Document:

This debenture has not been registered under the Securities Act of 1933 or
     any applicable state securities laws, and may not be offered for sale,
         sold, transferred, pledged or hypothecated without an effective
    registration statement under the Securities Act and under any applicable
        state securities laws, or an opinion of counsel, satisfactory to
        Borrower, that an exemption from such registration is available.

                                    DEBENTURE

Series 2001-A                                            Dated: August __, 2001
Certificate No. __
Amount $___________

         FOR  GOOD  AND  VALUABLE  CONSIDERATION,  BioTime,  Inc.  a  California
corporation  ("Borrower"),  promises to pay to the order of _________________ or
the  subsequent  registered  holder the principal sum of  ___________________AND
NO/100 DOLLARS  ($__________),  together with interest thereon,  all as provided
below:

         1. Series 2001-A Debenture.  This Debenture is one of a duly authorized
series of  Debentures  of like tenor and effect  issued by Borrower  referred to
herein as the "Series 2001-A  Debentures." Up to $5,000,000 of the Series 2001-A
Debentures (of which this Debenture is a part) may be issued by Borrower.

         2. Equal Rank.  All Series 2001-A  Debentures  rank equally and ratably
without priority over one another.

         3. Maturity.  Subject to the other  provisions of this  Debenture,  the
principal amount of this Debenture shall be due and payable in full on August 1,
2004 (the "Maturity Date").

         4. Manner of  Payment/Crediting  of  Payments.  The  Borrower  will pay
interest  and  principal on this  Debenture to the person who is the  registered
holder  of this  Debenture  at the  close of  business  on the date  immediately
preceding the next interest  payment date  specified in this  Debenture,  or the
Maturity Date, as applicable,  even if such Debenture is canceled or transferred
on the interest  payment date or Maturity  Date. The Borrower will pay principal
and interest in money of the United  States that at the time of payment is legal
tender for payment of public and private  debts.  However,  the Borrower may pay
principal and interest by check payable in such money, and any such check may be
mailed to a holder's registered address.

         5. Interest.

              (a) Interest on the principal amount of this Debenture outstanding
from time to time shall  accrue at the rate of ten  percent  (10.00%)  per annum
(computed on the basis of a 365 day year).  Interest  accrued on this  Debenture
shall be due and payable on February 1 and August 1 each year.

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              (b) In the event that any payment of  principal or interest is not
paid within five (5) days from on the date on which the same is due and payable,
such payment  shall  continue as an  obligation  of the  Borrower,  and interest
thereon from the due date of such payment shall accrue until paid in full at the
lesser of (i) fifteen percent (15%) per annum, or (ii) the highest interest rate
permitted under applicable law (the "Default Rate"). From and after the Maturity
Date or upon acceleration of this Debenture, the entire unpaid principal balance
with all unpaid interest accrued thereon, and any and all other fees and charges
then due at such maturity, shall bear interest at the Default Rate.

         6. Prepayment.  Principal and interest accrued on this Debenture may be
prepaid  in part or in full at any  time  and  from  time to time at  Borrower's
option, without penalty, premium or discount, upon ten (10) days prior notice to
the holder.

         7. Transfer of Debenture

              (a)  Borrower  may deem and treat the  person or  persons in whose
name this Debenture  shall be registered  upon the books and records of Borrower
as (i) the  absolute  owner  of  this  Debenture  (regardless  of  whether  this
Debenture  shall be past due, and  notwithstanding  any  notation of  ownership,
endorsement, or other writing on this Debenture) and (ii) the person entitled to
receive  payment of or on account of principal and interest due or payable under
this Debenture,  and for all other purposes;  and Borrower shall not be affected
by any notice to the contrary  unless such notice of transfer is given  pursuant
to Section 7(c).  All such payments  shall be valid and effectual to satisfy and
discharge the liability on this Debenture to the extent of all sums so paid.

              (b)  Borrower  shall not be bound to  recognize  any  equitable or
other claim or interest in this  Debenture  on the part of any person other than
the person or persons in whose name this Debenture  shall be registered upon the
books and  records  of  Borrower,  and  Borrower  shall  not be  liable  for any
registration  of  transfer  of  any  Debenture  which  is  registered  or  to be
registered  in the  name of a  fiduciary  or the  nominee  of a  fiduciary  upon
instruction  from such fiduciary,  unless made with the actual  knowledge that a
fiduciary  or  nominee  is  committing  a breach  of trust  in  requesting  such
registration  or  transfer,  or with  such  knowledge  of such  facts  that  its
participation therein amounts to bad faith.

              (c)  The  transfer  of  this   Debenture  is  registrable  by  the
registered holder in person,  or by his attorney duly authorized in writing,  on
the books and records of the Borrower at the address designated in Section 7(d),
as such address may be changed from time to time as provided therein, subject to
the terms, conditions, and restrictions of transfer set forth in this Debenture,
but  without  payment of any charge  other than a sum  sufficient  to  reimburse
Borrower  for  any tax or  other  governmental  charge  incident  thereto.  Such
registration  of  transfer  shall be  effected  only  upon  compliance  with the
provisions  of this  Section  7, and upon  surrender  and  cancellation  of this
Debenture. Upon any such registration of transfer, a new Debenture or Debentures
of the same aggregate  principal  amount will be issued to the persons  entitled
thereto  in  exchange  for  this   Debenture.   All  Debentures   presented  for
registration of transfer, if so required by Borrower, shall

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be  accompanied  by a written  instrument or  instruments  of transfer,  in form
reasonably  satisfactory to Borrower,  duly executed by the registered holder or
by his duly authorized  attorney,  with all signatures  acknowledged by a notary
public. In all cases of transfer by an attorney, the original power of attorney,
duly approved, or a copy thereof, duly certified,  shall be deposited and remain
with the Borrower. In case of transfer by executors,  administrators,  guardians
or other legal  representatives,  duly authenticated evidence of their authority
shall be  produced,  and may be  required  to be  deposited  and remain with the
Borrower in its discretion.

              (d)  Borrower  shall keep and  maintain a register or registers in
which  Borrower shall  register  Debentures and the transfer of Debentures.  All
payments of  principal,  interest,  and any other amount due or that becomes due
under this Debenture,  shall be paid to the holder by check mailed to the holder
at his or her  address of record.  The holder may change the address for payment
or for notice by delivery of written notice to Borrower.  The address for notice
to Borrower shall be 935 Pardee Street,  Berkeley,  California 94710; Attention:
Chief Financial  Officer.  Borrower may change its address for notice by written
notice to holder.

              (e)  This  Debenture  may  not  be  sold,  pledged,  hypothecated,
negotiated,  assigned,  or otherwise transferred except pursuant to an effective
registration  statement  under  the  Securities  Act of 1933,  as  amended,  and
pursuant to effective  registration  or  qualification  under  applicable  state
securities or "blue sky" laws,  unless an exemption from such  registration  and
qualification is available.  Borrower will make a stop transfer  notation in the
register maintained pursuant to this Section 7 with respect to such restrictions
on transfer.  Borrower may require,  as a condition to registration of transfer,
that the transferor or transferee deliver to Borrower an opinion of counsel,  in
form and substance  reasonably  acceptable to Borrower,  to the effect that such
transfer is exempt from the  registration  and  qualification  provisions of the
Securities  Act of 1933, as amended,  and applicable  state  securities or "blue
sky" laws.

         8. Default.

              (a)  Subject  to the  provisions  of this  Section  8, the  unpaid
principal balance of this Debenture, together with all accrued interest thereon,
shall, at the option of the holder of this Debenture, become immediately due and
payable upon the  occurrence of any of the  following  events (each an "Event of
Default"):  (i) the default of Borrower in the payment of any interest due under
this Debenture if such default  continues for ten (10) calendar  days;  (ii) the
default of Borrower in the payment of any  principal  due under this  Debenture;
(iii)  the  failure  of  Borrower  for a period  of 30 days  after  notice  from
Debenture  holders to observe or  perform  in any  material  respect  any of the
provisions of this Debenture,  other than payment of interest or principal; (iv)
Borrower instituting or consenting to any proceeding under any Debtor Relief Law
(as defined  below) with respect to Borrower or any part of Borrower's  property
or  assets,  or  Borrower  becoming  the  subject  of any order for  relief in a
proceeding  under any Debtor  Relief  Law;  (v) the  institution  of any case or
proceeding  under any Debtor  Relief Law with respect to Borrower or any part of
Borrower's  property  or assets  without the consent of Borrower if such case or
proceeding continues  undismissed or unstayed for sixty (60) calendar days; (vi)
the issuance or levy of any judgment, writ, warrant of

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attachment  or  execution  or  similar  process  against  property  or assets of
Borrower  in the  amount of $25,000 or more,  if such  process is not  released,
vacated or fully bonded within 60 calendar  days after its issue or levy;  (vii)
Borrower  making  an  assignment  for  the  benefit  of  creditors;  (viii)  the
dissolution or liquidation of Borrower, or (ix) Borrower defaults in the payment
of principal or interest on any  obligation for money owed in excess of $100,000
if such default  continues  for a period of ten calendar  days.  As used in this
Debenture,  the term "Debtor Relief Law" shall mean the  Bankruptcy  Code of the
United  States of America,  as  amended,  or any other  applicable  liquidation,
conservatorship,    bankruptcy,   moratorium,    rearrangement,    receivership,
insolvency, reorganization, or similar debtor relief law affecting the rights of
creditors generally.

