Exhibit 10.3

 

WARRANT AGREEMENT

 

This Warrant Agreement made as of June 18, 2012, is between Medgenics, Inc., a
Delaware corporation, with offices at 555 California Street, Suite 365, San
Francisco, California 94104 (the “Company”), and Corporate Stock Transfer, Inc.
with offices at 3200 Cherry Creek Drive South, Suite 4300, Denver, Colorado
80209 (the “Warrant Agent”).

 

WHEREAS, the Company is engaged in a private placement of Common Stock (as
defined below) and Warrants (as defined below) pursuant to Regulation D
promulgated under the Securities Act of 1933, as amended (the “Act”), and, in
connection therewith, has determined to issue and deliver up to 1,458,579
warrants (the “Warrants”) to accredited investors in the private placement, each
Warrant evidencing the right of the holder thereof to purchase 0.75 of one share
of the Company’s common stock, par value $.0001 per share (the “Common Stock”),
for an exercise price equal to 120% of the closing bid price of the Common Stock
as reported on NYSE Amex for the Trading Day immediately prior to the closing of
such private placement, subject to adjustment as described herein;

 

WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange, redemption and exercise of the Warrants;

 

WHEREAS, the Company desires to provide for the form and provisions of the
Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights and immunities of the Company, the
Warrant Agent and the holders of the Warrants; and

 

WHEREAS, all acts and things have been done and performed which are necessary to
make the Warrants, when executed on behalf of the Company and countersigned by
or on behalf of the Warrant Agent, as provided herein, the legally valid and
binding obligations of the Company, and to authorize the execution and delivery
of this Warrant Agreement.

 

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

 

1.          Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company for the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in
accordance with the terms and conditions set forth in this Agreement.

 

2.           Warrants.

 

2.1           Form of Warrant. Each Warrant shall be (a) issued in registered
form only, (b) in substantially the form of Exhibit A attached hereto, the
provisions of which are incorporated herein, (c) signed by, or bear the
facsimile signature of, the Chairman of the Board or, the Chief Executive
Officer or the President, and the Treasurer, Secretary or Assistant Secretary of
the Company, and (d) shall bear a facsimile of the Company’s seal. In the event
the person whose facsimile signature has been placed upon any Warrant shall have
ceased to serve in the capacity in which such person signed the Warrant before
such Warrant is issued, it may be issued with the same effect as if he or she
had not ceased to be such at the date of issuance.

 

2.2           Effect of Countersignature. Unless and until countersigned by the
Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no
effect and may not be exercised by the holder thereof.  Warrant certificates
shall be dated the date of countersignature by the Warrant Agent.

 

 

 

 

2.3           Registration.

 

2.3.1           Warrant Register. The Warrant Agent shall maintain books
(“Warrant Register”), for the registration of the original issuance and
transfers of the Warrants. Upon the initial issuance of the Warrants, the
Warrant Agent shall issue and register the Warrants in the names of the
respective holders thereof in such denominations and otherwise in accordance
with instructions delivered to the Warrant Agent by the Company.

 

2.3.2           Registered Holder. Prior to due presentment for registration of
transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the person in whose name such Warrant shall be registered upon the Warrant
Register (“Registered Holder”), as the absolute owner of such Warrant and of
each Warrant represented thereby (notwithstanding any notation of ownership or
other writing on the warrant certificate made by anyone other than the Company
or the Warrant Agent), for the purpose of any exercise thereof, and for all
other purposes, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary.

 

3.          Terms and Exercise of Warrants.

 

3.1           Warrant Price. Each Warrant shall, when countersigned by the
Warrant Agent, entitle the Registered Holder thereof, subject to the provisions
of such Warrant and of this Warrant Agreement, to purchase from the Company the
number of shares of Common Stock stated therein, at an exercise price per whole
share equal to 120% of the closing bid price of the Common Stock as reported on
NYSE Amex for the Trading Day immediately prior to the applicable closing of
such private placement, subject to the adjustments provided in Section 4 hereof
and in the last sentence of this Section 3.1. The term “Warrant Price” as used
in this Warrant Agreement refers to the price per share at which Common Stock
may be purchased at the time a Warrant is exercised. The Company, in its sole
discretion, may lower the Warrant Price at any time prior to the Expiration Date
(as defined below) for a period of not less than 20 business days; provided,
that any such reduction shall be identical in percentage terms among all of the
Warrants.

