Document:

Prepared by MERRILL CORPORATION

COMMON STOCK PURCHASE

WARRANT

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE

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

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

UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES

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

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

REASONABLY SATISFACTORY TO THE COMPANY) CONFIRMING THE AVAILABILITY OF SUCH

EXEMPTION.

Dated:

_____________

No. ____                AXONYX INC.

WARRANT TO PURCHASE ________ SHARES

OF COMMON STOCK

THIS CERTIFIES THAT, for

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

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

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

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

of $3.91per

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

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

1.             Method of Exercise; Payment.

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

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

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

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

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

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

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

(b)           Net Issue Exercise.

(i)            In lieu of exercising this Warrant,

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

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

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

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

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

Stock computed using the following formula:

X             =              Y

(A-B)

     A

Where:

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

the Holder.

Y                                                                                                                                        =                                         the number of shares of Common Stock purchasable under

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

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

being exercised.

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

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

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

calculation).

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

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

(i)            if the Company’s Common Stock is

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

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

the fair market value of the securities is being determined;

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

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

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

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

the securities is being determined; or

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

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

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

the Company in good faith.

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

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

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

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

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

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

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

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

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

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

within such time.

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

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

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

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

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

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

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

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

consecutive days.  Within thirty days

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

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

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

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

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

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

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

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

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

registration statement covering the sale of the Shares issuable upon exercise

of this Warrant.

3.             Stock Fully Paid; Reservation of

Shares.  All of the Shares issuable

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

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

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

the issue thereof.  During the period

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

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

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

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

Warrant.

4.             Adjustment of Exercise Price and

Number of Shares.  Subject to the

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

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

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

events, as follows:

(a)           Reclassification, Consolidation or

Merger.  In case of any

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

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

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

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

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

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

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

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

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

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

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

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

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

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

the Company’s assets or merger by a holder of 

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

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

provided for in this Section 4. 

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

shall similarly apply to successive reclassifications, changes, consolidations,

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

assets.

(b)           Stock Splits, Dividends and

Combinations.  In the event that the

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

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

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

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

proportionately increased, and the Exercise Price shall be proportionately

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

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

of this Warrant immediately prior to such combination shall be proportionately

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

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

combination, as the case may be.

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

hereunder or the Exercise Price thereof shall be adjusted pursuant to

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

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

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

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

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

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

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

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

of the Company on the date of such exercise.

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

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

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

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

effective as of the effective date of this Warrant.

8.             Representations and Warranties

by the Holder.  The Holder

represents and warrants to the Company as follows:

(a)           This Warrant and the Shares issuable

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

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

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

amended (the “Act”).  Upon exercise of

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

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

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

view toward distribution or resale.

(b)           The Holder understands that the

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

their issuance in a transaction exempt from the registration and prospectus

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

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

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

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

such registration.

(c)           The Holder has such knowledge and

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

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

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

therewith.

(d)           The Holder is able to bear the

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

Warrant.

9.             Restrictive Legend.

The Shares issuable upon exercise of this Warrant (unless registered

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

form:

THESE SECURITIES

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

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

TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT

AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AVAILABLE EXEMPTIONS

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

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

CONFIRMING THE AVAILABILITY OF SUCH EXEMPTION.

10.           Restrictions Upon Transfer and

Removal of Legend.

(a)           The Company need not register a

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

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

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

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

(b)           Notwithstanding the provisions of

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

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

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

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

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

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

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

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

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

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

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

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

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

extent as if such transferee were the original holder hereunder.

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

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

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

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

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

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

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

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

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

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

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

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

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

herein.

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

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

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

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

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

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

rights granted to holders of Registrable Securities thereunder.

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

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

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

first page of this Warrant.

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

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

shall be deemed duly given and received when delivered personally or

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

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

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

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

party to receive the same.  Any party

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

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

established pursuant to the foregoing. 

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

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

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

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

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

by the laws of such State.  The headings

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

otherwise affect any of the terms hereof.

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

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

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

the written consent of the Company and the Holder.

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

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

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

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

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

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

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

certificate of incorporation or bylaws, or through reorganization,

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

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

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

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

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

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

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

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

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

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

exercise of this Warrant.

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

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

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

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

fees.

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

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

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

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

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

like tenor.

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

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

any Shares.

[Signatures appear on the following page.]

 

                IN

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

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

	

  AXONYX INC.

  	

   

  
	

   

  	

   

  
	

  By:

  	

   

  
	

   

  	

   

  
	

  Name:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  
	

   

  	

   

  
	

  WARRANT HOLDER

  	

   

  
	

   

  	

   

  
	

  By:

  	

   

  
	

   

  	

   

  
	

  Name:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  
			

EXHIBIT A

NOTICE OF EXERCISE

TO:         AXONYX, INC.

______________________

New York, New York

____

Attention:  President

1.             The undersigned

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

pursuant to the terms of the attached Warrant.

2.             Method of Exercise

(Please initial the applicable blank):

___         The undersigned elects to exercise the

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

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

applicable transfer taxes, if any.

___         The undersigned elects to exercise the

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

of the Warrant.