              (b) If an Event of Default  specified in clause (iv),  (v), (vii),
or (viii) of  paragraph  (a) of this  Section 8  occurs,  the  unpaid  principal
balance of this  Debenture,  together  with all accrued  interest  thereon shall
become and be immediately  due and payable  without any declaration or other act
on the part of any Debenture holder.

              (c)  Neither  the holder of this  Debenture  nor the holder of any
other Series 2001-A  Debentures  shall  institute any suit or proceeding for the
enforcement  of the payment of  principal  or  interest  under any of the Series
2001-A  Debentures  unless  the  holders  of more than  fifty  percent  (50%) in
principal amount of all  then-outstanding  Series 2001-A Debentures join in such
suit or proceeding. Holders of more than fifty percent (50%) in principal amount
of the then outstanding Series 2001-A Debentures may direct the time, method and
place  of  conducting  any  proceeding  for  any  remedy  available  to  them or
exercising any power  conferred on them by the Debentures.  Notwithstanding  the
preceding  provisions of this  paragraph,  (i) any  Debenture  holder may file a
claim on their own behalf in any  proceeding to which  Borrower is subject under
the United States Bankruptcy Code or any other Debtor Relief Law; and (ii) if an
Event of  Default  arising  from the  failure of  Borrower  to pay  interest  or
principal  occurs  and  continues  for a  period  of  thirty  days  without  the
commencement  of any lawsuit or other  proceeding  by holders of more than fifty
percent  (50%)  in  principal  amount  of the  then  outstanding  Series  2001-A
Debentures,  any Debenture  holder may commence a lawsuit to enforce  payment of
principal and interest then due on the holder's  Debenture  (but not  accelerate
the  Maturity  Date of such  holder's  Debenture  or any  other  Series  2001- A
Debentures).

              (d) The Borrower  will furnish to any holder upon written  request
and  without  charge  a copy  of the  list of the  names  and  addresses  of the
registered  holders of Series 2001-A Debentures for a purpose reasonably related
to the interest of the holder as a Debenture holder.

         9.  Mutilated or Missing  Debentures.  In case any of the  certificates
evidencing the Debentures  shall be mutilated,  lost,  stolen or destroyed,  the
Borrower may in its  discretion  issue and deliver in exchange and  substitution
for  and  upon  cancellation  of the  mutilated  Debenture,  or in  lieu  of and
substitution  for the Debenture  lost,  stolen or destroyed,  a new Debenture of
like tenor,  but only upon receipt of evidence  reasonably  satisfactory  to the
Borrower of such loss,  theft or  destruction of such Debenture and an indemnity
or  bond,  if  requested,  also  reasonably  satisfactory  to the  Borrower.  An
applicant  for such a  substitute  Debenture  shall also  comply with such other
reasonable regulations and pay such other reasonable charges as the Borrower may
prescribe.

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         10. Law Governing. This Debenture shall be governed by and construed in
accordance  with the laws of the State of  California  applicable  to  contracts
entered into in the State of California, by residents of the State of California
and intended to be performed entirely within the State of California.

         11. Financial Covenants. Commencing on October 1, 2001 until such time,
subsequent  to the date of original  issue of this  Debenture,  as Borrower  (a)
obtains at least  $5,000,000 in additional cash in the aggregate  through one or
more sales of equity  securities  (including,  but not  limited  to, the sale of
capital  stock,  the sale or exercise of  options,  warrants or other  rights to
acquire  capital  stock,  and the conversion or exchange of any debt security or
evidence of indebtedness for capital stock), or (b) pays in full the outstanding
principal balance of, and all interest accrued on, the Series 2001-A Debentures,
Borrower's  total cash payments during any calendar quarter (ie. the three month
periods  ending March 31, June 30,  September 30, and December 31 of each year),
including,  without  limitation,  payment on account of  operating  expenses but
excluding  interest  payable on the Series 2001-A  Debentures,  shall not exceed
$450,000  in excess of all  revenues  collected  by Borrower in cash during such
calendar  quarter.  For the  purpose of this  Section,  revenues  shall  include
royalties,  license fees,  and other  proceeds from the sale or licensing of any
tangible or intangible property, but shall not include interest,  dividends, and
any monies borrowed or the proceeds from the issue or sale of any debt or equity
security.  Until such time as Borrower  pays in full the  outstanding  principal
balance of, and all interest accrued on, the Series 2001-A Debentures,  Borrower
shall not declare or pay any cash  dividend  on its  capital  stock or redeem or
repurchase any shares of its capital stock.

         12. Amendments, Supplements and Waiver.

              (a) Except as  provided  in the next  succeeding  paragraph,  this
Debenture and the other Series 2001-A  Debentures may be amended or supplemented
with the consent of the holders of at least a majority  in  principal  amount of
the Debentures then outstanding, and any existing default or compliance with any
provision of the Series 2001-A  Debentures,  including  this  Debenture,  may be
waived with the consent of the holders of a majority in principal  amount of the
then  outstanding  Series  2001-A  Debentures.  If any such  amendment or waiver
pertains to or affects some but not all of the Series  2001-A  Debentures,  such
consent need be obtained only from the holders of the Debentures so affected. If
any such  amendment or waiver would affect all of the Series  2001-A  Debentures
but would do so in a manner that differs  materially  between the  Debentures so
affected,  then the  consent of holders of a  majority  in  principal  amount of
Debenture  affected  in a like  manner  must be  obtained  to give effect to the
amendment or waiver.

              (b)  Without  the  written  consent of each  holder  affected,  an
amendment  or  waiver  may  not  (with  respect  to  any  Debenture  held  by  a
non-consenting  holder of Debentures) (i) reduce the principal  amount or change
the fixed maturity of any Debenture;  (ii) reduce the rate of or change the time
for  payment  of  interest  on any  Debenture;  (iii)  waive an Event of Default
arising  from the  failure of Borrower  to pay  principal  of or interest on the
Debentures (except a rescission of acceleration of the Debentures by the holders
of at least a majority in aggregate  principal  amount of the  Debentures  and a
waiver of the payment default that resulted from such acceleration); (iv) make

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any Debenture payable in money other than that stated in the Debentures;  or (v)
make any change in the provisions of the Debentures  relating to waivers of past
defaults or the rights of holders of Debentures to receive payments of principal
of or interest on the Debentures,  or make any change in the foregoing amendment
and waiver provisions.

              (c)  Notwithstanding  the  foregoing,  without  the consent of any
holder of Debentures, the Borrower may amend or supplement the Debentures to (i)
cure any ambiguity, defect or inconsistency,  (ii) to provide for uncertificated
Debentures  in  addition  to or in place of  certificated  Debentures,  (iii) to
provide  for  the  assumption  of  the  Borrower's  obligations  to  holders  of
Debentures  in the  case of a  merger  or  consolidation,  (iv) to  provide  any
collateral for the benefit of the holders of Debentures,  (v) to make any change
that  would  provide  any  additional  rights  or  benefits  to the  holders  of
Debentures  or that  does not  adversely  affect  the  legal  rights of any such
holder,  and (vi) to comply with the Trust  Indenture  Act of 1939,  if such law
becomes applicable to the Debentures.

         13. Release of Shareholders,  Officers and Directors. This Debenture is
the obligation of Borrower only, and no recourse shall be had for the payment of
this  Debenture  or the interest  thereon  against any  shareholder,  officer or
director of  Borrower,  either  directly or through  Borrower,  by virtue of any
statute for the  enforcement of any assessment or otherwise,  all such liability
of shareholders,  directors and officers as such being released by holder by the
acceptance of this Debenture.

         14. Fees and  Charges of  Attorneys  and Others.  In the event that the
holders  of  the  Series  2001-A  Debentures   employ  attorneys,   accountants,
appraisers,  consultants,  or other professional assistance,  in connection with
any of the following,  then, the reasonable amount of costs,  expenses, and fees
incurred by such Debenture  holders shall be payable on demand;  provided,  that
Borrower  shall not be  obligated  to pay the fees and expenses of more than one
firm of attorneys, accountants,  appraisers, consultants and other professionals
representing  all of the  Debenture  holders as a group.  Costs,  expenses,  and
reasonable fees of professionals  covered by this provision include such charges
for the following:

              (a) The preparation, modification, or renewal of the Series 2001-A
Debentures  and that  certain  Warrant  Agreement,  of even  date,  executed  by
Borrower in connection  with the issuance of common stock  purchase  warrants to
the persons to whom the 2001-A  Debentures were originally  issued and sold (the
"Warrant Agreement")..

