Document:

Exhibit

XERIUM TECHNOLOGIES, INC.
MANAGEMENT INCENTIVE COMPENSATION AWARD AGREEMENT
[NAME]
Pursuant to the terms of the Xerium Technologies, Inc. 2017 Management Incentive Compensation Program (the "MIC"), Xerium Technologies, Inc. (the "Company") hereby grants to the Employee the Management Incentive Compensation Award ("MIC Award") described below, effective as of _____, 2017 (the “Effective Date”).
1.The Incentive Compensation Award.  The MIC Award is subject to the terms and conditions of this Management Incentive Compensation Award Agreement ("Agreement") and the MIC. The Incentive Compensation Award is a cash award payable as set forth in this Agreement. The target amount of the award for the Employee, as a percentage of Employee's year-end annual base compensation from the Company, is set forth on Schedule 1 of this Agreement. The amount payable will be adjusted upward or downward, or may be forfeited, based on performance as set forth on Schedule 1 of this Agreement. "Vested" portion of the Award is the portion of the Award to which the Employee has a nonforfeitable rights. An Award shall be paid hereunder only to the extent that such Award is Vested, as provided in this Agreement. The Employee's rights to payment under the Award are subject to the restrictions described in this Agreement and the MIC in addition to such other restrictions, if any, as may be imposed by law.
2.    Payment of Award.  The amount determined under Schedule 1 shall be paid to the Employee in cash not later than March 15, 2018, subject to applicable tax withholding.  
3.    Treatment of Awards Upon a Change of Control; Termination of Employment.  
(a)In the event a Change of Control (defined below) occurs prior to the close of the performance year with respect to the Award, for the performance period from January 1, 2017 to the date of closing of the Change of Control (the "COC Performance Year") the applicable performance metrics specified in Schedule 1 of the Award Agreement shall be determined as follows: (i) the performance year shall be deemed to end on the effective date of such transaction; and (ii) the performance metrics shall be deemed achieved to the extent the applicable performance metrics specified in Schedule 1 of the Award Agreement for the shortened performance year described in clause (i) above are on target to be achieved based upon the financial information available to the Company. In the event such performance metrics have been achieved pursuant to the foregoing sentence for the COC Performance Year and the MIC (or an equivalent plan approved by the Board that is no less lucrative or generous than the MIC) is not continued for the period from the end of the COC Performance Year to the end of calendar year 2017, the full amount of the Award determined under Schedule 1 shall be paid to the Employee in cash promptly following the Change of Control, subject to applicable tax withholding. In the event such performance metrics have been achieved pursuant to the first sentence above for the COC Performance Year and the MIC (or an equivalent plan approved by the Board that is no less lucrative or generous than the MIC) is continued for the period from the end of the COC Performance Year to the end of the calendar year (subject to an adjustment for any payments made at the Change of Control effective date hereunder), the amount of the Award determined under Schedule 1 shall be prorated by multiplying the Award by a fraction, the numerator of which is the number of days in the COC Performance Year and the denominator of which is 365, and such Award shall be paid to the Employee in cash promptly following the Change of Control, subject to applicable tax withholding.

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(US - Standard MIC 2017)

(b)In the event of a termination of the Employee's employment for reasons other than (i) death or Disability, (ii) termination without Cause or (iii) termination by the Employee with Good Reason on or prior to December 31, 2017, no Award shall be payable to Employee.
(c)In the event of a termination of the Employee's employment as a result of (i) death or Disability, (ii) termination without Cause or (iii) termination by the Employee with Good Reason on or prior to December 31, 2017, the Formula Award for such Employee determined under Schedule 1 of the Award Agreement shall be prorated by multiplying such Formula Award amount by a fraction, the numerator of which is the number of days in the performance year in which Employee was employed by the Company and the denominator of which is 365. The resulting Award shall be paid to Employee in accordance with Section 2 above.
(d)For purposes of this Agreement, the following definitions will apply:
(i)"Cause" has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof). If the Employee has no written employment agreement with the Company, "Cause" shall mean (A) the Employee's conviction of or plea of nolo contendere to a felony or other crime involving moral turpitude; (B) the Employee's fraud, theft or embezzlement committed with respect to the Company or any of its subsidiaries; or (C) the Employee's willful and continued failure to perform his material duties to the Company and its Subsidiaries, where the Company has provided written notice to the Employee of the failure and the Employee shall not have remedied such failure within then (10) business days following the effectiveness of such notice.
(ii)"Change of Control" shall mean any of the following which takes place after the Effective Date: (A) any Person or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Act"), other than the Company or any of its subsidiaries or any trustee or other fiduciary holding securities under an employee benefit plan of the Company or one of its subsidiaries, becomes a beneficial owner, directly or indirectly, in one or a series of transactions, of securities representing more than fifty percent (50%) of the total number of votes that may be cast for the election of directors of the Company; (B) any merger or consolidation involving the Company occurs and the beneficial owners of the Company's voting securities outstanding immediately prior to such consolidation, merger, sale or other disposition do not, immediately following the consummation of such consolidation, merger, sale or other disposition, hold beneficial ownership, directly or indirectly, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for election of directors of the surviving or resulting corporation; (C) any sale or other disposition of all or a substantial portion of the assets of the Company occurs and the beneficial owners of the Company's voting securities outstanding immediately prior to such sale or other disposition do not, immediately following the consummation of such sale or other disposition, hold beneficial ownership, directly or indirectly, of securities representing fifty percent (50%) or more of the total number of votes that may be cast for election of directors of the acquiring Person or Persons in the case of any sale or other disposition; or (D) a change in the composition of the members of the Board such that the individuals who, as of the Effective Date, constitute the Board (such Board, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that, for purposes of this Section 3(d)(ii)(D), any individual who becomes a member of the Board subsequent to the Effective Date, whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; provided, further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board. For the purpose 

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of this definition, the term "beneficial owner" (and correlative terms, including "beneficial ownership") shall have the meaning set forth in Rule 13d-3 under the Act.
(iii)"Disability" has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof). If the Employee has no written employment agreement with the Company, "Disability" shall mean Employee (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company.
(iv)"Good Reason" has the meaning ascribed to it in the written employment agreement between the Company and the Employee (as in effect on the date hereof), where the Employee provides notice of the Good Reason event within 90 days of its occurrence and provides the Company at least 30 days to cure such matter. If the Employee has no written employment agreement with the Company, "Good Reason" shall mean a requirement that the Employee relocate more than fifty (50) miles from his then-current principal residence, it being understood that the Employee may be required to travel frequently and that prolonged periods spent away from Employee's principal residence shall not constitute Good Reason.
(v)"Person" means any individual, partnership, limited liability company, corporation, association, trust, joint venture, unincorporated organization, or other entity or group.

4.    Clawback.  If an Employee receives an Award payout under the MIC based on financial statements that are subsequently required to be restated in a way that would decrease the amount of the Award to which the Employee was entitled, the Employee will refund to the Company the difference between what the Employee received and what the Employee should have received; provided that (i) the value of any difference to be refunded will be determined net of withholding and (ii) no refund will be required for Awards paid more than three years prior to the date on which the Company is required to prepare the applicable restatement. The value of any difference to be refunded will be determined in a manner consistent with regulations the Securities and Exchange Commission may adopt pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
5.    Confidentiality.  
(a)    Employee acknowledges that the Company and its subsidiaries continually develop Confidential Information (defined below), that the Employee may develop Confidential Information for the Company or its subsidiaries during Employee’s employment with the Company, and that Employee may learn of Confidential Information during the course of such employment. Employee will comply with the policies and procedures of the Company and its subsidiaries for protecting Confidential Information and shall never use or disclose to any Person (except as required by applicable law or for the proper performance of his duties and responsibilities to the Company and its subsidiaries), any Confidential Information obtained by Employee incident to his employment or other association with the Company or any of its subsidiaries.  Employee agrees to only use the Company’s Confidential Information as necessary to perform his or her job during employment with the Company.  Employee understands that this restriction shall continue to apply after his employment terminates, regardless of the reason for such termination.  All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the 

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(US - Standard MIC 2017)

