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exv4w10

 

EXHIBIT 4.10

GUILFORD PHARMACEUTICALS INC.

and

[                    ], as Warrant Agent

FORM OF COMMON STOCK

WARRANT AGREEMENT

Dated as of

[                    ]

 

 

GUILFORD PHARMACEUTICALS INC.

COMMON STOCK WARRANT AGREEMENT

     COMMON STOCK WARRANT AGREEMENT, dated as of [     ] between
Guilford Pharmaceuticals Inc., a Delaware corporation (the “Company”) and [                    
], a [corporation] [national banking association] organized and
existing under the laws of [                    ] and having a corporate trust
office in [                    ], as warrant agent (the “Warrant Agent”).

     WHEREAS, the Company proposes to sell [if Warrants are sold with other
securities—[title of such other securities being offered] (the “Other
Securities”) with] warrant certificates evidencing one or more warrants (the
“Warrants” or individually a “Warrant”) representing the right to purchase
Common Stock of the Company, par value $0.01 per share (the “Warrant
Securities”), such warrant certificates and other warrant certificates issued
pursuant to this Agreement being herein called the “Warrant Certificates”; and

     WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange, exercise and replacement of the
Warrant Certificates, and in this Agreement wishes to set forth, among other
things, the form and provisions of the Warrant Certificates and the terms and
conditions on which they may be issued, registered, transferred, exchanged,
exercised and replaced;

     NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:

ARTICLE I

ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF

WARRANT CERTIFICATES

     Section 1.1 Issuance of Warrants. [If Warrants alone—Upon issuance,
each Warrant Certificate shall evidence one or more Warrants.] [If Other
Securities and Warrants—Warrants shall be [initially] issued in connection
with the issuance of the Other Securities [but shall be separately transferable
on and after [                    ] (the “Detachable Date”)] [and shall not be
separately transferable] and each Warrant Certificate shall evidence one or
more Warrants.] Each Warrant evidenced thereby shall represent the right,
subject to the provisions contained herein and therein, to purchase one Warrant
Security. [If Other Securities and Warrants—Warrant Certificates shall be
initially issued in units with the Other Securities and each Warrant
Certificate included in such a
unit shall evidence [                    ]

 

 

Warrants for each [$ [                    
]principal amount] [                    shares] of Other Securities included in
such unit.]

     Section 1.2 Execution and Delivery of Warrant Certificates. Each Warrant
Certificate, whenever issued, shall be in registered form substantially in the
form set forth in Exhibit A hereto, shall be dated the date of its
countersignature by the Warrant Agent and may have such letters, numbers, or
other marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as the officers of the Company
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
securities exchange on which the Warrants may be listed, or to conform to
usage. The Warrant Certificates shall be signed on behalf of the Company by
any of its present or future chief executive officers, presidents, senior vice
presidents, vice presidents, chief financial officers, chief legal officers,
treasurers, assistant treasurers, controllers, assistant controllers,
secretaries or assistant secretaries under its corporate seal reproduced
thereon. Such signatures may be manual or facsimile signatures of such
authorized officers and may be imprinted or otherwise reproduced on the Warrant
Certificates. The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.

     No Warrant Certificate shall be valid for any purpose, and no Warrant
evidenced thereby shall be exercisable, until such Warrant Certificate has been
countersigned by the manual signature of the Warrant Agent. Such signature by
the Warrant Agent upon any Warrant Certificate executed by the Company shall be
conclusive evidence that the Warrant Certificate so countersigned has been duly
issued hereunder.

     In case any officer of the Company who shall have signed any of the
Warrant Certificates either manually or by facsimile signature shall cease to
be such officer before the Warrant Certificates so signed shall have been
countersigned and delivered by the Warrant Agent, such Warrant Certificates may
be countersigned and delivered notwithstanding that the person who signed
Warrant Certificates ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons as, at the
actual date of the execution of such Warrant Certificate, shall be the proper
officers of the Company, although at the date of the execution of this
Agreement any such person was not such officer.

     The term “holder” or “holder of a Warrant Certificate” as used herein
shall mean any person in whose name at the time any Warrant Certificate shall
be

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registered upon the books to be maintained by the Warrant Agent for that
purpose [If Other Securities and Warrants are not immediately detachable—or
upon the registration of the Other Securities prior to the Detachable Date.
Prior to the Detachable Date, the Company will, or will cause the registrar of
the Other Securities to, make available at all times to the Warrant Agent such
information as to holders of the Other Securities as may be necessary to keep
the Warrant Agent’s records up to date].

     Section 1.3 Issuance of Warrant Certificates. Warrant Certificates
evidencing the right to purchase Warrant Securities may be executed by the
Company and delivered to the Warrant Agent upon the execution of this Warrant
Agreement or from time to time thereafter. The Warrant Agent shall, upon
receipt of Warrant Certificates duly executed on behalf of the Company,
countersign such Warrant Certificates and shall deliver such Warrant
Certificates to or upon the order of the Company.

ARTICLE II

WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS

     Section 2.1 Warrant Price. During the period specified in Section 2.2,
each Warrant shall, subject to the terms of this Warrant Agreement and the
applicable Warrant Certificate, entitle the holder thereof to initially
purchase the number of Warrant Securities specified in the applicable Warrant
Certificate at an initial exercise price of $ [                    ] per
Warrant Security, subject to adjustment upon the occurrence of certain events,
as hereinafter provided. Such purchase price per Warrant Security is referred
to in this Agreement as the “Warrant Price.”

     Section 2.2 Duration of Warrants. Each Warrant may be exercised in whole
or in part at any time, as specified herein, on or after [the date thereof] [                    ] and at or
before [                    ] p.m., [City] time, on
or such later date as the Company may designate by notice to the Warrant
Agent and the holders of Warrant Certificates mailed to their addresses as set
forth in the record books of the Warrant Agent (the “Expiration Date”). Each
Warrant not exercised at or before [                    ] p.m., [City] time, on
the Expiration Date shall become void, and all rights of the holder of the
Warrant Certificate evidencing such Warrant under this Agreement shall cease.

     Section 2.3 Exercise of Warrants.

     (a) During the period specified in Section 2.2, the Warrants may be
exercised to purchase a whole number of Warrant Securities in registered form
by providing certain information as set forth on the reverse side of the
Warrant Certificate and by paying in full, in lawful money of the United States
of America, [in cash or by certified check or official bank check in New York
Clearing House funds] [by bank wire transfer in immediately available funds]
the Warrant Price for each Warrant Security with respect to which a Warrant is
being exercised to the Warrant Agent at its corporate trust office, provided
that such exercise is subject to receipt within five business days of such
payment by the Warrant Agent of the Warrant

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Certificate with the form of
election to purchase Warrant Securities set forth on the reverse side of the
Warrant Certificate properly completed and duly executed. The date on which
payment in full of the Warrant Price is received by the Warrant Agent shall,
subject to receipt of the Warrant Certificate as aforesaid, be deemed to be the
date on which the Warrant is exercised; provided, however, that if, at the date
of receipt of such Warrant Certificates and payment in full of the Warrant
Price, the transfer books for the Warrant Securities purchasable upon the
exercise of such Warrants shall be closed, no such receipt of such Warrant
Certificates and no such payment of such Warrant Price shall be effective to
constitute the person so designated to be named as the holder of record of such
Warrant Securities on such date, but shall be effective to constitute such
person as the holder of record of such Warrant Securities for all purposes at
the opening of business on the next succeeding day on which the transfer books
for the Warrant Securities purchasable upon the exercise of such Warrants shall
be opened, and the certificates for the Warrant Securities in respect of which
such Warrants are then exercised shall be issuable as of the date on such next
succeeding day on which the transfer books shall next be opened, and until such
date the Company shall be under no duty to deliver any certificate for such
Warrant Securities. The Warrant Agent shall deposit all funds received by it in
payment of the Warrant Price in an account of the Company maintained with it
and shall advise the Company by telephone at the end of each day on which a
payment for the exercise of Warrants is received of the amount so deposited to
its account. The Warrant Agent shall promptly confirm such telephone advice to
the Company in writing.

     (b) The Warrant Agent shall, from time to time, as promptly as
practicable, advise the Company of (i) the number of Warrant Securities with
respect to which Warrants were exercised, (ii) the instructions of each holder
of the Warrant Certificates evidencing such Warrants with respect to delivery
of the Warrant Securities to which such holder is entitled upon such exercise,
(iii) delivery of Warrant Certificates evidencing the balance, if any, of the
Warrants for the
remaining Warrant Securities after such exercise, and (iv) such other
information as the Company shall reasonably require.