3.             Please issue a

certificate or certificates representing said shares of Common Stock in the

name of the under­signed or in such other name as is specified below:

_________________________________

(Name)

_________________________________

_________________________________

(Address)

4.             The undersigned

hereby represents and warrants that the aforesaid shares of Common Stock are

being acquired for the account of the undersigned for investment and not with a

view to, or for resale, in connection with the distribution thereof, and that

the undersigned has no present intention of distributing or reselling such

shares and all representations and warranties of the undersigned set forth in

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

hereof.  In support thereof, the

undersigned hereby delivers an Investment Representation Statement in a form

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

________________________________

(Signature)

Title:       __________________________

____________________________(Date)

EXHIBIT B

INVESTMENT REPRESENTATION STATEMENT

	

  HOLDER:

  	

   

  	

  _________________________

  
	

  COMPANY:

  	

   

  	

  AXONYX INC.

  
	

  SECURITY:

  	

   

  	

  COMMON STOCK ISSUED

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

  200__

  
	

  AMOUNT:

  	

   

  	

  __________ SHARES

  
	

  DATE:

  	

   

  	

  ____________, 200_

  

 

In connection with

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

Seller and to the Company the following:

(a)           Purchaser is aware of the Company’s

business affairs and financial condition, and has acquired sufficient

information about the Company to reach an informed and knowledgeable decision

to acquire the Securities.  Purchaser is

purchasing these Securities for its own account for investment purposes only

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

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

(the “Securities Act”).

(b)           Purchaser understands that the

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

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

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

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

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

unavailable if its representation was predicated solely upon a present

intention to hold these Securities for the minimum capital gains period

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

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

any other fixed period in the future.

(c)           Purchaser further understands that

the Securities must be held indefinitely unless subsequently registered under

the Securities Act or unless an exemption from registration is otherwise

available.  Moreover, Purchaser understands

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

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

certificate evidencing the Securities will be imprinted with a legend which

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

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

(d)           Purchaser is familiar with the

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

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

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

subject to the satisfaction of certain conditions.

(e)           Purchaser further understands that in

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

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

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

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

expressed its opinion that persons proposing to sell private placement

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

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

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

such persons and their respective brokers who participate in such transactions

do so at their own risk.

 

 

 

 

	

  By:

  	

   

  
	

   

  	

   

  
	

  Title:

  	

   

  
	

   

  	

   

  
	

  Date:

  	

                                                                , 200_

  

 

 

EXHIBIT C

FORM OF TRANSFER

(To be signed only

upon transfer of Warrant)

FOR VALUE RECEIVED, the

undersigned hereby sells, assigns and transfers unto

_________________________________ the right represented by the attached Warrant

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

attached Warrant relates, and appoints ______________ Attorney to transfer such

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

the premises.

Dated:

____________________

 

 

 

	

  (Signature must conform

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

  
	

   

  
	

   

  
	

   

  
	

  (Address)

  

Signed in the

presence of:

____________________________

*              Insert here the number of shares without making any

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

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

the Warrant, may be deliverable upon exercise.<PAGE>

                                                                    Exhibit 10.9

                            MOLICHEM MEDICINES, INC.
                              2001 STOCK AWARD PLAN

                                    ARTICLE I

                           Purpose; Term; Definitions

         1.1 Purpose. The Molichem Medicines, Inc. 2001 Stock Award Plan (the
"Plan") is intended to secure for Molichem Medicines, Inc. (the "Company") and
its stockholders the benefits of the incentive inherent in stock ownership by
the employees, directors, officers, consultants and advisers of the Company and
its Affiliates who are largely responsible for the Company's and its Affiliates
future growth and continued financial success; and to afford such persons the
opportunity to obtain or increase a proprietary interest in the Company on a
favorable basis and, thereby, to have an opportunity to share in its success.

         1.2 Effective Date of the Plan. This Plan was approved by the Board of
Directors of the Company on August 10, 2001, and was approved by the
stockholders of the Company on ____. The effective date of the Plan is August
10, 2001 (the "Effective Date").

         1.3 Term. No awards shall be made under the Plan after ten (10) years
from the Effective Date; provided, however, that the Plan and all awards made
under the Plan prior to such date shall remain in effect until such awards have
been satisfied or terminated in accordance with the Plan and the terms of such
awards.

         1.4 Definitions. Throughout this Plan, the following terms shall have
the meanings respectively indicated:

         (a) "Affiliate" shall mean any parent corporation or subsidiary,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.

         (b) "Benefits" shall mean any one or more of the following awards that
may be offered by the Committee to Participants under this Plan:

                  (i)     Incentive Stock Options,
                  (ii)    Non-Statutory Stock Options, or
                  (iii)   Restricted Stock.

         (c) "Board" shall mean the Board of Directors for the Company, as
elected by the stockholders of the Company.

         (d) "Code" shall mean the Internal Revenue Code of 1986, as amended,
and any successor revenue laws of the United States.

                                      E-3
<PAGE>

         (e) "Committee" shall mean the committee of Directors appointed by the
Board to administer this Plan.

         (f) "Common Stock" shall mean the Company's $0.0001 par value common
stock.

         (g) "Company" shall mean Molichem Medicines, Inc., a Delaware
corporation.

