Document:

EX-10.1

SCHEDULE OF COMPENSATION

BORLAND NON-EMPLOYEE DIRECTORS

Fees

We pay cash fees to each non-employee director for his or her services. Fees paid include an
annual retainer of $20,000 and a flat fee for attendance at each meeting of our Board and for
attendance at each meeting of a Board committee on which they serve as follows:

 

	 	 	 	 	 
	 

	 	 
	 	 
	Regularly Scheduled Board of Directors Meetings

	Non-employee Director

	 	  
	 	$2,000 per meeting
	Chairman

	 	  
	 	$3,000 per meeting
	 

	Special Telephonic Board Meetings

	Non-employee Director

	 	  
	 	$1,000 per meeting
	Chairman

	 	  
	 	$1,500 per meeting
	 

	Audit Committee Meetings

	Non-employee Director

	 	  
	 	$2,000 per meeting
	Chairman

	 	  
	 	$3,000 per meeting
	 

	Compensation Committee Meetings

	Non-employee Director

	 	  
	 	$1,000 per meeting
	Chairman

	 	  
	 	$1,500 per meeting
	 

	Nominating & Governance Committee Meetings

	Non-employee Director

	 	  
	 	$1,000 per meeting
	Chairman

	 	  
	 	$1,500 per meeting

Our directors are reimbursed for reasonable expenses incurred in connection with attending
Board or committee meetings. We do not provide any retirement benefits or other perquisites to our
directors.

Stock Options

 

Under the automatic option grant program in effect under our 2002 Stock Incentive Plan,
eligible non-employee members of our Board receive a series of option grants over their period of
Board service. Those option grants are as follows:

 

Initial Grant.    At the time of his or her initial election or appointment to the Board, each
new non-employee Board member receives an option grant for 30,000 shares of our common stock,
provided such individual has not previously been in our employ.

 

Annual Grant.    On the first trading day in July each year, each individual who is at that
time serving as a non-employee Board member receives one or more automatic stock option grants in
accordance with the following formula:

 

(i) each non-employee Board member on that annual grant date receives an option for 12,500
shares of our common stock, except that the chairperson of our Board receives an option grant for
17,500 shares;

 

(ii) each non-employee Board member who is serving as a member of any of our board committees
also receives an additional option grant for 1,000 shares of our common stock for each committee on
which he or she is serving on the annual grant date; and

 

(iii) each non-employee Board member who is also serving as the chairperson of any Board
committee at that time receives an additional option grant for 1,000 shares of our common stock for
each committee on which he or she is serving as chairperson on the annual grant date.

 

There is no limit on the number of annual option grants any one eligible non-employee Board
member may receive over his or her period of continued Board service, and non-employee Board
members who have previously been in our employ are eligible to receive one or more annual grants
over their period of Board service.

 

Each automatic grant has an exercise price per share equal to the fair market value per share
of our common stock on the grant date and has a maximum term of ten years, subject to early
termination upon the later of (i) twelve months after the date of the optionee’s cessation of Board
service for any reason or (ii) three months after the date the optionee is first free to sell the
option shares without contravention of applicable federal and state securities laws. Each automatic
option is immediately exercisable for all of the option shares. However, any shares purchased under
such option will be subject to repurchase by us, at the lower of the exercise price paid per share
or the fair market value per share, should the optionee cease Board service prior to vesting in
those shares.

 

The shares subject to each initial and annual automatic option grant vest as follows:
one-third of those option shares vest upon the optionee’s completion of one year of Board service
measured from the grant date of that option, and the remaining option shares vest in a series of
twenty-four successive equal monthly installments upon the optionee’s completion of each of the
next twenty-four months of continued Board service thereafter. However, the shares subject to each
initial and annual option grant vest in full on an accelerated basis should we experience certain
changes of control or ownership or should the optionee die or become disabled during his or her
period of Board service, as will be more fully described in the 2002 Stock Incentive Plan and
agreement thereunder.

Non-employee director compensation is periodically reviewed by our Board or its
Compensation Committee and is subject to change as deemed appropriate by the Board or Compensation
Committee.EX-4.1

EXHIBIT 4.1

COMMON STOCK PURCHASE WARRANT

ENCYSIVE PHARMACEUTICALS INC.

Warrant  shares:                                                                       Initial
Exercise Date: February      , 2008

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
     (the “Holder”) is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after February      , 2008 (the
“Initial Exercise Date”) and on or prior to the close of business on August      , 2012 (the
“Termination Date”) but not thereafter, to subscribe for and purchase from Encysive
Pharmaceuticals Inc., a Delaware corporation (the “Company”), up to       shares (the
“Warrant  shares”) of Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase Agreement (the
“Purchase Agreement”), dated August 20, 2007, among the Company and the purchasers
signatory thereto.

Section 2. Exercise.

