Document:

exv4w3

 

Exhibit 4.3

[ Form
of ]

INTELLECT NEUROSCIENCES, INC.

2006 EQUITY INCENTIVE PLAN

NOTICE OF STOCK OPTION AWARD

     Unless otherwise defined herein, the terms defined in the 2006 Equity Incentive Plan shall
have the same defined meanings in this Notice of Stock Option Award and the attached Stock Option
Award Terms, which is incorporated herein by reference (together, the “Award Agreement”).

Participant
(the “Participant”)

«Name»

Grant

The undersigned Participant has been granted an Option to purchase Common Stock of Intellect
Neurosciences, Inc. (the “Company”), subject to the terms and conditions of the Plan and this Award
Agreement, as follows:

	 	 	 	 	 	 	 
	Date of Grant

	 	«Grant_Date»
	 	Total Number of
Shares Granted
	 	«Shares_Granted»
	 
	 	 	 	 	 	 
	Vesting

	 	«Vesting_Date»
	 	Type of Option
	 	o Incentive Stock
	Commencement Date

	 	 	 	 	 	Option
	 
	 	 	 	 	 	 
	Exercise Price per

	 	$«Exercise_Price»
	 	 	 	o Non-Statutory Stock
	Share

	 	 	 	 	 	Option
	 
	 	 	 	 	 	 
	Total Exercise Price

	 	$«Total_Exercise_Price»
	 	Term/Expiration Date
	 	«Expiration_Date»

Vesting Schedule:

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

	 	 	 
	Number of Months (or years) of Service	 	% of Grant (or # of Shares) Vested
	 
	 	 

Vesting of this Option shall cease upon termination of Employment/Other Relationship (the
"Relationship”) of the Participant with the Company.

	 	 	 	 	 
	 
	 	 	 	 
	Participant

	 	Company
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Signature

	 	By	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	Print Name

	 	Title	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	Residence Address
	 	 	 	 

 

 

INTELLECT NEUROSCIENCES, INC.

STOCK OPTION

AWARD TERMS

	1.	 	Grant of Option. The Committee hereby grants to the Participant named
in the Notice of Stock Option Grant an option (the “Option”) to purchase the number of
Shares set forth in the Notice of Stock Option Award, at the exercise price per Share
set forth in the Notice of Stock Option Grant (the “Exercise Price”), and subject to
the terms and conditions of the 2006 Equity Incentive Plan (the “Plan”), which is
incorporated herein by reference. In the event of a conflict between the terms and
conditions of the Plan and this Stock Option Award Agreement, the terms and conditions
of the Plan shall prevail.
	 
	 	 	If designated in the Notice of Stock Option 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
limitation rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option (“NSO”).
	 
	2.	 	Exercise of Option.

	 	i.	 	Right to Exercise. This Option may be exercised during
its term in accordance with the Vesting Schedule set out in the Notice of Stock
Option Award and with the applicable provisions of the Plan and this Award
Agreement.
	 
	 	ii.	 	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 (the
“Exercised Shares”), the Participant’s agreement to be subject to a right of
first refusal with respect to Exercised Shares 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 payment of 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 Participant on the date on which
the Option is exercised with respect to such Shares.

 

 

	3.	 	Termination. This Option shall be exercisable for three months after
Participant ceases to be an employee; provided, however, if the
Relationship is terminated by the Company for cause, the Option shall terminate
immediately. Upon Participant’s death or Disability, this Option may be exercised for
twelve (12) months after the Relationship ceases. In no event may Participant exercise
this Option after the Term/Expiration Date as provided above.
	 
	4.	 	Participant’s Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, (the “Securities Act”) at the
time this Option is exercised and as a condition of such exercise, the Participant
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.
	 
	5.	 	Lock-Up Period. Participant hereby agrees that, if so requested by the
Company or any representative of the underwriters (the “Managing Underwriter”) in
connection with any registration of the offering of any securities of the Company under
the Securities Act, Participant 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. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such Market Standoff Period.
	 
	6.	 	Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the stockholders 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 Participant only by Participant. The terms of the
Plan and this Award Agreement shall be binding upon the executors, Committees, heirs,
successors and assigns of the Participant.
	 
	8.	 	Term of Option. This Option may be exercised only within the Term set
out in the Notice of Stock Option Award which Term may not exceed ten (10) years from
the Date of Grant, and may be exercised during such Term only in accordance with the
Plan and the terms of this Award Agreement.
	 
	9.	 	United States Tax Consequences. Set forth below is a brief summary as
of the date of this Option of some of the United States 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

2

 

TO CHANGE. THE PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS
OPTION OR DISPOSING OF THE SHARES.

	 	i.	 	Exercise of ISO. If this Option qualifies as an
Incentive Stock Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair 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 Participant to the alternative minimum tax in the year of
exercise.
	 
	 	ii.	 	Exercise of Nonstatutory Stock Option. There may be a
regular federal income tax liability upon the exercise of a Nonstatutory Stock
Option. The Participant 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
the Participant is an Employee or a former Employee, the Company will be
required to withhold from the Participant’s compensation or collect from the
Participant 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.
	 
	 	iii.	 	Disposition of Shares. In the case of a Nonstatutory
Stock Option, 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 Incentive Stock Option, if Shares
transferred pursuant to the Option are held for at least one year after exercise
and for 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 Incentive Stock
Option 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 Incentive Stock Option Shares were
held.
	 
	 	iv.	 	Notice of Disqualifying Disposition of Incentive Stock Option
Shares. If this Option is an Incentive Stock Option, and if the Participant
sells or otherwise disposes of any of the Shares acquired pursuant to the
Incentive Stock Option 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
Participant shall immediately notify the Company in writing of such disposition.
The Participant agrees that the Participant may be subject to income tax
withholding by the Company on the compensation income recognized by the
Participant.