Company or its subsidiaries and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by Employee, shall be the sole and exclusive property of the Company and its subsidiaries.  Employee shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in the Employee’s possession or control.
(b)    For purposes of this Agreement, “Confidential Information” means any and all information of the Company and its subsidiaries that is not generally known by others with whom they compete or do business, or with whom they plan to compete or do business and any and all information which, if disclosed by the Company or its subsidiaries, would assist in competition against them.  Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, marketing and financial activities of the Company and its subsidiaries, (ii) the Company and its subsidiaries Products (defined below), (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its subsidiaries, (iv) the identity and special needs of the customers of the Company and its subsidiaries and (v) the people and organizations with whom the Company and its subsidiaries have business relationships and those relationships.  Confidential Information also includes any information that the Company or any of its subsidiaries have received, or may receive hereafter, from others which was received by the Company or any of its subsidiaries with any understanding, express or implied, that the information would not be disclosed.  For purposes of this Agreement, “Products” mean all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its subsidiaries, together with all services provided or planned by the Company or any of its subsidiaries, during Employee’s employment with the Company or any of its subsidiaries.
6.    Restricted Activities.  Employee, as a condition to participation in the MIC and in consideration of Participant's continued employment by the Company and/or its subsidiaries, agrees that some restrictions on his activities during and after his employment are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and its subsidiaries and agrees as follows:
(a)    For a period of time beginning on the date Employee executes a copy of this Agreement and continuing for a period ending on the date which is one (1) year after Employee’s employment terminates (the “Non-Competition Period”) Employee shall not, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, engage in, assist or have any active interest in a business that competes with the Company or any of its subsidiaries or otherwise compete with the Company or any of its subsidiaries: (i) anywhere throughout the world; (ii) in North America; (iii) in South America; (iv) in Europe; (v) in Asia; (vi) in Australia; (vii) in the United States; (viii) in those states of the United States in which the Company or any of its subsidiaries sells products or conducts business activities.  Specifically, but without limiting the foregoing, Employee agrees that during the Non-Competition Period, Employee shall not: (A) undertake any planning for any business competitive with the Company or any of its subsidiaries; or (B) engage in any manner in any activity that is competitive with the business of the Company or any of its subsidiaries.  For the purposes of this Section 6, Employee’s undertaking shall encompass all items, products and services that may be used in substitution for Products.
(b)    Employee agrees that, during his employment with the Company, he will not undertake any outside activity, whether or not competitive with the business of the Company or its subsidiaries that could reasonably give rise to a conflict of interest or otherwise interfere with his duties and obligations to the Company or any of its subsidiaries.

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(US - Standard MIC 2017)

(c)    Employee further agrees that while he is employed by the Company and during the Non-Competition Period, Employee will not, (i) hire or attempt to hire any employee of the Company or any of its subsidiaries, (ii) hire or attempt to hire any independent contractor providing services to the Company or any of its subsidiaries, (iii) assist in hiring or any attempt to hire anyone identified in clauses (i) or (ii) of this sentence by any other Person, (iv) encourage any employee or independent contractor of the Company or any of its subsidiaries to terminate his or her relationship with the Company or any of its subsidiaries, or (v) solicit or encourage any customer or vendor of the Company or any of its subsidiaries to terminate or diminish its relationship with any of them, or, in the case of a customer, to conduct with any Person any competing business or activity.  For purposes of Employee’s obligations hereunder during that portion of the Non-Competition Period that follows termination of Employee’s employment, employee, independent contractor, customer or vendor of the Company or any of its subsidiaries shall mean any Person who was such at any time during the six (6) months immediately preceding the date of the termination of Employee’s employment.
(d)    In the event that the one (1) year period stated above is held unenforceable by a court of competent jurisdiction due to its length, then the period shall be six (6) months or such other time as determined enforceable by such court.
7.    Non-Inducement.  Employee will not directly or indirectly assist or encourage any person or entity in carrying out or conducting any activity that would be prohibited by this Agreement if such activity were carried out or conducted by me.
8.    Assignment of Rights to Intellectual Property.  Employee shall promptly and fully disclose all Intellectual Property (defined below) to the Company.  Employee hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) Employee’s full right, title and interest in and to all Intellectual Property.  Employee agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property.  Employee will not charge the Company for time spent in complying with these obligations.  All copyrightable works that Employee creates shall be considered “work made for hire” and shall, upon creation, be owned exclusively by the Company.  For purposes of this Section 8, “Intellectual Property” means inventions, discoveries, developments, methods, processes, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by Employee (whether alone or with others and whether or not during normal business hours or on or off the premises of the Company or any of its subsidiaries) during Employee’s employment with the Company or any of its subsidiaries (including prior to the Effective Date if applicable) that relate to either the Products or any prospective activity of the Company or any of its subsidiaries or that make use of Confidential Information or any of the equipment or facilities of the Company or any of its subsidiaries.
9.    Consideration and Acknowledgments.  Employee acknowledges and agrees that the covenants described in Sections 4 through 8 of this Agreement are essential terms, and the underlying Management Incentive Compensation Award would not be provided by the Company in the absence of these covenants.  Employee further acknowledges that these covenants are supported by adequate consideration as set forth in this Agreement, that full compliance with these covenants will not prevent Employee from earning a livelihood following the termination of his or her employment, and that these covenants do not 

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(US - Standard MIC 2017)

place undue restraint on Employee and are not in conflict with any public interest.  Employee further acknowledges and agrees that Employee fully understands these covenants, has had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, that these covenants are reasonable and enforceable in every respect, and has voluntarily agreed to comply with these covenants for their stated term.  Employee agrees that in the event he or she is offered employment with a competing business at any time in the future, Employee shall immediately notify the competing business of the existence of the covenants set forth above.
10.    Enforceability; General Provisions.
(a)    Employee agrees that the restrictions contained in this Agreement are reasonable and necessary to protect the Company’s legitimate business interests and that full compliance with the terms of this Agreement will not prevent Employee from earning a livelihood following the termination of employment, and that these covenants do not place undue restraint on Employee.
(b)    Because the Company’s current base of operations is in North Carolina, Employee consents to the jurisdiction of the state and federal courts of North Carolina with respect to any claim arising out of this Agreement.
(c)    Employee acknowledges that in the event of a breach or a threatened breach of this Agreement, the Company will face irreparable injury which may be difficult to calculate in dollar terms and that the Company shall be entitled, in addition to all remedies otherwise available in law or in equity, to temporary restraining orders and preliminary and final injunctions enjoining such breach or threatened breach in any court of competent jurisdiction without the necessity of posting a surety bond, as well as to obtain an equitable accounting of all profits or benefits arising out of any violation of this Agreement.
(d)    Employee agrees that if a court determines that any of the provisions in this Agreement is unenforceable or unreasonable in duration, territory, or scope, then that court shall modify those provisions so they are reasonable and enforceable, and enforce those provisions as modified.
(e)    If any phrase or provision of this Agreement is declared invalid or unenforceable by a court of competent jurisdiction, that phrase, clause or provision shall be deemed severed from this Agreement, and will not affect the enforceability of any other provisions of this Agreement, which shall otherwise remain in full force and effect.
(f)    Waiver of any of the provisions of this Agreement by the Company in any particular instance shall not be deemed to be a waiver of any provision in any other instance and/or of the Company’s other rights at law or under this Agreement.
(g)    Employee agrees that the Company may assign its rights under this Agreement to its successors and that any such successor may stand in the Company’s shoes for purposes of enforcing this Agreement.
(h)    Employee agrees to reimburse Company for all attorneys’ fees, costs, and expenses that it reasonably incurs in connection with enforcing its rights and remedies under this Agreement, but only to the extent the Company is ultimately the prevailing party in the applicable legal proceedings.

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(i)    If Employee violates this Agreement, then the restrictions set out in Sections 4 - 8 shall be extended by the same period of time as the period of time during which the violation(s) occurred.
(j)    Employee fully understands Employee’s obligations in this Agreement, has had full and complete opportunity to discuss and resolve any ambiguities or uncertainties regarding these covenants before signing this Agreement, and has voluntarily agreed to comply with these covenants for their stated terms.
(k)    Employee agrees that in the event Employee receives an offer of employment at any time in the future with any entity that may be considered a Competing Business Line, Employee shall immediately notify such Competing Business of the existence and terms of this Agreement.  Employee also understands and agrees that the Company may notify anyone later employing Employee of the existence and provisions of this Agreement.
(l)    Employee agrees that Employee’s obligations under Sections 4 through this Section 10 will survive the payment or forfeiture of the Award hereunder and continue for the duration of Employee’s employment with the Company, and thereafter to the extent stated in their terms.  
11.    Miscellaneous.
(a)    No Assignment.  No right or benefit or payment under the Plan shall be subject to assignment or other transfer nor shall it be liable or subject in any manner to attachment, garnishment or execution.
(b)    Employment Rights.  This Agreement shall not create any right of the Employee to continued employment with the Company or its Affiliates or limit the right of Company or its Affiliates to terminate the Employee’s employment at any time and shall not create any right of the Employee to employment with the Company or any of its Affiliates.  Except to the extent required by applicable law that cannot be waived, the loss of the Award shall not constitute an element of damages in the event of termination of the Employee’s employment even if the termination is determined to be in violation of an obligation of the Company or its Affiliates to the Employee by contract or otherwise.
(c)    Unfunded Status.  The obligations of the Company hereunder shall be contractual only.  The Employee shall rely solely on the unsecured promise of the Company and nothing herein shall be construed to give the Employee or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account or property of any kind whatsoever owned by the Company or any Affiliate.
(d)    Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction will not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  In the event that any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such provision will be construed by modifying or limiting it so as to be valid and enforceable to the maximum extent compatible with, and possible under, applicable law.
(e)    Employee Acknowledgements.  Employee acknowledges that (i) Employee has had access to Company’s trade secrets and Confidential Information at the highest levels, including without limitation manufacturing and marketing strategy, customer strategy and lists, technical know-how, product 

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and process research and development, and business plans, (ii) Employee has had access to Confidential Information regarding and has been privy to discussions and strategy sessions at the highest levels of the Company regarding all aspects, business lines and product segments of the Company, and (iii) that these trade secrets and Confidential Information would inevitably be disclosed were Employee to work for a competitor.
(f)    Governing Law. This Agreement and all actions arising in whole or in part under or in connection herewith, will be governed by and construed in accordance with the domestic substantive laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
(g)    Conflicts. To the extent there are any conflicts between provisions this Agreement and any applicable employment agreement entered into between Employee and the Company or its subsidiaries, the provisions of such employment agreement shall govern and nothing in this Agreement shall in any way amend, supersede or otherwise change any provisions or rights contained in such employment agreement.
(h)    409A.  The Award shall be construed and administered consistent with the intent that it be at all times in compliance with, or exempt from, the requirements of Section 409A of the Internal Revenue Code and the regulations thereunder.
(i)    Section 162(m).  The Award shall be construed and administered consistent with the intent that it qualify to the maximum extent possible as qualifying performance-based compensation within the meaning of Section 162(m) of the Internal Revenue Code and the regulations thereunder.
(j)    Amendment.  This Agreement may be amended only by mutual written agreement of the parties.

