Exhibit 10.1
 
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”)AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF CORPORATE COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  
 
 

Original Issue Date: January 27, 2015   $250,000.00

 
CONVERTIBLE NOTE DUE JULY 27, 2016

THIS CONVERTIBLE NOTE is one of a series of a duly authorized and validly issued
Convertible Notes of Cell Source, Inc., a Nevada corporation (the “Company”),
having its principal place of business at 65 Yigal Alon Street, Tel Aviv, Israel
67433, designated as its Convertible Note due July 27, 2016 (this Note, the
“Note” and, collectively with the other Notes of such series, the “Notes”).

FOR VALUE RECEIVED, the Company promises to pay to PRODIGIOUS WEALTH LIMITED or
its registered assigns (the “Holder”), or shall have paid pursuant to the terms
hereunder, the principal sum of $250,000.00 on JULY 27, 2016 (the “Maturity
Date”) or such earlier date as this Note is required or permitted to be repaid
as provided hereunder.  This Note is subject to the following additional
provisions:

Section 1. Definitions.  For the purposes hereof, in addition to the terms
defined elsewhere in this Note, (a) capitalized terms not otherwise defined
herein shall have the meanings set forth in the Purchase Agreement and (b) the
following terms shall have the following meanings:

“Bankruptcy Event” means any of the following events: (a) the Company or any
Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation
S-X) thereof commences a case or other proceeding under any bankruptcy,
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction relating to the
Company or any Significant Subsidiary thereof, (b) there is commenced against
the Company or any Significant Subsidiary thereof any such case or proceeding
that is not dismissed within 60 days after commencement, (c) the Company or any
Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order
of relief or other order approving any such case or proceeding is entered, (d)
the Company or any Significant Subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property that is not
discharged or stayed within 60 calendar days after such appointment, (e) the
Company or any Significant Subsidiary thereof makes a general assignment for the
benefit of creditors, (f) the Company or any Significant Subsidiary thereof
calls a meeting of its creditors with a view to arranging a composition,
adjustment or restructuring of its debts or (g) the Company or any Significant
Subsidiary thereof, by any act or failure to act, expressly indicates its
consent to, approval of or acquiescence in any of the foregoing or takes any
corporate or other action for the purpose of effecting any of the foregoing.
 
“Beneficial Ownership Limitation” shall have the meaning set forth in Section
4(d).

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

“Change of Control Transaction” means the occurrence after the date hereof of
any of (a) an acquisition after the date hereof by an individual or legal entity
or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act)
of effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of 50% of the
voting securities of the Company (other than by means of conversion or exercise
of the Notes and the Securities issued together with the Notes), (b) the Company
merges into or consolidates with any other Person, or any Person merges into or
consolidates with the Company and, after giving effect to such transaction, the
stockholders of the Company immediately prior to such transaction own less than
66% of the aggregate voting power of the Company or the successor entity of such
transaction, (c) the Company sells or transfers all or substantially all of its
assets to another Person and the stockholders of the Company immediately prior
to such
 
 
 

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transaction own less than 66% of the aggregate voting power of the acquiring
entity immediately after the transaction, (d) a replacement at one time or
within a three year period of more than one-half of the members of the Board of
Directors which is not approved by a majority of those individuals who are
members of the Board of Directors on the Original Issue Date (or by those
individuals who are serving as members of the Board of Directors on any date
whose nomination to the Board of Directors was approved by a majority of the
members of the Board of Directors who are members on the date hereof), or (e)
the execution by the Company of an agreement to which the Company  is a party or
by which it is bound, providing for any of the events set forth in clauses (a)
through (d) above.

“Conversion” shall have the meaning ascribed to such term in Section 4.

“Conversion Date” shall have the meaning set forth in Section 4(a).

“Conversion Price” shall have the meaning set forth in Section 4(b).

“Conversion Schedule” means the Conversion Schedule in the form of Schedule 1
attached hereto.

“Conversion Shares” means, collectively, the shares of Common Stock issuable
upon conversion of this Note in accordance with the terms hereof.

“Event of Default” shall have the meaning set forth in Section 8(a).
 
“New York Courts” shall have the meaning set forth in Section 9(d).
 
“Note Register” shall have the meaning set forth in Section 2(c).

“Notice of Conversion” shall have the meaning set forth in Section 4(a).