3

 

	 	v.	 	Withholding. Pursuant to applicable federal, state,
local or foreign laws, the Company may be required to collect income or other
taxes on the grant of this Option, the exercise of this Option, the lapse of a
restriction placed on this Option or the Shares issued upon exercise of this
Option, or at other times. The Company may require, at such time as it
considers appropriate, that the Participant pay the Company the amount of any
taxes which the Company may determine is required to be withheld or collected,
and the Participant shall comply with the requirement or demand of the Company.
In its discretion, the Company may withhold Shares to be received upon exercise
of this Option or offset against any amount owed by the Company to the
Participant, including compensation amounts, if in its sole discretion it deems
this to be an appropriate method for withholding or collecting taxes.

	10.	 	Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Award 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 Participant with respect to the
subject matter hereof, and may not be modified (except as provided herein and in the
Plan) adversely to the Participant’s interest except by means of a writing signed by
the Company and Participant. This agreement is governed by the internal substantive
laws but not the choice of law rules of the State of Delaware.
	 
	11.	 	No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING IN THE RELATIONSHIP AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
ENGAGED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). PARTICIPANT FURTHER
ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER
AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND
SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE COMPANY’S RIGHT TO
TERMINATE THE RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

Participant 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. Participant 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. Participant hereby agrees
to accept as binding, conclusive and final all decisions or interpretations of the Committee
upon any questions arising under the Plan or this Option. Participant further agrees to
notify the Company upon any change in the residence address indicated below.

4

 

EXHIBIT A

2006 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

Intellect Neurosciences, Inc.

Address

City, State, Zip Code

Attention: President

	 	1.	 	Exercise of Option. Effective as of today,                     , 200___, the
undersigned (“Participant”) hereby elects to exercise Participant’s option to purchase
                    
shares of the Common Stock (the “Shares”) of                     (the “Company”) under
and pursuant to the 2006 Equity Incentive Plan (the “Plan”) and the Stock Option Award
Agreement dated                     , 200___(the “Award Agreement”).
	 
	 	2.	 	Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Award Agreement.
	 
	 	3.	 	Representations of Participant. Participant acknowledges that
Participant has received, read and understood the Plan and the Award Agreement and
agrees to abide by and be bound by their terms and conditions.
	 
	 	4.	 	Rights as Stockholder. 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
stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option. The Shares shall be issued to the Participant 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 3(c) of the Plan.
	 
	 	5.	 	Tax Consultation. Participant understands that Participant may suffer
adverse tax consequences as a result of Participant’s purchase or disposition of the
Shares. Participant represents that Participant has consulted with any tax consultants
Participant deems advisable in connection with the purchase or disposition of the
Shares and that Participant is not relying on the Company for any tax advice.
	 
	 	6.	 	Restrictive Legends.

	 	a.	 	Legends. Participant 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

1

 

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 COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.

	 	b.	 	Stop-Transfer Notices. Participant 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.

	 	7.	 	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 Participant and his or
her heirs, executors, Committees, successors and assigns.
	 
	 	8.	 	Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or by the Company forthwith to the
Committee which shall review such dispute at its next regular meeting. The resolution
of such a dispute by the Committee shall be final and binding on all parties.
	 
	 	9.	 	Governing Law; Severability. This Agreement is governed by the laws of
the state of incorporation of the company.
	 
	 	10.	 	Entire Agreement. The Plan and Award Agreement are incorporated herein
by reference. This Agreement, the Plan, the Award Agreement (including all exhibits)
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 Participant with respect to the
subject matter hereof, and may not be modified adversely to the Participant’s interest
except by means of a writing signed by the Company and Participant.

2

 

[Signatures appear on next page.]

3

 

	 	 	 
	Submitted by:

	 	Accepted by:
	 
	 	 
	PARTICIPANT

	 	COMPANY
	 
	 	 
	 

	 	 
	Signature

	 	By
	 
	 	 
	 

	 	 
	Print Name

	 	Title
	 
	 	 
	Address:

	 	Address:
	 
	 	 
	 

	 	Type in address
	 
	 	 
	 

	 	City, State, Zip code
	 
	 	 
	 

	 	 
	 

	 	Date Received

1<PAGE>

                                                                     Exhibit 4.4

THIS WARRANT AND THE SHARES OF CAPITAL STOCK ISSUED UPON ANY EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED BY ANY PERSON, INCLUDING A PLEDGEE, UNLESS (1) EITHER
(A) A REGISTRATION WITH RESPECT TO THERETO SHALL BE EFFECTIVE UNDER THE
SECURITIES ACT, OR (B) THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT IS AVAILABLE, AND (2) THERE SHALL HAVE BEEN COMPLIANCE WITH ALL
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.