              (b)  Any  litigation,   dispute,  proceeding  or  action,  whether
instituted by the Debenture holders,  Borrower, or any other person, relating to
the Series 2001-A Debentures,  including  representation of Debenture holders in
any bankruptcy,  insolvency,  or reorganization case or proceeding instituted by
or against Borrower,  and any attempt by Debenture holders to enforce any rights
against Borrower under the Series 2001-A Debentures;

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              (c) In the event of any controversy, claim, or dispute relating to
the  Series  2001-A  Debentures,  including  but not  limited  to any  action to
construe or enforce the terms of the Series 2001-A  Debentures,  the  prevailing
party shall be entitled to recover its reasonable costs,  expenses, and attorney
fees;

              (d) In the event of bankruptcy or insolvency  proceedings (whether
state or federal)  instituted by or against Borrower,  the Debenture holders may
recover all costs, expenses, and reasonable attorney fees incurred to protect or
defend their rights under the  Debentures,  and other  documents  underlying the
loan transactions whether such costs, expenses, and attorney fees be contractual
or  bankruptcy  related,  including  costs,  expenses,  and  attorney  fees  for
meetings,  sessions, matters, proceedings and litigation involving issues solely
distinct  to federal  bankruptcy  law,  rules and  proceedings  as well as other
federal and state litigation and proceedings; and

              (e) The preparation and filing of all reports required to be filed
by Debenture  holders  under the  Securities  Exchange Act of 1934,  as amended,
during the term of this Debenture in connection with the ownership, acquisition,
or disposition of the warrants, common shares, or other equity securities issued
by Borrower pursuant to the Warrant Agreement.

         15. Miscellaneous.

              (a) Borrower waives (i) presentment,  demand,  protest,  notice of
dishonor,  and all other notices; (ii) any release or discharge arising from any
extension of time,  or discharge of a prior party;  and (iii) any other cause of
release or  discharge  other  than  actual  payment in full of all  indebtedness
evidenced by or arising under this Debenture.

              (b) The rights and  remedies  of the  holder as  provided  in this
Debenture and in law or equity shall be cumulative  and  concurrent,  and may be
pursued  singularly,  successively,  or together at the sole  discretion  of the
holder  subject to the provisions of Section 8, and may be exercised as often as
occasion  therefor  shall  occur;  and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or a release of any such right
or remedy.

              (c)  The  terms,  covenants,  and  conditions  contained  in  this
Debenture   shall  be  binding  upon  the  heirs,   executors,   administrators,
successors,  and  assigns of  Borrower,  and shall  inure to the  benefit of the
heirs, executors, administrators, successors and assigns of holder.

              (d) If any provisions of this Debenture would require the Borrower
to pay interest on the indebtedness evidenced by or arising under this Debenture
at a rate exceeding the highest rate

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allowable by applicable  law,  Borrower  shall  instead pay interest  under this
Debenture at the highest rate permitted by applicable law.

         IN WITNESS  WHEREOF,  Borrower has signed and sealed this  Debenture on
the date first set forth above.

                                     BIOTIME, INC.

                                     By:_______________________________

                                     Title: ___________________________

                                     By:_______________________________

                                     Title: ___________________________

                                        8---------------

                                Warrant Agreement

                           Dated as of August 13, 2001

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

<PAGE>

         WARRANT AGREEMENT,  dated as of August 13, 2001, between BioTime, Inc.,
a California  corporation  (the  "Company"),  and the persons named on Exhibit A
(the "Lenders").

         The Company  proposes  to issue  Common  Stock  Purchase  Warrants,  as
hereinafter  described  (the  "Warrants"),  to  purchase up to an  aggregate  of
769,231 of its Common Shares,  no par value (the "Common  Stock") (the shares of
Common Stock  issuable upon exercise of the Warrants being referred to herein as
the "Warrant  Shares"),  in connection  with the issue and sale of Series 2001-A
Debentures to the Lenders (the "Debentures").

         In  consideration  of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective  rights and  obligations
thereunder of the Company and each registered owner of a Warrant (the "Holder"),
the Company and the Lenders hereby agree as follows:

         Section 1. Issuance of Warrants;  Term of Warrants.  Concurrently  with
the  execution and delivery of this  Agreement and the issue of the  Debentures,
the  Company is issuing  and  delivering  to each Lender a Warrant to purchase a
number  of  Warrant  Shares  determined  by  dividing  the  principal  amount of
Debentures  purchased by such Lender by the initial  Warrant  Price (as shown in
Section 4). The Warrant shall be represented  by a certificate in  substantially
the form of Exhibit A hereto.  Subject to the terms of this Agreement,  a Holder
of any of such  Warrant  (including  any  Warrants  into which a Warrant  may be
divided) shall have the right,  which may be exercised at any time prior to 5:00
p.m., New York Time on August 1, 2004 (the "Expiration  Date"), to purchase from
the Company the number of fully paid and nonassessable  Warrant Shares which the
Holder may at the time be  entitled  to  purchase  upon  exercise of any of such
Warrant.

         Section  2.  Form  of  Warrant.  The  text of the  Warrants  and of the
Purchase Form shall be  substantially as set forth in Exhibit A attached hereto.
The price per  Warrant  Share and the number of  Warrant  Shares  issuable  upon
exercise of each  Warrant  are  subject to  adjustment  upon the  occurrence  of
certain events, all as hereinafter  provided.  The Warrants shall be executed on
behalf of the Company by its Chairman of the Board, President or one of its Vice
Presidents,  under  its  corporate  seal  reproduced  thereon  attested  by  its
Secretary or any Assistant Secretary.  The signature of any such officers on the
Warrants may be manual or facsimile,  provided,  however,  that the signature of
any  such  officers  must be  manual  until  such  time as a  warrant  agent  is
appointed.

                  2.1 Signatures;  Date of Warrants. Warrants bearing the manual
or facsimile  signatures of individuals who were at any time the proper officers
of the Company shall bind the Company,  notwithstanding that such individuals or
any one of them shall have ceased to hold such offices  prior to the delivery of
such Warrants or did not hold such offices on the date of this Agreement. In the
event that the  Company  shall  appoint a warrant  agent to act on its behalf in
connection with the division,  transfer,  exchange or exercise of Warrants,  the
Warrants issued after the date of such appointment shall be dated as of the date
of  countersignature  thereof  by the  warrant  agent upon  division,  exchange,
substitution or transfer. Until such time as the Company

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shall  appoint  a  warrant  agent,  Warrants  shall  be  dated as of the date of
execution  thereof by the Company either upon initial issuance or upon division,
exchange, substitution or transfer.

                  2.2  Countersignature  of  Warrants.  In the  event  that  the
Company shall  appoint a warrant  agent to act on its behalf in connection  with
the division,  transfer,  exchange or exercise of Warrants,  the Warrants issued
after the date of such  appointment  shall be countersigned by the warrant agent
(or any successor to the warrant  agent then acting as warrant  agent) and shall
not  be  valid  for  any  purpose  unless  so  countersigned.  Warrants  may  be
countersigned,  however,  by the warrant  agent (or by its  successor as warrant
agent hereunder) and may be delivered by the warrant agent, notwithstanding that
the  persons  whose  manual or  facsimile  signatures  appear  thereon as proper
officers  of the Company  shall have  ceased to be such  officers at the time of
such countersignature, issuance or delivery. The warrant agent (if so appointed)
shall, upon written instructions of the Chairman of the Board, the President, an
Executive  or Senior Vice  President,  the  Treasurer or the  Controller  of the
Company,  countersign,  issue and deliver the Warrants and shall countersign and
deliver Warrants as otherwise provided in this Agreement.

         Section 3.    Exercise of Warrants; Listing.

                  3.1  Exercise of  Warrants.  A Warrant may be  exercised  upon
surrender  of the  certificate  or  certificates  evidencing  the Warrants to be
exercised, together with the form of election to purchase on the reverse thereof
duly filled in and signed,  which  signature  shall be  guaranteed  by a bank or
trust  company  or a  broker  or  dealer  which  is a  member  of  the  National
Association of Securities Dealers,  Inc., to the Company at its principal office
(or if appointed, the principal office of the warrant agent) and upon payment of
the  Warrant  Price  (as  defined  in and  determined  in  accordance  with  the
provisions of Section 4 and Section 10) to the Company (or if appointed,  to the
warrant agent for the account of the Company),  for the number of Warrant Shares
in respect of which such Warrants are then  exercised.  Payment of the aggregate
Warrant  Price  (defined  in  Section  4  herein)  shall  be  made in cash or by
certified or bank  cashier's  check or by delivery of  Debentures in such amount
(including  principal  and accrued  interest).  In the event that the  principal
amount of  Debentures  delivered  as payment of the  Warrant  Price  exceeds the
Warrant Price, the Company shall issue and deliver to the Holder a new Debenture
in the amount not applied toward the Warrant Price.

