Document:

Unassociated Document

    
      
        
           

          
            
              	
                      

                    	
                      CONFIDENTIAL

                       

                    	
                      

                    

            

          

        

      

    

     

    Supply
Agreement

     

    This Agreement is entered into as of
February 20, 2009 (the “Effective Date”) by and between Oculus Innovative
Sciences, Inc., a Delaware corporation, having its principal place of business
at 1129 N. McDowell Blvd., Petaluma, California 95954 ("Seller"), and BioDrain
Medical, Inc., a Minnesota corporation, having its principal place of business
at 2060 Centre Pointe Boulevard, Suite 7, Mendota Heights, Minnesota
55120  ("Buyer").

     

    WHEREAS, Seller manufactures certain
products which it is willing to provide to Buyer on the terms and subject to the
conditions of this Agreement; and

     

    WHEREAS, Buyer wishes to purchase
certain of such products from Seller for use with its own products, and Seller
is willing to supply Buyer with such products;

     

    NOW, THEREFORE, in consideration of the
foregoing premises and the mutual promises and covenants set forth below, Seller
and Buyer mutually agree as follows:

     

    ARTICLE
1

    DEFINITIONS

     

    1.1 "Agreement " means
this License and Supply Agreement, as amended from time to time.

     

    1.2
“Buyer Product”
means a private labeled liquid, used solely for the “Permitted Use” as that term
is defined below.

     

    1.3  “Contract Year” means
each twelve (12) month period following and having as its anniversary the
Effective Date of the agreement, during the term of the Agreement.

     

    1.4  "EPA" means the United
States Environmental Protection Agency.

     

    1.5  "FDA" means the United
States Food and Drug Administration.

     

    1.6
"First Commercial
Sale" means the first commercial sale of the Buyer Product by Buyer to a
customer.

     

    1.7 "Initial Term" shall
have the meaning set forth in Section 6.1 hereof.

     

    1.8
“Liquid Solution
Specification” means the specifications for the liquid formulation of the
Seller Solutions set forth on Exhibit A, and the
attached Material Safety Data Sheet and Ingredient Sheet.  Exhibit A and the
attached Material Safety Data Sheet and Ingredient Sheet are attached hereto and
by this reference incorporated herein.

     

    
      
        
        

      

      
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    1.9 “Minimum Order
Requirements” means the minimum quantity for each period to be ordered by
Buyer and manufactured by Seller which are specified on Exhibit B,
incorporation in Buyer Products for sale to customers (purchased under Article
III) received by Seller in a Contract Year.

     

    1.10  “Permitted Use” means
as a liquid used to clean the BioDrain Fluid Management system and future
related products developed or sold by Buyer pertaining to infectious fluid
management applications in hospitals, surgical centers or any other areas where
Buyer products are sold.

     

    1.11  “Proprietary Rights”
means patent rights, copyrights, trade secret rights and all other intellectual
and industrial property rights of any sort.

     

    1.12
"Seller
Solution" means the liquid solution supplied hereunder by Seller, with no
claims made by the Company that conform to the Liquid Solution Specifications as
defined above.

     

    1.13  “Specifications” means
the Liquid Solution Specifications.

     

    1.14
“Technology”
means inventions (whether or not patentable), ideas, processes, formulas and
know-how directly related to the Seller Solution as formulated for the Permitted
Use which are owned by Seller and used by it as of the date of this Agreement,
and improvements thereto which are developed and owned by Seller during the term
of this Agreement.

     

    1.15  “Territory” means the
world.

     

    1.16  “Customer”
means the user of the Seller Solution for the Permitted Use.

     

    ARTICLE
II

    LICENSE
GRANT

    

        2.1
Proprietary Rights
License. On the terms and subject to the conditions of this Agreement,
Seller hereby grants to Buyer an exclusive license under its Proprietary Rights
in the Technology; provided, however, that: (i) if Buyer fails to meet its
Minimum Volume Requirements specified on Exhibit B for any
specified period, Seller may, at its option, terminate the
agreement.

    

    The
license is limited to and may be exercised by Buyer solely for the purpose of
using the Technology to make or have made by Seller or other party Buyer
Products and incorporate Seller Solution therein which are then to be marketed
and sold in the Territory solely for the Permitted Use.  Buyer may not
sublicense its rights hereunder, except pursuant to agreements which shall be in
writing and shall contain obligations of the third party equivalent to the
obligations of Buyer hereunder, and no less favorable to Seller’s rights than
the provisions contained in this Agreement.  The preceding sentence
does not, however, create for Seller any right to compensation or payments from
any third party with which Buyer contracts, nor any right to compensation from
Buyer beyond the compensation and payments provided in this
Agreement.  Buyer shall be liable to Seller for acts or omissions of
any sublicensee not in conformity with the terms of this Agreement or any
agreement between Buyer and any sublicensee. Buyer may export/import Buyer
Products incorporating Seller Solution as necessary to cover the Territory,
subject to compliance with all applicable import and export laws.

     

    
      
        
        

      

      
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    2.2 Trademark.  All
promotional materials and Buyer Product packaging may include in easily
readable, non-obscured type that is not less than 25% the size of the other
names and notices the mark “Microcyn” (or for product shipped outside the United
States such other trade name for “Microcyn” that Seller gives Buyer notice as
appropriate for the country into which the Buyer Product will be shipped), and a
legend that Seller owns such mark and any reasonable proprietary markings and
notices of Seller.  Buyer will confer with Seller prior to
distributing Buyer Product outside the United States to determine the
appropriate trade name for use in each country.

    

    Buyer
shall market the Buyer Product under a name agreeable to both parties, and the
associated mark specified by Buyer, and such name and mark shall be exclusively
owned by Buyer.  Seller shall have no rights in the name, mark and
designation that will be specified and used by Buyer for the Buyer
Product.   Seller shall not unreasonably withhold approval on use
of Buyer’s name. Buyer may use the “Microcyn” name and mark to describe the
active ingredient in Buyer Product, but may not use or register the name
”Oculus” or the ”Microcyn” name or any other name or mark of Seller or that is
confusingly similar to any such mark, anywhere in the world.

    

         2.3
No Implied
License.  Buyer acknowledges that Seller grants no license, by
implication or otherwise, except for the licenses expressly set forth in this
Article II.

     

    ARTICLE
III

    SALE AND
PURCHASE OF SOLUTION

     

     3.1
Sale and
Purchase. On the terms and conditions set forth in this Agreement, Seller
agrees to sell to Buyer such quantities of Seller Solution as Buyer may order to
satisfy 100% of Buyer's requirements for Seller Solution for use in Buyer’s sale
of Buyer Products ("Requirements"), except as provided in Section 6.3
below.

     

     3.2
Quantity;
Forecasts.

     

    (a) Buyer shall deliver to Seller once
every calendar quarter a 12-month forecast of Buyer’s projected Requirements of
Seller Solution (“Forecast”).  The first Forecast shall be provided to
Seller no less than one (1) full calendar quarters prior to the time when the
First Commercial Sale of Buyer Products is projected to
occur.   No Forecast shall be binding or treated as a firm
order.

