Prepared by MERRILL CORPORATION









COMMON STOCK PURCHASE

WARRANT




THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE

SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER APPLICABLE STATE

SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF

UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES

LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION, PROVIDED THAT

THE SELLER DELIVERS TO THE COMPANY AN OPINION OF COUNSEL (WHICH OPINION IS

REASONABLY SATISFACTORY TO THE COMPANY) CONFIRMING THE AVAILABILITY OF SUCH

EXEMPTION.




Dated:

_____________




No. ____                AXONYX INC.




WARRANT TO PURCHASE ________ SHARES

OF COMMON STOCK




THIS CERTIFIES THAT, for

value received, ____________ (the “Holder”) is entitled to subscribe for and

purchase _______ shares (as adjusted pursuant to Section 4 hereof) of the

fully paid and nonassessable Common Stock, par value $0.001 per share (the

“Shares”), of Axonyx Inc., a Nevada corporation (the “Company”), at the price

of $3.91per

share (the “Exercise Price”) (as adjusted pursuant to Section 4 hereof),

upon the terms and subject to the conditions hereinafter set forth.




1.             Method of Exercise; Payment.




(a)           Cash Exercise.  The purchase rights represented by this

Warrant may be exercised by the Holder, in whole or in part, at any time or

from time to time, by the surrender of this Warrant (with the notice of

exercise form attached hereto as Exhibit A duly executed) at the

principal office of the Company, and by the payment to the Company, by

certified, cashier’s or other check acceptable to the Company, of an amount

equal to the aggregate Exercise Price of the shares being purchased.




(b)           Net Issue Exercise.




(i)            In lieu of exercising this Warrant,

the Holder may elect to receive, without the payment by the Holder of any

additional consideration, shares equal to the value of this Warrant (or the

portion thereof being cancelled) by surrender of this Warrant at the principal

office of the Company together with notice of such election, in which event the

Company shall issue to the Holder a number of shares of the Company’s Common

Stock computed using the following formula:













X             =              Y

(A-B)




     A




Where:




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

the Holder.




Y                                                                                                                                        =                                         the number of shares of Common Stock purchasable under

this Warrant, or if only a portion of this Warrant is being exercised, the

number of shares of Common Stock represented by the portion of the Warrant

being exercised.




A                                                                                                                                      =                                         the fair market value of one share of the Company’s

Common Stock at the time the net issue exercise election is made.




B                                                                                                                                        =                                         the Exercise Price (as adjusted to the date of such

calculation).




(c)           Fair Market Value.  For purposes of this Section 1, the

fair market value of the Company’s Common Stock shall mean:




(i)            if the Company’s Common Stock is

traded on a securities exchange, the average of the closing price each day over

the thirty consecutive day period ending three days before the date on which

the fair market value of the securities is being determined;




(ii)           if the Company’s Common Stock is actively

traded over-the counter, the average of the closing bid and asked prices quoted

on the NASDAQ system (or similar system) each day over the thirty consecutive

day period ending three days before the date on which the fair market value of

the securities is being determined; or




(iii)          if at any time the Company’s Common

Stock is not listed on any securities exchange or quoted in the NASDAQ System

or the over-the-counter market, then as determined by the board of directors of

the Company in good faith.




(d)           Stock Certificates.  This Warrant shall be deemed to have been

exercised immediately prior to the close of business on the date of its

surrender for exercise as provided above, and the person entitled to receive

the Shares issuable upon such exercise shall be treated for all purposes as the

holder of record of such Shares as of the close of business on such date.  As soon as practicable, but in any event no

later than five days after such date, the Company shall issue and deliver to

the person or persons entitled to receive the same a certificate or

certificates for the number of whole Shares issuable upon such exercise.  Unless this Warrant has been fully exercised

or has expired, a new Warrant representing the Shares with respect to which

this Warrant shall not have been exercised shall also be issued to the Holder

within such time.




