Document:

Exhibit
4.14

THIS WARRANT AND THE
SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED.

	
  

  	
  WARRANT TO PURCHASE STOCK

  

 

	
  

  	
   

  
	
  Corporation:

  	
  NEUROGENETICS., a Delaware Corporation

  
	
  Number of Shares:

  	
   

  
	
  Class of Stock:

  	
  Series B Preferred Stock

  
	
  Initial Exercise Price:

  	
  per share

  
	
  Issue Date:

  	
  July 1, 2003

  
	
  Expiration Date:

  	
  July 1, 2010 (Subject to Section 4.1)

  

 

THIS WARRANT CERTIFIES
THAT, for good and valuable consideration, the receipt of which is hereby
acknowledged, COMERICA BANK or its assignee (“Holder”) is entitled to purchase
the number of fully paid and nonassessable shares of the class of securities
(the “Shares”) of the corporation (the “Company”) at the initial exercise price
per Share (the “Warrant Price”) all as set forth above and as adjusted pursuant
to Article 2 of this warrant, subject to the provisions and upon the terms and
conditions set forth in this warrant.

 

ARTICLE 1.  EXERCISE.

 

1.1           Method of Exercise.  Holder may exercise this warrant by
delivering this warrant and a duly executed Notice of Exercise in substantially
the form attached as Appendix 1 to the principal office of the Company. Unless
Holder is exercising the conversion right set forth in Section 1.2, Holder
shall also deliver to the Company a check for the aggregate Warrant Price for
the Shares being purchased.

 

1.2           Conversion Right.  In lieu of exercising this warrant as
specified in Section 1.1, Holder may from time to time convert this warrant, in
whole or in part, into a number of Shares determined by dividing (a) the
aggregate fair market value of the Shares or other securities otherwise
issuable upon exercise of this warrant minus the aggregate Warrant Price of
such Shares by (b) the fair market value of one Share. The fair market value of
the Shares shall be determined pursuant to Section 1.4.

 

1.3           Intentionally Omitted.

 

1.4           Fair Market Value.  If the Shares are traded regularly in a
public market, the fair market value of the Shares shall be the closing price
of the Shares (or the closing price of the Company’s stock into which the
Shares are convertible) reported for the business day immediately before Holder
delivers its Notice of Exercise to the Company. If the Shares are not regularly
traded in a public market, the Board of Directors of the Company shall
determine fair market value in its reasonable good faith judgment.

 

1.5           Delivery of Certificate and New
Warrant.  Promptly after Holder
exercises or converts this warrant, the Company shall deliver to Holder certificates
for the balance of the Shares that may be hereunder acquired and, if this
warrant has not been fully exercised or converted and has not expired, a new
warrant representing the Shares not so acquired.

1.6           Replacement of Warrants.  On 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, on delivery of an
indemnity agreement reasonably satisfactory in form and amount to the Company
or, in the case of mutilation, on surrender and cancellation of this warrant,
the Company at its expense shall execute and deliver, in lieu of this warrant,
a new warrant of like tenor. Any such new warrant shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed warrant shall be at any time enforceable by
anyone.

 

1.7           Repurchase on Sale, Merger, or
Consolidation of the Company.

 

1.7.1        “Acquisition.”  For the purpose of this warrant,
“Acquisition” means any sale, license, or other disposition of all or
substantially all of the assets (including intellectual property) of the
Company, or any reorganization, consolidation, or merger of the Company where
the holders of the Company’s voting securities before the transaction
beneficially own less than 50% of the outstanding voting securities of the
surviving entity after the transaction.

 

1.7.2        Assumption of Warrant.  If upon the closing of any Acquisition the
successor entity assumes the obligations of this warrant, then this warrant
shall be exercisable for the same securities, cash, and property as would be
payable for the Shares issuable upon exercise of the unexercised portion of
this warrant as if such Shares were outstanding on the record date for the
Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly. The Company shall use reasonable efforts to cause the surviving
corporation to assume the obligations of this warrant.

 

1.7.3        Nonassumption.  If upon the closing of any Acquisition the
successor entity does not assume the obligations of this warrant and Holder has
not otherwise exercised this warrant in full, then Holder shall have the option
either to (a) deem this warrant to have been automatically converted pursuant
to Section 1.2 and thereafter Holder shall participate in the Acquisition on
the same terms as other holders of the same class of securities of the Company;
or (b) require the Company to purchase this warrant for cash upon the closing
of the Acquisition for an amount per Share equal to one (1) times the Warrant
Price.

 

ARTICLE 2.  ADJUSTMENTS TO THE
SHARES.

 

2.1           Stock Dividends, Splits, Etc.  If the Company declares or pays a dividend to
its Series B Preferred Stock or other securities issuable upon exercise or
conversion of this warrant (“Securities”) payable in Securities, or other
securities, or subdivides the outstanding Securities into a greater amount of
Securities, then upon exercise of this warrant, for each Share acquired, Holder
shall receive, without cost to Holder, the total number and kind of securities
to which Holder would have been entitled bad Holder owned the Shares of record
as of the date the dividend or subdivision occurred, and the Warrant Price
shall be proportionately adjusted.

 

2.2           Reclassification, Exchange or
Substitution.  Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this warrant (other than an event described in Section 1.7, 2.1,
or 2.3), Holder shall be entitled to receive, upon exercise or conversion of
this warrant, the number and kind of securities and property that Holder would
have received for the Shares if this warrant had been exercised immediately
before such reclassification, exchange, substitution, or other event. Such an
event shall include any automatic conversion of the outstanding or issuable
securities of the Company of the same class or series as the Shares to common
stock pursuant to the terms of the Company’s Certificate of Incorporation upon
the closing of a registered public offering of the Company’s common stock. The
Company or its successor shall promptly issue to Holder a new warrant for such
new securities or other

 2
 

property. The new warrant shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Article 2 including, without limitation, adjustments to the Warrant Price
and to the number of securities or property issuable upon exercise of the new
warrant. The provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.