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IN WITNESS WHEREOF, Xerium Technologies, Inc. and Employee have executed this Management Incentive Compensation Agreement as of the date first written above.
Xerium Technologies, Inc.

By:         
Name:    Michael Bly 
Title:    EVP of Global Human Resources
Acknowledged and agreed:
Employee
Signature:    
Print Name:    
Date:    

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(US - Standard MIC 2017)

Schedule 1 
(a)    Target Award: ___% of base compensation
(b)    Metrics. Three measures of performance will be used in determining the formula
adjustment under the Award:
(1)34% of the Target Award shall be based on Xerium 2017 Operating Income. As identified in the audited Consolidated Statement of Operations contained in the Company’s 2017 10-K, Operating Income is defined as “Income from operations.”
(2)33% of the Target Award shall be based on Xerium 2017 Free Cash Flow. As identified in the audited Consolidated Statement of Cash Flows contained in the Company’s 2017 10-K, Free Cash Flow is defined as “net cash provided by operating activities” less “capital expenditures” plus “proceeds from disposals of property and equipment.”
(3)33% of the Target Award shall be based on Xerium 2017 Revenue.  As identified in the audited Consolidated Statement of Operations contained in the Company’s 2017 10-K, Revenue is defined as “Net sales.”  
(c)    Currency Adjustments. The final Operating Income, Free Cash Flow and Revenue figures will be adjusted at the end of the year to reflect currency fluctuations relative to the US$ in all markets. Any adjustments made will be based on the following budgeted rates:

(US - MIC - 2017)

	
			
	2017
	 
	 

	Budget
	 
	YTD

	 
	 
	Dec

	AvgRate
	EUR
	1.070000

	AvgRate
	USD
	1.00

	AvgRate
	ARS
	0.055556

	AvgRate
	AUD
	0.700000

	AvgRate
	BRL
	0.289855

	AvgRate
	CAD
	0.699301

	AvgRate
	CHF
	1.030928

	AvgRate
	CNY
	0.137931

	AvgRate
	EUR
	1.070000

	AvgRate
	GBP
	1.310000

	AvgRate
	JPY
	0.008333

	AvgRate
	MXN
	0.045662

	AvgRate
	SEK
	0.125628

	AvgRate
	TRY
	0.312500

(US - MIC - 2017)

(d)    Target and Formula. The minimum, target and maximum thresholds of Operating Income, Free Cash Flow and Revenue for 2017 shall be set by the Committee and delivered to the Employee in a separate writing; provided, however, that the amounts may be adjusted by the Committee after the initial determination of the amounts to reflect any material change of circumstance, including without limitation, the acquisition or disposition of any business by the Company or any of its subsidiaries.
Operating Income (34% of Target Award)
	
				
	Operating Income
	Minimum
	Target
	Maximum

	Percentage of Target Award Payable
	25%
	100%
	150%

Free Cash Flow (33% of Target Award)
	
				
	Free Cash Flow
	Minimum
	Target
	Maximum

	Percentage of Target Award Payable
	25%
	100%
	150%

Revenue (33% of Target Award)
	
				
	Revenue
	Minimum
	Target
	Maximum

	Percentage of Target Award Payable
	25%
	100%
	150%

The formula amount payable with respect to an Award shall be determined as follows (where "X" below refers to the portion of the target award for a Participant under an Award):
•Operating Income Metric below minimum:    34% of Award = no payment
•Operating Income Metric equal to minimum:    34% of Award = 0.25X
•Operating Income Metric at target:    34% of Award = X
•Operating Income Metric at maximum or above:    34% of Award = 1.5X

•Free Cash Flow Metric below minimum:    33% of Award = no payment
•Free Cash Flow Metric equal to minimum:    33% of Award = 0.25X
•Free Cash Flow Metric at target:    33% of Award = X
•Free Cash Flow Metric at maximum or above:     33% of Award = 1.5X

•Revenue Metric below minimum:    33% of Award = no payment
•Revenue Metric equal to minimum:    33% of Award = 0.25X

(US - MIC - 2017)

•Revenue Metric at target:    33% of Award = X
•Revenue Metric at maximum or above:     33% of Award = 1.5X
The amount payable between the levels of Operating Income, Free Cash Flow and Revenue identified above shall be determined on the basis of straight line interpolation between points.
(e)    The Committee may in its sole discretion adjust Award amount determined under subsection (d) upwards or downwards by 20% based on a set of individual goals separate from the thresholds of Operating Income, Free Cash Flow and Revenue which shall be set by the Committee (or the President and Chief Executive Officer of the Company as its delegate, except with respect to his own Award) and delivered to the Employee in a separate writing. 
The amount payable with respect to an Award shall in all cases be capped at one hundred eighty percent (180%) of a Participant's target Award (1.8X).

(US - MIC - 2017)Blueprint

 

Exhibit 4.2

 

WARRANT AGREEMENT

 

THIS WARRANT AGREEMENT (this
“Warrant
Agreement”), dated as of May [__], 2017, is entered
into by and between ENDRA Life Sciences Inc., a Delaware
corporation (the “Company”), and Corporate Stock
Transfer, Inc., a Colorado corporation (the “Warrant Agent”).

 

WHEREAS, the
Company is engaged in an initial public offering (the
“Offering”) of
up to [●] units (the “Units”) (including the additional
Units issuable to the underwriters if the underwriters’
over-allotment option is exercised), each Unit consisting of one
share of the Company’s Common Stock, par value $0.0001 per
share (the “Common
Stock”), and a warrant to purchase one share of Common
Stock for an exercise price of [$___] per share [NOTE: An exercise price equal to 125% of the
initial public offering price of each Unit.], subject to
adjustment as described herein (each, a “Warrant”);

 

WHEREAS, the
Company has filed with the U.S. Securities and Exchange Commission
(the “Commission”) a Registration
Statement on Form S-1, No. 333-214724 (as the same may be amended
from time to time, the “Registration Statement”), for the
registration, under the Securities Act of 1933, as amended (the
“Securities
Act”), of, among other securities, (i) the Units, (ii)
the Common Stock included in the Units, (iii) the Warrants included
in the Units, and (iv) the Common Stock issuable upon exercise of
the Warrants (the “Warrant
Shares”);

 

WHEREAS, the
Registration Statement was declared effective on [_____],
2017;

 

WHEREAS, the
Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and exercise of the
Warrants;

 

WHEREAS, the
Company desires to provide for the form and provisions of the
Warrants, the terms upon which they shall be issued and exercised,
and the respective rights, limitation of rights, and immunities of
the Company, the Warrant Agent, and the holders of the Warrants
(each, a “Holder”); and

 

WHEREAS, all acts
and things have been done and performed which are necessary to make
the Warrants, when executed on behalf of the Company and
countersigned by or on behalf of the Warrant Agent, as provided
herein, the valid and binding obligations of the Company, and to
authorize the execution and delivery of this Warrant
Agreement.

 

NOW,
THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:

 

1.            

Appointment of Warrant
Agent. The Company hereby
appoints the Warrant Agent to act as agent for the Company for the
Warrants, and the Warrant Agent hereby accepts such appointment and
agrees to perform the same in accordance with the terms and
conditions set forth in this Warrant Agreement.

 

 

 

 

 

2.            

Warrants.

 

2.1           Form
of Warrant. Each Warrant shall
be issued in registered, book-entry form only, shall be in
substantially the form of Exhibit A
hereto (each a
“Book-Entry Warrant
Certificate”), the
provisions of which are incorporated herein, and shall be signed
by, or bear the facsimile signature of, the Chief Executive
Officer, President, Chief Financial Officer, Treasurer, Secretary
or Assistant Secretary of the Company. For purposes of this
Agreement, the term “Issuance
Date” means the date a
Warrant shall be issued. In the event the person whose facsimile
signature has been placed upon any Warrant shall have ceased to
serve in the capacity in which such person signed the Warrant
before such Warrant is issued, it may be issued with the same
effect as if he or she had not ceased to be such at the Issuance
Date.

 

For purposes of this Agreement, the term “person” (whether or not capitalized) means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any
kind.

 

As used
in this Warrant Agreement, the term “Holder” refers only to a
registered holder of the Warrants.

 

2.2           Effect
of Countersignature. Unless and
until countersigned by the Warrant Agent pursuant to this Warrant
Agreement, a Warrant shall be invalid and of no effect and may not
be exercised by a Holder.