2.             Call Provision.  Notwithstanding the foregoing Section 1, the

Company shall have the right (the “Call Right”), except as may be limited by

law or other agreements, to require the exercise of this Warrant, in whole or

in part, by providing written notice (the “Call Notice”) thereof to the

registered Holder hereof, if the average closing price for the Company’s Common

Stock, as quoted by the Nasdaq National Market or any other established

over-the-counter quotation service, is equal to or greater than $11.73 per

share, as adjusted pursuant to Section 4 hereof, for any period of twenty

consecutive days.  Within thirty days

following the date of the Call Notice, the Holder hereof may, in its sole

discretion, exercise this Warrant in accordance with Section 1 as to the number

of shares against which the Company shall have exercised the Call Right.  If such exercise has not been made within

such period, this Warrant (or applicable portion hereof) shall expire and cease

to be exercisable, as to the number of shares against which the Company shall

have exercised the Call Right, at 11:59 p.m. Eastern Standard Time, on the

twenty-first day after the date of mailing of the Call Notice.  Notwithstanding the foregoing, the Company

may not exercise its rights pursuant to this Section 2 unless and until there

is, at the time of such Call Notice and exercise of this Warrant, an effective

registration statement covering the sale of the Shares issuable upon exercise

of this Warrant.







3.             Stock Fully Paid; Reservation of

Shares.  All of the Shares issuable

upon the exercise of the rights represented by this Warrant will, upon issuance

and receipt of the Exercise Price therefor, be fully paid and nonassessable,

and free from all preemptive rights, taxes, liens and charges with respect to

the issue thereof.  During the period

within which the rights represented by this Warrant may be exercised, the

Company shall at all times have authorized and reserved for issuance upon

exercise of the rights evidenced by this Warrant, sufficient shares of its

Common Stock to provide for the exercise of the rights represented by this

Warrant.




4.             Adjustment of Exercise Price and

Number of Shares.  Subject to the

provisions of Section 13 hereof, the number and kind of securities

purchasable upon the exercise of this Warrant and the Exercise Price therefor

shall be subject to adjustment from time to time upon the occurrence of certain

events, as follows:




(a)           Reclassification, Consolidation or

Merger.  In case of any

reclassification or change of the Common Stock (other than a change in par

value, or as a result of a subdivision or combination), or in case of any

consolidation or merger of the Company with or into another corporation (other

than a merger with another corporation in which the Company is a continuing

corpo­ration and which does not result in any reclassification or change of

outstanding securities issuable upon exercise of this Warrant), or in case of

any sale of all or substantially all of the assets of the Company, the Company

or such successor or purchasing corporation, as the case may be, shall execute

a new Warrant, providing that the holder of this Warrant shall have the right

to exercise such new Warrant, and procure upon such exercise and payment of the

same aggregate Exercise Price, in lieu of the shares of Common Stock

theretofore issuable upon exercise of this Warrant, the kind and amount of

shares of stock, other securities, money and property receivable upon such

reclassification, change, consolida­tion, sale of all or substantially all of

the Company’s assets or merger by a holder of 

an equivalent number of shares of Common Stock.  Such new Warrant shall provide for adjustments

which shall be as nearly equivalent as may be practicable to the adjustments

provided for in this Section 4. 

The provisions of this Section 4(a), subject to Section 13 hereof,

shall similarly apply to successive reclassifications, changes, consolidations,

mergers, transfers and the sale of all or substantially all of the Company’s

assets.




(b)           Stock Splits, Dividends and

Combinations.  In the event that the

Company shall at any time subdivide the outstanding shares of Common Stock or

shall issue a stock dividend on its outstanding shares of Common Stock the

number of Shares issuable upon exercise of this Warrant immediately prior to

such subdivision or to the issuance of such stock dividend shall be

proportionately increased, and the Exercise Price shall be proportionately

decreased, and in the event that the Company shall at any time combine the

outstanding shares of Common Stock the number of Shares issuable upon exercise

of this Warrant immediately prior to such combination shall be proportionately

decreased, and the Exercise Price shall be proportionately increased, effective

at the close of business on the date of such subdivision, stock dividend or

combination, as the case may be.







5.             Notice of Adjustments.  Whenever the number of Shares purchasable

hereunder or the Exercise Price thereof shall be adjusted pursuant to

Section 4 hereof, the Company shall provide notice by first class mail to

the holder of this Warrant setting forth, in reasonable detail, the event

requiring the adjustment, the amount of the adjustment, the method by which

such adjustment was calculated, and the number of Shares which may be purchased

and the Exercise Price therefor after giving effect to such adjustment.




6.             Fractional Shares.  No fractional shares of Common Stock will be

issued in connection with any exercise hereunder.  In lieu of such fractional shares, the Company shall make a cash

payment therefor based upon the Fair Market Value of one share of Common Stock

of the Company on the date of such exercise.




7.             Representations of the Company.  The Company represents that all corporate

actions on the part of the Company, its officers, directors and stockholders

necessary for the sale and issuance of the Shares pursuant hereto and the

performance of the Company’s obligations hereunder were taken prior to and are

effective as of the effective date of this Warrant.




