Placement Agreement




Exhibit 10.3


[Ladenburg Thalmann Logo]


December 12, 2000


Charles F. Willes

Chief Financial Officer

Illinois Superconductor Corporation

451 Kingston Court

Mount Prospect, IL 60056


Dear Mr. Willes:


The purpose of this letter agreement (the “Agreement”) is to set forth the
terms and conditions pursuant to which Ladenburg Thalmann & Co. Inc. (“LTCO”)
shall serve as placement agent in connection with the proposed offering of
equity securities (the “Securities”) of Illinois Superconductor Corporation
(the “Company”) pursuant to a “blank” shelf registration statement to be filed
by the Company naming LTCO as sole placement agent (the “Offering”). The gross
proceeds from the Offering will be up to $50,000,000. All references to dollars
shall be to U.S. dollars. The terms of such Offering and the Securities shall
be as agreed to between the Company and the purchasers thereof.


      Upon the terms and subject to the conditions of this Agreement, the
parties hereto agree as follows:


      1. Appointment. (a) Subject to the terms and conditions of this Agreement
hereinafter set forth, the Company hereby retains LTCO, and LTCO hereby agrees
to act as the Company’s placement agent and financial advisor in connection
with the Offering, effective as of the date hereof. The Company expressly
acknowledges and agrees that LTCO’s obligations hereunder are on a reasonable
best efforts basis only and that the execution of this Agreement does not
constitute a commitment by LTCO to purchase the Securities and does not ensure
the successful placement of the Securities or any portion thereof or the
success of LTCO with respect to securing any other financing on behalf of the
Company. LTCO shall not commence any selling efforts until the registration
statement has been declared effective by the SEC and all applicable state
securities (“Blue Sky”) filings have been made.


      2. Fees and Compensation. In consideration of the services rendered by
LTCO in connection with the Offering, the Company agrees to pay LTCO the
following fees and other compensation:



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	 	(a)	1)  1% warrant coverage as a fee payable on each date that
the Company makes any draw down under the Offering, and based on the
amount drawn down by the Company during each such draw down, which
warrants shall be in the form of Exhibit D; and




			
	 	 	2)  a cash fee payable upon the initial and each
subsequent closing equal to 4% of the amount drawn down by
the Company at each such closing; and




			
	 	(b)	$35,000 non-accountable expense allowance payable upon the
engagement of LTCO by the Company hereunder.
	 
	 	(c)	All fees payable hereunder shall be paid to LTCO out of an
attorney escrow account at the closing or by such other means
acceptable to LTCO.



      3. Terms of Retention. (a) Unless extended or terminated in writing by
the parties hereto in accordance with the provisions hereof, this Agreement
shall remain in effect until the termination date of the stock purchase
commitment of the investor as approved and agreed to by the Company in its sole
discretion, if one investor commits to purchase the entire Offering, or
November 1, 2002 if the Company elects to pursue an open shelf registration. If
the Company elects to pursue an open shelf registration, and on any particular
date when the Company wishes to sell Securities off of the shelf LTCO cannot
provide an investor within 30 days on terms and conditions acceptable to the
Company in its sole discretion, then the Company shall have a window of 60 days
in which to place such securities itself on the same terms as proposed to LTCO,
and the Company shall owe LTCO no fees in connection therewith.


      (b) Notwithstanding anything herein to the contrary, the obligation to pay
the Fees and Compensation and Expenses described in Section 2, if any, and the
provisions of paragraphs 2, 5, and 8 of Exhibit A and all of Exhibit B and
Exhibit C attached hereto, each of which exhibits is incorporated herein by
reference, shall survive any termination or expiration of the Agreement. It is
expressly understood and agreed by the parties hereto that, with respect to any
investors to whom the Company was introduced by LTCO or who was contacted by
LTCO while this Agreement was in effect, with the approval of the Company, and
disclosed to the Company in writing, any private financing of equity or debt or
other capital raising activity of the Company within 24 months of the
termination or expiration of this Agreement shall result in fees and
compensation being due and payable by the Company to LTCO under the same terms
of Section 2 above.