                  (a)  Subject to Section 5, upon the  surrender  of the Warrant
and payment of the Warrant Price as aforesaid, the Company (or if appointed, the
warrant  agent) shall  promptly  cause to be issued and delivered to or upon the
written  order  of the  Holder  and in such  name or  names  as the  Holder  may
designate,  a certificate or certificates  for the number of full Warrant Shares
so purchased upon the exercise of such Warrant,  together with cash, as provided
in Section 12, in respect of any fractional  Warrant Shares  otherwise  issuable
upon such surrender.  Such  certificate or certificates  shall be deemed to have
been issued and any person so  designated to be named therein shall be deemed to
have  become a holder  of record  of such  Warrant  Shares as of the date of the
surrender of such Warrants and payment of the Warrant Price,  as aforesaid.  The
rights of purchase  represented  by the  Warrant  shall be  exercisable,  at the
election of the Holder thereof, either in full or from time to time in part and,
in the event that a certificate evidencing

                                        2

<PAGE>

the  Warrant is  exercised  in respect  of less than all of the  Warrant  Shares
purchasable  on such exercise at any time prior to the date of expiration of the
Warrant,  a new certificate  evidencing the  unexercised  portion of the Warrant
will be issued,  and the warrant agent (if so  appointed) is hereby  irrevocably
authorized to countersign and to deliver the required new Warrant certificate or
certificates  pursuant to the  provisions of this Section 3 and Section 2.2, and
the Company, whenever required by the warrant agent (if appointed),  will supply
the  warrant  agent with  Warrant  certificates  duly  executed on behalf of the
Company for such purpose.

                  3.2 Listing of Shares on  Securities  Exchange;  Exchange  Act
Registration.  The  Company  will  promptly  use its best  efforts  to cause the
Warrant  Shares to be listed,  subject to official  notice of  issuance,  on all
national  securities  exchanges  on which the  Common  Stock is listed and whose
rules and regulations  require such listing,  as soon as possible  following the
date hereof.  The Company will promptly notify the Holders in the event that the
Company  plans to  register  the  Warrants  with  the  Securities  and  Exchange
Commission under the Securities  Exchange Act of 1934, as amended (the "Exchange
Act").

         Section 4.  Warrant  Price.  Subject  to any  adjustments  required  by
Section 10, the price per share at which  Warrant  Shares  shall be  purchasable
upon exercise of a Warrant (as to any particular  Warrant,  the "Warrant Price")
shall be six dollars and fifty-cents ($6.50) per share.

         Section 5. Payment of Taxes. The Company will pay all documentary stamp
taxes, if any,  attributable to the initial  issuance of Warrant Shares upon the
exercise of Warrants;  provided, however, that the Company shall not be required
to pay any tax or taxes which may be payable in respect of any transfer involved
in the issue or delivery of any Warrant or certificates  for Warrant Shares in a
name other than that of the registered Holder of such Warrants.

         Section 6. Redemption of Warrants.

                  6.1 Right to  Redeem.  The  Warrants  may be  redeemed  by the
Company, at its election,  at any time after June 30, 2002 if (a) a registration
statement under Section 18.1 or a registration statement under Section 18.2 that
includes  Warrants and Warrant Shares is then effective under the Securities Act
of 1933, as amended, and (b) the closing price of the Common Stock on a national
securities  exchange (including the Nasdaq Stock Market National Market System),
or the average bid price as quoted in Nasdaq Stock  Market if the Common  Shares
are not listed on a national securities exchange,  equals or exceeds 150% of the
Warrant Price for any fifteen (15) consecutive trading days ending not more than
thirty (30) days prior to the date of the notice given pursuant to Section 6.2.

                  6.2 Notice of Redemption. Notice of proposed redemption of the
Warrants  shall be sent by or on behalf of the  Company,  by first  class  mail,
postage  prepaid,  to the Holders of record of the Warrants at the  addresses of
such Holders  appearing in the records of the Company or the warrant  agent,  if
any. Such notice shall be sent not less than  forty-five  (45) days prior to the
date fixed by the Company for redemption (the  "Redemption  Date").  Such notice
shall  notify  the  Holder of the  Warrants  that the  Company  will  redeem the
Warrants, and shall state (i) the date

                                       3
<PAGE>

of redemption, (ii) the redemption price, (iii) the place or places at which the
redemption price shall be paid upon  presentation and surrender of the Warrants,
and (iv) the name and address of the  warrant  agent,  if any,  and the name and
address of any bank or trust  company  appointed  by the  Company to receive and
disburse the redemption price.

                  6.3 Effect of Redemption.  From and after the Redemption Date,
the Warrants shall no longer be deemed  outstanding and all rights of the Holder
of the  Warrants  shall  cease  and  terminate,  except  for  the  right  of the
registered Holder to receive payment of the redemption price of one cent ($0.01)
per Warrant Share upon presentation and surrender of the Warrants.

                  6.4 Abatement of Redemption.  The Redemption Date shall abate,
and the notice of  redemption  shall be of no effect,  if the  closing  price or
average bid price of the Common Stock, as applicable under Section 6.1, does not
equal or exceed 120% of the Warrant Price on the Redemption Date and each of the
five trading days  immediately  preceding the  Redemption  Date, but the Company
shall have the right to redeem the  Warrants at a future date if the  conditions
set forth in Section  6.1 are  subsequently  met and a new notice  setting a new
Redemption Date is sent to Warrant holders as provided in Section 6.2.

         Section 7. Transferability of Warrants.

                  7.1 Registration.  Each Warrant shall be numbered and shall be
registered on the books of the Company (the "Warrant  Register") as issued.  The
Company  and the  warrant  agent (if  appointed)  shall be entitled to treat the
Holder of any Warrant as the owner in fact  thereof for all  purposes  and shall
not be bound to  recognize  any  equitable  or other  claim or  interest in such
Warrant  on the part of any  other  person,  and  shall  not be  liable  for any
registration  of transfer of any Warrant which is registered or to be registered
in the name of a fiduciary or the nominee of a fiduciary upon the instruction of
such  fiduciary,  unless  made with the actual  knowledge  that a  fiduciary  or
nominee is  committing  a breach of trust in  requesting  such  registration  or
transfer,  or with such knowledge of such facts that its  participation  therein
amounts to bad faith.  Each Warrant shall initially be registered in the name of
the Lender to whom it is originally issued.

                  7.2  Restrictions  on Exercise and Transfer.  The Warrants may
not be exercised, sold, pledged, hypothecated, transferred or assigned, in whole
or in part, unless a registration statement under the Securities Act of 1933, as
amended (the "Act"), and under any applicable state securities laws is effective
therefor  or,  an  exemption  from  such  registration  is then  available.  Any
exercise, sale, pledge,  hypothecation,  transfer, or assignment in violation of
the  foregoing  restriction  shall be  deemed  null  and void and of no  binding
effect. The Company shall be entitled to obtain, as a condition precedent to its
issuance of any certificates representing Warrant Shares or any other securities
issuable upon any exercise of a Warrant,  a letter or other  instrument from the
Holder containing such covenants,  representations  or warranties by such Holder
as reasonably  deemed  necessary by Company to effect  compliance by the Company
with the requirements of applicable federal and/or state securities laws.

                                       4
<PAGE>

                  7.3  Transfer.  Subject to Section 7.2, the Warrants  shall be
transferable only on the Warrant Register upon delivery thereof duly endorsed by
the Holder or by his duly authorized attorney or representative,  or accompanied
by proper  evidence of  succession,  assignment or authority to transfer,  which
endorsement shall be guaranteed by a bank or trust company or a broker or dealer
which is a member of the National Association of Securities Dealers, Inc. In all
cases of transfer by an attorney, the original power of attorney, duly approved,
or a copy  thereof,  duly  certified,  shall be  deposited  and remain  with the
Company (or the warrant agent, if appointed).  In case of transfer by executors,
administrators,  guardians or other legal  representatives,  duly  authenticated
evidence  of  their  authority  shall be  produced,  and may be  required  to be
deposited  and remain with the Company (or the warrant  agent,  if appointed) in
its discretion. Upon any registration of transfer, the Company shall execute and
deliver (or if appointed, the warrant agent shall countersign and deliver) a new
Warrant or Warrants to the persons entitled thereto.

         Section 8. Exchange of Warrant  Certificates.  Each Warrant certificate
may be  exchanged,  at the option of the Holder  thereof,  for  another  Warrant
certificate or Warrant  certificates  in different  denominations  entitling the
Holder or Holders thereof to purchase a like aggregate  number of Warrant Shares
as the  certificate  or  certificates  surrendered  then  entitle each Holder to
purchase.  Any Holder desiring to exchange a Warrant certificate or certificates
shall make such  request in writing  delivered  to the Company at its  principal
office (or, if a warrant agent is appointed,  the warrant agent at its principal
office) and shall surrender,  properly endorsed, the certificate or certificates
to be so exchanged. Thereupon, the Company (or, if appointed, the warrant agent)
shall  execute  and  deliver  to  the  person  entitled  thereto  a new  Warrant
certificate or certificates,  as the case may be, as so requested,  in such name
or names as such Holder shall designate.

