize CCI and its ability to conduct business. There can be no assurance that we will be able to secure necessary funds.

We currently depend on the sale of a single product and product line.

CCI has sold only a very limited amount of our CytoCore Solutions System products to date and cannot be certain as to when sales of the Company’s products might occur in the future. Although we have contracts with four international distributors and a distributor in the United States, each of which contain annual minimum purchase requirements, only one product shipment was made in 2007 to a distributor in Italy. In the foreseeable future we will derive most of our revenues from the sale of the SoftPAP^tm cell collection device, and the other components of the CytoCore Solutions System. Our net sales and earnings will therefore be heavily dependent on the sale of these products. If we are unable to successfully develop and commercialize such products as well as other new or improved products, our business, sales and profits may be materially impaired.

Our future success will depend on our ability to develop new products and respond to technological changes in the markets in which we compete.

Our long-term ability to generate product-related revenue will depend in part on our ability to identify products and product candidates that may utilize the different components of the CytoCore Solutions System, including our drug delivery system and slide based tests. If internal efforts do not generate sufficient product candidates, we will need to identify third parties that wish to collaborate with the Company to develop new products and applications. Our ability to successfully pursue third-party relationships will depend in part on our ability to negotiate acceptable license and related agreements. Even if we are successful in establishing collaborative arrangements, they may never result in the successful development or commercialization of any product candidate or the generation of any sales or royalty revenues.

In addition, the markets for CytoCore’s products and services are characterized by rapid technological developments and innovations. Our success will depend in large part on our ability to correctly identify emerging trends, enhance capabilities, and develop and manufacture new products quickly, in a cost-effective manner, and at competitive prices. The development of new and enhanced products is a complex and costly process. We may need to make substantial capital expenditures and incur significant research and development costs to develop and introduce such new products and enhancements. Our choices for developing products may prove incorrect if customers do not adopt the products we develop or if the products ultimately prove to be medically or commercially unviable. Development schedules also may be adversely affected as the result of the discovery of performance problems. If we fail to timely develop and introduce competitive new products, our business, financial condition and results of operations would be adversely affected.

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Our products are subject to government regulation and they may not receive necessary government approvals.

The development, manufacture, sale and use of our products in the United States is subject to extensive regulation, by the FDA as well as other governmental agencies at both the federal and state level. We must meet significant FDA requirements before we receive clearance to market our products. Included in these FDA requirements may be the performance of lengthy and expensive clinical trials to prove the safety and efficacy of the products. We have limited experience in conducting and maintaining the preclinical and clinical trials necessary for regulatory approval, and face the risk that results in later trials may be inconsistent with results from earlier trials. A number of companies have suffered significant setbacks in advanced clinical trials, even after promising early trial results.

Delays in receiving governmental approvals can be costly in terms of lost sales opportunities and increased clinical trial costs. The speed with which we complete such trials and receive approval will depend on several factors, many of which are beyond our control, including but not limited to the rate of patient enrollment and retention, negative tests results, analysis of data obtained from testing activities and changes in regulatory policies.

Until we successfully complete clinical trials, our products may be used only for research purposes or to provide supplemental diagnostic information in the United States. We have FDA approval for one of our products, the SoftPAP^tm collector. We have commenced a follow-up clinical trial for the SoftPAP^tm collector but determined to suspend clinical trials for the tissue-based EndoScan product. We cannot be certain these trials can be completed according to plan or that the results of these trials, or any future trials, when submitted will result in regulatory approval to market our products in the United States. These processes are expensive, time-consuming and uncertain. Moreover, even when the FDA grants approval of a product, the approval may be limited to specific indications or limited with respect to its distribution. Expanded or additional indications for the products may not be approved, or could require additional testing and trials.

Sales of medical devices and diagnostic tests outside the United States are subject to foreign regulatory requirements that vary from country to country. The time required to obtain regulatory clearance in a foreign country may be longer or shorter than that required for FDA marketing clearance. Export sales of certain devices that have not received FDA marketing clearance may be subject to regulations and permits, which may restrict our ability to export the products to foreign markets. If we are unable to obtain FDA clearance for our products, we may need to seek foreign manufacturing agreements to be able to produce and deliver our products to foreign markets. We cannot be certain that we will be able to secure such foreign manufacturing agreements on acceptable terms, if at all.

Once a product gains regulatory approval, whether in the United States and/or abroad, the product remains subject to regulatory requirements, including adverse event reporting. Failure to comply with post-approval requirements can, among other things, result in warning letters, recalls, fines, injunctions and suspensions or revocations of marketing licenses. Any enforcement action, even if unsuccessful, would be time-consuming, expensive, and potentially damaging to our reputation.

Finally, we may be restricted or prohibited from marketing or manufacturing a product, even after obtaining product approval, if any unknown problems arise with respect to the product, its use or manufacture. With the widespread use of any product or device, serious adverse events may occur. Any safety issues could cause us to suspend or cease marketing our approved products, possibly subject us to substantial liabilities, and adversely affect our ability to generate revenues.

Changes in third-party reimbursement may negatively affect us.

Widespread adoption and commercial acceptance of our SoftPAP^tm device and the CytoCore Solutions System in the United States and other countries is in part dependent upon the ability of healthcare providers and laboratories to secure adequate reimbursement from third-party payers such as private insurance plans, managed care organizations, Medicare and Medicaid, and foreign governmental healthcare agencies. Although we anticipate that managed care organizations in the United States will add our products to their coverage, we cannot guarantee that reimbursement will in fact be provided, that it will continue to be available, or that reimbursement levels will be

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adequate to enable healthcare providers and laboratories in the United States and other countries to use our products instead of conventional methods or existing therapies.

Reimbursement and healthcare payment systems in international markets vary significantly by country and include both government-sponsored healthcare and private insurance. There can be no assurance that foreign third-party payers will provide or continue to provide coverage, that third-party reimbursement will be made available at adequate levels, if at all, for our products under any such overseas reimbursement system or that healthcare providers or clinical laboratories will use our products in lieu of other methods. We also will be required to secure adequate reimbursement for any new products we develop or acquire, and we may not be able to do so successfully.

Our international operations expose us to additional risks.

The Company expects that international sales will account for a significant portion of our revenues for the foreseeable future, and we believe international sales are a key element to our future success. As a result, we may be subject to the risks of doing business internationally, including:

•  imposition of tariffs or embargoes,

•  trade barriers and disputes,

•  regulations related to customs and export/import matters,

•  fluctuations in foreign economies and currency exchange rates,

•  longer payment cycles and difficulties in collecting accounts receivable,

•  the complexity and necessity of using foreign representatives and consultants,

•  tax uncertainties and unanticipated tax costs due to foreign taxing regimes,

•  the difficulty of managing and operating an enterprise spanning several countries, including difficulties in maintaining effective communications with employees and customers due to distance, language and cultural barriers,

•  the uncertainty of protection for intellectual property rights and differing legal systems generally,

•  compliance with a variety of laws, and

•  economic and geopolitical developments and conditions, including international hostilities, armed conflicts, acts of terrorism and governmental reactions, inflation, trade relationships and military and political alliances.

We may not be able to compete with companies that are larger and have more resources.

We compete in the highly competitive medical device and diagnostics marketplace and have several U.S. and foreign competitors, both publicly-traded and privately-held. Most of these companies have substantially greater financial, technical and research and development resources, established sales and marketing organizations and distribution networks, greater name recognition and longer-standing relationships with customers. Competitors with greater financial resources can be more aggressive in marketing campaigns, can survive sustained price reductions in order to gain market share, and can devote greater resources to support existing products and develop new products. Any period of sustained price reductions for our products would have a material adverse effect on the Company’s financial condition and results of operations. CytoCore may not be able to compete successfully in the future and competitive pressures may result in price reductions, loss of market share or otherwise have a material adverse effect on the Company’s financial condition and results of operations.

It is also possible that competing products will emerge that may be superior in quality, effectiveness and performance and/or less expensive than those of the Company, or that similar technologies may render CCI’s products obsolete or uncompetitive and prevent the Company from achieving or sustaining profitable operations. In addition, many of our competitors have significantly greater experience in conducting preclinical testing and clinical trials of products and obtaining regulatory approvals to market such products. Accordingly, our competitors

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may succeed in obtaining FDA approval for products more rapidly, which may give them an advantage in achieving market acceptance of their products.

We may not be able to market our products.

Our success and growth depend on the market acceptance of the SoftPAP^tm collection device and the CytoCore Solutions System. We do not intend to maintain a direct sales force to market and sell our products. Therefore, in order to successfully market and sell our products, we must be able to negotiate profitable distribution, marketing and sales agreements with organizations that have direct sales forces calling on domestic and foreign market participants that may use our products. If we are not able to successfully negotiate such agreements, we may be forced to market our products through our own sales force. We cannot be certain that we will be successful in developing and training such a sales force, should one be required, or that we will have the financial resources to carry out such development and training.

The accuracy, performance and cost of our products are critical to our business and reputation, and we are subject to product liability.

As noted above, we are dependent on the sale of the SoftPAP^tm collection device and the CytoCore Solutions System. Due in part to increased competitive pressures in the healthcare industry to reduce costs, our ability to gain market acceptance of our products will depend on our ability to keep product costs low and/or demonstrate that any increased cost of using our products is offset by the increased accuracy and performance achieved by using them. In particular, we need to convince healthcare providers, insurance companies and other third-party payers, as well as clinical laboratories, of the clinical benefits and cost-effectiveness of our products.

In addition, the sale and use of our products entail a risk of product failure, product liability or other claims. Coverage is becoming increasingly expensive, however, and we may not be able to obtain adequate coverage at an acceptable cost in the future. Any product liability claims and related litigation would likely be time-consuming and expensive, may not be adequately covered by our insurance coverage, and may delay or terminate research and development efforts, regulatory approvals and commercialization activities.

Occasionally, some of our products may have quality issues resulting from the design or manufacture of the product or, in the case of the AIPS platform, the hardware and software used in the product. Often these issues can be discovered prior to shipment and may result in shipping delays or even cancellation of orders by customers. Other times problems could be discovered after the products have shipped, which would require us to resolve issues in a manner that is timely and least disruptive to our customers. Such pre-shipment and post-shipment problems would have ramifications for CytoCore, including cancellation of orders, product returns, increased costs associated with product repair or replacement, and a negative impact on our goodwill and reputation.

We may not be able to adequately protect our intellectual property.

Our success in large part depends on our ability to maintain the proprietary nature of our technologies, trade secrets and other proprietary information. To protect our intellectual property and proprietary information, we rely primarily on patent, copyright, trademark and trade secret laws, as well as internal procedures and contractual provisions.

We hold a variety of patents and trademarks and have applied for a significant number of additional patents and trademarks with the U.S. Patent and Trademark Office and foreign patent authorities. We intend to file additional patent and trademark applications as dictated by our research and development projects and business interests. We cannot be certain that any of the currently pending patent or trademark applications, or any of those which may be filed in the future, will be granted or that they will provide any meaningful protection for our products or technologies or any competitive advantage. In order to provide protection, patents and trademarks must be enforced, which is costly and time-consuming, and trade secret and copyright laws afford only limited protection.

In addition, the laws and enforcement mechanisms of some foreign countries may not offer the same level of protection as do the laws of the United States. Legal protections of our rights may be ineffective in such countries, and technologies developed in such countries may not be protected in jurisdictions where protection is ordinarily

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available. Our inability to protect our intellectual property both in the United States and abroad would have a material adverse effect on our financial condition and results of operations.

We protect much of our core technology as trade secrets because our management believes that patent protection would not be possible or would be less effective than maintaining secrecy, and we have in place certain internal procedures and contractual provisions designed to maintain such secrecy. Despite our efforts to safeguard and maintain our proprietary rights, we may not be successful in doing so. The steps taken by us may be inadequate to deter unauthorized parties from misappropriating our technologies or prevent them from obtaining and using our proprietary information, products and technologies. Moreover, our competitors may independently develop similar technologies or design around patents issued to us.

If we fail to protect, defend and maintain the intellectual property rights with respect to any of our products or if we are subject to a third-party claim of infringement, the competitive position of our products could be impaired. We may be required to obtain licenses from third parties to avoid infringing third-party patents or other proprietary rights, yet there can be no assurance that such licenses would be available to us on acceptable terms, if at all. If we are unable to obtain required third-party licenses, we may be delayed in or prohibited from developing, manufacturing or selling products that require such licenses. In addition, infringement, interference and other intellectual property claims and proceedings, with or without merit, are expensive and time-consuming to litigate, divert resources, and could adversely affect our business, financial condition and operating results.

We may not be able to maintain effective product distribution channels.

We currently rely primarily on third-party distributors for the sale and distribution of our products. Our relationships with these distributors, therefore, must remain positive. We do not have a history of working with any of these companies and have only limited control over their performance. We cannot predict the success of these relationships or the efforts of these companies in marketing the SoftPAP^tm and our other products. Our sales and marketing efforts, including those of our distributors, may not be sufficient to successfully compete against more extensive and well-funded operations of certain of our competitors. In addition, we must manage sales and marketing personnel in numerous countries around the world with the concomitant difficulties in maintaining effective communications due to distance, language and cultural barriers.

Our quarterly operating results may fluctuate and our future revenues and profitability are uncertain.

We anticipate substantial fluctuations in our future operating results. A number of factors contribute to such fluctuations including but not limited to:

•  introduction and market acceptance of new products and product enhancements by both CytoCore and our competitors,

•  timing and execution of distribution and sale contracts,

•  competitive conditions in the medical device and diagnostic markets,

•  product development, sales and marketing expenses,

•  third-party reimbursement levels, and

•  changes in general economic conditions.

The loss of existing key management and technical personnel or the inability to attract new hires could have a detrimental effect on the Company.

Our success depends on identifying, hiring, training, and retaining qualified professionals. Competition for qualified employees in our industry is intense and we expect this to remain so for the foreseeable future. If we were unable to attract and hire a sufficient number of employees, or if a significant number of our current employees or any of our senior managers resign, we may be unable to complete or maintain existing projects or develop and implement new projects of similar scope and revenue. The Company’s success is particularly dependent on the retention of existing management and technical personnel, including Robert F. McCullough, Jr., the Company’s

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Chief Executive Officer and Chief Financial Officer, and Richard A. Domanik, Ph.D., the Company’s President. The loss or unavailability of the services of these executives could impede our ability to effectively manage our operations.

We may need to expand our operations and we may not effectively manage any future growth.

As of December 31, 2007, we employed 11 full-time and one part-time person as well as several part-time consultants. In the event our products and services obtain greater market acceptance, we may be required to expand our management team and hire and train additional technical and skilled personnel. We may need to scale up our operations in order to service our customers, which may strain our resources, and we may be unable to manage our growth effectively. If our systems, procedures, and controls are inadequate to support our operations, growth could be delayed or halted, and we could lose our opportunity to gain significant market share. In order to achieve and manage growth effectively, we must continue to improve and expand our operational and financial management capabilities. Any inability to manage growth effectively could have a material adverse effect on our business, results of operations, and financial condition.

Risks Related to Our Common Stock

There is a limited market for “penny stocks” such as our common stock.

Our common stock is considered a “penny stock” because, among other things, our price is below $5.00 per share, it trades on the Over-the-Counter Bulletin Board and we have net tangible assets of less than $2,000,000. This designation requires any broker or dealer selling these securities to disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect the ability of investors to sell their shares. In addition, since our common stock is currently traded on the OTCBB, investors may find it difficult to obtain accurate quotations of our common stock and may experience a lack of buyers to purchase such stock or a lack of market makers to support the stock price. Being a penny stock also could limit the liquidity of our common stock and limit the coverage of our stock by analysts.

The historically volatile market price of our common stock may affect the value of our stockholders’ investments.

The market price of our common stock, like that of many other life science and biotechnology companies, has in the past been highly volatile. In fiscal year 2007, the price of our common stock traded in a range of $1.65 to $7.50 (as adjusted for our reverse split). This volatility is likely to continue for the foreseeable future. Factors affecting potential volatility include:

•  announcements of new products or technology by us or our competitors

•  announcements of the FDA relating to products and product approvals;

•  announcements of private or public sales of securities;

•  ability to finance our operations;

•  announcements of mergers, acquisitions, licenses and strategic agreements;

•  fluctuations in operating results; and

•  general economic and other external market factors.

In addition, the occurrence of any of the risks described in this Risk Factors section could have a material adverse impact on the price of our common stock.

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Our common stock is unlikely to produce dividend income for the foreseeable future.

We have never declared or paid a cash dividend or distribution on our common stock and we do not anticipate doing so for the foreseeable future; our ability to declare dividends on our common stock is further limited by the terms of certain of the Company’s other securities, including several series of its preferred stock. We intend to reinvest any funds that might otherwise be available for the payment of dividends in the further development of our business.

Our common stock is subject to dilution, and an investor’s ownership interest and related value may decline.

We are authorized to issue up to 10,000,000 shares of preferred stock. As of December 31, 2007, we had 47,250 shares of Series A convertible preferred stock outstanding, which convert into approximately 2,064 shares of our common stock; 122,486 shares of Series B convertible preferred stock outstanding, which convert into approximately 48,994 shares of our common stock; 38,333 shares of Series C convertible preferred stock outstanding, which convert into approximately 19,167 shares of our common stock; 175,000 shares of Series D convertible preferred stock outstanding, which convert into approximately 175,000 shares of our common stock; and 20,203 shares of Series E convertible preferred stock outstanding, which convert into approximately 55,562 shares of our common stock. There are cumulative dividends due on the Series B, Series C, Series D, and Series E convertible preferred stock, which may be paid in kind in shares of our common stock. Our Certificate of Incorporation (as amended to date) gives our Board of Directors authority to issue the remaining 5,143,137 undesignated shares of preferred stock with such voting rights, if any, designations, rights, preferences and limitations as the Board may determine.

At December 31, 2007, we had outstanding warrants to purchase an aggregate 3,231,006 shares of our common stock, outstanding options to purchase approximately 160,786 shares of our common stock, and 45,000 stock appreciation rights, which are convertible into approximately 28,929 shares of common stock.

At December 31, 2007, we also had approximately 1,675,280 shares of our common stock reserved for future stock options under our 1999 Equity Incentive Plan and 16,000 shares of our common stock reserved for future sale to employees under our 1999 Employee Stock Purchase Plan.

The issuance of shares of our common stock upon the conversion of our preferred stock, or upon exercise of outstanding options and warrants, would cause dilution of existing stockholders’ percentage ownership of the Company. Holders of our common stock do not have preemptive rights, meaning that current stockholders do not have the right to purchase any new shares in order to maintain their proportionate ownership in the Company. Such stock issuances and the resulting dilution could also adversely affect the price of our common stock.

Investors may find it difficult to trade or obtain quotations for our common stock.

Although our common stock is quoted on the OTCBB, trading of our common stock is limited. There can be no assurance a more active market for our common stock will develop. Accordingly, investors must bear the economic risk of an investment in our common stock for an indefinite period of time. Even if an active market develops, Rule 144 promulgated under the Securities Act of 1933, as amended, which provides for an exemption from the registration requirements under such Act under certain conditions, requires, among other conditions, a holding period prior to the resale (in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements under the Act. We may not be able to fulfill our reporting requirements in the future under the Securities Exchange Act of 1934, as amended or disseminate to the public any current financial or other information concerning us, as is required by Rule 144 as part of the conditions of its availability.

Our authorized share capital may be used as an anti-takeover device.

The Company currently has authorized for issuance 500 million shares of its common stock. The Board of Directors has the authority to issue a significant number of shares of our common stock without further stockholder approval. This may have an anti-takeover effect of delaying or preventing a change of control without further action by our stockholders.

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The implementation of SFAS No. 123R has reduced and may continue to reduce our reported earnings, which could result in a decline in our stock price.

As part of our compensation to employees, directors and consultants, we issue equity awards, primarily in the form of stock options and warrants. Many of the companies within our industry and with whom we compete for skilled employees use stock-based compensation as a means to attract personnel, although not all do and many do not issue the same level of awards. In particular, during the periods when the Company was facing severe cash constraints, it used equity awards in lieu of salary to compensate employees and others. As a result, the impact of the January 1, 2006 implementation of SFAS No. 123R may be more significant for us as compared to other companies. In addition, if we unexpectedly hire additional employees or acquire another company, the impact of the implementation of SFAS No. 123R may be more significant for us than previously forecasted. To the extent investors believe the costs incurred for SFAS No. 123R by CCI are higher than those incurred by other companies, our stock price could be negatively impacted.

Item 2.   Description of Property

We occupy approximately 2,540 square feet of leased space at 414 N. Orleans St., Suites 502 and 503, Chicago, Illinois 60610, under a five-year lease that expires in October 2008. This space houses our executive offices, research laboratory, and engineering development facilities. We also lease an executive office of approximately 300 square feet at 212 Carnegie Center, Suite 206, Princeton, New Jersey 08540 for our President of International Operations. This lease is for a period of one year and expires November 2008. We consider our facilities to be well utilized, well maintained, and in good operating condition. Further, we consider the facilities to be suitable for their intended purposes and to have capacities adequate to meet current and projected needs for our operations. CCI does not have any policies regarding investing in real estate, and has not had in the past and does not expect in the future to invest in real estate.

Item 3.   Legal Proceedings

Settled in 2007

Peter Gombrich.  In April 2005, former CCI officer and director Peter Gombrich filed suit against CCI and CCI’s former Chief Executive Officer, Denis M. O’Donnell, M.D., in the Circuit Court of Cook County, Illinois (05 L 4543). Mr. Gombrich claimed that CCI breached a written employment contract and that it owed him in excess of $849,500. Mr. Gombrich also alleged a claim against CCI for contribution and indemnification regarding agreements he allegedly signed as a personal guarantor for certain alleged CCI obligations. CCI filed a motion to compel the case to arbitration, pursuant to the terms of the employment contract, and CCI’s motion was granted in August 2005. In late 2005, CCI filed its answer and affirmative defenses, and asserted numerous counterclaims against Mr. Gombrich. The arbitration hearing on the parties’ cross-claims concluded in October 2006 and an initial award was made in January 2007, which Mr. Gombrich appealed. The arbitrator issued a final decision in April 2007 following appeals, awarding Mr. Gombrich $538,413 for compensation plus $184,797 for attorney fees. In June 2007, the Company paid Mr. Gombrich $256,560 and issued 186,660 shares of common stock to Monsun, AS, a creditor of Mr. Gombrich. The common stock was valued at $2.50 per share or a total of $467,000. A Satisfaction and Release Of Judgment was filed with the Circuit Court of Cook County, Illinois, and CCI believes it has no further obligations in this matter.

The Regents of the University of California.  In May 2004, The Regents of the University of California filed suit against CCI in the Superior Court of California, County of San Francisco (CGC-04-431944). The University of California claimed that CCI breached an agreement to sponsor a research project for a period of one year. The complaint sought compensatory damages in the amount of $57,530 and additional lost opportunity damages in the amount of $75,220. In January 2005, the University of California requested that the court enter a default judgment against CCI in the amount of $132,827, which included court costs. In February 2007, CCI and the University of California agreed to a financial settlement of the default judgment. CCI tendered final payment totaling $66,413 in March 2007, and believes it has no further obligation in this matter.

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Pending as of December 31, 2007

Attorney General of Illinois.  In the third quarter of 2006, the Attorney General of the State of Illinois brought an action in the Circuit Court of Cook County, Illinois (Case No. 2006-L-003353) against the Company with regard to the Company’s alleged failure to pay back wages in the amount of $282,833 to certain of CCI’s former employees. The Company believed that it had settled the former employees’ claims and supplied the State with substantiation that all such back wages had been paid. As of May 9, 2007, the Circuit Court dismissed all the claims except for one remaining claim amounting to approximately $10,000.

NeoMed Innovation III L.P.  In October 2007, NeoMed Innovation III L.P. (“NeoMed”) filed suit against the Company in the United State District Court, Eastern District of Illinois (Case No. 07C 5721). NeoMed alleges that the Company has breached a contract with NeoMed. The alleged contract provided among other things that the Company would exchange two existing notes for a new note in the principal amount of $1,110,000 with an interest rate of 12%, payable on July 31, 2003 at the option of the holder in the form of common stock valued at $1.50 as adjusted for stock splits and equity raised at lower valuations. In 2006, the Company paid to NeoMed $1,060,000 and accrued interest calculated at 7% totaling $318,913. Despite accepting such payment, NeoMed is demanding that the Company honor the alleged contract. CCI believes its payment of principal and accrued interest to NeoMed satisfied all of its obligations owed to NeoMed.

Diamics, Inc.  In August of 2006, Diamics, Inc. brought an action against Dr. Reid Jilek and CCI in the Superior Court of Marin County, California (Case No. CV063475) to declare that Diamics had fully performed its payment obligations under a promissory note (“the Note”) which Diamics had previously issued to Dr. Jilek and for attorneys fees. The Note entitled Dr. Jilek to a non-dilutable 10% ownership interest in Diamics if the company’s payment of the loan installments to Dr. Jilek were not timely made. Dr. Jilek has asserted that Diamics defaulted under the Note and that he is entitled to the non-dilutable 10% equity ownership in Diamics. Dr. Jilek has assigned his rights under the Note to the Company. The case has been transferred to the Superior Court of San Diego. CCI believes the assigned ownership rights to 10% of Diamics are valid and enforceable. As such, the Company has not recorded any value for this ownership, pending the outcome of this litigation.

Other claims

Other Creditors.  CCI was a party to a number of other proceedings, informal demands, or claims of debts for services brought by former unsecured creditors to collect past due amounts for services. CCI is attempting to settle these demands and unfilled claims. CCI does not consider any of these claims to be material in the aggregate.

During the year ended December 31, 2007, CCI continued its restructuring settlement of its outstanding debt and accounts payable. Overall during 2007, the Company settled claims of creditors totaling approximately $476,000 through cash payments of approximately $127,000.

Item 4.   Submission of Matters to a Vote of Security Holders

At a special meeting of stockholders held on November 19, 2007, the following proposal was adopted by the votes specified below:

(1) To approve an amendment to the Company’s Certificate of Incorporation (as amended to date) to effect a reverse stock split of the common stock, $.001 par value, of the Company by a ratio of not less than one-for-five and not more than one-for-ten, with the exact ratio to be set within such range in the discretion of the Board of Directors, without further approval or authorization of stockholders.

FOR	AGAINST		ABSTAIN
245,432,298		6,049,542		842,497

Immediately after the special meeting, the Company’s Board of Directors voted to effect a 1-for-10 reverse stock split. The split became effective for trading on November 27, 2007.

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PART II

Item 5.   Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

Market Information

Our common stock is quoted on the Over-the-Counter Bulletin Board under the symbol “CYOE.OB.” The following table lists the high and low bid information for our common stock for the periods indicated, as reported on the Over-the-Counter Bulletin Board. These quotations reflect inter-dealer prices, may not include retail mark-ups, mark-downs, or commissions, and may not reflect actual transactions. All amounts have been adjusted to reflect the November 2007 reverse 1-for-10 stock split.

	Range of Common Stock
	High		Low
Year Ended December 31, 2007
1st Quarter	$	3.00	$	7.50
2nd Quarter	$	3.30	$	6.00
3rd Quarter	$	2.20	$	4.10
4th Quarter	$	1.65	$	4.10
Year Ended December 31, 2006
1st Quarter	$	1.50	$	0.50
2nd Quarter	$	2.50	$	1.10
3rd Quarter	$	2.30	$	1.50
4th Quarter	$	4.40	$	1.70

Holders

As of March 24, 2008, we had approximately 1,635 record holders of our shares of common stock. This number does not include other persons who may hold only a beneficial interest, and not an interest of record, in our common stock.

Dividends

We have not paid a cash dividend on shares of our common stock, and the Board of Directors is not contemplating paying dividends at any time in the foreseeable future. The terms of certain of the Company’s securities, including its Series B, C, D and E preferred stock, provide that so long as such security is outstanding the Company shall not declare any dividends on its common stock (or any other stock junior to such security) except for dividends payable in shares of stock of the Company of any class junior to such security, or redeem or purchase or permit any subsidiary to purchase any shares of common stock or such junior stock, or make any distributions of cash or property among the holders of the common stock or any junior stock by the reduction of capital stock or otherwise, if any dividends on the security are then in arrears.

We paid non-cash dividends, in the form of newly issued shares of our common stock, amounting to $324,000 and $693,000 during 2007 and 2006, respectively, to holders of shares of our preferred stock who elected to convert their preferred stock and cumulative dividends thereon into shares of our common stock. We have a contingent obligation to pay cumulative dividends on various series of our convertible preferred stock in the aggregate amount of approximately $1,764,000 at December 31, 2007, which we intend to pay through the issuance of shares of our common stock, if and when the holders of the preferred shares elect to convert their shares into common stock.

Stock Transfer Agent

Our stock transfer agent is LaSalle Bank NA, 135 South LaSalle Street, Chicago, IL 60603, and its telephone number is (312) 904-2000.

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Securities Authorized for Issuance under Equity Compensation Plans

The following table presents information about the equity compensation plans of the Company as of the fiscal-year ended December 31, 2007. See also Note 7 — Stockholders’ Equity and Note 8 — Equity Incentive Plan and Employee Stock Purchase Plan in the Notes to our Consolidated Financial Statements for further information.

Equity Compensation Plan Information

					Number of Securities
					Remaining Available
					for Future Issuance
	Number of Securities		Weighted-Average		Under Equity
	to be Issued Upon Exercise of		Exercise Price of		Compensation Plans
	Outstanding Options,		Outstanding Options,		(Excluding Securities
Plan Category	Warrants and Rights		Warrants, and Rights		Reflected in Column (a))
	(a)		(b)		(c)
Equity Compensation Plans Approved by Security Holders
1999 Equity Incentive Plan (as amended) — 2,000,000 shares		160,786	$	3.05		1,675,280
1999 Employee Stock Purchase Plan — 20,000 shares		—		—		16,042
Equity Compensation Plans Not Approved by Security Holders
Warrants issued with debt and equity(1)		1,590,422	$	1.54		—
Warrants issued for financial and IR services(2)		96,581	$	1.82		—
Warrants issued for officer, director and employee compensation(3)		1,181,000	$	1.82		—
Warrants issued in forgiveness of debt and other services(4)		359,020	$	1.88		—
Warrants from AccuMed acquisition(5)		3,983	$	150.60		—
Total		3,391,792	$	1.93		1,691,322

1)	CCI has issued warrants in conjunction with the issuance of debt and equity. The issuance of warrants significantly reduces the cash costs that would otherwise be associated with raising capital.
2)	CCI has included warrants in agreements for providers of investor relations and/or public relations services. Warrants were also issued to financial advisors as remuneration for the procurement of equity, debt and preferred stock convertible into equity. This practice significantly reduces the cash costs to CCI to obtain these services.
3)	CCI has issued warrants in lieu of cash payment for employment services, for achieving certain goals or for other corporate reasons. During fiscal year 2007, 25,000 warrants were issued to our current CEO Robert McCullough Jr. and 50,000 warrants to our President-International Operations, Augusto Ocana M.D. In addition, Richard Domanik Ph.D., our President, was issued 35,000 warrants, and our-non executive employees were issued 96,000 warrants in the aggregate.
4)	CCI has issued warrants to settle debt and pay for services rendered.
5)	In September 2001, CCI completed the acquisition of AccuMed by merging it into a wholly-owned subsidiary of CCI. As a result, CCI assumed stock options and warrants outstanding on the records of AccuMed at the time of the acquisition. The remainder of the options that were assumed in the acquisition is included in total options outstanding under the Company’s 1999 Equity Incentive Plan.

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Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

Issuance of Securities

Common Stock.  During fiscal 2007 and 2006, CCI offered common stock to foreign and accredited investors in exchange for cash.

During 2007, the company received gross proceeds of $3,760,000 to purchase an aggregate 1,741,389 shares of unregistered, restricted common stock at prices ranging from $1.80 to $3.30 per share, with a weighted average issuance price of $2.16 per share. In connection with these issuances, the Company paid placement agent fees totaling $249,000.

During 2007, the Company received aggregate proceeds of $2,224,000 from the exercise of warrants to purchase 2,205,368 shares of common stock. In connection with some of these warrant exercises, the Company reduced the exercise price from the original stated exercise price in order to induce the warrant holder to exercise and enable the Company to raise needed cash. The Company recorded the fair value of these modifications at the time of each exercise, which resulted in an aggregate $182,000 recorded as additional interest expense during the year ended December 31, 2007, since the modified warrants were originally issued primarily in connection with the various convertible notes of the Company. Included in these warrant exercises were warrants exercised by CCI’s chief executive and financial officer, who exercised 50,579 warrants to purchase common stock at a modified exercise price of $1.00 per share, resulting in a charge of $52,000 to interest expense, and warrants held by a director, who exercised 418,850 warrants to purchase common stock at a modified exercise price of $1.00 per share, resulting in a charge of $232,000 to selling, general and administrative expense.

For the year ended December 31, 2007, holders of warrants to purchase an aggregate 276,415 shares of common stock exercised their warrants under a cashless exercise option. As a result, they received 192,124 shares of common stock.

Also during 2007, the Company received proceeds of $77,000 from the exercise of stock options for 38,333 shares of common stock.

In June 2007, CCI issued 186,660 shares of common stock with a value of $467,000 to a creditor of Peter Gombrich, CCI’s former CEO and director, as a partial payment of an arbitrators’ award to Mr. Gombrich.

Also during 2007, CCI issued an aggregate 57,180 shares of restricted, unregistered shares of common stock to non-employees for services rendered. The Company valued the common stock at $158,000, using fair value, between $1.90 and $7.00 per share.

During 2006, the Company received net aggregate proceeds of $7,283,000 and issued an aggregate 8,006,429 shares of restricted common stock at a weighted average of $0.95 per share.

Also during 2006, the Company received proceeds of $246,988 from the exercise of warrants for 202,308 shares of restricted common stock.

Warrants.  In connection with its 2007 private placements of securities, the Company issued warrants to purchase an aggregate 106,750 shares of common stock with exercise prices ranging from $1.80 to $2.00 per share and a weighted average exercise price of $2.00 per share. These warrants have an exercise term of three years, and are exercisable immediately.

During 2007, the Company issued to vendors warrants to purchase an aggregate 122,905 shares of restricted, unregistered common stock at exercise prices of $1.30 to $3.50 per share. The warrants have a term of three or four years and are exercisable immediately. CCI valued the warrants at $372,000 using the Black-Scholes valuation model and recorded $342,000 as an administrative expense and $30,000 as a research and development expense.

During 2007 the Company issued to non-executive employees warrants to purchase an aggregate 96,000 shares of common stock with exercise prices from $1.60 to $2.87 per share. CCI valued these warrants at $235,000 using the Black-Scholes model.

Also during 2007, the Company issued to its executive officers, as described in Note 8 — Equity Incentive Plan and Employee Stock Purchase Plan — to the consolidated financial statements, warrants to purchase an

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aggregate 110,000 shares of common stock at exercise prices of $2.00 to $2.67 per share. These warrants were issued in part for the attainment of certain goals as provided for in their employment agreements. CCI valued the warrants at $314,000 using the Black-Scholes valuation model and recorded the amount as non-cash compensation expense in selling, general and administrative expense.

During 2006, as part of its offering of common stock, CCI granted investors at total of 2,068,945 warrants to purchase common stock at prices ranging from $1.00 to $3.20 per share.

In March 2006, CCI issued warrants to purchase 100,000 shares of common stock with an exercise price of $0.40 per share to a non-employee consultant as a settlement for past consulting services. CCI valued the warrants at $128,700 using the Black-Scholes valuation model and recorded the amount as an administrative expense for the year ended December 31, 2006.

In March 2006, CCI also issued warrants to purchase 30,000 shares of common stock with an exercise price of $1.00 per share to a former employee as a settlement for past employment services. CCI valued the warrants at $37,170 using the Black-Scholes valuation model and recorded the amount as a payroll expense for the year ended December 31, 2006.

In addition, during 2006, the Company issued warrants to purchase 194,317 shares of common stock at exercise prices ranging from $1.50 to $2.00 per share to non-employee vendors for services performed. The warrants are for terms ranging from three to five years and are exercisable immediately. CCI valued the warrants at $312,675 using the Black-Scholes valuation model and recorded the amount as an administrative expense for the year ended December 31, 2006.

During December 2006, the Company issued a warrant to a vendor in connection with settlement of trade debt. The warrant entitles the vendor to purchase 45,000 shares of common stock at an exercise price of $1.50 per share, exercisable immediately, over a term of five years. CCI valued the warrant $43,535 using the Black-Scholes model and recorded the amount against the trade debt owed.

Also in 2006, the Company issued to its executive officers warrants to purchase a total of 800,000 shares of restricted common stock at exercise prices ranging from $1.28 to $2.00 per share. These warrants vested on January 1, 2007. The Company also issued each independent director warrants to purchase 62,500 shares of common stock at $2.00 per share for a total of 125,000 shares of common stock. These warrants are immediately exercisable. CCI recorded total non-cash compensation expense in connection with these warrants of $1,094,600, based upon the fair value as determined using the Black-Scholes valuation model. The Company issued warrants to an executive officer to purchase a total of 50,000 shares of restricted common stock at an exercise price of $1.30 per share, exercisable immediately and for a term of three years. The Company also issued warrants to a former executive officer for compensation owed him during his employment term, to purchase a total of 50,000 shares of common stock at an exercise price of $2.00 per share, exercisable immediately and for a term of five years

The Company was obligated under the terms of the subscription agreement for its Bridge I convertible promissory notes to issue additional warrants to the note holders based on certain events. If and when the holder of a Bridge I note elected to convert the principal of the note into shares of CCI common stock, the holder was entitled to receive a warrant to purchase one share of CCI common stock for each four shares of CCI common stock into which the note was converted at an exercise price equal to $2.00, based on a written offer dated October 10, 2003. The Company issued 157,273 warrants in the fourth quarter of 2006 to all the holders that had converted their notes and accrued interest during the 2006 fiscal year.

In February 2005, CCI issued warrants to purchase an aggregate 650,000 shares of common stock of the Company with an exercise price of $3.00 per share to Azimuth Corporation and Cadmus Corporation in exchange for such warrant holders’ agreement to cancel certain other warrants containing anti-dilution provisions unfavorable to the Company. CCI valued the warrants at $420,551 using the Black-Scholes valuation model and recorded the amount as an administrative expense in the first quarter ended March 31, 2005. In 2006, the warrants issued to Azimuth and Cadmus in February 2005 were modified. The total of the warrants was reduced to 350,000, or 154,808 and 195,192 warrants to Azimuth and Cadmus, respectively, with an exercise price of $1.00 per share.

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In general, each of the above warrants expires between three and five years from the date of issuance and is exercisable immediately upon issuance. None of the warrants are subject to any vesting schedules or conditions other than those imposed by applicable securities laws, except for the 800,000 warrants issued to the officers in 2006, which warrants became exercisable on January 1, 2007. The exercise price and number of shares issuable upon exercise of the warrants are subject to anti-dilution protection in the event the Company effects a subdivision or combination of its common stock or declares or pays a dividend or distribution in common stock; the warrants also provide for adjustments in the event the Company declares or pays a dividend or other distribution in other securities or property of the Company or is a party to a reorganization, reclassification, merger or similar event.

Bridge and other Note Conversions

During 2006, holders of an aggregate $952,500 principal amount of Bridge I, II and III Convertible Promissory Notes elected to convert their notes and related accrued interest totaling approximately $278,000 into 933,770 shares of unregistered common stock

Also in 2006, Northlea Partners, a company affiliated with one of our directors, elected to convert convertible promissory notes held by such entity totaling approximately $120,000 in principal and accrued interest into 90,019 shares of unregistered common stock.

In May 2006, Monsun converted its convertible promissory notes in the principal amounts of $500,000 and $519,000, including accrued interest, into 762,433 unregistered shares of the Company’s common stock. Since the actual conversion rate was less than the rate specified in the note, the Company recorded an additional non-cash charge to interest expense of $1,321,000 on the beneficial conversion of the Monsun note for the year ended December 31, 2006.

Preferred Stock.  During 2007, a holder of Series A Convertible Preferred Stock elected to convert 35,405 shares into 1,546 unregistered shares of CCI’s common stock, two holders of Series B Convertible Cumulative Preferred Stock elected to convert an aggregate 103,250 shares and cumulative dividends totaling $242,482 into 65,548 unregistered shares of the Company’s common stock, and several holders converted an aggregate 32,715 shares of Series E convertible preferred stock, including cumulative dividends totaling $360,711, into 135,050 unregistered shares of common stock.

During 2006, holders of 139,370 shares of Series B convertible preferred stock converted their shares, including cumulative dividends due thereon, into 85,104 shares of unregistered common stock. Holders of 207,500 shares of Series C preferred stock converted their shares, including cumulative dividends due thereon, into 151,759 shares of unregistered common stock. Also in 2006, holders of 180,680 shares (of which 119,380 shares were held by affiliates of one of our directors) of Series E convertible preferred stock converted their shares, including cumulative dividends due thereon, into 720,996 shares of unregistered common stock.

Please refer to Note 6 — Notes Payable and Note 7 — Stockholders’ Equity in the Notes to our Consolidated Financial Statements for more information on the promissory notes and the Company’s preferred stock.

CCI issued such securities in reliance on the safe harbor and exemptions from registration provided under Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended and Regulation S for sales to foreign investors. No advertising or general solicitation was employed in offering the securities. The offerings and sales or issuances were made to a limited number of persons, all of whom were accredited and/or foreign investors, and transfer was restricted by the Company in accordance with the requirements of applicable law. In addition to representations by the above-referenced persons, the Company has made independent determinations such that it reasonably believes that all of the investors were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, these investors were provided with access to CCI’s filings with the Securities and Exchange Commission.

Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers

During 2007, CCI’s Chief Executive Officer exercised 50,579 warrants to purchase unregistered common stock at a modified exercise price of $1.00 per share, resulting in a charge of $52,000 to interest expense, and a

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director exercised 418,850 warrants to purchase common stock at a modified exercise price of $1.00 per share, resulting in a charge of $232,000 to selling, general and administrative expense. Also an executive officer exercised 50,000 warrants to purchase unregistered common stock at an exercise price of $1.30 per share.

During 2006, an affiliate of our Chief Executive Officer purchased 187,500 shares of unregistered common stock at a price of $0.40 per share.

Item 6.   Management’s Discussion and Analysis or Plan of Operation

Forward-Looking Statements

Certain statements contained in this discussion and analysis that are not related to historical results are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are predictive, that depend upon or refer to future events or conditions, or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “hopes,” or similar expressions constitute forward-looking statements. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, or possible future actions by us are also forward-looking statements.

These forward-looking statements are based on beliefs of our management as well as current expectations, projections and information currently available to the Company and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated or implied by such forward-looking statements. These risks are described more fully under the caption “Risk Factors” herein and include our ability to raise capital; our ability to settle litigation; our ability to retain key employees; economic conditions; technological advances in the medical field; demand and market acceptance risks for new and existing products, technologies, and healthcare services; the impact of competitive products and pricing; manufacturing capacity; U.S. and international regulatory, trade, and tax policies; product development risks, including technological difficulties; ability to enforce patents; and foreseeable and unforeseeable foreign regulatory and commercialization factors.

Should one or more of such risks or uncertainties materialize or should underlying expectations, projections or assumptions prove incorrect, actual results may vary materially from those described. Those events and uncertainties are difficult to predict accurately and many are beyond our control. We believe that our expectations with regard to forward-looking statements are based upon reasonable assumptions within the bounds of our current business and operational knowledge, but we cannot be sure that our actual results or performance will conform to any future results or performance expressed or implied by any forward-looking statements. We assume no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date of these statements except as specifically required by law. Accordingly, past results and trends should not be used to anticipate future results or trends.

Overview

CCI is a clinical diagnostics company engaged in the design, development and commercialization of cost-effective screening systems to assist in the early detection and treatment of cancer. CCI is currently focused on the production and sale of the SoftPAP^tm cervical collection device and the design and development of its AIPS image analysis-based screening system for cervical, endometrial, bladder and other cancers. The AIPS system provides for automated slide screening of the P2X7 and other biomarkers from cytological specimens. The CytoCore Solutions^tm System and its components are intended to screen for cancer and eventually treat cancer through the administration of an FDA approved therapeutic agent from CCI’s drug delivery system. We believe the CytoCore Solutions^tm System or its components may be used in a laboratory, clinic or doctor’s office.

The science of medical diagnostics has advanced significantly during the past decade. Much of this advance has come as a result of new knowledge of the human genome and related proteins, which form the foundation of cell biology and the functioning of the human body. Our goal is to utilize this research as a base to develop screening and diagnostic testing products for cancer and cancer-related diseases. Our biological marker, P2X7, and other markers in conjunction with the AIPS system are being tested in screening assays for various cancers. The P2X7 is the lead

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marker in the assay Cocktail-CVX^tm and Cocktail-GCI^tm. We believe that the success of these products will improve patient care through more accurate test performance, wider product availability and more cost-effective service delivery. We have developed an FDA-cleared sample collection device, and are developing and testing the cocktail assay markers for use with the AIPS system to screen for various cancers. We look to begin the product development of the drug delivery system in 2008 for the therapeutic treatment of various cancers with FDA-approved agents.

Our strategy is to develop products through internal development processes, strategic partnerships, licenses and acquisitions. This strategy has required and will continue to require additional capital. As a result, we will incur substantial operating losses until we are able to successfully market some, or all, of our products.

We launched sales of the SoftPAP^tm cervical cell collector in the fourth quarter of fiscal 2007. We believe the revenues from this device along with additional capital will allow us to complete the development of the other components of the CytoCore Solutions System, including the AIPS system and genetic biological markers used for the development of the various protein antibodies that allow for the detection of abnormal cervical, uterine, endometrial and bladder cancer cells.

CCI suspended clinical trials for the EndoScan tissue-based test in the first quarter of 2008. We hope the follow-up trial will provide statistically significant data regarding the superior sensitivity and accuracy of the device.

The Company has reduced total liabilities from $13.4 million at June 30, 2005 to $4.3 million at December 31, 2007, a reduction of close to 70%. CCI believes the December 31, 2007 debt balance can be significantly reduced in the future to reflect primarily only trade liabilities needed for operating purposes. Along with the restart of operations and reduction of debt, management settled numerous legal proceedings involving approximately $2.5 million in claims against the company during the 2007 fiscal year. All litigation has been settled except for the matters involving Diamics, the Attorney General of the State of Illinois and NeoMed Innovation III L.P. (See Item 3 — Legal Proceedings, above, for a more detailed description).

The Company has incurred significant operating losses since its inception. Management expects that significant on-going operating expenditures will be necessary to successfully implement its business plan and to develop, manufacture and market its products. Implementation of the Company’s plans will be contingent upon it securing substantial additional financing. In the first quarter of 2008, CCI raised approximately $9.4 million through the issuance of common stock and exercise of stock warrants. During 2007 and 2006, CCI raised approximately $6.1 million and $7.6 million, respectively, through the issuance of common stock and the exercise of warrants. For CCI to successfully implement its business plan, CCI may have to obtain additional capital. If the Company is unable to obtain additional capital or generate profitable sales revenues, it may be required to curtail product development and other activities and may have to cease operations. No assurances can be given about the Company’s ability to obtain capital if needed. The consolidated financial statements presented herein do not include any adjustments that might result from the outcome of this uncertainty.

Critical Accounting Policies and Significant Judgments and Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

We believe that the following critical accounting policies affect our more significant estimates and judgments used in the preparation of our consolidated financial statements:

Revenue Recognition.  CCI recognizes revenue from product sales in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition,” when the following criteria are met: shipment of a product or license to customers has occurred and there are no remaining Company obligations or contingencies; persuasive evidence of an arrangement exists; sufficient vendor-specific, objective evidence exists to support allocating the total fee to all elements of the arrangement; the fee is fixed or determinable; and collection is probable.

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Share-Based Payment.  Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” establishes accounting standards for transactions in which a company exchanges its equity instruments for goods or services. The Company adopted this statement on January 1, 2006. In particular, this statement requires that all share-based payments, such as employee stock options or warrants, be reflected as an expense based upon grant-date fair value of those awards. The expense is recognized over the remaining vesting period of the awards. The Company estimates the fair value of these awards using the Black-Scholes model. This model requires management to make certain estimates in the assumptions used in this model, including the expected term the award will be held, volatility of the underlying common stock, discount rate and forfeiture rate. We develop our assumptions based on our past historical trends and consider changes for future expectations.

Results of Operations

Fiscal Year Ended December 31, 2007 as compared to Fiscal Year Ended December 31, 2006

Revenue

Revenues of $83,000 for 2007 represented a decrease of $11,000, or 12%, from revenues of $94,000 in 2006. The decrease was a result of a reduction in licensing fees of $21,000, partially offset by sales of our SoftPAP^tm cervical cell collector totaling $10,000.

Costs and Expenses

Cost of Revenues

In 2007, cost of revenues was $30,000 and represents the cost of the product sold, depreciation of our design and tooling assets and a valuation adjustment to lower the inventory to fair market value.

Cost of revenues for 2006 represented a net charge of $19,000. No cost of revenues was incurred with regard to the generation of licensing — related revenues from the slide — based installed systems for the period. Rather, forgiveness of trade debt of $176,000 was credited against a property impairment charge of $169,000 related to design and tooling equipment and an increase in the obsolescence reserve for inventory of $26,000.

Research and Development

In 2007, research and development expenses were $2,599,000, net of trade debt settlements of approximately $207,000, an increase of 204% or $1,745,000 over 2006 expenses of $854,000 before a favorable legal settlement of approximately $342,000. Research and development expenses include industrial design and engineering covering the disposable and instrument components of CytoCore Solutions^tm System; payments to medical and engineering consultants for advice related to the design and development of our products and their potential uses in the medical technology marketplace; and payroll-related costs for in-house engineering, scientific, laboratory, software development, research management staff, and a consulting contract with GSG Enterprises LLC. Costs associated with University Hospital Case Medical Center (“UHCMC”) consist primarily of charges for the use of facilities and reimbursement of expenses paid directly by UHCMC on behalf of CCI and an overhead charge. The duration of UHCMC’s contract with CCI is for the duration of the studies defined under the contract.

New research and development expenses in 2007 increased substantially from 2006 due to a full year of operations after the 2006 resumption of operations in CCI’s Chicago facility and after services commenced at UHCMC in early 2006. The majority of the increase was associated with services provided under the UHCMC and GSG contracts, the administration of the clinical trials and the design and engineering operations of the SoftPAP^tm device.

Selling, General and Administrative

Significant components of selling, general and administrative expenses are compensation costs for executive and administrative personnel; professional fees primarily related to legal, audit/accounting, consulting services and financing and investor relations costs. Selling, general and administrative expenses totaled $5,299,000 for 2007, a

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34% increase of $1,332,000 over 2006 expenses totaling $3,967,000. Selling and administrative payroll expenses increased $454,000 to $2,038,000 or 29% over $1,584,000 in payroll expenses for 2006. Of this increase of $455,000, $1,176,000 was for the addition of six new employees and a full year’s compensation for the employees hired in 2006, partially offset by a decline in non-cash compensation to officers and employees of $721,000 in 2007. Directors’ fees for 2007 increased to $461,000 from $151,000 in 2006, an increase of $310,000 or 205%, and marketing costs for 2007 increased $174,000 to $189,000 from $15,000 in 2006 as we began preparations for the launch of our SoftPAP^tm Cervical Cell Collector. Professional fees for legal and accounting decreased $456,000, or 33%, to $915,000 in 2007 from $1,371,000 in 2006. This decrease was primarily the result of increasing our finance personnel in 2007, and reducing our need for outside professional assistance. These expenses were partially offset by gains on settlements of approximately $56,000 and $994,000 for 2007 and 2006, respectively.

Other Income and Expense

Interest Income

Interest income earned on unrestricted cash was $21,000 in 2007, an increase of $9,000 or 75% from interest income of $12,000 in 2006.

Interest Expense

Interest expense, including $14,000 of interest expense to related parties in 2006, decreased $1,730,000 for the fiscal year ended December 31, 2007 to $102,000, from $1,832,000 for the year ended December 31, 2006, a decrease of 94%. Of such decrease, 86% or $1,494,000 represents a non-cash charge for the Bridge II Convertible Promissory Notes and the Monsun notes’ beneficial conversion feature recognition. Interest expense included a non cash charge totaling $182,000, partially offset by a settlement of interest expense totaling $85,000, for the year ended December 31, 2007. During fiscal year ended December 31, 2007, CCI paid principal and accrued interest of $355,000 and $51,000, respectively, to noteholders.

Restructuring Settlements

For the fiscal years ended December 31, 2007 and 2006, CCI recorded gains of $349,000 and $1,581,000, respectively, from the settlement of various litigation matters and vendor payables. CCI recorded and netted these gains concurrently in the respective expense categories in which they were originally recorded.

Net Loss

The net loss for the fiscal year ended December 31, 2007 before preferred dividends totaled $7,919,000, compared with $6,566,000 for the same period in 2006, an increase of $1,353,000 or 21%. The increase resulted primarily from a full year of operations which included research and development expenses, administrative compensation, marketing expenses, and a reduction totaling $1,232,000 in restructuring gains in 2007. In addition, cumulative dividends issued as common shares on the outstanding Series B, Series C, Series D and Series E convertible preferred stock totaled $324,000 for the fiscal year ended December 31, 2007, compared with $693,000 for the same period in 2006. The combined net loss applicable to common stockholders for the fiscal year ended December 31, 2007 was $8,243,000, or ($0.24) per share, on 34,259,161 weighted average common shares outstanding, compared with the net loss applicable to common stockholders for the fiscal year ended December 31, 2006 of $7,259,000, or ($0.30) per share, on 24,143,146 weighted average common shares outstanding.

Liquidity and Capital Resources

The Company’s capital resources and liquidity are generated primarily from external individual investors and institutional investors.

Research and development, clinical trials and other studies of the components of our CytoCore Solutions System, conversions from designs and prototypes into product manufacturing, manufacturing, sales and marketing efforts, medical consultants and advisors, and research, administrative, and executive personnel are and will continue to be the principal basis for our cash requirements. We have provided operating funds for the business since

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its inception through private offerings of debt and equity securities to limited numbers of U.S. and foreign investors. We will be required to make additional offerings in the future to support the operations of the business until some or all of our products are introduced into the market. We used $5,691,000 and $5,252,000 during 2007 and 2006, respectively, to fund our operating activities.

At December 31, 2007, we had $316,000 cash on hand as compared to $874,000 at the beginning of the period. We were able to raise $5,812,000 of cash, net of expenses of $249,000, through the issuance of equity during the fiscal year ended December 31, 2007. This cash was used to fund operations, including research and development activities and clinical trials, purchase of tooling equipment and the settlement of debt. We believe we will be able to raise sufficient funds through the conversion of shareholder warrants and issuance of common stock in the immediate future until we can be self-sufficient through profitable operations. In the first quarter of 2008, we raised $9.4 million through the issuance of common stock and the exercise of warrants. Also in the first quarter of 2008 we ordered presses at an approximate cost of $700,000.

Our operations have been, and will continue to be, dependent upon management’s ability to raise operating capital in the form of debt or equity. We have incurred significant operating losses since inception of the business. We expect that significant on-going operating expenditures will be necessary to successfully implement our business plan and develop, manufacture and market our products. If we are unable to raise sufficient adequate additional capital or generate profitable sales revenues, we may be forced to substantially curtail product research and development and other activities and may be forced to cease operations.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements.

Item 7.   Financial Statements

Our consolidated financial statements for the years ended December 31, 2007 and 2006, together with the report of L J Soldinger Associates LLC dated March 28, 2008 for the year ended December 31, 2007 and the report of Amper, Politziner and Mattia, P.C. dated April 16, 2007 for the year ended December 31, 2006, and the notes thereto, are filed as part of this Annual Report on Form 10-KSB commencing on page F-1 and are incorporated herein by reference.

Item 8.   Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

Dismissal of Auditors

On June 29, 2007, the Company dismissed Amper, Politziner & Mattia, P.C. (“Amper”) as the Company’s independent registered public accounting firm. On July 2, 2007 the Company engaged L J Soldinger Associates LLC to replace Amper.

Amper reported on the consolidated financial statements of the Company as of December 31, 2006, which report contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that the opinion contained a going concern explanatory paragraph.

During the Company’s fiscal year ended December 31, 2006, and the subsequent interim period through June 29, 2007, there were no disagreements between the Company and Amper on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Amper’s satisfaction, would have caused them to make reference to the subject matter of the disagreement in connection with their reports on the Company’s consolidated financial statements for such years. There were no reportable events as described in Item 304(iv)(B) of Regulation S-B except for the material weaknesses in internal control over financial reporting as described below. In connection with its audit of the Company’s financial statements for the year ended December 31, 2006, Amper brought to the Company’s attention and advised and discussed with the Audit Committee certain material weaknesses identified as follows:

1. The Company currently has insufficient resources and an insufficient level of monitoring and oversight, which may restrict the Company’s ability to gather, analyze and report information relative to

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the financial statements in a timely manner, including insufficient documentation and review of the selection and application of generally accepted accounting principles to significant non-routine transactions. In addition, the limited size of the accounting department makes it impractical to achieve an optimum segregation of duties.

2. The Company currently has an insufficient level of monitoring and oversight controls for contracts and agreements. This may restrict the Company’s ability to gather, analyze and report information relative to the financial statements in a timely manner, including insufficient documentation and review of the selection and application of generally accepted accounting principles to significant non-routine transactions.

3. The Company currently has insufficient resources, tools and expertise to properly value equity instruments in accordance with generally accepted accounting principles.

4. The Company does not have the needed expertise in house to appropriately handle all tax related matters and related accounting treatment.

5. The Company’s current accounting package has very limited controls built into the software and allows data to be easily modified, added or deleted without a detailed audit trail.

The Company provided Amper with a copy of the forgoing disclosures and authorized them to respond fully to the inquiries of the successor accountant concerning the subject matter thereof.

During the Company’s two most recent fiscal years ended December 31, 2007 and the subsequent interim period through June 29, 2007, neither the Company nor anyone on behalf of the Company consulted with L J Soldinger Associates LLC with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, or written or oral advice that would have been an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue. Additionally, there was no consultation with respect to the subject of either a disagreement or event specified in Item 304(a)(1)(iv) of Regulation S-B.

Resignation of Auditors

On May 10, 2006, the Company was informed by Altschuler, Melvoin and Glasser LLP that such firm was resigning as the Company’s independent registered public accounting firm. On May 15, 2006 the Company engaged Amper, Politziner & Mattia, P.C. to replace Altschuler, Melvoin and Glasser LLP.

Altschuler, Melvoin and Glasser LLP’s reported on the consolidated financial statements of the Company as of December 31, 2005 which report contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that the opinion contained a going concern explanatory paragraph. Their report on the consolidated financial statements of the Company as of December 31, 2004 contained no adverse opinion or disclaimer in opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that the opinion contained a going concern explanatory paragraph.

During the Company’s two fiscal years ended December 31, 2005 and 2004 and the subsequent interim period through May 10, 2006, there were no disagreements between the Company and Altschuler, Melvoin and Glasser LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Altschuler, Melvoin and Glasser LLP’s satisfaction, would have cause them to make reference to the subject matter of the disagreement in connection with their reports on the Company’s consolidated financial statements for such years; and there were no reportable events as described in Item 304(iv)(B) of Regulation S-B. The Company provided Altschuler, Melvoin and Glasser LLP with a copy of the forgoing disclosures and has authorized them to respond fully to the inquiries of the successor accountant concerning the subject matter thereof.

During the Company’s two fiscal years ended December 31, 2005 and 2004 and the subsequent interim period through May 15, 2006, neither the Company nor anyone on behalf of the Company consulted with Amper, Politziner & Mattia, P.C. with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial

37

statements, or written or oral advice that would have been an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue. Additionally, there was no consultation with respect to the subject of either a disagreement or event specified in Item 304(a)(1)(iv) of Regulation S-B.

Item 8A.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive and financial officer, we evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report. Based on that evaluation, our chief executive and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosures.

Management’s Report on Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal controls over financial reporting and disclosure controls and proceedures. Internal controls over financial reporting are designed to provide reasonable assurance that the books and records reflect the transactions of the Company and that established policies and procedures are carefully followed. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is appropriately recorded, processed, summarized and reported within the specified time periods. An important feature of the Company’s system of internal controls and disclosure controls is that both are continually reviewed for effectiveness and are augmented by written policies and guidelines.

Management has conducted an evaluation of the Company’s internal control over financial reporting using the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission as a basis to evaluate effectiveness and determined that internal control over financial reporting was effective as of the end of the fiscal year ended December 31, 2007.

This annual report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. The Company’s internal control over financial reporting was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the quarterly period ended December 31, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 8B.   Other Information

On March 26, 2008, the Company announced that it had executed a Distribution Agreement with HT Hospital Technologies GmbH (“HT”), a subsidiary of M.O.S.S. S.r.l. M.O.S.S specializes in the distribution and maintenance of medical and surgical devices. Pursuant to the agreement, HT will act as the exclusive distributor in Switzerland for the SoftPAP^tm cervical cell collection device.

The agreement provides for certain annual minimum purchase requirements for the products, ranging from 150,000 units in the first 12-month period to 250,000 units in the third 12-month period. Prices are established for the first year and thereafter by agreement of the parties. Procedures for the return of products and product recalls are as set forth in the agreement.

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HT must use its best efforts to create and maintain a market for, and increase the sales of, the products in its designated territory and provide at its own expense an organization for the continuous sale, promotion and distribution thereof. CytoCore will provide initial product training and marketing materials, and may from time to time provide additional advertising, promotional and instructional materials. Any advertisements and the media in which they are to be used, as well as promotional and instructional materials, must be approved in advance by the Company.

The agreement’s initial term is four years, and automatically extends for three years unless a party notifies the other at least 12 months prior to the expiration of the initial term that it desires to terminate the agreement. CCI also has the right to terminate the agreement at any time prior to the expiration of its term in the event HT fails to attain the annual minimum purchase requirements or in the event the continued performance of the agreement becomes impractical due to the enactment or threatened enactment of any ordinance, statute, regulation law or similar provision. The agreement also provides for termination in the event of “cause”, as such term is defined in the agreement.

Under the agreement, HT may not sell, promote or otherwise distribute any products that compete directly or indirectly with the Company’s products or that are comparable to such products, and the distributor may not establish any branch, or maintain any distribution depot, outside of its territory for the sale of the products. The distributor is also bound by confidentiality obligations and acknowledges the rights and ownership, intellectual property and otherwise, of CytoCore in and to the products.

PART III

Item 9.   Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act

The information required by this Item 9 will be contained in the definitive Proxy Statement for the Company’s 2008 Annual Meeting of Stockholders (the “2008 Proxy Statement”) under the captions “The Board of Directors and Nominees; Executive Officers” and “Section 16(a) Beneficial Ownership Reporting Compliance” and is incorporated herein by reference. We expect to file the 2008 Proxy Statement within 120 days after the close of the fiscal year ended December 31, 2007.

Code of Ethics

The Company has adopted its Code of Ethics and Business Conduct for Officers, Directors and Employees that applies to all of the officers, directors and employees of the Company, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Company filed its code as an exhibit to its Annual Report on Form 10-KSB for the fiscal year ended December 31, 2003 as filed with the Securities and Exchange Commission on April 14, 2004.

Item 10.   Executive Compensation

The information required by this Item 10 will be contained in the 2008 Proxy Statement under the captions “Compensation” and “Compensation Discussion and Analysis” and is incorporated herein by reference.

Item 11.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item 11 will be contained in the 2008 Proxy Statement under the caption “Security Ownership of Certain Beneficial Owners and Management” and is incorporated herein by reference. See also the information included in Item 5 of this Form 10-KSB relating to the Company’s equity compensation plans and Note 8 — Equity Incentive Plan and Employee Stock Purchase Plan in the Notes to our Consolidated Financial Statements.

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Item 12.   Certain Relationships, Related Transactions and Director Independence

The information required by this Item 12 will be contained in the 2008 Proxy Statement under the captions “Transactions with Related Persons, Promoters and Certain Control Persons” and “Board of Directors and Committee Information” and is incorporated herein by reference.

Item 13.   Exhibits

(*) Denotes an exhibit filed herewith.

(+) Denotes a management contract or compensatory plan, contract or arrangement.

Exhibit No.			Description
	2	.1	Stock and Membership Interest Exchange Agreement dated as of December 4, 1998 among Bell National Corporation, InPath, LLC and the InPath Members (as such term is defined therein). (Incorporated herein by reference to Appendix A to the Bell National Corporation Definitive Proxy Statement on Schedule 14A, filed on April 30, 1999 (the “1999 Proxy Statement”).)
	2	.2	Agreement and Plan of Merger of Bell National Corporation and Ampersand Medical Corporation. (Incorporated herein by reference to Appendix C to 1999 Proxy Statement.)
	2	.3	Agreement and Plan of Merger by and among AccuMed International, Inc., AccuMed Acquisition Corp. and Ampersand Medical Corporation, dated as of February 7, 2001, and Amendment No. 1 thereto. (Incorporated herein by reference to Appendix I to Registration Statement (as amended) on Form S-4, No. 333-61666, as filed on May 25, 2001 (the “May 2001 S-4”).)
	3	.1	Certificate of Incorporation of Ampersand Medical Corporation, as amended. (Incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated September 26, 2001.)
	3	.2	By-laws of Ampersand Medical Corporation. (Incorporated herein by reference to Appendix E to the 1999 Proxy Statement.)
	3	.3	Certificate of Designation, Preferences and Rights of Series A Convertible Preferred Stock of Ampersand Medical Corporation. (Incorporated herein by reference to Exhibit 3.5 to the Ampersand Medical Corporation Annual Report on Form 10-K (as amended) for the fiscal year ended December 31, 2000, as filed on March 29, 2001 (the “2000 10-K”).)
	3	.4	Certificate of Designation, Preferences and Rights of Series B Convertible Preferred Stock of Ampersand Medical Corporation. (Incorporated herein by reference to Exhibit 3.6 to the 2000 10-K.)
	3	.5	Section 6 of Article VII of the By-laws of Ampersand Medical Corporation, as amended. (Incorporated herein by reference to Exhibit 3.3 to the May 2001 S-4.)
	3	.6	Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock (Incorporated herein by reference to Exhibit 3.4 to the Company’s Registration Statement on Form S-2 (as amended), File No. 333-83578, as filed on February 28, 2002 (the “February 2002 S-2”).)
	3	.7	Certificate of Amendment of Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock. (Incorporated herein by reference to Exhibit 3.5 to the February 2002 S-2.)
	3	.8	Certificate of Amendment of Amended Certificate of Designation, Preferences and Rights of Series C Convertible Preferred Stock. (Incorporated herein by reference to Exhibit 3.6 to the February 2002 S-2.)
	3	.9	Certificate of Designations, Preferences and Rights of Series D Convertible Preferred Stock. (Incorporated herein by reference to Exhibit 3.7 to the February 2002 S-2.)
	3	.10	Certificate of Designation, Preferences and Rights of Series E Convertible Preferred Stock. (Incorporated herein by reference to Exhibit 3.8 to the February 2002 S-2.)
	3	.11	Certificate of Amendment to Certificate of Incorporation of the Company, dated August 5, 2004. (Incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2004, as filed on August 16, 2004 (the “2004 2Q 10-QSB”).)
	3	.12	Certificate of Amendment to Certificate of Incorporation, as filed on June 22, 2006. (Incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2006, as filed on August 21, 2006)

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Exhibit No.			Description
	3	.13	Certificate of Amendment to Certificate of Incorporation of the Company, as filed with the Delaware Secretary of State on June 22, 2007. (Incorporated herein by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2007, as filed on August 17, 2007.)
	3	.14*	Certificate of Amendment to Certificate of Incorporation of the Company, as filed with the Delaware Secretary of State on November 19, 2007.
	4	.1	Common Stock Purchase Warrant issued to Holleb & Coff on July 14, 1999 representing the right to purchase 25,000 shares of Common Stock of Ampersand Medical Corporation. (Incorporated herein by reference to Exhibit 4.3 to the Ampersand Medical Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 1999, as filed on March 31, 2000.)
	4	.2	Form of Common Stock Purchase Warrant issued in connection with certain Bridge I financing in June 2002. (Incorporated herein by reference to Exhibit 4.33 to the Amendment No. 1 to the February 2002 S-2 as filed on June 21, 2002.)
	4	.3	Amendment No. 1, dated August 19, 2002, to the Common Stock Purchase Warrant issued in connection with certain Bridge I financing. (Incorporated herein by reference to Exhibit 4.36 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002, as filed on July 21, 2003 (the “2002 10-K”).)
	4	.4	Form of Common Stock Purchase Warrant to be issued in connection with certain Bridge II Financing beginning in October 2002. (Incorporated herein by reference to Exhibit 4.37 to the 2002 10-K.)
	4	.5	Form of Warrant issued in connection with Bridge III Offering. (Incorporated herein by reference to Exhibit 10.51 to the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2003, as filed on April 14, 2004 (the “2003 10-KSB”).)
	4	.6	Common Stock Purchase Warrant issued to Suzanne M. Gombrich on April 2, 2003 representing the right to purchase 100,000 shares of common stock of the Company. (Incorporated herein by reference to Exhibit 4.39 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended June 30, 2003, as filed on August 13, 2003.)
	4	.7	Common Stock Purchase Warrant issued to Don Hancock on June 4, 2004 representing the right to purchase 25,000 shares of common stock of the Company. (Incorporated herein by reference to Exhibit 4.3 to the 2004 2Q 10-QSB.
	4	.8	Form of common stock purchase warrant issued to private placement agents on June 15, 2004 representing the right to purchase an aggregate 681,625 shares of common stock of the Company. (Incorporated herein by reference to Exhibit 4.4 to the 2004 2Q 10-QSB.)
	4	.9	Form of common stock purchase warrant issued to vendors as part of restructuring settlements during the quarter ended June 30, 2004 representing the right to purchase an aggregate 48,398 shares of common stock of the Company. (Incorporated herein by reference to Exhibit 4.5 to the 2004 2Q 10-QSB.)
	4	.10	Common Stock Purchase Warrant issued to Ken Sgro on September 15, 2004 representing the right to purchase 19,200 shares of common stock of the Company. (Incorporated herein by reference to Exhibit 4.2 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2004, as filed on November 15, 2004 (the “2004 3Q 10-QSB”).)
	4	.11	Common Stock Purchase Warrant issued to Jorge Leon, Ph.D., on September 15, 2004 representing the right to purchase 2,500 shares of common stock of the Company. (Incorporated herein by reference to Exhibit 4.4 to the 2004 3Q 10-QSB.)
	4	.12	Common Stock Purchase Warrant issued to Jan L. Dorfman on September 15, 2004 representing the right to purchase 2,000 shares of common stock of the Company. (Incorporated herein by reference to Exhibit 4.5 to the 2004 3Q 10-QSB.)
	4	.13	Common Stock Purchase Warrant issued to Michael Pisani on February 15, 2005 representing the right to purchase 20,000 shares of common stock of the Company. (Incorporated herein by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31, 2005, as filed on August 16, 2005.)
	4	.14	Form of subscription agreement to purchase common stock of the Company at $0.25 per share. (Incorporated herein by reference to Exhibit 4.38 to the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2005, as filed on April 17, 2006 (the “2005 10-KSB”).)

