Document:

Exhibit 10.27

                   FINANCIAL ADVISORY AND CONSULTING AGREEMENT

                  This Agreement is made and entered into as of this 4th day of
January, 2000, by and between ATLANTIC PHARMACEUTICALS, INC., a Delaware
corporation (the "Company"), and JOSEPH STEVENS & COMPANY, INC. (the
"Consultant").

                  In  consideration of and for the mutual promises and covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged,  the parties hereto hereby agree as
follows:

                  1. Purpose. The Company hereby retains the Consultant during
the term specified in Section 2 hereof to render consulting advice to the
Company as an investment banker relating to financial and similar matters, upon
the terms and conditions as set forth herein.

                  2. Term. Other than the provisions of Sections 8, 9, 10 and 12
hereof, which shall survive any termination of this Agreement, this Agreement
shall be effective for a period (the "Term") beginning on the date hereof and
ending on January 4, 2001, unless earlier terminated pursuant to Section 14
hereof.

                  3. Duties of Consultant. During the term of this Agreement,
the Consultant will provide the Company with such regular and customary
consulting advice as is reasonably requested by the Company, provided that the
Consultant shall not be required to undertake duties not reasonably within the
scope of the consulting advisory service contemplated by this Agreement. In
performance of these duties, the Consultant shall provide the Company with the
benefits of its best judgment and efforts. It is understood and acknowledged by
the parties that the value of the Consultant's advice is not measurable in any
quantitative manner, and that the Consultant shall be obligated to render
advice, upon the request of the Company, in good faith, but shall not be
obligated to spend any specific amount of time in doing so. The Consultant's
duties may include, but will not necessarily be limited to:

                  A. Providing sponsorship and exposure in connection with the
dissemination of corporate information regarding the Company to the investment
community at large under a systematic planned approach.

                  B. Rendering advice and assistance in connection with the
preparation of annual and interim reports and press releases.

                  C. Arranging, on behalf of the Company and its
representatives, at appropriate times, meetings with securities analysts of
major regional investment banking firms.

<PAGE>

                  D. Assisting the Company's financial public relations,
including discussions between the Company and the financial community.

                  E. Rendering advice with regard to internal operations,
including:

                  (1)      advice regarding formation of corporate goals and
                           their implementation;

                  (2)      advice regarding the financial structure of the
                           Company and its divisions or subsidiaries or any
                           programs and projects;

                  (3)      advice concerning the securing, when necessary and,
                           if possible, of additional financing through banks
                           and/or insurance companies; and

                  (4)      advice regarding corporate organization and
                           personnel.

                  F. Rendering advice with respect to acquisitions by the
Company and/or mergers of the Company with other companies, joint ventures by
the Company with any third parties, license and royalty agreements and any other
financing (other than the private or public sale of the Company's securities for
cash) including, without limitation, the sale of the Company itself or any
significant percentage, subsidiaries or affiliates thereof (each of the
foregoing being referred to herein as a "Transaction") such advice to include,
without limitation, identifying potential acquisition targets or merger
candidates, and assisting the Company with analyzing, structuring, negotiating
and effecting acquisition and merger opportunities.

                  G. Rendering advice regarding a future public or private
offering of securities of the Company or of any subsidiary.

                  4. Relationships with Others. The Company acknowledges that
the Consultant and its affiliates are in the business of providing financial
services and consulting advice (of all types contemplated by this Agreement) to
others. Nothing herein contained shall be construed to limit or restrict the
Consultant or its affiliates from rendering such services or advice to others.
It is clearly understood that the Consultant, for services rendered under this
Agreement, makes no commitment whatsoever to make a market in the securities of
the Company or to recommend or advise its clients to purchase the securities of
the Company. Research reports or corporate finance reports that may be prepared
by the Consultant will, when and if prepared, be done solely on the merits or
judgment of analysts of the Consultant or senior corporate finance personnel of
the Consultant. The Company and the Consultant shall follow reasonable
procedures, to be mutually agreed, to eliminate the sharing of information
between employees of Consultant who are engaged in providing advisory services
to the Company and those who are engaged in such market-making and reporting
activities, if any.

                  5. Consultant's Liability. In the absence of gross negligence
or willful misconduct on the part of the Consultant, or the Consultant's breach
of this Agreement, the

                                       2

<PAGE>

Consultant shall not be liable to the Company, or to any officer, director,
employee, shareholder or creditor of the Company, for any act or omission in the
course of or in connection with the rendering or providing of advice or services
hereunder.

                  6. Expenses. The Company, upon receipt of appropriate
supporting documentation, shall reimburse the Consultant for any and all
reasonable out-of-pocket expenses incurred by the Consultant in connection with
services rendered by the Consultant to the Company pursuant to this Agreement,
including, but not limited to, hotel, food and associated expenses, all charges
for travel and long-distance telephone calls, reasonable attorneys' fees and all
other expenses incurred by the Consultant in connection with services rendered
by the Consultant to the Company pursuant to this Agreement. Notwithstanding the
foregoing, the Company shall not be obligated to reimburse the Consultant for
expenses in excess of $1000 individually or $10,000 in the aggregate, unless
such expenses were incurred with the Company's prior written consent. Expenses
payable under this Section 6 shall not include allocable overhead expenses of
the Consultant, including, but not limited to, secretarial charges and rent.

                  7. Compensation. As partial compensation for the services to
be rendered by the Consultant to the Company pursuant to Section 3 hereof, the
Company shall issue on the date hereof to the Consultant, or to such person as
the Consultant shall designate in writing subject to the approval of the
Company, warrants in the form of Exhibit A hereto ("Warrants") to purchase an
aggregate of 450,000 shares of common stock, par value $.001 per share of the
Company ("Common Stock"), with an exercise price and term of exercisability as
follows:

           # Shares             Exercise Price         Exercise Period
           --------             --------------         ---------------
           150,000                 $2.50                1/4/00 through 1/4/05

           150,000                 $3.50                1/4/01 through 1/4/06,
                                                        (subject to vesting in
                                                        equal monthly increments
                                                        during the Term)

           150,000                 $4.50                1/4/02 through 1/4/07,
                                                        (subject to vesting in
                                                        equal monthly increments
                                                        during the Term)

                  In addition,  each Warrant shall only be exercisable  when the
market  price of a share of  Common  Stock is at least  $1.00  greater  than the
relevant  Exercise  Price,  as provided in the Warrant.  In connection  with the
issuance of the Warrants,  the Company  shall execute a letter  agreement in the
form of Exhibit B hereto, which shall provide for

                                       3

<PAGE>

registration rights in respect of the shares of Common Stock issuable upon
exercise of the Warrants.

                  8. Success Fee. In addition to the compensation described in
Section 7 hereof, the Company agrees to pay to Consultant a success fee as
described below upon the closing of any Transaction with one or more parties
introduced to the Company by Consultant during the Term for which definitive
documentation is signed during the Term or within twelve (12) months after the
termination or non-renewal of the Term. The success fee described in this
Section 8 will not become payable in connection with any Transaction unless the
aggregate legal consideration (as defined below) payable to the Company in
connection with such Transaction is equal to or greater than $10 million.

           Legal Consideration                           Fee
           -------------------                           ---
           1.   $-0-            -  $3,000,000     5% of legal consideration
           2.   $3,000,000.01   -  $4,000,000     Amount calculated pursuant to
                                                  line 1 of this computation,
                                                  plus 4% of excess over
                                                  $3,000,000
           3.   $4,000,000.01   -  $5,000,000     Amount calculated pursuant to
                                                  lines 1 and 2 of this
                                                  computation, plus 3% of excess
                                                  over $4,000,000
           4.   above $5,000,000                  Amount calculated pursuant to
                                                  lines 1, 2 and 3 of this
                                                  computation, plus 2% of excess
                                                  over $5,000,000.

Legal consideration is defined, for purposes of this Agreement,  as the total of
stock (valued at market on the day of closing,  or if there is no public market,
valued as set forth herein for other property),  cash and assets and property or
other benefits  received by the Company or its  shareholders  in the Transaction
(all  valued at fair  market  value as agreed  or,  if not,  by any  independent
appraiser), irrespective of period of payment or terms.

                  9. Sales or Distributions of Securities. If the Consultant
assists the Company in the sale or distribution
a private transaction, the Consultant shall receive fees in the amount and form
to be arranged separately at the time of such transaction.

                  10. Form of Payment. All fees due to the Consultant pursuant
to Section 8 hereof are due and payable to the Consultant, in cash or by
certified check, at the closing or closings of the Transaction, whether during
or after the Term, or as otherwise agreed between the parties hereto; provided,
however, that in the case of license and royalty agreements specified in Section
8 hereof, the fees due the Consultant in receipt of such license and royalty
agreements shall be paid as and when license and/or royalty payments are
received by the Company.

                                       4

<PAGE>

                  11. Limitation Upon the Use of Advice and Services.

                  A. No person or entity, other than the Company or any of its
subsidiaries, shall be entitled to make use of or rely upon the advice of the
Consultant to be given hereunder, and the Company shall not transmit such advice
to others, or encourage or facilitate the use of or reliance upon such advice by
others, without the prior written consent of the Consultant.

                  B. The use of the Consultant's name in any annual report or
other report of the Company, or any release or similar document prepared by or
on behalf of the Company, must have the prior written approval of the Consultant
unless the Company is required by law to include the Consultant's name in such
annual report, other report or release, in which event the Consultant will be
furnished with a copy of such annual report, other report or release using the
Consultant's name in advance of publication by or on behalf of the Company.

                  C. Should any purchases of securities be requested to be
effected through the Consultant by the Company, its officers, directors,
employees or other affiliates, or by any person on behalf of any profit sharing,
pension or similar plan of the Company, for the account of the Company or the
individuals or entities involved, such orders shall be taken by a registered
account executive of the Consultant, shall not be subject to the terms of this
Agreement, and the normal brokerage commission as charged by the Consultant will
apply in conformity with all rules and regulations of the New York Stock
Exchange, the National Association of Securities Dealers, Inc. or other
regulatory bodies. Where no regulatory body sets the fee, the normal established
fee as used by the Consultant shall apply.

                  D. The Consultant shall not disclose confidential information
which it learns about the Company as a result of its engagement hereunder, and
which is not available from any other source not subject to a confidentiality
obligation, except for such disclosure as may be required for Consultant to
perform its duties hereunder.

                  12. Indemnification. Since the Consultant will be acting on
behalf of the Company in connection with its engagement hereunder, the Company
and Consultant have entered into a separate indemnification agreement
substantially in the form attached hereto as Exhibit C and dated the date
hereof, providing for the indemnification of Consultant by the Company. The
Consultant has entered into this Agreement in reliance on the indemnities set
forth in such indemnification agreement.

                  13. Severability. Every provision of this Agreement is
intended to be severable. If any term or provision hereof is deemed unlawful or
invalid for any reason whatsoever, such unlawfulness or invalidity shall not
affect the validity of the remainder of this Agreement.

                                       5

<PAGE>

                  14. Termination. This Agreement may be terminated by either
party at any time for any reason, provided that 30 days written notice of
termination has been given to the other party.

                  15. Miscellaneous.

                  A. Any notice or other communication between the parties
hereto shall be sent by certified or registered mail, postage prepaid, if to the
Company, addressed to it at 150 Broadway, Suite 1100, New York, NY 10038,
Attention: A. Joseph Rudick, with a copy to Kramer Levin Naftalis & Frankel, 919
Third Avenue, New York, NY 10022, Attention: Ezra G. Levin, Esq., or, if to the
Consultant, addressed to it at 33 Maiden Lane, 8th Floor, New York, New York
10038, Attention: Joseph Sorbara, Chief Executive Officer, with a copy to Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, Attention:
Carl Lobell, Esq., or to such address as may hereafter be designated in writing
by one party to the other. Such notice or other communication shall be deemed to
be given on the date of receipt.

