Document:

exv10w1

Exhibit 10.1

2011 ANNUAL INCENTIVE AWARDS

GRANTED UNDER

RYDER SYSTEM, INC. 2005 EQUITY COMPENSATION PLAN

TERMS AND CONDITIONS

     The following terms and conditions apply to the 2011 annual incentive cash awards (the
“Awards”) granted by Ryder System, Inc. under the Ryder System, Inc. 2005 Equity Compensation Plan
(the “Plan”) a description of which is set forth in the relevant Guide to the Annual Incentive
Compensation Program (the “Guide”) to which these terms and conditions are appended. No individual
shall receive an Award unless the Company has notified the individual of the Award and delivered
these Terms and Conditions and the Guide to the individual. Certain terms of the Award, including
the performance goals and target payout amounts, are also set forth in the Guide and the payout
grids titled “Incentive Payout Components by Position” (“Payout Grid”) applicable to the
Participant. The Compensation Committee of the Company’s Board of Directors (the “Committee”)
shall administer the Awards in accordance with the Plan. Capitalized terms used herein and not
defined shall have the meaning ascribed to such terms in the Plan or the Guide.

	 	1.	 	General. The Award represents the right to receive a cash payment based on the
attainment of certain financial performance goals, on the terms and conditions set
forth herein, in the Guide and in the Plan, the applicable terms, conditions and other
provisions of which are incorporated by reference herein (collectively, the “Award
Documents”). It is intended that any Awards granted to “Covered Employees” as that
term is defined Section 162(m) of the Internal Revenue Code of 1986, as amended,
including any successor provisions and regulations (the “Code”), shall qualify as
“performance-based compensation” for purposes of Section 162(m).
	 
	 	 	 	The Award Documents supersede any and all prior oral representations, promises or
guarantees relating to short-term incentives or annual bonuses. All provisions of the
Award Documents shall apply unless otherwise prohibited by law.
	 
	 	 	 	In the event there is an express conflict between the provisions of the Plan and those
set forth in the Guide or in these terms and conditions, the terms and conditions of the
Plan shall govern. Unless otherwise approved by the Committee, individuals who have
written agreements which specifically provide for annual incentive compensation other
than that which is provided under the Award or who are participants in any other
short-term incentive compensation plan of the Company or its subsidiaries and affiliates
are not eligible to receive an Award hereunder. The Company may, in its sole
discretion, provide discretionary or other bonuses to Company employees, whether or not
they receive an Award.
	 
	 	 	 	The terms and conditions contained herein may be amended by the Committee as permitted
by the Plan; none of the terms and conditions of the Award may be amended or waived
without the prior approval of the Committee. Any amendment or waiver not approved by
the Committee will be void and have no force or effect. Any employee or officer of the
Company who authorizes any such amendment or waiver without the prior approval of the
Committee will be subject to disciplinary action up to and including forfeiture of an
Award and/or termination of employment (unless otherwise prohibited by law). All
decisions and determinations made by the Committee relating to the Awards shall be final
and binding on the Participant, his or her beneficiaries and any other person having or
claiming an interest under the Plan.

 

 

	 	2.	 	Financial Performance Goals; Performance Period. The Awards are intended to reward
Participants for the attainment by the Company of certain performance goals during the
period beginning on January 1, 2011 and ending on December 31, 2011 (the “Performance
Period”). The performance metrics (the “Performance Metrics”) and performance goals
(the “Performance Goals”) applicable to a Participant, the weight given to each of the
Performance Metrics and any other requirements or limitations of the Awards are approved
by the Committee, may vary based on the Participant’s Management Level, position and
responsibilities and will be set forth in the Guide and the Payout Grid applicable to
such Participant.
	 
	 	 	 	Once established, Performance Goals shall not be changed during the Performance Period;
provided, however, if the Committee determines that external changes or other
unanticipated business conditions have materially affected the fairness of the
Performance Goals, to the extent permitted by Section 162(m) of the Code if applicable,
then the appropriate adjustments may be made to the Performance Goals (either up or
down) during the Performance Period.
	 