     

    
      
        
        

      

      
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    Buyer
shall deliver to Seller at least thirty (30) days prior to First Commercial Sale
of Buyer Products or at least thirty (30) days after Execution Date written
below of this Agreement, which ever is first a firm order for the initial
calendar quarter commencing on the First Commercial Sale date.  No
Forecasts or orders need be given for any period after the term of this
Agreement.

     

    (b)
Buyer's forecasts and orders shall reflect its good-faith expectations of
customer demand, and Buyer shall act in a commercially reasonable manner to
schedule orders to avoid creating production capacity problems for
Seller.

     

     3.3
Delivery.

     

    (a)  All customs, duties,
costs, taxes, insurance premiums, and other expenses associated with
transportation from Seller’s location to Buyer’s facility shall be at Seller’s
expense.

     

    (b) All customs, duties, costs, taxes,
insurance premiums, and other expenses associated with transportation from
Seller’s location to Buyer’s customers shall be at Seller’s
expense.

     

     (c)
Seller shall assist Buyer in arranging any desired shipping insurance (in
amounts that Buyer shall determine) and transportation, via ground freight
unless otherwise specified in writing, to any destination specified in writing
from time to time by Buyer.

     

    (d) Seller shall manufacture Seller
Solution in a facility with a current ISO 13485 certification for medical device
design and manufacturing, and shall be compliant with all US and International
regulations and laws that are applicable and consistent with this
certification.

     

     3.4
Rejection of Seller
Solution in Case of Nonconformity.

     

    (a) On the terms of this Agreement,
Buyer may reject any portion of any shipment of Seller Solution that does not
conform in all material respects with the Specifications.

     

    Seller
shall supply to Buyer with each delivery of Seller Solution a document(s)
reflecting, for each batch of Seller Solution, laboratory data substantiating
conformity of the Seller Solution to the appropriate Specifications and shall
retain a sample of each batch of Seller Solution shipped to
Buyer.  Buyer shall have the right, in its discretion but at its
expense, to test Seller Solution within fourteen (14) days of delivery, using a
laboratory of Buyer’s choice, for conformity to the
Specifications.  If Buyer rejects Seller’s Solution due to
non-conformity of the Seller Solution with the appropriate Specifications,
Seller may, within five (5) days of notice of the rejection, request examination
of Seller’s batch sample of Seller Solution by a third-party laboratory chosen
jointly by the parties (an “Independent Lab”), in which event the Independent
Lab shall examine Seller’s batch sample of Seller Solution for conformity to the
Specifications.  The party whose laboratory results are inconsistent
with conformity/non-conformity findings of the Independent Lab shall pay the
costs of the Independent Lab, as well as the laboratory costs of the other party
incurred in testing the disputed batch.

     

    
      
        
        

      

      
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    In order
to reject a shipment, Buyer must (i) give notice to Seller of Buyer's rejection
of the shipment within thirty (30) days of receipt together with a reasonably
detailed written indication of the reasons for such rejection. If no such notice
of rejection is timely received, Buyer shall be deemed to have accepted such
delivery of Seller Solution.

     

    (b)  Buyer
shall not be obligated to pay for Seller Solution that is rejected by Buyer
unless the Independent Lab concludes that Seller’s batch sample conformed to the
Specifications. Seller shall be responsible for costs of shipment, insurance,
duties, customs and fees incurred in connection with justifiably rejected Seller
Solution, and Buyer shall be responsible for any costs of shipment, insurance,
duties, customs and fees incurred in connection with wrongfully rejected Seller
Solution.  Seller shall use commercially reasonable efforts to deliver
to Seller no more than fourteen (14) days after the receipt of Buyer’s notice of
rejection and Buyer’s request for re-shipment a replacement shipment of Seller
Solution which, unless justifiably rejected pursuant to the terms of this
Agreement, shall be purchased by Buyer as provided in this
Agreement.  After receipt of Buyer’s notice of rejection, Seller shall
submit a batch sample of the rejected Seller Solution to the Independent Lab or,
if it does not submit the batch sample to the Independent Lab within fifteen
(15) days, Buyer’s rejection shall be deemed to be justifiable.  If
the Independent Lab determines that Seller Solution conformed to the
Specifications and that Buyer improperly rejected Seller Solution, Buyer shall
be obligated to pay for the improperly rejected Seller Solution, and shall be
obligated to pay for any replacement Seller Solution requested by
Buyer.

     

    (c)
Unless Seller requests the return of a rejected batch within thirty (30) days of
receipt of Buyer's notice of rejection, Buyer shall dispose of, at Seller’s
cost, such batch promptly and provide Seller with certification of such
disposal.  Buyer shall, upon receipt of Seller's request for return,
promptly dispatch said batch to Seller, at Seller's cost; provided, however that
Buyer may retain a sample of said batch until conformity of the Seller Solution
in finally resolved by the Independent Lab.

     

    3.5 Other
Obligations.

     

    
      
        
        

      

      
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    (a) Buyer
and Seller agree to ascertain and comply with all applicable laws and
regulations and standards of industry or professional conduct in connection with
the use of the Buyer Products and the distribution and promotion of Buyer
Products.

     

    (b) Buyer
shall have the right to perform post-market studies on Buyer Product, however
Buyer shall not publish and shall not authorize the publication of, any
post-market study results without the prior and not unreasonably withheld
consent of Seller.  If Buyer contracts for, or sponsors a post-market
study by a third party (if permitted under this Agreement), such contract shall
prohibit the third-party from publishing such study unless mutually consented
and such consent not unreasonably withheld to by Seller and Buyer in
writing.

     

    (c) Buyer
agrees to market and label the Buyer Products consistent with all applicable
regulatory label claims.  Buyer is responsible for obtaining all
applicable label claims, but these claims must apply only to the intended
use.

     

    Buyer
shall not, and shall cause its sublicensees not, to make any representations or
warranties relating to Seller Solution except for those representations
contained in this Agreement.  Buyer
agrees not to make, and agrees to cause its sublicensees not to make, any
representation or warranty, whether oral or in writing, regarding the Buyer
Product that is not consistent with the label claims authorized in the country
in which Buyer Products are marketed.  Buyer agrees to notify, and to
cause those with whom it contracts to notify, customers that use of the Buyer
Product is restricted to the Permitted Use.

     

    (d) Buyer
and Seller agree to immediately notify one another of any serious adverse event
resulting from use of Buyer Product with Seller Solution, or any actual or
potential government action related to a Seller Solution or Buyer Product (but
in no event later than 24 business hours thereafter) and, if and to the extent
requested by Seller in writing as a result of a communication from the FDA, EPA,
or other regulatory entity, to suspend distribution of the Buyer
Products.

     

    (e) Buyer
and Seller agree to keep and make reasonably available for the other’s use and
copying, in connection with an FDA-recommended recall, for one year after
termination of this Agreement (or longer if required by applicable law or
regulation) records of all Buyer Product and Seller Solution sales and customers
sufficient to adequately administer a recall of any Seller Solution or Buyer
Product and to cooperate fully in any decision by Seller to recall, retrieve
and/or replace any Seller Solution based on communications with the FDA or other
regulatory authority.