         (h) "Consultant" shall mean a natural person who is a consultant or
advisor engaged by the Company or an Affiliate to provide advice or assistance
in a field in which the consultant or advisor has specialized knowledge or
experience; the term shall not include Directors unless such person comes within
the above definition outside his or her capacity as a director. Further, the
term shall not include a person who provides services in connection with the
offer or sale of securities in a capital-raising transaction or a person who
directly or indirectly promotes or maintains a market for the Company's
securities.

         (i) "Director" shall mean any person elected and currently serving as a
member of the Board or of the board of directors of any Affiliate.

         (j) "Effective Date" shall have the meaning assigned in Paragraph 1.2.

         (k) "Employee" shall mean an employee, as defined in Section 3401(c) of
the Code, of the Company or of an Affiliate, including Officers and Directors;
provided however that neither service as a Director nor payment of a director's
fee by the Company shall be sufficient to constitute the Director an Employee.

         (l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

         (m) "Fair Market Value" shall mean: (i) if the Common Stock is not
listed on a national securities exchange or traded in the NASDAQ National Market
System or the over-the-counter market, the fair value thereof determined in good
faith by the Committee without taking into account any restrictions on the
shares other than restrictions which, by their terms, will never lapse; or (ii)
if the Common Stock is traded in the over-the-counter market and is not listed
on a national securities exchange or traded on the NASDAQ National Market
System, the average of the closing bid and asked prices for the Common Stock as
reported by the National Association of Securities Dealers Automated Quotation
("NASDAQ") System; or (iii) if the Common Stock is listed on a national
securities exchange or traded on the NASDAQ National Market System, the closing
price of the Common Stock.

         (n) "Incentive Stock Option" shall mean an option to acquire Common
Stock that is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code.

         (o) "Incentive Stock Option Agreement" shall mean a written agreement
between the Company and an Employee pursuant to which an Incentive Stock Option
is issued to the Employee pursuant to this Plan.

                                      E-4
<PAGE>

         (p) "Initial Public Offering" shall mean the consummation of the
Company's sale of its Common Stock in a bona fide, firm commitment or best
efforts underwriting pursuant to a registration statement under the Securities
Act, in which the net proceeds to the Company are not less than $10,000,000.

         (q) "Non-Employee Director" shall mean a director who: (i) is not
currently an officer of and is not otherwise currently employed by, the Company
or an Affiliate of the Company, (ii) does not receive compensation, either
directly or indirectly, from the Company or an Affiliate of the Company, for
services rendered as a consultant or in any capacity other than as a director,
except in an amount permitted by Rule 16b-3 under the Exchange Act, and (iii)
who otherwise meets the definition of a "Non-Employee Director" under Rule
16b-3.

         (r) "Non-Statutory Stock Option" shall mean an option to acquire Common
Stock that is not intended to be an Incentive Stock Option or does not qualify
as an Incentive Stock Option.

         (s) "Non-Statutory Stock Option Agreement" shall mean a written
agreement between the Company and a Participant pursuant to which a
Non-Statutory Stock Option is issued to the Participant pursuant to this Plan.

         (t) "Officer" shall mean a person who is an officer of the Company or
its Affiliate within the meaning of Section 16 of the Exchange Act.

         (u) "Option" shall mean a Non-Statutory Stock Option or an Incentive
Stock Option, as the context may require, granted pursuant to this Plan.

         (v) "Optionee" shall mean the holder of a Non-Statutory Stock Option or
an Incentive Stock Option, as the context may require.

         (w) "Participant" shall mean an Employee, Director, Officer or
Consultant selected by the Committee pursuant to Article III of this Plan to
receive Benefits.

         (x) "Plan" shall mean the Molichem Medicines, Inc. 2001 Stock Award
Plan, as it may be amended from time to time.

         (y) "Reporting Company" shall mean a company that has a class of equity
securities registered under Section 12 of the Exchange Act.

         (z) "Restricted Stock" shall mean Common Stock granted under Article VI
of this Plan or pursuant to the exercise of an Option, and subject to such
restrictions as the Committee may determine as evidenced in a Restricted Stock
Agreement.

         (aa) "Restricted Stock Agreement" shall mean a written agreement
between the Company and a Participant pursuant to which Restricted Stock is
issued to the Participant under this Plan, including, without limitation,
Restricted Stock issued upon exercise of an Option.

                                       E-5

<PAGE>

         (bb) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.

                                   ARTICLE II

                                 Administration

         2.1 Administration of Plan. The Plan shall be administered by the
Committee, which shall be appointed by the Board in accordance with Paragraph
2.2. In the event the Board should fail to appoint a Committee, the Board shall
administer the Plan as if it were the Committee. If the Board appoints a
Committee, the Board shall retain the power to take any action permitted to be
taken by the Committee hereunder, or to amend or modify any action taken by the
Committee hereunder.

         2.2 Committee Composition. The Committee shall consist of not less than
two (2) nor more than five (5) Directors, each of whom shall be a Non-Employee
Director and, if so required by the Board, an "outside director" within the
meaning Section 162(m) of the Code and the regulations promulgated thereunder.
Once designated, the Committee shall continue to serve until otherwise directed
by the Board. From time to time, the Board may increase the size of the
Committee, appoint additional members, remove members (with or without cause),
appoint new members in substitution therefor, fill vacancies however caused, and
remove all members of the Committee.