 

2.3           Adjustments for Combinations, Etc.  If the Securities are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
then upon exercise of this warrant, for each Share acquired, Holder shall
receive the total number of securities to which Holder would have been entitled
bad Holder owned the Shares of the date the combination or consolidation
occurred, and the Warrant Price shall be proportionately increased.

 

2.4           Adjustments for Diluting Issuances.  The Warrant Price and the number of Shares
issuable upon exercise of this warrant shall be subject to adjustment, from
time to time, in the manner set forth on Exhibit A, if attached, in the
event of Diluting Issuances (as defined on Exhibit A).

 

2.5           No Impairment.  The Company shall not, by amendment of its
Certificate of Incorporation or through a reorganization, transfer of assets,
consolidation, merger, dissolution, issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed under this warrant by the Company, but
shall at all times in good faith assist in carrying out all the provisions of
this Article 2 and in taking all such actions as may be necessary or
appropriate to protect Holder’s rights under this Article 2 against impairment.

 

2.6           Certificate as to Adjustments.  Upon each adjustment of the Warrant Price pursuant
to this Article 2, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate of its President (or
designated officer) setting forth such adjustment and the facts upon which such
adjustments in based. The Company shall, upon written request, furnish Holder a
certificate setting forth the Warrant Price in effect upon the date thereof and
the series of adjustments leading to such Warrant Price.

 

2.7           Fractional Shares.  No fractional Shares shall be issuable upon
exercise or conversion of the Warrant and the Number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder amount computed
by multiplying the fractional interest by the fair market value of a full
Share.

 

ARTICLE 3.  REPRESENTATIONS
AND COVENANTS OF THE COMPANY.

 

3.1           Representations and Warranties.  The Company hereby represents and warrants to
the Holder as follows:

 

(a)           The initial Warrant Price referenced
on the first page of this warrant is not greater than the fair market value of
the Shares as of the date of this warrant.

 

(b)           All Shares which may be issued upon
the exercise of the purchase right represented by this warrant, and all
securities, if any, issuable upon conversion of the Shares, shall, upon issuance,
be duly authorized, validly issued, fully paid and nonassessable, and free of
any liens and encumbrances except for restrictions on transfer provided for
herein or under applicable federal and state securities laws.

 3

(c)           The Company’s capitalization table
attached to this warrant is true and complete as of the Issue Date.

 

3.2           Notice of Certain Events.  If the Company proposes at any time (a) to
declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash
dividend; (b) to offer for subscription pro rata to the holders of any of the
Securities or the common stock any additional shares of stock of any class or
series or other rights; (c) to effect any reclassification or recapitalization
of common stock; or (d) effect an Acquisition or to liquidate, dissolve or wind
up, then, in connection with each such event, the Company shall give Holder (1)
at least 20 days prior written notice of the date on which a record will be
taken for such dividend, distribution, or subscription rights (and specifying
the date on which the holders of common stock will be entitled thereto) or for
determining rights to vote, if any, in respect of the matters referred to in
(a) and (b) above; and (2) in the case of the matters referred to in (c) and
(d) above at least 20 days prior written notice of the date when the same will
take place (and specifying the date on which the holders of common stock will
be entitled to exchange their common stock for securities or other property
deliverable upon the occurrence of such event).

 

3.3           Information Rights.  So long as the Holder holds this warrant
and/or any of the Shares, the Company shall deliver to the Holder (a) promptly
after mailing, copies of all communiques to the shareholders of the Company,
(b) within one hundred twenty (120) days after the end of each fiscal year of
the Company, the annual audited financial statements of the Company certified
by independent public accountants of recognized standing and (c) within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year, the Company’s quarterly, unaudited financial statements.

 

3.4           Registration Under Securities Act
of 1933, as amended.  The Company
agrees that the Shares or, if the Shares are convertible into common stock of
the Company, such common stock, shall be subject to the registration rights set
forth on Exhibit B, if attached.

 

ARTICLE 4.  REPRESENTATIONS
AND COVENANTS OF THE HOLDER.

 

4.1           Acquisition of Warrants for
Personal Account.  Subject to Section
5.2 hereof, the Holder represents and warrants that it is acquiring the warrant
and the Shares solely for its account for investment and not with a view to or
for sale or distribution of said warrant or Shares or any part thereof; and the
Holder also represents that the entire legal and beneficial interests of the
warrant and Shares the Holder is acquiring is being acquired for, and will be
held for, its account only.

 

4.2           Securities Are Not Registered.

 

4.2.1        The Holder understands that the warrant
and the Shares have not been registered under the Securities Act of 1933, as
amended (the “Act”) on the basis that no distribution or public offering of the
stock of the Company is to be effected. The Holder realizes that the basis for
the exemption may not be present if, notwithstanding its representations, the
Holder has a present intention of acquiring the securities for a fixed or
determinable period in the future, selling (in connection with a distribution
or otherwise), granting any participation in, or otherwise distributing the
securities. The Holder has no such present intention.

 

4.2.2        The Holder recognizes that the warrant
and the Shares must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.

 

4.2.3        The Holder is aware that neither the
warrant nor the Shares may be sold pursuant to Rule 144 adopted under the Act
unless certain conditions are met, including, among other things, the

 4
 

existence of a public market for the shares, the availability of
certain public information about the Company, the resale following the required
holding period under Rule 144 and the number of shares being sold during any three
month period not exceeding specified limitations, Holder is aware that the
conditions for resale set forth in Rule 144 have not been satisfied and that
the Company presently has no plans to satisfy these conditions in the
foreseeable future.

 

4.3           Disposition of Warrant and Shares.

 

4.3.1        Subject to Section 5.2 hereof, the
Holder further agrees not to make any disposition of all or any part of the
warrant or the Shares in any event unless and until:

 

(a)           The Company shall have received a
letter secured by the Holder from the Securities and Exchange Commission
stating that no action will be recommended to the Commission with respect to
the proposed disposition;

 

(b)           There is then in effect a
registration statement under Act covering such proposed disposition and such
disposition is made in accordance with said registration statement; or

 

(c)           The Holder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and if reasonably requested by the Company, the Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, for
the Holder to the effect that such disposition will not require registration of
such warrant or Shares under the Act or any applicable state securities laws.

