exv4w3



 




Exhibit 4.3




NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE
SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. NEITHER THE WARRANTS NOR SUCH
SHARES MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT, OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.



WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK




			
	 	 	 
	No. 1
	 	___Shares






THIS CERTIFIES that, for value received, ___(the “Holder”), is entitled to
subscribe for and purchase from ___, a ___corporation (the “Company”), upon the terms and
conditions set forth herein, at any time or from time to time after the date hereof, and before
5:00 p.m. on ___ ___, 2011, Pacific Standard time (the “Exercise Period”), ___(___) shares of
common stock, par value $.001 per share, of the Company (“Common Stock”), at an exercise price of
$1.00 per share (the “Exercise Price”). This Warrant is being issued in connection with the Holder
acting as placement agent in connection with the sale of up to 12,000,000 shares of Common Stock
pursuant to a Confidential Private Placement Memorandum dated August 3, 2006, of International Stem
Cell Corporation. As used herein, the term “this Warrant” shall mean and include this Warrant and
any Warrant or Warrants hereafter issued as a consequence of the exercise or transfer of this
Warrant in whole or in part.



The number of shares of Common Stock issuable upon exercise of the Warrants (the “Warrant
Shares”) and the Exercise Price may be adjusted from time to time as hereinafter set forth.



1. This Warrant may be exercised during the Exercise Period, as to the whole or any lesser
number of the respective whole Warrant Shares, as follows:



(a) by the surrender of this Warrant (with the form of election at the end hereof duly
executed) to the Company at its office as set forth in the form of election attached hereto, or at
such other place as is designated in writing by the Company, together with a certified or bank
cashier’s check payable to the order of the Company in an amount equal to the Exercise Price
multiplied by the number of respective Warrant Shares for which this Warrant is being exercised;
or



(b) by surrender of this Warrant (with the notice of cashless exercise at the end hereof duly
executed) to the Company at its office as set forth in the notice of cashless exercise attached
hereto, or at such other place as is designated in writing by the Company, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as follows:



X = Y (A-B)/A


 


 









 






where:




X = the number of Warrant Shares to be issued to the Holder.




Y = the number of Warrant Shares with respect to which this Warrant is being
exercised.




A = the closing sale price of the Common Stock for the trading day
immediately prior to the date of exercise.




B = the Exercise Price.



2. Upon each exercise of the Holder’s rights to purchase Warrant Shares, either pursuant to
Section 1(a) or (b) above, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of the Company shall
then be closed or certificates representing such Warrant Shares shall not then have been actually
delivered to the Holder. For purposes of Rule 144 promulgated under the Securities Act of 1933, as
amended (the “Act”), it is intended, understood and acknowledged that the Warrant Shares issued in
a cashless exercise transaction pursuant to Section 1(b) above shall be deemed to have been
acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date of the Warrant. As soon as practicable after each such exercise of
this Warrant and payment of the Exercise Price, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such exercise, registered in the
name of the Holder or its designee. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the right of the Holder to purchase the balance of the Warrant Shares (or portions
thereof) subject to purchase hereunder.



3. Any Warrants issued upon the transfer or exercise in part of this Warrant shall be numbered
and shall be registered in a Warrant Register as they are issued. The Company shall be entitled to
treat the registered holder of any Warrant on the Warrant Register as the owner in fact thereof for
all purposes and shall not be bound to recognize any equitable or other claim to or interest in
such Warrant on the part of any other person, and shall not be liable for any registration or
transfer of Warrants which are registered or to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or with the knowledge of
such facts that its participation therein amounts to bad faith. This Warrant shall be transferable
only on the books of the Company upon delivery thereof duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence of succession, assignment,
or authority to transfer. In all cases or transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence of his or its authority shall
be produced. Upon any registration of transfer, the Company shall deliver a new Warrant or
Warrants to the person entitled thereto. This Warrant may be exchanged, at the option of the
Holder thereof, for another Warrant, or other Warrants of different denominations, of like tenor
and representing in the aggregate the right to purchase a like number of Warrant Shares (or
portions thereof), upon surrender to the Company or its duly authorized agent. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be transferred on its books to
any person if, in the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Act and the rules and regulations thereunder.


 


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4. The Company shall at all times reserve and keep available out of its authorized and
unissued Common Stock, solely for the purpose of providing for the exercise of the rights to
purchase all Warrant Shares granted pursuant to the Warrants, such number of shares of Common Stock
as shall, from time to time, be sufficient therefor. The Company covenants that all shares of
Common Stock issuable upon exercise of this Warrant, upon receipt by the Company of the full
Exercise Price therefor if such exercise is pursuant to Section 1(a) above, or upon receipt by the
Company of the notice of cashless exercise duly executed if such exercise is pursuant to Section
1(b) above, shall be validly issued, fully paid, non-assessable, and free of preemptive rights.