“Optional Redemption” shall have the meaning set forth in Section 6(a).

“Optional Redemption Notice” shall have the meaning set forth in Section 6(a).

“Optional Redemption Notice Date” shall have the meaning set forth in Section
6(a).
  
“Original Issue Date” means the date of the first issuance of the Notes,
regardless of any transfers of any Note and regardless of the number of
instruments which may be issued to evidence such Notes.

“Purchase Agreement” means the Securities Purchase Agreement, dated as of
January 27, 2015 among the Company and the original Holders, as amended,
modified or supplemented from time to time in accordance with its terms.

“Qualified Financing” means, as long as there remains a balance on a Note, an
offering of equity securities pursuant to which the Company receives an
aggregate of at least $5,000,000 in gross proceeds.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

“Share Delivery Date” shall have the meaning set forth in Section 4(c)(ii).

“Trading Day” means a day on which the principal Trading Market is open for
trading.

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
MKT (formerly NYSE AMEX), the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin
Board or the Pink OTC Markets (or any successors to any of the foregoing).
 
 
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Section 2. Interest.  The Notes shall bear interest at an annual interest rate
of 10%.  All payments hereunder will be paid to the Person in whose name this
Note is registered on the records of the Company regarding registration and
transfers of this Note (the “Note Register”).

Section 3.Registration of Transfers and Exchanges.
 
a)  Different Denominations. This Note is exchangeable for an equal aggregate
principal amount of Notes of different authorized denominations, as requested by
the Holder surrendering the same; provided, that the minimum principal amount of
any replacement Note shall be $25,000.  No service charge will be payable for
such registration of transfer or exchange.
 
b)  Investment Representations. This Note has been issued subject to certain
investment representations of the original Holder set forth in the Purchase
Agreement and may be transferred or exchanged only in compliance with the
Purchase Agreement and applicable federal and state securities laws and
regulations to successor Holders who provide the same investment representations
to the Company.

c)   Reliance on Note Register. Prior to due presentment for transfer to the
Company of this Note, the Company and any agent of the Company may treat the
Person in whose name this Note is duly registered on the Note Register as the
owner hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Note is overdue, and neither the Company nor
any such agent shall be affected by notice to the contrary.
 
Section 4.Conversion.
 
a) Qualified Financing Conversion. Upon consummation of a Qualified Financing,
any outstanding principal and interest of the Note shall automatically convert,
in whole (subject to the conversion limitations set forth in Section 4(f)
hereof), into shares of Common Stock (“QF Conversion Shares”) at the QF
Conversion Price, which QF Conversion Shares shall be subject to a prohibition
from any sale, pledge or transfer for a period of six (6) month from the date of
the closing on which the Company generates an aggregate gross proceeds under the
Qualified Financing of at least $5,000,000 (“QF Conversion Share Lockup”).  In
addition, upon conversion under this Section 4(a), the Holder of the Note shall
automatically receive a warrant to purchase 100% of that number of shares of
Common Stock into which the Note automatically converts under this Section 4(a),
which warrant shall be exercisable for five years at an exercise price equal to
the LESSER of (i) Seventy Percent (70%) of the price per share of Common Stock
or per unit (assuming a unit consisting of one share of Common Stock) at which
the Company sells its securities in the Qualified Financing; or (ii)
$0.75.  Such Underlying Warrant, at the sole discretion of the Company, shall be
callable for $0.01 per share underlying the warrant if (i) the average daily
volume weighted average price (VWAP) of the Company’s Common Stock for any
twenty (20) consecutive trading days is at least 250% of the price per share of
Common Stock or per unit (assuming a unit consisting of one share of Common
Stock) at which the Company sells its securities in the Qualified Financing; and
(ii) the Company notifies the holder of such Underlying Warrant that such holder
has a 30 calendar day period in which to exercise such Underlying Warrant and
such holder does not exercise on or prior to the 30th day after the date of such
notice.  Furthermore, upon conversion under this Section 4(a), the Holder of the
Note shall receive, with respect to the QF Conversion Shares and the Common
Stock into which the Underlying Warrant is exercisable, the same registration
rights granted to the investors in the Qualified Financing.  The Holder, and any
assignee by acceptance of this Note, acknowledge and agree that, by reason of
the provisions of this paragraph, following a conversion into QF Conversion
Shares of this Note, the Holder, and any assignee, shall be subject to the QF
Conversion Share Lockup.