 

(d)           The Holder understands and agrees
that all certificates evidencing the shares to be issued to the Holder may bear
the following legend:

 

THESE SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

 

ARTICLE 5.  MISCELLANEOUS.

 

5.1           Term: Notice of Expiration.  This warrant is exercisable in whole in part,
at any time and from time to time on or before the Expiration Date set forth
above; provided, however, that if the Company completes its initial public
offering within the three-year period immediately prior to the Expiration Date,
the Expiration Date shall automatically be extended until the third anniversary
of the effective date of the Company’s initial public offering. If this warrant
has not been exercised prior to the Expiration Date, this warrant shall be
deemed to have been automatically exercised on the Expiration Date by
“cashless” conversion pursuant to Section 1.2.

 

5.2           Transfer Procedure.  Subject to the provisions of Section 4.3,
Holder may transfer all or part of this warrant or the Shares issuable upon
exercise of this warrant (or the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) by giving the Company notice of the
portion of the warrant being transferred setting forth the name, address and
taxpayer identification number of the transferee and surrendering this warrant
to the Company for reissuance to the transferee(s) (and Holder, if applicable);
provided, however, that Holder may transfer all or part of this warrant
to its affiliates, including, without limitation, Comerica Incorporated, at any
time without notice to the Company, and

 5
 

such affiliate shall then be entitled to all the rights of Holder under
this warrant and any related agreements, and the Company shall cooperate fully
in ensuring that any stock issued upon exercise of this warrant is issued in
the name of the affiliate that exercises the warrant. The terms and conditions
of this warrant shall inure to the benefit of, and be binding upon, the Company
and the holders hereof and their respective permitted successors and assigns.
Unless the Company is filing financial information with the SEC pursuant to the
Securities Exchange Act of 1934, the Company shall have the right to refuse to
transfer any portion of this warrant to any person who directly competes with
the Company.

 

5.3           Notices.  All notices and other communications from the
Company to the Holder, or vice versa, shall be deemed delivered and effective
when given personally or mailed by first-class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company or
the Holder, as the case may be, in writing by the Company or such Holder from
time to time. All notices to the Holder shall be addressed as follows:

 

	
   

  	
  COMERICA BANK

  
	
   

  	
  Attn: Warrant
  Administrator

  
	
   

  	
  Technology and
  Life Sciences Division

  
	
   

  	
  P.O. Box 7279

  
	
   

  	
  San Francisco,
  CA 94120-7270

  
	
   

  	
   

  
	
   

  	
  With a copy to

  
	
   

  	
   

  
	
   

  	
  COMERICA BANK

  
	
   

  	
  Attn: Warrant
  Administrator

  
	
   

  	
  Technology and
  Life Sciences Division

  
	
   

  	
  5 Palo Alto
  Square, Suite 800

  
	
   

  	
  3000 El Camino
  Real

  
	
   

  	
  Palo Alto, CA
  94306

  

 

5.4           Amendments.  This warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought.

 

5.5           Attorneys’ Fees.  In the event of any dispute between the
parties concerning the terms and provisions of this warrant, the party
prevailing in such dispute shall be entitled to collect from the other party
all costs incurred in such dispute, including reasonable attorneys’ fees.

 

5.6           Acceptance.  Receipt of this warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions
contained herein.

 

5.7           Governing Law.  This warrant shall be governed by and
construed in accordance with the laws of the State of California, without
giving effect to its principles regarding conflicts of law.

 

[REMINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]

 6

IN
WITNESS WHEREOF, the Company has caused this warrant to be executed by its duly
authorized representative as of the Issue Date.

	
  

   

  	
  NEUROGENETICS, INC.

   

  
	
   

  	
  By:

  	
  /s/ Neil Kurtz

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Neil Kurtz

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President and
  CEO

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

Authorized signatories
under Corporate Resolutions to Borrow or an authorized signer(s) under a resolution
covering warrants must sign the warrant.

 7
 

APPENDIX 1

NOTICE OF EXERCISE

1.             The undersigned hereby elects to
purchase
                
shares of the
              stock
of Neurogenetics, Inc. pursuant to the terms of the attached warrant, and
tenders herewith payment of the purchase price of such shares in full.

1.             The undersigned hereby elects to
convert the attached warrant into shares in the manner specified in the
warrant. This conversion is exercised with respect to
                 of
the shares covered by the warrant.

[Strike
paragraph that does not apply.]

2.             Please issue a certificate or
certificates representing said shares in the name of the undersigned or in such
other name as is specified below:

COMERICA BANK

Attn: Warrant Administrator

Technology and Life Sciences Division

P.O. Box 7279

San Francisco, CA 94120-7279

3.             The undersigned represents it is
acquiring the shares solely for its own account and not as a nominee for any
other party and not with a view toward the resale or distribution thereof
except in compliance with applicable securities laws.

	
  COMERICA BANK — CALIFORNIA or

  
	
  Registered Assignee

  
	
   

  
	
   

  	
   

  
	
  (Signature)

  
	
   

  
	
   

  	
   

  
	
  (Date)

  

 

 8
 

EXHIBIT A

 

Anti-Dilution Provisions

 

 

In the event of the
issuance by the Company, after the Issue Date of the warrant, of securities at
a price per share less than the Warrant Price (a “Diluting Issuance”), then the
number of shares of common stock issuable upon conversion of the Shares shall
be adjusted in accordance with those provisions (the “Provisions”) of the
Company’s Certificate of Incorporation which apply to Diluting Issuances.

 

Under no circumstances
shall the aggregate Warrant Price payable by the Holder upon exercise of the
warrant increase as a result of any adjustment arising from a Diluting
Issuance.

