Document:

EXHIBIT 10.59

 

OPTION AGREEMENT

 

This Option Agreement (“Option”) is entered into as of March 4, 2014 (the “Effective Date”) by BioTime, Inc., a California corporation (the “Company”), and Milton H. Dresner, Trustee of the Milton H. Dresner Revocable Living Trust (the “Purchaser”) in connection that certain Preferred Stock Purchase Agreement, dated March 4, 2014, between the Company and Purchaser (the “Securities Purchase Agreement”).

 

1.                    GRANT OF OPTION. 

 

(a)          Option.  The Company hereby grants to Purchaser the option (the “Option”) to exchange shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) for Common Stock of LifeMap Sciences, Inc. (“LifeMap”) owned by the Company (the “LifeMap Shares”), free of any liens and charges and preemptive or similar rights.  The Option shall expire if not exercised on or before the earliest to occur of (a) 5:00 p.m. New York time on March 4, 2019, (b) the date on which all of the share of Series A Preferred Stock held by Purchaser have been converted into common shares of the Company, or the date on which all of the shares of Series A Preferred Stock issued by the Company to Purchaser shall have been sold or transferred otherwise than in a sale or transfer described in Section 4(a) (the “Expiration Date”).

(b)          Exchange Ratio.  Series A Preferred Stock may be exchanged for LifeMap Shares at the ratio of one share of Series A Preferred Stock for 12.5 LifeMap Shares, subject to adjustment as provided in Section 3 (the “Exchange Ratio”).

(c)          Minimum Exercise.  This Option may be exercised by Purchaser in whole or in part; provided, however, that any partial exercise of this Option shall not be for less than the lower of (i) 10,000 LifeMap Shares and (ii) all of the remaining LifeMap Shares that are issuable upon the exercise of the Option held by the Purchaser.

2.                    EXERCISE OF OPTION

 

(a)          Mechanics of Exercise.  Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(c) and Section 4), this Option may be exercised by the Purchaser at any time or times on or after the Effective Date, in whole or in part, subject to Section 1(c), by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), duly completed and executed by Purchaser, stating Purchaser's election to exercise this Option, the number of shares of Series A Preferred Stock being tendered in exchange for LifeMap Shares upon exercise of this Option, and the number of LifeMap Shares being issued upon such exchange, and (ii) delivery of shares of Series A Preferred Stock, endorsed in blank, to the Company to be exchange for LifeMap Shares at the Exchange Ratio then in effect.  On or before the first (1st) Trading Day following the date on which the Company has received the Exercise Notice and shares of Series A Preferred Stock, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Notice to the Purchaser and the transfer agent of the LifeMap Shares (the “Transfer Agent”), if any.  On or before the third (3rd) Trading Day following the date on which the Company has received the Exercise Notice, so long as the Purchaser delivers a number of shares of Series A Preferred Stock sufficient for such exercise at the Exchange Ratio (the “Aggregate Option Exchange Shares”) on or prior to the second (2nd) Trading Day following the date on which the Company has received the Exercise Notice (the “Share Delivery Date”) (provided that if the Aggregate Option Exchange Shares have not been delivered by such date, the Share Delivery Date shall be one (1) Trading Day after the Aggregate Option Exchange Shares are delivered), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of LifeMap Shares to which the Purchaser is entitled pursuant to such exercise to the Purchaser's or its designee's balance account with DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, or if there is no Transfer Agent, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the name of the Purchaser or its designee, for the number of LifeMap Shares to which the Purchaser is entitled pursuant to such exercise.  The Company shall be responsible for all fees and expenses of the Transfer Agent and all fees and expenses with respect to the transfer of LifeMap Shares to the Purchaser, if any.  No fractional LifeMap Shares are to be issued upon the exercise of this Option, but rather the number of LifeMap Shares to be issued shall be rounded down to the nearest whole number.  The Company shall pay any and all taxes which may be payable with respect to the transfer of LifeMap Shares to the Purchaser upon exercise of this Option.

(b)          Reissue of Stock Certificate.  If the Purchaser delivers to the Company a number of shares of Series A Preferred Stock greater than the Aggregate Option Exchange Shares upon the exercise of this Option, the Company shall issue to Purchaser a replacement Series A Preferred Stock certificate for the number of shares of Series A Preferred Stock in excess of the Aggregate Option Exchange Shares.

 

(c)          Company's Failure to Timely Deliver Securities.  If the Company shall fail for any reason or for no reason to transfer to the Purchaser, or cause LifeMap to issue, on or prior to the Share Delivery Date, a certificate for the number of LifeMap Shares to which the Purchaser is entitled and cause such LifeMap Shares to be registered on LifeMap's share register or to credit the Purchaser's balance account with DTC for such number of LifeMap Shares to which the Purchaser is entitled upon the Purchaser's exercise of this Option, then, in addition to all other remedies available to the Purchaser, the Company (X) shall pay in cash to the Purchaser on each day after such third (3rd) Trading Day that the transfer of such LifeMap Shares is not timely effected an amount equal to 1.5% of the product of (A) the sum of the number of LifeMap Shares not transferred to the Purchaser on a timely basis and to which the Purchaser is entitled and (B) the Closing Sale Price of the LifeMap Shares on the Trading Day immediately preceding the last possible date which the Company could have transferred such LifeMap Shares to the Purchaser without violating Section 2(a), or if the LifeMap Shares are then not traded on an Eligible Market, $4.00 (the “Designated Price”), and (Y) the Purchaser, upon written notice to the Company, may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any shares of Series A Preferred Stock cancelled in connection with such voided exercise; provided that the voiding of an exercise shall not affect the Company's obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 2(c) or otherwise.  In addition to the foregoing, if on or prior to the Share Delivery Date, the Company shall fail to transfer, or cause LifeMap to issue, a certificate to the Purchaser and cause the registration of such LifeMap Shares on LifeMap's share register or credit the Purchaser's balance account with DTC for the number of LifeMap Shares to which the Purchaser is entitled upon the Purchaser's exercise of this Option or pursuant to the Company's obligation pursuant to clause (ii) below, as applicable, and if on or after such Trading Day the Purchaser purchases (in an open market transaction or otherwise) LifeMap Shares to deliver in satisfaction of a sale by the Purchaser of LifeMap Shares issuable upon such exercise that the Purchaser anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Trading Days after the Purchaser's request and in the Purchaser's discretion, either (i) pay cash to the Purchaser in an amount equal to the Purchaser's total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the LifeMap Shares so purchased (the “Buy-In Price”), at which point the Company's obligation to deliver such certificate (and to transfer LifeMap Shares) or credit such Purchaser's balance account with DTC for such LifeMap Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Purchaser a certificate or certificates representing such LifeMap Shares or credit such Purchaser's balance account with DTC and pay cash to the Purchaser in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of LifeMap Shares, times (B) the Closing Bid Price on the date of exercise.  Nothing shall limit the Purchaser's right to pursue a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing LifeMap Shares (or to electronically deliver such LifeMap Shares) upon the exercise of this Option as required pursuant to the terms hereof.

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(d)          Disputes.  In the case of a dispute as to the determination of the Exchange Ratio or the arithmetic calculation of the LifeMap Shares, the Company shall promptly transfer to the Purchaser the number of LifeMap Shares that are not disputed and resolve such dispute in accordance with Section 12.

 

3.                    CERTAIN ADJUSTMENTS.  The Exchange Ratio and the number of LifeMap Shares purchasable hereunder shall be adjusted from time to time as follows:

 

(a)          Stock Splits, Combinations, Reclassifications and Other Changes in Common Stock.  If LifeMap, at any time after the Effective Date, shall (A) pay a dividend in its Common Stock or make a distribution in Common Stock, (B) subdivide its outstanding Common Stock, (C) combine its outstanding Common Stock into a smaller number of shares, or (D) reclassify or change (including a change to the right to receive, or a change into, as the case may be, shares of stock, other securities, property, cash or any combination thereof) its Common Stock (including any such reclassification or change in connection with a consolidation or merger in which LifeMap is the surviving corporation), upon the exercise of this Option the Purchaser shall be entitled to receive from the Company the kind and number of LifeMap Shares or other securities of LifeMap or other property which the Purchaser would have owned or have been entitled to receive upon the happening of any of the events described above, had this Option been exercised at the Exchange Ratio immediately prior to the happening of such event or any record date with respect thereto.

 

(b)          Distribution of Options, Warrants, Warrants, Rights, and Convertible Securities or Other Assets.  If LifeMap at any time after the Effective Date, shall distribute to all holders of its Common Stock (including any distribution made in connection with a merger in which LifeMap is the surviving corporation) (i) rights, options or warrants, or convertible or exchangeable securities containing the right to subscribe for or purchase Common Stock, or (ii) evidences of its indebtedness or assets, including cash but excluding Ordinary Cash Dividends (as defined below), then in each case with respect to each LifeMap Share issued upon the exercise of this Option, the Purchaser shall also receive from the Company either (a) the portion of the subscription rights, options or warrants, or convertible or exchangeable securities (or securities issued upon the conversion of convertible securities) or assets or evidences of indebtedness so distributed to the Company applicable to one LifeMap Share, or (b) the then fair value of the securities described in (a) as determined in good faith by the Board of Directors of the Company whose determination shall be conclusive; provided, that the Company need not deliver any subscription rights, options or warrants that shall have expired by their terms.  The Company shall determine whether to deliver the consideration described in clause (a) or clause (b) of the preceding sentence upon the exercise of this Option.  A cash dividend shall be deemed an “Ordinary Cash Dividend” for purposes of this Option if the dividend is paid out of consolidated earnings or earned surplus and is declared by the Board of Directors of LifeMap to be a regular or ordinary quarterly, semi-annual or annual dividend.

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(c)          Notice.  Whenever an event described in paragraph (a) or paragraph (b) of this Section 3 occurs, the Company shall promptly, in any event within ten (10) days, send to the Purchaser notice of such event.

 

(d)          No Adjustment for Dividends.  No adjustment in respect of any Ordinary Cash Dividends shall be made during the term of this Option or upon the exercise of this Option, nor shall the Purchaser be entitled to acquire from the Company upon the exercise of this Option any Ordinary Cash Dividends received by the Company with respect to LifeMap Shares or any other LifeMap securities owned or acquired by the Company upon the exercise of any subscription rights, options, warrants or exchangeable securities.

 

4.                    RESTRICTIONS ON TRANSFER.

 

(a)          Transfer.  This Option is personal to the Purchaser and may not be sold, transferred or assigned, except (i) to a successor in interest of the Purchaser as a result of any consolidation of the Purchaser with or merger of the Purchaser into another Person, (ii) to another Purchaser (as defined in the Securities Purchase Agreement) or (iii) to another Person as part of a sale of all or substantially all the property of the Purchaser to such other Person.

(b)          Restrictions on Transfer of LifeMap Shares.

 

(i)      Any LifeMap Shares issued to Purchaser upon the exercise of this Option, may not be sold, pledged, hypothecated, transferred or assigned, in whole or in part, unless (A) a registration statement under the Securities Act and under any applicable state securities laws is effective therefor or (B) an exemption from such registration is then available and an opinion of counsel, reasonably acceptable to LifeMap and the Transfer Agent, if any, has been rendered stating that such sale, pledge, hypothecation, transfer or assignment will not violate the Securities Act. Notwithstanding anything to the contrary contained herein (x) the LifeMap Shares may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the securities and no legal opinion shall be required therefor and (y) no representation, warranty, covenant or opinion shall be required for the sale, pledge, hypothecation, transfer or assignment of any LifeMap Shares if a registration statement with respect to the resale of such LifeMap Shares is effective at the time of any such sale, pledge, hypothecation, transfer or assignment.