     (c) As soon as practicable after the exercise of any Warrant, the Company
shall issue to or upon the order of the holder of the Warrant Certificate
evidencing such Warrant the Warrant Securities to which such holder is
entitled, in fully registered form, registered in such name or names as may be
directed by such holder. If fewer than all of the Warrants evidenced by such
Warrant Certificate are

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exercised, the Company shall execute, and an authorized
officer of the Warrant Agent shall manually countersign and deliver, a new
Warrant Certificate evidencing Warrants for the number of Warrant Securities
remaining unexercised.

     (d) The Company shall not be required to pay any stamp or other tax or
other governmental charge required to be paid in connection with any transfer
involved in the issue of the Warrant Securities, and in the event that any such
transfer is involved, the Company shall not be required to issue or deliver any
Warrant Security until such tax or other charge shall have been paid or it has
been established to the Company’s satisfaction that no such tax or other charge
is due.

     (e) Prior to the issuance of any Warrants there shall have been reserved,
and the Company shall at all times through the Expiration Date keep reserved,
out of its authorized but unissued Warrant Securities, a number of shares
sufficient to provide for the exercise of the Warrants.

ARTICLE III

OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF

WARRANT CERTIFICATES

     Section 3.1 No Rights as Warrant Securityholder Conferred by Warrants or
Warrant Certificates. No Warrant Certificate or Warrant evidenced thereby
shall entitle the holder thereof to any of the rights of a holder of Warrant
Securities, including, without limitation, the right to receive the payment of
dividends or distributions, if any, on the Warrant Securities or to exercise
any voting rights, except to the extent expressly set forth in this Agreement
or the applicable Warrant Certificate.

     Section 3.2 Lost, Stolen, Mutilated or Destroyed Warrant Certificates.
Upon receipt by the Warrant Agent of evidence reasonably satisfactory to it and
the Company of the ownership of and the loss, theft, destruction or mutilation
of any Warrant Certificate and/or indemnity reasonably satisfactory to the
Warrant Agent
and the Company and, in the case of mutilation, upon surrender of the mutilated
Warrant Certificate to the Warrant Agent for cancellation, then, in the absence
of notice to the Company or the Warrant Agent that such Warrant Certificate has
been acquired by a bona fide purchaser, the Company shall execute, and an
authorized officer of the Warrant Agent shall manually countersign and deliver,
in exchange for or in lieu of the lost, stolen, destroyed or mutilated Warrant
Certificate, a new Warrant Certificate of the same tenor and evidencing
Warrants for a like number of Warrant Securities. Upon the issuance of any new
Warrant Certificate under this Section 3.2, the Company may require the payment
of a sum sufficient to cover any tax or other governmental

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charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Warrant Agent) in connection therewith. Every substitute
Warrant Certificate executed and delivered pursuant to this Section 3.2 in lieu
of any lost, stolen or destroyed Warrant Certificate shall represent an
additional contractual obligation of the Company, whether or not the lost,
stolen or destroyed Warrant Certificate shall be at any time enforceable by
anyone, and shall be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder. The provisions of this Section 3.2 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement of mutilated, lost, stolen or destroyed Warrant
Certificates.

     Section 3.3 Holder of Warrant Certificate May Enforce Rights.
Notwithstanding any of the provisions of this Agreement, any holder of a
Warrant Certificate, without the consent of the Warrant Agent, the holder of
any Warrant Securities or the holder of any other Warrant Certificate, may, in
such holder’s own behalf and for such holder’s own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such holder’s right to
exercise the Warrants evidenced by such holder’s Warrant Certificate in the
manner provided in such holder’s Warrant Certificate and in this Agreement.

     Section 3.4 Adjustments.

     (a) In case the Company shall at any time subdivide its outstanding shares
of Common Stock into a greater number of shares, the Warrant Price in effect
immediately prior to such subdivision shall be proportionately reduced and the
number of Warrant Securities purchasable under the Warrants shall be
proportionately increased. Conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares,
the Warrant Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Securities purchasable
under the Warrants shall be proportionately decreased.

     (b) If at any time or from time to time the holders of Common Stock (or
any shares of stock or other securities at the time receivable upon the
exercise of the Warrants) shall have received or become entitled to receive,
without payment therefore,

          (i) Common Stock or any shares of stock or other securities
which are at any time directly or indirectly convertible into or
exchangeable for

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Common Stock, or any rights or options to
subscribe for, purchase or otherwise acquire any of the foregoing
by way of dividend or other distribution;

          (ii) any cash paid or payable otherwise than as a cash
dividend paid or payable out of the Company’s current or retained
earnings;

          (iii) any evidence of the Company’s indebtedness or rights to
subscribe for or purchase the Company’s indebtedness; or

          (iv) Common Stock or additional stock or other securities or
property (including cash) by way of spin-off, split-up,
reclassification, combination of shares or similar corporate
rearrangement (other than shares of Common Stock issued as a stock
split or adjustments in respect of which shall be covered by the
terms of Section 3.4(a) above),

then and in each such case, the holder of each Warrant shall, upon the exercise
of the Warrant, be entitled to receive, in addition to the number of Warrant
Securities receivable thereupon, and without payment of any additional
consideration therefore, the amount of stock and other securities and property
(including cash and indebtedness (or rights to subscribe for or purchase
indebtedness) which such holder would hold on the date of such exercise had he
been the holder of record of such Warrant Securities as of the date on which
holders of Common Stock received or became entitled to receive such shares or
all other additional stock and other securities and property.

     (c) In case of (i) any reclassification, capital reorganization, or change
in the Common Stock of the Company (other than as a result of a subdivision,
combination, or stock dividend provided for in Section 3.4(a) or Section 3.4(b)
above), (ii) share exchange, merger or similar transaction of the Company with
or into another person or entity (other than a share exchange, merger or
similar transaction in which the Company is the acquiring or surviving
corporation and which does not result in any change in the Common Stock other
than the issuance of additional shares of Common Stock) or (iii) the sale,
exchange, lease, transfer or
other disposition of all or substantially all of the properties and assets of
the Company as an entirety (in any such case, a “Reorganization Event”), then,
as a condition of such Reorganization Event, lawful provisions shall be made,
and duly

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executed documents evidencing the same from the Company or its
successor shall be delivered to the holders of the Warrants, so that the
holders of the Warrants shall have the right at any time prior to the
expiration of the Warrants to purchase, at a total price equal to that payable
upon the exercise of the Warrants, the kind and amount of shares of stock and
other securities and property receivable in connection with such Reorganization
Event by a holder of the same number of Warrant Securities as were purchasable
by the holders of the Warrants immediately prior to such Reorganization Event.
In any such case appropriate provisions shall be made with respect to the
rights and interests of the holders of the Warrants so that the provisions
hereof shall thereafter be applicable with respect to any shares of stock or
other securities and property deliverable upon exercise the Warrants, and
appropriate adjustments shall be made to the Warrant Price payable hereunder
provided the aggregate purchase price shall remain the same. In the case of
any transaction described in clauses (ii) and (iii) above, the Company shall
thereupon be relieved of any further obligation hereunder or under the
Warrants, and the Company as the predecessor corporation may thereupon or at
any time thereafter be dissolved, wound up or liquidated. Such successor or
assuming entity thereupon may cause to be signed, and may issue either in its
own name or in the name of the Company, any or all of the Warrants issuable
hereunder which heretofore shall not have been signed by the Company, and may
execute and deliver securities in its own name, in fulfillment of its
obligations to deliver Warrant Securities upon exercise of the Warrants. All
the Warrants so issued shall in all respects have the same legal rank and
benefit under this Agreement as the Warrants theretofore or thereafter issued
in accordance with the terms of this Agreement as though all of such Warrants
had been issued at the date of the execution hereof. In any case of any such
Reorganization Event, such changes in phraseology and form (but not in
substance) may be made in the Warrants thereafter to be issued as may be
appropriate.

     The Warrant Agent may receive a written opinion of legal counsel as
conclusive evidence that any such Reorganization Event complies with the
provisions of this Section 3.4.