                  B. If, during the term hereof, the Consultant shall cease to
do business, the provisions hereof relating to the duties of the Consultant and
the compensation by the Company as it applies to the Consultant shall thereupon
cease to be in effect, except for the Company's obligation of payment for
services rendered prior thereto. This Agreement shall survive any merger of,
acquisition of, or acquisition by the Consultant and, after any such merger or
acquisition, shall be binding upon the Company and the corporation surviving
such merger or acquisition.

                  C.  This   Agreement   embodies  the  entire   agreement   and
understanding  between the Company and the Consultant and supersedes any and all
negotiations,  prior  discussions  and  preliminary  and  prior  agreements  and
understandings related to the central subject matter hereof.

                  D. This Agreement has been duly authorized, executed and
delivered by and on behalf of the Company and the Consultant.

                  E. This  Agreement  shall be governed by and  construed in all
respects  under  the laws of the  State of New York,  without  reference  to its
conflict of laws rules or principles. Any suit, action, proceeding or litigation
arising out of or relating to this Agreement  shall be brought and prosecuted in
such  federal or state court or courts  located  within the State of New York as
provided by law. The parties hereby irrevocably and  unconditionally  consent to
the  jurisdiction  of each such court or courts  located within the State of New
York and to service of process by registered or certified  mail,  return receipt
requested,  or by any other  manner  provided  by  applicable  law,  and  hereby
irrevocably and unconditionally  waive any right to claim that any suit, action,
proceeding  or litigation  so commenced  has been  commenced in an  inconvenient
forum.

                                       6

<PAGE>

                  F. This Agreement and the rights hereunder may not be assigned
by either party (except by operation of law) and shall be binding upon and inure
to the benefit of the parties and their respective successors, assigns and legal
representatives.

                         [SIGNATURES BEGIN ON NEXT PAGE]

                                       7

<PAGE>

                  IN WITNESS  WHEREOF,  the parties  hereto have  executed  this
Agreement as of the date hereof.

                                                ATLANTIC PHARMACEUTICALS, INC.

                                                By: /s/ A. Joseph Rudick
                                                   ----------------------------
                                                Name:  A. Joseph Rudick
                                                Title: President

                                                JOSEPH STEVENS & COMPANY, INC.

                                                By: /s/ Steven Markowitz
                                                   ----------------------------
                                                Name:  Steven Markowitz
                                                Title: Chairman

                                       8

<PAGE>

                                                                       EXHIBIT A
                                                                 FORM OF WARRANT

--------------------------------------------------------------------------------

                                     WARRANT

                           To Purchase Common Stock of

                         ATLANTIC PHARMACEUTICALS, INC.

                                Warrant No. ____

                      No. of Shares of Common Stock: _____

--------------------------------------------------------------------------------

                                      B-1

<PAGE>

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.

No. of Shares of Common Stock: _________           Warrant No. _____

                                     WARRANT

                           To Purchase Common Stock of

                         ATLANTIC PHARMACEUTICALS, INC.

                  THIS IS TO CERTIFY  THAT Joseph  Stevens & Company,  Inc.,  or
registered  assigns,  is entitled,  at any time during the  Exercise  Period (as
hereinafter  defined),  to  purchase  from  Atlantic  Pharmaceuticals,  Inc.,  a
Delaware corporation ("Company"), _______ shares of Common Stock (as hereinafter
defined and subject to  adjustment  as  provided  herein),  in whole or in part,
including  fractional  parts,  at a  purchase  price of  $_________  1per  share
(subject to adjustment as provided  herein) all on the terms and  conditions and
pursuant to the provisions hereinafter set forth.

1.     DEFINITIONS

                  Capitalized  terms used in this  Warrant but not defined  have
the meaning set forth in the Warrant Agreement (as defined below). The following
terms have the respective meanings set forth below:

                  "Additional Shares of Common Stock" means all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.

                  "Business  Day" means any day that is not a Saturday or Sunday
or a day on which banks are  required or  permitted to be closed in the State of
New York.

                  "Commission"  means the Securities and Exchange  Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.

                  "Common  Stock"  means  (except  where the  context  otherwise
indicates)  the  Common  Stock,  par  value  $.001  per  share,  of  Company  as
constituted  on the Closing  Date,  and any capital stock into which such Common
Stock may  thereafter  be changed,  and shall also include (i) capital  stock of
Company of any other class (regardless of how denominated) issued to the holders
of shares of Common Stock upon any  reclassification  thereof  which is also not
preferred as to dividends or assets over any other class of stock of Company and
which is not  subject  to  redemption  and (ii)  shares of  common  stock of any
successor or acquiring  corporation  (as defined in Section 4.8)  received by or

----------------------
1 See Section 7 of the Financial Advisory Agreement.

                                      A-2

<PAGE>

distributed  to the  holders of Common  Stock of  Company  in the  circumstances
contemplated by Section 4.8.

                  "Convertible  Securities"  means  evidences  of  indebtedness,
shares of stock or other  securities which are convertible into or exchangeable,
with or without  payment of additional  consideration  in cash or property,  for
Additional Shares of Common Stock,  either immediately or upon the occurrence of
a specified date or a specified event.

                  "Current  Market Price" means, in respect of a share of Common
Stock on any date, either (a) if there shall not then be a public market for the
Common Stock, the Fair Market Value per share of Common Stock as at such date or
(b) if there shall then be a public market for the Common Stock,  the average of
the daily market  prices for 20  consecutive  Business  Days  commencing 30 days
before such date. The daily market price for each such Business Day shall be (i)
the last sale price on such day on the principal  stock exchange or NASDAQ Small
Cap Market  ("NASDAQ")  on which such Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange or NASDAQ,
the average of the last  reported  closing  bid and asked  prices on such day as
officially  quoted on any such exchange or NASDAQ,  (iii) if the Common Stock is
not then  listed or admitted  to trading on any stock  exchange  or NASDAQ,  the
average of the last  reported  closing  bid and asked  prices on such day in the
over-the-counter  market, as furnished by the National Association of Securities
Dealers Automatic Quotation System or the National Quotation Bureau,  Inc., (iv)
if neither such  corporation at the time is engaged in the business of reporting
such prices, as furnished by any similar firm then engaged in such business,  or
(v) if there is no such firm,  as furnished  by any member of the NASD  selected
mutually by the Majority  Holders and Company or, if they cannot agree upon such
selection,  as selected by two such  members of the NASD,  one of which shall be
selected by the Majority Holders and one of which shall be selected by Company.

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended,  or any similar federal  statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise Period" means the period during which this Warrant
is exercisable pursuant to Section 2.1.

                  "Expiration Date" means January 4, 200___2.

                  "Financial  Advisory  Agreement" means the Financial  Advisory
and Consulting Agreement,  dated January 4, 2000, by and between the Company and
the Consultant.

                  "Fully Diluted  Outstanding" means, on any date, all shares of
Common Stock Outstanding on such date and all shares of Common Stock issuable in
respect of this Warrant  outstanding on such date, and other options or warrants
to purchase,  or

------------------------
2 See Section 7 of the Financial Advisory Agreement.

                                      A-3

<PAGE>

securities convertible into or exchangeable for, shares of Common Stock
outstanding on such date, regardless of whether such options, warrants or other
securities are then exercisable or convertible.

                  "GAAP" means generally accepted  accounting  principles in the
United States of America as in effect from time to time.

                  "Holder"  means the Person in whose name the Warrant set forth
herein is registered on the books of Company maintained for such purpose.

                  "Majority  Holders" means the holders of Warrants  exercisable
for in excess of 50% of the  aggregate  number of shares of  Warrant  Stock then
purchasable upon exercise of all Warrants.

                  "NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.

                  "Other Property" has the meaning set forth in Section 4.8.

                  "Outstanding" means, when used with reference to Common Stock,
on any date, all issued shares of Common Stock on such date,  except shares then
owned or held by or for the account of Company or any  subsidiary  thereof,  and
shall  include  all  shares  issuable  in respect  of  outstanding  scrip or any
certificates representing fractional interests in shares of Common Stock.

                  "Permitted  Issuances"  means the issuance of shares of Common
Stock  upon the  exercise  or  conversion  of  Company's  presently  outstanding
convertible preferred stock, warrants and employee incentive options.

                  "Person"   means   any   individual,    sole   proprietorship,
partnership,  limited  liability  company,  joint venture,  trust,  incorporated
organization, association, corporation, institution, public benefit corporation,
entity or  government  (whether  federal,  state,  county,  city,  municipal  or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended,  or any similar federal  statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "Transfer"  shall  mean  any  disposition  of any  Warrant  or
Warrant  Stock or of any interest in either  thereof,  which would  constitute a
sale thereof within the meaning of the Securities Act.

                  "Transfer Notice" has the meaning set forth in Section 9.2.

                  "Warrant"  means this  Warrant  and all  warrants  issued upon
transfer,  division or combination of, or in substitution for, this Warrant. All
Warrants  shall at all

                                      A-4

<PAGE>

times be identical as to terms and conditions and date, except as to the number
of shares of Common Stock for which they may be exercised.

                  "Warrant  Price"  means an amount  equal to (i) the  number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section  2.1,  multiplied  by (ii)  $________,  as  adjusted  from  time to time
pursuant to Section 4 of this Warrant.

                  "Warrant Stock" means the shares of Common Stock issued or
issuable upon the exercise of this Warrant.

2.     EXERCISE OF WARRANT

       2.1 EXERCISE PERIOD. (a) From and after January 4, 200 __3 and until 5:00
P.M., New York time, on the Expiration Date (the "Exercise Period"), Holder may
exercise this Warrant, on any Business Day on which the condition set forth in
Section 2.1(b) hereof is met, for all or any part of the Warrant Stock [which is
then purchasable in accordance with the vesting schedule set forth below:

                                                              Shares purchasable
               Date                                             upon exercise
               ----                                           -----------------
             January 4, 2000                                         12,500
             February 4, 2000                                        25,000
             March 4, 2000                                           37,500
             April 4, 2000                                           50,000
             May 4, 2000                                             62,500
             June 4, 2000                                            75,000
             July 4, 2000                                            87,500
             August 4, 2000                                          100,000
             September 4, 2000                                       112,500
             October 4, 2000                                         125,000
             November 4, 2000                                        137,500
             December  4, 2000                                       150,000

                  Upon  any  termination  of the  Financial  Advisory  Agreement
pursuant  to Section  14  thereof,  the  Warrant  shall  cease to vest and shall
continue to be exercisable,  in accordance with the terms set forth herein,  for
the number of shares of Warrant  Stock  which were  purchasable  on such date of
termination.]4

                  (b) The Warrant may be exercised on any Business  Day,  except
that it may only be  exercised if the last sale price of a share of Common Stock
on NASDAQ (or the  principal  stock  exchange on which the Common  Stock is then
listed or admitted to

-----------------------
3 See Section 7 of the Financial Advisory Agreement.

4 This vesting  schedule will only apply to the $3.50 and $4.50  exercise  price
  warrants.

                                      A-5

<PAGE>

trading) on the immediately preceding Business Day was equal to or greater than
$1.00 plus the Exercise Price then in effect.

       2.2 EXERCISE NOTICE; DELIVERY OF CERTIFICATES. In order to exercise this
Warrant, Holder shall deliver to Company at its principal office at 150
Broadway, Suite 1100, New York, New York 10038, or at the office or agency
designated by Company pursuant to Section 13.2, (i) a written notice of Holder's
election to exercise this Warrant, specifying the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price and (iii) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt thereof, Company shall, as promptly as
practicable, and in any event within five (5) Business Days thereafter, deliver
to Holder a duly executed certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise, together with
cash in lieu of any fraction of a share, as hereinafter provided. Such stock
certificate or certificates shall be in such denominations and registered in the
name designated in the subscription form, subject to Section 9. Holder or any
other Person so designated to be named therein shall be deemed to have become a
holder of record of such shares of Warrant Stock for all purposes, as of the
date on which all items in clauses (i)-(iii) above have been received by Company
and all taxes required to be paid by Holder, if any, pursuant to Section 2.4
have been paid. If this Warrant shall have been exercised in part, Company shall
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
remaining shares of Common Stock issuable upon exercise of this Warrant, which
new Warrant shall in all other respects be identical with this Warrant, or
appropriate notation may be made on this Warrant and the same returned to
Holder.