 

2.3           Registration.

 

2.3.1                 Warrant
Register. The Warrant Agent
shall maintain books (the “Warrant
Register”) for the
registration of the original issuance and the registration of any
transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants
in the names of the respective Holders in such denominations and
otherwise in accordance with instructions delivered to the Warrant
Agent by the Company. To the extent the Warrants are eligible as of
the Issuance Date to be deposited through the Depository Trust
Company (the “Depository”), all of the Warrants shall be represented
by one or more Book-Entry Warrant Certificates deposited with the
Depository and
registered in the name of Cede & Co., a nominee of the
Depository. Ownership of beneficial interests in the Book-Entry
Warrant Certificates shall be shown on, and the transfer of such
ownership shall be effected through, records maintained (i) by the
Depository or its nominee for each Book-Entry Warrant Certificate;
or (ii) by institutions that have accounts with the Depository
(such institution, with respect to a Warrant in its account, a
“Participant”).

 

 

2

 

 

If the Warrants are not eligible as of the Issuance Date to be
deposited through the Depository, or if the Depository subsequently
ceases to make its book-entry settlement system available for the
Warrants, the Company may instruct the Warrant Agent to make other
arrangements for book-entry settlement within ten (10) Business
Days after the Depository ceases to make its book-entry settlement
available. In the event that the Company does not make alternative
arrangements for book-entry settlement within ten (10) Business
Days or the Warrants are not eligible for, or it is no longer
necessary to have the Warrants available in, book-entry form, the
Warrant Agent shall provide written instructions to the Depository
to deliver to the Warrant Agent for cancellation each Book-Entry
Warrant Certificate, and the Company shall instruct the Warrant
Agent to deliver to the Depository definitive warrant certificates
in physical form evidencing such Warrants (the
“Definitive Warrant
Certificates”; each of
the Book-Entry Warrant Certificates and the Definitive Warrant
Certificates is referred to herein as a “Warrant
Certificate”). Such
Definitive Warrant certificates shall be in substantially the form
attached hereto as Exhibit
A.

 

As used in this Warrant Agreement, the term
“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 or executive order to remain
closed.

 

2.3.2                 Beneficial
Owner; Registered Holder. Prior
to due presentment for registration of transfer of any Warrant, the
Company and the Warrant Agent may deem and treat the person in
whose name such Warrant shall be registered upon the Warrant
Register (“registered
holder”), as the absolute
owner of such Warrant and of each Warrant represented thereby
(notwithstanding any notation of ownership or other writing on the
Definitive Warrant Certificate made by anyone other than the
Company or the Warrant Agent), for the purpose of any exercise
thereof, and for all other purposes, and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary.
The term “beneficial
owner” shall mean, on or
after the Separation Date (as defined below), any person in whose
name ownership of a beneficial interest in the Warrant evidenced by
a Book-Entry Warrant Certificate is recorded in the records
maintained by the Depository or its nominee, and prior to the
Separation Date, the person in whose name the Unit of which such
Warrant was originally part, as registered upon the register
relating to such Unit; provided, that all such beneficial interests
shall be held through a Participant which shall be the registered
holder of such Warrants. The rights of beneficial owners shall be
limited to those established by applicable law and agreements
between the Depository and the Participants and between such
Participants and beneficial owners and must be exercised through a
Participant in accordance with the rules and procedures of the
Depository; provided, however, the Company acknowledges and agrees
that the rights and remedies of a Holder hereunder are vested with
such beneficial owners.

 

2.4           Uncertificated
Warrants. Notwithstanding the
foregoing and anything else in this Warrant Agreement to the
contrary, the Warrants may be issued in uncertificated
form.

 

2.5           Detachability
of Warrants. The Common Stock
and Warrants that comprise the Units will begin to trade separately
on (i) the first trading day following the 60th day of the date of
the prospectus filed in connection with the Company’s initial
public offering, or (ii) such earlier date as National Securities
Corporation shall determine is acceptable (such date, the
“Separation
Date”). On or after the
Separation Date, a Holder may surrender a Warrant to the Warrant
Agent, whereupon the Warrant Agent shall execute and deliver to the
Registered Holder a new Definitive Warrant Certificate entitling a
Holder to purchase the same number of shares of Common Stock, but
without the legend which states:

 

 

 

3

 

 

“UNTIL JULY
[__], 2017 OR THE EARLIER WRITTEN APPROVAL OF NATIONAL SECURITIES
CORPORATION, THIS WARRANT MAY NOT BE TRANSFERRED SEPARATELY, SPLIT
UP, COMBINED OR EXCHANGED, BUT MAY ONLY BE TRANSFERRED, SPLIT UP,
COMBINED OR EXCHANGED TOGETHER WITH THE SHARES OF COMMON STOCK OF
ENDRA LIFE SCIENCES INC. WITH WHICH IT WAS SOLD AS A
UNIT.”

 

3.            

Terms and Exercise of
Warrants.

 

3.1           Exercise
Price. Each Warrant shall, when
countersigned by the Warrant Agent, entitle the Holder, subject to
the provisions of such Warrant and of this Warrant Agreement, to
purchase from the Company the number of shares of Common Stock
stated therein, at the price of $[___] per share, subject to the
subsequent adjustments provided in Section 4 hereof. The term
“Exercise
Price” as used in this
Warrant Agreement refers to the price per share at which Common
Stock may be purchased at the time a Warrant is
exercised.

 

3.2           Duration
of Warrants. A Warrant may be
exercised only during the period (“Exercise
Period”) commencing on
the Separation Date and terminating at 5:00 p.m., New York City
time on May [__], 2022 (the “Expiration
Date”). Each Warrant not
exercised on or before the Expiration Date shall become void, and
all rights thereunder and all rights in respect thereof under this
Warrant Agreement shall cease at the close of business on the
Expiration Date.

 

3.3           Exercise
of Warrants.

 

3.3.1                 Exercise
and Payment. A Holder may
exercise a Warrant by delivering, not later than 5:00 p.m., New
York City time, on any Business Day during the Exercise Period (the
“Exercise
Date”) to the Warrant
Agent at its corporate trust department (i) a duly executed e-mail
or facsimile copy of an election to purchase Warrant Shares
underlying such Warrant in the form included on the reverse side of
the applicable Warrant Certificate (an “Election to
Purchase”) and (ii)
unless the cashless exercise procedure specified in Section 3.3.9
below is specified in the applicable Election to Purchase, the
aggregate Exercise Price for the shares specified in the applicable
Election to Purchase by wire transfer or cashier’s check
drawn on a United States bank. No ink-original Election to Purchase
shall be required. Unless Warrant Shares, or a Warrant Certificate
evidencing unexercised Warrants, are to be issued in a name other
than that of the exercising Holder, no medallion guarantee (or
other type of guarantee or notarization) of any Election to
Purchase form shall be required. Notwithstanding anything herein to
the contrary, a Holder shall not be required to physically
surrender such Holder’s Warrant Certificate to the Warrant
Agent or the Company until such Holder has purchased all of the
Warrant Shares available thereunder and the Warrant has been
exercised in full, in which case, the Holder shall surrender such
Holder’s Warrant Certificate to the Warrant Agent for
cancellation at the same time that the final Election to Purchase
is delivered to the Warrant Agent. Partial exercises of any Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available thereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable thereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Warrant Agent shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company or the Warrant Agent shall deliver any objection to any
Election to Purchase within one (1) Trading Day of receipt of such
notice.

 

 

4

 

 

The
term “Trading
Day” means a day on which the principal Trading Market
is open for trading. The term “Trading Market” means any of the
following U.S. markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE,
NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market or
the NASDAQ Global Select Market (or any successors to any of the
foregoing).

 

The
Warrant Agent shall promptly deposit all funds received by it in
payment of the Exercise Price in the account of the Company
maintained with the Warrant Agent for such purpose and shall advise
the Company via telephone or e-mail at the end of each day on which
funds for the exercise of the Warrants are received of the amount
so deposited to its account. The Warrant Agent shall promptly
confirm such telephonic advice to the Company in
writing.

 

3.3.2                 Issuance
of Certificates. The Warrant
Agent shall, by 11:00 a.m. New York City time on the Trading Day
following the Exercise Date of any Warrant, advise the Company or
the transfer agent and registrar in respect of (a) the number of
Warrant Shares issuable upon such exercise in accordance with the
terms and conditions of this Warrant Agreement, (b) the
instructions of each Holder with respect to delivery of the Warrant
Shares issuable upon such exercise, and the delivery of Definitive
Warrant Certificates, as appropriate, evidencing the balance, if
any, of the Warrants remaining after such exercise and (c) in case
of a Book-Entry Warrant Certificate, the notation that shall be
made to the records maintained by the Depository or its nominee for
each Book-Entry Warrant Certificate, as appropriate, evidencing the
balance, if any, of the Warrants remaining after such
exercise.

 

The
Company shall, by 5:00 p.m., New York City time, on the third
Trading Day next succeeding the Exercise Date of any Warrant and
the clearance of the funds in payment of the aggregate Exercise
Price, execute, issue and deliver to the Warrant Agent, the Warrant
Shares to which such Holder is entitled, in fully registered form,
registered in such name or names as may be directed by such Holder.
Upon receipt of such Warrant Shares, the Warrant Agent shall, by
5:00 p.m., New York City time, on the third Trading Day next
succeeding such Exercise Date, transmit such Warrant Shares to, or
upon the order of, such Holder.