 

3.2           Duration of Warrants. A Warrant may be exercised only during the
period (“Exercise Period”) commencing on the date that is 180 days after the
date of issuance and terminating at 5:00 p.m., New York City time, on the
Expiration Date. For purposes of this Warrant Agreement, the “Expiration Date”
shall mean the fifth anniversary of the date of issuance.  Each Warrant not
exercised on or before the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Agreement shall cease at
the close of business on the Expiration Date. The Company may extend the
duration of the Warrants by delaying the Expiration Date; provided, however,
that the Company will provide notice to registered holders of the Warrants of
such extension of not less than 20 days.

 

3.3           Exercise of Warrants.

 

3.3.1           Payment. Subject to the provisions of the Warrant and this
Warrant Agreement, a Warrant, when countersigned by the Warrant Agent, may be
exercised by the Registered Holder thereof during the Exercise Period by
surrendering it, at the office of the Warrant Agent, or at the office of its
successor as Warrant Agent, with the subscription form (“Exercise Notice”), as
set forth in the Warrant, duly executed and by paying in full, in lawful money
of the United States, by certified check made payable to the Warrant Agent, for
the benefit of the Company, or by wire transfer of immediately available funds
to an account designated by the Company and established by the Warrant Agent (or
as otherwise agreed to by the Company), the Warrant Price for each full share of
Common Stock as to which the Warrant is exercised and any and all applicable
taxes due in connection with the exercise of the Warrant, the exchange of the
Warrant for the Common Stock, and the issuance of the Common Stock (“Aggregate
Exercise Price”) provided that the Registered Holder was not eligible to or did
not notify the Warrant Agent and the Company in such Exercise Notice of the
Registered Holder’s eligibility and election to have such exercise made pursuant
to a Cashless Exercise (as defined in Section 3.3.2).  Execution and delivery of
an Exercise Notice with respect to less than all of the shares represented by
the Warrant shall have the same effect as cancellation of the original of this
Warrant and issuance of a new Warrant evidencing the right to purchase the
remaining number of shares. Execution and delivery of an Exercise Notice for all
of the then-remaining shares shall have the same effect as cancellation of the
original of the Warrant after delivery of the shares of Common Stock in
accordance with the terms hereof.

 

 

 

 

3.3.2       Cashless Exercise. Notwithstanding anything contained herein to the

contrary, during any period that the Warrants are exercisable when the
Registration Statement (as defined in the Registration Rights Agreement (as
defined in Section 7.4 below)) covering the resale of the shares of Common Stock
issuable upon exercise of the Warrants is not effective, the Holder may, in its
sole discretion, exercise such Holder’s Warrant in whole or in part and, in lieu
of making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of shares of Common Stock determined
according to the following formula (a “Cashless Exercise”):

 

  Net Number = (A x B) - (A x C)     B

 

For purposes of the foregoing formula:

 

A= the total number of shares with respect to which the Warrant is then being
exercised.

 

B= as applicable: (i) the Closing Sale Price (as defined below) of the Common
Stock on the Trading Day (as defined below) immediately preceding the date of
the applicable Exercise Notice if such Exercise Notice is (1) both executed and
delivered pursuant to Section 3.3.1 hereof on a day that is not a Trading Day or
(2) both executed and delivered pursuant to Section 3.3.1 hereof on a Trading
Day prior to the opening of “regular trading hours” (as defined in Rule
600(b)(64) of Regulation NMS promulgated under the federal securities laws) on
such Trading Day, and (ii) the Closing Sale Price of the Common Stock on the
date of the applicable Exercise Notice if the date of such Exercise Notice is a
Trading Day and such Exercise Notice is both executed and delivered pursuant to
Section 3.3.1 hereof after the close of “regular trading hours” on such Trading
Day.

 

C= the Warrant Price then in effect at the time of such exercise.

 

No fractional shares shall be issuable upon a Cashless Exercise, 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 date that the Exercise Notice is executed and delivered pursuant to
Section 3.3.1 hereof. Alternatively, in the sole discretion of the Company, the
Company may determine to round up fractional shares to the nearest whole share.
Shares issued pursuant to a Cashless Exercise shall be treated as if they were
issued upon the exercise of the Warrant.