         Section  9.  Mutilated  or  Missing  Warrants.   In  case  any  of  the
certificates  evidencing  the  Warrants  shall be  mutilated,  lost,  stolen  or
destroyed,  the  Company  may in its  discretion  issue  and  deliver  (and,  if
appointed,  the warrant  agent shall  countersign  and  deliver) in exchange and
substitution for and upon cancellation of the mutilated Warrant certificate,  or
in  lieu of and  substitution  for  the  Warrant  certificate  lost,  stolen  or
destroyed,  a new Warrant  certificate  of like tenor,  but only upon receipt of
evidence  reasonably  satisfactory  to the Company and the warrant  agent (if so
appointed) of such loss,  theft or  destruction of such Warrant and an indemnity
or bond, if requested,  also  reasonably  satisfactory to them. An applicant for
such a  substitute  Warrant  certificate  shall  also  comply  with  such  other
reasonable  regulations and pay such other reasonable charges as the Company (or
the warrant agent, if so appointed) may prescribe.

         Section 10.  Adjustment of Warrant Price and Number of Warrant  Shares.
The number and kind of securities  purchasable upon the exercise of each Warrant
and the Warrant Price shall be subject to adjustment  from time to time upon the
happening of certain events, as hereinafter defined.

                  10.1  Adjustments.  The number of Warrant  Shares  purchasable
upon the  exercise of each  Warrant  and the  Warrant  Price shall be subject to
adjustment as follows:

                                       5
<PAGE>

                       (a) In  the  event  that  the  Company  shall  (i)  pay a
dividend in shares of Common  Stock or make a  distribution  in shares of Common
Stock, (ii) subdivide its outstanding  shares of Common Stock, (iii) combine its
outstanding  shares of Common  Stock  into a smaller  number of shares of Common
Stock or (iv) reclassify or change  (including a change to the right to receive,
or a change  into,  as the case may be (other  than with  respect to a merger or
consolidation  pursuant to the exercise of appraisal  rights),  shares of stock,
other securities,  property,  cash or any combination  thereof) its Common Stock
(including   any  such   reclassification   or  change  in  connection   with  a
consolidation or merger in which the Company is the surviving corporation),  the
number of Warrant Shares  purchasable upon exercise of each Warrant  immediately
prior  thereto  shall be  adjusted so that the Holder of each  Warrant  shall be
entitled to receive the kind and number of Warrant Shares or other securities of
the Company or other property which he would have owned or have been entitled to
receive  after the  happening  of any of the events  described  above,  had such
Warrant been exercised  immediately  prior to the happening of such event or any
record date with respect thereto.  An adjustment made pursuant to this paragraph
(a) shall become  effective  immediately  after the effective date of such event
retroactive to the record date, if any, for such event.

                       (b) In case the Company  shall issue  rights,  options or
warrants to all holders of its outstanding  Common Stock,  without any charge to
such holders, entitling them to subscribe for or purchase shares of Common Stock
at a price per share which is lower at the record date mentioned  below than the
then current market price per share of Common Stock (as defined in paragraph (d)
below), the number of Warrant Shares thereafter purchasable upon the exercise of
each Warrant  shall be determined by  multiplying  the number of Warrant  Shares
theretofore  purchasable  upon exercise of each Warrant by a fraction,  of which
the numerator  shall be the number of shares of Common Stock  outstanding on the
date of  issuance  of such  rights,  options  or  warrants  plus the  number  of
additional  shares of Common  Stock  offered  for  subscription  or  purchase in
connection with such rights,  options or warrants,  and of which the denominator
shall be the  number  of  shares  of  Common  Stock  outstanding  on the date of
issuance of such rights, options or warrants plus the number of shares which the
aggregate  offering  price of the total  number  of  shares  of Common  Stock so
offered would  purchase at the current market price per share of Common Stock at
such record date. Such adjustment shall be made whenever such rights, options or
warrants are issued,  and shall become  effective  immediately  after the record
date for the  determination  of  stockholders  entitled to receive  such rights,
options or warrants.

                       (c) In case the Company  shall  distribute to all holders
of its shares of Common Stock,  (including any  distribution  made in connection
with a merger in which the Company is the surviving  corporation),  evidences of
its indebtedness or assets (excluding cash,  dividends or distributions  payable
out of  consolidated  earnings or earned surplus and dividends or  distributions
referred  to in  paragraph  (a)  above)  or  rights,  options  or  warrants,  or
convertible or exchangeable  securities containing the right to subscribe for or
purchase  shares of Common Stock  (excluding  those referred to in paragraph (b)
above),  then in each case the number of Warrant Shares  thereafter  purchasable
upon the exercise of each Warrant shall be determined by multiplying  the number
of Warrant Shares theretofore purchasable upon the exercise of each

                                       6
<PAGE>

Warrant by a fraction,  of which the numerator  shall be the then current market
price per share of Common Stock (as defined in paragraph  (d) below) on the date
of such  distribution,  and of which the  denominator  shall be the then current
market price per share of Common Stock,  less the then fair value (as determined
by the Board of Directors of the Company or, in the case of Warrants held by the
Lender, an independent  investment  banker which shall be mutually  agreeable to
the parties,  whose  determination,  in each case,  shall be  conclusive) of the
portion of the assets or evidences of  indebtedness  so  distributed  or of such
subscription rights, options or warrants, or of such convertible or exchangeable
securities  applicable to one share of Common Stock.  Such  adjustment  shall be
made whenever any such  distribution is made, and shall become  effective on the
date of  distribution  retroactive to the record date for the  determination  of
shareholders entitled to receive such distribution.

                       (d) For the purpose of any computation  under  paragraphs
(b) and (c) of this Section 10.1,  the current  market price per share of Common
Stock at any date shall be the  average of the daily last sale prices for the 20
consecutive  trading  days  ending  one  trading  day  prior to the date of such
computation.  The closing  price for each day shall be the last  reported  sales
price regular way or, in case no such reported sale takes place on such day, the
average of the  closing bid and asked  prices  regular way for such day, in each
case on the principal national securities exchange on which the shares of Common
Stock are listed or  admitted  to trading  or, if not so listed or  admitted  to
trading,  the last sale price of the Common  Stock on the Nasdaq Stock Market or
any comparable system. If the current market price of the Common Stock cannot be
so determined,  the Board of Directors of the Company shall reasonably determine
the current market price on the basis of such quotations as are available.

                       (e)  No  adjustment  in  the  number  of  Warrant  Shares
purchasable  hereunder shall be required unless such adjustment would require an
increase  or  decrease  of at least one  percent  (1%) in the  number of Warrant
Shares purchasable upon the exercise of each Warrant;  provided,  however,  that
any  adjustments  which by reason of this  paragraph  (e) are not required to be
made shall be carried forward and taken into account in the determination of any
subsequent adjustment. All calculations shall be made with respect to the number
of Warrant  Shares  purchasable  hereunder,  to the nearest tenth of a share and
with respect to the Warrant Price payable hereunder, to the nearest whole cent.

                       (f)  Whenever  the number of Warrant  Shares  purchasable
upon the exercise of each Warrant is adjusted,  as herein provided,  the Warrant
Price  payable upon  exercise of each Warrant  shall be adjusted by  multiplying
such Warrant Price immediately prior to such adjustment by a fraction,  of which
the  numerator  shall be the  number  of  Warrant  Shares  purchasable  upon the
exercise of each Warrant immediately prior to such adjustment,  and of which the
denominator  shall be the  number  of  Warrant  Shares  purchasable  immediately
thereafter.

                       (g)  No  adjustment  in  the  number  of  Warrant  Shares
purchasable  upon the exercise of each Warrant need be made under paragraphs (b)
and (c) if the Company  issues or  distributes  to each  Holder of Warrants  the
rights  options,   warrants,  or  convertible  or  exchangeable  securities,  or
evidences of indebtedness or assets referred to in those  paragraphs

                                       7
<PAGE>

which each  Holder of  Warrants  would  have been  entitled  to receive  had the
Warrants been exercised  prior to the happening of such event or the record date
with respect  thereto.  No adjustment need be made for a change in the par value
of the Warrant Shares.

                       (h) For  the  purpose  of this  Section  10.1,  the  term
"shares of Common  Stock"  shall mean (i) the class of stock  designated  as the
Common  Stock of the  Company at the date of this  Agreement,  or (ii) any other
class of stock resulting from successive  changes or  reclassifications  of such
shares  consisting  solely of changes in par value,  or from par value to no par
value,  or from no par value to par value.  In the event that at any time,  as a
result of an adjustment made pursuant to paragraph (a) above,  the Holders shall
become  entitled to purchase any  securities of the Company other than shares of
Common Stock,  thereafter  the number of such other shares so  purchasable  upon
exercise of each  Warrant and the Warrant  Price of such shares shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable  to the provisions  with respect to the Warrant Shares  contained in
paragraphs  (a) through  (i),  inclusive,  and the  provisions  of Section 3 and
Section  10.2  through  Section  10.5,  inclusive,  with  respect to the Warrant
Shares, shall apply on like terms to any such other securities.