                                                           _______________, 2005

                            WARRANT TO PURCHASE STOCK

                                       OF

                          INTELLECT NEUROSCIENCES, INC.
                            (A DELAWARE CORPORATION)

     INTELLECT NEUROSCIENCES, INC., a Delaware corporation (the "Company"), for
value received, hereby certifies that __________________ (the "Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company, at
any time or from time to time at or before the earlier of 5:00 p.m. New York
City time on ______, 2010 (the "Expiration Date") and the termination of this
Warrant as provided in Section 8 hereof, that number of shares of Common Stock,
par value $0.001 per share, of the Company (the "Common Stock") equal to
___________ divided by 50% of the purchase price per share in the Company's next
round of equity financing resulting in gross proceeds to the Company of at least
$5,000,000 (the "Exercise Price"), as adjusted upon the occurrence of certain
events as set forth in Section 3 of this Warrant. The date on which the number
of shares of Common Stock underlying this Warrant and the Exercise Price of this
Warrant are determined is referred to herein as the "Determination Date". The
shares of stock issuable upon exercise of this Warrant is hereinafter referred
to as the "Warrant Stock".

     1. Exercise.

          1.1 Manner of Exercise; Payment in Cash. This Warrant may be exercised
     by the Holder, in whole or in part, by surrendering this Warrant, with the
     purchase form appended hereto as Exhibit A duly executed by the Holder, at
     the principal office of the Company, or at such other place as the Company
     may designate, accompanied by payment in full of the Exercise Price payable
     in respect of the number of shares of Warrant Stock purchased upon such
     exercise. Payment of the Exercise Price shall be in cash or by certified or
     official bank check payable to the order of the Company.

          1.2 Effectiveness. Each exercise of this Warrant shall be deemed to
     have been effected immediately prior to the close of business on the day on
     which this Warrant shall have been surrendered to the Company as provided
     in Section 1.1 above. At such time, the

<PAGE>

     person or persons in whose name or names any certificates for Warrant Stock
     shall be issuable upon such exercise as provided in Section 1.3 below shall
     be deemed to have become the holder or holders of record of the Warrant
     Stock represented by such certificates.

          1.3. Delivery of Certificates. As soon as practicable after the
     exercise of this Warrant in full or in part, and in any event within ten
     (10) business days thereafter, the Company at its sole expense will cause
     to be issued in the name of, and delivered to, the Holder, or, subject to
     the terms and conditions hereof, as such Holder (upon payment by such
     Holder of any applicable transfer taxes) may direct:

               (a) A certificate or certificates for the number of full shares
          of Warrant Stock to which such Holder shall be entitled upon such
          exercise plus, in lieu of any fractional share to which such Holder
          would otherwise be entitled, cash in an amount determined pursuant to
          Section 2 hereof, and

               (b) In case such exercise is in part only, a new warrant or
          warrants (dated the date hereof) of like tenor, calling in the
          aggregate on the face or faces thereof for the number of shares of
          Warrant Stock (without giving effect to any adjustment therein) equal
          to the number of such shares called for on the face of this Warrant
          minus the number of such shares purchased by the Holder upon such
          exercise as provided in Section 1.1 above.

     2. Fractional Shares. The Company shall not be required upon the exercise
of this Warrant to issue any fractional shares. As to any fraction of a share
which the Holder would otherwise be entitled to purchase upon such exercise, the
Company shall pay a cash adjustment in respect of such final fraction in an
amount equal to such fraction multiplied by the Exercise Price.

     3. Certain Adjustments.

          3.1 Changes in Common Stock. If, after the Determination Date, the
     Company shall (i) combine the outstanding shares of Common Stock into a
     lesser number of shares, (ii) subdivide the outstanding shares of Common
     Stock into a greater number of shares, or (iii) issue additional shares of
     Common Stock as a dividend or other distribution with respect to the Common
     Stock, the number of shares of Warrant Stock shall be equal to the number
     of shares which the Holder would have been entitled to receive after the
     happening of any of the events described above if such shares had been
     issued immediately prior to the happening of such event, such adjustment to
     become effective concurrently with the effectiveness of such event. The
     Exercise Price in effect immediately prior to any such combination of
     Common Stock shall, upon the effectiveness of such combination, be
     proportionately increased. The Exercise Price in effect immediately prior
     to any such subdivision of Common Stock or at the record date of such
     dividend shall upon the effectiveness of such subdivision or immediately
     after the record date of such dividend be proportionately reduced.

          3.2 Reorganizations and Reclassifications. If, after the Determination
     Date, there shall occur any capital reorganization or reclassification of
     the Common Stock (other

                                       -2-

<PAGE>

     than a change in par value or a subdivision or combination as provided for
     in Section 3.1), then, as part of any such reorganization or
     reclassification, lawful provision shall be made so that the Holder shall
     have the right thereafter to receive upon the exercise hereof the kind and
     amount of shares of stock or other securities or property which such Holder
     would have been entitled to receive if, immediately prior to any such
     reorganization or reclassification, such Holder had held the number of
     shares of Common Stock which were then purchasable upon the exercise of
     this Warrant. In any such case, appropriate adjustment (as reasonably
     determined by the Board of Directors of the Company) shall be made in the
     application of the provisions set forth herein with respect to the rights
     and interests thereafter of the Holder such that the provisions set forth
     in this Section 3 (including provisions with respect to adjustment of the
     Exercise Price) shall thereafter be applicable, as nearly as is reasonably
     practicable, in relation to any shares of stock or other securities or
     property thereafter deliverable upon the exercise of this Warrant.

