Document:

exv10w1

 

EXHIBIT 10.1

Northwest Biotherapeutics DCVax-Brain Services Agreement

	 	 	 
	To: Northwest Biotherapeutics

	 	Agreement #: 051407-1
	18701 120th Avenue NE, Suite 101
	 	 
	Bothell, WA 98011

	 	Date: 5/17/07
	Phone No: (425) 608-3000

	 	Cognate Contact: Alan Smith
	Fax No: (425) 608-3009

	 	Phone:     410-455-5564       Fax: 410-455-5562
	Email:

	 	Email: asmith@cognatebioservices.com

The attached Cognate BioServices, Inc., Services Terms and Conditions dated 5/17/07 is incorporated
in its entirety in this Services Agreement. Together, the Cognate BioServices Service Terms and
Conditions and this Services Proposal are referred to as the Agreement.

We have prepared the Agreement for the services requested. Due to the broad nature of the tasks
required, and the differing mix of services required at various stages, we feel it is important to
quote these services in monthly increments. These increments reflect estimated costs, and some
variation, either up or down, can be anticipated. We will bill Northwest Biotherapeutics (“NWBT”)
the amounts set forth in the attached budget (Exhibit B) to perform the services as indicated in
the attached “Scope of Work Proposal for Northwest Biotherapeutics, Inc. Phase II Clinical Trial
for the Treatment of Glioblastoma with DCVax-Brain”
(Exhibit A). The initial monthly charge is
[        ] per
month. The monthly charge is subject to Cognate’s quarterly review and change. The projected
types, amounts and timing of various services reflected in the attached budget are based upon
Cognate’s understanding that NWBT wishes to move as quickly as possible in its brain cancer
clinical trial, as well as to make certain manufacturing improvements and pursue certain R&D
objectives.

This Agreement only applies to only to NWBT’s DCVax-Brain project.

Cognate BioServices, Inc. (“Cognate”) will reconcile on a quarterly basis the amounts paid by NWBT
with Cognate’s actual fee, including without limitation, charges, expenses and mark-ups of whatever
nature, within 15 days of the close of each quarter. Cognate will then provide to NWBT a “true-up”
statement, showing the additional amounts to be paid by NWBT or the amounts to be credited to NWBT.
Any additional payments due from NWBT will be payable to Cognate within 15 days after delivery of
the “true-up” statement. Any such credits due to NWBT will be deducted from the next monthly
payment due from NWBT or refunded as the case may be. Any anticipated material changes in the
monthly amounts to be billed to NWBT by Cognate, beyond the anticipated variations described above,
will be promptly forwarded to NWBT for approval.

The quarterly reconciliation will be based on the following hourly rates:

	 	 	 
	Executive management

	 	[        ]
	Senior management

	 	[        ]

 

 

	 	 	 
	Director level

	 	[                          ]
	Managers

	 	[                          ]
	Scientists, technicians and other staff

	 	[                          ]

Billing rates will vary by individual employee, but a summary and statement of adjustments will be
provided at the close of each quarter.

At the earlier of the commencement of manufacturing or nine months after execution of this
Agreement, Cognate shall, on a quarterly basis, compare actual patient enrollment with the
predicted enrollment as set forth in Exhibit C. In the event that [                          ]

Both parties will jointly determine the optimal mechanism and timing for dissemination, management,
and reporting of progress with respect to tasks performed during the previous period of time and
the upcoming period of time. Progress reports in the form of teleconference, written and other
forms will be determined between the parties.

The price to NWBT for performance of the services summarized above is detailed as follows:

	 	 	 	 	 	 	 
	Payment due upon next equity finanicng
	 	 	 	 	 	 
	 

Non-refundable contract initiation fee

	 	 
	 	[               ]
	 
	 	 	 	 	 	 
	Monthly cost payments

	 	 	 	amounts per Exhibit B

	 

	 	 	 	 	 	 

The monthly payments are to be made by NWBT at least 15 days in advance of the start of the month
to which they relate.

Terms and Conditions:

The attached Cognate Therapeutics, Inc. Services Terms and Conditions of even date herewith apply
to the services provided hereunder.