     

    (f) Buyer
agrees to provide to Seller each month a report of all inventory of Seller
Solution in the inventory of Buyer at each month end.  Such reports
shall include the unit count of all Seller Solution units, and locations of such
units, as well as the carrying value of such units.  Buyer shall
provide such a report to Seller within three (3) business days following each
calendar month end.

     

    
      
        
        

      

      
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    ARTICLE
IV

    ROYALTIES,
PRICE AND PAYMENTS

     

    4.1 Price. Buyer shall
pay to Seller for Seller Solution the amounts set forth on Exhibit B in United
States dollars.

     

    4.2 Method of Payment.
All payments for the purchase of Seller Solution due hereunder to Seller shall
be paid to Seller in United States dollars in the United States not later than
forty-five (45) days following the invoice date of the applicable
order.

     

    ARTICLE
V

    CONFIDENTIALITY

     

    5.1
Confidentiality.  
Each party recognizes the importance to the other of the other's Proprietary
Information. In particular the parties recognize that the Technology and other
of Proprietary Information (and the confidential nature thereof) are critical to
the business of Buyer and Seller and that Buyer and Seller would not enter into
this Agreement without assurance that such technology and information and the
value thereof will be protected as provided in this Article 5 and elsewhere in
this Agreement.

     

    Accordingly,
each party agrees as follows:

     

     

    (a) The
party receiving Proprietary Information (the “Receiving Party”) of the other
party, which information shall be specifically identified as proprietary or
confidential, (the “Disclosing Party”) agrees (i) to hold the Disclosing Party's
Proprietary Information in confidence and to take all reasonable precautions to
protect such Proprietary Information (including, without limitation, all
precautions the Receiving Party employs with respect to its confidential
materials), (ii) not to divulge any such Proprietary Information or any
information derived therefrom to any third person, provided, however, that Buyer
may disclose, subject to a written non-disclosure agreement, Proprietary
Information to third parties with a need to know solely for the purpose of
validating manufacturing, distribution and sale viability, and (iii) not to
remove or export from the United States or reexport any such Proprietary
Information or any direct product thereof (e.g., Products by whomever made)
unless expressly consented to in writing by the other party and except in
compliance with all licenses and approvals required under applicable U.S. and
foreign export laws and regulations, including without limitation, those of the
U.S. Department of Commerce.  Any employee given
access to any such Proprietary Information must have a legitimate “need to know”
and shall be similarly bound in writing. Without granting any right or license,
the Disclosing Party agrees that the foregoing clauses (i), (ii) and (iii) shall
not apply with respect to information the Receiving Party can document (i) is in
or (through no improper action or inaction by the Receiving Party, agent or
employee) enters the public domain (and is readily available without substantial
effort), or (ii) was rightfully in its possession or known by it prior to
receipt from the Disclosing Party, or (iii) was rightfully disclosed to it by
another person without restriction, or (iv) was independently developed by it by
persons without access to such information and without use of any Proprietary
Information of the Disclosing Party. The Receiving Party must promptly notify
the Disclosing Party of any information it believes comes within any
circumstance listed in the immediately preceding sentence and will bear the
burden of proving the existence of any such circumstance by clear and convincing
evidence. Each party’s obligations under this Article 5 shall terminate five (5)
years after the termination or expiration of this Agreement.

     

    
      
        
        

      

      
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    (b) Immediately
upon termination of the Receiving Party's license under Article 2, the Receiving
Party will turn over, or shall cause to have turned over, to the Disclosing
Party all Proprietary Information of the Disclosing Party and all documents or
media containing any such Proprietary Information and any and all copies or
extracts thereof.  Buyer shall notify Seller of and keep only such
proprietary information as is necessary for legal and or regulatory
purposes.

     

     

    (c) The
Receiving Party acknowledges and agrees that due to the unique nature of the
Disclosing Party's Proprietary Information, there can be no adequate remedy at
law for any breach of its obligations hereunder, that any such breach may allow
the Receiving Party or third parties to unfairly compete with the Disclosing
Party resulting in irreparable harm to the Disclosing Party, and therefore, that
upon any such breach or any threat thereof, the Disclosing Party shall be
entitled to appropriate equitable relief (without the posting of any bond) in
addition to whatever remedies it might have at law and to be indemnified by the
Receiving Party from any loss or harm, including, without limitation, lost
profits and attorney's fees, in connection with any breach or enforcement of the
Receiving Party's obligations hereunder or the unauthorized use or release of
any such Proprietary Information. The Receiving Party will notify the Disclosing
Party in writing immediately upon the occurrence of any such unauthorized
release or other breach. Any breach of this Article 5 will constitute a material
breach of this Agreement.

     

     

    ARTICLE
VI

    TERMINATION,
RIGHTS AND

    OBLIGATIONS
UPON TERMINATION

     

    6.1 Term. Unless
terminated by either party pursuant to the other provisions of this Article VI,
this Agreement shall continue in effect until five (5) years from the Effective
Date  (the "Initial Term"), and shall thereafter continue and
automatically renew on an annual basis unless terminated by either party by
giving thirty (30) days’ written notice prior to the expiration of the Initial
Term or any extension thereof.

     

    
      
        
        

      

      
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    6.2
Termination for
Failure to Commercialize.  Seller may terminate this Agreement
immediately if the First Commercial Sale does not occur within six months
following the Effective Date of this Agreement.

     

    6.3
Termination for
Failure to Meet Minimum Order Requirements.  If Buyer fails to
order from Seller an amount, which is equal to or greater than the Minimum Order
Requirement for such calendar year, then Seller may, in addition to any other
rights it has under this Agreement, terminate the Agreement on thirty (30)
business days’ written notice to Buyer.

     

    If Seller
does not terminate this Agreement following a failure of Buyer to meet the
Minimum Order Requirements within thirty (30) business days following the end of
the calendar year in which the failure occurred, Buyer may request of Seller, in
writing and within sixty (60) business days of the end of the calendar year in
which the failure occurred, a written letter from Seller waiving the rights of
Seller to terminate this Agreement at a later date for that particular failure.
Seller will then respond with such a written waiver within ninety (90) business
days of the calendar year in which the failure occurred.

     

    6.4 Termination by Mutual
Agreement.  This Agreement may be terminated upon mutual
written agreement of the parties.

     

    6.5 Termination for
Default. If either party materially defaults in the performance of any
material agreement, condition or covenant of this Agreement, the defaulting or
non-complying party shall have ninety (90) days to remedy after receipt by the
defaulting party of a notice thereof from the other party.  If the
default or non-compliance has not been remedied in ninety (90) business days (or
thirty (30) business days in the case of non-payment), then the party not in
default may terminate this Agreement without penalty, unless, within said ninety
(90) business days, the defaulting party has initiated remedial action
reasonably satisfactory to the party not in default.

     

    6.6 Rights and Obligations on
Expiration or Termination. Except to the extent expressly provided to the
contrary, the following provisions shall survive the termination of this
Agreement: Article I, Section 3.5(e), Article V, this Section 6.7 and Articles
VII and VIII. Any rights of Seller to payments accrued through termination as
well as obligations of the parties under firm orders for purchase and delivery
of Seller Solutions at the time of such termination shall remain in effect,
except that in the case of termination under Section 6.6, the terminating party
may elect whether obligations under firm orders will remain in effect and except
that Seller will have no obligation with respect to Delivery Dates more than six
(6) months after termination.