b) Qualified Financing Conversion Price.  The Conversion Price (the “QF
Conversion Price”) in effect upon the consummation of a Qualified Financing
shall be equal to the lesser of (i) Seventy Percent (70%) of the price per share
of Common Stock or per unit (assuming a unit consisting of one share of Common
Stock) at which the Company sells its securities in the Qualified Financing; or
(ii) the quotient obtained by dividing $35 million by the aggregate number of
outstanding shares of the Common Stock, measured on a fully-diluted basis on the
date immediately preceding the Qualified Financing effective date, but the
Excluded Shares (as described below) will be excluded from the
 
 
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calculation and shall not be deemed outstanding.  “Excluded Shares” shall mean
(i) shares issuable upon conversion of Notes or exercise of any warrants issued
in connection herewith; and (ii) shares issuable upon the conversion or exchange
of preferred stock or upon the conversion, exercise or exchange of other
securities of the Company as a result of any anti-dilution adjustments required
to be made on or after the date hereof under any charter provision, note,
warrant, agreement or otherwise.

 
c) Maturity Conversion.  So long as a Qualified Financing has not been
consummated and the Company has not repaid all outstanding principal and
interest, on the day following the Maturity Date, this Note shall be
automatically converted, in whole (subject to the conversion limitations set
forth in Section 4(f) hereof), into shares of Common Stock at the Maturity
Conversion Price.  In addition, upon conversion under this Section 4(c), the
Holder of the Note shall automatically receive a warrant to purchase 100% of
that number of shares of Common Stock into which the Note automatically converts
under this Section 4(c), which warrant shall be exercisable for five years at an
exercise price equal to 100% of the Maturity Conversion Price.  Such Underlying
Warrant, at the sole discretion of the Company, shall be callable for $0.01 per
share underlying the warrant if (i) the average daily volume weighted average
price (VWAP) of the Company’s Common Stock for any twenty (20) consecutive
trading days is at least 250% of the Maturity Conversion Price; and (ii) the
Company notifies the holder of such Underlying Warrant that such holder has a 30
calendar day period in which to exercise such Underlying Warrant and such holder
does not exercise on or prior to the 30th day after the date of such notice.
 
d) Maturity Conversion Price.  The Conversion Price (the “Maturity Conversion
Price”) in effect upon conversion under Section 4(c) shall be equal to the
quotient obtained by dividing $20 million by the aggregate number of outstanding
shares of the Common Stock, measured on a fully-diluted basis on the date
immediately preceding the Maturity Date, but the Excluded Shares will be
excluded from the calculation and shall not be deemed outstanding.

e) Mechanics of Conversion.
 
i.            Conversion Shares Issuable Upon Conversion of Principal
Amount.  The number of Conversion Shares issuable upon a conversion hereunder
shall be determined by the quotient obtained by dividing (x) the outstanding
principal amount of this Note to be converted and any accrued but unpaid
interest, as applicable, by (y) the QF Conversion Price or the Maturity
Conversion Price, as applicable.

ii.           Delivery of Certificate Upon Conversion. Not later than ten (10)
Trading Days after the date of the closing on which the Company generates an
aggregate gross proceeds under the Qualified Financing of at least $5,000,000 or
the Maturity Date (the “Share Delivery Date”), the Company shall deliver, or
cause to be delivered, to the Holder (A) a certificate or certificates
representing the Conversion Shares representing the number of Conversion Shares
being acquired upon the conversion of this Note and (B) a bank check in the
amount of any accrued and unpaid interest (if the Company has elected or is
required to pay accrued interest in cash).
 
iii.            Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of this Note.  As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such conversion, the Company shall at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the QF Conversion Price or the Maturity Conversion Price, as
applicable, or round up to the next whole share.
 
iv.           Transfer Taxes and Expenses.  The issuance of certificates for
shares of the Common Stock on conversion of this Note shall be made without
charge to the Holder hereof for any documentary stamp or similar taxes that may
be payable in respect of the issue or delivery of such certificates, provided
that, the Company shall not be required to pay any tax that may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the Holder of this Note
so converted and the Company shall not be required to issue or deliver such
certificates unless or until the Person or Persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.  The
Company shall pay all Transfer Agent fees required for processing of any
conversion hereunder.
 