     (d) The Company may, at its option, at any time until the Expiration Date,
reduce the then current Warrant Price to any amount deemed appropriate by the
Board of Directors of the Company for any period not exceeding twenty
consecutive days (as evidenced in a resolution adopted by such Board of
Directors), but only upon giving the notices required by Section 3.5 at least
ten days prior to taking such action.

     (e) Except as herein otherwise expressly provided, no adjustment in the
Warrant Price shall be made by reason of the issuance of shares of Common
Stock, or securities convertible into or exchangeable for shares of Common
Stock, or securities carrying the right to purchase any of the foregoing or for
any other reason whatsoever.

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     (f) No fractional Warrant Securities shall be issued upon the exercise of
Warrants. If more than one Warrant shall be exercised at one time by the same
holder, the number of full Warrant Securities which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of Warrant
Securities purchased pursuant to the Warrants so exercised. Instead of any
fractional Warrant Security which would otherwise be issuable upon exercise of
any Warrant, the Company shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the last sales price (or
bid price if there were no sales) per Warrant Security, in either case as
reported on the New York Stock Exchange Composite Tape on the business day
which next precedes the day of exercise or, if the Warrant Securities are not
then listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which the Warrant Securities are
listed or admitted to trading or, if not listed or admitted to trading on any
national securities exchange, on the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System (“NASDAQ”),
or if the Warrant Securities are not then listed or admitted to trading on any
national securities exchange or quoted on the National Market System of NASDAQ,
the average of the closing high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ, or such other system then in
use, or if on any such date the Warrant Securities are not quoted by any such
organization, an amount equal to the same fraction of the average of the
closing bid and asked prices as furnished by any New York Stock Exchange firm
selected from time to time by the Company for that purpose at the close of
business on the business day which next precedes the day of exercise.

     (g) Whenever the Warrant Price then in effect is adjusted as herein
provided, the Company shall mail to each holder of the Warrants at such
holder’s address as it shall appear on the books of the Company a statement
setting forth the adjusted Warrant Price then and thereafter effective under
the provisions hereof, together with the facts, in reasonable detail, upon
which such adjustment is based.

     Section 3.5 Notice to Warrantholders. In case the Company shall (a)
effect any dividend or distribution described in Section 3.4(b), (b) effect any
Reorganization Event, (c) make any distribution on or in respect of the Common
Stock in connection with the dissolution, liquidation or winding up of the
Company, or (d) reduce the then current Warrant Price pursuant
to Section 3.4(d), then the Company shall mail to each holder of Warrants at
such holder’s address as it shall appear on the books of the Warrant Agent, at
least ten days prior to the applicable date hereinafter specified, a notice
stating (x) the record date for such dividend or distribution, or, if a record
is not to be taken, the date as of which the holders of record of Common Stock

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that will be entitled to such dividend or distribution are to be determined,
(y) the date on which such Reorganization Event, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such Reorganization Event, dissolution, liquidation or winding up, or (z) the
first date on which the then current Warrant Price shall be reduced pursuant to
Section 3.4(d). No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect any such transaction or any adjustment in the
Warrant Price required by Section 3.4.

     Section 3.6 [If the Warrants are subject to acceleration by the Company,
insert—Acceleration of Warrants by the Company.

     (a) At any time on or after[                    ], the Company shall have
the right to accelerate any or all Warrants at any time by causing them to
expire at the close of business on the day next preceding a specified date (the
“Acceleration Date”), if the Market Price (as hereinafter defined) of the
Common Stock equals or exceeds[                    ] percent (                    %) of
the then effective Warrant Price on any twenty Trading Days (as hereinafter
defined) within a period of thirty consecutive Trading Days ending no more than
five Trading Days prior to the date on which the Company gives notice to the
Warrant Agent of its election to accelerate the Warrants.

     (b) “Market Price” for each Trading Day shall be, if the Common Stock is
listed or admitted for trading on the New York Stock Exchange, the last
reported sale price, regular way (or, if no such price is reported, the average
of the reported closing bid and asked prices, regular way) of Common Stock, in
either case as reported on the New York Stock Exchange Composite Tape or, if
the Common Stock is not listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, on the National Market System of NASDAQ
or, if not listed or admitted to trading on any national securities exchange or
quoted on the National Market System of NASDAQ, the average of the closing high
bid and low asked prices in the over-the-counter market, as reported by NASDAQ,
or such other system then in use, or if on any such date the shares of Common
Stock are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by any New York Stock Exchange firm selected from
time to time by the Company for that
purpose.

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“Trading Day” shall be each Monday through Friday, other than any day
on which securities are not traded in the system or on the exchange that is the
principal market for the Common Stock, as determined by the Board of Directors
of the Company.

     (c) In the event of an acceleration of less than all of the Warrants, the
Warrant Agent shall select the Warrants to be accelerated by lot, pro rata or
in such other manner as it deems, in its discretion, to be fair and
appropriate.

     (d) Notice of an acceleration specifying the Acceleration Date shall be
sent by mail first class, postage prepaid, to each registered holder of a
Warrant Certificate representing a Warrant accelerated at such holder’s address
appearing on the books of the Warrant Agent not more than sixty days nor less
than thirty days before the Acceleration Date. Such notice of an acceleration
also shall be given no more than twenty days, and no less than ten days, prior
to the mailing of notice to registered holders of Warrants pursuant to this
Section 3.6, by publication at least once in a newspaper of general circulation
in the City of New York.

     (e) Any Warrant accelerated may be exercised until [ ] p.m.,
[City] time, on the business day next preceding the Acceleration Date. The
Warrant Price shall be payable as provided in Section 2.]

ARTICLE IV

EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES

     Section 4.1 Exchange and Transfer of Warrant Certificates. [If Other
Securities with Warrants which are immediately detachable—Upon] [If Other
Securities with Warrants which are not immediately detachable—Prior to the
Detachable Date, a Warrant Certificate may be exchanged or transferred only
together with the Other Security to which the Warrant Certificate was initially
attached, and only for the purpose of effecting or in conjunction with an
exchange or transfer of such Other Security. Prior to any Detachable Date, each
transfer of the Other Security shall operate also to transfer the related
Warrant Certificates. After the Detachable Date, upon] surrender at the
corporate trust office of the Warrant Agent, Warrant Certificates evidencing
Warrants may be exchanged for Warrant Certificates in other denominations
evidencing such Warrants or the transfer thereof may be registered in whole or
in part; provided that such other Warrant Certificates evidence Warrants for
the same aggregate number of Warrant Securities as the Warrant Certificates so
surrendered. The Warrant Agent shall keep, at its corporate trust office,
books in which, subject to such reasonable regulations as it may prescribe, it
shall register Warrant Certificates and exchanges
and transfers of outstanding Warrant Certificates, upon surrender of the
Warrant

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Certificates to the Warrant Agent at its corporate trust office for
exchange or registration of transfer, properly endorsed or accompanied by
appropriate instruments of registration of transfer and written instructions
for transfer, all in form satisfactory to the Company and the Warrant Agent.
No service charge shall be made for any exchange or registration of transfer of
Warrant Certificates, but the Company may require payment of a sum sufficient
to cover any stamp or other tax or other governmental charge that may be
imposed in connection with any such exchange or registration of transfer.
Whenever any Warrant Certificates are so surrendered for exchange or
registration of transfer, an authorized officer of the Warrant Agent shall
manually countersign and deliver to the person or persons entitled thereto a
Warrant Certificate or Warrant Certificates duly authorized and executed by the
Company, as so requested. The Warrant Agent shall not be required to effect
any exchange or registration of transfer which will result in the issuance of a
Warrant Certificate evidencing a Warrant for a fraction of a Warrant Security
or a number of Warrants for a whole number of Warrant Securities and a fraction
of a Warrant Security. All Warrant Certificates issued upon any exchange or
registration of transfer of Warrant Certificates shall be the valid obligations
of the Company, evidencing the same obligations and entitled to the same
benefits under this Agreement as the Warrant Certificate surrendered for such
exchange or registration of transfer.

     Section 4.2 Treatment of Holders of Warrant Certificates. [If Other
Securities and Warrants are not immediately detachable—Prior to the Detachable
Date, the Company, the Warrant Agent and all other persons may treat the owner
of the Other Security as the owner of the Warrant Certificates initially
attached thereto for any purpose and as the person entitled to exercise the
rights represented by the Warrants evidenced by such Warrant Certificates, any
notice to the contrary notwithstanding. After the Detachable Date and prior to
due presentment of a Warrant Certificate for registration of transfer, the]
[T]he Company, the Warrant Agent and all other persons may treat the registered
holder of a Warrant Certificate as the absolute owner thereof for any purpose
and as the person entitled to exercise the rights represented by the Warrants
evidenced thereby, any notice to the contrary notwithstanding.