5. (a) In case the Company shall at any time after the date the Warrants were first issued (i)
declare a dividend on the outstanding Common Stock payable in shares of its capital stock, (ii)
subdivide the outstanding Common Stock, (iii) combine the outstanding Common Stock into a smaller
number of shares, or (iv) issue any shares of its capital stock by reclassification of the Common
Stock (including any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the Exercise Price, and the number
of Warrant Shares issuable upon exercise of this Warrant, in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination, or reclassification,
shall be proportionately adjusted so that the Holder after such time shall be entitled to receive
the aggregate number and kind of shares which, if such Warrant had been exercised immediately prior
to such time, he would have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification. Such adjustment shall be made
successively whenever any event listed above shall occur.



(b) In case the Company shall issue or fix a record date for the issuance to all holders of
Common Stock of rights, options, or warrants to subscribe for or purchase Common Stock (or
securities convertible into or exchangeable for Common Stock) at a price per share (or having a
conversion or exchange price per share, if a security convertible into or exchangeable for Common
Stock) less than the Exercise Price per share of Common Stock on such record date, then, in each
case, the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on such record date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock so to be offered (or the
aggregate initial conversion or exchange price of the convertible or exchangeable securities so to
be offered) would purchase at such current Exercise Price and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the number of additional
shares of Common Stock to be offered for subscription or purchase (or into which the convertible or
exchangeable securities so to be offered are initially



 


3









 






convertible or exchangeable). Such
adjustment shall become effective at the close of business on such record date; provided,
however, that, to the extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price shall be readjusted
after the expiration of such rights, options, or warrants (but only with respect to Warrants
exercised after such expiration), to the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights, options, or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) actually issued. In case any subscription price may be
paid in a consideration part or all of which shall be in a form other
than cash, the value of such consideration shall be as determined in good faith by the board
of directors of the Company, whose determination shall be conclusive absent manifest error. Shares
of Common Stock owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.



(c) In case the Company shall distribute to all holders of Common Stock (including any such
distribution made to the stockholders of the Company in connection with a consolidation or merger
in which the Company is the continuing corporation) evidences of its indebtedness or assets (other
than cash dividends or distributions and dividends payable in shares of Common Stock), or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities convertible into or
exchangeable for shares of Common Stock (excluding those with respect to the issuance of which an
adjustment of the Exercise Price is provided pursuant to Section 5(b) hereof), then, in each case,
the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior
to the record date for the determination of stockholders entitled to receive such distribution by a
fraction, the numerator of which shall be the Exercise Price per share of Common Stock on such
record date, less the fair market value (as determined in good faith by the board of directors of
the Company, whose determination shall be conclusive absent manifest error) of the portion of the
evidences of indebtedness or assets so to be distributed, or of such rights, options, or warrants
or convertible or exchangeable securities, applicable to one share, and the denominator of which
shall be such current Exercise Price per share of Common Stock. Such adjustment shall be made
whenever any such distribution is made, and shall become effective on the record date for the
determination of shareholders entitled to receive such distribution.



(d) In case the Company shall issue shares of Common Stock or rights, options, or warrants to
subscribe for or purchase Common Stock, or securities convertible into or exchangeable for Common
Stock (excluding shares, rights, options, warrants, or convertible or exchangeable securities
issued or issuable (i) in any of the transactions with respect to which an adjustment of the
Exercise Price is provided pursuant to Sections 5(a), 5(b) or 5(c) above or (ii) upon exercise of
the Warrant), at a price per share (determined, in the case of such rights, options, warrants, or
convertible or exchangeable securities, by dividing (x) the total amount received or receivable by
the Company in consideration of the sale and issuance of such rights, options, warrants, or
convertible or exchangeable securities, plus the minimum aggregate consideration payable to the
Company upon exercise, conversion, or exchange thereof, by (y) the maximum number of shares covered
by such rights, options, warrants, or convertible or



 


4









 