                       (i) Upon the expiration of any rights, options,  warrants
or  conversion  or  exchange  privileges,  if any  thereof  shall  not have been
exercised,  the Warrant Price and the number of Warrant Shares  purchasable upon
the exercise of each Warrant  shall,  upon such  expiration,  be readjusted  and
shall  thereafter be such as it would have been had it been originally  adjusted
(or had the original adjustment not been required, as the case may be) as if (A)
the only shares of Common  Stock so issued were the shares of Common  Stock,  if
any, actually issued or sold upon the exercise of such rights, options, warrants
or  conversion or exchange  rights and (B) such shares of Common Stock,  if any,
were issued or sold for the consideration  actually received by the Company upon
such exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all such rights, options, warrants or
conversion or exchange rights whether or not exercised.

                  10.2 Voluntary  Adjustment by the Company.  The Company may at
its option, at any time during the term of the Warrants, reduce the then current
Warrant Price to any amount deemed  appropriate by the Board of Directors of the
Company.

                  10.3  Notice of  Adjustment.  Whenever  the  number of Warrant
Shares  purchasable  upon the exercise of each  Warrant or the Warrant  Price of
such Warrant Shares is adjusted,  as herein  provided,  the Company shall, or in
the event that a warrant agent is appointed, the Company shall cause the warrant
agent promptly to, mail by first class,  postage prepaid,  to each Holder notice
of such  adjustment  or  adjustments.  Such notice shall set forth the number of
Warrant  Shares  purchasable  upon the  exercise of each Warrant and the Warrant
Price of such  Warrant  Shares  after  such  adjustment,  setting  forth a brief
statement  of  the  facts  requiring  such  adjustment  and  setting  forth  the
computation by which such adjustment was made.

                                       8
<PAGE>

                  10.4 No  Adjustment  for  Dividends.  Except  as  provided  in
Section 10.1, no adjustment in respect of any dividends shall be made during the
term of a Warrant or upon the exercise of a Warrant.

                  10.5    Preservation   of   Purchase   Rights   Upon   Merger,
Consolidation,  etc. In case of any  consolidation of the Company with or merger
of the Company  into  another  corporation  or in case of any sale,  transfer or
lease to another  corporation  of all or  substantially  all the property of the
Company,  the Company or such successor or purchasing  corporation,  as the case
may be,  shall  execute  an  agreement  that each  Holder  shall  have the right
thereafter,  upon such Holder's election, either (i) upon payment of the Warrant
Price in effect  immediately  prior to such action, to purchase upon exercise of
each  Warrant the kind and amount of shares and other  securities  and  property
(including  cash)  which he would  have owned or have been  entitled  to receive
after the happening of such consolidation,  merger,  sale, transfer or lease had
such Warrant been  exercised  immediately  prior to such action (such shares and
other  securities and property  (including  cash) being referred to as the "Sale
Consideration") or (ii) to receive, in cancellation of such Warrant (and in lieu
of paying the Warrant price and exercising such Warrant), the Sale Consideration
less a portion  thereof having a fair market value (as reasonably  determined by
the Company) equal to the Warrant Price (it being  understood  that, if the Sale
Consideration  consists  of more than one type of shares,  other  securities  or
property,  the amount of each type of shares, other securities or property to be
received  shall  be  reduced  proportionately);   provided,   however,  that  no
adjustment  in respect of  dividends,  interest or other  income on or from such
shares or other  securities  and  property  shall be made  during  the term of a
Warrant or upon the exercise of a Warrant. The Company shall mail by first class
mail,  postage  prepaid,  to each  Holder,  notice of the  execution of any such
agreement.  Such  agreement  shall  provide for  adjustments,  which shall be as
nearly equivalent as may be practicable to the adjustments  provided for in this
Section 10. The provisions of this paragraph shall similarly apply to successive
consolidations,  mergers,  sales,  transfers  or leases.  The warrant  agent (if
appointed) shall be under no duty or responsibility to determine the correctness
of any provisions contained in any such agreement relating to the kind or amount
of shares of stock or other  securities or property  receivable upon exercise of
Warrants or with respect to the method  employed  and  provided  therein for any
adjustments  and shall be entitled to rely upon the provisions  contained in any
such agreement.

                  10.6 Statement on Warrants. Irrespective of any adjustments in
the Warrant Price or the number or kind of shares  purchasable upon the exercise
of the Warrants, Warrants issued before or after such adjustment may continue to
express  the same  price and  number  and kind of  shares  as are  stated in the
Warrants initially issuable pursuant to this Agreement.

         Section 11. Reservation of Warrant Shares; Purchase and Cancellation of
Warrants.

                  11.1 Reservation of Warrant Shares.  There have been reserved,
and the Company shall at all times keep reserved,  out of its authorized  Common
Stock, a number of shares of Common Stock sufficient to provide for the exercise
of the  rights of  purchase  represented  by the  outstanding  Warrants  and any
additional Warrants issuable hereunder.  The Transfer Agent for the Common Stock
and every  subsequent  transfer  agent for any shares of the  Company's  capital
stock issuable upon the exercise of any of the rights of purchase aforesaid will
be  irrevocably  authorized  and directed at all times to reserve such number of
authorized shares as shall be required for such purpose. The Company will keep a
copy of this  Agreement on file with the Transfer Agent for the Common Stock and
with every  subsequent  transfer  agent for any shares of the

                                       9
<PAGE>

Company's  capital  stock  issuable  upon the exercise of the rights of purchase
represented  by  the  Warrants.  The  warrant  agent,  if  appointed,   will  be
irrevocably authorized to requisition from time to time from such Transfer Agent
the stock  certificates  required to honor  outstanding  Warrants  upon exercise
thereof in accordance with the terms of this Agreement.  The Company will supply
such Transfer Agent with duly executed stock  certificates for such purposes and
will  provide  or  otherwise  make  available  any cash  which may be payable as
provided in Section 12. The Company will furnish such  Transfer  Agent a copy of
all notices of adjustments and certificates related thereto, transmitted to each
Holder pursuant to Section 10.3.

                  11.2  Purchase of Warrants by the Company.  The Company  shall
have the right,  except as limited by law, other agreements or herein,  with the
consent of the Holder,  to purchase or otherwise acquire Warrants at such times,
in such manner and for such consideration as it may deem appropriate.

                  11.3 Cancellation of Warrants.  In the event the Company shall
purchase or otherwise  acquire  Warrants,  the same shall thereupon be cancelled
and  retired.  The  warrant  agent (if so  appointed)  shall  cancel any Warrant
surrendered  for  exchange,  substitution,  transfer  or exercise in whole or in
part.

         Section 12. Fractional Interests.  The Company shall not be required to
issue  fractional  Warrant Shares on the exercise of Warrants.  If more than one
Warrant  shall be  presented  for  exercise in full at the same time by the same
Holder,  the number of full  Warrant  Shares  which shall be  issuable  upon the
exercise  thereof  shall be  computed  on the basis of the  aggregate  number of
Warrant  Shares  purchasable  on exercise of the Warrants so  presented.  If any
fraction of a Warrant Share would, except for the provisions of this Section 12,
be issuable on the exercise of any Warrant (or specified portion  thereof),  the
Company  shall pay an amount in cash equal to the  average of the daily  closing
sale prices  (determined  in accordance  with paragraph (d) of Section 10.1) per
share of Common Stock for the 20 consecutive trading days ending one trading day
prior to the date the Warrant is  presented  for  exercise,  multiplied  by such
fraction.

         Section  13. No Rights as  Shareholders;  Notices to  Holders.  Nothing
contained  in this  Agreement  or in any of the  Warrants  shall be construed as
conferring upon the Holders or their transferees the right to vote or to receive
dividends or to consent or to receive notice as  shareholders  in respect of any
meeting of  shareholders  for the  election of  directors  of the Company or any
other matter,  or any rights  whatsoever  as  shareholders  of the Company.  If,
however,  at any time prior to the expiration of the Warrants and prior to their
exercise, any of the following events shall occur:

                       (a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution  (other than
a regular cash dividend,

                                       10
<PAGE>

as such dividend may be increased  from time to time,  or a dividend  payable in
shares of Common Stock) to the holders of its shares of Common Stock; or

                       (b) the Company  shall offer to the holders of its shares
of Common Stock on a pro rata basis any cash,  additional shares of Common Stock
or other securities of the Company or any right to subscribe for or purchase any
thereof; or

                       (c) a  dissolution,  liquidation  or  winding  up of  the
Company (other than in connection with a consolidation,  merger,  sale, transfer
or lease of all or substantially all of its property, assets, and business as an
entirety) shall be proposed,

then in any one or more of said  events  the  Company  shall (i) give  notice in
writing of such event as  provided in Section 15 and (ii) if the  Warrants  have
been registered  pursuant to the Act, cause notice of such event to be published
once in The Wall Street Journal  (national  edition),  such giving of notice and
publication to be completed at least 10 days prior to the date fixed as a record
date or the date of closing  the  transfer  books for the  determination  of the
stockholders entitled to such dividend,  distribution, or subscription rights or
for the  determination  of  stockholders  entitled  to  vote  on  such  proposed
dissolution,  liquidation or winding up or the date of expiration of such offer.
Such notice  shall  specify such record date or the date of closing the transfer
books or the date of expiration, as the case may be. Failure to publish, mail or
receive  such  notice or any  defect  therein or in the  publication  or mailing
thereof  shall not affect the  validity  of any action in  connection  with such
dividend,  distribution or subscription  rights,  or such proposed  dissolution,
liquidation or winding up, or such offer.

