EX-10.3






Exhibit 10.3




THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN
OPINION IS REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED.



MEMORY PHARMACEUTICALS CORP.

WARRANT TO PURCHASE COMMON STOCK




No.



________________




December 19, 2005 Void After December 18, 2010



This Certifies That, for value received, The Stanley Medical Research Institute, with
its principal office at 5430 Grosvenor Lane, Suite 200 Bethesda, MD, 20814 or its successors and
permitted assigns (the “Holder”), is entitled to subscribe for and purchase at the Exercise Price
(defined below) from Memory Pharmaceuticals Corp., a Delaware corporation, with its principal
office at 100 Philips Parkway, Montvale, New Jersey 07645 (the “Company”) up to 154,128 shares of
the common stock of the Company, par value $.001 per share (the “Common Stock”), subject to
adjustment as provided herein. This Warrant is being issued pursuant to the terms of the
Securities Purchase Agreement, dated December 19, 2005, among the Company and the original Holder
of this Warrant (the “Purchase Agreement”). Capitalized terms not otherwise defined herein shall
have the respective meanings ascribed to such terms in the Purchase Agreement.



1.  Definitions. As used herein, the following terms shall have
the meanings ascribed to them below:



(a) “Exercise Period” shall mean the period commencing 180 days after the date hereof and
ending December 18, 2010 at 5:00 p.m., unless sooner exercised or terminated as provided below.



(b) “Exercise Price” shall mean $2.62 per share, subject to adjustment pursuant to Section 5
below.



(c) “Warrant Shares” shall mean the shares of the Common Stock issued upon exercise of this
Warrant, subject to adjustment pursuant to the terms herein, including but not limited to
adjustment pursuant to Section 5 below.



2.  Exercise of Warrant.



2.1. Method of Exercise. The rights represented by this Warrant may be exercised in whole or
in part at any time during the Exercise Period, by delivery of the following to the Company at its
address set forth above (or at such other address as it may designate by notice in writing to the
Holder):



(a) an executed Notice of Exercise in the form attached hereto;



(b) payment of the Exercise Price either (i) by check payable to the order of the Company, or
(ii) pursuant to a Cashless Exercise, as described below; and



(c) this Warrant.



Upon the exercise of the rights represented by this Warrant, shares of Common Stock shall be
issued for the Warrant Shares so purchased, and shall be registered in the name of the Holder or
persons affiliated with the Holder, if the Holder so designates, within a reasonable time after the
rights represented by this Warrant shall have been so exercised and shall be issued in certificate
form and delivered to the Holder, if so requested.



The person in whose name any Warrant Shares are to be issued upon exercise of this Warrant
shall be deemed to have become the holder of record of such shares on the date on which this
Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of
issuance of the shares of Common Stock, except that, if the date of such surrender and payment is a
date when the stock transfer books of the Company are closed, such person shall be deemed to have
become the holder of such shares at the close of business on the next succeeding date on which the
stock transfer books are open.



2.2. Cashless Exercise. Notwithstanding any provisions herein to the contrary, if, at any
time during the Exercise Period, the Current Market Price (as defined below) of one share of Common
Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu
of exercising this Warrant by payment of cash, the Holder may exercise this Warrant by a cashless
exercise by surrender of this Warrant at the principal office of the Company together with the
properly endorsed Notice of Exercise and the Company shall issue to the Holder a number of shares
of Common Stock computed using the following formula:



X = (Y*(B-A)/B)




X = the number of shares of Common Stock to be issued to the Holder.



Y = the number of shares of Common Stock purchasable upon exercise of all of the
Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being
exercised.



A = the Exercise Price.



B = the Current Market Price of one share of Common Stock.



“Current Market Price” means on any particular date:



(a) if the Common Stock is traded on the Nasdaq SmallCap Market or the Nasdaq National Market,
the average of the closing prices of the Common Stock on such market over the five trading days
ending immediately prior to the applicable date of valuation;



(b) if the Common Stock is traded on any registered national stock exchange but is not traded
on the Nasdaq SmallCap Market or the Nasdaq National Market, the average of the closing prices of
the Common Stock on such exchange over the five trading days ending immediately prior to the
applicable date of valuation;



(c) if the Common Stock is traded over-the-counter, but not on the Nasdaq SmallCap Market, the
Nasdaq National Market or a registered national stock exchange, the average of the closing bid
prices over the 30-day period ending immediately prior to the applicable date of valuation; and



(d) if there is no active public market for the Common Stock, the value thereof, as determined
in good faith by the Board of Directors of the Company upon due consideration of the proposed
determination thereof by the Holder.