       2.3 PAYMENT OF WARRANT PRICE. Payment of the Warrant Price shall be made
at the option of the Holder by:

                       (i) certified or official bank check;

                       (ii) The surrender to Company of that number of shares of
Warrant Stock (or the right to receive such number of shares) or shares of
Common Stock having an aggregate Current Market Price equal to or greater than
the Current Warrant Price for all shares then being purchased (including those
being surrendered); or

                       (iii) any combination thereof, duly endorsed by or
accompanied by appropriate duly executed instruments of transfer.

       2.4 PAYMENT OF TAXES. All shares of Warrant Stock shall be validly
issued, fully paid and nonassessable and without any preemptive rights. Company
shall pay all expenses, taxes and other governmental charges with respect to the
issue or delivery thereof, unless such tax or charge is imposed by law upon
Holder. Company shall not be required, however, to pay any transfer tax or other
similar charge imposed in connection with any transfer involved in the issue of
any certificate for shares of Common Stock issuable upon exercise of this
Warrant in any name other than that of Holder, and in such case Company shall
not be required to issue or deliver any stock

                                      A-6

<PAGE>

certificate until such tax or other charge has been paid or it has been
established to the satisfaction of Company that no such tax or other charge is
due.

       2.5 FRACTIONAL SHARES. Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants would otherwise be
entitled to purchase upon such exercise, except as otherwise provided in Section
2.1, Company shall pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Current Market Price per share of
Common Stock on the date of exercise.

3.     TRANSFER, DIVISION AND COMBINATION

       3.1 TRANSFER. Subject to compliance with Section 9 hereof, transfer of
this Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of Company referred to in Section 2.1 or
the office or agency designated by Company pursuant to Section 13.2, together
with a duly executed written assignment of this Warrant substantially in the
form of Exhibit B hereto and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, Company shall, subject to Section 9, execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees and in the denomination
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.

       3.2 DIVISION AND COMBINATION. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of Company, together with a duly executed written
notice specifying the names and denominations in which new Warrants are to be
issued. Subject to compliance with Section 3.1 and with Section 9, as to any
transfer which may be involved in such division or combination, Company shall
execute and deliver a new Warrant or Warrants in exchange for the Warrant or
Warrants to be divided or combined in accordance with such notice.

       3.3 EXPENSES. Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 3.

       3.4 MAINTENANCE OF BOOKS. Company agrees to maintain, at its aforesaid
office or agency, books for the registration and the registration of transfer of
the Warrants.

4.     ADJUSTMENTS

                  The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this

                                      A-7

<PAGE>

Warrant, shall be subject to adjustment from time to time as set forth in this
Section 4. Company shall give each Holder notice of any event described below
which requires an adjustment pursuant to this Section 4 at the time of such
event.

       4.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
Company shall:

                  (a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Common Stock,

                  (b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or

                  (c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,

then (i) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive after the  happening of such event,  and (ii) the Warrant Price shall be
adjusted to equal (A) the Warrant  Price  multiplied  by the number of shares of
Common  Stock for which this  Warrant is  exercisable  immediately  prior to the
adjustment  divided  by (B) the  number of  shares  for which  this  Warrant  is
exercisable immediately after such adjustment.

       4.2 CERTAIN OTHER DISTRIBUTIONS AND ADJUSTMENTS.

                  (a) If at any time Company shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any dividend or
other distribution of:

                       (i) cash in excess of earned surplus,

                       (ii) any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or

                       (iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash, Convertible
Securities or Additional Shares of Common Stock),

then the  Exercise  Price  shall be reduced,  without any further  action by the
parties hereto, by the Per Share Value (as hereinafter defined) of the dividend.
For purposes of this Section 4.2 the "Per Share Value" of cash dividend or other
distribution  shall be the dollar  amount of the  distribution  on each share of
Common  Stock and the "Per Share Value" of any  dividend or  distribution  other
than cash shall be equal to the fair market

                                      A-8

<PAGE>

value of such non-cash distribution on each share of Common Stock, as determined
in good faith by the Board of Directors of the Company.

                  (b) A reclassification of the Common Stock (other than a
change in par value) into shares of Common Stock and shares of any other class
of stock shall be deemed a distribution by Company to the holders of its Common
Stock of such shares of such other class of stock within the meaning of
paragraph (a) above, and if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock as a part of
such reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the meaning
of Section 4.1.

       4.3 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.

                  (a) If at any time Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, in exchange for consideration in an amount per Additional
Share of Common Stock less than the Current Market Price, then

                       (i) the Warrant Price as to the number of shares for
which this Warrant is exercisable prior to such adjustment shall be reduced to a
price determined by dividing (A) an amount equal to the sum of (x) the number of
shares of Common Stock Outstanding immediately prior to such issue or sale
multiplied by the Current Market Price plus (y) the consideration, if any,
received by Company upon such issue or sale as determined pursuant to Section
4.7(a), by (B) the total number of shares of Common Stock Outstanding
immediately after such issue or sale; and (ii) the number of shares of Common
Stock for which this Warrant is exercisable shall be adjusted to equal the
product obtained by multiplying the Warrant Price in effect immediately prior to
such issue or sale by the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such issue or sale and dividing the
product thereof by the Warrant Price resulting from the adjustment made pursuant
to clause (i) above.

                  (b) The provision of paragraph (a) shall not apply to any
issuance of Additional Shares of Common Stock for which an adjustment is
provided under Section 4.1 or 4.2. No adjustment of the number of shares of
Common Stock for which this Warrant shall be exercisable shall be made under
paragraph (a) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or exchange rights
in any Convertible Securities, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights or upon the issuance of
such Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Sections 4.4 or 4.5 hereof.

       4.4 ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which Company is the surviving corporation) issue
or sell, any warrants or

                                      A-9

<PAGE>

other rights to subscribe for or purchase any Additional Shares of Common Stock
or any Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such warrants or other rights or upon
conversion or exchange of such Convertible Securities shall be less than the
Current Market Price in effect immediately prior to the time of such issue or
sale, then the number of shares for which this Warrant is exercisable and the
Current Warrant Price shall be adjusted as provided in Section 4.3 on the basis
that the maximum number of Additional Shares of Common Stock issuable pursuant
to all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
and outstanding and Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of the issuance of such
warrants or other rights.

       4.5 ISSUANCE OF CONVERTIBLE SECURITIES. If at any time Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive a distribution of, or shall in any manner (whether directly or by
assumption in a merger in which Company is the surviving corporation) issue or
sell, any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange shall be less
than the Current Market Price in effect immediately prior to the time of such
issue or sale, then the number of Shares for which this Warrant is exercisable
and the Warrant Price shall be adjusted as provided in Section 4.3 on the basis
that the maximum number of Additional Shares of Common Stock necessary to effect
the conversion or exchange of all such Convertible Securities shall be deemed to
have been issued and outstanding and Company shall have received all of the
consideration payable therefor, if any, as of the date of issuance of such
Convertible Securities. No adjustment of the number of Shares for which this
Warrant is exercisable and the Warrant Price shall be made under this Section
4.5 upon the issuance of any Convertible Securities which are issued pursuant to
the exercise of any warrants or other subscription or purchase rights therefor,
if any such adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to Section 4.4. If any issue or sale of
Convertible Securities is made upon exercise of any warrant or other right to
subscribe for or to purchase any such Convertible Securities for which
adjustments of the number of Shares for which this Warrant is exercisable and
the Warrant Price have been or are to be made pursuant to Section 4.4, no
further adjustments of the number of Shares for which this Warrant is
exercisable and the Warrant Price shall be made by reason of such issue or sale.

       4.6 SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5 as the
result of any issuance of warrants, rights or Convertible Securities,

                  (a) such warrants or rights, or the right of conversion or
exchange in such other Convertible Securities, shall expire, and all or a
portion of such warrants or rights,

                                      A-10

<PAGE>

or the right of conversion or exchange with respect to all or a portion of such
other Convertible Securities, as the case may be, shall not have been exercised,
or

                  (b) the consideration per share for which shares of Common
Stock are issuable pursuant to such warrants or rights, or the terms of such
other Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per share upon
the occurrence of a specified date or event,

then for each  outstanding  Warrant such previous  adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to have
been issued by virtue of the computation  made in connection with the adjustment
so  rescinded  and  annulled  shall no longer  be deemed to have been  issued by
virtue of such  computation.  Thereupon,  a  recomputation  shall be made of the
effect of such rights or options or other Convertible Securities on the basis of

                  (c) treating the number of Additional Shares of Common Stock
or other property, if any, theretofore actually issued or issuable pursuant to
the previous exercise of any such warrants or rights or any such right of
conversion or exchange, as having been issued on the date or dates of any such
exercise and for the consideration actually received and receivable therefor,
and

                  (d) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been granted or
issued immediately after the time of such increase of the consideration per
share for which shares of Common Stock or other property are issuable under such
warrants or rights or other Convertible Securities; whereupon a new adjustment
of the number of shares of Common Stock for which this Warrant is exercisable
and the Warrant Price shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled.

       4.7 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price provided for in this Section 4:

                  (a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any warrants
or other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash consideration, the
consideration received by Company therefor shall be the amount of the cash
received by Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities are offered by Company for subscription, the subscription
price, or, if such Additional Shares of Common Stock or Convertible Securities
are sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation, discounts or expenses paid or incurred by
Company for and in the underwriting of, or otherwise in connection with, the
issuance thereof). To the

                                      A-11

<PAGE>

extent that such issuance shall be for a consideration other than cash, then,
except as herein otherwise expressly provided, the amount of such consideration
shall be deemed to be the fair market value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors of Company.
In case any Additional Shares of Common Stock or any Convertible Securities or
any warrants or other rights to subscribe for or purchase such Additional Shares
of Common Stock or Convertible Securities shall be issued in connection with any
merger in which Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair value, as determined in good faith by
the Board of Directors of Company, of such portion of the assets and business of
the nonsurviving corporation as such Board in good faith shall determine to be
attributable to such Additional Shares of Common Stock, Convertible Securities,
warrants or other rights, as the case may be. The consideration for any
Additional Shares of Common Stock issuable pursuant to any warrants or other
rights to subscribe for or purchase the same shall be the consideration received
by Company for issuing such warrants or other rights plus the additional
consideration payable to Company upon exercise of such warrants or other rights.
The consideration for any Additional Shares of Common Stock issuable pursuant to
the terms of any Convertible Securities shall be the consideration received by
Company for issuing warrants or other rights to subscribe for or purchase such
Convertible Securities, plus the consideration paid or payable to Company in
respect of the subscription for or purchase of such Convertible Securities, plus
the additional consideration, if any, payable to Company upon the exercise of
the right of conversion or exchange in such Convertible Securities. In case of
the issuance at any time of any Additional Shares of Common Stock or Convertible
Securities in payment or satisfaction of any dividends upon any class of stock
other than Common Stock, Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a consideration
equal to the amount of such dividend so paid or satisfied.

                  (b) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of Common Stock, as provided for in Section 4.1) up to,
but not beyond the date of exercise if such adjustment either by itself or with
other adjustments not previously made adds or subtracts less than 1% of the
shares of Common Stock for which this Warrant is exercisable immediately prior
to the making of such adjustment. Any adjustment representing a change of less
than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

                  (c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.