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Exhibit No.			Description
	4	.15	Form of common stock purchase warrant issued as part of 2005 financings representing the right to purchase shares of common stock of the Company at $1.00 per share. (Incorporated herein by reference to Exhibit 4.39 to 2005 10-KSB.)
	4	.16	Common Stock Purchase Warrant issued to Eric Gombrich on March 1, 2006 representing the right to purchase 30,000 shares of common stock. (Incorporated herein by reference to Exhibit 4.41 to 2005 10-KSB.)
	4	.17	Form of common stock purchase warrant issued as part of 2006 financings representing the right to purchase shares of common stock of the Company at $1.80 per share. (Incorporated herein by reference to Exhibit 4.42 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006 as filed on April 17, 2007 (the “2006 10-KSB”).)
	4	.18	Form of subscription agreement used to purchase common stock of the Company during 2006. (Incorporated herein by reference to Exhibit 4.43 to the 2006 10-KSB.)
	4	.19*	Common Stock Purchase Warrant dated December 8, 2006 in favor of Azimuth Corporation representing the right to purchase 154,808 shares of common stock of the Company.
	4	.20*	Common Stock Purchase Warrant dated December 8, 2006 in favor of Cadmus Corporation representing the right to purchase 195,192 shares of common stock of the Company.
	4	.21*	Form of common stock purchase warrant issued in 2006 and 2007 to vendors in consideration for services rendered.
	4	.22*	Registration Rights Agreement in connection with $7 million maximum offering of Units completed in March 2008.
	4	.23*	Form of Warrant in connection with $7 million maximum offering of Units completed in March 2008.
	10	.1+	1999 Equity Incentive Plan established as of June 1, 1999, as amended. (Incorporated herein by reference to Appendix B to the Company’s Definitive Proxy Statement on Schedule 14A, as filed on July 1, 2004.)
	10	.2+	1999 Employee Stock Purchase Plan. (Incorporated herein by reference to Appendix G to the 1999 Proxy Statement.)
	10	.3	Lease Agreement between Ampersand Medical Corporation and O.P., L.L.C, dated May 18, 2000, pertaining to premises located at 414 N. Orleans, Suite 510, Chicago, Illinois 60610. (Incorporated by reference to Exhibit 10.32 to the 2000 10-K.)
	10	.4	First Amendment to Lease Agreement between Ampersand Medical Corporation and O.P., L.L.C., dated February 13, 2001, pertaining to additional premises at 414 N. Orleans, Suite 503, Chicago, Illinois 60610 and extending the term of the original lease until February 28, 2006. (Incorporated by reference to Exhibit 10.33 to the 2000 10-K.)
	10	.5	Form of Convertible Promissory Note issued in connection with certain Bridge I financing beginning in March 2002. (Incorporated herein by reference to Exhibit 10.42 to the 2002 10-K.)
	10	.6	Amendment No. 1 to Convertible Promissory Note issued in connection with certain Bridge I financing dated August 20, 2003. (Incorporated herein by reference to Exhibit 10.43 to the 2002 10-K.)
	10	.7	Form of Bridge II Convertible Promissory Note Indenture, including Form of Convertible Promissory Note, Form of Security Agreement, Form of Collateral Sharing Agreement, and Form of Warrant issued in connection with certain Bridge II Financing beginning in October 2002. (Incorporated herein by reference to Exhibit 10.44 to the 2002 10-K.)
	10	.8	Amendment No. 1 to the 12% Convertible Secured Promissory Note issued in connection with certain Bridge II financing in October 2002. (Incorporated herein by reference to Exhibit 10.47 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2003, as filed on November 19, 2003 (the “2003 3Q 10-QSB”).)
	10	.9	Amendment No. 1 dated July 31, 2003 to the Indenture dated October 1, 2002 issued in connection with certain Bridge II financing in October 2002 (Incorporated herein by reference to Exhibit 10.48 to the 2003 3Q 10-QSB.)
	10	.10	Form of Subscription Agreement for Bridge III $1,500,000 minimum offering/$4,000,000 Maximum Offering placed by Bathgate Capital Partners LLC. (Incorporated herein by reference to Exhibit 10.47 to the 2003 10-KSB.)

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Exhibit No.			Description
	10	.11	Form of Note for Bridge III $1,500,000 minimum offering/$4,000,000 Maximum Offering placed by Bathgate Capital Partners LLC. (Incorporated herein by reference to Exhibit 10.48 to the 2003 10-KSB.)
	10	.12	Form Registration Rights Agreement issued in connection with Bridge III Offering. (Incorporated herein by reference to Exhibit 10.49 to the 2003 10-KSB.)
	10	.13	Form of General Security Agreement by the Company in connection with Bridge III Offering. (Incorporated herein by reference to Exhibit 10.50 to the 2003 10-KSB.)
	10	.14	Form of Subscription Agreement for Bridge IV Offering. (Incorporated herein by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31, 2004, as filed on May 18, 2004 (the “2004 1Q 10-QSB”).)
	10	.15	Form of Note for Bridge IV Offering. (Incorporated herein by reference to Exhibit 4.4 to the 2004 1Q 10-QSB.)
	10	.16	Form of General Security Agreement for Bridge IV Offering. (Incorporated herein by reference to Exhibit 4.5 to the 2004 1Q 10-QSB.)
	10	.17	Form of Registration Rights Agreement for Bridge IV Offering. (Incorporated herein by reference to Exhibit 4.6 to the 2004 1Q 10-QSB.)
	10	.18	Form of Subscription Agreement for the Company’s August 2004 common stock offering. (Incorporated herein by reference to Exhibit 4.6 to the 2004 3Q 10-QSB.)
	10	.19	Settlement Agreement, effective as of October 14, 2004, by and among the Company, AccuMed and MonoGen, Inc. and accompanying License Agreement, made as of October 14, 2004, by and between MonoGen, Inc., the Company and AccuMed. (Incorporated herein by reference to Exhibit 4.8 to the Company’s Quarterly Report on Form 10-QSB/A for the quarter ended September 30, 2004, as filed on November 17, 2004.)
	10	.20	Form of Subscription Agreement for the Company’s common stock offering beginning in December 2004. (Incorporated herein by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004, as filed on April 14, 2005 (the “2004 10-KSB”).)
	10	.21	General Release and Settlement Agreement, effective as of July 18, 2003, by and among the Company, Azimuth Corporation and Cadmus Corporation. (Incorporated herein by reference to Exhibit 10.29 to the 2004 10-KSB.)
	10	.22	Agreement, made as of December 31, 2004, between British Columbia Cancer Agency Branch and the Company, AccuMed and Oncometrics. (Incorporated herein by reference to Exhibit 10.30 to the 2004 10-KSB.)
	10	.23	Settlement Agreement, entered into as of December 2004, by and between Bruce Patterson and Invirion, Inc. and the Company. (Incorporated herein by reference to Exhibit 10.31 to the 2004 10-KSB.)
	10	.24	Lease proposal letter agreement, dated September 22, 2004 from Spectrum Real Estate Services to the Company pertaining to the lease of premises located at 414 N. Orleans, Suite 510, Chicago, Illinois 60610 to be effective as third amendment to original lease. (Incorporated herein by reference to Exhibit 10.32 to the 2004 10-KSB.)
	10	.25	Strategic alliance agreement entered into by the Company in November 2004. (Incorporated herein by reference to Exhibit 10.33 to the 2004 10-KSB.)
	10	.26	Settlement Agreement and Mutual Release effective June 7, 2005, by and between the Cleveland Clinic Foundation and the Company. (Incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2005, as filed on November 21, 2005 (the “2005 3Q 10-QSB”).)
	10	.27	General Release and Confidentiality Agreement, entered into October 2005, by and between Eric Gombrich and the Company. (Incorporated herein by reference to Exhibit 10.2 to the 2005 3Q 10-QSB.)

43

Exhibit No.			Description
	10	.28	Settlement Agreement and Mutual Release, entered into October 2005, by and among the Lash Group Inc., Peter Gombrich and the Company. (Incorporated herein by reference to Exhibit 10.3 to the 2005 3Q 10-QSB.)
	10	.29	Clinical Study Agreement, entered into January 2006, between University Hospitals of Cleveland and the Company. (Incorporated herein by reference to Exhibit 10.36 to 2005 10-KSB.)
	10	.30	Separation Agreement, entered into December 31, 2005, between Denis M. O’Donnell, M.D. and the Company. (Incorporated herein by reference to Exhibit 10.37 to 2005 10-KSB.)
	10	.31	Consulting Agreement, dated January 27, 2006 and effective March 1, 2006, by and between the Company and GSG Enterprises LLC (Incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2006, as filed on November 20, 2006 (the “2006 3Q 10-QSB/A”).)
	10	.32+	Employment agreement dated November 15, 2006 between Augusto Ocana and the Company. (Incorporated herein by reference to Exhibit 10.39 to the 2006 10-KSB.)
	10	.33+	Employment agreement dated November 20, 2006 between Robert McCullough and the Company. (Incorporated herein by reference to Exhibit 10.40 to the 2006 10-KSB.)
	10	.34	Consulting agreement dated November 20, 2006 between Future Wave Management and the Company. (Incorporated herein by reference to Exhibit 10.41 to the 2006 10-KSB.)
	10	.35	Consulting agreement dated November 20, 2006 between EBM, Inc. and the Company. (Incorporated herein by reference to Exhibit 10.42 to the 2006 10-KSB.)
	10	.36	Common Stock Purchase Warrant dated September 28, 2006 issued to David Weissberg representing the right to purchase 400,000 shares of common stock. (Incorporated herein by reference to Exhibit 10.2 to the 2006 3Q 10-QSB/A.)
	10	.37+	Common Stock Purchase Warrant dated September 28, 2006 issued to Robert McCullough Jr. representing the right to purchase 400,000 shares of common stock. (Incorporated herein by reference to Exhibit 10.45 to the 2006 10-KSB.)
	10	.38+	Common Stock Purchase Warrant dated September 28, 2006 issued to Alexander Milley representing the right to purchase 62,500 shares of common stock. (Incorporated herein by reference to Exhibit 10.46 to the 2006 10-KSB.)
	10	.39+	Common Stock Purchase Warrant dated September 28, 2006 issued to John Abeles representing the right to purchase 62,500 shares of common stock. (Incorporated herein by reference to Exhibit 10.47 to the 2006 3Q 10-QSB/A.)
	10	.40*+	Common Stock Purchase Warrant dated January 22, 2007 issued to Augusto Ocana representing the right to purchase 50,000 shares of common stock.
	10	.41*+	Common Stock Purchase Warrant dated February 12, 2007 issued to Robert McCullough Jr. representing the right to purchase 25,000 shares of common stock.
	10	.42*+	Form of common stock purchase warrants issued to Richard A. Domanik on each of June 29, 2007, December 18, 2007 representing the right to purchase an aggregate 35,000 shares of common stock.
	10	.43*	Form of common stock purchase warrants issued to non-executive employees of the Company during the 2007 fiscal year representing the right to purchase an aggregate 96,000 shares of common stock.
	10	.44	Form of warrant amendment (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-QSB for the quarter ended March 31, 207, as filed on May 15, 2007).
	10	.45*	Distribution Agreement with M.O.S.S. S.r.L.
	10	.46*	Distribution Agreement with MUNDITER — Intercambio Mundial de Comercio, S.A.
	10	.47*	Distribution Agreement with Palex Medical S.A.
	10	.48*	Distribution Agreement with CoMedical, Inc. dated February 16, 2008 and executed March 18, 2008.
	10	.49*	Distribution Agreement with HT Hospital Technologies GmbH.
	10	.50*	Exclusive License Agreement with University Hospitals of Cleveland.
	10	.51	Exclusive License Agreement, made as of January 27, 2006, by and between University Hospitals of Cleveland and the Company.

44

Exhibit No.			Description
	10	.52*+	Amendment to Employment Agreement dated as of December 15, 2006 by and between the Company and Augusto Ocana dated as of July 15, 2007
	10	.53*+	Second Amendment to Employment Agreement dated as of December 15, 2006 by and between the Company and Augusto Ocana
	10	.54*	Form of Subscription Agreement and Letter of Investment Intent in connection with $7 million maximum offering of Units completed in March 2008
	10	.55*	Purchase Agreement in connection with $7 million maximum offering of Units completed in March 2008
	14		Code of Ethics and Business Conduct of Officers, Directors and Employees of CytoCore, Inc. (Incorporated herein by reference to Exhibit 99.1 to the 2003 10-KSB.)
	21	*	Subsidiaries of the Company
	23	.1*	Consent of L. J. Soldinger Associates
	23	.2*	Consent of Amper, Politziner & Mattia, P.C.
	31	.1*	Certification of the Chief Executive Officer and Chief Financial Officer of CytoCore, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1*	Certification of the Chief Executive Officer and Chief Financial Officer of CytoCore, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Item 14.   Principal Accountant Fees and Services

The information required by this Item 14 will be contained in the 2008 Proxy Statement under the caption “Independent Registered Public Accounting Firm” and is incorporated herein by reference.

45

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CYTOCORE, INC.

By:  /s/  Robert McCullough, Jr.

Robert McCullough, Jr

Chief Executive Officer and

Chief Financial Officer

Date: March 31, 2008

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/  Daniel Burns Daniel Burns	Chairman of the Board of Directors	March 31, 2008
/s/  Robert McCullough, Jr. Robert McCullough, Jr	Chief Executive Officer and Chief Financial Officer (Principal Accounting Officer and Director)	March 31, 2008
/s/  Alexander M. Milley Alexander M. Milley	Director	March 31, 2008
/s/  John Abeles John Abeles	Director	March 31, 2008
/s/  Clint Severson Clint Severson	Director	March 31, 2008
Floyd E. Taub M.D	Director

46

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CYTOCORE INC.
AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2007 and 2006

Table of Contents

Report of Independent Registered Public Accounting Firms	F-1
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Cash Flows	F-5
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Loss	F-6
Notes to Consolidated Financial Statements	F-8

47

Report of Independent Registered Public Accounting Firm

To The Board of Directors and Stockholders of

CytoCore, Inc.

We have audited the accompanying consolidated balance sheet of CytoCore, Inc. and Subsidiaries as of December 31, 2007, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of CytoCore, Inc. and Subsidiaries as of December 31, 2007, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We have also audited the retroactive adjustments to the 2006 consolidated financial statements for the one-for-ten split in 2007 discussed in Note 1 to the consolidated financial statements. In our opinion, such retrospective adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review or apply any procedures to the 2006 consolidated financial statements of the Company other than with respect to the retrospective adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2006 consolidated financial statements and financial statement schedules taken as a whole.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s recurring losses from operations and resulting dependence upon access to additional external financing, raise substantial doubt concerning its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 11 to the consolidated financial statements, the Company adopted Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” as of January 1, 2007.

/s/  L J Soldinger Associates LLC

March 28, 2008

Dear Park, Illinois

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

CytoCore, Inc.,

We have audited the accompanying consolidated balance sheet of CytoCore, Inc. and Subsidiaries as of December 31, 2006, and the related consolidated statement of operations, stockholders’ deficit, and cash flow for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above, before the effects of the adjustments to retrospectively reflect the one-for-ten reverse stock split described in Note 1, present fairly, in all material respects, the consolidated financial position of CytoCore, Inc. and Subsidiaries as of December 31, 2006, and the results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s recurring losses from operations and resulting dependence upon access to additional external financing, raise substantial doubt concerning its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 2 to the consolidated financial statements, effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” applying the modified-prospective method.

We were not engaged to audit, review, or apply any procedures to the adjustment to retrospectively apply the effects of the one-for-ten reverse stock split described in Note 1 to the consolidated financial statements and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.

/s/  AMPER, POLITZINER & MATTIA, P.C.

April 16, 2007

Edison, New Jersey

F-2

CYTOCORE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31,
	2007			2006
	(Dollars in thousands, except per share amounts)
ASSETS
Current Assets:
Cash and cash equivalents	$	316		$	874
Accounts receivables		15			24
Inventories		14			—
Prepaid expenses and other current assets		216			122
Total current assets		561			1,020
Fixed assets, net		532			242
Licenses, patents, and technology, net of amortization		20			20
Total assets	$	1,113		$	1,282
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	1,778		$	1,434
Accrued payroll costs		589			421
Accrued expenses		1,912			1,825
Deferred revenue		—			25
Notes payable		70			425
Total current liabilities		4,349			4,130
Long-term liabilities
Convertible securities		—			567
Stockholders’ Deficit:
Preferred stock; $0.001 par value; shares authorized 10,000,000; 403,272 and 574,642 shares issued and outstanding at December 31, 2007 and 2006, respectively (Liquidation value of all classes of preferred stock of $3,012 at December 31, 2007)		1,628			2,920
Common stock, $0.001 par value; 500,000,000 and 375,000,000 shares authorized; 35,866,156 and 31,242,958 shares issued and 35,846,947 and 31,223,749 shares outstanding at December 31, 2007 and 2006, respectively(1)		36			31
Additional paid-in capital		80,917			71,206
Treasury stock at cost; 19,209 shares at December 31, 2007 and 2006		(327	)		(327	)
Accumulated deficit		(85,413	)		(77,170	)
Accumulated comprehensive loss — Cumulative translation adjustment		(77	)		(75	)
Total stockholders’ deficit		(3,236	)		(3,415	)
Total liabilities and stockholders’ deficit	$	1,113		$	1,282

(1) Reflects the one-for-ten reverse stock split effected on November 27, 2007. All periods have been restated to reflect the reverse stock split.

The accompanying notes are an integral part of these consolidated financial statements.

F-3

CYTOCORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2007			2006
	(Dollars in thousands,
	except per share amounts)
Net Sales	$	83		$	94
Operating expenses:
Cost of revenues (includes impairment charge of property assets of $169, net of settlement of trade debt of $176 for the year ended December 31, 2006)		30			19
Research and development (net of settlement of trade debt of $207 and $342 for the years ended December 31, 2007 and 2006, respectively)		2,599			854
Selling, general and administrative (net of settlement of trade debt of $56 and $994 for the years ended December 31, 2007 and 2006, respectively)		5,060			3,967
Selling, general and administrative — related parties		239			—
Total costs and expenses		7,928			4,840
Operating loss		(7,845	)		(4,746	)
Other income (expense):
Interest expense — related party		(93	)		(14	)
Interest expense (net of settlement of interest of $85 and $70 for the years ended December 31, 2007 and 2006, respectively)		(9	)		(1,818	)
Unrealized gain on convertible securities		7			—
Interest income		21			12
Total other income (expense)		(74	)		(1,820	)
Loss from operations before income taxes		(7,919	)		(6,566	)
Income taxes		—			—
Net loss		(7,919	)		(6,566	)
Preferred stock dividends		(324	)		(693	)
Net loss applicable to common stockholders	$	(8,243	)	$	(7,259	)
Basic and fully diluted net loss per common share(1)	$	(.24	)	$	(.30	)
Weighted average number of common shares outstanding(1)		34,259,161			24,143,146

(1) Reflects the one-for-ten reverse stock split effected on November 27, 2007. All periods have been restated to reflect the reverse stock split.

The accompanying notes are an integral part of these consolidated financial statements.

F-4

CYTOCORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2007			2006
	(Dollars in thousands)
Operating Activities:
Net loss	$	(7,919	)	$	(6,566	)
Amortization of debt discount		—			173
Depreciation		34			41
Non-cash interest related to warrant modification		182			100
Impairment charge of property asset		—			169
Non-cash interest on beneficial note conversion settled in stock		—			1,321
Stock and warrants issued for settlement of debt		—			210
Stock and warrants issued to non-employees for services		530			832
Non-cash compensation expense		549			1,270
Gain on settlements of trade indebtedness		(349	)		(1,581	)
Unrealized gain on convertible securities		(7	)		—
Changes in assets and liabilities:
Accounts receivable		10			14
Inventories		(14	)		26
Prepaid expenses and other current assets		(94	)		(50	)
Accounts payable		605			(745	)
Deferred Revenue		(25	)		—
Lease obligation		—			(14	)
Accrued expenses		807			(452	)
Net cash used for operating activities		(5,691	)		(5,252	)
Investing activities:
Capital purchases		(324	)		(219	)
Net cash used for investing activities		(324	)		(219	)
Financing activities:
Proceeds from issuance of common stock		3,760			7,362
Financing costs in connection with private placement of stock		(249	)		(79	)
Payments of notes payable		(355	)		(1,185	)
Proceeds from exercise of warrants and options		2,301			247
Net cash provided by financing activities		5,457			6,345
Net (decrease) increase in cash and cash equivalents		(558	)		874
Cash and cash equivalents at beginning of year		874			—
Cash and cash equivalents at end of year	$	316		$	874
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	23		$	319
Non-cash transaction during the year for:
Preferred stock and cumulative dividends converted into common stock	$	1,616		$	5,489
Convertible promissory notes and accrued interest converted into common stock	$	—		$	2,370
Convertible securities related to shares issued in excess of amount authorized	$	567		$	—
Settlement of trade debt with stock	$	467		$	321

The accompanying notes are an integral part of these consolidated financial statements.

F-5

CYTOCORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

																						Accumulated
	Preferred Stock						Common Stock									Additional						Other			Total
	Par Value $0.001						Par Value $0.001(1)				Treasury Stock(1)					Paid-In			Accumulated			Comprehensive			Stockholders’
	Shares			Amount			Shares		Amount		Shares		Amount			Capital(1)			Deficit			Loss			Deficit
	(Dollars in thousands)
January 1, 2006		1,102,192		$	7,716			15,466,508	$	16		19,209	$	(327	)	$	52,525		$	(69,911	)	$	(68	)	$	(10,049	)
Comprehensive Loss:
Net loss					—					—				—			—			(6,566	)		—			(6,566	)
Foreign currency translation					—					—				—			—			—			(7	)		(7	)
Total net comprehensive loss					—					—				—			—			—			—			(6,573	)
Series B preferred stock and cumulative dividends converted to common stock		(139,370	)		(557	)		85,104		—				—			608			(51	)		—			—
Series C preferred stock and cumulative dividends converted to common stock		(207,500	)		(264	)		151,759		—				—			365			(101	)		—			—
Series E preferred stock and cumulative dividends converted to common stock		(180,680	)		(3,975	)		720,996		1				—			4,515			(541	)		—			—
Bridge I conversions					—			428,194		—				—			642			—			—			642
Bridge II conversions					—			169,306		—				—			253			—			—			253
Bridge III conversions					—			336,270		—				—			336			—			—			336
Related party notes converted					—			90,019		—				—			120			—			—			120
Monsun note conversion					—			762,433		1				—			2,339			—			—			2,340
Sale of common stock, net of financing costs of $79,317					—			8,006,429		8				—			7,275			—			—			7,283
Stock issued for sale of stock in prior year					—			3,821,050		4				—			(4	)		—			—			—
Exercise of warrants					—			202,308		—				—			247			—			—			247
Common stock issued for services					—			680,903		1				—			518			—			—			519
Common stock issued in settlement of debt					—			292,827		—				—			321			—			—			321
Common stock issued for compensation					—			28,852		—				—			38			—			—			38
Warrant conversion exercise price modification					—					—				—			100			—			—			100
Convertible securities in excess of authorized					—					—				—			(567	)		—			—			(567	)
Stock appreciation rights liability					—					—				—			(180	)		—			—			(180	)
Warrants issued for compensation					—					—				—			1,232			—			—			1,232
Warrants issued for services					—					—				—			313			—			—			313
Warrants issued in settlement of trade debt					—					—				—			210			—			—			210
December 31, 2006		574,642		$	2,920			31,242,958	$	31		19,209	$	(327	)	$	71,206		$	(77,170	)	$	(75	)	$	(3,415	)

1) Reflects the one-for-ten reverse stock split effected on November 27, 2007. All periods have been restated to reflect the reverse stock split.

The accompanying notes are an integral part of these consolidated financial statements

F-6

CYTOCORE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT — (Continued)

																					Accumulated
	Preferred Stock						Common Stock									Additional					Other			Total
	Par Value $0.001						Par Value $0.001(1)				Treasury Stock(1)					Paid-In		Accumulated			Comprehensive			Stockholders’
	Shares			Amount			Shares		Amount		Shares		Amount			Capital(1)		Deficit			Loss			Deficit
	(Dollars in thousands)
January 1, 2007		574,642		$	2,920			31,242,958	$	31		19,209	$	(327	)	$	71,206	$	(77,170	)	$	(75	)	$	(3,415	)
Comprehensive Loss:
Net loss					—					—				—			—		(7,919	)		—			(7,919	)
Foreign currency translation					—					—				—			—		—			(2	)		(2	)
Total net comprehensive loss					—					—				—			—		—			—			(7,921	)
Series A preferred stock converted to common stock		(35,405	)		(159	)		1,546		—				—			159		—			—			—
Series B preferred stock and cumulative dividends converted to common stock		(103,250	)		(413	)		65,548		—				—			513		(100	)		—			—
Series E preferred stock and cumulative dividends converted to common stock		(32,715	)		(720	)		135,050		—				—			944		(224	)		—			—
Sale of common stock, net of financing costs of $249,366					—			1,741,389		2				—			3,509		—			—			3,511
Exercise of warrants					—			2,397,492		3				—			2,221		—			—			2,224
Exercise of options					—			38,333		—				—			77		—			—			77
Common stock issued for services					—			57,180		—				—			158		—			—			158
Common stock issued in settlement of debt					—			186,660		—				—			467		—			—			467
Warrant conversion exercise price modification					—					—				—			182		—			—			182
Convertible securities in excess of authorized					—					—				—			560		—			—			560
Warrants issued for compensation					—					—				—			549		—			—			549
Warrants issued for services					—					—				—			372		—			—			372
December 31, 2007		403,272		$	1,628			35,866,156	$	36		19,209	$	(327	)	$	80,917	$	(85,413	)	$	(77	)	$	(3,236	)

1) Reflects the one-for-ten reverse stock split effected on November 27, 2007. All periods have been restated to reflect the reverse stock split.

The accompanying notes are an integral part of these consolidated financial statements.

F-7

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2007 and 2006
(Tabular data in thousands, except per share amounts)

Note 1.   The Company and Basis of Presentation

CytoCore, Inc. (“CCI” or the “Company”) was incorporated as Ampersand Medical Corporation in Delaware in December 1998.

In September 2001, following the Company’s acquisition of AccuMed International, Inc. (“AccuMed”) via the merger of AccuMed into a wholly-owned subsidiary of CCI, the Company changed its corporate name to Molecular Diagnostics, Inc. in order to better represent its operations and products. On June 16, 2006, the shareholders ratified a proposal to change the Company’s name from Molecular Diagnostics, Inc. to CytoCore, Inc., which change was effected in Delaware on June 22, 2006. Except where the context otherwise requires, “CCI,” the “Company,” “we” and “our” refers to CytoCore, Inc. and our subsidiaries and predecessors.

CCI is a clinical diagnostics company engaged in the design, development and commercialization of cost-effective screening and diagnostic products, as well as therapeutic-delivery products, in women’s healthcare. CCI is currently focused on the production and sales launch of its SoftPAP^tm cervical collection device and the design and development of its screening systems for cervical, endometrial, and bladder precancerous and cancerous conditions through the CytoCore Solutions^tm System. The CytoCore Solutions^tm System utilizes the Company’s Automated Image Proteomic System or AIPS^tm image analysis that provides for automated slide screening of the P2X7 genetic biomarker from cytological and histological specimens. The CytoCore Solutions^tm System and its components are intended to screen for cancer and eventually treat cancer through the administration of a Food and Drug Administration-approved therapeutic agent from CCI’s drug delivery system. We believe the CytoCore Solutions^tm System or its components may be used in a laboratory, clinic or doctor’s office.

The Company hopes to integrate the next generation AIPS system into the CytoCore Solutions^tm System to be used for various cancer-screening tests. As a result, the Company has discontinued production and sales of the AcCell Savant^tm System.

Liquidity

The Company has incurred significant operating losses since its inception. Management expects that significant on-going operating expenditures will be necessary to successfully implement CCI’s business plan and develop, manufacture and market its products. These circumstances raise substantial doubt about CCI’s ability to continue as a going concern. Implementation of the Company’s plans and its ability to continue as a going concern depend upon its securing substantial additional financing.

During 2007, CCI raised net proceeds of approximately $3.5 million through the private sale of unregistered, restricted common stock and $2.3 million from the exercise of warrants and options to purchase common stock. Management’s plans include efforts to obtain additional capital, although no assurances can be given about the Company’s ability to obtain such capital. In the first quarter of 2008, the Company raised an additional $9.4 million through the sale of unregistered, restricted common stock and $20,000 from the exercise of warrants to purchase common stock. The Company’s management team also has nearly completed implementation of its restructuring plan which is designed to provide unsecured creditors a settlement plan regarding outstanding payables. Completion of this plan may be contingent on the Company’s ability to raise sufficient new equity to fund operations. If the Company is unable to obtain adequate additional financing or generate profitable sales revenues, or negotiate a favorable settlement plan with creditors, it may be unable to fully resume its product development and other activities and may be forced to cease operations. The consolidated financial statements presented herein do not include any adjustments that might result from the outcome of this uncertainty.

F-8

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Increase in authorized shares

On June 21, 2007, the Company’s shareholders voted and approved a proposal to amend CCI’s Certificate of Incorporation (as amended to date) to increase the number of authorized shares of common stock ($0.001 par value) of the Company by 125,000,000 shares from 375,000,000 to 500,000,000 shares.

Reverse Stock Split

On November 27, 2007, we effected a one-for-ten reverse stock split of our common stock. We did not reduce the number of shares we are authorized to issue or change the par value of the common stock. All references to share value in these consolidated financial statements have been restated to reflect this split. See Note 7 — Stockholders’ Equity for further details.

Note 2.   Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

CCI recognizes revenue from product sales in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition,” when the following criteria are met: shipment of a product or license to customers has occurred and there are no remaining Company obligations or contingencies; persuasive evidence of an arrangement exists; sufficient vendor-specific, objective evidence exists to support allocating the total fee to all elements of the arrangement; the fee is fixed or determinable; and collection is probable.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

Inventory

Inventory consisted of component parts necessary to assemble the Company’s SoftPAP^tm cervical collection device as of December 31, 2007. Inventory is valued at the lower of cost or market, using the first in, first out method. During the year ended December 31, 2006, the Company had provided an obsolescence reserve for its entire inventory and therefore the inventory is carried at no value on its books.

F-9

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and are depreciated using the straight-line method over the assets’ estimated useful lives. Principal useful lives are as follows:

Furniture and fixtures	5 years
Laboratory equipment	5 years
Computer and communications equipment	3 years
Design and tooling	5 years
Leasehold improvements	Useful life or term of lease, whichever is shorter

Normal maintenance and repairs for property and equipment are charged to expense as incurred, while significant improvements are capitalized.

Licenses, Patents, and Technology

Licenses, patents, and purchased technology are recorded at their acquisition cost. Costs to prepare patent filings are expensed when incurred. Costs related to abandoned or denied patents are written off at the time of abandonment or denial. Amortization is begun as of the date of acquisition or upon the grant of the final patent. Costs are amortized over the asset’s useful life, which ranges from two to 17 years. The Company assesses licenses, patents, and technology periodically for impairment.

Impairment or Disposal of Long-Lived Assets

At each balance sheet date or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, management of the Company evaluates recoverability of such assets. An impairment loss is recognized if the amount of undiscounted cash flows is less than the carrying amount of the asset, in which case the asset is written down to fair value. The fair value of the asset is measured by either quoted market prices or the present value of estimated expected future cash flows using a discount rate commensurate with the risks involved.

Research and Development Costs

Research and development costs are charged to operations as incurred. CCI conducts a portion of its research activities under contractual arrangements with scientists, researchers, universities, and other independent third parties.

Stock Based Compensation

We adopted SFAS No. 123R, “Share-Based Payments,” effective January 1, 2006, which requires that share-based payments be reflected as an expense based upon the grant-date fair value of those awards. The expense is recognized over the remaining vesting periods of the awards.

Foreign Currency Translation

The functional currency of the Company’s foreign operations is the local currency. Accordingly, all assets and liabilities are translated into U.S. dollars using year-end exchange rates, and all revenues and expenses are translated using average exchange rates during the year.

F-10

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Fair Value of Financial Instruments

The carrying value of accounts receivable, accounts payable, accrued expenses and notes payable approximate their respective fair values due to their short maturities.

Other Comprehensive Income (Loss)

Translation adjustments related to the Company’s foreign dormant subsidiary are included in other comprehensive loss and reported separately in stockholders’ deficit.

Net Loss Per Share

Basic loss per share is calculated based on the weighted-average number of outstanding common shares. Diluted loss per share is calculated based on the weighted-average number of outstanding common shares plus the effect of dilutive potential common shares, using the treasury stock method. CCI’s calculation of diluted net loss per share excludes potential common shares as of December 31, 2007 and 2006 as the effect would be anti-dilutive (i.e. would reduce the loss per share).

Income Taxes

CCI follows the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting carrying amounts and the respective tax bases of assets and liabilities, and are measured using tax rates and laws that are expected to be in effect when the differences are expected to be recovered or settled. Valuation allowances are provided against deferred tax assets if it is more likely than not that the deferred tax assets will not be realized.

As of January 1, 2007 the Company adopted FASB Interpretation No 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement 109” (FIN 48), which seeks to reduce the diversity in practice associated with the accounting and reporting for uncertainty in income tax positions. This Interpretation prescribes a comprehensive model for financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns.

Risks from Concentrations

The Company had deposits at one financial institution in excess of FDIC insured limits. However, the Company does not believe a material risk of loss exists with respect to the financial position due to concentrations of credit risk.

Revenues were derived solely from two customers during 2007 and one customer in 2006.

Recent Accounting Pronouncements

In September 2006, the FASB issued a new standard which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. The new standard does not require new fair value measurements, rather, its provisions will apply when fair value measurements are performed under other accounting pronouncements. The standard is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. In February 2008, the standard was deferred for one year as it applies to nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis (e.g. those measured at fair value in a business combination and goodwill impairment). We are reviewing the potential impact, if any, of this new guidance.

F-11

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

In February 2007, the FASB issued a new standard that permits entities to choose to measure many financial instruments and certain other items at fair value. This standard expands the use of fair value measurement and applies to entities that elect the fair value option. The fair value option established by the new standard permits all entities to choose to measure eligible items at fair value at specified election dates and is effective for fiscal years beginning after November 15, 2007. We do not expect the adoption of this pronouncement to have a material impact on our financial position or results of operations.

In December 2007, the FASB issued a new standard for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a noncontrolling interest (minority interest) as a component of consolidated equity. This is a change from the current practice to present noncontrolling interests in liabilities or between liabilities and stockholders’ equity. Similarly, the new standard requires consolidated net income and comprehensive income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interests. The standard is effective prospectively with respect to transactions involving noncontrolling financial interests that occur on or after January 1, 2009. We do not expect the adoption of this pronouncement to have a material impact on our financial position or results of operations.

In December 2007, FASB issued SFAS No. 141R (“SFAS 141R”), Business Combinations, which impacts the accounting for business combinations. The statement requires changes in the measurement of assets and liabilities required in favor of a fair value method consistent with the guidance provided in SFAS 157 (see above). Additionally, the statement requires a change in accounting for certain acquisition related expenses and business adjustments which no longer are considered part of the purchase price. Adoption of this standard is required for fiscal years beginning after December 15, 2008. Early adoption of this standard is not permitted. The statement requires prospective application for all acquisitions after the date of adoption. The adoption of SFAS 141R is not expected to have a material impact on the Company’s financial statements.

Note 3.   Fixed Assets

Fixed assets consist of the following at December 31:

	2007			2006
Furniture and fixtures	$	124		$	124
Laboratory equipment		622			595
Computer and communications equipment		343			331
Design and tooling		486			201
Leasehold improvements		28			28
		1,603			1,279
Less accumulated depreciation and amortization		(1,071	)		(1,037	)
Total	$	532		$	242

For the years ended December 31, 2007 and 2006, depreciation expense was $34,000 and $41,000, respectively.

F-12

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Note 4.   Licenses, Patents, and Technology

Licenses, patents, and technology include the following at December 31:

	2007			2006
Licenses	$	20		$	20
Patent costs		133			133
LabCorp Technology Agreement		260			260
Subtotal		413			413
Less accumulated amortization		(393	)		(393	)
Total	$	20		$	20

For the years ended December 31, 2007 and 2006, there was no amortization expense for licenses, patents and technology. All patents and technology have been fully amortized. The licenses are deemed to have an indefinite life and are therefore not amortized.

Note 5.   Accrued Expenses

Accrued expenses include the following at December 31:

	2007		2006
Accrued interest	$	350	$	478
Accrued settlement costs		—		438
Accrued taxes (see Note 10)		707		589
Accrued compensation		637		180
Other accrued expenses		218		140
Total	$	1,912	$	1,825

F-13

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Note 6.   Notes Payable

Notes payable at December 31 consist of:

	2007		2006
Bridge II Convertible Promissory Notes; due July 31, 2004; interest rate 12% or 15% per annum; convertible into common stock at $1.00 or $1.50 per share; beneficial conversion feature valued at $1,777,000 and $330,000 at December 31, 2003 and 2002, respectively; warrants at an exercise price of $1.50 or $2.00 per share	$	—	$	50
MonoGen, Inc., $305,000 Promissory Note issued October 14, 2004; interest at 14% per annum; first installment of $25,000 due November 1, 2004 with monthly principal and interest installments of $10,000 thereafter; due January 1, 2007		—		305
Xillix Technologies Corporation, $361,000 Promissory Note issued June 26, 1998; interest rate Canadian Prime plus 6% per annum; represents a debt of AccuMed due December 27, 1999		34		34
Robert Shaw, $25,000 Promissory Note issued September 20, 2001; interest rate 9% per annum		15		15
Ventana Medical Systems, Inc., $62,946 Promissory Note issued November 30, 2003; due December 31, 2003; interest at 8% per annum payable after December 31, 2003		21		21
	$	70	$	425

Bridge I.  During the twelve months ended December 31, 2006, the remaining holders of Bridge I Convertible Promissory Notes elected to convert an aggregate $642,000 note principal and accrued interest into 428,294 shares of unregistered common stock. There were no Bridge I notes outstanding at December 31, 2006 or 2007.

Bridge II.  Beginning in October 2002, the Company began an issue of up to $4,000,000 in Bridge II Convertible Promissory Notes to accredited investors. CCI issued $550,000 in Bridge II notes as of December 31, 2002. From January 1, 2003 through the closing of the offering on December 5, 2003, CCI issued Bridge II notes in the principal amount of: $1,980,200 in exchange for cash, $1,060,000 as a conversion of a Bridge I Convertible Promissory Note and $305,667 in exchange for a note payable to Peter P. Gombrich, the Company’s then-Chairman, for a total issuance during fiscal year 2003 of $3,345,867. The notes bear interest at a rate of 12% per annum payable at the maturity date in kind in the form of shares of common stock of CCI. The Company granted the holders a junior security position in all of its assets. The notes are convertible at any time into the common stock of CCI. The note conversion price and the value of common shares paid in kind as interest for the first $1,000,000 in principal amount of cash subscriptions, determined on a “first come — first served basis,” is $1.00 per share. The note conversion price and the value of common shares paid in kind as interest for the remaining $3,000,000 of principal amount of notes in the series is $1.50 per share. The conversion prices of the notes issued during 2002 and 2003 were less than the market price of the common stock when the notes were issued; therefore, the holders were considered to have a beneficial conversion feature. CCI determined the value of the beneficial conversion feature to be $1,777,200 and $330,000 at December 31, 2003 and 2002, respectively. The value was recorded as a reduction of the debt and was amortized as additional interest over the original life of the notes and was fully amortized by 2004.

At the time CCI completes significant additional funding plans, as outlined in the subscription agreement for the Bridge II notes, each remaining holder of Bridge II notes is entitled to receive a warrant to purchase one share of the common stock of the Company for each four shares of common stock into which the note is convertible at an exercise price of $1.50 per share for notes in the class pertaining to the first $1,000,000 in subscriptions and $2.00 for the remaining $3,000,000 in note principal subscriptions. In September 2003, an amendment to the Bridge II convertible promissory notes was sent to holders requesting an extension of the notes to July 31, 2004. As additional consideration for the extension, holders were offered an increase in the interest rate from 12% to 15%. In addition,

F-14

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

an amendment to the indenture also offered an increase in the warrant coverage ratio from 25% to 33%. The Bridge II offering was closed as of December 5, 2003.

The Company never completed the additional funding requirements, as defined in the agreement, and therefore has not issued any warrants in connection with this note agreement.

For the twelve months ended December 31, 2006, holders of $175,000 principal amount of Bridge II convertible promissory notes elected to convert their notes and related accrued interest of approximately $78,000 into 169,306 shares of unregistered common stock. In December 2006, the Company paid in cash to a note holder $1,060,000 in principal and related accrued interest of approximately $319,000. (See note — 11 Commitments and Contingencies)

In March 2007, CCI paid in cash the remaining note holder $50,000 and related accrued interest of approximately $28,000. There were no Bridge II notes outstanding as of December 31, 2007.

Bathgate Capital Partners, LLC — Bridge III.  Beginning in January 2004, Bathgate Capital Partners, LLC began an offering of a maximum of $4,000,000 and a minimum of $1,500,000 in Bridge III Convertible Promissory Notes to accredited investors on behalf of the Company. The notes had an interest rate of 10% per annum payable, on a semi-annual basis, in kind in the form of shares of common stock for the first two years and then in cash for the remaining three years until due December 31, 2008. The note conversion price and the value of common shares paid in kind as interest is $1.00 per share. The notes were convertible at any time into the common stock of CCI, although the notes will automatically convert if the last sales price of the stock was $3.00 or higher for twenty consecutive trading days, the daily average trading volume was at least 25,000 shares, and the underlying shares were registered for sale. The holders were also granted a security interest in all of the Company’s assets. CCI granted each note holder the right to receive 25% warrant coverage on all money invested; therefore, for every $100,000 invested, an investor received warrants to purchase 2,500 shares of common stock at an exercise price of $1.50 per share. The warrants expire on December 31, 2008.

During 2004, the Company issued an additional $1,662,500 in Bridge III notes in exchange for cash. The conversion prices of the notes issued during 2004 were less than the market price of the common stock when the notes were issued; therefore, the holders were considered to have a beneficial conversion feature. CCI determined the value of the beneficial conversion feature to be $1,604,000 at June 30, 2004. The value was recorded as a reduction of the debt and was amortized as additional interest over the life of the notes, with acceleration upon any conversion of the notes. CCI recorded additional interest expense of $172,698 and $1,126,771 to reflect amortization of the discount during the years ended December 31, 2006 and 2005, respectively. As of December 31, 2006, the discount had been fully amortized.

During the twelve months ended December 31, 2006, holders of the final remaining Bridge III Convertible Promissory Notes elected to convert an aggregate $277,500 note principal and accrued interest of approximately $59,000 into 336,270 unregistered common shares. As of December 31, 2006, there are no Bridge III notes outstanding.

Monsun.  On November 1, 2000, CCI issued a convertible promissory note to Monsun, AS (“Monsun”) in exchange for $500,000 in cash. The note bore interest at the rate of 20% per year and was originally due 12 months from the date of issue. The Company entered into several extensions during 2001 and 2002 and the final extension maturity date was July 31, 2002.

The note was convertible into common stock, any time after the expiration of the first 180 days of the loan term, at a conversion price of $10.00 per share.

In January 2003, Monsun initiated a legal action against Peter Gombrich, CCI’s then-Chairman, as a personal guarantor on the note, in an attempt to collect the unpaid principal balance of the note. Monsun was successful in obtaining a legal judgment of approximately $675,000 related to the note balance and accrued interest against

F-15

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Mr. Gombrich as personal guarantor. In addition, Monsun was granted an award of approximately $438,000 for attorneys’ fees against Peter Gombrich as the personal guarantor. The award for legal fees was recorded as an accrued expense.

In May 2006, Monsun converted its convertible promissory notes in the principal amounts of $500,000 and $519,000, including accrued interest, into 762,433 unregistered shares of the Company’s common stock. Since the actual conversion rate was less than the rate specified in the note, the Company recorded an additional non-cash charge to interest expense of $1,321,000 on the beneficial conversion of the Monsun note for the year ended December 31, 2006.

In June 2007, as part of the arbitration award to Peter Gombrich, the Company issued 186,660 shares of common stock to Monsun as a creditor of Mr. Gombrich, such shares valued at $2.50 per share or a total of $467,000. (See Note 11 — Commitments and Contingencies)

MonoGen, Inc.  In October 2004, CCI issued a promissory note to MonoGen in the amount of $305,000, payable in an initial installment of $25,000 on November 1, 2004 and monthly installments thereafter of $10,000 until the note was paid in full, and agreed to transfer to MonoGen certain assets. Inasmuch as the assets were not timely transferred, and because the initial $25,000 payment to be made under the note was not paid by its due date, MonoGen delivered a notice of default to the Company and AccuMed in November 2004. The note became due on January 1, 2007, and the Company subsequently entered into an agreement with MonoGen to pay $328,000 as full settlement of its obligations. The Company made this payment in 2007.

Ungaretti & Harris LLP.  In March 2005, CCI entered into a settlement agreement, related to a lawsuit filed by Ungaretti & Harris for unpaid legal fees, for $150,000 payable in installments of $25,000 commencing March 22, 2005 with subsequent payments due in 90 day increments until the balance was paid in full. The parties thereafter modified the settlement agreement and CCI made the final payments in 2006.

Ernst & Young LLP.  In July 2006, the Company entered into a settlement agreement to pay Ernst & Young $15,000 in full satisfaction of $15,000 in trade debt and its $31,000 note payable. The Company recorded the settlement benefit as a reduction of selling, general and administrative expense during 2006.

Western Economic Diversification.  In August 2006, the Company entered into a settlement agreement with the Receiver General of Canada to pay $75,000 in full settlement of this note. The Company recorded the settlement benefit as a reduction of selling, general and administrative expense during 2006.

See Note 11 — Commitments and Contingencies for a description of the legal proceedings regarding or giving rise to some of the above notes.

Defaults.  Specific events of default have occurred on all of the outstanding notes payable issued by CCI, ranging from failure to make principal payments when due to breach of certain warranties and representations. The notes payable require the holder to notify CCI in writing of a declaration of default at which time a cure period, as specified in each individual note, would commence. There is no guarantee that CCI would be able to cure any event of default if, or when, the holder provides the required written notice. CCI has not received any written declarations of default from holders of its outstanding notes payable.

Note 7.   Stockholders’ Equity

Reverse Stock Split

On November 19, 2007, our shareholders voted to authorize the Company’s Board of Directors to effect a reverse stock split of common stock at a ratio ranging from not less than a 1-for-5 shares to not more than 1-for-10 shares. On the same day, the Company’s Board of Directors voted to effect a 1-for-10 reverse split. As a result of this stock split, we filed an amendment to our Certificate of Incorporation (as amended to date) with the

F-16

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Secretary of State of the State of Delaware. This amendment became effective on November 27, 2007. As of the effective date of the split, every ten shares of our issued and outstanding common stock, $0.001 par value, automatically converted to one share of common stock, $0.001 par value. No fractional shares of common stock were issued and no cash was paid for fractional shares. The split did not alter any voting rights or other terms of our common stock.

All references to share data have been restated to reflect the split.

Earnings (loss) per share

A reconciliation of the numerator and the denominator used in the calculation of earnings (loss) per share is as follows:

	For the Years Ended
	December 31,
	2007			2006
Basic and Diluted:
Net loss applicable to common stockholder (in thousands)	$	(8,243	)	$	(7,259	)
Weighted average common shares outstanding		34,259,161			24,143,146
Net loss per common share	$	(.24	)	$	(.30	)

Stock options and warrants in the amount of 3,391,792 and 5,734,432 shares and preferred stock convertible into 488,820 and 660,811 shares for the years ended December 31, 2007 and 2006, respectively and convertible notes convertible into 50,977 shares for the year ended December 31, 2006 and 45,000 stock appreciation rights were not included in the computation of diluted loss per share applicable to common stockholders, as they are anti-dilutive as a result of net losses for the years ended December 31, 2007 and 2006, respectively.

Preferred Stock

A summary of the Company’s preferred stock as of December 31, 2007 and 2006 is as follows:

			Shares Issued &		Shares Issued &
			Outstanding		Outstanding
Offering	Shares Authorized		2007		2006
Series A convertible		590,197		47,250		82,655
Series B convertible, 10% cumulative		1,500,000		122,486		225,736
Series C convertible, 10% cumulative		1,666,666		38,333		38,333
Series D convertible, 10% cumulative		300,000		175,000		175,000
Series E convertible, 10% cumulative		800,000		20,203		52,918
Undesignated Preferred Series		5,143,137		—		—
Total Preferred Stock		10,000,000		403,272		574,642

Convertible Cumulative Preferred Stock Conversions:

During 2007, a holder of Series A Convertible Preferred Stock elected to convert 35,405 shares into 1,546 unregistered shares of CCI’s common stock, two holders of Series B Convertible Cumulative Preferred Stock elected to convert 103,250 shares and cumulative dividends totaling $242,482 into 65,548 unregistered shares of the Company’s common stock, and several holders converted 32,715 shares of Series E convertible preferred stock, including cumulative dividends totaling $360,711, into 135,050 unregistered shares of common stock. As a result of the above conversion, the Company recorded a preferred stock dividend of $334,000.

F-17

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

During 2006, two holders of Series B Convertible Cumulative Preferred Stock elected to convert 139,370 shares and cumulative dividends totaling $293,561 into 85,104 unregistered shares of the Company’s common stock, and several holders converted 207,500 shares of Series C convertible preferred stock, including cumulative dividends totaling $288,056, into 151,759 unregistered shares of common stock. Also in 2006, holders of Series E Convertible Preferred Stock elected to convert 180,680 shares and cumulative dividends totaling $1,792,999 into 720,996 unregistered shares of common stock.

Summary of Preferred Stock Terms

Series A Convertible Preferred Stock
Liquidation Value:	$4.50 per share
Conversion Price:	$103.034 per share
Conversion Rate:	0.04367 — Liquidation Value divided by Conversion Price ($4.50/$103.034)
Voting Rights:	None
Dividends:	None
Conversion Period:	Any time
Series B Convertible Preferred Stock
Liquidation Value:	$4.00 per share
Conversion Price:	$10.00 per share
Conversion Rate:	0.40 — Liquidation Value divided by Conversion Price ($4.00/$10.00)
Voting Rights:	None
Dividends:	10% — Quarterly — Commencing March 31, 2001
Conversion Period:	Any time
Cumulative dividends in arrears at December 31, 2007 were $336,161
Series C Convertible Preferred Stock
Liquidation Value:	$3.00 per share
Conversion Price:	$6.00 per share
Conversion Rate:	0.50 — Liquidation Value divided by Conversion Price ($3.00/$6.00)
Voting Rights:	None
Dividends:	10% — Quarterly — Commencing March 31, 2002
Conversion Period:	Any time
Cumulative dividends in arrears at December 31, 2007 were $70,882
Series D Convertible Preferred Stock
Liquidation Value:	$10.00 per share
Conversion Price:	$10.00 per share
Conversion Rate:	1.00 — Liquidation Value divided by Conversion Price ($10.00/$10.00)
Voting Rights:	None
Dividends:	10% — Quarterly — Commencing April 30, 2002
Conversion Period:	Any time
Cumulative dividends in arrears at December 31, 2007 were $1,079,726

F-18

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Series E Convertible Preferred Stock
Liquidation Value:	$22.00 per share
Conversion Price:	$8.00 per share
Conversion Rate:	2.75 — Liquidation Value divided by Conversion Price ($22.00/$8.00)
Voting Rights:	Equal in all respects to holders of common shares
Dividends:	10% — Quarterly — Commencing May 31, 2002
Conversion Period:	Any time
Cumulative dividends in arrears at December 31, 2007 were $277,049

Issuance of Common Shares for Cash

2007

During 2007, the CCI offered shares of unregistered, restricted common stock to accredited investors in exchange for cash. The company received gross proceeds of $3,760,000 to purchase an aggregate 1,741,289 shares of unregistered, restricted common stock at prices ranging from $1.80 to $3.30 per share with a weighted average issuance price of $2.16 per share. In connection with these issuances, the Company paid placement agent fees totaling $249,000, and issued aggregate warrants to purchase 106,750 shares of common stock with exercise prices ranging from $1.80 to $2.00 and a weighted average exercise price of $2.00 per share. These warrants have an exercise term of three years, and are exercisable immediately.

During 2007, the Company received aggregate proceeds of $2,224,000 from the exercise of warrants to purchase 2,205,368 shares of common stock. In connection with some of these warrant exercises, the Company reduced the exercise price from the original stated exercise price in order to induce the warrant holder to exercise and enable the Company to raise needed cash. The Company recorded the fair value of these modifications at the time of each exercise, which resulted in an aggregate $182,000 recorded as additional interest expense during the year ended December 31, 2007, since the modified warrants were originally issued primarily in connection with the various convertible notes of the Company. Included in these warrant exercises were warrants exercised by CCI’s chief executive officer, who exercised 50,579 warrants to purchase common stock at a modified exercise price of $1.00 per share, resulting in a charge of $17,000 to interest expense, and warrants held by a director, who exercised 418,850 warrants to purchase common stock at a modified exercise price of $1.00 per share, resulting in a charge of $76,000 to selling, general and administrative expense.

For the year ended December 31, 2007, holders of warrants to purchase an aggregate 276,415 shares of common stock exercised their warrants under a cashless exercise option. As a result, they received 192,124 shares of common stock.

Also during 2007, the Company received proceeds of $77,000 from the exercise of stock options for 38,333 shares of common stock.

2006

During 2006, the Company continued an offering of unregistered, restricted common stock to accredited investors in exchange for cash. In 2006, the Company issued 3,821,050 shares of restricted common stock for funds received in 2005.

During 2006, the Company received gross proceeds of $7,363,250 to purchase an aggregate 7,786,117 shares of unregistered subscribed common stock at prices per share ranging from $0.25 to $2.20, with a weighted average issuance price of $0.95. In connection with this issuance, the Company paid placement agent fees of $79,317 as well as issued 220,313 shares of common stock to a placement agent, which were valued at $176,250. The placement

F-19

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

agent fees were recorded as a reduction to the gross proceeds in additional paid in capital. In connection with the private placements, the Company issued aggregate warrants to purchase 1,722,486 shares of common stock with exercise prices ranging from $1.00 to $3.20 and a weighted average exercise price of $1.60 per share. The warrants exercise terms were either three or five years, with a weighted average term of 3.7 years, and are exercisable immediately.

During 2006, the Company received proceeds of $246,988 from the exercise of warrants for 202,308 shares of restricted common stock. In connection with some of these warrant exercises, the Company had reduced the exercise price from the original stated exercise price in order to induce the warrant holder to exercise in order to enable the Company to raise needed cash. Due to these modifications to the exercise prices, the Company recorded the fair value of these modifications at the time of each exercise, which resulted in an aggregate $100,000, which was recorded as additional interest expense since the modified warrants were originally issued in connection with the various convertible notes of the Company.

Issuance of Common Stock for Services and as a Settlement of Debt

2007

In June 2007, CCI issued 186,660 shares of common stock with a value of $467,000 to a creditor of Peter Gombrich, CCI’s former CEO and director, as a partial payment of an arbitrators’ award to Mr. Gombrich. (See Note 11 — Commitments and Contingencies)

Also during 2007, CCI issued an aggregate 57,180 shares of restricted, unregistered shares of common stock to non-employees for services rendered. The Company valued the common stock at $158,000, using fair value, between $1.90 and $7.00 per share.

2006

During 2006, CCI issued an aggregate 680,903 shares of the Company’s restricted common stock to non-employees as payment for services rendered. CCI valued the shares at $519,000 at a weighted average value of $0.76 per share.

In addition, the Company issued an aggregate 292,827 shares of its restricted common stock to various vendors as settlement of trade debt. CCI valued the shares in the aggregate at $321,000 at a weighted average value of $1.10 per share.

Issuance of Common Stock as Payment for Employee Compensation

During 2006, the Company issued 28,852 shares of restricted common stock to a former executive officer for services rendered. CCI valued the shares at $38,000 with a weighted average value of $1.32 per share.

Issuance of Warrants for Services and Settlement of Debt

2007

During 2007, the Company issued to vendors warrants to purchase an aggregate 134,905 shares of restricted, unregistered common stock at exercise prices of $1.30 to $3.50 per share. The warrants have a term of three or four years and are exercisable immediately. CCI valued the warrants at $372,000 using the Black-Scholes valuation model and recorded $342,000 as an administrative expense and $30,000 as a research and development expense.

F-20

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

2006

In March 2006, CCI issued warrants to purchase 100,000 shares of common stock with an exercise price of $0.40 per share to a non-employee consultant as a settlement for past consulting services. The warrants are for a term of five years and are exercisable immediately. CCI valued the warrants at $128,700 using the Black-Scholes valuation model and recorded the amount as an administrative expense for the year ended December 31, 2006.

In March 2006, CCI also issued warrants to purchase 30,000 shares of common stock with an exercise price of $1.00 per share to a former employee as a settlement for past employment services. The warrants are for a term of five years and are exercisable immediately. CCI valued the warrants at $37,170 using the Black-Scholes valuation model and recorded the amount as a payroll expense for the year December 31, 2006.

In addition, during 2006, the Company issued warrants to purchase 194,317 shares of common stock at exercise prices ranging from $1.50 to $2.00 per share to non-employee vendors for services performed. The warrants are for a term ranging from three to five years and are exercisable immediately. CCI valued the warrants at $312,675 using the Black-Scholes valuation model and recorded the amount as an administrative expense for the year ended December 31, 2006.

During December 2006, the Company issued a warrant to a vendor in connection with settlement of trade debt. The warrant entitles the vendor to purchase 45,000 shares of common stock at an exercise price of $1.50, exercisable immediately, over a term of five years. CCI valued the warrant $43,535 using the Black-Scholes model and recorded the amount against the trade debt owed.

Issuance of warrants for debt

On July 18, 2003, Mr. Milley, a director of CCI, Azimuth Corporation (of which Mr. Milley is President and Chairman of the Board) and Cadmus Corporation (of which Mr. Milley is President), agreed to cancel seven warrants held by Azimuth and one warrant held by Cadmus, which warrants entitled the holders to purchase a total of 312,500 shares of CCI common stock at various exercise prices between $0.10 and $12.50 per share. The warrants, issued between December 1999 and August 2001, contained anti-dilution clauses which required CCI to increase the number of shares of common stock the holders were entitled to purchase under the warrants by approximately 150,000 shares as of the date of the agreement, with commensurate adjustments in individual exercise prices so that gross proceeds to the Company from exercise of the warrants remained the same. These anti-dilution provisions could have required the Company to make additional adjustments in shares and exercise prices in the future based on the Company’s issuance of debt or equity instruments at prices below the adjusted exercise prices of these warrants. In consideration for the parties’ agreement to cancel these warrants, including their individual anti-dilution clauses, and the forgiveness of approximately $100,000 owed to Azimuth and Cadmus, in February 2005, CCI issued warrants to purchase 287,500 and 362,500 shares to Azimuth and Cadmus, respectively, at an exercise price of $3.00 per share. CCI had also agreed to issue a 120-day warrant entitling the holders to purchase 50,000 shares of common stock at an exercise price of $3.00, which warrant expired on November 19, 2003. CCI valued the warrants at $420,551 using the Black-Scholes valuation model and recorded the amount as a current quarter administrative expense.

In 2006, the warrants issued to Azimuth and Cadmus in February 2005, as noted above, were modified. The total of the warrants were reduced to 350,000 or 154,808 and 195,192 shares to Azimuth and Cadmus, respectively, at an exercise price of $1.00 per share. These warrants expire on July 18, 2008. This modification did not result in an increase in the fair value of the warrants; therefore no further charges were taken.

F-21

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Issuance of Warrants as Payment for Employee Compensation

2007

During the year ended December 31, 2007 the Company issued to non-executive employees warrants to purchase an aggregate 96,000 shares of common stock with exercise prices from $1.60 to $2.87. The warrants are for a term of three years and are exercisable immediately. CCI valued these warrants at $235,000 using the Black-Scholes model.

Also during 2007, the Company issued to its executive officers, as described in Note 8 below, warrants to purchase an aggregate 110,000 shares of common stock at exercise prices of $2.00 to $2.67 per share. These warrants were issued in part for the attainment of certain goals as provided for in their employment agreements. The warrants are for a term of three years and are exercisable immediately. CCI valued the warrants at $314,000 using the Black-Scholes valuation model and recorded the amount as non-cash compensation expense in selling, general and administrative expense

2006

In 2006, as described in Note 8, the Company issued to its executive officers warrants to purchase a total of 800,000 shares of restricted common stock at an exercise price of $1.275 to $2.00 per share. These warrants vested on January 1, 2007 and were for a term of three and five years.

The Company also issued each independent director warrants to purchase 62,500 shares of common stock at $2.00 per share for a total of 125,000 shares of common stock. The warrants are for a term of five years and are exercisable immediately. CCI recorded total non-cash compensation expense in connection with these warrants of $1,094,600, based upon the fair value as determined using the Black-Scholes valuation model.

Also during 2006, the Company issued warrants to an officer to purchase a total of 50,000 shares of restricted common stock at an exercise price of $1.30 per share, exercisable immediately and for a term of three years. The Company also issued 50,000 warrants to a former executive officer for compensation owed him during his employment term, to purchase a total of 50,000 shares of common stock at an exercise price of $2.00 per share, exercisable immediately and for a term of five years. CCI recorded total non-cash compensation expense in connection with these warrants of $137,050, based upon the fair value as determined using the Black-Scholes valuation model.

Exchange of Certain Convertible Promissory Notes for Common Shares

As described in more detail in Note 6, during the year ended December 31, 2006, holders of certain convertible promissory notes (Bridge I, II and III, including notes to a related party) elected to convert an aggregate $952,500 principal and $278,000 accrued interest into 933,770 unregistered shares of the Company’s common stock. The Company also settled other notes payable to related parties in principal and accrued interest of approximately $120,000 for 90,019 unregistered shares of the Company’s common stock during the year ended December 31, 2006.

Also in 2006, Monsun converted its convertible promissory notes in the principal amounts of $500,000 and $519,000 into 762,433 unregistered shares of the Company’s common stock. Since the actual conversion rate was less than the rate specified in the note (see Note 6), the Company recorded an additional non-cash charge to interest expense of $1,321,000 on the beneficial conversion of the Monsun note.

F-22

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Application of Black-Scholes Valuation Model

In applying the Black-Scholes valuation model, the Company used the following assumptions for the years ended December 31, 2007 and 2006:

	2007			2006
Expected volatility		120	% — 143%		84	% — 206%
Expected term (years)		11/2 — 2			3 — 5
Risk-free interest rate		4.25	%		4.25	% — 4.50%
Expected dividend yield		0	%		0	%
Forfeiture rate		0	%		0	%
Resulting weighted average grant date fair value	$	2.80		$	1.20

Expected volatility is based solely on historical volatility of our common stock over the period commensurate with the expected term of the stock options. The expected term calculation is based upon the expected term the option is to be held, which in most cases is one-half of the term of the option. The risk-free interest rate is based upon the U.S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield of zero is based on the fact that we have never paid cash dividends on our common stock and we have no present intention to pay cash dividends.

Warrants

At December 31, 2007, the Company had the following outstanding warrants to purchase shares of Common Stock:

	Total Warrant		Warrant Shares		Exercise Price		Weighted Average
	Shares Outstanding		Exercisable		(Not Weighted)		Years Until Expiration
		480,304		480,304	$	1.00		0.96
		400,000		400,000	$	1.28		1.75
		12,500		12,500	$	1.30		1.70
		5,000		5,000	$	1.33		3.00
		612,596		612,596	$	1.50		2.74
		29,498		29,498	$	1.60		1.50
		10,000		10,000	$	1.66		2.62
		42,500		42,500	$	1.70		1.45
		350,403		350,403	$	1.80		3.25
		19,000		19,000	$	1.89		2.97
		12,500		12,500	$	1.90		1.55
		1,010,149		1,010,149	$	2.00		2.96
		75,000		75,000	$	2.60		2.12
		30,000		30,000	$	2.67		2.50
		30,000		30,000	$	2.80		2.58
		64,000		64,000	$	2.87		2.30
		25,000		25,000	$	3.30		1.54
		10,000		10,000	$	3.40		3.53
		8,572		8,572	$	3.50		2.62
		1,328		1,328	$	75.10		Perpetual
		1,328		1,328	$	150.50		Perpetual
		1,328		1,328	$	226.20		Perpetual
Total		3,231,006		3,231,006

F-23

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

The Company was obligated under the terms of subscription agreements for the Bridge I and Bridge II convertible promissory notes to issue additional warrants to the note holders based on certain events. If and when the holder of a Bridge I note elects to convert the principal of the note into shares of CCI common stock, the holder was entitled to receive a warrant to purchase one share of CCI common stock for each four shares of CCI common stock into which the note was converted at an exercise price equal to $2.00, based on the written offer dated October 10, 2003. The Company issued 157,273 warrants in the fourth quarter of 2006 to all the holders that have converted their notes and accrued interest. No Bridge I and II notes remained outstanding at December 31,2007.

Convertible Securities

As of December 31, 2006, the Company had an aggregate number of shares of common stock issued as well as instruments convertible or exercisable into common shares that exceeded the number of the Company’s total authorized common shares by 189,177 shares. The Company determined that the excess shares were related to warrants issued at the end of 2006. Based upon EITF 00-19, “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock”, the Company determined the fair value of these excess shares using the Black-Scholes valuation model. As a result, as of December 31, 2006 the Company reported a liability of $567,000. As of March 31, 2007, the Company remeasured this liability, in accordance with EITF 00-19, and recorded an unrealized loss of $379,000. During the quarter ended June 30, 2007, the Company issued more securities and a number of warrants expired. On June 21, 2007, the shareholders of the Company authorized an increase in the number of authorized common shares of the Company from 375,000,000 to 500,000,000 shares. As a result of the increase in authorized common shares, the Company did not have equity instruments issued or exercisable in excess of the authorized capital and therefore no liability at September 30, 2007. The Company remeasured the liability up until the day the shareholders authorized the increase in shares and determined the Company had an unrealized gain of $7,000 for the year ended December 31, 2007.

Note 8.   Equity Incentive Plan and Employee Stock Purchase Plan

On May 25, 1999, CCI stockholders approved the establishment of the 1999 Equity Incentive Plan effective as of June 1, 1999 (the “Plan”). The Plan provides that the Board may grant various forms of equity incentives to directors and employees, including but not limited to Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, and Restricted Stock Awards. Grants under the Plan are exercisable at fair market value determined as of the date of grant in accordance with the terms of the Plan. Grants vest to recipients immediately or ratably over periods ranging from two to five years, and expire five to ten years from the date of grant.

On May 23, 2000, stockholders approved an amendment to the Plan, which increased the number of shares of common stock allocated for use in the Plan from 200,000 shares to 300,000 shares. On June 21, 2002, stockholders approved a second amendment to the Plan, which increased the number of shares allocated for use in the Plan from 300,000 shares to 550,000 shares. On July 29, 2004, stockholders approved a third amendment to the Plan, which increased the number of shares for use in the Plan from 550,000 to 2,000,000 shares.

The Board of Directors has also granted options and warrants to purchase common stock of CCI that are not covered by the terms of the Plan. As of December 31, 2007, there were 1,675,280 shares of common stock available to be issued under the Plan.

For the years ended December 31, 2007 and 2006, the Company did not grant any options.

However, during the quarter ended December 31, 2007, the Company issued to non-executive employees warrants to purchase an aggregate 20,000 shares of common stock with exercise prices of $1.33 and $2.00 per share. The Company valued these warrants at $29,000 using the Black-Scholes valuation model. The warrants have a term of three years and are immediately exercisable. During the year ended December 31, 2007, the Company issued to

F-24

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

non-executive employees warrants to purchase an aggregate 96,000 shares of common stock with exercise prices from $1.60 to $2.87. CCI valued these warrants at $235,000 using the Black-Scholes model.