Duration:

Unless otherwise terminated in accordance with the terms herein, this Agreement shall continue from
the date of commencement of services until the earlier of: a) [                          ]

 

 

[        ]

For inquiries please contact Alan Smith at (410) 455-5564; Fax: (410) 455-5562.

Client’s Authorization:

Proposal Agreed and Accepted

	 	 	 
	Signature

	 	Date
	 
	 
	 	 
	Print Name

	 	Title
	 
	 
	 	 
	Company

	 	Phone
	 
	 
	 	 
	Address
	 	 
	 
	 
	 	 
	Billing Name/Address

	 	Fax
	 
	 
	 	 
	Cognate’s Authorization:
	 	 
	 
	 	 
	Signature

	 	Date
	 
	 
	 	 
	Print Name     Alan K. Smith

	 	Title President and COO
	 
	 
	 	 
	Company       Cognate BioServices, Inc.

	 	Phone (410) 455-5564
	 
	 
	 	 
	Address          1448 So. Rolling Rd., Baltimore, MD 21227
	 	 
	 
	 
	 	 
	Billing Name/Address       same

	 	Fax (410) 455-5562
	 

 

 

COGNATE BIOSERVICES, INC. SERVICES

TERMS AND CONDITIONS DATED 5/17/07

SERVICES: Subject to these terms and conditions and to the terms and conditions on the
attached Services Agreement (collectively, “Agreement”), Cognate BioServices, Inc. (“Cognate”) will
provide Services as attached in Exhibit A.

ACCEPTANCE OF AGREEMENT: This Agreement is valid only for the entity to whom it is addressed
(“Client”) and only until the date inserted for the “Quote Valid To” date stated on the face page
hereof. Client may accept this Agreement by executing the signature page above.

Fees, Costs and Expenses: The stated charges are exclusive of any taxes, imposts, stamp duties,
consular or other fees, duties, licenses or levies (“Taxes”), now or hereinafter imposed upon the
Services. Client shall pay any Taxes related to the Services and reimburse Cognate for any such
Taxes which Cognate is required to pay. Client shall provide an exemption certificate acceptable
to the authorities responsible for any such Taxes. All such Taxes shall be billed as a separate
item on the invoice.

PAYMENT TERMS: Payment will be made on a monthly basis in accordance with the budget set forth in
Exhibit B and in accordance with an invoice from Cognate 15 days prior to the start of the month in
which the services are rendered and will be payable within 15 days after the invoice date. If
payment is not received by the due date, a service charge will be
added at the rate of [           ]  on unpaid invoices from the due
date thereof.

TERMINATION: Client may cancel the Services effective one hundred eighty (180) days following
documented receipt by Cognate of Client’s written notice of termination. Upon such documented
receipt, Cognate will immediately cease all further work and activity with respect to the Services
and use reasonable efforts to minimize wind-up costs. Client shall compensate Cognate for all
reasonable and documented wind-up costs incurred by Cognate and all unpaid amounts for services
rendered prior to termination. Client shall further make an additional termination fee payment to
Cognate equal to
[          ]

CREDIT TERMS AND COLLECTION COSTS: If Cognate determines, at any time and in its sole discretion,
that Client may not pay the contract price in full when due, Cognate may demand reasonable
assurances from Client, including, without limitation, a letter of credit for payment of the price
or payment in cash before performing all or a portion of the Services. Upon making such demand,
Cognate may suspend shipments until such demand is satisfied. If within 30 days of Cognate’s
making such demand, Client fails to agree and comply with such different terms of payment and/or
fails to give adequate assurance of payment, Cognate may treat such failure as a repudiation by
Client of its agreement with Cognate with respect to the portion of the agreement still to be
performed and terminate such agreement.