 

3.3.3      Timing of Issuance of Certificates. Upon receipt by the Warrant Agent
of an Exercise Notice and payment of the Aggregate Exercise Price, the Warrant
Agent shall promptly (X) provided that the Warrant Agent is participating in The
Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program,
upon the request of the Registered Holder, credit such aggregate number of
shares of Common Stock to which the Registered Holder is entitled pursuant to
such exercise to the Registered Holder’s or its designee’s balance account with
DTC through its Deposit/Withdrawal at Custodian system, provided that the shares
of Common Stock to be issued upon exercise are eligible to participate in DTC
Fast Automated Securities Transfer Program, or (Y) if the Warrant Agent is not
participating in the DTC Fast Automated Securities Transfer Program or the
shares of Common Stock to be issued upon exercise are not eligible to
participate in the DTC Fast Automated Securities Transfer Program, issue and
deliver to the Registered Holder or, at the Registered Holder’s instruction
pursuant to the Exercise Notice, the Registered Holder’s agent or designee, in
each case, sent by reputable overnight courier to the address as specified in
the applicable Exercise Notice, a certificate, registered in the Company’s share
register in the name of the Registered Holder or its designee (as indicated in
the applicable Exercise Notice), for the number of shares of Common Stock to
which the Registered Holder is entitled pursuant to such exercise.

 

 

 

 

3.3.4      Stock Certificate Legend. If (a) a registration statement under the
Act with respect to the Common Stock issuable upon exercise of such Warrants is
effective and a current prospectus relating to the shares of Common Stock
issuable upon exercise of the Warrants is available for delivery to the
Registered Holders or (b) in the opinion of counsel to the Company, the exercise
of the Warrants is exempt from the registration requirements of the Act and such
securities are qualified for sale or exempt from qualification under applicable
securities laws of the states or other jurisdictions in which the Registered
Holder resides, then the Company shall deliver the shares of Common Stock
pursuant to the exercise of a Warrant free from any restrictive legend. If,
however, (a) a registration statement under the Act with respect to the Common
Stock issuable upon exercise of such Warrants is not effective or a current
prospectus relating to the shares of Common Stock issuable upon exercise of the
Warrants is not available for delivery to the Registered Holders or (b) in the
opinion of counsel to the Company, the exercise of the Warrants is not exempt
from the registration requirements of the Act and such securities are qualified
for sale or exempt from qualification under applicable securities laws of the
states or other jurisdictions in which the Registered Holder resides, or because
such exercise would be unlawful with respect to a Registered Holder in any
state, then all of the securities delivered by the Company pursuant to the
exercise of the Warrant shall contain the following restrictive legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE
TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.

 

Warrants may not be exercised by, or securities issued to, any Registered Holder
in any state in which such exercise or issuance would be unlawful.  In no event
will the Company be obligated to pay such Registered Holder any cash
consideration upon exercise (except pursuant to Section 4.5).

 

3.3.5.      Valid Issuance. All shares of Common Stock issued upon the proper
exercise or surrender of a Warrant in conformity with this Agreement shall be
validly issued, fully paid and nonassessable.

 

3.3.6      Date of Issuance. Each person or entity in whose name any such
certificate for shares of Common Stock is issued shall, for all purposes, be
deemed to have become the Registered Holder of record of such shares on the date
on which the Warrant was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

 

3.3.7     Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:

 

(a)   “Trading Day” means any day on which the Common Stock is traded on the
NYSE Amex, or, if the NYSE Amex is not the principal trading market for the
Common Stock, then on the principal securities exchange or securities market on
which the Common Stock is then traded, provided that “Trading Day” shall not
include any day on which the Common Stock is scheduled to trade on such exchange
or market for less than 4.5 hours or any day that the Common Stock is suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.
of such exchange’s or market’s local time) unless such day is otherwise
designated as a Trading Day in writing by the Registered Holder.

 

 

 

 

(b)   “Bloomberg” means Bloomberg, L.P.