          3.3 Merger, Consolidation or Sale of Assets. Subject to the provisions
     of Section 8, if, after the Determination Date, there shall be a merger or
     consolidation of the Company with or into another corporation (other than a
     merger or reorganization involving only a change in the state of
     incorporation of the Company or the acquisition by the Company of other
     businesses where the Company survives as a going concern), or the sale of
     all or substantially all of the Company's capital stock or assets to any
     other person, then as a part of such transaction, provision shall be made
     so that the Holder shall thereafter be entitled to receive the number of
     shares of stock or other securities or property of the Company, or of the
     successor corporation resulting from the merger, consolidation or sale, to
     which the Holder would have been entitled if the Holder had exercised its
     rights pursuant to the Warrant immediately prior thereto. In any such case,
     appropriate adjustment shall be made in the application of the provisions
     of this Section 3 to the end that the provisions of this Section 3 shall be
     applicable after that event in as nearly equivalent a manner as may be
     practicable.

          3.4 Certain Anti-Dilution Adjustments. If at any time after the
     Determination Date while any portion of this Warrant remains outstanding,
     the Company shall issue shares of Common Stock (or rights, warrants, or
     other securities convertible into or exchangeable for shares of Common
     Stock, other than issuances covered by Sections 3.1, 3.2 or 3.3 above, at a
     price per share (or having an exercise, conversion, or exchange price per
     share) less than the Exercise Price in effect as of the date of issuance of
     such shares or of such rights, warrants, or other convertible or
     exchangeable securities, then, and in each such case, the Exercise Price
     shall be reduced (but not increased) to a price determined by dividing (A)
     an amount equal to the sum of (x) the number of shares of Common Stock
     outstanding immediately prior to such issue (determined on a fully-diluted
     basis; i.e., treating as outstanding all shares of Common Stock issuable
     upon exercise, exchange or conversion of all outstanding options (to the
     extent then vested and exercisable), warrants, or other securities
     exercisable or exchangeable for or convertible into, directly or
     indirectly, shares of Common Stock) multiplied by the then existing
     Exercise Price, plus (y) the consideration, if any received by the Company
     upon such issue, by (B) the total number of shares of Common Stock
     outstanding immediately after such issue or sale (determined on a
     fully-diluted basis as aforesaid). For the purpose of determining the
     consideration received by the Company upon any such issue pursuant to

                                       -3-
<PAGE>

     clause (y) above, if the consideration received by the Company is other
     than cash, its value will be deemed its fair market value, which if not
     readily determinable shall be determined in good faith by the Board of
     Directors of the Company. An adjustment made pursuant to the paragraph
     shall be made on the next business day following the date on which any such
     issuance is made and shall be effective retroactively immediately after the
     close of business on such date. Notwithstanding anything contrary in this
     Section, there shall be no reduction to the Exercise Price pursuant to this
     Section with respect to (i) the issuance or sale of options to purchase
     shares of Common Stock to employees, consultants and directors, pursuant to
     a stock option plan approved by the Board of Directors, (ii) securities
     issued in connection with the Company's initial public offering of its
     securities pursuant to a registration statement declared effective by the
     Securities and Exchange Commission which raises gross proceeds to the
     Company of at least Ten Million Dollars ($10,000,000) or any securities
     issued by the Company thereafter, (iii) the issuance of securities pursuant
     to the conversion or exercise of convertible or exercisable securities as
     of the date of this Warrant, (as adjusted for recapitalizations, stock
     splits, and the like) which are currently outstanding as of the date of
     this Warrant or (iv) the issuance of securities as consideration for a bona
     fide business acquisition of or by the Company, whether by merger,
     consolidation, sale of assets, sale or exchange of stock or otherwise,
     which involves a third party which is not affiliated with the Company or
     its current stockholders or in a strategic allowance.

          3.4 Certificate of Adjustment. When any adjustment is required to be
     made in the Exercise Price, the Company shall promptly mail to the Holder a
     certificate setting forth the Exercise Price after such adjustment and
     setting forth a brief statement of the facts requiring such adjustment.
     Delivery of such certificate shall be deemed to be a final and binding
     determination with respect to such adjustment unless challenged by the
     Holder within ten (10) days of receipt thereof. Such certificate shall also
     set forth the kind and amount of stock or other securities or property into
     which this Warrant shall be exercisable following the occurrence of any of
     the events specified in this Section 3.

     4. Compliance with Securities Act.

          4.1 Unregistered Securities. The Holder acknowledges that this Warrant
     and the Warrant Stock have not been registered under the Securities Act of
     1933, as amended, and the rules and regulations thereunder, or any
     successor legislation, and agrees not to sell, pledge, distribute, offer
     for sale, transfer or otherwise dispose of this Warrant or any Warrant
     Stock in the absence of (i) an effective registration statement under the
     Securities Act covering this Warrant or such Warrant Stock and registration
     or qualification of this Warrant or such Warrant Stock under any applicable
     "blue sky" or state securities law then in effect, or (ii) an opinion of
     counsel, satisfactory to the Company, that such registration and
     qualification are not required. The Company may delay issuance of the
     Warrant Stock until completion of any action or obtaining of any consent,
     which the Company deems necessary under any applicable law (including
     without limitation state securities or "blue sky" laws).