During the quarter ended December 31, 2007, the Company issued to its president warrants to purchase 5,000 shares of common stock with an exercise price of $1.89 per share. The warrants have a term of three years and are exercisable immediately. CCI valued the warrants at $6,600 using the Black-Scholes valuation model. During the year ended December 31, 2007, CCI issued to a former chief executive officer under the terms of his employment agreement warrants to purchase a total of 50,000 shares of common stock with an exercise price of $2.00 per share and to its president warrants to purchase 35,000 shares of common stock with exercise prices ranging from $1.89 to $2.67. The warrants have a term of three years and are exercisable immediately. CCI valued the warrants collectively at $205,000 using the Black-Scholes valuation model. In addition during the period, CCI issued its chief executive officer under the terms of his employment agreement warrants to purchase a total of 25,000 shares of common stock with an exercise price of $2.60 per share. The warrants have a term of three years and became exercisable on June 21, 2007. CCI valued the warrants at $109,000 using the Black-Scholes valuation model.

The Company recorded a total of $549,000 as non-cash compensation expense for the year ended December 31, 2007 in connection with these officer and employee warrants.

In 2006, CCI issued to a former chief executive officer warrants to purchase a total of 400,000 shares of common stock with an exercise price of $2.00 per share. The warrants have a term of five years and became exercisable on January 1, 2007. CCI valued the warrants at $483,000 using the Black-Scholes valuation model. In addition, CCI issued its chief financial officer warrants to purchase a total of 400,000 shares of common stock with an exercise price of $1.28 per share. The warrants have a term of three years and became exercisable on January 1, 2007. CCI valued the warrants at $460,000 using the Black-Scholes valuation model. The Company also issued each independent director warrants to purchase 62,500 shares of common stock with an exercise price of $2.00 per share. In total 125,000 warrants were issued to the independent directors. The warrants have a term of five years and are exercisable immediately. CCI valued the director’s warrants at $152,000 using the Black-Scholes valuation model. During the fourth quarter of 2006, the Company issued its former chief executive officer warrants to purchase 50,000 shares of common stock with an exercise price of $1.30 per share. The warrants have a term of three years. CCI valued the warrants at $68,000 using the Black-Scholes valuation model. The Company also issued to a former executive officer warrants to purchase 50,000 shares of common stock with an exercise price of $2.00 per share. These warrants have a term of five years, and were valued at $69,000 using the Black-Scholes valuation model. The Company recorded a total of $1,232,000 as non-cash compensation expense for the year ended December 31, 2006.

The fair value of each stock option and warrant award was determined as of the date of grant using the Black-Scholes option-pricing model with the following assumptions in each of the years ended December 31:

	2007			2006
Expected volatility		120	% — 143%		84	% — 206%
Expected term (years)		11/2 — 2			3 — 5
Risk-free interest rate		4.25	%		4.25 — 4.50	%
Expected dividend yield		0	%		0	%
Forfeiture rate		0	%		0	%
Resulting weighted average grant date fair value	$	2.80		$	1.20

Expected volatility is based solely on historical volatility of our common stock over the period commensurate with the expected term of the stock options. The expected term calculation is based upon the expected term the option is to be held, which in most cases is one-half of the term of the option. The risk-free interest rate is based upon

F-25

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

the U.S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield of zero is based on the fact that we have never paid cash dividends on our common stock and we have no present intention to pay cash dividends.

As of December 31, 2007, there were no unrecognized compensation costs related to unvested share-based compensation arrangements since all costs related to grants in 2007 or previous years were fully recognized as of December 31, 2007.

A summary of the Company’s stock option activity and related information follows:

1999 Stock Option Plan

				Weighted				Weighted Average
				Average		Aggregate		Remaining
				Exercise		Intrinsic		Contractual Life
	Options			Price		Value		(Years)
Outstanding at December 31, 2005		400,398		$	4.412	$	0.00
Granted		—
Exercised		—
Forfeited		(174,600	)	$	5.662
Outstanding at December 31, 2006		225,798		$	2.767	$	433,500		1.68
Granted		—
Exercised		(38,333	)	$	2.000
Forfeited		(26,679	)	$	2.000
Outstanding and exercisable at
December 31, 2007		160,786		$	3.050	$	0.00		1.01

Warrants and options issued outside of the Plan for employee compensation

				Weighted				Weighted Average
				Average		Aggregate		Remaining
	Options and			Exercise		Intrinsic		Contractual Life
	Warrants			Price		Value		(Years)
Outstanding at December 31, 2005		—
Granted		1,025,000		$	1.70
Exercised		—
Forfeited		—
Outstanding at December 31, 2006		1,025,000		$	1.70	$	323,100
Granted		206,000
Exercised		(50,000	)	$	2.66
Forfeited		—
Outstanding and exercisable at
December 31, 2007		1,181,000		$	1.82	$	299,000		2.83

At the Annual Meeting of Stockholders on May 25, 1999, CCI stockholders also approved the 1999 Employee Stock Purchase Plan (the “Purchase Plan”). The Purchase Plan offers employees the opportunity to purchase shares of common stock of CCI through a payroll deduction plan at 85% of the fair market value of such shares at specified

F-26

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

enrollment measurement dates. The aggregate number of shares available for purchase under the plan is 16,000. There was no activity in 2007 or 2006.

Stock Appreciation Rights

At December 31, 2007, CCI had 45,000 stock appreciation rights (SARs) outstanding and a related liability for $180,000. These SARs, issued in 1989, had an exercise price of $3.00 and could be exercised through November 20, 2001. These SARs were deemed automatically exercised on November 20, 2001 if not done so at the option of the holder. In general, each SAR entitles the holder to receive upon exercise an amount equal to the excess, if any, of the market value per share of common stock at the date of exercise over the exercise price of the SAR, plus any dividends or distributions per share made by CCI prior to the exercise date. In lieu of making cash payments, CCI may elect and intends, to issue shares of common stock. CCI recorded compensation expense related to these SARs in fiscal years prior to 2002, to reflect the difference between the closing market price of CCI’s common stock and the exercise price of the SARs. Since the SARs were deemed exercised at November 20, 2001, no additional entries were required subsequently.

Note 9.   Leases

As of December 31, 2007, the Company leased approximately 2,540 square feet of space for its Chicago, Illinois corporate headquarters and research laboratory and offices under an operating lease expiring in 2008. Total rental expense related to the Company’s headquarters location during the years ended December 31, 2007 and 2006 was $85,000 and $72,000, respectively. In addition, CCI has renewed a lease for a period of one year for an executive office in Princeton, NJ at a total cost of $25,000.

CCI had another lease obligation relating to the pre-merger office space of AccuMed. During 2002, AccuMed’s landlord brought suit against AccuMed for unpaid rent and obtained a judgment in the amount of approximately $157,000. In the first quarter of 2004, a preliminary settlement was reached on the outstanding judgment and four payments totaling $54,896 were paid. CCI also agreed to issue 82,347 shares of its common stock as part of the final settlement. The final payment was made in 2006 and the obligation was fully settled.

Future minimum annual lease payments under these leases as of December 31, 2007 are:

	Operating
Year	Leases
2008	$	85

Note 10.   Income Taxes

As of January 1, 2007 the Company adopted FASB Interpretation No 48, “Accounting for uncertainty in Income Taxes — an interpretation of FASB Statement 109” (FIN 48), which clarifies the accounting and disclosure for uncertainty in tax positions, as defined. Pursuant to FIN 48, the Company has analyzed filing positions in all of the federal and state jurisdictions where it is required to file income tax returns, as well as open tax years in these jurisdictions. The periods subject to examination for the Company’s tax returns are for the years from 2001 to 2006. The Company believes that its income tax filing positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to FIN 48. In addition, the Company did not record a cumulative effect adjustment related to the adoption of FIN 48.

F-27

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Significant components of deferred income taxes consist of the following at December 31:

	2007		2006
Deferred tax assets related to:
Net operating loss carryforwards	$	28,730	$	26,308
Non-cash compensation		368		—
Writedown of intangibles		12		14
Accrued liabilities		417		150
Accrued expenses		—		132
		29,527		26,604
Less valuation reserve		29,527		26,604
Net deferred tax asset	$	—	$	—

At December 31, 2007, the Company had domestic net operating loss carryforwards aggregating approximately $71,000,000 for federal income tax purposes and approximately $80,000,000 for state income tax purposes. For financial reporting purposes, the entire amount of deferred tax assets related principally to the net operating loss carryforwards has been offset by a valuation allowance due to uncertainty regarding the realization of the assets. The valuation allowance increased by approximately $2,923,000 and $1,964,000 for the years ended December 31, 2007 and 2006, respectively.

The net operating loss carryforwards may not be available to offset future taxable income of CCI due to statutory limitations based on changes of ownership and other statutory restrictions.

Net operating loss carryforwards totaling approximately $415,000 that expired in 2007 related to certain losses that are limited under statutory provisions, and these will continue to expire in this same amount each subsequent year. The remaining net operating loss carryforwards expire between 2018 and 2027 for federal income tax purposes and 2017 and 2027 for state income tax purposes.

CCI was delinquent in filing certain federal and state income tax returns for 2005, 2004, 2003 and 2002, which returns were filed in March 2008. The Company does not believe penalties and interest from late filing of these tax returns will be material.

A reconciliation of the differences between income taxes computed at the U.S. federal statutory rate of 34% and the Company’s reported provision for income taxes as of December 31, 2007 is as follows:

Income tax (benefit) at statutory rate	$	(2,693	)
Other		(230	)
Benefit not recognized due to valuation allowance		2,923
Benefit for income taxes	$	—

Note 11.   Commitments and contingencies

Legal Proceedings

Settled in 2007

Peter Gombrich.  In April 2005, former CCI officer and director Peter Gombrich filed suit against CCI and CCI’s former Chief Executive Officer, Denis M. O’Donnell, M.D., in the Circuit Court of Cook County, Illinois (05 L 4543). Mr. Gombrich claimed that CCI breached a written employment contract and that it owed him in excess of $849,500. Mr. Gombrich also alleged a claim against CCI for contribution and indemnification regarding

F-28

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

agreements he allegedly signed as a personal guarantor for certain alleged CCI obligations. CCI filed a motion to compel the case to arbitration, pursuant to the terms of the employment contract, and CCI’s motion was granted in August 2005. In late 2005, CCI filed its answer and affirmative defenses, and asserted numerous counterclaims against Mr. Gombrich. The arbitration hearing on the parties’ cross-claims concluded in October 2006 and an initial award was made in January 2007, which Mr. Gombrich appealed. The arbitrator issued a final decision in April 2007 following appeals, awarding Mr. Gombrich $538,413 for compensation plus $184,797 for attorney fees. In June 2007, the Company paid Mr. Gombrich $256,560 and issued 186,660 shares of common stock to Monsun, AS, a creditor of Mr. Gombrich. The common stock was valued at $2.50 per share or a total of $467,000. A Satisfaction and Release Of Judgment was filed with the Circuit Court of Cook County, Illinois, and CCI believes it has no further obligations in this matter.

The Regents of the University of California.  In May 2004, The Regents of the University of California filed suit against CCI in the Superior Court of California, County of San Francisco (CGC-04-431944). The University of California claimed that CCI breached an agreement to sponsor a research project for a period of one year. The complaint sought compensatory damages in the amount of $57,530 and additional lost opportunity damages in the amount of $75,220. In January 2005, the University of California requested that the court enter a default judgment against CCI in the amount of $132,827, which included court costs. In February 2007, CCI and the University of California agreed to a financial settlement of the default judgment. CCI tendered final payment totaling $66,413 in March 2007, and believes it has no further obligations in this matter.

Pending as of December 31, 2007

Attorney General of Illinois.  In the third quarter of 2006, the Attorney General of the State of Illinois brought an action in the Circuit Court of Cook County, Illinois (Case No. 2006-L-003353) against the Company with regard to the Company’s alleged failure to pay back wages in the amount of $282,833 to certain of CCI’s former employees. The Company believed that it had settled the former employees’ claims and supplied the State with substantiation that all such back wages had been paid. As of May 9, 2007, the Circuit Court dismissed all the claims except for one remaining claim amounting to approximately $10,000.

NeoMed Innovation III L.P.  In October 2007, NeoMed Innovation III L.P. (“NeoMed”) filed suit against the Company in the United State District Court, Eastern District of Illinois (Case No. 07C 5721). NeoMed alleges that the Company has breached a contract with NeoMed. The alleged contract provided among other things that the Company would exchange two existing notes for a new note in the principal amount of $1,110,000 with an interest rate of 12%, payable on July 31, 2003 at the option of the holder in the form of common stock valued at $1.50 (adjusted for stock splits and equity raised at lower valuations). In 2006, the Company paid to NeoMed $1,060,000 and accrued interest calculated at 7% totaling $318,913. Despite accepting this payment, NeoMed is demanding that the Company honor the alleged contract. CCI believes its payment of principal and accrued interest to NeoMed satisfied all of CCI’s obligations owed to NeoMed.

Diamics, Inc.  In August of 2006, Diamics, Inc. brought an action against Dr. Reid Jilek and CCI in the Superior Court of Marin County, California (Case No. CV063475) to declare that Diamics had fully performed its payment obligations under a promissory note (“the Note”) which Diamics had previously issued to Dr. Jilek and for attorneys fees. The Note entitled Dr. Jilek to a non-dilutable 10% ownership interest in Diamics if the company’s payment of the loan installments to Dr. Jilek were not timely made. Dr. Jilek has asserted that Diamics defaulted under the Note and that he is entitled to the non-dilutable 10% equity ownership in Diamics. Dr. Jilek has assigned his rights under the Note to the Company. The case has been transferred to the Superior Court of San Diego. CCI believes the assigned ownership rights to 10% of Diamics are valid and enforceable. As such, the Company has not recorded any value for this ownership, pending the outcome of this litigation.

F-29

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

Other claims

Other Creditors.  CCI was a party to a number of other proceedings, informal demands, or debt for services brought by former unsecured creditors to collect past due amounts for services. CCI is attempting to settle these demands and unfilled claims. CCI does not consider any of these claims to be material.

During the year ended December 31, 2007, CCI continued its restructuring settlement of its outstanding debt and accounts payable. Overall during 2007, the Company settled claims of creditors totaling approximately $476,000 through cash payments of approximately $127,000.

During 2006, the Company settled claims of creditors totaling approximately $2.5 million through cash payments of approximately $800,000 and the issuance of 292,827 shares of restricted common stock issued at a value of approximately $320,500. In addition, the Company issued 45,000 warrants valued at $44,000.

Commitments

CCI has an agreement with its Chief Executive Officer (“CEO”) for a term of two years that provides for an annual salary of $120,000, which increased to $180,000 annually after certain conditions were met. The Board of Directors has also awarded the CEO 400,000 warrants to purchase shares of common stock at a $1.28 per share, which vested on January 1, 2007. In 2007, the Company awarded Mr. McCullough warrants to purchase 25,000 shares of common stock at $2.60 per share for the attainment of performance goals under the agreement. The agreement also provides for the issuance of up to 475,000 additional warrants upon the achievement of certain performance goals.

The Company has a consulting agreement with an entity owned by its Chairman of the Board of Directors. The agreement is for two years and provides for annual payments of $120,000, which increased to $180,000 after certain performance goals were met. In 2007, the Company awarded the consulting company warrants to purchase 25,000 shares of common stock at $2.60 per share for the attainment of performance goals under the agreement. The agreement also provides for the issuance of up to 475,000 additional warrants upon the achievement of certain performance goals.

Also, the Company has an agreement with one of its consultants. The agreement provides for annual payments of $120,000, which increased to $180,000 annually after certain performance goals were met. In 2007, the Company awarded the consulting company warrants to purchase 25,000 shares of common stock at $2.60 per share for the attainment of performance goals under the agreement. The agreement also provides for the issuance of up to 475,000 additional warrants upon the achievement of certain performance goals.

In addition, CCI has an agreement with its principal investigator. The agreement provides for the annual payment of $200,000 with $20,000 payable in unregistered restricted common stock of the Company. The annual payments were increased to $300,000 in 2007 with $50,000 payable in unregistered common stock of the Company. These payments are subject to an annual increase of four percent. The term of the agreement is ten years.

The Company has entered into long term commitments with various parties for the distribution of its products in domestic and foreign markets which include minimum annual purchase requirements by the distributors.

Note 12.   Related Party Transactions

In 2007, Daniel Burns, Chairman of the Board of Directors of the Company, exercised warrants to purchase 418,850 shares of restricted, unregistered common stock, and was paid directly $77,000 as reimbursement for income taxes incurred on a common stock award made in 2006. Also, Future Wave Management Inc., of which Mr. Burns is President, was paid $150,000 for consulting services and $25,000 for reimbursement of expenses. In 2006, the Company made payments to Mr. Burns totaling $154,000 in consideration for his consulting services and reimbursement totaling $31,000 for fees and expenses. The Company also issued Mr. Burns an aggregate

F-30

CYTOCORE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007 and 2006 — (Continued)

437,500 shares of restricted common stock in April 2006, which closing price on the date of issuance was $1.80, for services rendered.

In December 2006, Dr. Floyd Taub, a director of the Company and former Chief Executive Officer, through his wholly-owned company FindCure.org, entered into a consulting agreement with the Company and Dr. Taub also personally entered into an agreement to serve on CCI’s Medical Advisory Board. The consulting agreement called for the payment of $5,000 per month and reimbursement of out-of-pocket expenses. The agreement to serve on the Medical Advisory Board provides for the monthly payment of $2,000 payable in unregistered, restricted common stock of the Company valued at $1.90 per share. During 2007 the Company paid FindCure.org a total of $41,367 in cash under the consulting agreement and issued to FindCure.org 7,368 shares of common stock as payment under the agreement to serve on the Medical Advisory Board.

During 2007, three officers of the Company exercised warrants to purchase an aggregate 105,728 shares of restricted, unregistered common stock for total proceeds of $116,000.

Also in 2007 the Company agreed to pay Cadmus Corporation, an affiliate of Alexander Milley, a director of the Company, $45,000 for reimbursement of the tax incurred as a result of modifying the terms of the warrant agreements discussed below.

During 2006, Alexander Milley, Azimuth Corporation, Cadmus Corporation and other affiliates of Mr. Milley converted 119,460 shares of Series E Convertible Cumulative Preferred Stock and cumulative dividends totaling $1,477,986 into 476,348 shares of common stock. Also in 2006, the 650,000 warrants issued to Azimuth and Cadmus in February 2005 (see Note 7 — Stockholders Equity) were modified. The total warrants were reduced to 350,000, or 154,808 and 195,192 shares to Azimuth and Cadmus, respectively, at an exercise price of $1.00 per share. These warrants expire on July 18, 2008. This modification did not result in an increase in the fair value of the warrants; therefore no further charges were taken.

Also, Northlea Partners LTD., an affiliate of John Abeles M.D., a director, converted approximately $120,000 in principal and accrued interest into 90,019 shares unregistered shares of common stock. The same affiliate also converted 7,665 shares of Series E Convertible Cumulative Preferred Stock and cumulative dividends totaling $75,995 into 30,563 shares of unregistered common stock.

In 2006, an affiliate of the Company’s CEO purchased 187,500 shares of restricted unregistered common stock at $0.40 per share.

Note 13.   Subsequent Events

During the first quarter of 2008, the Company raised approximately $9.4 million from the sale of 4,690,500 shares of common stock to foreign and accredited investors at $2.00 per share. The offering provides for the issuance of one warrant to purchase unregistered restricted shares of common stock at a price of $2.00 per share for every two shares of common stock purchased. Therefore, warrants to purchase 2,345,250 shares of the Company’s unregistered common stock will be issued.

F-31

EX-3.14

Exhibit 3.14

PAGE 1

     I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF “CYTOCORE, INC. ”, FILED IN THIS OFFICE ON THE NINETEENTH DAY OF NOVEMBER, A.D. 2007, AT 1:26 O’CLOCK P.M.

     A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS.

     AND I DO HEREBY FURTHER CERTIFY THAT THE EFFECTIVE DATE OF THE AFORESAID CERTIFICATE OF AMENDMENT IS THE TWENTIETH DAY OF NOVEMBER, A.D. 2007.

2971781   8100

071237562
You may verify this certificate online
at corp.delaware.gov/authver.shtml /s/ Harriet Smith Windsor
  Harriet Smith Windsor, Secretary of State
AUTHENTICATION: 6172176

DATE: 11-19-07

State of Delaware
Secretary of State
Division of Corporations
Delivered 01:28 PM 11/19/2007
FILED 01:26 PM 11/19/2007
SRV 071237562 — 2971781 FILE

CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
CYTOCORE, INC.

Pursuant to Section 242 of the
General Corporation Law of the State of Delaware (“DGCL”)

     CytoCore, Inc., a Delaware corporation (hereinafter called the “Corporation”), does hereby certify as follows:

     1. That at a meeting of the Board of Directors of the Corporation, resolutions were adopted recommending an amendment of the Corporation’s Certificate of Incorporation (as amended to date) and directing that such amendment be considered at a special meeting of the stockholders of the Corporation called for such purpose. The text of the proposed amendment is as follows:

Article FOURTH of the Certificate of Incorporation (as amended to date) shall be amended by adding a new Section 4.3 thereto as follows:

“Section 4.3. Effective at 9:00 a.m. (Eastern Time) on November 20, 2007 (such time, on such date, the “Effective Time”), each ten (10) shares of the Corporation’s common stock, $0,001 par value per share, issued and outstanding immediately prior to the Effective Time (the “Old Common Stock”) shall automatically without further action on the part of the Corporation or any holder of Old Common Stock, be reclassified, combined, converted and changed into one (1) fully paid and non-assessable share of common stock, $0,001 par value per share (the “New Common Stock”), subject to the treatment of fractional share interests as described below. The conversion of the Old Common Stock into New Common Stock will be deemed to occur at the Effective Time. From and after the Effective Time, certificates representing the Old Common Stock shall represent the number of shares of New Common Stock into which such Old Common Stock shall have been converted pursuant to this Certificate of Amendment, subject to the treatment of fractional share interests. There shall be no fractional shares issued. In lieu thereof, the Corporation will round up to the nearest whole share any stockholder’s share ownership to the extent such stockholder would be entitled to receive one-half of one share of Common Stock or greater, and the Corporation will round down to the nearest whole share any stockholder’s share ownership to the extent such stockholder would be entitled to receive less than one-half of one share of Common Stock, as a result of the reverse split effected hereby.”

     2. That said amendment, having been duly proposed and recommended by the Board of Directors of the Corporation, was considered by the stockholders of the Corporation at a special meeting of stockholders, duly called for such purpose and held upon notice in accordance with Section 222 of the DGCL.

     3. That said amendment was duly adopted, by the holders of a majority of the outstanding stock of each class of stock of the Corporation entitled to vote thereon, in accordance with the provisions of Section 242 of the DGCL.

     IN WITNESS WHEREOF, CytoCore, Inc. has caused this Certificate of Amendment to be duly executed in its corporate name this 19^th day of November, 2007.

CYTOCORE, INC.
By:	/s/ Robert F. McCullough, Jr.
	Name:	Robert F. McCullough, Jr.
		Chief Executive Officer and Chief Financial Officer

EX-4.19

Exhibit 4.19

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No. 120806-C

WARRANT TO PURCHASE SHARES OF COMMON STOCK

ISSUE DATE: December 8, 2006

     This certifies that Azimuth Corporation, a corporation with a principal business address at Orlando, FL (or any valid transferee thereof, the “Holder”), for value received, is entitled to purchase from CytoCore, Inc., a Delaware corporation with its principal business office located at 414 North Orleans Street, Suite 502, Chicago, Illinois 60610 (together with its successors and assigns, the “Company”), subject to the terms and conditions set forth below, at any time or from time to time on and after the Issue Date as set forth above and before 3:00 p.m. (Eastern Daylight Time) on July 18, 2008 (the “Expiration Date”), 1,326,923 shares of common stock, $.001 par value per share, of the Company (“Common Stock”), at a price of $0.10 per share. The shares purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and the “Purchase Price,” respectively.

     1. Exercise of the Warrant.

          (a) Exercise. The Holder may, at the Holder’s option, elect to exercise this Warrant, in whole or in part, at any time or from time to time on or after the Issue Date but prior to 3:00 p.m. (Eastern Daylight Time) on the Expiration Date, by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly executed by or on behalf of the Holder, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise. In no event shall any such exercise be for fewer than 10,000 Warrant Shares unless fewer than an aggregate of 10,000 Warrant Shares are then purchasable under all outstanding Warrants held by the Holder. Payment of the aggregate Purchase Price may be made in cash, certified or bank check, or wire transfer of immediately available funds.

          (b) Exercise Date and Status as Holder of Shares. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Subsection 1(a) above (the “Exercise Date”). At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in Subsection 1(c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.

          (c) Issuance of Certificates. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 10 business days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder, or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct:

               (i) a certificate or certificates for the number of full Warrant Shares to which the Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so exercised.

          (d) Warrant Shares. The Warrant Shares issued upon any such exercise of this Warrant shall be validly issued, fully paid and non-assessable.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issue Date (or, if this Warrant was issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date on which such original warrant was first issued) (either such date being referred to as the “Original Issue Date”) effect a subdivision of the outstanding Common Stock, the Purchase Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Purchase Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this Subsection 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in shares of Common Stock, then and in each such event the Purchase Price then in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Purchase Price then in effect by a fraction:

-2-

                    (1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

                    (2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Purchase Price shall be adjusted pursuant to this Subsection 2(b) as of the time of actual payment of such dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is required to be made to the Purchase Price pursuant to Subsections 2(a) or 2(b), the number of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.

          (d) Adjustment for Reorganization. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 2(a) or 2(b)) (collectively, a “Reorganization”), then, following such Reorganization, the Holder shall receive upon exercise hereof the kind and amount of securities, cash or other property which the Holder would have been entitled to receive pursuant to such Reorganization if such exercise had taken place immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Purchase Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of this Warrant.

          (e) No Adjustments in Certain Cases. No adjustment in the number of Warrant Shares purchasable pursuant to this Warrant shall be required unless the adjustment would require an increase or decrease of at least one percent (1.0%) in the number of Warrant Shares then purchasable upon the exercise of this Warrant. Except as provided in this Section 2, no other adjustments in the number, kind or price of shares constituting Warrant Shares shall be made during the term, or upon the exercise, of this Warrant. Further, no adjustments shall be made pursuant to this Section 2 hereof in connection with the grant or exercise of presently authorized or outstanding options to purchase, or the issuance of shares of Common Stock under, the Company’s director or employee benefit, option and incentive plans.

-3-

          (f) Treasury Stock. For purposes of this Section 2, shares of Common Stock owned or held at any relevant time by, or for the account of, the Company, in its treasury or otherwise, shall not be deemed to be outstanding for purposes of the calculations and adjustments herein described.

     3. Fractional Shares. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall pay in cash to the Holder an amount equal to such fraction multiplied by the fair market value per share of Common Stock, as determined by the Board of Directors in good faith.

     4. Investment Representations. The initial Holder represents and warrants to the Company as follows:

          (a) Investment. The Holder is acquiring this Warrant, and (if and when such Holder exercises this Warrant) will acquire the Warrant Shares, for such Holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Holder has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

          (b) Accredited Investor. The Holder is an “accredited investor” as defined in Rule 501(a) under the Act.

          (c) Experience. The Holder has made such inquiry concerning the Company and its business and personnel as the Holder has deemed appropriate; and the Holder has sufficient knowledge and experience in finance and business that the Holder is capable of evaluating the risks and merits of an investment in the Company.

     5. Transfers, etc.

          (a) This Warrant and the Warrant Shares shall not be offered, sold or transferred unless either (i) they first shall have been registered under the Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel, satisfactory to the Company, to the effect that such offer, sale or transfer is exempt from the registration requirements of the Act and any applicable state securities laws.

          (b) Each Warrant and certificate representing Warrant Shares shall bear a legend substantially in the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such act and applicable state securities laws or an opinion of counsel reasonably satisfactory to the Company is obtained to the effect that such registration is not required.”

-4-

     The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144 under the Act.

          (c) The Company will maintain a register containing the name and address of the Holder of this Warrant. The Holder may change the Holder’s address as shown on the warrant register by written notice to the Company requesting such change.

          (d) Subject to the provisions of clauses (a) and (b) of this Section 5, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit II hereto) at the principal office of the Company (or, if another office or agency has been designated by the Company for such purpose, then at such other office or agency). Upon the presentation and surrender of such items to the Company, the Company shall execute and deliver to the transferee or transferees of this Warrant a new Warrant or Warrants, in the name of the transferee or transferees named in the assignment, and this Warrant shall at that time be canceled to the extent transferred.

     6. No Impairment; Adjustment of Par Value.

          (a) The Company will not, by amendment of its charter 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 Holder against impairment.

          (b) Before taking any action that would cause an adjustment reducing the Purchase Price per share below the then par value of the shares of Warrant Shares issuable upon exercise of the Warrant, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Warrant Shares at such adjusted price.

     7. Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or

          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

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then, and in each such case, the Company will send or cause to be sent to the Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

     8. Reservation of Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other securities, cash and/or property as from time to time shall be issuable upon the exercise of this Warrant.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Holder of this Warrant, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 5 hereof, issue and deliver to or upon the order of the Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of the Holder or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (or other securities, cash and/or property) then issuable upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the address last furnished to the Company in writing by the Holder. All notices and other communications from the Holder to the Company in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the Company at its principal office set forth above. If the Company should at any time change the location of its principal office to a place other than as set forth above, it shall give prompt written notice to the Holder and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. All such notices and communications shall be deemed delivered (a) three business days after being sent by certified or registered mail, return receipt requested, postage prepaid, or (b) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery.

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     11. No Rights as Stockholder; No Liability. No provision of this Warrant shall be construed as conferring upon the Holder hereof the right to vote, consent, receive dividends or receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matter whatsoever as a stockholder of the Company. In the absence of affirmative action by the Holder hereof to purchase shares of Common Stock, no provision hereof shall give rise to any liability of such Holder for the purchase price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

     12. Payment of Taxes. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of this Warrant or the shares of Common Stock comprising the Warrant Shares; provided, however, the Company shall not be required to pay any tax that may be payable in respect of any transfer of this Warrant or Warrant Shares.

     13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision or any other term, condition or provision hereof.

     14. Section Headings. The section headings in this Warrant are for the convenience of the parties only and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties.

     15. Severability. If any provision of this Warrant shall be held invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Warrant and, to this end, the provisions hereof are severable.

     16. Assignment. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.

     17. Governing Law. This Warrant will be governed by and construed in accordance with the internal laws of the State of Delaware (without reference to the conflicts of law provisions thereof).

     18. Signatures. This Warrant may be executed in one or more counterparts by facsimile signature.

(Signature appears on next page).

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     EFFECTIVE as of the Issue Date indicated above.

CYTOCORE, INC.
By:
	Title:

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EXHIBIT I

PURCHASE FORM

To:                                          Dated:                                         

     The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby elects to purchase                      shares of the Common Stock of CytoCore, Inc. by such Warrant.

     The undersigned herewith makes payment of the full Purchase Price for such shares at the price per share provided for in such Warrant. Such payment shall be in the aggregate amount of $                     in cash, certified or bank check, or wire transfer of immediately available funds.

Signature:  

Address: 

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EXHIBIT II

ASSIGNMENT FORM

     FOR VALUE RECEIVED,                                                                                   hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. ___) with respect to the number of shares of Common Stock of CytoCore, Inc. covered thereby set forth below, unto:

Name of Assignee Address No. of Shares

Dated:  Signature:  

Signature Guaranteed:
 

The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17A under the Securities Exchange Act of 1934, as amended.

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EX-4.20

Exhibit 4.20

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No. 120806-B

WARRANT TO PURCHASE SHARES OF COMMON STOCK

ISSUE DATE: December 8, 2006

     This certifies that Cadmus Corp, a corporation with a principal business address of 3600 Rio Vista Ave., #A, Orlando, FL 32805-6605 (or any valid transferee thereof, the “Holder”), for value received, is entitled to purchase from CytoCore, Inc., a Delaware corporation with its principal business office located at 414 North Orleans Street, Suite 502, Chicago, Illinois 60610 (together with its successors and assigns, the “Company”), subject to the terms and conditions set forth below, at any time or from time to time on and after the Issue Date as set forth above and before 3:00 p.m. (Eastern Daylight Time) on July 18, 2008 (the “Expiration Date”), 1,673,077 shares of common stock, $.001 par value per share, of the Company (“Common Stock”), at a price of $0.10 per share. The shares purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and the “Purchase Price,” respectively.

     1. Exercise of the Warrant.

          (a) Exercise. The Holder may, at the Holder’s option, elect to exercise this Warrant, in whole or in part, at any time or from time to time on or after the Issue Date but prior to 3:00 p.m. (Eastern Daylight Time) on the Expiration Date, by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly executed by or on behalf of the Holder, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise. In no event shall any such exercise be for fewer than 10,000 Warrant Shares unless fewer than an aggregate of 10,000 Warrant Shares are then purchasable under all outstanding Warrants held by the Holder. Payment of the aggregate Purchase Price may be made in cash, certified or bank check, or wire transfer of immediately available funds.

          (b) Exercise Date and Status as Holder of Shares. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the

day on which this Warrant shall have been surrendered to the Company as provided in Subsection 1(a) above (the “Exercise Date”). At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in Subsection 1(c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.

          (c) Issuance of Certificates. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 10 business days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder, or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct:

               (i) a certificate or certificates for the number of full Warrant Shares to which the Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so exercised.

          (d) Warrant Shares. The Warrant Shares issued upon any such exercise of this Warrant shall be validly issued, fully paid and non-assessable.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issue Date (or, if this Warrant was issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date on which such original warrant was first issued) (either such date being referred to as the “Original Issue Date”) effect a subdivision of the outstanding Common Stock, the Purchase Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Purchase Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this Subsection 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in shares of Common Stock, then and in each such event the Purchase Price then in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Purchase Price then in effect by a fraction:

               (1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the

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close of business on such record date, and

               (2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Purchase Price shall be adjusted pursuant to this Subsection 2(b) as of the time of actual payment of such dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is required to be made to the Purchase Price pursuant to Subsections 2(a) or 2(b), the number of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.

          (d) Adjustment for Reorganization. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 2(a) or 2(b)) (collectively, a “Reorganization”), then, following such Reorganization, the Holder shall receive upon exercise hereof the kind and amount of securities, cash or other property which the Holder would have been entitled to receive pursuant to such Reorganization if such exercise had taken place immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Purchase Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of this Warrant.

          (e) No Adjustments in Certain Cases. No adjustment in the number of Warrant Shares purchasable pursuant to this Warrant shall be required unless the adjustment would require an increase or decrease of at least one percent (1.0%) in the number of Warrant Shares then purchasable upon the exercise of this Warrant. Except as provided in this Section 2, no other adjustments in the number, kind or price of shares constituting Warrant Shares shall be made during the term, or upon the exercise, of this Warrant. Further, no adjustments shall be made pursuant to this Section 2 hereof in connection with the grant or exercise of presently authorized or outstanding options to purchase, or the issuance of shares of Common Stock under, the Company’s director or employee benefit, option and incentive plans.

          (f) Treasury Stock. For purposes of this Section 2, shares of Common Stock owned or held at any relevant time by, or for the account of, the Company, in its treasury or

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otherwise, shall not be deemed to be outstanding for purposes of the calculations and adjustments herein described.

     3. Fractional Shares. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall pay in cash to the Holder an amount equal to such fraction multiplied by the fair market value per share of Common Stock, as determined by the Board of Directors in good faith.

     4. Investment Representations. The initial Holder represents and warrants to the Company as follows:

          (a) Investment. The Holder is acquiring this Warrant, and (if and when such Holder exercises this Warrant) will acquire the Warrant Shares, for such Holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Holder has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

          (b) Accredited Investor. The Holder is an “accredited investor” as defined in Rule 501(a) under the Act.

          (c) Experience. The Holder has made such inquiry concerning the Company and its business and personnel as the Holder has deemed appropriate; and the Holder has sufficient knowledge and experience in finance and business that the Holder is capable of evaluating the risks and merits of an investment in the Company.

     5. Transfers, etc.

          (a) This Warrant and the Warrant Shares shall not be offered, sold or transferred unless either (i) they first shall have been registered under the Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel, satisfactory to the Company, to the effect that such offer, sale or transfer is exempt from the registration requirements of the Act and any applicable state securities laws.

          (b) Each Warrant and certificate representing Warrant Shares shall bear a legend substantially in the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such act and applicable state securities laws or an opinion of counsel reasonably satisfactory to the Company is obtained to the effect that such registration is not required.”

     The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144 under the Act.

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          (c) The Company will maintain a register containing the name and address of the Holder of this Warrant. The Holder may change the Holder’s address as shown on the warrant register by written notice to the Company requesting such change.

          (d) Subject to the provisions of clauses (a) and (b) of this Section 5, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit II hereto) at the principal office of the Company (or, if another office or agency has been designated by the Company for such purpose, then at such other office or agency). Upon the presentation and surrender of such items to the Company, the Company shall execute and deliver to the transferee or transferees of this Warrant a new Warrant or Warrants, in the name of the transferee or transferees named in the assignment, and this Warrant shall at that time be canceled to the extent transferred.

     6. No Impairment; Adjustment of Par Value.

          (a) The Company will not, by amendment of its charter 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 Holder against impairment.

          (b) Before taking any action that would cause an adjustment reducing the Purchase Price per share below the then par value of the shares of Warrant Shares issuable upon exercise of the Warrant, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Warrant Shares at such adjusted price.

     7. Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or

          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

then, and in each such case, the Company will send or cause to be sent to the Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which

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such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

     8. Reservation of Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other securities, cash and/or property as from time to time shall be issuable upon the exercise of this Warrant.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Holder of this Warrant, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 5 hereof, issue and deliver to or upon the order of the Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of the Holder or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (or other securities, cash and/or property) then issuable upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the address last furnished to the Company in writing by the Holder. All notices and other communications from the Holder to the Company in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the Company at its principal office set forth above. If the Company should at any time change the location of its principal office to a place other than as set forth above, it shall give prompt written notice to the Holder and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. All such notices and communications shall be deemed delivered (a) three business days after being sent by certified or registered mail, return receipt requested, postage prepaid, or (b) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery.

     11. No Rights as Stockholder; No Liability. No provision of this Warrant shall be construed as conferring upon the Holder hereof the right to vote, consent, receive dividends or receive notice as a stockholder in respect of meetings of stockholders for the election of directors

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of the Company or any other matter whatsoever as a stockholder of the Company. In the absence of affirmative action by the Holder hereof to purchase shares of Common Stock, no provision hereof shall give rise to any liability of such Holder for the purchase price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

     12. Payment of Taxes. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of this Warrant or the shares of Common Stock comprising the Warrant Shares; provided, however, the Company shall not be required to pay any tax that may be payable in respect of any transfer of this Warrant or Warrant Shares.

     13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision or any other term, condition or provision hereof.

     14. Section Headings. The section headings in this Warrant are for the convenience of the parties only and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties.

     15. Severability. If any provision of this Warrant shall be held invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Warrant and, to this end, the provisions hereof are severable.

     16. Assignment. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.

     17. Governing Law. This Warrant will be governed by and construed in accordance with the internal laws of the State of Delaware (without reference to the conflicts of law provisions thereof).

     18. Signatures. This Warrant may be executed in one or more counterparts by facsimile signature.

(Signature appears on next page).

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     EFFECTIVE as of the Issue Date indicated above.

CYTOCORE, INC.
By:
	Title:

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EXHIBIT I

PURCHASE FORM

To:____________ Dated:_________

     The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby elects to purchase ______ shares of the Common Stock of CytoCore, Inc. by such Warrant.

     The undersigned herewith makes payment of the full Purchase Price for such shares at the price per share provided for in such Warrant. Such payment shall be in the aggregate amount of $_________ in cash, certified or bank check, or wire transfer of immediately available funds.

Signature:

Address:

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EXHIBIT II

ASSIGNMENT FORM

     FOR VALUE RECEIVED,                                                              hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. ___) with respect to the number of shares of Common Stock of CytoCore, Inc. covered thereby set forth below, unto:

Name of Assignee Address No. of Shares

Dated:	Signature:
Signature Guaranteed:
By:

The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17A under the Securities Exchange Act of 1934, as amended.

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EX-4.21

Exhibit 4.21

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No. _____

WARRANT TO PURCHASE SHARES OF COMMON STOCK

ISSUE DATE:                     , 200 __

     This certifies that                                         , an [individual resident of                                         ] [a                                          with a principal business address of                                         ] (or any valid transferee thereof, the “Holder”), for value received, is entitled to purchase from CytoCore, Inc., a Delaware corporation with its principal business office located at 414 North Orleans Street, Suite 502, Chicago, Illinois 60610 (together with its successors and assigns, the “Company”), subject to the terms and conditions set forth below, at any time or from time to time on and after the Issue Date as set forth above and before 3:00 p.m. (Eastern Daylight Time) on                      (the “Expiration Date”),                                          shares of common stock, $.001 par value per share, of the Company (“Common Stock”), at a price of $              per share. The shares purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and the “Purchase Price,” respectively.

     1. Exercise of the Warrant.

          (a) Exercise. The Holder may, at the Holder’s option, elect to exercise this Warrant, in whole or in part, at any time or from time to time on or after the Issue Date but prior to 3:00 p.m. (Eastern Daylight Time) on the Expiration Date, by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly executed by or on behalf of the Holder, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise. In no event shall any such exercise be for fewer than 10,000 Warrant Shares unless fewer than an aggregate of 10,000 Warrant Shares are then purchasable under all outstanding Warrants held by the Holder. Payment of the aggregate Purchase Price may be made in cash, certified or bank check, or wire transfer of immediately available funds.

          (b) Exercise Date and Status as Holder of Shares. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Subsection 1(a) above (the “Exercise Date”). At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in Subsection 1(c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.

          (c) Issuance of Certificates. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 10 business days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder, or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct:

               (i) a certificate or certificates for the number of full Warrant Shares to which the Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so exercised.

          (d) Warrant Shares. The Warrant Shares issued upon any such exercise of this Warrant shall be validly issued, fully paid and non-assessable.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issue Date (or, if this Warrant was issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date on which such original warrant was first issued) (either such date being referred to as the “Original Issue Date”) effect a subdivision of the outstanding Common Stock, the Purchase Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Purchase Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this Subsection 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in shares of Common Stock, then and in each such event the Purchase Price then in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Purchase Price then in effect by a fraction:

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               (1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

               (2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Purchase Price shall be adjusted pursuant to this Subsection 2(b) as of the time of actual payment of such dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is required to be made to the Purchase Price pursuant to Subsections 2(a) or 2(b), the number of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.

          (d) Adjustment for Reorganization. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 2(a) or 2(b)) (collectively, a “Reorganization”), then, following such Reorganization, the Holder shall receive upon exercise hereof the kind and amount of securities, cash or other property which the Holder would have been entitled to receive pursuant to such Reorganization if such exercise had taken place immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Purchase Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of this Warrant.

          (e) No Adjustments in Certain Cases. No adjustment in the number of Warrant Shares purchasable pursuant to this Warrant shall be required unless the adjustment would require an increase or decrease of at least one percent (1.0%) in the number of Warrant Shares then purchasable upon the exercise of this Warrant. Except as provided in this Section 2, no other adjustments in the number, kind or price of shares constituting Warrant Shares shall be made during the term, or upon the exercise, of this Warrant. Further, no adjustments shall be made pursuant to this Section 2 hereof in connection with the grant or exercise of presently authorized or outstanding options to purchase, or the issuance of shares of Common Stock under, the Company’s director or employee benefit, option and incentive plans.

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          (f) Treasury Stock. For purposes of this Section 2, shares of Common Stock owned or held at any relevant time by, or for the account of, the Company, in its treasury or otherwise, shall not be deemed to be outstanding for purposes of the calculations and adjustments herein described.

     3. Fractional Shares. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall pay in cash to the Holder an amount equal to such fraction multiplied by the fair market value per share of Common Stock, as determined by the Board of Directors in good faith.

     4. Investment Representations. The initial Holder represents and warrants to the Company as follows:

          (a) Investment. The Holder is acquiring this Warrant, and (if and when such Holder exercises this Warrant) will acquire the Warrant Shares, for such Holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Holder has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

          (b) Accredited Investor. The Holder is an “accredited investor” as defined in Rule 501(a) under the Act.

          (c) Experience. The Holder has made such inquiry concerning the Company and its business and personnel as the Holder has deemed appropriate; and the Holder has sufficient knowledge and experience in finance and business that the Holder is capable of evaluating the risks and merits of an investment in the Company.

     5. Transfers, etc.

          (a) This Warrant and the Warrant Shares shall not be offered, sold or transferred unless either (i) they first shall have been registered under the Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel, satisfactory to the Company, to the effect that such offer, sale or transfer is exempt from the registration requirements of the Act and any applicable state securities laws.

          (b) Each Warrant and certificate representing Warrant Shares shall bear a legend substantially in the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such act and applicable state securities laws or an opinion of counsel reasonably satisfactory to the Company is obtained to the effect that such registration is not required.”

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     The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144 under the Act.

          (c) The Company will maintain a register containing the name and address of the Holder of this Warrant. The Holder may change the Holder’s address as shown on the warrant register by written notice to the Company requesting such change.

          (d) Subject to the provisions of clauses (a) and (b) of this Section 5, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit II hereto) at the principal office of the Company (or, if another office or agency has been designated by the Company for such purpose, then at such other office or agency). Upon the presentation and surrender of such items to the Company, the Company shall execute and deliver to the transferee or transferees of this Warrant a new Warrant or Warrants, in the name of the transferee or transferees named in the assignment, and this Warrant shall at that time be canceled to the extent transferred.

     6. No Impairment; Adjustment of Par Value.

          (a) The Company will not, by amendment of its charter 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 Holder against impairment.

          (b) Before taking any action that would cause an adjustment reducing the Purchase Price per share below the then par value of the shares of Warrant Shares issuable upon exercise of the Warrant, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Warrant Shares at such adjusted price.

     7. Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or

          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

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then, and in each such case, the Company will send or cause to be sent to the Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

     8. Reservation of Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other securities, cash and/or property as from time to time shall be issuable upon the exercise of this Warrant.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Holder of this Warrant, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 5 hereof, issue and deliver to or upon the order of the Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of the Holder or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (or other securities, cash and/or property) then issuable upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the address last furnished to the Company in writing by the Holder. All notices and other communications from the Holder to the Company in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the Company at its principal office set forth above. If the Company should at any time change the location of its principal office to a place other than as set forth above, it shall give prompt written notice to the Holder and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. All such notices and communications shall be deemed delivered (a) three business days after being sent by certified or registered mail, return receipt requested, postage prepaid, or (b) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery.

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     11. No Rights as Stockholder; No Liability. No provision of this Warrant shall be construed as conferring upon the Holder hereof the right to vote, consent, receive dividends or receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matter whatsoever as a stockholder of the Company. In the absence of affirmative action by the Holder hereof to purchase shares of Common Stock, no provision hereof shall give rise to any liability of such Holder for the purchase price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

     12. Payment of Taxes. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of this Warrant or the shares of Common Stock comprising the Warrant Shares; provided, however, the Company shall not be required to pay any tax that may be payable in respect of any transfer of this Warrant or Warrant Shares.

     13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision or any other term, condition or provision hereof.

     14. Section Headings. The section headings in this Warrant are for the convenience of the parties only and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties.

     15. Severability. If any provision of this Warrant shall be held invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Warrant and, to this end, the provisions hereof are severable.

     16. Assignment. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.

     17. Governing Law. This Warrant will be governed by and construed in accordance with the internal laws of the State of Delaware (without reference to the conflicts of law provisions thereof).

     18. Signatures. This Warrant may be executed in one or more counterparts by facsimile signature.

(Signature appears on next page).

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     EFFECTIVE as of the Issue Date indicated above.

CYTOCORE, INC.
By:
	Title:

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EXHIBIT I

PURCHASE FORM

To:                                          Dated:                     

     The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby elects to purchase              shares of the Common Stock of CytoCore, Inc. by such Warrant.

     The undersigned herewith makes payment of the full Purchase Price for such shares at the price per share provided for in such Warrant. Such payment shall be in the aggregate amount of $                     in cash, certified or bank check, or wire transfer of immediately available funds.

Signature:  

Address:   

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EXHIBIT II

ASSIGNMENT FORM

     FOR VALUE RECEIVED,                                                                                  hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. ___) with respect to the number of shares of Common Stock of CytoCore, Inc. covered thereby set forth below, unto:

Name of Assignee Address No. of Shares

Dated: _____________________________                                                                             Signature: _______________________________

Signature Guaranteed:
 

By:  

The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17A under the Securities Exchange Act of 1934, as amended.

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EX-4.22

Exhibit 4.22

REGISTRATION RIGHTS AGREEMENT

     This Registration Rights Agreement (this “AGREEMENT”) is made and entered into as of January ___, 2008, by and among Cytocore, Inc., a Delaware corporation (the “COMPANY”), and the investors signatory hereto (each a “INVESTOR” and collectively, the “INVESTORS”).

     This Agreement is made pursuant to Purchase Agreements between the Company and each Investor (the “PURCHASE AGREEMENT”) and the Finder’s Agreement between the Company and Bathgate Capital Partners LLC.

     The Company and the Investors hereby agree as follows:

     1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement will have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms have the respective meanings set forth in this Section 1:

“ADDITIONAL WARRANTS” has the meaning set forth in Section 2(c).

“ADVICE” has the meaning set forth in Section 6(d).

“COMMON STOCK” means the Company’s $.001 par value common stock.

“EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended.

“FILING DATE” means (a) with respect to the initial Registration Statement required to be filed under Section 2(a), 120 days from the Final Close of the Offering.

“HOLDER” or “HOLDERS” means the holder or holders, as the case may be, from time to time of Registrable Securities.

“INDEMNIFIED PARTY” has the meaning set forth in Section 5(c).

“INDEMNIFYING PARTY” has the meaning set forth in Section 5(c). “LOSSES” has the meaning set forth in Section 5(a).

“OFFERING” means that private offering of Units made pursuant to the Purchase Agreements.

“FINDER’S AGREEMENT” means that agreement dated January 24, 2008, between the Company and Bathgate Capital Partners LLC relating to the Offering.

“PROCEEDING” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“PROSPECTUS” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“REGISTRABLE SECURITIES” means: (i) the Warrant Shares and (ii) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event, or any conversion price adjustment with respect to the Warrant Shares.

“REGISTRATION STATEMENT” means the initial registration statement required to be filed in accordance with Section 2(a) and any additional registration statement(s) required to be filed under Section 2(b) and 2(c), including (in each case) the Prospectus, amendments and supplements to such registration statements or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference therein.

“RULE 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“RULE 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“RULE 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SECURITIES ACT” means the Securities Act of 1933, as amended.

“UNITS” means the units comprising shares of Common Stock and Warrants issued in the Offering.

“WARRANTS” means the Common Stock purchase warrants issued or issuable to the Investors as part of the Units and the Finder’s Warrants issued pursuant to the Finder’s Agreement.

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“WARRANT SHARES” means the shares of Common Stock issued or issuable upon exercise of the Warrants and the Additional Warrants.

“ILLINOIS COURTS” means the state and federal courts sitting in the City of Chicago, Illinois.

     2. Registration.

     (a) As soon as possible after the Final Closing of the Offering, but not later than each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all Registrable Securities not already covered by an existing and effective Registration Statement, for an offering to be made on a continuous basis pursuant to Rule 415, on Form SB-2 (or on such other form appropriate for such purpose). Such Registration Statement shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached hereto as Annex A. The Company shall cause such Registration Statement to be declared effective under the Securities Act as soon as possible after it is filed, and shall use its reasonable best efforts to keep the Registration Statement continuously effective under the Securities Act until the date which is the earlier of (i) four years after its Effective Date, (ii) such time as all of the Registrable Securities covered by such Registration Statement have been publicly sold by the Holders, or (iii) such time as all of the Registrable Securities covered by such Registration Statement may be sold by the Holders pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the affected Holders (the “EFFECTIVENESS PERIOD”).

     (b) Promptly following any date on which the Company becomes eligible to use a registration statement on Form S-3 to register the Registrable Securities for resale, the Company shall file a registration statement on Form S-3 covering the Registrable Securities (or a post-effective amendment on Form S-3 to the then effective Registration Statement) and shall cause such Registration Statement to be declared effective as soon as possible thereafter. Such Registration Statement shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached hereto as Annex A. The Company shall cause such Registration Statement to be declared effective under the Securities Act as soon as possible and shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act during the entire Effectiveness Period.

     (c) If a Registration Statement is not filed on or prior to its Filing Date (if the Company files a Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) hereof, the Company shall not be deemed to have satisfied this clause (i)(such failure or breach being referred to as an “EVENT” and the date on which such Event occurs, being referred to as the “EVENT DATE”), and/or if the Company fails to use its reasonable best efforts to cause the

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Registration Statement to be declared effective as soon as possible after it is filed, then in addition to any other rights the Holders may have hereunder or under applicable law, the Company shall issue to the holders of the Registrable Securities, as liquidated damages and not as a penalty, warrants (“ADDITIONAL WARRANTS”). The number of Additional Warrants that shall be issued to a Holder is equivalent to two Additional Warrants for every four Warrants owned by such Holder. The Additional Warrants will have a per share exercise price equal to the lower of $2.00 per share. The Additional Warrants will be exercisable for three years, and will be in the same form as the warrants issued as part of the Units in the Offering.

     (d) Each Holder agrees to furnish to the Company a completed Questionnaire in the form attached to this Agreement as Annex B (a “SELLING HOLDER QUESTIONNAIRE”). The Company shall not be required to include the Registrable Securities of a Holder in a Registration Statement and shall not be required to issue any Additional Warrants or other damages under Section 2(d) to any Holder who fails to furnish to the Company a fully completed Selling Holder Questionnaire at least two Trading Days prior to the Filing Date (subject to the requirements set forth in Section 3(a)).

     3. Registration Procedures. In connection with the Company’s registration obligations hereunder, the Company shall:

     (a) Not less than four Trading Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto, the Company shall furnish to each Holder copies of the “Selling Stockholders” section of such document, the “Plan of Distribution” and any risk factor contained in such document that addresses specifically this transaction or the Selling Stockholders, as proposed to be filed which documents will be subject to the review of such Holder. The Company shall not file a Registration Statement, any Prospectus or any amendments or supplements thereto in which the “Selling Stockholder” section thereof differs from the disclosure received from a Holder in its Selling Holder Questionnaire (as amended or supplemented).

     (b) Prepare and file with the Commission such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Securities for its Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible provide the Holders true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that would not result in the disclosure to the Holders of material and non-public information

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concerning the Company; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the Registration Statements and the disposition of all Registrable Securities covered by each Registration Statement.

     (c) Notify the Holders as promptly as reasonably possible (and, in the case of (i)(A) below, not less than three Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders that pertain to the Holders as a Selling Stockholder or to the Plan of Distribution, but not information which the Company believes would constitute material and non-public information); and (C) with respect to each Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus, as the case may be, 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 light of the circumstances under which they were made, not misleading.

     (d) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

     (e) Furnish to each Holder, without charge, at least one conformed copy of each Registration Statement and each amendment thereto and all exhibits to the extent requested by such Person (including those previously furnished) promptly after the filing of such documents with the Commission.

     (f) Promptly deliver to each Holder, without charge, as many copies of each Prospectus or Prospectuses (including each form of prospectus) and each amendment or

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supplement thereto as such Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.

     (g) Prior to any public offering of Registrable Securities, to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of all jurisdictions within the United States, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statements.

     (h) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statements, which certificates shall be free, to the extent permitted by the Subscription Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request.

     (i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the affected Registration Statements or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, no Registration Statement nor any Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

     4. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement.

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In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.

     5. Indemnification.

     (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents, investment advisors, partners, members and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation and reasonable attorneys’ fees) and expenses (collectively, “LOSSES”), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected. The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

     (b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law,

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from and against all Losses, as incurred, arising solely out of or based solely upon: (x) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent that, (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

     (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “INDEMNIFIED PARTY”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “INDEMNIFYING PARTY”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

     An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely

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to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld), effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

     All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

     (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each 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, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party 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 of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

     The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this

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Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

     The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

     6. Miscellaneous.

     (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

     (b) No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in a Registration Statement other than the Registrable Securities.

     (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.

     (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the “ADVICE”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.

     (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration

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statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights.

     (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this Section 6(f), may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of no less than a majority in interest of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates.

     (g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:

If to the Company:

Cytocore, Inc.
414 North Orleans Street, Suite 502
Chicago, Illinois 60610
Attention: Robert F. McCullough Jr., CEO, CFO
Fax: 312-222-9580

If to an Investor: To the address set forth under such Investor’s name on the signature pages hereto.

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If to any other Person who is then the registered Holder:

To the address of such Holder as it appears in the stock transfer books of the Company or such other address as may be designated in writing hereafter, in the same manner, by such Person.

     (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Subscription Agreement.

     (i) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

     (j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Illinois, without regard to the principles of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) will be commenced in the Illinois Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the Illinois Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any Illinois Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its

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attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

     (k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

     (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

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

     (n) Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under this Agreement are several and not joint with the obligations of each other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement or any other Transaction Document. Each Investor acknowledges that no other Investor will be acting as agent of such Investor in enforcing its rights under this Agreement. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose. The Company acknowledges that each of the Investors has been provided with the same Registration Rights Agreement for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES TO FOLLOW]

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

CYTOCORE, INC.
By:
	Name:	Robert F. McCullough Jr.
	Title:	CEO & CFO

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES OF INVESTORS TO FOLLOW]

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

If Investor is an Individual:
(Print Name)
(Signature)
If Investor is an Entity:
(Name of Entity)
By:
	(Signature)
	(Print name of signer)
	Title:

ADDRESS FOR NOTICE

c/o:

Street:

City/State/Zip:

Attention:

Tel:

Fax:

Email:

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Annex A

Plan of Distribution

The Selling Stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares:

• ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;

• block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• privately negotiated transactions;

• to cover short sales made after the date that this Registration Statement is declared effective by the Commission;

• broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

• a combination of any such methods of sale; and

• any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. upon the Company being notified in writing by a Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a

broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such Selling Stockholder’s business and, at the time of its purchase of such securities such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

The Company has advised each Selling Stockholder that it may not use shares registered on this Registration Statement to cover short sales of Common Stock made prior to the date on which this Registration Statement shall have been declared effective by the Commission. If a Selling Stockholder uses this prospectus for any sale of the Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective shares under this Registration Statement.

The Company is required to pay all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

A-2

Annex B

CYTOCORE, INC.

SELLING SECURITYHOLDER QUESTIONNAIRE

The undersigned beneficial owner of common stock (the “COMMON STOCK”) of Cytocore, Inc. (the “COMPANY”) understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “COMMISSION”) a Registration Statement for the registration and resale of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement, dated as of ___, 2008 (the “REGISTRATION RIGHTS AGREEMENT”), among the Company and the Investors named therein. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

QUESTIONNAIRE

1. NAME.

(a) Full Legal Name of Selling Securityholder

(b) Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held:

(c) Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire):

2. ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

Telephone:

Fax:

Contact Person:

3. BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

Type and Principal Amount of Registrable Securities beneficially owned:

4.	BROKER-DEALER STATUS:
	(a) Are you a broker-dealer?
	Yes o No o

Note: If yes, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

     (b) Are you an affiliate of a broker-dealer?

     Yes o No o

     (c) If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

     Yes o No o

Note: If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

     5. BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE SELLING SECURITYHOLDER.

Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 3.

B-2

Type and Amount of Other Securities beneficially owned by the Selling Securityholder:

6. RELATIONSHIPS WITH THE COMPANY:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof and prior to the Effective Date for the Registration Statement.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 6 and the inclusion of such information in the Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus.

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:	Beneficial Owner:
	By:
			Signature
		Title:

B-3

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

[COMPANY’S ATTORNEY]

B-4

EX-4.23

Exhibit 4.23

THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION, UNLESS THE HOLDER HEREOF PROVIDES THE COMPANY WITH AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT THE PROPOSED SALE OR TRANSFER IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS.

WARRANT TO PURCHASE
SHARES OF
COMMON STOCK

Void after ___, 2011

     THIS IS TO CERTIFY that, as of this ______ day of ____________, 2008, for value received and subject to the provisions hereinafter set forth, ___________________________ (the “Purchaser”), is entitled to purchase from Cytocore, Inc., a Delaware corporation (the “Company”), at any time from the date hereof to and including ___, 2011 (the “Expiration Date”), at a price initially equal to Two Dollars ($2.00) per share (the “Warrant Calculation Price”), __________________  (_____) (the “Warrant Number”) shares of the Common Stock of the Company (the “Stock”).

     The aggregate price for the shares of Stock purchasable hereunder shall be equal to the initial Warrant Calculation Price multiplied by the number of shares initially purchasable hereunder. Such aggregate price is not subject to adjustment and is herein sometimes referred to as the “aggregate Warrant Price.” The Warrant Calculation Price per share is, however, subject to adjustment as hereinafter provided (such price, or such price as last adjusted, as the case may be, being herein referred to as the “Per Share Warrant Price”). The Warrant Number is likewise subject to adjustment as hereinafter provided.

     1. Exercise of Warrant. Subject to the conditions hereinafter set forth, this Warrant may be exercised in whole at any time, or in part from time to time, by the holder hereof, by the surrender of this Warrant (with the subscription form at the end hereof duly executed) at the principal office of the Company in Chicago, Illinois, or at such other office as the Company may designate by written notice to the holder hereof within the above-mentioned period and, at the election of the holder, by paying to the Company the Aggregate Warrant Price (or the proportionate part thereof if exercised in part) for the shares so purchased in current funds, which payment shall be made in cash or by certified or official bank check.

     If this Warrant is exercised in respect of fewer than all of the shares of Stock at the time purchasable hereunder, the holder hereof shall be entitled to receive a new Warrant covering the number of shares in respect of which this Warrant shall not have been exercised and setting forth the Aggregate Warrant Price applicable to such shares. Notwithstanding anything to the contrary set forth herein, this Warrant or any new Warrant issued as the result of a partial exercise hereof and all rights and options hereunder or thereunder shall expire and shall be wholly null and void

to the extent this Warrant or such new warrant is not exercised before it expires at the close of business on the Expiration Date.

     2. Reservation of Stock. The Company covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and in reserve, a sufficient number of shares of its Stock to provide for the exercise of the rights represented by this Warrant.

     3. Protection Against Dilution. Subject and pursuant to the provisions of this Section 3, the Warrant Price and the Warrant Calculation Number shall be subject to adjustment from time to time as set forth hereinafter.

          (a) If the Company shall, at any time or from time to time while this Warrant is outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then the Warrant Calculation Number and the Warrant Price in effect immediately prior to the date upon which such change shall become effective, shall be adjusted by the Company so that the Warrantholder thereafter exercising the Warrant shall be entitled to receive the number of shares of Common Stock or other capital stock which the Warrantholder would have received if the Warrant had been exercised immediately prior to such event upon payment of a Warrant Price that has been adjusted to reflect a fair allocation of the economics of such event to the Warrantholder. Such adjustments shall be made successively whenever any event listed above shall occur.

          (b) If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation

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purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the Warrantholder, at the last address of the Warrantholder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Warrantholder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions.

          (c) In case the Company shall fix a payment date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated earnings or earned surplus or dividends or distributions referred to in Section 8(a)), or subscription rights or warrants, the Warrant Price to be in effect after such payment date shall be determined by multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the Market Price (as defined below) per share of Common Stock immediately prior to such payment date, less the fair market value (as determined by the Company’s Board of Directors in good faith) of said assets or evidences of indebtedness so distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Market Price per share of Common Stock immediately prior to such payment date. “Market Price” as of a particular date (the “Valuation Date”) shall mean the following: (a) if the Common Stock is then listed on a national stock exchange, the closing sale price of one share of Common Stock on such exchange on the last trading day prior to the Valuation Date; (b) if the Common Stock is then quoted on The Nasdaq Stock Market, Inc. (“Nasdaq”), the National Association of Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin Board”) or such similar exchange or association, the closing sale price of one share of Common Stock on Nasdaq, the Bulletin Board or such other exchange or association on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low asked price quoted thereon on the last trading day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a national stock exchange or quoted on Nasdaq, the Bulletin Board or such other exchange or association, the fair market value of one share of Common Stock as of the Valuation Date, shall be determined in good faith by the Board of Directors of the Company and the Warrantholder. If the Common Stock is not then listed on a national securities exchange, the Bulletin Board or such other exchange or association, the Board of Directors of the Company shall respond promptly, in writing, to an inquiry by the Warrantholder prior to the exercise hereunder as to the fair market value of a share of Common Stock as determined by the Board of Directors of the Company. In the event that the Board of Directors of the Company and the Warrantholder are unable to agree upon the fair market value in respect of subpart (c) hereof, the Company and the Warrantholder shall jointly select an appraiser, who is experienced in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne equally by the Company and the Warrantholder. Such adjustment shall be made successively whenever such a payment date is fixed.

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          (d) An adjustment to the Warrant Price shall become effective immediately after the payment date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment.

          (e) In the event that, as a result of an adjustment made pursuant to this Section 3, the Warrantholder shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Warrant.

     4. Ownership Cap and Certain Exercise Restrictions. (a) Notwithstanding anything to the contrary set forth in this Warrant, at no time may a Holder of this Warrant exercise this Warrant if the number of shares of Common Stock to be issued pursuant to such exercise would exceed, when aggregated with all other shares of Common Stock owned by such Holder at such time, the number of shares of Common Stock which would result in such Holder owning more than 4.999% of all of the Common Stock outstanding at such time; provided, however, that upon a holder of this Warrant providing the Company with sixty-one (61) days notice (pursuant to Section 16 hereof) (the “Waiver Notice”) that such Holder would like to waive this Section 4 with regard to any or all shares of Common Stock issuable upon exercise of this Warrant (and upon consent of the Company, which will not be unreasonably withheld), this Section 4 will be of no force or effect with regard to all or a portion of the Warrant referenced in the Waiver Notice; provided, further, that this provision shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of this Warrant.

     (b) The Holder may not exercise the Warrant hereunder to the extent such exercise would result in the Holder beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) in excess of 9.999% of the then issued and outstanding shares of Common Stock, including shares issuable upon exercise of the Warrant held by the Holder after application of this Section; provided, however, that upon a holder of this Warrant providing the Issuer with a Waiver Notice that such holder would like to waive this Section 4.13 with regard to any or all shares of Common Stock issuable upon exercise of this Warrant, this Section 4.13 shall be of no force or effect with regard to those shares of Warrant Stock referenced in the Waiver Notice; provided, further, that this provision shall be of no further force or effect during the sixty-one (61) days immediately preceding the expiration of the term of this Warrant.

     5. Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant but in any case where the holder hereof would, except for the provisions of this paragraph, be entitled under the terms hereof to receive a fractional share upon the complete exercise of this Warrant, the Company shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the excess of the Fair Market Value of such fractional share over the proportional part of the Per Share Warrant Price represented by such fractional share.

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     6. Fully Paid Stock; Taxes. The Company covenants and agrees that the shares of stock represented by each and every certificate for its Stock to be delivered on any exercise of this Warrant shall, at the time of such delivery, be duly authorized, validly issued and outstanding and be fully paid and nonassessable. The Company further covenants and agrees that it will pay when due and payable any and all federal and state taxes, other than taxes on income, which may be payable in respect of this Warrant or any Stock or certificates therefor upon the exercise of the rights herein provided for pursuant to the provisions hereof. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the transfer and delivery of stock certificates in the name other than that of the holder of the Warrant converted, and any such tax shall be paid by such holder at the time of presentation.

     7. Closing of Transfer Books. The holder of this Warrant shall continue to have the right to exercise this Warrant even during a period when the stock transfer books of the Company for its Stock are closed. The Company shall not be required, however, to deliver certificates of its Stock upon such exercise while such books are duly closed for any purpose, but the Company may postpone the delivery of the certificates for such Stock until the opening of such books, and they shall, in such case, be delivered forthwith upon the opening thereof, or as soon as practicable thereafter.

     8. Redemption

     8.1 Right to Redeem. The Company may, at its option, redeem the Warrants in whole or in part on a pro rata basis for a redemption price of $.05 per Warrant (the “Redemption Price”) on 15 days prior written notice to the Warrant Holders. The right to redeem the Warrants may be exercised by the Company only in the event (i) the average of the closing sale prices of the Company’s common stock is at or above $4.00 per share for twenty (20) consecutive trading days preceding the date the Warrants are called, (ii) the Warrant Securities can be resold pursuant to an effective registration statement under the Act, (iii) the expiration of the 15 days notice period is within the Exercise Period. In the event the Company exercises its right to redeem the Warrants, the Expiration Date will be deemed to be, and the Warrants will be exercisable until the close of business on, the date fixed for redemption in such notice (the “Redemption Date”). If any Warrant called for redemption is not exercised by such time, it will cease to be exercisable and the Warrant Holder thereof will be entitled only to the Redemption Price.

     8.2 Termination of Rights. From and after the Redemption Date, all rights of the holders of record of redeemed Warrants (except the right to receive the Redemption Price) shall terminate.

     8.3 Payment of Redemption Price. The Company shall pay to the holders of record of redeemed Warrants all amounts to which the holders of record of such redeemed Warrants who shall have surrendered their Warrants are entitled.

     9. Restrictions on Transferability of Warrants and Shares; Compliance with Securities Act; Exchange, Assignment or Loss of Warrant. This Warrant and the Stock

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issued upon the exercise hereof, and any security into which such Stock may be convertible (“Underlying Stock”) shall not be transferable except upon the conditions hereinafter specified, which conditions are intended to insure compliance with the provisions of the Securities Act of 1933, as amended, or any similar Federal statute at the time in effect (the “Securities Act”) in respect of the transfer of any Warrant or any such Stock or any security into which such Stock may be convertible.