 9

EXHIBIT B

Registration
Rights

The Company shall use commercially reasonable efforts
to amend the Amended and Restated Shareholders’ Rights Agreement, dated June
21, 2001, as amended September 23, 2002 (the “Agreement”) to include the Holder
as an “Investor” and the Shares as “Preferred Stock” under the Agreement solely
for the purpose of granting registration rights to the Holder thereunder, with
the following exceptions and clarifications:

(a)           the
Shares (if common stock), or the common stock issuable upon conversion of the
Shares, shall be considered “registrable securities” or otherwise entitled to
“piggy back” registration rights in accordance with the terms of the Agreement;

(b)           the
Holder will be subject to Articles 5, 6, 7, 8, 9, 10 and 14 thereof as if the
Holder hereof were a party to the Agreement; and 

(c)           the
registration rights described above will be freely assignable by the Holder in
connection with a permitted transfer of this warrant or the Shares.Exhibit
4.15

THIS WARRANT HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES
LAWS.  NO SALE OR DISPOSITION MAY BE
EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS RELATED THERETO, (ii) AN
OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii) RECEIPT OF NO-ACTION LETTERS
FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR (iv) OTHERWISE COMPLYING WITH
THE PROVISIONS OF SECTION 7 OF THIS WARRANT.

NEUROGENETICS,
INC.

WARRANT TO
PURCHASE STOCK

THIS CERTIFIES
THAT, for value received, Silicon Valley Bank and its assignees are entitled to
subscribe for and purchase fully paid and nonassessable shares of Series A
Preferred Stock, as adjusted pursuant to Section 4 hereof, the “Shares”) of
Neurogenetics, Inc., a Delaware corporation (the “Company”) at $ (such price
and such other price as shall result, from time to time, from the adjustments
specified in Section 4 hereof is herein referred to as the “Warrant Price”),
subject to the provisions and upon the terms and conditions hereinafter set
forth.  As used herein, (a) the term
“Series Preferred” shall mean the Company’s presently authorized Series A
Preferred Stock, and any stock into or for which such Series A Preferred Stock
may hereafter be converted or exchange, (b) the term “Date of Grant” shall mean
December 8, 2000, and (c) the term “Other Warrants” shall mean any other
warrants issued by the Company in connection with the transaction with respect
to which this Warrant was issued, and any warrant issued upon transfer or
partial exercise of or in lieu of this Warrant. 
The term “Warrant” as used herein shall be deemed to include Other
Warrants unless the context clearly requires otherwise.

1.  Term. 
The purchase right represented by this Warrant is exercisable, in whole
or in part, at any time and from time to time from the Date of Grant through
the earlier of (i) ten (10) years after the Date of Grant or (ii) five (5) years
after the closing of the Company’s initial public offering of its Common Stock
(“IPO”) effected pursuant to a Registration Statement on Form S-1 (or its
successor) filed under the Securities Act of 1933, as amended (the “Act”).

2.  Method of Exercise; Payment; Issuance of
New Warrant.  Subject to Section 1
hereof, the purchase right represented by this Warrant may be exercised by the
holder hereof, in whole or in part and from time to time, at the election of
the holder hereof, by (a) the surrender of this Warrant (with the notice of
exercise substantially in the form attached hereto as Exhibit A-1 duly
completed and executed) at the principal office of the Company and by the
payment to the Company, by certified or bank check, or by wire transfer to an
account designated by the Company (a “Wire Transfer”) of an amount equal to the
then applicable Warrant Price multiplied by the number of Shares then being
purchased; (b) if in connection with a registered public offering of the Company’s
securities, the surrender of this Warrant (with the notice of exercise form
attached hereto as Exhibit A-2 duly completed and executed) at the principal
office of the Company together with notice of arrangements reasonably
satisfactory to the Company for payment to the Company either by certified or
bank

check or by Wire Transfer
from the proceeds of the sale of shares to be sold by the holder in such public
offering of an amount equal to the then applicable Warrant Price per share
multiplied by the number of Shares then being purchase; or (c) exercise of the
“net issuance” right provided for in Section 10.2 hereof.  The person or persons in whose name(s) any
certificate(s) representing shares of Series Preferred shall be issuable upon
exercise of this Warrant shall be deemed to have become the holder(s) of record
of, and shall be treated for all purposes as the record holder(s) of, the
shares represented thereby (and such shares shall be deemed to have been
issued) immediately prior to the close of business on the date or dates upon
which this Warrant is exercised.  In the
event of any exercise of the rights represented by this Warrant, certificates
for the shares of stock so purchased shall be delivered to the holder hereof as
soon as possible and in any event within thirty (30) days after such exercise
and, unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof as soon as possible and in any event within such thirty-day period;
provided, however, at such time as the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, if requested
by the holder of this Warrant, the Company shall cause its transfer agent to
deliver the certificate representing Shares issued upon exercise of this
Warrant to a broker or other person (as directed by the holder exercising this
Warrant) within the time period required to settle any trade made by the holder
after exercise of this Warrant.

3.  Stock Fully Paid; Reservation of Shares.  All Shares that may be issued upon the
exercise of the rights represented by this Warrant will, upon issuance pursuant
to the terms and conditions herein, be fully paid and nonassessable, and free
from all 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 will at all times
have authorized, and reserved for the purpose of the issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of it
Series Preferred to provide for the exercise of the rights represented by this
Warrant and a sufficient number of shares of its Common Stock to provide for
the conversion of the Series Preferred into Common Stock.

4.  Adjustment of Warrant Price and Number of
Shares.  The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:

(a)  Reclassification of Merger.  In case of any reclassification or change of
securities of the class issuable upon exercise of this Warrant (other than a
change in par value, or from par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), or in case of any
merger of the Company with or into another corporation (other than a merger
with another corporation in which the Company is the acquiring and the
surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of nay 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
duly execute and deliver to the holder of this Warrant a new Warrant (in form
and substance satisfactory to the holder of this Warrant), or the Company shall
make appropriate provision without the issuance of a new Warrant, so that the
holder of this Warrant shall have the right to receive, at a total purchase not
to exceed that payable upon the exercise of the unexercised portion of this

 2
 

Warrant, and in lieu of
the shares of Series Preferred 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, merger or sale by a
holder of the number of shares of Series Preferred then purchasable under this
Warrant.  Any new Warrant shall provide
for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. 
The provisions of this subparagraph (a) shall similarly apply to
successive reclassifications, changes mergers and transfers.