          4.2 Investment Letter. Without limiting the generality of Section 4.1,
     unless the offer and sale of any shares of Warrant Stock shall have been
     effectively registered under

                                       -4-

<PAGE>

     the Securities Act, the Company shall be under no obligation to issue the
     Warrant Stock unless and until the Holder shall have executed an investment
     letter in form and substance satisfactory to the Company, including a
     warranty at the time of such exercise that the Holder is acquiring such
     shares for its own account, for investment and not with a view to, or for
     sale in connection with, the distribution of any such shares.

          4.3 Legend. Certificates delivered to the Holder pursuant to Section
     1.3 shall bear the following legend or a legend in substantially similar
     form:

          "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN TAKEN FOR
          INVESTMENT AND THEY MAY NOT BE SOLD OR OTHERWISE TRANSFERRED BY ANY
          PERSON, INCLUDING A PLEDGEE, IN THE ABSENCE OF AN EFFECTIVE
          REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF
          1933, AS AMENDED, OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
          COMPANY, THAT AN EXEMPTION FROM REGISTRATION IS THEN AVAILABLE."

          5. Registration Rights.

          5.1 Certain Definitions.

          As used in this Section 5, the following terms shall have the
     following respective meanings:

     "Holder" shall mean the record owner of Registrable Securities.

     The terms "Register" "Registered" and "Registration" refer to a
     registration effected by preparing and filing a registration statement in
     compliance with the Securities Act ("Registration Statement"), and the
     declaration or ordering of the effectiveness of such Registration
     Statement.

     "Registrable Securities" shall mean all Common Stock not previously sold to
     the public and issued to the Holder pursuant to the exercise of this
     Warrant, or Common Stock issued with respect to such shares pursuant to
     stock splits, stock dividends and similar distributions with respect to
     such shares, provided, however, that shares of Common Stock which are
     Registrable Securities shall cease to be Registrable Securities at such
     time, and for so long as, such shares are eligible for sale pursuant to
     Rule 144(k) under the Securities Act.

     "Registration Expenses" shall mean all expenses incurred by the Company in
     complying with Section 5.2 of this Agreement, including, without
     limitation, all federal and state registration, qualification and filing
     fees, printing expenses, fees and disbursements of counsel for the Company,
     blue sky fees and the expense of any special audits incident to or required
     by any such registration, but shall not include Selling Expenses.

                                       -5-

<PAGE>

     "Selling Expenses" shall mean all underwriting discounts and selling
     commissions applicable to the sale of Registrable Securities pursuant to
     this Agreement and all expenses of any special counsel for the Holder.

          5.2 Piggyback Registration.

          5.2.1 Notice of Piggyback Registration and Inclusion of Registrable
     Securities. Subject to the terms of this Agreement, in the event the
     Company decides to Register any of its Common Stock for cash (either for
     its own account or the account of a security holder), other than pursuant
     to a Registration Statement which exclusively relates to the Registration
     of securities under an employee stock option, purchase, bonus or other
     benefit plan, then for so long as the Holder holds Registrable Securities,
     the Company will: (1) promptly give the Holder written notice thereof
     (which shall include a list of the jurisdictions in which the Company
     intends to attempt to qualify such securities under the applicable Blue Sky
     or other state securities laws) and (2) include in such Registration (and
     any related qualification under Blue Sky laws or other compliance), and in
     any underwriting involved therein, all the Registrable Securities specified
     in a written request delivered to the Company by the Holder within 10 days
     after delivery of such written notice from the Company. The right of the
     Holder to have Registrable Securities included in any Registration
     Statement shall be conditioned upon the provision by the Holder of any
     information reasonably requested by the Company within ten (10) days of
     such request.

          5.2.2 Underwriting in Piggyback Registration. If the Registration of
     which the Company gives notice is a Registered public offering involving an
     underwriting, the Company shall so advise the Holder as a part of the
     written notice given pursuant to Subsection 5.2.1. In such event the right
     of the Holder to Registration shall be conditioned upon such underwriting.
     The Holder shall, together with the Company, enter into an underwriting
     agreement with the Underwriter's Representative for such offering. The
     Holder shall have no right to participate in the selection of the
     underwriters for an offering pursuant to this Section.

          5.2.3 Withdrawal in Piggyback Registration. If the Holder disapproves
     of the terms of any such underwriting, it may elect to withdraw therefrom
     by written notice to the Company and the underwriter delivered at least
     seven (7) days prior to the effective date of the Registration Statement.
     Any Registrable Securities or other securities excluded or withdrawn from
     such underwriting shall be withdrawn from such Registration.

          5.3 Obligations of the Company and the Holder.

          5.3.1 Underwriting Requirements. In connection with any offering
     involving an underwriting of shares pursuant to Section 5.2 the Company
     shall not be required to include any of the Holder's Registrable Securities
     in such underwriting unless they accept the terms of the underwriting as
     agreed upon between the Company and the underwriters selected by it.