          9.1 Assignments Generally. Except as may otherwise be expressly provided herein, this Warrant is exchangeable, without expense, at the option of the holder, upon compliance with the express provisions of this Section 9 and presentation and surrender of the Warrant to the Company, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Stock purchasable hereunder. Any assignment shall be made by surrender of this Warrant to the Company with the Form of Assignment annexed hereto duly executed and funds sufficient to pay any transfer tax. Upon compliance with the express provisions of this Section 9, the Company shall, without charge, cause to be executed and delivered a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants that carry the same rights upon presentation hereof to the Company together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the holder hereof.

          9.2 Notice of Proposed Transfer; Opinion. The holder of each Warrant or any Underlying Stock that is not the subject of a registration statement effective under the Securities Act (“Restricted Stock”), by acceptance thereof, agrees to give prior written notice to the Company of such holder’s intention to transfer such Warrant or the Restricted Stock (as hereinafter defined) relating thereto or such Restricted Stock (or any portion thereof), describing briefly the manner and circumstances of the proposed transfer, including the identity of the proposed transferee and the consideration to be paid thereby. Promptly after receiving such written notice, the Company shall present copies thereof to Company counsel and, if required by the Company, to counsel designated by such holder. If in the opinion of each such counsel the proposed transfer may be effected without registration or qualification under any Federal or State law of such Warrant or the Underlying Shares or such Restricted Stock, the Company, as promptly as practicable, shall notify such holder of such opinion and of the terms and conditions, if any, to be observed, whereupon such holder shall be entitled to transfer such Warrant or such Restricted Stock, all in accordance with the terms of the notice delivered to such holder by the Company.

          If in the opinion of either of such counsel (such opinion to state the basis of the legal conclusions reached therein) the proposed transfer described in the written notice given pursuant to this subparagraph may not be effected without such registration or qualification or without compliance with the conditions of an exemptive regulation of the Commission, the Company shall promptly notify such holder and thereafter such holder shall not be entitled to effect such transfer until receipt of a subsequent notice from the Company pursuant to the immediately preceding sentence or until such registration or qualification or filing has become effective. All fees and expenses of the Company’s counsel shall be borne by the Company and

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the fees of the counsel, if any, designated by any holder of this Warrant or Restricted Stock shall be borne by such holder.

          Notwithstanding anything to the contrary set forth herein, no opinion of counsel shall be required in the case of transfers to affiliates of the holder of this Warrant or of the Underlying Stock.

          9.3. Certain Assignments Following Registration. Notwithstanding anything to the contrary contained herein, if the Company has registered the Underlying Stock pursuant to a Registration Statement which has been declared effective by the Securities and Exchange Commission (“SEC”) and, thereafter, the holder purports to assigns all or a portion of the Underlying Stock to any other person, the assignee shall have the right to cause the Registration Statement to be amended or the prospectus related thereto to be supplemented, in either case to name such assignee as a selling stockholder, provided that (i) the use of a post-effective amendment or a supplement to the prospectus is permitted by applicable law for such purpose, and (ii) all costs and expenses to the Company, including without limitation legal and accounting expenses, incurred to so amend such Registration Statement or supplement the Prospectus shall be paid by the assignee requesting such amendment (or shared on a pro rata basis to the extent more than one assignee requests such amendment).

          9.4. Restrictive Legends. Each Warrant shall bear on the face thereof a legend substantially in the form of the notice endorsed on the first page of this Warrant.

          Each certificate for shares of Underlying Stock initially issued upon the exercise of any Warrant and each certificate for shares of Underlying Stock issued to a subsequent transferee of such certificate shall, unless otherwise permitted by the provisions of this Section 9 bear on the face thereof a legend reading substantially as follows:

THE TRANSFER, SALE, ASSIGNMENT, PLEDGE AND ENCUMBRANCE OF OTHER DISPOSITION OF THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE WARRANT UNDER WHICH THESE SHARES WERE ISSUED AND WHICH TERMS CONTINUE IN EFFECT FOLLOWING THE EXERCISE THEREOF. A COPY OF THE WARRANT IS ON FILE IN THE OFFICE OF THE SECRETARY OF THE COMPANY. NO SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE EFFECTED EXCEPT PURSUANT TO THE TERMS OF THE WARRANT.

          9.5 Removal of Legend. In the event that the Company shall receive an opinion of its counsel or counsel of the holder, which opinion is reasonably acceptable to it, that, in the opinion of such counsel, such legend is not, or is no longer, necessary or required (including, without limitation, because of the availability of the exemption afforded by Rule 144 of the General Rules and Regulations of the Securities and Exchange Commission), the Company shall, or shall instruct its transfer agents and registrars to, remove such legend from the

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certificates evidencing the Restricted Stock or issue new certificates without such legend in lieu thereof.

     10. Partial Exercise and Partial Assignment. If this Warrant be exercised in part only, the holder hereof shall be entitled to receive a new Warrant covering the number of shares in respect of which this Warrant shall not have been exercised as provided in paragraph 1 hereof. If this Warrant is partially assigned, this Warrant shall be surrendered at the principal office of the Company (with the partial assignment form at the end hereof duly executed), and thereupon a new Warrant shall be issued to the holder hereof covering the number of shares not assigned and setting forth the proportionate Aggregate Warrant Price applicable to such shares not assigned. The assignee of such partial assignment of this Warrant shall also be entitled to receive a new Warrant covering the number of shares so assigned and setting forth the proportionate Aggregate Warrant Price applicable to such assigned shares.

     11. Registration Rights

          11.1 Definitions. As used in this Section 11, the following terms shall have the meanings set forth below:

          (a) The terms “register,” “registered” and “registration” shall refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Act, and the declaration or ordering of the effectiveness of such registration statement or document.

          (b) The term “Registrable Securities” shall mean together in the aggregate: (A) the Underlying Stock issued or issuable upon exercise of this Warrant and (B) the Stock held by or issuable upon exercise of any warrant or conversion of convertible security to any other persons with similar registration rights as provided in this Warrant.

          (c) The term “Holder” means any person owning of record Registrable Securities.

          11.2 Piggy-back Registration Rights. If (but without any obligation to do so) at any time prior to the date one (1) year after the Purchaser has fully exercised this Warrant, the Company proposes to register any of its securities under the Act in connection with the public offering of such securities solely for cash (other than a registration on Form S-4, Form S-8 or any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities and a registration statement relating to a PIPE (private investment public equity) or similar transaction), the Company shall, each such time, promptly give the Holder written notice of such registration. Upon the written request of the Holder given within twenty (20) days after receipt of such written notice from the Company, the Company shall, subject to the provisions of Section 11, cause to be registered under the Act all of the Registrable Securities that the Holder has requested to be registered; provided, however, that if the managing underwriter of any underwritten offering by the Company expresses reasonable written objection to the registration of all of the Registrable Securities, then the Registrable Securities which shall be registered in

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such offering on behalf of holders of Registrable Securities shall be reduced in the proportion equal to the average proportion of reduction as that of all such holders seeking registration in connection with such offering, subject to any rights granted to other holders of securities of the Company that are expressly by the terms of their agreements with the Company entitled to have priority registration rights. The inclusion of any of the Purchaser’s Registrable Securities in a registration statement filed by the Company and declared effective by the SEC shall be deemed to be the exercise by such Purchaser of the piggy-back registration rights granted herein to such Purchaser except as to such Registrable Securities as were not registered as a result of the immediately preceding sentence.

     11.3 Obligations of the Company. Whenever required hereunder to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

          (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and act diligently to cause such registration statement to become effective as promptly as practicable and maintain the effectiveness of the registration statement (i) in the case of firm commitment underwritten public offering, until each underwriter has completed the distribution of all of the securities purchased by it, and (ii) in the case of any other offering, 180 days after the effective date thereof, except that in the case of registrations on Form S-3 or its equivalent, those registration statements shall in any event be kept effective until at least one (1) year after the Purchaser has fully exercised this Warrant.

          (b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement.

          (c) Furnish to the Purchasers such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

          (d) Use its best efforts to register and qualify the securities covered by such registration statement under the securities laws of such jurisdictions as shall be reasonably requested by the Purchasers for the distribution of the securities covered by the registration statement, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such jurisdiction.

          (e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement with terms generally satisfactory to the managing underwriter of such offering.

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          (f) Notify the Purchasers, promptly after the Company shall have received notice thereof, of the time when the registration statement becomes effective or any supplement to any prospectus forming a part of the registration statement has been filed.

          (g) Notify the Purchasers of any stop order suspending the effectiveness of the registration statement and use its reasonable best efforts to remove such stop order.

          11.4 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant hereto that the Purchaser, having chosen to have its Registrable Securities included for registration, shall furnish to the Company such information regarding the Purchaser, its Registrable Securities and the intended method of disposition of such securities as shall be required to effect the registration thereof. The Purchaser shall be required to represent to the Company that all such information that is given is complete and accurate in all material respects. The Purchaser shall deliver to the Company a statement in writing from the beneficial owners of such securities that such beneficial owners bona fide intend to sell, transfer or otherwise dispose of such securities.

          11.5 Expenses.

          (a) Registration Expenses. All expenses incurred by the Company in complying with the terms of Sections 11.2 and 11.3 hereof, including without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, “Blue Sky” fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company) shall be borne by the Company.

          (b) Selling Expenses. All underwriting discounts, underwriters’ expense allowance, and selling commissions applicable to the sale of Registrable Securities by the Purchasers and all fees and disbursements of any special counsel (other than the Company’s regular counsel) shall be borne by the Purchasers of the Registrable Securities so registered pro rata on the basis of the number of Registrable Securities so registered.

          11.6 Underwriting Requirements; Lock-up Provisions. All Purchasers proposing to distribute their Registrable Securities through an underwriting in which the Company has proposed or is proposing to participate, shall (together with the Company and any other Purchasers distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for underwriting by the Company. If any Purchaser disapproves of the terms of any such underwriting, such Purchaser may elect to withdraw therefrom by written notice to the Company and the managing underwriter; such notice to be given by the Purchaser not later than two (2) business days following receipt of the Company’s notice (which shall include the terms of the underwriting agreement) to Purchaser that the Company will file a registration statement (not later than five (5) business days after such Company’s notice) which will include a preliminary prospectus which sets forth the number of shares of Common Stock to be offered for sale by

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selling stockholders. Any Registrable Securities excluded or withdrawn from such underwriting shall not be withdrawn from such registration except at the election of the Purchaser.

     Notwithstanding the foregoing, the Purchaser acknowledges that if the Company elects to distribute its shares in an underwritten public offering (whether or not any Registrable Securities held by Purchaser are included as a part of such offering), the underwriter may require as a condition of the offering that the Purchaser agree to a lock-up of the Registrable Securities for a period commencing 10 days prior to the anticipated commencement of the offering and continuing for up to 180 days after completion of the offering (the “Lock-up Provision”). The Purchaser agrees that, if requested by any such underwriter and not waived by the Company, such Purchaser will be bound by such Lock-up Provisions if required by such underwriter.

          11.7 Indemnification. In the event that any Registrable Securities are included in a registration statement pursuant hereto:

          (a) To the extent permitted by law, the Company will indemnify and hold harmless each Purchaser, the officers, directors, employees, agents, attorneys and partners of each Purchaser, any underwriter (as defined in the Act) for such Purchaser and each person, if any, who controls such Purchaser or underwriter within the meaning of the Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, a “Violation”): (A) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (B) 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; or (C) any violation or alleged violation by the Company of the Act, the Exchange Act, any applicable state securities law or any rule or regulation promulgated under the Act, the Exchange Act or any applicable state securities law; and the Company will reimburse the Purchaser for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Subsection 11.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Purchaser, underwriter or controlling person; 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 said registration statement, said preliminary prospectus, said final prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished by such Purchaser or any other Purchaser, for use in the preparation thereof; and further provided, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any untrue statement, alleged

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untrue statement, omission or alleged omission made in any preliminary prospectus but eliminated or remedied in the prospectus, such indemnity agreement shall not inure to the benefit of any underwriter or broker, if a copy of the final prospectus was not sent or given to such person with or prior to the confirmation of the sale of such securities to such person.

          (b) To the extent permitted by law, each selling Purchaser will indemnify and hold harmless the Company, its directors, its officers, its employees, its agents, its attorneys, any person who controls the Company within the meaning of the Act or the Exchange Act, any underwriter (within the meaning of the Act) for the Company and any person who controls such underwriter against any losses, claims, damages or liabilities joint or several) to which the Company or any such director, officer, employee, agent, attorney, controlling person, or underwriter or controlling person may become subject, under the Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by the Purchaser expressly for use in connection with such registration; and the Purchaser will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or controlling person thereof, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Subsection 11.7b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Purchaser, which consent shall not be unreasonably withheld, and further provided that Purchaser’s obligations under this subsection shall not exceed the amount invested by Purchaser in the securities that are included in the registration to which the violation relates.

          (c) Promptly after receipt by an indemnified party under this Section 11.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 11.7 notify the indemnifying party in writing of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to notify an indemnifying party within a reasonable time of the commencement of any such action, to the extent prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 11.7 but the omission so to notify the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section.

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          11.8 Reports under Exchange Act. The Company agrees to:

          (a) use its best efforts to make and keep public information available, as those terms are understood and defined in Rule 144, at all times; and

          (b) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the Exchange Act.

          11.9 Purchaser’s Acceptance of Obligations. Acceptance of this Warrant by its Purchaser(s) shall be deemed to constitute the unqualified acceptance by the Purchaser of all of the terms and conditions set forth herein.

          11.10 Registration Rights Agreement. The provisions of this Section 11 are in addition to the rights provided the Holder described in the Registration Rights Agreement entered into between the Purchaser and the Company concurrently with the issuance of this Warrant.

     12. Lost, Stolen Warrants, etc. In case any Warrant shall be mutilated, stolen or destroyed, the Company may issue a new Warrant of like date, tenor and denomination and deliver the same in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or in lieu of any Warrant lost, stolen or destroyed, upon receipt of evidence satisfactory to the Company of the loss, theft or destruction of such Warrant, and upon receipt of indemnity satisfactory to the Company.

     13. Warrant Holder Not Shareholder. This Warrant does not confer upon the holder hereof any right to vote or to consent or to receive notice as a shareholder of the Company, as such, in respect of any matters whatsoever, or any other rights or liabilities as a shareholder, prior to the exercise hereof as hereinbefore provided.

     14. Severability. Should any part of this Warrant for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in force and effect as if this Warrant had been executed with the invalid portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed and accepted the remaining portion of this Warrant without including therein any such part, parts or portion which may, for any reason, be hereafter declared invalid.

     15. Notice. All notices and other communications required or permitted to be given under any Agreement shall be deemed given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, overnight delivery or confirmed facsimile transmission to the parties at the following address or fax number:

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          To the Company at:

          Cytocore, Inc.
          414 North Orleans Street, Suite 502
          Chicago, Illinois 60610
          Attention: Chief Financial Officer
          Facsimile No.: 312-222-9580

To the Purchaser at: The address set forth in the Subscription Agreement under which the Purchaser acquired, among other things, this Warrant.

or, as to either party or any subsequent holder of this Warrant, to such other address and/or facsimile number as such party designates by written notice to the other party or parties.

     16. Miscellaneous.

          (a) This Warrant shall be governed by, construed and enforced in accordance with the law of the State of Illinois, without regard to its conflict of laws principles.

          (b) The agreements which are contained herein shall survive the exercise of this Warrant to the extent applicable thereafter.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers as of the day and year first set forth above.

CYTOCORE, INC.
By
	Robert McCullough, CEO, CFO

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ASSIGNMENT

(Form of Assignment to be Executed if the Warrant Holder
Desires to Transfer Warrants Evidenced Hereby)

     FOR VALUE RECEIVED,                                                                                                                                               hereby sells, assigns and transfers to                                                                                                                                                                                                           .

(Please print name and address including zip code)

Please insert social security, federal
tax ID number or other identifying number:

                                                                                                                                                                                       Warrants represented by this Warrant Certificate and does hereby irrevocably constitute and appoint                                                                                                                             , Attorney, to transfer said Warrants on the books of the Company with full power of substitution.

Dated:
	Signature (Signature must conform in all respects to name of holder as specified on the face of this Warrant Certificate.)

SIGNATURE GUARANTEED:

Note: Any transfer or assignment of this Warrant Certificate is subject to compliance with the restrictions on transfer imposed under the Warrant Terms.

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EXERCISE

(Form of Exercise to be Executed if the Warrant Holder
Desires to Exercise Warrants Evidenced Hereby)

TO THE COMPANY:

     The undersigned hereby irrevocably elects to exercise                             Warrants represented by this Warrant Certificate and to purchase thereunder the full number of shares of Common Stock issuable upon exercise of said Warrants and enclose $          as the purchase price therefor, and requests that certificates for such shares shall be issued in the name of, and cash for any fractional shares shall be paid to,

Please insert Social Security Number or other
identifying number:

(Please print name and address, including zip code)

and, if said number of Warrants shall not be all the Warrants evidenced by this Warrant Certificate, that a new Warrant Certificate for the unexercised number of Warrants may be assigned under the form of Assignment appearing hereon.

Dated:	Signature:
		(Signature must conform in all respects to name of holder as specified on the face of this Warrant Certificate)

SIGNATURE GUARANTEED:

IMPORTANT: Signature guarantee must be made by a participant of STAMP or another signature guarantee program acceptable to the Securities and Exchange Commission, the Securities Transfer Association and the Transfer Agent of the Company or the Company.

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EX-10.40

Exhibit 10.40

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No. 012207-A

WARRANT TO PURCHASE SHARES OF COMMON STOCK

ISSUE DATE: January 22, 2007

     This certifies that Dr. Augusto Ocana, an individual resident of the State of New Jersey (the “Holder”), for value received, is entitled to purchase from CytoCore, Inc., a Delaware corporation with its principal business office located at 414 North Orleans Street, Suite 502, Chicago, Illinois 60610 (together with its successors and assigns, the “Company”), subject to the terms and conditions set forth below, at any time or from time to time on and after the Issue Date as set forth above and before 3:00 p.m. (Eastern Time) on January 22, 2010 (the “Expiration Date”), Five Hundred Thousand (500,000) shares of common stock, $.001 par value per share, of the Company (“Common Stock”), at a price per share of $0.20. The shares purchasable upon exercise of this Warrant, and the applicable purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and the “Purchase Price,” respectively.

     1. Exercise of the Warrant.

          (a) Exercise. The Holder may, at the Holder’s option, elect to exercise this Warrant, in whole or in part, at any time or from time to time on or after the Issue Date but prior to 3:00 p.m. (Eastern Time) on the Expiration Date, by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly executed by or on behalf of the Holder, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise. In no event shall any such exercise be for fewer than 10,000 Warrant Shares unless fewer than an aggregate of 10,000 Warrant Shares are then purchasable under all outstanding Warrants held by the Holder. Payment of the aggregate Purchase Price may be made in cash, certified or bank check, or wire transfer of immediately available funds.

          (b) Exercise Date and Status as Holder of Shares. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the

day on which this Warrant shall have been surrendered to the Company as provided in Subsection 1(a) above (the “Exercise Date”). At such time, the Holder shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.

          (c) Issuance of Certificates. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 10 business days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder:

               (i) a certificate or certificates for the number of full Warrant Shares to which the Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so exercised.

          (d) Warrant Shares. The Warrant Shares issued upon any such exercise of this Warrant shall be validly issued, fully paid and non-assessable.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issue Date (or, if this Warrant was issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date on which such original warrant was first issued) (either such date being referred to as the “Original Issue Date”) effect a subdivision of the outstanding Common Stock, the Purchase Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Purchase Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this Subsection 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in shares of Common Stock, then and in each such event the Purchase Price then in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Purchase Price then in effect by a fraction:

                    (1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

                    (2) the denominator of which shall be the total number of

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shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Purchase Price shall be adjusted pursuant to this Subsection 2(b) as of the time of actual payment of such dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is required to be made to the Purchase Price pursuant to Subsections 2(a) or 2(b), the number of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.

          (d) Adjustment for Reorganization. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 2(a) or 2(b)) (collectively, a “Reorganization”), then, following such Reorganization, the Holder shall receive upon exercise hereof the kind and amount of securities, cash or other property which the Holder would have been entitled to receive pursuant to such Reorganization if such exercise had taken place immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Purchase Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of this Warrant.

          (e) No Adjustments in Certain Cases. No adjustment in the number of Warrant Shares purchasable pursuant to this Warrant shall be required unless the adjustment would require an increase or decrease of at least one percent (1.0%) in the number of Warrant Shares then purchasable upon the exercise of this Warrant. Except as provided in this Section 2, no other adjustments in the number, kind or price of shares constituting Warrant Shares shall be made during the term, or upon the exercise, of this Warrant. Further, no adjustments shall be made pursuant to this Section 2 hereof in connection with the grant or exercise of presently authorized or outstanding options to purchase, or the issuance of shares of Common Stock under, the Company’s director or employee benefit, option and incentive plans.

          (f) Treasury Stock. For purposes of this Section 2, shares of Common Stock owned or held at any relevant time by, or for the account of, the Company, in its treasury or otherwise, shall not be deemed to be outstanding for purposes of the calculations and adjustments herein described.

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     3. Fractional Shares. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall pay in cash to the Holder an amount equal to such fraction multiplied by the fair market value per share of Common Stock, as determined by the Board of Directors in good faith.

     4. Investment Representations. The Holder represents and warrants to the Company as follows:

          (a) Investment. The Holder is acquiring this Warrant, and (if and when such Holder exercises this Warrant) will acquire the Warrant Shares, for such Holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Holder has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

          (b) Accredited Investor. The Holder is an “accredited investor” as defined in Rule 501(a) under the Act.

          (c) Experience. The Holder has made such inquiry concerning the Company and its business and personnel as the Holder has deemed appropriate; and the Holder has sufficient knowledge and experience in finance and business that the Holder is capable of evaluating the risks and merits of an investment in the Company.

     5. Restrictions on Transfer.

          (a) The Warrant Shares shall not be offered, sold or transferred unless either (i) they first shall have been registered under the Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel, satisfactory to the Company, to the effect that such offer, sale or transfer is exempt from the registration requirements of the Act and any applicable state securities laws.

          (b) Each Warrant and certificate representing Warrant Shares shall bear a legend substantially in the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such act and applicable state securities laws or an opinion of counsel reasonably satisfactory to the Company is obtained to the effect that such registration is not required.”

     The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144 under the Act.

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          (c) The Company will maintain a register containing the name and address of the Holder of this Warrant. The Holder may change the Holder’s address as shown on the warrant register by written notice to the Company requesting such change.

          (d) Except as provided herein, this Warrant and all rights hereunder are personal to the Holder, is exercisable only by the Holder, and no rights granted hereunder may be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise). Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Warrant or of such rights contrary to the provisions hereto, or upon the levy of any attachment or similar process upon this Warrant or such rights, this Warrant and such rights shall, at the election of the Company, become null and void. Notwithstanding the foregoing, in the event of the death of the Holder, this Warrant may be exercised by the estate of the Holder, or by any person or persons who acquired the right to exercise such Warrant by bequest or inheritance or by reason of the death of the Holder and, in such case, such person or persons shall be deemed the “Holder” or “Holders” hereunder.

     6. No Impairment; Adjustment of Par Value.

          (a) The Company will not, by amendment of its charter 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 Holder against impairment.

          (b) Before taking any action that would cause an adjustment reducing the Purchase Price per share below the then par value of the shares of Warrant Shares issuable upon exercise of the Warrant, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Warrant Shares at such adjusted price.

     7. Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or

          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

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then, and in each such case, the Company will send or cause to be sent to the Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

     8. Reservation of Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other securities, cash and/or property as from time to time shall be issuable upon the exercise of this Warrant.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Holder of this Warrant, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 5 hereof, issue and deliver to or upon the order of the Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of the Holder, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (or other securities, cash and/or property) then issuable upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the address last furnished to the Company in writing by the Holder. All notices and other communications from the Holder to the Company in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the Company at its principal office set forth above. If the Company should at any time change the location of its principal office to a place other than as set forth above, it shall give prompt written notice to the Holder and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. All such notices and communications shall be deemed delivered (a) three business days after being sent by certified or registered mail, return receipt requested, postage prepaid, or (b) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery.

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     11. No Rights as Stockholder; No Liability. No provision of this Warrant shall be construed as conferring upon the Holder hereof the right to vote, consent, receive dividends or receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matter whatsoever as a stockholder of the Company. In the absence of affirmative action by the Holder hereof to purchase shares of Common Stock, no provision hereof shall give rise to any liability of such Holder for the purchase price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

     12. Payment of Taxes. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of this Warrant or the shares of Common Stock comprising the Warrant Shares; provided, however, the Company shall not be required to pay any tax that may be payable in respect of any permitted transfer of this Warrant or Warrant Shares.

     13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision or any other term, condition or provision hereof.

     14. Section Headings. The section headings in this Warrant are for the convenience of the parties only and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties.

     15. Severability. If any provision of this Warrant shall be held invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Warrant and, to this end, the provisions hereof are severable.

     16. Assignment. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors and personal representatives.

     17. Governing Law. This Warrant will be governed by and construed in accordance with the internal laws of the State of Delaware (without reference to the conflicts of law provisions thereof).

     18. Signatures. This Warrant may be executed in one or more counterparts by facsimile signature.

(Signature appears on next page).

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     EFFECTIVE as of the Issue Date indicated above.

CYTOCORE, INC.  

By:  

Title:  

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EXHIBIT I

PURCHASE FORM

To:                     Dated:                    

     The undersigned, pursuant to the provisions set forth in the attached Warrant (No.      ), hereby elects to purchase                      shares of the Common Stock of CytoCore, Inc. by such Warrant.

     The undersigned herewith makes payment of the full Purchase Price for such shares at the price per share provided for in such Warrant. Such payment shall be in the aggregate amount of $                     in cash, certified or bank check, or wire transfer of immediately available funds.

Signature:  

Address:  

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EX-10.41

Exhibit 10.41

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No.21207-A

WARRANT TO PURCHASE SHARES OF COMMON STOCK

ISSUE DATE: February 12, 2007

     This certifies that Robert McCullough Jr., an individual resident of the State of California (or any valid transferee thereof, the “Holder”), for value received, is entitled to purchase from CytoCore, Inc., a Delaware corporation with its principal business office located at 414 North Orleans Street, Suite 502, Chicago, Illinois 60610 (together with its successors and assigns, the “Company”), subject to the terms and conditions set forth below, at any time or from time to time on and after the Issue Date as set forth above and before 3:00 p.m. (Eastern Daylight Time) on February 12, 2010 (the “Expiration Date”), Two Hundred and Fifty Thousand (250,000) shares of common stock, $.001 par value per share, of the Company (“Common Stock”), at a price of $0.26 per share. The shares purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and the “Purchase Price,” respectively.

     1. Exercise of the Warrant.

          (a) Exercise. The Holder may, at the Holder’s option, elect to exercise this Warrant, in whole or in part, at any time or from time to time on or after the Issue Date but prior to 3:00 p.m. (Eastern Daylight Time) on the Expiration Date, by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly executed by or on behalf of the Holder, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise. In no event shall any such exercise be for fewer than 10,000 Warrant Shares unless fewer than an aggregate of 10,000 Warrant Shares are then purchasable under all outstanding Warrants held by the Holder. Payment of the aggregate Purchase Price may be made in cash, certified or bank check, or wire transfer of immediately available funds.

          (b) Exercise Date and Status as Holder of Shares. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Subsection 1(a) above (the “Exercise Date”). At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in Subsection 1(c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.

          (c) Issuance of Certificates. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 10 business days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder, or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct:

               (i) a certificate or certificates for the number of full Warrant Shares to which the Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so exercised.

          (d) Warrant Shares. The Warrant Shares issued upon any such exercise of this Warrant shall be validly issued, fully paid and non-assessable.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issue Date (or, if this Warrant was issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date on which such original warrant was first issued) (either such date being referred to as the “Original Issue Date”) effect a subdivision of the outstanding Common Stock, the Purchase Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Purchase Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this Subsection 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in shares of Common Stock, then and in each such event the Purchase Price then in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Purchase Price then in effect by a fraction:

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               (1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

               (2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Purchase Price shall be adjusted pursuant to this Subsection 2(b) as of the time of actual payment of such dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is required to be made to the Purchase Price pursuant to Subsections 2(a) or 2(b), the number of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.

          (d) Adjustment for Reorganization. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 2(a) or 2(b)) (collectively, a “Reorganization”), then, following such Reorganization, the Holder shall receive upon exercise hereof the kind and amount of securities, cash or other property which the Holder would have been entitled to receive pursuant to such Reorganization if such exercise had taken place immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Purchase Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of this Warrant.

          (e) No Adjustments in Certain Cases. No adjustment in the number of Warrant Shares purchasable pursuant to this Warrant shall be required unless the adjustment would require an increase or decrease of at least one percent (1.0%) in the number of Warrant Shares then purchasable upon the exercise of this Warrant. Except as provided in this Section 2, no other adjustments in the number, kind or price of shares constituting Warrant Shares shall be made during the term, or upon the exercise, of this Warrant. Further, no adjustments shall be made pursuant to this Section 2 hereof in connection with the grant or exercise of presently authorized or outstanding options to purchase, or the issuance of shares of Common Stock under, the Company’s director or employee benefit, option and incentive plans.

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          (f) Treasury Stock. For purposes of this Section 2, shares of Common Stock owned or held at any relevant time by, or for the account of, the Company, in its treasury or otherwise, shall not be deemed to be outstanding for purposes of the calculations and adjustments herein described.

     3. Fractional Shares. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall pay in cash to the Holder an amount equal to such fraction multiplied by the fair market value per share of Common Stock, as determined by the Board of Directors in good faith.

     4. Investment Representations. The initial Holder represents and warrants to the Company as follows:

          (a) Investment. The Holder is acquiring this Warrant, and (if and when such Holder exercises this Warrant) will acquire the Warrant Shares, for such Holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Holder has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

          (b) Accredited Investor. The Holder is an “accredited investor” as defined in Rule 501(a) under the Act.

          (c) Experience. The Holder has made such inquiry concerning the Company and its business and personnel as the Holder has deemed appropriate; and the Holder has sufficient knowledge and experience in finance and business that the Holder is capable of evaluating the risks and merits of an investment in the Company.

     5. Transfers, etc.

          (a) This Warrant and the Warrant Shares shall not be offered, sold or transferred unless either (i) they first shall have been registered under the Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel, satisfactory to the Company, to the effect that such offer, sale or transfer is exempt from the registration requirements of the Act and any applicable state securities laws.

          (b) Each Warrant and certificate representing Warrant Shares shall bear a legend substantially in the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such act and applicable state securities laws or an opinion of counsel reasonably satisfactory to the Company is obtained to the effect that such registration is not required.”

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     The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144 under the Act.

          (c) The Company will maintain a register containing the name and address of the Holder of this Warrant. The Holder may change the Holder’s address as shown on the warrant register by written notice to the Company requesting such change.

          (d) Subject to the provisions of clauses (a) and (b) of this Section 5, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit II hereto) at the principal office of the Company (or, if another office or agency has been designated by the Company for such purpose, then at such other office or agency). Upon the presentation and surrender of such items to the Company, the Company shall execute and deliver to the transferee or transferees of this Warrant a new Warrant or Warrants, in the name of the transferee or transferees named in the assignment, and this Warrant shall at that time be canceled to the extent transferred.

     6. No Impairment; Adjustment of Par Value.

          (a) The Company will not, by amendment of its charter 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 Holder against impairment.

          (b) Before taking any action that would cause an adjustment reducing the Purchase Price per share below the then par value of the shares of Warrant Shares issuable upon exercise of the Warrant, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Warrant Shares at such adjusted price.

     7. Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or

          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

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then, and in each such case, the Company will send or cause to be sent to the Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

     8. Reservation of Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other securities, cash and/or property as from time to time shall be issuable upon the exercise of this Warrant.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Holder of this Warrant, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 5 hereof, issue and deliver to or upon the order of the Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of the Holder or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (or other securities, cash and/or property) then issuable upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the address last furnished to the Company in writing by the Holder. All notices and other communications from the Holder to the Company in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the Company at its principal office set forth above. If the Company should at any time change the location of its principal office to a place other than as set forth above, it shall give prompt written notice to the Holder and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. All such notices and communications shall be deemed delivered (a) three business days after being sent by certified or registered mail, return receipt requested, postage prepaid, or (b) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery.

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     11. No Rights as Stockholder; No Liability. No provision of this Warrant shall be construed as conferring upon the Holder hereof the right to vote, consent, receive dividends or receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matter whatsoever as a stockholder of the Company. In the absence of affirmative action by the Holder hereof to purchase shares of Common Stock, no provision hereof shall give rise to any liability of such Holder for the purchase price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

     12. Payment of Taxes. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of this Warrant or the shares of Common Stock comprising the Warrant Shares; provided, however, the Company shall not be required to pay any tax that may be payable in respect of any transfer of this Warrant or Warrant Shares.

     13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision or any other term, condition or provision hereof.

     14. Section Headings. The section headings in this Warrant are for the convenience of the parties only and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties.

     15. Severability. If any provision of this Warrant shall be held invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Warrant and, to this end, the provisions hereof are severable.

     16. Assignment. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.

     17. Governing Law. This Warrant will be governed by and construed in accordance with the internal laws of the State of Delaware (without reference to the conflicts of law provisions thereof).

     18. Signatures. This Warrant may be executed in one or more counterparts by facsimile signature.

(Signature appears on next page).

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     EFFECTIVE as of the Issue Date indicated above.

CYTOCORE, INC.
By:
	Title:

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EXHIBIT I

PURCHASE FORM

To:                                         Dated:                    

     The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby elects to purchase                      shares of the Common Stock of CytoCore, Inc. by such Warrant.

     The undersigned herewith makes payment of the full Purchase Price for such shares at the price per share provided for in such Warrant. Such payment shall be in the aggregate amount of $                     in cash, certified or bank check, or wire transfer of immediately available funds.

Signature:

Address:

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EXHIBIT II

ASSIGNMENT FORM

     FOR VALUE RECEIVED,                                                              hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. ___) with respect to the number of shares of Common Stock of CytoCore, Inc. covered thereby set forth below, unto:

Name of Assignee Address No. of Shares

Dated:                                          Signature:

Signature Guaranteed:

By:

The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17A under the Securities Exchange Act of 1934, as amended.

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EX-10.42

Exhibit 10.42

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No. ___

WARRANT TO PURCHASE SHARES OF COMMON STOCK

ISSUE DATE:                     , 200_

     This certifies that                     , an [individual resident of                     ] [a                       with a principal business address of                      ] (or any valid transferee thereof, the “Holder”), for value received, is entitled to purchase from CytoCore, Inc., a Delaware corporation with its principal business office located at 414 North Orleans Street, Suite 502, Chicago, Illinois 60610 (together with its successors and assigns, the “Company”), subject to the terms and conditions set forth below, at any time or from time to time on and after the Issue Date as set forth above and before 3:00 p.m. (Eastern Daylight Time) on                      (the “Expiration Date”),                      shares of common stock, $.001 par value per share, of the Company (“Common Stock”), at a price of $        per share. The shares purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and the “Purchase Price,” respectively.

     1. Exercise of the Warrant.

          (a) Exercise. The Holder may, at the Holder’s option, elect to exercise this Warrant, in whole or in part, at any time or from time to time on or after the Issue Date but prior to 3:00 p.m. (Eastern Daylight Time) on the Expiration Date, by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly executed by or on behalf of the Holder, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise. In no event shall any such exercise be for fewer than 10,000 Warrant Shares unless fewer than an aggregate of 10,000 Warrant Shares are then purchasable under all outstanding Warrants held by the Holder. Payment of the aggregate Purchase Price may be made in cash, certified or bank check, or wire transfer of immediately available funds.

          (b) Exercise Date and Status as Holder of Shares. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Subsection 1(a) above (the “Exercise Date”). At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in Subsection 1(c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.

          (c) Issuance of Certificates. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 10 business days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder, or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct:

               (i) a certificate or certificates for the number of full Warrant Shares to which the Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so exercised.

          (d) Warrant Shares. The Warrant Shares issued upon any such exercise of this Warrant shall be validly issued, fully paid and non-assessable.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issue Date (or, if this Warrant was issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date on which such original warrant was first issued) (either such date being referred to as the “Original Issue Date”) effect a subdivision of the outstanding Common Stock, the Purchase Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Purchase Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this Subsection 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in shares of Common Stock, then and in each such event the Purchase Price then in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Purchase Price then in effect by a fraction:

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                    (1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

                    (2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Purchase Price shall be adjusted pursuant to this Subsection 2(b) as of the time of actual payment of such dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is required to be made to the Purchase Price pursuant to Subsections 2(a) or 2(b), the number of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.

          (d) Adjustment for Reorganization. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 2(a) or 2(b)) (collectively, a “Reorganization”), then, following such Reorganization, the Holder shall receive upon exercise hereof the kind and amount of securities, cash or other property which the Holder would have been entitled to receive pursuant to such Reorganization if such exercise had taken place immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Purchase Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of this Warrant.

          (e) No Adjustments in Certain Cases. No adjustment in the number of Warrant Shares purchasable pursuant to this Warrant shall be required unless the adjustment would require an increase or decrease of at least one percent (1.0%) in the number of Warrant Shares then purchasable upon the exercise of this Warrant. Except as provided in this Section 2, no other adjustments in the number, kind or price of shares constituting Warrant Shares shall be made during the term, or upon the exercise, of this Warrant. Further, no adjustments shall be made pursuant to this Section 2 hereof in connection with the grant or exercise of presently authorized or outstanding options to purchase, or the issuance of shares of Common Stock under, the Company’s director or employee benefit, option and incentive plans.

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          (f) Treasury Stock. For purposes of this Section 2, shares of Common Stock owned or held at any relevant time by, or for the account of, the Company, in its treasury or otherwise, shall not be deemed to be outstanding for purposes of the calculations and adjustments herein described.

     3. Fractional Shares. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall pay in cash to the Holder an amount equal to such fraction multiplied by the fair market value per share of Common Stock, as determined by the Board of Directors in good faith.

     4. Investment Representations. The initial Holder represents and warrants to the Company as follows:

          (a) Investment. The Holder is acquiring this Warrant, and (if and when such Holder exercises this Warrant) will acquire the Warrant Shares, for such Holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Holder has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

          (b) Accredited Investor. The Holder is an “accredited investor” as defined in Rule 501(a) under the Act.

          (c) Experience. The Holder has made such inquiry concerning the Company and its business and personnel as the Holder has deemed appropriate; and the Holder has sufficient knowledge and experience in finance and business that the Holder is capable of evaluating the risks and merits of an investment in the Company.

     5. Transfers, etc.

          (a) This Warrant and the Warrant Shares shall not be offered, sold or transferred unless either (i) they first shall have been registered under the Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel, satisfactory to the Company, to the effect that such offer, sale or transfer is exempt from the registration requirements of the Act and any applicable state securities laws.

          (b) Each Warrant and certificate representing Warrant Shares shall bear a legend substantially in the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such act and applicable state securities laws or an opinion of counsel reasonably satisfactory to the Company is obtained to the effect that such registration is not required.”

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     The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144 under the Act.

          (c) The Company will maintain a register containing the name and address of the Holder of this Warrant. The Holder may change the Holder’s address as shown on the warrant register by written notice to the Company requesting such change.

          (d) Subject to the provisions of clauses (a) and (b) of this Section 5, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit II hereto) at the principal office of the Company (or, if another office or agency has been designated by the Company for such purpose, then at such other office or agency). Upon the presentation and surrender of such items to the Company, the Company shall execute and deliver to the transferee or transferees of this Warrant a new Warrant or Warrants, in the name of the transferee or transferees named in the assignment, and this Warrant shall at that time be canceled to the extent transferred.

     6. No Impairment; Adjustment of Par Value.

          (a) The Company will not, by amendment of its charter 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 Holder against impairment.

          (b) Before taking any action that would cause an adjustment reducing the Purchase Price per share below the then par value of the shares of Warrant Shares issuable upon exercise of the Warrant, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Warrant Shares at such adjusted price.

     7. Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or

          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

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then, and in each such case, the Company will send or cause to be sent to the Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

     8. Reservation of Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other securities, cash and/or property as from time to time shall be issuable upon the exercise of this Warrant.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Holder of this Warrant, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 5 hereof, issue and deliver to or upon the order of the Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of the Holder or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (or other securities, cash and/or property) then issuable upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the address last furnished to the Company in writing by the Holder. All notices and other communications from the Holder to the Company in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the Company at its principal office set forth above. If the Company should at any time change the location of its principal office to a place other than as set forth above, it shall give prompt written notice to the Holder and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. All such notices and communications shall be deemed delivered (a) three business days after being sent by certified or registered mail, return receipt requested, postage prepaid, or (b) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery.

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     11. No Rights as Stockholder; No Liability. No provision of this Warrant shall be construed as conferring upon the Holder hereof the right to vote, consent, receive dividends or receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matter whatsoever as a stockholder of the Company. In the absence of affirmative action by the Holder hereof to purchase shares of Common Stock, no provision hereof shall give rise to any liability of such Holder for the purchase price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

     12. Payment of Taxes. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of this Warrant or the shares of Common Stock comprising the Warrant Shares; provided, however, the Company shall not be required to pay any tax that may be payable in respect of any transfer of this Warrant or Warrant Shares.

     13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision or any other term, condition or provision hereof.

     14. Section Headings. The section headings in this Warrant are for the convenience of the parties only and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties.

     15. Severability. If any provision of this Warrant shall be held invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Warrant and, to this end, the provisions hereof are severable.

     16. Assignment. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.

     17. Governing Law. This Warrant will be governed by and construed in accordance with the internal laws of the State of Delaware (without reference to the conflicts of law provisions thereof).

     18. Signatures. This Warrant may be executed in one or more counterparts by facsimile signature.

(Signature appears on next page).

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     EFFECTIVE as of the Issue Date indicated above.

CYTOCORE, INC.
By:
	Title:

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EXHIBIT I

PURCHASE FORM

To:                                          Dated:                                         

     The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby elects to purchase                      shares of the Common Stock of CytoCore, Inc. by such Warrant.

     The undersigned herewith makes payment of the full Purchase Price for such shares at the price per share provided for in such Warrant. Such payment shall be in the aggregate amount of $                     in cash, certified or bank check, or wire transfer of immediately available funds.

Signature:  

Address:  

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EXHIBIT II

ASSIGNMENT FORM

     FOR VALUE RECEIVED,                                                              hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. ___) with respect to the number of shares of Common Stock of CytoCore, Inc. covered thereby set forth below, unto:

Name of Assignee Address No. of Shares

Dated: Signature:

Signature Guaranteed:
 

By:  

The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17A under the Securities Exchange Act of 1934, as amended.

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EX-10.43

Exhibit 10.43

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND ARE “RESTRICTED SECURITIES” AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

Warrant No. ___

WARRANT TO PURCHASE SHARES OF COMMON STOCK

ISSUE DATE:                     , 200_

     This certifies that                     , an [individual resident of                     ] [a                       with a principal business address of                      ] (or any valid transferee thereof, the “Holder”), for value received, is entitled to purchase from CytoCore, Inc., a Delaware corporation with its principal business office located at 414 North Orleans Street, Suite 502, Chicago, Illinois 60610 (together with its successors and assigns, the “Company”), subject to the terms and conditions set forth below, at any time or from time to time on and after the Issue Date as set forth above and before 3:00 p.m. (Eastern Daylight Time) on                      (the “Expiration Date”),                      shares of common stock, $.001 par value per share, of the Company (“Common Stock”), at a price of $        per share. The shares purchasable upon exercise of this Warrant, and the purchase price per share, each as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred to as the “Warrant Shares” and the “Purchase Price,” respectively.

     1. Exercise of the Warrant.

          (a) Exercise. The Holder may, at the Holder’s option, elect to exercise this Warrant, in whole or in part, at any time or from time to time on or after the Issue Date but prior to 3:00 p.m. (Eastern Daylight Time) on the Expiration Date, by surrendering this Warrant, with the purchase form appended hereto as Exhibit I duly executed by or on behalf of the Holder, at the principal office of the Company, or at such other office or agency as the Company may designate, accompanied by payment in full, in lawful money of the United States, of the Purchase Price payable in respect of the number of Warrant Shares purchased upon such exercise. In no event shall any such exercise be for fewer than 10,000 Warrant Shares unless fewer than an aggregate of 10,000 Warrant Shares are then purchasable under all outstanding Warrants held by the Holder. Payment of the aggregate Purchase Price may be made in cash, certified or bank check, or wire transfer of immediately available funds.

          (b) Exercise Date and Status as Holder of Shares. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Subsection 1(a) above (the “Exercise Date”). At such time, the person or persons in whose name or names any certificates for Warrant Shares shall be issuable upon such exercise as provided in Subsection 1(c) below shall be deemed to have become the holder or holders of record of the Warrant Shares represented by such certificates.

          (c) Issuance of Certificates. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 10 business days thereafter, the Company, at its expense, will cause to be issued in the name of, and delivered to, the Holder, or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct:

               (i) a certificate or certificates for the number of full Warrant Shares to which the Holder shall be entitled upon such exercise plus, in lieu of any fractional share to which the Holder would otherwise be entitled, cash in an amount determined pursuant to Section 3 hereof; and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of Warrant Shares equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of Warrant Shares for which this Warrant was so exercised.

          (d) Warrant Shares. The Warrant Shares issued upon any such exercise of this Warrant shall be validly issued, fully paid and non-assessable.

     2. Adjustments.

          (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the Issue Date (or, if this Warrant was issued upon partial exercise of, or in replacement of, another warrant of like tenor, then the date on which such original warrant was first issued) (either such date being referred to as the “Original Issue Date”) effect a subdivision of the outstanding Common Stock, the Purchase Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the Original Issue Date combine the outstanding shares of Common Stock, the Purchase Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this Subsection 2(a) shall become effective at the close of business on the date the subdivision or combination becomes effective.

          (b) Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in shares of Common Stock, then and in each such event the Purchase Price then in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Purchase Price then in effect by a fraction:

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                    (1) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

                    (2) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution;

provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Purchase Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Purchase Price shall be adjusted pursuant to this Subsection 2(b) as of the time of actual payment of such dividends or distributions.

          (c) Adjustment in Number of Warrant Shares. When any adjustment is required to be made to the Purchase Price pursuant to Subsections 2(a) or 2(b), the number of Warrant Shares purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Purchase Price in effect immediately prior to such adjustment, by (ii) the Purchase Price in effect immediately after such adjustment.

          (d) Adjustment for Reorganization. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 2(a) or 2(b)) (collectively, a “Reorganization”), then, following such Reorganization, the Holder shall receive upon exercise hereof the kind and amount of securities, cash or other property which the Holder would have been entitled to receive pursuant to such Reorganization if such exercise had taken place immediately prior to such Reorganization. In any such case, appropriate adjustment (as determined in good faith by the Board) shall be made in the application of the provisions set forth herein with respect to the rights and interests thereafter of the Holder, to the end that the provisions set forth in this Section 2 (including provisions with respect to changes in and other adjustments of the Purchase Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities, cash or other property thereafter deliverable upon the exercise of this Warrant.

          (e) No Adjustments in Certain Cases. No adjustment in the number of Warrant Shares purchasable pursuant to this Warrant shall be required unless the adjustment would require an increase or decrease of at least one percent (1.0%) in the number of Warrant Shares then purchasable upon the exercise of this Warrant. Except as provided in this Section 2, no other adjustments in the number, kind or price of shares constituting Warrant Shares shall be made during the term, or upon the exercise, of this Warrant. Further, no adjustments shall be made pursuant to this Section 2 hereof in connection with the grant or exercise of presently authorized or outstanding options to purchase, or the issuance of shares of Common Stock under, the Company’s director or employee benefit, option and incentive plans.

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          (f) Treasury Stock. For purposes of this Section 2, shares of Common Stock owned or held at any relevant time by, or for the account of, the Company, in its treasury or otherwise, shall not be deemed to be outstanding for purposes of the calculations and adjustments herein described.

     3. Fractional Shares. The Company shall not be required upon the exercise of this Warrant to issue any fractional shares, but shall pay in cash to the Holder an amount equal to such fraction multiplied by the fair market value per share of Common Stock, as determined by the Board of Directors in good faith.

     4. Investment Representations. The initial Holder represents and warrants to the Company as follows:

          (a) Investment. The Holder is acquiring this Warrant, and (if and when such Holder exercises this Warrant) will acquire the Warrant Shares, for such Holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same; and the Holder has no present or contemplated agreement, undertaking, arrangement, obligation, indebtedness or commitment providing for the disposition thereof.

          (b) Accredited Investor. The Holder is an “accredited investor” as defined in Rule 501(a) under the Act.

          (c) Experience. The Holder has made such inquiry concerning the Company and its business and personnel as the Holder has deemed appropriate; and the Holder has sufficient knowledge and experience in finance and business that the Holder is capable of evaluating the risks and merits of an investment in the Company.

     5. Transfers, etc.

          (a) This Warrant and the Warrant Shares shall not be offered, sold or transferred unless either (i) they first shall have been registered under the Act and any applicable state securities laws, or (ii) the Company first shall have been furnished with an opinion of legal counsel, satisfactory to the Company, to the effect that such offer, sale or transfer is exempt from the registration requirements of the Act and any applicable state securities laws.

          (b) Each Warrant and certificate representing Warrant Shares shall bear a legend substantially in the following form:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and may not be offered, sold or otherwise transferred, pledged or hypothecated unless and until such securities are registered under such act and applicable state securities laws or an opinion of counsel reasonably satisfactory to the Company is obtained to the effect that such registration is not required.”

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     The foregoing legend shall be removed from the certificates representing any Warrant Shares, at the request of the holder thereof, at such time as they become eligible for resale pursuant to Rule 144 under the Act.

          (c) The Company will maintain a register containing the name and address of the Holder of this Warrant. The Holder may change the Holder’s address as shown on the warrant register by written notice to the Company requesting such change.

          (d) Subject to the provisions of clauses (a) and (b) of this Section 5, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant with a properly executed assignment (in the form of Exhibit II hereto) at the principal office of the Company (or, if another office or agency has been designated by the Company for such purpose, then at such other office or agency). Upon the presentation and surrender of such items to the Company, the Company shall execute and deliver to the transferee or transferees of this Warrant a new Warrant or Warrants, in the name of the transferee or transferees named in the assignment, and this Warrant shall at that time be canceled to the extent transferred.

     6. No Impairment; Adjustment of Par Value.

          (a) The Company will not, by amendment of its charter 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 Holder against impairment.

          (b) Before taking any action that would cause an adjustment reducing the Purchase Price per share below the then par value of the shares of Warrant Shares issuable upon exercise of the Warrant, the Company will take any corporate action that may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Warrant Shares at such adjusted price.

     7. Record Date, etc. In the event:

          (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right; or

          (b) of any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity and its Common Stock is not converted into or exchanged for any other securities or property), or any transfer of all or substantially all of the assets of the Company; or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,

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then, and in each such case, the Company will send or cause to be sent to the Holder a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up. Such notice shall be sent at least 10 days prior to the record date or effective date for the event specified in such notice.

     8. Reservation of Stock. The Company will at all times reserve and keep available, solely for issuance and delivery upon the exercise of this Warrant, such number of Warrant Shares and other securities, cash and/or property as from time to time shall be issuable upon the exercise of this Warrant.

     9. Exchange or Replacement of Warrants.

          (a) Upon the surrender by the Holder of this Warrant, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 5 hereof, issue and deliver to or upon the order of the Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of the Holder or as the Holder (upon payment by the Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock (or other securities, cash and/or property) then issuable upon exercise of this Warrant.

          (b) Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     10. Notices. All notices and other communications from the Company to the Holder in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the address last furnished to the Company in writing by the Holder. All notices and other communications from the Holder to the Company in connection herewith shall be mailed by certified or registered mail, postage prepaid, or sent via a reputable nationwide overnight courier service guaranteeing next business day delivery, to the Company at its principal office set forth above. If the Company should at any time change the location of its principal office to a place other than as set forth above, it shall give prompt written notice to the Holder and thereafter all references in this Warrant to the location of its principal office at the particular time shall be as so specified in such notice. All such notices and communications shall be deemed delivered (a) three business days after being sent by certified or registered mail, return receipt requested, postage prepaid, or (b) one business day after being sent via a reputable nationwide overnight courier service guaranteeing next business day delivery.

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     11. No Rights as Stockholder; No Liability. No provision of this Warrant shall be construed as conferring upon the Holder hereof the right to vote, consent, receive dividends or receive notice as a stockholder in respect of meetings of stockholders for the election of directors of the Company or any other matter whatsoever as a stockholder of the Company. In the absence of affirmative action by the Holder hereof to purchase shares of Common Stock, no provision hereof shall give rise to any liability of such Holder for the purchase price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

     12. Payment of Taxes. The Company will pay all documentary stamp taxes, if any, attributable to the initial issuance of this Warrant or the shares of Common Stock comprising the Warrant Shares; provided, however, the Company shall not be required to pay any tax that may be payable in respect of any transfer of this Warrant or Warrant Shares.

     13. Amendment or Waiver. Any term of this Warrant may be amended or waived only by an instrument in writing signed by the party against which enforcement of the change or waiver is sought. No waivers of any term, condition or provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such term, condition or provision or any other term, condition or provision hereof.

     14. Section Headings. The section headings in this Warrant are for the convenience of the parties only and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties.

     15. Severability. If any provision of this Warrant shall be held invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Warrant and, to this end, the provisions hereof are severable.

     16. Assignment. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns.

     17. Governing Law. This Warrant will be governed by and construed in accordance with the internal laws of the State of Delaware (without reference to the conflicts of law provisions thereof).

     18. Signatures. This Warrant may be executed in one or more counterparts by facsimile signature.

(Signature appears on next page).

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     EFFECTIVE as of the Issue Date indicated above.

CYTOCORE, INC.
By:
	Title:

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EXHIBIT I

PURCHASE FORM

To:                                          Dated:                                         

     The undersigned, pursuant to the provisions set forth in the attached Warrant (No. ___), hereby elects to purchase                      shares of the Common Stock of CytoCore, Inc. by such Warrant.

     The undersigned herewith makes payment of the full Purchase Price for such shares at the price per share provided for in such Warrant. Such payment shall be in the aggregate amount of $                     in cash, certified or bank check, or wire transfer of immediately available funds.

Signature:  

Address:  

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EXHIBIT II

ASSIGNMENT FORM

     FOR VALUE RECEIVED,                                                              hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (No. ___) with respect to the number of shares of Common Stock of CytoCore, Inc. covered thereby set forth below, unto:

Name of Assignee Address No. of Shares

Dated: Signature:

Signature Guaranteed:
 

By:  

The signature should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program) pursuant to Rule 17A under the Securities Exchange Act of 1934, as amended.

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EX-10.45

Exhibit 10.45

DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (“Agreement”) effective between CytoCore, Inc. (“CytoCore”), a corporation organized and existing under the laws of the State of Delaware, United States of America whose principal address is 414 N. Orleans, Chicago 60601 and M.O.S.S. S.r.l. (“Distributor”), a company organized and existing under the laws of Italy whose principal address is Via all’Erno, 5 28040 Lesa (NO) — Italy. Distributor and CytoCore may sometimes be referred to herein individually as a “party” or collectively as the “parties.”

IN CONSIDERATION of the mutual promises and agreements contained herein the parties hereto agree as follows:

1.	APPOINTMENT OF DISTRIBUTOR.
	CytoCore hereby appoints Distributor as the exclusive Distributor in Italy (“Area”) of the products set forth on Schedule A annexed hereto as of the date hereof and such other products (if any) as may be added to the said Schedule by mutual agreement (“Products”). CytoCore may delete any Products from Schedule A at any time in its sole discretion upon written notice to Distributor to be served at least 3 months prior to the deletion of any such Products, unless such deletion results from health or safety considerations.
2	SUPPLY OF PRODUCTS
a.	CytoCore or its designee shall sell and Distributor shall purchase such quantities of Products (as are agreed herein) for sale in the Area. Distributor shall accept to purchase from CytoCore or its designee exclusively Products that have at least 36 months shelf life before expiration, CytoCore may from time to time change the source of supply of Products and, if CytoCore or its designated supplier shall discontinue the manufacture, sale or promotion of any Product, CytoCore shall delete such Product Schedule A and cease selling the Product to Distributor upon written notice to Distributor to be served at least 3 months prior to the deletion of any such Products unless such deletion results from health or safety considerations. Distributor shall be entitled to continue selling such Product in the Area until such time as the stocks of such Product held by Distributor have been exhausted unless CytoCore advises Distributor to return such inventory to Cytocore.
b.	CytoCore or its designee shall sell and Distributor shall purchase Products at prices established in accordance with Schedule A.
c.	Risks for Products shall pass to Distributor when Products are delivered into the Area covered by this agreement and Distributor shall thereafter be responsible for any damage to or loss of Products. Distributor shall notify CytoCore of the details of any incorrect delivery or of any damage to or shortage in any delivery within eight (8) working days of the receipt thereof by Distributor. Title in and to the Products shall pass to Distributor upon receipt of the Products by Distributor in accordance with clause 2(e) of this Agreement.

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d.	Distributor shall not knowingly re-export or sell Products for sale outside the Area without the prior written consent of CytoCore, except that nothing in this Agreement shall prevent Distributor from accepting unsolicited orders from outside the Area for the Products, as long as there is no exclusive distributor for the Area.
e.	Distributor shall pay the price stated on the invoice by 50% prepayment and 50% act 60 days for the Initial Term (as defined below at clause 6a). Distributor shall make payment to CytoCore in the currency of U.S.Dollars ($) at such place as CytoCore shall from time to time in writing, or by wire transfer pursuant to wire transfer instructions delivered by CytoCore to Distributor.
f.	Distributor shall not be entitled by reason of any set off, counter claim, abatement, or other similar deduction to withhold payment of any invoiced amount due to CytoCore. If Distributor fails to pay by the due date any amount payable by it under this Agreement, CytoCore shall be entitled, but not obliged, to charge Distributor interest on the overdue amount payable by Distributor immediately on demand, from the due date up to the date of actual payment, after as well as before judgment at the rate of two (2%) per cent per annum above the base rate for the time being of (8%) as determined by CitiBank N.A. from time ti time and fixed sum compensation under the Late Payment of Commercial Debts Regulations 2002. Such interest shall accrue on a daily basis and be compounded quarterly. CytoCore may increase the Base Rate to reflect then market conditions.
g.	During the term of this Agreement Distributor shall provide CytoCore every quarter with a written twelve (12) month forecast containing its best estimates of the number of units of each Product which will be required by Distributor, the production and delivery of which shall be subject to approval by CytoCore (“Forecast”). The Forecast for the immediate next three (3) months shall be binding on Distributor. If notice of termination of this Agreement has been served by either party in accordance with the terms of this Agreement, the Forecast shall be binding on Distributor until such time as this Agreement terminates.
h.	Distributor shall submit written purchase orders to CytoCore or its designee stating both the quantities of Products to be purchased and delivery schedules therefore in accordance with the purchasing procedures mutually agreed upon by CytoCore and Distributor from time to time. CytoCore, upon acceptance of the purchase order from Distributor, shall use its reasonable endeavors to deliver or cause to be delivered to Distributor the quantities of Products set forth in such purchase orders at the times specified therein.
3.	SALVAGE OF DAMAGED GOODS
	CytoCore shall have the full right under the Distributor’s insurance policies to possession of any of the Products involved in any loss or damage and shall control the possession of any such Products, even if full payment of same already

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has been made by Distributor to CytoCore. For the duration of this Agreement, Distributor shall maintain insurance in respect of the Products. CytoCore, exercising its reasonable discretion, shall be the sole judge as to whether Products involved in any loss or damage under the Distributor’s policies are fit for consumption or sale, or shall be sold or otherwise disposed of. In case any such damaged Products are judged by CytoCore unfit for consumption or sale, they shall be replaced by CytoCore with brand new Products, It is agreed that all the freight charges and customs duties associated to this replacement procedure shall be borne entirely by CytoCore. Where payment for Products already has been made by Distributor, Distributor, after deduction of salvage expenses, shall be entitled to all proceeds below the policy retention or deductible. Under no circumstances may Distributor release Products involved in any loss or damage to the insurer without CytoCore’s prior written approval.

4.	RETURN OF MERCHANDISE TO CYTOCORE
	CytoCore shall be obliged to accept the return of the Products from Distributor only according to the policy set forth in Schedule B attached hereto.
5.	DISTRIBUTION AND PROMOTION OF PRODUCTS
a.	During the first (six) 6 months of this Agreement from the Effective Date (“Implementation Period”), and annually thereafter, the parties shall work together and provide the other party with all reasonable assistance and information in order to produce a business plan in respect of the Products including, without limitation, minimum purchase requirements (Schedule A) for the Products in the Area, pricing of Products advertising and marketing expense committed by each party and any other aspect relevant to the distribution, sale and promotion of the Products in the Area (“Business Plan”). For this purpose, the parties shall meet no later than one (1) month prior to the end of the Implementation Period, and thereafter annually for the duration of this Agreement, as amended or extended at a mutually convenient time and location, to review the Business Plan.
b.	The parties will agree on minimum purchase requirements to apply during the Implementation Period, based on marketing evaluations and analysis aiming to the launch and promotion of the Products in the Area. No later than one (1) month prior to the end of the Implementation Period the parties will meet to discuss the minimum purchase requirements of Distributor for the Products for the following twelve (12) month period following the Implementation Period. Within seven (7) days of such meeting, the parties will negotiate in good faith the level of minimum purchase requirements for the Products for the following twelve (12) months (“Yearly Commitment”) and within seven (7) business days shall agree on the parties’ respective knowledge of the marketplace in general. Subsequent year volume commitments will be agreed upon in writing by both parties, no later than the end of each twelve (12) months of this Agreement In the event the parties fail for any reason to agree on minimum purchase requirements for the

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Products for any calendar year, the minimum purchase requirements for such year shall be deemed to be increased by 30% of the actual sales in the preceding year. The attainment of such minimum purchase requirements shall be an essential condition to the continuation of this Agreement, and failure shall constitute for CytoCore the right, but without the obligation to CytoCore to terminate this Agreement pursuant to clauses 14(b).

c.	Distributor shall use its best efforts to create and maintain a market for and to increase the sales or Products in the Area, shall provide at its sole expense an organization for the continuous sale, promotion and distribution of the Products throughout the Area, and shall sell, ship, and invoice the Products to purchasers in the Area. In the Area, Distributor shall use its own sales force to sell, promote and distribute the Products. Distributor may not sell, promote or otherwise distribute any products which compete either directly or indirectly with the Products and Distributor shall not establish any branch, or maintain any distribution depot, outside of its Area for the sale of the Products. CytoCore shall not be obligated to provide any resources to Distributor for the obligations set out in this clause except for initial Product training to the Distributor’s sales force to be held at Distributor’s premises in Via all’ Erno, 5 — 28040 Lesa (NO) — Italy and the provision of appropriate marketing materials.
d.	Distributor shall maintain a minimum inventory of Products not less than three (3) months as set forth in the Forecast, as amended from time to time.
e.	CytoCore or its designee shall have the right to inspect and audit at all reasonable times and by previous agreement with Distributor to be determined at least 1 month prior to the inspection and audit, Distributor’s inventory of the Products and any data related to CytoCore’s business and/or the Products.
6.	Term
a.	This Agreement shall begin on the Effective Date and shall continue in effect, unless sooner terminated as provided herein, for a period of four (4) years (“Initial Term”). At the end of the Initial Term this Agreement will be automatically extended for a further three (3) years unless one of the parties has advised the other in writing at least twelve (12) months prior to expiration of the Initial Term that it intends to terminate this Agreement,
b.	In addition to the right of termination granted by Clause 14, CytoCore shall have the right to terminate this Agreement at any time prior to the expiration of its term upon sixty (60) days’ prior this Agreement should Distributor shall fail to attain the annual minimum purchase requirements referred to in clause 5a. above and shall take effect immediately unless otherwise agreed by CytoCore. Distributor shall notify CytoCore as soon as Distributor becomes aware that the annual minimum purchase requirements are unlikely to be attained. For the first full calendar year of this agreement a mutually agreed range for the value of purchases will be established by the end of the first quarter. This minimum-

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maximum range will be mutually agreed by Distributor and CytoCore and relate to purchases for the remaining three-quarters of the first calendar year. In the event CytoCore terminates this Agreement before the end of the Initial Term, CytoCore shall repurchase from Distributor the inventory of Products at prices prevailing at the start of the calendar year in which such Products are to be repurchased by CytoCore. Such inventory of Products must be in saleable condition and have at least (12 )months shelf life before expiration.

c.	In addition to such other rights of termination granted by clause 14, CytoCore shall have the right to terminate of this Agreement at any time if the continued performance under this Agreement becomes impractical due to the enactment of, or threatened enactment of, any ordinance, statute, regulation, law or similar provision by any local, state or national government. This Agreement shall terminate sixty (60) days after the date of written notice by CytoCore to Distributor.
7.	INTELLECTUAL PROPERTY
a.	Distributor acknowledges and agrees that CytoCore or its Affiliate are the owners of all Intellectual Property Rights incorporated on, in or relating to the Products. For the purposes of this Agreement, “Intellectual Property Rights” includes all intellectual property rights including (without limitation) patents, supplementary protection certificates, pending patents, utility models, trade marks, database rights, rights in designs, copyrights, confidential information and topography rights including applications and the right to apply for registration of any such rights) and all inventions, know-how, trade secrets, techniques and confidential information, and all rights and forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world, in each case for their full term, and together with any renewals or extensions. Distributor acknowledges that it neither has nor shall secure by this Agreement or by its acts during the term of this Agreement any right to any Intellectual Property Rights incorporated on, in or relating to the Products. Distributor agrees that title to and the right to use all such Intellectual Property Rights incorporated on, in or relating to the Products shall at all times be vested in CytoCore or its Affiliates whether or not such Intellectual Property Rights incorporated on, in or relating to the Products become vested in Distributor, Distributor hereby assigns to CytoCore, including by way of present assignment present and future rights, with full title guarantee, any Intellectual Property Rights incorporated on, in or relating to the Products, together with all of the goodwill associated therewith to hold the same unto CytoCore, its successors in title and assigns.
b.	Distributor shall make no use of Intellectual Property Rights in or relating to the Products as part of or in conjunction with or in. relation to or associated with Distributor’s company name, commercial name, tradename, corporate name, divisional name, subsidiary name, nickname, translated name,

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transliterated name, trading style, or similar name (hereinafter referred to as (“Mark”).

c.	Distributor shall comply, at all times, with such rules and regulations as CytoCore may issue with respect to the reproduction or reference to any Intellectual Property Rights incorporated on, in or relating to the Products. In particular, Distributor shall ensure that on all advertising and promotional materials to be used and/or prepared by Distributor relating to the Products, the symbol ® shall be used in conjunction with any Marks owned by CytoCore or “TM” in the case of any unregistered trade marks owned by CytoCore.
d.	Distributor shall make no use of any Intellectual Property Rights incorporated on, in or relating to the Products without CytoCore prior to written consent on Distributor’s material such as, but not limited to, advertising, stationery, bills, business forms, calling cards, or real property signs.
e.	Distributor shall not use any of CytoCore’s trade marks in any way which would tend to allow them to become generic, lose their distinctiveness, become liable to mislead the public, or be materially detrimental to or inconsistent with the good name, goodwill, reputation and image of CytoCore or any Affiliate and shall use its best endeavors not to do anything which would bring into disrepute CytoCore, the Products or any of CytoCore’s trade marks.
f.	Distributor shall not adopt or use any trade mark, symbol or device which incorporates or is confusingly similar to, or is a simulation or colorable imitation of any of CytoCore’s trade marks or unfairly competes with any of CytoCore’s trade marks. Distributor shall not any time, whether during or after termination of this Agreement, apply anywhere in the world to register any trade marks identical to or so nearly resembling any of CytoCore’s trade marks as to be likely to deceive or cause confusion.
g.	If Distributor believes or becomes aware that third parties are infringing any Intellectual Property Rights incorporated on, in or relating to the Products or are passing-off their products as products of CytoCore or of any of its Affiliates or of any allegation that the Intellectual Property Rights incorporated on, in or relating to the Products infringe the Intellectual Property Rights of a third party, Distributor shall notify immediately. Distributor shall not, without the prior written consent of CytoCore, take any action in respect thereof, informal or formal, including but limited to making any admission notifying others or of bringing any legal proceedings or entering into any administrative proceedings against any such alleged infringement or passing off. Distributor shall co-operate fully with CytoCore or its Affiliates in the preparation or prosecution of any legal proceeding or administrative proceeding and shall be entirely reimbursed by CytoCore for its reasonable costs unless Distributor shall elect to be represented by its independent counsel in which case Distributor shall be responsible to pay for the fees and expenses of its counsel.