exchangeable securities) lower than the
Exercise Price per share of Common Stock in effect immediately prior to such issuance, then the
Exercise Price shall be reduced on the date of such issuance to a price (calculated to the nearest
cent) determined by multiplying the Exercise Price in effect immediately prior to such issuance by
a fraction, (iii) the numerator of which shall be an amount equal to the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such issuance plus (B) the quotient
obtained by dividing the consideration received by the Company upon such issuance by such current
Exercise Price, and (iv) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such issuance. For the purposes of such adjustments, the
maximum number of shares which the holders of any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to initially subscribe for or purchase or convert or
exchange such securities into shall be deemed to be issued and outstanding as of the date of such
issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration received by the
Company for such rights, options, warrants, or convertible or exchangeable securities, plus the
minimum aggregate consideration or premiums stated in such rights, options, warrants, or
convertible or exchangeable securities to be paid for the shares covered thereby. No further
adjustment of the Exercise Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights, options, or warrants or on conversion or exchange of such
convertible or exchangeable securities. On the expiration or the termination of such rights,
options, or warrants, or the termination of such right to convert or exchange, the Exercise Price
shall be readjusted (but only with respect to Warrants exercised after such expiration or
termination) to such Exercise Price as would have obtained had the adjustments made upon the
issuance of such rights, options, warrants, or convertible or exchangeable securities been made
upon the basis of the delivery of only the number of shares of Common Stock actually delivered upon
the exercise of such rights, options, or warrants or upon the conversion or exchange of any such
securities; and on any change of the number of shares of Common Stock deliverable upon the exercise
of any such rights, options, or warrants or conversion or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by the Company upon such
exercise, conversion, or exchange, including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Exercise Price, as then in effect, shall forthwith be
readjusted (but only with respect to Warrants exercised after such change) to such Exercise Price
as would have been obtained had an adjustment been made upon the issuance of such rights, options,
or warrants not exercised prior to such change, or securities not converted or exchanged prior to
such change, on the basis of such change. In case the Company shall issue shares of Common Stock
or any such rights, options, warrants, or convertible or exchangeable securities for a
consideration consisting, in whole or in part, of property other than cash or its equivalent, then
the “price per share” and the “consideration received by the Company” for purposes of the first
sentence of this Section 5(d) shall be as determined in good faith by the board of directors of the
Company, whose determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary shall not be
deemed outstanding for the purpose of any such computation.


 


5









 





(e) No adjustment in the Exercise Price shall be required if such adjustment is less than
$.05; provided, however, that any adjustments which by reason of this Section 5 are
not required to be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 5 shall be made to the nearest cent or to the
nearest one-thousandth of a share, as the case may be.



(f) In any case in which this Section 5 shall require that an adjustment in the Exercise Price
be made effective as of a record date for a specified event, the Company may elect to defer, until
the occurrence of such event, issuing to the Holder, if the Holder exercised this Warrant after
such record date, the shares of Common Stock, if any, issuable upon such exercise over and above
the shares of Common Stock, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that the Company shall
deliver to the Holder a due bill or other appropriate instrument evidencing the Holder’s right to
receive such additional shares upon the occurrence of the event requiring such adjustment.



(g) Upon each adjustment of the Exercise Price as a result of the calculations made in
Sections 5(b), 5(c) or 5(d) hereof, this Warrant shall thereafter evidence the right to purchase,
at the adjusted Exercise Price, that number of shares (calculated to the nearest thousandth)
obtained by dividing (A) the product obtained by multiplying the number of shares purchasable upon
exercise of this Warrant prior to adjustment of the number of shares by the Exercise Price in
effect prior to adjustment of the Exercise Price by (B) the Exercise Price in effect after such
adjustment of the Exercise Price.



(h) Whenever there shall be an adjustment as provided in this Section 5, the Company shall
promptly cause written notice thereof to be sent by registered mail, postage prepaid, to the
Holder, at its address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer’s certificate setting forth the number of Warrant Shares purchasable upon
the exercise of this Warrant and the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment and the computation thereof, which officer’s
certificate shall be conclusive evidence of the correctness of any such adjustment absent manifest
error.



6. (a) In case of any consolidation with or merger of the Company with or into another
corporation (other than a merger or consolidation in which the Company is the surviving or
continuing corporation), or in case of any sale, lease, or conveyance to another corporation of the
property and assets of any nature of the Company as an entirety or substantially as an entirety,
such successor, leasing, or purchasing corporation, as the case may be, shall (i) execute with the
Holder an agreement providing that the Holder shall have the right thereafter to receive upon
exercise of this Warrant solely the kind and amount of shares of stock and other securities,
property, cash, or any combination thereof receivable upon such consolidation, merger, sale, lease,
or conveyance by a holder of the number of shares of Common Stock for which this Warrant; might
have been exercised immediately prior to such consolidation, merger, sale, lease, or conveyance and
(ii) make effective provision in its certificate of incorporation or otherwise, if necessary, to
effect such agreement. Such agreement shall provide for adjustments which shall be as nearly
equivalent as practicable to the adjustments in Section 5.


 


6









 





(b) In case of any reclassification or change of the shares of Common Stock issuable upon
exercise of this Warrant (other than a change in par value or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change in the shares into
two or more classes or series of shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation and in which there
is a reclassification or change (including a change to the right to receive cash or other property)
of the shares of Common Stock (other than a change in par value, or from no par value to a
specified par value, or as a result of a subdivision or combination, but including any change in
the shares into two or more classes or series of shares), the Holder shall have the right
thereafter to receive upon exercise of this Warrant solely the kind and amount of shares of stock
and other securities, property, cash, or any combination thereof receivable upon such
reclassification, change, consolidation, or merger by a holder of the number of shares of Common
Stock for which this Warrant might have been exercised immediately prior to such reclassification,
change, consolidation, or merger. Thereafter, appropriate provision shall be made for adjustments
which shall be as nearly equivalent as practicable to the adjustments in Section 5.