         2.3 Operation of Committee. A majority of the entire Committee shall
constitute a quorum and the action of a majority of the members present at any
meeting at which a quorum is present shall be deemed the action of the
Committee. In addition, any decision or determination reduced to writing and
signed by all of the members of the Committee shall be fully as effective as if
it had been made by a majority vote at a meeting duly called and held. Subject
to the provisions of the Plan, to the provisions of the Company's bylaws, and to
any terms and conditions prescribed by the Board, the Committee may make such
rules and regulations for the conduct of its business as it shall deem
advisable. The Committee shall hold meetings at such time and places as it may
determine. The interpretation and construction by the Committee of any
provisions of the Plan or of any Benefit granted under it shall be final, unless
otherwise determined by the Board.

         2.4 Committee Authority. Subject to the provisions of the Plan and any
conditions and limitations prescribed by the Board consistent with the Plan, the
Committee shall have the authority, in its sole discretion, to:

         (a) designate the Participants eligible to participate in the Plan;

         (b) grant awards provided in the Plan in such form and amount as the
Committee may determine, including without limitation whether each grant shall
be for Incentive Stock Options, Non-Statutory Stock Options or Restricted Stock;

                                      E-6
<PAGE>

         (c) impose such limitations, restrictions and conditions upon such
awards as the Committee shall deem appropriate;

         (d) construe and interpret the Plan and Benefits granted under it,
adopt, amend and rescind rules and regulations relating to the Plan, and make
all other determinations and take all other actions necessary or advisable for
the implementation and administration of the Plan.

         2.5 Good Faith Determinations. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any award under the Plan.

                                   ARTICLE III

         Eligibility; Types of Benefits; Shares Subject to the Plan

         3.1 Criteria. The Committee shall from time to time determine and
designate the Participants to receive Benefits under the Plan and the number of
Incentive Stock Options, Non-Statutory Stock Options, or shares of Restricted
Stock to be awarded to such persons; provided, however, that for a person to be
eligible to receive Benefits under the Plan, such person must be included in the
definition of "employee" for purposes of a Form S-8 Registration Statement filed
under the Securities Act; and provided further that only Employees may be
designated to receive Incentive Stock Options; and provided further, however,
that no Benefits may be received by a Consultant under this Plan for services
rendered in connection with the offer and sale of securities in a
capital-raising transaction nor for services rendered that directly or
indirectly promote or maintain a market for the Company's securities. In making
any such awards, the Committee may take into account the nature of services
rendered, commissions or other compensation earned, the capacity of the
Employee, Consultant, Officer or Director to contribute to the success of the
Company or any of its Affiliates, and such other factors as the Committee may
consider relevant.

         3.2 Types of Benefits. Benefits available under the Plan may be awarded
singularly or in any combination provided, however, that Incentive Stock Options
may not be awarded in tandem with Non-Statutory Stock Options where the exercise
of one affects the right to exercise the other.

         3.3 Shares Subject to the Plan. Stock that may be issued under the Plan
shall be authorized and unissued Common Stock. The maximum total number of
shares of Common Stock which may be issued under the Plan shall be two million
seven hundred thousand (2,700,000) shares. For purposes of calculating the
maximum number of shares of Common Stock that may be issued under the Plan:

         (a) The Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise;

         (b) When cash is used by the Participant as full payment for shares
issued upon exercise of a Non-Statutory Stock Option or an Incentive Stock
Option or as payment for the purchase of Restricted Shares, all the shares
issued (including the shares, if any, withheld for tax withholding requirements)
shall be counted;

                                      E-7
<PAGE>

         (c) When shares of stock, including, without limitation, Common Stock
issued pursuant to the Plan, are used by the Participant as full or partial
payment for shares issued upon exercise of a Non-Statutory Stock Option or an
Incentive Stock Option or as payment for the purchase of Restricted Shares, all
the shares issued (including shares, if any, withheld for tax withholding
requirements, and the shares used in the purchase) shall be counted;

         (d) Any shares of Common Stock subject to a Non-Statutory Stock Option
or an Incentive Stock Option which for any reason is terminated unexercised or
expires shall again be available for issuance under the Plan; and

         (e) If any change is made to the Common Stock subject to the Plan,
through merger, consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidatory dividend,
combination of shares, exchange of shares, change in corporate structure, or
otherwise, the maximum number of shares subject to the Plan shall be
appropriately adjusted.

         3.4 Ten Percent Stockholders. No Employee shall be eligible to receive
an Incentive Stock Option if such Employee owns, or is deemed to beneficially
own under Section 424(d) of the Code, stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates, unless (i) the option price is at least one hundred
ten percent (110%) of the Fair Market Value of the Common Stock as the time the
Option is granted; and (ii) the Option is not exercisable after the expiration
of five (5) years (or such shorter period as the Committee may determine).