     

    
      
        
        

      

      
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    6.7 Continuation of
Supply.

     

    (a)
Following the termination of this Agreement by Seller , Seller shall be
obligated to continue to fulfill Buyer orders on a non-exclusive basis for six
(6) months following the termination under the same terms of this Agreement
other than the exclusive nature of the Agreement assuming the Seller in
compliance with this agreement.

     

    (b)
Following the expiration of this Agreement or non-renewal of this Agreement at
any time by Buyer and or Seller, the Seller shall be obligated to continue to
fulfill Buyer orders on a non-exclusive basis for six (6) months following the
expiration under the same terms of this Agreement other than the exclusive
nature of the Agreement assuming the Seller is in compliance with this
agreement.

     

     

    ARTICLE
VII

    WARRANTY
AND INDEMNIFICATION

     

    7.1 Warranties. Seller
warrants to Buyer that, when shipped to Buyer by Seller, the Seller Solutions
will conform in all material respects to the applicable Specifications at the
time of shipment to Buyer.  Seller further warrants to Buyer that, to
its knowledge, the Seller Solution does not infringe any third party Proprietary
Rights.

     

    BUYER’S
SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE FOREGOING WARRANTIES OR FOR
SELLER SOLUTION DEFECTS SHALL BE ITS RIGHT TO DEMAND REPLACEMENT OF
NON-CONFORMING UNITS OF SELLER SOLUTION FOR WHICH FULL DOCUMENTATION AND PROOF
OF NONCONFORMITY IS PROVIDED TO SELLER AFTER REJECTION AND TESTING FOR
NONCONFORMITY AS PROVIDED HEREIN.  EXCEPT FOR THE FOREGOING
WARRANTIES, SELLER MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO
SELLER SOLUTIONS.  SELLER HAS NOT AUTHORIZED ANYONE TO MAKE ANY
REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE.

     

    7.2 Seller
Insurance.

     

    Seller
shall carry an insurance policy or policies, which shall name Buyer as an
additional insured, covering, in the following amounts, any and all losses for
death or bodily injury, patent claims, and any costs incurred by Buyer in
connection with any recall of Buyer Product or Seller Solution caused by Seller
for death or bodily injury on account of Seller: $2,000,000/occurrence, and
$2,000,000 general aggregate.

     

    7.3 Buyer Indemnification and
Insurance.

     

    
      
        
        

      

      
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    (a)  Buyer
shall indemnify Seller against any and all liability, damages and cost and
expenses, including reasonable attorneys' fees, made against or sustained by
Seller arising from the death of, or bodily injury to, any person on account of
use of Buyer Product, provided that such harm is unrelated to Seller Solution
being in Buyer’s Product.

     

    At the
time of First Commercial Sale, Buyer shall carry an insurance policy or
policies, which shall name Seller as an additional insured, covering, in the
following amounts, any and all losses for death or bodily injury caused by Buyer
Product, provided that such loss was solely attributable to the Seller Solution;
$2,000,000/occurrence, and $2,000,000 general aggregate.

     

    (b)  Buyer
will also indemnify Seller from any liability, damages, costs and expenses,
including reasonable attorneys’ fees, that result from Buyer’s or one or more of
Buyer’s sublicensee’s failure to market or label the Buyer Products as required
herein, and Buyer’s failure to effectively notify Buyer’s and its sublicensee’s
customers of the restrictions on use and properly disclaim to its customer all
warranties and liabilities on behalf of Seller to the same extent as disclaimed
herein.

     

    7.4 Limitations to
Indemnity. The indemnities of Sections 7.2 and 7.3 shall not apply (i) if
the indemnified party fails to give the indemnifying party prompt notice of any
claim it receives and such failure materially prejudices the indemnifying party,
or (ii) unless the indemnifying party is given the opportunity to approve any
settlement.  Furthermore, the indemnifying party shall not be liable
for attorneys' fees or expenses of litigation of the indemnified party unless
the indemnified party gives the indemnifying party the opportunity to assume
control of the defense or settlement.

     

    7.5 Settlement.  The
indemnified party shall not be entitled to settle any of the above-mentioned
claims without the consent of the indemnifying party, which consent shall not be
unreasonably withheld.  However, if for any reason the indemnifying
party refuses to grant consent to the indemnified party to settle a claim, the
indemnifying party shall bear the indemnified party’s legal costs in defending
of the claim.

     

    7.6 Incidental and
Consequential Damages.  EXCEPT  FOR WILLFUL BREACH BY
A PARTY OF ITS OBLIGATIONS UNDER THIS AGREEMENT, OR BREACH OF ARTICLE 5
(CONFIDENTIALITY), NEITHER PARTY WILL BE LIABLE UNDER ANY CONTRACT, NEGLIGENCE,
STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR ANY INCIDENTAL OR
CONSEQUENTIAL DAMAGES WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT.

     

    7.7 Abandonment,
Insolvency.  In the event that, at any time and for any reason,
Seller abandons efforts to produce and supply Seller Solution in liquid form, or
if Seller files for bankruptcy protection and such proceeding is not dismissed
within ninety (90) business days, Buyer has the right to an uninterrupted supply
of Seller Solution from Seller, or the surviving entity of such a transaction
under the same terms of this Agreement.

     

    
      
        
        

      

      
        Page 11
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                    CONFIDENTIAL

                     

                  	
                    

                  

          

        

      

    

     

    ARTICLE
VIII

    MISCELLANEOUS

     

    8.1 Entire Agreement.
This Agreement contains the entire agreement of the parties regarding the
subject matter hereof and supersedes all prior agreements, understandings and
negotiations regarding the same. This Agreement may not be modified or
supplemented except by a written instrument signed by both parties. Furthermore,
it is the intention of the parties that this Agreement be controlling over
additional or different terms of any order, confirmation, invoice or similar
document, even if accepted in writing by both parties, and that waivers and
amendments shall be effective only if made by negotiated waiver agreements
clearly understood by both parties to be an amendment or waiver.

     

    8.2 Severability. If any
provision of this Agreement shall be held illegal or unenforceable, that
provision shall be limited or eliminated to the minimum extent necessary so that
this Agreement shall otherwise remain in full force and effect and
enforceable.

     

    8.3 Further Assurances.
Each party hereto agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts as may be reasonably necessary or
appropriate in order to carry out the purposes and intent of this
Agreement.

     

    8.4 Use of Party's Name, Press
Release. Except as provided in Article II herein, no right, express or
implied, is granted by this Agreement to either party to use in any manner the
name or trademark of the other.  Within seven (7) business days
following execution of this Agreement, each party may release a mutually
acceptable and approved in advance in writing press release (or other public
announcement) announcing the execution of this Agreement.

     

     8.5 Assignment,
Successorship.  This Agreement may be assigned by either party
to any third  party that succeeds to substantially all of a party’s
assets or business that constitutes the subject matter of this Agreement,
whether by reason of stock sale, merger, or asset sale, so long as the assignee
agrees in writing to be bound by the terms of this Agreement.