     Section 4.3 Cancellation of Warrant Certificates. Any Warrant Certificate
surrendered for exchange, registration of transfer or exercise of the Warrants
evidenced thereby shall, if surrendered to the Company, be delivered to the
Warrant Agent and all Warrant Certificates surrendered or so delivered to the
Warrant Agent shall be promptly canceled by the Warrant Agent and shall not be
reissued and, except as expressly permitted by this Agreement, no
Warrant Certificate shall be issued hereunder in exchange therefor or in lieu
thereof. The Warrant Agent shall deliver to the Company from time to time or
otherwise dispose of canceled Warrant Certificates in a manner satisfactory to
the Company.

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ARTICLE V

CONCERNING THE WARRANT AGENT

     Section 5.1 Warrant Agent. The Company hereby appoints [                      ] as
Warrant Agent of the Company in respect of the Warrants and the Warrant
Certificates upon the terms and subject to the conditions herein set forth, and
[                    ] hereby accepts such appointment. The Warrant Agent shall have the
powers and authority granted to and conferred upon it in the Warrant
Certificates and hereby and such further powers and authority to act on behalf
of the Company as the Company may hereafter grant to or confer upon it. All of
the terms and provisions with respect to such powers and authority contained in
the Warrant Certificates are subject to and governed by the terms and
provisions hereof.

     Section 5.2 Conditions of Warrant Agent’s Obligations. The Warrant Agent
accepts its obligations herein set forth upon the terms and conditions hereof,
including the following to all of which the Company agrees and to all of which
the rights hereunder of the holders from time to time of the Warrant
Certificates shall be subject:

     (a) Compensation and Indemnification. The Company agrees promptly to pay
the Warrant Agent the compensation to be agreed upon with the Company for all
services rendered by the Warrant Agent and to reimburse the Warrant Agent for
reasonable out-of-pocket expenses (including reasonable counsel fees) incurred
without negligence, bad faith or willful misconduct by the Warrant Agent in
connection with the services rendered hereunder by the Warrant Agent. The
Company also agrees to indemnify the Warrant Agent for, and to hold it harmless
against, any loss, liability or expense incurred without negligence, bad faith
or willful misconduct on the part of the Warrant Agent, arising out of or in
connection with its acting as Warrant Agent hereunder, including the reasonable
costs and expenses of defending against any claim of such liability.

     (b) Agent for the Company. In acting under this Warrant Agreement and in
connection with the Warrant Certificates, the Warrant Agent is acting solely as
agent of the Company and does not assume any obligations or relationship of
agency or trust for or with any of the holders of Warrant Certificates or
beneficial owners of Warrants.

     (c) Counsel. The Warrant Agent may consult with counsel satisfactory to
it, which may include counsel for the Company, and the written advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with the advice of such counsel.

13

 

     (d) Documents. The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken or omitted by it in reliance
upon any Warrant Certificate, notice, direction, consent, certificate,
affidavit, statement or other paper or document reasonably believed by it to be
genuine and to have been presented or signed by the proper parties.

     (e) Certain Transactions. The Warrant Agent, and its officers, directors
and employees, may become the owner of, or acquire any interest in, Warrants,
with the same rights that it or they would have if it were not the Warrant
Agent hereunder, and, to the extent permitted by applicable law, it or they may
engage or be interested in any financial or other transaction with the Company
and may act on, or as depositary, trustee or agent for, any committee or body
of holders of Warrant Securities or other obligations of the Company as freely
as if it were not the Warrant Agent hereunder. Nothing in this Warrant
Agreement shall be deemed to prevent the Warrant Agent from acting as trustee
under any indenture to which the Company is a party.

     (f) No Liability for Interest. Unless otherwise agreed with the Company,
the Warrant Agent shall have no liability for interest on any monies at any
time received by it pursuant to any of the provisions of this Agreement or of
the Warrant Certificates.

     (g) No Liability for Invalidity. The Warrant Agent shall have no
liability with respect to any invalidity of this Agreement or any of the
Warrant Certificates (except as to the Warrant Agent’s countersignature
thereon).

     (h) No Responsibility for Representations. The Warrant Agent shall not be
responsible for any of the recitals or representations herein or in the Warrant
Certificates (except as to the Warrant Agent’s countersignature thereon), all
of which are made solely by the Company.

     (i) No Implied Obligations. The Warrant Agent shall be obligated to
perform only such duties as are herein and in the Warrant Certificates
specifically set forth and no implied duties or obligations shall be read into
this Agreement or the Warrant Certificates against the Warrant Agent. The
Warrant Agent shall not
be under any obligation to take any action hereunder which may tend to involve
it in any expense or liability, the payment of which within a reasonable time
is not, in its reasonable opinion, assured to it. The Warrant Agent shall not
be accountable or under any duty or responsibility for the use by the Company
of any of the Warrant Certificates authenticated by the Warrant Agent and
delivered by it to the Company pursuant to this Agreement or for the
application by the Company of the proceeds of the Warrant Certificates. The
Warrant Agent shall have no duty or responsibility in case of any default by
the Company in the performance of its

14

 

covenants or agreements contained herein
or in the Warrant Certificates or in the case of the receipt of any written
demand from a holder of a Warrant Certificate with respect to such default,
including, without limiting the generality of the foregoing, any duty or
responsibility to initiate or attempt to initiate any proceedings at law or
otherwise or, except as provided in Section 6.2 hereof, to make any demand upon
the Company.

     Section 5.3 Resignation and Appointment of Successor.

     (a) The Company agrees, for the benefit of the holders from time to time
of the Warrant Certificates, that there shall at all times be a Warrant Agent
hereunder until all the Warrants have been exercised or are no longer
exercisable.

     (b) The Warrant Agent may at any time resign as agent by giving written
notice to the Company of such intention on its part, specifying the date on
which its desired resignation shall become effective; provided that such date
shall not be less than three months after the date on which such notice is
given unless the Company otherwise agrees. The Warrant Agent hereunder may be
removed at any time by the filing with it of an instrument in writing signed by
or on behalf of the Company and specifying such removal and the intended date
when it shall become effective. Such resignation or removal shall take effect
upon the appointment by the Company, as hereinafter provided, of a successor
Warrant Agent (which shall be a bank or trust company authorized under the laws
of the jurisdiction of its organization to exercise corporate trust powers) and
the acceptance of such appointment by such successor Warrant Agent. The
obligation of the Company under Section 5.2(a) shall continue to the extent set
forth therein notwithstanding the resignation or removal of the Warrant Agent.

     (c) In case at any time the Warrant Agent shall resign, or shall be
removed, or shall become incapable of acting, or shall be adjudged a bankrupt
or insolvent, or shall commence a voluntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or under any other applicable Federal or
state bankruptcy, insolvency or similar law or shall consent to the appointment
of or taking possession by a receiver, custodian, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Warrant Agent or its
property or affairs, or shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts generally as they
become due, or shall take corporate action in furtherance of any such action,
or a decree or order for relief by a court having jurisdiction in the premises
shall have been entered in respect of the Warrant Agent in an involuntary case
under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or similar law, or a
decree or order by a court having jurisdiction in the premises shall have been
entered for the appointment of a receiver, custodian,

15

 

liquidator, assignee,
trustee, sequestrator (or similar official) of the Warrant Agent or of its
property or affairs, or any public officer shall take charge or control of the
Warrant Agent or of its property or affairs for the purpose of rehabilitation,
conservation, winding up or liquidation, a successor Warrant Agent, qualified
as
aforesaid, shall be appointed by the Company by an instrument in writing, filed
with the successor Warrant Agent. Upon the appointment as aforesaid of a
successor Warrant Agent and acceptance by the successor Warrant Agent of such
appointment, the Warrant Agent shall cease to be Warrant Agent hereunder.

     (d) Any successor Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Company an instrument
accepting such appointment hereunder, and thereupon such successor Warrant
Agent, without any further act, deed or conveyance, shall become vested with
all the authority, rights, powers, trusts, immunities, duties and obligations
of such predecessor with like effect as if originally named as Warrant Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay
over, and such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by such
predecessor, as Warrant Agent hereunder.