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h.	CytoCore may defend or initiate proceedings against unauthorized use of CytoCore’s Intellectual Property Rights incorporated on, in or relating to the Products and shall, in its sole discretion, decide what action (including litigation, arbitration or compromise), if any, to take in respect of any infringement or alleged infringement of any of the Intellectual Property Rights incorporated on, in or relating to the Products or any other claim or counterclaim brought or threatened in respect of the Intellectual Property Rights incorporated on, in or relating to the Products. CytoCore shall not be obliged to bring or defend any proceedings, whether for infringement or otherwise in relation to any of Intellectual Property Rights incorporated on, in or relating to the Products, if it decides in its absolute discretion not do so. In the event that Distributor is charged with any infringement of the Intellectual Property Rights of any third party as a consequence of the necessary activities of Distributor hereunder and Distributor notifies CytoCore fully and promptly in writing thereof, CytoCore agrees to defend Distributor in any action taken against it based upon such infringement and to indemnify Distributor in respect of all costs, claims, demands and expenses associated therewith; provide however, CytoCore shall have the sole conduct of such claims and shall have the right to require Distributor to discontinue the acts complained of and to cancel the rights granted by this Agreement in respect thereof.
i.	In any infringement proceedings which are brought by CytoCore, CytoCore shall be entitled to claim in respect of any loss suffered or likely to be suffered by the Distributor, and any costs or damages awarded in respect of such claim shall first be applied to satisfy CytoCore’s costs and expenses and shall then be apportioned between CytoCore and Distributor in accordance with their respective losses.
j.	Distributor shall, on CytoCore’s reasonable request, give to CytoCore or its authorized representative any information as to its use of Intellectual Property Rights incorporated on, in or relating to the Products and provide samples of such use.
8.	ADVERTISING AND PROMOTION OF PRODUCTS

          As part of the Business Plan to be produced in accordance with clause 5a, CytoCore shall from time to time deliver advertising, promotional and instructional programs for the Products. Such programs may be modified in CytoCore in its sole discretion at any time. Advertisements and the media in which it is to be used, as well as all promotional and instructional materials to be used, must be approved in advance in writing by CytoCore. Distributor shall at its sole expense distribute all promotional and instructional materials supplied by CytoCore from time to time, Distributor shall be free to utilize advertising as is reasonably necessary to promote the sale of the Products in the Area, however any advertising by Distributor with regard to the Products shall be conducted with prior approval in writing by CytoCore.

CytoCore recognizes that Distributor may from time to time request authorization in writing from CytoCore to use the Intellectual Property Rights on, in or relating to the

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Products CytoCore grants an exclusive royalty-free license to Distributor to use in the Area the Intellectual Property Rights on, in or relating to the Products for the purposes only of fulfilling any orders made pursuant to this Agreement, and performing its obligations under this Agreement. Distributor shall provide CytoCore, for CytoCore’s prior written approval, copies of any materials to be used and/or prepared by Distributor on or in relation to the Products. The right of Distributor to use such Intellectual Property Rights on, in or relating to the Products may unilaterally be revoked by CytoCore at any time and Distributor shall immediately stop such use upon receipt of notification from CytoCore.

9.	RECORDS REPORTS. AND INSPECTION Within fifteen (15) days after the last day of each calendar quarter Distributor shall furnish a marketing report to CytoCore in such form as CytoCore may from time to time specify covering Distributor’s performance under this Agreement during the previous calendar quarter. Distributor shall keep true and correct books of account in which shall be entered any of said marketing reports. CytoCore or its designee shall have the right at any reasonable time upon notice to have its auditing firm, to inspect such books and records to verify gross sales and to review with Distributor marketing strategies for subsequent years.
10.	LEGAL MATTERS
a.	Distributor shall advise CytoCore or its legal representative of laws, regulations and decrees of particular applicability to the sale of the Products in the Area.
b.	The formulae, ingredients or specifications for Products may be changed at any time by CytoCore at the sole discretion of CytoCore when such changes are deemed necessary for any reason satisfactory to CytoCore. When necessary for the maintenance of any applicable registrations, approvals, or consents, CytoCore shall inform Distributor of such changes.
a.a	Distributor shall promptly send to CytoCore any data, report or information regarding Products which may come to Distributor’s attention in the Area during the term of this Agreement and shall report promptly to CytoCore any unexpected or serious adverse reactions which arise in patients using Products. The person to contact with respect to any such reactions is Richard Domanik, President, or his successor. Should it be necessary, during the term of this Agreement, to recall the Products due to an error imputable to the manufacture of the Products, or to any third party who handled, worked with or gave advice in respect of the Products or for any other reason, Distributor shall cease selling such Products in the Area and shall provide CytoCore with all reasonable assistance to recall any such Products and shall, at all terms, act in accordance with CytoCore’s directions
a.b	Distributor understands that the Business Code of Conduct of CytoCore and its Affiliates dictates that all of the Products are sold only on the basis of quality, service, price and other legitimate marketing

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attributes, only to duly licensed and authorized parties and that the payment of bribes for any purpose has no place in CytoCore’s business and its absolutely prohibited. Distributor represents and warrants that it will not engage in any conduct which is in violation of any applicable law in the Area, the United States Foreign Corrupt Practices Act, or any other applicable laws or regulations.

a.c	CytoCore may in its sole discretion decide to cease the distribution of any of the Products by Distributor in the Area in circumstances where it appears to CytoCore, acting reasonably, that any of the Products may, for whatever reason, be injurious to health or unfit for human consumption or where the continued sale of a Product would be inconsistent with the principles and standards applicable to good business practice. The costs associated with any Product recall (including, for the avoidance of doubt, the cost of any of the Products and the costs involved in recalling any of the Products) will be borne by CytoCore. If either party becomes aware of any circumstances which may require the distribution of any of the Products to be suspended under this clause 10e, it shall immediately notify the other party of such circumstances. Distributor shall execute any documents and do all such acts and things in accordance with the reasonable directions of CytoCore to assist with the recall of any Products. CytoCore shall, in its sole discretion, determine when the distribution and sale of the affected Product can recommence. In the event of a recall, the agreed minimum purchase levels will be reviewed by mutual consent.
11.	FORCE MAJEURE Neither CytoCore, nor its Affiliates, or their suppliers shall. be liable for any failure or delay in the delivery of Products occasioned in whole or in part by force majeure, Act of God, strike, lockout, fire, inability to obtain materials or shipping space, boycott, breakdown, war, terrorism, civil commotion, destruction of plant, delay of carrier, any governmental act, requirement, or regulation, or any other cause beyond its control. IN NO EVENT WILL EITHER CYTOCORE AND DISTRIBUTOR BE LIABLE FOR CONSEQUENTIAL OR SPECIAL DAMAGES DUE TO ANY SUCH CAUSE.
12.	RELATIONSHIP OF PARTIES The relationship between CytoCore and Distributor is and during the term hereof shall be that of the seller and purchaser. Distributor, its agents and employees are not the legal representatives, employees or agents of CytoCore for any purpose and have no right or authority to assume or create, in writing or otherwise, any obligation of any kind, express or implied, in the name of or on behalf of CytoCore. Distributor shall make not representation inconsistent with the foregoing during or after termination of this Agreement.
13.	OTHER OBLIGATIONS OF DISTRIBUTOR
a.	Distributor shall not market or sell, distribute or promote any product comparable to or competitive with any Product covered by this Agreement. Distributor may request the CytoCore’s prior written approval. The notice shall specify the source and name of such product and include a full and complete description of the nature, characteristics, and uses of such product.

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b.	Distributor shall maintain in confidence and not use except for purposes of this Agreement any confidential information furnished to it by CytoCore including information contained in any report furnished by Distributor hereunder, all confidential Product information and all advertising programs and plans. Distributor shall impose the same obligation upon its employees and agents, including advertising agencies. Such obligation will not apply in respect of any information which was already in the public domain; or is already known to Distributor or which Distributor acquired from a third party who has the free right to disclose the information to them.
c.	Inasmuch as the laws of particular countries mandate the use of specifiedingredients, forms of labels and instructions for use, the precise requirements for which vary from country to country and also frequently differ even as between lines of trade in the same country, Distributor shall resell Products only to purchasers as to whom Products meet all local legal requirements and shall not sell Products to any purchaser that Distributor has reason to believe may resell them otherwise than as provided herein.
e.	CytoCore will not accept any return Products for credit unless (1) Distributor has first obtained CytoCore’s authorization in writing to return such Products in saleable condition and Distributor prepays the return freight, or (2) packaging for the Products is defective, or Distributor becomes aware that the Products are defective, and notice of such defect is received by CytoCore from Distributor within thirty (30) days of delivery of such Products to Distributor.
14.	TERMINATION FOR CAUSE
a.	Subject to clause 6 of this Agreement, failure by any party to comply with any of its material obligations hereunder shall entitle the other party to give the party in default notice requiring it to make good such default. If such default be cured within sixty (60) days after receipt of such notice, the notifying party shall be entitled (without prejudice to any of its other rights conferred on it by this Agreement or By Law) to terminate this Agreement by giving written notice to take effect immediately. The cure period shall not apply to default under Sub-sections 2 and 4 below.
b.	CytoCore may (without prejudice to any of its other rights conferred on it by this Agreement by law) terminate this Agreement forthwith by giving notice to such effect in the event.
	(1) of war, insurrection, invasion or extended civil commotion in the Area,
	(2) that Distributor or any part of its assets is acquired by or otherwise comes under the direct or indirect control of any third party (governmental, private or public) other than the present owners, or

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	(3) that Distributor becomes insolvent or any insolvency proceedings are instituted by or against it, or
	(4) that Distributor engages in illegal activities or conduct which CytoCore deems to damage the commercial reputation of either CytoCore or Distributor or
	(5) of any breach by Distributor of any of the provision of Clause 10, 13 (b) , or (d) above, or
	(6) of any failure to attain the minimum purchase requirements referred to in clause 5b of the Agreement or
	(7) of any failure to make the expenditures for advertising and promotion agreed to in clause 8 above, or
	(8) that Distributor knowingly without CytoCore’s prior written consent, re-exports or sells the Products outside the Area (but excluding any re export or sale of the Products outside the Area by Distributor in response to unsolicited orders), or
	(9) Distributor challenges the validity of any of CytoCore’s trade marks.
	(10) Distributor, without CytoCore’s prior written consent, sells, promotes, or otherwise distributes products which compete either directly or indirectly with the Products.
c.	The parties hereby agree that any of the above-mentioned events will constitute just cause for termination as provided in this clause 14.
15.	UPON TERMINATION OR EXPIRATION
a.	CytoCore or its designee may, by giving Distributor written notice within ninety (90) days following the expiration or termination of this Agreement, purchases from Distributor any part of all or Products not theretofore sold by Distributor, at a price, payable in such currency as CytoCore shall determine, equal to the sum of the purchase price paid by Distributor plus the actual cost of shipment and importation of such Products, against which amounts due from Distributor may be applied. Such Products must be in saleable condition and have at least 12 months shelf life remaining.
	Upon such purchase or upon the expiration of two (2) months from the aforesaid expiration or termination, Distributor shall cease to display or use any Intellectual Property Rights on, in or relating to the Products or signs, labels or other indications identifying Distributor or any products in any way with CytoCore and shall deliver to CytoCore all printed material, including advertising, promotional and instruction material, and all labels and packages, relating to Products, together with all samples, parts, tools, or other equipment relating to Products that CytoCore may have furnished free of charge (other than for shipping and import

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costs) to Distributor Distributor in its sole discretion shall be free of deciding which marketing information and documentation, to be regarded as strictly privileged and confidential, may be revealed to CytoCore together with the above material. Except that such, discretion shall not relate to any Product or Service offered by Distributor on behalf of CytoCore.

	Upon termination of this Agreement, Distributor shall identify customers with whom. Distributor has commitments to provide Products after the termination date. CytoCore will honor such commitments and continue to deliver the Products to Distributor until Distributor’s commitment to supply Products has expired.
	Distributor shall provide CytoCore with all necessary documents confirming its commitments with customers and awarded tenders\
b.	Immediately upon termination or expiration of this Agreement, Distributor shall cease in any manner whatsoever to make any reference to its former role as the Distributor of the Products except for the requirements provided by the terms and conditions of the awarded supply as a result of tenders which are in force Upon termination or expiration of this Agreement.
c.	Upon the expiration of this Agreement all rights granted or obligations undertaken hereunder shall terminate forthwith except rights and obligations which arose prior to such expiration or termination and those set forth in clauses 7, 8, 9, 10, 15, 16, and 21, and in sub-classes 13(b) and (d). Neither CytoCore or Distributor shall incur any liability to the oilier by reason of the expiration or termination of this Agreement as provided herein, nor for its non-renewal, whether for loss of goodwill, anticipated profits or otherwise, and CytoCore and Distributor shall accept all rights granted and all obligations assumed hereunder including those in connection with such expiration or termination in full satisfaction of any claim resulting from such expiration or termination.
d.	The acceptance of any order form or the sale of any Products to Distributor, after the expiration or termination of this Agreement shall, unless otherwise specified, be subject to all the pertinent terms of this Agreement but shall not be construed as a renewal or extension of this Agreement nor as a waiver of termination thereof.
16.	INDEMNIFICATION
a.	Distributor agrees to indemnify and hold harmless CytoCore, its Affiliates and their respective directors, officers, and employees against any and all claims, demands, proceedings, losses, costs, and expenses which may be brought against or suffered or incurred by CytoCore, its Affiliates or its or their respective directors, officers, and employees, in consequence of any error, mistake, acts, omissions, or negligence on the part of Distributor or any of its employees or agents, in storing, selling, promoting, or distributing any of the Products. Distributor shall have no right to an indemnity under this clause 16b to the extent

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directors, officers, and employees, in consequence of any error, mistake, acts, omissions, or negligence on the part of Distributor or any of its employees or agents, in storing, selling, promoting, or distributing any of the Products. Distributor shall have no right to an indemnity under this clause 16b to the extent that the negligence of Distributor, or its employees or agents has contributed to the loss, liability or cost for which Distributor is claiming an indemnity. CytoCore shall not, in any event, be liable for indirect or consequential losses, special charges, loss of profit, or loss of reputation or good will.

b.	CytoCore agrees to indemnify and hold harmless Distributor, its affiliates, and its directors, officers, and employees, against any and all claims, demands, proceedings, losses, costs, expenses which may be brought against or suffered or incurred by Distributor, its affiliates, or its directors, officer, and employees, in consequence of any error, mistake, or negligence on the part of CytoCore. Distributor shall have no right to an indemnity under this clause 16b to the extent that the negligence of Distributor, or its employees or agents has contributed to the loss, liability or cost for which Distributor is claiming an indemnity. CytoCore shall not, in any event, be liable for indirect or consequential losses, special charges, loss of profit, or loss of reputation or good will.
c.	It shall be a condition of any obligation to defend, indemnify and hold harmless hereunder that the party seeking indemnification (i) promptly notify the party from which indemnification is sought of the assertion of any claim to be covered, (ii) permit the indemnifying party to assume and control the defense thereof, and (iii) co-operate fully in such defense.
d.	Nothing in this Agreement shall in any way exclude or limit either party’s liability for death or personal injury.
17.	ASSIGNMENT
a.	CytoCore may assign all or any part of this Agreement to any Affiliate. Subject to clause 17b. below, in all other respects this Agreement and the distributorship and/or sub-distributorship shall be non-assignable. Any non-permitted assignment shall be void.
b.	Distributor may, with CytoCore’s prior written consent which shall not be unreasonably withheld, appoint agents for the distribution, sale and promotion of the Products provided that:

(1)	no such sub-license shall relieve Distributor of any of its obligations under his Agreement.
(2)	Distributor shall ensure that any sub-licensee agrees to be bound by the terms of this Agreement, and

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(3)  such sub-licensee shall only be used to supplement the existing structure of CytoCore’s business

18.	NOTICES Any notice or report pursuant to this Agreement shall be deemed duly given if sent by prepaid registered mail letter (air mail, if sent overseas), or facsimile addressed to the party at the address or fax number, as applicable, set forth at the beginning of this Agreement, or to such other address or fax number as shall have been furnished in writing.
19.	SEVERABLE CONDITIONS/UNENFORCED PROVISIONS
a.	Any provision of this Agreement held to be void, invalid, or unenforceable, will be construed as severable and will not in any way affect render void, invalid, or unenforceable any other provision of this Agreement, and this Agreement will be carried out as if such void, invalid, or unenforceable provision was not a part of this Agreement.
b.	Failure by any party to exercise any right given in this Agreement or to insist on strict compliance by the other party of any obligation under this Agreement does not constitute a waiver of the Party’s right to later demand exact compliance with the terms of this Agreement.
20.	Any dispute that may arise between the parties in connection with or as a consequence of this Agreement shall be exclusively settled in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, by three arbitrators appointed in accordance with such rules. Such arbitration shall be in the English language with arbitration taking place in the Chamber of Commerce of Milan.
21.	ENTIRE AGREEMENT This Agreement, including its Schedules, contains the entire understanding of the parties with respect to the matters herein contained and voids all prior understandings, if any, between the parties with respect to the distribution of the Products. The Agreement may be changed from time to time only by an instrument in writing signed by an officer of CytoCore and an authorized representation of Distributor.
22.	THIRD PARTY RIGHTS
a.	Except as provide at clause 23 (or insofar as this Agreement otherwise expressly provides that a third party may in his own right enforce a term of this Agreement), a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to rely upon or enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

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b.	The decision of the Expert shall be final and binding on the parties. The costs of the reference to the Expert (including the costs of any expert appointed by him) and will be borne as agreed between the parties prior to making the reference
c	Except for any party’s right to seek interim relief in the courts, no party may commence legal proceedings while the dispute resolution procedures referred to in this clause 22 are being undertaken.
23.	EXECUTION IN COUNTERPARTS This Agreement may be executed in one or more counterparts, all of which should be considered one and the same agreement, and should become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party.
	IN WITNESS WHEREOF the parties have executed this Agreement of writtten.

Distributor		CytoCore, Inc.
By:	/s/ Illegible	By:	/s/ Bob McCullough, Jr.
	Name: Illegible		Name: Bob McCullough, Jr.
	Title: PRESIDENT & CEO		Title: CFO

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SCHEDULE A

PRODUCTS, PRICES, AND QUOTAS

Whether described generically or by reference to trade mark, only the products having the form and composition in which they are sold by CytoCore on the Effective Date, are intended to be included in this Agreement.

Prices

For the first calendar year from the Effective Date, prices to be charged for the Products by CytoCore to Distributor are as per attached appendix.

Quotas

     1.1 Annual Quotas

                Period

1.1 First 12 Months—l,000,0001 Units

1.2 Second 12 Months—2,000,000 Units

1.3 Third 12 Months—2,500,000 Units

1.4

     1.2 Terms

          Orders will be applied against the Annual Quota based on the net invoice price of the Products ordered by Distributor and billed by Seller to the Distributor during the Period

     Thereafter, the parties shall meet twelve (12) months after the date hereof during each calendar year of this Agreement to discuss and agree in good faith on any increase in prices to be charged for the Products to Distributor by CytoCore. Prices may be changed at other times on agreement between the parties, taking into account market conditions in the Area which have an effect on the distribution, sale or promotion of the Products.

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SCHEDULE B

A.	CytoCore will only entertain claims for returned Products where same was originally purchased from CytoCore. Proof of purchase must be provided upon request.
B.	Returned Products will be valued at the original sale price or the current price whichever is lower.
C.	Full credit will only be given if CytoCore is notified within twelve (12) months prior to expiry of the returned Product so that arrangements can be made for disposal prior to the Product’s expiry date. This request is made in recognition of the fact that, in most instances, the Products are delivered with expiry dating in excess of one (1) year B twelve (12) months.
	Credit for returned Products with a shelf life shorter than twelve (12) months before expiration shall be from time to time discussed and quantified by mutual consent between CyotoCore and Distributor.
D.	In no instance will credit be given for Products which are returned because of insufficient sales except for the case CytoCore decides to terminate the Agreement.
E.	Credit will also be denied for Products which have not been stored in accordance with CytoCore’s instructions.
F.	It is not CytoCore’s policy to reimburse Distributor damaged Products but each case will be reviewed at CytoCore’s sole discretion in light of any special circumstances that may necessitate special consideration.
	CytoCore Sales Representative will inspect all expired or damaged Products and will issue a Preliminary Credit Report which will be referred to his/her immediate Supervisor for final approval.
	Destruction of all expired and/or damaged Products is to be in accordance with the Food and Drugs ordinances within the Area and, if requested, witnessed by a CytoCore Sales Representative.

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SCHEDULE C

UNIT BY PRODUCT

ITEM DESCRIPTION UNIT PRICE

Soft Pap™ Disposable	US$	5.00
Soft Pap™ Reusable Handle	US$	12.00

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EX-10.46

Exhibit 10.46

DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (“Agreement”) effective between CytoCore, Inc. (“CytoCore”), a corporation organized and existing under the laws of the State of Delaware, United States of America whose principal address is 414 N. Orleans, Chicago 60601 and MUNDITER — Intercâmbio Mundial de Comércio, S.A. (“Distributor”), organized and existing under the laws of Portugal whose principal address is at Av. Antonio Augusto de Aguiar, 138-1069-132 Lisboa. Distributor and CytoCore may sometimes be referred to herein individually as a “party” or collectively as the “parties.”)

IN CONSIDERATION of the mutual promises and payments contained herein the parties hereto agree as follows:

1.	APPOINTMENT OF DISTRIBUTOR.
	CytoCore hereby appoints Distributor as the sole and exclusive Distributor in (“Area”) of the products set forth on Schedule A annexed hereto as of the date hereof and such other products (if any) as may be added to the said Schedule by mutual agreement (“Products”). Except as provided in Clause 10 e below, CytoCore may delete any Products from Schedule A at any time in its sole discretion upon ninety (90) days prior written notice to Distributor.
2	SUPPLY OF PRODUCTS
a.	CytoCore or its designee shall sell and Distributor shall purchase such quantities of Products (as are agreed herein) for sale in the Area. CytoCore may from time to time change the source of supply of Products and, if CytoCore or its designated supplier shall discontinue the manufacture, sale or promotion of any Product, CytoCore shall delete such Product Schedule A and cease selling the Product to Distributor upon ninety (90) days prior written notice. Distributor shall be entitled to continue selling such Product in the Area until such time as the stocks of such Product held by Distributor have been exhausted unless CytoCore advises Distributor to return such inventory to CytoCore.
b.	CytoCore or its designee shall sell and Distributor shall purchase Products at prices established in accordance with Schedule A.
c.	Risks for Products shall pass to Distributor when Products are delivered into the Area covered by this agreement and Distributor shall thereafter be responsible for any damage to or loss of Products. Distributor shall notify CytoCore of the details of any incorrect delivery or of any damage to or shortage in any delivery within ten (10) working days of the receipt thereof by Distributor. Title in and to the Products shall pass to Distributor upon receipt of the Products by Distributor in accordance with clause 2(e) of this Agreement.
d.	Distributor shall not knowingly re-export or sell Products for sale outside the Area

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	without the prior written consent of CytoCore, except that nothing in this Agreement shall prevent Distributor from accepting unsolicited orders from outside the Area for the Products, as long as there is no exclusive distributor for the Area.
e.	Distributor shall pay the price stated on the invoice by a net ninety (90) days on open account for the Initial Term (as defined below at clause 6a). Distributor shall make payment to CytoCore in the currency of Euros ( ) at such place as CytoCore shall from time to time in writing. CytoCore may direct Distributor to make payment through wire transfer, in which case CytoCore shall provide Distributor with wire transfer instructions.
f.	Distributor shall not be entitled by reason of any set off, counter claim, abatement, or other similar deduction to withhold payment of any invoiced amount due to CytoCore. If Distributor fails to pay by the due date any amount payable by it under this Agreement, CytoCore shall be entitled, but not obliged, to charge Distributor interest on the overdue amount payable by Distributor immediately on demand, from the due date up to the date of actual payment, after as well as before judgment at the rate of two (2%) per cent per annum above the US prime rate of interest offered by CitiBank to its preferred customers and fixed sum compensation under the Late Payment of Commercial Debts Regulations 2002. Such interest shall accrue on a daily basis and be compounded quarterly. CytoCore may increase the Base Rate to reflect then market conditions.
g.	During the term of this Agreement Distributor shall provide CytoCore every quarter with a written twelve (12) month forecast containing its best estimates of the number of units of each Product which will be required by Distributor, the production and delivery of which shall be subject to approval by CytoCore (“Forecast”). The Forecast for the immediate next three (3) months shall be binding on Distributor. If notice of termination of this Agreement has been served by either party in accordance with the terms of this Agreement, the Forecast shall be binding on Distributor until such time as this Agreement terminates.
h.	Distributor shall submit written purchase orders to CytoCore or its designee stating both the quantities of Products to be purchased and delivery schedules therefore in accordance with the purchasing procedures mutually agreed upon by CytoCore and Distributor from time to time. CytoCore, upon acceptance of the purchase order from Distributor, shall use its reasonable endeavors to deliver or cause to be delivered to Distributor the quantities of Products set forth in such purchase orders at the times specified therein.
3.	SALVAGE OF DAMAGED GOODS
	CytoCore shall have the full right under the Distributor’s insurance policies to possession of any of the Products involved in any loss or damage and shall control the possession of any such Products, even if full payment of same already has been made by Distributor to CytoCore. For the duration of this Agreement, Distributor

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	shall maintain insurance in respect of the Products and, if possible after consulting its insurance company, will list CytoCore as a named insured on the face of the insurance policy. CytoCore, exercising its reasonable discretion, shall be the sole judge as to whether Products involved in any loss or damage under the Distributor’s policies are fit for consumption or sale, or shall be sold or otherwise disposed of. Where payment for Products already has been made by Distributor, Distributor, after deduction of salvage expenses, shall be entitled to all proceeds below the policy retention or deductible. Under no circumstances may Distributor release Products involved in any loss or damage to the insurer without CytoCore’s prior written approval
4.	RETURN OF MERCHANDISE TO CYTOCORE
	CytoCore shall be obliged to accept the return of the Products from Distributor only according to the policy set forth in Schedule B attached hereto.
5.	DISTRIBUTION AND PROMOTION OF PRODUCTS
a.	During the first six (6) months of this Agreement from the Effective Date (“Implementation Period”), and annually thereafter, the parties shall work together and provide the other party with all reasonable assistance and information in order to produce a business plan in respect of the Products including, without limitation, minimum purchase requirements (Schedule A) for the Products in the Area, pricing of Products advertising and marketing expense committed by each party and any other aspect relevant to the distribution, sale and promotion of the Products in the Area (“Business Plan”). For this purpose, the parties shall meet no later than one (1) month prior to the end of the Implementation Period, and thereafter annually for the duration of this Agreement, as amended or extended at a mutually convenient time and location, to review the Business Plan.
b.	The parties will agree on minimum purchase requirements to apply during the Implementation Period, based on current realistic sales trends as at the Effective Date for the Products (or similar or competing products) in the Area. No later than one (1) month prior to the end of the Implementation Period the parties will meet to discuss the minimum purchase requirements of Distributor for the Products for the following twelve (12) month period following the Implementation Period. Within seven (7) days of such meeting, the parties will negotiate in good faith the level of minimum purchase requirements for the Products for the following twelve (12) months (“Yearly Commitment”) and within seven (7) business days shall agree on the parties’ respective knowledge of the marketplace in general. Subsequent year volume commitments will be agreed upon in writing by both parties, no later than the end of each twelve (12) months of this Agreement. In the event the parties’ fail, for any reason to agree on minimum purchase requirements for the Products for any calendar year, the minimum purchase requirements for such year shall be deemed to be the same as those established or deemed hereby to be established for the preceding calendar year, or the same as the actual sales in such preceding calendar year if

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	greater, increased in each case by 10% over the prior twelve months’ sales. The attainment of such minimum purchase requirements shall be an essential condition to the continuation of this Agreement, and failure shall constitute for CytoCore the right, but without the obligation to CytoCore to terminate this Agreement pursuant to clause 14(b) (6).
c.	Distributor shall use its best efforts to create and maintain a market for and to increase the sales of Products in the Area, shall provide at its sole expense an organization for the continuous sale, promotion and distribution of the Products throughout the Area, and shall sell, ship, and invoice the Products to purchasers in the Area. In the Area, Distributor shall use its own sales force to sell, promote and distribute the Products. Distributor may not sell, promote or otherwise distribute any products which compete either directly or indirectly with the Products and Distributor shall not establish any branch, or maintain any distribution depot, outside of its Area for the sale of the Products. CytoCore shall not be obligated to provide any resources to Distributor for the obligations set out in this clause except for initial Product training to the Distributor’s sales force and the provision of appropriate marketing materials,
d.	Distributor shall maintain a minimum inventory of Products not less than three (3) months as set forth in the Forecast, as amended from time to time.
e.	CytoCore or its designee shall have the right to inspect and audit at all reasonable times and by previous agreement with Distributor, Distributor’s inventory of the Products and any data related to CytoCore’s business and/or the Products.
6.	Term
a.	This Agreement shall begin on the Effective Date and shall continue in effect, unless sooner terminated as provided herein, for a period of two (2) years (“Initial Term”). At the end of the Initial Term this Agreement will be automatically extended for a further three (3) years unless one of the parties has advised the other in writing at least 12 (twelve) months prior to expiration of the Initial Term that it intends to terminate this Agreement.
b.	In addition to the right of termination granted by Clause 14, CytoCore shall have the right to terminate this Agreement at any time prior to the expiration of its term upon sixty (60) days’ prior written notice should Distributor fail to attain the annual minimum purchase requirements referred to in clause 5a. above and shall take effect immediately unless otherwise agreed by CytoCore. Distributor shall notify CytoCore as soon as Distributor becomes aware that that the annual minimum purchase requirements are unlikely to be attained. For the first full calendar year of this agreement a mutually agreed range for the value of purchases will be established by the end of the first quarter. This minimum-maximum range will be agreed by Distributor and CytoCore and relate to purchases for the remaining three-quarters of the first calendar year. In the event CytoCore terminates this Agreement before the

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	end of the Initial Term, CytoCore shall repurchase from Distributor the inventory of Products at prices prevailing at the start of the calendar year in which such Products are to be repurchased by CytoCore. Such inventory of Products must be in saleable condition and have at least (12) months’ shelf life before expiration.
c.	In addition to such other rights of termination granted by clause 14, CytoCore shall have the right to terminate this Agreement at any time if the continued performance under this Agreement becomes impractical due to the enactment of, or threatened enactment of, any ordinance, statute, regulation, law or similar provision by any local, state or national government. This Agreement shall terminate sixty (60) days after the date of written notice by CytoCore to Distributor.
7.	INTELLECTUAL PROPERTY
a.	Distributor acknowledges and agrees that CytoCore or its Affiliate are the owners of all Intellectual Property Rights incorporated on, in or relating to the Products. For the purposes of this Agreement, “Intellectual Property Rights” includes all intellectual property rights including (without limitation) patients, supplementary protection certificates, pending patents, utility models, trade marks, database rights, rights in designs, copyrights and topography rights (whether or not any of these rights are registered, and including applications and the right to apply for registration of any such rights) and all inventions, know-how, trade secrets, techniques and confidential information, and all rights and forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world, in each case for their full term, and together with any renewals or extensions. Distributor acknowledges that it neither has nor shall secure by this Agreement or by its acts during the term of this Agreement any right to any Intellectual Property Rights incorporated on, in or relating to the Products. Distributor agrees that title to and the right to use all such Intellectual Property Rights incorporated on, in or relating to the Products shall at all times be vested in CytoCore or its Affiliates whether or not such Intellectual Property Rights incorporated on, in or relating to the Products become vested in Distributor, Distributor hereby assigns to CytoCore, including by way of present assignment of present and future rights, with full title guarantee, any Intellectual Property Rights incorporated on, in or relating to the Products, together with all of the goodwill associated therewith to hold the same unto CytoCore, its successors in title and assigns.
b.	Distributor shall make no use of Intellectual Property Rights in or relating to the Products as part of or in conjunction with or in relation to or associated with Distributor’s company name, commercial name, tradename, corporate name, divisional name, subsidiary name, nickname, translated name, transliterated name, trading style, or similar name,
c.	Distributor shall comply, at all times, with such rules and regulations as CytoCore may issue with respect to the reproduction or reference to any Intellectual Property Rights incorporated on, in or relating to the Products. In particular, Distributor shall

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	ensure that on all advertising and promotional materials to be used and/or prepared by Distributor relating to the Products, the symbol ® shall be used in conjunction with any registered trade marks or service marks owned by CytoCore or “TM” in the cast of any unregistered trade marks owned by CytoCore,
d.	Distributor shall make no use of any Intellectual Property Rights incorporated on, in or relating to the Products without CytoCore prior to written consent on Distributor’s material such as, but not limited to, advertising, stationery, bills, business forms, calling cards, or real property signs.
e.	Distributor shall not use any of CytoCore’s trade marks in any way which would tend to allow them to become generic, lose their distinctiveness, become liable to mislead the public, or be materially detrimental to or inconsistent with the good name, goodwill, reputation and image of CytoCore or any Affiliate and shall use its best endeavors not to do anything which would bring into disrepute CytoCore, the Products or any of CytoCore’s trade marks.
f.	Distributor shall not adopt or use any trade mark, symbol or device which incorporates or is confusingly similar to, or is a simulation or colorable imitation of any of CytoCore’s trade marks or unfairly competes with any of CytoCore’s trade marks. Distributor shall not at any time, whether during or after termination of this Agreement, apply anywhere in the world to register any trade marks identical to or so nearly resembling any of CytoCore’s trade marks as to be likely to deceive or cause confusion.
g.	If Distributor believes or becomes aware that third parties are infringing any Intellectual Property Rights incorporated on, in or relating to the Products or are passing-off their products as products of CytoCore or of any of its Affiliates or of any allegation that the Intellectual Property Rights incorporated on, in or relating to the Products infringe the Intellectual Property Rights of a third party, Distributor shall notify immediately Distributor shall not, without the prior written consent of CytoCore, take any action in respect thereof, informal or formal, including but limited to making any admission notifying others or of bringing any legal proceedings or entering into any administrative proceedings against any such alleged infringement or passing off. Distributor shall co-operate fully with CytoCore or its Affiliates in the preparation or prosecution of any legal proceeding or administrative proceeding and shall be reimbursed by CytoCore for its reasonable costs.
h.	CytoCore may defend or initiate proceedings against unauthorized use of CytoCore’s Intellectual Property Rights incorporated on, in or relating to the Products and shall, in its sole discretion, decide what action (including litigation, arbitration or compromise), if any, to take in respect of any infringement or alleged infringement of any of the Intellectual Property Rights incorporated on, in or relating to the Products or any other claim or counterclaim brought or threatened in respect of the Intellectual Property Rights incorporated on, in or relating to the Products. CytoCore shall not be obliged to bring or defend any proceedings, whether for infringement or otherwise in

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	relation to any of Intellectual Property Rights incorporated on, in or relating to the Products, if it decides in its absolute discretion not do so. In the event that Distributor is charged with any infringement of the Intellectual Property Rights of any third party as a consequence of the necessary activities of Distributor hereunder and Distributor notifies CytoCore fully and promptly in writing thereof, CytoCore agrees to defend Distributor in any action taken against it based upon such infringement and to indemnify Distributor in respect of all costs, claims, demands and expenses associated therewith; provide however, CytoCore shall have the sole conduct of such claims and shall have the right to require Distributor to discontinue the acts complained of and to cancel the rights granted by this Agreement in respect thereof.
i.	In any infringement proceedings which are brought by CytoCore, CytoCore shall be entitled to claim in respect of any loss suffered or likely to be suffered by the Distributor, and any costs or damages awarded in respect of such claim shall first be applied to satisfy CytoCore’s costs and expenses and shall then be apportioned between CytoCore and Distributor in accordance with their respective losses.
j.	Distributor shall, on CytoCore’s reasonable request, give to CytoCore or its authorized representative any information as to its use of Intellectual Property Rights incorporated on, in or relating to the Products which may require and will render any reasonable assistance required at reasonable cost in maintaining resignations of the Intellectual Property Rights incorporated on, in or relating to the Products.
8.	ADVERTISING AND PROMOTION OF PRODUCTS
a.	As part of the Business Plan to be produced in accordance with clause 5a, CytoCore shall from time to time deliver advertising, promotional and instructional programs for the Products. Such programs may be modified by CytoCore in its sole discretion at any time. Advertisements and the media in which it is to be used, as well as all promotional and instructional materials to be used, must be approved in advance in writing by CytoCore. Distributor shall at its sole expense distribute all promotional and instructional materials supplied by CytoCore from time to time. Distributor shall be free to utilize advertising as is reasonably necessary to promote the sale of the Products in the Area; however any advertising by Distributor with regard to the Products shall be conducted with prior approval in writing by CytoCore.
b.	CytoCore recognizes that Distributor may from time to time request authorization in writing from CytoCore to use the Intellectual Property Rights on, in or relating to the Products. CytoCore grants a non-exclusive royalty-free license to Distributor to use in the Area the Intellectual Property Rights on, in or relating to the Products for the purposes only of fulfilling any orders made pursuant to this Agreement, and performing its obligations under this Agreement. Distributor shall provide CytoCore, for CytoCore’s prior written approval, copies of any materials to be used and/or prepared by Distributor on or in relation to the Products. The right of Distributor to use such Intellectual Property Rights on, in or relating to the Products may

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	unilaterally be revoked by CytoCore at any time and Distributor shall immediately stop such use upon receipt of notification from CytoCore.
9.	RECORDS, REPORTS, AND INSPECTION Within fifteen (15) days after the last day of each calendar month Distributor shall furnish a report to CytoCore in such form as CytoCore may from time to time specify covering Distributor’s performance under this Agreement during the previous calendar month. Distributor shall keep true and correct books of account in which shall be entered sales by Product for each month. CytoCore or its designee shall have the right at any reasonable time to inspect and examine such data, records and books of account and Distributor’s inventory of Products, samples and product literature, and records relating to Products. Review of the Distributor’s books shall be done by a reputable independent auditing company that is acceptable to both parties.
10.	LEGAL MATTERS
a.	Distributor shall notify CytoCore of all Area’s laws, regulations, or decrees relating to the purchase, sale and importation, if applicable, of Products and to the carrying the terms of this Agreement and of any transactions contemplated hereby.
b.	The formulae, ingredients or specifications for Products may be changed at any time by CytoCore at the sole discretion of CytoCore when such changes are deemed necessary for any reason satisfactory to CytoCore. When necessary for the maintenance of any applicable registrations, approvals, or consents, CytoCore shall inform Distributor of such changes.
c.	Distributor shall promptly send to CytoCore any data, report or information regarding Products which may come to Distributor’s attention in the Area during the term of this Agreement and shall report promptly to CytoCore any unexpected or serious adverse reactions which arise in patients using Products. The person to contact with respect to any such reactions is Richard Domanik, President., or his successor. Should it be necessary, during the term of this Agreement, to recall the Products due to an error imputable to the manufacture of the Products, or to any third party who handled, worked with or gave advice in respect of the Products or for any other reason, Distributor shall cease selling such Products in the Area and shall provide CytoCore with all reasonable assistance to recall any such Products and shall, at all terms, act in accordance with CytoCore’s directions
d.	Distributor understands that the Business Code of Conduct of CytoCore and its Affiliates dictates that all of the Products are sold only on the basis of quality, service, price and other legitimate marketing attributes, only to duly licensed and authorized parties and that the payment of bribes for any purpose has no place in CytoCore’s business and its absolutely prohibited. Distributor represents and warrants that it will not engage in any conduct which is in violation of any applicable law in the Area, the United States Foreign Corrupt Practices Act, or any other applicable laws or regulations.

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e.	CytoCore may in its sole discretion decide to cease the distribution of any of the Products by Distributor in the Area if circumstances appear to CytoCore, acting reasonably, that any of the Products may, for whatever reason, be injurious to health or unfit for human use or where the continued sale of a Product would be inconsistent with the principles and standards applicable to good business practice., The costs associated with any Product recall (including, for the avoidance of doubt, the cost of any of the Products and the costs involved in recalling any of the Products) will be borne by CytoCore. If either party becomes aware of any circumstances which may require the distribution of any of the Products to be suspended under this clause 10e, it shall immediately notify the other party of such circumstances. Distributor shall execute any documents and do all such acts and things in accordance with the reasonable directions of CytoCore to assist with the recall of any Products. CytoCore shall, in its sole discretion, determine when the distribution and sale of the affected Product can recommence. In the event of a recall, the agreed minimum purchase levels will be reviewed by mutual consent.
11.	FORCE MAJEURE Neither CytoCore, nor its Affiliates, or their suppliers shall be liable for any failure or delay in the delivery of Products occasioned in whole or in part by force majeure, Act of God, strike, lockout, fire, inability to obtain materials or shipping space, boycott, breakdown, war, terrorism, civil commotion, destruction of plant, delay of carrier, any governmental act, requirement, or regulation, or any other cause beyond its control. IN NO EVENT WILL CYTOCORE BE LIABLE FOR CONSEQUENTIAL OR SPECIAL DAMAGES DUE TO ANY SUCH CAUSE.
12.	RELATIONSHIP OF PARTIES The relationship between CytoCore and Distributor is and during the term hereof shall be that of the seller and purchaser. Distributor, its agents and employees are not the legal representatives, employees or agents of CytoCore for any purpose and have no right or authority to assume or create, in writing or otherwise, any obligation of any kind, express or implied, in the name of or on behalf of CytoCore. Distributor shall make not representation inconsistent with the foregoing during or after termination of this Agreement.
13.	OTHER OBLIGATIONS OF DISTRIBUTOR
a.	Distributor shall not market or sell, distribute or promote any product comparable to or competitive with any Product covered by this Agreement. Distributor may request the CytoCore’s prior written approval. The notice shall specify the source and name of such product and include a full and complete description of the nature, characteristics, and uses of such product.
b.	Distributor shall maintain in confidence and not use except for purposes of this Agreement any confidential information furnished to it by CytoCore including information contained in any report furnished by Distributor hereunder, all confidential Product information and all advertising programs and plans. Distributor shall impose the same obligation upon its employees and agents, including

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	advertising agencies. Such obligation will not apply in respect of any information which was already in the public domain; or is already known to Distributor or which Distributor acquired from a third party who has the free right to disclose the information to them.
c	In as much as the laws of particular countries mandate the use of specified ingredients, forms of labels and instructions for use, the precise requirements for which vary from country to country and also frequently differ even as between lines of trade in the same country, Distributor shall resell Products only to purchasers as to whom Products meet all local legal requirements and shall not sell Products to any purchaser that Distributor has reason to believe may resell them otherwise than as provided herein.
d.	CytoCore will not accept any return Products for credit unless (1) Distributor has first obtained CytoCore’s authorization in writing to return such Products in saleable condition and Distributor prepays the return freight, or (2) packaging for the Products is defective, or Distributor becomes aware that the Products are defective, and notice of such defect is received by CytoCore from Distributor within thirty (30) days of delivery of such Products to Distributor.
14.	TERMINATION FOR CAUSE
a.	Subject to clause 6 of this Agreement, failure by any party to comply with any of its material obligations hereunder shall entitle the other party to give the party in default notice requiring it to make good such default. If such default is not cured within sixty (60) days after receipt of such notice, the notifying party shall be entitled (without prejudice to any of its other rights conferred on it by this Agreement or By Law) to terminate this Agreement by giving written notice to take effect immediately. The cure period shall not apply to default under Sub-sections 2 and 4 below.
b.	CytoCore may (without prejudice to any of its other rights conferred on it by this Agreement by or by law) terminate this Agreement forthwith by giving fifteen (15) days’ prior written notice to such effect in the event.

(1) of war, insurrection, invasion or extended civil commotion in the Area,

(2) that Distributor or any part of its assets is acquired by or otherwise comes under the direct or indirect control of any third party (governmental, private or public) other than the present owners, or

(3) that Distributor becomes insolvent or any insolvency proceedings are instituted by or against it, or

(4) that Distributor engages in illegal activities or conduct which CytoCore deems to damage the commercial reputation of either CytoCore or Distributor or

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(5) of any material breach by Distributor of any of the provision of Clause 10,13 (b) (c), or (d) above, or

(6) of any material failure to attain the minimum purchase requirements referred to in clause 5b of the Agreement or

(7) of any material failure to make the expenditures for advertising and promotion agreed to in clause 8 above, or

(8) that Distributor knowingly without CytoCore’s prior written consent, re-exports or sells the Products outside the Area (but excluding any re export or sale of the Products outside the Area by Distributor in response to unsolicited orders), or

(9) Distributor challenges the validity of any of CytoCore’s trade marks.

(10) Distributor, without CytoCore’s prior written consent, sells, promotes, or otherwise distributes products which compete either directly or indirectly with the Products.

c.	The parties hereby agree that any of the above-mentioned events will constitute just cause for termination as provided in this clause 14.
15.	UPON TERMINATION OR EXPIRATION
a.	CytoCore or its designee may, by giving Distributor written notice within ninety (90) days following the expiration or termination of this Agreement, purchases from Distributor any part of all or Products not theretofore sold by Distributor, at a price, payable in such currency as CytoCore may determine, equal to the sum of the purchase price paid by Distributor plus the actual cost of shipment and importation of such Products, against which amounts due from Distributor may be applied. Such Products must be in saleable condition and have at least 12 months shelf life remaining.
	Upon such purchase or upon the expiration of two (2) months from the aforesaid expiration or termination, Distributor shall cease to display or use any Intellectual Property Rights on, in or relating to the Products or signs, labels or other indications identifying Distributor or any products in any way with CytoCore and shall deliver to CytoCore all printed material, including advertising, promotional and instruction material, and all labels and packages, relating to Products, together with all samples, parts, tools, or other equipment relating to Products that CytoCore may have furnished free of charge (other than for shipping and import costs) to Distributor and together with all records of Distributor’s sales necessary for CytoCore to ascertain any outstanding guarantee obligations thereunder.

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b.	Following any expiration or termination of this Agreement, Distributor shall immediately cease to make any use of the Intellectual Property Rights on, in or relating to the Products in any way.
c.	Upon termination or expiration of this Agreement, Distributor shall cease in any manner whatsoever to make any reference to its former role as the Distributor of the Products.
d.	Upon the expiration of this Agreement all rights granted or obligations undertaken hereunder shall terminate forthwith except rights and obligations which arose prior to such expiration or termination and those set forth in clauses 7, 8, 9, 10, 15, 16, and 21, and in sub-classes 13(b), (c) and (d). Neither CytoCore or Distributor shall incur any liability to the other by reason of the expiration or termination of this Agreement as provided herein, nor for its non-renewal, whether for loss of goodwill, anticipated profits or otherwise, and CytoCore and Distributor shall accept all rights granted and all obligations assumed hereunder including those in connection with such expiration or termination in full satisfaction of any claim resulting from such expiration or termination.
e.	The acceptance of any order form or the sale of any Products to Distributor, after the expiration or termination of this Agreement shall, unless otherwise specified, be subject to all the pertinent terms of this Agreement but shall not be construed as a renewal or extension of this Agreement nor as a waiver of termination thereof
16.	INDEMNIFICATION
a.	Distributor agrees to indemnify and hold harmless CytoCore, its Affiliates and their respective directors, officers, and employees against any and all claims, demands, proceedings, losses, costs, and expenses which may be brought against or suffered or incurred by CytoCore, its Affiliates or its or their respective directors, officers, and employees, in consequence of any error, mistake, acts, omissions, or negligence on the part of Distributor or any of its employees or agents, in storing, selling, promoting, or distributing any of the Products.
b.	CytoCore agrees to indemnify and hold harmless Distributor, its affiliates, and its directors, officers, and employees, against any and all claims, demands, proceedings, losses, costs, expenses which may be brought against or suffered or incurred by Distributor, its affiliates, or its directors, officer, and employees, in consequence of any error, mistake, or negligence on the part of CytoCore or any of its employees or agents, in promoting, or manufacturing any of the Products. Unless otherwise foreseen in mandatory applicable law, CytoCore shall not, in any event be liable for indirect or consequential damages or losses, special charges, loss of profit or reputation or good will. Distributor shall have no right to be indemnified by CytoCore under this Agreement to the extent the negligence of Distributor, or its employees or agents has contributed to the loss, liability or cost for which Distributor is claiming indemnification.

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c.	It shall be a condition of any obligation to defend, indemnify and hold harmless hereunder that the party seeking indemnification (i) promptly notify the party from which indemnification is sought of the assertion of any claim to be covered, (ii) permit the indemnifying party to assume and control the defense thereof, and (iii) co-operate fully in such defense.
d.	Nothing in this Agreement shall in any way exclude or limit either party’s liability for death or personal injury.
17.	ASSIGNMENT
a.	CytoCore may assign all or any part of this Agreement to any Affiliate. Subject to clause 17b. below, in all other respects this Agreement and the distributorship shall be non-assignable. Any non-permitted assignment shall be null and void.
b.	Distributor may, with CytoCore’s prior written consent, appoint agents for the distribution, sale and promotion of the Products provided that:

(1)	no such sub-license shall relieve Distributor of any of its obligations under his Agreement.
(2)	Distributor shall ensure that any sub-licensee agrees to be bound by the terms of this Agreement, and
(3)	such sub-licensee shall only be used to supplement the existing structure of CytoCore’s business and not for the purposes of creating other opportunities for Distributor.

18.	NOTICES Any notice or report pursuant to this Agreement shall be deemed duly given if sent by prepaid registered mail letter (air mail, if sent overseas), or facsimile addressed to the party at the address or fax number, as applicable, set forth at the beginning of this Agreement, or to such other address or fax number as shall have been furnished in writing.
19.	SEVERABLE CONDITIONS/UNENFORCED PROVISIONS
a.	Any provision of this Agreement held to be void, invalid, or unenforceable, will be construed as severable and will not in any way affect, render void, invalid, or unenforceable any other provision of this Agreement, and this Agreement will be carried out as if such void, invalid, or unenforceable provision was not a part of this Agreement.
b.	Failure by any party to exercise any right given in this Agreement or to insist on strict compliance by the other party of any obligation under this Agreement does not

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	constitute a waiver of the Party’s right to later demand exact compliance with the terms of this Agreement.
20.	GOVERNING LAW Unless otherwise foreseen in mandatory applicable law, any dispute or matter that may arise between the parties in connection with or as a consequence of this Agreement shall be exclusively settled in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, by three(3) arbitrators appointed in accordance with such rules. Such arbitration shall be in the English language with arbitration taking place in the Chamber of Commerce in Milan, Italy.
21.	ENTIRE AGREEMENT This Agreement, including its Schedules, contains the entire understanding of the parties with respect to the matters herein contained and voids all prior understandings, if any, between the parties with respect to the distribution of the Products. With the exception of changes that may be made by CytoCore at its sole discretion to Schedule A as set forth in clause 2 (a), the Agreement may be changed from time to time only by an instrument in writing signed by an officer of CytoCore and an authorized representation of Distributor.
22.	THIRD PARTY RIGHTS
a.	A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to rely upon or enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
b.	Any Affiliate may rely upon and enforce the terms of clause 16a.
c.	Unless otherwise foreseen in mandatory applicable law, the decision of the Arbitrators shall be final and binding on the parties. The costs of the reference to the Arbitration(including the costs of any expert appointed by him) and will be borne as agreed between the parties prior to making the reference or, failing such agreement, in accordance with the instructions of the Expert.
d.	Except for any Party’s right to seek interim relief in the courts, no party may commence legal proceedings while the dispute resolution procedures referred to in this clause 22 are being undertaken.
23.	EXECUTION IN COUNTERPARTS This Agreement may be executed in one or more counterparts, all of which should be considered one and the same agreement, and should become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party.
	IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

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Mundinter			CytoCore, Inc.
By:	/s/ Alfredo Fidalgo	By:		/s/ Bob McCullough, Jr.	11/05/07
	Name: Alfredo Fidalgo			Name: Bob McCullough, Jr.
	Title: Administrator			Title: CFO

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     SCHEDULE A

     PRODUCTS, PRICES, AND QUOTAS

Whether described generically or by reference to trade mark, only the products having the form and composition in which they are sold by CytoCore on the Effective Date, are intended to be included in this Agreement.

Prices

For the first calendar year from the Effective Date, prices to be charged for the Products by CytoCore to Distributor are as per attached appendix.

Quotas

1. Annual Quotas

• Period

                             1. First 12 Months—300,000 Units
                             2. Second 12 Months—600,000 Units
                             3. Third 12 Months—l,000,000 Units

2. Terms

• Orders will be applied against the Annual Quota based on the net invoice price of the Products ordered from and billed by Seller during the Period

          Thereafter, the parties shall meet twelve (12) months after the date hereof during each calendar year of this Agreement to discuss and agree on any increase in prices to be charged for the Products to Distributor by CytoCore. Prices may be changed at other times on agreement between the parties, taking into account market conditions in the Area which have an effect on the distribution, sale or promotion of the Products. Notwithstanding the foregoing, if prices can not be agreed to by both parties acting in good faith, either party may terminate this Agreement upon sixty (60) days’ prior written notice.

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SCHEDULE B

A.	CytoCore will only entertain claims for returned Products where same was originally purchased from CytoCore. Proof of purchase must be provided upon request.
B.	Returned Products will be valued at the original sale price or the current price whichever is lower.
C.	Full credit will only be given if CytoCore is notified within twelve (12) months prior to expiry of the returned Product so that arrangements can be made for disposal prior to the Product’s expiry date. This request is made in recognition of the fact that, in most instances, the Products are delivered with expiry dating in excess of one (1) year B twelve (12) months.
D.	In no instance will credit be given for Products for which are returned because of insufficient sales.
E.	Credit will also be denied for Products which have not been stored in accordance with CytoCore’s instructions.
F.	It is not CytoCore’s policy to reimburse Distributor for Products damaged for reasons attributed to the Distributor but each case will be reviewed at CytoCore’s sole discretion in light of any special circumstances that may necessitate special consideration.
	CytoCore Sales Representative will inspect all expired or damaged Products and will issue a Preliminary Credit Report which will be referred to his/her immediate Supervisor for final approval.
	Destruction of all expired and/or damaged Products is to be in accordance with the Food and Drugs ordinances within the Area and, if requested, witnessed by a CytoCore Sales Representative.

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SCHEDULE C

UNIT BY PRODUCT

ITEM	DESCRIPTION	UNIT PRICE
	Soft Pap™ Disposable	US$5.00
	Soft Pap™ Reusable Handle	US$12.00

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EX-10.47

Exhibit 10.47

DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (“Agreement”) effective between CytoCore, Inc. (“CytoCore”), a corporation organized and existing under the laws of the State of Delaware, United States of America whose principal address is 414 N. Orleans, Chicago 60601 and Palex Medical SA (“Distributor”), organized and existing under the laws of whose principal address is Johann Sebastian Bach, 12, 08021 Barcelona, Spain. (Distributor and CytoCore may sometimes be referred to herein individually as a “party” or collectively as the “parties”).

IN CONSIDERATION of the mutual promises and payments contained herein the parties hereto agree as follows:

1.	APPOINTMENT OF DISTRIBUTOR.
	CytoCore hereby appoints Distributor as the exclusive Distributor in (“Area”) of the products set forth on Schedule A annexed hereto as of the date hereof and such other products (if any) as may be added to the said Schedule by mutual agreement (“Products”). CytoCore may delete any Products from Schedule A at any time in its sole discretion upon written notice to Distributor.
2	SUPPLY OF PRODUCTS
a.	CytoCore or its designee shall sell and Distributor shall purchase such quantities of Products (as are agreed herein) for sale in the Area. CytoCore may from time to time change the source of supply of Products and, if CytoCore or its designated supplier shall discontinue the manufacture, sale or promotion of any Product, CytoCore shall delete such Product Schedule A and cease selling the Product to Distributor. Distributor shall be entitled to continue selling such Product in the Area until such time as the stocks of such Product held by Distributor have been exhausted unless CytoCore advises Distributor to return such inventory to Cytocore.
b.	CytoCore or its designee shall sell and Distributor shall purchase Products at prices established in accordance with Schedule A.
c.	Risks for Products shall pass to Distributor when Products are delivered into the Area covered by this agreement and Distributor shall thereafter be responsible for any damage to or loss of Products. Distributor shall notify CytoCore of the details of any incorrect delivery or of any damage to or shortage in any delivery within eight (8) working days of the receipt thereof by Distributor. Title in and to the Products shall pass to Distributor upon receipt of the Products by Distributor in accordance with clause 2(e) of this Agreement.
d.	Distributor shall not knowingly re-export or sell Products for sale outside the Area without the prior written consent of CytoCore, except that nothing in this

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	Agreement shall prevent Distributor from accepting unsolicited orders from outside the Area for the Products, as long as there is no exclusive distributor for the Area.
e.	Distributor shall pay the price stated on the invoice by 50% prepayment and 50% net 60 days for the Initial Term (as defined below at clause 6a) . Distributor shall make payment to CytoCore in the currency of Euros ( ) at such place as CytoCore shall from time to time in writing.
f.	Distributor shall not be entitled by reason of any set off, counter claim, abatement, or other similar deduction to withhold payment of any invoiced amount due to CytoCore. If Distributor fails to pay by the due date any amount payable by it under this Agreement, CytoCore shall be entitled, but not obliged, to charge Distributor interest on the overdue amount payable by Distributor immediately on demand, from the due date up to the date of actual payment, after as well as before judgment at the rate of 2 %per cent above the base rate for the time being of (8%), and fixed sum compensation under the Late Payment of Commercial Debts Regulations 2002. Such interest shall accrue on a daily basis and be compounded quarterly. CytoCore may increase the Base Rate to reflect then market conditions.
g.	During the term of this Agreement Distributor shall provide CytoCore every quarter with a written twelve (12) month forecast containing its best estimates of the number of units of each Product which will be required by Distributor, the production and delivery of which shall be subject to approval by CytoCore (“Forecast”). The Forecast for the immediate next three (3) months shall be binding on Distributor. If notice of termination of this Agreement has been served by either party in accordance with the terms of this Agreement, the Forecast shall be binding on Distributor until such time as this Agreement terminates.
h.	Distributor shall submit written purchase orders to CytoCore or its designee stating both the quantities of Products to be purchased and delivery schedules therefore in accordance with the purchasing procedures mutually agreed upon by CytoCore and Distributor from time to time. CytoCore, upon acceptance of the purchase order from Distributor, shall use its reasonable endeavors to deliver or cause to be delivered to Distributor the quantities of Products set forth in such purchase orders at the times specified therein.
3.	SALVAGE OF DAMAGED GOODS
	CytoCore shall have the full right under the Distributor’s insurance policies to possession of any of the Products involved in any loss or damage and shall control the possession of any such Products, even if full payment of same already has been made by Distributor to CytoCore. For the duration of this Agreement, Distributor shall maintain insurance in respect of the Products and will list CytoCore as a “named insured” on the face of the insurance policy. CytoCore, exercising its reasonable discretion, shall be the sole judge as to whether Products

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	involved in any loss or damage under the Distributor’s policies are fit for consumption or sale, or shall be sold or otherwise disposed of. Where payment for Products already has been made by Distributor, Distributor, after deduction of salvage expenses, shall be entitled to all proceeds below the policy retention or deductible. Under no circumstances may Distributor release Products involved in any loss or damage to the insurer without CytoCore’s prior written approval.
4.	RETURN OF MERCHANDISE TO CYTOCORE
	CytoCore shall be obliged to accept the return of the Products from Distributor only according to the policy set forth in Schedule B attached hereto.
5.	DISTRIBUTION AND PROMOTION OF PRODUCTS
a.	During the first (six) 6 months of this Agreement from the Effective Date (“Implementation Period”), and annually thereafter, the parties shall work together and provide the other party with all reasonable assistance and information in order to produce a business plan in respect of the Products including, without limitation, minimum purchase requirements (Schedule A) for the Products in the Area, pricing of Products advertising and marketing expense committed by each party and any other aspect relevant to the distribution, sale and promotion of the Products in the Area (“Business Plan”). For this purpose, the parties shall meet no later than one (1) month prior to the end of the Implementation Period, and thereafter annually thereafter for the duration of this Agreement, as amended or extended at a mutually convenient time and location, to review the Business Plan.
b.	The parties will agree on minimum purchase requirements to apply during the Implementation Period, based on current realistic sales trends as at the Effective Date for the Products (or similar or competing products) in the Area. No later than one (1) month prior to the end of the Implementation Period the parties will meet to discuss the minimum purchase requirements of Distributor for the Products for the following twelve (12) month period following the Implementation Period. Within seven (7) days of such meeting, the parties will negotiate in good faith the level of minimum purchase requirements for the Products for the following twelve (12) months (“Yearly Commitment”) and within seven (7) business days shall agree on the parties= respective knowledge of the marketplace in general. Subsequent year volume commitments will be agreed upon in writing by both parties, no later than the end of each twelve (12) months of this Agreement. In the event the parties fail for any reason to agree on minimum purchase requirements for the Products for any calendar year, the minimum purchase requirements for such year shall be deemed to be the same as those established or deemed hereby to be established for the preceding calendar year, or the same as the actual sales in such preceding calendar year if greater, increased in each case by 10 % of the prior twelve month’s sales.. The attainment of such minimum purchase requirements shall be an essential condition to the continuation of this Agreement, and failure shall constitute for CytoCore the right,

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	but without the obligation to CytoCore to terminate this Agreement pursuant to clauses 14(b) (6).
c.	Distributor shall use its best efforts to create and maintain a market for and to increase the sales or Products in the Area, shall provide at its sole expense an organization for the continuous sale, promotion and distribution of the Products throughout the Area, and shall sell, ship, and invoice the Products to purchasers in the Area. In the Area, Distributor shall use its own sales force to sell, promote and distribute the Products. Distributor may not sell, promote or otherwise distribute any products which compete either directly or indirectly with the Products and Distributor shall not establish any branch, or maintain any distribution depot, outside of its Area for the sale of the Products. CytoCore shall not be obligated to provide any resources to Distributor for the obligations set out in this clause except for initial Product training to the Distributor’s sales force and the provision of appropriate marketing materials.
d.	Distributor shall maintain a minimum inventory of Products not less than three (3) months as set forth in the Forecast, as amended from time to time.
e.	CytoCore or its designee shall have the right to inspect and audit at all reasonable times and by previous agreement with Distributor, Distributor’s inventory of the Products and any data related to CytoCore’s business and/or the Products.
6.	Term
a.	This Agreement shall begin on the Effective Date and shall continue in effect, unless sooner terminated as provided herein, for a period of five (5) years (“Initial Term”). At the end of the Initial Term this Agreement will be automatically extended for a further (three) years unless one of the parties has advised the other in writing at least twelve (12) months prior to expiration of the Initial Term that it intends to terminate this Agreement.
b.	In addition to the right of termination granted by Clause 14, CytoCore shall have the right to terminate this Agreement at any time prior to the expiration of its term upon sixty (60) days’ prior this Agreement should Distributor shall fail to attain the annual minimum purchase requirements referred to in clause 5a.above and shall take effect immediately unless otherwise agreed by CytoCore. Distributor shall notify CytoCore as soon as Distributor becomes aware that that the annual minimum purchase requirements are unlikely to be attained.. For the first full calendar year of this agreement a mutually agreed range for the value of purchases will be established by the end of the first quarter. This minimum-maximum range will be agreed by Distributor and CytoCore and relate to purchases for the remaining three-quarters of the first calendar year. In the event CytoCore terminates this Agreement before the end of the Initial Term, CytoCore shall repurchase from Distributor the inventory of Products at prices prevailing at the start of the calendar year in which such Products are to be repurchased by

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CytoCore. Such inventory of Products must be in saleable condition and have at least twenty four( 24 )months shelf life before expiration.

c.	In addition to such other rights of termination granted by clause 14, CytoCore shall have the right to terminate of this Agreement at any time if the continued performance under this Agreement becomes impractical due to the enactment of, or threatened enactment of, any ordinance, statute, regulation, law or similar provision by any local, state or national government. This Agreement shall terminate sixty (60) days after the date of written notice by CytoCore to Distributor.
7.	INTELLECTUAL PROPERTY
a.	Distributor acknowledges and agrees that CytoCore or its Affiliate are the owners of all Intellectual Property Rights incorporated on, in or relating to the Products. For the purposes of this Agreement, “Intellectual Property Rights” includes all intellectual property rights including (without limitation) patients, supplementary protection certificates, pending patents, utility models, trade marks, database rights, rights in designs, copyrights and topography rights (whether or not any of these rights are registered, and including applications and the right to apply for registration of any such rights) and all inventions, know-how, trade secrets, techniques and confidential information, and all rights and forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world, in each case for their full term, and together with any renewals or extensions. Distributor acknowledges that it neither has nor shall secure by this Agreement or by its acts during the term of this Agreement any right to any Intellectual Property Rights incorporated on, in or relating to the Products. Distributor agrees that title to and the right to use all such Intellectual Property Rights incorporated on, in or relating to the Products shall at all times be vested in CytoCore or its Affiliates whether or not such Intellectual Property Rights incorporated on, in or relating to the Products become vested in Distributor, Distributor hereby assigns to CytoCore, including by way of present assignment of present and future rights, with full title guarantee, any Intellectual Property Rights incorporated on, in or relating to the Products, together with all of the goodwill associated therewith to hold the same unto CytoCore, its successors in title and assigns.
b.	Distributor shall make no use of Intellectual Property Rights in or relating to the Products as part of or in conjunction with or in relation to or associated with Distributor’s company name, commercial name, tradename, corporate name, divisional name, subsidiary name, nickname, translated name, transliterated name, trading style, or similar name (hereinafter referred to as Marks”).
c.	Distributor shall comply, at all times, with such rules and regulations as CytoCore may issue with respect to the reproduction or reference to any Intellectual Property Rights incorporated on, in or relating to the Products. In particular, Distributor

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	shall ensure that on all advertising and promotional materials to be used and/or prepared by Distributor relating to the Products, the symbol ® shall be used in conjunction with any registered Marks owned by CytoCore or “TM” in the cast of any unregistered trade marks owned by CytoCore.
d.	Distributor shall make no use of any Intellectual Property Rights incorporated on, in or relating to the Products without CytoCore prior to written consent on Distributor’s material such as, but not limited to, advertising, stationery, bills, business forms, calling cards, or real property signs.
e.	Distributor shall not use any of CytoCore’s trade marks in any way which would tend to allow them to become generic, lose their distinctiveness, become liable to mislead the public, or be materially detrimental to or inconsistent with the good name, goodwill, reputation and image of CytoCore or any Affiliate and shall use its best endeavors not to do anything which would bring into disrepute CytoCore, the Products or any of CytoCore’s trade marks.
f.	Distributor shall not adopt or use any trade mark, symbol or device which incorporates or is confusingly similar to, or is a simulation or colorable imitation of any of CytoCore’s Marks or unfairly competes with any of CytoCore’s trade marks. Distributor shall not any time, whether during or after termination of this Agreement, apply anywhere in the world to register any trade marks identical to or so nearly resembling any of CytoCore’s Marks as to be likely to deceive or cause confusion.
g.	If Distributor believes or becomes aware that third parties are infringing any Intellectual Property Rights incorporated on, in or relating to the Products or are passing-off their products as products of CytoCore or of any of its Affiliates or of any allegation that the Intellectual Property Rights incorporated on, in or relating to the Products infringe the Intellectual Property Rights of a third party, Distributor shall notify immediately Distributor shall not, without the prior written consent of CytoCore, take any action in respect thereof, informal or formal, including but limited to making any admission notifying others or of bringing any legal proceedings or entering into any administrative proceedings against any such alleged infringement or passing off. Distributor shall co-operate fully with CytoCore or its Affiliates in the preparation or prosecution of any legal proceeding or administrative proceeding and shall be reimbursed by CytoCore for its reasonable costs.
h.	CytoCore may defend or initiate proceedings against unauthorized use of CytoCore’s Intellectual Property Rights incorporated on, in or relating to the Products and shall, in its sole discretion, decide what action (including litigation, arbitration or compromise), if any, to take in respect of any infringement or alleged infringement of any of the Intellectual Property Rights incorporated on, in or relating to the Products or any other claim or counterclaim brought or threatened in respect of the Intellectual Property Rights incorporated on, in or

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	relating to the Products. CytoCore shall not be obliged to bring or defend any proceedings, whether for infringement or otherwise in relation to any of Intellectual Property Rights incorporated on, in or relating to the Products, if it decides in its absolute discretion not do so. In the event that Distributor is charged with any infringement of the Intellectual Property Rights of any third party as a consequence of the necessary activities of Distributor hereunder and Distributor notifies CytoCore fully and promptly in writing thereof, CytoCore agrees to defend Distributor in any action taken against it based upon such infringement and to indemnify Distributor in respect of all costs, claims, demands and expenses associated therewith; provide however, CytoCore shall have the sole conduct of such claims and shall have the right to require Distributor to discontinue the acts complained of and to cancel the rights granted by this Agreement in respect thereof.
i.	In any infringement proceedings which are brought by CytoCore, CytoCore shall be entitled to claim in respect of any loss suffered or likely to be suffered by the Distributor, and any costs or damages awarded in respect of such claim shall first be applied to satisfy CytoCore’s costs and expenses and shall then be apportioned between CytoCore and Distributor in accordance with their respective losses.
j.	Distributor shall, on CytoCore’s reasonable request, give to CytoCore or its authorized representative any information as to its use of Intellectual Property Rights incorporated on, in or relating to the Products which may require and will render any reasonable assistance required at reasonable cost in maintaining the Intellectual Property Rights incorporated on, in or relating to the Products.
8.	ADVERTISING AND PROMOTION OF PRODUCTS
a.	As part of the Business Plan to be produced in accordance with clause 5a, CytoCore shall from time to time deliver advertising, promotional and instructional programs for the Products. Such programs may be modified in CytoCore in its sole discretion at any time. Advertisements and the media in which it is to be used, as well as all promotional and instructional materials to be used, must be approved in advance in writing by CytoCore. Distributor shall at its sole expense distribute all promotional and instructional materials supplied by CytoCore from time to time. Distributor shall be free to utilize advertising as is reasonably necessary to promote the sale of the Products in the Area, however any advertising by Distributor with regard to the Products shall be conducted with prior approval in writing by CytoCore.
b.	CytoCore recognizes that Distributor may from time to time request authorization in writing from CytoCore to use the Intellectual Property Rights on, in or relating to the Products. CytoCore grants a non-exclusive royalty-free license to Distributor to use in the Area the Intellectual Property Rights on, in or relating to the Products for the purposes only of fulfilling any orders made pursuant to this Agreement, and performing its obligations under this Agreement. Distributor

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	shall provide CytoCore, for CytoCore’s prior written approval, copies of any materials to be used and/or prepared by Distributor on or in relation to the Products. The right of Distributor to use such Intellectual Property Rights on, in or relating to the Products may unilaterally be revoked by CytoCore at any time and Distributor shall immediately stop such use upon receipt of notification from CytoCore.
9.	RECORDS, REPORTS. AND INSPECTION Within fifteen (15) days after the last day of each calendar month Distributor shall furnish a report to CytoCore in such form as CytoCore may from time to time specify covering Distributor’s performance under this Agreement during the previous calendar month. Distributor shall keep true and correct books of account in which shall be entered contained in any of said reports. CytoCore or its designee shall have the right at any reasonable time to inspect and examine such data, records and books of account and Distributor’s inventory of Products, samples and product literature, and records relating to Products. Review of the Distributor’s books shall be done by a reputable independent auditing company that is acceptable to both parties necessary information to permit Distributor to furnish the data to be
10.	LEGAL MATTERS
a.	Distributor shall notify CytoCore of all laws, regulations, or decrees relating to the purchase, sale and importation, if applicable, of Products and to the carrying the terms of this Agreement and of any transactions contemplated hereby.
b.	The formulae, ingredients or specifications for Products may be changed at any time by CytoCore at the sole discretion of CytoCore when such changes are deemed necessary for any reason satisfactory to CytoCore. When necessary for the maintenance of any applicable registrations, approvals, or consents, CytoCore shall inform Distributor of such changes.
c.	Distributor shall promptly send to CytoCore any data, report or information regarding Products which may come to Distributor’s attention in the Area during the term of this Agreement and shall report promptly to CytoCore any unexpected or serious adverse reactions which arise in patients using Products. The person to contact with respect to any such reactions is Richard Domanik, President., or his successor. Should it be necessary, during the term of this Agreement, to recall the Products due to an error imputable to the manufacture of the Products, or to any third party who handled, worked with or gave advice in respect of the Products or for any other reason, Distributor shall cease selling such Products in the Area and shall provide CytoCore with all reasonable assistance to recall any such Products and shall, at all terms, act in accordance with CytoCore’s directions
d.	Distributor understands that the Business Code of Conduct of CytoCore and its Affiliates dictates that all of the Products are sold only on the basis of quality, service, price and other legitimate marketing attributes, only to duly licensed and

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	authorized parties and that the payment of bribes for any purpose has no place in CytoCore’s business and its absolutely prohibited. Distributor represents and warrants that it will not engage in any conduct which is in violation of any applicable law in the Area, the United States Foreign Corrupt Practices Act, or any other applicable laws or regulations.
e.	CytoCore may in its sole discretion decide to cease the distribution of any of the Products by Distributor in the Area in circumstances where it appears to CytoCore, acting reasonably, that any of the Products may, for whatever reason, be injurious to health or unfit for human consumption or where the continued sale of a Product would be inconsistent with the principles and standards applicable to good food production. The costs associated with any Product recall (including, for the avoidance of doubt, the cost of any of the Products and the costs involved in recalling any of the Products) will be borne by CytoCore. If either party becomes aware of any circumstances which may require the distribution of any of the Products to be suspended under this clause l0f, it shall immediately notify the other party of such circumstances. Distributor shall execute any documents and do all such acts and things in accordance with the reasonable directions of CytoCore to assist with the recall of any Products. CytoCore shall, in its sole discretion, determine when the distribution and sale of the affected Product can recommence. In the event of a recall, the agreed minimum purchase levels will be reviewed by mutual consent.
11.	FORCE MAJEURE Neither CytoCore, nor its Affiliates, or their suppliers shall. be liable for any failure or delay in the delivery of Products occasioned in whole or in part by force majeure, Act of God, strike, lockout, fire, inability to obtain materials or shipping space, boycott, breakdown, war, terrorism, civil commotion, destruction of plant, delay of carrier, any governmental act, requirement, or regulation, or any other cause beyond its control. IN NO EVENT WILL CYTOCORE BE LIABLE FOR CONSEQUENTIAL OR SPECIAL DAMAGES DUE TO ANY SUCH CAUSE.
12.	RELATIONSHIP OF PARTIES The relationship between CytoCore and Distributor is and during the term hereof shall be that of the seller and purchaser. Distributor, its agents and employees are not the legal representatives, employees or agents of CytoCore for any purpose and have no right or authority to assume or create, in writing or otherwise, any obligation of any kind, express or implied, in the name of or on behalf of CytoCore. Distributor shall make not representation inconsistent with the foregoing during or after termination of this Agreement.
13.	OTHER OBLIGATIONS OF DISTRIBUTOR
a.	Distributor shall not market or sell, distribute or promote any product comparable to or competitive with any Product covered by this Agreement. Distributor may request the CytoCore’s prior written approval. The notice shall specify the source

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13.	OTHER OBLIGATIONS OF DISTRIBUTOR
a.	Distributor shall not market or sell, distribute or promote any product comparable to or competitive with any Product covered by this Agreement. Distributor may request the CytoCore’s prior written approval. The notice shall specify the source and name of such product and include a full and complete description of the nature, characteristics, and uses of such product.
b.	Distributor shall maintain in confidence and not use except for purposes of this Agreement any confidential information furnished to it by CytoCore including information contained in any report furnished by Distributor hereunder, all confidential Product information and all advertising programs and plans. Distributor shall impose the same obligation upon its employees and agents, including advertising agencies. Such obligation will not apply in respect of any information which was already in the public domain; or is already known to Distributor or which Distributor acquired from a third party who has the free right to disclose the information to them.
c.	Distributor shall maintain in confidence and not use except for purpose of this Agreement any Confidential Product Information and all advertising programs and plans. Distributor shall impose the same obligation upon its employees and agents, including advertising agencies. Such obligation will not apply in respect of any information which was already in the public domain; or is already known to Distributor or which Distributor acquired from a third party who has the free right to disclose the information to them.
d.	Inasmuch as the laws of particular countries mandate the use of specified ingredients, forms of labels and instructions for use, the precise requirements for which vary from country to country and also frequently differ even as between lines of trade in the same country, Distributor shall resell Products only to purchasers as to whom Products meet all local legal requirements and shall not sell Products to any purchaser that Distributor has reason to believe may resell them otherwise than as provided herein.
e.	CytoCore will not accept any return Products for credit unless (1) Distributor has first obtained CytoCore’s authorization in writing to return such Products in saleable condition and Distributor prepays the return freight, or (2) packaging for the Products is defective, or Distributor becomes aware that the Products are defective, and notice of such defect is received by CytoCore from Distributor within thirty (30) days of delivery of such Products to Distributor.
14.	TERMINATION FOR CAUSE
a.	Subject to clause 6 of this Agreement, failure by any party to comply with any of its material obligations hereunder shall entitle the other party to give the party in default notice requiring it to make good such default. If such default shall not be

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b. CytoCore may (without prejudice to any of its other rights conferred on it by this Agreement by law) terminate this Agreement forthwith by giving notice to such effect in the event.