      4. [Intentionally Omitted]


      5. Information. The Company recognizes and confirms that in completing its
engagement hereunder, LTCO will be using and relying solely on publicly
available information and on data, material and other information furnished to
LTCO by the Company or the Company’s affiliates and agents. It is

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understood and agreed that in performing under this engagement, LTCO will
rely upon the accuracy and completeness of, and is not assuming any
responsibility for independent verification of, such publicly available
information and the other information so furnished (except information
furnished to the Company by LTCO). Notwithstanding the foregoing, it is
understood that LTCO will conduct a due diligence investigation of the Company
and the Company will cooperate in all respects with such investigation as a
condition of LTCO’s obligations hereunder.


      6. Registration. Promptly following execution of this Agreement, the
Company shall prepare and, following review and approval by LTCO’s counsel,
file with the SEC a registration statement. From time to time in connection
with any particular sale of Securities, the Company will, at its own expense,
obtain any registration or qualification required to sell any Securities under
the Blue Sky laws of any applicable jurisdictions, as reasonably requested by
LTCO, and shall pay any filing fees required by NASD Regulation, Inc. in
connection with their review of the terms of this Agreement, if so required.


      7. No General Solicitation. The Securities will be offered only by
approaching prospective purchasers on an individual basis. No general
solicitation or general advertising in any form will be used in connection with
the offering of the Securities. From and after the execution of this Agreement
until the completion of the Offering, the Company shall pre-clear any proposed
press release which mentions this Agreement or the Offering with LTCO.


      8. Closing. The closing of the sale of the Securities shall be subject to
customary closing conditions, including the provision by the Company to LTCO of
officers’ certificates, opinions of counsel and “cold comfort” letters from the
Company’s auditors.


      9. Miscellaneous. This Agreement together with the attached Exhibits A
through D constitutes the entire understanding and agreement between the
parties with respect to its subject matter and there are no agreements or
understandings with respect to the subject matter hereof which are not
contained in this Agreement. This Agreement may be modified only in writing
signed by the party to be charged hereunder.


      If the foregoing correctly sets forth our agreement, please confirm this
by signing and returning to us the duplicate copy of this letter.


      We appreciate this opportunity to be of service and are looking forward to
working with you on this matter.


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	 	Very truly yours,
	 
	 	LADENBURG THALMANN & CO. INC.
	 
	 	By: /s/ Robert Kropp

     Name: Robert Kropp

     Title: Director of Investment Banking





Agreed to and accepted

as of the date first written above:


ILLINOIS SUPERCONDUCTOR CORPORATION


By: /s/ Charles F. Willes

     Name: Charles F. Willes

     Title: Chief Financial Officer


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EXHIBIT A


STANDARD TERMS AND CONDITIONS



		
	1.	The Company shall promptly provide LTCO with all relevant information
about the Company (to the extent available to the Company in the case of
parties other than the Company) that shall be reasonably requested or
required by LTCO, which information shall be complete and accurate in all
material respects at the time furnished.




		
	2.	LTCO shall keep all information obtained from the Company strictly
confidential except: (a) information which is otherwise publicly
available, or previously known to, or obtained by LTCO independently of
the Company and without breach of LTCO’s agreement with the Company; (b)
LTCO may disclose such information to its employees and attorneys, and to
its other advisors and financial sources on a need to know basis only and
shall use best efforts to ensure that all such employees, attorneys,
advisors and financial sources will keep such information strictly
confidential; and (c) pursuant to any order of a court of competent
jurisdiction or other governmental body (including any subpoena) or as may
otherwise be required by law.




		
	3.	The Company recognizes that in order for LTCO to perform properly its
obligations in a professional manner, it is necessary that LTCO be
informed of and, to the extent practicable, participate in meetings and
discussions between the Company and any third party, including, without
limitation, any prospective purchaser of the securities, relating to the
matters covered by the terms of LTCO’s engagement.




		
	4.	The Company agrees that any report or opinion, oral or written, delivered
to it by LTCO is prepared solely for its confidential use and shall not be
reproduced, summarized, or referred to in any public document or given or
otherwise divulged to any other person without LTCO’s prior written
consent, except as may be required by applicable law or regulation.




		
	5.	No fee payable to LTCO pursuant to any other agreement with the
Company or payable by the Company to any agent, lender or investor
shall reduce or otherwise affect any fee payable by the Company to LTCO
hereunder. If LTCO engages any other broker-dealer or other finder to
assist LTCO in the placement of the Offering, then the fees of such
other broker-dealer or finder shall be paid by LTCO.