                                      A-12

<PAGE>

                  (d) When Adjustment Not Required. If Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.

                  (e) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Stock, but prior to the occurrence of the event for
which such record is taken, and Holder exercises this Warrant, any Additional
Shares of Common Stock issuable upon exercise by reason of such adjustment shall
be deemed the last shares of Common Stock for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for Holder by Company to be issued to
Holder upon and to the extent that the event actually takes place, upon payment
of the Warrant Price. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by Company and escrowed
property returned to Company.

                  (f) Challenge to Good Faith Determination. Whenever the Board
of Directors of Company shall be required to make a determination in good faith
of the fair market value of any item under this Section 4, such determination
may be challenged in good faith by the Majority Holders, and any dispute shall
be resolved by an investment banking or valuation firm of recognized national
standing selected by Company and acceptable to the Majority Holders.

       4.8 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation (where
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business
to another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of Company, then
each Holder shall have the right thereafter to receive, upon exercise of such
Warrant, the number of shares of common stock of the successor or acquiring
corporation or of Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than Company) shall expressly assume the due
and punctual observance and

                                      A-13

<PAGE>

performance of each and every covenant and condition of this Warrant to be
performed and observed by Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of Company) in order to
provide for adjustments of shares of Common Stock for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.8,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.

       4.9 OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from time
to time Company shall take any action in respect of its Common Stock, other than
any action described in this Section 4, then, unless such action will not have a
materially adverse effect upon the rights of the Holders, the number of shares
of Common Stock or other stock for which this Warrant is exercisable and/or the
purchase price thereof shall be adjusted in such manner as may be equitable in
the circumstances.

5.     NOTICES TO WARRANT HOLDERS

       5.1 NOTICE OF ADJUSTMENTS. Whenever an adjustment to this Warrant is made
pursuant to Section 4, Company shall prepare a certificate to be executed by the
chief financial officer of Company setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated, specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section 4.8
or 4.9) describing the number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any change in the purchase
price or prices thereof, after giving effect to such adjustment or change.
Company shall promptly cause a signed copy of such certificate to be delivered
to each Holder. Company shall keep at its office or agency designated pursuant
to Section 15 copies of all such certificates and cause the same to be available
for inspection at said office during normal business hours by any Holder or any
prospective purchaser of a Warrant designated by a Holder thereof.

       5.2 NOTICE OF CORPORATE ACTION. If at any time

                  (a) Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or

                                      A-14

<PAGE>

                  (b) there shall be any capital reorganization of Company, any
reclassification or recapitalization of the capital stock of Company or any
consolidation or merger of Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of
Company to, another corporation, or

                  (c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of Company;

then,  in any one or more of such  cases,  Company  shall  give to Holder (i) at
least 30 days' prior written  notice of the date on which a record date shall be
selected  in respect of such  event and (ii) in the case of any such  event,  at
least 30 days' prior written  notice of the date when the same shall take place.
Such notice in accordance  with the foregoing  clause also shall specify (i) the
date on  which  the  holders  of  Common  Stock  shall be  entitled  to any such
dividend,  distribution or right, and the amount and character  thereof and (ii)
the  date  on  which   any  such   reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up is to take place and the time,  if any such time is to be fixed,  as of which
the holders of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other  property  deliverable  upon such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution, liquidation or winding up.

6.     NO IMPAIRMENT

                  Company   shall  not  by  any   action,   including,   without
limitation,   amending   its   articles   of   incorporation   or  through   any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities  or any other  voluntary  action,  avoid or seek to avoid the
observance or performance  of any of the terms of this Warrant,  but will at all
times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such  actions as may be necessary  or  appropriate  to protect the
rights of Holder  against  impairment.  Without  limiting the  generality of the
foregoing,  Company will take all such action as may be necessary or appropriate
in order that Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant,  including taking such
action as is necessary  for the Warrant  Price to be not less than the par value
of the shares of Common  Stock  issuable  upon  exercise  of this  Warrant.  The
Company will use its best efforts to obtain all such authorizations,  exemptions
or consents from any public regulatory body having  jurisdiction  thereof as may
be necessary to enable Company to perform its obligations under this Warrant.

7.     RESERVATION AND AUTHORIZATION OF COMMON STOCK

                  From and after the Closing  Date,  Company  shall at all times
reserve and keep  available  for issue upon the exercise of Warrants such number
of its authorized  but unissued  shares of Common Stock as will be sufficient to
permit the exercise in full of all  outstanding  Warrants.  All shares of Common
Stock which shall be so issuable,  when issued upon  exercise of any Warrant and
payment therefor in accordance with the terms

                                      A-15

<PAGE>

of such Warrant, shall be duly and validly issued and fully paid and
nonassessable, and not subject to preemptive rights.

8.     TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

                  In the case of all dividends or other distributions by Company
to the  holders of its  Common  Stock with  respect  to which any  provision  of
Section 4 refers to the taking of a record of such holders, Company will in each
such  case  take  such a record  and will  take  such  record as of the close of
business  on a  Business  Day.  Company  will  not  at  any  time,  except  upon
dissolution,  liquidation  or winding up of  Company,  close its stock  transfer
books or Warrant  transfer  books so as to result in  preventing or delaying the
exercise or transfer of any Warrant.

9.     RESTRICTIONS ON TRANSFERABILITY

                  The Warrants and the Warrant  Stock shall not be  transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section  9,  which  conditions  are  intended  to  ensure  compliance  with  the
provisions of the  Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant,  agrees to be bound by
the provisions of this Section 9.

       9.1 RESTRICTIVE LEGEND. 1. Except as otherwise provided in this Section
9, each certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:

                           "The shares  represented by this certificate have not
                  been registered  under the Securities Act of 1933, as amended,
                  and may not be  transferred  in  violation  of such Act or the
                  rules and regulations thereunder."

                  (b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:

                           "This Warrant and the securities  represented  hereby
                  have not been registered  under the Securities Act of 1933, as
                  amended,  and may not be transferred in violation of such Act,
                  the rules and regulations thereunder or the provisions of this
                  Warrant."

       9.2 NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION. Prior to or
promptly following any Transfer of any Warrants or any shares of Restricted
Common Stock, the holder of such Warrants or Restricted Common Stock shall give
written notice (a "Transfer Notice") to Company of such Transfer. Each
certificate, if any, evidencing such shares of Restricted Common Stock issued
upon such Transfer shall bear the restrictive legend set forth in Section
9.1(a), and each Warrant issued upon such Transfer

                                      A-16

<PAGE>

shall bear the restrictive legend set forth in Section 9.1(b), unless in the
opinion of counsel to such holder which is reasonably acceptable to Company such
legend is not required in order to ensure compliance with the Securities Act.

       9.3 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing provisions
of Section 9, the restrictions imposed by this Section upon the transferability
of the Warrants and the Warrant Stock, and the legend requirements of Section
9.1, shall terminate as to any particular Warrant or share of Warrant Stock (i)
when and so long as such security shall have been effectively registered under
the Securities Act and disposed of pursuant thereto or (ii) when Company shall
have received an opinion of counsel reasonably satisfactory to it that such
security may be transferred without registration thereof under the Securities
Act. Whenever the restrictions imposed by Section 9 shall terminate as to this
Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive
from Company, at the expense of Company, a new Warrant without the restrictive
legend set forth in Section 9.1(b). Whenever the restrictions imposed by this
Section shall terminate as to any share of Warrant Stock, as hereinabove
provided, the holder thereof shall be entitled to receive from Company, at
Company's expense, a new certificate representing such Warrant Stock not bearing
the restrictive legend set forth in Section 9.1(a).

10.    SUPPLYING INFORMATION

                  Company  shall  cooperate  with each  Holder  of a Warrant  or
Warrant Stock in supplying such  information as may be reasonably  necessary for
such holder to complete and file any  information  reporting  forms presently or
hereafter  required by the Commission as a condition to the  availability  of an
exemption from the Securities Act for the sale of any Warrant or Warrant Stock.

11.    LOSS OR MUTILATION

                  Upon receipt by Company from any Holder of evidence reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of Holder shall be sufficient  indemnity),
and in case of mutilation upon surrender and cancellation  hereof,  Company will
execute and  deliver in lieu hereof a new Warrant of like tenor to such  Holder;
provided,  in the case of  mutilation,  no  indemnity  shall be required if this
Warrant in identifiable form is surrendered to Company for cancellation.

12.    LIMITATION OF LIABILITY

                  No provision hereof,  in the absence of affirmative  action by
Holder to purchase  shares of Common  Stock,  and no  enumeration  herein of the
rights or privileges of Holder hereof,  shall give rise to any liability of such
Holder  for the  purchase  price  of any  Common  Stock or as a  stockholder  of
Company,  whether  such  liability  is  asserted by Company or by  creditors  of
Company.

                                      A-17

<PAGE>

13.    MISCELLANEOUS

       13.1 NONWAIVER AND EXPENSES. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder's rights, powers or remedies. If
Company fails to make, when due, any payments provided for hereunder, or fails
to comply with any other provision of this Warrant, Company shall pay to Holder
such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.

       13.2 NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:

                  (a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of Company maintained for such purpose.

                  (b) If to Company at:

                           Atlantic Pharmaceuticals, Inc.
                           150 Broadway
                           Suite 1100
                           New York, NY 10038
                           Attn: A. Joseph Rudick

or at such  other  address  as may be  substituted  by  notice  given as  herein
provided.  The giving of any notice required  hereunder may be waived in writing
by the party  entitled to receive such notice.  Every notice,  demand,  request,
consent, approval, declaration,  delivery or other communication hereunder shall
be  deemed to have  been  duly  given or served on the date on which  personally
delivered,  with  receipt  acknowledged,  telecopied  and  confirmed by telecopy
answerback,  or three (3) Business Days after the same shall have been deposited
in the United States mail.  Failure or delay in delivering copies of any notice,
demand, request, approval,  declaration,  delivery or other communication to the
person  designated  above to receive a copy shall in no way adversely affect the
effectiveness of such notice, demand, request, approval,  declaration,  delivery
or other communication.

       13.3 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of Company and the successors and assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant and shall be enforceable by any
such Holder.

                                      A-18

<PAGE>

       13.4 AMENDMENT. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of Company and
the Majority Holders, provided that no such Warrant may be modified or amended
to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.

       13.5 SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.

       13.6 HEADINGS. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.

       13.7 GOVERNING LAW. This Warrant shall be governed by the laws of the
State of Delaware, without regard to the provisions thereof relating to conflict
of laws.

                         [SIGNATURES BEGIN ON NEXT PAGE]

                                      A-19

<PAGE>

                  IN WITNESS WHEREOF, Company has caused this Warrant to be duly
executed and attested by its Secretary or an Assistant Secretary.

Dated:

                                                ATLANTIC PHARMACEUTICALS, INC.

                                                By:_____________________________
                                                Name:
                                                Title:

Attest:

By:___________________________
   Name:
   Title:

                                      A-20

<PAGE>

                              EXHIBIT A TO WARRANT

                                SUBSCRIPTION FORM

                 [To be executed only upon exercise of Warrant]

                  The undersigned  registered owner of this Warrant  irrevocably
exercises  this  Warrant for the  purchase of ______  Shares of Common  Stock of
Atlantic  Pharmaceuticals,  Inc. and herewith makes payment therefor, all at the
price and on the terms and  conditions  specified  in this  Warrant and requests
that  certificates  for the shares of Common  Stock  hereby  purchased  (and any
securities or other property  issuable upon such exercise) be issued in the name
of and delivered to  _____________  whose address is  _________________  and, if
such shares of Common  Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant,  that a new Warrant of like tenor and date
for the balance of the shares of Common Stock issuable hereunder be delivered to
the undersigned.