 

(ii)    As a condition precedent to the registration of transfer of any certificates representing LifeMap Shares upon the exercise of this Option or transfer of LifeMap Shares, the Company and LifeMap shall be entitled to obtain a letter or other instrument from the Purchaser containing such covenants, representations or warranties by such Purchaser similar to those contained in this Section 4 as reasonably deemed necessary by the Company or LifeMap to effect compliance by the Company or LifeMap with the requirements of the Securities Act and any other applicable federal and/or state securities laws.

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(iii)   Any sale, pledge, hypothecation, transfer, or assignment of this Option or LifeMap Shares in violation of the foregoing restrictions shall be deemed null and void and of no binding effect.

 

(iv)   The Company will, and will request that LifeMap will, issue instructions to any Transfer Agent and registrar of the Common Stock to refuse to register the transfer of any LifeMap Shares not made pursuant to registration under the Securities Act and applicable state securities laws, or pursuant to an available exemption from registration under the Securities Act and applicable state securities laws.

 

(v)  The LifeMap Shares shall bear an appropriate legend, conspicuously disclosing the restrictions on transfer, under this Section 4, until the same are registered for sale under the Securities Act or are transferred in a transaction exempt from registration under the Securities Act entitling the transferee to receive securities that are not deemed to be “restricted securities” as such term is defined in Rule 144 under the Securities Act.  The Company agrees that upon the sale of LifeMap Shares pursuant to a registration statement or an exemption entitling the transferee to receive securities that are not deemed to be “restricted securities,” or at such time as registration under the Securities Act shall no longer be required, upon the presentation of the certificates containing such a legend to the transfer agent or warrant agent, if any, it will request removal of such legend; provided, that unless the request for removal of the legend is in connection with a sale registered under the Securities Act, the Purchaser shall have provided an opinion of counsel, acceptable to the Company and the Transfer Agent to the effect that such legend may be removed in compliance with the Securities Act.

 

(c)          Investment Representations.  Each Purchaser makes the following representations, severally and not jointly and severally, in connection with its acquisition of this Option and any LifeMap Shares upon the exercise of this Option:

 

(i)     Purchaser has made such investigation of LifeMap as Purchaser deemed appropriate for determining to acquire (and thereby make an investment in) this Option and LifeMap Shares, and in making such investigation Purchaser has had access to such financial and other information concerning LifeMap as Purchaser requested.  Purchaser is relying on the information communicated to Purchaser in writing by LifeMap or the Company.  Purchaser has not relied on any statement or representations inconsistent with those communicated to Purchaser in writing by LifeMap or the Company. Purchaser has had a reasonable opportunity to ask questions of and receive answers from the executive officers of LifeMap and the Company concerning LifeMap, and to obtain additional information, to the extent possessed or obtainable by LifeMap or the Company without unreasonable effort or expense, necessary to verify the information communicated or provided to Purchaser.  All such questions have been answered to Purchaser’s satisfaction.

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(ii)    Purchaser is acquiring this Option and upon exercise of this Option will purchase LifeMap Shares solely for Purchaser's own account, and Purchaser has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of the LifeMap Shares or this Option; provided, that this representation and warranty shall not prohibit Purchaser from selling LifeMap Shares in the ordinary course of business pursuant to a registration statement under the Securities Act or otherwise in compliance with the Securities Act and applicable state securities or “blue sky” laws.

 

(iii)   Purchaser is an “accredited investor” as defined in Rule 501 under the Securities Act.

 

(iv)  Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in this Option and LifeMap Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in this Option and LifeMap Shares and, at the present time, is able to afford a complete loss of such investment.

 

5.                   REGISTRATION RIGHTS.  The Company hereby covenants and agrees that in the event the Company receives any registration rights from LifeMap in respect of any LifeMap Shares owned by the Company, simultaneously with the exercise of any such registration rights at any time that this Option remains exercisable in whole or in part, the Company shall cause LifeMap to register all of the LifeMap Shares issuable to the Purchaser as of the applicable date of determination pursuant to the terms of this Option. The Company acknowledges and agrees that prior to excluding any LifeMap Shares from any registration statement, it shall first exclude all other LifeMap Shares owned by the Company other than any LifeMap Shares that are subject to an option provided to another Purchaser (as defined in the Securities Purchase Agreement) which shall be subject to exclusion on a pro rata basis with all other Purchasers (as defined in the Securities Purchase Agreement).  The Company shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, including, without limitation, any assignment of any registration rights with respect to the Common Stock purchasable pursuant to this Option granted to the Company under any registration rights agreement by LifeMap and the Company or under any registration statement, as Purchaser may reasonably request in order to carry out the intent and accomplish the purposes of this Section 5.

 

6.                    NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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 Option, and will at all times in good faith carry out all the provisions of this Option and take all action as may be required to protect the rights of the Purchaser.  Without limiting the generality of the foregoing, the Company shall continue to hold a sufficient number of LifeMap Shares to permit Purchaser to exercise this Option in full.  The Company will, and will request that LifeMap will, issue instructions to any Transfer Agent and registrar of the Common Stock to refuse to register the transfer of any LifeMap Shares in violation of the immediately preceding sentence.

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7.                    PURCHASER NOT DEEMED A LIFEMAP SHAREHOLDER.  The Purchaser, solely in such Person's capacity as the holder of this Option, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of LifeMap for any purpose, nor shall anything contained in this Option be construed to confer upon the Purchaser, solely in such Person's capacity as the holder of this Option, any of the rights of a shareholder of LifeMap or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the purchase of the LifeMap Shares through the due exercise of this Option.  In addition, nothing contained in this Option shall be construed as imposing any liabilities on the Purchaser to purchase any securities or as a shareholder of the Company or LifeMap (other than upon exercise of this Option), whether such liabilities are asserted by the Company or LifeMap or by their respective creditors.  Notwithstanding this Section, the Company shall provide the Purchaser with copies of such notices and other information given to the Common Stock holders of LifeMap generally, promptly after receipt thereof by the Company, unless the Company believes that such information is material, nonpublic information regarding the Company or LifeMap.

 

8.                    NOTICES.  Any notice pursuant to this Agreement by the Purchaser to the Company shall be in writing and shall be delivered in person, or mailed first class, postage prepaid, or sent by air delivery service or by facsimile transmission (FAX) or email to the Company, at its office, Attention: Chief Financial Officer.  The address of the principal office of the Company is 1301 Harbor Bay Parkway, Alameda, California 94502; FAX (510) 521-3389; email rpeabody@biotimemail.com.  Any notice given pursuant to this Agreement by the Company to the Purchaser shall be in writing and shall be mailed first class, postage prepaid, or sent by air delivery service, or by facsimile transmission (FAX) or email or otherwise delivered to the Purchaser at the Purchaser’s address shown on the signature page of this Option.  Each party hereto may from time to time change the address to which notices to it are to be delivered or mailed hereunder by notice to the other party.

 

9.                    AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Option may only be amended by a written instrument signed by the Company and the Purchaser.

 

10.                 GOVERNING LAW; JURISDICTION.  This Option shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Option shall be governed by, the internal laws of the State of California, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of California or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of California.  The Company and the Purchaser hereby irrevocably submit to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York and the County of Alameda and the United States District Court for the Northern District of California for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.

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11.                 CONSTRUCTION; HEADINGS.  This Option shall be deemed to be jointly drafted by the Company and Purchaser and shall not be construed against any Person as the drafter hereof.  The headings of this Option are for convenience of reference and shall not form part of, or affect the interpretation of, this Option.

 

12.                 DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exchange Ratio or the arithmetic calculation of the LifeMap Shares purchasable upon the exercise of this Option, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Purchaser.  If the Purchaser and the Company are unable to agree upon such determination or calculation of the Exchange Ratio or the LifeMap Shares within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Purchaser, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exchange Ratio to an independent, reputable investment bank selected by the Company and approved by the Purchaser or (b) the disputed arithmetic calculation of the LifeMap Shares to the Company's independent, outside accountant.  The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Purchaser of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations.  Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

13.                 REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Option shall be cumulative and in addition to all other remedies available under this Option, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Purchaser to pursue actual damages for any failure by the Company to comply with the terms of this Option.

 

14.                 SEVERABILITY.  If any provision of this Option is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Option so long as this Option as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.

 

15.                COMPANY'S REPRESENTATIONS AND WARRANTIES.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  The Company has the power and authority to execute and deliver this Option and to perform all of its obligations hereunder.  This Option has been duly authorized, executed and delivered by the Company and is the valid and binding agreement of the Company, enforceable in accordance with its terms subject to:  (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) general principles of equity.  There is no lawsuit, arbitration proceeding, or administrative action or proceeding pending or threatened against the Company which questions the validity of this Option or any action taken or to be taken by the Company in connection with this Option or the transfer of the LifeMap Shares hereunder.  The Company owns beneficially of record, free and clear of any lien or other encumbrance, the LifeMap Shares, and upon exercise of the Option, the Purchaser will acquire good and valid title to such LifeMap Shares thereto, free and clear of any lien or other encumbrance.  The execution and delivery of this Option and consummation of the transactions contemplated by this Option (a) do not and will not violate any provisions of (i) any rule, regulation, statute, or law, (ii) the terms of any order, writ or decree of any court or judicial or regulatory authority or body, (iii) the Articles of Incorporation or bylaws of the Company, or (iv) the rules and regulations of the NYSE MKT applicable to the listing of the Company’s common shares, (b) will not conflict with or result in a breach of any condition or provision or constitute a default under or pursuant to the terms of any Material Contract (as defined in the Securities Purchase Agreement), and (c) will not result in the creation or imposition of any lien, charge or encumbrance upon any of the LifeMap Shares (other than pursuant to this Option) or upon any of the assets or properties of the Company.

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16.                REPRESENTATIONS AND WARRANTIES CONCERNING LIFEMAP.  LifeMap is a corporation duly organized, validly existing and in good standing under the laws of the State of California, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. There is no lawsuit, arbitration proceeding, or administrative action or proceeding pending or threatened against LifeMap which questions the validity of this Option or any action taken or to be taken by the Company in connection with this Option or the transfer of the LifeMap Shares hereunder.  The execution and delivery of this Option and consummation of the transactions contemplated by this Option (a) do not and will not violate any provisions of (i) any rule, regulation, statute, or law, (ii) the terms of any order, writ or decree of any court or judicial or regulatory authority or body or (iii) the Articles of Incorporation or bylaws of LifeMap, (b) will not conflict with or result in a breach of any condition or provision or constitute a default under or pursuant to the terms of any Material Contract of LifeMap (as defined in the Securities Purchase Agreement as if such contract was a contract to which LifeMap is a party), and (c) will not result in the creation or imposition of any lien, charge or encumbrance upon any of the LifeMap Shares (other than pursuant to this Option) or upon any of the assets or properties of LifeMap.  The authorized capital stock of LifeMap consists of: 2,250,000 shares of Preferred Stock, none of which are issued and outstanding, and 22,500,000 shares of Common Stock, of which 11,715,095 shares, are issued and outstanding.  All outstanding shares of LifeMap Common Stock are duly and validly authorized and issued, fully paid and nonassessable.  Except for up to 2,342,269 shares of Common Stock reserved for issuance to employees, directors and consultants under the terms of a stock option plan previously approved by LifeMap’s Board of Directors, there are no outstanding options, warrants, rights or obligations for the purchase or acquisition from LifeMap of any shares of capital stock.

 

17.                 CERTAIN DEFINITIONS.  For purposes of this Option, the following terms shall have the following meanings:

 

(a)           “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

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(b)          “Bloomberg” means Bloomberg Financial Markets.