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EXHIBIT A (CONTINUED)



		
	6.	The Company represents and warrants that: (a) it has full right, power
and authority to enter into this Agreement and to perform all of its
obligations hereunder; (b) this Agreement has been duly authorized and
executed by and constitutes a valid and binding agreement of the Company
enforceable in accordance with its terms; and (c) the execution and
delivery of this
Agreement and the consummation of the transactions contemplated hereby do
not conflict with or result in a breach of (i) the Company’s certificate
of
incorporation or by-laws or (ii) any agreement to which the Company is a
party or by which any of its property or assets is bound (except for such
conflicts, defaults, and/or violations as would not, individually or in
the aggregate, have a material adverse effect on the Company’s ability to
perform its obligations under this Agreement).




		
	7.	Nothing contained in this Agreement shall be construed to place LTCO and
the Company in the relationship of partners or joint venturers. Neither
LTCO nor the Company shall represent itself as the agent or legal
representative of the other for any purpose whatsoever nor shall either
have the power to obligate or bind the other in any manner whatsoever.
LTCO, in performing its services hereunder, shall at all times be an
independent contractor.




		
	8.	This Agreement has been and is made solely for the benefit of LTCO and
the Company and each of the persons, agents, employees, officers,
directors and controlling persons referred to in Exhibit B and their
respective heirs, executors, personal representatives, successors and
assigns, and nothing contained in this Agreement shall confer any rights
upon, nor shall this Agreement be construed to create any rights in, any
person who is not party to such Agreement, other than as set forth in this
paragraph.




		
	9.	The rights and obligations of either party under this Agreement may not
be assigned without the prior written consent of the other party hereto
and any other purported assignment shall be null and void.



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	10.	All communications hereunder, except as may be otherwise specifically
provided herein, shall be in writing and shall be mailed, hand delivered,
or sent by a recognized overnight courier service such as Federal Express,
via facsimile and confirmed by letter, to the party to whom it is
addressed at the following addresses or such other address as such party
may advise the other in writing:




		
	 	To the Company:

Charles F. Willes

Chief Financial Officer

Illinois Superconductor Corporation

451 Kingston Court

Mount Prospect, IL 60056

Telephone: (847) 391-9400

Facsimile: (847) 299-9609
	 
	 	To LTCO:

Ladenburg Thalmann & Co. Inc.

590 Madison Avenue

New York, NY 10022

Attention: Robert J. Kropp

Telephone: (212) 409-2000

Facsimile: (212) 409-2169



All notices hereunder shall be effective upon receipt by the party to which it
is addressed.


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EXHIBIT B


INDEMNIFICATION


      The Company agrees that it shall indemnify and hold harmless, LTCO, its
stockholders, directors, officers, employees, agents, affiliates and
controlling persons within the meaning of Section 20 of the Securities Exchange
Act of 1934 and Section 15 of the Securities Act of 1933, each as amended (any
and all of whom are referred to as an “Indemnified Party”), from and against
any and all losses, claims, damages, liabilities, or expenses, and all actions
in respect thereof (including, but not limited to, all legal or other expenses
reasonably incurred by an Indemnified Party in connection with the
investigation, preparation, defense or settlement of any claim, action or
proceeding, whether or not resulting in any liability), incurred by an
Indemnified Party: (a) arising out of, or in connection with, any actions
taken or omitted to be taken by the Company, its affiliates, employees or
agents, or any untrue statement or alleged untrue statement of a material fact
contained in any of the financial or other information contained in the
registration statement and/or final prospectus furnished to LTCO by or on
behalf of the Company or the omission or alleged omission of 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 (unless
such alleged untrue statement or omission relates to information furnished, or
information which should have been furnished, by LTCO to the Company); or (b)
with respect to, caused by, or otherwise arising out of any transaction
contemplated by the Agreement or LTCO’s performing the services contemplated
hereunder; provided, however, the Company will not be liable under clause (b)
hereof to the extent, and only to the extent, that any loss, claim, damage,
liability or expense is finally judicially determined to have resulted
primarily from LTCO’s gross negligence, intentional misconduct or bad faith in
performing such services.