                                       -6-
<PAGE>

          5.3.2 Expenses of Registration. All Registration Expenses incurred in
     connection with all Registrations pursuant to Section 5.2 shall be borne by
     the Company. Selling Expenses to be borne by the holders of the Registrable
     Securities Registered shall be borne pro rata on the basis of the number of
     Registrable Securities being Registered.

          5.4 Indemnification.

          5.4.1 Company's Indemnification of the Holder. The Company will
     indemnify the Holder, and each of its directors, officers, stockholders,
     partners or other beneficial owners, and each person controlling the
     Holder, with respect to which Registration, qualification or compliance of
     Registrable Securities has been effected pursuant to this Warrant, and each
     underwriter, if any, and each person who controls any underwriter against
     all claims, losses, damages or liabilities, including reasonable legal fees
     and expenses (or actions in respect thereof) to the extent such claims,
     losses, damages or liabilities arise out of or are based upon any untrue
     statement (or alleged untrue statement) of a material fact contained in any
     prospectus or other document (including any related Registration Statement)
     incident to any such Registration, qualification or compliance, or are
     based on any omission (or alleged omission) to state therein a material
     fact required to be stated therein or necessary to make the statements
     therein not misleading, or any violation by the Company of any rule or
     regulation promulgated under the Securities Act applicable to the Company
     and relating to action or inaction required of the Company in connection
     with any such Registration, qualification or compliance; and the Company
     will reimburse the Holder, each of its directors, officers, stockholders,
     partners or other beneficial owners, each such underwriter and each person
     who controls the Holder or underwriter for any legal and any other expenses
     reasonably incurred in connection with investigating or defending any such
     claim, loss, damage, liability or action; provided, however, that the
     indemnity contained in this Section 5.4 shall not apply to amounts paid in
     settlement of any such claim, loss, damage, liability or action if
     settlement is effected without the consent of the Company (which consent
     shall not unreasonably be withheld); and provided, further, that the
     Company will not be liable in any such case to the extent that any such
     claim, loss, damage, liability or expense arises out of or is based upon
     any untrue statement or omission based upon written information furnished
     to the Company by the Holder, underwriter or controlling person and stated
     to be for use in connection with the offering of securities of the
     Company.

          5.4.2 The Holder's Indemnification of Company. The Holder will, if
     Registrable Securities held by the Holder are included in the securities as
     to which such Registration, qualification or compliance is being effected
     pursuant to this Warrant, indemnify the Company, each of its directors and
     officers, each legal counsel and independent accountant of the Company,
     each underwriter, if any, of the Company's securities covered by such a
     Registration Statement, and each person who controls the Company or such
     underwriter within the meaning of the Securities Act against all claims,
     losses, damages and liabilities, including legal fees and expenses (or
     actions in respect thereof), arising out of or based upon any untrue
     statement (or alleged untrue statement) of a material fact contained in any
     such Registration Statement, prospectus, offering circular

                                       -7-

<PAGE>

     or other document, or any omission (or alleged omission) to state therein a
     material fact required to be stated therein or necessary to make the
     statements therein not misleading, or any violation by the Holder of any
     rule or regulation promulgated under the Securities Act applicable to the
     Holder and relating to action or inaction required of the Holder in
     connection with any such Registration, qualification or compliance; and
     will reimburse the Company, such directors, officers, partners, persons,
     law and accounting firms, underwriters or control persons for any legal and
     any other expenses reasonably incurred in connection with investigating or
     defending any such claim, loss, damage, liability or action, in each case
     to the extent, but only to the extent, that such untrue statement (or
     alleged untrue statement) or omission (or alleged omission) is made in such
     Registration Statement, prospectus, offering circular or other document in
     reliance upon and in conformity with written information furnished to the
     Company by the Holder and stated to be specifically for use in connection
     with the offering of securities of the Company; provided, however, that the
     Holders' liability under this Section 5.4 shall not exceed the Holder's
     proceeds from the offering of securities made in connection with such
     Registration.

          5.4.3 Indemnification Procedure. Promptly after receipt by an
     indemnified party under this Section 5.4 of notice of the commencement of
     any action, such indemnified party will, if a claim in respect thereof is
     to be made against an indemnifying party under this Section 5.4, notify the
     indemnifying party in writing of the commencement thereof and generally
     summarize such action. The indemnifying party shall have the right to
     participate in and to assume the defense of such claim; provided, however,
     that the indemnifying party shall be entitled to select counsel for the
     defense of such claim with the approval of any parties entitled to
     indemnification, which approval shall not be unreasonably withheld;
     provided further, however, that if either party reasonably determines that
     there may be a conflict between the position of the Company and the Holders
     in conducting the defense of such action, suit or proceeding by reason of
     recognized claims for indemnity under this Section 5.4, then counsel for
     such party shall be entitled to conduct the defense to the extent
     reasonably determined by such counsel to be necessary to protect the
     interest of such party. The failure to notify an indemnifying party
     promptly of the commencement of any such action, if prejudicial to the
     ability of the indemnifying party to defend such action, shall relieve such
     indemnifying party, to the extent so prejudiced, of any liability to the
     indemnified party under this Section 5.4, but the omission so to notify the
     indemnifying party will not relieve such party of any liability that such
     party may have to any indemnified party otherwise other than under this
     Section 5.4.