 

(c)   “Closing Sale Price” means, for any security as of any date, the last
closing trade price for such security on the NYSE Amex, as reported by
Bloomberg, or, if the NYSE Amex begins to operate on an extended hours basis and
does not designate the closing trade price, then the last trade price of such
security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
the NYSE Amex is not the principal securities exchange or trading market for
such security, the last trade price of such security on the principal securities
exchange or trading market where such security is listed or traded as reported
by Bloomberg, or if the foregoing does not apply, the last trade price of such
security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no last trade price is reported
for such security by Bloomberg, the average of the ask prices of any market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.). If the Closing Sale Price cannot
be calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as determined by the Board of Directors of the Company in good faith. All
such determinations shall be appropriately adjusted for any stock dividend,
stock split, stock combination or other similar transaction during such period.

 4.            Adjustments.

 

4.1           Stock Dividends - Split-Ups. If, after the date hereof, and
subject to the provisions of Section 4.6 below, the number of outstanding shares
of Common Stock is increased by a stock dividend payable in shares of Common
Stock, or by a split-up of shares of Common Stock, or other similar event, then,
on the effective date of such stock dividend, split-up or similar event, the
number of shares of Common Stock issuable on exercise of each Warrant shall be
increased in proportion to such increase in outstanding shares of Common Stock.

 

4.2           Aggregation of Shares. If, after the date hereof, and subject to
the provisions of Section 4.6, the number of outstanding shares of Common Stock
is decreased by a consolidation, combination, reverse stock split or
reclassification of shares of Common Stock or other similar event, then, on the
effective date of such consolidation, combination, reverse stock split,
reclassification or similar event, the number of shares of Common Stock issuable
on exercise of each Warrant shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.

 

4.3           Adjustments in Warrant Price. Whenever the number of shares of
Common Stock purchasable upon the exercise of the Warrants is adjusted, as
provided in Sections 4.1 and 4.2 above, the Warrant Price shall be adjusted (to
the nearest cent) by multiplying such Warrant Price, immediately prior to such
adjustment, by a fraction, (a) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of the Warrants immediately
prior to such adjustment, and (b) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.

 

4.4           Extraordinary Dividends. If the Company, at any time during the
Exercise Period, shall pay a dividend in cash, securities or other assets to the
Registered Holders of Common Stock (or other shares of the Company’s capital
stock into which the Warrants are convertible), other than (i) as described in
Sections 4.1, 4.2 or 4.5 or (ii) regular quarterly or other periodic dividends
(any such non-excluded event being referred to herein as an “Extraordinary
Dividend”), then the Warrant Price shall be decreased, effective immediately
after the effective date of such Extraordinary Dividend, by the amount of cash
and/or the fair market value (as determined by the Company’s Board of Directors,
in good faith) of any securities or other assets paid on each share of Common
Stock in respect of such Extraordinary Dividend.

 

 

 

 

4.5           Replacement of Securities upon Reorganization, etc. In case of any
reclassification or reorganization of the outstanding shares of Common Stock
(other than a change covered by Sections 4.1 or 4.2 hereof or one that solely
affects the par value of such shares of Common Stock), or, in the case of any
merger or consolidation of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or, in the case of any sale or
conveyance to another corporation or entity of the assets or other property of
the Company as an entirety or substantially as an entirety, in connection with
which the Company is dissolved, the Registered Holders shall thereafter have the
right to purchase and receive, upon the basis and upon the terms and conditions
specified in the Warrants and in lieu of the shares of Common Stock of the
Company immediately theretofor purchasable and receivable upon the exercise of
the rights represented thereby, the kind and amount of shares of stock or other
securities or property (including cash) receivable upon such reclassification,
reorganization, merger or consolidation, or upon a dissolution following any
such sale or transfer, that the Registered Holder would have received if such
Registered Holder had exercised his, her or its Warrant(s) immediately prior to
such event; and if any reclassification also results in a change in shares of
Common Stock covered by Sections 4.1 or 4.2, then such adjustment shall be made
pursuant to Sections 4.1, 4.2, 4.3 and this Section 4.5. The provisions of this
Section 4 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other transfers.