(c) The above provisions of this Section 6 shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive consolidations, mergers,
sales, leases or conveyances.



7. In case at any time the Company shall propose:




(a) to pay any dividend or make any distribution on shares of Common Stock in shares of
Common Stock or make any other distribution (other than regularly scheduled cash dividends
which are not in a greater amount per share than the most recent such cash dividend) to all
holders of Common Stock; or




(b) to issue any rights, warrants, or other securities to all holders of Common Stock
entitling them to purchase any additional shares of Common Stock or any other rights,
warrants, or other securities; or




(c) to effect any reclassification or change of outstanding shares of Common Stock, or
any consolidation, merger, sale, lease, or conveyance of property, described in Section 6;
or




(d) to effect any liquidation, dissolution, or winding-up of the Company; or




(e) to take any other action which would cause an adjustment to the Exercise Price;


 


7









 





then, and in any one or more of such cases, the Company shall give written notice thereof, by
registered mail, postage prepaid, to the Holder at the Holder’s address as it shall appear in the
Warrant Register, mailed at least 15 days prior to (i) the date as of which the holders of record
of shares of Common Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, (ii) the date on which any such
reclassification, change of outstanding shares of Common Stock, consolidation, merger, sale, lease,
conveyance of property, liquidation, dissolution, or winding-up is expected to become effective,
and the date as of which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any, deliverable upon such
reclassification, change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution, or winding-up, or (iii) the date of such action which would
require an adjustment to the Exercise Price.



8. (a) If at any time prior to the expiration of the Exercise Period, the Company shall file a
registration statement (other than a registration statement on Form S-4, Form S-8 or any successor
form) with the U.S. Securities and Exchange Commission (the “Commission”) while any Registrable
Securities (as hereinafter defined) are outstanding, the Company shall give all the then holders of
any Registrable Securities (the “Eligible Holders”) at least 30 days prior written notice of the
filing of such registration statement. If requested by any Eligible Holder in writing within 20
days after receipt of any such notice, the Company shall, at the Company’s sole expense (other than
the fees and disbursements of counsel for the Eligible Holders and the underwriting discounts, if
any, payable in respect of the Registrable Securities sold by any
Eligible Holder), register or qualify all or, at each Eligible Holder’s option, any portion of
the Registrable Securities of any Eligible Holders who shall have made such request, concurrently
with the registration of such other securities, all to the extent requisite to permit the public
offering and sale of the Registrable Securities through the facilities of all appropriate
securities exchanges and the over-the-counter market, and will use its best efforts through its
officers, directors, auditors, and counsel to cause such registration statement to become effective
as promptly as practicable. Notwithstanding the foregoing, if the managing underwriter of any such
offering shall advise the Company in writing that, in its opinion, the distribution of all or a
portion of the Registrable Securities requested to be included in the registration concurrently
with the securities being registered by the Company would materially adversely affect the
distribution of such securities by the Company for its own account, then any Eligible Holder who
shall have requested registration of his or its Registrable Securities shall delay the offering and
sale of such Registrable Securities (or the portions thereof so designated by such managing
underwriter) for such period, not to exceed 90 days (the “Delay Period”), as the managing
underwriter shall request, provided that no such delay shall be required as to any Registrable
Securities if any securities of the Company are included in such registration statement and
eligible for sale during the Delay Period for the account of any person other than the Company and
any Eligible Holder unless the securities included in such registration statement and eligible for
sale during the Delay Period for such other person shall have been reduced pro rata to the
reduction of the Registrable Securities which were requested to be included and eligible for sale
during the Delay Period in such registration. As used herein, “Registrable Securities” shall mean
the Warrants and the Warrant Shares which, in each case, have not been previously sold pursuant to
a registration statement or Rule 144 promulgated under the Act.