2.3. Partial Exercise. If this Warrant is exercised in part only, the Company shall, upon
surrender of this Warrant, execute and deliver, within 10 days of the date of exercise, a new
Warrant evidencing the rights of the Holder, or such other person as shall be designated in the
Notice of Exercise, to purchase the balance of the Warrant Shares purchasable hereunder. In no
event shall this Warrant be exercised for a fractional Warrant Share, and the Company shall not
distribute a Warrant exercisable for a fractional Warrant Share. Fractional Warrant Shares shall
be treated as provided in Section 6 hereof.



2.4. Delivery. Certificates for shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker
with the Depository Trust Company through its Deposit Withdrawal Agent Commission system if the
Company is a participant in such system (and so long as the legend may be removed in accordance
with Section 3.8(b) of the Purchase Agreement), and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise.



3.  Covenants of the Company.



3.1. Covenants as to Warrant Shares. The Company covenants and agrees that if at any time
during the Exercise Period the number of authorized but unissued shares of Common Stock shall not
be sufficient to permit exercise of this Warrant, the Company will take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of
Common Stock (or other securities as provided herein) to such number of shares as shall be
sufficient for such purposes.



3.2. No Impairment. Except and to the extent as waived or consented to by the Holder or
otherwise in accordance with Section 10 hereof, the Company will not, by amendment of its
Certificate of Incorporation (as such may be amended from time to time), or through any means,
avoid or seek to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist in the carrying out
of all the provisions of this Warrant and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against impairment.



3.3. Notices of Record Date. In the event of any taking by the Company of a record of the
holders of any class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a cash dividend which is the same as cash dividends
paid in previous quarters) or other distribution, the Company shall mail to the Holder, at least
ten days prior to the date specified herein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend or distribution.



4.  Representations of Holder.



4.1. Acquisition of Warrant for Personal Account. The Holder represents and warrants that it
is acquiring the Warrant and the Warrant Shares solely for its account and not with a present view
toward the public or distribution of said Warrant or Warrant Shares or any part thereof and has no
intention of selling or distributing said Warrant or Warrant Shares or any arrangement or
understanding with any other persons regarding the sale or distribution of said Warrant or, except
in accordance with the provisions of Article 6 of the Purchase Agreement, the Warrant Shares, and
except as would not result in a violation of the Securities Act. The Holder will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) the Warrant except in accordance with the
Securities Act and will not, directly or indirectly, offer, sell, pledge, transfer or otherwise
dispose of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge of) the
Warrant Shares except in accordance with the provisions of Article 6 of the Purchase Agreement or
pursuant to and in accordance with the Securities Act.



4.2. Securities Are Not Registered.



(a) The Holder understands that the offer and sale of the Warrant or the Warrant Shares have
not been registered under the Securities Act on the basis that no distribution or public offering
of the stock of the Company is to be effected. The Holder realizes that the basis for the
exemption may not be present if, notwithstanding its representations, the Holder has a present
intention of acquiring the securities for a fixed or determinable period in the future, selling (in
connection with a distribution or otherwise), granting any participation in, or otherwise
distributing the securities. The Holder has no such present intention.



(b) The Holder recognizes that the Warrant and the Warrant Shares must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption from such
registration is available. The Holder recognizes that the Company has no obligation to register
the Warrant or, except as provided in the Purchase Agreement, the Warrant Shares, or to comply with
any exemption from such registration.



(c) The Holder is aware that neither the Warrant nor the Warrant Shares may be sold pursuant
to Rule 144 adopted under the Securities Act unless certain conditions are met, including, among
other things, the existence of a public market for the shares, the availability of certain current
public information about the Company, the resale following the required holding period under Rule
144 and the number of shares being sold during any three month period not exceeding specified
limitations. Holder is aware that any such sale made in reliance on Rule 144, if Rule 144 is
available, may be made only in accordance with the terms of Rule 144.