 

4.6           Notices of Changes in Warrant. Upon every adjustment of the
Warrant Price or the number of shares issuable upon exercise of a Warrant, the
Company shall give written notice thereof to the Warrant Agent, which notice
shall state the Warrant Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. Upon the
occurrence of any event specified in Sections 4.1, 4.2, 4.4 or 4.5 the Company
shall give written notice to each Registered Holder, at the last address set
forth for such Registered Holder in the Warrant Register, of the record date or
the effective date of the event. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of such event.

 

4.7           No Fractional Shares. Notwithstanding any provision contained in
this Warrant Agreement to the contrary, the Company shall not issue fractional
shares upon exercise of Warrants. If, by reason of any adjustment made pursuant
to this Section 4, the Registered Holder of any Warrant would be entitled, upon
the exercise of such Warrant, to receive a fractional interest in a share, the
Company shall, upon such exercise, round up to the nearest whole number the
number of the shares of Common Stock to be issued to the Registered Holder.

 

4.8           Form of Warrant. The form of Warrant need not be changed because
of any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares as is
stated in the Warrants initially issued pursuant to this Agreement. However, the
Company may, at any time, in its sole discretion, make any change in the form of
Warrant that the Company may deem appropriate and that does not affect the
substance thereof, and any Warrant thereafter issued or countersigned, whether
in exchange or substitution for an outstanding Warrant or otherwise, may be in
the form as so changed.

 

4.9           Notice of Certain Transactions.  In the event that the Company
shall propose to (a) offer the Registered Holders of its Common Stock rights to
subscribe for or to purchase any securities convertible into shares of Common
Stock or shares of stock of any class or any other securities, rights or
options, (b) issue any rights, options or warrants entitling the Registered
Holders of Common Stock to subscribe for shares of Common Stock or (c) make a
tender offer, redemption offer or exchange offer with respect to the Common
Stock, the Company shall send to the Registered Holders a notice of such
proposed action or offer. Such notice shall be mailed to the Registered Holders
at their addresses as they appear in the Warrant Register, which shall specify
the record date for the purposes of such dividend, distribution or rights, or
the date such issuance or event is to take place and the date of participation
therein by the Registered Holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect of such action on the Common Stock
and on the number and kind of any other shares of stock and on other property,
if any, and the number of shares of Common Stock and other property, if any,
issuable upon exercise of each Warrant and the Warrant Price after giving effect
to any adjustment pursuant to this Article 4 which would be required as a result
of such action. Such notice shall be given as promptly as practicable after the
Board has determined to take any such action and (x) in the case of any action
covered by clause (a) or (b) above, at least 10 days prior to the record date
for determining the Registered Holders of the Common Stock for purposes of such
action or (y) in the case of any other such action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of Common Stock, whichever shall be the earlier.

 

 

 

 

 

4.10         Other Events.  If any event occurs as to which the foregoing
provisions of this Article 4 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board, fairly and
adequately protect the purchase rights of the Registered Holders of the Warrants
in accordance with the essential intent and principles of such provisions, then
the Board shall make such adjustments in the application of such provisions, in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of the Board, to protect such purchase
rights as aforesaid.

 

5.          Transfer and Exchange of Warrants.

 

5.1           Registration of Transfer. Registered Holders agree not to make any
disposition of the Warrants or any rights thereunder with the prior written
consent of the Company. With respect to any permitted transfer, the Warrant
Agent shall register the transfer, from time to time, of any outstanding Warrant
into the Warrant Register, upon surrender of such Warrant for transfer, properly
endorsed with signatures properly guaranteed and accompanied by appropriate
instructions for transfer. Upon any such transfer, a new Warrant representing an
equal aggregate number of Warrants shall be issued and the old Warrant shall be
cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered by
the Warrant Agent to the Company from time to time upon the Company’s request.

 

5.2           Procedure for Surrender of Warrants. Subject to Section 5.1,
Warrants may be surrendered to the Warrant Agent, together with a written
request for exchange or transfer, and, thereupon, the Warrant Agent shall issue
in exchange therefor one or more new Warrants as requested by the Registered
Holder of the Warrants so surrendered, representing an equal aggregate number of
Warrants; provided, however, that, in the event a Warrant surrendered for
transfer bears a restrictive legend, the Warrant Agent shall not cancel such
Warrant and shall issue new Warrants in exchange therefor until the Warrant
Agent has received an opinion of counsel for the Company stating that such
transfer may be made and indicating whether the new Warrants must also bear a
restrictive legend.