 

(c)           “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(d)           “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg.  If the Company and the Purchaser are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.

 

(e)            “Common Stock” means (i) the Common Stock, no par value per share, of LifeMap, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

(f)            “Eligible Market” means the NYSE, the NYSE MKT, The NASDAQ Global Market, The NASDAQ Global Select Market, the NASDAQ Capital Market, or the OTC Bulletin Board.

 

(g)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(h)           “Expiration Date” has the meaning ascribed in Section 1, provided, that, if March 4, 2019 falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next day that is not a Holiday shall apply.

 

(i)             “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(j)            “Principal Market” means the principal Eligible Market on which the Common Stock trades.

 

(k)           “Securities Act” means the Securities Act of 1933, as amended.

 

(l)            “Trading Day” means any day on which the Common Stock is traded on the Principal Market, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company and Purchaser have caused this Option Agreement to be duly executed as of the Effective Date.

 

	
BIOTIME, INC.

	
 

	
 

	
 

	
 

	
By:

	
/s/ Michael D. West

	
 

	
Name: Michael D. West

	
 

	
Title:  Chief Executive Officer

	
 

	
 

	
 

	
 

	
PURCHASER

	
 

		
 

	
The Milton H. Dresner Revocable Living Trust

	
 

	
 

	
 

	
 

	
By:

	
/s/ Milton H. Dresner 

	
 

	
Name:  Milton H. Dresner 

	
 

	
Title:  Trustee of The Million H. Dresner Revocable Living Trust

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EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED PURCHASER TO EXERCISE THIS

OPTION TO PURCHASE LIFEMAP COMMON STOCK

BIOTIME, INC.

 

The undersigned Purchaser hereby exercises the right to purchase _________________ LifeMap Shares (“LifeMap Shares”) of LifeMap Sciences, Inc., a California corporation, held by BioTime, Inc. (the “Company”), pursuant to the attached Option Agreement and tenders herewith __________ shares of Series A Preferred Stock, duly endorsed in blank, in exchange for such LifeMap Shares.

Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Option Agreement.

	
Date:

	
_______________ __, ______

		
 

	
 

	
 

		
 

	 		
	
Name of Registered Purchaser

		
 

	
 

	
 

		
 

	
By:

	
 

		
 

	
 

	
Name:

		
 

	
 

	
Title:

		
 

[NOTE:  The above signature should correspond exactly with the name of the Purchaser in the Option Agreement]

ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs [Transfer Agent] to issue the above indicated number of LifeMap Shares in accordance with the Transfer Agent Instructions dated ________ from the Company and acknowledged and agreed to by [Transfer Agent].

	
 

	
BIOTIME, INC.

	
	
 

	
 

	
 

	
	
 

	
By:

	
 

	
	
 

	
Name:

	
	
 

	
Title:

	

 

OPTION AGREEMENT

 

This Option Agreement (“Option”) is entered into as of March 4, 2014 (the “Effective Date”) by BioTime, Inc., a California corporation (the “Company”), and British & American Investment Trust plc (the “Purchaser”) in connection that certain Preferred Stock Purchase Agreement, dated March 4, 2014, between the Company and Purchaser (the “Securities Purchase Agreement”).

 

1.                   GRANT OF OPTION. 

 

(a)          Option.  The Company hereby grants to Purchaser the option (the “Option”) to exchange shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) for Common Stock of LifeMap Sciences, Inc. (“LifeMap”) owned by the Company (the “LifeMap Shares”), free of any liens and charges and preemptive or similar rights.  The Option shall expire if not exercised on or before the earliest to occur of (a) 5:00 p.m. New York time on March 4, 2019, (b) the date on which all of the share of Series A Preferred Stock held by Purchaser have been converted into common shares of the Company, or the date on which all of the shares of Series A Preferred Stock issued by the Company to Purchaser shall have been sold or transferred otherwise than in a sale or transfer described in Section 4(a) (the “Expiration Date”).

(b)          Exchange Ratio.  Series A Preferred Stock may be exchanged for LifeMap Shares at the ratio of one share of Series A Preferred Stock for 12.5 LifeMap Shares, subject to adjustment as provided in Section 3 (the “Exchange Ratio”).

(c)          Minimum Exercise.  This Option may be exercised by Purchaser in whole or in part; provided, however, that any partial exercise of this Option shall not be for less than the lower of (i) 10,000 LifeMap Shares and (ii) all of the remaining LifeMap Shares that are issuable upon the exercise of the Option held by the Purchaser.

2.                    EXERCISE OF OPTION

 

(a)          Mechanics of Exercise.  Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(c) and Section 4), this Option may be exercised by the Purchaser at any time or times on or after the Effective Date, in whole or in part, subject to Section 1(c), by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), duly completed and executed by Purchaser, stating Purchaser's election to exercise this Option, the number of shares of Series A Preferred Stock being tendered in exchange for LifeMap Shares upon exercise of this Option, and the number of LifeMap Shares being issued upon such exchange, and (ii) delivery of shares of Series A Preferred Stock, endorsed in blank, to the Company to be exchange for LifeMap Shares at the Exchange Ratio then in effect.  On or before the first (1st) Trading Day following the date on which the Company has received the Exercise Notice and shares of Series A Preferred Stock, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Notice to the Purchaser and the transfer agent of the LifeMap Shares (the “Transfer Agent”), if any.  On or before the third (3rd) Trading Day following the date on which the Company has received the Exercise Notice, so long as the Purchaser delivers a number of shares of Series A Preferred Stock sufficient for such exercise at the Exchange Ratio (the “Aggregate Option Exchange Shares”) on or prior to the second (2nd) Trading Day following the date on which the Company has received the Exercise Notice (the “Share Delivery Date”) (provided that if the Aggregate Option Exchange Shares have not been delivered by such date, the Share Delivery Date shall be one (1) Trading Day after the Aggregate Option Exchange Shares are delivered), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, credit such aggregate number of LifeMap Shares to which the Purchaser is entitled pursuant to such exercise to the Purchaser's or its designee's balance account with DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, or if there is no Transfer Agent, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the name of the Purchaser or its designee, for the number of LifeMap Shares to which the Purchaser is entitled pursuant to such exercise.  The Company shall be responsible for all fees and expenses of the Transfer Agent and all fees and expenses with respect to the transfer of LifeMap Shares to the Purchaser, if any.  No fractional LifeMap Shares are to be issued upon the exercise of this Option, but rather the number of LifeMap Shares to be issued shall be rounded down to the nearest whole number.  The Company shall pay any and all taxes which may be payable with respect to the transfer of LifeMap Shares to the Purchaser upon exercise of this Option.

(b)          Reissue of Stock Certificate.  If the Purchaser delivers to the Company a number of shares of Series A Preferred Stock greater than the Aggregate Option Exchange Shares upon the exercise of this Option, the Company shall issue to Purchaser a replacement Series A Preferred Stock certificate for the number of shares of Series A Preferred Stock in excess of the Aggregate Option Exchange Shares.

 

(c)          Company's Failure to Timely Deliver Securities.  If the Company shall fail for any reason or for no reason to transfer to the Purchaser, or cause LifeMap to issue, on or prior to the Share Delivery Date, a certificate for the number of LifeMap Shares to which the Purchaser is entitled and cause such LifeMap Shares to be registered on LifeMap's share register or to credit the Purchaser's balance account with DTC for such number of LifeMap Shares to which the Purchaser is entitled upon the Purchaser's exercise of this Option, then, in addition to all other remedies available to the Purchaser, the Company (X) shall pay in cash to the Purchaser on each day after such third (3rd) Trading Day that the transfer of such LifeMap Shares is not timely effected an amount equal to 1.5% of the product of (A) the sum of the number of LifeMap Shares not transferred to the Purchaser on a timely basis and to which the Purchaser is entitled and (B) the Closing Sale Price of the LifeMap Shares on the Trading Day immediately preceding the last possible date which the Company could have transferred such LifeMap Shares to the Purchaser without violating Section 2(a), or if the LifeMap Shares are then not traded on an Eligible Market, $4.00 (the “Designated Price”), and (Y) the Purchaser, upon written notice to the Company, may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any shares of Series A Preferred Stock cancelled in connection with such voided exercise; provided that the voiding of an exercise shall not affect the Company's obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 2(c) or otherwise.  In addition to the foregoing, if on or prior to the Share Delivery Date, the Company shall fail to transfer, or cause LifeMap to issue, a certificate to the Purchaser and cause the registration of such LifeMap Shares on LifeMap's share register or credit the Purchaser's balance account with DTC for the number of LifeMap Shares to which the Purchaser is entitled upon the Purchaser's exercise of this Option or pursuant to the Company's obligation pursuant to clause (ii) below, as applicable, and if on or after such Trading Day the Purchaser purchases (in an open market transaction or otherwise) LifeMap Shares to deliver in satisfaction of a sale by the Purchaser of LifeMap Shares issuable upon such exercise that the Purchaser anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Trading Days after the Purchaser's request and in the Purchaser's discretion, either (i) pay cash to the Purchaser in an amount equal to the Purchaser's total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the LifeMap Shares so purchased (the “Buy-In Price”), at which point the Company's obligation to deliver such certificate (and to transfer LifeMap Shares) or credit such Purchaser's balance account with DTC for such LifeMap Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Purchaser a certificate or certificates representing such LifeMap Shares or credit such Purchaser's balance account with DTC and pay cash to the Purchaser in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of LifeMap Shares, times (B) the Closing Bid Price on the date of exercise.  Nothing shall limit the Purchaser's right to pursue a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing LifeMap Shares (or to electronically deliver such LifeMap Shares) upon the exercise of this Option as required pursuant to the terms hereof.

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(d)          Disputes.  In the case of a dispute as to the determination of the Exchange Ratio or the arithmetic calculation of the LifeMap Shares, the Company shall promptly transfer to the Purchaser the number of LifeMap Shares that are not disputed and resolve such dispute in accordance with Section 12.

 

3.                    CERTAIN ADJUSTMENTS.  The Exchange Ratio and the number of LifeMap Shares purchasable hereunder shall be adjusted from time to time as follows:

 

(a)          Stock Splits, Combinations, Reclassifications and Other Changes in Common Stock.  If LifeMap, at any time after the Effective Date, shall (A) pay a dividend in its Common Stock or make a distribution in Common Stock, (B) subdivide its outstanding Common Stock, (C) combine its outstanding Common Stock into a smaller number of shares, or (D) reclassify or change (including a change to the right to receive, or a change into, as the case may be, shares of stock, other securities, property, cash or any combination thereof) its Common Stock (including any such reclassification or change in connection with a consolidation or merger in which LifeMap is the surviving corporation), upon the exercise of this Option the Purchaser shall be entitled to receive from the Company the kind and number of LifeMap Shares or other securities of LifeMap or other property which the Purchaser would have owned or have been entitled to receive upon the happening of any of the events described above, had this Option been exercised at the Exchange Ratio immediately prior to the happening of such event or any record date with respect thereto.