 

 

CONFIDENTIAL INFORMATION: Except for regulatory purposes and any other permitted purposes
hereunder, neither Cognate nor Client (in each case, the “Receiving Party”) shall disclose to
third parties any proprietary data or other information (“Confidential Information”) received from
the other party (in each case, the “Disclosing Party”), unless the information (i) was known to the
Receiving Party at the time of its receipt from the Disclosing Party; (ii) is or becomes publicly
available through publication or otherwise without breach of this Agreement; (iii) is received from
a third party who was under no obligation to the Disclosing Party to keep confidential such
Confidential Information, (iv) is developed by the Receiving Party without benefit of the
Confidential Information disclosed by the Disclosing Party; or, (v) is required by court order to
be disclosed, except with the prior approval of the Disclosing Party, which approval shall not be
unreasonably withheld or denied. It is the intention of the parties that Cognate shall be able to
use such Client Confidential Information as may demonstrate Cognate’s capabilities and
accomplishments for business development purposes, without violation of HIPAA rules. Upon
termination or completion of Services by Cognate, Cognate shall return to Client all Client
Confidential Information, except Cognate may retain one such copy for archival, regulatory and any
other permitted uses.

OWNERSHIP OF MATERIALS: Materials provided by Client to Cognate for Cognate’s use in providing
Services shall at all times be the property of, and the risk of loss with respect thereto shall
remain with, Client. Cognate will not, without prior written approval from Client, transfer these
materials to a third party. Upon receipt of payment in full for the Services, Cognate shall either
return or dispose of all portions of the materials, as requested by Client. For
equipment purchased by Cognate but fully reimbursed by Client (including, without limitation, all
applicable taxes), ownership of said reimbursed equipment shall be with Client.

OWNERSHIP OF DELIVERABLES: Client shall own all data and test results acquired or created through
Cognate’s provision of the Services, provided, however, that Cognate shall be permitted to use such
data and test results for regulatory purposes, and with the approval of Client, which shall not be
unreasonably withheld or denied, to use such data and test results for business development
purposes. It is the intention of the parties that Cognate shall be able to use such data and test
results as may demonstrate Cognate’s capabilities and accomplishments for business development
purposes, to the extent said use does not violate HIPAA rules.

JOINT DEVELOPMENTS: Advancements, modifications and other new intellectual property that are
clearly and demonstrably developed jointly by Client and Cognate will be owned jointly by Client
and Cognate, in accordance with standard patent rules.

COGNATE DEVELOPMENTS: Advancements, modifications and other new intellectual property that are
developed by Cognate during, in connection with or as a result of the performance of the Services
will be owned by Cognate. In the event that Client, in the course of carrying out its business of
producing dendritic cells for the treatment of cancer (the “Field of Use”): a) infringes the claim
of a Cognate patent; and, b) where that infringed claim covers an invention that would not have
been made by Cognate but for Client’s disclosure of its evaluation and/or testing methodologies,
techniques, protocols, tools and/or equipment, ([      ]),
then Cognate and Client agree to enter into good faith negotiations whereby Client may receive a royalty free,
non-transferable license to said patent in the Field of Use. Such license will be non-exclusive;
however, Cognate agrees that Cognate will not license said patent in the Field of Use to a direct
competitor of Client for so long as Client maintains an exclusive relationship with Cognate for the
Services. If and when Client ceases to maintain an exclusive relationship with Cognate for the
Services, Cognate will cease to be subject to any such restriction. Client may thereafter seek to
negotiate a royalty-bearing license from Cognate.

 

 

INTELLECTUAL PROPERTY RIGHTS: This Agreement shall not be construed to grant any license or other
rights to either party in any patent rights or know-how of the other party.

COGNATE WARRANTS: Cognate warrants that the Services will be performed in a workman-like manner.
Cognate holds a current Dept of Health Services Drug Manufacturing License from the State of
California. COGNATE MAKES NO OTHER REPRESENTATION OR WARRANTY CONCERNING THE SERVICES OR THE
RESULTS.