      LTCO agrees to indemnify and hold harmless the Company and its affiliates,
the respective officers, directors, agents, representatives and employees of
each of the foregoing, and each other person controlling the Company or any of
its affiliates, within the meaning of either Section 15 of the Securities Act
of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended (any and all of whom are referred to as an “Indemnified Party”), from
and against any and all losses, claims, damages, liabilities, or expenses, and
all actions in respect thereof (including, but not limited to, all legal or
other expenses reasonably incurred by an Indemnified Party in connection with
the investigation, preparation, defense or settlement of any claim, action or
proceeding, whether or not resulting in any liability), incurred by an
Indemnified Party relating to, arising in any manner from, or based upon, any
transaction contemplated by this Agreement or LTCO’s engagement hereunder
resulting from (i) the gross negligence or willful misconduct of LTCO or any
person acting on its behalf, (ii) breach of any agreement, representation or
warranty of LTCO contained in this Agreement, or (iii) violations by LTCO or
any person acting on its behalf of any federal or state securities laws.


      Each party agrees that the indemnification and reimbursement obligations
set forth in this Agreement shall apply whether or not the Indemnified Party is
a

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formal party to any such claim, action, suit or proceeding. The Company and
LTCO each further agree that they will not, without the prior written consent
of the other, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any Indemnified Party
is a named party or potential party to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes the unconditional
release of each Indemnified Party hereunder from all liability arising from
such claim, action, suit or proceeding.


      Promptly after receipt by an Indemnified Party of notice of its
involvement in any claim, action, suit, proceeding or investigation (a
“Claim”), such Indemnified Party shall, if a Claim in respect thereof is to be
made against the Company or LTCO (each, as the context requires, an
“Indemnifying Party”), for indemnification, notify the Indemnifying Party in
writing of such involvement. Failure by such Indemnified Party to give such
notice shall not relieve the Indemnifying Party from its obligation to
indemnify all Indemnified Parties under this Indemnification Agreement and
shall not relieve the Indemnifying Party from its obligation to provide
reimbursement and contribution to the Indemnified Parties, except to the extent
that such failure to notify results in the forfeiture by the Indemnifying Party
of substantive rights or defenses. If an Indemnified Party seeks
indemnification hereunder with respect to any Claim brought by a third party,
the Indemnifying Party shall be entitled to assume the defense of any such
Claim with counsel reasonably satisfactory to such Indemnified Party. Upon
assumption by the Indemnifying Party of the defense of any such Claim, such
Indemnified Party shall have the right to participate in the defense of such
Claim and to retain its own counsel but the Indemnifying Party shall not be
liable for any legal fees or expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof. An Indemnifying Party shall not
be liable for any settlement of any Claim effected without its written consent
(which consent shall not be unreasonably withheld or delayed).


      Each party agrees that, except as provided in the last sentence of this
paragraph, if any indemnification or reimbursement sought pursuant to this
Indemnification Agreement were for any reason not to be available to any
Indemnified Party or were insufficient to hold it harmless, then the
Indemnifying Party shall contribute to the amount paid or payable by the
Indemnified Party as a result of the losses, claims, damages, liabilities and
expenses in such proportion as is appropriate to reflect the relative benefits
to the Company on the one hand, and LTCO on the other hand, in connection with
any transaction to which such indemnification or reimbursement relates. The
Company and LTCO hereby agree that the relative benefits to the Company on the
one hand and LTCO on the other hand, with respect to LTCO’s engagement, shall
be deemed to be in the same proportion as (i) the total amount or value paid or
proposed to be paid to the Company in connection with the transactions
contemplated by the Agreement, whether or not consummated, bear to (ii) the
fees actually paid to LTCO in connection with the transaction to which such
contribution relates. If, however, the allocation provided by the first
sentence of this paragraph is not permitted by applicable law, then the
Indemnifying Party shall contribute to such

9








amount paid or payable by an Indemnified Party in such proportion as is
appropriate to reflect not only such relative benefits, but also the relative
fault of the Company on the one hand and LTCO on the other hand in connection
with the matters as to which such losses, claims, damages, liabilities or
expenses relate and other equitable considerations. In no event shall the
aggregate amount payable by LTCO exceed the fees actually received by LTCO
pursuant to this Agreement, unless there is a final judicial determination of
gross negligence or willful misconduct by LTCO. The parties hereby agree that
it would not be just or equitable if the contribution governed by this
paragraph were determined by pro rata allocation or any other method that does
not take into account the considerations taken into account by this paragraph.