4.3. Disposition of Warrant and Warrant Shares.



(a) The Holder understands that the Warrants and the Warrant Shares have not been and are not
being registered under the Securities Act (other than as contemplated in Article 6 of the Purchase
Agreement) or any applicable state securities laws and, consequently, the Purchaser may have to
bear the risk of owning the Warrant and the Warrant Shares for an indefinite period of time because
such securities may not be transferred unless (i) the resale of such securities is registered
pursuant to an effective registration statement under the Securities Act; (ii) the Holder has
delivered to the Company an opinion of counsel (in form, substance and scope reasonably
satisfactory to the Company) to the effect that the Warrants or Warrant Shares to be sold or
transferred may be sold or transferred pursuant to an exemption from such registration; or (iii)
such securities are sold or transferred pursuant to Rule 144



(b) The Holder understands and agrees that all certificates evidencing the Warrant Shares to
be issued to the Holder may bear a legend in substantially the following form:



THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE COMPANY
SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE
EXTENT THAT SUCH OPINION IS REQUIRED PURSUANT TO THAT CERTAIN
SECURITIES PURCHASE AGREEMENT UNDER WHICH THE SECURITIES WERE
ISSUED.



5.  Adjustment of Exercise Price. In the event of changes in the
outstanding Common Stock of the Company by reason of stock dividends, split-ups, recapitalizations,
reclassifications, combinations or exchanges of shares, separations, reorganizations, liquidations,
or the like (other than as set forth in Section 7), the number and class of shares available under
the Warrant in the aggregate and the Exercise Price shall be correspondingly adjusted to give the
Holder, on exercise for the same aggregate Exercise Price, the total number, class, and kind of
shares as the Holder would have owned had the Warrant been exercised prior to the event and had the
Holder continued to hold such shares until after the event requiring adjustment. The form of this
Warrant need not be changed because of any adjustment in the number, class, and kind of shares
subject to this Warrant. The Company shall promptly provide a certificate from its Chief Executive
Officer notifying the Holder in writing of any adjustment in the Exercise Price and/or the total
number, class, and kind of shares issuable upon exercise of this Warrant, which certificate shall
specify the Exercise Price and number, class and kind of shares under this Warrant after giving
effect to such adjustment.



6.  Fractional Shares. No fractional shares shall be issued upon
the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Warrant
Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes
of determining whether the exercise would result in the issuance of any fractional share. If, after
aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in
lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum
in cash equal to the product resulting from multiplying the fair market value of the Common Stock
on the date of exercise of the Warrant by such fraction.



7.  Certain Events. In the event of, at any time during the
Exercise Period, any capital reorganization, or any reclassification of the capital stock of the
Company (other than a change in par value or from par value to no par value or no par value to par
value or as a result of a stock dividend or subdivision, split-up or combination of shares), or the
consolidation or merger of the Company with or into another corporation (other than a merger solely
to effect a reincorporation of the Company into another state), in each case, in which the
stockholders of the Company immediately prior to such capital reorganization, reclassification,
consolidation or merger, will hold less than a majority of the outstanding shares of the Company or
resulting corporation immediately after such capital reorganization, reclassification,
consolidation or merger, or the sale or other disposition of all or substantially all of the
properties and assets of the Company and its subsidiaries, taken as a whole, in its entirety to any
other person, other than sales or other dispositions that do not require stockholder approval
(each, an “Event”), then, as a condition of such Event, lawful and adequate provision shall be made
whereby each Holder 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
Event not taken place, and in any such case appropriate provision shall be made with respect to the
rights and interests of each Holder to the end that the provisions hereof (including, without
limitation, provision for adjustment of the Exercise 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 Event 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 purchasing or
otherwise acquiring such assets or other appropriate corporation or entity shall assume the
obligation to deliver to the Holder, at the last address of the Holder appearing on the books of
the Company, such shares of stock, securities or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to purchase, and the other obligations under this Warrant.
The provisions of this Section 7 shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other dispositions.