 


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(b) If, at any time prior to the expiration of the Exercise Period, the Company shall receive
a written request, from Eligible Holders who in the aggregate own (or upon exercise of all Warrants
then outstanding or issuable would own) 50% of the total number of shares of Common Stock then
included (or upon such exercises would be included) in the Registrable Securities (the “Majority
Holders”), to register the sale of all or part of such Registrable Securities, the Company shall,
as promptly as practicable, prepare and file with the Commission a registration statement
sufficient to permit the public offering and sale of the Registrable Securities through the
facilities of all appropriate securities exchanges and the over-the-counter market, and will use
its best efforts through its officers, directors, auditors, and counsel to cause such registration
statement to become effective as promptly as practicable; provided, however, that
the Company shall only be obligated to file one such registration statement for which all expenses
incurred in connection with such registration (other than the fees and disbursements of counsel for
the Eligible Holders and underwriting discounts, if any, payable in respect of the Registrable
Securities sold by the Eligible Holders) shall be borne by the Company. The Company shall not be
obligated to effect any registration of its securities pursuant to this Section 8(b) within six
months after the effective date of a previous registration statement prepared and filed in
accordance with Sections 8(a) or 8(b). Within three business days after receiving any request
contemplated by this Section 8(b), the Company shall give written notice to all the other Eligible
Holders, advising each of them that the Company is proceeding with such registration and offering
to include therein all or any portion of any such other Eligible Holder’s Registrable Securities,
provided that the Company receives a written request to do so from such Eligible Holder within 30
days after receipt by him or it of the Company’s notice.



(c) In the event of a registration pursuant to the provisions of this Section 8, the Company
shall use its best efforts to cause the Registrable Securities so registered to be registered or
qualified for sale under the securities or blue sky laws of such jurisdictions as the Eligible
Holder or such holders may reasonably request; provided, however, that the Company
shall not be required to qualify to do business in any state by reason of this Section 8(c) in
which it is not otherwise required to qualify to do business.



(d) The Company shall keep effective any registration or qualification contemplated by this
Section 8 and shall from time to time amend or supplement each applicable registration statement,
preliminary prospectus, final prospectus, application, document, and communication for such period
of time as shall be required to permit the Eligible Holders to complete the offer and sale of the
Registrable Securities covered thereby. The Company shall in no event be required to keep any such
registration or qualification in effect for a period in excess of nine months from the date on
which the Eligible Holders are first free to sell such Registrable Securities; provided,
however, that, if the Company is required to keep any such registration or qualification in
effect with respect to securities other than the Registrable Securities beyond such period, the
Company shall keep such registration or qualification in effect as it relates to the Registrable
Securities for so long as such registration or qualification remains or is required to remain in
effect in respect of such other securities.


 


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(e) In the event of a registration pursuant to the provisions of this Section 8, the Company
shall furnish to each Eligible Holder such number of copies of the registration statement and of
each amendment and supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and each supplement or
amendment thereto (including each preliminary prospectus), all of which shall conform to the
requirements of the Act and the rules and regulations thereunder, and such other documents, as any
Eligible Holder may reasonably request to facilitate the disposition of the Registrable Securities
included in such registration.



(f) In the event of a registration pursuant to the provisions of this Section 8, the Company
shall furnish each Eligible Holder of any Registrable Securities so registered with an opinion of
its counsel (reasonably acceptable to the Eligible Holders) to the effect that (i) the registration
statement has become effective under the Act and no order suspending the effectiveness of the
registration statement, preventing or suspending the use of the registration statement, any
preliminary prospectus, any final prospectus, or any amendment or supplement thereto has been
issued, nor has the Commission or any securities or blue sky authority of any jurisdiction
instituted or threatened to institute any proceedings with respect to such an order, (ii) the
registration statement and each prospectus forming a part thereof (including each preliminary
prospectus), and any amendment or supplement thereto, complies as to form with the Act and the
rules and regulations thereunder, and (iii) such counsel has no knowledge of any material
misstatement or omission in such registration statement or any prospectus, as amended or
supplemented. Such opinion shall also state the jurisdictions in which the Registrable Securities
have been registered or qualified for sale pursuant to the provisions of Section 8(c).



(g) In the event of a registration pursuant to the provision of this Section 8, the Company
shall enter into a cross-indemnity agreement and a contribution agreement, each in customary form,
with each underwriter, if any, and, if requested, enter into an underwriting
agreement containing conventional representations, warranties, allocation of expenses, and
customary closing conditions, including, but not limited to, opinions of counsel and accountants’
cold comfort letters, with any underwriter who acquires any Registrable Securities.




(h) In the event of a registration pursuant to the provisions of this Section 8:



(i) each Eligible Holder shall furnish to the Company in writing such appropriate information
(relating to such Eligible Holder and the intention of such Eligible Holder as to proposed methods
of sale or other disposition of their shares of Common Stock) and the identity of and compensation
to be paid to any proposed underwriters to be employed in connection therewith as the Company, any
underwriter, or the Commission or any other regulatory authority may request;



(ii) the Eligible Holders shall enter into the usual and customary form of underwriting
agreement agreed to by the Company and any underwriter with respect to any such offering, if
required, and such underwriting agreement shall contain the customary rights of indemnity between
the Company, the underwriters, and such Eligible Holders;


 


10









 