 

In lieu
of delivering physical certificates representing the Warrant Shares
issuable upon exercise of any Warrants, provided the
Company’s transfer agent is participating in the
Depository’s Fast Automated Securities Transfer (FAST)
program, the Company shall use its commercially reasonable efforts
to cause its transfer agent to electronically transmit the Warrant
Shares issuable upon exercise to the Depository by crediting the
account of the Depository or of the Participant, as the case may
be, through its Deposit Withdrawal Agent Commission system. The
time periods for delivery described in the immediately preceding
paragraph shall apply to the electronic transmittals described in
this Warrant Agreement. While the Warrants are outstanding, the
Company agrees to use reasonable best efforts to maintain a
transfer agent that participates in the FAST program.

 

 

 

5

 

 

3.3.3                 Rescission
Rights. If the Company fails to
cause the Warrant Agent to transmit to any Holder the Warrant
Shares by the third Trading Day following the Exercise Date, then
such Holder will have the right to rescind such
exercise.

 

3.3.4                 Valid
Issuance. All shares of Common
Stock issued upon the proper exercise of a Warrant in conformity
with this Warrant Agreement shall be validly issued, fully paid and
nonassessable.

 

3.3.5                 No
Fractional Exercise. Warrants
may be exercised only in whole numbers of Warrant Shares. No
fractional Warrant Shares are to be issued upon the exercise of a
Warrant, but rather the number of Warrant Shares to be issued shall
be rounded up or down, as applicable, to the nearest whole number.
If fewer than all of the Warrants evidenced by a Definitive Warrant
Certificate are exercised, a new Definitive Warrant Certificate for
the number of unexercised Warrants remaining shall be executed by
the Company and countersigned by the Warrant Agent as provided in
Section 2 of this Warrant Agreement, and delivered to the Holder at
the address specified on the books of the Warrant Agent or as
otherwise specified by such Holder. If fewer than all of the
Warrants evidenced by a Book-Entry Warrant Certificate are
exercised, a notation shall be made to the records maintained by
the Depository or its nominee for each Book-Entry Warrant
Certificate, as appropriate, evidencing the balance of the Warrants
remaining after such exercise.

 

3.3.6                 No
Transfer Taxes. The Company
shall not be required to pay any stamp or other tax or governmental
charge required to be paid in connection with any third party
transfer involved in the issue of the Warrant Shares upon the
exercise of Warrants; and in the event that any such third party
transfer is involved, the Company shall not be required to issue or
deliver any Warrant Shares until such tax or other charge shall
have been paid or it has been established to the Company’s
satisfaction that no such tax or other charge is
due.

 

3.3.7                 Date
of Issuance. Each person in
whose name any such certificate for Warrant Shares is issued shall
for all purposes be deemed to have become the holder of record of
such shares on the date on which the applicable Warrant was
surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of any such certificate,
except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of record of such
shares at the close of business on the next succeeding date on
which the stock transfer books are open.

 

3.3.8                 Cashless
Exercise. If at any time during
the term of this Warrant there is no effective registration
statement registering under the Securities Act, or no current
prospectus available for, the issuance or resale of the Warrant
Shares by the registered holder, then this Warrant may only be
exercised at such time by means of a “cashless
exercise” in which the registered 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 (as defined below) 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.

 

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

 

3.3.9                 Disputes.
In the case of a dispute as to the determination of the Exercise
Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the registered holder the number of
Warrant Shares that are not disputed.

 

 

6

 

 

3.3.10                 Limitations
on Exercise. Neither the
Warrant Agent nor the Company shall effect any exercise of any
Warrant, and a registered holder shall not have the right to
exercise any portion of a Warrant to the extent that after giving
effect to the issuance of Warrant Shares after exercise as set
forth on the applicable Election to Purchase, such Holder (together
with such Holder’s affiliates (as defined in Rule 405 under
the Securities Act), and any other person or entity acting as a
group together with such Holder or any of such Holder’s
affiliates (each an “Attribution
Party”)), 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 a Holder and
its Affiliates and its Attribution Parties shall include the number
of shares of Common Stock issuable upon exercise of the Warrant
with respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which would be
issuable upon (i) exercise of the remaining, nonexercised portion
of this Warrant beneficially owned by such Holder or any of its
Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or nonconverted portion of any other securities
of the Company (including, without limitation, any other Common
Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by such Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 3.3.10,
beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and the rules and regulations
promulgated thereunder, it being acknowledged by each Holder that
neither the Warrant Agent nor the Company is representing to such
Holder that such calculation is in compliance with Section 13(d) of
the Exchange Act and such Holder is solely responsible for any
schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section
3.3.10 applies, the determination of whether a Warrant is
exercisable (in relation to other securities owned by a Holder
together with any Affiliates and Attribution Parties) and of which
portion of a Warrant is exercisable shall be in the sole discretion
of a Holder, and the submission of an Election to Purchase shall be
deemed to be such Holder’s determination of whether such
Warrant is exercisable (in relation to other securities owned by
such Holder together with any Affiliates and Attribution Parties)
and of which portion of a Warrant is exercisable, and neither the
Warrant Agent nor the Company shall have any obligation to verify
or confirm the accuracy of such determination and neither of them
shall have any liability for any error made by such Holder. 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 3.3.10, in
determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock
as reflected in (A) the Company’s most recent periodic or
annual report filed with the Commission, as the case may be, (B) a
more recent public announcement by the Company or (C) a more recent
written notice by the Company or the Company’s transfer agent
setting forth the number of shares of Common Stock outstanding. The
provisions of this Section 3.3.10
shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this
Section 6 to correct this subsection (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.

 

The “Beneficial Ownership
Limitation” means 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 such Warrant.

 

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

 

The Holder may upon prior notice to the Company
and the Warrant Agent increase or decrease the Beneficial Ownership
Limitation, provided that the Beneficial Ownership Limitation in no
event exceeds 9.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock upon exercise of the applicable Warrant held
by such Holder and the provisions of this Section 3.3.10
shall continue to apply. Any such
increase will not be effective until the 61st day after such notice
is delivered to the Company and the Warrant Agent. The provisions
of this Section 3.3.10 shall be construed, corrected and implemented in a
manner so as to effectuate the intended Beneficial Ownership
Limitation herein contained. The limitations contained in this
paragraph shall apply to a successor Holder of any
Warrant.

 

 

 

7

 

 

4.            

Adjustments.

 

4.1           Stock
Dividends and Splits. If the
Company, at any time while any of the Warrants is outstanding: (i)
pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or
equity equivalent securities payable in shares of Common Stock
(which, for avoidance of doubt, shall not include any Warrant
Shares issued pursuant to this Warrant Agreement or any of the
Warrants), (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a
smaller number of shares, or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the
Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after
such event, and the number of Warrant Shares shall be
proportionately adjusted such that the aggregate Exercise Price of
each Warrant shall remain unchanged. Any adjustment made pursuant
to this Section 4.1 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. The Company shall promptly notify Warrant Agent
of any such adjustment and give specific instructions to Warrant
Agent with respect to any adjustments to the Warrant
Register.

 

4.2           Subsequent
Rights Offerings. In addition
to any adjustments pursuant to Section 4.1
above, if at any time the Company
grants, issues or sells any Common Stock Equivalents or rights to
purchase stock, warrants, securities or other property pro rata to
the record holders of any class of shares of Common Stock (the
“Purchase
Rights”), then each
Holder will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such
Holder could have acquired if such Holder had held the number of
shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the grant, issue or sale
of such Purchase Rights (provided, however, to the extent that any
Holder’s right to participate in any such Purchase Right
would result in such Holder exceeding the Beneficial Ownership
Limitation, then such Holder shall not be entitled to participate
in such Purchase Right to such extent (or beneficial ownership of
such shares of Common Stock as a result of such Purchase Right to
such extent) and such Purchase Right to such extent shall be held
in abeyance for such Holder until such time, if ever, as its right
thereto would not result in such Holder exceeding the Beneficial
Ownership Limitation).

 

4.3           Pro
Rata Distributions. During such
time as any of the Warrants is outstanding, if the Company shall
declare or make any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common
Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a “Distribution”), at any time after the Issuance Date,
then, in each such case, each Holder shall be entitled to
participate in such Distribution to the same extent that such
Holder would have participated therein if such Holder had held the
number of Warrant Shares acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided,
however,
to the extent that any Holder’s right to participate in any
such Distribution would result in such Holder exceeding the
Beneficial Ownership Limitation, then such Holder shall not be
entitled to participate in such Distribution to such extent (or in
the beneficial ownership of any shares of Common Stock as a result
of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of such
Holder until such time, if ever, as its right thereto would not
result in such Holder exceeding the Beneficial Ownership
Limitation).