(b)  Subdivision or Combination of Shares.  If the Company at any time while this Warrant
remains outstanding and unexpired shall subdivide or combine its outstanding
shares of Series Preferred, the Warrant Price shall be proportionately
decreased and the number of Shares issuable hereunder shall be proportionately
increased in the case of the subdivision and the Warrant Price shall be
proportionately increased and the number of Shares issuable hereunder shall be
proportionately decreased in the case of a combination.

(c)  Stock Dividends and other Distributions.  If the Company at any time while this Warrant
is outstanding and unexpired shall (i) pay a dividend with respect to Series
Preferred payable in Series Preferred, then the Warrant Price shall be
adjusted, from and after the date of determination of shareholders entitled to
receive such dividend or distribution, to that price determined by multiplying
the Warrant Price in effect immediately prior to such date of determination by
a fraction (A) the numerator of which shall be the total number of shares of
Series Preferred outstanding immediately prior to such dividend or
distribution, and (B) the denominator of which shall be the total number of
shares of Series Preferred outstanding immediately after such dividend or
distribution; or (ii) make any other distribution with respect to Series
Preferred (except any distribution specifically provided for in Sections 4(a)
and 4 (b)), then, in each such case, provision shall be made by the Company
such that the holder of this Warrant shall receive upon exercise of this
Warrant a proportionate share of any such dividend or distribution as though it
were the holder of the Series Preferred (or Common Stock issuable upon
conversion thereof) as of the record date fixed for the determination of the
shareholders of the Company entitled to receive such dividend or distribution.

(d)  Adjustment of Number of Shares.  Upon each adjustment in the Warrant Price,
the number of Shares of Series Preferred purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by multiplying
the number of Shares purchasable immediately prior to such adjustment in the
Warrant Price by a fraction, the numerator of which shall be the Warrant Price
immediately prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter.

(e)  Antidilution Rights.  The other antidilution rights applicable to the
Shares of Series Preferred purchasable hereunder are set forth in the company’s
Certificate of Incorporation as amended through the Date of Grant, a true and
complete copy of which is attached hereto as Exhibit B (the “Charter”).  The Company shall promptly provide the holder
hereof with any restatement, amendment, modification or waiver of the Charter
promptly after the same has been made.

 3

5.  Notice of Adjustments.  Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof,
the Company shall make a certificate signed by its chief financial officer
setting forth, in reasonable detail, the event requiring the adjustment, the
mount of the adjustments, the method by which such adjustment was calculated,
and the Warrant Price and the number of Shares purchasable hereunder after
giving effect to such adjustment, and shall cause copies of such certificate to
be mailed (without regard to Section 13 hereof, by first class mail, postage
prepaid) to the holder of this Warrant. 
In addition, whenever the conversion price or conversion ratio of the
Series Preferred shall be adjusted, the Company shall make a certificate signed
by its chief financial officer 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 conversion price or ratio of the Series
Preferred after giving effect to such adjustment, and shall cause copies of
such certificate to be mailed (without regard to Section 13 hereof, by first
class mail, postage prepaid) to the holder of this Warrant.

6.  Fractional Shares.  No fractional shares of Series Preferred will
be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefore based on the
fair market value of the Series Preferred on the date of exercise as reasonably
determined in good faith by the Company’s Board of Directors.

7.  Compliance with Act: Disposition of
Warrant or Shares of Series Preferred.

(a)  Compliance with Act.  The holder of this Warrant, by acceptance
hereof, agrees that this Warrant, and the shares of Series Preferred to be
issued upon exercise hereof and any common Stock issued upon conversion thereof
are being acquired for investment and that such holder will not offer, sell or
otherwise dispose of this Warrant, or any shares of Series Preferred to be
issued upon exercise hereof or any Common Stock issued upon conversion thereof
except under circumstances which will not result in a violation of the Act or
any applicable state securities laws. 
Upon exercise of this Warrant, unless the Shares being acquired are
registered under the Act and any applicable state securities laws or an
exemption from such registration is available, the holder hereof shall confirm
in writing that the shares of Series Preferred so purchased (and any shares of
Common Stock issued upon conversion thereof) are being acquired for investment
and not with a view toward distribution or resale in violation of the Act and
shall confirm such other matters related thereto as may be reasonably requested
by the Company.  This Warrant and all
shares of Series Preferred issued upon exercise of this Warrant and all shares
of Common Stock issued upon conversion thereof (unless registered under the Act
and any applicable state securities laws) shall be stamped or imprinted with a
legend in substantially the following form:

“THE SECURITIES EVIDENCED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR
ANY STATE SECURITIES LAWS.  NO SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT (i) EFFECTIVE REGISTRATION STATEMENTS
RELATED THERETO, (ii) AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATIONS ARE NOT REQUIRED, (iii)
RECEIPT OF NO-ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL AUTHORITIES, OR
(iv) OTHERWISE COMPLYING WITH THE PROVISION OF SECTION 7 OF THE WARRANT UNDER
WHICH THESE SECURITIES WERE ISSUED, DIRECTLY OR INDIRECTLY.”

 4
 

Said legend shall
be removed by the Company, upon the request of a holder, at such time as the
restrictions on the transfer of the applicable security shall have
terminated.  In addition, in connection
with the issuance of this Warrant, the holder specifically represents to the
Company by acceptance of this Warrant as follows:

(1)           The holder is aware of the Company’s
business affairs and financial condition, and has acquired information about
the Company sufficient to reach an informed and knowledgeable decision to
acquire this Warrant.  The holder is
acquiring this Warrant for its own account for investment purposes only and not
with a view to, or for the resale in connection with, any “distribution”
thereof in violation of the Act.

(2)           The holder understands that this
Warrant has not been registered under the Act in reliance upon a specific
exemption therefrom, which exemption depends upon, among other things, the bona
fide nature of the holder’s investment intent as expressed herein.

(3)           The holder further understands that
this Warrant must be held indefinitely unless subsequently registered under the
Act and qualified under any applicable state securities laws, or unless
exemptions from registration and qualification are otherwise available.  The holder is aware of the provisions of Rule
144, promulgated under the Act.

(4)           The holder is an “accredited
investor” as such term is defined in Rule 501 of Regulation D promulgated under
the Act.