      In the event an Indemnified Party incurs any expenses covered by this
Exhibit B, the Indemnifying Party shall reimburse the Indemnified Party for
such covered expenses within ten (10) business days of the Indemnified Party’s
delivery to the Indemnifying Party of an invoice therefor, with receipts
attached. Such obligation of an Indemnifying Party to so advance funds is
conditioned upon the Indemnifying Party’s receipt of a written undertaking from
the Indemnified Party to repay such amounts if it shall be determined that such
Indemnified Party was not entitled to indemnification hereunder.


      The rights accorded to Indemnified Parties hereunder shall be in addition
to any rights that any Indemnified Party may have at common law, by separate
agreement or otherwise, shall survive termination of this Agreement and shall
be binding upon and inure to the benefit of any successors, heirs,
representatives and assigns of the respective parties.


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EXHIBIT C


JURISDICTION


      The Company and LTCO each hereby irrevocably: (a) submits to the
jurisdiction of any court of the State of New York sitting in the City of New
York or any federal court sitting in the City of New York for the purposes of
any suit, action or other proceeding arising out of the Agreement between the
Company and LTCO which is brought by or against the Company or LTCO; (b) agrees
that all claims in respect of any suit, action or proceeding may be heard and
determined in any such court; and (c) to the extent that the Company or LTCO
has acquired, or hereafter may acquire, any immunity from jurisdiction of any
such court or from any legal process therein, the Company and LTCO each hereby
waives, to the fullest extent permitted by law, such immunity. The prevailing
party in any litigation respecting this Agreement shall be entitled to an award
of its costs, including reasonable attorneys’ fees, in connection therewith.


      The Company and LTCO each waives, and agrees not to assert in any such
suit, action or proceeding, in each case, to the fullest extent permitted by
applicable law, any claim that: (a) it is not personally subject to the
jurisdiction of any such court; (b) it is immune from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
the aid of execution, execution or otherwise) with respect to it or its
property; (c) any such suit, action or proceeding is brought in an inconvenient
forum; (d) the venue of any such suit, action or proceeding is improper; or (e)
this Agreement may not be enforced in or by any such court.


      Any process against the Company or LTCO in, or in connection with, any
suit, action or proceeding filed in the United States District Court for the
Southern District of New York or any other court of the State of New York,
arising out of or relating to this Agreement or any transaction or agreement
contemplated hereby, may be served personally, or by first class mail or
overnight courier (with the same effect as though served personally) addressed
to the party being served at the address set forth in the Agreement between the
Company and LTCO.


      Nothing in these provisions shall affect any party’s right to serve
process in any manner permitted by law or limit its rights to bring a
proceeding in the competent courts of any jurisdiction or jurisdictions or to
enforce in any lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction.


      This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of law principles.

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EXHIBIT D


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,
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
OR EXERCISED UNLESS AND UNTIL SUCH WARRANT AND/OR SHARES OF COMMON STOCK IS
REGISTERED UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. THIS WARRANT
AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTIONS 4 AND 10 OF THIS
WARRANT.



	 	 	 
	Warrant No. 1
Date of Issuance: ______________, 2000		Number of Shares: _______

(subject to adjustment)
	 		
	Date of Issuance: ______________, 2000		



[ISSUER]


Common Stock Purchase Warrant


(Void after [three years])


[Issuer], a ________________ corporation (the “Company”), for value received,
hereby certifies that Ladenburg Thalmann & Co. Inc., or its registered assigns
(the “Registered Holder”), is entitled, subject to the terms and conditions set
forth below, to purchase from the Company, at any time or from time to time on
or after the date which is ninety (90) days after the date of issuance and on
or before 5:00 p.m. (Eastern time) on________, 200_, _____________________
shares of Common Stock, of the Company, at a purchase price of $  per
share (120% of the average volume weighted average price for the applicable
Draw Down Pricing Period). 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.


      (a) This Warrant may be exercised by the Registered Holder, in whole or in
part, by surrendering this Warrant, with the purchase form appended hereto as
Exhibit I duly executed by the Registered Holder or by the Registered Holder’s
duly authorized attorney, 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.