                                            -------------------------------
                                            (Name of Registered Owner)

                                            -------------------------------
                                            (Signature of Registered Owner)

                                            -------------------------------
                                            (Street Address)

                                            -------------------------------
                                            (City)     (State)     (Zip Code)

NOTICE:           The signature on this  subscription  must  correspond with the
                  name as written  upon the face of the within  Warrant in every
                  particular,  without  alteration or  enlargement or any change
                  whatsoever.

                                      A-21

<PAGE>

                              EXHIBIT B TO WARRANT

                                 ASSIGNMENT FORM

           FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant,  with respect to the number of
shares of Common Stock set forth below:

Name and Address of Assignee                      No. of Shares of Common Stock
----------------------------                      -----------------------------

and does hereby irrevocably  constitute and appoint  ___________________________
attorney-in-fact   to   register   such   transfer  on  the  books  of  Atlantic
Pharmaceuticals,   Inc.   maintained  for  the  purpose,   with  full  power  of
substitution in the premises.

Dated:__________________                      Print Name:___________________

                                              Signature:____________________

                                              Witness:______________________

NOTICE:  The  signature  on this  assignment  must  correspond  with the name as
written  upon the  face of the  within  Warrant  in  every  particular,  without
alteration or enlargement or any change whatsoever.

                                      A-22

<PAGE>

                                                                       EXHIBIT B
                                                        FORM OF LETTER AGREEMENT

                         Atlantic Pharmaceuticals, Inc.
                             1017 Main Campus Drive
                                   Suite 3900
                                Raleigh, NC 27607

Joseph Stevens & Company, Inc.
33 Maiden Lane
8th Floor
New York, New York 10038

                  Re:  Amendment to Underwriters Warrant Agreement
                       -------------------------------------------

Ladies and Gentlemen:

                  With   reference   to  that  certain   Underwriter's   Warrant
Agreement,  dated as of _______,  1995, between Atlantic  Pharmaceuticals,  Inc.
("Company")  and  Joseph  Stevens  &  Company,   L.P.  (the  "Original   Warrant
Agreement"), we wish to provide that the shares of common stock, par value $.001
per share,  of the  Company  ("Common  Stock")  issuable  upon  exercise  of the
warrants to be issued to you  ("Warrants")  pursuant to that  certain  Financial
Advisory and Consulting Agreement, dated as of the date hereof, shall be subject
to Sections 7.2 through 7.5 of the Original Warrant  Agreement.  Notwithstanding
anything to the contrary in the Original  Warrant  Agreement,  (i) the piggyback
registration rights granted pursuant to Section 7.2 shall be effective for seven
years  from the date  hereof  and (ii) the demand  registration  rights  granted
pursuant to section 7.3 shall be effective  for five years from the date hereof,
in each case with  respect  to all  shares of  Common  Stock  issuable  upon the
exercise of Warrants held by Joseph Stevens & Company,  Inc. and its affiliates,
and all shares of Common Stock  issuable  upon the  exercise of warrants  issued
pursuant to the Original Warrant Agreement.

                                                  Very truly yours,

                                                  ATLANTIC PHARMACEUTICALS INC.

                                                  By: _________________________
                                                      Name:
                                                      Title:

Agreed and Acknowledged

JOSEPH STEVENS & COMPANY, INC.

By: ________________________________
    Name:
    Title:

                                      B-1

<PAGE>

                                                                       EXHIBIT C
                                               FORM OF INDEMNIFICATION AGREEMENT

                         Atlantic Pharmaceuticals, Inc.
                             1017 Main Campus Drive
                                   Suite 3900
                                Raleigh, NC 27607

                                 January 4, 2000

JOSEPH STEVENS & COMPANY, INC.
33 Maiden Lane
8th Floor
New York, New York  10038

Ladies and Gentlemen:

                  In connection with the engagement by Atlantic Pharmaceuticals,
Inc. (the "Company") of JOSEPH STEVENS & COMPANY, INC. (the "Consultant") as the
Company's  financial advisor and investment banker, the Company hereby agrees to
indemnify  and  hold  the  Consultant  and its  affiliates,  and the  directors,
officers,  partners,  shareholders,  agents  and  employees  of  the  Consultant
(collectively the "Indemnified Persons"),  harmless from and against any and all
claims, actions, suits, proceedings (including those of shareholders),  damages,
liabilities and expenses incurred by any of them (including, but not limited to,
fees and  expenses of counsel)  which are (A) related to or arise out of (i) any
actions taken or omitted to be taken  (including any untrue  statements  made or
any statements omitted to be made) by the Company,  or (ii) any actions taken or
omitted to be taken by any Indemnified  Person in connection with our engagement
of the Consultant  pursuant to the Financial Advisory and Consulting  Agreement,
of even date herewith,  between the Consultant and the Company (the  "Consulting
Agreement"),  or (B)  otherwise  related to or arising  out of the  Consultant's
activities on the Company's behalf pursuant to the Consultant's engagement under
the Consulting Agreement, and the Company shall reimburse any Indemnified Person
for all expenses  (including,  but not limited to, fees and expenses of counsel)
incurred by such Indemnified Person in connection with investigating,  preparing
or  defending  any  such  claim,  action,  suit or  proceeding  (collectively  a
"Claim"),  whether or not in connection with pending or threatened litigation in
which any  Indemnified  Person is a party.  The Company  will not,  however,  be
responsible  for any  Claim  which  is  finally  judicially  determined  to have
resulted  exclusively  from the gross  negligence  or willful  misconduct of any
person seeking  indemnification  hereunder.  The Company  further agrees that no
Indemnified  Person shall have any liability to the Company for or in connection
with the Consultant's  engagement under the Consulting  Agreement except for any
Claim  incurred  by the  Company  solely as a direct  result of any  Indemnified
Person's gross negligence or willful misconduct.

                                      C-1

<PAGE>

                  The Company further agrees that the Company will not,  without
the prior written  consent of the Consultant,  settle,  compromise or consent to
the entry of any judgment in any pending or threatened Claim in respect of which
indemnification  may be sought hereunder  (whether or not any Indemnified Person
is an  actual  or  potential  party  to such  Claim),  unless  such  settlement,
compromise or consent includes a legally binding, unconditional, and irrevocable
release of each Indemnified  Person hereunder from any and all liability arising
out of such Claim.

                  Promptly  upon receipt by an  Indemnified  Person of notice of
any complaint or the assertion or institution of any Claim with respect to which
indemnification is being sought hereunder,  such Indemnified Person shall notify
the Company in writing of such  complaint or of such  assertion or  institution,
but  failure to so notify the Company  shall not  relieve  the Company  from any
obligation the Company may have hereunder,  unless, and only to the extent that,
such failure results in the forfeiture by the Company of substantial  rights and
defenses,  and such  failure  to so  notify  the  Company  will not in any event
relieve the Company from any other  obligation or liability the Company may have
to any Indemnified Person otherwise than under this Agreement. If the Company so
elects or is requested by such Indemnified  Person,  the Company will assume the
defense  of  such  Claim,   including  the  employment  of  counsel   reasonably
satisfactory to such Indemnified Person and the payment of the fees and expenses
of such counsel. In the event,  however, that such Indemnified Person reasonably
determines in its sole  judgment  that having common  counsel would present such
counsel with a conflict of interest or such  Indemnified  Person  concludes that
there may be legal defenses  available to it or other  Indemnified  Persons that
are different from or in addition to those  available to the Company,  then such
Indemnified Person may employ its own separate counsel to represent or defend it
in any such Claim and the Company shall pay the reasonable  fees and expenses of
such counsel.  Notwithstanding  anything herein to the contrary,  if the Company
fails timely or diligently to defend,  contest, or otherwise protect against any
Claim,  the  relevant  Indemnified  Party  shall  have  the  right,  but not the
obligation,  to defend,  contest,  compromise,  settle,  assert  crossclaims  or
counterclaims,  or  otherwise  protect  against  the  same,  and  shall be fully
indemnified by the Company therefor, including, but not limited to, for the fees
and  expenses of its  counsel and all amounts  paid as a result of such Claim or
the compromise or settlement  thereof. In any Claim in which the Company assumes
the defense,  the Indemnified Person shall have the right to participate in such
defense and to retain its own counsel therefor at its own expense.

                  The  Company  agrees  that  if  any  indemnity  sought  by  an
Indemnified  Person  hereunder  is  held by a court  to be  unavailable  for any
reason,  then  (whether or not the  Consultant  is the  Indemnified  Person) the
Company  and the  Consultant  shall  contribute  to the  Claim  for  which  such
indemnity is held  unavailable  in such  proportion as is appropriate to reflect
the relative  benefits to the Company,  on the one hand, and the Consultant,  on
the other, in connection with the  Consultant's  engagement by the Company under
the Consulting  Agreement,  subject to the limitation that in no event shall the
amount of the Consultant's  contribution to such Claim exceed the amount of fees
actually   received  by  the  Consultant  from  the  Company   pursuant  to  the

                                      C-2

<PAGE>

Consultant's  engagement  under the  Consulting  Agreement.  The Company  hereby
agrees that the  relative  benefits  to the  Company,  on the one hand,  and the
Consultant,  on the other, with respect to the Consultant's engagement under the
Consulting  Agreement  shall be deemed to be in the same  proportion  as (a) the
total  value  paid or  proposed  to be paid or  received  by the  Company or the
Company's  shareholders as the case may be, pursuant to the transaction (whether
or not consummated) for which the Consultant is engaged to render services bears
to (b) the fee paid or proposed to be paid to the Consultant in connection  with
such engagement.

                  Our  indemnity,  reimbursement  and  contribution  obligations
under  this  Agreement  shall be in  addition  to,  and shall in no way limit or
otherwise adversely affect any rights that any Indemnified Party may have at law
or at equity.

                  Should  the  Consultant,  or any of its  directors,  officers,
partners,  shareholders,  agents or employees, be required or be requested by us
to provide  documentary  evidence or testimony in connection with any proceeding
arising from or relating to the  Consultant's  engagement  under the  Consulting
Agreement, the Company agrees to pay all reasonable expenses (including, but not
limited  to,  fees and  expenses of  counsel)  in  complying  therewith  and one
thousand  dollars  ($1,000)  per day  for any  sworn  testimony  or  preparation
therefor, payable in advance.

                  The  Company  hereby  consents to  personal  jurisdiction  and
service of process  and venue in any court in which any claim for  indemnity  is
brought by any Indemnified Person.

                  It is understood  that, in  connection  with the  Consultant's
engagement under the Consulting Agreement,  the Consultant may be engaged to act
in one or  more  additional  capacities  and  that  the  terms  of the  original
engagement  or any such  additional  engagement  may be  embodied in one or more
separate written agreements. The provisions of this Agreement shall apply to the
original engagement and any such additional  engagement and shall remain in full
force and effect  following the completion or  termination  of the  Consultant's
engagement(s).

                                    Very truly yours,

                                    ATLANTIC PHARMACEUTICALS, INC.

                                    By:___________________________________
                                       Name:
                                       Title:

CONFIRMED AND AGREED TO:

JOSEPH STEVENS & COMPANY, INC.

By: ________________________________
    Name:
    Title:

                                      C-3Exhibit 10.28

--------------------------------------------------------------------------------

                                     WARRANT

                           To Purchase Common Stock of

                         ATLANTIC PHARMACEUTICALS, INC.

                                  Warrant No. 1

                     No. of Shares of Common Stock: 150,000

--------------------------------------------------------------------------------

<PAGE>

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.

No. of Shares of Common Stock:  150,000               Warrant No. 1

                                     WARRANT

                           To Purchase Common Stock of

                         ATLANTIC PHARMACEUTICALS, INC.