     (e) Any corporation into which the Warrant Agent hereunder may be merged
or converted or any corporation with which the Warrant Agent may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party, or any corporation
to which the Warrant Agent shall sell or otherwise transfer all or
substantially all the assets and business of the Warrant Agent, provided that
it shall be qualified as aforesaid, shall be the successor Warrant Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto.

ARTICLE VI

MISCELLANEOUS

     Section 6.1 Amendment. This Agreement may be amended by the parties
hereto, without the consent of the holder of any Warrant Certificate, for the
purpose of curing any ambiguity, or of curing, correcting or supplementing any
defective provision contained herein, or making any other provisions with
respect to matters or questions arising under this Agreement as the Company and
the Warrant Agent may deem necessary or desirable; provided that such action
shall not materially adversely affect the interests of the holders of the
Warrant Certificates.

16

 

     Section 6.2 Notices and Demands to the Company and Warrant Agent. If the
Warrant Agent shall receive any notice or demand addressed to the Company by
the holder of a Warrant Certificate pursuant to the provisions of the Warrant
Certificates, the Warrant Agent shall promptly forward such notice or demand to
the Company.

     Section 6.3 Addresses. Any communication from the Company to the Warrant
Agent with respect to this Agreement shall be addressed to [                    
], Attention: [                    ] and any communication from the Warrant
Agent to the Company with respect to this Agreement shall be addressed to
Guilford Pharmaceuticals Inc., 6611 Tributary Street, Baltimore, Maryland
21224, Attention: Corporate Secretary (or such other address as shall be
specified in writing by the Warrant Agent or by the Company).

     Section 6.4 Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be governed by and construed in accordance with the laws
of the State of New York.

     Section 6.5 Delivery of Prospectus. The Company shall furnish to the
Warrant Agent sufficient copies of a prospectus meeting the requirements of the
Securities Act of 1933, as amended, relating to the Warrant Securities
deliverable upon exercise of the Warrants (the “Prospectus”), and the Warrant
Agent agrees that upon the exercise of any Warrant, the Warrant Agent will
deliver to the holder of the Warrant Certificate evidencing such Warrant, prior
to or concurrently with the delivery of the Warrant Securities issued upon such
exercise, a Prospectus.

     The Warrant Agent shall not, by reason of any such delivery, assume any
responsibility for the accuracy or adequacy of such Prospectus.

     Section 6.6 Obtaining of Governmental Approvals. The Company will from
time to time take all action which may be necessary to obtain and keep
effective any and all permits, consents and approvals of governmental agencies
and authorities and securities act filings under United States Federal and
state laws (including without limitation a registration statement in respect of
the Warrants and Warrant Securities under the Securities Act of 1933, as
amended), which may be or become requisite in connection with the issuance,
sale, transfer, and delivery of the Warrant Securities issued upon exercise of
the Warrants, the issuance, sale, transfer and delivery of the Warrants or upon
the expiration of the period during which the Warrants are exercisable.

     Section 6.7 Persons Having Rights Under Warrant Agreement. Nothing in
this Agreement shall give to any person other than the Company, the

17

 

Warrant
Agent and the holders of the Warrant Certificates any right, remedy or claim
under or by reason of this Agreement.

     Section 6.8 Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

     Section 6.9 Counterparts. This Agreement may be executed in any number of
counterparts, each of which as so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same
instrument.

     Section 6.10 Inspection of Agreement. A copy of this Agreement shall be
available at all reasonable times at the principal corporate trust office of
the Warrant Agent for inspection by the holder of any Warrant Certificate. The
Warrant Agent may require such holder to submit his Warrant Certificate for
inspection by it.

18

 

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

	 	 	 	 	 
	 	 	GUILFORD PHARMACEUTICALS INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Its:	 	 
	

	 	 	 	

	 
	 	 	 	 
	Attest:
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	

	 	 	Warrant Agent
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Its:	 	 
	

	 	 	 	

	 
	 	 	 	 
	Attest:
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 

[SIGNATURE PAGE TO COMMON STOCK WARRANT AGREEMENT]

19

 

EXHIBIT A

FORM OF WARRANT CERTIFICATE

[Face of Warrant Certificate]

	 	 	 
	[Form if Warrants are attached to
other Securities and are not
immediately detachable.

	 	Prior to          , this
Warrant Certificate cannot be
transferred or exchanged unless
attached to a [Title of Other
Securities].]
	 
	 	 
	[Form of Legend if Warrants are not
immediately exercisable.

	 	Prior to          ,
Warrants evidenced by this Warrant
Certificate cannot be exercised.]

EXERCISABLE ONLY IF COUNTERSIGNED BY THE WARRANT

AGENT AS PROVIDED HEREIN

VOID AFTER [          ] P.M., [CITY] TIME, ON          ,

GUILFORD PHARMACEUTICALS INC.

WARRANT CERTIFICATE REPRESENTING

WARRANTS TO PURCHASE

COMMON STOCK, PAR VALUE $0.01 PER SHARE

                                        

	 	 	 
	     No.

	Warrants	 

     This certifies that [                    ] or registered assigns is the
registered owner of the above indicated number of Warrants, each Warrant
entitling such Owner [if Warrants are attached to Other Securities and are not
immediately detachable—, subject to the registered owner qualifying as a
“Holder” of this Warrant Certificate, as hereinafter defined], to purchase, at
any time [after [     ] p.m., [City] time, on [                    
] and] on or before [                    ] p.m., [City] time, on
        ,                    shares of Common Stock, par value $0.01 per share (the
“Warrant Securities”), of Guilford Pharmaceuticals Inc. (the “Company”) on the
following basis: during the period from [                    ], through and
including [                    ], the exercise price per Warrant Security will
be $[                    ] , subject to adjustment as provided in the Warrant
Agreement (as hereinafter defined) (the “Warrant Price”). The Holder may
exercise the Warrants evidenced hereby by providing certain information set
forth on the back hereof and by paying in full, in

A-1

 

lawful money of the United States of America, [in cash or by certified check or
official bank check in New York Clearing House funds] [by bank wire transfer in
immediately available funds], the Warrant Price for each Warrant Security with
respect to which this Warrant is exercised to the Warrant Agent (as hereinafter
defined) and by surrendering this Warrant Certificate, with the purchase form
on the back hereof duly executed, at the corporate trust office of [name of
Warrant Agent], or its successor as warrant agent (the “Warrant Agent”), which
is, on the date hereof, at the address specified on the reverse hereof, and
upon compliance with and subject to the conditions set forth herein and in the
Warrant Agreement (as hereinafter defined).

     The term “Holder” as used herein shall mean [if Warrants are attached to
Other Securities and are not immediately detachable—prior to [                     ] (the
“Detachable Date”), the registered owner of the Company’s [title of Other
Securities]to which this Warrant Certificate was initially attached, and after
such Detachable Date,] the person in whose name at the time this Warrant
Certificate shall be registered upon the books to be maintained by the Warrant
Agent for that purpose pursuant to Section 4 of the Warrant Agreement.

     The Warrants evidenced by this Warrant Certificate may be exercised to
purchase a whole number of Warrant Securities in registered form. Upon any
exercise of fewer than all of the Warrants evidenced by this Warrant
Certificate, there shall be issued to the Holder hereof a new Warrant
Certificate evidencing Warrants for the number of Warrant Securities remaining
unexercised.

     This Warrant Certificate is issued under and in accordance with the
Warrant Agreement dated as of [                     ,                    ] (the
“Warrant Agreement”), between the Company and the Warrant Agent and is subject
to the terms and provisions contained in the Warrant Agreement, to all of which
terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent.

     [If Warrants are attached to Other Securities and are not immediately
detachable—Prior to the Detachable Date, this Warrant Certificate may be
exchanged or transferred only together with the [Title of Other Securities]
(the “Other Securities”) to which this Warrant Certificate was initially
attached, and only for the purpose of effecting or in conjunction with, an
exchange or transfer of such Other Security. Additionally, on or prior to the
Detachable Date, each transfer of such Other Security on the register of the
Other Securities shall operate also to transfer this Warrant Certificate. After
such date, transfer of this] [If Warrants are attached to Other Securities and
are immediately detachable—Transfer of this] Warrant Certificate may be
registered when this Warrant Certificate is surrendered at the corporate trust
office of the Warrant Agent by the registered owner or such

A-2

 

owner’s assigns, in the manner and subject to the limitations provided in the
Warrant Agreement.