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

b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $1.95, subject to adjustment hereunder (the “Exercise Price”).

c) Cashless Exercise. If at the time of exercise pursuant to Section 2(a),
there is no effective Registration Statement registering, or no current prospectus available
for, the resale of the Warrant  shares by the Holder, then this Warrant may also be exercised
at such time by means of a “cashless exercise” in which the Holder shall be entitled to
receive a certificate for the number of Warrant  shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:

	 	(A)	 	= the VWAP on the Trading Day immediately preceding the date of
such election;

	 	(B)	 	= the Exercise Price of this Warrant, as adjusted; and

	 	(X)	 	= the number of Warrant  shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash exercise
rather than a cashless exercise.

d) Holder’s Restrictions. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with
the Holder’s Affiliates, and any other person or entity acting as a group together with the
Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number
of  shares of Common Stock beneficially owned by the Holder and its Affiliates shall include
the number of  shares of Common Stock issuable upon exercise of this Warrant with respect to
which such determination is being made, but shall exclude the number of  shares of Common
Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of
this Warrant beneficially owned by the Holder or any of its Affiliates and (B) exercise or
conversion of the unexercised or nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents) subject to a limitation
on conversion or exercise analogous to the limitation contained herein beneficially owned by
the Holder or any of its affiliates.  Except as set forth in the preceding sentence, for
purposes of this Section 2(d)(i), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this Section 2(d) applies, the determination of whether this
Warrant is exercisable (in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be in the sole
discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be
the Holder’s determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject the Beneficial Ownership Limitation, and the
Company shall have no obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(d), in determining the number of
outstanding  shares of Common Stock, a Holder may rely on the number of outstanding  shares
of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the
case may be, (y) a more recent public announcement by the Company or (z) any other notice by
the Company or the Company’s Transfer Agent setting forth the number of  shares of Common
Stock outstanding.  Upon the written request of a Holder, the Company shall within two
Trading Days confirm in writing to the Holder the number of  shares of Common Stock then
outstanding.  In any case, the number of outstanding  shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates since the date as of which such
number of outstanding  shares of Common Stock was reported. The “Beneficial Ownership
Limitation” shall be 4.99% of the number of  shares of the Common Stock outstanding
immediately after giving effect to the issuance of  shares of Common Stock issuable upon
exercise of this Warrant. The Beneficial Ownership Limitation provisions of this Section
2(d) may be waived by the Holder, at the election of the Holder, upon not less than 61 days’
prior notice to the Company to change the Beneficial Ownership Limitation to 9.99% of the
number of  shares of the Common Stock outstanding immediately after giving effect to the
issuance of  shares of Common Stock upon exercise of this Warrant, and the provisions of this
Section 2(d) shall continue to apply. Following such a change by a Holder of the Beneficial
Ownership Limitation from such 4.99% limitation to such 9.99% limitation, notwithstanding
anything to the contrary contained in this Warrant, (a) no term of this Section may
thereafter be waived by any party, nor amended such that the threshold percentage of
ownership would be directly or indirectly increased, (b) this restriction shall thereafter
run with the Warrant and may not be modified or waived by any subsequent holder hereof and
(c) any attempted waiver, modification or amendment of this Section will be void
ab initio. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of this Section
2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor holder of this Warrant.

e) Mechanics of Exercise.

	 	i.	 	Delivery of Certificates Upon Exercise.
Certificates for  shares purchased hereunder shall be transmitted by the
transfer agent of the Company to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (“DWAC”) system if the Company is a
participant in such system and either (A) there is an effective Registration
Statement for the issuance or permitting the resale of the Warrant  shares
by the Holder or (B) this Warrant is being exercised via cashless exercise,
and otherwise by physical delivery to the address specified by the Holder in
the Notice of Exercise within 3 Trading Days from the latest to occur of
delivery to the Company of the Notice of Exercise Form, surrender of this
Warrant (if required) and payment of the aggregate Exercise Price as set
forth above (“Warrant Share Delivery Date”). This Warrant shall be
deemed to have been exercised on the date the Exercise Price is received by
the Company. The Warrant  shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed
to have become a holder of record of such  shares for all purposes, as of
the date the Warrant has been exercised by payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all taxes
required to be paid by the Holder, if any, pursuant to Section 2(e)(vi)
prior to the issuance of such  shares, have been paid.

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

	 	iii.	 	Rescission Rights. If the Company fails to cause
its transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant  shares pursuant to Section 2(e)(i) by the
applicable Warrant Share Delivery Date, then the Holder will have the right
to rescind such exercise.

	 	iv.	 	Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise. In addition to any other rights available
to the Holder, other than during any periods that the Company has notified
the Holder in writing that, at such time, there is no registration statement
effective or available for the sale or resale of the Warrant  shares, if the
Company fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant  shares pursuant to an
exercise on or before the applicable Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) or the Holder’s brokerage firm otherwise
purchases  shares of Common Stock to deliver in satisfaction of a sale by
the Holder of the Warrant  shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the Company shall (1) pay in
cash to the Holder the amount by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the  shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Warrant  shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant  shares for which such exercise was not honored
or deliver to the Holder the number of  shares of Common Stock that would
have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted exercise of  shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (1) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of
the Buy-In and, upon request of the Company, evidence of the amount of such
loss. Nothing herein shall limit a Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
 shares of Common Stock upon exercise of the Warrant as required pursuant to
the terms hereof.