                  THIS IS TO CERTIFY  THAT Joseph  Stevens & Company,  Inc.,  or
registered  assigns,  is entitled,  at any time during the  Exercise  Period (as
hereinafter  defined),  to  purchase  from  Atlantic  Pharmaceuticals,  Inc.,  a
Delaware corporation ("Company"), 150,000 shares of Common Stock (as hereinafter
defined and subject to  adjustment  as  provided  herein),  in whole or in part,
including  fractional  parts, at a purchase price of $2.50 per share (subject to
adjustment as provided  herein) all on the terms and  conditions and pursuant to
the provisions hereinafter set forth.

1.     DEFINITIONS

                  Capitalized  terms used in this  Warrant but not defined  have
the meaning set forth in the Warrant Agreement (as defined below). The following
terms have the respective meanings set forth below:

                  "Additional Shares of Common Stock" means all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.

                  "Business  Day" means any day that is not a Saturday or Sunday
or a day on which banks are  required or  permitted to be closed in the State of
New York.

                  "Commission"  means the Securities and Exchange  Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.

                  "Common  Stock"  means  (except  where the  context  otherwise
indicates)  the  Common  Stock,  par  value  $.001  per  share,  of  Company  as
constituted  on the Closing  Date,  and any capital stock into which such Common
Stock may  thereafter  be changed,  and shall also include (i) capital  stock of
Company of any other class (regardless of how denominated) issued to the holders
of shares of Common Stock upon any  reclassification  thereof  which is also not
preferred as to dividends or assets over any other class of stock of Company and
which is not  subject  to  redemption  and (ii)  shares of  common  stock of any
successor or acquiring  corporation  (as defined in Section 4.8)  received by or
distributed  to the  holders of Common  Stock of  Company  in the  circumstances
contemplated by Section 4.8.

                                       2

<PAGE>

                  "Convertible  Securities"  means  evidences  of  indebtedness,
shares of stock or other  securities which are convertible into or exchangeable,
with or without  payment of additional  consideration  in cash or property,  for
Additional Shares of Common Stock,  either immediately or upon the occurrence of
a specified date or a specified event.

                  "Current  Market Price" means, in respect of a share of Common
Stock on any date, either (a) if there shall not then be a public market for the
Common Stock, the Fair Market Value per share of Common Stock as at such date or
(b) if there shall then be a public market for the Common Stock,  the average of
the daily market  prices for 20  consecutive  Business  Days  commencing 30 days
before such date. The daily market price for each such Business Day shall be (i)
the last sale price on such day on the principal  stock exchange or NASDAQ Small
Cap Market  ("NASDAQ")  on which such Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange or NASDAQ,
the average of the last  reported  closing  bid and asked  prices on such day as
officially  quoted on any such exchange or NASDAQ,  (iii) if the Common Stock is
not then  listed or admitted  to trading on any stock  exchange  or NASDAQ,  the
average of the last  reported  closing  bid and asked  prices on such day in the
over-the-counter  market, as furnished by the National Association of Securities
Dealers Automatic Quotation System or the National Quotation Bureau,  Inc., (iv)
if neither such  corporation at the time is engaged in the business of reporting
such prices, as furnished by any similar firm then engaged in such business,  or
(v) if there is no such firm,  as furnished  by any member of the NASD  selected
mutually by the Majority  Holders and Company or, if they cannot agree upon such
selection,  as selected by two such  members of the NASD,  one of which shall be
selected by the Majority Holders and one of which shall be selected by Company.

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended,  or any similar federal  statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

                  "Exercise Period" means the period during which this Warrant
is exercisable pursuant to Section 2.1.

                  "Expiration Date" means January 4, 2005.

                  "Financial  Advisory  Agreement" means the Financial  Advisory
and Consulting Agreement,  dated January 4, 2000, by and between the Company and
the Consultant.

                  "Fully Diluted  Outstanding" means, on any date, all shares of
Common Stock Outstanding on such date and all shares of Common Stock issuable in
respect of this Warrant  outstanding on such date, and other options or warrants
to purchase,  or securities  convertible  into or  exchangeable  for,  shares of
Common Stock  outstanding  on such date,  regardless  of whether  such  options,
warrants or other securities are then exercisable or convertible.

                                       3

<PAGE>

                  "GAAP" means generally accepted  accounting  principles in the
United States of America as in effect from time to time.

                  "Holder"  means the Person in whose name the Warrant set forth
herein is registered on the books of Company maintained for such purpose.

                  "Majority  Holders" means the holders of Warrants  exercisable
for in excess of 50% of the  aggregate  number of shares of  Warrant  Stock then
purchasable upon exercise of all Warrants.

                  "NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.

                  "Other Property" has the meaning set forth in Section 4.8.

                  "Outstanding" means, when used with reference to Common Stock,
on any date, all issued shares of Common Stock on such date,  except shares then
owned or held by or for the account of Company or any  subsidiary  thereof,  and
shall  include  all  shares  issuable  in respect  of  outstanding  scrip or any
certificates representing fractional interests in shares of Common Stock.

                  "Permitted  Issuances"  means the issuance of shares of Common
Stock  upon the  exercise  or  conversion  of  Company's  presently  outstanding
convertible preferred stock, warrants and employee incentive options.

                  "Person"   means   any   individual,    sole   proprietorship,
partnership,  limited  liability  company,  joint venture,  trust,  incorporated
organization, association, corporation, institution, public benefit corporation,
entity or  government  (whether  federal,  state,  county,  city,  municipal  or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).

                  "Securities  Act" shall mean the  Securities  Act of 1933,  as
amended,  or any similar federal  statute,  and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.

                  "Transfer"  shall  mean  any  disposition  of any  Warrant  or
Warrant  Stock or of any interest in either  thereof,  which would  constitute a
sale thereof within the meaning of the Securities Act.

                  "Transfer Notice" has the meaning set forth in Section 9.2.

                  "Warrant"  means this  Warrant  and all  warrants  issued upon
transfer,  division or combination of, or in substitution for, this Warrant. All
Warrants  shall at all times be identical as to terms and  conditions  and date,
except  as to the  number of  shares  of  Common  Stock  for  which  they may be
exercised.

                  "Warrant  Price"  means an amount  equal to (i) the  number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2.1,

                                       4

<PAGE>

multiplied by (ii) $2.50, as adjusted from time to time pursuant to Section 4 of
this Warrant.

                  "Warrant Stock" means the shares of Common Stock issued or
issuable upon the exercise of this Warrant.

2.     EXERCISE OF WARRANT

       2.1 EXERCISE PERIOD. (a) From and after January 4, 2000 and until 5:00
P.M., New York time, on the Expiration Date (the "Exercise Period"), Holder may
exercise this Warrant, on any Business Day on which the condition set forth in
Section 2.1(b) hereof is met, for all or any part of the Warrant Stock.

                  (b) The Warrant may be exercised on any Business  Day,  except
that it may only be  exercised if the last sale price of a share of Common Stock
on NASDAQ (or the  principal  stock  exchange on which the Common  Stock is then
listed or admitted to trading) on the  immediately  preceding  Business  Day was
equal to or greater than $1.00 plus the Exercise Price then in effect.

       2.2 EXERCISE NOTICE; DELIVERY OF CERTIFICATES. In order to exercise this
Warrant, Holder shall deliver to Company at its principal office at 150
Broadway, Suite 1100, New York, New York 10038, or at the office or agency
designated by Company pursuant to Section 13.2, (i) a written notice of Holder's
election to exercise this Warrant, specifying the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price and (iii) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt thereof, Company shall, as promptly as
practicable, and in any event within five (5) Business Days thereafter, deliver
to Holder a duly executed certificate or certificates representing the aggregate
number of full shares of Common Stock issuable upon such exercise, together with
cash in lieu of any fraction of a share, as hereinafter provided. Such stock
certificate or certificates shall be in such denominations and registered in the
name designated in the subscription form, subject to Section 9. Holder or any
other Person so designated to be named therein shall be deemed to have become a
holder of record of such shares of Warrant Stock for all purposes, as of the
date on which all items in clauses (i)-(iii) above have been received by Company
and all taxes required to be paid by Holder, if any, pursuant to Section 2.4
have been paid. If this Warrant shall have been exercised in part, Company shall
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
remaining shares of Common Stock issuable upon exercise of this Warrant, which
new Warrant shall in all other respects be identical with this Warrant, or
appropriate notation may be made on this Warrant and the same returned to
Holder.

       2.3 PAYMENT OF WARRANT PRICE. Payment of the Warrant Price shall be made
at the option of the Holder by:

                  (i) certified or official bank check;

                                       5

<PAGE>

                  (ii) The surrender to Company of that number of shares of
Warrant Stock (or the right to receive such number of shares) or shares of
Common Stock having an aggregate Current Market Price equal to or greater than
the Current Warrant Price for all shares then being purchased (including those
being surrendered); or

                  (iii) any combination thereof, duly endorsed by or accompanied
by appropriate duly executed instruments of transfer.

       2.4 PAYMENT OF TAXES. All shares of Warrant Stock shall be validly
issued, fully paid and nonassessable and without any preemptive rights. Company
shall pay all expenses, taxes and other governmental charges with respect to the
issue or delivery thereof, unless such tax or charge is imposed by law upon
Holder. Company shall not be required, however, to pay any transfer tax or other
similar charge imposed in connection with any transfer involved in the issue of
any certificate for shares of Common Stock issuable upon exercise of this
Warrant in any name other than that of Holder, and in such case Company shall
not be required to issue or deliver any stock certificate until such tax or
other charge has been paid or it has been established to the satisfaction of
Company that no such tax or other charge is due.

       2.5 FRACTIONAL SHARES. Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants would otherwise be
entitled to purchase upon such exercise, except as otherwise provided in Section
2.1, Company shall pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Current Market Price per share of
Common Stock on the date of exercise.

3.     TRANSFER, DIVISION AND COMBINATION

       3.1 TRANSFER. Subject to compliance with Section 9 hereof, transfer of
this Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of Company referred to in Section 2.1 or
the office or agency designated by Company pursuant to Section 13.2, together
with a duly executed written assignment of this Warrant substantially in the
form of Exhibit B hereto and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such
payment, Company shall, subject to Section 9, execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees and in the denomination
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned in
compliance with Section 9, may be exercised by a new Holder for the purchase of
shares of Common Stock without having a new Warrant issued.

       3.2 DIVISION AND COMBINATION. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of Company, together with a duly executed written
notice specifying the names and denominations in which new Warrants are to be
issued. Subject to compliance with

                                       6

<PAGE>

Section 3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

       3.3 EXPENSES. Company shall prepare, issue and deliver at its own expense
(other than transfer taxes) the new Warrant or Warrants under this Section 3.

       3.4 MAINTENANCE OF BOOKS. Company agrees to maintain, at its aforesaid
office or agency, books for the registration and the registration of transfer of
the Warrants.

4.     ADJUSTMENTS

                  The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant,  shall be subject to adjustment  from time to time as set forth in
this Section 4.  Company  shall give each Holder  notice of any event  described
below which  requires an  adjustment  pursuant to this  Section 4 at the time of
such event.

       4.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time
Company shall:

                  (a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Common Stock,

                  (b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or

                  (c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,

then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Warrant Price shall be
adjusted to equal (A) the Warrant Price multiplied by the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to the
adjustment divided by (B) the number of shares for which this Warrant is
exercisable immediately after such adjustment.

       4.2 CERTAIN OTHER DISTRIBUTIONS AND ADJUSTMENTS.

                  (a) If at any time Company shall take a record of the holders
of its Common Stock for the purpose of entitling them to receive any dividend or
other distribution of:

                       (i) cash in excess of earned surplus,

                                       7

<PAGE>

                       (ii) any evidences of its indebtedness, any shares of its
stock or any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or

                       (iii) any warrants or other rights to subscribe for or
purchase any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash, Convertible
Securities or Additional Shares of Common Stock),

then the Exercise Price shall be reduced, without any further action by the
parties hereto, by the Per Share Value (as hereinafter defined) of the dividend.
For purposes of this Section 4.2 the "Per Share Value" of cash dividend or other
distribution shall be the dollar amount of the distribution on each share of
Common Stock and the "Per Share Value" of any dividend or distribution other
than cash shall be equal to the fair market value of such non-cash distribution
on each share of Common Stock, as determined in good faith by the Board of
Directors of the Company.