     [If Other Securities with Warrants which are not immediately
detachable—Except as provided in the immediately preceding paragraph, after]
[If Other Securities with Warrants which are immediately detachable or Warrants
alone—After] countersignature by the Warrant Agent and prior to the expiration
of this Warrant Certificate, this Warrant Certificate may be exchanged at the
corporate trust office of the Warrant Agent for Warrant Certificates
representing Warrants for the same aggregate number of Warrant Securities.

     This Warrant Certificate shall not entitle the Holder hereof to any of the
rights of a holder of the Warrant Securities, including, without limitation,
the right to receive payments of dividends or distributions, if any, on the
Warrant Securities (except to the extent set forth in the Warrant Agreement) or
to exercise any voting rights.

     Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.

     This Warrant Certificate shall not be valid or obligatory for any purpose
until countersigned by the Warrant Agent.

A-3

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in
its name and on its behalf by the facsimile signatures of its duly authorized
officers.

	 	 	 	 	 
	 	 	GUILFORD PHARMACEUTICALS INC.
	 
	 	 	 	 
	Dated:

	 	By:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Its:	 	 
	

	 	 	 	

	Attest:
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 
	 
	 	 	 	 
	Countersigned:
	 	 	 	 
	 
	 	 	 	 
	

	 	 	 	 
	As Warrant Agent
	 	 	 	 

	 	 	 
	By:
	 	 
	

	 	

	

	 	Authorized Signature

A-4

 

     [REVERSE OF WARRANT CERTIFICATE]

(Instructions for Exercise of Warrant)

     To exercise any Warrants evidenced hereby for Warrant Securities (as
hereinafter defined), the Holder must pay, in lawful money of the United States
of America, [in cash or by certified check or official bank check in New York
Clearing House funds] [by bank wire transfer in immediately available funds],
the Warrant Price in full for Warrants exercised, to [Warrant Agent] [address
of Warrant Agent], Attn: [                    ], which payment must specify the
name of the Holder and the number of Warrants exercised by such Holder. In
addition, the Holder must complete the information required below and present
this Warrant Certificate in person or by mail (certified or registered mail is
recommended) to the Warrant Agent at the appropriate address set forth above.
This Warrant Certificate, completed and duly executed, must be received by the
Warrant Agent within five business days of the payment.

(To be executed upon exercise of Warrants)

     The undersigned hereby irrevocably elects to exercise [                    
] Warrants, evidenced by this Warrant Certificate, to purchase [                    
]
shares of the Common Stock, par value $0.01 per share (the “Warrant
Securities”) of Guilford Pharmaceuticals Inc. and represents that he has
tendered payment for such Warrant Securities, in lawful money of the United
States of America, [in cash or by certified check or official bank check in New
York Clearing House funds] [by bank wire transfer in immediately available
funds], to the order of Guilford Pharmaceuticals Inc., c/o [insert name and
address of Warrant Agent], in the amount of $[                    ] in
accordance with the terms hereof. The undersigned requests that said Warrant
Securities be in fully registered form in the authorized denominations,
registered in such names and delivered all as specified in accordance with the
instructions set forth below.

A-5

 

     If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
evidencing the Warrants for the number of Warrant Securities remaining
unexercised be issued and delivered to the undersigned unless otherwise
specified in the instructions below.

	 	 	 	 	 
	Dated:

	 	Name	 	 
	

	 	 	 	

	

	 	 	 	(Please Print)
	 
	 	 	 	 
	

	 	Address:	 	 
	

	 	 	 	

	 
	

	 	

	 
	 	 	 	 
	 	 	

	 	 	(Insert Social Security or Other Identifying Number of Holder)
	 
	 	 	 	 
	Signature Guaranteed	 	

	 	 	Signature
	 
	 	 	 	 
	 	 	(Signature must conform in all respects to
name of holder as specified on the face of
this Warrant Certificate and must bear a
signature guarantee by a bank, trust
company or member broker of the New York,
Midwest or Pacific Stock Exchange)

This Warrant may be exercised at the following addresses:

	 	 	 
	By Hand at

	 	

	 	 	 
	 	 	

	 
	 	 
	By mail at

	 	

	 	 	 
	 	 	

[Instructions as to form and delivery of Warrant Securities and, if applicable,
Warrant Certificates evidencing Warrants for the number of Warrant Securities
remaining unexercised—complete as appropriate.]

A-6

 

ASSIGNMENT

[Form of assignment to be executed if

Warrant Holder desires to transfer Warrant)

     FOR VALUE RECEIVED,                     hereby sells, assigns and transfers unto:

	 	 	 
	

	 	

	 
	 	 
	

	 	

	(please print name and address including zip code)

	 	Please insert Social Security or other identifying number

the right represented by the within Warrant to purchase [                    ]
shares of [Title of Warrant Securities] of Guilford Pharmaceuticals Inc. to
which the within Warrant relates and appoints [                    ] attorney
to transfer such right on the books of the Warrant Agent with full power of
substitution in the premises.

	 	 	 
	Dated
	 	 
	

	 	

	

	 	Signature
	 
	 	 
	

	 	(Signature must conform in all
respects to name of holder as
specified on the face of the
Warrant)
	Signature Guaranteed
	 	 
	 
	 	 
	

	 	 

A-7

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page

	ARTICLE I
	 	 	 	 
	ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF WARRANT CERTIFICATES
	 	 	1	 
	Section 1.1 Issuance of Warrants
	 	 	1	 
	Section 1.2 Execution and Delivery of Warrant Certificates
	 	 	2	 
	Section 1.3 Issuance of Warrant Certificates
	 	 	3	 
	ARTICLE II
	 	 	 	 
	WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS
	 	 	3	 
	Section 2.1 Warrant Price
	 	 	3	 
	Section 2.2 Duration of Warrants
	 	 	3	 
	Section 2.3 Exercise of Warrants
	 	 	3	 
	ARTICLE III
	 	 	 	 
	OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANT CERTIFICATES
	 	 	5	 
	Section 3.1 No Rights as Warrant Securityholder Conferred by
Warrants or Warrant Certificates
	 	 	5	 
	Section 3.2 Lost, Stolen, Mutilated or Destroyed Warrant Certificates
	 	 	5	 
	Section 3.3 Holder of Warrant Certificate May Enforce Rights
	 	 	6	 
	Section 3.4 Adjustments
	 	 	6	 
	Section 3.5 Notice to Warrantholders
	 	 	9	 
	Section 3.6 [If the Warrants are subject to acceleration by the
Company, insert—Acceleration of Warrants by the Company
	 	 	10	 

-i-

 

	 	 	 	 	 
	 	 	Page

	ARTICLE IV
	 	 	 	 
	EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES 
	 	 	11	 
	Section 4.1 Exchange and Transfer of Warrant Certificates
	 	 	11	 
	Section 4.2 Treatment of Holders of Warrant Certificates
	 	 	12	 
	Section 4.3 Cancellation of Warrant Certificates
	 	 	12	 
	ARTICLE V
	 	 	 	 
	CONCERNING THE WARRANT AGENT 
	 	 	13	 
	Section 5.1 Warrant Agent
	 	 	13	 
	Section 5.2 Conditions of Warrant Agent’s Obligations
	 	 	13	 
	Section 5.3 Resignation and Appointment of Successor
	 	 	15	 
	ARTICLE VI
	 	 	 	 
	MISCELLANEOUS 
	 	 	16	 
	Section 6.1 Amendment
	 	 	16	 
	Section 6.2 Notices and Demands to the Company and Warrant Agent
	 	 	17	 
	Section 6.3 Addresses
	 	 	17	 
	Section 6.4 Governing Law
	 	 	17	 
	Section 6.5 Delivery of Prospectus
	 	 	17	 
	Section 6.6 Obtaining of Governmental Approvals
	 	 	17	 
	Section 6.7 Persons Having Rights Under Warrant Agreement
	 	 	17	 
	Section 6.8 Headings
	 	 	18	 
	Section 6.9 Counterparts
	 	 	18	 
	Section 6.10 Inspection of Agreement
	 	 	18	 

-ii-<PAGE>
                                                                    EXHIBIT 10.2

                                 ZIPREALTY, INC.
                                 1999 STOCK PLAN

      1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants and to promote the success of the Company's business. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options, as determined by the Administrator at the time of grant. Stock Purchase
Rights may also be granted under the Plan.