 

5.3           Fractional Warrants. The Warrant Agent shall not be required to
effect any registration of transfer or exchange which will result in the
issuance of a warrant certificate for a fraction of a warrant.

 

5.4           Service Charges. No service charge shall be made for any exchange
or registration of transfer of Warrants.

 

5.5           Warrant Execution and Countersignature. The Warrant Agent is
hereby authorized to countersign and to deliver, in accordance with the terms of
this Agreement, the Warrants required to be issued pursuant to the provisions of
this Section 5, and the Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrants duly executed on behalf of the Company
for such purpose.

 

6.           Intentionally Deleted.

 

7.           Other Provisions Relating to Rights of Holders of Warrants.

 

7.1           No Rights as Stockholder. A Warrant does not entitle the
Registered Holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other
distributions, exercise any preemptive rights to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter.

 

7.2           Lost, Stolen Mutilated or Destroyed Warrants. If any Warrant is
lost, stolen, mutilated or destroyed, the Company and the Warrant Agent may, on
such terms as to indemnity or otherwise as they may in their discretion impose
(which terms shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination, tenor and date as the
Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall
constitute a substitute contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time
enforceable by anyone.

 

 

 

 

7.3           Reservation of Common Stock. The Company shall at all times
reserve and keep available a number of its authorized but unissued shares of
Common Stock that will be sufficient to permit the exercise in full of all
outstanding Warrants issued pursuant to this Warrant Agreement.

 

7.4           Registration of Common Stock. The Company hereby agrees that the
Registered Holders shall be entitled, with respect to all shares of Common Stock
issued upon the exercise of the Warrants, to the registration rights set forth
in the Registration Rights Agreement dated as of June 18, 2012 by and between
the Company and the Registered Holders, as may be amended or supplemented from
time to time (“Registration Rights Agreement”), the terms of which are hereby
incorporated by this reference, with the same force and effect as if
specifically set forth herein.

 

8.           Concerning the Warrant Agent and Other Matters.

 

8.1           Payment of Taxes. The Company will, from time to time, promptly
pay all taxes and charges that may be imposed upon the Company or the Warrant
Agent in respect of the issuance or delivery of shares of Common Stock upon the
exercise of Warrants, but the Company shall not be obligated to pay any transfer
taxes in respect of the Warrants or such shares.

 

8.2           Resignation, Consolidation, or Merger of Warrant Agent.

 

8.2.1           Appointment of Successor Warrant Agent. The Warrant Agent, or
any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) days’
notice in writing to the Company. If the office of the Warrant Agent becomes
vacant by resignation or incapacity to act or otherwise, the Company shall
appoint, in writing, a successor Warrant Agent in place of the Warrant Agent. If
the Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such resignation or incapacity by the Warrant
Agent or by the Registered Holder of the Warrant (who shall, with such notice,
submit his, her or its Warrant for inspection by the Company), then the
Registered Holder of any Warrant may apply to the Supreme Court of the State of
New York for the County of New York for the appointment of a successor Warrant
Agent. Any successor Warrant Agent, whether appointed by the Company or by such
court, shall be a corporation organized and existing under the laws of the State
of New York, in good standing and have its principal office in the Borough of
Manhattan, City and State of New York, and be authorized under such laws to
exercise corporate trust powers and subject to supervision or examination by
federal or state authorities. After appointment, any successor Warrant Agent
shall be vested with all the authority, powers, rights, immunities, duties and
obligations of its predecessor Warrant Agent with like effect as if originally
named as Warrant Agent hereunder, without any further act or deed; but, if for
any reason it becomes necessary or appropriate, the predecessor Warrant Agent
shall execute and deliver, at the expense of the Company, an instrument
transferring to such successor Warrant Agent all the authority, powers, and
rights of such predecessor Warrant Agent hereunder; and, upon request of any
successor Warrant Agent, the Company shall make, execute, acknowledge, and
deliver any and all instruments in writing for more fully and effectually
vesting in and confirming to such successor Warrant Agent all such authority,
powers, rights, immunities, duties and obligations.

 

8.2.2           Notice of Successor Warrant Agent. In the event a successor
Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later
than the effective date of any such appointment.