(1) of war, insurrection, invasion or extended civil commotion in the Area,

(2) that Distributor or any part of its assets is acquired by or otherwise comes under the direct or indirect control of any third party (governmental, private or public) other than the present owners, or

(3) that Distributor becomes insolvent or any insolvency proceedings are instituted by or against it, or

(4) that Distributor engages in illegal activities or conduct which CytoCore deems to damage the commercial reputation of either CytoCore or Distributor or

(5) of any breach by Distributor of any of the provision of Clause 10, 13 (b) (c), or (d) above, or

(6) of any failure to attain the minimum purchase requirements referred to in clause 5b of the Agreement or

(7) of any failure to make the expenditures for advertising and promotion agreed to in clause 8 above, or

(8) that Distributor knowingly without CytoCore’s prior written consent, reexports or sells the Products outside the Area (but excluding any re export or sale of the Products outside the Area by Distributor in response to unsolicited orders), or

(9) Distributor challenges the validity of any of CytoCore’s trade marks.

(10) Distributor, without CytoCore’s prior written consent, sells, promotes, or otherwise distributes products which compete either directly or indirectly with the Products.

c.	The parties hereby agree that any of the above-mentioned events will constitute just cause for termination as provided in this clause 14.
15.	UPON TERMINATION OR EXPIRATION
a.	CytoCore or its designee shall, by giving Distributor written notice within ninety (90) days following the expiration or termination of this Agreement, purchase from Distributor any part of all or Products not theretofore sold by Distributor, at a price, payable in such currency as CytoCore may determine, equal to the sum of the purchase price paid by Distributor plus the actual cost of

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	shipment and importation of such Products, against which amounts due from Distributor may be applied. Such Products must be in saleable condition and have at least 12 months shelf life remaining.
	Upon such purchase or upon the expiration of two (2) months from the aforesaid expiration or termination, Distributor shall cease to display or use any Intellectual Property Rights on, in or relating to the Products or signs, labels or other indications identifying Distributor or any products in any way with CytoCore and shall deliver to CytoCore all printed material, including advertising, promotional and instruction material, and all labels and packages, relating to Products, together with all samples, parts, tools, or other equipment relating to Products that CytoCore may have furnished free of charge (other than for shipping and import costs) to Distributor and together with all records of Distributor’s sales necessary for CytoCore to ascertain any outstanding guarantee obligations thereunder.
b.	Following any expiration or termination of this Agreement, Distributor shall immediately cease to make any use of the Intellectual Property Rights on, in or relating to the Products in any way.
c.	Immediately upon termination or expiration of this Agreement, Distributor shall cease in any manner whatsoever to make any reference to its former role as the Distributor of the Products.
d.	Upon the expiration of this Agreement all rights granted or obligations undertaken hereunder shall terminate forthwith except rights and obligations which arose prior to such expiration or termination and those set forth in clauses 7, 8, 9, 10, 15, 16, and 21, and in sub-classes 13(b), (c) and (d). Neither CytoCore or Distributor shall incur any liability to the other by reason of the expiration or termination of this Agreement as provided herein, nor for its non-renewal, whether for loss of goodwill, anticipated profits or otherwise, and CytoCore and Distributor shall accept all rights granted and all obligations assumed hereunder including those in connection with such expiration or termination in full satisfaction of any claim resulting from such expiration or termination.
e.	The acceptance of any order form or the sale of any Products to Distributor, after the expiration or termination of this Agreement shall, unless otherwise specified, be subject to all the pertinent terms of this Agreement but shall not be construed as a renewal or extension of this Agreement nor as a waiver of termination thereof.
16.	INDEMNIFICATION
a.	Distributor agrees to indemnify and hold harmless CytoCore, its Affiliates and their respective directors, officers, and employees against any and all claims, demands, proceedings, losses, costs, and expenses which may be brought against or suffered or incurred by CytoCore, its Affiliates or its or their respective

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	directors, officers, and employees, in consequence of any error, mistake, acts, omissions, or negligence on the part of Distributor or any of its employees or agents, in storing, selling, promoting, or distributing any of the Products.
b.	CytoCore agrees to indemnify and hold harmless Distributor, its affiliates, and its directors, officers, and employees, against any and all claims, demands, proceedings, losses, costs, expenses which may be brought against or suffered or incurred by Distributor, its affiliates, or its directors, officer, and employees, in consequence of any error, mistake, or negligence on the part of CytoCore or any of its employees or agents, in promoting, or manufacturing any of the Products. CytoCore shall not, in any event, be liable for indirect or consequential losses, special charges, loss of profit or loss of reputation or goodwill. Distributor shall have no right to an indemnity under this clause 16b to the extent that the negligence of Distributor, or its employees or agents has contributed to the loss, liability or cost for which Distributor is claiming an indemnity.
c.	It shall be a condition of any obligation to defend, indemnify and hold harmless hereunder that the party seeking indemnification (i) promptly notify the party from which indemnification is sought of the assertion of any claim to be covered, (ii) permit the indemnifying party to assume and control the defense thereof, and (iii) co-operate fully in such defense.
d.	Nothing in this Agreement shall in any way exclude or limit either party’s liability for death or personal injury.
17.	ASSIGNMENT
a.	CytoCore may assign all or any part of this Agreement to any Affiliate. Subject clause 17b. below, in all other respects this Agreement and the distributorship and/or sub-distributorship shall be non-assignable. Any non-permitted assignment shall be void.
b.	Distributor may, with CytoCore’s prior written consent, appoint agents for the distribution, sale and promotion of the Products provided that:

(1)	no such sub-license shall relieve Distributor of any of its obligations under his Agreement.
(2)	Distributor shall ensure that any sub-licensee agrees to be bound by the terms of this Agreement, and
(3)	such sub-licensee shall only be used to supplement the existing structure of CytoCore’s business and not for the purposes of creating other opportunities for Distributor.

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18.	NOTICES Any notice or report pursuant to this Agreement shall be deemed duly given if sent by prepaid registered mail letter (air mail, if sent overseas), or facsimile addressed to the party at the address or fax number, as applicable, set forth at the beginning of this Agreement, or to such other address or fax number as shall have been furnished in writing.
19.	SEVERABLE CONDITIONS/UNENFORCED PROVISIONS
a.	Any provision of this Agreement held to be void, invalid, or unenforceable, will be construed as severable and will not in any way affect render void, invalid, or unenforceable any other provision of this Agreement, and this Agreement will be carried out as if such void, invalid, or unenforceable provision was not a part of this Agreement.
b.	Failure by any party to exercise any right given in this Agreement or to insist on strict compliance by the other party of any obligation under this Agreement does not constitute a waiver of the Party’s right to later demand exact compliance with the terms of this Agreement.
20.	GOVERNING LAW Any dispute that may arise between the parties in connection with or as a consequence of this Agreement shall be settled in accordance with the Rules of Conciliation and Arbitration of the International Chamber of Commerce, by three arbitrators appointed in accordance with its rules. Such arbitration shall be in the English language with arbitration to take place in the City of Madrid, Spain..
21.	ENTIRE AGREEMENT This Agreement, including its Schedules, contains the entire understanding of the parties with respect to the matters herein contained and voids all prior understandings, if any, between the parties with respect to the distribution of the Products. With the exception of changes that may be made by CytoCore at its sole discretion to Schedule A as set forth in clause 2 (a), the Agreement may be changed from time to time only by an instrument in writing signed by an officer of CytoCore and an authorized representation of Distributor.
22.	THIRD PARTY RIGHTS
a.	Except as provide at clause 23b (or insofar as this Agreement otherwise expressly provides that a third party may in his own right enforce a term of this Agreement), a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to rely upon or enforce any term of this Agreement but this Agreement does not affect any right or remedy of a third party which exists or is available apart from that Act.
b.	Any Affiliate may rely upon and enforce the terms of clause 16a.

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c.	The decision of the Expert shall be final and binding on the parties. The costs of the reference to the Expert (including the costs of any expert appointed by him) and will be borne as agreed between the parties prior to making the reference or, failing such agreement, in accordance with the instructions of the Expert.
d.	Except for any party’s right to seek interim relief in the courts, no party may commence legal proceedings while the dispute resolution procedures referred to in this clause 24 are being undertaken.
23.	EXECUTION IN COUNTERPARTS This Agreement may be executed in one or more counterparts, all of which should be considered one and the same agreement, and should become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party.
	IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

PALEX MEDICAL SA		CYTOCORE, INC.
By:	/s/ Jose Terol Name: Jose Terol	By:	/s/ Bob McCullough Jr. Name: Bob McCullough, Jr.
	Title:   General Manager		Title:   CFO

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SCHEDULE A

PRODUCTS. PRICES. AND QUOTAS

Whether described genetically or by reference to trade mark, only the products having the form and composition in which they are sold by CytoCore on the Effective Date, are intended to be included in this Agreement.

Prices

For the first calendar year from the Effective Date, prices to be charged for the Products by CytoCore to Distributor are as per attached appendix.

Quotas

1.	Annual Quotas
	•       Period

1.	First 12 Months—600,000 Units
2.	Second 12 Months—1,200,000 Units
3.	Third 12 Months—2,400,000 Units

2. Terms

•  Orders will be applied against the Annual Quota based on the net invoice price of the Products ordered from and billed by Seller during the Period

     Thereafter, the parties shall meet twelve (12) months after the date hereof during each calendar year of this Agreement to discuss and agree on any increase in prices to be charged for the Products to Distributor by CytoCore. Prices may be changed at other times on agreement between the parties, taking into account market conditions in the Area which have an effect on the distribution, sale or promotion of the Products. Notwithstanding the foregoing, if prices can not be agreed to by both parties acting in good faith, either party may terminate this Agreement upon sixty (60) days’ prior written notice.

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SCHEDULE B

A.	CytoCore will only entertain claims for returned Products where same was originally purchased from CytoCore. Proof of purchase must be provided upon request.
B.	Returned Products will be valued at the original sale price or the current price whichever is lower.
C.	Full credit will only be given if CytoCore is notified within twelve (12) months prior to expiry of the returned Product so that arrangements can be made for disposal prior to the Product’s expiry date. This request is made in recognition of the fact that, in most instances, the Products are delivered with expiry dating in excess of one (1) year B twelve (12) months.
D.	In no instance will credit be given for Products for which are returned because of insufficient sales.
E.	Credit will also be denied for Products which have not been stored in accordance with CytoCore’s instructions.
F.	It is not CytoCore’s policy to reimburse Distributor damaged Products but each case will be reviewed at CytoCore’s sole discretion in light of any special circumstances that may necessitate special consideration.
	CytoCore Sales Representative will inspect all expired or damaged Products and will issue a Preliminary Credit Report which will be referred to his/her immediate Supervisor for final approval.
	Destruction of all expired and/or damaged Products is to be in accordance with the Food and Drugs ordinances within the Area and, if requested, witnessed by a CytoCore Sales Representative.

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SCHEDULE C

UNIT BY PRODUCT

ITEM	DESCRIPTION	UNIT PRICE
	Soft Pap™ Disposable	US$5.00
	Soft Pap™ Reusable Handle	US$12.00

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EX-10.48

Exhibit 10.48

DISTRIBUTION AGREEMENT

This DISTRIBUTION AGREEMENT (“Agreement”) is made this 16^th day of February 2008 (the “Effective Date”) by and between CytoCore, Inc. (“CytoCore”), a Delaware corporation whose principal address is 414 N. Orleans, Chicago 60610 and CoMedical, Inc. (“Distributor”), a Washington corporation whose principal address is 7100 Roosevelt Way N.E., Seattle, WA 98115. Distributor and CytoCore may sometimes be referred to herein individually as a “party” or collectively as the “parties.”

          Whereas, CytoCore has developed and patented a particular device know as SoftPap^® (patent No. 6,475,164) approved by U.S. Food and Drug Administration on January 30, 2008;

          Whereas, Distributor desires to be an exclusive distributor of the SoftPap^® device in accordance with the terms and conditions of this agreement;

          Whereas, Distributor has represented to CytoCore that it has a staff of highly trained sales representatives who are capable of selling SoftPap^® to licensed medical service providers for consumer use; and,

          Whereas Distributor has represented to CytoCore that is has sufficient capitalization to effectively market SoftPap^® in the Area assigned to Distributor as set forth on schedule “A” hereto.

IN CONSIDERATION of the foregoing recitals (which are incorporated herein), mutual promises and covenants contained herein the parties hereto agree as follows:

1.	APPOINTMENT OF DISTRIBUTOR.
	CytoCore hereby appoints Distributor as the Exclusive Distributor of the Products in the “Area” set forth on Schedule “A” annexed hereto as of the Effective Date and such other products (if any) as may be added to the Schedule by mutual agreement (“Products”). CytoCore may delete any Products from Schedule “A” at any time at its sole discretion upon 30 days written notice to Distributor.
2	SUPPLY OF PRODUCTS
a.	CytoCore or its designee shall sell and Distributor shall purchase such minimum quantities of Products (as are agreed herein in accordance with section 4.b. hereof) for sale in the Area. CytoCore may from time to time change the source of supply of Products and, if CytoCore or its designated supplier shall discontinue the manufacture, sale or promotion of any Product, CytoCore shall delete such Product from Schedule A and cease selling the Product to Distributor. Distributor shall be entitled to continue selling such Product in the Area until such time as the stocks of such Product held by Distributor have been exhausted unless CytoCore advises Distributor to return such inventory to CytoCore.
b.	CytoCore or its designee shall sell and Distributor shall purchase Products at prices established in accordance with Schedule B. Prices for all Products shall be subject to change by CytoCore twice each year after December 31, 2009, with written notice to Customer. Price adjustment descriptions and formula are set forth on Schedule B.
c.	All prices and charges are F.O.B. Origin, freight prepaid and charged back so that Distributor shall pay delivery charges from the plant to the Distributor location or from the warehouse to the Distributor location. CytoCore shall not be liable for delays in deliveries caused by a recognized delivery service or common carrier. Any and all Products delivered or made available to Distributor shall be conclusively deemed accepted by Distributor without objection unless, within five (5) days following the delivery thereof, Distributor rejects such Products by delivering to CytoCore a written notice describing with particularity the basis upon which such Products are rejected. Distributor shall not be entitled to reject any Products that conform in all material respects to CytoCore’s published Product specifications.
d.	Distributor shall not knowingly re-export or sell Products outside the Area without the prior written consent

	of CytoCore, except that nothing in this Agreement shall prevent Distributor from accepting unsolicited orders from outside the Area for the Products as long as there is no exclusive distributor for that Area.
e.	Distributor will be invoiced by CytoCore’s direct billing procedure. Payment shall be due within thirty (30) days from the invoice date. A discount of 1% of the invoice price (exclusive of freight and taxes) will be allowed if CytoCore receives payment with fifteen (15) days of invoice date. All late payments shall accrue interest from the due date at a rate of one and one-half percent (11/2%) per month or, if lower, the highest rate allowed by law. If Distributor fails to pay any amounts when due, CytoCore may, without liability, cease performing any Services or delivering any Products until full payment for all outstanding amounts is received. CytoCore reserves the right at any time to alter or suspend credit or to change any credit terms provided herein when, in its sole discretion, the financial condition of Distributor so warrants. Should any portion of an invoice become disputed, Distributor agrees to promptly notify CytoCore of the dispute and to deduct and pay the undisputed amount in accordance with the foregoing. The parties shall use their best efforts to resolve a disputed invoice amount within thirty (30) days.
	CytoCore is required to charge applicable state and local taxes (“Applicable Taxes”) on every item for which a sales tax exemption certification has not been provided. In the event that Distributor seeks to claim any exemption from Applicable Taxes in any transaction, Distributor agrees to promptly furnish CytoCore tangible copies of any appropriate or required exemption certificates or other required documentation deemed necessary or desirable by CytoCore to properly support any such claimed exemptions. Failure on Distributors part to promptly provide any such exemption certificates or other documentation to CytoCore upon request will give CytoCore the right to immediately invoice Distributor for all Applicable Taxes due as if the claimed exemption did not apply. IN ANY EVENT, DISTRIBUTOR AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS CYTOCORE FROM ANY TAXES INCURRED BY CYTOCORE AS THE RESULT OF ANY CLAIMED EXEMPTION FROM APPLICABLE TAXES.
f.	Except as provided in subsection 2.(e) above, Distributor shall not be entitled by reason of any set off, counter claim, abatement, or other similar deduction to withhold payment of any invoiced amount due to CytoCore.
g.	Distributor shall submit written purchase orders, or electronic equivalents, to CytoCore or its designee stating both the quantities of Products to be purchased and delivery schedules therefore in accordance with the purchasing procedures mutually agreed upon by CytoCore and Distributor. CytoCore, upon acceptance of Distributor’s purchase order, shall use its commercially reasonable efforts to deliver or cause to be delivered to Distributor the quantities of Products set forth in such purchase orders at the times specified therein. For its convenience, Distributor may use its preprinted forms to order Products, and CytoCore may use its preprinted forms to acknowledge same; provided, however, that the provisions of this Agreement shall override the provisions of such forms and govern the transaction and that neither this Agreement nor any provision hereof shall be deemed to be superseded or otherwise changed in any way by any preprinted or other provision contained in any such forms.
3.	RETURN OF PRODCUT INVENTORY OR SALVAGE OF DAMAGED PRODUCTS TO CYTOCORE
	CytoCore shall be obliged to accept the return of the Products from Distributor only according to the policy set forth in Schedule D attached hereto.
4.	DISTRIBUTION AND PROMOTION OF PRODUCTS
a.	During the first six (6) months from the Effective Date (“Implementation Period”), and annually thereafter, the parties shall work together and provide the other party with all reasonable assistance and information in order to produce a business plan in respect of the Products including, without limitation, minimum purchase requirements (Schedule A) for the Products in the Area, advertising and marketing expenses committed by each party and any other aspect relevant to the distribution, sale and promotion of the Products in the Area (“Business Plan”).
b.	No later than one (1) month prior to the end of the Implementation Period the parties will meet to discuss the minimum purchase requirements of Distributor for the Products for the twelve (12) month period following the Implementation Period. The attainment of such minimum purchase requirements is an essential condition to the continuation of this Agreement, and failure shall give CytoCore the right to terminate this Agreement pursuant to sections 5(a) and 12(b) (6).

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c.	Distributor shall use its best efforts to create and maintain a market for and to increase the sales of Products in the Area, shall provide at its sole expense an organization for the continuous sale, promotion and distribution of the Products throughout the Area, and shall sell, ship, and invoice the Products to qualified purchasers in the Area. In the Area, Distributor shall use its own employed sales force to sell, promote and distribute the Products. CytoCore shall not be obligated to provide any resources to Distributor for the obligations stipulated in this Agreement, except for initial appropriate training of Distributor’s sales force and the provision of appropriate marketing materials. These services and materials will be provided to Distributor without cost.
d.	Distributor shall maintain a minimum inventory of Products not less than one (1) month as set forth in the Forecast, as amended from time to time.
e.	Distributor agrees to keep in full force and effect and maintain at its sole cost and expense the following policies of insurance during the entire duration of the Agreement:

(a) Types and Limits of Insurance.

(1)	Workers Compensation with statutory limits and Employers Liability Insurance limits of $500,000 per employee, accident or disease.
(2)	Commercial General Liability Insurance providing coverage for bodily injury and property damage arising out of the work to be performed and including coverage for personal and advertising injury and contractual liabilities providing limits of not less than $1,000,000 per occurrence.
(3)	Professional Liability Insurance including coverage for wrongful acts, errors and omissions, with limits of not less than $1,000,000 per claim.

(b)	All such insurance shall be with insurance companies that maintain a rating of not less than A- VII in the most current publication of Best’s Insurance Reports published by A.M. Best.
(c)	Distributor shall provide certificates of insurance signed by an authorized representative of the respective carriers within 10 days of the Effective Date of this Agreement. All such certificates will contain no less than thirty (30) days prior written notice of cancellation, non-renewal, or material change in coverage.

5.	Term
a.	This Agreement shall begin on the Effective Date and shall continue in effect, unless sooner terminated as provided herein, for a period of three (3) years (“Initial Term”). At the end of the Initial Term this Agreement will be automatically extended for further one (1) year periods unless one of the parties has advised the other in writing at least ninety (90) days prior to expiration of the Initial Term that it intends to terminate this Agreement.
b.	In addition to the right of termination granted by Section 12, CytoCore shall have the right to terminate this Agreement at any time prior to the expiration of its term upon ninety (90) days’ prior written notice should Distributor fail to attain the annual minimum purchase requirements referred to in section 4a.above. Distributor shall notify CytoCore as soon as Distributor becomes aware that the annual minimum purchase requirements are unlikely to be attained. In the event CytoCore terminates this Agreement before the end of the Initial Term, CytoCore shall repurchase from Distributor the inventory of Products at prices prevailing at the start of the calendar year in which such Products are to be repurchased by CytoCore. Such inventory of Products must be in saleable condition, in unopened full cartons, and have at least nine (9) months shelf life before expiration.
c.	In addition to such other rights of termination granted by section 12, CytoCore shall have the right to terminate of this Agreement at any time if the continued performance under this Agreement becomes impractical due to the enactment of, or threatened enactment of, any ordinance, statute, regulation, law or similar provision by any local, state or national government. This Agreement shall terminate sixty (60) days after the date of written notice by CytoCore to Distributor.

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6.	INTELLECTUAL PROPERTY
a.	This Section 6 will be binding upon Distributor’s Shareholders, beneficial owners, directors, officers and employees as if they were actual signatories to this Agreement.
b.	Distributor acknowledges and agrees that CytoCore or its Affiliate are the owners of all Intellectual Property Rights incorporated on, in or relating to the Products. For the purposes of this Agreement, “Intellectual Property Rights” includes all intellectual property rights including (without limitation) patents, supplementary protection certificates, pending patents, utility models, trade marks, database rights, rights in designs, copyrights (whether or not any of these rights are registered, and including applications and the right to apply for registration of any such rights) and all inventions, know-how, trade secrets, techniques and confidential information, and ail rights and forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world, in each case for their full term, and together with any renewals or extensions. Distributor acknowledges that it neither has nor shall secure by this Agreement or by its acts during the term of this Agreement any right to any Intellectual Property Rights incorporated on, in or relating to the Products. Distributor agrees that title to and the right to use all such Intellectual Property Rights incorporated on, in or relating to the Products shall at all times be vested in CytoCore or its Affiliates whether or not such Intellectual Property Rights are incorporated on, in or relating to the Products become vested in Distributor. Distributor hereby assigns to CytoCore, including by way of present assignment of present and future rights, any Intellectual Property Rights incorporated on, in or relating to the Products, together with all of the goodwill associated therewith to hold the same unto CytoCore, its successors and assigns.
c.	Without CytoCore’s prior written permission, Distributor shall make no use of Intellectual Property Rights in or relating to the Products as part of or in conjunction with or in relation to or associated with Distributor’s company name, commercial name, tradename, corporate name, divisional name, subsidiary name, nickname, translated name, transliterated name, trading style, or similar name (hereinafter referred to as (“...”).
d.	Distributor shall comply, at all times, with such rules and regulations as CytoCore may issue with respect to the reproduction or reference to any Intellectual Property Rights incorporated on, in or relating to the Products. In particular, Distributor shall ensure that on all advertising and promotional materials to be used and/or prepared by Distributor relating to the Products, the symbol ® shall be used in conjunction with any registered trade marks or service marks owned by CytoCore or “TM” in the case of any unregistered trade marks owned by CytoCore.
e.	Distributor shall not use any of CytoCore’s trade marks in any way which would tend to allow them to become generic, lose their distinctiveness, become liable to mislead the public, or be materially detrimental to or inconsistent with the good name, goodwill, reputation and image of CytoCore or any affiliate and shall use its best efforts not to do anything which would bring into disrepute CytoCore, the Products or any of CytoCore’s trade marks.
f.	In any infringement proceedings which are brought by CytoCore, CytoCore shall be entitled to claim in respect of any loss suffered or likely to be suffered by the Distributor, and any costs or damages awarded in respect of such claim shall first be applied to satisfy CytoCore’s costs and expenses and shall then be apportioned between CytoCore and Distributor in accordance with their respective losses.
g.	Distributor shall, on CytoCore’s reasonable request, give to CytoCore or its authorized representative any information as to its use of Intellectual Property Rights incorporated on, in or relating to the Products which it may require and will render any reasonable assistance required at reasonable cost in maintaining registrations of the Intellectual Property Rights incorporated on, in or relating to the Products.
h.	Distributor agrees that it will not seek to (i) challenge, through the courts, administrative governmental bodies, private organizations or in any other manner, the rights of CytoCore to exploit the Intellectual Property by any means whatsoever or (ii) thwart, hinder or subvert the intent of the preceding grants and conveyances to CytoCore, or the collection by CytoCore of any proceeds relating to the rights conveyed under this Agreement.
7.	ADVERTISING AND PROMOTION OF PRODUCTS
a.	As part of the Business Plan to be produced in accordance with section 4a, CytoCore shall, at its sole discretion, from time to time deliver to Distributor advertising, promotional and instructional programs for the Products. Such programs may be modified by CytoCore in its sole discretion at any time.

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	Advertisements and the media in which it is to be used, as well as all promotional and instructional materials to be used, must be approved in advance in writing by CytoCore.
b.	CytoCore recognizes that Distributor may from time to time request authorization in writing from CytoCore to use the Intellectual Property Rights on, in or relating to the Products. CytoCore grants a non-exclusive royalty-free license to Distributor to use in the Area the Intellectual Property Rights on, in or relating to the Products for the purposes only of fulfilling any orders made pursuant to this Agreement, and performing its obligations under this Agreement. The right of Distributor to use such Intellectual Property Rights on, in or relating to the Products may unilaterally be revoked by CytoCore at any time and Distributor shall immediately stop such use upon receipt of notification from CytoCore.
8.	RECORDS. REPORTS. AND INSPECTION.
	Distributor shall provide CytoCore, on a monthly basis, a complete list of customers to whom it has sold Products and the quantities of such sales.
9.	GENERAL MATTERS
a.	The formulae, ingredients or specifications for Products may be changed at any time by CytoCore at its sole discretion when such changes are deemed necessary for any reason to CytoCore including compliance with applicable laws and regulations. When necessary for the maintenance of any applicable registrations, approvals, or consents, CytoCore shall inform Distributor of such changes.
b.	Should it be necessary, during the term of this Agreement, to recall the Products due to an error imputable to the manufacture of the Products, or to any third party who handled, worked with or gave advice in respect of the Products or for any other reason, Distributor shall cease selling such Products in the Area and shall provide CytoCore with all reasonable assistance to recall any such Products and shall, at all terms, act in accordance with CytoCore’s directions. The return of said Products will be in accordance with schedule D hereof.
c.	Distributor shall promptly send to CytoCore any data, report or information regarding Products which may come to Distributor’s attention in the Area during the term of this Agreement and shall report promptly to CytoCore any unexpected or serious adverse reactions which arise in patients using Products. The person to contact with respect to any such reactions is CytoCore’s Quality Assurance Manager. CytoCore may in its sole discretion decide to cease the distribution of any of the Products by Distributor in the Area in circumstances where it appears to CytoCore, acting reasonably, that any of the Products may, for whatever reason, be injurious to health or unfit for human consumption or where the continued sale of a Product would be inconsistent with the principles and standards applicable to careful medical device production. The costs associated with any Product recall (including, for the avoidance of doubt, the cost of any of the Products and the costs involved in recalling any of the Products) will be borne by CytoCore. If either party becomes aware of any circumstances which may require the distribution of any of the Products to be suspended under this subsection 9c, it shall immediately notify the other party of such circumstances. Distributor shall execute any documents and do all such acts and things in accordance with the reasonable directions of CytoCore to assist with the recall of any Products. CytoCore shall, in its sole discretion, determine when the distribution and sale of the affected Product can recommence. In the event of a recall, the agreed minimum purchase levels will be reviewed by mutual consent.
10.	FORCE MAJEURE
	Neither CytoCore, nor its Affiliates, or their suppliers shall be liable for any failure or delay in the delivery of Products occasioned in whole or in part by force majeure, Act of God, strike, lockout, fire, inability to obtain materials or shipping space, boycott, breakdown, war, terrorism, civil commotion, destruction of plant, delay of carriers, any governmental act, requirement, or regulation, or any other cause beyond its control. IN NO EVENT WILL CYTOCORE BE LIABLE FOR CONSEQUENTIAL OR SPECIAL DAMAGES DUE TO ANY SUCH CAUSE.
11.	OTHER OBLIGATIONS OF DISTRIBUTOR
a.	Neither Distributor, nor its affiliates or subsidiaries may sell, promote or otherwise distribute any products which compete directly with the Products. Distributor shall not establish any branch, or maintain any distribution depot, outside of its Area for the sale of the Products. This provision will apply to other business entities owned by Distributor’s shareholders, directors, beneficial owners, or employees as if such individuals or entities were actual signatories to this Agreement.

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b.

Distributor shall maintain in confidence and not use except for purposes of this Agreement any confidential information furnished to it by CytoCore including information contained in any report furnished by Distributor hereunder, all confidential Product information and all advertising programs and plans. Distributor shall impose the same obligation upon its agents, if any, permitted under subsection 14(b) hereof. This Section 1 will be binding upon Distributors Shareholders, beneficial owners, directors, officers, employees and agents, including advertising agencies as if they were original signatories to this Agreement. This subsection 11B shall not affect Distributor’s right to use or disclose information that: (i) is or may hereafter be in the public domain; (ii) the Distributor can show was Known to it without any confidentiality obligation prior to the disclosure by CytoCore; (iii) is disclosed to the Distributor by a third party, without violation of any confidentiality obligation, subsequent to disclosure by CytoCore; (iv) is independently developed by the receiving party without use of the Confidential Information of CytoCore; or (v) is required to be disclosed pursuant to governmental or judicial process, provided that notice of such process is promptly provided to CytoCore in order that it may have every opportunity to intercede in such process to contest such disclosure.

c.

On an annual basis Distributor’s chief financial officer, or independent public accountant, must verify in writing to CytoCore that its financial condition meets 3 out of the following 4 metrics:

Return on Sales (Net Profit/Sales) > 3.5%
Return on Assets (Net Profit/Total Assets) > 9.0%
Return on Net Worth (Net Profit/Net Worth) > 25.5%
Inventory Turns > 11.5 times

	These ratios were calculated using data published in Dun & Bradstreet’s Industry Norms & Financial Ratios for SIC 5097 (Medical Equipment and Device Wholesalers).
12.	TERMINATION FOR CAUSE

This Agreement shall be a continuing Agreement unless terminated earlier as follows:

a.	This Agreement may be terminated with cause upon notice, which shall become effective ten (10) days after receipt. To the extent that the form of notice or the time period of notice permitted herein shall conflict with applicable law, then such alternate form of notice or notice period of such applicable law shall be deemed to be incorporated into this Agreement.
b.	To the extent that the CytoCore shall elect to terminate this Agreement for cause or to the extent that any applicable law shall determine that cause is required for the termination or non-renewal of this Agreement, good cause shall include, but not be limited to, the following:

(i) Consistent failure by the Distributor to achieve minimum annual sales volume of as defined in Schedule A in the assigned Area;

(ii) Consistent failure by the Distributor to maintain and properly train a staff of sales and service personnel of adequate size for meeting the minimum volume requirement for the Area as established in accordance with Section 4.b. hereof the Products;

(iii) Failure by the Distributor to maintain a current account status, or to furnish financial information on request; or,

(iv) Persistent (for 3 consecutive months) failure by the Distributor to make timely paymentofany obligation owing to CytoCore.

c.	The transfer by any means of more than ten percent (10%) of Distributor’s assets (other than in the ordinary course of business) or the transfer of more than ten percent (10%) of the stock of the Distributor, if the Distributor is a corporation; or the transfer, removal, resignation, withdrawal, elimination or any other change of principal owners or principal managers of the Distributor for any reason without prior written approval of CytoCore, which shall not be unreasonably withheld;
d.	A misrepresentation to CytoCore by the Distributor or by any principal owner or principal manager in applying for the appointment as the Distributor under this Agreement or, after appointment, as to the records of the Distributor, the status of current accounts or orders for Products or concerning the beneficial ownership or management of the Distributor;
e.	Any attempted sale, transfer or assignment, voluntarily or involuntarily, by operation of law or otherwise, including merger, consolidation or reorganization to which the Distributor is a party, by the Distributor of this Agreement or any of the rights granted to the Distributor under the provisions of this Agreement; or

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	any attempted transfer, assignment or delegation, voluntarily or involuntarily, by operation of law or otherwise, by the Distributor of any of the responsibilities assumed by the Distributor under the provisions of this Agreement, without the prior written consent of CytoCore;
f.	Conviction of any principal owner or principal manager of the Distributor of any crime which, in the opinion of CytoCore, may adversely affect the reputation of CytoCore or the reputation of CytoCore’s Products;
g.	Any submission by the Distributor to CytoCore of any false or fraudulent claim, or statement in support thereof, for payment, for parts, for compensation or for any discount, allowance, refund or credit, warranty claim, or any claim made by the Distributor to CytoCore;
h.	Willful failure by the Distributor to comply with the provisions of any law or regulation relating to the operation of its business as a Distributor or to the sales or servicing of the Products;
i.	Failure by the Distributor to perform any of the other obligations, duties or responsibilities under this Agreement, which continues for a period of thirty (30) days after notice thereof from CytoCore;
j.	The decision by CytoCore to: (a) discontinue the Product line or lines that are the subject matter of this Agreement; or (b) withdraw from all or a substantial portion of the geographic market in which the Area is located; or (c) sell, convey, merge or otherwise transfer all or a substantial portion of the part or parts of the business of CytoCore responsible for the Product line or lines that are the subject matter of this Agreement.
k.	In the event that Distributor shall be declared bankrupt or insolvent, or have a receiver appointed over its property or shall petition for reorganization or other remedy under the bankruptcy laws as now or hereafter existing, or make any assignment for the benefit of creditors or pursue any other remedy under any other insolvency laws, to the extent permitted by law, this Agreement may be terminated by CytoCore, effective immediately upon the mailing of a notice of such termination by certified mail. In the event of termination of this Agreement under this subsection k, all amounts owed to CytoCore shall be immediately due and payable.
l.	In the event of termination of this Agreement by either party as provided herein the following provisions shall apply:

(i.)	CytoCore is relieved from any obligation to make any further shipments hereunder, and may cancel all of the Distributor’s unshipped orders for any Products, irrespective of previous acceptance by CytoCore, except those Products which are proved to CytoCore’s satisfaction to have been sold by the Distributor prior to the receipt by the Distributor of notice of termination. CytoCore shall have no obligation or liability to the Distributor or its prospective customers in connection with any such cancellation. If CytoCore accepts such an order and the Product is shipped, CytoCore will arrange for the delivery and warranty service of the Product. The acceptance of orders from the Distributor or the continuous sale of Products to the Distributor or any other act after termination of this Agreement shall not be construed as a renewal of this Agreement for any further term nor as a waiver of the termination.
(ii.)	Upon termination of this Agreement or of any schedule hereto, the Distributor shall return to CytoCore, upon CytoCore’s request and at CytoCore’s expense, promptly and without charge (except as hereinafter provided) all documents regarding Products, Product customer lists, price books, and service policy manuals, service bulletins, sales aids, such as videos, CD’s, filmstrips and recordings, and other publications of CytoCore and its affiliates which the Distributor has on hand relating to Products.
(iii)	Upon termination of this Agreement Distributor shall cease to display or use any Intellectual Property Rights on, in or relating to the Products or signs, labels or other indications identifying Distributor or any products in any way with CytoCore and shall deliver to CytoCore all printed material, including advertising, promotional and instruction material, and all labels and packages, relating to Products, together with all samples, parts, tools, or other equipment relating to Products that CytoCore may have furnished free of charge (other than for shipping and import costs) to Distributor and together with all records of Distributor’s sales necessary for CytoCore to ascertain any outstanding guarantee obligations thereunder.

m. The Distributor shall be solely responsible for all commitments incurred or assumed by it during the term of this Agreement or hereafter, and CytoCore shall not be held responsible in any manner therefore,

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	irrespective of any suggestion or recommendation with respect thereto by CytoCore or any of its employees or representatives unless CytoCore has expressly agreed in writing to assume the responsibility.
n.	In the event of any termination of this Agreement, all obligations owed by the Distributor to CytoCore shall become immediately due and payable on the effective date of termination whether otherwise then due or not (without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Distributor); and CytoCore may offset and deduct from any or all sums owed to the Distributor any or all sums owed by the Distributor, rendering to the Distributor the excess, if any.
o.	Neither CytoCore nor the Distributor shall, by reason of the termination of the Agreement, be liable to the other for compensation, reimbursement, or damages either on account of present or prospective profits on sales or anticipated sales, or on account of expenditures, investments or commitments made in connection therewith or in connection with the establishment, development or maintenance of the business or goodwill of CytoCore or the Distributor, or on account of any cause or thing whatsoever, provided, however, that such termination shall not affect the rights or liabilities of the parties with respect to Products previously sold hereunder or with respect to any indebtedness then owing by either party to the other. Distributor shall accept all rights granted and all obligations assumed hereunder including those in connection with such expiration or termination in full satisfaction of any claim resulting from such expiration or termination.
p.	Unless otherwise provided by applicable law, in the event this Agreement is terminated, CytoCore will repurchase at Distributor’s request all new, unused, current, complete and undamaged Products at the original invoice prices, less any applicable discounts or payments made thereon, less a 10% handling charge computed on Distributor’s net price. In addition, such return of Products will be in accordance with Schedule D hereof.
q.	Neither party will be in breach of this Agreement unless the other party provides written notice to the allegedly breaching party of any violation of this Agreement and the allegedly breaching party fails to cure this violation within 30 days after receiving this notice. If the default is not cured by the end of the 30 day period, then termination will be effective without further notice. Notwithstanding the above, a breach by Distributor of any part of sections 2, 5, or 6 of this Agreement is not subject to cure and, accordingly, any such breach gives CytoCore the right to terminate the Agreement immediately upon written notice to Distributor.
13.	INDEMNIFICATION
	Each party (“indemnifying Party”) shall at all times (both during and after the term hereof) defend, indemnify, and hold the other party and its agents, officers, affiliates, directors, and employees (each of them, individually, an “Indemnified Party”) harmless against and from any and all third party actions, suits, liabilities, settlements, losses, damages, charges, costs, counsel fees, and all other expenses relating to or arising in connection with any and all claims (whether or not groundless) relating to or arising out of this Agreement relating to personal injury or death to persons and damage to real and personal property of the Indemnified Party to the proportionate extent caused by the actual or alleged negligence, dishonesty, willful misconduct, or negligent omission by the Indemnifying Party, or any of its employees or agents; and in case any action, suit or proceeding shall at any time (either during or after the term hereof) be brought against an Indemnified Party by reason of any such claim, the Indemnifying Party shall resist and defend such action, suit or proceeding, at the sole expense of the Indemnifying Party by counsel of its choice, provided that (i) the Indemnified Party notifies the Indemnifying Party promptly in writing of the claim; and (ii) the Indemnified Party provides the Indemnifying Party with all reasonably necessary assistance, information, and authority to perform the foregoing at the Indemnified Party’s expense. Neither party’s liability hereunder shall include consequential, incidental, special, or punitive damages, including without limitation lost profits and/or lost business opportunities, whether arising in tort, warranty contract or strict liability.
14.	ASSIGNMENT
a.	CytoCore may assign all or any part of this Agreement to any Affiliate. Subject to subsection 14b, below, in all other respects this Agreement and the distributorship and/or sub-distributorship shall be non-assignable. Any non-permitted assignment shall be void.
b.	Distributor may, with CytoCore’s prior written consent, appoint agents for the distribution, sale and promotion of the Products provided that:

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(1)	no such agent shall relieve Distributor of any of its obligations under his Agreement;
(2)	Distributor shall ensure that any agent agrees to be bound by the terms of this Agreement; and,
(3)	such agent shall only be used to supplement the existing structure of CytoCore’s business and not for the purposes of creating other opportunities for Distributor.

15.	NOTICES
	Any notice or report pursuant to this Agreement shall be deemed duly given if sent by prepaid registered mail letter (air mail, if sent overseas), or facsimile addressed to the party at the address or fax number, as applicable, set forth at the beginning of this Agreement, or to such other address or fax number as shall have been furnished in writing.
16.	SEVERABLE CONDITIONS/UNENFORCED PROVISIONS
a.	Any provision of this Agreement held to be void, invalid, or unenforceable, will be construed as severable and will not in any way affect render void, invalid, or unenforceable any other provision of this Agreement, and this Agreement will be carried out as if such void, invalid, or unenforceable provision was not a part of this Agreement.
b.	Failure by any party to exercise any right given in this Agreement or to insist on strict compliance by the other party of any obligation under this Agreement does not constitute a waiver of the Party’s right to later demand exact compliance with the terms of this Agreement.
17.	GOVERNING LAW.

(i)

All controversies and disputes arising out of or under this Agreement will be determined pursuant to the laws of the State Delaware, regardless of applicable principles of conflicts of laws. The Parties irrevocably submit to the exclusive jurisdiction of (i) the Courts of the State of Illinois, and (ii) if federal jurisdiction exists, to the Federal District Court, Northern District of Illinois for the purposes of any suit, action, or other proceeding arising out of the Agreement. The Parties hereby irrevocably waive any objection, including that of inconvenient forum, which they may now or hereafter have to the laying of venue for any suit, action or proceeding arising out of or relating to the Agreement in the Courts of the State of Illinois, or in the Federal District Court, Northern District of Illinois. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.

(ii)

THE PARTIES AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY AND ALL CLAIMS OR CAUSES OF ACTION BASED UPON OR ARISING OUT OF THE AGREEMENT.

18.	ENTIRE AGREEMENT
	This Agreement, including its Schedules, contains the entire understanding of the parties with respect to the matters herein contained and voids all prior understandings, if any, between the parties with respect to the distribution of the Products. With the exception of changes that may be made by CytoCore at its sole discretion to Schedule A as set forth in section 2 (a), the Agreement may be changed from time to time only by an instrument in writing signed by an officer of CytoCore and an authorized representation of Distributor.
19.	THIRD PARTY RIGHTS
	This Agreement and the rights and obligations created under it shall be binding upon and inure solely to the benefit of the parties hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended or should be construed to confer upon any other person any right, remedy or claim under or by virtue of this Agreement.
20.	INDEPENDENT PARTIES

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	In all dealings within the scope of this Agreement, the parties acknowledge and agree that the relationship created by this Agreement is that of independent contracting parties and is not, and will not be deemed to be any other relationship, including, without limitation, that of joint venturers, joint employers, or a partnership. Personnel employed by, or acting under the authority of, a party to this Agreement are not employees or agents of the other party. CytoCore and Distributor assume full responsibility for the acts, supervision and control of their own respective employees. Distributor is not a general agent of CytoCore. When conducting business under this Agreement, Distributor must identify itself as an “Authorized Distributor” of CytoCore. Distributor has not paid and will not be required to pay any franchise fee or other fee to be a Distributor for CytoCore or to use CytoCore’s name or other intellectual property. This Agreement does not create any franchise between the parties.
21.	COMPLIANCE WITH LAWS
	This Agreement is subject to changes or modifications necessary to comply with the laws, orders, or regulations of, and any necessary approvals of, local, state and federal regulatory agencies having jurisdiction over the offering or provision of the Products in the Area or Distributor’s activities in connection therewith. Accordingly, CytoCore may add, delete, suspend or modify the rates for, and features included with the Product, and determine whether these changes apply to both existing and future Distributors. CytoCore will notify Distributor as soon as practicable of each modification. Distributor may not take any action inconsistent with any efforts by the CytoCore before regulatory authorities or others regarding any modification of Product prices or modifications. Distributor shall strictly comply with all applicable laws and regulations, including the Federal Food, Drug and Cosmetic Act (including all laws which it administers), all laws and regulations promulgated under the U.S, Medicare program including its anti-fraud provisions, export laws and regulations in connection with the Products and other materials provided hereunder. Distributor shall insure that all of its personnel strictly adhere to all applicable laws relating to the use and sale of the Products. Distributor shall not, and shall not permit any other person or entity to, export or re-export, directly or indirectly, any Product or technical data (as defined by the U.S. Export Administration Regulations) produced or provided under or in connection with this Agreement, or export or re-export, directly or indirectly, any direct product of any of the foregoing, including software, to any person, entity, government or destination for which such export or re-export is restricted or prohibited by U.S. or non-U.S. law, without obtaining prior authorization from U.S. Department of Commerce and other competent government authorities to the extent required by those laws. If, in CytoCore’s opinion, a Business Associate Agreement with Distributor is required by Federal or State laws, such agreement will be duly executed, without additional compensation, by Distributor.
22.	MANUFACTURER’S LIMITED WARRANTY
	The manufacturer’s limited warranty as set forth on Schedule “C” is the only warranty, except for warranty of title, provided with the Products furnished under this Agreement. Distributor must make the limited warranty statement readily available to Distributor’s end-user purchasers prior to sale. Any warranty statements made by Distributor that are in addition to the statements in the limited warranty apply against Distributor only and any costs, administrative, legal, or otherwise connected with any such additional warranty statements must be borne by Distributor. Distributor agrees to indemnify, defend and hold CytoCore harmless from all direct and indirect results and claims flowing from such statements.
23.	DISCLAIMER OF WARRANTIES
	EXCEPT FOR THE WARRANTY OF TITLE, AS STATED ABOVE, CYTOCORE MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY PRODUCTS. CYTOCORE SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR ANY OTHER WARRANTY OF FITNESS OR QUALITY.

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24.	LIMITATION OF LIABILITIES
	IN NO EVENT WILL CYTOCORE BE LIABLE TO DISTRIBUTOR FOR LOST PROFITS OR REVENUES, WHETHER PRESENT OR PROSPECTIVE, FOR LOSS OF TIME OR BUSINESS REPUTATION, INCONVENIENCE, LOSS OF USE OF ANY EQUIPMENT OR PROPERTY DAMAGE CAUSED BY ANY PRODUCTS SOLD UNDER THIS AGREEMENT OR THEIR FAILURE TO WORK, OR FOR ANY OTHER INDIRECT, SPECIAL, RELIANCE, INCIDENTAL OR CONSEQUENTIAL LOSS OR DAMAGE ARISING OUT OF THIS AGREEMENT OR ANY OBLIGATION RESULTING THEREFROM, OR FROM THE USE OR PERFORMANCE OF ANY PRODUCTS. THESE LIMITATIONS OF LIABILITY APPLY TO ALL CAUSES OF ACTION IN ANY WAY RELATED TO THIS AGREEMENT OR THE PRODUCTS, INCLUDING, WITHOUT LIMITATION, ALLEGED BREACH OF WARRANTY, BREACH OF CONTRACT, PATENT OR COPYRIGHT INFRINGEMENT, OR TORT, WHETHER IN NEGLIGENCE, STRICT LIABILITY, OR OTHERWISE, EVEN IF CYTOCORE HAS BEEN ADVISED OF THE POSSIBILITY OF ANY SUCH LOSSES OR DAMAGES. IN THE EVENT OF ANY LIABILITY OF CYTOCORE TO DISTRIBUTOR RELATED TO PRODUCTS SOLD UNDER THIS AGREEMENT, THIS LIABILITY WILL BE LIMITED TO THE LESSER OF (A) DISTRIBUTOR’S PROVEN DIRECT DAMAGES AND (B) THE PURCHASE PRICE OF THE PRODUCTS WITH RESPECT TO WHICH THE ALLEGED LOSSES OR DAMAGES ARE CLAIMED.
25.	AMENDMENT
	This Agreement may only be amended or superseded by written agreement executed by authorized representatives of both parties, except as otherwise explicitly stated in this Agreement. Each such modification will be effective only in the specific instance for the specific purpose for which given. No course of dealing, course of performance, or usage of trade may be invoked to modify or supplement in any way the terms and conditions of this Agreement. No other understandings or representations, whether oral or in writing, will amend or supersede this Agreement.
26.	INTERPRETATION
	CytoCore and Distributor acknowledge that they have read this Agreement and understand and accept the terms, conditions and covenants contained in it as being reasonably necessary to maintain CytoCore’s high PRODUCT standards and thereby to protect and preserve the goodwill of CytoCore’s Products and its Intellectual Property. Distributor has independently investigated the business outlined in this Agreement and the profitability (if any) and risks, and is not relying on any representation, guarantee, or statement of CytoCore other than as set forth in this Agreement.
27.	ALLOCATION OF RISK
	CytoCore and Distributor each acknowledge that the limitations and exclusions contained in this Agreement have been the subject of active and complete negotiation between the parties and represent the parties’ agreement based upon the level of risk to CytoCore and Distributor associated with their respective obligations under this Agreement and the payments to be made to Distributor and charges incurred by Distributor pursuant to this Agreement. The parties agree that the terms and conditions of this Agreement will not be construed in favor of or against any party by reason of the extent to which any party or its professional advisors participated in the preparation of this Agreement.
28.	SURVIVAL
	Unless otherwise indicated herein, all provisions of this Agreement regarding payment, indemnification, liability and limitations on liability, disclaimers of warranty, confidentiality and/or protection of proprietary rights and trade secrets shall survive the expiration or termination of this Agreement and remain in full force and effect in perpetuity thereafter. In addition, upon the expiration of this Agreement all rights granted or obligations undertaken hereunder shall terminate forthwith except rights and obligations which arose prior to such expiration or termination and those set forth in sections 6, 9, , and 12, and in subclasses 11 (b), (c) and (d).

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

By:	Illegible	By:	CytoCore, Inc.
Name:	Illegible	Name:
Title:	PRESIDENT	Title:
Date:	February 16, 2008	Date:	February      , 2008

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Schedule A: Area Appointment and Product Schedule:

Area Appointment: Alaska, Washington, Idaho, Montana, Oregon

Product Schedule:
SoftPap™ cervical cell collector
Non-disposable SoftPAP™ handle

Minimum Purchase Requirement: Data from the American Medical Association indicate that there are 1,434 physicians specializing in obstetrics and gynecology in private practice in the designated area of appointment. These and other data suggest that each physician in this category will collect an average of 1,800 specimens per annum for Pap testing.

The Distributor agrees to purchase the following minimum quantities of the aforementioned product(s) for resale into the Area of appointment,

	# OBGYN		Annual Pap		Minimum
	in Area		Specimens		Purchases (Each)		% Opportunity
Year 1 (2008)		1,434		2,581,200		195,741		8	%
Year 2 (2009)		1,434		2,581,200		1,338,998		52	%
Year 3 (2010)		1,434		2,581,200		2,323,080		90	%

Schedule B: Product Prices And Escalation Provisions:

Product Pricing:

SoftPAP™ cervical cell collector:	$5.00 per unit
Non-disposable SoftPAP™ handle:	$35.00 each

Escalation Provision:

Starting January 1, 2009, CytoCore, may, at its sole discretion, adjust product pricing either upward or downward to reflect changes in material and labor costs and to respond to changing market conditions. Such price changes will occur no more frequently that twice per annum.

Schedule C: CytoCore Warranty Policies

The SoftPap™ handle is guaranteed against any defects in materials and workmanship for a period of 1 year from the date of sale or placement with an end-use physician when used according to manufacturer’s instructions.

The SoftPAP™ disposable is guaranteed against any defects in materials and workmanship for a period of two years from the date of manufacture (expiration date) when used according to manufacturer’s instructions.

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     Schedule D: CytoCore’s Product Return Policy

1. PURPOSE

1.1. This document describes the procedure for handling of returned goods.

2. SCOPE

2.1. This procedure applies to materials shipped by CytoCore to distributors or customers. This procedure applies to returned medical devices that have been returned under the following conditions:

• Material was received by the customer, opened or partially used, returned remaining quantities to CytoCore.

• Material was received by the customer/distributor, unopened and returned to CytoCore.

• Material was undelivered due to shipping requirements or related complications.

3. RESPONSIBILITY

3.1. QA is responsible for handling and documentation of returned goods and is responsible for inspecting returned goods to determine their incoming status.

4. REFERENCES

4.1.	QAP-005 Complaint Handling
4.2.	QAP-005-F1 Complaint/RGA Form
4.3.	WRP-001-F1 Incoming Material Log

5. PROCEDURE

5.1. General

5.1.1.	Document all requests for returned goods on the “Complaint/RGA Form” QAP-005-F1.
5.1.2.	Returned Good are accepted under the following circumstances.

• CytoCore shipping error (wrong quantity/wrong item shipped)

• Defective merchandise (within warranty period)

• Unopened merchandise (in whole packaged unit quantities).

• At the discretion of the Marketing Director

• Merchandise that is past its expiration date will not be accepted.

5.1.3.	Enter the return of goods (or complaint) into the complaint log. Assign a tracking number following QAP-005.
5.1.4.	Provide the customer with the tracking number and instructions for marking the tracking number on the outside of the shipping carton.
5.1.5.	Forward QAP-005-F1 to Quality Assurance for notification and investigation.

5.2. Receiving Returned Goods

5.2.1.	QA (or designee) shall log in the receipt of the material into the Incoming Material Log (WRP-001-F1).
5.2.2.	QA will inspect the containers for damage, contamination, and broken seals.

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5.2.3.	All returned materials will be quarantined until and appropriate investigation and inspection can be performed by quality assurance.
5.2.4.	If appropriate, QA will contact the person returning the goods with any questions or will provide an appropriate follow-up.
5.2.5.	Quality Assurance will prepare an inspection file to document the return and inspection of any returned goods.
5.2.6.	Goods that were received by the customer and returned unopened and in whole unit quantities can be returned to the approved inventory and be redistributed as needed.
5.2.7.	Any goods that were opened by the customer cannot be returned to the approved inventory. Items that were opened by the customer may be investigated to determine the root cause for the reason for the return.
5.2.8.	After the investigation into any returned goods is complete the completed QAP-005-F1 will be forwarded to the accounting department for notification of the return and to issue any refunds (as appropriate).
5.2.9.	If appropriate (as determined by QA) — returned merchandise may be reworked, tested, and returned to approved inventory.

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Addendum #1 to Distribution Agreement
By and between CytoCore Inc. and Co- Medical Inc.
dated February 16th, 2008 (the “Agreement”)

The parties agree to modify the Agreement as follows. The capitalized terms in this Addendum shall have the same meaning as in the Agreement.

1. Section 13, Indemnification, of the Agreement is revised by re-designating the first paragraph thereof as (a) and adding a new paragraph (b) that reads as follows:

“(b) CytoCore will accept full responsibility and liability for its products distributed by the Distributor and will furnish the Distributor with an appropriate rider on CytoCore’s liability policy, naming the Distributor as an additional insured party. CytoCore agrees to indemnify Distributor for reasonable attorney fees and costs incurred as a result of a lawsuit initiated against Distributor arising out of the sale of CytoCore’s product(s) only as it relates to product that is defective in workmanship or materials.”

2. The agreement is amended by adding a new Section 29, Non-Solicitation of Employees, thereto that reads as follows:

“Section 29. NON-SOLICITATION OF EMPLOYEES.

CytoCore and Distributor agree not to employ or engage the services of any employee or agent of the other during the term of this agreement, and for two (2) years from the effective date of termination or Nonrenewal; nor, to employ anyone who has left the other’s employment or has ceased being its agent within six (6) months of the date the ex-employee or agent ceased such employment or service.”

3. All other terms of the Agreement shall remain unchanged and in full force and effect.

CytoCore Inc.			Co-Medical Inc.
By:	/s/ Robert F. McCullough Jr		By:	/s/ DOUG OVERTURF
	Name:	Robert F. McCullough Jr		Name:	DOUG OVERTURF
	Title:	CEO		Title:	PRESIDENT

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EX-10.49

EXHIBIT 10.49

DISTRIBUTION AGREEMENT WITH HT HOSPITAL TECHNOLOGIES GmbH

This DISTRIBUTION AGREEMENT (“Agreement”) effective between CytoCore, Inc. (“CytoCore”), a corporation organized and existing under the laws of the State of Delaware, United States of America whose principal address is 414 N. Orleans, Chicago 60601 and HT Hospital Technologies GmbH (“Distributor”), organized and existing under the laws of Switzerland, whose principal address is Kernserstrasse 31 — 6061 Sarnen — Switzerland. Distributor and CytoCore may sometimes be referred to herein individually as a “party” or collectively as the “parties.”