	 	 	 	The amount of the payment that the Participant is eligible to receive (the “Payout
Amount”) (expressed as a percentage of the Participant’s Eligible Base Salary) in the
event that the Performance Goals are achieved is also set forth in the Guide.
	 
	 	 	 	For purposes of the Award, Eligible Base Salary means the annual rate of pay for the
Performance Period, excluding all other compensation paid to the Participant during the
year, including but not limited to bonuses, incentives, commissions, car allowance,
employee benefits, relocation expenses, and any imputed income for which the Participant
may be eligible (all as more fully described in the Guide). As soon as practicable
after the end of the Performance Period, the Committee will determine the attainment of
the Performance Goals, to the extent applicable, in accordance with generally accepted
accounting principles (“GAAP”), provided that, the Committee may, in its sole discretion
and to the extent permitted under Section 162(m) of the Code, if applicable, exclude or
include certain items from actual results in determining performance including (i)
changes in accounting principle, standard or policy; (ii) changes in law or regulation;
(iii) asset impairments; (iv) restructuring charges; (v) discontinued operations; and
(vi) significant non-operational or non-recurring items, in each case, other than those
included in the Company’s 2011 business plan.
	 
	 	 	 	The Committee may increase or decrease a Participant’s Payout Amount based on the
Participant’s individual performance by way of a performance modifier to the extent
provided in the Guide; provided, however that in no event may the Payout Amount for a
Participant that is in a Management Level 17 or above be increased by way of a
performance modifier.
	 
	 	3.	 	Payment. Subject to Sections 4 and 5 below and the provisions of the Guide,
amounts payable with respect to the Award will be payable in cash to the Participant
following the determination that the Performance Goals have been satisfied and the
Committee’s (or Board, as the case may be) approval of the payout. Payment shall be
made during the 2012 calendar year, but in no event later than March 15, 2012 (the
applicable date, the “Payment Date”), provided that the Participant is, on the Payment
Date, and has been from the first day of the Performance Period through the Payment
Date, continuously employed in good standing by the Company or a Subsidiary. No
Participant shall have a vested or accrued right to any payment under the Award. For
purposes of these terms and conditions, the Participant shall not be deemed to have
terminated his or her employment with the Company and its Subsidiaries if he or she is
then immediately thereafter employed by the Company or another Subsidiary.
Notwithstanding anything to the contrary set forth herein, (i) the Company retains the
right, in its sole and absolute discretion, to withhold payment and participation,

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	 	 	 	from any Participant who violates or has violated any Company value, principle,
agreement, plan, procedure, protocol, policy or the rules contained in the Award
Documents even if there are no documented performance issues in the Participant’s
personnel file and (ii) if the Company has any claim against the Participant for money
or assets owed that have not been satisfied by the Participant, the amount otherwise
payable pursuant to the Award shall be reduced by any such unpaid claims unless
otherwise prohibited by law. The calculation of amounts payable pursuant to the Award
with respect to Participants outside of the U.S. will be set forth in the Guide.
	 
	 	4.	 	New Hire, Promotion or Transfer. Participants who are newly hired, promoted,
or transferred into or out of eligible positions, and those who move from one
eligibility level to another, will receive a pro-rata incentive based on the terms in
effect for his/her Management Level position, the portion of time spent in each
position during the Performance Period, the annual rate of pay and the target incentive
award for the eligible position(s).
	 
	 	5.	 	Termination of Employment; Temporary Leave. Except as specifically set forth
below, the Award will terminate and no amounts will be paid under the Award following
the termination of the Participant’s employment as follows:

	 	(a)	 	Resignation by the Participant or Termination by the
Company or a Subsidiary: Notwithstanding anything herein to the contrary,
(i) with respect to Participants who are entitled to severance benefits under
the terms and conditions of any individual agreement or under the Company’s
Executive Severance Plan, any amounts due will be calculated in accordance
with such agreement or plan and (ii) with respect to Participants who are not
otherwise entitled to severance benefits under the terms of any individual
agreement or the Company’s Executive Severance Plan, the Award will terminate
and no amounts will be paid under the Award, provided that if a Participant’s
employment is terminated by the Company after October 1, 2011 but before the
Payment Date as a result of a reduction in force by the Company, or a location
closing or loss of business, as determined by the Committee, in its sole and
absolute discretion, the Participant shall be eligible to receive a payment
hereunder, if the Participant would have received a payment under the Award but
for his or her termination. Payment made to a terminated employee pursuant to
the preceding sentence shall only be made if the Participant has executed and
delivered to the Company a release in favor of the Company in form and
substance satisfactory to the Company, which has not been revoked, and shall
not be made prior to the effective date of such release.
	 