         3.5 Agreement and Securities Registration.

         (a) If, in the opinion of counsel to the Company, such action is
necessary or desirable, no Options or Restricted Stock shall be granted to any
Participant, and no Options shall be exercisable, unless, at the time of grant
or exercise, as applicable, such Participant (i) represents and warrants that he
will acquire the Common Stock for investment only and not for purposes of resale
or distribution, and (ii) makes such further representations and warranties as
are deemed necessary or desirable by counsel to the Company with regard to
holding and resale of the Common Stock. The Participant shall, upon the request
of the Committee, execute and deliver to the Company an agreement or affidavit
to such effect. Should the Committee have reasonable cause to believe that such
Participant did not execute such agreement or affidavit in good faith, the
Company shall not be bound by the grant of the Option or the Restricted Stock or
by the exercise of the Option. All certificates representing shares of Common
Stock issued pursuant to the Plan shall be marked with the following restrictive
legend or similar legend, if such marking, in the opinion of counsel to the
Company, is necessary or desirable:

                                      E-8
<PAGE>

         THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACTO OF 1933, AS AMENDED, OR THE SECURITIES LAWS
         OF ANY STATE. ACCORDINGLY, THESE SHARES MAY NOT BE SOLD, HYPOTHECATED,
         PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (I) PURSUANT TO AN EFFECTIVE
         REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
         AND ANY APPLICABLE SECURITIES LAWS OR REGULATIONS OF ANY STATE WITH
         RESPECT TO SUCH SHARES, (II) IN ACCORDANCE WITH SECURITIES AND EXCHANGE
         COMMISSION RULE 144, OR (III) UPON THE ISSUANCE TO THE CORPORATION OF A
         FAVORABLE OPINION OF COUNSEL OR THE SUBMISSION TO THE CORPORATION OF
         SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE CORPORATION THAT SUCH
         PROPOSED SALE, ASSIGNMENT, ENCUMBRANCE OR OTHER TRANSFER WILL NOT BE IN
         VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
         SECURITIES LAWS OF ANY STATE OR ANY RULES OR REGULATIONS THEREUNDER.
         ANY ATTEMPTED TRANSFER OF THIS CERTIFICATE OR THE SHARES REPRESENTED
         HEREBY WHICH IS IN VIOLATION OF THE PRECEDING RESTRICTIONS WILL NOT BE
         RECOGNIZED BY THE CORPORATION, NOR WILL ANY TRANSFEREE BE RECOGNIZED AS
         THE OWNER THEREOF BY THE CORPORATION.

If the Common Stock is (A) held by a Participant who is not an "affiliate" as
that term is defined in Rule 144 of the Securities Act, or who ceases to be an
"affiliate", or (B) registered under the Securities Act and all applicable state
securities laws and regulations as provided in Section 3.5(b), the Committee, in
its discretion and with the advice of counsel, may dispense with or authorize
the removal of the restrictive legend set forth above or the portion thereof
which is inapplicable.

         (b) In the event that the Company in its sole discretion shall deem it
necessary or advisable to register, under the Securities Act or any state
securities laws or regulations, any shares with respect to which Options or
Restricted Stock have been granted, or will be granted, hereunder, then the
Company shall take such action at its own expense before delivery of the
certificates representing such shares to a Participant. In such event, and if
the shares of Common Stock of the Company shall be listed on any national
securities exchange or on NASDAQ at the time of the exercise of any Option, the
Company shall make prompt application at its own expense for the listing on such
stock exchange or NASDAQ of the shares of Common Stock to be issued.

                                   ARTICLE IV

                             Incentive Stock Options

         Incentive Stock Options granted pursuant to this Article are intended
to constitute "incentive stock options" under Section 422 of the Code. No
Employee may be granted Incentive Stock Options under this Plan if the aggregate
Fair Market Value (determined as of the date the Option is granted and taking
into account such Option) of stock of the Company and its Affiliates with
respect to which incentive stock options (as defined in Section 422 of the Code)
are exercisable for the first time by such Employee during any calendar year,
under this and all other plans of the Company and its Affiliates, would exceed
one hundred thousand dollars ($100,000).

         The Incentive Stock Option Agreements shall contain terms and
provisions determined by the Committee and consistent with this Plan. The
Committee from time to time may grant Incentive Stock Options to Employees under
this Plan, which grants shall be evidenced by Incentive Stock Option Agreements.

                                      E-9
<PAGE>

         4.1 Mandatory Provisions. The Incentive Stock Option Agreements need
not be identical, but each such Incentive Stock Option Agreement shall include,
by appropriate language, the substance of all the following terms and
provisions:

         (a) That the Option granted thereunder is an Incentive Stock Option.

         (b) The number of shares to which it pertains.

         (c) A minimum number of the shares that may be purchased upon each
partial exercise of an Option.

         (d) The option exercise price, which price shall be set by the
Committee and shall be equal to at least one hundred percent (100%) of the Fair
Market Value of the Common Stock at the time the Option is granted; provided,
however, that for an Employee who is a ten percent (10%) stockholder, as
determined in Paragraph 3.4, the option price for the Option shall be at least
one hundred ten percent (110%) of the Fair Market Value of the Common Stock at
the time the Option is granted.

         (e) The date the Option is granted, which shall be the date selected by
the Committee as of which the Committee allots a specific number of shares of
Common Stock to an Employee pursuant to the Plan.