      (b) The Registered Holder may, at its option, elect to pay some or all of
the Purchase Price payable upon an exercise of this Warrant by canceling all or

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a portion of this Warrant. If the Registered Holder wishes to exercise
this Warrant by this method, the number of Warrant Shares purchasable (which
shall in no event exceed the total number of Warrant Shares purchasable under
this Warrant as set forth above), subject to adjustment under Section 2 of this
Warrant) shall be determined as follows:


X=Y[(A-B)/A]; where


      X= the number of Warrant Shares to be issued to the Holder.


      Y= the number of Warrant Shares with respect to which this Warrant is being
exercised.


      A= the Fair Market Value of one share of Common Stock.


      B= the Purchase Price of one share of Common Stock.


      The Fair Market Value per share of Common Stock shall be determined as
follows:



		
	 	      (i)  If the Common Stock is listed on a national securities exchange,
the Nasdaq National Market or another nationally recognized trading
system (including, without limitation, the OTC Bulletin Board and, if the
average daily trading volume for the preceding 10 days has been at least
100,000 shares, the Pink Sheets) as of the Exercise Date, the Fair Market
Value per share of Common Stock shall be deemed to be the average of the
high and low reported sale prices per share of Common Stock thereon on
the trading day immediately preceding the Exercise Date (provided that if
no such price is reported on such day, the Fair Market Value per share of
Common Stock shall be determined pursuant to clause (ii)).




		
	 	      (ii)  If the Common Stock is not listed on a national securities
exchange, the Nasdaq National Market or another nationally recognized
trading system as of the Exercise Date, the Fair Market Value per share
of Common Stock shall be deemed to be the amount most recently determined
by the Board of Directors to represent the fair market value per share of
the Common Stock (including without limitation a determination for
purposes of granting Common Stock options or issuing Common Stock under
an employee benefit plan of the Company); and, upon request of the
Registered Holder, the Board of Directors (or a representative thereof)
shall promptly notify the Registered Holder of the Fair Market Value per
share of Common Stock. Notwithstanding the foregoing, if the Board of
Directors has not made such a determination within the three-month period
prior to the Exercise Date, then (A) the Board of Directors shall make a
determination of the Fair Market Value per share of the Common Stock
within 15 days of a request by the Registered Holder that it do so, and
(B) the exercise of this Warrant pursuant to this subsection 1(b) shall
be delayed until such determination is made.



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	 	      (c)  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
accompanied by payment in full of the Purchase Price (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(d) below shall be deemed to have become the holder or holders of record of
the Warrant Shares represented by such certificates.




		
	 	      (d)  As soon as practicable after the exercise of this Warrant in full or
in part, and in any event within 5 business days thereafter, the Company, at
its expense, will cause to be issued in the name of, and delivered to, the
Registered Holder, or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may direct:




		
	 	      (i)  a certificate or certificates for the number of full Warrant
Shares to which the Registered Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which the Registered
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 remaining Warrant Shares.



2. Adjustments.


      (a)  Adjustment for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date on which this Warrant was first
issued (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
paragraph 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
additional 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, 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 paragraph 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 in 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)  Adjustments for Other 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
securities of the Company (other than shares of Common Stock) or in cash or
other property (other than cash out of earnings or earned surplus, determined
in accordance with generally accepted accounting principles), then and in each
such event provision shall be made so that the Registered Holder shall receive
upon exercise hereof, in addition to the number of shares of Common Stock
issuable hereunder, the kind and amount of securities of the Company and/or
cash and other property which the Registered Holder would have been entitled to
receive had this Warrant been exercised into Common Stock on the date of such
event and had the Registered Holder thereafter, during the period from the date
of such event to and including the Exercise Date, retained any such securities
receivable, giving application to all adjustments called for during such period
under this Section 2 with respect to the rights of the Registered Holder.