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

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

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

Section 3. Certain Adjustments.

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

b) [Intentionally deleted.]

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

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

e) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(A) the Company effects any merger or consolidation of the Company with or into another
Person, (B) the Company effects any sale of all or substantially all of its assets in one or
a series of related transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their  shares for other securities, cash or property, or (D)
the Company effects any reclassification of the Common Stock or any compulsory share exchange
pursuant to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (each “Fundamental Transaction”), then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise immediately prior to the
occurrence of such Fundamental Transaction, the number of  shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation, and
any additional consideration (the “Alternate Consideration”) receivable as a result
of such merger, consolidation or disposition of assets by a holder of the numberof  shares of
Common Stock for which this Warrant is exercisable immediately prior to such event. For
purposes of any such exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or surviving entity in such
Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing
provisions and evidencing the Holder’s right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is
effected shall include terms requiring any such successor or surviving entity to comply with
the provisions of this Section 3(e) and insuring that this Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous to a
Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction”
as defined in Rule 13e-3 under the Securities Exchange Act of 1934, as amended, or (3) a
Fundamental Transaction involving a person or entity not traded on a national securities
exchange, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital
Market, the Company or any successor entity shall pay at the Holder’s option, exercisable at
any time concurrently with or within 30 days after the consummation of the Fundamental
Transaction, an amount of cash equal to the value of this Warrant as determined in accordance
with the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P.
using (i) a price per share of Common Stock equal to the VWAP of the Common Stock for the
Trading Day immediately preceding the date of consummation of the applicable Fundamental
Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the remaining term of this Warrant as of the date of consummation of the
applicable Fundamental Transaction and (iii) an expected volatility equal to the 100 day
volatility obtained from the “HVT” function on Bloomberg L.P. determined as of the Trading
Day immediately following the public announcement of the applicable Fundamental Transaction.

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

g) Notice to Holder.

i. Adjustment to Exercise Price. Whenever the Exercise Price is
adjusted pursuant to this Section 3, the Company shall promptly mail to the
Holder a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.

ii. Notice to Allow Exercise by Holder. If (A) the Company shall
declare a dividend (or any other distribution in whatever form) on the Common
Stock; (B) the Company shall declare a special nonrecurring cash dividend on or
a redemption of the Common Stock; (C) the Company shall authorize the granting
to all holders of the Common Stock rights or warrants to subscribe for or
purchase any  shares of capital stock of any class or of any rights; (D) the
approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to
which the Company is a party, any sale or transfer of all or substantially all
of the assets of the Company, of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or property; (E) the
Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company; then, in each case, the Company
shall cause to be mailed to the Holder at its last address as it shall appear
upon the Warrant Register of the Company, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their  shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. The Holder is entitled to exercise this Warrant during the
20-day period commencing on the date of such notice until the effective date of
the event triggering such notice.

Section 4. Transfer of Warrant.

a) Transferability. This Warrant and all rights hereunder (including, without
limitation, any registration rights) are transferable, in whole or in part, upon surrender of
this Warrant at the principal office of the Company or its designated agent, together with a
written assignment of this Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer. Upon such surrender and, if required, such payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, if any, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant  shares
without having a new Warrant issued. Notwithstanding anything herein to the contrary, this
Warrant may only be transferred to an entity that meets the investor suitability requirements
set forth in the Purchase Agreement, including, without limitation, the requirements that the
transferee be an “accredited investor” or a “qualified institutional buyer” and that the
transferee satisfy the applicable definitions set forth in Exhibit 3.2(c) to the Purchase
Agreement.

b) New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or combination, the Company shall execute and
deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.

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

Section 5. Miscellaneous.

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

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

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

d) Authorized  shares.

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

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

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

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

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

g) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right or
otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all
rights hereunder terminate on the Termination Date. If the Company willfully and knowingly
fails to comply with any provision of this Warrant, which results in any material damages to
the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any
out of pocket costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

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

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

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

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

l) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.

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

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

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

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

	 	 	 
	                                                        	 	ENCYSIVE PHARMACEUTICALS INC.
	
 
	 	By:                                    
	
 
	 	 
	
 
	 	Name:
	
 
	 	Title:

NOTICE OF EXERCISE

TO: ENCYSIVE PHARMACEUTICALS INC.

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

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

[ ] in lawful money of the United States; or

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

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

                             

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

                             

                             

                             

[SIGNATURE OF HOLDER]

Name of Investing
Entity:                                                                                         
         

Signature of Authorized Signatory of Investing Entity:
                                                                 

Name of Authorized Signatory:
                                                                                           

Title of Authorized Signatory:
                                                                                           

Date:
                                                                                           

1

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

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

_                                                                                               
    whose address is

_                                                                                               
                               

_                                                                                               
                               

Dated:                            ,
             

	 	 	 
	Holder’s Signature:

	 	                      
	
 
	 	 
	Holder’s Address:

	 	                      
	
 
	 	 
	.

	 	                      
	
 
	 	 

Signature Guaranteed:
                                                                                            

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

2

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