	 	 	 	Notwithstanding the foregoing, if the Participant is terminated by the
Company or a Subsidiary prior to the Payment Date and is subsequently
re-employed by the Company or a Subsidiary prior to the Payment Date, such
Participant shall be eligible to receive a pro-rata payment on the Payment
Date based on the number of days during the Performance Period that the
Participant was considered to be an active employee, as determined by the
Company, provided that, any such payment shall be reduced by any amounts
previously paid to Participant in connection with his or her termination of
employment pursuant to the preceding paragraph or otherwise in lieu of
amounts earned under the Award.
	 
	 	 	 	In the event that the Participant voluntarily terminates his or her
employment with the Company prior to the Payment Date, (i) if the
Participant is re-employed by the Company or a Subsidiary within 90 days of
the effective date of such termination, but in any event prior to the
Payment Date, the Participant shall be

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	 	 	 	eligible to receive a pro-rata payment on the Payment Date based on the
number of days during the Performance Period that the Participant was
considered to be an active employee, as determined by the Company, provided
that, any such payment shall be reduced by any amounts previously paid to
Participant in connection with his or her termination of employment pursuant
to the preceding paragraph or otherwise in lieu of amounts earned under the
Award; or (ii) unless otherwise provided for herein, if the Participant is
re-employed by the Company or a Subsidiary more than 90 days after the
effective date of such resignation, but in any event before the end of the
Performance Period, the Participant shall be eligible to receive a pro-rata
payment on the Payment Date based on the number of days during the
Performance Period that the Participant was considered to be an active
employee, as determined by the Company, after the Participant was
re-employed.
	 
	 	(b)	 	Death or Disability (including Disability Retirement):
If the death or Disability occurs after the end of the Performance Period, the
Participant (or his or her Beneficiary, in the event of death) shall receive
all amounts otherwise payable to him or her under the Award on the Payment
Date. If the death or Disability occurs during the Performance Period and the
Participant would have received a payment under the Award but for his or her
death or Disability, the Participant (or his or her Beneficiary, in the event
of death) will be eligible to receive a pro-rata payment based on the amount
otherwise payable to the Participant on the Payment Date and the number of days
during the Performance Period that the Participant was considered to be an
active employee, as determined by the Company.
	 
	 	(c)	 	Workers’ Compensation or Approved Leave of Absence:
Except as otherwise set forth herein, a Participant who takes an approved
workers’ compensation leave or an approved leave of absence during any portion
of the Performance Period and is actively employed for at least one hundred and
eighty (180) days during 2011, as determined by the Company, will be eligible
to receive a payment on the Payment Date (to the extent the Participant would
have received a payment under the Award but for his or her leave of absence),
which will be pro-rated based on the number of days during the Performance
Period that the Participant is considered to be an active employee, as
determined by the Company.
	 
	 	(d)	 	Military Leave of Absence: A Participant who takes an
approved military leave of absence will be eligible to receive a payment on the
Payment Date (to the extent the Participant would have received a payment under
the Award but for his or her military leave of absence) based on the
Participant’s full Eligible Base Salary regardless of the number of days worked
during the Performance Period.
	 
	 	(e)	 	Retirement: If the Retirement occurs after December
31, 2011 and before the Payment Date, the Participant shall receive all amounts
due to him or her under the Award on the Payment Date. If the Retirement
occurs on or prior to December 31, 2011, the Award will terminate and no
amounts will be paid under the Award.