 

(b)          Distribution of Options, Warrants, Warrants, Rights, and Convertible Securities or Other Assets.  If LifeMap at any time after the Effective Date, shall distribute to all holders of its Common Stock (including any distribution made in connection with a merger in which LifeMap is the surviving corporation) (i) rights, options or warrants, or convertible or exchangeable securities containing the right to subscribe for or purchase Common Stock, or (ii) evidences of its indebtedness or assets, including cash but excluding Ordinary Cash Dividends (as defined below), then in each case with respect to each LifeMap Share issued upon the exercise of this Option, the Purchaser shall also receive from the Company either (a) the portion of the subscription rights, options or warrants, or convertible or exchangeable securities (or securities issued upon the conversion of convertible securities) or assets or evidences of indebtedness so distributed to the Company applicable to one LifeMap Share, or (b) the then fair value of the securities described in (a) as determined in good faith by the Board of Directors of the Company whose determination shall be conclusive; provided, that the Company need not deliver any subscription rights, options or warrants that shall have expired by their terms.  The Company shall determine whether to deliver the consideration described in clause (a) or clause (b) of the preceding sentence upon the exercise of this Option.  A cash dividend shall be deemed an “Ordinary Cash Dividend” for purposes of this Option if the dividend is paid out of consolidated earnings or earned surplus and is declared by the Board of Directors of LifeMap to be a regular or ordinary quarterly, semi-annual or annual dividend.

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(c)          Notice.  Whenever an event described in paragraph (a) or paragraph (b) of this Section 3 occurs, the Company shall promptly, in any event within ten (10) days, send to the Purchaser notice of such event.

 

(d)          No Adjustment for Dividends.  No adjustment in respect of any Ordinary Cash Dividends shall be made during the term of this Option or upon the exercise of this Option, nor shall the Purchaser be entitled to acquire from the Company upon the exercise of this Option any Ordinary Cash Dividends received by the Company with respect to LifeMap Shares or any other LifeMap securities owned or acquired by the Company upon the exercise of any subscription rights, options, warrants or exchangeable securities.

 

4.                    RESTRICTIONS ON TRANSFER.

 

(a)          Transfer.  This Option is personal to the Purchaser and may not be sold, transferred or assigned, except (i) to a successor in interest of the Purchaser as a result of any consolidation of the Purchaser with or merger of the Purchaser into another Person, (ii) to another Purchaser (as defined in the Securities Purchase Agreement) or (iii) to another Person as part of a sale of all or substantially all the property of the Purchaser to such other Person.

 

(b)          Restrictions on Transfer of LifeMap Shares.

 

(i)    Any LifeMap Shares issued to Purchaser upon the exercise of this Option, may not be sold, pledged, hypothecated, transferred or assigned, in whole or in part, unless (A) a registration statement under the Securities Act and under any applicable state securities laws is effective therefor or (B) an exemption from such registration is then available and an opinion of counsel, reasonably acceptable to LifeMap and the Transfer Agent, if any, has been rendered stating that such sale, pledge, hypothecation, transfer or assignment will not violate the Securities Act. Notwithstanding anything to the contrary contained herein (x) the LifeMap Shares may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the securities and no legal opinion shall be required therefor and (y) no representation, warranty, covenant or opinion shall be required for the sale, pledge, hypothecation, transfer or assignment of any LifeMap Shares if a registration statement with respect to the resale of such LifeMap Shares is effective at the time of any such sale, pledge, hypothecation, transfer or assignment.

 

(ii)    As a condition precedent to the registration of transfer of any certificates representing LifeMap Shares upon the exercise of this Option or transfer of LifeMap Shares, the Company and LifeMap shall be entitled to obtain a letter or other instrument from the Purchaser containing such covenants, representations or warranties by such Purchaser similar to those contained in this Section 4 as reasonably deemed necessary by the Company or LifeMap to effect compliance by the Company or LifeMap with the requirements of the Securities Act and any other applicable federal and/or state securities laws.

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(iii)   Any sale, pledge, hypothecation, transfer, or assignment of this Option or LifeMap Shares in violation of the foregoing restrictions shall be deemed null and void and of no binding effect.

 

(iv)  The Company will, and will request that LifeMap will, issue instructions to any Transfer Agent and registrar of the Common Stock to refuse to register the transfer of any LifeMap Shares not made pursuant to registration under the Securities Act and applicable state securities laws, or pursuant to an available exemption from registration under the Securities Act and applicable state securities laws.

 

(v)  The LifeMap Shares shall bear an appropriate legend, conspicuously disclosing the restrictions on transfer, under this Section 4, until the same are registered for sale under the Securities Act or are transferred in a transaction exempt from registration under the Securities Act entitling the transferee to receive securities that are not deemed to be “restricted securities” as such term is defined in Rule 144 under the Securities Act.  The Company agrees that upon the sale of LifeMap Shares pursuant to a registration statement or an exemption entitling the transferee to receive securities that are not deemed to be “restricted securities,” or at such time as registration under the Securities Act shall no longer be required, upon the presentation of the certificates containing such a legend to the transfer agent or warrant agent, if any, it will request removal of such legend; provided, that unless the request for removal of the legend is in connection with a sale registered under the Securities Act, the Purchaser shall have provided an opinion of counsel, acceptable to the Company and the Transfer Agent to the effect that such legend may be removed in compliance with the Securities Act.

 

(c)           Investment Representations.  Each Purchaser makes the following representations, severally and not jointly and severally, in connection with its acquisition of this Option and any LifeMap Shares upon the exercise of this Option:

 

(i)    Purchaser has made such investigation of LifeMap as Purchaser deemed appropriate for determining to acquire (and thereby make an investment in) this Option and LifeMap Shares, and in making such investigation Purchaser has had access to such financial and other information concerning LifeMap as Purchaser requested.  Purchaser is relying on the information communicated to Purchaser in writing by LifeMap or the Company.  Purchaser has not relied on any statement or representations inconsistent with those communicated to Purchaser in writing by LifeMap or the Company. Purchaser has had a reasonable opportunity to ask questions of and receive answers from the executive officers of LifeMap and the Company concerning LifeMap, and to obtain additional information, to the extent possessed or obtainable by LifeMap or the Company without unreasonable effort or expense, necessary to verify the information communicated or provided to Purchaser.  All such questions have been answered to Purchaser’s satisfaction.

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(ii)    Purchaser is acquiring this Option and upon exercise of this Option will purchase LifeMap Shares solely for Purchaser's own account, and Purchaser has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of the LifeMap Shares or this Option; provided, that this representation and warranty shall not prohibit Purchaser from selling LifeMap Shares in the ordinary course of business pursuant to a registration statement under the Securities Act or otherwise in compliance with the Securities Act and applicable state securities or “blue sky” laws.

 

(iii)  Purchaser is an “accredited investor” as defined in Rule 501 under the Securities Act.

 

(iv) Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in this Option and LifeMap Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in this Option and LifeMap Shares and, at the present time, is able to afford a complete loss of such investment.

 

5.                   REGISTRATION RIGHTS.  The Company hereby covenants and agrees that in the event the Company receives any registration rights from LifeMap in respect of any LifeMap Shares owned by the Company, simultaneously with the exercise of any such registration rights at any time that this Option remains exercisable in whole or in part, the Company shall cause LifeMap to register all of the LifeMap Shares issuable to the Purchaser as of the applicable date of determination pursuant to the terms of this Option. The Company acknowledges and agrees that prior to excluding any LifeMap Shares from any registration statement, it shall first exclude all other LifeMap Shares owned by the Company other than any LifeMap Shares that are subject to an option provided to another Purchaser (as defined in the Securities Purchase Agreement) which shall be subject to exclusion on a pro rata basis with all other Purchasers (as defined in the Securities Purchase Agreement).  The Company shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, including, without limitation, any assignment of any registration rights with respect to the Common Stock purchasable pursuant to this Option granted to the Company under any registration rights agreement by LifeMap and the Company or under any registration statement, as Purchaser may reasonably request in order to carry out the intent and accomplish the purposes of this Section 5.

 

6.                   NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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 Option, and will at all times in good faith carry out all the provisions of this Option and take all action as may be required to protect the rights of the Purchaser.  Without limiting the generality of the foregoing, the Company shall continue to hold a sufficient number of LifeMap Shares to permit Purchaser to exercise this Option in full.  The Company will, and will request that LifeMap will, issue instructions to any Transfer Agent and registrar of the Common Stock to refuse to register the transfer of any LifeMap Shares in violation of the immediately preceding sentence.

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7.                    PURCHASER NOT DEEMED A LIFEMAP SHAREHOLDER.  The Purchaser, solely in such Person's capacity as the holder of this Option, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of LifeMap for any purpose, nor shall anything contained in this Option be construed to confer upon the Purchaser, solely in such Person's capacity as the holder of this Option, any of the rights of a shareholder of LifeMap or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the purchase of the LifeMap Shares through the due exercise of this Option.  In addition, nothing contained in this Option shall be construed as imposing any liabilities on the Purchaser to purchase any securities or as a shareholder of the Company or LifeMap (other than upon exercise of this Option), whether such liabilities are asserted by the Company or LifeMap or by their respective creditors.  Notwithstanding this Section, the Company shall provide the Purchaser with copies of such notices and other information given to the Common Stock holders of LifeMap generally, promptly after receipt thereof by the Company, unless the Company believes that such information is material, nonpublic information regarding the Company or LifeMap.

 

8.                    NOTICES.  Any notice pursuant to this Agreement by the Purchaser to the Company shall be in writing and shall be delivered in person, or mailed first class, postage prepaid, or sent by air delivery service or by facsimile transmission (FAX) or email to the Company, at its office, Attention: Chief Financial Officer.  The address of the principal office of the Company is 1301 Harbor Bay Parkway, Alameda, California 94502; FAX (510) 521-3389; email rpeabody@biotimemail.com.  Any notice given pursuant to this Agreement by the Company to the Purchaser shall be in writing and shall be mailed first class, postage prepaid, or sent by air delivery service, or by facsimile transmission (FAX) or email or otherwise delivered to the Purchaser at the Purchaser’s address shown on the signature page of this Option.  Each party hereto may from time to time change the address to which notices to it are to be delivered or mailed hereunder by notice to the other party.

 

9.                     AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Option may only be amended by a written instrument signed by the Company and the Purchaser.

 

10.                 GOVERNING LAW; JURISDICTION.  This Option shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Option shall be governed by, the internal laws of the State of California, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of California or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of California.  The Company and the Purchaser hereby irrevocably submit to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York and the County of Alameda and the United States District Court for the Northern District of California for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.

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11.                 CONSTRUCTION; HEADINGS.  This Option shall be deemed to be jointly drafted by the Company and Purchaser and shall not be construed against any Person as the drafter hereof.  The headings of this Option are for convenience of reference and shall not form part of, or affect the interpretation of, this Option.

 

12.                 DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exchange Ratio or the arithmetic calculation of the LifeMap Shares purchasable upon the exercise of this Option, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Purchaser.  If the Purchaser and the Company are unable to agree upon such determination or calculation of the Exchange Ratio or the LifeMap Shares within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Purchaser, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exchange Ratio to an independent, reputable investment bank selected by the Company and approved by the Purchaser or (b) the disputed arithmetic calculation of the LifeMap Shares to the Company's independent, outside accountant.  The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Purchaser of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations.  Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

13.                 REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Option shall be cumulative and in addition to all other remedies available under this Option, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Purchaser to pursue actual damages for any failure by the Company to comply with the terms of this Option.

 

14.                 SEVERABILITY.  If any provision of this Option is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Option so long as this Option as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.