     

    8.6 Notice
Delivery.  All notices, consents, or approvals required by this
Agreement shall be in writing sent by certified or registered air mail, postage
prepaid, or by confirmed facsimile to the parties at the addresses set forth in
the preamble of this Agreement or such other addresses as may be designated in
writing by the respective parties.  Notices shall be deemed effective
on the date of mailing.

     

    
      
        
        

      

      
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                    CONFIDENTIAL

                     

                  	
                    

                  

          

        

      

    

     

    8.7 Relationships of the
Parties. Both parties are independent contractors under this Agreement.
Nothing contained in this Agreement is intended nor is to be construed so as to
constitute Seller and Buyer as partners, agents or joint venturers with respect
to this Agreement. Neither party hereto shall have any express or implied right
or authority to assume or create any obligations on behalf of or in the name of
the other party or to bind the other party to any contract, agreement or
undertaking with any third party.

     

    8.8 Waiver. The waiver by
either party of a breach of any provisions contained herein shall be in writing
and shall in no way be construed as a waiver of any subsequent breach of such
provision or the waiver of the provision itself.

     

    8.9 Applicable Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without regard to the conflicts of laws provisions thereof or
the United Nations Convention on the International Sale of Goods. The exclusive
jurisdiction and venue of any action with respect to this Agreement shall be in
New York, and each of the parties hereto submits itself to the exclusive
jurisdiction and venue of such courts for the purpose of any such action.
Service of process in any such action may be effected in the manner provided in
Section 8.6 for delivery of notices. The prevailing party in any legal action to
enforce or interpret this Agreement shall be entitled to reasonable costs and
attorneys' fees.

     

    8.10
Captions.
Paragraph captions are for convenience only and in no way are to be construed to
define, limit or affect the construction or interpretation hereof.

     

    8.11
Force Majeure.
A party shall not be liable for nonperformance or delay in performance (other
than of obligations regarding payment of money or confidentiality) caused by any
event reasonably beyond the control of such party including, but not limited to
wars, hostilities, revolutions, riots, civil commotion, national emergency,
strikes, lockouts, epidemics, fire, flood, earthquake, force of nature,
explosion, embargo, or any other Act of God, or any law, proclamation,
regulation, ordinance, or other act or order of any court, government or
governmental agency.

     

    8.12
Export Control;
Corruption.

     

    (a) Buyer shall comply with the U.S.
Foreign Corrupt Practices Act and all applicable export laws, restrictions, and
regulations of the U.S. Department of Commerce, the U.S. Department of Treasury
and any other any U.S. or foreign agency or authority. Buyer will not export or
re-export, or allow the export or re-export of any product, technology or
information it obtains or learns pursuant to this Agreement (or any direct
product thereof) in violation of any such law, restriction or regulation,
including, without limitation, export or re-export to Cuba, Iran, Iraq, Libya,
North Korea, or any other country subject to U.S. trade embargoes, or to any
party on the U.S. Export Administration Table of Denial Orders or the U.S.
Department of Treasury List of Specially Designated Nationals, or to any
prohibited destination in any of the Country Groups specified in the then
current Supplement No. 1 to Part 740 or the Commerce Control List specified in
the then current Supplement No. 1 to Part 738 of the U.S. Export Administration
Regulations (or any successor supplement or regulations).

     

    
      
        
        

      

      
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                  CONFIDENTIAL

                   

                	
                  

                

        

      

    

     

    (b) Buyer shall obtain and bear all
expenses relating to any necessary licenses and/or exemptions with respect to
the export from the U.S. of any Seller Solution to any location in compliance
with all applicable laws and regulations prior to delivery thereof by Seller. If
Buyer is involved in a transaction that gives Buyer reason to suspect that any
product, technology or information it obtains or learns pursuant to this
Agreement will be exported, re-exported, or diverted in violation of any such
laws, restrictions or regulations (including, without limitation, knowledge of
suspect end users, abnormal transaction circumstances, or other Bureau of Export
Administration "red flag" indicators), then Buyer will take appropriate steps to
terminate such transaction, notify the correct U.S. agency, and give notice to
Seller.

     

     

    IN
WITNESS WHEREOF, the parties have executed this Agreement to be effective as of
the date first written above.

     

    
      	 
      	
              SELLER:

              Oculus
      Innovative Sciences, Inc.

            
	 
      	 
      
	 
      	
              Signature:
      /s/Robert E. Miller

            
	 
      	
              Name/Title
      (print): Chief Financial Officer

               

            
	 
      	
              Date:
      3/12/09

            
	 
      	
              BUYER:

              BioDrain
      Medical, Inc.,

            
	 
      	 
      
	 
      	
              Signature:
      /s/ Kevin Davidson

            
	 
      	
              Name/Title
      (print): CEO

            
	 
      	
              Date:
      3/16/09

            

    

     

    

    
      
        
        

      

      
        Page 14
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                  CONFIDENTIAL

                   

                	
                  

                

        

      

    

     

    Exhibit
A

     

    Seller
Solution (Liquid) Specifications and Claims

     

    Liquid
Solution Specification (including shelf life):

     

    Seller
Solution is a non-regulated superoxidized solution based on the Microcyn
platform technology manufactured with a free available chlorine concentration of
100 ppm to 225 ppm, a pH range of 4 to 6, and a phosphate buffer.

    

    Seller
Solution, in liquid form, shall conform in all respects to the Liquid Solution
Specifications (including the attached Material Safety Data Sheet and Ingredient
Sheet), and shall be shipped in a 32-ounce “ringed carafe” bottle or, if the
parties mutually agree, different containers at prices mutually agreed to by the
parties (the “Package specifications”).

    

    The shelf
life of the product will be at least twenty four (24) months, from the date of
manufacturing.

    

    Liquid
Solution Claims

    

    There are
no EPA or FDA regulated claims, or any unregulated claims, made or implied by
Seller as to the efficacy or use of the Seller Solution.  For clarity,
Seller Solution is void of any claims as to it’s efficacy or
use.  Buyer is responsible for any and all label content and any and
all claims made on the label of the Buyer Products or associated marketing
material of the Buyer Products.  Buyer will provide an electronic
version of the label to Seller for printing purposes only.  Seller
shall not have the obligation or right to review the given label, and will not
be held responsible for any content or claims made on the given label for Buyer
Products.