LIMITATION OF LIABILITY: Client shall promptly notify Cognate of any alleged breach by Cognate of
its warranty in respect of the Services. In its sole discretion, Cognate shall, where such
warranty is breached with respect to the Services, either perform the Services again, or refund any
monies paid for the specific Services alleged to be in breach of warranty and cancel any remaining
payments for such Services. Client’s remedies in the preceding sentence are Client’s sole and
exclusive remedies for any and all breaches by Cognate of its agreement with Client. In no event
shall Cognate be liable for any special, incidental, indirect or consequential damages arising out
of or in connection with the agreement between Cognate and Client with respect to the Services. In
no event shall Cognate’s liability to Client or to any third parties exceed the total amount
actually paid by Client to Cognate.

INDEMNITY: Client shall indemnify, defend and hold Cognate harmless against all costs and
liabilities which arise from Client’s use of the Services, including, without limitation, any
claim, action, proceeding or investigation initiated against Cognate with respect to the use of the
products produced from the Services, except for any such cost or liability which results from
Cognate’s gross negligence or willful misconduct.

CHOICE OF LAW: This Agreement shall be governed by and construed in accordance with the laws of the
State of Maryland, without reference to that State’s choice of law rules.

MISCELLANEOUS:

1) Clerical errors on the face of this form are subject to correction.

2) Cognate shall not be liable for any delay in performance of any order accepted by it when such
delay is directly or indirectly caused by or in any manner arises from fire, flood accident, riot,
war, government interference, rationing, embargoes or strikes.

3) In case of discrepancy, the most recent Agreement will supersede all prior Agreements.

4) All amounts are given in U.S. dollars.

 

 

COMPLETE UNDERSTANDING: This Agreement, when accepted by Client, constitutes the entire agreement
between the parties with respect to the subject matter thereof, and supersedes and replaces all
prior or contemporaneous understandings or agreements, written or oral, regarding such subject
matter. No amendments to or modification of such agreement shall be binding unless in writing and
signed by a duly authorized representative of both parties.

WHEN THE AGREEMENT HAS BEEN EXECUTED, PLEASE FAX THE SIGNED AGREEMENT TO COGNATE THERAPEUTICS, INC.
at 410-455-5562.

 

 

Exhibit A

Scope of Work Agreement for Northwest Biotherapeutics, Inc. Phase II Clinical Trial for the

Treatment of Glioblastoma with DCVax-Brain

Consulting including clinical trial development

Assay development

Clinical Site qualification visits/training

IND amendment and annual update submissions to FDA

Planning of equivalence studies, where required

Manufacturing process improvements

Reimbursement and clinical trial reimbursement activities

Planning and conduct of
[        ] methods development and validation studies

Clinical site staff coordination/interface activities

CRO staff coordination/interface activities

cGMP Manufacturing

Document creation, revision and control of:

SOPs

Raw material specifications

Batch production records

Intermediate batch production records

Kit documentation

CRO procedure summary documentation/descriptive materials

Shipping and receiving

Materials management

Raw and intermediate materials

Quarantine

Released

Products

Quarantine

Released

Biohazardous waste management/disposal

Chemical management/disposal

Waste water management/compliance

Kit supply inventory management

Supply purchasing/inventory management

Manufacturing

Training

Process Validation/Qualification

Product manufacturing

 

 

Kit manufacture

Tumor digestion

Tumor shipment

Leukapheresis shipment kit

Validation of shipping methods

Validation of process methods

Product shipping to clinical sites

Quality control

Testing

Final Product

Incoming Raw Materials

Raw Materials

Coordination for outsourcing of QC testing

Sample handling and shipment to contractors

QC results review

QC product release and in-process testing methods and specifications
development

Environmental monitoring

Quality assurance

Quality System management

Documentation control/review/management/revision/maintenance

Records review/verification

Quality control

Manufacturing

Raw materials vendor qualification/auditing

Product storage/inventory control/verification for shipping

Corrective and preventive action system management

Regulatory support

US FDA

Other geographies

Regulatory filings and consulting as required

Application for clinical trial cost reimbursement

Inspection/auditing of facilities and records in conjunction client with regulatory
requirements

Facilities design and modification

Product stability studies and expiry dating

Raw and intermediate material stability studies and expiry dating

Shipping suitability/feasibility studies

 

 