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15.                COMPANY'S REPRESENTATIONS AND WARRANTIES.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  The Company has the power and authority to execute and deliver this Option and to perform all of its obligations hereunder.  This Option has been duly authorized, executed and delivered by the Company and is the valid and binding agreement of the Company, enforceable in accordance with its terms subject to:  (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) general principles of equity.  There is no lawsuit, arbitration proceeding, or administrative action or proceeding pending or threatened against the Company which questions the validity of this Option or any action taken or to be taken by the Company in connection with this Option or the transfer of the LifeMap Shares hereunder.  The Company owns beneficially of record, free and clear of any lien or other encumbrance, the LifeMap Shares, and upon exercise of the Option, the Purchaser will acquire good and valid title to such LifeMap Shares thereto, free and clear of any lien or other encumbrance.  The execution and delivery of this Option and consummation of the transactions contemplated by this Option (a) do not and will not violate any provisions of (i) any rule, regulation, statute, or law, (ii) the terms of any order, writ or decree of any court or judicial or regulatory authority or body, (iii) the Articles of Incorporation or bylaws of the Company, or (iv) the rules and regulations of the NYSE MKT applicable to the listing of the Company’s common shares, (b) will not conflict with or result in a breach of any condition or provision or constitute a default under or pursuant to the terms of any Material Contract (as defined in the Securities Purchase Agreement), and (c) will not result in the creation or imposition of any lien, charge or encumbrance upon any of the LifeMap Shares (other than pursuant to this Option) or upon any of the assets or properties of the Company.

 

16.                REPRESENTATIONS AND WARRANTIES CONCERNING LIFEMAP.  LifeMap is a corporation duly organized, validly existing and in good standing under the laws of the State of California, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. There is no lawsuit, arbitration proceeding, or administrative action or proceeding pending or threatened against LifeMap which questions the validity of this Option or any action taken or to be taken by the Company in connection with this Option or the transfer of the LifeMap Shares hereunder.  The execution and delivery of this Option and consummation of the transactions contemplated by this Option (a) do not and will not violate any provisions of (i) any rule, regulation, statute, or law, (ii) the terms of any order, writ or decree of any court or judicial or regulatory authority or body or (iii) the Articles of Incorporation or bylaws of LifeMap, (b) will not conflict with or result in a breach of any condition or provision or constitute a default under or pursuant to the terms of any Material Contract of LifeMap (as defined in the Securities Purchase Agreement as if such contract was a contract to which LifeMap is a party), and (c) will not result in the creation or imposition of any lien, charge or encumbrance upon any of the LifeMap Shares (other than pursuant to this Option) or upon any of the assets or properties of LifeMap.  The authorized capital stock of LifeMap consists of: 2,250,000 shares of Preferred Stock, none of which are issued and outstanding, and 22,500,000 shares of Common Stock, of which 11,715,095 shares, are issued and outstanding.  All outstanding shares of LifeMap Common Stock are duly and validly authorized and issued, fully paid and nonassessable.  Except for up to 2,342,269 shares of Common Stock reserved for issuance to employees, directors and consultants under the terms of a stock option plan previously approved by LifeMap’s Board of Directors, there are no outstanding options, warrants, rights or obligations for the purchase or acquisition from LifeMap of any shares of capital stock.

 

17.                 CERTAIN DEFINITIONS.  For purposes of this Option, the following terms shall have the following meanings:

 

(a)           “Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

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(b)          “Bloomberg” means Bloomberg Financial Markets.

 

(c)          “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(d)          “Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg.  If the Company and the Purchaser are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.

 

(e)          “Common Stock” means (i) the Common Stock, no par value per share, of LifeMap, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

(f)            “Eligible Market” means the NYSE, the NYSE MKT, The NASDAQ Global Market, The NASDAQ Global Select Market, the NASDAQ Capital Market, or the OTC Bulletin Board.

 

(g)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(h)          “Expiration Date” has the meaning ascribed in Section 1, provided, that, if March 4, 2019 falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next day that is not a Holiday shall apply.

 

(i)             “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(j)             “Principal Market” means the principal Eligible Market on which the Common Stock trades.

 

(k)            “Securities Act” means the Securities Act of 1933, as amended.

 

(l)             “Trading Day” means any day on which the Common Stock is traded on the Principal Market, provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

 

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company and Purchaser have caused this Option Agreement to be duly executed as of the Effective Date.

 

	
BIOTIME, INC.

	
 

	
 

	
 

	
 

	
By:

	
/s/ Michael D. West

	
 

	
Name: Michael D. West

	
 

	
Title:  Chief Executive Officer

	
 

	
 

	
 

	
 

	
PURCHASER

	
 

		
 

	
British & American Investment Trust Plc

	
 

	
 

	
 

	
 

	
By:

	
/s/ Jonathan C. Woolf 

	
 

	
Name:  Jonathan C. Woolf 

	
 

	
Title:  Managing Director

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EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED PURCHASER TO EXERCISE THIS

OPTION TO PURCHASE LIFEMAP COMMON STOCK

BIOTIME, INC.

 

The undersigned Purchaser hereby exercises the right to purchase _________________ LifeMap Shares (“LifeMap Shares”) of LifeMap Sciences, Inc., a California corporation, held by BioTime, Inc. (the “Company”), pursuant to the attached Option Agreement and tenders herewith __________ shares of Series A Preferred Stock, duly endorsed in blank, in exchange for such LifeMap Shares.

Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Option Agreement.

	
Date:

	
_______________ __, ______

		
 

	
 

	
 

		
 

	  		
	
Name of Registered Purchaser

		
 

	
 

	
 

		
 

	
By:

	
 

		
 

	
 

	
Name:

		
 

	
 

	
Title:

		
 

 

[NOTE:  The above signature should correspond exactly with the name of the Purchaser in the Option Agreement]

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs [Transfer Agent] to issue the above indicated number of LifeMap Shares in accordance with the Transfer Agent Instructions dated ________ from the Company and acknowledged and agreed to by [Transfer Agent].

	
 

	
BIOTIME, INC.

	
	
 

	
 

	
 

	
	
 

	
By:

	
 

	
	
 

	
Name:

	
	
 

	
Title:

	

OPTION AGREEMENT

 

This Option Agreement (“Option”) is entered into as of March 4, 2014 (the “Effective Date”) by BioTime, Inc., a California corporation (the "Company"), and ALB Private Investments, LLC (the “Purchaser”) in connection that certain Preferred Stock Purchase Agreement, dated March 4, 2014, between the Company and Purchaser (the “Securities Purchase Agreement”).

 

1.                   GRANT OF OPTION. 

 

(a)          Option.  The Company hereby grants to Purchaser the option (the “Option”) to exchange shares of the Company’s Series A Convertible Preferred Stock (“Series A Preferred Stock”) for Common Stock of LifeMap Sciences, Inc. (“LifeMap”) owned by the Company (the “LifeMap Shares”), free of any liens and charges and preemptive or similar rights.  The Option shall expire if not exercised on or before the earliest to occur of (a) 5:00 p.m. New York time on March 4, 2019, (b) the date on which all of the share of Series A Preferred Stock held by Purchaser have been converted into common shares of the Company, or the date on which all of the shares of Series A Preferred Stock issued by the Company to Purchaser shall have been sold or transferred otherwise than in a sale or transfer described in Section 4(a) (the “Expiration Date”).

(b)          Exchange Ratio.  Series A Preferred Stock may be exchanged for LifeMap Shares at the ratio of one share of Series A Preferred Stock for 12.5 LifeMap Shares, subject to adjustment as provided in Section 3 (the “Exchange Ratio”).

(c)          Minimum Exercise.  This Option may be exercised by Purchaser in whole or in part; provided, however, that any partial exercise of this Option shall not be for less than the lower of (i) 10,000 LifeMap Shares and (ii) all of the remaining LifeMap Shares that are issuable upon the exercise of the Option held by the Purchaser.

2.                   EXERCISE OF OPTION

 

(a)          Mechanics of Exercise.  Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(c) and Section 4), this Option may be exercised by the Purchaser at any time or times on or after the Effective Date, in whole or in part, subject to Section 1(c), by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the "Exercise Notice"), duly completed and executed by Purchaser, stating Purchaser's election to exercise this Option, the number of shares of Series A Preferred Stock being tendered in exchange for LifeMap Shares upon exercise of this Option, and the number of LifeMap Shares being issued upon such exchange, and (ii) delivery of shares of Series A Preferred Stock, endorsed in blank, to the Company to be exchange for LifeMap Shares at the Exchange Ratio then in effect.  On or before the first (1st) Trading Day following the date on which the Company has received the Exercise Notice and shares of Series A Preferred Stock, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Notice to the Purchaser and the transfer agent of the LifeMap Shares (the "Transfer Agent"), if any.  On or before the third (3rd) Trading Day following the date on which the Company has received the Exercise Notice, so long as the Purchaser delivers a number of shares of Series A Preferred Stock sufficient for such exercise at the Exchange Ratio (the “Aggregate Option Exchange Shares”) on or prior to the second (2nd) Trading Day following the date on which the Company has received the Exercise Notice (the "Share Delivery Date") (provided that if the Aggregate Option Exchange Shares have not been delivered by such date, the Share Delivery Date shall be one (1) Trading Day after the Aggregate Option Exchange Shares are delivered), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of LifeMap Shares to which the Purchaser is entitled pursuant to such exercise to the Purchaser's or its designee's balance account with DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, or if there is no Transfer Agent, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the name of the Purchaser or its designee, for the number of LifeMap Shares to which the Purchaser is entitled pursuant to such exercise.  The Company shall be responsible for all fees and expenses of the Transfer Agent and all fees and expenses with respect to the transfer of LifeMap Shares to the Purchaser, if any.  No fractional LifeMap Shares are to be issued upon the exercise of this Option, but rather the number of LifeMap Shares to be issued shall be rounded down to the nearest whole number.  The Company shall pay any and all taxes which may be payable with respect to the transfer of LifeMap Shares to the Purchaser upon exercise of this Option.

(b)          Reissue of Stock Certificate.  If the Purchaser delivers to the Company a number of shares of Series A Preferred Stock greater than the Aggregate Option Exchange Shares upon the exercise of this Option, the Company shall issue to Purchaser a replacement Series A Preferred Stock certificate for the number of shares of Series A Preferred Stock in excess of the Aggregate Option Exchange Shares.

 

(c)          Company's Failure to Timely Deliver Securities.  If the Company shall fail for any reason or for no reason to transfer to the Purchaser, or cause LifeMap to issue, on or prior to the Share Delivery Date, a certificate for the number of LifeMap Shares to which the Purchaser is entitled and cause such LifeMap Shares to be registered on LifeMap's share register or to credit the Purchaser's balance account with DTC for such number of LifeMap Shares to which the Purchaser is entitled upon the Purchaser's exercise of this Option, then, in addition to all other remedies available to the Purchaser, the Company (X) shall pay in cash to the Purchaser on each day after such third (3rd) Trading Day that the transfer of such LifeMap Shares is not timely effected an amount equal to 1.5% of the product of (A) the sum of the number of LifeMap Shares not transferred to the Purchaser on a timely basis and to which the Purchaser is entitled and (B) the Closing Sale Price of the LifeMap Shares on the Trading Day immediately preceding the last possible date which the Company could have transferred such LifeMap Shares to the Purchaser without violating Section 2(a), or if the LifeMap Shares are then not traded on an Eligible Market, $4.00 (the “Designated Price”), and (Y) the Purchaser, upon written notice to the Company, may void its Exercise Notice with respect to, and retain or have returned, as the case may be, any shares of Series A Preferred Stock cancelled in connection with such voided exercise; provided that the voiding of an exercise shall not affect the Company's obligations to make any payments which have accrued prior to the date of such notice pursuant to this Section 2(c) or otherwise.  In addition to the foregoing, if on or prior to the Share Delivery Date, the Company shall fail to transfer, or cause LifeMap to issue, a certificate to the Purchaser and cause the registration of such LifeMap Shares on LifeMap's share register or credit the Purchaser's balance account with DTC for the number of LifeMap Shares to which the Purchaser is entitled upon the Purchaser's exercise of this Option or pursuant to the Company's obligation pursuant to clause (ii) below, as applicable, and if on or after such Trading Day the Purchaser purchases (in an open market transaction or otherwise) LifeMap Shares to deliver in satisfaction of a sale by the Purchaser of LifeMap Shares issuable upon such exercise that the Purchaser anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Trading Days after the Purchaser's request and in the Purchaser's discretion, either (i) pay cash to the Purchaser in an amount equal to the Purchaser's total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the LifeMap Shares so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to transfer LifeMap Shares) or credit such Purchaser's balance account with DTC for such LifeMap Shares shall terminate, or (ii) promptly honor its obligation to deliver to the Purchaser a certificate or certificates representing such LifeMap Shares or credit such Purchaser's balance account with DTC and pay cash to the Purchaser in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of LifeMap Shares, times (B) the Closing Bid Price on the date of exercise.  Nothing shall limit the Purchaser's right to pursue a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing LifeMap Shares (or to electronically deliver such LifeMap Shares) upon the exercise of this Option as required pursuant to the terms hereof.