         (f) The time after which the Option expires, provided that the Option
shall not be exercisable after the expiration of ten (10) years from the date it
is granted and that with respect to an employee who is a ten percent (10%)
stockholder, as determined in Paragraph 3.4, the Option shall not be exercisable
after the expiration of five (5) years from the date it is granted.

         (g) That the Option terminates upon termination of employment of the
Employee with either the Company or an Affiliate, except as such period may be
extended under the optional provisions in Paragraph 4.2.

         (h) That the Option is exercisable during the Optionee's lifetime only
by the Optionee, and that the Option shall not be assignable or transferable by
the Optionee except by will or distribution through intestate succession.

         (i) That neither the Optionee, nor any person to whom an Option is
permitted to be transferred, shall be deemed to be the holder of, or have any
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option,
pursuant to its terms, and then only after shares have been issued to the
Optionee.

         (j) The time and medium of payment with respect to exercise of the
Option, provided that if payment is permitted to be made by Common Stock, the
stock shall be valued at its Fair Market Value as of the date the Option is
exercised.

                                      E-10
<PAGE>

         (k) Unless modified by the optional provisions in Paragraph 4.2, that
to the extent the Employee (or other person exercising such Option) recognizes
income as a result of the exercise of the Option, the subsequent sale of the
Common Stock issued pursuant to exercise of the Option, or a lapse in the
restrictions on the Restricted Stock issued upon exercise of the Option, then
the Employee shall pay the Company or its applicable Affiliate an amount equal
to the federal, state and local withholding taxes on income so recognized at the
time required by law.

         (l) The treatment of the Options upon merger, reorganization,
recapitalization, exchange of shares, change in corporate structure,
liquidation, stock dividend and similar events.

         4.2 Optional Provisions. Incentive Stock Option Agreements may contain
such other provisions not inconsistent with the Plan and Section 422 of the Code
as the Committee, in its discretion, deems advisable. Without limiting the
foregoing, the Committee may consider inclusion of the following terms:

         (a) That upon termination of Employee's employment with the Company or
its Affiliates other than as a result of death or disability, the Option may be
exercised for an additional period of time specified by the Committee but not
exceeding ninety (90) days.

         (b) That upon termination of Employee's employment with the Company or
its Affiliates as a result of death, the Option may be exercised for an
additional period of time specified by the Committee but not exceeding one (1)
year.

         (c) That upon termination of Employee's employment with the Company or
its Affiliates as a result of disability (within the meaning of Section 22(e)(3)
of the Code and as defined in the Incentive Stock Option Agreement), the Option
may be exercised for an additional period of time specified by the Committee but
not exceeding one (1) year.

         (d) That the Optionee be prohibited from transferring any share of
stock issued upon exercise of an Option within two (2) years from the date of
the granting of the Option or within one (1) year after the transfer of such
share to the Optionee.

         (e) That the total number of shares of stock subject to an Option shall
be allotted in periodic installments (which may, but need not, be equal) and
that from time to time during each of such installment periods, the Option shall
become exercisable ("vest") with respect to some or all of the shares allotted
to that period, and may be exercised with respect to some or all of the shares
allocated to such period and/or any prior period as to which the Option became
vested but was not fully exercised. The Option may be subject to such other
terms and conditions on the time or times when it may be exercised (which may be
based on performance or other criteria) as the Committee may deem appropriate.

         (f) The circumstances under which all or any portion of any Option
granted and not yet vested may or shall have the vesting schedule accelerated or
terminated.

         (g) The circumstances under which all or any portion of any Option
previously granted and unexercised may or shall be terminated.

                                      E-11
<PAGE>

         (h) That the shares to be received upon exercise shall be Restricted
Stock and that no exercise of an Option shall be effective until a Restricted
Stock Agreement has been executed with respect to such shares.

         (i) That in the event an Employee accepting a grant of Options under
this Plan incurs federal, state or local income, employment or other withholding
taxes applicable to the income recognized by such Employee and attributable to
the Common Stock issued upon exercise of the Option, the subsequent sale of the
Common Stock issued pursuant to exercise of the Option, or a lapse in the
restrictions on the Restricted Stock issued upon exercise of the Option, then at
the time as may be required by law, the Company or its applicable Affiliate may
provide for payment of the taxes on behalf of the Employee (or other person
exercising such Option) pursuant to one or any combination of the following: (i)
by an advance on behalf of Employee by the Company or such Affiliate pursuant to
a repayment schedule satisfactory to the Company or such Affiliate; or (ii) by
withholding from the Employee's salary, commissions or other compensation; or
(iii) by payment in whole or in part by the Company or such Affiliate.

         (j) If the Company is a Reporting Company, a term providing that any
Common Stock acquired upon exercise of the Option may only be sold or otherwise
transferred in accordance with Rule 16b-3 under the Exchange Act.

         4.3 Prohibited Provision. No Incentive Stock Option Agreement shall
impose an obligation upon the Optionee to exercise an Option.

                                    ARTICLE V

                           Non-Statutory Stock Options

         Non-Statutory Stock Options granted pursuant to this Article are not
intended to constitute "incentive stock options" under Section 422 of the Code.
The Non-Statutory Stock Option Agreement shall contain terms and provisions
determined by the Committee and consistent with this Plan. The Committee from
time to time may grant Non-Statutory Stock Options to Participants under this
Plan, which grants shall be evidenced by Non-Statutory Stock Option Agreements.