 
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f) Holder’s Conversion Limitations.  The Company shall not effect any conversion
of this Note to the extent that after giving effect to such conversion, the
Holder (together with the Holder’s Affiliates, and any Persons acting as a group
together with the Holder or any of the Holder’s Affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below).  For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon conversion of this Note with respect to
which such determination is being made, but shall exclude the number of shares
of Common Stock which are issuable upon (i) conversion of the remaining,
unconverted principal amount of this Note beneficially owned by the Holder or
any of its Affiliates and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained
herein (including, without limitation, any other Notes or Underlying Warrants)
beneficially owned by the Holder or any of its Affiliates.  Except as set forth
in the preceding sentence, for purposes of this Section 4(f), beneficial
ownership shall be calculated in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder.  To the extent that
the limitation contained in this Section 4(f) applies, the determination of
whether this Note is convertible (in relation to other securities owned by the
Holder together with any Affiliates) and of which principal amount of this Note
is convertible shall be in the sole discretion of the Holder, and the acceptance
of any Conversion Shares shall be deemed to be the Holder’s determination of
whether this Note may be converted (in relation to other securities owned by the
Holder together with any Affiliates) and which principal amount of this Note is
convertible, in each case subject to the Beneficial Ownership Limitation. To
ensure compliance with this restriction, the Holder will be deemed to represent
to the Company in the event the Company requests confirmation of such beneficial
holding prior to the delivery of Conversion Shares and such Holder either does
not respond or confirms that such issuance of Conversion Shares would not
violate the restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such determination.  In
addition, a determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder.   For purposes of this Section 4(f), in
determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as stated in the most
recent of the following: (i) the Company’s most recent periodic or annual report
filed with the Commission, as the case may be, (ii) a more recent public
announcement by the Company, or (iii) a more recent written notice by the
Company or the Company’s transfer agent setting forth the number of shares of
Common Stock outstanding.  Upon the written or oral request of a Holder, the
Company shall within two (2) Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Note, by the Holder or its Affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon conversion of this Note held by the Holder.  The Holder,
upon not less than 61 days’ prior notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this Section 4(f),
provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of
the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon conversion of this Note
held by the Holder and the Beneficial Ownership Limitation provisions of this
Section 4(f) shall continue to apply.  Any such increase or decrease will not be
effective until the 61st day after such notice is delivered to the Company.  The
Beneficial Ownership Limitation provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity with the terms
of this Section 4(f) to correct this paragraph (or any portion hereof) which may
be defective or inconsistent with the intended Beneficial Ownership Limitation
contained herein or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this
paragraph shall apply to a successor holder of this Note.
 
Section 5. Events of Default.

a) “Event of Default” means, wherever used herein, any of the following events
(whatever the reason for such event and whether such event shall be voluntary or
involuntary or effected by operation of law or pursuant to any judgment, decree
or order of any court, or any order, rule or regulation of any administrative or
governmental body):

i.           any default in the payment of (A) the principal amount of any Note
or (B) interest, liquidated damages and other amounts owing to a Holder on any
Note, as and when the same shall become due and payable (whether on a Conversion
Date or the Maturity Date or by acceleration or otherwise) which default, solely
in the case of an interest payment or other default under clause (B) above, is
not cured within five (5) Trading Days;
 
 
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ii.           the Company shall fail to observe or perform any other material
covenant or agreement contained in the Notes (other than a breach by the Company
of its obligations to deliver shares of Common Stock to the Holder upon
conversion, which breach is addressed in clause (x) below) which failure is not
cured, if possible to cure, within the earlier to occur of (A) ten (10) Trading
Days after notice of such failure sent by the Holder or by any other Holder to
the Company and (B) twenty (20) Trading Days after the Company has become or
should reasonably have become aware of such failure;

iii.           a material default or event of default (subject to any grace or
cure period provided in the applicable agreement, document or instrument) shall
occur under any of the Transaction Documents;

iv.           any representation or warranty made in this Note, any other
Transaction Documents, any written statement pursuant hereto or thereto or any
other report, financial statement or certificate made or delivered to the Holder
or any other Holder shall be untrue or incorrect in any material respect as of
the date when made or deemed made;

v.           the Company or any Significant Subsidiary (as such term is defined
in Rule 1-02(w) of Regulation S-X) shall be subject to a Bankruptcy Event;

vi.           the Company shall be a party to any Change of Control Transaction;
or

vii.           any monetary judgment, writ or similar final process shall be
entered or filed against the Company, any Subsidiary or any of their respective
property or other assets for more than $100,000, and such judgment, writ or
similar final process shall remain unvacated, unbonded or unstayed for a period
of 45 calendar days.