	 	 	 	As used herein, the term “Retirement” means termination of employment for any reason
(other than for Cause or by reason of death or Disability) upon or following
attainment of age 55 and completion of 10 years of service, or upon or following
attainment of age 65 without regard to years of service. As used herein, the term
“Cause” shall have the

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	 	 	 	meaning set forth in any individual, valid, written agreement between the
Participant and the Company or any Subsidiary, or, if none exists, shall mean a
determination of “Cause” under any applicable Severance Plan, as in effect on the
date hereof.
	 
	 	6.	 	Withholding Taxes; Section 409A. Payment of the Award will be taxable to the
Participant as ordinary income, subject to wage-based withholding and reporting. The
Company will satisfy this withholding obligation by reducing the cash to be delivered
in an amount sufficient to satisfy the withholding obligations. This Section 6 shall
only apply with respect to the Company’s U.S. federal, state and local income tax
withholding obligations. The Company may satisfy any tax obligations it may have in
any other jurisdiction in any manner it deems, in its sole and absolute discretion, to
be necessary or appropriate. All payments made under the Award are intended to
constitute short-term deferral amounts excludible from the requirements of Section 409A
of the Code.
	 
	 	7.	 	Change of Control. Notwithstanding anything herein to the contrary, in the
event of a Change in Control of the Company during the Performance Period, (i) with
respect to Participants who are entitled to Change of Control benefits under the terms
of any individual agreement or any severance plan or arrangement, the amount payable
pursuant to this Award will be calculated in accordance with such agreement or plan and
(ii) with respect to Participants who are not otherwise entitled to Change of Control
benefits under the terms of any individual agreement or any severance plan or
arrangement, and whose employment is terminated in connection with or as a result of
the Change of Control, upon approval by the Committee, the Participant will be entitled
to receive a pro-rata payment based on the number of days during the Performance Period
that the Participant is considered to be an active employee, as determined by the
Company, assuming target performance. This payment shall be made no later than March
15, 2012. 
	 
	 	8.	 	Sale of Business. If a business unit is sold during the Performance Period,
the Participants that are employees of such business unit will receive a pro-rata
payment. Such payment will be made over time or in one lump sum, as determined by the
Committee, provided that in any event all payments will be made on or before March 15,
2012.
	 
	 	9.	 	Statute of Limitations and Conflicts of Laws. All rights of action by, or on
behalf of the Company or by any shareholder against any past, present, or future member
of the Board of Directors, officer, or employee of the Company arising out of or in
connection with the Award or the Award Documents, must be brought within three years
from the date of the act or omission in respect of which such right of action arises.
The Awards and the Award Documents shall be governed by the laws of the State of
Florida, without giving effect to principles of conflict of laws, and construed
accordingly.
	 
	 	10.	 	No Employment Right. Neither the grant of the Award, nor any action taken
hereunder, shall be construed as giving any employee or any Participant any right to be
retained in the employ of the Company. The Company is under no obligation to grant
Awards hereunder. Nothing contained in the Award Documents shall limit or affect in
any manner or degree the normal and usual powers of management, exercised by the
officers and the Board of Directors or committees thereof, to change the duties or the
character of employment of any employee of the Company or to remove the individual from
the employment of the Company at any time, all of which rights and powers are expressly
reserved.
	 
	 	11.	 	No Assignment. A Participant’s rights and interest under the Award may not be
assigned or transferred, except as otherwise provided herein, and any attempted
assignment or transfer shall be null and void and shall extinguish, in the Company’s
sole discretion, the Company’s

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	 	 	 	obligation under the Award to make any payment thereunder.
	 
	 	12.	 	Unfunded Plan. Any amounts owed under the Award shall be unfunded. The Company
shall not be required to establish any special or separate fund, or to make any other
segregation of assets, to assure payment of any amounts payable under the Award.
	 