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(d)          Disputes.  In the case of a dispute as to the determination of the Exchange Ratio or the arithmetic calculation of the LifeMap Shares, the Company shall promptly transfer to the Purchaser the number of LifeMap Shares that are not disputed and resolve such dispute in accordance with Section 12.

 

3.                   CERTAIN ADJUSTMENTS.  The Exchange Ratio and the number of LifeMap Shares purchasable hereunder shall be adjusted from time to time as follows:

 

(a)          Stock Splits, Combinations, Reclassifications and Other Changes in Common Stock.  If LifeMap, at any time after the Effective Date, shall (A) pay a dividend in its Common Stock or make a distribution in Common Stock, (B) subdivide its outstanding Common Stock, (C) combine its outstanding Common Stock into a smaller number of shares, or (D) reclassify or change (including a change to the right to receive, or a change into, as the case may be, shares of stock, other securities, property, cash or any combination thereof) its Common Stock (including any such reclassification or change in connection with a consolidation or merger in which LifeMap is the surviving corporation), upon the exercise of this Option the Purchaser shall be entitled to receive from the Company the kind and number of LifeMap Shares or other securities of LifeMap or other property which the Purchaser would have owned or have been entitled to receive upon the happening of any of the events described above, had this Option been exercised at the Exchange Ratio immediately prior to the happening of such event or any record date with respect thereto.

 

(b)          Distribution of Options, Warrants, Warrants, Rights, and Convertible Securities or Other Assets.  If LifeMap at any time after the Effective Date, shall distribute to all holders of its Common Stock (including any distribution made in connection with a merger in which LifeMap is the surviving corporation) (i) rights, options or warrants, or convertible or exchangeable securities containing the right to subscribe for or purchase Common Stock, or (ii) evidences of its indebtedness or assets, including cash but excluding Ordinary Cash Dividends (as defined below), then in each case with respect to each LifeMap Share issued upon the exercise of this Option, the Purchaser shall also receive from the Company either (a) the portion of the subscription rights, options or warrants, or convertible or exchangeable securities (or securities issued upon the conversion of convertible securities) or assets or evidences of indebtedness so distributed to the Company applicable to one LifeMap Share, or (b) the then fair value of the securities described in (a) as determined in good faith by the Board of Directors of the Company whose determination shall be conclusive; provided, that the Company need not deliver any subscription rights, options or warrants that shall have expired by their terms.  The Company shall determine whether to deliver the consideration described in clause (a) or clause (b) of the preceding sentence upon the exercise of this Option.  A cash dividend shall be deemed an “Ordinary Cash Dividend” for purposes of this Option if the dividend is paid out of consolidated earnings or earned surplus and is declared by the Board of Directors of LifeMap to be a regular or ordinary quarterly, semi-annual or annual dividend.

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(c)          Notice.  Whenever an event described in paragraph (a) or paragraph (b) of this Section 3 occurs, the Company shall promptly, in any event within ten (10) days, send to the Purchaser notice of such event.

 

(d)          No Adjustment for Dividends.  No adjustment in respect of any Ordinary Cash Dividends shall be made during the term of this Option or upon the exercise of this Option, nor shall the Purchaser be entitled to acquire from the Company upon the exercise of this Option any Ordinary Cash Dividends received by the Company with respect to LifeMap Shares or any other LifeMap securities owned or acquired by the Company upon the exercise of any subscription rights, options, warrants or exchangeable securities.

 

4.                    RESTRICTIONS ON TRANSFER.

 

(a)          Transfer.  This Option is personal to the Purchaser and may not be sold, transferred or assigned, except (i) to a successor in interest of the Purchaser as a result of any consolidation of the Purchaser with or merger of the Purchaser into another Person, (ii) to another Purchaser (as defined in the Securities Purchase Agreement) or (iii) to another Person as part of a sale of all or substantially all the property of the Purchaser to such other Person.

 

(b)          Restrictions on Transfer of LifeMap Shares.

 

(i)    Any LifeMap Shares issued to Purchaser upon the exercise of this Option, may not be sold, pledged, hypothecated, transferred or assigned, in whole or in part, unless (A) a registration statement under the Securities Act and under any applicable state securities laws is effective therefor or (B) an exemption from such registration is then available and an opinion of counsel, reasonably acceptable to LifeMap and the Transfer Agent, if any, has been rendered stating that such sale, pledge, hypothecation, transfer or assignment will not violate the Securities Act. Notwithstanding anything to the contrary contained herein (x) the LifeMap Shares may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the securities and no legal opinion shall be required therefor and (y) no representation, warranty, covenant or opinion shall be required for the sale, pledge, hypothecation, transfer or assignment of any LifeMap Shares if a registration statement with respect to the resale of such LifeMap Shares is effective at the time of any such sale, pledge, hypothecation, transfer or assignment.

 

(ii)    As a condition precedent to the registration of transfer of any certificates representing LifeMap Shares upon the exercise of this Option or transfer of LifeMap Shares, the Company and LifeMap shall be entitled to obtain a letter or other instrument from the Purchaser containing such covenants, representations or warranties by such Purchaser similar to those contained in this Section 4 as reasonably deemed necessary by the Company or LifeMap to effect compliance by the Company or LifeMap with the requirements of the Securities Act and any other applicable federal and/or state securities laws.

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(iii)  Any sale, pledge, hypothecation, transfer, or assignment of this Option or LifeMap Shares in violation of the foregoing restrictions shall be deemed null and void and of no binding effect.

 

(iv)  The Company will, and will request that LifeMap will, issue instructions to any Transfer Agent and registrar of the Common Stock to refuse to register the transfer of any LifeMap Shares not made pursuant to registration under the Securities Act and applicable state securities laws, or pursuant to an available exemption from registration under the Securities Act and applicable state securities laws.

 

(v)  The LifeMap Shares shall bear an appropriate legend, conspicuously disclosing the restrictions on transfer, under this Section 4, until the same are registered for sale under the Securities Act or are transferred in a transaction exempt from registration under the Securities Act entitling the transferee to receive securities that are not deemed to be “restricted securities” as such term is defined in Rule 144 under the Securities Act.  The Company agrees that upon the sale of LifeMap Shares pursuant to a registration statement or an exemption entitling the transferee to receive securities that are not deemed to be “restricted securities,” or at such time as registration under the Securities Act shall no longer be required, upon the presentation of the certificates containing such a legend to the transfer agent or warrant agent, if any, it will request removal of such legend; provided, that unless the request for removal of the legend is in connection with a sale registered under the Securities Act, the Purchaser shall have provided an opinion of counsel, acceptable to the Company and the Transfer Agent to the effect that such legend may be removed in compliance with the Securities Act.

 

(c)           Investment Representations.  Each Purchaser makes the following representations, severally and not jointly and severally, in connection with its acquisition of this Option and any LifeMap Shares upon the exercise of this Option:

 

(i)    Purchaser has made such investigation of LifeMap as Purchaser deemed appropriate for determining to acquire (and thereby make an investment in) this Option and LifeMap Shares, and in making such investigation Purchaser has had access to such financial and other information concerning LifeMap as Purchaser requested.  Purchaser is relying on the information communicated to Purchaser in writing by LifeMap or the Company.  Purchaser has not relied on any statement or representations inconsistent with those communicated to Purchaser in writing by LifeMap or the Company. Purchaser has had a reasonable opportunity to ask questions of and receive answers from the executive officers of LifeMap and the Company concerning LifeMap, and to obtain additional information, to the extent possessed or obtainable by LifeMap or the Company without unreasonable effort or expense, necessary to verify the information communicated or provided to Purchaser.  All such questions have been answered to Purchaser’s satisfaction.

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(ii)    Purchaser is acquiring this Option and upon exercise of this Option will purchase LifeMap Shares solely for Purchaser's own account, and Purchaser has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of the LifeMap Shares or this Option; provided, that this representation and warranty shall not prohibit Purchaser from selling LifeMap Shares in the ordinary course of business pursuant to a registration statement under the Securities Act or otherwise in compliance with the Securities Act and applicable state securities or “blue sky” laws.

 

(iii) Purchaser is an “accredited investor” as defined in Rule 501 under the Securities Act.

 

(iv) Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in this Option and LifeMap Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in this Option and LifeMap Shares and, at the present time, is able to afford a complete loss of such investment.

 

5.                    REGISTRATION RIGHTS.  The Company hereby covenants and agrees that in the event the Company receives any registration rights from LifeMap in respect of any LifeMap Shares owned by the Company, simultaneously with the exercise of any such registration rights at any time that this Option remains exercisable in whole or in part, the Company shall cause LifeMap to register all of the LifeMap Shares issuable to the Purchaser as of the applicable date of determination pursuant to the terms of this Option. The Company acknowledges and agrees that prior to excluding any LifeMap Shares from any registration statement, it shall first exclude all other LifeMap Shares owned by the Company other than any LifeMap Shares that are subject to an option provided to another Purchaser (as defined in the Securities Purchase Agreement) which shall be subject to exclusion on a pro rata basis with all other Purchasers (as defined in the Securities Purchase Agreement).  The Company shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, including, without limitation, any assignment of any registration rights with respect to the Common Stock purchasable pursuant to this Option granted to the Company under any registration rights agreement by LifeMap and the Company or under any registration statement, as Purchaser may reasonably request in order to carry out the intent and accomplish the purposes of this Section 5.

 

6.                    NONCIRCUMVENTION.  The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation, Bylaws, or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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 Option, and will at all times in good faith carry out all the provisions of this Option and take all action as may be required to protect the rights of the Purchaser.  Without limiting the generality of the foregoing, the Company shall continue to hold a sufficient number of LifeMap Shares to permit Purchaser to exercise this Option in full.  The Company will, and will request that LifeMap will, issue instructions to any Transfer Agent and registrar of the Common Stock to refuse to register the transfer of any LifeMap Shares in violation of the immediately preceding sentence.

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7.                   PURCHASER NOT DEEMED A LIFEMAP SHAREHOLDER.  The Purchaser, solely in such Person's capacity as the holder of this Option, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of LifeMap for any purpose, nor shall anything contained in this Option be construed to confer upon the Purchaser, solely in such Person's capacity as the holder of this Option, any of the rights of a shareholder of LifeMap or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the purchase of the LifeMap Shares through the due exercise of this Option.  In addition, nothing contained in this Option shall be construed as imposing any liabilities on the Purchaser to purchase any securities or as a shareholder of the Company or LifeMap (other than upon exercise of this Option), whether such liabilities are asserted by the Company or LifeMap or by their respective creditors.  Notwithstanding this Section, the Company shall provide the Purchaser with copies of such notices and other information given to the Common Stock holders of LifeMap generally, promptly after receipt thereof by the Company, unless the Company believes that such information is material, nonpublic information regarding the Company or LifeMap.