(b)  Disposition of Warrant or Shares.  With respect to any offer, sale or other disposition
of this Warrant or any shares of Series Preferred acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or shares, the
holder hereof agrees to give written notice to the Company prior thereto, describing
briefly the manner thereof, together with a written opinion of such holder’s
counsel, or other evidence, if reasonably satisfactory to the Company, to the
effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal
or state securities law then in effect) of this Warrant or such shares of
Series Preferred or Common Stock and indicating whether or not under the Act
certificates for this Warrant or such shares of Series Preferred to be sold or otherwise
disposed of require any restrictive legend as to applicable restrictions on transferability
in order to ensure compliance with such law. 
Upon receiving such written notice and reasonably satisfactory opinion
or other evidence, the Company, as promptly as practicable but no later than
fifteen (15) days after receipt of the written notice, shall notify such holder
that such holder may sell or otherwise dispose of this Warrant or such shares
of Series Preferred or Common Stock, all in accordance with the terms of the
notice delivered to the Company.  If a
determination has been made pursuant to this Section 7(b) that the opinion of
counsel for the holder or other evidence is not reasonably satisfactory to the
Company, the Company shall so notify the holder promptly with details thereof
after such determination has been made. 
Notwithstanding the foregoing, this Warrant or such shares of Series
Preferred or Common Stock may, as to such federal laws, be offered, sold or
otherwise disposed of in accordance with Rule 144 or 144A under the Act,
provided that the Company shall have been furnished with such information as
the Company may reasonably request to provide a reasonable assurance that the
provisions of Rule 144 or 144A have been satisfied.  Each certificate representing this Warrant or
the shares of Series Preferred thus transferred (except a transfer

 5
 

pursuant to Rule 144 or
144A) shall bear a legend as to the applicable restrictions on transferability
in order to ensure compliance with such laws, unless in the aforesaid opinion
of counsel for the holder, such legend is not required in order to ensure
compliance with such laws.  The Company
may issue stop transfer instructions to its transfer agent in connection with
such restrictions.

(c)  Applicability of Restrictions.  Neither any restrictions of any legend
described in this Warrant nor the requirements of Section 7(b) above shall
apply to any transfer of, or grant of a security interest in, this Warrant (or
the Series Preferred or Common Stock obtainable upon exercise thereof) or any
part hereof (i) to a partner of the holder if the holder is a partnership or to
a member of the holder if the holder is a limited liability company, (ii) to a
partnership of which the holder is a partner or to a limited liability company
of which the holder is a member, or (iii) to any affiliate of the holder if the
holder is a corporation; provided, however, in any such transfer,
if applicable, the transferee shall on the Company’s request agree in writing
to be bound by the terms of this Warrant as if an original holder hereof.

8.  Rights as Shareholders; Information.  No holder of this Warrant, as such, shall be
entitled to vote or receive dividends or be deemed the holder of Series
Preferred or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, no shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any of
the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised
and the Shares purchasable upon the exercise hereof shall have become
deliverable, as provided herein.

Notwithstanding
the foregoing, the Company will transmit to the holder of this Warrant such
information, documents and reports as are generally distributed to the holders
of any class or series of the securities of the Company concurrently with the
distribution thereof to the shareholders.

9.  Market Stand-Off Agreement.  If required by the Company and an underwriter
of Common Stock or other securities of the Company, Holder shall agree not to
sell or otherwise transfer or dispose of any Registrable Shares or other securities
of the Company held by Holder (other than Registrable Shares included in such
registration) for a specified period of time (not to exceed on hundred eighty
(180) days) following the effective date of a registration statement of the
Company filed under the Securities Act of 1933; provided, however,
that: (a) such agreement shall only apply to any such registration statement
covering the common stock of the Company to be sold on its behalf to the public
in an underwritten offering; (b) all other holders of more than on percent (1%)
of the outstanding common stock of the Company and all executive officers and
directors of the Company enter into similar agreements; and (c) notwithstanding
the restrictions set forth herein a Holder may transfer or distribute Shares to
its affiliates, including the shareholders or partners of such Holder  provided such affiliates agree to be bound
in writing by the restrictions hereof. 
Such agreement shall be in writing in a form reasonably satisfactory to
the Company and such underwriter.  The
Company may impose stop-transfer instructions with respect to the Registrable
Shares or other securities subject to the foregoing restriction until the end
of the “stand-off” period.

Further, if the
Company is acquired pursuant to an acquisition, Holder shall have the right to
be no longer bound by the foregoing restrictions in this Section 9 if and to
the extent such foregoing

 6
 

restrictions are more
restrictive than the applicable “lock-up agreement” (or equivalent) provisions
(if any) binding on all officers and directors of the acquiring or surviving
entity who own stock of such entity, all 1% or greater security holders (on a
fully diluted basis) and all other persons with registration rights relative to
such entity.

10.  Additional Rights.

10.1                           Acquisition
Transactions.  The Company shall
provide the holder of this Warrant with at least ten (10) days’ written notice
prior to closing thereof of the terms and conditions of any of the following
transaction (to the extent the Company has notice thereof):  (i) the sale, lease, exchange, conveyance or
other disposition of all or substantially all of the Company’s property or
business, or (ii) its merger into or consolidation with any other corporation
(other than a wholly-owned subsidiary of the Company), or any transaction
(including a merger or other reorganization) or series of related transactions,
in which more than 50% of the voting power of the Company is disposed of.