	 	13.	 	Definitions. Capitalized terms used above that are not defined below have the
meanings set forth in the Plan.

	 	(a)	 	“Change of Control” occurs when
	 
	 	 	 	          (i) any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “1934
Act”)) (a “Person”) becomes the beneficial owner, directly or indirectly, of
thirty percent (30%) or more of the combined voting power of the Company’s
outstanding voting securities ordinarily having the right to vote for the
election of directors of the Company; provided, however, that for purposes
of this subparagraph (i), the following acquisitions shall not constitute a
Change of Control: (A) any acquisition by any employee benefit plan or
plans (or related trust) of the Company and its subsidiaries and affiliates
or (B) any acquisition by any corporation pursuant to a transaction which
complies with clauses (A), (B) and (C) of subparagraph (iii) below; or
	 
	 	 	 	          (ii) the individuals who, as of January 1, 2007, constituted the Board
of Directors of the Company (the “Board” generally and as of January 1, 2007
the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director
subsequent to January 1, 2007 whose election, or nomination for election,
was approved by a vote of the persons comprising at least a majority of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or threatened
election contest, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the 1934 Act) (as in effect on January 23, 2000)) shall
be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board; or
	 
	 	 	 	          (iii) there is a reorganization, merger or consolidation of the Company
(a “Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Company’s outstanding
Shares and outstanding voting securities ordinarily having the right to vote
for the election of directors of the Company immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
fifty percent (50%) of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities ordinarily having the right to vote for the election of
directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all of
the Company’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to
such Business Combination, of the Company’s outstanding Shares and
outstanding voting securities ordinarily having the right to vote for the
election of directors of the Company, as the case may be, (B) no Person
(excluding any corporation resulting from such Business Combination or any

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	 	 	 	employee benefit plan or plans (or related trust) of the Company or such
corporation resulting from such Business Combination and their subsidiaries
and affiliates) beneficially owns, directly or indirectly, 30% or more of
the combined voting power of the then outstanding voting securities of the
corporation resulting from such Business Combination and (C) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination; or
	 
	 	 	 	          (iv) there is a liquidation or dissolution of the Company approved by
the shareholders; or
	 
	 	 	 	          (v) there is a sale of all or substantially all of the assets of the
Company.

	 	(b)	 	“Disability” means (i) the Participant is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months; (ii) the
Participant is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than 3 months under an accident
and health plan of the Company; or (iii) a determination by the Social Security
Administration that a Participant is totally disabled.

7Exhibit 4.1

Exhibit 4.1

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

FIBROCELL SCIENCE, INC.

          -     

	 	 	 
	Warrant Shares:                     

	 	Initial Exercise Date:                     ,           

THIS 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 December 31, 2015 (the
“Termination Date”) but not thereafter, to subscribe for and purchase from Fibrocell
Science, 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.

a) “Affiliate” means any Person that, directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control with a Person,
as such terms are used in and construed under Rule 405 under the Securities Act.

b) “Commission” means the United States Securities and Exchange Commission.

c) “Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may hereafter be
reclassified or changed.

d) “Common Stock Equivalents” means any securities of the Company which would
entitle the holder thereof to acquire at any time Common Stock, including, without
limitation, any debt, preferred stock, rights, options, warrants or other instrument that is
at any time convertible into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.

e) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

 

 

 

f) “Exempt Issuance” means the issuance of (a) shares of Common Stock or
options to employees, consultants, officers or directors of the Company pursuant to any
stock or option plan or agreement duly adopted for such purpose, by a majority of the
non-employee members of the Board of
Directors or a majority of the members of a committee of non-employee directors
established for such purpose, (b) securities upon the exercise or exchange of or conversion
of any securities exercisable or exchangeable for or convertible into shares of Common Stock
issued and outstanding on the date of this Warrant or to be issued upon the conversion of
any of the Company’s preferred stock, including, without limitation, the Company’s Series D
Convertible Preferred Stock, provided that such securities have not been amended since the
date of this Warrant to increase the number of such securities or to decrease the exercise
price, exchange price or conversion price of such securities, (c) securities issued pursuant
to acquisitions or strategic transactions approved by a majority of the disinterested
directors of the Company, provided that any such issuance shall only be to a Person (or to
the equity holders of a Person) which is, itself or through its subsidiaries, an operating
company or an owner of an asset in a business synergistic with the business of the Company
and shall provide to the Company additional benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing securities primarily for
the purpose of raising capital or to an entity whose primary business is investing in
securities and (d) securities issued to the Placement Agent in the transactions pursuant to
which this Warrant is being issued (including all future transactions pursuant to which
similar Warrants are being issued).

g) “Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity of any kind.

h) “Registration Statement” means a registration statement covering the resale
by the Holder of the Warrant Shares.

i) “Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same effect as such
Rule.