 

8.                    NOTICES.  Any notice pursuant to this Agreement by the Purchaser to the Company shall be in writing and shall be delivered in person, or mailed first class, postage prepaid, or sent by air delivery service or by facsimile transmission (FAX) or email to the Company, at its office, Attention: Chief Financial Officer.  The address of the principal office of the Company is 1301 Harbor Bay Parkway, Alameda, California 94502; FAX (510) 521-3389; email rpeabody@biotimemail.com.  Any notice given pursuant to this Agreement by the Company to the Purchaser shall be in writing and shall be mailed first class, postage prepaid, or sent by air delivery service, or by facsimile transmission (FAX) or email or otherwise delivered to the Purchaser at the Purchaser’s address shown on the signature page of this Option.  Each party hereto may from time to time change the address to which notices to it are to be delivered or mailed hereunder by notice to the other party.

 

9.                    AMENDMENT AND WAIVER.  Except as otherwise provided herein, the provisions of this Option may only be amended by a written instrument signed by the Company and the Purchaser.

 

10.                 GOVERNING LAW; JURISDICTION.  This Option shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Option shall be governed by, the internal laws of the State of California, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of California or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of California.  The Company and the Purchaser hereby irrevocably submit to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York and the County of Alameda and the United States District Court for the Northern District of California for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.

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11.                 CONSTRUCTION; HEADINGS.  This Option shall be deemed to be jointly drafted by the Company and Purchaser and shall not be construed against any Person as the drafter hereof.  The headings of this Option are for convenience of reference and shall not form part of, or affect the interpretation of, this Option.

 

12.                 DISPUTE RESOLUTION.  In the case of a dispute as to the determination of the Exchange Ratio or the arithmetic calculation of the LifeMap Shares purchasable upon the exercise of this Option, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two (2) Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Purchaser.  If the Purchaser and the Company are unable to agree upon such determination or calculation of the Exchange Ratio or the LifeMap Shares within three (3) Business Days of such disputed determination or arithmetic calculation being submitted to the Purchaser, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exchange Ratio to an independent, reputable investment bank selected by the Company and approved by the Purchaser or (b) the disputed arithmetic calculation of the LifeMap Shares to the Company's independent, outside accountant.  The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Purchaser of the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations.  Such investment bank's or accountant's determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

 

13.                REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The remedies provided in this Option shall be cumulative and in addition to all other remedies available under this Option, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Purchaser to pursue actual damages for any failure by the Company to comply with the terms of this Option.

 

14.                 SEVERABILITY.  If any provision of this Option is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Option so long as this Option as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.

 

15.                 COMPANY'S REPRESENTATIONS AND WARRANTIES.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  The Company has the power and authority to execute and deliver this Option and to perform all of its obligations hereunder.  This Option has been duly authorized, executed and delivered by the Company and is the valid and binding agreement of the Company, enforceable in accordance with its terms subject to:  (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors; and (ii) general principles of equity.  There is no lawsuit, arbitration proceeding, or administrative action or proceeding pending or threatened against the Company which questions the validity of this Option or any action taken or to be taken by the Company in connection with this Option or the transfer of the LifeMap Shares hereunder.  The Company owns beneficially of record, free and clear of any lien or other encumbrance, the LifeMap Shares, and upon exercise of the Option, the Purchaser will acquire good and valid title to such LifeMap Shares thereto, free and clear of any lien or other encumbrance.  The execution and delivery of this Option and consummation of the transactions contemplated by this Option (a) do not and will not violate any provisions of (i) any rule, regulation, statute, or law, (ii) the terms of any order, writ or decree of any court or judicial or regulatory authority or body, (iii) the Articles of Incorporation or bylaws of the Company, or (iv) the rules and regulations of the NYSE MKT applicable to the listing of the Company’s common shares, (b) will not conflict with or result in a breach of any condition or provision or constitute a default under or pursuant to the terms of any Material Contract (as defined in the Securities Purchase Agreement), and (c) will not result in the creation or imposition of any lien, charge or encumbrance upon any of the LifeMap Shares (other than pursuant to this Option) or upon any of the assets or properties of the Company.

8

16.                 REPRESENTATIONS AND WARRANTIES CONCERNING LIFEMAP.  LifeMap is a corporation duly organized, validly existing and in good standing under the laws of the State of California, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. There is no lawsuit, arbitration proceeding, or administrative action or proceeding pending or threatened against LifeMap which questions the validity of this Option or any action taken or to be taken by the Company in connection with this Option or the transfer of the LifeMap Shares hereunder.  The execution and delivery of this Option and consummation of the transactions contemplated by this Option (a) do not and will not violate any provisions of (i) any rule, regulation, statute, or law, (ii) the terms of any order, writ or decree of any court or judicial or regulatory authority or body or (iii) the Articles of Incorporation or bylaws of LifeMap, (b) will not conflict with or result in a breach of any condition or provision or constitute a default under or pursuant to the terms of any Material Contract of LifeMap (as defined in the Securities Purchase Agreement as if such contract was a contract to which LifeMap is a party), and (c) will not result in the creation or imposition of any lien, charge or encumbrance upon any of the LifeMap Shares (other than pursuant to this Option) or upon any of the assets or properties of LifeMap.  The authorized capital stock of LifeMap consists of: 2,250,000 shares of Preferred Stock, none of which are issued and outstanding, and 22,500,000 shares of Common Stock, of which 11,715,095 shares, are issued and outstanding.  All outstanding shares of LifeMap Common Stock are duly and validly authorized and issued, fully paid and nonassessable.  Except for up to 2,342,269 shares of Common Stock reserved for issuance to employees, directors and consultants under the terms of a stock option plan previously approved by LifeMap’s Board of Directors, there are no outstanding options, warrants, rights or obligations for the purchase or acquisition from LifeMap of any shares of capital stock.

 

17.                 CERTAIN DEFINITIONS.  For purposes of this Option, the following terms shall have the following meanings:

 

(a)           "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person, it being understood for purposes of this definition that "control" of a Person means the power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

9

(b)          "Bloomberg" means Bloomberg Financial Markets.

 

(c)           "Business Day" means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

 

(d)          "Closing Bid Price" and "Closing Sale Price" means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg.  If the Company and the Purchaser are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.

 

(e)           "Common Stock" means (i) the Common Stock, no par value per share, of LifeMap, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

 

(f)            "Eligible Market" means the NYSE, the NYSE MKT, The NASDAQ Global Market, The NASDAQ Global Select Market, the NASDAQ Capital Market, or the OTC Bulletin Board.

 

(g)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(h)          "Expiration Date" has the meaning ascribed in Section 1, provided, that, if March 4, 2019 falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a "Holiday"), the next day that is not a Holiday shall apply.

 

(i)            "Person" means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(j)            "Principal Market" means the principal Eligible Market on which the Common Stock trades.

 

(k)           "Securities Act" means the Securities Act of 1933, as amended.

 

(l)            "Trading Day" means any day on which the Common Stock is traded on the Principal Market, provided that "Trading Day" shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York time).

Signature Page Follows]

10

IN WITNESS WHEREOF, the Company and Purchaser have caused this Option Agreement to be duly executed as of the Effective Date.

 

	
BIOTIME, INC.

	
 

	
 

	
 

	
 

	
By:

	
/s/ Michael D. West

	
 

	
Name: Michael D. West

	
 

	
Title:  Chief Executive Officer

	
 

	
 

	
 

	
 

	
PURCHASER

	
 

		
 

	
ALB Private Investments, LLC

	
 

	
 

	
 

	
 

	
By:

	
/s/ Francis A. Mlynarczyk, Jr.

	
 

	
Name:  Francis A. Mlynarczyk, Jr.

	
 

	
Title:  Manager

 

11

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED PURCHASER TO EXERCISE THIS

OPTION TO PURCHASE LIFEMAP COMMON STOCK

BIOTIME, INC.

The undersigned Purchaser hereby exercises the right to purchase _________________ LifeMap Shares ("LifeMap Shares") of LifeMap Sciences, Inc., a California corporation, held by BioTime, Inc. (the "Company"), pursuant to the attached Option Agreement and tenders herewith __________ shares of Series A Preferred Stock, duly endorsed in blank, in exchange for such LifeMap Shares.

Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Option Agreement.

 

	
Date:

	
_______________ __, ______

		
 

	
 

	
 

		
 

	 		
	
Name of Registered Purchaser

		
 

	
 

	
 

		
 

	
By:

	
 

		
 

	
 

	
Name:

		
 

	
 

	
Title:

		
 

 

[NOTE:  The above signature should correspond exactly with the name of the Purchaser in the Option Agreement]

	
 

	
 

	
 

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs [Transfer Agent] to issue the above indicated number of LifeMap Shares in accordance with the Transfer Agent Instructions dated ________ from the Company and acknowledged and agreed to by [Transfer Agent].

	
 

	
BIOTIME, INC.

	
	
 

	
 

	
 

	
	
 

	
By:

	
 

	
	
 

	
Name:

	
	
 

	
Title:ELEVENTH AMENDMENT TO LOAN AND SECURITY
AGREEMENT

 

THIS ELEVENTH AMENDMENT
TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and entered into on March 13, 2014, by and among SED
INTERNATIONAL HOLDINGS, INC., a Georgia corporation (“Parent”), SED INTERNATIONAL, INC., a Georgia
corporation (“SED”; Parent and SED are collectively referred to herein as “Borrowers” and
each individually as “Borrower”), the parties to the Loan Agreement (as hereinafter defined) from time to time
as lenders (collectively, “Lenders” and each individually, a “Lender”) and WELLS FARGO
BANK, NATIONAL ASSOCIATION, a national banking association and successor-by-merger to Wachovia Bank, National Association,
in its capacity as agent for Lenders (together with its successors in such capacity, “Agent”).

 

Recitals:

 

WHEREAS, Borrowers,
Agent and Lenders are parties to that certain Loan and Security Agreement dated September 21, 2005 (as at any time amended, restated,
modified or supplemented, the “Loan Agreement”), pursuant to which Lenders have made certain revolving credit
loans and other financial accommodations to Borrowers; and

 

WHEREAS, as of the
date hereof, Borrowers each acknowledge and agree that the Existing Specified Defaults (as such term is defined in the Notice of
Default) have occurred and are continuing.

 

NOW, THEREFORE, the
parties desire to amend the Loan Agreement as hereinafter set forth.

 

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are hereby severally acknowledged, the parties hereto, intending
to be legally bound hereby, agree as follows:

 

1.              Definitions. All capitalized terms used in this Amendment, unless otherwise defined herein, shall have
the meaning ascribed to such terms in the Loan Agreement.

 

2.              Amendments to Loan Agreement. The Loan Agreement is hereby amended as follows:

 

(a)               
By deleting the definitions of “Applicable Margin” “Inventory Loan Limit”, “Foreign
Accounts Loan Limit,” “Foreign Accounts (Uninsured) Loan Limit,” “Letter of Credit Limit”, “Maximum
Credit” and “Revolving Loan Limit” contained in Section 1 of the Loan Agreement and by substituting the following
new definitions in lieu thereof, respectively:

 

1.9 “Applicable
Margin” shall mean (a) 1.75%, with respect to Prime Rate Loans, and (b) 3.75%, with respect to Three Month Fixed Eurodollar
Rate Loans. Upon the occurrence and during the continuance of an Event of Default, at the option of the Agent, the Applicable Margin
shall increase by two percent (2%) for (1) the period from and after the date of termination or non-renewal hereof until Lenders
have received full and final payment of all Obligations and (2) the period from and after the date of the occurrence of an Event
of Default for so long as such Event of Default is continuing as determined by Agent.