      2. Definitions. As used herein, the following definitions shall apply:

            (a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan in accordance with Section 4 hereof.

            (b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any other country or jurisdiction where Options or Stock Purchase Rights are
granted under the Plan.

            (c) "Board" means the Board of Directors of the Company.

            (d) "Code" means the Internal Revenue Code of 1986, as amended.

            (e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 hereof.

            (f) "Common Stock" means the Common Stock of the Company.

            (g) "Company" means zipRealty, Inc., a California corporation.

            (h) "Consultant" means any person who is engaged by the Company or
any Parent or Subsidiary to render consulting or advisory services to such
entity.

            (i) "Director" means a member of the Board of Directors of the
Company.

            (j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.

            (k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. A Service
Provider shall not cease to be an Employee in the case of (i) any leave of
absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless
<PAGE>
reemployment upon expiration of such leave is guaranteed by statute or contract.
If reemployment upon expiration of a leave of absence approved by the Company is
not so guaranteed, on the 181st day of such leave any Incentive Stock Option
held by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.

            (l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            (m) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

                  (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;

                  (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or

                  (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.

            (n) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.

            (o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

            (p) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

            (q) "Option" means a stock option granted pursuant to the Plan.

            (r) "Option Agreement" means a written or electronic agreement
between the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.

            (s) "Option Exchange Program" means a program whereby outstanding
Options are exchanged for Options with a lower exercise price.

                                      -2-
<PAGE>
            (t) "Optioned Stock" means the Common Stock subject to an Option or
a Stock Purchase Right.

            (u) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.

            (v) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

            (w) "Plan" means this 1999 Stock Plan.

            (x) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.

            (y) "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.

            (z) "Service Provider" means an Employee, Director or Consultant.

            (aa) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.

            (bb) "Stock Purchase Right" means a right to purchase Common Stock
pursuant to Section 11 below.

            (cc) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

      3. Stock Subject to the Plan. Subject to the provisions of Section 12 of
the Plan, the maximum aggregate number of Shares which may be subject to option
and sold under the Plan is 10,085,873 Shares. The Shares may be authorized but
unissued, or reacquired Common Stock.

            If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated). However, Shares that have actually been issued under the Plan,
upon exercise of either an Option or Stock Purchase Right, shall not be returned
to the Plan and shall not become available for future distribution under the
Plan, except that if Shares of Restricted Stock are repurchased by the Company
at their original purchase price, such Shares shall become available for future
grant under the Plan.

                                      -3-
<PAGE>
      4. Administration of the Plan.

            (a) Administrator. The Plan shall be administered by the Board or a
Committee appointed by the Board, which Committee shall be constituted to comply
with Applicable Laws.

            (b) Powers of the Administrator. Subject to the provisions of the
Plan and, in the case of a Committee, the specific duties delegated by the Board
to such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its discretion:

                  (i) to determine the Fair Market Value;

                  (ii) to select the Service Providers to whom Options and Stock
Purchase Rights may from time to time be granted hereunder;

                  (iii)to determine the number of Shares to be covered by each
such award granted hereunder;

                  (iv) to approve forms of agreement for use under the Plan;

                  (v) to determine the terms and conditions, of any Option or
Stock Purchase Right granted hereunder. Such terms and conditions include, but
are not limited to, the exercise price, the time or times when Options or Stock
Purchase Rights may be exercised (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Stock Purchase Right or the
Common Stock relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, shall determine;

                  (vi) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(e) instead of Common Stock;

                  (vii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option has declined since the date the Option was granted;

                  (viii) to initiate an Option Exchange Program;

                  (ix) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax treatment under
foreign tax laws;

                  (x) to allow Optionees to satisfy withholding tax obligations
by electing to have the Company withhold from the Shares to be issued upon
exercise of an Option or Stock Purchase Right that number of Shares having a
Fair Market Value equal to the amount required to be

                                      -4-
<PAGE>
withheld. The Fair Market Value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined. All
elections by Optionees to have Shares withheld for this purpose shall be made in
such form and under such conditions as the Administrator may deem necessary or
advisable; and

                  (xi) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan.

            (c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees.

      5. Eligibility.

            (a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Service Providers. Incentive Stock Options may be granted only to
Employees.

            (b) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.

            (c) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon any Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall it interfere in
any way with his or her right or the Company's right to terminate such
relationship at any time, with or without cause.

      6. Term of Plan. The Plan shall become effective upon its adoption by the
Board. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 14 of the Plan.

      7. Term of Option. The term of each Option shall be stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10) years
from the date of grant thereof. In the case of an Incentive Stock Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant or such shorter term as may be provided in the
Option Agreement

                                      -5-
<PAGE>
      8. Option Exercise Price and Consideration.

            (a) The per share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:

                  (i) In the case of an Incentive Stock Option

                        (A) granted to an Employee who, at the time of grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.

                        (B) granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.

                  (ii) In the case of a Nonstatutory Stock Option

                        (A) granted to a Service Provider who, at the time of
grant of such Option, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the date of grant.

                        (B) granted to any other Service Provider, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.

                  (iii) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price other than as required above pursuant to a
merger or other corporate transaction.

            (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company

                                      -6-
<PAGE>
      9. Exercise of Option.

            (a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Except in the case of Options granted to Officers,
Directors and Consultants, Options shall become exercisable at a rate of no less
than 20% per year over five (5) years from the date the Options are granted.
Unless the Administrator provides otherwise, vesting of Options granted
hereunder shall be tolled during any unpaid leave of absence. An Option may not
be exercised for a fraction of a Share.

                  An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 12 of the Plan.

                  Exercise of an Option in any manner shall result in a decrease
in the number of Shares thereafter available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which the Option is
exercised.

            (b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least thirty (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.

            (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
(of at least six (6) months) to the extent the Option is vested on the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified time
in the Option Agreement,

                                      -7-
<PAGE>
the Option shall remain exercisable for twelve (12) months following the
Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan.

            (d) Death of Optionee. If an Optionee dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent that the Option is
vested on the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement) by the Optionee's
estate or by a person who acquires the right to exercise the Option by bequest
or inheritance. In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to the
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

            (e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

      10. Non-Transferability of Options and Stock Purchase Rights. The Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.

      11. Stock Purchase Rights.

            (a) Rights to Purchase. Stock Purchase Rights may be issued either
alone, in addition to, or in tandem with other awards granted under the Plan
and/or cash awards made outside of the Plan. After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing or electronically of the terms, conditions and restrictions
related to the offer, including the number of Shares that such person shall be
entitled to purchase, the price to be paid, and the time within which such
person must accept such offer. The terms of the offer shall comply in all
respects with Section 260.140.42 of Title 10 of the California Code of
Regulations. The offer shall be accepted by execution of a Restricted Stock
purchase agreement in the form determined by the Administrator.

            (b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse

                                      -8-
<PAGE>
at such rate as the Administrator may determine. Except with respect to Shares
purchased by Officers, Directors and Consultants, the repurchase option shall in
no case lapse at a rate of less than 20% per year over five (5) years from the
date of purchase.

            (c) Other Provisions. The Restricted Stock purchase agreement shall
contain such other terms, provisions and conditions not inconsistent with the
Plan as may be determined by the Administrator in its sole discretion.

            (d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company. No adjustment shall be
made for a dividend or other right for which the record date is prior to the
date the Stock Purchase Right is exercised, except as provided in Section 12 of
the Plan.

      12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

            (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company. The conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option or Stock Purchase Right.

            (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option or Stock Purchase Right until
fifteen (15) days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option or Stock Purchase Right
would not otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased upon
exercise of an Option or Stock Purchase Right shall lapse as to all such Shares,
provided the proposed dissolution or liquidation takes place at the time and in
the manner contemplated. To the

                                      -9-
<PAGE>
extent it has not been previously exercised, an Option or Stock Purchase Right
will terminate immediately prior to the consummation of such proposed action.

            (c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the Option or Stock Purchase
Right shall terminate upon the expiration of such period. For the purposes of
this paragraph, the Option or Stock Purchase Right shall be considered assumed
if, following the merger or sale of assets, the option or right confers the
right to purchase or receive, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger or sale of
assets, the consideration (whether stock, cash, or other securities or property)
received in the merger or sale of assets by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.