                  (b) A reclassification of the Common Stock (other than a
change in par value) into shares of Common Stock and shares of any other class
of stock shall be deemed a distribution by Company to the holders of its Common
Stock of such shares of such other class of stock within the meaning of
paragraph (a) above, and if the outstanding shares of Common Stock shall be
changed into a larger or smaller number of shares of Common Stock as a part of
such reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the meaning
of Section 4.1.

       4.3 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK.

                  (a) If at any time Company shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock, other than
Permitted Issuances, in exchange for consideration in an amount per Additional
Share of Common Stock less than the Current Market Price, then

                       (i) the Warrant Price as to the number of shares for
which this Warrant is exercisable prior to such adjustment shall be reduced to a
price determined by dividing (A) an amount equal to the sum of (x) the number of
shares of Common Stock Outstanding immediately prior to such issue or sale
multiplied by the Current Market Price plus (y) the consideration, if any,
received by Company upon such issue or sale as determined pursuant to Section
4.7(a), by (B) the total number of shares of Common Stock Outstanding
immediately after such issue or sale; and (ii) the number of shares of Common
Stock for which this Warrant is exercisable shall be adjusted to equal the
product obtained by multiplying the Warrant Price in effect immediately prior to
such issue or sale by the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such issue or sale and dividing the
product thereof by the Warrant Price resulting from the adjustment made pursuant
to clause (i) above.

                                       8

<PAGE>

                  (b) The provision of paragraph (a) shall not apply to any
issuance of Additional Shares of Common Stock for which an adjustment is
provided under Section 4.1 or 4.2. No adjustment of the number of shares of
Common Stock for which this Warrant shall be exercisable shall be made under
paragraph (a) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or exchange rights
in any Convertible Securities, if any such adjustment shall previously have been
made upon the issuance of such warrants or other rights or upon the issuance of
such Convertible Securities (or upon the issuance of any warrant or other rights
therefor) pursuant to Sections 4.4 or 4.5 hereof.

                  4.4 ISSUANCE OF WARRANTS OR OTHER RIGHTS. If at any time
Company shall take a record of the holders of its Common Stock for the purpose
of entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Market Price in effect
immediately prior to the time of such issue or sale, then the number of shares
for which this Warrant is exercisable and the Current Warrant Price shall be
adjusted as provided in Section 4.3 on the basis that the maximum number of
Additional Shares of Common Stock issuable pursuant to all such warrants or
other rights or necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and outstanding and
Company shall be deemed to have received all of the consideration payable
therefor, if any, as of the date of the issuance of such warrants or other
rights.

                  4.5 ISSUANCE OF CONVERTIBLE SECURITIES. If at any time Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Market Price in effect immediately prior
to the time of such issue or sale, then the number of Shares for which this
Warrant is exercisable and the Warrant Price shall be adjusted as provided in
Section 4.3 on the basis that the maximum number of Additional Shares of Common
Stock necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued and outstanding and Company shall
have received all of the consideration payable therefor, if any, as of the date
of issuance of such Convertible Securities. No adjustment of the number of
Shares for which this Warrant is exercisable and the Warrant Price shall be made
under this Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 4.4. If
any issue or sale of Convertible Securities is made upon exercise of any warrant
or other

                                       9

<PAGE>

right to subscribe for or to purchase any such Convertible Securities for which
adjustments of the number of Shares for which this Warrant is exercisable and
the Warrant Price have been or are to be made pursuant to Section 4.4, no
further adjustments of the number of Shares for which this Warrant is
exercisable and the Warrant Price shall be made by reason of such issue or sale.

       4.6 SUPERSEDING ADJUSTMENT. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5 as the
result of any issuance of warrants, rights or Convertible Securities,

                  (a) such warrants or rights, or the right of conversion or
exchange in such other Convertible Securities, shall expire, and all or a
portion of such warrants or rights, or the right of conversion or exchange with
respect to all or a portion of such other Convertible Securities, as the case
may be, shall not have been exercised, or

                  (b) the consideration per share for which shares of Common
Stock are issuable pursuant to such warrants or rights, or the terms of such
other Convertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per share upon
the occurrence of a specified date or event,

then for each outstanding Warrant such previous adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to have
been issued by virtue of the computation made in connection with the adjustment
so rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a recomputation shall be made of the
effect of such rights or options or other Convertible Securities on the basis of

                  (c) treating the number of Additional Shares of Common Stock
or other property, if any, theretofore actually issued or issuable pursuant to
the previous exercise of any such warrants or rights or any such right of
conversion or exchange, as having been issued on the date or dates of any such
exercise and for the consideration actually received and receivable therefor,
and

                  (d) treating any such warrants or rights or any such other
Convertible Securities which then remain outstanding as having been granted or
issued immediately after the time of such increase of the consideration per
share for which shares of Common Stock or other property are issuable under such
warrants or rights or other Convertible Securities; whereupon a new adjustment
of the number of shares of Common Stock for which this Warrant is exercisable
and the Warrant Price shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled.

       4.7 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price provided for in this Section 4:

                                       10

<PAGE>

                  (a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any warrants
or other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities shall be issued for cash consideration, the
consideration received by Company therefor shall be the amount of the cash
received by Company therefor, or, if such Additional Shares of Common Stock or
Convertible Securities are offered by Company for subscription, the subscription
price, or, if such Additional Shares of Common Stock or Convertible Securities
are sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation, discounts or expenses paid or incurred by
Company for and in the underwriting of, or otherwise in connection with, the
issuance thereof). To the extent that such issuance shall be for a consideration
other than cash, then, except as herein otherwise expressly provided, the amount
of such consideration shall be deemed to be the fair market value of such
consideration at the time of such issuance as determined in good faith by the
Board of Directors of Company. In case any Additional Shares of Common Stock or
any Convertible Securities or any warrants or other rights to subscribe for or
purchase such Additional Shares of Common Stock or Convertible Securities shall
be issued in connection with any merger in which Company issues any securities,
the amount of consideration therefor shall be deemed to be the fair value, as
determined in good faith by the Board of Directors of Company, of such portion
of the assets and business of the nonsurviving corporation as such Board in good
faith shall determine to be attributable to such Additional Shares of Common
Stock, Convertible Securities, warrants or other rights, as the case may be. The
consideration for any Additional Shares of Common Stock issuable pursuant to any
warrants or other rights to subscribe for or purchase the same shall be the
consideration received by Company for issuing such warrants or other rights plus
the additional consideration payable to Company upon exercise of such warrants
or other rights. The consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Convertible Securities shall be the
consideration received by Company for issuing warrants or other rights to
subscribe for or purchase such Convertible Securities, plus the consideration
paid or payable to Company in respect of the subscription for or purchase of
such Convertible Securities, plus the additional consideration, if any, payable
to Company upon the exercise of the right of conversion or exchange in such
Convertible Securities. In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or satisfaction of
any dividends upon any class of stock other than Common Stock, Company shall be
deemed to have received for such Additional Shares of Common Stock or
Convertible Securities a consideration equal to the amount of such dividend so
paid or satisfied.

                  (b) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur, except that any adjustment of the number of
shares of Common Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of a subdivision or
combination of shares of Common Stock, as provided for in Section 4.1) up to,
but not beyond the date of exercise if such adjustment either by itself or with
other adjustments not previously made adds or

                                       11

<PAGE>

subtracts less than 1% of the shares of Common Stock for which this Warrant is
exercisable immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount (except as aforesaid)
which is postponed shall be carried forward and made as soon as such adjustment,
together with other adjustments required by this Section 4 and not previously
made, would result in a minimum adjustment or on the date of exercise. For the
purpose of any adjustment, any specified event shall be deemed to have occurred
at the close of business on the date of its occurrence.

                  (c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest 1/10th of a share.

                  (d) When Adjustment Not Required. If Company shall take a
record of the holders of its Common Stock for the purpose of entitling them to
receive a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.

                  (e) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the taking of any record
of the holders of Common Stock, but prior to the occurrence of the event for
which such record is taken, and Holder exercises this Warrant, any Additional
Shares of Common Stock issuable upon exercise by reason of such adjustment shall
be deemed the last shares of Common Stock for which this Warrant is exercised
(notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for Holder by Company to be issued to
Holder upon and to the extent that the event actually takes place, upon payment
of the Warrant Price. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by Company and escrowed
property returned to Company.

                  (f) Challenge to Good Faith Determination. Whenever the Board
of Directors of Company shall be required to make a determination in good faith
of the fair market value of any item under this Section 4, such determination
may be challenged in good faith by the Majority Holders, and any dispute shall
be resolved by an investment banking or valuation firm of recognized national
standing selected by Company and acceptable to the Majority Holders.

       4.8 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR
DISPOSITION OF ASSETS. In case Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation (where
Company is not the surviving corporation or where there is a change in or
distribution with respect to the Common Stock of Company), or sell, transfer or
otherwise dispose of all or substantially all its property, assets or business
to another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets,

                                       12

<PAGE>

shares of common stock of the successor or acquiring corporation, or any cash,
shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of Company, then each Holder shall have the right thereafter to receive, upon
exercise of such Warrant, the number of shares of common stock of the successor
or acquiring corporation or of Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than Company) shall expressly assume the due
and punctual observance and performance of each and every covenant and condition
of this Warrant to be performed and observed by Company and all the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board of Directors of Company)
in order to provide for adjustments of shares of Common Stock for which this
Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.8,
"common stock of the successor or acquiring corporation" shall include stock of
such corporation of any class which is not preferred as to dividends or assets
over any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for any such
stock, either immediately or upon the arrival of a specified date or the
happening of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Section 4.8 shall
similarly apply to successive reorganizations, reclassifications, mergers,
consolidations or disposition of assets.

       4.9 OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from time
to time Company shall take any action in respect of its Common Stock, other than
any action described in this Section 4, then, unless such action will not have a
materially adverse effect upon the rights of the Holders, the number of shares
of Common Stock or other stock for which this Warrant is exercisable and/or the
purchase price thereof shall be adjusted in such manner as may be equitable in
the circumstances.

5.     NOTICES TO WARRANT HOLDERS

       5.1 NOTICE OF ADJUSTMENTS. Whenever an adjustment to this Warrant is made
pursuant to Section 4, Company shall prepare a certificate to be executed by the
chief financial officer of Company setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated, specifying the number of shares of Common Stock for which this
Warrant is exercisable and (if such adjustment was made pursuant to Section 4.8
or 4.9) describing the number and kind of any other shares of stock or Other
Property for which this Warrant is exercisable, and any change in the purchase
price or prices thereof, after giving effect to such adjustment or

                                       13

<PAGE>

change. Company shall promptly cause a signed copy of such certificate to be
delivered to each Holder. Company shall keep at its office or agency designated
pursuant to Section 15 copies of all such certificates and cause the same to be
available for inspection at said office during normal business hours by any
Holder or any prospective purchaser of a Warrant designated by a Holder thereof.