R&D

Assay development

Immune monitoring assays for DCVax-Brain

Perform pre-clinical studies

Manufacturing process development/optimization

Closed system

Culture optimization

Harvesting and washing

[                          ] Disposable contract manufacturing

QC cell counting/characterization

Participation and support of [                          ] design

[                          ] validation

Clinical trial execution

Assistance with prospective/current investor interactions

Fixed facility charges

Contract consulting/administration

Supply/raw materials vendor identification

Outsourcing/contract services

Clinical site agreements

Other duties as required to support Northwest Biotherapeutics DCVax-Brain study

 

 

Exhibit B

NWBT DCVax-Brain project budget

The
budget for the first three months following execution of this
Services Agreement is [            ].

On a quarterly basis, Cognate shall determine whether the monthly budget for the next quarter shall
be adjusted. In making such determination, Cognate shall take into account, without limitation,
Cognate’s projected costs, expenses, and markups in providing Services.

 

 

Exhibit C

Projected patient enrollment

[                  ]

[                  ]

[                  ]

[                  ]

[                  ]

[                  ]

[                  ]

[                  ]Exhibit 10.1 to Scanner Technologies Corporation Form 10-Q for period ended March 31, 2007

EXHIBIT 10.1

THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OFFERED, PLEDGED OR OTHERWISE DISTRIBUTED FOR VALUE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS COVERING SUCH SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT, OFFER, PLEDGE OR OTHER DISTRIBUTION FOR VALUE IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND SUCH LAWS.

COMMON STOCK PURCHASE WARRANT

To Purchase 50,000 Shares of Common Stock

of

SCANNER TECHNOLOGIES CORPORATION

THIS CERTIFIES THAT, for good and valuable consideration, Betsy Brenden Radtke, or her registered successors or assigns, is entitled to subscribe for and purchase from Scanner Technologies Corporation, a New Mexico corporation (the “Company”), at any time up to and including January 24, 2012, fifty thousand (50,000) fully paid and nonassessable shares of Common Stock of the Company at a price of $0.70 per share (the “Warrant Exercise Price”), subject to the antidilution provisions of this Warrant. The shares of Common Stock that may be acquired upon exercise of this Warrant are referred to herein as the “Warrant Shares.”  As used herein, the term “Common Stock” means and includes the Company’s presently authorized common stock, no par value, and shall also include any capital stock of any class of the Company hereafter authorized which shall
not be limited to a fixed sum or percentage in respect of the rights of the holders thereof to participate in dividends or in the distribution of assets upon the voluntary or involuntary liquidation, dissolution, or winding up of the Company.

This Warrant is subject to the following provisions, terms and conditions:

	
             
 	
            1.
 	
            Exercise; Transferability.
 

	
             
 	
            (a)
 	
            The rights represented by this Warrant may be exercised by the holder hereof, in whole or in part (but not as to a fractional share of Common Stock), by written notice of exercise (in the form attached hereto) delivered to the Company at the principal office of the Company prior to the expiration of this Warrant and accompanied or preceded by the surrender of this Warrant along with a check in payment of the Warrant Exercise Price for such shares.
 

	
             
 	
            (b)
 	
            This Warrant may not be sold, transferred, assigned, hypothecated or divided into two or more Warrants of smaller denominations, nor may any Warrant Shares issued pursuant to exercise of this Warrant be transferred, except as provided in Section 7 hereof.
 

 

2.             Exchange and Replacement. Subject to Sections l and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the holder to the Company at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the holder at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon
surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement. The Company shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2.

	
             
 	
            3.
 	
            Issuance of the Warrant Shares.
 

	
             
 	
            (a)
 	
            The Company agrees that the Warrant Shares shall be and are deemed to be issued to the holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as aforesaid. Subject to the provisions of the next section, certificates for the Warrant Shares so purchased shall be delivered to the holder within a reasonable time, not exceeding fifteen (15) days after the rights represented by this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the holder within such time.
 