10.2                           Right
to Convert Warrant into Stock:  Net
Issuance.

(a)  Right to Convert.  In addition to and without limiting the
rights of the holder under the terms of this Warrant, the holder shall have the
right to convert this Warrant or any portion thereof (the “Conversion Right”)
into shares of Series Preferred (or Common Stock if the Series Preferred has
been automatically converted into Common Stock) as provided in this Section
10.2 at any time or from time to time during the term of this Warrant.  Upon exercise of the Conversion Right with
respect to a particular number of shares subject to this Warrant (the
“Converted Warrant Shares”), the Company shall deliver to the holder (without
payment by the holder of any exercise price or any cash or other consideration)
that number of shares of fully paid and nonassessable Series Preferred (or
Common Stock if the Series Preferred has been automatically converted into
Common Stock) as is determined according to the following formula:

	
  X=

  	
  B-A

  	
   

  	
   

  	
   

  
	
   

  	
  Y

  	
   

  	
   

  	
   

  
	
  Where:

  	
  X =

  	
   

  	
  the number of shares of Series Preferred (or Common
  Stock if the Series Preferred has been automatically converted to Common
  Stock) that shall be issued to holder

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Y =

  	
   

  	
  the fair market value of one share of Series
  Preferred (or Common Stock if the Series Preferred has been automatically
  converted to Common Stock)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A =

  	
   

  	
  the aggregate Warrant Price of the specified number
  of Converted Warrant Shares immediately prior to the exercise of the
  Conversion Right (i.e., the
  number of Converted Warrant Shares multiplied by the
  Warrant Price)

  

 

 7
 

 

	
  

  	
  B =

  	
   

  	
  the aggregate fair market value of the specified
  number of Converted Warrant Shares (i.e., the
  number of Converted Warrant Shares multiplied by
  the fair market value of one Converted Warrant Share)

  

No fractional shares shall be issuable upon exercise
of the Conversion Right, and, if the number of shares to be issued determined
in accordance with the foregoing formula is other than a whole number, the
Company shall pay to the holder an amount in cash equal to the fair market
value of the resulting fractional share on the Conversion Date (as hereinafter
defined).  For purposes of Section 9 of
this Warrant, shares issued pursuant to the Conversion Right shall be treated
as if they were issued upon the exercise of this Warrant.

(b)  Method
of Exercise.  The Conversion Right
may be exercised by the holder by the surrender of this Warrant at the
principal office of the Company together with a written statement (which may be
in the form of Exhibit A-1 or Exhibit A-2 hereto) specifying that the holder
thereby intends to exercise the Conversion Right and indicating the number of
shares subject to this Warrant which are being surrendered (referred to in
Section 10.2(a) hereof as the Converted Warrant Shares) in exercise of the
Conversion Right.  Such conversion shall
be effective upon receipt by the Company of this Warrant together with the aforesaid
written statement, or on such later date as is specified therein (the
“Conversion Date”), and , at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company’s Common Stock to the
public in a public offering pursuant to a Registration Statement under the Act
(a “Public Offering”).  Certificates for
the shares issuable upon exercise of the Conversion Right and, if applicable, a
new warrant evidencing the balance of the shares remaining subject to this
Warrant, shall be issued as of the Conversion Date and shall be delivered to
the holder within thirty (30) days following the Conversion Date.

(c)  Determination
of Fair Market Value.  For purposes
of this Section 10.2, “fair market value” of a share of Series Preferred (or
Common Stock if the Series Preferred has been automatically converted into
Common Stock) as of a particular date (the “Determination Date”) shall mean:

(i)  If the
Conversion Right is exercised in connection with and contingent upon a Public
Offering, and if the Company’s Registration Statement relating to such Public
Offering (“Registration Statement”) has been declared effective by the
Securities and Exchange Commission, then the initial “Price to the Public”
specified in the final prospectus with respect to such offering.

(ii)  If the
Conversion Right is not exercised in connection with and contingent upon a Public
Offering, then as follows:

(A)    If traded on a securities
exchange, the fair market value of the Common Stock shall be deemed to be the
average of the closing prices of Common Stock on such exchange over the five
trading days immediately prior to the Determination Date, and the fair market
value of the Series Preferred shall be deemed to be such fair market value of
the Common Stock multiplied by the number of shares of Common Stock into which
each share of the Series Preferred is then convertible;

 8

(B)           If traded on the Nasdaq Stock Market
or other over-the-counter system, the fair market value of the Common Stock
shall be deemed to be the average of the closing bid prices of the Common Stock
over the five trading days immediately prior to the Determination Date, and the
fair market value of the Series Preferred shall be deemed to be such fair
market value of the Common Stock multiplied by the number of shares of Common
Stock into which each share of Series Preferred is then convertible; and

(C)           If there is no public market for the
Common Stock, then fair market value shall be determined by the Company’s Board
of Directors in good faith.

10.3         Exercise Prior to Expiration. To the
extent this Warrant is not previously exercised as to all of the Shares subject
hereto, and if the fair market value of one share of the Series Preferred is
greater than the Warrant Price then in effect, this Warrant shall be deemed
automatically exercised pursuant to Section 9.2 above (even if not surrendered)
immediately before its expiration. For purposes of such automatic exercise, the
fair market value of one share of the Series Preferred upon such expiration
shall be determined pursuant to Section 9.2(c). To the extent this Warrant or
any portion thereof is deemed automatically exercised pursuant to this Section,
the Company agrees to promptly notify the holder hereof of the number of
Shares, if any, the holder hereof is to receive by reason of such automatic
exercise.

11.   Representations and Warranties. The
Company represents and warrants to the holder of this Warrant as follows:

(a)   This Warrant has been duly authorized and executed
by the Company and is a valid and binding obligation of the Company enforceable
in accordance with its terms, subject to laws of general application relating
to bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and
other equitable remedies;

(b)   The Shares have been duly authorized and
reserved for issuance by the Company and, when issued in accordance with the
terms hereof, will be validly issued, fully paid and non-assessable;

(c)   The rights, preferences, privileges and
restrictions granted to or imposed upon the Series Preferred and the holders
thereof are as set forth in the Charter, and on the Date of Grant, each share
of the Series Preferred represented by this Warrant is convertible into one
share of Common Stock;

(d)   The shares of Common Stock issuable upon
conversion of the Shares have been duly authorized and reserved for issuance by
the Company and, when issued in accordance with the terms of the Charter will be
validly issued, fully paid and nonassessable;

(e)   The execution and delivery of this Warrant
are not, and the issuance of the Shares upon exercise of this Warrant in
accordance with the terms hereof will not be, inconsistent with the Company’s
Charter or by-laws, do not and will not contravene any law, governmental rule
or regulation, judgment or order applicable to the Company, and do not and will
not conflict with or

 9
 

contravene any provision
of, or constitute a default under, any indenture, mortgage, contract or other
instrument or which the Company is a party or by which it is bound or require
the consent or approval of, the giving of notice to, the registration or filing
with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person, except for the filing of
notices pursuant to federal and state securities laws, which filings will be
effected by the time required thereby; and

(f)    There are no actions, suits, audits,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company in any court or before any governmental
commission, board or authority which, if adversely determined, will have a
material adverse effect on the ability of the Company to perform its
obligations under this Warrant.