      (e)  Adjustment for Mergers or Reorganizations, etc. If there shall occur
any reorganization, recapitalization, 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), 2(b) or 2(d)), then, following any such reorganization,
recapitalization, consolidation or merger, the Registered Holder shall receive
upon exercise hereof the kind and amount of securities, cash or other property

15








which the Registered Holder would have been entitled to receive if,
immediately prior to such reorganization, recapitalization, consolidation or
merger, the Registered Holder had held the number of shares of Common Stock
subject to this Warrant. Notwithstanding the foregoing sentence, if (x) there
shall occur any reorganization, recapitalization, consolidation or merger
involving the Company in which the Common Stock is converted into or exchanged
for anything other than solely equity securities, and (y) the common stock of
the acquiring or surviving company is publicly traded, then, as part of any
such reorganization, recapitalization, consolidation or merger, (i) the
Registered Holder shall have the right thereafter to receive upon the exercise
hereof such number of shares of common stock of the acquiring or surviving
company as is determined by multiplying (A) the number of shares of Common
Stock then subject to this Warrant by (B) a fraction, the numerator of which is
the Fair Market Value per share of Common Stock as of the effective date of
such transaction, as determined pursuant to subsection 1(b), and the
denominator of which is the fair market value per share of common stock of the
acquiring or surviving company as of the effective date of such transaction, as
determined in good faith by the Board of Directors of the Company (using the
principles set forth in subsection 1(b) to the extent applicable), and (ii) the
exercise price per share of common stock of the acquiring or surviving company
shall be the Purchase Price divided by the fraction referred to in clause (B)
above. In any such case, appropriate adjustment (as determined in good faith
by the Board of Directors of the Company) shall be made in the application of
the provisions set forth herein with respect to the rights and interests
thereafter of the Registered 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)  Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Purchase Price pursuant to this Section 2, the Company
at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish to the Registered Holder a
certificate setting forth such adjustment or readjustment (including the kind
and amount of securities, cash or other property for which this Warrant shall
be exercisable and the Purchase Price) and showing in detail the facts upon
which such adjustment or readjustment is based. The Company shall, upon the
written request at any time of the Registered Holder, furnish or cause to be
furnished to the Registered Holder a certificate setting forth (i) the Purchase
Price then in effect and (ii) the number of shares of Common Stock and the
amount, if any, of other securities, cash or property which then would be
received upon the exercise of this Warrant.


3.  Fractional Shares. The Company shall not be required upon the exercise of
this Warrant to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the Fair Market Value per share of Common
Stock, as determined pursuant to subsection 1(b) above.

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4. Requirements for Transfer.


      (a)  This Warrant and the Warrant Shares shall not be sold or transferred
unless either (i) they first shall have been registered under the Securities
Act of 1933, as amended (the “Act”), or (ii) the Company first shall have been
furnished with an opinion of legal counsel, reasonably satisfactory to the
Company, to the effect that such sale or transfer is exempt from the
registration requirements of the Act.


      (b)  Notwithstanding the foregoing, no registration or opinion of counsel
shall be required for (i) a transfer by a Registered Holder which is a
corporation to a wholly owned subsidiary of such corporation, a transfer by a
Registered Holder which is a partnership to a partner of such partnership or a
retired partner of such partnership or to the estate of any such partner or
retired partner, a transfer by a Registered Holder which is a limited liability
company to a member of such limited liability company or a retired member or to
the estate of any such member or retired member, or a transfer by a Registered
Holder which is a member of the National Association of Securities Dealers (the
“NASD”) to an officer or employee of the Registered Holder as permitted by NASD
rules, provided that the transferee in each case agrees in writing to be
subject to the terms of this Section 4, or (ii) a transfer made in accordance
with Rule 144 under the Act.


      (c)  Each 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, and may not be offered,
sold or otherwise transferred, pledged or hypothecated unless and until
such securities are registered under such Act or an opinion of counsel
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(k) under the Act or if an
effective registration statement is then in effect permitting the resale of the
Warrant Shares.


      (d)  The Registered Holder shall have “piggyback” registration rights to
have the Warrant Shares (but not the Warrants) registered for resale on any
registration statement which the Company files for any purpose on a form
available for such registration, after the Original Issue Date. Such
registration shall be subject to customary obligations by the Registered Holder
to provide information to the Company and by the Company to indemnify the
Registered Holder against Securities Act liabilities.


5. No Impairment. 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

17








all such action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.


6. Notices of 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 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


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


then, and in each such case, the Company will mail or cause to be mailed to the
Registered 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 mailed at least ten days prior
to the record date or effective date for the event specified in such notice.


7. 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.


