ex10-3





Exhibit 10.3




OPTION TO PURCHASE

SERIES B CONVERTIBLE PREFERRED STOCK

AND WARRANTS OF ANTEX BIOLOGICS INC.



            THIS OPTION TO PURCHASE AGREEMENT (the “Agreement”),dated as of July 3,
2001, is entered into among Antex Biologics Inc., a Delaware corporation (the
“Company”), Xmark Fund, Ltd., Xmark Fund, L.P., S.A.C. Capital Associates, LLC,
SDS Merchant Fund, LP and OTATO, L.P. (Xmark Fund, Ltd., Xmark Fund, L.P., SDS
Merchant Fund, LP, S.A.C. Capital Associates, LLC and OTATO, L.P., each are
referred to herein as a “Purchaser” and, collectively, as the “Purchasers”).


            WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company desires to grant each of the Purchasers, and each of the Purchasers
desires to accept from the Company, the option to acquire from the Company, (i)
shares of the Company’s Series B Convertible Preferred Stock, having such terms
and conditions as are set forth in a Certificate of Designation, dated July 3,
2001, as filed by the Company with the Secretary of State of the State of
Delaware (the “Preferred Stock”), (ii) Class E Warrants, having such terms and
conditions as are set forth in the form of Class E Warrant attached as Exhibit
B-1 to a Securities Purchase Agreement, dated the dated hereof, among parties
to this Agreement (the “Purchase Agreement”), except that such Class E Warrants
shall not have a cashless exercise provision, and (iii) Class F Warrants,
having such terms and conditions as are set forth in the form of Class F
Warrant attached as Exhibit B-2 to the Purchase Agreement, except that such
Class F Warrants shall not have a cashless exercise provision (the Class E
Warrants and the Class F Warrants, together the “Warrants”);


            NOW THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter, and for other good and valid consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the
Purchasers hereby agree as follows:



	1.	 	      Option Grant.




	 	 	 
	a)	 	
        The Company hereby grants to Xmark Fund, Ltd., an option to
purchase from the Company, 236,437.5 units, each unit consisting of
(i) 1/500th of a share of the Preferred Stock, (ii) one-half of a
Class E Warrant and (iii) one-quarter of a Class F Warrant (each a
“Unit”), at an exercise price of $2.00 per Unit, exercisable on one
occasion at any time, in whole and not in part, during the period
commencing July 3, 2001, and terminating on April 2, 2002.
	
	
	
	

	 	 	 
	b)	 	
        The Company hereby grants to Xmark Fund, L.P., an option to
purchase from the Company, 138,562.5 Units at an exercise price of
$2.00 per Unit, exercisable on one occasion at any time, in whole
and not in part, during the period commencing July 3, 2001, and
terminating on April 2, 2002.
	
	
	
	

	 	 	 
	c)	 	
        The Company hereby grants to S.A.C. Capital Associates, LLC,
an option to purchase from the Company, 625,000 Units at an exercise
price of $2.00



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per Unit, exercisable on one occasion at any time, in whole and not
in part, during the period commencing July 3, 2001, and terminating
on April 2, 2002.
	
	
	
	

	 	 	 
	d)	 	
        The Company hereby grants to SDS Merchant Fund, LP, an option
to purchase from the Company, 375,000 Units at an exercise price of
$2.00 per Unit, exercisable on one occasion at any time, in whole
and not in part, during the period commencing July 3, 2001, and
terminating on April 2, 2002.
	
	
	
	

	 	 	 
	e)	 	
        The Company hereby grants to OTATO, L.P., an option to
purchase from the Company, 125,000 Units at an exercise price of
$2.00 per Unit, exercisable on one occasion at any time, in whole
and not in part, during the period commencing July 3, 2001, and
terminating on April 2, 2002 (together with the options granted to
Xmark Fund, Ltd, Xmark Fund, L.P., S.A.C. Capital Associates, LLC
and SDS Merchant Fund, LP, the “Options”, each an “Option”).




	2.	 	      Exercise of the Option




	 	 	 
	a)	 	
        If any of the Purchasers (the “Exercising Purchaser”)
determines to exercise its respective Option, it shall do so by
written notice to the Company (the “Exercise Notice”).
	
	
	
	

	 	 	 
	b)	 	
        The closing date (“Closing Date”) of the exercise of the
Option shall be the date specified in the Option Notice, which shall
not be less then 15 Business Days, nor more than 30 Business Days
after the date of the Option Notice, unless the parties agree to
another date
	
	
	
	

	 	 	 
	c)	 	
        On the Closing Date, the parties shall execute and deliver a
securities purchase agreement, in substantially the form of the
Purchase Agreement, pursuant to which the Company agrees to issue
and sell to the Exercising Purchaser, and the Exercising Purchaser
agrees to acquire from the Company, all of the Units to which it is
entitled.




	3.	 	   Cancellation of the Options. If at any time the Average Price of the
common stock, par value $.01 per share, of the Company (the “Common
Stock”) equals or exceeds $3.00 per share, the Company unilaterally may
elect, in its sole discretion, to cancel the Options, in whole or in part,
by delivering a notice of cancellation (a “Cancellation Notice”) to each
Purchaser by facsimile and overnight courier (the date that the
Cancellation Notice is given being referred to as the “Cancellation Notice
Date”). The cancellation shall take effect at 5:00 p.m., Washington, D.C.
time, on the tenth Trading Day following the Cancellation Notice Date (the
“Cancellation Time”). Notwithstanding anything in this Section 3, the
Company shall effect the exercise of the Options pursuant to Section 2 if
the Exercise Notice is received by the Company before the Cancellation
Time.
	 