         Section 14.  Appointment of Warrant Agent.  At such time as the Company
shall register Warrants under the Act, the Company shall appoint a warrant agent
to act on behalf of the  Company  in  connection  with the  issuance,  division,
transfer  and  exercise  of  Warrants.  At such time as the  Company  appoints a
warrant  agent,  the Company shall enter into a new Warrant  Agreement  with the
warrant  agent   pursuant  to  which  all  new  Warrants  will  be  issued  upon
registration of transfer or division,  which will reflect the appointment of the
warrant agent, as well as additional customary provisions as shall be reasonably
requested by the warrant agent in connection with the performance of its duties.
In the event that a warrant agent is  appointed,  the Company shall (i) promptly
notify the Holders of such  appointment  and the place  designated for transfer,
exchange and exercise of the Warrants, and (ii) take such steps as are necessary
to insure that Warrants  issued prior to such  appointment  may be exchanged for
Warrants countersigned by the warrant agent.

         Section 15.  Notices;  Principal  Office.  Any notice  pursuant to this
Agreement  by  the  Company  or by  any  Holder  to  the  warrant  agent  (if so
appointed),  or by the warrant  agent (if so  appointed) or by any Holder to the
Company,  shall be in writing and shall be delivered in person,  or mailed first
class, postage prepaid (a) to the Company, at its office,  Attention:  President
or (b) to the  warrant  agent,  at its  offices  as  designated  at the time the
warrant agent is appointed.  The address of the principal  office of the Company
is 935 Pardee Street, Berkeley,  California 94710. Any notice mailed pursuant to
this  Agreement by the Company or the warrant  agent to the

                                       11
<PAGE>

Holders shall be in writing and shall be mailed first class, postage prepaid, or
otherwise delivered,  to such Holders at their respective addresses on the books
of the Company or the warrant  agent,  as the case may be. Each party hereto and
any Holder may from time to time change the  address to which  notices to it are
to be delivered or mailed hereunder by notice to the other party.

         Section 16.  Successors.  Except as  expressly  provided  herein to the
contrary,  all the  covenants  and  provisions  of this  Agreement by or for the
benefit of the  Company  and the Lender  shall bind and inure to the  benefit of
their respective successors and permitted assigns hereunder.

         Section 17. Merger or  Consolidation  of the Company.  The Company will
not  merge or  consolidate  with or  into,  or sell,  transfer  or lease  all or
substantially all of its property to, any other corporation unless the successor
or  purchasing  corporation,  as the  case  may be (if not the  Company),  shall
expressly assume, by supplemental  agreement,  the due and punctual  performance
and  observance of each and every covenant and condition of this Agreement to be
performed and observed by the Company.

         Section 18. Registration Rights.

                  18.1 Filing of Registration Statement.  The Company agrees, at
its expense,  to file a registration  statement with the Securities and Exchange
Commission to register the Warrants and the Warrant Shares under the Act, and to
take such  other  actions  as may be  necessary  to allow the  Warrants  and the
Warrant Shares to be freely tradable,  without restrictions,  in compliance with
all regulatory requirements. Such registration statement shall be filed promptly
and the Company will use its best efforts to cause the registration statement to
become effective  within 120 days after the date of this Agreement.  The Company
will make all filings  required under  applicable state securities or "blue sky"
laws so  that  the  Warrants  and  Warrant  Shares  being  registered  shall  be
registered or qualified  for sale under the  securities or blue sky laws of such
jurisdictions  as  shall  be  reasonably  appropriate  for  distribution  of the
Warrants  and  Warrant  Shares  covered  by  the  registration  statement.   The
registration  statement shall be a "shelf" registration pursuant to Rule 415 (or
similar rule that may be adopted by the Securities and Exchange  Commission) and
shall  provide  that each  Holder's  plan of  distribution  is to offer and sell
Warrant  Shares from time to time at market  prices or prices  related to market
prices;  provided, that the registration statement may be amended to provide for
an  underwritten  public offering of Warrant Shares if the Holders submit to the
Company  a  written  notice  to  such  effect  with  a copy  of  the  applicable
underwriting  documents  and such  other  relevant  information  concerning  the
offering as the Company may request.  The Company  shall keep such  registration
statement  effective until the earlier of (a) completion of the  distribution or
distributions  being  made  pursuant  thereto,  and (b) such  time as all of the
Holders are  eligible to sell their  Warrant  Shares under Rule 144(k) under the
Act.  The Company  shall  utilize  Form S-3 if it  qualifies  for such use.  The
Company will furnish to the Holders of Warrants  and Warrant  Shares  registered
for sale under the Act (the "Selling Securities Holders") such numbers of copies
of a prospectus,  including a  preliminary  prospectus,  in conformity  with the
requirements  of the  Act  and  such  other  related  documents  as the  Selling
Securities  Holders  may  reasonably  request in order to effect the sale of the
Warrants and Warrant Shares.  To effect any offering  pursuant to a registration
statement  under  this  Section,  the  Company  shall  enter  into an  agreement
containing  customary

                                       12
<PAGE>

representations and warranties, and indemnification and contribution provisions,
all for the  benefit  of  Selling  Securities  Holders,  and,  in the case of an
Underwritten  public  offering,  an  underwriting  agreement  with an investment
banking firm selected by the Selling Security Holders and reasonably  acceptable
to the Company,  containing such customary  representations and warranties,  and
indemnification and contribution provisions

                  18.2 "Piggy-Back  Registration."  If, at any time, the Company
proposes  to  register  any of its  securities  under  the Act  (otherwise  than
pursuant  to  Section  18.1 or on a Form  S-8 if such  form  cannot  be used for
registration  of the Warrant or Warrant Shares  pursuant to its terms),  and the
registration  statement  described  in Section  18.1 shall not then be effective
under the Act,  the Company  shall,  as promptly as  practicable,  give  written
notice to the Lender.  The Company shall include in such registration  statement
the  Warrants  and  any  Warrant  Shares  proposed  to be  sold  by the  Selling
Securities  Holders.  Notwithstanding  the  foregoing,  if the  offering  of the
Company's securities is to be made through  underwriters,  the Company shall not
be required to include the Warrants and Warrant Shares if and to the extent that
the managing  underwriter  reasonably believes in good faith that such inclusion
would materially  adversely  affect such offering unless the Selling  Securities
Holders agree to postpone  their sales until 10 days after the  distribution  is
completed.

                  18.3 Costs of Registration.  The Company shall pay the cost of
the registration statements filed pursuant to this Agreement,  including without
limitation  all  registration  and filing fees,  fees and expenses of compliance
with  securities  or blue sky laws  (including  counsel's  fees and  expenses in
connection  therewith),  printing  expenses,  messenger  and delivery  expenses,
internal  expenses  of the  Company,  listing  fees and  expenses,  and fees and
expenses of the Company's  counsel,  independent  accountants  and other persons
retained or employed by the Company.  Selling  Securities  Holders shall pay any
underwriters discounts applicable to the Warrants and Warrant Shares.

         Section 19. Legends. The Warrants and Warrant Shares issued pursuant to
this Agreement shall bear an appropriate  legend,  conspicuously  disclosing the
restrictions  on exercise and transfer under Section 7.2 of this Agreement until
the same are registered for sale under the Act. The Company agrees that upon the
sale of the Warrants and Warrant Shares pursuant to a registration  statement or
an exemption, upon the presentation of the certificates containing such a legend
to it's transfer agent,  it will remove such legend.  The Company further agrees
to remove the legend at such time as registration  under the Act shall no longer
be required.

         Section 20.  Applicable  Law. This  Agreement  and each Warrant  issued
hereunder  shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to principles of conflict of laws.

         Section 21. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any person or  corporation  other than the Company,  the
warrant  agent (if  appointed)  and the  Holders any legal or  equitable  right,
remedy or claim under this  Agreement;  but this Agreement shall be for the sole
and exclusive  benefit of the Company,  the warrant agent and the Holders of the
Warrants.

                                       13
<PAGE>

         Section 22. Counterparts.  This Agreement may be executed in any number
ofcounterparts and each of such counterparts shall for all purposes be deemed to
be an original,  and all such counterparts shall together constitute but one and
the same instrument.

         Section 23.  Captions.  The captions of the Sections and subsections of
this Agreement

have been inserted for convenience only and shall have no substantive effect.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.

                                BIOTIME, INC.