    

    
      
        
        

      

      
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                  CONFIDENTIAL

                   

                	
                  

                

        

      

    

     

    Exhibit
B

     

    Prices
and Minimum Order Requirements

     

    Prices:

    The
following prices are for 750ml to 946ml of Seller Solution in a 32-ounce “ringed
carafe” bottle, or different bottle as mutually agreed upon by Buyer and Seller,
including cap, label, and shipping to Buyer or other holding facility in the
US.  Price does not include any additional shipping costs to ship from
Buyer’s or other’s warehouse to the end customer.  All orders shall be
made in case denominations, 32-case denominations, or 768-case denominations,
with unit prices as follows:

    

    For the
first 50,000 bottles ordered by Buyer:

    

    
      
        
          
            
              	 
      	 	
                      Load

                    	 	 	
                      Pallet

                    	 	 	
                      Case

                    	 
	
                      Order
      size (case)

                    	 	 	768	 	 	 	32	 	 	 	1	 
	
                      Order
      size (bottles)

                    	 	 	9,216	 	 	 	384	 	 	 	12	 
	
                      Price
      per case (12 bottles)

                    	 	 	 	***	 	 	***	 	 	 	***	 
	
                      Price
      per unit (bottle)

                    	 	 	***	 	 	 	***	 	 	 	***	 

            

          

        

      

    

    

    After the
first 50,000 bottles have been ordered by Buyer:

    

    

    
      
        
          
            
              	 
      	 	
                      Load

                    	 	 	
                      Pallet

                    	 	 	
                      Case

                    	 
	
                      Order
      size (cases)

                    	 	 	768	 	 	 	32	 	 	 	1	 
	
                      Order
      size (bottles)

                    	 	 	9,216	 	 	 	384	 	 	 	12	 
	
                      Price
      per case (12 bottles)

                    	 	 	***	 	 	 	***	 	 	 	***	 
	
                      Price
      per bottle

                    	 	 	***	 	 	 	***	 	 	 	***	 

            

          

        

      

    

    

    

    Minimum
Order Requirements:

    

    
      
        	
                Calendar
      Year

              	
                2009

              	
                2010

              	
                2011

              	
                2012

              	
                2013
      and calendar years thereafter

              
	
                Minimum
      bottles purchased

              	
                15,000

              	
                175,000

              	
                500,000

              	
                1,000,000

              	
                1,500,000

              
	 
      	 
      	 
      	 
      	 
      	 
      

      

    

     

    
      
        
          

        

      

      ***This
material has been omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.

    

     

    
      
        
        

      

      
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                  CONFIDENTIAL

                   

                	
                  

                

        

      

    

     

    Incentive
Price Discounts:

    

    Seller
shall grant to Buyer a per-bottle price discount for Buyer reaching the
following purchasing milestones during a calendar year.  Only one of
the following discounts will apply at any time, and will last for the remainder
of that year and the succeeding calendar year in which the milestone was met.
Once the milestone is met and the discount is applied for the following calendar
year, and if in that following year the bottles purchased falls below the
milestone, then the discount applied to the next year can only decrease to the
discount related to the prior milestone.  For example, if in 2011 the
Seller purchases more than ***
bottles, then the discount applied for calendar year 2012 is $***.Then
if the actual amount purchased for 2012 was less than ***
bottles, then the discount would drop only one level to ***.

    

    
      
        	
                Bottles
      Purchased

              	
                Per-Bottle
      Discount

              
	 
      	 
      
	
                            ***

              	
                ***

              
	
                            ***

              	
                ***

              
	
                            ***

              	
                ***

              
	
                            ***

              	
                ***

              

      

    

    

     

    *** This
material has been omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.

     

    
      
        
        

      

      
        Page 17
of 17[SERIES D/E/F]
COMMON STOCK PURCHASE WARRANT

    

    NEURALSTEM,
INC.

     

    Warrant
Shares:
_______                                                                                                Issue
Date: June __, 2009

    

    THIS
[SERIES D/E/F] COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies
that, for value received, _____________ (the “Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise
Date”) and on or prior to the close of business on the ___1
anniversary of the Initial Exercise Date (the “Termination Date”)
but not thereafter, to subscribe for and purchase from Neuralstem, Inc., a
Delaware corporation (the “Company”), up to
______ shares (the “Warrant Shares”) of
Common Stock.  The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).

     

    Section
1.             Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings set forth in
that certain Securities Purchase Agreement (the “Purchase Agreement”),
dated June __, 2009, among the Company and the Purchaser signatories
thereto.

     

    Section
2.             Exercise.

     

    a)           Exercise of
Warrant.  Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile copy of the
Notice of Exercise Form annexed hereto; and, within three (3) Trading Days of
the date said Notice of Exercise is delivered to the Company, the Company shall
have received payment of the aggregate Exercise Price of the shares thereby
purchased by wire transfer or cashier’s check drawn on a United States bank of,
if available, pursuant to the cashless exercise procedure specified in Section
2(c) below.  Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three (3) Trading
Days of the date the final Notice of Exercise is delivered to the
Company.  Partial exercises of this Warrant resulting in purchases of
a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable
hereunder in an amount equal to the applicable number of Warrant Shares
purchased.  The Holder and the Company shall maintain records showing
the number of Warrant Shares purchased and the date of such
purchases.  The Company shall deliver any objection to any Notice of
Exercise Form within 1 Business Day of receipt of such notice.  In the
event of any dispute or discrepancy, the records of the Holder shall be
controlling and determinative in the absence of manifest error. The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face
hereof.

     

    
      
        

      

    

    
      1 As to
the Series A, one year; As to the Series B, three year; As to the Series C, five
year.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    b)           Exercise
Price.  The exercise price per share of the Common Stock under
this Warrant shall be $1.25, subject to adjustment
hereunder (the “Exercise
Price”).

     

    c)           Cashless
Exercise.  If at the time of exercise hereof there is no
effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder
and all of the Warrant Shares are not then registered for resale by Holder into
the market at market prices from time to time on an effective registration
statement for use on a continuous basis (or the prospectus contained therein is
not available for use), then this Warrant may also be exercised, in whole or in
part, at such time by means of a “cashless exercise” in which the Holder shall
be entitled to receive a certificate for the number of Warrant Shares equal to
the quotient obtained by dividing [(A-B) (X)] by (A), where:

     

    
      
        
          	
                	
                  (A) =

                	
                  the
      VWAP on the Trading Day immediately preceding the date on which Holder
      elects to exercise this Warrant by means of a “cashless exercise,” as set
      forth in the applicable Notice of
Exercise;

                

        

      

    

    

    
      
        
          
            	
                  	
                    (B) =

                  	
                    the
      Exercise Price of this Warrant, as adjusted hereunder;
  and

                  

          

        

      

    

    

    
      
        
          	
                	
                  (X) =

                	
                  the
      number of Warrant Shares that would be issuable upon exercise of this
      Warrant in accordance with the terms of this Warrant if such exercise were
      by means of a cash exercise rather than a cashless
    exercise.

                

        

      

    

    

    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m.
(New York City time) to 4:02 p.m. (New York City time), (b)  if the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the
OTC Bulletin Board and if prices for the Common Stock are then reported in the
“Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or
agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported, or (d) in all other cases,
the fair market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holder and reasonably acceptable to the
Company, the fees and expenses of which shall be paid by the
Company.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this Section
2(c).

     

    d)           Mechanics of
Exercise.

     

    i.      Delivery of Certificates
Upon Exercise.  Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company through
its Deposit Withdrawal Agent Commission (“DWAC”) system if the
Company is then a participant in such system and either (A) there is an
effective Registration Statement permitting the issuance of the Warrant Shares
to or resale of the Warrant Shares by Holder or (B) this Warrant is being
exercised via cashless exercise, and otherwise by physical delivery to the
address specified by the Holder in the Notice of Exercise by the date that is
three (3) Trading Days after the latest of (A) the delivery to the Company of
the Notice of Exercise Form, (B) surrender of this Warrant (if required) and (C)
payment of the aggregate Exercise Price as set forth above (including by
cashless exercise, if permitted) (such date, the “Warrant Share Delivery
Date”).  This Warrant shall be deemed to have been exercised on
the first date on which all of the foregoing have been delivered to the
Company.  The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to
have become a holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the Exercise
Price (or by cashless exercise, if permitted) and all taxes required to be paid
by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of
such shares, having been paid. If the Company fails for any reason to deliver to
the Holder certificates evidencing the Warrant Shares subject to a Notice of
Exercise by the Warrant Share Delivery Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of
Warrant Shares subject to such exercise (based on the VWAP of the Common Stock
on the date of the applicable Notice of Exercise), $10 per Trading Day
(increasing to $20 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such certificates are delivered or Holder rescinds
such exercise.