(iii) each Eligible Holder shall agree that he shall execute, deliver and/or file with or
supply the Company, any underwriters, the Commission and/or any state or other regulatory authority
such information, documents, representations, undertakings and/or agreements necessary to carry out
the provisions of the registration covenants contained in this Section 8 and/or to effect the
registration or qualification of his or its Registrable Securities under the Act and/or any of the
laws and regulations of any state of governmental instrumentality;



(iv) the Company’s obligation to include any Registrable Securities in a registration
statement shall be subject to the written agreement of each holder thereof to offer such securities
in the same manner and on the same terms and conditions as the other securities of the same class
are being offered pursuant to the registration statement, if such shares are being underwritten;



(v) in the event that all the Registrable Securities have not been sold on or prior to the
expiration of the period specified in Section 8(d) above, the Company may de-register by
post-effective amendment any Registrable Securities covered by the registration statement, but not
sold on or prior to such date. The Company agrees that it will notify each holder of Registrable
Securities of the filing and effective date of such post-effective amendment; and



(vi) each Eligible Holder agrees that upon notification by the Company that the prospectus in
respect to any public offering covered by the provisions hereof is in need of revision, such
Eligible Holder shall immediately upon receipt of such notification (x) cease to offer or sell any
securities of the Company which must be accompanied by such prospectus, (y) return all such
prospectuses in such Eligible Holder’s hands to the Company, and (z) not offer or sell any
securities of the Company until such Holder has been provided with a current prospectus and the
Company has given such Eligible Holder notification permitting such Eligible Holder to resume
offers and sales.



(i) The Company agrees that until all the Registrable Securities have been sold under a
registration statement or pursuant to Rule 144 under the Act, it shall keep current in filing all
reports, statements and other materials required to be filed with the Commission to permit holders
of the Registrable Securities to sell such securities under Rule 144.



(j) Except for rights granted to holders of the Warrants, the Company will not, without the
written consent of the Majority Holders, grant to any persons the right to request the Company to
register any securities of the Company, provided that the Company may grant such registration
rights to other persons so long as such rights are subordinate or pari passu to the rights of the
Eligible Holders.


 


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9. (a) Subject to the conditions set forth below, the Company agrees to indemnify and hold
harmless each Eligible Holder, its officers, directors, partners, employees, agents and counsel,
and each person, if any, who controls any such person within the meaning of Section 15 of the Act
or Section 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from and
against any and all loss, liability, charge, claim, damage, and expense whatsoever (which shall
include, for all purposes of this Section 9, but not be limited to, attorneys’ fees and any and all
reasonable expense whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), as and when incurred, arising out of, based upon, or in
connection with: (i) any untrue statement or alleged untrue statement of a material fact contained
(A) in any registration statement, preliminary prospectus, or final prospectus (as from time to
time amended and supplemented), or any amendment or supplement thereto, relating to the sale of any
of the Registrable Securities, or (B) in any application or other document or communication (in
this Section 9 collectively called an “application”) executed by or on behalf of the Company or
based upon written information furnished by or on behalf of the Company filed in any jurisdiction
in order to register or qualify any of the Registrable Securities under the securities or blue sky
laws thereof or filed with the Commission or any securities exchange; or (ii) any omission or
alleged omission to state a material fact required to be stated in any document referenced in
clause (A) or (B) above or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to such Eligible Holder by or on behalf of such person
expressly for inclusion in any registration statement, preliminary prospectus, or final prospectus,
or any amendment or supplement thereto, or in any application, as the case may be; or (iii) any
breach of any representation, warranty, covenant, or agreement of the Company contained in this
Warrant. The foregoing agreement to indemnify shall be in addition to any liability the Company
may otherwise have, including liabilities arising under this Warrant.



If any action is brought against any Eligible Holder or any of its officers, directors,
partners, employees, agents, or counsel, or any controlling persons of such person (an “indemnified
party”) in respect of which indemnity may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the Company from any
liability other than pursuant to this Section 9(a), except to the extent it may have been
prejudiced in any material respect by such failure) and the Company shall promptly assume the
defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses. Such indemnified
party or parties shall have the right to employ its or their own counsel in any such case, but the
fees and expenses of such counsel shall be at the expense of such indemnified party or parties
unless the employment of such counsel shall have been authorized in writing by the Company in
connection with the defense of such action or the Company shall not have promptly employed counsel
reasonably satisfactory to such indemnified party or parties to have charge of the defense of such
action or such indemnified party or parties shall have reasonably concluded that there may be one
or more legal defenses available to it or them or to other indemnified parties which



 


12









 






are different
from or additional to those available to the Company, in any of which events such fees and expenses
shall be borne by the Company and the Company shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties. Anything in this Section 10 to the
contrary notwithstanding, the Company shall not be liable for any settlement of any such claim or
action effected without its written consent, which shall not be unreasonably withheld. The Company
shall not, without the prior written consent of each indemnified party that is not released as
described in this sentence, settle or compromise any action, or permit a default or consent to the
entry of judgment in or otherwise seek to terminate any pending or threatened action, in respect of
which indemnity may be sought hereunder (whether or not any indemnified party is a party thereto),
unless such settlement, compromise, consent, or termination includes an unconditional release of
each indemnified party from all liability in respect of such action. The Company agrees promptly
to notify the Eligible Holders of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the sale of any Registrable
Securities or any preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Registrable Securities.