          5.4.4 Subsequent Transferees. The provisions of this Section 5.4
     applicable to the Holder shall apply with equal force and effect to each
     subsequent transferee to whom any of the Registrable Securities are
     transferred with the consent of the Company.

     6. Reservation of Stock. The Company will at all times thereafter reserve
and keep available, solely for issuance and delivery upon the exercise of this
Warrant, such shares of Warrant Stock and other stock, securities and property,
as from time to time shall be issuable upon the

                                       -8-

<PAGE>

exercise of this Warrant. The Company covenants that all shares of Warrant Stock
so issuable will, when issued, be duly and validly issued and fully paid and
nonassessable.

     7. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and (in the case of loss, theft or destruction) upon delivery of an
indemnity agreement (with surety if reasonably required) in an amount reasonably
satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new
Warrant of like tenor.

     8. Termination Upon Certain Events. If there shall be a merger or
consolidation of the Company with or into another corporation (other than a
merger or reorganization involving only a change in the state of incorporation
of the Company or the acquisition by the Company of other businesses where the
Company survives as a going concern), or the sale of all or substantially all of
the Company's capital stock or assets to any other person, or the liquidation or
dissolution of the Company, then as a part of such transaction, at the Company's
option, either:

          (a) provision shall be made so that the Holder shall thereafter be
     entitled to receive the number of shares of stock or other securities or
     property of the Company, or of the successor corporation resulting from the
     merger, consolidation or sale, to which the Holder would have been entitled
     if the Holder had exercised its rights pursuant to the Warrant immediately
     prior thereto (and, in such case, appropriate adjustment shall be made in
     the application of the provisions of this Section 8(a) to the end that the
     provisions of Section 3 shall be applicable after that event in as nearly
     equivalent a manner as may be practicable); or

          (b) this Warrant shall terminate on the effective date of such merger,
     consolidation or sale (the "TERMINATION DATE") and become null and void,
     provided that if this Warrant shall not have otherwise terminated or
     expired, (1) the Company shall have given the Holder written notice of such
     Termination Date at least ten (10) business days prior to the occurrence
     thereof and (2) the Holder shall have the right until 5:00 p.m., Eastern
     Standard Time, on the day immediately prior to the Termination Date to
     exercise its rights hereunder to the extent not previously exercised.

     9. Transferability. Without the prior written consent of the Company, the
Warrant shall not be assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of the Warrant or of any rights granted hereunder contrary to
the provisions of this Section 8, or the levy of any attachment or similar
process upon the Warrant or such rights, shall be null and void.

     10. No Rights as Stockholder. Until the exercise of this Warrant, the
Holder shall not have or exercise any rights by virtue hereof as a stockholder
of the Company.

     11. Notices. All notices, requests and other communications hereunder shall
be in writing, shall be either (i) delivered by hand, (ii) made by telex,
telecopy or facsimile transmission, (iii) sent by overnight courier, or (iv)
sent by registered mail, postage prepaid, return receipt requested. In the case
of notices from the Company to the Holder, they shall be sent to the address

                                       -9-

<PAGE>

furnished to the Company in writing by the last Holder who shall have furnished
an address to the Company in writing. All notices from the Holder to the Company
shall be delivered to the Company at its offices at 465 West 23rd Street, Apt.
12-J, New York, New York 10001 or such other address as the Company shall so
notify the Holder. All notices, requests and other communications hereunder
shall be deemed to have been given (i) by hand, at the time of the delivery
thereof to the receiving party at the address of such party described above,
(ii) if made by telex, telecopy or facsimile transmission, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next business day following the day
such notices is delivered to the courier service, or (iv) if sent by registered
mail, on the fifth business day following the day such mailing is made.

     12. Waivers and Modifications. Any term or provision of this Warrant may be
waived only by written document executed by the party entitled to the benefits
of such terms or provisions. The terms and provisions of this Warrant may be
modified or amended only by written agreement executed by the parties hereto.

     13. Headings. The headings in this Warrant are for convenience of reference
only and shall in no way modify or affect the meaning or construction of any of
the terms or provisions of this Warrant.

     14. Governing Law. This Warrant will be governed by and construed in
accordance with and governed by the laws of the State of New York, without
giving effect to the conflict of law principles thereof.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

                                      -10-

<PAGE>

     IN WITNESS WHEREOF, this Warrant has been executed and delivered as a
sealed instrument on the date first written above by the duly authorized
representative of the Company.

                                        INTELLECT NEUROSCIENCES, INC.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

<PAGE>

                                    EXHIBIT A

                                  PURCHASE FORM

To: INTELLECT NEUROSCIENCES, INC.

     The undersigned pursuant to the provisions set forth in the attached
Warrant (No. W-_________), hereby irrevocably elects to purchase ____ shares of
the Common Stock, par value $0.01 per share, of INTELLECT NEUROSCIENCES, INC.
(the "COMMON STOCK"), covered by such Warrant and herewith makes payment of
$_____, representing the full purchase price for such shares at the price per
share provided for in such Warrant.

     The Common Stock for which the Warrant may be exercised or converted shall
be known herein as the "Warrant Stock".