     

    ii.     Delivery of New Warrants
Upon Exercise.  If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon surrender of this
Warrant certificate, at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased Warrant Shares called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    iii.    Rescission
Rights.  If the Company fails to cause the Transfer Agent to
transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date,
then, the Holder will have the right to rescind such exercise.

     

    iv.    Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise.  In
addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the Holder is
required by its broker to purchase (in an open market transaction or otherwise)
or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue times (2) the
price at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Warrant Shares for which such exercise was
not honored (in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and delivery obligations
hereunder.  For example, if the Holder purchases Common Stock having a
total purchase price of $11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately
preceding sentence the Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the Company,
evidence of the amount of such loss.  Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    v.     No Fractional Shares or
Scrip.  No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant.  As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.

     

    vi.    Charges, Taxes and
Expenses.  Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of which
taxes and expenses shall be paid by the Company, and such certificates shall be
issued in the name of the Holder or in such name or names as may be directed by
the Holder; provided, however, that in the
event certificates for Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum
sufficient to reimburse it for any transfer tax incidental thereto.

     

    vii.   Closing of
Books.  The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    e)           Holder’s Exercise
Limitations.  The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below).  For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other  Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its
Affiliates.  Except as set forth in the preceding sentence, for purposes of
this Section 2(e), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for any schedules
required to be filed in accordance therewith.   To the extent
that the limitation contained in this Section 2(e) applies, the determination of
whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder’s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination.   In addition, a determination as to any group
status as contemplated above shall be determined in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder.  For purposes of this Section 2(e), in determining the
number of outstanding shares of Common Stock, a Holder may rely on the number of
outstanding shares of Common Stock as reflected in (A) the Company’s most recent
periodic or annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent written
notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding.  Upon the written or oral request of a Holder,
the Company shall within two Trading Days confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding.  In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported.  The “Beneficial Ownership
Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant.  The Holder, upon not
less than 61 days’ prior notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(e), provided that
the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply.  Any such increase or decrease will not be effective until the
61st
day after such notice is delivered to the Company.  The provisions of
this paragraph shall be construed and implemented in a manner otherwise than in
strict conformity with the terms of this Section 2(e) to correct this paragraph
(or any portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder of
this Warrant.

    
      
         

      

      
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    Section
3.             Certain
Adjustments.

     

    a)           Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding:
(i) pays a stock dividend or otherwise makes a distribution or distributions on
shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues by reclassification of shares of the Common Stock any shares of capital
stock of the Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares of Common
Stock (excluding treasury shares, if any) outstanding immediately before such
event and of which the denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares issuable upon
exercise of this Warrant shall be proportionately adjusted such that the
aggregate Exercise Price of this Warrant shall remain unchanged.  Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    b)           [INTENTIONALLY
DELETED]

     

    c)           Subsequent Rights
Offerings.  If the Company, at any time while the Warrant is
outstanding, shall issue rights, options or warrants to all holders of Common
Stock (and not to the Holders) entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the VWAP on the record
date mentioned below, then, the Exercise Price shall be multiplied by a
fraction, of which the denominator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of additional shares of Common Stock offered for subscription or
purchase, and of which the numerator shall be the number of shares of the Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of shares which the aggregate offering price of the total number
of shares so offered (assuming receipt by the Company in full of all
consideration payable upon exercise of such rights, options or warrants) would
purchase at such VWAP.  Such adjustment shall be made whenever such
rights, options or warrants are issued, and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights, options or warrants.

     

    d)           Pro Rata
Distributions.  If the Company, at any time while this Warrant
is outstanding, shall distribute to all holders of Common Stock (and not to the
Holders) evidences of its indebtedness or assets (including cash and cash
dividends) or rights or warrants to subscribe for or purchase any security other
than the Common Stock), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the VWAP determined
as of the record date mentioned above, and of which the numerator shall be such
VWAP on such record date less the then per share fair market value at such
record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith.  In either case
the adjustments shall be described in a statement provided to the Holder of the
portion of assets or evidences of indebtedness so distributed or such
subscription rights applicable to one share of Common Stock.  Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    e)           Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the
Company, directly or indirectly, in one or more related transactions effects any
merger or consolidation of the Company with or into another Person, (ii) the
Company, directly or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any, direct or
indirect, purchase offer, tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common Stock are
permitted to sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the outstanding
Common Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property, (v) the Company, directly or indirectly, in one or more related
transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person whereby such other Person
acquires more than 50% of the outstanding shares of Common Stock (not including
any shares of Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making or party to,
such stock or share purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent exercise of this Warrant, the
Holder shall have the right to receive, for each Warrant Share that would have
been issuable upon such exercise immediately prior to the occurrence of such
Fundamental Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the “Alternate
Consideration”) receivable as a result of such Fundamental Transaction by
a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction (without regard to
any limitation in Section 2(e) on the exercise of this Warrant).  For
purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration.  If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction.  Notwithstanding anything to the contrary, in the event
of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a
Fundamental Transaction involving a person or entity not traded on a national
securities exchange, including, but not limited to, the Nasdaq Global Select
Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or
any Successor Entity (as defined below) shall, at the Holder’s option,
exercisable at any time concurrently with, or within 30 days after, the
consummation of the Fundamental Transaction, purchase this Warrant from the
Holder by paying to the Holder an amount of cash equal to the Black Scholes
Value of the remaining unexercised portion of this Warrant on the date of the
consummation of such Fundamental Transaction.  “Black Scholes Value”
means the value of this Warrant based on the Black and Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”)
determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the time between
the date of the public announcement of the applicable Fundamental Transaction
and the Termination Date, (B) an expected volatility equal to the greater of
100% and the 100 day volatility obtained from the HVT function on Bloomberg as
of the Trading Day immediately following the public announcement of the
applicable Fundamental Transaction, (C) the underlying price per share used in
such calculation shall be the sum of the price per share being offered in cash,
if any, plus the value of any non-cash consideration, if any, being offered in
such Fundamental Transaction and (D) a remaining option time equal to the time
between the date of the public announcement of the applicable Fundamental
Transaction and the Termination Date.  The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Company under this Warrant and
the other Transaction Documents in accordance with the provisions of this
Section 3(e) pursuant to written agreements in form and substance reasonably
satisfactory to the Holder and approved by the Holder (without unreasonable
delay) prior to such Fundamental Transaction and shall, at the option of the
holder of this Warrant, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the other
Transaction Documents referring to the “Company” shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity had
been named as the Company herein.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    f)           Calculations. All
calculations under this Section 3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of this Section 3,
the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock (excluding
treasury shares, if any) issued and outstanding.

     

    g)           Notice to
Holder.