IN CONSIDERATION of the mutual promises and payments contained herein the parties hereto agree as follows:

1.	APPOINTMENT OF DISTRIBUTOR.
	CytoCore hereby appoints Distributor as the exclusive Distributor in Switzerland (“Area”) of the products set forth on Schedule A annexed hereto as of the date hereof and such other products (if any) as may be added to the said Schedule by mutual agreement (“Products”). CytoCore may delete any Products from Schedule A at any time in its sole discretion upon written notice to Distributor.
2	SUPPLY OF PRODUCTS
a.	CytoCore or its designee shall sell and Distributor shall purchase such quantities of Products (as are agreed herein) for sale in the Area. CytoCore may from time to time change the source of supply of Products and, if CytoCore or its designated supplier shall discontinue the manufacture, sale or promotion of any Product, CytoCore shall delete such Product Schedule A and cease selling the Product to Distributor. Distributor shall be entitled to continue selling such Product in the Area until such time as the stocks of such Product held by Distributor have been exhausted unless CytoCore advises Distributor to return such inventory to Cytocore.
b.	CytoCore or its designee shall sell and Distributor shall purchase Products at prices established in accordance with Schedule A.
c.	Risks for Products shall pass to Distributor when Products are delivered into the Area covered by this agreement and Distributor shall thereafter be responsible for any damage to or loss of Products. Distributor shall notify CytoCore of the details of any incorrect delivery or of any damage to or shortage in any delivery within eight (8) working days of the receipt thereof by Distributor. Title in and to the Products shall pass to Distributor upon receipt of the Products by Distributor in accordance with clause 2(e) of this Agreement.
d.	Distributor shall not knowingly re-export or sell Products for sale outside the Area without the prior written consent of CytoCore, except that nothing in this

	Agreement shall prevent Distributor from accepting unsolicited orders from outside the Area for the Products, as long as there is no exclusive distributor for the Area.
e.	Distributor shall pay the price stated on the invoice by prepayment or a net 60 days on open account for the Initial Term (as defined below at clause 6a). Distributor shall make payment to CytoCore in the currency of Euros (€) at such place as CytoCore shall from time to time in writing.
f.	Distributor shall not be entitled by reason of any set off, counter claim, abatement, or other similar deduction to withhold payment of any invoiced amount due to CytoCore. If Distributor fails to pay by the due date any amount payable by it under this Agreement, CytoCore shall be entitled, but not obliged, to charge Distributor interest on the overdue amount payable by Distributor immediately on demand, from the due date up to the date of actual payment, after as well as before judgment at the rate of 1/2 per cent per annum above the base rate for the time being of (8%), and fixed sum compensation under the Late Payment of Commercial Debts Regulations 2002. Such interest shall accrue on a daily basis and be compounded quarterly. CytoCore may increase the Base Rate to reflect then market conditions.
g.	During the term of this Agreement Distributor shall provide CytoCore every quarter with a written twelve (12) month forecast containing its best estimates of the number of units of each Product which will be required by Distributor, the production and delivery of which shall be subject to approval by CytoCore (“Forecast”). The Forecast for the immediate next three (3) months shall be binding on Distributor. If notice of termination of this Agreement has been served by either party in accordance with the terms of this Agreement, the Forecast shall be binding on Distributor until such time as this Agreement terminates.
h.	Distributor shall submit written purchase orders to CytoCore or its designee stating both the quantities of Products to be purchased and delivery schedules therefore in accordance with the purchasing procedures mutually agreed upon by CytoCore and Distributor from time to time. CytoCore, upon acceptance of the purchase order from Distributor, shall use its reasonable endeavors to deliver or cause to be delivered to Distributor the quantities of Products set forth in such purchase orders at the times specified therein.
3.	SALVAGE OF DAMAGED GOODS
	CytoCore shall have the full right under the Distributor’s insurance policies to possession of any of the Products involved in any loss or damage and shall control the possession of any such Products, even if full payment of same already has been made by Distributor to CytoCore. For the duration of this Agreement, Distributor shall maintain insurance in respect of the Products. CytoCore, exercising its reasonable discretion, shall be the sole judge as to whether Products

	involved in any loss or damage under the Distributor’s policies are fit for consumption or sale, or shall be sold or otherwise disposed of. Where payment for Products already has been made by Distributor, Distributor, after deduction of salvage expenses, shall be entitled to all proceeds below the policy retention or deductible. Under no circumstances may Distributor release Products involved in any loss or damage to the insurer without CytoCore’s prior written approval.
4.	RETURN OF MERCHANDISE TO CYTOCORE
	CytoCore shall be obliged to accept the return of the Products from Distributor only according to the policy set forth in Schedule B attached hereto.
5.	DISTRIBUTION AND PROMOTION OF PRODUCTS
a.	During the first (six) 6 months of this Agreement from the Effective Date (“Implementation Period”), and annually thereafter, the parties shall work together and provide the other party with all reasonable assistance and information in order to produce a business plan in respect of the Products including, without limitation, minimum purchase requirements (Schedule A) for the Products in the Area, pricing of Products advertising and marketing expense committed by each party and any other aspect relevant to the distribution, sale and promotion of the Products in the Area (“Business Plan”). For this purpose, the parties shall meet no later than one (1) month prior to the end of the Implementation Period, and thereafter annually thereafter for the duration of this Agreement, as amended or extended at a mutually convenient time and location, to review the Business Plan.
b.	The parties will agree on minimum purchase requirements to apply during the Implementation Period, based on current realistic sales trends as at the Effective Date for the Products (or similar or competing products) in the Area. No later than one (1) month prior to the end of the Implementation Period the parties will meet to discuss the minimum purchase requirements of Distributor for the Products for the following twelve (12) month period following the Implementation Period. Within seven (7) days of such meeting, the parties will negotiate in good faith the level of minimum purchase requirements for the Products for the following twelve (12) months (“Yearly Commitment”) and within seven (7) business days shall agree on the parties’ respective knowledge of the marketplace in general. Subsequent year volume commitments will be agreed upon in writing by both parties, no later than the end of each twelve (12) months of this Agreement. In the event the parties fail for any reason to agree on minimum purchase requirements for the Products for any calendar year, the minimum purchase requirements for such year shall be deemed to be the same as those established or deemed hereby to be established for the preceding calendar year, or the same as the actual sales in such preceding calendar year if greater, increased in each case by 100% of the prior twelve month’s sales. The attainment of such minimum purchase requirements shall be an essential condition to the continuation of this Agreement,

	and failure shall constitute for CytoCore the right, but without the obligation to CytoCore to terminate this Agreement pursuant to clauses 14(b).
c.	Distributor shall use its best efforts to create and maintain a market for and to increase the sales or Products in the Area, shall provide at its sole expense an organization for the continuous sale, promotion and distribution of the Products throughout the Area, and shall sell, ship, and invoice the Products to purchasers in the Area. In the Area, Distributor shall use its own sales force to sell, promote and distribute the Products. Distributor may not sell, promote or otherwise distribute any products which compete either directly or indirectly with the Products and Distributor shall not establish any branch, or maintain any distribution depot, outside of its Area for the sale of the Products. CytoCore shall not be obligated to provide any resources to Distributor for the obligations set out in this clause except for initial Product training to the Distributor’s sales force and the provision of appropriate marketing materials.
d.	Distributor shall maintain a minimum inventory of Products not less than three (3) months as set forth in the Forecast, as amended from time to time.
e.	CytoCore or its designee shall have the right to inspect and audit at all reasonable times and by previous agreement with Distributor, Distributor’s inventory of the Products and any data related to CytoCore’s business and/or the Products.
6.	Term
a.	This Agreement shall begin on the Effective Date and shall continue in effect, unless sooner terminated as provided herein, for a period of four (4) years (Initial Term@). At the end of the Initial Term this Agreement will be automatically extended for a further (three) years unless one of the parties has advised the other in writing at least twelve (12) months prior to expiration of the Initial Term that it intends to terminate this Agreement.
b.	In addition to the right of termination granted by Clause 14, CytoCore shall have the right to terminate this Agreement at any time prior to the expiration of its term upon sixty (60) days’ prior this Agreement should Distributor shall fail to attain the annual minimum purchase requirements referred to in clause 5a. above and shall take effect immediately unless otherwise agreed by CytoCore. Distributor shall notify CytoCore as soon as Distributor becomes aware that that the annual minimum purchase requirements are unlikely to be attained. For the first full calendar year of this agreement a mutually agreed range for the value of purchases will be established by the end of the first quarter. This minimum-maximum range will be agreed by Distributor and CytoCore and relate to purchases for the remaining three-quarters of the first calendar year. In the event CytoCore terminates this Agreement before the end of the Initial Term, CytoCore shall repurchase from Distributor the inventory of Products at prices prevailing at the start of the calendar year in which such Products are to be repurchased by

	CytoCore. Such inventory of Products must be in saleable condition and have at least (12) months shelf life before expiration.
c.	In addition to such other rights of termination granted by clause 14, CytoCore shall have the right to terminate of this Agreement at any time if the continued performance under this Agreement becomes impractical due to the enactment of, or threatened enactment of, any ordinance, statute, regulation, law or similar provision by any local, state or national government. This Agreement shall terminate sixty (60) days after the date of written notice by CytoCore to Distributor.
7.	INTELLECTUAL PROPERTY
a.	Distributor acknowledges and agrees that CytoCore or its Affiliate are the owners of all Intellectual Property Rights incorporated on, in or relating to the Products. For the purposes of this Agreement, “Intellectual Property Rights” includes all intellectual property rights including (without limitation) patents, supplementary protection certificates, pending patents, utility models, trade marks, database rights, rights in designs, copyrights and topography rights (whether or not any of these rights are registered, and including applications and the right to apply for registration of any such rights) and all inventions, know-how, trade secrets, techniques and confidential information, and all rights and forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world, in each case for their full term, and together with any renewals or extensions. Distributor acknowledges that it neither has nor shall secure by this Agreement or by its acts during the term of this Agreement any right to any Intellectual Property Rights incorporated on, in or relating to the Products. Distributor agrees that title to and the right to use all such Intellectual Property Rights incorporated on, in or relating to the Products shall at all times be vested in CytoCore or its Affiliates whether or not such Intellectual Property Rights incorporated on, in or relating to the Products become vested in Distributor, Distributor hereby assigns to CytoCore, including by way of present assignment of present and future rights, with full title guarantee, any Intellectual Property Rights incorporated on, in or relating to the Products, together with all of the goodwill associated therewith to hold the same unto CytoCore, its successors in title and assigns.
b.	Distributor shall make no use of Intellectual Property Rights in or relating to the Products as part of or in conjunction with or in relation to or associated with Distributors company name, commercial name, tradename, corporate name, divisional name, subsidiary name, nickname, translated name, transliterated name, trading style, or similar name (hereinafter referred to as (“...”).

c.	Distributor shall comply, at all times, with such rules and regulations as CytoCore may issue with respect to the reproduction or reference to any Intellectual Property Rights incorporated on, in or relating to the Products. In particular, Distributor shall ensure that on all advertising and promotional materials to be used and/or prepared by Distributor relating to the Products, the symbol ® shall be used in conjunction with any registered trade marks or service marks owned by CytoCore or “TM” in the cast of any unregistered trade marks owned by CytoCore.
d.	Distributor shall make no use of any Intellectual Property Rights incorporated on, in or relating to the Products without CytoCore prior to written consent on Distributor’s material such as, but not limited to, advertising, stationery, bills, business forms, calling cards, or real property signs.
e.	Distributor shall not use any of CytoCore’s trade marks in any way which would tend to allow them to become generic, lose their distinctiveness, become liable to mislead the public, or be materially detrimental to or inconsistent with the good name, goodwill, reputation and image of CytoCore or any Affiliate and shall use its best endeavors not to do anything which would bring into disrepute CytoCore, the Products or any of CytoCore’s trade marks.
f.	Distributor shall not adopt or use any trade mark, symbol or device which incorporates or is confusingly similar to, or is a simulation or colorable imitation of any of CytoCore’s trade marks or unfairly competes with any of CytoCore’s trade marks. Distributor shall not any time, whether during or after termination of this Agreement, apply anywhere in the world to register any trade marks identical to or so nearly resembling any of CytoCore’s trade marks as to be likely to deceive or cause confusion.
g.	If Distributor believes or becomes aware that third parties are infringing any Intellectual Property Rights incorporated on, in or relating to the Products or are passing-off their products as products of CytoCore or of any of its Affiliates or of any allegation that the Intellectual Property Rights incorporated on, in or relating to the Products infringe the Intellectual Property Rights of a third party, Distributor shall notify immediately Distributor shall not, without the prior written consent of CytoCore, take any action in respect thereof, informal or formal, including but limited to making any admission notifying others or of bringing any legal proceedings or entering into any administrative proceedings against any such alleged infringement or passing off. Distributor shall co-operate fully with CytoCore or its Affiliates in the preparation or prosecution of any legal proceeding or administrative proceeding and shall be reimbursed by CytoCore for its reasonable costs.
h.	CytoCore may defend or initiate proceedings against unauthorized use of CytoCore’s Intellectual Property Rights incorporated on, in or relating to the Products and shall, in its sole discretion, decide what action (including litigation, arbitration or compromise), if any, to take in respect of any infringement or

	alleged infringement of any of the Intellectual Property Rights incorporated on, in or relating to the Products or any other claim or counterclaim brought or threatened in respect of the Intellectual Property Rights incorporated on, in or relating to the Products. CytoCore shall not be obliged to bring or defend any proceedings, whether for infringement or otherwise in relation to any of Intellectual Property Rights incorporated on, in or relating to the Products, if it decides in its absolute discretion not do so. In the event that Distributor is charged with any infringement of the Intellectual Property Rights of any third party as a consequence of the necessary activities of Distributor hereunder and Distributor notifies CytoCore fully and promptly in writing thereof, CytoCore agrees to defend Distributor in any action taken against it based upon such infringement and to indemnify Distributor in respect of all costs, claims, demands and expenses associated therewith; provide however, CytoCore shall have the sole conduct of such claims and shall have the right to require Distributor to discontinue the acts complained of and to cancel the rights granted by this Agreement in respect thereof.
i.	In any infringement proceedings which are brought by CytoCore, CytoCore shall be entitled to claim in respect of any loss suffered or likely to be suffered by the Distributor, and any costs or damages awarded in respect of such claim shall first be applied to satisfy CytoCore’s costs and expenses and shall then be apportioned between CytoCore and Distributor in accordance with their respective losses.
j.	Distributor shall, on CytoCore’s reasonable request, give to CytoCore or its authorized representative any information as to its use of Intellectual Property Rights incorporated on, in or relating to the Products which may require and will render any reasonable assistance required at reasonable cost in maintaining resignations of the Intellectual Property Rights incorporated on, in or relating to the Products.
8.	ADVERTISING AND PROMOTION OF PRODUCTS
a.	As part of the Business Plan to be produced in accordance with clause 5a, CytoCore shall from time to time deliver advertising, promotional and instructional programs for the Products. Such programs may be modified in CytoCore in its sole discretion at any time. Advertisements and the media in which it is to be used, as well as all promotional and instructional materials to be used, must be approved in advance in writing by CytoCore. Distributor shall at its sole expense distribute all promotional and instructional materials supplied by CytoCore from time to time. Distributor shall be free to utilize advertising as is reasonably necessary to promote the sale of the Products in the Area, however any advertising by Distributor with regard to the Products shall be conducted with prior approval in writing by CytoCore.
b.	CytoCore recognizes that Distributor may from time to time request authorization in writing from CytoCore to use the Intellectual Property Rights on, in or relating

	to the Products. CytoCore grants a non-exclusive royalty-free license to Distributor to use in the Area the Intellectual Property Rights on, in or relating to the Products for the purposes only of fulfilling any orders made pursuant to this Agreement, and performing its obligations under this Agreement. Distributor shall provide CytoCore, for CytoCore’s prior written approval, copies of any materials to be used and/or prepared by Distributor on or in relation to the Products. The right of Distributor to use such Intellectual Property Rights on, in or relating to the Products may unilaterally be revoked by CytoCore at any time and Distributor shall immediately stop such use upon receipt of notification from CytoCore.
9.	RECORDS, REPORTS, AND INSPECTION Within fifteen (15) days after the last day of each calendar month Distributor shall furnish a report to CytoCore in such form as CytoCore may from time to time specify covering Distributor’s performance under this Agreement during the previous calendar month. Distributor shall keep true and correct books of account in which shall be entered contained in any of said reports. CytoCore or its designee shall have the right at any reasonable time to inspect and examine such data, records and books of account and Distributor’s inventory of Products, samples and product literature, and records relating to Products. Review of the Distributor’s books shall be done by a reputable independent auditing company that is acceptable to both parties necessary information to permit Distributor to furnish the data to be
10.	LEGAL MATTERS
a.	Distributor shall notify CytoCore of all laws, regulations, or decrees relating to the purchase, sale and importation, if applicable, of Products and to the carrying the terms of this Agreement and of any transactions contemplated hereby.
b.	The formulae, ingredients or specifications for Products may be changed at any time by CytoCore at the sole discretion of CytoCore when such changes are deemed necessary for any reason satisfactory to CytoCore. When necessary for the maintenance of any applicable registrations, approvals, or consents, CytoCore shall inform Distributor of such changes.
c.	Distributor shall promptly send to CytoCore any data, report or information regarding Products which may come to Distributor’s attention in the Area during the term of this Agreement and shall report promptly to CytoCore any unexpected or serious adverse reactions which arise in patients using Products. The person to contact with respect to any such reactions is Richard Domanik, President, or his successor. Should it be necessary, during the term of this Agreement, to recall the Products due to an error imputable to the manufacture of the Products, or to any third party who handled, worked with or gave advice in respect of the Products or for any other reason, Distributor shall cease selling such Products in the Area and shall provide CytoCore with all reasonable assistance to recall any such Products and shall, at all terms, act in accordance with CytoCore’s directions

d.	Distributor understands that the Business Code of Conduct of CytoCore and its Affiliates dictates that all of the Products are sold only on the basis of quality, service, price and other legitimate marketing attributes, only to duly licensed and authorized parties and that the payment of bribes for any purpose has no place in CytoCore’s business and its absolutely prohibited. Distributor represents and warrants that it will not engage in any conduct which is in violation of any applicable law in the Area, the United States Foreign Corrupt Practices Act, or any other applicable laws or regulations.
e.	CytoCore may in its sole discretion decide to cease the distribution of any of the Products by Distributor in the Area in circumstances where it appears to CytoCore, acting reasonably, that any of the Products may, for whatever reason, be injurious to health or unfit for human consumption or where the continued sale of a Product would be inconsistent with the principles and standards applicable to good food production. The costs associated with any Product recall (including, for the avoidance of doubt, the cost of any of the Products and the costs involved in recalling any of the Products) will be borne by CytoCore. If either party becomes aware of any circumstances which may require the distribution of any of the Products to be suspended under this clause 10f, it shall immediately notify the other party of such circumstances. Distributor shall execute any documents and do all such acts and things in accordance with the reasonable directions of CytoCore to assist with the recall of any Products. CytoCore shall, in its sole discretion, determine when the distribution and sale of the affected Product can recommence. In the event of a recall, the agreed minimum purchase levels will be reviewed by mutual consent.
11.	FORCE MAJEURE Neither CytoCore, nor its Affiliates, or their suppliers shall. be liable for any failure or delay in the delivery of Products occasioned in whole or in part by force majeure, Act of God, strike, lockout, fire, inability to obtain materials or shipping space, boycott, breakdown, war, terrorism, civil commotion, destruction of plant, delay of carrier, any governmental act, requirement, or regulation, or any other cause beyond its control. IN NO EVENT WILL CYTOCORE BE LIABLE FOR CONSEQUENTIAL OR SPECIAL DAMAGES DUE TO ANY SUCH CAUSE.
12.	RELATIONSHIP OF PARTIES The relationship between CytoCore and Distributor is and during the term hereof shall be that of the seller and purchaser. Distributor, its agents and employees are not the legal representatives, employees or agents of CytoCore for any purpose and have no right or authority to assume or create, in writing or otherwise, any obligation of any kind, express or implied, in the name of or on behalf of CytoCore. Distributor shall make not representation inconsistent with the foregoing during or after termination of this Agreement.
13.	OTHER OBLIGATIONS OF DISTRIBUTOR

a.	Distributor shall not market or sell, distribute or promote any product comparable to or competitive with any Product covered by this Agreement. Distributor may request the CytoCore’s prior written approval. The notice shall specify the source and name of such product and include a full and complete description of the nature, characteristics, and uses of such product.
b.	Distributor shall maintain in confidence and not use except for purposes of this Agreement any confidential information furnished to it by CytoCore including information contained in any report furnished by Distributor hereunder, all confidential Product information and all advertising programs and plans. Distributor shall impose the same obligation upon its employees and agents, including advertising agencies. Such obligation will not apply in respect of any information which was already in the public domain; or is already known to Distributor or which Distributor acquired from a third party who has the free right to disclose the information to them.
c.	Distributor shall maintain in confidence and not use except for purpose of this Agreement any Confidential Product Information and all advertising programs and plans. Distributor shall impose the same obligation upon its employees and agents, including advertising agencies. Such obligation will not apply in respect of any information which was already in the public domain; or is already known to Distributor or which Distributor acquired from a third party who has the free right to disclose the information to them.
d.	Inasmuch as the laws of particular countries mandate the use of specified ingredients, forms of labels and instructions for use, the precise requirements for which vary from country to country and also frequently differ even as between lines of trade in the same country, Distributor shall resell Products only to purchasers as to whom Products meet all local legal requirements and shall not sell Products to any purchaser that Distributor has reason to believe may resell them otherwise than as provided herein.
e.	CytoCore will not accept any return Products for credit unless (1) Distributor has first obtained CytoCore’s authorization in writing to return such Products in saleable condition and Distributor prepays the return freight, or (2) packaging for the Products is defective, or Distributor becomes aware that the Products are defective, and notice of such defect is received by CytoCore from Distributor within thirty (30) days of delivery of such Products to Distributor.
14.	TERMINATION FOR CAUSE
a.	Subject to clause 6 of this Agreement, failure by any party to comply with any of its material obligations hereunder shall entitle the other party to give the party in default notice requiring it to make good such default. If such default be cured within sixty (60) days after such notice, the notifying party shall be entitled (without prejudice to any of its other rights conferred on it by this Agreement or

	By Law) to terminate this Agreement by giving written notice to take effect immediately. The cure period shall not apply to default under Sub-sections 2 and four.
b.	CytoCore may (without prejudice to any of its other rights conferred on it by this Agreement by law) terminate this Agreement forthwith by giving notice to such effect in the event.
	(1) of war, insurrection, invasion or extended civil commotion in the Area,
	(2) that Distributor or any part of its assets is acquired by or otherwise comes under the direct or indirect control of any third party (governmental, private or public) other than the present owners, or
	(3) that Distributor becomes insolvent or any insolvency proceedings are instituted by or against it, or
	(4) that Distributor engages in illegal activities or conduct which CytoCore deems to damage the commercial reputation of either CytoCore or Distributor or
	(5) of any breach by Distributor of any of the provision of Clause 10, 13 (b) (c), or (d) above, or
	(6) of any failure to attain the minimum purchase requirements referred to in clause 5b of the Agreement or
	(7) of any failure to make the expenditures for advertising and promotion agreed to in clause 8 above, or
	(8) that Distributor knowingly without CytoCore’s prior written consent, re-exports or sells the Products outside the Area (but excluding any re export or sale of the Products outside the Area by Distributor in response to unsolicited orders), or
	(9) Distributor challenges the validity of any of CytoCore’s trade marks.
	(10) Distributor, without CytoCore’s prior written consent, sells, promotes, or otherwise distributes products which compete either directly or indirectly with the Products.
c.	The parties hereby agree that any of the above-mentioned events will constitute just cause for termination as provided in this clause 14.
15.	UPON TERMINATION OR EXPIRATION
a.	CytoCore or its designee may, by giving Distributor written notice within

	Ninety (90) days following the expiration or termination of this Agreement, purchases from Distributor any part of all or Products not theretofore sold by Distributor, at a price, payable in such currency as CytoCore shall determine, equal to the sum of the purchase price paid by Distributor plus the actual cost of shipment and importation of such Products, against which amounts due from Distributor may be applied. Such Products must be in saleable condition and have at least 12 months shelf life remaining.
	Upon such purchase or upon the expiration of two (2) months from the aforesaid expiration or termination, Distributor shall cease to display or use any Intellectual Property Rights on, in or relating to the Products or signs, labels or other indications identifying Distributor or any products in any way with CytoCore and shall deliver to CytoCore all printed material, including advertising, promotional and instruction material, and all labels and packages, relating to Products, together with all samples, parts, tools, or other equipment relating to Products that CytoCore may have furnished free of charge (other than for shipping and import costs) to Distributor and together with all records of Distributor’s sales necessary for CytoCore to ascertain any outstanding guarantee obligations thereunder.
b.	Following any expiration or termination of this Agreement, Distributor shall immediately cease to make any use of the Intellectual Property Rights on, in or relating to the Products in any way.
c.	Immediately upon termination or expiration of this Agreement, Distributor shall cease in any manner whatsoever to make any reference to its former role as the Distributor of the Products.
d.	Upon the expiration of this Agreement all rights granted or obligations undertaken hereunder shall terminate forthwith except rights and obligations which arose prior to such expiration or termination and those set forth in clauses 7, 8, 9, 10, 15, 16, and 21, and in sub-classes 13(b), (c) and (d). Neither CytoCore or Distributor shall incur any liability to the other by reason of the expiration or termination of this Agreement as provided herein, nor for its non-renewal, whether for loss of goodwill, anticipated profits or otherwise, and CytoCore and Distributor shall accept all rights granted and all obligations assumed hereunder including those in connection with such expiration or termination in full satisfaction of any claim resulting from such expiration or termination.
e.	The acceptance of any order form or the sale of any Products to Distributor, after the expiration or termination of this Agreement shall, unless otherwise specified, be subject to all the pertinent terms of this Agreement but shall not be construed as a renewal or extension of this Agreement nor as a waiver of termination thereof.

16.	INDEMNIFICATION
a.	Distributor agrees to indemnify and hold harmless CytoCore, its Affiliates and their respective directors, officers, and employees against any and all claims, demands, proceedings, losses, costs, and expenses which may be brought against or suffered or incurred by CytoCore, its Affiliates or its or their respective directors, officers, and employees, in consequence of any error, mistake, acts, omissions, or negligence on the part of Distributor or any of its employees or agents, in storing, selling, promoting, or distributing any of the Products.
b.	CytoCore agrees to indemnify and hold harmless Distributor, its affiliates, and its directors, officers, and employees, against any and all claims, demands, proceedings, losses, costs, expenses which may be brought against or suffered or incurred by Distributor, its affiliates, or its directors, officer, and employees, in consequence of any error, mistake, or negligence on the part of CytoCore or any of its employees or agents, in promoting, or manufacturing any of the Products. CytoCore’s liability to Distributor as an indemnification is limited to an amount no greater than 1.5 times the net sales of Distributor arising from the sale of the Product regarding which such default shall have resulted under this agreement (directly or through the designated sub-Distributors) during the preceding contractual year, being those sales calculated on the basis of end-user prices. CytoCore shall not, in any event, CytoCore shall not be liable for indirect or consequential losses, special charges, loss of profit or loss of reputation or goodwill. Distributor shall have no right to an indemnity under this clause 16b to the extent that the negligence of Distributor, or its employees or agents has contributed to the loss, liability or cost for which Distributor is claiming an indemnity.
c.	It shall be a condition of any obligation to defend, indemnify and hold harmless hereunder that the party seeking indemnification (i) promptly notify the party from which indemnification is sought of the assertion of any claim to be covered, (ii) permit the indemnifying party to assume and control the defense thereof, and (iii) co-operate fully in such defense.
d.	Nothing in this Agreement shall in any way exclude or limit either party’s liability for death or personal injury.
17.	ASSIGNMENT
a.	CytoCore may assign all or any part of this Agreement to any Affiliate. Subject clause 17b. below, in all other respects this Agreement and the distributorship and/or sub-distributorship shall be non-assignable. Any non-permitted assignment shall be void.
b.	Distributor may, with CytoCore’s prior written consent, appoint agents for the

distribution, sale and promotion of the Products provided that: 

(1)	no such sub-license shall relieve Distributor of any of its obligations under his Agreement.
(2)	Distributor shall ensure that any sub-licensee agrees to be bound by the terms of this Agreement, and
(3)	such sub-licensee shall only be used to supplement the existing structure of CytoCore’s business and not for the purposes of creating other opportunities for Distributor.

18.	NOTICES Any notice or report pursuant to this Agreement shall be deemed duly given if sent by prepaid registered mail letter (air mail, if sent overseas), or facsimile addressed to the party at the address or fax number, as applicable, set forth at the beginning of this Agreement, or to such other address or fax number as shall have been furnished in writing.
19.	SEVERABLE CONDITIONS/UNENFORCED PROVISIONS
a.	Any provision of this Agreement held to be void, invalid, or unenforceable, will be construed as severable and will not in any way affect render void, invalid, or unenforceable any other provision of this Agreement, and this Agreement will be carried out as if such void, invalid, or Unenforceable provision was not a part of this Agreement.
b.	Failure by any party to exercise any right given in this Agreement or to insist on strict compliance by the other party of any obligation under this Agreement does not constitute a waiver of the Party’s right to later demand exact compliance with the terms of this Agreement.
20.	GOVERNING LAW The validity, construction and performance of this Agreement shall be governed by and construed in accordance with the law of England and Wales. Each party irrevocably agrees to submit to the exclusive jurisdiction of the courts of England and Wales over any claim, dispute or matter arising under or in connection with this Agreement.
21.	ENTIRE AGREEMENT This Agreement, including its Schedules, contains the entire understanding of the parties with respect to the matters herein contained and voids all prior understandings, if any, between the parties with respect to the distribution of the Products. With the exception of changes that may be made by CytoCore at its sole discretion to Schedule A as set forth in clause 2 (a), the Agreement may be changed from time to time only by an instrument in writing signed by an officer of CytoCore and an authorized representation of Distributor.
22.	THIRD PARTY RIGHTS

a.	Except as provide at clause 23b (or insofar as this Agreement otherwise expressly provides that a third party may in his own right enforce a term of this Agreement), a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to rely upon or enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from that Act.
b.	Any Affiliate may rely upon and enforce the terms of clause 16a.
c.	The decision of the Expert shall be final and binding on the parties. The costs of the reference to the Expert (including the costs of any expert appointed by him) and will be borne as agreed between the parties prior to making the reference or, failing such agreement, in accordance with the instructions of the Expert.
d.	Except for any party’s right to seek interim relief in the courts, no party may commence legal proceedings while the dispute resolution procedures referred to in this clause 24 are being undertaken.
23.	EXECUTION IN COUNTERPARTS This Agreement may be executed in one or more counterparts, all of which should be considered one and the same agreement, and should become a binding agreement when one or more counterparts have been signed by each of the parties and delivered to the other party.
	IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

HT Hospital Technologies GmbH			CytoCore, Inc.
By:	/s/ Mr. Paolo Burg		By:	/s/ Bob McCullough, Jr.
	Name:	Mr. Paolo Burg		Name:	Bob McCullough, Jr.
	Title:			Title:	CFO

SCHEDULE .A

PRODUCTS, PRICES, AND QUOTAS

Whether described generically or by reference to trade mark, only the products having the form and composition in which they are sold by CytoCore on the Effective Date, are intended to be included in this Agreement.

Prices

For the first calendar year from the Effective Date, prices to be charged for the Products by CytoCore to Distributor are as per attached appendix.

Quotas

1. Annual Quotas

o	Period
1.	First 12 Months—150,000 Units
2.	Second 12 Months—200,000 Units
3.	Third 12 Months—250,000 Units

2. Terms

o  Orders will be applied against the Annual Quota based on the net invoice price of the Products ordered from and billed by Seller during the Period

     Thereafter, the parties shall meet twelve (12) months after the date hereof during each calendar year of this Agreement to discuss and agree on any increase in prices to be charged for the Products to Distributor by CytoCore. Prices may be changed at other times on agreement between the parties, taking into account market conditions in the Area which have an effect on the distribution, sale or promotion of the Products. Notwithstanding the foregoing, if prices can not be agreed to by both parties acting in good faith, either party may terminate this Agreement upon sixty (60) days’ prior written notice.

SCHEDULE B

A. CytoCore will only entertain claims for returned Products where same was originally purchased from CytoCore. Proof of purchase must be provided upon request.

B. Returned Products will be valued at the original sale price or the current price whichever is lower.

C.	Full credit will only be given if CytoCore is notified within twelve (12) months prior to expiry of the returned Product so that arrangements can be made for disposal prior to the Product’s expiry date. This request is made in recognition of the fact that, in most instances, the Products are delivered with expiry dating in excess of one (1) year B twelve (12) months.
	Credit for returned Products with a shelf life shorter than twelve (12) months before expiration shall be from time to time discussed and quantified by mutual consent between CyotoCore and Distributor.

D. In no instance will credit be given for Products which are returned because of insufficient sales except for the case CytoCore decides to terminate the Agreement.

E. Credit will also be denied for Products which have not been stored in accordance with CytoCore’s instructions.

F.	It is not CytoCore’s policy to reimburse Distributor damaged Products but each case will be reviewed at CytoCore’s sole discretion in light of any special circumstances that may necessitate special consideration.
	CytoCore Sales Representative will inspect all expired or damaged Products and will issue a Preliminary Credit Report which will be referred to his/her immediate Supervisor for final approval.
	Destruction of all expired and/or damaged Products is to be in accordance with the Food and Drugs ordinances within the Area and, if requested, witnessed by a CytoCore Sales Representative.

SCHEDULE C

UNIT BY PRODUCT

ITEM	DESCRIPTION	UNIT PRICE
	Soft Pap™ Disposable	TBD $5.00
	Soft Pap™ Reusable Handle	TBD $12.00

EX-10.50

EXHIBIT 10.50

EXCLUSIVE LICENSE AGREEMENT

Bio-Marker

This Exclusive License Agreement (the “Agreement”) is made as of January 27, 2006 (the “Effective Date”) by and between University Hospitals of Cleveland (“LICENSOR”), an Ohio not-for-profit corporation having its principal offices at 11100 Euclid Ave, Cleveland, Ohio 44106, for itself and Case Western Reserve University, and Molecular Diagnostics, dba CytoCore, Inc. (the “LICENSEE”)a Delaware corporation having its principal offices at 414 N. Orleans St., Suite 800, Chicago, IL 60610. The LICENSOR and the LICENSEE are sometimes referred to herein individually as the “Party” and collectively as the “Parties.”

W I T N E S S E T H:

WHEREAS, the LICENSOR desires to herewith license to LICENSEE the Cancer and Cancer Potential Marker, Target, Antibody and Therapeutic Technology, as further defined here-in.

NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows:

1.	LICENSE
1.1	Grant of License
	A. LICENSOR hereby grants to LICENSEE, upon and subject to all the terms and conditions of this Agreement, a worldwide, exclusive, royalty-bearing license with right to sub-license under the Licensed Technology and to know-how necessary to practice the patents and patent applications listed in Appendices A, to make, use, distribute, and sell products based upon the licensed technology. This grant to Licensed Technology and know-how is exclusive to LICENSEE subject to the rights retained by UHC to:

(a) publish or otherwise disclose the general scientific findings from research related to Licensed Technology in accordance with the Sponsored Research Agreement; and

(b) (i) develop, make and use Licensed Technology for UHC’s own research, teaching and other educationally-related and non-commercial purposes and (ii) under a Material Transfer Agreement, provide to not-for-profit research or educational institutions embodiments and copies of the Licensed Technology for their own research, teaching and other educationally-related and non-commercial purposes, provided however, LICENSOR is specifically prohibited from providing Licensed Technology in any form to not-for-profit hospitals or laboratories for the purpose of providing services.

EXCLUSIVE LICENSE AGREEMENT

	B. LICENSEE acknowledges and agrees that (i) the Licensed Technology or any Tangible Property associated therewith may have been developed under a government-funded grant, and if so, the United States government may have certain rights relative thereto, (ii) all rights and licenses granted to LICENSEE under Section 1.1(A) are made explicitly subject to the United States government’s rights, and (iii) any conflict between the rights and licenses granted to LICENSEE under this Agreement and the rights of the United States government to the Licensed Technology and any Tangible Property associated therewith may be resolved in favor of the United States government. As of the Effective Date, LICENSOR represents and warrants that the United States government has not sent notice to LICENSOR in either written or oral form regarding rights it may have under Licensed Technology.
1.2	The Licensed Technology
	As used in this Agreement, “Licensed Technology” shall mean and include the Cancer and Cancer Potential Marker, Target, Antibody and Therapeutic Technology (Appendix A):
	A. the United States patent applications identified in Appendix A,
	B. any divisional, continuation (but excluding continuations-in-part except to the extent of claims entitled to the priority date of the parent case), or substitute patent application that shall be based on the United States patents and patent applications identified in Appendix A;
	C. any patents that shall issue on any of the patent applications identified in Sections 1.2A or B, and any reissues and extensions thereof;
	D. any patents and patent applications corresponding to the patents and patent applications described in Sections 1.2A, B or C that are issued, filed, or to be filed in any and all foreign countries; and any patents or foreign equivalent thereto (including but not limited to patents of importation, utility models, and inventors certificates) that shall subsequently issue thereof; and any renewals, divisions, reissues, continuations, or extensions of the foregoing patents identified in this Section 1.2D;
1.3	Sublicenses
	A. LICENSOR grants to the LICENSEE the right to grant sublicenses to third parties consistent with the Agreement, provided that LICENSEE shall remain bound by Section 3 hereof regardless of whether such payment conditions are met by LICENSEE or the activities of any of its sublicensees, and further provided that all sublicenses (both directly and indirectly from LICENSEE) shall contain

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	all obligations herein applicable to LICENSEE, in addition to those obligations specified herein as applicable to the sublicensee. Sublicensees of LICENSEE do not have the right to grant sublicenses without the prior written consent of LICENSOR. LICENSEE must deliver to LICENSOR a true and correct copy of each sublicense granted by LICENSEE or any of its direct or indirect sublicenses, and any modification or termination thereof within thirty (30) days after execution, modification or termination and shall deliver a copy of royalty reports received by LICENSEE from such sublicenses in accordance with Section 3.5.
	B. LICENSEE grants to LICENSOR the limited right and license under all improvements or derivative works of the Licensed Technology owned by LICENSEE or any of its sublicensees for the same purposes set forth in Section 1.1A.
1.4	Ownership: Reservation of Rights

Nothing in this Agreement is intended to transfer LICENSOR’s interest in or ownership of any Licensed Technology or Tangible Property (as defined in Section 12.1) to the LICENSEE.

2. TERM

This Agreement shall be effective with respect to each patent or patent application licensed hereunder commencing upon the effective date and ending with expiration of the last Valid Patent Claim, as defined in Section 3.1, and unless terminated earlier pursuant to Article 8, shall continue in effect until the expiration of Royalty Term, as defined in Section 3.2.

3.	ROYALTIES AND LICENSING PAYMENTS
3.1	Definitions

     For purposes of this Agreement, the following defined terms shall have the meaning ascribed to them in this Section 3.1.

A. “Product” means any product or products derived from or made using the Licensed Technology by or on behalf of the LICENSEE and/or its sublicensees for all applications. Product may include, but is not limited to, development of a cancer and cancer potential marker, target, antibody and therapeutic technology.

B. “Net Sales from Royalties” means royalty revenue derived from the sale of products covered by this agreement paid to LICENSEE from any sublicense granted by LICENSEE.

D. “Royalty Term” means (i) with respect to Licensed Technology that is covered by a Valid Patent Claim, expiration of the last Valid Patent Claim

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covering such technology and (ii) with respect to Licensed Technology that is not covered by a Valid Patent Claim, twenty (20) years from the Effective Date.

E. “Valid Patent Claim” means a claim of a pending patent application or an issued patent, in either case to the extent that such claim patent or application has not expired, gone abandoned, been finally rejected or finally held invalid or unenforceable by an order of a court or other governmental agency of competent jurisdiction or been admitted to be invalid or unenforceable through re-issue, disclaimer or otherwise.

     In the event that Licensee elects to directly or indirectly manufacture and distribute any of the products associated with this Agreement, the following terms apply.

F. “Cost of Goods Sold” means the sum total of all costs and expenses associated with getting the finished packaged Licensed Product ready for sale (to include manufacturing, inbound transportation and packaging). This calculation specifically excludes those costs associated with research and development, regulatory compliance, product distribution and sales and marketing, administrative, and overhead expenses attributable to the development, manufacture, distribution and support of the Licensed Product.

G. “Gross Sales” means the amount of all sales, revenues, receipts, fees and other amounts collected by Licensee either directly or through its distributors or agents arising from the sale, lease, rental or other transfer of a Licensed Product, less the following deductions where they are factually applicable and to the extent they were included in the actual billings: (i) discounts, allowed and taken, in amounts customary in the trade; (ii) documented sales and/or use taxes, duties or fees imposed upon, and with specific reference to, particular sales; (iii) amounts credited on returns (not exceeding the original billing), or retroactive price reductions; and (iv) outbound transportation prepaid or allowed.

H. “Net Sales from Manufacturing” means Gross Sales less the Cost of Goods Sold.

I. “Distribution Rights Fee” means any upfront payment from an entity (commercial or otherwise) for the rights to distribute any product covered by this agreement.

3.2 Products

A. Upfront Licensing Fee.

LICENSEE agrees to pay an upfront licensing fee totaling Twenty-Five Thousand Dollars (US$25,000) for Independently Developed Patents, with such payment due immediately upon execution of this Agreement.

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B. Valid Patent Claim.

In consideration for the rights and licenses granted hereunder, the LICENSEE agrees to pay, for the duration of the Royalty Term to LICENSOR for each Product protected by at least one Valid Patent Claim, a royalty of four percent (4.0%) of the “Net Sales from Royalties” and “Net Sales from Manufacturing” of each such Product.

3.3 Minimum Royalty

The LICENSEE agrees to use its best efforts to maximize the worldwide sales of Product. The LICENSEE agrees to make Minimum Annual Royalty Payments of Twenty Five Thousand Dollars (US$25,000) to LICENSOR for Product that uses Licensed Technology as defined in Appendix A wherein a Product is covered by a Valid Patent Claim. Should cumulative payments be less than $25,000 in a single calendar year, then the balance due is payable with the fourth quarter Royalty Period payment.

3.4 Payments Related to Sublicensees or Distributors

If other, non-royalty sublicensing or Distribution Rights Fee payments are made to LICENSEE; LICENSEE SHALL pay LICENSOR fifteen percent (15%) of such payments within the Royalty Period in which LICENSEE received payment from the sublicensee(s) or Distributors.

3.5 Written Payment Statement

A. For LICENSEE’s Sublicensing of Product: For each Royalty Period (as defined below), LICENSEE shall provide LICENSOR with a written statement reciting, on a country-by-country basis, the item, units sold, description, Net Sales from Royalties, payment due and such other information as reasonably requested by LICENSOR for each Product sold by its sub-licensees.

B. For LICENSEE’s Manufacturing of Product: For each Royalty Period (as defined below), LICENSEE shall provide LICENSOR with a written statement reciting, on a country-by-country basis, the stock number, the item, units sold, description, quantity shipped, gross invoice, amount billed customers less discounts, allowances, returns, Gross Sales, Cost of Goods Sold, Net Sales from Manufacturing, payment due and such other information as reasonably requested by LICENSOR for each Product sold by LICENSEE.

3.6 Form of Payments

All payments due LICENSOR shall be made in United States currency by check drawn on a U.S. bank, unless otherwise specified by LICENSOR. Furthermore, all payments due LICENSOR based on sales in countries outside the United States shall accrue in the currency of the country in which the sales are made. LICENSEE shall utilize its best efforts to affect U.S. dollar transfers with respect to such royalties. However, any and all loss of

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exchange value, taxes, or other expenses incurred in the transfer or conversion of foreign currency into U.S. dollars, and any income, remittance, or other required taxes on such royalties are deductible from payments due to LICENSOR. All payments shall be made to the following address:

Center for Clinical Research
University Hospitals of Cleveland
PO Box 74420
Cleveland, Ohio 44194-4420

3.7 Royalty Payment Schedule

Payments due hereunder shall be made by the LICENSEE to LICENSOR on or before the thirtieth (30th) day of April, July, October and January of each calendar year for sale of all Products sold during the immediately preceding calendar quarterly periods ending on the last day of March, June, September and December (each a “Royalty Period”).

4.	RECORD INSPECTION AND AUDIT
4.1	Inspection of Books and Records

LICENSOR shall have the right, upon reasonable notice, to inspect LICENSEE’s books and records and all other documents and material in LICENSEE’s possession or control with respect to the subject matter of this Agreement. LICENSOR shall have access thereto for such purposes and may make copies thereof. However, in no event shall LICENSOR have the right to examine information with respect to LICENSEE’s costs, pricing formulas, or percentages of markup. LICENSEE shall impose similar obligations on its sublicensees for the benefit of itself and of LICENSOR.

4.2 Independent Audit

LICENSOR shall have the right for a period of five (5) years after receiving any report required under Section 3.7 to appoint an independent certified public accountant, at LICENSOR’s sole expense, who shall have access to LICENSEE’s records during reasonable business hours for the purpose of verifying the amounts payable under this Agreement, but this right may not be exercised more than once in any calendar year, and the accountant shall disclose to LICENSOR only information relating solely to the accuracy of such report and the payments made in accordance with this Agreement. The failure of LICENSOR to request verification of any royalty report during said five (5) year period shall be considered acceptance of the accuracy of such report and the LICENSEE shall have no obligation to maintain any records pertaining to such report beyond said five (5) year period. If the independent certified public accountant’s review reveals an increase of more than five percent (5.0%) in any payment due to the LICENSOR hereunder, LICENSEE shall be obligated to pay any out-of-pocket expenses incurred by LICENSOR with respect to such review, in addition to paying such arrears within fifteen (15) days of the date that LICENSEE receives notice of such audit results.

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5.	INTELLECTUAL PROPERTY
5.1	Patent Prosecution
	A. LICENSOR shall have the sole right to control the filing, prosecution and maintenance of patents for the Licensed Technology; provided however, that LICENSOR shall consult with LICENSEE regarding the filing, prosecution and maintenance of any such patent applications to the extent such applications relate to the Licensed Technology licensed to LICENSEE hereunder, including, without limitation, by providing LICENSEE a reasonable opportunity to review and comment on all aspects of patent prosecution and proposed submissions to any patent office before submittal, and provided further that LICENSOR shall keep LICENSEE reasonably informed as to the status of prosecution of any such patent applications by promptly providing LICENSEE copies of all communications relating to same that are received from any patent office or foreign associate, and provide LICENSEE a reasonable opportunity to review and comment on all submissions to any patent office before submittal. If LICENSEE obtains an exclusive license to the Licensed Technology pursuant to the terms and conditions of this Agreement that is the subject of such patent application, then LICENSEE shall reimburse LICENSOR, within thirty (30) days of receipt by the LICENSOR of the billing invoices, or otherwise be responsible, for all expenses related to the filing of such patent applications, including attorney’s fees, for domestic and foreign patent applications filed under this paragraph. The LICENSOR agrees to provide the LICENSEE with copies of any such patent applications, as well as copies of any documents related to the prosecution of said patent applications. Notwithstanding the above, LICENSOR may at its discretion and upon written notification choose to allow LICENSEE to direct all patent prosecution.
	B. If LICENSOR decides not to file a patent application as directed by LICENSEE in writing on any aspect of the Licensed Technology, LICENSOR will promptly notify LICENSEE of the decision and permit LICENSEE to file patent applications on such subject matter, which shall then be considered a Licensed Technology, as the case may be.
	C. If the LICENSEE subsequently informs the LICENSOR, upon a 90 day advanced written notice, that LICENSEE no longer wishes to pay patent prosecution and maintenance fees and expenses on any aspect of the Licensed Technology, then the LICENSOR will be free to either abandon such patent applications or patents or to continue such prosecution and maintenance at the LICENSOR’s sole expense, all solely in the name of LICENSOR and the LICENSEE shall have no further interest or rights in said patents and applications whatsoever.

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EXCLUSIVE LICENSE AGREEMENT

5.2 Third Party Infringers

If either Party to this Agreement becomes aware that any of the Licensed Technology for which a patent has issued is being or has been infringed by a third party, that Party shall promptly notify the other Party in writing describing the facts relating to the infringement. Following said notification:

A. LICENSEE shall have the initial right, but not the obligation, to institute, prosecute and control any action, suit or proceeding (an “Action”) with respect to such infringement, including any declaratory judgment action, at its expense, using legal counsel of its choice. The LICENSOR shall have the right to participate in any such Action, at its own expense, using legal counsel of its choice.

B. If the LICENSEE elects not to exercise its right to initiate, prosecute and control any Action within one hundred twenty (120) days after notice of infringement, then the LICENSOR shall have the exclusive right, but not the obligation, to initiate, prosecute and control such Action at its sole expense.

C. The LICENSEE shall be entitled to offset fifty percent (50%) of any reasonable and documented (to the LICENSOR) expenses that are incurred by the LICENSEE in connection with such Action. LICENSEE agrees to reimburse LICENSOR for fifty percent (50%) of such expenses provided that LICENSEE has obtained an exclusive license to the Licensed Technology subject to such Action. Any amounts recovered in such Action shall be used first to reimburse the LICENSEE and/or the LICENSOR, as the case may be, for expenses it incurred in connection with any Action. Any remaining amount shall be equally divided between the LICENSEE and the LICENSOR.

5.3 Third Party Claims of Infringement

If the exercise by the LICENSEE of the exclusive license rights granted by the LICENSOR to the LICENSEE under this Agreement results in any claim of patent infringement by a third party against the LICENSEE, the LICENSEE shall have the exclusive right to defend itself against any such claim, suit or proceeding at its own expense, using legal counsel of its own choice, and shall have the sole right and authority to settle any such suit with the written consent of the Licensor. In the event of such litigation, the LICENSOR agrees to cooperate with the LICENSEE, at the LICENSEE’s reasonable request and sole expense, in connection with the defense of such claim. The LICENSEE shall be entitled to offset any costs and expenses (including attorneys and professional fees) incurred by it in connection with any such proceeding against any amounts it would otherwise owe the LICENSOR in license-derived payments, up to a maximum of fifty percent (50%) of the amounts the LICENSEE would otherwise owe the LICENSOR. Should the LICENSEE choose to not proceed with defense with any third party infringement claim, suit or proceeding, LICENSOR shall have the right to defend such claims at LICENSOR’s sole expense.

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EXCLUSIVE LICENSE AGREEMENT

6.	WARRANTIES AND DISCLAIMER
6.1	General Warranties

The LICENSOR represents and warrants that (except for the rights, if any, of the government of the United States of America): (i) it has an ownership interest in the entire right, title, and interest in and to the Licensed Technology either alone or jointly with Case Western Reserve University (CWRU); (ii) it has the right and power to grant the licenses granted herein; (iii) that it has not knowingly granted licenses thereunder to any other entity that would restrain the rights granted Licensee except as stated herein; and (iv) it has not received written notification from any third party relating to actions against LICENSOR for infringement with respect to the Licensed Technology anywhere in the world.

6.2 ANY AND ALL INFORMATION, INTELLECTUAL PROPERTY, PATENT RIGHTS, TECHNOLOGY, LICENSED SUBJECT MATTER OR OTHER RIGHTS, MATERIALS OR PROPERTY GRANTED OR PROVIDED TO LICENSEE BY LICENSOR UNDER THIS AGREEMENT IS GRANTED OR PROVIDED TO LICENSEE BY LICENSOR UNDER THIS AGREEMENT IS GRANTED OR PROVIDED ON AN “AS IS” “WHERE-IS” BASIS WITH ALL FAULTS. LICENSEE UNDERSTANDS AND ACKNOWLEDGES THAT LICENSOR MAKES NO REPRESENTATION AS TO ALL SUCH INFORMATION, INTELLECTUAL PROPERTY, PATENT RIGHTS, TECHNOLOGY, LICENSED SUBJECT MATTER OR OTHER RIGHTS, MATERIALS OR PROPERTY GRANTED OR PROVIDED TO LICENSEE, AND LICENSOR DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES OF ANY KIND WHATSOEVER WITH RESPECT TO THE FOREGOING INCLUDING, WITHOUT LIMITATION, ANY SUCH WARRANTIES CONCERNING INFRINGEMENT, THE OPERATABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, COMMERCIAL POTENTIAL, USE, SAFETY EFFICACY, APPROVABILITY BY REGULATORY AUTHORITIES, TIME AND COST OF DEVELOPMENT, PATENTABILITY, VALIDITY, ENFORCEABILITY AND/OR BREADTH OF THE LICENSED SUBJECT AND/OR PATENT RIGHTS. LICENSOR ALSO MAKES NO REPRESENTATIONS AS TO, AND LICENSOR DISCLAIMS ALL EXPRESS OR IMPLIED WARRANTIES CONCERNING, WHETHER THERE ARE ANY PATENTS NOW HELD, OR WHICH WILL BE HELD, BY OTHERS OR BY LICENSOR WHICH MAY BE DOMINANT OR SUBORDINATE TO THE PATENT RIGHTS, NOR DOES LICENSOR MAKE ANY REPRESENTATION THAT THE INVENTIONS CONTAINED IN THE PATENT RIGHTS, THE LICENSED SUBJECT MATTER OR LICENSED PRODUCTS DO NOT INFRINGE ANY OTHER PATENTS NOW HELD OR THAT WILL BE HELD BY OTHERS OR BY LICENSOR. IN NO EVENT WILL THE LICENSOR BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF THE INVENTION OR LICENSED PRODUCTS OR THE USE OR THE PRACTICE OF LICENSED METHODS.

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EXCLUSIVE LICENSE AGREEMENT

NOTHING IN THIS AGREEMENT WILL BE CONSTRUED AS CONFERRING BY IMPLICATION, ESTOPPEL OR OTHER WISE ANY LICENSE OR RIGHTS UNDER ANY PATENTS OF LICENSOR OTHER THAN THOSE DEFINED HEREIN UNDER LICENSED TECHNOLOGY AND JOINT LICENSED TECHNOLOGY, RETGARDLESS OF WHETHER SUCH PATENTS ARE DOMINANT OR SUBORDINATE TO THOSE DEFINED UNDER LICENSED TECHNOLOGY.

6.3 Manufacture, Production, Sale, and Distribution

The LICENSEE shall be solely responsible for the manufacture, production, sale, and distribution of the Licensed Technology and will bear all costs associated therewith except as specifically defined herein.

7. MARKING AND SAMPLES

LICENSEE shall, and agrees to require its sublicensees to, fully comply with the patent marking provisions of the intellectual property laws of the applicable countries in which the Product is sold or distributed. Furthermore, within a reasonable period of time, not to exceed one year from the effective date, Licensee shall have included in all marketing literature relating to all Licensed Products a statement to the effect that “this product or a portion thereof is made under license from University Hospitals of Cleveland.”

8.	TERMINATION
8.1	Immediate Right of Termination.

LICENSOR shall have the right to immediately terminate this Agreement by giving written notice to LICENSEE in the event that LICENSEE files a petition in bankruptcy or is adjudicated a bankrupt or insolvent, or makes an assignment for the benefit of creditors or an arrangement pursuant to any bankruptcy law, or if the LICENSEE discontinues or dissolves its business.

8.2 Right to Terminate Upon Notice of Material Breach

Either party may terminate this Agreement upon sixty (60) days’ written notice to the other party in the event of a material breach of any provision of this Agreement by the other party, provided that, during the sixty (60) day period, the breaching party fails to cure such breach. If, however, one Party (the “Receiving Party”) receives notification from the other Party (the “Notifying Party”) of a material breach or default and the Receiving Party notifies the Notifying Party, in writing within thirty (30) days of receipt of such breach or default notice, that it disputes the asserted breach or default, the matter will be resolved according to the dispute resolution procedures in Paragraph 20 of this Agreement. In such event, the

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Notifying Party shall not have the right to terminate this Agreement until it has been determined that the Receiving Party materially breached or was in default of any of the terms and conditions of this Agreement, and the Receiving Party fails to cure such breach within sixty (60) days after the conclusion of such proceeding.

8.3 Licensee’s Right to Terminate

LICENSEE shall have the right to terminate this Agreement at any time upon thirty (30) days’ written notice to LICENSOR, such termination to become effective at the conclusion of such thirty (30) day period. Notwithstanding the previous sentence, upon termination of this Agreement, the LICENSEE shall be entitled to (i) complete the manufacture of any Products in process at the time of such termination, and (ii) dispose of any Products on hand in the ordinary course of business.

8.4 Post Termination Rights

Upon expiration or termination of this Agreement, LICENSEE shall thereafter immediately cease all further use of the Licensed Technology and know-how required to practice the Licensed Technology (except for which the Royalty Term has expired before termination) and LICENSOR’S Confidential Information in the possession or control of LICENSEE and each of the sublicensees of the Licensed Technology, and all rights granted to LICENSEE and the sublicensees under this Agreement or any sublicense agreement shall forthwith terminate and immediately revert to LICENSOR. In addition, LICENSEE and each sublicensee of the Licensed Technology shall promptly return or destroy any tangible embodiments of the Confidential Information, Licensed Technology, Tangible Property or Products in its possession or control at the time of such termination. However, nothing herein shall be construed to release either Party of any obligation that matured prior to the date of such termination, Moreover, the obligations of the Parties in Sections 4, 6, 8.4,9.3-9.5, and Articles 10,11,14 and 20 shall survive termination of this Agreement for any reason.

9.	CONFIDENTIALITY
9.1	Confidential Information

“Confidential Information” means any and all information about a Party which is used, developed or obtained by a Party relating to that Party’s business, research and development efforts, including, without limitation, technical information, know-how, compositions of matter, processes, material, technology, software, prototypes, ideas, inventions, improvements, data, files, information relating to supplier and customer identities and lists, accounting records, business and marketing plans, and all similar information, and all copies and tangible embodiments thereof (in whatever form or medium).

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9.2 Exceptions

Notwithstanding Paragraph 9.1, Confidential Information shall not include information which: (i) is known to the receiving party at the time of disclosure or becomes known to the receiving party without breach of this Agreement; (ii) is or becomes publicly known through no wrongful act of the receiving party or any subsidiary of the receiving party; (iii) is rightfully received from a third party without restriction on disclosure; (iv) is independently developed by the receiving party or any of its subsidiary; (v) is furnished to any third party by the disclosing party without restriction on its disclosure; (vi) is approved for release upon a prior written consent of the disclosing party; or (vii) is disclosed pursuant to judicial order, requirement of a governmental agency or by operation of law.

9.3 Terms of Confidentiality

The receiving party agrees that it will not disclose any Confidential Information to any third party and will not use Confidential Information of the disclosing party for any purpose other than for the performance of the rights and obligations hereunder during the term of this Agreement and for a period of five (5) years thereafter, without the prior written consent of the disclosing party. The receiving party further agrees that Confidential Information shall remain the sole property of the disclosing party and that it will take all reasonable precautions to prevent any unauthorized disclosure of Confidential Information by its employees. No license shall be granted by the disclosing party to the receiving party with respect to Confidential Information disclosed hereunder unless otherwise expressly provided herein.

9.4 Publicity

The Parties agree that all publicity and public announcements concerning the formation and existence of this Agreement shall be jointly planned and coordinated by and among the Parties. Except as otherwise set forth in this Agreement, neither party will make any public statement, press release or other announcement relating to the terms of or existence of this Agreement without the prior written approval of the other.

9.5 Publication

LICENSOR agrees that any publication of data or other technical information related to the Licensed Technology or the Products will be submitted to the LICENSEE at least forty five (45) days prior to the publication date. No publication of data or other technical information related to the Licensed Technology or the Products shall be made by LICENSEE without the prior written consent of LICENSOR.

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10.	INDEMNITY AND INSURANCE
10.1	Licensee’s Obligation

LICENSEE agrees to defend, indemnify and hold Dr. Gorodeski, (MacDonald Physicians, Inc.), Case Western Reserve University, LICENSOR, their successors and assigns, and its officers, trustees, directors, agents, and employees, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims or actions of third parties against LICENSOR arising from or related in any way to LICENSEE’S performance of the Agreement or based on the manufacture or sale, marketing, commercialization or sublicensing of Product or portions of the Product including, but not limited to, claims or actions founded on product liability, the use of the Licensed Technology or any other actions or omissions of LICENSEE in connection with this Agreement except those described in Section 10.2.

10.2 Licensor’s Obligation; Limitation

LICENSOR agrees to defend, indemnify and hold LICENSEE and its officers, directors, agents, sublicensees, employees, and customers, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims or actions of third parties against LICENSEE based on a breach by LICENSOR of any representation and warranty made in this Agreement.

In no event shall LICENSOR be liable for lost profits, lost business opportunity and any other reliance or expectancy, any indirect, serial, punitive, future, incidental or consequential damages of any kind, even if advised of the possibility of such damage.

10.3 Insurance

In addition to any other insurance LICENSOR may reasonably require, LICENSEE shall obtain and keep in full force during the term of this Agreement and for a period of three (3) years thereafter, comprehensive general liability insurance, including coverage for workers compensation, products liability, bodily and personal injury, death, and its indemnity obligations under this Agreement, issued by a responsible insurance company or companies, rated at least A-VII by A.M. Best, in good standing and authorized to do business in the State of Ohio, in the amount of no less than $2 million per occurrence. LICENSOR shall be named as an additional insured under said policies. LICENSOR shall within ten (10) days after request, provide LICENSOR with a copy of all policies or certificates showing such insurance to be then in force. All policies shall contain an undertaking by the insurers to notify LICENSOR, in writing, by registered or certified mail, not less than thirty (30) days prior to any material change, cancellation or other terminations thereof

- 13 -

EXCLUSIVE LICENSE AGREEMENT

11.	TAXES AND GOVERNMENTAL APPROVALS
11.1	Compliance with Law, Taxes, Fees, and Duties

LICENSEE shall be solely responsible for the payment of any and all taxes, fees, duties and other payments incurred in relation to the manufacture, use and sale of the Licensed Technology, or Products.

11.2 Approvals, Authorizations, and Validations

LICENSEE shall comply with all applicable national, regional, state, and local laws and regulations (all as may be amended from time to time) in connection with its activities under this Agreement. LICENSEE shall be solely responsible, at its own expense, for applying for and obtaining any approvals, authorizations, or validations necessary to effectuate the terms of this Agreement under the laws of the appropriate national laws of each of the countries where the Products are sold.

12. FORCE MAJEURE

Neither Party shall lose any rights hereunder or be liable to the other Party for damages or losses (except for payment obligations) on account of failure of performance by the defaulting Party if the failure is occasioned by war, strike, fire, Act of God, earthquake, flood, terrorism, lockout, embargo, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control and not caused by the negligence, intentional conduct or misconduct of the nonperforming Party has exerted all reasonable efforts to avoid or remedy such force majeure; provided, however, that in no event shall a Party be required to settle any labor dispute or disturbance.

13. NOTICE AND COMMUNICATIONS

Notices and other communications required by the terms and conditions of this Agreement shall be made by first-class mail, postage prepaid, with confirmation by facsimile, addressed to the Party receiving the notice or communication at the address specified below, or at any other address as either Party may designate in writing to the other Party:

If to:	If to:
University Hospitals of Cleveland	CytoCore, Inc.
President and CEO	President and CEO
11100 Euclid Avenue	414 N. Orleans,
Cleveland, OH 44106	Suite 502
(216)844-1428	Chicago, IL 60610 312-222-9550

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EXCLUSIVE LICENSE AGREEMENT

with a copy to:

University Hospitals of Cleveland
11100 Euclid Avenue
Cleveland, OH 44106
Phone: (216) 844-3817
Fax: (216) 844-5010
Attention: General Counsel

14. AGREEMENT BINDING ON SUCCESSORS

The provisions of the Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, their heirs, administrators, successors and assigns.

15. ASSIGNABILITY

     Neither this Agreement nor the rights and obligations hereunder may be assigned by either Party without the prior express written approval of the other Party, unless through the sale of all or substantially all of the assets of either organization to a third party.

16. WAIVER

No waiver by either party of any default shall be deemed as a waiver of prior or subsequent default of the same of other provisions of this Agreement. Any waiver must be in writing and signed by the Party entitled to the benefit of the right being waived.

17. SEVERABILITY

If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other term, clause or provision and such invalid term, clause or provision shall be deemed to be severed from the Agreement.

18 INTEGRATION

This Agreement constitutes the entire understanding of the Parties, and revokes and supersedes all prior agreements between the Parties regarding the subject matter hereof, and is intended as a final expression of their Agreement concerning the subject matter hereof. It shall not be modified or amended except in writing signed by the Parties hereto and specifically referring to this Agreement.

- 15 -

EXCLUSIVE LICENSE AGREEMENT

19. DISPUTE RESOLUTION

If a dispute arises out of or relates to this Agreement, or the breach thereof, and if such dispute cannot be settled promptly, the Parties agree first to try in good faith to settle the dispute by good faith discussions between the senior management of each Party. If such discussions do not resolve the dispute within thirty (30) days after a Party has referred the dispute to resolution by the senior management, the Parties agree to submit such dispute within ten (10) days to non-binding mediation in Cleveland, Ohio, under the Commercial Mediation Rules of the American Arbitration Association. If such mediation fails to resolve the dispute within sixty (60) days, either Party may proceed to seek any remedies available to it.

20. GOVERNING LAW

THIS AGREEMENT IS TO BE INTERPRETED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO, but the scope and validity of any patent or patent application will be governed by the applicable laws of the country of the patent or patent application.

21. EXPORT CONTROL LAWS

LICENSEE shall observe all applicable United States and foreign laws with respect to the transfer of Licensed Products and related technical data to foreign countries, including the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations.

IN WITNESS WHEREOF, the Parties hereto have caused their duly authorized representatives to execute this Agreement on behalf of the parties as of the date appearing at the beginning of this Agreement.

UNIVERSITY HOSPITALS OF CLEVELAND
By:
Name:
Date:
CYTOCORE, INC.
By:	/s/ David Weissberg
Name:	David Weissberg
Date:	1/27/06

- 16 -

EXCLUSIVE LICENSE AGREEMENT

Appendix A.

UHC File #	Activity	Date	Patent#
UH2004-006	Naturally occurring truncated P2X7 Receptor	06/02/05	60/686,770

EXCLUSIVE LICENSE AGREEMENT

APPENDIX B
University Hospitals of Cleveland

MATERIAL TRANSFER AGREEMENT

This document may not be used for the transfer of radioactive materials.

Parties to this Agreement:

Recipient Company/Organization/Institution:

Recipient’s Address:

Recipient’s Scientist(s):

Recipient Scientist’s Address:

Provider Company/Organization/Institution:

Provider’s Address:

Provider’s Scientist(s):

Definitions:

Effective Date:

Original Material:

Progeny: Unmodified descendant from the Original Material, such as virus from virus, cell from cell, or organism from organism, and any immediate or remote progeny of or descendant from organisms or cell lines containing the same genetic mutation(s) or lesion(s) as Original Material.

Unmodified Derivatives: Substances created by Recipient which constitute an important unmodified functional sub-unit or expression product of the Original Material, e.g., subclones of unmodified cell lines, purified or fractionated sub-sets of the Original Material such as novel plasmids or vectors, proteins expressed by DNA or RNA, antibodies secreted by a hybridoma.

Material: Original Material plus Progeny and Unmodified Derivatives.

- 18 -

EXCLUSIVE LICENSE AGREEMENT

Modifications: Substances created by Recipient which contain/incorporate any form of the Material (Original Material, Progeny or Unmodified Derivatives).

Information: All information relating to Material or Modifications disclosed to Recipient by Provider

Purpose for Transfer:

Terms and Conditions of this Agreement:

1. (a) The Material as defined above is and remains the property of Provider and is to be used by Recipient only under the direction of Recipient’s Scientist for the Purpose stated above.

     (b) Provider does not claim ownership of substances or Modifications produced as a result of Recipient’s research with the Material that are not included in the definition of Material above; however, Provider does retain ownership of any form of the Material included in such substances or Modifications.

     (c) Except as expressly provided in this Agreement, no rights are provided to Recipient under any patent applications, trade secrets or other proprietary rights of Provider. In particular, except as provided for under the Exclusive License Agreement of               , 2006, between CytoCore, Inc. and University Hospitals of Cleveland, no rights are provided to use the Material or Modifications for profit-making or commercial purposes, such as sale; use in manufacturing; use in drug screening, evaluation, and/or design programs; or provision of a commercial service based upon the Material or Modifications.

     (d) If Recipient desires to use the Material or Modifications for such profit-making or commercial purposes, Recipient agrees that it must first negotiate a license or other appropriate agreement with Provider and third parties as may be required, and it is further understood by Recipient that Provider shall have no obligation to enter into such a license or agreement and in fact may grant exclusive or non-exclusive commercial licenses to others.

     (e) Recipient agrees to obtain Provider’s written approval before entering into any sponsored research agreement in which the sponsor (other than the government) gains rights to intellectual property arising from research with the Material and/or Modifications.

2. The Recipient agrees not to transfer the Material or Modifications without the prior written consent of Provider to anyone who does not work under the Recipient Scientist’s direct supervision. No person authorized to use the Material

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EXCLUSIVE LICENSE AGREEMENT

shall be allowed to take or send the Material to any location other than the Recipient Scientist’s Address without Provider’s written consent.

3. Each party agrees to use reasonable efforts to hold confidential all Information identified as confidential at the time of disclosure and, if orally disclosed, then confirmed in writing or other tangible medium within thirty (30) days, except for Information that: (a) is now or will enter the public domain as the result of its disclosure in a publication, the issuance of a patent, or otherwise without the legal fault of the receiving party; (b) the receiving party can prove was in its possession at the time of the disclosure by the other party other than by prior disclosure by Provider, or was developed by recipient alone or in collaboration with a third party without knowledge of the Confidential Information; (c) comes into the hands of the receiving party by means of a third party who is entitled to make such disclosure and who has no obligation of confidentiality toward the disclosing party; or (d) must be disclosed pursuant to a court order or as otherwise required by law. Obligations of non-disclosure of Information shall terminate three (3) years from the Effective Date of this Agreement.

4. If Recipient’s research results in a discovery, invention, new use, or a product (collectively referred to as “Invention”), Recipient agrees to disclose promptly such Invention(s) to Provider on a confidential basis. Inventorship shall be determined in accordance with United States patent law (if patentable) or by mutual agreement between the parties (if not patentable) taking into account the role and contributions of individuals involved in the development of the Invention. If Provider personnel are co-inventors of such inventions, the Recipient agrees to enter into a license agreement with Provider concerning Recipient’s and/or Provider’s use of the invention, such license to provide a reasonable royalty to be negotiated in good faith based on the respective parties’ contributions and relevant industry standards. If either Provider or Recipient is the sole inventor of any Invention, that party shall be free to dispose of such Invention as it sees fit. Any educational institution which is a party to this Agreement shall have the right to use for its internal research purposes Inventions developed through use of the Material under this Agreement without payment of license or royalty fees.

5. This Agreement shall not be interpreted to prevent or delay publication of research results using the Material or Modifications. Recipient’s Scientist and Recipient agree to provide appropriate acknowledgment of the source of the Material in all publications and presentations based on use of the Material, and agrees to furnish Provider with a copy of the manuscript or abstract disclosing such results prior to submission thereof to publisher, and not less than thirty (30) days prior to publication to allow Provider an opportunity to protect proprietary or intellectual property rights relating to the Material that might be contained in such disclosure. Provider agrees to keep such copy confidential during the thirty (30) day period and until publication. Other than as specified above, Provider will not use the Recipient’s name or the names of its schools or departments in any publication or marketing materials without prior written consent.

- 20 -

EXCLUSIVE LICENSE AGREEMENT

6. Any Material delivered pursuant to this Agreement is understood to be experimental in nature, and Provider makes no representations and extends no warranties of any kind, either express or implied. There are no express or implied warranties of merchantability or fitness for a particular purpose, or that the use of the Material will not infringe any patent, copyright, trademark, or other rights.

7. In no event shall Provider be liable for any use by Recipient of the Material or for any loss, claim, damage, or liability, of any kind or nature, that may arise from or in connection with the Recipient’s use, handling, storage, or disposal of the Material, except as such claims, demands, costs, or judgments may arise from Provider’s gross negligence or willful misconduct. Recipient assumes responsibility for, and agrees to indemnify and hold harmless Provider and Provider’s trustees, officers, agents, and employees from any liability, loss, or damage they may suffer as a result of any claims, demands, costs, or judgments against them arising but of the use, handling, storage, or disposal of the Material by Recipient, except as such claims, demands, costs, or judgments may arise from Provider’s gross negligence or willful misconduct.

8. The Material shall in no event be used in human beings (including for diagnostic purposes) without the appropriate prior government regulatory approval. All research involving the Material (including but not limited to research involving the use of animals and recombinant DNA) and disposal of the Material shall be conducted in accordance with all federal, state, local and other laws, regulations, and ordinances governing such research including applicable NIH guidelines.

9. (a) This Agreement will terminate on the earliest of the following dates: (1) when the Material becomes generally available, for example, through reagent catalogs or from a repository under the Budapest treaty, in which case Recipient shall be bound by the least restrictive terms applicable to Material obtained from the then-available sources, or (2) on completion of Recipient’s proposed research studies with the Material, or (3) on thirty (30) days written notice by either party to the other, or (4) one year from the date that this Agreement is signed by Provider.

     (b) On termination of this Agreement, Recipient will discontinue its use of the Material and will, unless otherwise directed by Provider, return or destroy the Material. Recipient will also either destroy Modifications or remain bound by the terms of this Agreement as they apply to Modifications.

     (c) Paragraphs 3, 4, 5, 6 and 7 shall survive termination.

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EXCLUSIVE LICENSE AGREEMENT

10. This Agreement is not assignable without the prior written consent of Provider, and shall be governed by the laws of the State of Ohio, without reference to its choice of law provisions.

AGREED to this                        day of                                            , 20          :

Recipient Company/Organization/Institution:

(authorized signature)	(name and title)
(date)
Recipient’s Scientist(s):
(signature)	(printed name)
(date)
Provider Company/Organization/Institution
(authorized signature)	(name and title)
(date)
Provider’s Scientist(s):
(signature)	(printed name)
(date)

- 22 -

EX-10.52

Exhibit 10.52

AMENDMENT TO EMPLOYMENT AGREEMENT

          Amendment to the Employment Agreement dated as of November 15, 2006 by and between CytoCore, Inc. (“Company” ) and Dr. Augusto Ocana (“Ocana”). The parties thereto agree as follows:

          1. Upon execution of this Agreement, Ocana shall resign as CEO of the Company and as a member of its Board of Directors of the Company and shall cease to be an employee of the Company. Thereafter, Ocana shall provide the following services to the Company as a Consultant (“Consultant”).

          2. Consultant shall devote a substantial amount of his time and effort to develop a distribution system for the Company’s products in Europe and Latin America. Consultant shall identify reputable and experienced European and Latin American distributors and upon authorization by the Company negotiate the terms of distribution agreements, subject to the Company’s approval and execution of such agreements (“Ocana Distributors”). The Ocana Distributors shall be assigned exclusive “Areas” so that the major markets in Europe and Latin America will be adequately served. The Company shall determine the Areas, transfer pricing and minimum quantities acceptable to the Company to enter into any distribution agreements. Upon execution of the distribution agreements, Consultant shall work with the Ocana Distributors on the Company’s behalf to implement said agreements.

          3. Consultant shall receive a commission of 3% of gross revenue received from the Ocana Distributors for Company products sold to them. The Company may terminate any or all of the Ocana Distributors upon the Company’s determination that such Distributor(s) are not producing sufficient sales, poor payment history with the Company or maintaining a 35%

or greater profit margin on the Company’s sale of its products to such Distributor(s). Gross sales shall be determined on the basis of F.O.B., point of manufacture. In addition, gross sales shall be reduced by refunds, returns or allowances and bad debts.

          4. (a) The commission shall be paid to Consultant during the life of any agreement with an Ocana Distributor, including any renewals thereof and shall continue beyond the termination or expiration of this Agreement.

               (b) Consultant shall receive a monthly advance fee (“Draw”) of $5,000/month to be offset against future commissions earned by Consultant. Such Draw will be increased to $7,500/month in the event Consultant delivers a distribution agreement accepted and executed by the Company, but the sale of Company products is delayed until the Company has received a “CE” approval.