	
             
 	
            (b)
 	
            Notwithstanding the foregoing, however, the Company shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws. Nothing herein, however, shall obligate the Company to effect registrations under federal or state securities laws. If registrations are not in effect and if exemptions are not available when the holder seeks to exercise the Warrant, the Warrant exercise period will be extended, if need be, to prevent the Warrant from expiring, until such time as either registrations become effective or exemptions are available, and the Warrant shall then remain exercisable for a period of at least 30 calendar days from the date the Company delivers to
the holder written notice of the availability of such registrations or exemptions. The holder agrees to execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company, or the registrations made, for the issuance of the Warrant Shares.
 

4.             Covenants of the Company. The Company covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, nonassessable, and free from all taxes, liens, and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant.

 

2

	
             
 	
            5.
 	
            Antidilution Adjustments. The provisions of this Warrant are subject to adjustment as provided in this Section 5.

	
             
 	
            (a)
 	
            The Warrant Exercise Price shall be adjusted from time to time such that in case the Company shall hereafter:
 

	
             
 	
            (i)
 	
            pay any dividends on any class of stock of the Company payable in  Common Stock or securities convertible into Common Stock;
 

	
             
 	
            (ii)
 	
            subdivide its then outstanding shares of Common Stock into a greater number of shares; or
 

	
             
 	
            (iii)
 	
            combine outstanding shares of Common Stock, by reclassification or otherwise;
 

then, in any such event, the Warrant Exercise Price in effect immediately prior to such event shall (until adjusted again pursuant hereto) be adjusted immediately after such event to a price (calculated to the nearest full cent) determined by dividing (a) the number of shares of Common Stock outstanding immediately prior to such event, multiplied by the then existing Warrant Exercise Price, by (b) the total number of shares of Common Stock outstanding immediately after such event (including the maximum number of shares of Common Stock issuable in respect of any securities convertible into Common Stock), and the resulting quotient shall be the adjusted Warrant Exercise Price per share. An adjustment made pursuant to this subsection shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subsection, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Company, the Board of Directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Warrant Exercise Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. All calculations under this subsection shall be made to the nearest cent or to the nearest 1/100 of a share, as the case may be. In the event that at any time as a result of an adjustment made pursuant to this subsection, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of the Company other than shares of Common Stock, thereafter the Warrant Exercise
Price of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this subsection.

	
             
 	
            (b)
 	
            Upon each adjustment of the Warrant Exercise Price pursuant to subsection 5(a) above, the holder of each Warrant shall thereafter (until another such adjustment) be entitled to purchase at the adjusted Warrant Exercise Price the number of shares, calculated to the nearest full share, obtained by multiplying the number of shares specified in such Warrant (as adjusted as a result of all adjustments in the Warrant Exercise Price in effect prior to such adjustment) by the Warrant Exercise Price in effect prior to such adjustment and dividing the product so obtained by the adjusted Warrant Exercise Price.
 

 

3

	
             
 	
            (c)
 	
            In case of any consolidation or merger to which the Company is a party other than a merger or consolidation in which the Company is the continuing corporation, or in case of any sale or conveyance to another corporation of the Company’s property as an entirety or substantially as an entirety, or in the case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Company), there shall be no adjustment under subsection (a) of this Section but the holder of each Warrant then outstanding shall have the right thereafter to convert such Warrant into the kind and amount of shares of stock and other securities and property which the holder would have owned or have been entitled to receive immediately after such consolidation,
merger, statutory exchange, sale, or conveyance had such Warrant been converted immediately prior to the effective date of such consolidation, merger, statutory exchange, sale, or conveyance and in any such case, if necessary, appropriate adjustment shall be made in the application of the provisions set forth in this subsection with respect to the rights and interests thereafter of any holders of the Warrant, to the end that the provisions set forth in this Section shall thereafter correspondingly be made applicable, as nearly as may reasonably be, in relation to any shares of stock and other securities and property thereafter deliverable on the exercise of the Warrant. The provisions of this subsection shall similarly apply to successive consolidations, mergers, statutory exchanges, sales or conveyances.
 