     

    i.      Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to any provision
of this Section 3, the Company shall promptly mail to the Holder a notice
setting forth the Exercise Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Notwithstanding the foregoing,
the filing of a Current Report on Form 8-K with the SEC with regard to the
forgoing will be deemed notice to the Holder.

     

    ii.     Notice to Allow Exercise by
Holder. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock, (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights, (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at its last address as it shall appear upon the Warrant Register of the Company,
at least 10 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.  To the extent that
any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K.  The Holder shall remain entitled to exercise this
Warrant during the period commencing on the date of such notice to the effective
date of the event triggering such notice except as may otherwise be expressly
set forth herein. Notwithstanding the foregoing, the filing of a Current Report
on Form 8-K with the SEC with regard to the forgoing will be deemed notice to
the Holder.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    Section
4.             Transfer of
Warrant.

     

    a)           Transferability.  This
Warrant and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent,
together with a written assignment of this Warrant substantially in the form
attached hereto duly executed by the Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such
transfer.  Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees, as applicable, and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  The Warrant, if properly
assigned in accordance herewith, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant issued.

     

    b)           New Warrants. This
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Holder or its agent or attorney.  Subject to compliance
with Section 4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. All Warrants issued on transfers or exchanges shall be dated
the initial issuance date set forth on the first page of this Warrant and shall
be identical with this Warrant except as to the number of Warrant Shares
issuable pursuant thereto.

     

    c)           Warrant Register. The
Company shall register this Warrant, upon records to be maintained by the
Company for that purpose (the “Warrant Register”),
in the name of the record Holder hereof from time to time.  The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the
contrary.

     

    d)           Representation by the
Holder.  The Holder, by the acceptance hereof, represents and
warrants that it is acquiring this Warrant and, upon any exercise hereof, will
acquire the Warrant Shares issuable upon such exercise, for its own account and
not with a view to or for distributing or reselling such Warrant Shares or any
part thereof in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted under the
Securities Act.

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    Section
5.             Miscellaneous.

     

    a)           No Rights as Stockholder
Until Exercise.  This Warrant does not entitle the Holder to
any voting rights, dividends or other rights as a stockholder of the Company
prior to the exercise hereof as set forth in Section 2(d)(i).

     

    b)           Loss, Theft, Destruction or
Mutilation of Warrant. The Company covenants that upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it (which, in the case of the Warrant, shall
not include the posting of any bond), and upon surrender and cancellation of
such Warrant or stock certificate, if mutilated, the Company will make and
deliver a new Warrant or stock certificate of like tenor and dated as of such
cancellation, in lieu of such Warrant or stock certificate.

     

    c)           Saturdays, Sundays,
Holidays, etc.  If the last or appointed day for the taking of
any action or the expiration of any right required or granted herein shall not
be a Business Day, then, such action may be taken or such right may be exercised
on the next succeeding Business Day.

     

    d)           Authorized
Shares.

     

    The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant.  The Company further covenants
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant.  The Company will
take all such reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the Trading Market upon which the
Common Stock may be listed.  The Company covenants that all Warrant
Shares which may be issued upon the exercise of the purchase rights represented
by this Warrant will, upon exercise of the purchase rights represented by this
Warrant and payment for such Warrant Shares in accordance herewith, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with
such issue).

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant against
impairment.  Without limiting the generality of the foregoing, the
Company will (i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase in
par value, (ii) take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may be,
necessary to enable the Company to perform its obligations under this
Warrant.

     

    Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     

    e)           Jurisdiction. All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be determined in accordance with the provisions of the
Purchase Agreement.

     

    f)           Restrictions.  The
Holder acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, and the Holder does not utilize cashless exercise,
will have restrictions upon resale imposed by state and federal securities
laws.

     

    g)           Nonwaiver and
Expenses.  No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice Holder’s rights, powers or
remedies.  Without limiting any other provision of this Warrant or the
Purchase Agreement, if the Company willfully and knowingly fails to comply with
any provision of this Warrant, which results in any material damages to the
Holder, the Company shall pay to Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable
attorneys’ fees, including those of appellate proceedings, incurred by Holder in
collecting any amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.

     

    h)           Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder by the Company shall be delivered in accordance with the notice
provisions of the Purchase Agreement.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    i)           Limitation of
Liability.  No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of Holder, shall
give rise to any liability of Holder for the purchase price of any Common Stock
or as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.

     

    j)           Remedies.  The
Holder, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant.  The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach
by it of the provisions of this Warrant and hereby agrees to waive and not to
assert the defense in any action for specific performance that a remedy at law
would be adequate.

     

    k)           Successors and
Assigns.  Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
successors and permitted assigns of Holder.  The provisions of this
Warrant are intended to be for the benefit of any Holder from time to time of
this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares.

     

    l)           Amendment.  This
Warrant may be modified or amended or the provisions hereof waived with the
written consent of the Company and Holders holding Warrants at least equal to
67% of the Warrant Shares issuable upon exercise of all then outstanding
Warrants.

     

    m)           Severability.  Wherever
possible, each provision of this Warrant shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

     

    n)           Headings.  The
headings used in this Warrant are for the convenience of reference only and
shall not, for any purpose, be deemed a part of this Warrant.

    

    ********************

    

    (Signature
Pages Follow)

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

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

    

    
      
        	 
      	
                NEURALSTEM,
      INC.

              
	 
      	 
      	 
      
	 
      	
                By:

              	
                  

              
	 
      	 
      	
                Name:

              
	 
      	 
      	
                Title:

              

      

    

    
      
         

      

      
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    NOTICE
OF EXERCISE

    

    TO:      NEURALSTEM, INC.

    

    (1) The
undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.

     

    (2) Payment
shall take the form of (check applicable box):

     

    o in lawful money of
the United States; or

     

    o [if permitted] the
cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c).

     

    (3) Please
issue a certificate or certificates representing said Warrant Shares in the name
of the undersigned or in such other name as is specified below:

     

    _______________________________

    

    The
Warrant Shares shall be delivered to the following DWAC Account Number or by
physical delivery of a certificate to:

    

    _______________________________

    

    _______________________________

    

    _______________________________

    

    [SIGNATURE
OF HOLDER]

    

    Name of
Investing Entity:
________________________________________________________________________

    Signature of Authorized Signatory of
Investing Entity:
_________________________________________________

    Name of
Authorized Signatory:
___________________________________________________________________

    Title of
Authorized Signatory:
____________________________________________________________________

    Date:
________________________________________________________________________________________

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
FORM

    

    (To
assign the foregoing warrant, execute

    this form
and supply required information.

    Do not
use this form to exercise the warrant.)

    

    FOR VALUE
RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
rights evidenced thereby are hereby assigned to

    
 

    _______________________________________________
whose address is

    

    _______________________________________________________________.

    

     

    
 

    _______________________________________________________________

    

    Dated:  ______________,
_______

    

    

    Holder’s
Signature:       
_____________________________

    

    Holder’s
Address:        
 _____________________________

    
   
   _____________________________

    

    

    

    Signature
Guaranteed:  ___________________________________________

    

    

    NOTE:  The
signature to this Assignment Form must correspond with the name as it appears on
the face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust
company.  Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00160-of-00352.parquet"}]]