(b) The Holder agrees to indemnify and hold harmless the Company, each director of the
Company, each officer of the Company who shall have signed any registration statement covering
Registrable Securities held by the Holder, each other person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and its or their
respective counsel, to the same extent as the foregoing indemnity from the Company to the Holder in
Section 9(a), but only with respect to statements or omissions, if any, made in any registration
statement, preliminary prospectus, or final prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application, in reliance upon and
in conformity with written information furnished to the Company with respect to the Holder by or on
behalf of the Holder expressly for inclusion in any such registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in any application, as
the case may be. If any action shall be brought against the Company or any other person so
indemnified based on any such registration statement, preliminary prospectus, or final prospectus,
or any amendment or supplement thereto, or in any application, and in respect of which indemnity
may be sought against the Holder pursuant to this Section 9(b), the Holder shall have the rights
and duties given to the Company, and the Company and each other person so indemnified shall have
the rights and duties given to the indemnified parties, by the provisions of Section 9(a).



(c) To provide for just and equitable contribution, if (i) an indemnified party makes a claim
for indemnification pursuant to Section 9(a) or 9(b) (subject to the limitations thereof) but it is
found in a final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this Agreement expressly
provides for indemnification in such case, or (ii) any indemnified or indemnifying party seeks
contribution under the Act, the Exchange Act or otherwise, then the Company (including for this
purpose any contribution made by or on behalf of any director of the Company, any officer of the
Company who signed any such registration statement, any controlling person of the Company,



 


13









 






and its
or their respective counsel), as one entity, and the Eligible Holders of the Registrable Securities
included in such registration in the aggregate (including for this purpose any contribution by or
on behalf of an indemnified party), as a second entity, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them may be subject, on the
basis of relevant equitable considerations such as the relative fault of the Company and such
Eligible Holders in connection with the facts which resulted in such losses, liabilities, claims,
damages, and expenses. The relative fault, in the case of an untrue statement, alleged untrue
statement, omission, or alleged omission, shall be determined by, among other things, whether such
statement, alleged statement, omission, or alleged omission relates to information supplied by the
Company or by such Eligible Holders, and the parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged statement, omission, or
alleged omission. The Company and the Holder agree that it would be unjust and inequitable if the
respective obligations of the Company and the Eligible Holders for contribution were determined by
pro rata or per capita allocation of the aggregate losses, liabilities, claims, damages, and
expenses (even if the Holder and the other indemnified parties were treated as one entity for such
purpose) or by any other method of allocation that does not reflect the equitable considerations
referred to in this Section 9(c). In no case shall any Eligible Holder be responsible for a
portion of the contribution obligation imposed on all Eligible Holders in excess of its pro rata
share based on the number of shares of Common Stock owned (or which would be owned upon exercise of
the Registrable Securities) by it and included in such registration as compared to the number of
shares of Common Stock owned (or which would be owned upon exercise of the Registrable Securities)
by all Eligible Holders and included in such registration. No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes
of this Section 9(c), each person, if any, who controls any Eligible Holder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and each officer, director, partner,
employee, agent, and counsel of each such Eligible Holder or control person shall have the same
rights to contribution as such Eligible Holder or control person and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed any such registration statement, each
director of the Company, and its or their respective counsel shall have the same rights to
contribution as the Company, subject in each case to the provisions of this Section 9(c). Anything
in this Section 9(c) to the contrary notwithstanding, no party shall be liable for contribution
with respect to the settlement of any claim or action effected without its written consent. This
Section 9(c) is intended to supersede any right to contribution under the Act, the Exchange Act, or
otherwise.



10. The issuance of any shares or other securities upon the exercise of this Warrant, and the
delivery of certificates or other instruments representing such shares or other securities, shall
be made without charge to the Holder for any tax or other charge in respect of such issuance. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of any certificate in a name other
than that of the Holder and the Company shall not be required to issue or deliver any such
certificate unless and until the person or persons requesting the issue 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.


 


14









 





11. Certificates evidencing the Warrant Shares issued upon exercise of the Warrants shall bear
the following legend:



“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.”



12. Upon receipt of evidence satisfactory to the Company of the loss, theft, destruction, or
mutilation of any Warrant (and upon surrender of any Warrant if mutilated), and upon reimbursement
of the Company’s reasonable incidental expenses, the Company shall execute and deliver to the
Holder thereof a new Warrant of like date, tenor and denomination.