	
             
 	
            (d)
 	
            Upon any adjustment of the Warrant Exercise Price, then and in each such case, the Company shall give written notice thereof, by first-class mail, postage prepaid, addressed to the holder as shown on the books of the Company, which notice shall state the Warrant Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.
 

	
             
 	
            6.
 	
            No Voting Rights. This Warrant shall not entitle the holder to any voting rights or other rights as a shareholder of the Company.

	
             
 	
            7.
 	
            Notice of Transfer of Warrant or Resale of the Warrant Shares.
 

	
             
 	
            (a)
 	
            Subject to the sale, assignment, hypothecation, or other transfer restrictions set forth in Section 1 hereof, the holder, by acceptance hereof, agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving such written notice, the Company shall present copies thereof to the Company’s counsel and to counsel to the original purchaser of this Warrant. If in the opinion of each such counsel the proposed transfer may be effected without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall notify the holder of such opinion, whereupon the holder shall be entitled to transfer this Warrant or
to dispose of Warrant Shares received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the holder to the Company; provided that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent further transfers which would be in violation of Section 5 of the Securities Act of 1933, as amended (the “Securities Act”) and applicable state securities laws; 
 

 

4

and provided further that the prospective transferee or purchaser shall execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.

	
             
 	
            (b)
 	
            If in the opinion of either of the counsel referred to in this Section, the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this Section may not be effected without registration or qualification of this Warrant or such Warrant Shares the Company shall promptly give written notice thereof to the holder, and the holder will limit its activities in respect to such as, in the opinion of both such counsel, are permitted by law.
 

8.             Fractional Shares. Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Company shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the sum of (a) the excess, if any, of the Market Price of such fractional share over the proportional part of the Warrant Exercise Price represented by such fractional share, plus (b) the proportional part of the Warrant Exercise Price represented by such fractional share. For purposes of this Section, the term “Market Price” with respect to shares of Common Stock of any class or series
means the last reported sale price or, if none, the average of the last reported closing bid and asked prices on any national securities exchange or quoted on the Nasdaq Stock Market or other over-the-counter market, or, if not listed on a national securities exchange or quoted on the Nasdaq Stock Market or other over-the-counter market, then the price per share established by the Board of Directors of the Company.

IN WITNESS WHEREOF, Scanner Technologies Corporation has caused this Warrant to be signed by its duly authorized officer and this Warrant to be dated January 24, 2007.

 

	
             
 	
            SCANNER TECHNOLOGIES CORPORATION
 
	 
	
             
 	
            By:   
 	
            /s/   Elwin M. Beaty
 
	
             
 	
            Elwin M. Beaty, President, Chief Executive
   Officer and Chief Financial Officer
 

 

 

5

To:    SCANNER TECHNOLOGIES CORPORATION

 

NOTICE OF EXERCISE OF WARRANT –

To Be Executed by the Registered Holder in

Order to Exercise the Warrant

Subscriber hereby irrevocably elects to exercise the attached Warrant to purchase by surrendering a check, ________________________ of the shares issuable upon the exercise of such Warrant, and requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, with respect to which this Warrant is not exercised) shall be issued in the name of

 

	
             
 	
            (Print Name)
 
	 
	
            Please insert social security or other identifying number of
registered holder of certificate (_______________________)
 	
            Address:
 
	 
	
             
 	
             
 
	 
	
             
 	
             
 
	 
	 
	
            Dated:   ___________________________, ______
 	
             
 
	
             
 	
            (Signature)*
 

 

 

*The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, PLEASE indicate your position(s) and title(s) with such entity.

 

 

 

ASSIGNMENT FORM

 

To be signed only upon authorized transfer of Warrants.

FOR VALUE RECEIVED, Subscriber hereby sells, assigns, and transfers unto _____________________________ the right to purchase the securities of Scanner Technologies Corporation, to which the within Warrant relates and appoints _____________, attorney, to transfer said right on the books of Scanner Technologies Corporation, with full power of substitution in the premises.

	
            Dated:   ___________________________, ______
 	
             
 	
             
 
	
             
 	
             
 	
            (Signature)
 
	 
	
             
 	
            Address:

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