                                By: s/Paul Segall
                                    ------------------------
                                    Name: Paul Segall, Ph.D
                                    Title: Chairman and Chief Executive Officer

Attest:

By: s/Judith Segall
    -------------------------------
    Name: Judith Segall
    Title: Secretary

                                       14
<PAGE>

                                                                      EXHIBIT A

         THIS WARRANT HAS NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933,
AS AMENDED,  OR UNDER  APPLICABLE STATE SECURITIES LAWS. THIS WARRANT MAY NOT BE
EXERCISED, SOLD, PLEDGED, HYPOTHECATED,  TRANSFERRED OR ASSIGNED EXCEPT UNDER AN
EFFECTIVE  REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

               VOID AFTER 5:00 P.M. NEW YORK TIME, August 1, 2004

Certificate No.
               ------                                     Warrant to Purchase
                                                       [Insert number of Shares]
                                                         Shares of Common Stock

                                  BIOTIME, INC.
                         COMMON STOCK PURCHASE WARRANTS

         This  certifies  that, for value  received,  [Insert name of Holder] or
registered assigns (the "Holder"),  is entitled to purchase from BioTime, Inc. a
California  corporation (the  "Company"),  at a purchase price per share [Insert
Warrant Price determined pursuant to Sections 4 and 10 of the Warrant Agreement]
(the "Warrant  Price"),  the number of its Common Shares, no par value per share
(the  "Common  Stock"),  shown  above.  The  number of shares  purchasable  upon
exercise of the Common Stock Purchase  Warrants (the "Warrants") and the Warrant
Price are  subject to  adjustment  from time to time as set forth in the Warrant
Agreement  referred to below.  Outstanding  Warrants not exercised prior to 5:00
p.m., New York time, on August 1, 2004 shall thereafter be void.

         Subject to restriction specified in the Warrant Agreement, Warrants may
be exercised  in whole or in part by  presentation  of this Warrant  Certificate
with the Purchase Form on the reverse side hereof duly executed, which signature
shall be  guaranteed by a bank or trust company or a broker or dealer which is a
member of the National Association of Securities Dealers, Inc., and simultaneous
payment of the Warrant  Price (or as otherwise  set forth in Section 10.5 of the
Warrant Agreement) at the principal office of the Company (or if a warrant agent
is appointed,  at the  principal  office of the warrant  agent).  Payment of the
Warrant Price shall be made in cash or by certified or bank  cashier's  check or
by delivery of Debentures in such amount as provided in Section 3 of the Warrant
Agreement.  As  provided  in the Warrant  Agreement,  the Warrant  Price and the
number or kind of shares which may be purchased upon the exercise of the Warrant
evidenced by this Warrant Certificate are, upon the happening of certain events,
subject to modification and adjustment.

         The Warrants  evidenced by this Warrant  Certificate may be redeemed by
the  Company,  at its  election,  at any  time  after  June 30,  2002,  if (a) a
registration statement under Section 18.1 of the

                                       A-1
<PAGE>

Warrant Agreement or a registration  statement under Section 18.2 of the Warrant
Agreement that includes  Warrants and Warrant Shares is then effective under the
Securities  Act of 1933,  as amended,  and (b) the  closing  price of the Common
Stock on a national  securities  exchange  (including  the Nasdaq  Stock  Market
National  Market  System) , or the average  bid price as quoted in Nasdaq  Stock
Market if the Common  Shares are not listed on a national  securities  exchange,
equals or exceeds  150% of the Warrant  Price for any fifteen  (15)  consecutive
trading  days  ending  not more than  thirty  (30) days prior to the date of the
notice given  pursuant to Section 6.2 of the Warrant  Agreement.  From and after
the  date  specified  by  the  Company  for  redemption  of  the  Warrants  (the
"Redemption  Date"), the Warrants evidenced by this Warrant Certificate shall no
longer be  deemed  outstanding  and all  rights  of the  Holder of this  Warrant
Certificate  shall cease and  terminate,  except for the right of the registered
Holder to  receive  payment  of the  redemption  price of one cent  ($0.01)  per
Warrant Share upon presentation and surrender of this Warrant  Certificate.  The
Redemption Date shall abate, and the notice of redemption shall be of no effect,
if the closing  price or average bid price of the Common  Stock,  as  applicable
under Section 6.1 of the Warrant Agreement, does not equal or exceed 120% of the
Warrant  Price on the  Redemption  Date and the five  trading  days  immediately
preceding  the  Redemption  Date,  but the right Company shall have the right to
redeem the Warrants at a future date if the  conditions set forth in Section 6.1
of the Warrant  Agreement are  subsequently  met and a new notice  setting a new
Redemption Date is sent to Warrant holders.

         This  Warrant  Certificate  is issued  under and in  accordance  with a
Warrant  Agreement  dated as of August 13,  2001  between  the  Company  and the
persons named as "Lenders"  therein,  and is subject to the terms and provisions
contained in the Warrant  Agreement,  to all of which the Holder of this Warrant
Certificate by acceptance of this Warrant  Certificate  consents.  A copy of the
Warrant  Agreement may be obtained by the Holder hereof upon written  request to
the Company. In the event that pursuant to Section 14 of the Warrant Agreement a
warrant agent is appointed and a new warrant  agreement entered into between the
Company and such warrant agent, then such new warrant agreement shall constitute
the Warrant Agreement for purposes hereof and this Warrant  Certificate shall be
deemed to have been issued pursuant to such new warrant agreement.

         Upon any  partial  exercise of the Warrant  evidenced  by this  Warrant
Certificate,  there  shall  be  issued  to  the  Holder  hereof  a  new  Warrant
Certificate  in respect of the  shares of Common  Stock as to which the  Warrant
evidenced  by this  Warrant  Certificate  shall  not have been  exercised.  This
Warrant  Certificate  may be  exchanged  at the  office of the  Company  (or the
warrant agent, if appointed) by surrender of this Warrant  Certificate  properly
endorsed  either  separately  or in  combination  with one or more other Warrant
Certificates  for one or more new Warrant  Certificates  evidencing the right of
the  Holder  thereof  to  purchase  the  aggregate  number  of  shares  as  were
purchasable on exercise of the Warrants evidenced by the Warrant  Certificate or
Certificates exchanged. No fractional shares will be issued upon the exercise of
any  Warrant,  but the Company  will pay the cash value  thereof  determined  as
provided in the Warrant Agreement.  This Warrant  Certificate is transferable at
the office of the Company (or the warrant agent, if appointed) in the manner and
subject to the limitations set forth in the Warrant Agreement.

                                       A-2
<PAGE>

         The Holder hereof may be treated by the Company,  the warrant agent (if
appointed)  and all other persons  dealing with this Warrant  Certificate as the
absolute owner hereof for any purpose and as the person entitled to exercise the
rights  represented  hereby,  or to the  transfer  hereof  on the  books  of the
Company, any notice to the contrary notwithstanding,  and until such transfer on
such books,  the Company (and the warrant  agent,  if  appointed)  may treat the
Holder hereof as the owner for all purposes.

         Neither the Warrant nor this Warrant Certificate entitles any Holder to
any of the rights of a stockholder of the Company.

         [This  Warrant  Certificate  shall not be valid or  obligatory  for any
purpose until it shall have been countersigned by the warrant agent.]*

DATED:

                                                   BIOTIME, INC.

(Seal)                                             By:________________________

                                                   Title: ______________________

Attest:____________________

[COUNTERSIGNED:

WARRANT AGENT

By:_________________________]*
         Authorized Signature

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

*        To be part of the Warrant only after the appointment of a warrant agent
         pursuant to Section 14 of the Warrant Agreement.

                                       A-3
<PAGE>

                                  PURCHASE FORM

                    (To be executed upon exercise of Warrant)

To BioTime, Inc.:

         The  undersigned  hereby  irrevocably  elects to exercise  the right of
purchase  represented  by the within  Warrant  Certificate  for, and to purchase
thereunder, _______ shares of Common Stock, as provided for therein, and tenders
herewith payment of the Warrant Price in full in the form of cash or a certified
or bank cashier's check or outstanding Series 2001-A Debentures in the amount of
$______________.

         Please issue a certificate  or  certificates  for such shares of Common
Stock in the name of, and pay any cash for any fractional share to:

------------------------------------
(Please Print Name)

------------------------------------
(Please Print Address)

------------------------------------
(Social Security Number or
Other Taxpayer Identification Number)

------------------------------------
(Signature)

NOTE:         The above signature should correspond exactly with the name on the
              face of this Warrant  Certificate or with the name of the assignee
              appearing in the assignment form below.

And, if said number of shares shall not be all the shares  purchasable under the
within  Warrant  Certificate,  a new Warrant  Certificate is to be issued in the
name of said  undersigned  for the balance  remaining  of the share  purchasable
thereunder less any fraction of a share paid in cash.

                                       A-4
<PAGE>

                                   ASSIGNMENT

          (To be executed only upon assignment of Warrant Certificate)

         For value received,  _____________  hereby sells, assigns and transfers
unto  _______________ the within Warrant  Certificate,  together with all right,
title and interest therein,  and does hereby irrevocably  constitute and appoint
_________________ attorney, to transfer said Warrant Certificate on the books of
the within-named Company, with full power of substitution in the premises.

Dated:___________________                       ________________________________
                                                       (Signature)

                               NOTE: The above signature should correspond
                                     exactly with the name on the face of this
                                     Warrant Certificate.

                                       A-5

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