13. The Holder of any Warrant shall not have, solely on account of such status, any rights of
a stockholder of the Company, either at law or in equity, or to any notice of meetings of
stockholders or of any other proceedings of the Company, except as provided in this Warrant.



14. Any notice or other communication required or permitted to be given hereunder shall be in
writing and shall be mailed by certified mail, return receipt requested or sent by Federal Express,
Express Mail, or similar overnight delivery or courier service or delivered (in person or by
telecopy, telex, or similar telecommunications equipment) against receipt to the party to whom it
is to be given, if sent to the Company, at: 157 Surfview Drive, Pacific Palisades, California
90272, Attention: Chief Executive Officer; or if sent to the Holder, at the Holder’s address as it
shall appear on the Warrant Register; or to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 14. Any notice or other communication
given by certified mail shall be deemed given at the time of certification thereof, except for a
notice changing a party’s address which will be deemed given at the time of receipt thereof. Any
notice given by other means permitted by this Section 14 shall be deemed given at the time of
receipt thereof.



15. This Warrant shall be binding upon the Company and its successors and assigns and shall
inure to the benefit of the Holder and its successors and assigns.



16. This Warrant shall be construed in accordance with the laws of the State of California
applicable to contracts made and performed within such State, without regard to principles of
conflicts of law.



[Remainder of page intentionally left blank; signature page follows.]




 


15









 







17. The Company irrevocably consents to the jurisdiction of the courts of the State of
California and of any federal court located in such State in connection with any action or
proceeding arising out of or relating to this Warrant, any document or instrument delivered
pursuant to, in connection with or simultaneously with this Warrant, or a breach of this Warrant or
any such document or instrument. In any such action or proceeding, the Company waives personal
service of any summons, complaint or other process.



Dated: _____ __, 2006




	 	 	 	 	 
	 	[COMPANY]

 	 
	  	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



 


16









 





FORM OF ASSIGNMENT




(To be executed by the registered holder if such holder desires to transfer the attached Warrant.)




FOR VALUE RECEIVED, ___hereby sells, assigns, and transfers unto
___a Warrant to purchase shares of Common Stock, par value $.001 per share, of
[COMPANY] (the “Company”), together with all right, title, and interest therein, and does hereby
irrevocably constitute and appoint ___attorney to transfer such Warrant on the
books of the Company, with full power of substitution.



Dated: ________________________




Signature_________________________




NOTICE




The signature on the foregoing Assignment must correspond to the name as written upon the face
of this Warrant in every particular, without alteration or enlargement or any change whatsoever.


 


17









 






			
	To:	 	[COMPANY]

[ADDRESS]






ELECTION TO EXERCISE




The undersigned hereby exercises its rights to purchase ___Warrant Shares covered
by the within Warrant and tenders payment herewith in the amount of $ ___in accordance
with the terms thereof, and requests that certificates for such securities be issued in the name
of, and delivered to:



 



 




 



 



 




 



 



 




(Print Name, Address and Social Security



or Tax Identification Number)




and, if such number of Warrant Shares shall not be all the Warrant Shares covered by the within
Warrant, that a new Warrant for the balance of the Warrant Shares covered by the within Warrant be
registered in the name of, and delivered to, the undersigned at the address stated below.



	 	 	 	 	 	 	 
	Dated:

	 	 	 	Name	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	(Print)
	 

	 	 
	 	 
	 	 
	Address:
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	(Signature)





 


18









 






			
	To:	 	[COMPANY]

157 Surfview Drive

Pacific Palisades, California 90272






NOTICE OF CASHLESS EXERCISE




(To be executed upon exercise of Warrant

pursuant to Section 1(b))




The undersigned hereby irrevocably elects to exchange its Warrant for ___Warrant
Shares pursuant to the cashless exercise provisions of the within Warrant, as provided for in
Section 1(b) of such Warrant, and requests that a certificate or certificates for such Warrant
Shares be issued in the name of, and delivered to:



 



 




 



 



 




 



 



 




(Print Name, Address and Social Security

or Tax Identification Number)




and, if such number of Warrant Shares shall not be all the Warrant Shares which the undersigned is
entitled to purchase in accordance with the within Warrant, that a new Warrant for the balance of
the Warrant Shares covered by the within Warrant be registered in the name of, and delivered to,
the undersigned at the address stated below.




	 	 	 	 	 	 	 
	Dated:

	 	 	 	Name	 	 
	 

	 	 
	 	 	 	 
	 

	 	 	 	 	 	(Print)
	 

	 	 
	 	 
	 	 
	Address:
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	(Signature)
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	(Signature must conform in all respects to the
name of the Holder as specified on the face of
the Warrant)







 


19