      13. Time of Granting Options and Stock Purchase Rights. The date of grant
of an Option or Stock Purchase Right shall, for all purposes, be the date on
which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the determination shall be given to each Employee to whom an Option or Stock
Purchase Right is so granted within a reasonable time after the date of such
grant.

      14. Amendment and Termination of the Plan.

            (a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.

            (b) Shareholder Approval. The Board shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

                                      -10-
<PAGE>
            (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.

      15. Conditions Upon Issuance of Shares.

            (a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

            (b) Investment Representations. As a condition to the exercise of an
Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

      16. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

      17. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

      18. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the degree and manner
required under Applicable Laws.

      19. Information to Optionees and Purchasers. The Company shall provide to
each Optionee and to each individual who acquires Shares pursuant to the Plan,
not less frequently than annually during the period such Optionee or purchaser
has one or more Options or Stock Purchase Rights outstanding, and, in the case
of an individual who acquires Shares pursuant to the Plan, during the period
such individual owns such Shares, copies of annual financial statements. The
Company shall not be required to provide such statements to key employees whose
duties in connection with the Company assure their access to equivalent
information.

                                      -11-
<PAGE>

                                 ZIPREALTY, INC.

                                 1999 STOCK PLAN

                             STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.

I.    NOTICE OF STOCK OPTION GRANT

      Name

      The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:

      Date of Grant

      Vesting Commencement Date

      Exercise Price per Share

      Total Number of Shares Granted

      Total Exercise Price

      Type of Option:                         Incentive Stock Option
                                        -----
                                              Nonstatutory Stock Option
                                        -----

      Term/Expiration Date:

      Vesting Schedule:

      This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:

      One-fourth (1/4) of the Shares subject to the Option shall vest one year
from the Vesting Commencement Date, and One-forty-eighth (1/48) of the Shares
subject to the Option shall vest on the first day of each calendar month
thereafter, subject to Optionee's continuing to be a Service Provider on such
dates.
<PAGE>
      Termination Period:

      This Option shall be exercisable for three months after Optionee ceases to
be a Service Provider. Upon Optionee's death or disability, this Option may be
exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.

II.   AGREEMENT

      1. Grant of Option. The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of Grant, at
the exercise price per Share set forth in the Notice of Grant (the "Exercise
Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.

      If designated in the Notice of Grant as an Incentive Stock Option ("ISO"),
this Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").

      2. Exercise of Option.

            (a) Right to Exercise. This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.

            (b) Method of Exercise. This Option shall be exercisable by delivery
of an exercise notice in the form attached as Exhibit A (the "Exercise Notice")
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed Exercise Notice accompanied by the aggregate Exercise
Price.

      No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.

      3. Optionee's Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company, concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B.

                                      -2-
<PAGE>
      4. Lock-Up Period. Optionee hereby agrees that, if so requested by the
Company or any representative of the under-writers (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.

      5. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:

            (a) cash or check;

            (b) consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan; or

            (c) surrender of other Shares which, (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.

      6. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.

      7. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

      8. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option.

      9. Tax Consequences. Set forth below is a brief summary as of the date of
this Option of some of the federal tax consequences of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

            (a) Exercise of ISO. If this Option qualifies as an ISO, there will
be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair

                                      -3-
<PAGE>
Market Value of the Shares on the date of exercise over the Exercise Price will
be treated as an adjustment to the alternative minimum tax for federal tax
purposes and may subject the Optionee to the alternative minimum tax in the year
of exercise.

            (b) Exercise of Nonstatutory Stock Option. There may be a regular
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.

            (c) Disposition of Shares. In the case of an NSO, if Shares are held
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes. In the case
of an ISO, if Shares transferred pursuant to the Option are held for at least
one year after exercise and of at least two years after the Date of Grant, any
gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If Shares purchased under an ISO
are disposed of within one year after exercise or two years after the Date of
Grant, any gain realized on such disposition will be treated as compensation
income (taxable at ordinary income rates) to the extent of the difference
between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the Shares. Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.

            (d) Notice of Disqualifying Disposition of ISO Shares. If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.

      10. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of California.

      11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED

                                      -4-
<PAGE>
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS
OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH
OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS
A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

      Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.

                                      -5-
<PAGE>
OPTIONEE:                               ZIPREALTY, INC.

----------------------------------      ---------------------------------------
Signature                               By

----------------------------------      ---------------------------------------
Print Name                              Title

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

----------------------------------
Residence Address
<PAGE>
                                    EXHIBIT A

                                 1999 STOCK PLAN

                                 EXERCISE NOTICE

zipRealty, Inc.
2000 Powell Street, Suite 1555
Emeryville, CA 94608

Attention: Chief Executive Officer

      1. Exercise of Option. Effective as of today,             , the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
             shares of the Common Stock (the "Shares") of zipRealty, Inc. (the
"Company") under and pursuant to the 1999 Stock Plan (the "Plan") and the Stock
Option Agreement dated              (the "Option Agreement").

      2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option Agreement.

      3. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.

      4. Rights as Shareholder. Until the issuance of the Shares (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Optionee as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance except as provided in Section 12 of the Plan.

      5. Company's Right of First Refusal. Before any Shares held by Optionee or
any transferee (either being sometimes referred to herein as the "Holder") may
be sold or otherwise transferred (including transfer by gift or operation of
law), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the
"Right of First Refusal").

            (a) Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the
number of Shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder pro-poses to
transfer the Shares (the "Offered Price"), and the Holder shall offer the Shares
at the Offered Price to the Company or its assignee(s).
<PAGE>
            (b) Exercise of Right of First Refusal. At any time within thirty
(30) days after receipt of the Notice, the Company and/or its assignee(s) may,
by giving written notice to the Holder, elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection (c)
below.

            (c) Purchase Price. The purchase price ("Purchase Price") for the
Shares purchased by the Company or its assignee(s) under this Section shall be
the Offered Price. If the Offered Price includes consideration other than cash,
the cash equivalent value of the non-cash consideration shall be determined by
the Board of Directors of the Company in good faith.

            (d) Payment. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

            (e) Holder's Right to Transfer. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this
Section shall continue to apply to the Shares in the hands of such Pro-posed
Transferee. If the Shares described in the Notice are not transferred to the
Proposed Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignees shall again be offered the Right
of First Refusal before any Shares held by the Holder may be sold or otherwise
transferred.

            (f) Exception for Certain Family Transfers. Anything to the contrary
contained in this Section notwithstanding, the transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's immediate family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section.

            (g) Termination of Right of First Refusal. The Right of First
Refusal shall terminate as to any Shares upon the first sale of Common Stock of
the Company to the general public pursuant to a registration statement filed
with and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.

      6. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with

                                      -2-
<PAGE>
the purchase or disposition of the Shares and that Optionee is not relying on
the Company for any tax advice.

      7. Restrictive Legends and Stop-Transfer Orders.

            (a) Legends. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by the Company or by state or
federal securities laws:

      THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.

      THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS
ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST
REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

            (b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

            (c) Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

      8. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.

      9. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Administrator shall be final and binding on
all parties.

                                      -3-
<PAGE>
      10. Governing Law; Severability. This Agreement is governed by the
internal substantive laws but not the choice of law rules, of California.

      11. Entire Agreement. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan, the Option Agreement and the
Investment Representation Statement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee.

                [The Remainder of this Page Intentionally Blank]

                                      -4-
<PAGE>
Submitted by:                           Accepted by:

OPTIONEE                                ZIPREALTY, INC.

----------------------------------      ---------------------------------------
Signature                               By

----------------------------------      ---------------------------------------
Print Name                              Its

Address:                                Address:

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

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

                                        ---------------------------------------
                                        Date Received
<PAGE>
                                    EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT

OPTIONEE:

COMPANY:          ZIPREALTY, INC.

SECURITY:         COMMON STOCK

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:

      (a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").

      (b) Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, a legend prohibiting their transfer without the
consent of the Commissioner of Corporations of the State of California and any
other legend required under applicable state securities laws.

      (c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly from
the issuer thereof, in a non-public offering subject to the

                                      -2-
<PAGE>
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of
certain public information about the Company, (3) the amount of Securities being
sold during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

      In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.

      (d) Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.

                                        Signature of Optionee:

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

                                        Date:
                                             ----------------------------------

                                      -3-

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