 

    	-1-

    	 

    

 

1.72“Inventory Loan Limit”
shall mean at any time, the amount equal to $2,000,000 minus Letters of Credit to the extent provided in the Borrowing Base.

 

"Foreign
Accounts Loan Limit" shall mean an amount equal to $1,500,000.

 

"Foreign
Accounts (Uninsured) Loan Limit" shall mean the amount of $500,000.

 

1.77“Letter of Credit Limit”
means $250,000.

 

1.87“Maximum Credit”
shall mean $7,500,000

 

1.111“Revolving Loan Limit”
shall mean an amount equal to $7,500,000.

 

(b)              
By adding the following new definition of “Special Availability Reserve” to Section 1 of the Loan Agreement:

 

“Special
Availability Reserve” shall mean $3,750,000.

 

(c)               
By adding the following new definition of “EBITDA” to Section 1 of the Loan Agreement:

 

"EBITDA"
means for any specified period the sum of (A) the aggregate net income of Borrowers for such period (computed without regard to
any extraordinary items of gain or loss) plus (B) to the extent deducted from (or included in) revenue in computing net
income of Borrowers for such period, the sum of (1) interest expense plus (2) income tax expense plus (3) depreciation
and amortization plus (4) extraordinary items (but excluding any items arising from any foreign currency fluctuations or
events) plus (5) non-cash losses plus (or minus) (6) non-recurring items minus (7) non-cash gains minus
(8) earnings from any Foreign Subsidiary of any Borrower unless cash or Cash Equivalents are received by Borrowers as distributions
from such Foreign Subsidiary.”

 

(d)              
By adding the following new definition of “Eleventh Amendment Date” to Section 1 of the Loan Agreement:

 

“Eleventh Amendment Date”
shall mean March 13, 2014.

 

(e)               
By adding the following new definition of “Notice of Default” to Section 1 of the Loan Agreement:

 

“Notice of Default” shall
mean the letter Re: Notice of Event of Default, dated October 29, 2013, from the Agent to the Borrowers.

 

    	-2-

    	 

    

 

(f)               
By amending and restating, in its entirety, clause (i) of the definition of “Reserves” (Section 1.110)
to read as follows:

 

“(i) the
Special Availability Reserve,”

 

(g)              
By amending and restating Section 9.22(f) of the Loan Agreement in its entirety to read as follows:

 

“(f) all
out-of-pocket expenses and costs heretofore and from time to time hereafter incurred by Agent during the course of periodic field
examinations or appraisals of the Collateral and such Borrower's operations, plus a per diem charge at Agent's then standard rate
for Agent's examiners in the field and office (which rate as of the date hereof is $850 per person per day), which out-of- pocket
expenses, costs and per-diem charges shall not exceed $12,500 per field examination; provided, that, so long as no Default or Event
of Default exists, Borrowers shall not be required to pay to Agent or reimburse Agent for the expenses, costs and charges for more
than (1) inventory appraisal and no more than three (3) field examinations during such twelve month period; the foregoing limitations
on payment and reimbursement of expenses, costs and charges shall not be construed to limit Agent's or any Lender's right to conduct
field examinations and appraisals of the Collateral as otherwise permitted under this Agreement;”

 

(h)              
By deleting Section 9.17 of the Loan Agreement.

 

(i)                
By deleting Schedule 1.97 “Permitted Holders” to the Loan Agreement in its entirety and by substituting
Schedule 1.97 attached hereto in lieu thereof.

 

3.             Unused Line Fee. For purposes of calculating the Unused Line Fee under the Loan Agreement, upon the
satisfaction of the conditions set forth in Section 11 of the Amendment, the Revolving Loan Limit shall be deemed to be $7,500,000
as of the Eleventh Amendment Date.

 

4.             Adjusted Eurodollar Rate Loans. As of the Eleventh Amendment Date, all references in the Financing
Agreements to (a) “Eurodollar Rate Loans” shall be deemed references to “Three Month Fixed Eurodollar Rate Loans”,
(b) the “Applicable Margin For Adjusted Eurodollar Rate Loans: shall be deemed references to the “Applicable Margin
for Three Month Fixed Eurodollar Rate Loans,” and (c) the “Adjusted Eurodollar Rate” shall be deemed references
to the “Three Month Fixed Eurodollar Rate.” As of the effective date of this Amendment no requests for Alternative
Eurodollar Rate Loans shall be made by Borrowers or honored by Agent under the Loan Agreement.

 

5.             Ratification and Reaffirmation. Each Borrower hereby ratifies and reaffirms the Obligations, each of
the Financing Agreements and all of such Borrower’s covenants, duties, indebtedness and liabilities under the Financing Agreements.
Each Borrower hereby acknowledges, confirms and agrees that the obligations, liabilities and indebtedness owing by it to Agent
and Lenders for the payment and performance of the Obligations pursuant to the Financing Agreements are unconditionally due and
owing to Agent and Lenders without offset, defense or counterclaim of any kind, nature or description whatsoever.

 

    	-3-

    	 

    

 

6.             Acknowledgments and Stipulations. Each Borrower acknowledges and stipulates that the Loan Agreement
and the other Financing Agreements executed by such Borrower are legal, valid and binding obligations of such Borrower that are
enforceable against such Borrower in accordance with the terms thereof; all of the Obligations are owing and payable without defense,
offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is
hereby waived by such Borrower); and the security interests and liens granted by Borrowers in favor of Agent are duly perfected,
first priority security interests and liens, subject only to liens and other encumbrances permitted under the Loan Agreement.

 

7.             Waiver of Existing Event of Default.

 

(a)               
Each Borrower hereby acknowledges and agrees that the “Existing Event of Default” (as such term is defined
in the Notice of Default) has occurred and is continuing, and constitutes an Event of Default and, entitles Lenders to cease making
and providing Revolving Loans, Letters of Credit and other financial and credit accommodations otherwise available under the Loan
Agreement and the other Financing Agreements and to exercise their other rights and remedies under the Financing Agreements, applicable
law or otherwise. Agent and Lenders have agreed that upon the satisfaction of the conditions precedent set forth in Section 11
below, the Existing Event of Default shall be deemed waived.

 

(b)              
Agent and Lenders have not waived, and are not by this Amendment waiving and have no intention of waiving, any Defaults
or Events of Default (other than the Existing Event of Default) that have occurred or which may be continuing on the date hereof
or any Defaults or Events of Default which may occur after the date hereof (whether the same or similar to the Existing Event of
Defaults or otherwise), and, Agent and Lenders have not agreed to forbear with respect to any of its rights or remedies concerning
any Defaults or Events of Default, which may have occurred or are continuing as of the date hereof or which may occur after the
date hereof.

 

8.             Representations and Warranties. Each Borrower represents and warrants to Agent and Lenders, to induce
Agent and Lenders to enter into this Amendment, that no Default or Event of Default exists on the date hereof; delivery and performance
of this Amendment have been duly authorized by all requisite corporate action on the part of such Borrower and this Amendment has
been duly executed and delivered by such Borrower; and all of the representations and warranties made by such Borrower in the Loan
Agreement are true and correct in all material respects on and as of the date hereof, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such earlier date.

 

9.             Reference to Loan Agreement. Upon the effectiveness of this Amendment, each reference in the Loan Agreement
to “this Agreement,” “hereunder,” or words of like import shall mean and be a reference to the Loan Agreement,
as amended by this Amendment.

 

10.           Breach of Amendment. This Amendment shall be part of the Loan Agreement and a breach of any representation,
warranty or covenant herein shall constitute an Event of Default.

 

    	-4-

    	 

    

 

11.           Conditions Precedent. The effectiveness of the amendments contained in Sections 2, 3, and 4 hereof
is subject to the delivery to Agent of the following documents, each in form and substance satisfactory to Agent:

 

(a)               
an original counterpart of this Amendment executed by each Borrower; and

 

(b)              
such other documents, instruments and agreements as the Agent may require, in each case in form and substance satisfactory
to Agent.

 

12.           Expenses of Agent. In consideration of Agent’s and Lenders’ willingness to enter into this
Amendment as set forth herein, Borrowers jointly and severally agree to pay, on demand, all costs and expenses incurred by Agent
in connection with the preparation, negotiation and execution of this Amendment and any other Financing Agreements executed pursuant
hereto and any and all amendments, modifications, and supplements thereto, including, without limitation, the costs and fees of
Agent’s legal counsel and any taxes or expenses associated with or incurred in connection with any instrument or agreement
referred to herein or contemplated hereby.

 

13.           Effectiveness; Governing Law. This Amendment shall be effective upon acceptance by Agent and Lenders
(notice of which acceptance is hereby waived), whereupon the same shall be governed by and construed in accordance with the internal
laws of the State of Georgia.

 

14.           Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.

 

15.           No Novation, etc. Except as otherwise expressly provided in this Amendment, nothing herein shall be
deemed to amend or modify any provision of the Loan Agreement or any of the other Financing Agreements, each of which shall remain
in full force and effect. This Amendment is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction,
and the Loan Agreement as herein modified shall continue in full force and effect.

 

16.           Counterparts; Signatures. This Amendment may be executed in any number of counterparts and by different
parties to this Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile or other electronic transmission
shall be deemed to be an original signature hereto.

 

17.           Further Assurances. Each Borrower agrees to take such further actions as Agent shall reasonably request
from time to time in connection herewith to evidence or give effect to the amendments set forth herein or any of the transactions
contemplated hereby.

 

18.           Section Titles. Section titles and references used in this Amendment shall be without substantive meaning
or content of any kind whatsoever and are not a part of the agreements among the parties hereto.

 

19.           Release of Claims. To induce Agent and Lenders to enter into this Amendment, each Borrower hereby releases,
acquits and forever discharges Agent and each Lender, and all officers, directors, agents, employees, successors and assigns of
Agent and each Lender, from any and all liabilities, claims, demands, actions or causes of action of any kind or nature (if there
be any), whether absolute or contingent, disputed or undisputed, at law or in equity, which are known to such Borrower, that such
Borrower now has or ever had against Agent and any Lender arising under or in connection with any of the Financing Agreements or
otherwise. Each Borrower represents and warrants to Agent and Lenders that such Borrower has not transferred or assigned to any
Person any claim that such Borrower ever had or claimed to have against Agent or any Lender.

 

    	-5-

    	 

    

 

20.           Waiver of Jury Trial. To the fullest extent permitted by applicable law, the parties hereto each hereby
waives the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or related to this Amendment.

 

[Remainder of page intentionally left
blank; signatures appear on following page.]

 

 

 

    	-6-

    	 

    

 

 

IN WITNESS WHEREOF,
the Borrowers have caused this Amendment to be duly executed under seal and delivered in Atlanta, Georgia by their respective duly
authorized officers on the date first written above.

 

	 	SED INTERNATIONAL HOLDINGS, INC.
	 	 
	 	By:  /s/ Sham Gad
	 	Name:  Sham Gad
	 	Title:  Chairman and CEO
	 	 
	 	 
	 	SED INTERNATIONAL, INC.
	 	 
	 	By:  /s/ Sham Gad
	 	Name:  Sham Gad
	 	Title:  Chairman and CEO
	 	 
	 	 
	 	Accepted and agreed:
	 	 
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Agent and sole Lender
	 	 
	 	By:  Sherrill Grant
	 	Name:  Sherrill Grant
	 	Title:  Authorized Signatory

 

 

    	-7-

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