 

 

 

8

 

 

4.4           Fundamental
Transaction. If, at any time
while the Warrants are outstanding, (i) the Company, directly or
indirectly, in one or more related transactions effects any merger
or consolidation of the Company with or into another person, (ii)
the Company, directly or indirectly, effects any sale, lease,
license, assignment, transfer, conveyance or other disposition of
all or substantially all of its assets in one transaction or a
series of related transactions, (iii) any, direct or indirect,
purchase offer, tender offer or exchange offer (whether by the
Company or another person) is completed pursuant to which holders
of Common Stock are permitted to sell, tender or exchange their
shares for other securities, cash or property and has been accepted
by the holders of 50% or more of the outstanding Common Stock, (iv)
the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share
exchange (other than as a result of a dividend, subdivision or
combination covered by Section 4.1) pursuant to which the Common
Stock is effectively converted into or exchanged for other
securities, cash or property, or (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another person or group of
persons whereby such other person or group acquires more than 50%
of the outstanding shares of Common Stock (not including any shares
of Common Stock held by the other person or other persons making or
party to, or associated or affiliated with the other persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental
Transaction”), then, upon
any subsequent exercise of a Warrant, each Holder shall have the
right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of
such Fundamental Transaction, at the option of the Holder (without
regard to any limitation in Section 3.3.10
on the exercise of such Warrant), the
number of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate
Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of Warrant Shares for which each Warrant is
exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 3.3.10
on the exercise of such Warrant). For
purposes of any such exercise, the determination of the Exercise
Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable
manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given
any choice as to the securities, cash or other property to be
received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration that such
Holder receives upon any exercise of each Warrant following such
Fundamental Transaction. The Company shall cause any successor
entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor
Entity”), to assume in
writing all of the obligations of the Company under this Warrant
Agreement in accordance with the provisions of this Section 4.3
pursuant to written agreements and shall, upon the written request
of such Holder and without regard to any limitation in
Section 3.3.10 on
the exercise of such Warrant, deliver to such Holder in exchange
for the applicable Warrants created by this Warrant Agreement a
security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to the Warrants which
are exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity), if any, plus
any Alternate Consideration, receivable as a result of such
Fundamental Transaction by a holder of the number of shares of
Common Stock for which the Warrants are exercisable immediately
prior to such Fundamental Transaction, and with an exercise price
which applies the Exercise Price hereunder to such shares of
capital stock, if any, plus any Alternate Consideration (but taking
into account the relative value of the shares of Common Stock
pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and
such exercise price being for the purpose of protecting the
economic value of such Warrant immediately prior to the
consummation of such Fundamental Transaction). Upon the occurrence
of any such Fundamental Transaction the Successor Entity shall
succeed to, and be substituted for (so that from and after the date
of such Fundamental Transaction, the provisions of this Warrant
Agreement and the Warrants referring to the “Company”
shall refer instead to the Successor Entity), and may exercise
every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant Agreement and the
Warrants with the same effect as if such Successor Entity had been
named as the Company herein and therein.

 

The
Company shall instruct the Warrant Agent to mail, by first class
mail, postage prepaid, to each Holder, written notice of the
execution of any such amendment, supplement to this Warrant
Agreement and/or the Warrants or other agreement. Any such
amendment, supplement or other agreement entered into by the
Successor Entity shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided
for in this Section 4. The Warrant Agent shall be under no
responsibility to determine the correctness of any provisions
contained in such amendment, supplement or other agreement relating
either to the kind or amount of securities or other property
receivable upon exercise of the Warrants or with respect to the
method employed and provided therein for any adjustments and shall
be entitled to rely upon the provisions contained in any such
amendment, supplement or other agreement. The provisions of this
Section 4.3 shall similarly apply to successive reclassifications,
changes, consolidations, mergers, sales and conveyances of the kind
described above.

 

 

 

9

 

 

4.5           Other
Events. If any event occurs of
the type contemplated by the provisions of Section 4.1, 4.2 or 4.3
but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features to all
holders of Common Stock for no consideration), then the
Company’s Board of Directors will in good faith make an
adjustment in the Exercise Price and the number of Warrant Shares
so as to protect the rights of each Holder.

 

4.6           Notice
to Allow Exercise by Holder. If
(A) the Company shall declare a dividend (or any other distribution
in whatever form) on the Common Stock, (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of
the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any
rights, (D) the approval of any stockholders of the Company shall
be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party,
any sale or transfer of all or substantially all of the assets of
the Company, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E)
the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed
to each Holder at its last address as it shall appear upon the
Warrant Register of the Company, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which
the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange; provided that the failure to mail such notice or any
defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. A Holder shall remain entitled to
exercise its Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice except as may otherwise be expressly set forth
herein.

 

4.7           Notices
of Changes in Warrant. Upon
every adjustment of the Exercise Price or the number of Warrant
Shares, the Company shall give written notice thereof to the
Warrant Agent, which notice shall state the Exercise Price
resulting from such adjustment and the increase or decrease, if
any, in the number of Warrant Shares purchasable upon the exercise
of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
Upon the occurrence of any event specified in Sections 4.1, 4.2 or
4.3, then, in any such event, the Company shall give written notice
to each Holder, at the last address set forth for such Holder in
the Warrant Register, of the record date or the effective date of
the event. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such
event.

 

 

 

10

 

 

4.8           No
Fractional Shares.
Notwithstanding any provision contained in this Warrant Agreement
to the contrary, the Company shall not issue fractional shares upon
exercise of Warrants. If, by reason of any adjustment made pursuant
to this Section 4, a Holder would be entitled, upon the exercise of
such Warrant, to receive a fractional interest in a share, the
Company shall, upon such exercise, round up or down, as applicable,
to the nearest whole number the number of Warrant Shares to be
issued to such Holder.

 

4.9           Form
of Warrant. The form of Warrant
need not be changed because of any adjustment pursuant to this
Section 4, and Warrants issued after such adjustment may state the
same Exercise Price and the same number of shares as is stated in
the Warrants initially issued pursuant to this Warrant Agreement.
However, the Company may at any time in its sole discretion make
any change in the form of Warrant that the Company may deem
appropriate and that does not affect the substance thereof, and any
Warrant thereafter issued or countersigned, whether in exchange or
substitution for an outstanding Warrant or otherwise, may be in the
form as so changed.

 

4.10           Calculations.
All calculations under this Section 4 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 4, 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.

 

5.            

Transfer and Exchange
of Warrants.

 

5.1           Registration
of Transfer. Prior to the
Separation Date, the Warrants may be transferred or exchanged only
as part of the Unit in which such Warrant is included, and only for
the purpose of effecting, or in conjunction with, a transfer or
exchange of such Unit. For the avoidance of doubt, each transfer of
a Unit on the register relating to such Units shall operate also to
transfer the Warrants included in such Unit. The Warrant Agent
shall register the transfer, from time to time, of any outstanding
Warrant upon the Warrant Register, upon surrender of such Warrant
for transfer, properly endorsed with signatures properly guaranteed
and accompanied by appropriate instructions for transfer. Upon any
such transfer, a new Warrant representing an equal aggregate number
of Warrants shall be issued and the old Warrant shall be cancelled
by the Warrant Agent. The Warrants so cancelled shall be delivered
by the Warrant Agent to the Company from time to time upon
request.

 

5.2           Procedure
for Surrender of Warrants.
Warrants may be surrendered to the Warrant Agent, together with a
written request for exchange or transfer reasonably acceptable to
Warrant Agent, duly executed by the Holder thereof, or by a duly
authorized attorney, and thereupon the Warrant Agent shall issue in
exchange therefor one or more new Warrants as requested by the
Holder of the Warrants so surrendered, representing an equal
aggregate number of Warrants; provided, however, that except as
otherwise provided herein or in any Book-Entry Warrant Certificate,
each Book-Entry Warrant Certificate may be transferred only in
whole and only to the Depository, to another nominee of the
Depository, to a successor depository, or to a nominee of a
successor depository; provided further, however, that in the event
that a Warrant surrendered for transfer bears a restrictive legend,
the Warrant Agent shall not cancel such Warrant and issue new
Warrants in exchange therefor until the Warrant Agent has received
an opinion of counsel for the Company stating that such transfer
may be made and indicating whether the new Warrants must also bear
a restrictive legend.

 

 

 

11

 

 

5.3           Fractional
Warrants. The Warrant Agent
shall not be required to effect any registration of transfer or
exchange which will result in the issuance of a Warrant Certificate
for a fraction of a Warrant.

 

5.4           Service
Charges. No service charge
shall be made for any exchange or registration of transfer of
Warrants.

 

5.5           Warrant
Execution and Countersignature.
The Warrant Agent is hereby authorized to countersign and to
deliver, in accordance with the terms of this Warrant Agreement,
the Warrants required to be issued pursuant to the provisions of
this Section 5, and the Company, whenever required by the Warrant
Agent, will supply the Warrant Agent with Warrants duly executed on
behalf of the Company for such purpose.

 

6.            

Other Provisions
Relating to Rights of Holders of Warrants.

 

6.1           No
Rights as Stockholder. Except
as otherwise specifically provided herein, a Holder, solely in its
capacity as an owner of a Warrant, shall not be entitled to vote or
receive dividends or be deemed the holder of share capital of the
Company for any purpose, nor shall anything contained in this
Warrant Agreement be construed to confer upon a Holder, solely in
its capacity as the owner of a Warrant, any of the rights of a
stockholder of the Company 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
issuance to the Holder of the Warrant Shares which it is then
entitled to receive upon the due exercise of a Warrant. For the
avoidance of doubt, ownership of a Warrant does not entitle the
Holder or any beneficial owner thereof to any of the rights of a
stockholder.