               (c) 35% of the commissions due Consultant shall be paid upon delivery of inventory to Ocana Distributor, reduced by Draw previously paid by the Company to Consultant; the balance shall be paid with 10 days after payment by the Ocana Distributor has cleared.

               (d) The Company will provide Consultant with the basis upon which the Company has determined commissions to be due to Consultant. Consultant may request an audit of such calculation. The Company shall perform such audit, but Consultant will be charged for such expense if the audit determines that the commission paid to the Consultant is less than 95% of the correct commission amount.

               (e) Payment of commissions shall be paid in U.S. Dollars.

          5. The term of this agreement shall be on a month-to-month basis, but

2

the Company may not terminate this Agreement for at least 90 days from the date hereof. Notwithstanding the foregoing, the Company may continue the agreement without continuing to pay a Draw if, in the company’s sole discretion it determines that progress in implementing the Ocana Distributor system is not proceeding as rapidly as anticipated.

          6. Consultant confirms that he has received, or is entitled to receive, the following additional compensation.

               (a) A warrant to purchase 500,000 shares of the Company’s common stock at the exercise price equal to the closing price of such stock on the OTC Bulletin Board on November 15, 2006 less 33¹/3%.

               (b) A warrant to purchase 500,000 shares of the Company’s common stock based on the closing price of the Company’s common stock listed on the OTC Bulletin Board having been not less than $.30 per share during thirty (30) days out of any consecutive forty five (45) day period during which the Company’s common stock is traded. The exercise price of the warrant is the average closing price of the Company’s common stock during such forty five (45) day period less a discount of 33¹/3%.

               (c) Consultant shall continue to be covered under any medical, dental, disability, life insurance and other Company benefit plans and programs offered to its executives as long as Consultant remains as a consultant to the Company, but at least until December 31, 2007.

               (d) Consultant is authorized to incur reasonable, ordinary and necessary business expenses in the performance of his duties, except that any expense of $200.00 or higher shall require the prior approval of the CFO of the Company.

3

               (e) The Company shall reimburse Consultant for his monthly office rent at Carnegie Center through December 31, 2007.

               (f) The Company shall pay Consultant the sum of $45,000 in three (3) equal monthly installments commencing on August 15, 2007 as additional compensation. Such payments shall be subject to federal and state tax withholding. Ordinary and necessary expenses of the Consultant relating to Company business incurred prior to the date of Consultant’s resignation shall be paid by the Company in accordance with the company’s policy regarding reimbursement of employee expenses.

          7. Consultant hereby confirms his obligation to comply with Sections 6, 7, 8, 9 and 10 of the “Employment Agreement” and be subject to the exercise by the Company of its remedies as set forth in Section 10 thereof. Notwithstanding the foregoing, the Company will release Consultant from his obligations to comply with the restrictions set forth in Section 7, 8 and 9 of the Employment Agreement by relinquishing his right to receive commissions from the Ocana Distributors, effective on the date Consultant notifies the Company in writing that he is relieved of such compliance obligations.

          8. Any inconsistency between the terms of this Amendment and the terms of the Agreement it amends shall be resolved in favor of this Amendment. Any provision in the Employment Agreement which is not inconsistent with the terms of this Amendment shall remain in full force and effect. However, Compensation as defined in the Employment Agreement shall only refer to the consideration set forth in this Amendment.

          9. Consultant agrees, ratifies and confirms that his resignation and change of his responsibilities shall be deemed to be a voluntary resignation and not a “Termination Without

4

Cause” or a “Termination for Good Reason” as such terms are defined in the Employment Agreement.

          10. Consultant has entered into this Amendment voluntarily and after receiving the advice of and consultation with his attorney. He understands the meaning and consequences to him resulting from his execution of this Amendment.

          11. The parties hereto shall jointly issue a press release relating to the change of responsibilities of Consultant.

          12. This Amendment shall be governed by and construed under the laws of the State of Illinois.

          IN WITNESS WHEREOF, the parties hereto have set their hands this 12 day of July, 2007.

CYTOCORE, INC.
By:	/s/ Illegible
/s/ Dr. Augusto Ocana
Dr. Augusto Ocana

5

EX-10.53

Exhibit 10.53

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

     Second Amendment to the Employment Agreement dated as of November 15, 2006 (“Employment Agreement”) by and between CYTOCORE, INC. (“Company”) and DR. AUGUSTO OCANA (“Ocana”). The parties thereto agree as follows:

     1. Commencing on December 1, 2007 Ocana shall be employed by the Company as its President of International Operations. Ocana shall devote a substantial amount of his time and effort to develop a distribution system for the Company’s products in Europe, Latin America and Asia.. Ocana shall identify reputable and experienced European, Latin American and Asian distributors and upon authorization by the Company negotiate the terms of distribution agreements with them, subject to the Company’s approval and execution of such agreements (“Ocana Distributors”). The Ocana Distributors shall be assigned exclusive ‘Areas’ so that the major markets in Europe, Latin America and Asia will be adequately served. The Company shall determine the Areas, transfer pricing and minimum quantities acceptable to the Company to enter into any distribution agreements. Upon execution of the distribution agreements, Ocana shall work with the Ocana Distributors on the Company’s behalf to implement said agreements.

     2. In that capacity, Ocana shall receive the following compensation:

     (a) a commission of 3% of gross revenue received from the Ocana Distributors for Company products sold to them. The Company may terminate any or all of the Ocana Distributors upon the Company’s determination that such Distributor(s) are not producing sufficient sales in its Area, exhibiting poor payment history with the Company or failing to maintain a 35% or greater profit margin on the Company’s sale of its products to such

1

Distributor(s). In addition, gross sales shall be reduced by refunds, returns or allowances, taxes and bad debts.

     (b) The commission due on the sale of Company products to the Ocana Distributors shall be paid to Ocana during the term of this Agreement including any renewals thereof. Upon the expiration or earlier termination of this Agreement, Ocana shall receive 3% of gross revenue during the 12 months after the expiration or earlier termination date; 2% of gross revenues during the following 12 months after the expiration or earlier termination date of this Agreement and 1% during the third year after the expiration or earlier termination date of this Agreement. 35% of the commissions due Ocana shall be paid upon delivery of products to each Ocana Distributor; the balance shall be paid within 10 days after payment by the Ocana Distributor has cleared. Payment of commissions shall be paid in U.S. Dollars.

     The Company will provide Ocana with the basis upon which the Company has determined his commissions. Ocana may request an audit of such calculation. The Company shall perform such audit, but Ocana will be charged for such expense if the audit determines that the commission paid to Ocana is not less than 95% of the correct commission amount.

     (c) Ocana will work with the Company’s management to identify and appoint distributors of the Company’s products in the United States. Ocana shall receive a commission of 1 and l/2% of gross revenue (as defined above) from the sale of the Company’s products to such distributors for a period of 2 years, commencing on the first sale of the Company’s products to each such United States distributor. Such commission shall be earned upon the reasonable determination of the President of the Company that Ocana’s assistance materially aided in securing the distributor. The United States shall be deemed to be the 50 states, Puerto Rico and U.S. Territories.

2

     (d) a salary of $10,000 per month, commencing on December 1, 2007. Salary paid hereunder shall be subject to all appropriate federal and state withholding practices of the Company.

     Draws received by Ocana under the Amendment to Employment Agreement dated July 2007 shall continue to be treated as offsets against commissions earned by Ocana from the Ocana Distributors until repaid in full.

     (e) Ocana will participate in any medical, dental, disability, life insurance and other Executive benefit plans of the Company which are made available to other executives of the Company; provided, however, that any such benefits for Company executives as a group may be changed, modified or revoked at the discretion of the Company on not less than 90 days prior written notice.

     (f) Ocana is authorized to incur reasonable, ordinary and necessary business expenses in the performance of his duties hereunder and the Company shall reimburse him, or pay the expenses, in accordance with the policies established by the Company within 30 days of submission of adequate substantiation of such expenses. During the term of this Agreement and any renewal thereof Ocana shall receive an automobile allowance of $550.00 per month.

     (g) During the term of this agreement and any renewal thereof, the Company shall reimburse Ocana for his monthly office rent at Carnegie Center.

     (h) Ocana will be nominated for membership to the Board of Directors of the Company at its next scheduled meeting.

     3. The term of this Agreement shall commence on December 1, 2007 and continue in full force and effect until November 30, 2008 and may be extended for additional 12 month periods upon notice no later than September 30 of each year. Notwithstanding the foregoing,

3

either party may terminate this Agreement upon not less than 60 days prior written notice to the other.

     4. Ocana shall be eligible to receive the following grants of warrants based on performance:

     (a) a warrant to purchase 15,000 shares of common stock of the Company should sales to Ocana Distributors equal or exceed U.S. $20,000,000 during calendar year 2008.

     (b) a warrant to purchase 15,000 shares of common stock of the Company should sales to Ocana Distributors equal or exceed U.S. $40,000,000 during calendar year 2008.

     (c) a warrant to purchase 15,000 shares of common stock of the Company should sales to Ocana Distributors equal or exceed U.S. $40,000,000 during calendar year 2009.

     (d) a warrant to purchase 15,000 shares of common stock of the Company should sales to Ocana Distributors equal or exceed U.S. $60,000,000 during calendar year 2009.

     (e) a warrant to purchase 15,000 shares of common stock of the Company should sales to Ocana Distributors equal or exceed U.S. $60,000,000 during calendar year 2010.

     (f) a warrant to purchase 15,000 shares of common stock of the Company should sales to Ocana Distributors equal or exceed U.S. $90,000,000 during calendar year 2010.

     (g) a warrant to purchase 20,000 shares of common stock of the Company should the closing price of the Company’s common stock exceed $5.00 per share during 30 trading days out of any consecutive 45 trading days.

     (h) a warrant to purchase 20,000 shares of common stock of the Company should the closing price of the Company’s common stock exceed $7.00 per share during 30 trading days out of any consecutive 45 trading days.

4

     (i) a warrant to purchase 20,000 shares of common stock of the Company should the closing price of the Company’s common stock exceed $10.00 per share during 30 trading days out of any consecutive 45 trading days.

     (j) a warrant to purchase 20,000 shares of common stock of the Company should the closing price of the Company’s common stock exceed $12.00 per share during 30 trading days out of any consecutive 45 trading days.

     The exercise price for each of the warrants shall be fair market value on the date each such warrant may be exercised taking into consideration the restriction on transferability of such shares at the time of exercise.

     5. Ocana hereby confirms his obligation to comply with Sections 6, 7, 8, 9 and 10 of the Employment Agreement and be subject to the exercise by the Company of its remedies as set forth in Section 10 thereof. Notwithstanding the foregoing, the Company will release Ocana from his obligations to comply with the restrictions set forth in Section 7, 8 and 9 of the Employment Agreement by relinquishing his right to receive commissions from the Ocana Distributors, effective on the date Ocana notifies the Company in writing that he elects to be relieved of such compliance obligations.

     6. Any inconsistency between the terms of this Second Amendment and the terms of the Employment Agreement and Amendment shall be resolved in favor of this Second Amendment. Any provision in the Employment Agreement and Amendment which is not inconsistent with the terms of this Second Amendment shall remain in full force and effect. However, Compensation as defined in the Employment Agreement shall only refer to the consideration set forth in this Amendment.

5

     7. Ocana has entered into this Second Amendment voluntarily and after receiving the advice of and consultation with his attorney. He understands the meaning and consequences to him resulting from his execution of this Second Amendment.

     8. The parties hereto shall jointly issue a press release relating to the change of responsibilities of Ocana.

     9. This Second Amendment shall be governed by and construed under the laws of the State of Illinois.

           IN WITNESS WHEREOF, the parties hereto have set their hands as of this       day of November, 2007.

CYTOCORE, INC.
 

By:  

Dr. Augusto Ocana 

6

EX-10.54

Exhibit 10.54

BROKER’S NAME:                                                             

BROKER-DEALER’S NAME:                                                             

IMPORTANT: PLEASE READ CAREFULLY BEFORE SIGNING.
SIGNIFICANT REPRESENTATIONS ARE CALLED FOR HEREIN.

SUBSCRIPTION AGREEMENT
and
LETTER OF INVESTMENT INTENT

Cytocore, Inc.
414 North Orleans Street, Suite 502
Chicago, Illinois 60610

Gentlemen:

     The undersigned (the “Subscriber”) hereby tenders this subscription for the purchase of securities (the “Securities”) of Cytocore, Inc. (the “Company”), consisting of units (“Units”). The Units are offered by the Company (the “Offering”) through Bathgate Capital Partners, LLC (the “Finder”). The Units and the terms of the Offering are described in the Purchase Agreement delivered contemporaneously with this Subscription Agreement (the “Purchase Agreement”). Subscriber understands that a subscription for the Securities may be rejected for any reason and that, in the event that this subscription is rejected, the funds delivered herewith will be promptly returned, without interest thereon or deduction therefrom. By execution below, the Subscriber acknowledges that the Company is relying upon the accuracy and completeness of the representations contained herein in complying with their obligations under applicable securities laws.

ARTICLE 1 — SUBSCRIPTION AND DESCRIPTION OF SECURITIES

1.1 Subscription for Units

     The Subscriber hereby confirms its subscription for and offers to purchase the Securities from the Company, on and subject to the terms and conditions set out in this Subscription Agreement, and hereby tenders the full Subscription Amount in cash or check payable to “Cytocore, Inc. Escrow Account” in the amount subscribed for. Investors may also wire funds to the escrow account as set forth below:

Receiving Bank Name:	Front Range Bank
	7600 S. Alton Way, Building B
	Centennial, CO 80112
ABA Routing Number:	107006428
Account Number:	0310000401
Name of Account:	Cytocore, Inc. Escrow Account

$

Amount of Subscription

1.2 Acceptance and Rejection of Subscription by the Company

     The Subscriber acknowledges and agrees that the Company reserves the right, in its absolute discretion, to reject this subscription, in whole or in part, at any time prior to the Closing as that term is defined in the Purchase Agreement. If this subscription is rejected in whole, any checks or other forms of payment delivered to the Company representing the Subscription Amount will be promptly returned to the Subscriber without interest and without deduction. If this subscription is accepted only in part, a check representing any refund of the Subscription Amount for that portion of the subscription for the Securities which is not accepted, will be promptly delivered to the Subscriber without interest and without deduction.

ARTICLE 2 — ACKNOWLEDGEMENTS, COVENANTS, REPRESENTATIONS AND
WARRANTIES OF THE SUBSCRIBER

     The Subscriber, on its own behalf and, if applicable and if fully disclosed to the Company and to the Finder, on behalf of others for whom it is acting hereunder, hereby represents and warrants to, and covenants with, the Company as follows and acknowledges that the Company is relying on such representations and warranties in connection with the transactions contemplated herein:

(a)	The Subscriber certifies that it is resident in the jurisdiction set out on the signature page of this Subscription Agreement. Such address was not created and is not used solely for the purpose of acquiring the Securities and the Subscriber was solicited to purchase in such jurisdiction.
(b)	If the Subscriber is not a person in the United States or a U.S. Person (as defined in Rule 902(k) of Regulation S under the U.S. Securities Act of 1933, as amended (the “US Securities Act”) or not purchasing the Securities on behalf of a person in the United States or a U.S. Person:

(i)	neither the Subscriber nor any disclosed principal is a U.S. Person nor subscribing for the Securities for the account of a U.S. Person or for resale in the United States and the Subscriber confirms that the Securities have not been offered to the Subscriber in the United States and that this Subscription Agreement has not been signed in the United States;
(ii)	the Subscriber acknowledges that the Securities have not been registered under the U.S. Securities Act and may not be offered or sold in the United States or to a U.S. Person unless the securities are registered under the U.S. Securities Act and all applicable state securities laws or an exemption from such registration requirements is available, and further agrees that hedging transactions involving such securities may not be conducted unless in compliance with the U.S. Securities Act;
(iii)	the Subscriber and if applicable, the disclosed principal for whom the Subscriber is acting, understands that the Company is the seller of the Securities and underlying securities and that, for purposes of Regulation S, a “distributor” is any underwriter, dealer or other person who participates, pursuant to a contractual arrangement in the distribution of securities sold in reliance on

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Regulation S and that an “affiliate” is any partner, officer, director or any person directly or indirectly controlling, controlled by or under common control with any person in question. Except as otherwise permitted by Regulation S, the Subscriber and if applicable, the disclosed principal for whom the Subscriber is acting, agrees that it will not, during a one year distribution compliance period, act as a distributor, either directly or through any affiliate, or sell, transfer, hypothecate or otherwise convey the Securities or underlying securities other than to a non-U.S. Person;

(iv)

the Subscriber and if applicable, the disclosed principal for whom the Subscriber is acting, acknowledges and understands that in the event the Securities are offered, sold or otherwise transferred by the Subscriber or if applicable, the disclosed principal for whom the Subscriber is acting, to a non-U.S Person prior to the expiration of a one year distribution compliance period, the purchaser or transferee must agree not to resell such securities except in accordance with the provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration; and must further agree not to engage in hedging transactions with regard to such securities unless in compliance with the U.S. Securities Act; and

(v)

neither the Subscriber nor any disclosed principal will offer, sell or otherwise dispose of the Securities in the United States or to a U.S. Person unless (A) the Company has consented to such offer, sale or disposition and such offer, sale or disposition is made in accordance with an exemption from the registration requirements under the U.S. Securities Act and the securities laws of all applicable states of the United States or (B) the SEC has declared effective a registration statement in respect of such securities.

(c) If the Subscriber is a person in the United States or a U.S. person, or is purchasing the Securities on behalf of a person in the United States or a U.S. person, the Subscriber or each beneficial purchaser as to which the Subscriber exercises sole investment discretion for whom it is purchasing:

(i)	is acquiring the Securities to be held for investment only and not with a view to resale, distribution or other disposition of the Securities and without any present intention of selling, offering to sell or otherwise disposing of or distributing such securities, or any portion thereof, in any transaction other than a transaction complying with the registration requirements of the U.S. Securities Act and applicable state securities laws, or pursuant to an exemption therefrom;
(ii)	is aware that the Securities have not been registered under the U.S. Securities Act and the sale contemplated hereby is being made in reliance on a private placement exemption to Accredited Investors (as defined in Rule 501 of the U.S. Securities Act);
(iii)	the Subscriber is an Accredited Investor within the meaning of Rule 501 of Regulation D of the U.S. Securities Act (see categories of “Accredited Investor” on Exhibit A to this Agreement and initial your category); or each beneficial purchaser as to which the Subscriber exercises sole investment discretion for

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whom it is purchasing and each disclosed principal for whom the Subscriber may be acting is an Accredited Investor;

(iv)	if the undersigned is the Subscriber, he or she is making the above statement based on personal knowledge of his or her financial situation and has reviewed personal financial documentation with an accountant, financial advisor or other financial professional, if necessary, to determine that the above statement is true; or (b) if the undersigned is other than the Subscriber, he or she is making the above statement based on a review, if necessary, of the financial statements of the Subscriber for the most recently completed financial year and any interim financial statements prepared since the end of such financial year and has undertaken such other review and due diligence necessary to determine and certify that the Subscriber is an “Accredited Investor” as that term is defined in Rule 501(a) of the U.S. Securities Act;
(v)	is not purchasing the Securities as a result of any “general solicitation or general advertising” (as such term is defined in Rule 502(c) of the U.S. Securities Act), including any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio, or any seminar or meeting where the attendees have been invited by general solicitation or general advertising;
(vi)	understands that if it decides to offer, sell, pledge or otherwise transfer the Securities, and, prior to a Registration Statement under the U.S. Securities Act becoming effective, the Securities may be offered, sold or otherwise transferred only: (A) to the Company; (B) in compliance with Rule 904 under Regulation S, (C) in accordance with Rule 144 or Rule 144A under the U.S. Securities Act, if available, and in compliance with applicable local laws and regulations, or (D) in a transaction that does not otherwise require registration under the U.S. Securities Act or any applicable state securities laws if an opinion of counsel, of recognized standing reasonably satisfactory to the Company has been provided to the Company to that effect; and
(vii)	consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company in order to implement the restrictions on transfers set forth and described herein, and the Subscriber understands and acknowledges that the Company may instruct the registrar and transfer agent of the Company not to record a transfer without first being notified by the Company that it is satisfied that such transfer is exempt from or not subject to registration under the U.S. Securities Act.

(d) If the Subscriber or any disclosed principal is not a person described in paragraphs 2(b) or 2(c) above, the subscription for the Securities by the Subscriber does not contravene any of the applicable securities legislation in the jurisdiction in which the Subscriber resides and does not give rise to any obligation of the Company to prepare and file a prospectus or similar document or to register the Securities or to be registered with, or to file any report or notice with, any governmental or regulatory authority. There is no undisclosed principal for the Subscriber.

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(e)	The execution and delivery of this Subscription Agreement, the performance and compliance with the terms hereof, the subscription for the Securities and the completion of the transactions described herein by the Subscriber will not result in any material breach of, or be in conflict with, or constitute a material default under, or create a state of facts that, after notice or lapse of time, or both, would constitute a material default under any term or provision of the constituent documents, by-laws or resolutions of the Subscriber, the securities laws or any other laws applicable to the Subscriber, any agreement to which the Subscriber is a party, or any judgment, decree, order, statute, rule or regulation applicable to the Subscriber.
(f)	The Subscriber is subscribing for the Securities as principal for its own account and not for the benefit of any other person (within the meaning of applicable securities laws) except as fully disclosed to the Company and to the Finder. If it is subscribing as agent for a disclosed principal, it has disclosed the name of the disclosed principal on the face page of this Subscription Agreement and acknowledges that the Company may be required by law to disclose to certain regulatory authorities the identity of each disclosed principal for whom the Subscriber is acting.
(g)	In the case of a subscription for the Securities by the Subscriber acting as trustee or agent for a fully managed account or as agent for a disclosed principal, the Subscriber is duly authorized to execute and deliver this Subscription Agreement and all other necessary documentation in connection with such subscription on behalf of the fully managed account or disclosed principal, as applicable and this Subscription Agreement has been duly authorized, executed and delivered by or on behalf of and constitutes a legal, valid and binding agreement of, the fully managed account or disclosed principal, as applicable.
(h)	In the case of a subscription for the Securities by the Subscriber acting as principal or agent, this Subscription Agreement has been duly authorized, executed and delivered by, and constitutes a legal, valid and binding agreement of, the Subscriber. This Subscription Agreement is enforceable in accordance with its terms against the Subscriber.
(i)	If the Subscriber is:

(i)

a corporation, company or similar entity, the Subscriber is duly incorporated or organized and is validly subsisting under the laws of its jurisdiction and has all requisite legal and corporate power and authority to execute and deliver this Subscription Agreement, to subscribe for the Securities as contemplated herein and to carry out and perform its obligations under the terms of this Subscription Agreement;

(ii)

a partnership, syndicate or other form of unincorporated organization, the Subscriber has the necessary legal capacity and authority to execute and deliver this Subscription Agreement and to observe and perform its covenants and obligations hereunder and has obtained all necessary approvals in respect thereof; or

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(iii) an individual, the Subscriber is of the full age of majority and is legally competent to execute this Subscription Agreement and to observe and perform his or her covenants and obligations hereunder.

(j)	The Subscriber is not, with respect to the Company or any of its affiliates, a “control person” as defined under the U.S. Securities Act and the purchase of the Securities hereunder and the exercise or deemed exercise of the Securities will not result in the Subscriber becoming a control person.
(k)	The Subscriber acknowledges that the Company and the Finder have each advised the Subscriber to consult its own legal, financial, tax, investment, and other advisors with respect to

(i)	the advisability of the Subscriber, as principal or agent, investing in the Securities pursuant to the terms of this Subscription Agreement;
(ii)	the adequacy of the Purchase Agreement and the SEC Filings (as defined below) for the purposes of the Subscriber;
(iii)	trading in the Securities and resale restrictions imposed by the securities laws of the United States and in the jurisdiction in which the Subscriber resides, as well as other applicable securities laws,

and the Subscriber has completed such consultation with such advisors to the extent that the Subscriber believed necessary or appropriate in the circumstances. The Subscriber acknowledges that (except as specifically set forth in the Purchase Agreement) no representation has been made respecting the applicable hold periods imposed by the securities laws or other resale restrictions applicable to such securities that restrict the ability of the Subscriber (or others for whom it is contracting hereunder) to resell such securities, that the Subscriber (or others for whom it is contracting hereunder) is solely responsible to find out what these restrictions are and the Subscriber is solely responsible (and neither the Company nor the Agent are in any way responsible) for compliance with applicable resale restrictions and the Subscriber is aware that it (or beneficial persons for whom it is contracting hereunder) may not be able to resell such securities except in accordance with limited exemptions under the securities laws and other applicable securities laws.

(l) No person has made any written or oral representations:

(i)	that any person will resell or repurchase the Securities;
(ii)	that any person will refund the Subscription Amount;
(iii)	as to the future price or value of the Securities; or
(iv)	that are inconsistent with the information contained in this Subscription Agreement, the SEC Filings, or the Purchase Agreement.

(m) The Subscriber is aware that the purchase of the Securities involves a high degree of risk and the Subscriber has such knowledge and experience that it is capable of evaluating the merits and risks of an investment in the Securities, fully understands the

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restrictions on resale of the Securities, and is capable of bearing the economic risk of the investment.

(n)

The funds representing the Subscription Amount that will be advanced by the Subscriber to the Company hereunder, as applicable, will not represent proceeds of crime for the purposes of United States anti-terrorist legislation and the Subscriber acknowledges that the Company may in the future be required by law to disclose the Subscriber’s name and other information relating to this Subscription Agreement and the Subscriber’s subscription hereunder pursuant to such legislation. To the best of its knowledge (a) none of the Subscription Amount to be provided by the Subscriber (i) has been or will be derived from or related to any activity that is deemed criminal under the law of the United States of America, or any other jurisdiction, or (ii) is being tendered on behalf of a person or entity who has not been identified to the Subscriber, and (b) it shall promptly notify the Company if the Subscriber discovers that any of such representations ceases to be true, and to provide the Company with appropriate information in connection therewith.

(o)

The Subscriber understands that

(i)	No securities commission, agency, governmental authority, regulatory body, stock exchange or other regulatory body or similar regulatory authority has reviewed or passed on the merits of the Securities.
(ii)	The Securities shall be subject to statutory resale restrictions under the securities laws of the jurisdiction in which the Subscriber resides and under other applicable securities laws, and the Subscriber covenants that it will not resell the Securities except in compliance with such laws and the Subscriber acknowledges that it is solely responsible (and in no way is the Company responsible) for such compliance.
(iii)	The certificates representing the Securities and all certificates issued in substitution or exchange thereof, will bear a legend substantially in the following form:
	THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (B) IN COMPLIANCE WITH RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (C) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO CYTOCORE, INC. AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO CYTOCORE, INC.

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HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.

(iv)	The Company is relying on the representations, warranties and covenants contained herein to determine the Subscriber’s eligibility to subscribe for the Securities under applicable securities laws and the Subscriber agrees to indemnify the Company and each of its directors, officers and agents against all losses, claims, costs, expenses, damages or liabilities that any of them may suffer or incur as a result of or arising from reliance thereon. The Subscriber undertakes to immediately notify the Company of any change in any statement or other information relating to the Subscriber set forth in such applicable Schedules which takes place prior to the Closing.
(v)	The Subscriber is responsible for obtaining such legal, tax, investment, and other advice as it considers appropriate in connection with the execution, delivery and performance of this Subscription Agreement and the transactions contemplated under this Subscription Agreement.
(vi)	THERE ARE SIGNIFICANT AND SUBSTANTIAL RISKS ASSOCIATED WITH THE PURCHASE OF THE SECURITIES AND THE SUBSCRIBER MAY LOSE HIS, HER OR ITS ENTIRE INVESTMENT.

(p)

The Company has made available to the Subscriber through the EDGAR system, true and complete copies of the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (the “10-K”), and all other reports filed by the Company pursuant to the Securities and Exchange Act of 1934 (the “1934 Act”) since the filing of the 10-K and prior to the date hereof (collectively, the “SEC Filings”). The Subscriber, in consultation with its legal, financial, tax, investment, and other advisors as the Subscriber has determined to be appropriate, has reviewed the SEC Filings. The Subscriber’s decision to purchase the Securities was based solely on the representations in this Subscription Agreement and the Purchase Agreement, and no person or entity has made any representations or warranties except as set forth herein or in the Purchase Agreement. The Subscriber has made such further inquiry of the Company, its assets, business, operations, forecasts, management, and industry, as the Subscriber, in consultation with its advisors, has determined to be appropriate in the circumstances. Notwithstanding such inquiry, the Subscriber has made its decision to make any investment herein solely based on this Subscription Agreement and the Purchase Agreement and the information in the SEC Filings. Following such inquiry as the Subscriber has determined to be appropriate, the Subscriber is not aware of any statement in this Subscription Agreement, the SEC Filings, or the Purchase Agreement that is inaccurate or incomplete in any material respect.

(q)

This Subscription Agreement requires the Subscriber to provide certain personal information to the Company. The Company is collecting such information for the purposes of completing the offering, which includes, without limitation, determining the Subscriber’s eligibility to purchase the Securities under the securities laws, preparing and registering certificates representing Securities to be issued to the Subscriber and completing filings required by any stock exchange or securities regulatory authority.

8

The Company may disclose the Subscriber’s personal information to: (a) stock exchanges or securities regulatory authorities and (b) any of the other parties involved in the offering, including legal counsel and may be included in record books in connection with the offering. By executing this Subscription Agreement, the Subscriber is deemed to be consenting to the foregoing collection, use and disclosure of the Subscriber’s personal information. The Subscriber also consents to the filing of copies or originals of this Subscription Agreement as may be required to be filed with any stock exchange or securities regulatory authority in connection with the transactions contemplated hereby. The Subscriber represents and warrants that it has the authority to provide the consents and acknowledgements set out in this paragraph on behalf of each disclosed principal.

(r) I hereby acknowledge that Bathgate Capital Partners LLC has acted as a Finder on this offering. I acknowledge that the Finder has performed very limited due diligence on the Company. I acknowledge that the Finder will receive the compensation described below. The Finder has had access to the same information on the Company as the Investors participating in the Offering have had.

ARTICLE 3 — COMPENSATION OF THE FINDER

3.1 The Finder

     The Finder, who will offer the Units as the Company’s agent, is:

Bathgate Capital Partners LLC
5350 South Roslyn Street, Suite 400
Greenwood Village, Colorado 80111
(303) 694-0862

3.2 Finder Commission

     The Company will pay the Finder a commission of 7% of the gross proceeds of the offering, which amount will be reduced to 4% for investments received by persons referred to the Finder by the Company. The Company will also sell the Finder warrants to purchase shares of Common Stock, as described below. The Finder may allow other registered broker-dealers to participate in the offering; and will re-allow a portion of the compensation to such participating broker-dealers.

3.3 Finder’s Warrants

     The Company will sell to the Finder and its designees, for an aggregate purchase price of $100, warrants to purchase shares of Common Stock (“Finder’s Warrants”). For each five Units sold it will sell the Finder warrants to purchase one common share, exercisable at $2.25 per share. The Finder’s Warrants will be exercisable for a three-year period commencing on the date they are issued. The Finder’s Warrants will contain a “cashless exercise” provision, piggy-back registration rights, and anti-dilution provisions. The shares into which the Finder’s Warrants are exercisable are subject to the provisions of the Registration Rights Agreement.

3.4 Indemnification

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     The Company has agreed to indemnify, defend and hold harmless the Finder and participating dealers, their agents, officers and managers, and each person who controls the Finder and participating dealers within the meaning of either Section 15 of the U.S. Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended, from and against any and all losses, claims, damages, liabilities or expenses, joint or several (including reasonable legal and other expenses incurred by each such person in connection with defending or investigating any such claim or liability, whether or not resulting in any liability to such person) incurred under the U.S. Securities Act, or state securities laws or the rules or regulations thereunder, or at common law or otherwise based upon any untrue statement or alleged untrue statement of a material fact contained in this Memorandum or any amendment hereto and any application or other document filed in connection with the offering, or the failure to comply with the securities registration requirements of the U.S. Securities Act or any applicable state law.

ARTICLE 4 — SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

     The representations, warranties and covenants of the Subscriber contained in this Subscription Agreement shall survive the Closing and, notwithstanding such Closing or any investigation made by or on behalf of the Company with respect thereto and notwithstanding any subsequent disposition by the Subscriber of any of the Securities.

ARTICLE 5 — MISCELLANEOUS

5.1 FINRA Questionnaire

     If the Subscriber is a member of FINRA, a person associated with a member of FINRA, or an affiliate of a member, please fill out the FINRA Questionnaire that is attached to this agreement as Appendix B. For a definition of those terms, please refer to the Questionnaire.

5.2 Further Assurances

     Each of the parties hereto upon the request of each of the other parties hereto, whether before or after the Closing, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may reasonably be necessary or desirable to complete the transactions contemplated herein.

5.3 Costs and Expenses

     All costs and expenses (including, without limitation, the fees and disbursements of legal counsel) incurred in connection with this Subscription Agreement and the transactions herein contemplated shall be paid and borne by the party incurring such costs and expenses.

5.4 Governing Law; Venue

     The parties agree that this Agreement, and any disputes arising hereunder, will be governed by and construed in accordance with the laws of the state of Illinois, without giving effect to any conflict of laws principle to the contrary. The parties agree that venue for any dispute arising under this Agreement will lie exclusively in the state or federal courts located in Chicago, Illinois, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that Illinois is not the proper venue.

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5.5 Entire Agreement

     This Subscription Agreement, the Purchase Agreement, the Registration Rights Agreement, and the Warrant, constitute the entire agreement between the parties with respect to the transactions contemplated herein and cancel and supersede any prior understandings, agreements, negotiations and discussions between the parties. There are no representations, warranties, terms, conditions, undertakings or collateral agreements or understandings, express or implied, between the parties hereto other than those expressly set forth in the Purchase Agreement or in any such agreement, certificate, affidavit, statutory declaration or other document as aforesaid. This Subscription Agreement may not be amended or modified in any respect except by written instrument executed by each of the parties hereto.

5.6 Counterparts

     This Subscription Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Subscription Agreement. Counterparts may be delivered either in original or faxed form and the parties adopt any signature received by a receiving fax machine as original signatures of the parties.

5.7 Assignment

     This Subscription Agreement may not be assigned by either party except with the prior written consent of the other parties hereto.

5.8 Enurement

     This Subscription Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, successors (including any successor by reason of the amalgamation or merger of any party), administrators and permitted assigns.

5.9 Language

     It is the express wish of the Subscriber that the Subscription Agreement and any related documentation be drawn up in English.

5.10 Acceptance

     The Subscriber acknowledges and agrees that this Subscription Agreement and the Subscriber’s offer to purchase the Securities as described herein is not effective against the Company until and unless accepted by the Company.

5.11 Manner in Which Title is To Be Held.

Place an “X” in one space below:

                             (a) Individual Ownership

                             (b) Community Property

                             (c) Joint Tenant with Right of Survivorship (both parties must sign)

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                             (d) Partnership

                             (e) Tenants in Common

                             (f) Corporation

                             (g) Trust

                             (h) Limited Liability Company:

                             (i) Other (Describe)

SIGNATURES ON NEXT PAGE

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SIGNATURES

The Subscriber hereby represents he has read this entire Subscription Agreement.

Dated:                                                             

Please print above the exact name(s) in which the Securities are to be held.

INDIVIDUAL

	Address to Which Correspondence
	Should be Directed
Signature (Individual)
Signature (All record holders should sign)	City, State and Zip Code
Name(s) Typed or Printed	Tax Identification or Social Security Number
	(                    )
Name(s) Typed or Printed	Telephone Number
Date of Birth	State of Residence (if different from above)

COPY OF DRIVER’S LICENSE OR PASSAPORT REQUIRED IF NON-BCP CUSTOMER

Customer Identification Program Notice: To help the government fight the funding of terrorism and money laundering activities, federal law requires financial institutions to obtain, verify, and record information that identifies each client. This means that we will require you to provide the following information: name, date of birth, address, identification number, and a piece of documentary identification. If you are an individual and do not have an account with Bathgate Capital Partners please include a copy of your driver’s license or passport. If you are an entity, please provide a copy of your articles of incorporation, trust document, or other identifying document. If you are unable to produce the information required, we may not be able to complete your investment transaction.

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CORPORATION, PARTNERSHIP, TRUST, OR OTHER ENTITY

		Address to Which Correspondence Should be Directed
Name of Entity
By:
	*Signature	City, State and Zip Code
Its:
	Title	Tax Identification or Social Security Number
		(                 )
Name Typed or Printed			Telephone Number

* If Securities are being subscribed for by an entity, the Certificate of Signatory must also be completed.

CERTIFICATE OF SIGNATORY

To be completed if Securities are being subscribed for by an entity.

     I,                                                              , am the                                                                                  of                                                                                                      (the “Entity”).

     I certify that I am empowered and duly authorized by the Entity to execute and carry out the terms of the Subscription Agreement and Letter of Investment Intent and to purchase and hold the Securities, and certify that the Subscription Agreement and Letter of Investment Intent has been duly and validly executed on behalf of the Entity and constitutes a legal and binding obligation of the Entity.

     IN WITNESS WHEREOF, I have hereto set may hand this                day of                  , 2008.

                                                                                
Signature

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COPY OF DRIVER’S LICENSE OR PASSAPORT REQUIRED IF NON-BCP CUSTOMER

Customer Identification Program Notice: To help the government fight the funding of terrorism and money laundering activities, federal law requires financial institutions to obtain, verify, and record information that identifies each client. This means that we will require you to provide the following information: name, date of birth, address, identification number, and a piece of documentary identification. If you are an individual and do not have an account with Bathgate Capital Partners (“BCP”), please include a copy of your driver’s license or passport. If you are an entity, please provide a copy of your articles of incorporation, trust document, or other identifying document. If you are unable to produce the information required, we may not be able to complete your investment transaction.

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ACCEPTANCE BY THE COMPANY

     The Company hereby accepts the subscription for Securities as set forth on the face page of this Subscription Agreement on the terms and conditions contained in the Subscription Agreement this ___day of                     , 2008.

CYTOCORE, INC.
 

By:  

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APPENDIX A
CATEGORIES OF ACCREDITED INVESTOR
INITIAL YOUR CATEGORY

Category I	___	The Subscriber is an individual (not a partnership, Company, etc.) whose individual net worth, or joint net worth with the Subscriber’s spouse, presently exceeds $1,000,000.
		Explanation. In calculation of net worth the Subscriber may include equity in personal property and real estate, including the Subscriber’s principal residence, cash, short-term investments, stocks and securities. Equity in personal property and real estate should be based on the fair market value of such property less debt secured by such property.
Category II		The Subscriber is an individual (not a partnership, Company, etc.) who had an individual net income in excess of $200,000 in each of the last two years, or joint income with his/her spouse in excess of $300,000 in each of the last two years, and has a reasonable expectation of reaching the same income level in the current year
Category III		The Subscriber is an executive officer or director of Cytocore, Inc.
Category IV		The Subscriber is a bank; savings and loan; insurance company; registered broker or dealer; registered investment company; registered business development company; licensed small business investment company (“SBIC”); or employee benefit plan within the meaning of Title I of ERISA whose plan fiduciary is either a bank, savings and loan, insurance company or registered investment advisor or whose total assets exceed $5,000,000; or a self-directed employee benefit plan with investment decisions made solely by persons that are accredited investors.
Category V		The Subscriber is a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940
Category VII		The Subscriber is an entity with total assets in excess of $5,000,000 which was not formed for the purpose of investing in the Securities and which is a Company; a partnership; a business trust; or a tax-exempt organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended.
Category VII		The Subscriber is a trustee for a trust that is revocable by the grantor at any time (including an IRA) and the grantor qualifies under either Category I or Category II above. A copy of the declaration of trust or trust agreement and a representation as to the net worth or income of the grantor is enclosed.
Category VIII		The Subscriber is an entity all the equity owners of which are “accredited investors” within one or more of the above categories, other than Category IV or Category V.
Category IX		The Subscriber is a trust with total assets in excess of $5,000,000, not formed for

17

the specific purpose of acquiring the Securities, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

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APPENDIX B
FINRA QUESTIONNAIRE

     Are you a member of FINRA,¹ a person associated with a member² of FINRA, or an affiliate of a member?

Yes o     No o

If “Yes,” please list any members of FINRA with whom you are associated or affiliated.

     If you are a Company, are any of your officers, directors or 5% shareholders a member of FINRA, a person associated with a member of FINRA, or an affiliate of a member?

Yes o     No o

If “Yes,” please list the name of the respective officer, director, or 5% shareholder and any members of FINRA with whom they are associated or affiliated.

1

FINRA defines a “member” as being either any broker or dealer admitted to membership in FINRA or any officer or partner of such a member, or the executive representative of such a member or the substitute for such representative.

2

FINRA defines a “person associated with a member” as being every sole proprietor, general or limited partner, officer, director or branch manager or such member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by such member (for example, any employee), whether or not any such person is registered or exempt from registration without FINRA. Thus, “person associated with a member” includes a sole proprietor, general or limited partner, officer, director or branch manager or an organization of any

19

kind (whether a Company, partnership or other business entity) which itself is a “member” or a “person associated with a member.” In addition, an organization of any kind is a “person associated with a member” if its sole proprietor or anyone of its general or limited partners, officers, director or branch managers is a “member” or “person associated with a member.”

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APPENDIX C
BCP DISCLOSURES

SHORT FORM PRIVACY NOTICE FOR BATHGATE CAPITAL PARTNERS

DATE OF NOTICE: January 1, 2008
THIS IS A “SHORT FORM” PRIVACY NOTICE FOR “CONSUMERS” ONLY.

This Privacy Notice is being provided to you the consumer under a newly-adopted Federal privacy law and regulations designed to protect you from unauthorized use of your Private Information by Non-Affiliated Third Parties. If you have provided the Private Information to us as a consumer we are required to notify you only if we intend to disclose your information to a Non-Affiliated Third Party.

UNDER FEDERAL LAW YOU ARE ENTITLED TO RECEIVE MORE DETAILED INFORMATION FROM US SHOULD YOU SO DESIRE AND TO “OPT OUT” OF OUR DISCLOSURE OF PRIVATE INFORMATION TO THIRD PARTIES.

TO OBTAIN THIS INFORMATION, PLEASE EITHER:

• TELEPHONE US AT THE FOLLOWING TOLL FREE NUMBER: 800-833-0862

• CONTACT US THROUGH E-MAIL AT: abauer@bathgatepartners.com

• MAIL A COPY OF THIS NOTICE AS FOLLOWS:

     “PLEASE SEND ME FURTHER INFORMATION”

Andrea Bauer
Bathgate Capital Partners LLC
5350 S. Roslyn St. Suite 400
Greenwood Village, CO 80111

BATHGATE CAPITAL PARTNERS BUSINESS CONTINUITY PLANNING

Bathgate Capital Partners LLC has developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan.

Contacting Us — If after a significant business disruption you cannot contact us as you usually do at 303-694-0862, please go to our web site at www.bathgatepartners.com.

Our Business Continuity Plan — We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption. Our business continuity plan addresses: data back up and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and assuring our customers prompt access to their funds and securities if we are unable to continue our business.

Varying Disruptions — Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our firm or a building housing our firm, we will

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transfer our operations to a local site when needed and expect to recover and resume business within an hour. In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and recover and resume business within a few hours. In either situation, we plan to continue in business, transfer operations to our clearing firm if necessary, and notify you through our web site [www.bathgatepartners.com] or a telephone recording from our main line, [303-694-0862] how to contact us. If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customer’s prompt access to their funds and securities.

For more information — If you have questions about our business continuity planning, you can contact us at (303) 694-0862 or send inquiries to our main office: 5350 S. Roslyn St. Suite 400 Greenwood Village, CO 80111.

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EX-10.55

Exhibit 10.55

PURCHASE AGREEMENT

     THIS PURCHASE AGREEMENT (“Agreement”) is made as of the      day of           , 2008, by and between Cytocore, Inc., a Delaware corporation (the “Company”), and the Investor set forth on the signature page affixed hereto (an “Investor”).

Recitals

     A. The Company and the Investor are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D (“Regulation D”), as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”); and

     B. The Investor wishes to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this Agreement and the attached Summary of Terms dated January 24, 2008, Units, each Unit comprising (i) 2 shares (the “Shares”) of the Company’s Common Stock, par value $0.00 1 per share (together with any Securities into which such shares may be reclassified the “Common Stock”), and (ii) one warrant to purchase one share of Common Stock (subject to adjustment) at an exercise price of $2.00 per share (subject to adjustment) in the form attached hereto as Exhibit A (the “Warrants”). The number of Units the Investor is purchasing from the Company is set forth on the Subscription Agreement executed by the Investor and delivered with this Agreement (the “Subscription Agreement”). The purchase price of the Units is $4.00 per Unit.

     C. Contemporaneous with the sale of the Units, the parties hereto will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, and applicable state securities laws. Among other things, the Registration Rights Agreement provides (i) that the Company shall file a registration statement under the Securities Act (the “Registration Statement”) registering the shares into which the Warrants are exercisable as soon as possible after the Final Closing, but in no case later than 120 days after the Final Closing; (ii) the Company will use it best efforts to cause the Registration Statement to be declared effective as soon as possible after it is filed; and (iii) if the Company fails to file the Registration Statement within that time frame, or if it does not use its reasonable best efforts to have the Registration Statement declared effective as soon as possible after it is filed, it will issue each warrant holder Additional Warrants equivalent to two Additional Warrants for each four Warrants owned by the Holder. The Additional Warrants will be substantially similar to the Warrants, will be exercisable for three years at an exercise price of the lower of the market price of the Common Stock on the date the Registration Statement should have been filed (or should have been declared effective) or $2.00 per share.

     D. This Agreement is one of several purchase agreements containing the same terms entered into by the Company and investors (the Investor executing this Agreement and investors

executing other Agreements are referred to herein as the “Investors”), pursuant to the offering (the “Offering”) by the Company of the Units through Bathgate Capital Partners, LLC (the “Finder”).

     In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

     1. Definitions. In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall have the meanings set forth below:

          “Affiliate” means, with respect to any Person, any other Person which directly or indirectly through one or more intermediaries Controls, is controlled by, or is under common control with, such Person.

          “Business Day” means a day, other than a Saturday or Sunday, on which banks in San Francisco are open for the general transaction of business.

          “Company’s Knowledge” means the actual knowledge of the executive officers (as defined in Rule 405 under the 1933 Act) of the Company, after due inquiry.

          “Confidential Information” means trade secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, processes, procedures and techniques, research and development information, computer program code, performance specifications, support documentation, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information).

          “Control” (including the terms “controlling”, “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting Securities, by contract or otherwise.

          “Material Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations under the Transaction Documents.

          “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.

          “Purchase Price” means $4.00 per Unit.

          “Registration Statement” has the meaning set forth in the Registration Rights Agreement.

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          “SEC Filings” has the meaning set forth in Section 6.6.

          “Securities” means the Units, the Shares, the Warrants, and the Warrant Shares.

          “Subsidiary” of any Person means another Person, an amount of the voting Securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first Person.

          “Transaction Documents” means this Agreement, the Warrants, the Subscription Agreement, and the Registration Rights Agreement.

          “Warrant Shares” means the shares of Common Stock issuable upon the exercise of the Warrants.

          “1933 Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

          “1934 Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder.

     2. Purchase and Sale of the Units. Subject to the terms and conditions of this Agreement, on the Closing Date (as defined below), each of the Investors shall purchase, and the Company shall sell and issue to each Investor, the Units in the respective amounts set forth opposite the Investor’s name on the signature page of the Subscription Agreements in exchange for the Purchase Price.

     3. Escrow Account. The proceeds from the sale of at least the first 250,000 Units ($1,000,000) in the Offering shall be promptly deposited in an escrow account (“Escrow Account”) entitled “Cytocore, Inc. Escrow Account” with Front Range Bank (the “Escrow Agent”) pursuant to an agreement between the Escrow Agent, the Finder, and the Company. The proceeds from any sale of Units after the First Closing (hereinafter defined) may continue to be deposited to the Escrow Account.

     4. Subscription Acceptance. The acceptance of subscriptions for Units tendered by Investors will be conditional upon (i) the tendering of Subscriptions and receipt of payment for such Subscriptions for at least 250,000 Units (“Minimum Subscriptions”) by February 29, 2008 (which date may be extended by the Company and the Finder) to March 31, 2008)(the “Escrow Date”) and (ii) the receipt, on the First Closing Date, of the net proceeds from subscribers for the Minimum Subscriptions (“Minimum Payments”) less the Finder’s Fees due the Finder as described below. If subscriptions are received for more than 1,750,000 Units, the Company may (i) accept one subscription over another (ii) accept subscriptions for up to an additional 125,000 Units, and/or (iii) allocate available Units among subscribers as it deems appropriate. If the Minimum Subscriptions and/or Minimum Payments are not received by the Escrow Date, all proceeds will be returned to Investors, without deduction and without interest.

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     5. Payment. Payment for Units sold shall be made by the Escrow Agent to the Company at such place and at such time and date as may be fixed by agreement between the Company and the Finder, which in no case shall be later than five (5) business days after the Escrow Date. The delivery of the Units against payment therefore is defined as the “Closing” and the time and date thereof are defined as the “Closing Date.” The first Closing will be held when the Minimum Payments are received (“First Closing”). It is anticipated that there may be additional Closings as additional funds are received, and the final Closing will be referred to as the “Final Closing.” The Final Closing could also be the First Closing in the event that no Units are sold after the First Closing. As soon as practicable after each Closing Date, the Company shall deliver by mail to each Investor a certificate for the Shares and Warrants that have been purchased and which contains a legend conforming to the requirements of Rule 502(d)(3) under the Act.

     6. Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor that, except as set forth in the SEC Filings:

          6.1 Organization, Good Standing and Qualification. Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification or leasing necessary unless the failure to so qualify has not and could not reasonably be expected to have a Material Adverse Effect. The Company’s Subsidiaries are listed in the SEC Filings.

          6.2 Authorization. The Company has full power and authority and, except for the filing of such securities filings relating to the offer, sale and issuance of the Securities with the relevant authorities, has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities. The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.

          6.3 Capitalization. The capitalization of the Company is described in the SEC Filings. All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights and were issued in full compliance with applicable state and federal securities law and any rights of third parties. All of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive rights, were issued in full compliance with applicable state and federal securities law and any rights of third parties and are owned by the Company, beneficially and of record, subject to no lien, encumbrance or other adverse claim. No Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company. Except as described in the SEC Filings, there are no outstanding warrants, options, convertible securities or other rights, agreements or arrangements of

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any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and except as contemplated by this Agreement, and neither the Company nor any of its Subsidiaries is currently in negotiations for the issuance of any equity securities of any kind. Except as described in the SEC Filings and except for the Registration Rights Agreement, there are no voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the securityholders of the Company relating to the Securities of the Company held by them. Except as described in the SEC Filings and except as provided in the Registration Rights Agreement, no Person has the right to require the Company to register any securities of the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the account of any other Person.

     The issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the Investors and the Finder) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security.

     Except as described in the SEC Filings, the Company does not have outstanding stockholder purchase rights or “poison pill” or any similar arrangement in effect giving any Person the right to purchase any equity interest in the Company upon the occurrence of certain events.

          6.4 Valid Issuance. The Securities have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Investors), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. The Warrants have been duly and validly authorized, and when issued will be valid and enforceable under their terms. Upon the due exercise of the Warrants, the Warrant Shares will be validly issued, fully paid and non-assessable free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws and except for those created by the Investors. The Company has reserved a sufficient number of shares of Common Stock for issuance upon the exercise of the Warrants, free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws and except for those created by the Investors.

          6.5 Consents. The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws, which the Company undertakes to file within the applicable time periods. Subject to the accuracy of the representations and warranties of each Investor set forth in Subscription Agreements, the Company has taken all action necessary to exempt (i) the issuance and sale of the Securities, (ii) the issuance of the Warrant Shares upon due exercise of the Warrants, and (iii) the other transactions contemplated by the Transaction Documents from the provisions of any stockholder rights plan or other “poison pill” arrangement, any anti-takeover, business combination or control share law or statute binding on the Company or to which the

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Company or any of its assets and properties may be subject and any provision of the Company’s Certificate of Incorporation or By-laws that is or could reasonably be expected to become applicable to the Investors as a result of the transactions contemplated hereby, including without limitation, the issuance of the Securities and the ownership, disposition or voting of the Securities by the Investors or the exercise of any right granted to the Investors pursuant to this Agreement or the other Transaction Documents.

          6.6 Delivery of SEC Filings; Business. The Company has made available to the Investors through the EDGAR system, true and complete copies of the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2006 (the “10-K”), and all other reports filed by the Company pursuant to the 1934 Act since the filing of the 10-K and prior to the date hereof (collectively, the “SEC Filings”). The SEC Filings are the only filings required of the Company pursuant to the 1934 Act for such period. The Company and its Subsidiaries are engaged in all material respects only in the business described in the SEC Filings and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and its Subsidiaries, taken as a whole.

          6.7 Use of Proceeds. The net proceeds of the sale of the Units hereunder shall be used by the Company for working capital and general corporate purposes.

          6.8 No Material Adverse Change. Since September 30, 2007, except as identified and described in the SEC Filings, there has not been:

               (i) any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, except for changes in the ordinary course of business which have not had and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate;

               (ii) any declaration or payment of any dividend, or any authorization or payment of any distribution, on any of the capital stock of the Company, or any redemption or repurchase of any securities of the Company;

               (iii) any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company or its Subsidiaries;

               (iv) any waiver, not in the ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it;

               (v) any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or a Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of the Company and its Subsidiaries taken as a whole (as such business is presently conducted and as it is proposed to be conducted);

               (vi) any change or amendment to the Company’s Certificate of Incorporation or Bylaws, or material change to any material contract or arrangement by which the

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Company or any Subsidiary is bound or to which any of their respective assets or properties is subject;

               (vii) any material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary;

               (viii) any material transaction entered into by the Company or a Subsidiary other than in the ordinary course of business;

               (ix) the loss of the services of any key employee, or material change in the composition or duties of the senior management of the Company or any Subsidiary;

               (x) the loss or threatened loss of any customer which has had or could reasonably be expected to have a Material Adverse Effect; or

               (xi) any other event or condition of any character that has had or could reasonably be expected to have a Material Adverse Effect.

          6.9 SEC Filings. At the time of filing thereof, the SEC Filings complied as to form in all material respects with the requirements of the 1934 Act and did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

          6.10 No Conflict, Breach, Violation or Default. The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Certificate of Incorporation or the Company’s Bylaws, both as in effect on the date hereof (true and complete copies of which have been made available to the Investors through the EDGAR system), or (ii)(a) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their respective assets or properties, or (b) any agreement or instrument to which the Company or any Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their respective assets or properties is subject.

          6.11 Tax Matters. Except as described in the SEC Filings: the Company and each Subsidiary has timely prepared and filed all tax returns required to have been filed by the Company or such Subsidiary with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it; the charges, accruals and reserves on the books of the Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of any additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company and its Subsidiaries, taken as a whole; all taxes and other assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due; and there

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are no tax liens or claims pending or, to the Company’s Knowledge, threatened against the Company or any Subsidiary or any of their respective assets or property. There are no outstanding tax sharing agreements or other such arrangements between the Company and any Subsidiary or other corporation or entity.

          6.12 Title to Properties. Except as disclosed in the SEC Filings, the Company and each Subsidiary has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the SEC Filings, the Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or currently planned to be made thereof by them.

          6.13 Certificates, Authorities and Permits. The Company and each Subsidiary possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.

          6.14 Labor Matters.

               (a) The Company is not a party to or bound by any collective bargaining agreements or other agreements with labor organizations. The Company has not violated in any material respect any laws, regulations, orders or contract terms, affecting the collective bargaining rights of employees, labor organizations or any laws, regulations or orders affecting employment discrimination, equal opportunity employment, or employees’ health, safety, welfare, wages and hours.

               (b) (i) There are no labor disputes existing, or to the Company’s Knowledge, threatened, involving strikes, slow-downs, work stoppages, job actions, disputes, lockouts or any other disruptions of or by the Company’s employees, (ii) there are no unfair labor practices or petitions for election pending or, to the Company’s Knowledge, threatened before the National Labor Relations Board or any other federal, state or local labor commission relating to the Company’s employees, (iii) no demand for recognition or certification heretofore made by any labor organization or group of employees is pending with respect to the Company and (iv) to the Company’s Knowledge, the Company enjoys good labor and employee relations with its employees and labor organizations.

               (c) The Company is in compliance in all material respects with all applicable laws respecting employment (including laws relating to classification of employees and independent contractors) and employment practices, terms and conditions of employment, wages and hours, and immigration and naturalization. There no claims are pending against the Company before the Equal Employment Opportunity Commission or any other administrative body or in any court asserting any violation of Title VII of the Civil Rights Act of 1964, the Age Discrimination Act

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of 1967, 42 U.S.C. §§ 1981 or 1983 or any other federal, state or local Law, statute or ordinance barring discrimination in employment.

               (d) Except as disclosed in the SEC Filings, the Company is not a party to, or bound by, any employment or other contract or agreement that contains any severance, termination pay or change of control liability or obligation, including, without limitation, any “excess parachute payment,” as defined in Section 2806(b) of the Internal Revenue Code.

               (e) Each of the Company’s employees is a Person who is either a United States citizen or a permanent resident entitled to work in the United States. To the Company’s Knowledge, the Company has no liability for the improper classification by the Company of such employees as independent contractors or leased employees prior to the Closing.

          6.15 Environmental Matters. Neither the Company nor any Subsidiary is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to any Environmental Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, or is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim.

          6.16 Litigation. Except as disclosed in the SEC Filings, there are no pending actions, suits or proceedings against or affecting the Company, its Subsidiaries or any of its or their properties; and to the Company’s Knowledge, no such actions, suits or proceedings are threatened or contemplated.

          6.17 Financial Statements. The financial statements included in each SEC Filing present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (“GAAP”) (except as may be disclosed therein or in the notes thereto, and, in the case of quarterly financial statements, as permitted by Form 10-Q under the 1934 Act). Except as set forth in the financial statements of the Company included in the SEC Filings filed prior to the date hereof, neither the Company nor any of its Subsidiaries has incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect.

          6.18 Insurance Coverage. The Company and each Subsidiary maintains in full force and effect insurance coverage that is customary for comparably situated companies for the business being conducted and properties owned or leased by the Company and each Subsidiary, and

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the Company reasonably believes such insurance coverage to be adequate against all liabilities, claims and risks against which it is customary for comparably situated companies to insure.

          6.19 Brokers and Finders. Except for the Finder, no Person will have, as a result of the transactions contemplated by the Transaction Documents, any valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of the Company.

          6.20 No Directed Selling Efforts or General Solicitation. Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

          6.21 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 Company security or solicited any offers to buy any security, under circumstances that would adversely affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the 1933 Act.

          6.22 Private Placement. The offer and sale of the Securities to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act.

          6.23 Questionable Payments. Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of their respective current or former stockholders, directors, officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has on behalf of the Company or any Subsidiary or in connection with their respective businesses: (a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books and records of the Company or any Subsidiary; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

          6.24 Transactions with Affiliates. Except as disclosed in the SEC Filings, none of the officers or directors of the Company and, to the Company’s Knowledge, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the Company’s Knowledge, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

          6.25 Internal Controls. Except as described in the SEC Filings: the Company is in material compliance with the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the Company; the Company and the Subsidiaries maintain a system of internal accounting controls

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sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and, the Company has established disclosure controls and procedures (as defined in 1934 Act Rules 13a-14 and 15d-14) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including the Subsidiaries, is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s most recently filed period report under the 1934 Act, as the case may be, is being prepared. The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with GAAP and the applicable requirements of the 1934 Act.

          6.26 Disclosures. Neither the Company nor any Person acting on its behalf has provided the Investors or their agents or counsel with any information that constitutes or might constitute material, non-public information. The written materials delivered to the Investors in connection with the transactions contemplated by the Transaction Documents do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading.

     7. Representations and Warranties of the Investors. The Investor hereby represents and warrants to the Company that representations and warranties it has made in the Subscription Agreement are accurate. Those representations are incorporated by reference herein.

     8. Conditions to Closing.

          8.1 Conditions to the Investor’ Obligations. The obligation of the Investor to purchase the Units at the Closing is subject to the fulfillment to such Investor’s satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by such Investor (as to itself only):

               (a) The representations and warranties made by the Company in Section 6 hereof qualified as to materiality shall be true and correct at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date, and, the representations and warranties made by the Company in Section 6 hereof not qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date. The Company shall have performed in all material respects all obligations and conditions herein required to be performed or observed by it on or prior to the Closing Date.

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               (b) The Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Shares and the Warrants and the consummation of the other transactions contemplated by the Transaction Documents to be consummated on or prior to the Closing Date, all of which shall be in full force and effect.

               (c) The Company shall have executed and delivered the Registration Rights Agreement.

               (d) No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated hereby or in the other Transaction Documents.

               (e) The Company shall have delivered a Certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in subsections (a), (b), (d), (e) and (g) of this Section 8.1.

               (f) The Company shall have delivered a Certificate, executed on behalf of the Company by its Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the other Transaction Documents, and the issuance of the Securities, certifying the current versions of the Certificate of Incorporation and Bylaws of the Company and certifying as to the signatures and authority of Persons signing the Transaction Documents and related documents on behalf of the Company.

               (g) No stop order or suspension of trading shall have been imposed by the SEC or any other governmental or regulatory body with respect to public trading in the Common Stock.

          8.2 Conditions to Obligations of the Company. The Company’s obligation to sell and issue the Shares and the Warrants at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company:

               (a) The representations and warranties made by the Investors in the Subscription Agreements shall be true and correct in all material respects when made, and shall be true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investors shall have performed in all material respects all obligations and conditions herein required to be performed or observed by them on or prior to the Closing Date.

               (b) The Investors shall have executed and delivered the Registration Rights Agreement.

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               (c) The Investors shall have delivered the Purchase Price to the Company.

          8.3 Termination of Obligations to Effect Closing; Effects. The obligations of the Company, on the one hand, and the Investors, on the other hand, to effect the Closing shall terminate as follows:

               (i) Upon the mutual written consent of the Company and the Investors;

               (ii) By the Company if any of the conditions set forth in Section 8.2 shall have become incapable of fulfillment, and shall not have been waived by the Company; or

               (iii) By an Investor (with respect to itself only) if any of the conditions set forth in Section 6.1 shall have become incapable of fulfillment, and shall not have been waived by the Investor;

provided, however, that, except in the case of clause (i) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of its representations, warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect the Closing.

     9. Covenants and Agreements of the Company.

          9.1 Reservation of Common Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of providing for the exercise of the Warrants, such number of shares of Common Stock as shall from time to time equal the number of shares sufficient to permit the exercise of the Warrants issued pursuant to this Agreement in accordance with their respective terms.

          9.2 No Conflicting Agreements. The Company will not take any action, enter into any agreement or make any commitment that would conflict or interfere in any material respect with the Company’s obligations to the Investors under the Transaction Documents.

          9.3 Listing of Underlying Shares and Related Matters. If the Company applies to have its Common Stock or other securities traded on any stock exchange or market, it shall include in such application the Shares and the Warrant Shares and will take such other action as is necessary to cause such Common Stock to be so listed.

          9.4 Removal of Legends. Upon the earlier of (i) (A) the registration for resale pursuant to the Registration Rights Agreement and (B) receipt of a written certification from an Investor that Shares have been sold in accordance with the Plan of Distribution contained in the Registration Statement and that such Investor has delivered or intends to deliver a current prospectus in compliance with the prospectus delivery requirements of the 1933 Act or (ii) Rule 144(k) becoming available the Company shall, upon an Investor’s written request, promptly cause certificates evidencing the Shares sold (in the case of clause (i)) or the Investor’s Securities (in the case of clause (ii)) to be replaced with certificates which do not bear such restrictive legends, and Warrant Shares subsequently issued upon due exercise of the Warrants shall not bear such restrictive

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legends provided the provisions of either clause (i) or clause (ii) above, as applicable, are satisfied with respect to such Warrant Shares.

     10. Survival and Indemnification.

          10.1 Survival. The representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing of the transactions contemplated by this Agreement for one year after the Closing.

          10.2 Indemnification. The Company agrees to indemnify and hold harmless each Investor and its Affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) (collectively, “Losses”) to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will reimburse any such Person for all such amounts as they are incurred by such Person.

          10.3 Conduct of Indemnification Proceedings. Promptly after receipt by any Person (the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity may be sought pursuant to Section 10.2, such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless: (i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person 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 Person from all liability arising out of such proceeding.

     11. Miscellaneous.

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          11.1 Successors and Assigns. This Agreement may not be assigned by a party hereto without the prior written consent of the Company or the Investor, as applicable, provided, however, that (i) an Investor may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or to a third party acquiring some or all of its Securities in a private transaction without the prior written consent of the Company or the other Investors, after notice duly given by such Investor to the Company provided, that no such assignment or obligation shall affect the obligations of such Investor hereunder, and (ii) the Company may assign its rights and delegate its duties hereunder to any surviving or successor corporation in connection with a merger or consolidation of the Company with another corporation, or a sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation, without the prior written consent of the Investors. The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

          11.2 Counterparts; Faxes. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original.

          11.3 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

          11.4 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one Business Day after delivery to such carrier. All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice to the other party:

     If to the Company:

Cytocore, Inc.
414 North Orleans Street, Suite 502
Chicago, Illinois 60610
Attention: Robert F. McCullough Jr., CEO, CFO
Fax: 312-222-9580

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     If to the Investors:

          to the addresses set forth on the signature pages hereto.

          11.5 Expenses. The parties hereto shall pay their own costs and expenses in connection herewith. In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings.

          11.6 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investors. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under this Agreement at the time outstanding, each future holder of all such Securities, and the Company.

          11.7 Publicity. Except as set forth below, no public release or announcement concerning the transactions contemplated hereby shall be issued by the Company or the Investors without the prior consent of the Company (in the case of a release or announcement by the Investors) or the Investors (in the case of a release or announcement by the Company) (which consents shall not be unreasonably withheld), except as such release or announcement may be required by law or the applicable rules or regulations of any securities exchange or securities market, in which case the Company or the Investors, as the case may be, shall allow the Investors or the Company, as applicable, to the extent reasonably practicable in the circumstances, reasonable time to comment on such release or announcement in advance of such issuance. Promptly following the Closing Date, the Company shall issue a press release disclosing the consummation of the transactions contemplated by this Agreement and file a Current Report on Form 8-K attaching the press release described in the foregoing sentence as well as copies of the Transaction Documents. In addition, the Company will make such other filings and notices in the manner and time required by the SEC. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Investor, or include the name of any Investor in any filing with the SEC (other than the Registration Statement and any exhibits to filings made in respect of this transaction in accordance with periodic filing requirements under the 1934 Act) or any regulatory agency, without the prior written consent of such Investor, except to the extent such disclosure is required by law or trading market regulations, in which case the Company shall provide the Investors with prior notice of such disclosure.

          11.8 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.

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          11.9 Entire Agreement. This Agreement, including the Exhibits, and the other Transaction Documents constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof.

          11.10 Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

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

          11.12 Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. The decision of each Investor to purchase Securities pursuant to the Transaction Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that each of the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

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[signature page follows]

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     IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

The Company:	CYTOCORE, INC.
	By:
		Name:
		Title:
The Investor:
Individuals:	Entities:
Print Name	Print Name of Entity
	By:
Signature		Signature
		Name:
		Title:

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EX-21

EXHIBIT 21

Subsidiaries of the Company

AccuMed International, Inc.
Oncometrics Imaging Corp.
Bell National Corporation
PFI National Corporation
Inpath, LLC

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-97863) of CytoCore, Inc. of our report dated March 28, 2008, with respect to the consolidated balance sheet of CytoCore, Inc. as of December 31, 2007 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2007, which appears on page F-1 in this 2007 annual report on Form 10-KSB for the year ended December 31, 2007.

/s/ L J Soldinger Associates, LLC

Deer Park, Illinois
March 28, 2008

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statement on Form S-8 (333-97863) of CytoCore, Inc. of our report dated April 16, 2007, with respect to the consolidated balance sheet of CytoCore, Inc. as of December 31, 2006, and the related consolidated statement of operations, stockholders’ deficit and cash flow for the year then ended, which report appears in the Annual Report on Form 10-KSB of CytoCore, Inc. for the year ended December 31, 2007.

Our report dated April 16, 2007, contains an explanatory paragraph that states that the Company has suffered recurring losses from operations and is dependent upon access to additional external financing, which raises substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

Our report dated April 16, 2007 also notes that we were not engaged to audit, review, or apply any procedures to the adjustment to retrospectively apply the effects of the one-for-ten reverse stock split described in Note 1 to the consolidated financial statements for the year ended December 31, 2007 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.

/s/ Amper, Politziner & Mattia, P.C.

Edison, New Jersey
March 31, 2008

EX-31.1

Exhibit 31.1

Cytocore, Inc.

CERTIFICATION

I, Robert McCullough Jr., certify that:

1. I have reviewed this report on Form 10-KSB of Cytocore, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

     (c) Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     (d) Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

     (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

     (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: March 31, 2008	/s/ Robert McCullough Jr.
	Robert McCullough Jr.
	Chief Executive Officer and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert F. McCullough, Jr., the Chief Executive and Chief Financial Officer of Cytocore, Inc. (the “Company”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of my knowledge:

(1) the Annual Report on Form 10-KSB of the Company for the fiscal year ended December 31, 2007 (the “Report”) fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 31, 2008	/s/ Robert McCullough Jr.
	Robert McCullough Jr.
	Chief Executive Officer and Chief Financial Officer