       5.2 NOTICE OF CORPORATE ACTION. If at any time

                  (a) Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its
indebtedness, any shares of stock of any class or any other securities or
property, or to receive any other right, or

                  (b) there shall be any capital reorganization of Company, any
reclassification or recapitalization of the capital stock of Company or any
consolidation or merger of Company with, or any sale, transfer or other
disposition of all or substantially all the property, assets or business of
Company to, another corporation, or

                  (c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of Company;

then,  in any one or more of such  cases,  Company  shall  give to Holder (i) at
least 30 days' prior written  notice of the date on which a record date shall be
selected  in respect of such  event and (ii) in the case of any such  event,  at
least 30 days' prior written  notice of the date when the same shall take place.
Such notice in accordance  with the foregoing  clause also shall specify (i) the
date on  which  the  holders  of  Common  Stock  shall be  entitled  to any such
dividend,  distribution or right, and the amount and character  thereof and (ii)
the  date  on  which   any  such   reorganization,   reclassification,   merger,
consolidation, sale, transfer, disposition,  dissolution, liquidation or winding
up is to take place and the time,  if any such time is to be fixed,  as of which
the holders of Common Stock shall be entitled to exchange their shares of Common
Stock for securities or other  property  deliverable  upon such  reorganization,
reclassification,    merger,   consolidation,   sale,   transfer,   disposition,
dissolution, liquidation or winding up.

6.     NO IMPAIRMENT

                  Company   shall  not  by  any   action,   including,   without
limitation,   amending   its   articles   of   incorporation   or  through   any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities  or any other  voluntary  action,  avoid or seek to avoid the
observance or performance  of any of the terms of this Warrant,  but will at all
times in good  faith  assist in the  carrying  out of all such  terms and in the
taking of all such  actions as may be necessary  or  appropriate  to protect the
rights of Holder  against  impairment.  Without  limiting the  generality of the
foregoing,  Company will take all such action as may be necessary or appropriate
in order that Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant,  including taking such
action as is necessary  for the Warrant  Price to be not less than the par value
of the shares of Common  Stock  issuable  upon

                                       14

<PAGE>

exercise of this Warrant. The Company will use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable Company to perform its
obligations under this Warrant.

7.     RESERVATION AND AUTHORIZATION OF COMMON STOCK

                  From and after the Closing  Date,  Company  shall at all times
reserve and keep  available  for issue upon the exercise of Warrants such number
of its authorized  but unissued  shares of Common Stock as will be sufficient to
permit the exercise in full of all  outstanding  Warrants.  All shares of Common
Stock which shall be so issuable,  when issued upon  exercise of any Warrant and
payment therefor in accordance with the terms of such Warrant, shall be duly and
validly issued and fully paid and  nonassessable,  and not subject to preemptive
rights.

8.     TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

                  In the case of all dividends or other distributions by Company
to the  holders of its  Common  Stock with  respect  to which any  provision  of
Section 4 refers to the taking of a record of such holders, Company will in each
such  case  take  such a record  and will  take  such  record as of the close of
business  on a  Business  Day.  Company  will  not  at  any  time,  except  upon
dissolution,  liquidation  or winding up of  Company,  close its stock  transfer
books or Warrant  transfer  books so as to result in  preventing or delaying the
exercise or transfer of any Warrant.

9.     RESTRICTIONS ON TRANSFERABILITY

                  The Warrants and the Warrant  Stock shall not be  transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section  9,  which  conditions  are  intended  to  ensure  compliance  with  the
provisions of the  Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant,  agrees to be bound by
the provisions of this Section 9.

       9.1 RESTRICTIVE LEGEND. 1. Except as otherwise provided in this Section
9, each certificate for Warrant Stock initially issued upon the exercise of this
Warrant, and each certificate for Warrant Stock issued to any subsequent
transferee of any such certificate, shall be stamped or otherwise imprinted with
a legend in substantially the following form:

                           "The shares  represented by this certificate have not
                  been registered  under the Securities Act of 1933, as amended,
                  and may not be  transferred  in  violation  of such Act or the
                  rules and regulations thereunder."

                  (b) Except as otherwise provided in this Section 9, each
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:

                                       15

<PAGE>

                           "This Warrant and the securities  represented  hereby
                  have not been registered  under the Securities Act of 1933, as
                  amended,  and may not be transferred in violation of such Act,
                  the rules and regulations thereunder or the provisions of this
                  Warrant."

       9.2 NOTICE OF PROPOSED TRANSFERS; REQUESTS FOR REGISTRATION.

Prior to or promptly  following  any  Transfer of any  Warrants or any shares of
Restricted  Common Stock, the holder of such Warrants or Restricted Common Stock
shall give  written  notice (a "Transfer  Notice") to Company of such  Transfer.
Each  certificate,  if any,  evidencing  such shares of Restricted  Common Stock
issued upon such Transfer shall bear the restrictive legend set forth in Section
9.1(a),  and each Warrant issued upon such Transfer  shall bear the  restrictive
legend set forth in  Section  9.1(b),  unless in the  opinion of counsel to such
holder which is reasonably  acceptable to Company such legend is not required in
order to ensure compliance with the Securities Act.

       9.3 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing provisions
of Section 9, the restrictions imposed by this Section upon the transferability
of the Warrants and the Warrant Stock, and the legend requirements of Section
9.1, shall terminate as to any particular Warrant or share of Warrant Stock (i)
when and so long as such security shall have been effectively registered under
the Securities Act and disposed of pursuant thereto or (ii) when Company shall
have received an opinion of counsel reasonably satisfactory to it that such
security may be transferred without registration thereof under the Securities
Act. Whenever the restrictions imposed by Section 9 shall terminate as to this
Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive
from Company, at the expense of Company, a new Warrant without the restrictive
legend set forth in Section 9.1(b). Whenever the restrictions imposed by this
Section shall terminate as to any share of Warrant Stock, as hereinabove
provided, the holder thereof shall be entitled to receive from Company, at
Company's expense, a new certificate representing such Warrant Stock not bearing
the restrictive legend set forth in Section 9.1(a).

10.    SUPPLYING INFORMATION

                  Company  shall  cooperate  with each  Holder  of a Warrant  or
Warrant Stock in supplying such  information as may be reasonably  necessary for
such holder to complete and file any  information  reporting  forms presently or
hereafter  required by the Commission as a condition to the  availability  of an
exemption from the Securities Act for the sale of any Warrant or Warrant Stock.

11.    LOSS OR MUTILATION

                  Upon receipt by Company from any Holder of evidence reasonably
satisfactory  to it of the  ownership  of and the loss,  theft,  destruction  or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of Holder shall be sufficient  indemnity),
and in case of mutilation upon

                                       16

<PAGE>

surrender and cancellation hereof, Company will execute and deliver in lieu
hereof a new Warrant of like tenor to such Holder; provided, in the case of
mutilation, no indemnity shall be required if this Warrant in identifiable form
is surrendered to Company for cancellation.

12.    LIMITATION OF LIABILITY

                  No provision hereof,  in the absence of affirmative  action by
Holder to purchase  shares of Common  Stock,  and no  enumeration  herein of the
rights or privileges of Holder hereof,  shall give rise to any liability of such
Holder  for the  purchase  price  of any  Common  Stock or as a  stockholder  of
Company,  whether  such  liability  is  asserted by Company or by  creditors  of
Company.

13.    MISCELLANEOUS

       13.1 NONWAIVER AND EXPENSES. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Holder's rights, powers or remedies. If
Company fails to make, when due, any payments provided for hereunder, or fails
to comply with any other provision of this Warrant, Company shall pay to Holder
such amounts as shall be sufficient to cover any costs and expenses including,
but not limited to, reasonable attorneys' fees, including those of appellate
proceedings, incurred by Holder in collecting any amounts due pursuant hereto or
in otherwise enforcing any of its rights, powers or remedies hereunder.

       13.2 NOTICE GENERALLY. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and either delivered in person with receipt acknowledged or sent by registered
or certified mail, return receipt requested, postage prepaid, or by telecopy and
confirmed by telecopy answerback, addressed as follows:

                  (a) If to any Holder or holder of Warrant Stock, at its last
known address appearing on the books of Company maintained for such purpose.

                  (b) If to Company at:

                           Atlantic Pharmaceuticals, Inc.
                           150 Broadway
                           Suite 1100
                           New York, NY 10038
                           Attn: A. Joseph Rudick

or at such  other  address  as may be  substituted  by  notice  given as  herein
provided.  The giving of any notice required  hereunder may be waived in writing
by the party  entitled to receive such notice.  Every notice,  demand,  request,
consent, approval, declaration,  delivery or other communication hereunder shall
be  deemed to have  been  duly  given or

                                       17

<PAGE>

served on the date on which personally delivered, with receipt acknowledged,
telecopied and confirmed by telecopy answerback, or three (3) Business Days
after the same shall have been deposited in the United States mail. Failure or
delay in delivering copies of any notice, demand, request, approval,
declaration, delivery or other communication to the person designated above to
receive a copy shall in no way adversely affect the effectiveness of such
notice, demand, request, approval, declaration, delivery or other communication.

       13.3 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of Company and the successors and assigns
of Holder. The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant and shall be enforceable by any
such Holder.

       13.4 AMENDMENT. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of Company and
the Majority Holders, provided that no such Warrant may be modified or amended
to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.

       13.5 SEVERABILITY. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.

       13.6 HEADINGS. The headings used in this Warrant are for the convenience
of reference only and shall not, for any purpose, be deemed a part of this
Warrant.

       13.7 GOVERNING LAW. This Warrant shall be governed by the laws of the
State of Delaware, without regard to the provisions thereof relating to conflict
of laws.

                         [SIGNATURES BEGIN ON NEXT PAGE]

                                       18

<PAGE>

                  IN WITNESS WHEREOF, Company has caused this Warrant to be duly
executed and attested by its Secretary or an Assistant Secretary.

Dated:  January 4, 2000

                                                ATLANTIC PHARMACEUTICALS, INC.

                                                By: /s/ A. Joseph Rudick
                                                   ----------------------------
                                                   Name:  A. Joseph Rudick
                                                   Title: President

Attest:

By: /s/ John Brancaccio
   ------------------------
   Name:  John Brancaccio
   Title: CFO

                                       19

<PAGE>

                              EXHIBIT A TO WARRANT

                                SUBSCRIPTION FORM

                 [To be executed only upon exercise of Warrant]

                  The undersigned  registered owner of this Warrant  irrevocably
exercises  this  Warrant for the  purchase of ______  Shares of Common  Stock of
Atlantic  Pharmaceuticals,  Inc. and herewith makes payment therefor, all at the
price and on the terms and  conditions  specified  in this  Warrant and requests
that  certificates  for the shares of Common  Stock  hereby  purchased  (and any
securities or other property  issuable upon such exercise) be issued in the name
of and delivered to  _____________  whose address is  _________________  and, if
such shares of Common  Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant,  that a new Warrant of like tenor and date
for the balance of the shares of Common Stock issuable hereunder be delivered to
the undersigned.

                                            -------------------------------
                                            (Name of Registered Owner)

                                            -------------------------------
                                            (Signature of Registered Owner)

                                            -------------------------------
                                            (Street Address)

                                            -------------------------------
                                            (City)    (State)     (Zip Code)

NOTICE:           The signature on this  subscription  must  correspond with the
                  name as written  upon the face of the within  Warrant in every
                  particular,  without  alteration or  enlargement or any change
                  whatsoever.

                                       20

<PAGE>

                              EXHIBIT B TO WARRANT

                                 ASSIGNMENT FORM

                  FOR VALUE RECEIVED the  undersigned  registered  owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant,  with respect to the number of
shares of Common Stock set forth below:

Name and Address of Assignee                       No. of Shares of Common Stock
----------------------------                       -----------------------------

and does hereby irrevocably  constitute and appoint  ___________________________
attorney-in-fact   to   register   such   transfer  on  the  books  of  Atlantic
Pharmaceuticals,   Inc.   maintained  for  the  purpose,   with  full  power  of
substitution in the premises.

Dated:__________________                      Print Name:___________________

                                              Signature:____________________

                                              Witness:______________________

NOTICE:  The  signature  on this  assignment  must  correspond  with the name as
written  upon the  face of the  within  Warrant  in  every  particular,  without
alteration or enlargement or any change whatsoever.

                                       21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00006-of-00352.parquet"}]]