 

6.2           Lost,
Stolen, Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated or
destroyed, the Company and the Warrant Agent may, on such terms as
to indemnity or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination, tenor
and date as the Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute a substitute contractual
obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant shall be at any time
enforceable by anyone.

 

6.3           Reservation
of Common Stock. The Company
shall at all times reserve and keep available a number of its
authorized but unissued shares of Common Stock that will be
sufficient to permit the exercise in full of all outstanding
Warrants issued pursuant to this Warrant
Agreement.

 

7.            

Concerning the Warrant
Agent and Other Matters.

 

7.1           Payment
of Taxes. The Company will from
time to time promptly pay all taxes and charges that may be imposed
upon the Company or the Warrant Agent in respect of the issuance or
delivery of Warrant Shares upon the exercise of Warrants, but the
Company shall not be obligated to pay any transfer taxes in respect
of the Warrants or such shares.

 

 

 

12

 

 

7.2           Resignation,
Consolidation, or Merger of Warrant Agent.

 

7.2.1                 Appointment
of Successor Warrant Agent. The
Warrant Agent, or any successor to it hereafter appointed, may
resign its duties and be discharged from all further duties and
liabilities hereunder after giving sixty (60) calendar days’
notice in writing to the Company. If the office of the Warrant
Agent becomes vacant by resignation or incapacity to act or
otherwise, the Company shall appoint in writing a successor Warrant
Agent in place of the Warrant Agent. If the Company shall fail to
make such appointment within a period of thirty (30) calendar days
after it has been notified in writing of such resignation or
incapacity by the Warrant Agent or by the Holder (who shall, with
such notice, submit such Holder’s Warrants for inspection by
the Company), then such Holder may apply to the Supreme Court of
the State of New York for the County of New York for the
appointment of a successor Warrant Agent, the expenses of which
shall be paid by the Company. Any successor Warrant Agent (but not
including the initial Warrant Agent), whether appointed by the
Company or by such court, shall be a duly organized and existing
corporation, authorized under the laws of its state of
incorporation to exercise corporate trust powers and subject to
supervision or examination by federal or state authority. After
appointment, any successor Warrant Agent shall be vested with all
the authority, powers, rights, immunities, duties, and obligations
of its predecessor Warrant Agent with like effect as if originally
named as Warrant Agent hereunder, without any further act or deed;
but if for any reason it becomes necessary or appropriate, the
predecessor Warrant Agent shall execute and deliver, at the expense
of the Company, an instrument transferring to such successor
Warrant Agent all the authority, powers, and rights of such
predecessor Warrant Agent hereunder; and upon request of any
successor Warrant Agent the Company shall make, execute,
acknowledge, and deliver any and all instruments in writing for
more fully and effectually vesting in and confirming to such
successor Warrant Agent all such authority, powers, rights,
immunities, duties, and obligations.

 

7.2.2                 Notice
of Successor Warrant Agent. In
the event a successor Warrant Agent shall be appointed, the Company
shall give notice thereof to the predecessor Warrant Agent and the
transfer agent for the Common Stock not later than the effective
date of any such appointment.

 

7.2.3                 Merger
or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may
be merged or with which it may be consolidated or any corporation
resulting from any merger or consolidation to which the Warrant
Agent shall be a party shall be the successor Warrant Agent under
this Warrant Agreement without any further act.

 

7.3           Fees
and Expenses of Warrant Agent.

 

7.3.1                 Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration
for its services as such Warrant Agent hereunder and will reimburse
the Warrant Agent upon demand for all expenditures that the Warrant
Agent may reasonably incur in the execution of its duties
hereunder.

 

7.3.2                 Further
Assurances. The Company agrees
to perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all such further
and other acts, instruments and assurances as may reasonably be
required by the Warrant Agent for the carrying out or performing of
the provisions of this Warrant Agreement.

 

 

 

13

 

 

7.4           Liability
of Warrant Agent.

 

7.4.1                 Reliance
on Company Statement. Whenever
in the performance of its duties under this Warrant Agreement the
Warrant Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a statement
signed by the President, Chief Executive Officer or Chief Financial
Officer of the Company and delivered to the Warrant Agent. The
Warrant Agent may rely upon such statement for any action taken or
suffered in good faith by it pursuant to the provisions of this
Warrant Agreement.

 

7.4.2                 Indemnity.
The Warrant Agent shall be liable hereunder only for its own gross
negligence, willful misconduct or bad faith. The Company agrees to
indemnify the Warrant Agent and save it harmless against any and
all liabilities, including judgments, costs and reasonable counsel
fees, for anything done or omitted by the Warrant Agent in the
execution of this Warrant Agreement, except as a result of the
Warrant Agent’s gross negligence, willful misconduct or bad
faith.

 

7.4.3                 Exclusions.
The Warrant Agent shall have no responsibility with respect to the
validity of this Warrant Agreement or with respect to the validity
or execution of any Warrant (except its countersignature hereof and
thereof); nor shall it be responsible for any breach by the Company
of any covenant or condition contained in this Warrant Agreement or
in any Warrant; nor shall it be responsible to make any adjustments
required under the provisions of Section 4 hereof or responsible
for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment; nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation
of any Warrant Shares to be issued pursuant to this Warrant
Agreement or any Warrant or as to whether any Warrant Shares will
when issued be validly issued and fully paid and
nonassessable.

 

7.5        
Acceptance
of Agency. The Warrant Agent
hereby accepts the agency established by this Warrant Agreement and
agrees to perform the same upon the terms and conditions herein set
forth and, among other things, shall account promptly to the
Company with respect to Warrants exercised and concurrently account
for, and pay to the Company, all moneys received by the Warrant
Agent for the purchase of Warrant Shares through the exercise of
Warrants.

 

8.            

Miscellaneous
Provisions.

 

8.1           Successors.
All the covenants and provisions of this Warrant Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and
inure to the benefit of their respective successors and
assigns.

 

 

 

14

 

 

8.2        
Notices.
Any notice, statement or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by a Holder
to or on the Company shall be sufficiently given when so delivered
if by e-mail or fax, the date of confirmed transmission, and if by
hand or overnight delivery or if sent by certified mail or private
courier service within five (5) Business Days after deposit of such
notice, postage prepaid, addressed (until another address is filed
in writing by the Company with the Warrant Agent), as
follows:

 

ENDRA
Life Sciences Inc.

3600
Green Court, Suite 350

Ann
Arbor, MI 48105

E-mail:
fmichelon@endrainc.com

Attn:
Chief Executive Officer

 

with a
copy in each case to:

 

K&L
Gates LLP

214
North Tryon Street, Suite 4700

Charlotte, NC
28202

E-mail:
mark.busch@klgates.com

Fax:
(704) 353-3140

Attn:
Mark R. Busch

 

Any
notice, statement or demand authorized by this Warrant Agreement to
be given or made by a Holder or by the Company to or on the Warrant
Agent shall be sufficiently given when so delivered if by e-mail or
fax, the date of confirmed transmission, and if by hand or
overnight delivery or if sent by certified mail or private courier
service within five (5) Business Days after deposit of such notice,
postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company), as
follows:

 

Corporate Stock
Transfer, Inc.

3200
Cherry Creek Drive South, #430

Denver,
CO 80209

E-mail:
knaughton@corporatestock.com

Fax:
(303) 282-5800

Attn:
Karen Naughton

 

8.3         
Applicable
Law. The validity,
interpretation and performance of this Warrant Agreement and of the
Warrants shall be governed in all respects by the laws of the State
of New York, without giving effect to conflicts of law principles
that would result in the application of the substantive laws of
another jurisdiction. The Company hereby agrees that any action,
proceeding or claim against it arising out of or relating in any
way to this Warrant Agreement shall be brought and enforced in the
courts of the State of New York or the United States District Court
for the Southern District of New York, and irrevocably submits to
such jurisdiction, which jurisdiction shall be exclusive. The
Company hereby waives any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum. Any such
process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at the address
set forth in Section 8.2 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in
any action, proceeding or claim.

 

 

 

15

 

 

8.4           Persons
Having Rights under this Warrant Agreement. Nothing in this Warrant Agreement expressed and
nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the parties hereto and the Holders
of the Warrants and, for purposes of Sections 3.3, 8.3 and 8.8, the
Underwriter, any right, remedy, or claim under or by reason of this
Warrant Agreement or of any covenant, condition, stipulation,
promise, or agreement hereof. The Underwriters shall be deemed to
be an express third-party beneficiary of this Warrant Agreement
with respect to Sections 3.3, 8.3 and 8.8 hereof. All covenants,
conditions, stipulations, promises, and agreements contained in
this Warrant Agreement shall be for the sole and exclusive benefit
of the parties hereto (and the Underwriters with respect to the
Sections 3.3, 8.3 and 8.8 hereof) and their successors and assigns
and of the Holders.

 

8.5           Examination
of the Warrant Agreement. A
copy of this Warrant Agreement shall be available for inspection by
any Holder at all reasonable times at the office of the Warrant
Agent in Denver, Colorado and at the office of the Company in Ann
Arbor, Michigan. The Warrant Agent may require any such Holder to
submit his, her or its Warrant for inspection by
it.