b) Remedies Upon Event of Default. If any Event of Default occurs before the
Maturity Date, the outstanding principal amount of this Note, plus liquidated
damages, interest and other amounts owing in respect thereof through the date of
acceleration, shall become, at the Holder’s election, immediately due and
payable in cash.  Commencing five (5) days after the occurrence of any Event of
Default that results in the eventual acceleration of this Note, the interest
rate on this Note shall accrue at an interest rate equal to the lesser of 18%
per annum or the maximum rate permitted under applicable law.  Upon the payment
in full, the Holder shall promptly surrender this Note to or as directed by the
Company.  In connection with such acceleration described herein, the Holder need
not provide, and the Company hereby waives, any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law.  Such acceleration may
be rescinded and annulled by Holder at any time prior to payment hereunder and
the Holder shall have all rights as a holder of the Note until such time, if
any, as the Holder receives full payment pursuant to this Section 5(b).  No such
rescission or annulment shall affect any subsequent Event of Default or impair
any right consequent thereon.

Section 6. Miscellaneous.
 
a) Notices.  Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, or sent
by a nationally recognized overnight courier service, addressed to the Company,
at the address set forth above, or such other facsimile number or address as the
Company may specify for such purposes by notice to the Holder delivered in
accordance with this Section 6(a).  Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, by email, or sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile number,
email address or address of the Holder appearing on the books of the Company, or
if no such facsimile number or address appears on the books of the Company, at
the principal place of business of such Holder, as set forth in the Purchase
Agreement.  Any notice or other communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on any date, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (iii) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (iv) upon actual receipt by
the party to whom such notice is required to be given.
 
 
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b) Absolute Obligation. Except as expressly provided herein, no provision of
this Note shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of, liquidated damages and accrued
interest, as applicable, on this Note at the time, place, and rate, and in the
coin or currency, herein prescribed.  This Note is a direct debt obligation of
the Company.  
 
c)  Lost or Mutilated Note.  If this Note shall be mutilated, lost, stolen or
destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution
for a lost, stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such Note, and of the ownership
hereof, reasonably satisfactory to the Company.
 
d)  Governing Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Note shall be governed by and construed
and enforced in accordance with the internal laws of the State of New York,
without regard to the principles of conflict of laws thereof.  Each party agrees
that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the “New
York Courts”).  Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Note and
agrees that such service shall constitute good and sufficient service of process
and notice thereof.  Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by applicable law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Note or the transactions contemplated hereby.
If any party shall commence an action or proceeding to enforce any provisions of
this Note, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred in the investigation, preparation and prosecution of such
action or proceeding.
 
e)  Waiver.  Any waiver by the Company or the Holder of a breach of any
provision of this Note shall not operate as or be construed to be a waiver of
any other breach of such provision or of any breach of any other provision of
this Note.  The failure of the Company or the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Note on any other
occasion.  Any waiver by the Company or the Holder must be in writing.
 
f)  Severability.  If any provision of this Note is invalid, illegal or
unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances.  If it shall be found
that any interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of interest permitted
under applicable law. The Company covenants (to the extent that it may lawfully
do so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law or other law which would prohibit or forgive the Company from paying
all or any portion of the principal of or interest on this Note as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Note, and the Company (to the
extent it may lawfully do so) hereby expressly waives all benefits or advantage
of any such law, and covenants that it will not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the Holder,
but will suffer and permit the execution of every such as though no such law has
been enacted.
 
g) Next Business Day.  Whenever any payment or other obligation hereunder shall
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.

h) Headings.  The headings contained herein are for convenience only, do not
constitute a part of this Note and shall not be deemed to limit or affect any of
the provisions hereof.
 
 

 
[Signature Page Follows]

 
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IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
duly authorized officer as of the date first above indicated.
 

 
Cell Source, Inc.
       
By:
 
 
Name:  Itamar Shimrat
 
Title: Chief Executive Officer

 
 

 
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