 

8.2.3           Merger or Consolidation of Warrant Agent. Any corporation into
which the Warrant Agent may be merged or with which it may be consolidated or
any corporation resulting from any merger or consolidation to which the Warrant
Agent shall be a party shall be the successor Warrant Agent under this Warrant
Agreement without any further act on the part of the Company or the Warrant
Agent.

 

 

 

 

8.3           Fees and Expenses of Warrant Agent.

 

8.3.1           Remuneration. The Company agrees to pay the Warrant Agent
reasonable remuneration for its services as Warrant Agent hereunder as set forth
on Exhibit B hereto and will reimburse the Warrant Agent upon demand for all
expenditures that the Warrant Agent may reasonably incur in the execution of its
duties hereunder.

 

8.3.2           Further Assurances. The Company agrees to perform, execute,
acknowledge and deliver, or cause to be performed, executed, acknowledged and
delivered, all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Warrant Agreement.

 

8.4           Liability of Warrant Agent.

 

8.4.1           Reliance on Company Statement. Whenever, in the performance of
its duties under this Warrant Agreement, the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a statement signed by the
Chief Executive Officer, Chief Financial Officer or Chairman of the Board of the
Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such
statement for any action taken or suffered in good faith by it pursuant to the
provisions of this Warrant Agreement.

 

8.4.2           Indemnity. The Warrant Agent shall be liable hereunder only for
its own negligence, willful misconduct or bad faith. The Company agrees to
indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and reasonable counsel fees, for
anything done or omitted by the Warrant Agent in the execution of this Warrant
Agreement, except as a result of the Warrant Agent’s negligence, willful
misconduct or bad faith.

 

8.4.3           Exclusions. The Warrant Agent shall have no responsibility with
respect to the validity of this Warrant Agreement or with respect to the
validity or execution of any Warrant (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Warrant Agreement or in any Warrant; nor shall it be
responsible to make any adjustments required under the provisions of Section 4
hereof or responsible for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment; nor shall it, by any act hereunder, be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Warrant Agreement or any Warrant
or as to whether any shares of Common Stock will when issued be valid and fully
paid and nonassessable.

 

8.5           Acceptance of Agency. The Warrant Agent hereby accepts the agency
established by this Warrant Agreement and agrees to perform the same upon the
terms and conditions herein set forth and, among other things, shall account
promptly to the Company with respect to Warrants exercised and concurrently
account for, and pay to the Company, all moneys received by the Warrant Agent
for the purchase of shares of the Company’s Common Stock through the exercise of
Warrants.

 

9.           Miscellaneous Provisions.

 

9.1           Successors. All the covenants and provisions of this Warrant
Agreement by or for the benefit of the Company or the Warrant Agent shall bind
and inure to the benefit of their respective successors and assigns.

 

 

 

 

9.2           Notices. Any notice, statement or demand authorized by this
Warrant Agreement to be given or made by the Warrant Agent or by the Registered
Holder of any Warrant to or on the Company shall be delivered by hand or sent by
registered or certified mail or overnight courier service, addressed (until
another address is filed in writing by the Company with the Warrant Agent) as
follows:

 

Medgenics, Inc.

555 California Street, Suite 365

San Francisco, California 94104

Attn: Clarence “Butch” Dellio, Chief Operating Officer

 

Any notice, statement or demand authorized by this Warrant Agreement to be given
or made by the holder of any Warrant or by the Company to or on the Warrant
Agent shall be delivered by hand or sent by registered or certified mail or
overnight courier service, addressed (until another address is filed in writing
by the Warrant Agent with the Company), as follows:

 

Corporate Stock Transfer, Inc.

3200 Cherry Creek Drive South

Suite 430

Denver, Colorado 80209

Attn: Carylyn Bell

 

Any notice, sent pursuant to this Warrant Agreement shall be effective, if
delivered by hand, upon receipt thereof by the party to whom it is addressed, if
sent by overnight courier, on the next business day of the delivery to the
courier, and if sent by registered or certified mail on the third day after
registration or certification thereof.