8.             Representations and Warranties

by the Holder.  The Holder

represents and warrants to the Company as follows:




(a)           This Warrant and the Shares issuable

upon exercise thereof are being acquired for its own account, for investment

and not with a view to, or for resale in connection with, any distribution or

public offering thereof within the meaning of the Securities Act of 1933, as

amended (the “Act”).  Upon exercise of

this Warrant, the Holder shall, if so requested by the Company, confirm in

writing, in a form satisfactory to the Company, that the securities issuable

upon exercise of this Warrant are being acquired for investment and not with a

view toward distribution or resale.




(b)           The Holder understands that the

Warrant and the Shares have not been registered under the Act by reason of

their issuance in a transaction exempt from the registration and prospectus

delivery requirements of the Act pursuant to Section 4(2) thereof, and

that they must be held by the Holder indefinitely, and that the Holder must

therefore bear the economic risk of such investment indefinitely, unless a

subsequent disposition thereof is registered under the Act or is exempted from

such registration.




(c)           The Holder has such knowledge and

experience in financial and business matters that it is capable of evaluating

the merits and risks of the purchase of this Warrant and the Shares purchasable

pursuant to the terms of this Warrant and of protecting its interests in connection

therewith.




(d)           The Holder is able to bear the

economic risk of the purchase of the Shares pursuant to the terms of this

Warrant.




9.             Restrictive Legend.




The Shares issuable upon exercise of this Warrant (unless registered

under the Act) shall be stamped or imprinted with a legend in the following

form:




THESE SECURITIES

HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES

ACT”) OR UNDER APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD,

TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT

AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS

FROM SUCH REGISTRATION, PROVIDED THAT THE SELLER DELIVERS TO THE COMPANY AN

OPINION OF COUNSEL (WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY)

CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.







10.           Restrictions Upon Transfer and

Removal of Legend.




(a)           The Company need not register a

transfer of Shares bearing the restrictive legend set forth in Section 9

hereof, unless the conditions specified in such legend are satisfied.  The Company may also instruct its transfer

agent not to register the transfer of the Shares, unless one of the conditions

specified in the legend referred to in Section 9 hereof is satisfied.




(b)           Notwithstanding the provisions of

Section 9(a) above, no opinion of counsel or “no-action” letter shall be

necessary for a transfer without consideration by any holder (i) to an

affiliate of the holder, (ii) if such holder is a partnership, to a

partner or retired partner of such partnership who retires after the date

hereof or to the estate of any such partner or retired partner, (iii) if

such holder is a corporation, to a stockholder of such corporation, or to any

other corporation under common control, direct or indirect, with such holder,

(iv) if such holder is a limited liability company, to a member or retired

member of such limited liability company who retires after the date hereof or

to the estate of any such member or retired member, or (v) by gift, will

or intestate succession of any individual holder to his spouse or siblings, or

to the lineal descendants or ancestors of such holder or his spouse, if the

transferee agrees in writing to be subject to the terms hereof to the same

extent as if such transferee were the original holder hereunder.




11.           Rights of Stockholders.  No holder of this Warrant shall be entitled,

as a Warrant holder, to vote or receive dividends or be deemed the holder of

Common Stock or any other securities of the Company which may at any time be

issuable on the exercise hereof for any purpose, nor shall anything contained

herein be construed to confer upon the holder of this Warrant, as such, any of

the rights of a stockholder of the Company or any right to vote for the

election of directors or upon any matter submitted to stockholders at any

meeting thereof, or to give or withhold consent to any corporate action

(whether upon any recapitalization, issuance of stock, reclassification of

stock, change of par value, consolidation, merger, conveyance, or otherwise) or

to receive notice of meetings, or to receive dividends or subscription rights

or otherwise until the Warrant shall have been exercised and the Shares

purchasable upon the exercise hereof shall have become deliverable, as provided

herein.




12.           Registration Rights.  All Shares issuable upon exercise of this

Warrant shall be deemed to be “Registrable Securities” or such other definition

of securities entitled to registration rights pursuant to Section 5 of the

Common Stock and Warrant Purchase Agreement dated December __, 2001, by

and between the Company and the Holder (the “Purchase Agreement”), and are

entitled, subject to the terms and conditions of the Purchase Agreement, to all

rights granted to holders of Registrable Securities thereunder.