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

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

l) “Trading Market” means any of the following markets or exchanges on which
the Common Stock is listed or quoted for trading on the date in question: the NYSE AMEX, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New
York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

m) “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 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 (c) 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 Company, the fees and expenses of which shall be paid by the Company.

 

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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 or, 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
two (2) Business Days 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.

b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $0.50, subject to adjustment hereunder (the “Exercise Price”).

c) Cashless Exercise. If, at any time after the earlier of (i) the one year
anniversary of the date of the Purchase Agreement and (ii) the completion of the
then-applicable holding period required by Rule 144, or any successor provision then in
effect, there is no effective Registration Statement registering, or no current prospectus
available for, the resale of the Warrant Shares by the Holder, 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.

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

 

3

 

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 the Holder and the Holder agrees in writing to make any resale
of the Warrant Shares in accordance with such Registration Statement or
(B) the shares are eligible for resale by the Holder without volume or
manner-of-sale limitations pursuant to Rule 144, 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, having been paid.

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.

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 seventh
(7th) Trading Day after such Warrant Share Delivery Date, then,
the Holder will have the right to rescind such exercise.

iv. 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.

v. 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.

vi. 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.

 

4

 

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 by
the Holder 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 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 9.99% 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 decrease
the Beneficial Ownership Limitation provisions of this Section 2(e) and the
provisions of this Section 2(e) shall continue to apply. Any such 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.

 

5

 

f) Call Provision. Subject to the provisions of Section 2(e) and this
Section 2(f), if, after the effective date of the Registration Statement
“Effective Date”), (i) the VWAP for each of 20 consecutive Trading Days (the
“Measurement Period,” which 20 consecutive Trading Day period shall not have
commenced until after the Effective Date) exceeds 250% of the then Exercise Price
and (ii) the Holder is not in possession of any information that constitutes, or
might constitute, material non-public information which was provided by the Company,
then the Company may, within 1 Trading Day of the end of such Measurement Period,
call for cancellation of all or any portion of this Warrant for which a Notice of
Exercise has not yet been delivered (such right, a “Call”) for consideration
equal to $.001 per Share. To exercise this right, the Company must deliver to the
Holder an irrevocable written notice (a “Call Notice”), indicating therein
the portion of unexercised portion of this Warrant to which such notice applies. If
the conditions set forth below for such Call are satisfied from the period from the
date of the Call Notice through and including the Call Date (as defined below), then
any portion of this Warrant
subject to such Call Notice for which a Notice of Exercise shall not have been
received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on the
thirtieth (30th) calendar day after the date the Call Notice is received by the
Holder (such date and time, the “Call Date”). Any unexercised portion of
this Warrant to which the Call Notice does not pertain will be unaffected by such
Call Notice. In furtherance thereof, the Company covenants and agrees that it will
honor all Notices of Exercise with respect to Warrant Shares subject to a Call
Notice that are tendered through 6:30 p.m. (New York City time) on the Call Date.
The parties agree that any Notice of Exercise delivered following a Call Notice
which calls less than all the Warrants shall first reduce to zero the number of
Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant
Shares available for purchase under this Warrant. For example, if (A) this Warrant
then permits the Holder to acquire 100 Warrant Shares, (B) a Call Notice pertains to
75 Warrant Shares, and (C) prior to 6:30 p.m. (New York City time) on the Call Date
the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (x) on
the Call Date the right under this Warrant to acquire 25 Warrant Shares will be
automatically cancelled, (y) the Company, in the time and manner required under this
Warrant, will have issued and delivered to the Holder 50 Warrant Shares in respect
of the exercises following receipt of the Call Notice, and (z) the Holder may, until
the Termination Date, exercise this Warrant for 25 Warrant Shares (subject to
adjustment as herein provided and subject to subsequent Call Notices). Subject
again to the provisions of this Section 2(f), the Company may deliver subsequent
Call Notices for any portion of this Warrant for which the Holder shall not have
delivered a Notice of Exercise. Notwithstanding anything to the contrary set forth
in this Warrant, the Company may not deliver a Call Notice or require the
cancellation of this Warrant (and any such Call Notice shall be void), unless, from
the beginning of the Measurement Period through the Call Date, (1) the Company shall
have honored in accordance with the terms of this Warrant all Notices of Exercise
delivered by 6:30 p.m. (New York City time) on the Call Date, and (2) the
Registration Statement shall be effective as to all Warrant Shares and the
prospectus thereunder available for use by the Holder for the resale of all such
Warrant Shares, and (3) the Common Stock shall be listed or quoted for trading on
the Trading Market, and (4) there is a sufficient number of authorized shares of
Common Stock for issuance of all Securities under the Transaction Documents, and (5)
the issuance of the shares shall not cause a breach of any provision of Section 2(e)
herein. The Company’s right to call the Warrants under this Section 2(f) shall be
exercised ratably among the Holders based on each Holder’s initial purchase of
Warrants.