 

9.3           Applicable Law. The validity, interpretation, and performance of
this Warrant Agreement and of the Warrants shall be governed in all respects by
the laws of the State of New York, without giving effect to conflict of laws.
The Company hereby agrees that any action, proceeding or claim against it
arising out of or relating in any way to this Warrant Agreement shall be brought
and enforced in the courts of the State of New York or the United States
District Court for the Southern District of New York, and irrevocably submits to
such jurisdiction, which jurisdiction shall be exclusive. The Company hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it at
the address set forth in Section 9.2 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding or claim.

 

9.4           Persons Having Rights under this Warrant Agreement. Nothing in
this Warrant Agreement expressed and nothing that may be implied from any of the
provisions hereof is intended, or shall be construed, to confer upon, or give
to, any person or corporation other than the parties hereto and the Registered
Holders of the Warrants, any right, remedy, or claim under or by reason of this
Warrant Agreement or of any covenant, condition, stipulation, promise, or
agreement hereof. All covenants, conditions, stipulations, promises, and
agreements contained in this Agreement shall be for the sole and exclusive
benefit of the parties hereto and their successors and assigns and of the
Registered Holders of the Warrants.

 

9.5           Examination of the Warrant Agreement. A copy of this Warrant
Agreement shall be available at all reasonable times at the office of the
Warrant Agent for inspection by the Registered Holder of any Warrant. The
Warrant Agent may require any such Registered Holder to submit his, her or its
Warrant for inspection.

 

9.6           Counterparts- Facsimile Signatures. This Warrant Agreement may be
executed in any number of counterparts, and each of such counterparts shall, for
all purposes, be deemed to be an original, and all such counterparts shall
together constitute one and the same instrument. Facsimile signatures shall
constitute original signatures for all purposes of this Warrant Agreement.

 

 

 

 

9.7           Effect of Headings. The section headings herein are for
convenience only and are not part of this Warrant Agreement and shall not affect
the interpretation thereof.

 

9.8           Amendments.

 

9.8.1           This Agreement and any Warrant certificate may be amended by the
parties hereto by executing a supplemental warrant agreement (a “Supplemental
Agreement”), without the consent of any of the Registered Holders, for the
purpose of (i) curing any ambiguity, or curing, correcting or supplementing any
defective provision contained herein, or making any other provisions with
respect to matters or questions arising under this agreement that is not
inconsistent with the provisions of this agreement or the Warrant certificates,
(ii) evidencing the succession of another corporation to the Company and the
assumption by any such successor of the covenants of the Company contained in
this agreement and the Warrants, (iii) evidencing and providing for the
acceptance of appointment by a successor Warrant Agent with respect to the
Warrants, (iv) adding to the covenants of the Company for the benefit of the
Registered Holders or surrendering any right or power conferred upon the Company
under this Agreement, or (viii) amending this agreement and the Warrants in any
manner that the Company may deem to be necessary or desirable and that will not
adversely affect the interests of the Registered Holders in any material
respect.

 

9.8.2           The Company and the Warrant Agent may amend this Warrant
Agreement and the Warrants by executing a Supplemental Agreement with the
consent of the Registered Holders of not fewer than a majority of the
unexercised Warrants affected by such amendment, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Registered
Holders under this Warrant Agreement; provided, however, that, without the
consent of each of the Registered Holders affected thereby, no such amendment
may be made that (i) changes the Warrants so as to reduce the number of shares
purchasable upon exercise of the Warrants or so as to increase the Warrant Price
(other than as provided by Section 4), (ii) shortens the period of time during
which the Warrants may be exercised, (iii) otherwise adversely affects the
exercise rights of the Registered Holders in any material respect, or (iv)
reduces the number of unexercised Warrants the Registered Holders of which must
consent for amendment of this agreement or the Warrants.

 

9.9           Severability. This Warrant Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Warrant Agreement or of any other
term or provision hereof. Furthermore, in lieu of any such invalid or
unenforceable term or provision, the parties hereto intend that there shall be
added as a part of this Warrant Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and
enforceable.

 

 

 

 

IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the parties
hereto as of the day and year first above written.

 

MEDGENICS, INC.

  

By:  /s/ Andrew L. Pearlman     Andrew L. Pearlman, Chief Executive Officer    
  CORPORATE STOCK TRANSFER, INC.         By:  /s/ Carylyn Bell     Carylyn Bell,
President