         5.1 Mandatory Provisions. The Non-Statutory Stock Option Agreements
need not be identical, but each such Non-Statutory Stock Option Agreement, by
appropriate language, shall include the substance of all the following terms:

         (a) The number of shares to which it pertains.

         (b) A minimum number of the shares that may be purchased upon each
partial exercise of an Option.

         (c) The option exercise price, which price shall be set by the
Committee.

                                      E-12
<PAGE>

         (d) The date the Option is granted, which shall be the date selected by
the Committee as of which date the Committee allots a specific number of shares
of Common Stock to a Participant pursuant to the Plan.

         (e) The time after which the Option expires.

         (f) Whether and upon what terms the Option is transferable.

         (g) That neither an Optionee, nor any person to whom an Option is
permitted to be transferred, shall be deemed to be the holder of, or have any
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option,
pursuant to its terms, and then only after shares have been issued to the
Optionee.

         (h) The time and medium of payment with respect to exercise of the
Option, provided that if payment is permitted to be made by Common Stock, the
stock shall be valued at its Fair Market Value as of the date the Option is
exercised.

         (i) Unless modified by the optional provisions in Paragraph 5.2, that
to the extent the Participant (or other person exercising such Option)
recognizes income as a result of the exercise of the Option, the subsequent sale
of the Common Stock issued pursuant to exercise of the Option, or a lapse in the
restrictions on the Restricted Stock issued upon exercise of the Option, then
the Participant shall pay the Company or its applicable Affiliate an amount
equal to the federal, state and local withholding taxes on income so recognized
at the time required by law.

         (j) Terms indicating treatment of the Options upon merger,
reorganization, recapitalization, exchange of shares, change in corporate
structure, liquidation, stock dividend and similar events.

         5.2 Optional Provisions. Non-Statutory Stock Option Agreements may
contain such other provisions not inconsistent with the Plan as the Committee,
in its discretion, shall deem advisable. Without limiting the foregoing, the
Committee shall specifically consider inclusion of the following terms:

         (a) That the total number of shares of stock subject to an Option be
allotted in periodic installments (which may, but need not, be equal) and that
from time to time during each of such installment periods, the Option may become
exercisable ("vest") with respect to some or all of the shares allotted to that
period, and may be exercised with respect to some or all of the shares allocated
to such period and/or any prior period as to which the Option became vested but
was not fully exercised. The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based on
performance or other criteria) as the Committee may deem appropriate.

         (b) The circumstances under which all or any portion of any Option
previously granted and unexercised may or shall be terminated, including without
limitation expiration of the Option as it may be related to termination of
employment, death, disability or retirement.

                                      E-13
<PAGE>

         (c) The circumstances under which all or any portion of any Option
granted and not yet vested may or shall have the vesting schedule accelerated or
terminated.

         (d) That the shares to be received upon exercise shall be Restricted
Stock and that no exercise of an Option shall be effective until a Restricted
Stock Agreement has been executed with respect to such shares.

         (e) That in the event a Participant accepting a grant of Options under
this Plan incurs federal, state or local income, employment or other withholding
taxes applicable to the income recognized by such Participant and attributable
to the Common Stock issued upon exercise of the Option, the subsequent sale of
the Common Stock issued pursuant to exercise of the Option, or a lapse of the
restrictions on the Restricted Stock, then at the time as may be required by
law, the Company or its applicable Affiliate may provide for payment of the
taxes on behalf of the Participant (or other person exercising such Option)
pursuant to one or any combination of the following: (i) by an advance on behalf
of Participant by the Company or such Affiliate pursuant to a repayment schedule
satisfactory to the Company or such Affiliate; or (ii) by withholding from the
Participant's salary, commissions or other compensation; or (iii) by payment in
whole or in part by the Company or such Affiliate.

         (f) If the Company is a Reporting Company, a term providing that the
Option any Common Stock acquired upon exercise of the Option may only be sold or
otherwise transferred in accordance with Rule 16b-3 under the Exchange Act.

         5.3 Prohibited Provision. No Non-Statutory Stock Option Agreement shall
impose an obligation on the Optionee to exercise an Option.

                                   ARTICLE VI

                                Restricted Stock

         The Committee from time to time may award Restricted Stock to
Participants under this Plan, which awards shall be evidenced by Restricted
Stock Agreements. The Restricted Stock Agreements shall contain terms and
provisions determined by the Committee, and consistent with this Plan.

         6.1 Mandatory Provisions. The Restricted Stock Agreements need not be
identical, but each such Restricted Stock Agreement, by appropriate language,
shall include the substance of all the following terms:

         (a) The number of shares of Restricted Stock to which it pertains.

         (b) The price for the issuance of the shares of Restricted Stock, which
price shall be set by the Committee.

                                      E-14
<PAGE>

         (c) The time and medium of payment with respect for the Restricted
Stock, provided that if payment is permitted to be made by Common Stock, the
stock shall be valued at its Fair Market Value as of the date the payment.