13.           Expiration of Warrant.  This Warrant shall expire and shall no

longer be exercisable at 5:00 p.m., New York local time, on the date that

is two (2) years after the date of issuance of this Warrant as set forth on the

first page of this Warrant.




14.           Notices, Etc.  Any request, consent, notice or other

communication required or permitted under this Warrant shall be in writing and

shall be deemed duly given and received when delivered personally or

transmitted by facsimile, or one business day after being deposited for

next-day delivery with a nationally recognized overnight delivery service, or

three days after being deposited as first class mail with the United States

Postal Services, all charges or postage prepaid, and properly addressed to the

party to receive the same.  Any party

may, at any time, by providing ten days’ advance written notice to the other

party hereto, designate any other address in substitution of the an address

established pursuant to the foregoing. 

The Company’s and the Holder’s notice address shall be as set forth on

the Purchase Agreement or as may have been subsequently furnished by the

Company or the Holder, as the case may be, to the other in writing.




15.           Governing Law; Headings.  This Warrant is being delivered in the State

of New York and shall be construed and enforced in accordance with and governed

by the laws of such State.  The headings

in this Warrant are for purposes of reference only, and shall not limit or

otherwise affect any of the terms hereof.




16.           Amendment; Waiver.  Any term of this Warrant may be amended, and

the observance of any term of this Warrant may be waived (either generally or

in a particular instance and either retroactively or prospectively) only with

the written consent of the Company and the Holder.




17.           Severability.  If one or more provisions of this Warrant

are held to be unenforceable under applicable law, such provision(s) shall be

replaced with a provision that accomplishes, to the extent possible, the

original business purpose of such provision in a valid and enforceable manner,

and the balance of the Warrant shall be interpreted as if such provision were

so modified and shall be enforceable in accordance with its terms.




18.           No Impairment.  The Company will not, by amendment of its

certificate of incorporation or bylaws, or through reorganization,

consolidation, merger, dissolution, issue or sale of securities, sale of assets

or any other voluntary action, avoid or seek to avoid the observance or

performance of any of the terms of this Warrant, but will at all times in good

faith assist in the carrying out of all such terms and in the taking of all

such action as may be necessary or appropriate in order to protect the rights

of the Holder of this Warrant against impairment.  Without limiting the generality of the foregoing, the Company (a)

will not increase the par value of any shares of stock issuable upon the

exercise of this Warrant above the amount payable therefor upon such exercise,

and (b) will take all such action as may be necessary or appropriate in order

that the Company may validly issue fully paid and non-assessable Shares upon

exercise of this Warrant.




19.           Attorneys’ Fees.  In the event any party is required to engage

the services of any attorneys for the purpose of enforcing this Warrant, or any

provision thereof, the prevailing party shall be entitled to recover its

reasonable expenses and costs in enforcing this Warrant, including attorneys’

fees.







20.           Loss or Mutilation.  Upon receipt by the Company of evidence

reasonably satisfactory to it of the ownership and the loss, theft, destruction

or mutilation of this Warrant, and of indemnity reasonably satisfactory to it,

and (in the case of mutilation) upon surrender and cancellation of this

Warrant, the Company will execute and deliver in lieu thereof a new Warrant of

like tenor.




21.           Taxes.  The Company shall pay all taxes and other

governmental charges that may be imposed in respect of the issue or delivery of

any Shares.




[Signatures appear on the following page.]













 




                IN

WITNESS WHEREOF, this Warrant has been executed as of the date first written

above by an authorized officer of the Company and the Warrant Holder.




	

  AXONYX INC.


  	

   


  
	

   


  	

   


  
	

  By:


  	

   


  
	

   


  	

   


  
	

  Name:


  	

   


  
	

   


  	

   


  
	

  Title:


  	

   


  
	

   


  	

   


  
	

  WARRANT HOLDER


  	

   


  
	

   


  	

   


  
	

  By:


  	

   


  
	

   


  	

   


  
	

  Name:


  	

   


  
	

   


  	

   


  
	

  Title:


  	

   


  
			














EXHIBIT A




NOTICE OF EXERCISE




TO:         AXONYX, INC.




______________________




New York, New York

____




Attention:  President




1.             The undersigned

hereby elects to purchase __________ shares of Common Stock of AXONYX, INC.

pursuant to the terms of the attached Warrant.




2.             Method of Exercise

(Please initial the applicable blank):




___         The undersigned elects to exercise the

attached Warrant by means of a cash payment, and tenders herewith payment in

full for the purchase price of the shares being purchased, together with all

applicable transfer taxes, if any.