(g)   The number of shares of Common Stock of the
Company outstanding on the date hereof, on a fully diluted basis (assuming the
conversion of all outstanding convertible securities and the exercise of all
outstanding options and warrants), does not exceed 13,220,961 shares.

12.   Modification and Waiver.  This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.

13.   Notices.  Any notice, request, communication or other
document required or permitted to be given or delivered to the holder hereof or
the Company shall be delivered, or shall be sent by certified or registered
mail, postage prepaid, to each such holder at its address as shown on the books
of the Company or to the Company at the address indicated therefor on the signature
page of this Warrant.

14.   Binding Effect on Successors.  This Warrant shall be binding upon any
corporation succeeding the Company by merger, consolidation or acquisition of
all or substantially all of the Company’s assets, subject to the provisions of
section 4(a) hereof, and all of the obligations of the Company relating to the
Series Preferred issuable upon the exercise or conversion of this Warrant shall
survive the exercise, conversion and termination of this Warrant and all of the
covenants and agreements of the Company shall inure to benefit of the successors
and assigns of the holder hereof.

15.   Lost Warrants or Stock Certifications.  The Company covenants to the holder hereof
that, upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
and, in the case of any such loss, theft or destruction, upon receipt of an
indemnity reasonably satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.

16.   Descriptive Headings.  The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant. The language in this Warrant shall be
construed as to its fair meaning without regard to which party drafted this
Warrant.

 10
 

17.   Governing Law.  This Warrant shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the
laws of the State of California.

18.   Survival of Representations, Warranties
and Agreements.  All representations
and warranties of the Company and the holder hereof contained herein shall
survive the Date of Grant, the exercise or conversion of this Warrant (or any
part hereof) or the termination or expiration of rights hereunder. All
agreements of the Company and the holder hereof contained herein shall survive indefinitely
until, by their respective terms, they are no longer operative.

19.   Remedies.  In case any one or more of the covenants and
agreements contained in this Warrant shall have been breached, the holders
hereof (in the case of a breach by the Company), or the Company (in the case of
a breach by a holder), may proceed to protect and enforce their or its rights
either by suit in equity and/or by action at law, including, but not limited to,
an action for damages as a result of any such breach and/or an action for
specific performance of any such covenant or agreement contained in this
Warrant.

20.   No Impairment of Rights.  The Company will not, by amendment of its
Charter or through any other means, 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.

21.   Severability.  The invalidity or unenforceability of any
provision of this Warrant in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction, or affect any other
provision of this Warrant, which shall remain in full force and effect.

22.   Recovery of Litigation Costs.  If any legal action or other proceeding is
brought for the enforcement of this Warrant, or because of an alleged dispute,
breach, default, or misrepresentation in connection with any of the provisions
of this Warrant, the successful or prevailing party or parties shall be
entitled to recover reasonable attorneys’ fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it or they may
be entitled.

23.   Entire Agreement: Modification.  This Warrant constitutes the entire agreement
between the parties pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations, and
undertakings of the parties, whether oral or written, with respect to such
subject matter.

 11
 

The Company has
caused this Warrant to be duly executed and delivered as of the Date of Grant
specified above.

	
   

  	
  NEUROGENETICS, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  Bruce Perry

  
	
   

  	
   

  
	
   

  	
  Title

  	
  Vice President, Operations

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  4370 La Jolla
  Village Drive, Suite 400

  San Diego, CA 92122

  
					

 

 12

EXHIBIT A-1

NOTICE OF EXERCISE

To:          Neurogenetics, Inc. (the “Company”)

1.       
The undersigned hereby:

elects to purchase
                   
shares of [Series A Preferred Stock] [ Common Stock] of the Company pursuant to
the terms of the attached Warrant, and tenders herewith payment of the purchase
price of such shares in full, or

elects to exercise its net issuance rights pursuant to
Section 10.2 of the attached Warrant with respect to
                Shares
of [Series A Preferred Stock] [Common Stock]. 

2.             Please issue a
certificate or certificates representing
              
shares in the name of the undersigned or in such other name or names as are
specified below:

	
   

  	
   

  	
   

  
	
  

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address)

  	
   

  

 

3.             The undersigned
represents that the aforesaid shares 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, all except as in compliance
with applicable securities laws.

 

	
   

  	
   

  
	
  

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
   

  

 

EXHIBIT A-2

NOTICE OF EXERCISE

To:          Neurogenetics, Inc.
(the “Company”)

 

1.             Contingent upon and effective immediately prior to the
closing (the “Closing”) of the Company’s public offering contemplated by the
Registration Statement on Form S    , filed
                ,
           , the
undersigned hereby:

 

elects to purchase
                 shares
of [Series Preferred Stock] [Common Stock] of the Company (or such lesser
number of shares as may be sold on behalf of the undersigned at the Closing)
pursuant to the terms of the attached Warrant, or

 

elects to exercise
its net issuance rights pursuant to Section 10.2 of the attached Warrant with
respect to            Shares
of [Series Preferred Stock] [Common Stock].

2.             Please deliver to the custodian for
the selling shareholders a stock certificate representing such
            shares.

3.             The undersigned has instructed the
custodian for the selling shareholders to deliver to the Company
$            or, if
less, the net proceeds due the undersigned from the sale of shares in the
aforesaid public offering.  If such net
proceeds are less than the purchase prices for such shares, the undersigned
agrees to deliver the difference to the Company prior to the Closing. 

 

	
  

  	
   

  
	
  

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
  (Date)

  	
   

  	
   

  

 

EXHIBIT B

CHARTER

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