     The undersigned is aware that the Warrant Stock has not been and will not
be registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT") or any state securities laws. The undersigned understands that reliance by
the Company on exemptions under the Securities Act is predicated in part upon
the truth and accuracy of the statements of the undersigned in this Purchase
Form.

     The undersigned represents and warrants that (1) it has been furnished with
all information which it deems necessary to evaluate the merits and risks of the
purchase of the Warrant Stock, (2) it has had the opportunity to ask questions
concerning the Warrant Stock and the Company and all questions posed have been
answered to its satisfaction, (3) it has been given the opportunity to obtain
any additional information it deems necessary to verify the accuracy of any
information obtained concerning the Warrant Stock and the Company and (4) it has
such knowledge and experience in financial and business matters that it is able
to evaluate the merits and risks of purchasing the Warrant Stock and to make an
informed investment decision relating thereto.

     The undersigned hereby represents and warrant that it is purchasing the
Warrant Stock for its own account for investment and not with a view to the sale
or distribution of all or any part of the Warrant Stock.

     The undersigned understands that because the Warrant Stock has not been
registered under the Securities Act, it must continue to bear the economic risk
of the investment for an indefinite period of time and the Warrant Stock cannot
be sold unless it is subsequently registered under applicable federal and state
securities laws or an exemption from such registration is available.

     The undersigned agrees that it will in no event sell or distribute or
otherwise dispose of all or any part of the Warrant Stock unless (1) there is an
effective registration statement under the Securities Act and applicable state
securities laws covering any such transaction involving the Warrant Stock, or
(2) the Company receives an opinion satisfactory to the Company of the

                                       -1-

<PAGE>

undersigned's legal counsel stating that such transaction is exempt from
registration. The undersigned consents to the placing of a legend on its
certificate for the Warrant Stock stating that the Warrant Stock has not been
registered and setting forth the restriction on transfer contemplated hereby and
to the placing of a stop transfer order on the books of the Company and with any
transfer agents against the Warrant Stock until the Warrant Stock may be legally
resold or distributed without restriction.

     The undersigned has considered the federal and state income tax
implications of the exercise of the Warrant and the purchase and subsequent sale
of the Warrant Stock.

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

                                       -2-
<PAGE>

     IN WITNESS WHEREOF, this Warrant has been executed and delivered on the
date first written above by the duly authorized representative of the Company.

                                        INTELLECT NEUROSCIENCES, INC.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       14

<PAGE>

                                    EXHIBIT A

                                  PURCHASE FORM

To: INTELLECT NEUROSCIENCES, INC.

     The undersigned pursuant to the provisions set forth in the attached
Warrant (No. ____), hereby irrevocably elects to purchase shares of the Common
Stock, par value $0.01 per share, of INTELLECT NEUROSCIENCES, INC. (the "COMMON
STOCK"), covered by such Warrant and herewith makes payment of $_____,
representing the full purchase price for such shares at the price per share
provided for in such Warrant.

     The Common Stock for which the Warrant may be exercised or converted shall
be known herein as the "Warrant Stock".

     The undersigned is aware that the Warrant Stock has not been and will not
be registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT") or any state securities laws. The undersigned understands that reliance by
the Company on exemptions under the Securities Act is predicated in part upon
the truth and accuracy of the statements of the undersigned in this Purchase
Form.

     The undersigned represents and warrants that (1) it has been furnished with
all information which it deems necessary to evaluate the merits and risks of the
purchase of the Warrant Stock, (2) it has had the opportunity to ask questions
concerning the Warrant Stock and the Company and all questions posed have been
answered to its satisfaction, (3) it has been given the opportunity to obtain
any additional information it deems necessary to verify the accuracy of any
information obtained concerning the Warrant Stock and the Company and (4) it has
such knowledge and experience in financial and business matters that it is able
to evaluate the merits and risks of purchasing the Warrant Stock and to make an
informed investment decision relating thereto.

     The undersigned hereby represents and warrant that it is purchasing the
Warrant Stock for its own account for investment and not with a view to the sale
or distribution of all or any part of the Warrant Stock.

     The undersigned understands that because the Warrant Stock has not been
registered under the Securities Act, it must continue to bear the economic risk
of the investment for an indefinite period of time and the Warrant Stock cannot
be sold unless it is subsequently registered under applicable federal and state
securities laws or an exemption from such registration is available.

     The undersigned agrees that it will in no event sell or distribute or
otherwise dispose of all or any part of the Warrant Stock unless (1) there is an
effective registration statement under the Securities Act and applicable state
securities laws covering any such transaction involving the Warrant Stock, or
(2) the Company receives an opinion satisfactory to the Company of the
undersigned's legal counsel stating that such transaction is exempt from
registration. The undersigned consents to the placing of a legend on its
certificate for the Warrant Stock stating that

                                       15

<PAGE>

the Warrant Stock has not been registered and setting forth the restriction on
transfer contemplated hereby and to the placing of a stop transfer order on the
books of the Company and with any transfer agents against the Warrant Stock
until the Warrant Stock may be legally resold or distributed without
restriction.

     The undersigned has considered the federal and state income tax
implications of the exercise of the Warrant and the purchase and subsequent sale
of the Warrant Stock.

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       16

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