8. Exchange of Warrants. Upon the surrender by the Registered Holder,
properly endorsed, to the Company at the principal office of the Company, the
Company will, subject to the provisions of Section 4 hereof, issue and deliver
to or upon the order of such Holder, at the Company’s expense, a new Warrant or
Warrants of like tenor, in the name of the Registered Holder or as the
Registered Holder (upon payment by the Registered 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.

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9. Replacement of Warrants. 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. Transfers, etc.


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


      (b)  Subject to the provisions of Section 4 hereof, 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.


      (c)  Until any transfer of this Warrant is made in the warrant register,
the Company may treat the Registered Holder as the absolute owner hereof for
all purposes; provided, however, that if and when this Warrant is properly
assigned in blank, the Company may (but shall not be obligated to) treat the
bearer hereof as the absolute owner hereof for all purposes, notwithstanding
any notice to the contrary.


11. Representations of the Registered Holder. The Registered Holder of this
Warrant represents and warrants to the Company as follows:


      (a)  Investment. The Registered Holder is acquiring this Warrant and the
Warrant Shares issuable upon the exercise of this Warrant, for its 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, except as otherwise may be permitted under applicable securities
laws.


      (b)  Authority. The Registered Holder has full power and authority to
enter into and to perform this Warrant in accordance with its terms. The
Registered Holder has not been organized specifically for the purpose of
investing in the Company.


      (c)  Accredited Investor. The Registered Holder is an Accredited Investor
within the definition set forth in Rule 501(a) promulgated under the Securities
Act.


12. Mailing of Notices, etc. All notices and other communications from the
Company to the Registered Holder shall be mailed by first-class certified or
registered mail, postage prepaid, to the address last furnished to the Company
in writing by the Registered Holder. All notices and other communications from
the Registered Holder or in connection herewith to the Company shall be mailed
by first-class certified or registered mail, postage prepaid, to the Company at
its

19








principal office set forth below. If the Company should at any time change the
location of its principal office to a place other than as set forth below, it
shall give prompt written notice to the Registered 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.


13. No Rights as Stockholder. Until the exercise of this Warrant, the
Registered Holder shall not have or exercise any rights by virtue hereof as a
stockholder of the Company. Notwithstanding the foregoing, in the event (i)
the Company effects a split of the Common Stock by means of a stock dividend
and the Purchase Price of and the number of Warrant Shares are adjusted as of
the date of the distribution of the dividend (rather than as of the record date
for such dividend), and (ii) the Registered Holder exercises this Warrant
between the record date and the distribution date for such stock dividend, the
Registered Holder shall be entitled to receive, on the distribution date, the
stock dividend with respect to the shares of Common Stock acquired upon such
exercise, notwithstanding the fact that such shares were not outstanding as of
the close of business on the record date for such stock dividend.


14. Change or Waiver. Any term of this Warrant may be changed or waived only
by an instrument in writing signed by the party against which enforcement of
the change or waiver is sought.


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


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


EXECUTED as of the Date of Issuance indicated above.



	 	 	 
			[ISSUER]
	 		 
			By:________________________________

Title:_______________________________
	 		 
	ATTEST:

_________________________



20







EXHIBIT I


PURCHASE FORM


	 	 	 
	To:_________________		Dated: _______________________




      The undersigned, pursuant to the provisions set forth in the attached Warrant
(No. ___), hereby irrevocably elects to purchase (check applicable box):



			
	 		_____ shares of the Common Stock covered by such Warrant; or




			
	 		the maximum number of shares of Common Stock covered by such
Warrant pursuant to the cashless exercise procedure set forth in
Section 1(b).



The undersigned herewith makes payment of the full purchase price for such
shares at the price per share provided for in such Warrant, which is $________.
Such payment takes the form of (check applicable box or boxes):



			
	 		$______ in lawful money of the United States; and/or




			
	 		the cancellation of such portion of the attached Warrant as
is exercisable for a total of _____ Warrant Shares (using a Fair
Market Value of $  per share for purposes of this calculation);
and/or




			
	 		the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section 1(b),
to exercise this Warrant with respect to the maximum number of
Warrant Shares purchasable pursuant to the cashless exercise
procedure set forth in Section 1(b).




	 	 
		Signature: _____________________
	 
		Address: ______________________
	 
		              ______________________



21







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 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
17Ad-15 under the Securities
Exchange Act of 1934.



22