8.  No Stockholder Rights. This Warrant in and of itself shall not
entitle the Holder to any voting rights or other rights as a stockholder of the Company.



9.  Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or
otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as the Warrant so lost,
stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.



10.  Modifications and Waiver. This Warrant and any provision
hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by
the Company and (i) Purchasers holding Warrants representing a majority of the number of Warrant
Shares then issuable upon exercise of the then unexercised Warrants, provided, however, that such
modification, amendment or waiver is made with respect to all unexercised Warrants issued pursuant
to the Purchase Agreement and does not adversely affect the Holder without adversely affecting all
holders of Warrants in a similar manner; or (ii) the Holder.



11.  Notices, etc. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified, (b) when sent by confirmed email, telex or facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, (c) five days after having been sent
by registered or certified mail, return receipt requested, postage prepaid, or (d) one business day
after deposit with a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the Company at the address
listed on the signature page and to the Holders at the addresses on the Company records, or at such
other address as the Company or Holder may designate by ten days’ advance written notice to the
other party hereto.



12.  Acceptance. Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions contained herein.



13.  Governing Law. This Warrant and all rights, obligations and
liabilities hereunder shall be governed by the laws of the State of New York without regard to the
principles of conflict of laws. The Company and the Holder each irrevocably submit and consent to
the exclusive jurisdiction of the courts of the State of Maryland for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Warrant. The Company and the
Holder each irrevocably waive any objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waive any claim that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum. THE COMPANY AND
EACH HOLDER WAIVE ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS
WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.



14.  Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this
Warrant. The language in this Warrant shall be construed as to its fair meaning without regard to
which party drafted this Warrant.



15.  Severability. The invalidity or unenforceability of any
provision of this Warrant in any jurisdiction shall not affect the validity or enforceability of
such provision in any other jurisdiction, or affect any other provision of this Warrant, which
shall remain in full force and effect.



[Remainder of this page intentionally left blank.]







1






In Witness Whereof, the Company has caused this Warrant to be executed by its duly
authorized officer as of December 19, 2005.




MEMORY PHARMACEUTICALS CORP.




By:

Name:

Title:



Address: 100 Philips Parkway




Montvale, NJ 07645


Attn: President and Chief Executive
Officer




Facsimile: (201) 802-7190



2




NOTICE OF EXERCISE




TO: Memory Pharmaceuticals Corp.



(1) The undersigned hereby elects to (check one box only):




purchase      shares of the Common Stock of Memory Pharmaceuticals Corp. (the
“Company”) pursuant to the terms of the attached Warrant, and tenders herewith
payment of the exercise price in full for such shares, together with all
applicable transfer taxes, if any.




purchase the number of shares of Common Stock of the Company by cashless exercise
pursuant to the terms of the Warrant as shall be issuable upon cashless exercise
of the portion of the Warrant relating to      shares, and shall tender payment
of all applicable transfer taxes, if any.



(2) Please issue a certificate or certificates representing said shares of Common Stock in
the name of the undersigned or in such other name as is specified below:




(Name)




(Address)



(3) The undersigned represents that (i) the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares; (ii) the undersigned is aware of the Company’s business
affairs and financial condition and has acquired sufficient information about the Company to reach
an informed and knowledgeable decision regarding its investment in the Company; (iii) the
undersigned is experienced in making investments of this type and has such knowledge and background
in financial and business matters that the undersigned is capable of evaluating the merits and
risks of this investment and protecting the undersigned’s own interests; (iv) the undersigned is
aware that the aforesaid shares of Common Stock may not be sold pursuant to Rule 144 adopted under
the Securities Act unless certain conditions are met and until the undersigned has held the shares
for the number of years prescribed by Rule 144, that among the conditions for use of the Rule is
the availability of current information to the public about the Company and the Company has not
made such information available and has no present plans to do so; and (v) the undersigned agrees
not to make any disposition of all or any part of the aforesaid shares of Common Stock unless and
until there is then in effect a registration statement under the Securities Act covering such
proposed disposition and such disposition is made in accordance with said registration statement,
or the undersigned has provided the Company with an opinion of counsel satisfactory to the Company,
stating that such registration is not required.



Date:          



(Signature)



     



(Print Name)




3