	4.	 	   Certain Definitions



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	 	 	      “Average Price” on any date means (x) the sum of the Per Share
Market Value for the ten (10) Trading Days immediately preceding such
date minus (y) the highest and lowest Per Share Market Value during the
ten (10) Trading Days immediately preceding such date, divided by (z)
eight (8), or a similar calculation if another figure for the number of
Trading Days is set forth for clause (x) of this definition.
	 
	 	 	      “Business Day” means any day except Saturday, Sunday and any day
which shall be a legal holiday in the State of New York or a day on which
banking institutions in the State of New York generally are authorized or
required by law or other government action to close.
	 
	 	 	      “National Market” means the NASDAQ National Market, the NASDAQ
SmallCap Market, the New York Stock Exchange and the AMEX.
	 
	 	 	      “Per Share Market Value” means on any particular date (a) the
closing bid price per share of the Common Stock on such date on (i) the
National Market on which the Common Stock is then listed or quoted, or,
if there is no such price on such date, then the closing bid price on
such exchange or quotation system on the date nearest preceding such
date, or the OTCBB, as reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its
function of reporting prices.
	 
	 	 	      “Person” means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
	 
	 	 	      “Trading Day” means any day on which the OTCBB or any National
Market on which the Common Stock is then listed or quoted is open for
trading.
	 
	5.	 	   Notices. Except as otherwise expressly provided for herein, any notices,
consents, waivers or other communications required or permitted to be
given under the terms of this Agreement shall be in writing and shall be
deemed to have been delivered (a) upon receipt, when delivered personally;
(b) upon receipt, when sent by facsimile, provided confirmation of
transmission is mechanically or electronically generated and kept on file
by the sending party (if received by 5:30 p.m. Eastern Standard Time) or
the first Business Day following such delivery (if received on or after
5:30 p.m. Eastern Standard Time); or (c) two Business Days after deposit
with a nationally recognized overnight courier, in each case properly
addressed to the party to receive the same. The addresses and facsimile
numbers for such communications shall be:





	 	If to the Company:







	 	Antex Biologics Inc.

300 Professional Drive

Gaithersburg, Maryland 20879

Telephone: (301) 590-0129

Facsimile: (301) 590-1252

Attention: V.M. Esposito, Chairman and CEO






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	 	With a copy to:







	 	Covington & Burling

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20004

Telephone: (202) 662-6000

Facsimile: (202) 662-6291

Attention: D. Michael Lefever, Esq.







	 	If to Xmark Fund, Ltd. or Xmark Fund, L.P. to:







	 	Brown Simpson Asset Management, LLC

152 West 57th Street, 21st Floor

New York, New York 10029

Telephone: (212) 247-8200

Facsimile: (212) 247-1329

Attention: Peter Greene







	 	With a copy, in the case of Notice to Xmark Fund, Ltd. or Xmark
Fund, L.P., to:







	 	Akin, Gump, Strauss, Hauer & Feld, L.L.P.

590 Madison Avenue

New York, New York 10022

Telephone: (212) 872-1000

Facsimile: (212) 872-1002

Attention: James Kaye







	 	If to S.A.C. Capital Associates, LLC to:







	 	S.A.C. Capital Advisors, LLC

777 Long Ridge Road

Stamford, Connecticut 06902

Telephone: (203) 614-2000

Facsimile: (203) 614-2393

Attention: Peter Nussbaum







	 	If to SDS Merchant Fund, LP to:







	 	One Sound Drive, Second Floor

Greenwich, Connecticut 06830

Telephone: (203) 629-8400

Facsimile: (203) 629-0345

Attention: Steve Derby







	 	If to OTATO, L.P. to:







	 	OTA Limited Partnership

1 Manhattanville Road






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	 	Purchase, New York 10577

Telephone: (914) 694-5857

Facsimile: (914) 694-6342

Attention: Vinny DiGeso






	 	 	Each party shall provide written notice to the other party of any change
in address or facsimile number in accordance with the provisions hereof.
	 
	6.	 	   Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the Purchasers and their permitted assigns, and shall be
binding upon any Person succeeding to the Company by merger or acquisition
of all or substantially all of the assets of the Company. Neither the
Company nor any of the Purchasers may assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other,
which consent shall not be unreasonably withheld.
	 
	7.	 	   Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York
without regard to the principles of conflicts of law thereof. Each party
hereby irrevocably submits to the nonexclusive jurisdiction of the state
and federal courts sitting in the City of New York, Borough of Manhattan,
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 suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, or that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
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 HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN.
	 
	8.	 	   Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and
the same agreement and shall become effective when counterparts have been
signed by each party and delivered to the other parties, it being
understood that the parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission, such
signature shall create a valid and 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 page were an
original thereof.




[Signature Page Follows]




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



Company:




ANTEX BIOLOGICS INC.




By: /s/ V. M. Esposito


         V. M. Esposito

         Chairman and Chief Executive Officer




Purchasers:




XMARK FUND, LTD.




By: Brown Simpson Asset Management, LLC, its Investment Manager




By: /s/ Peter D. Greene

         Name: Peter D. Greene

         Title: Managing Principal




XMARK FUND, L.P.




By: Brown Simpson Capital, LLC, its General Partner




By: /s/ Peter D. Greene

         Name: Peter D. Greene

         Title: Managing Principal




S.A.C. CAPITAL ASSOCIATES, LLC


By: S.A.C. Capital Advisors, LLC



By: /s/ Peter Nussbaum

         Name: Peter Nussbaum

         Title: General Counsel




SDS MERCHANT FUND, LP




By: /s/ Steve Derby

         Name: Steve Derby

         Title: Managing Member




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OTATO, L.P.




By: /s/ James W. Santori

         Name: James W. Santori

         Title: CFO


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