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 its shares of 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.

 

6

 

b) 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.

c) Subsequent Equity Sales. If the Company at any time while this Warrant is
outstanding, shall sell or grant any option to purchase, or sell or grant any right to
reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option
to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any
Person to acquire shares of Common Stock, at an effective price per share less than the then
Exercise Price (such lower price, the “Base Share Price” and such issuances
collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common
Stock Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights per share which are issued in connection
with such issuance, be entitled to receive shares of Common Stock at an effective price per
share that is less than the Exercise Price, such issuance shall be deemed to have occurred
for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise
Price shall be reduced and only reduced to equal the Base Share Price and the number of
Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price
payable hereunder, after taking into account the decrease in the Exercise Price, shall be
equal to the aggregate Exercise Price prior to such adjustment. Such adjustment shall be
made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the
foregoing, no adjustments shall be made, paid or issued under this Section 3(c) in respect
of an Exempt Issuance.

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 or rights or warrants 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.

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

 

7

 

(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, which results in securities that are not listed on a Trading Market
being issued to the Holder, 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 in accordance with the provisions of this
Section 3(e) 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). 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 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 with the same effect as if
such Successor Entity had been named as the Company herein.

 

8

 

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.

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, excluding a stock dividend as contemplated in Section 3(a),
(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 20 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.

Section 4. Transfer of Warrant.

a) Transferability. Subject to compliance with any applicable securities laws
and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder
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.

 

9

 

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 original Issue Date 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) Transfer Restrictions. If, at the time of the surrender of this Warrant in
connection with any transfer of this Warrant, the transfer of this Warrant shall not be
either (i) registered pursuant to an effective registration statement under the Securities
Act and under applicable state securities or blue sky laws or (ii) eligible for resale
without volume or manner-of-sale restrictions or current public information requirements
pursuant to Rule 144, the Company may require, as a condition of allowing such transfer,
that the Holder or transferee of this Warrant, as the case may be, provide to the Company an
opinion of counsel selected by the Holder or transferee and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such transferred
Securities under the Securities Act.

e) 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.

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.

 

10

 

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).

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. This Warrant and any dispute, disagreement, or issue of
construction or interpretation arising hereunder, whether relating to its execution, its
validity, the obligations provided herein or performance, shall be governed or interpreted
according to the laws of the State of Delaware without regard for principles of conflicts of
laws.

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered, 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, notwithstanding the fact that
all rights hereunder terminate on the Termination Date. 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.

 

11

 

h) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company at the address set forth in the Company’s
records.

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 the Holder.

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)

 

12

 

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.

	 	 	 	 	 
	 	FIBROCELL SCIENCE, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	David Pernock 	 
	 	 	Title:  	Chief Executive Officer 	 

 

13

 

NOTICE OF EXERCISE

	 	 	 
	TO:

	 	FIBROCELL SCIENCE, 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:

	 	 	 
	 	 	 
	 	 	 
	 	 	 

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in
Regulation D promulgated under the Securities Act of 1933, as amended.

[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.

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