___         The undersigned elects to exercise the

attached Warrant by means of the net exercise provisions of Section 1(b)

of the Warrant.




3.             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)




4.             The undersigned

hereby represents and warrants that 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 and all representations and warranties of the undersigned set forth in

Section 8 of the attached Warrant are true and correct as of the date

hereof.  In support thereof, the

undersigned hereby delivers an Investment Representation Statement in a form

substantially similar to the form attached to the Warrant as Exhibit B.




________________________________




(Signature)




Title:       __________________________




____________________________(Date)













EXHIBIT B




INVESTMENT REPRESENTATION STATEMENT




	

  HOLDER:


  	

   


  	

  _________________________


  
	

  COMPANY:


  	

   


  	

  AXONYX INC.


  
	

  SECURITY:


  	

   


  	

  COMMON STOCK ISSUED

  UPON EXERCISE OF THE COMMON STOCK PURCHASE WARRANT ISSUED ON ___________,

  200__


  
	

  AMOUNT:


  	

   


  	

  __________ SHARES


  
	

  DATE:


  	

   


  	

  ____________, 200_


  





 




In connection with

the purchase of the above-listed Securities, the Purchaser represents to the

Seller and to the Company the following:




(a)           Purchaser 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

to acquire the Securities.  Purchaser is

purchasing these Securities for its own account for investment purposes only

and not with a view to, or for the resale in connection with, any

“distribution” thereof for purposes of the Securities Act of 1933, as amended

(the “Securities Act”).




(b)           Purchaser understands that the

Securities have not been registered under the Securities Act in reliance upon a

specific exemption therefrom, which exemption depends upon, among other things,

the bona fide nature of its investment intent as expressed herein. In this

connection, Purchaser understands that, in the view of the Securities and

Exchange Commission (the “SEC”), the statutory basis for such exemption may be

unavailable if its representation was predicated solely upon a present

intention to hold these Securities for the minimum capital gains period

specified under tax statutes, for a deferred sale, for or until an increase or

decrease in the market price of the Securities, or for a period of one year or

any other fixed period in the future.




(c)           Purchaser further understands that

the Securities must be held indefinitely unless subsequently registered under

the Securities Act or unless an exemption from registration is otherwise

available.  Moreover, Purchaser understands

that the Company is under no obligation to register the Securities except as

otherwise set forth in the Purchase Agreement (as defined in the Warrant).  In addition, Purchaser understands that the

certificate evidencing the Securities will be imprinted with a legend which

prohibits the transfer of the Securities unless they are registered or such

registration is not required in the opinion of counsel for the Holder.




(d)           Purchaser is familiar with the

provisions of Rule 144, promulgated under the Securities Act, which, in

substance, permits limited public resale of “restricted securities” acquired,

directly or indirectly, from the issuer thereof, in a non-public offering

subject to the satisfaction of certain conditions.













(e)           Purchaser further understands that in

the event all of the applicable requirements of Rule 144 are not satisfied,

registration under the Securities Act, compliance with Regulation A, or

some other registration exemption will be required; and that, notwithstanding

the fact that Rule 144 is not exclusive, the Staff of the SEC has

expressed its opinion that persons proposing to sell private placement

securities other than in a registered offering and otherwise than pursuant to

Rule 144 will have a substantial burden of proof in establishing that an

exemption from registration is available for such offers or sales, and that

such persons and their respective brokers who participate in such transactions

do so at their own risk.




 




 




 




 




	

  By:


  	

   


  
	

   


  	

   


  
	

  Title:


  	

   


  
	

   


  	

   


  
	

  Date:


  	

                                                                , 200_


  





 






















 




EXHIBIT C




FORM OF TRANSFER




(To be signed only

upon transfer of Warrant)




FOR VALUE RECEIVED, the

undersigned hereby sells, assigns and transfers unto

_________________________________ the right represented by the attached Warrant

to purchase ____________* shares of Common Stock of AXONYX INC., to which the

attached Warrant relates, and appoints ______________ Attorney to transfer such

right on the books of __________________, with full power of substitution in

the premises.




Dated:

____________________




 




 




 




	

  (Signature must conform

  in all respects to name of Holder as specified on the face of the Warrant)


  
	

   


  
	

   


  
	

   


  
	

  (Address)


  





Signed in the

presence of:




____________________________




*              Insert here the number of shares without making any

adjustment for additional shares of Common Stock or any other stock or other

securities or property or cash which, pursuant to the adjustment provisions of

the Warrant, may be deliverable upon exercise.