         (d) The restrictions that are to be placed on the stock, which
restrictions may include but need not be limited to limitations on the sale,
transfer or encumbrance of the Restricted Stock, and rights of first refusal,
mandatory or optional puts or calls, and forfeiture upon the occurrence of
certain events.

         (e) The time, if any, when the restrictions terminate or lapse.

         (f) Unless modified by the optional provisions in Paragraph 6.2, that
to the extent the Participant recognizes income attributable to the receipt of
the Restricted Stock or upon subsequent lapse of the restrictions on the
Restricted Stock, then at the time as may be required by law, the Participant
shall pay the Company or its applicable Affiliate an amount equal to the
federal, state and local withholding taxes on income so recognized at the time
required by law.

         (g) That if any change is made in the Common Stock by reason of any
merger, consolidation, reorganization, recapitalization, stock dividend, split
up, combination of shares, exchange of shares, change in corporate structure, or
otherwise, any shares received by a Participant with respect to Restricted Stock
shall be subject to the same restrictions applicable to such Restricted Stock.

         6.2 Optional Provisions. The Restricted Stock Agreement may contain
such other provisions not inconsistent with the Plan as the Committee in its
discretion shall deem advisable. Without limiting the foregoing, the Committee
shall specifically consider inclusion of the following terms:

         (a) The circumstances under which the time at which any or all of the
restrictions lapse may be accelerated.

         (b) That the Participant receiving the Restricted Stock must file an
election under Section 83(b) of the Code and pay the applicable taxes due upon
such filing.

         (c) That in the event a Participant accepting Restricted Stock under
this Plan incurs federal, state or local income, employment or other withholding
taxes applicable to the income recognized by such Participant and attributable
to the receipt of the Restricted Stock or upon subsequent lapse of the
restrictions on the Restricted Stock, then at the time as may be required by
law, the Company or its applicable Affiliate may provide for payment of the
taxes on behalf of the Participant pursuant to one or any combination of the
following: (i) by an advance on behalf of Participant by the Company or such
Affiliate pursuant to a repayment schedule satisfactory to the Company or such
Affiliate; or (ii) by withholding from the Participant's salary, commissions or
other compensation; or (iii) by payment in whole or in part by the Company or
such Affiliate.

                                      E-15

<PAGE>

                                   ARTICLE VII

                            Miscellaneous Provisions

         7.1 Right to Terminate Employment. Nothing in this Plan shall confer
upon any Participant the right to be employed by the Company, or, if already
employed, to continue in the employment of the Company or of any Affiliate or
affect any right which the Company or any Affiliate may have to terminate the
employment of such Participant.

         7.2 Securities Laws. Each Benefit awarded under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Common
Stock subject to the Plan upon any securities exchange or under any state or
federal law, or (ii) the consent or approval of any governmental authority, or
(iii) an agreement by the recipient of an award with respect to the disposition
of shares of Common Stock, is necessary or desirable as a condition of, or in
connection with, the granting of such Benefit or the issue or purchase of shares
of Common Stock thereunder, the award of such Benefit may not be consummated in
whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority deemed by the
Company's counsel to be necessary to the lawful issuance of any shares of its
Common Stock hereunder shall relieve the Company of any liability in respect of
the nonissuance or sale of such stock as to which such requisite authority shall
not have been obtained.

         7.3 Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available, and will seek or obtain from any
regulatory body having jurisdiction any requisite authority in order to issue
such number of shares of its Common Stock as shall be sufficient to satisfy the
requirements of the Plan.

         7.4 Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceeding, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Benefit granted under the Plan, and against all amounts paid by them
in settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for gross negligence or willful misconduct in the
performance of his duties, provided that within sixty (60) days after
institution of any such action, suit or proceeding, a Committee member shall
have offered the Company, in writing, the opportunity, at its own expense, to
handle and defend the same.

                                      E-16

<PAGE>

         7.5 Amendment, Modification, Suspension or Discontinuance of the Plan.
The Board, without stockholder approval, may from time to time alter, amend,
suspend or terminate this Plan for the purpose of improving the effectiveness of
the Plan as an incentive device, or conforming the Plan to applicable
governmental regulations or to any change in applicable law or regulations, or
any other purpose permitted by law; provided, however, that no such action by
the Board shall adversely affect any Benefit theretofore granted under the Plan
without the consent of the holder so affected; provided further, however, that
the Board may not increase the number of shares of Common Stock authorized under
Paragraph 3.3 of this Plan or change the employees or class of employees
eligible to participate in the Plan without the approval of the stockholders of
the Company; and provided further, however, that the Board shall submit any
amendments to the stockholders of the Company for approval to the extent
necessary to maintain compliance with the requirements of Rule 16b-3 under the
Exchange Act, Section 422 of the Code for Incentive Stock Options, and Section
162(m) of the Code for awards made under that section.

         7.6 Use of Proceeds. Proceeds from the sale of stock pursuant to
Options or from the sale of Restricted Stock shall constitute general funds of
the Company.

         7.7 Governing Law. This Plan and all rights and obligations hereunder
shall be construed in accordance with and governed by the internal laws of the
State of Delaware.

         7.8 Designation. This Plan may be referred to in other documents and
instruments as the "Molichem Medicines, Inc. 2001 Stock Award Plan".

                                      E-17

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