 

8.6         
Counterparts.
This Warrant Agreement may be executed in any number of original or
facsimile counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same
instrument.

 

8.7           Effect
of Headings. The section
headings herein are for convenience only and are not part of this
Warrant Agreement and shall not affect the interpretation
thereof.

 

8.8         
Amendments.
Any modifications or amendments, including any amendment to
increase the Exercise Price or shorten the Exercise Period, shall
require the written consent of the Holders of a majority of the
then outstanding Warrants. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification
of any provision of this Warrant Agreement unless the same
consideration is also offered to all of the
Holders.

 

8.9        
Severability.
This Warrant Agreement shall be deemed severable, and the
invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of this Warrant
Agreement or of any other term or provision hereof. Furthermore, in
lieu of any such invalid or unenforceable term or provision, the
parties hereto intend that there shall be added as a part of this
Warrant Agreement a provision as similar in terms to such invalid
or unenforceable provision as may be possible and be valid and
enforceable.

 

[Signature
page follows]

 

 

16

 

IN
WITNESS WHEREOF, this Warrant Agreement has been duly executed by
the parties hereto as of the day and year first above
written.

 

ENDRA
LIFE SCIENCES INC.

 

By:                                                                                 

Name:                                                                            

 

Title:
_______________________________________

 

CORPORATE
STOCK TRANSFER, INC.

 

By:                                                                          
      

Name:                                                                            

Title:                                                                               

 

 

 

 

 

[SIGNATURE
PAGE TO WARRANT AGREEMENT]

 

 

 

Exhibit A - Form of Warrant Certificate

 

 

THE
SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE (INCLUDING THE
SECURITIES ISSUABLE UPON THE EXERCISE OF THE WARRANT) ARE SUBJECT
TO THE TERMS AND CONDITIONS SET FORTH IN THE WARRANT AGREEMENT
DATED AS OF [_____], 2017, BY AND BETWEEN THE COMPANY AND THE
WARRANT AGENT. COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS
WITHOUT CHARGE.

 

UNTIL
MAY [__], 2017 OR THE EARLIER WRITTEN APPROVAL OF NATIONAL
SECURITIES CORPORATION, THIS WARRANT MAY NOT BE TRANSFERRED
SEPARATELY, SPLIT UP, COMBINED OR EXCHANGED, BUT MAY ONLY BE
TRANSFERRED, SPLIT UP, COMBINED OR EXCHANGED TOGETHER WITH THE
SHARES OF COMMON STOCK OF ENDRA LIFE SCIENCES INC. WITH WHICH IT
WAS SOLD AS A UNIT.

 

EXERCISABLE
ONLY IF COUNTERSIGNED BY THE WARRANT

AGENT
AS PROVIDED HEREIN.

 

Warrant
Certificate Evidencing Warrants to Purchase

Common
Stock, par value of $0.0001 per share, as described
herein.

 

ENDRA LIFE SCIENCES INC.

 

	

No.
___________

 

	

CUSIP 29273B 112

 

 

 

VOID AFTER 5:00 P.M., NEW YORK CITY TIME,

ON MAY [__], 2022

 

This
certifies that ________________________ or registered assigns is
the registered holder (the “Holder”) of _____________________
warrants to purchase certain securities (each a “Warrant”). Each Warrant entitles
the Holder, subject to the provisions contained herein and in the
Warrant Agreement (as defined below), to purchase from ENDRA Life
Sciences Inc., a Delaware corporation (the “Company”), one share
(collectively, the “Warrant
Shares”) of Common Stock, par value $0.0001 per share,
of the Company (“Common
Stock”), at the Exercise Price (as defined below). The
price per share at which each Warrant Share may be purchased at the
time each Warrant is exercised (the “Exercise Price”) is $[___],
subject to adjustments as set forth in the Warrant Agreement (as
defined below).

 

 

A-1

 

 

This
Warrant Certificate is issued under and in accordance with the
Warrant Agreement, dated as of May [__], 2017 (the
“Warrant
Agreement”), between the Company and the Warrant Agent
(as defined below), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and
provisions the Holder of this Warrant Certificate and the
beneficial owners of the Warrants represented by this Warrant
Certificate consent by acceptance hereof. Copies of the Warrant
Agreement are on file and can be inspected at the below-mentioned
office of the Warrant Agent and at the office of the Company at
3600 Green Court, Suite 350, Ann Arbor, Michigan 48105. Capitalized
terms used but not defined herein shall have the meaning ascribed
to them in the Warrant Agreement.

 

Subject
to the terms of the Warrant Agreement, each Warrant evidenced
hereby may be exercised in whole but not in part at any time, as
specified herein, on any Business Day (as defined below) occurring
during the period (the “Exercise Period”) commencing on
the Separation Date and terminating at 5:00 p.m., New York City
time, on May [__], 2022 (the “Expiration Date”). Each Warrant
remaining unexercised after 5:00 p.m., New York City time, on the
Expiration Date shall become void, and all rights of the Holder of
this Warrant Certificate evidencing such Warrant shall
cease.

 

The
Holder of the Warrants represented by this Warrant Certificate may
exercise any Warrant evidenced hereby by delivering, not later than
5:00 p.m., New York City time, on any Business Day during the
Exercise Period (the “Exercise Date”) to Corporate Stock
Transfer, Inc. (the “Warrant
Agent,” which term includes any successor warrant
agent under the Warrant Agreement described below) at its corporate
trust department at 3200 Cherry Creek Drive South, #430, Denver,
Colorado 80209, (i) a duly executed e-mail or facsimile copy of an
election to purchase (“Election to Purchase”), properly
executed by the Holder hereof on the reverse of this Warrant
Certificate or properly executed by the institution in whose
account the Warrant is recorded on the records of the Depository
(the “Participant”), and substantially
in the form included on the reverse of this Warrant Certificate,
and (ii) unless cashless exercise is permitted under the Warrant
Agreement and is exercised by the Holder, the aggregate Exercise
Price for the shares specified in the applicable Election to
Purchase by wire transfer or cashier’s check drawn on a
United States bank. No ink-original Election to Purchase shall be
required. Unless Warrant Shares, or a Warrant Certificate
evidencing unexercised Warrants, are to be issued in a name other
than that of the exercising Holder, no medallion guarantee (or
other type of guarantee or notarization) of any Election to
Purchase form shall be required. Notwithstanding anything herein to
the contrary, the Holder shall not be required to physically
surrender this Warrant Certificate to the Warrant Agent or 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 Certificate to
the Warrant Agent for cancellation at the same time the final
Election to Purchase is delivered to the Warrant Agent. 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 Warrant Agent shall
maintain records showing the number of Warrant Shares purchased and
the date of such purchases. The Company or the Warrant Agent shall
deliver any objection to any Election to Purchase within one (1)
Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of
this Warrant Certificate, 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.

 

 

A-2

 

 

The
term “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 or executive order to remain closed.
The term “Trading
Day” means a day on which the principal Trading Market
is open for trading. The term “Trading Market” means any of the
following U.S. markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE,
NYSE MKT, the NASDAQ Capital Market, the NASDAQ Global Market or
the NASDAQ Global Select Market (or any successors to any of the
foregoing).

 

Warrants may be
exercised only in whole numbers of Warrants. No fractional Warrant
Shares are to be issued upon the exercise of this Warrant, but
rather the number of Warrant Shares to be issued shall be rounded
up or down, as applicable, to the nearest whole number. If fewer
than all of the Warrants evidenced by this Warrant Certificate are
exercised, a new Warrant Certificate for the number of Warrants
remaining unexercised shall be executed by the Company and
countersigned by the Warrant Agent as provided in Section 3 of the
Warrant Agreement, and delivered to the Holder of this Warrant
Certificate at the address specified on the books of the Warrant
Agent or as otherwise specified by such Holder.

 

Exercise of the
Warrants is subject to the terms, conditions and limitations set
forth in the Warrant Agreement, which such terms, conditions and
limitations include, without limitation, the prohibitions on
exercise set forth in Section 3.3.10 of the Warrant Agreement if
the exercise would result in the Holder, together with certain of
its Affiliates, beneficially owning in excess of the Beneficial
Ownership Limitation.

 

The
Exercise Price and the number of Warrant Shares purchasable upon
the exercise of each Warrant shall be subject to adjustment as
provided pursuant to Section 4 of the Warrant
Agreement.

 

Neither
this Warrant Certificate nor the Warrants evidenced hereby entitles
the Holder to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or
other distributions, exercise any preemptive rights to vote or to
consent or to receive notice as stockholders in respect of the
meetings of stockholders or the election of directors of the
Company or any other matter.

 

The
Warrant Agreement and this Warrant Certificate may be amended as
provided in the Warrant Agreement including, under certain
circumstances described therein, without the consent of the Holder
of this Warrant Certificate or the Warrants evidenced
thereby.

 

THIS
WARRANT CERTIFICATE AND ALL RIGHTS HEREUNDER AND UNDER THE WARRANT
AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS FORMED AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF
TO THE EXTENT SUCH PRINCIPLES OR RULES WOULD REQUIRE OR PERMIT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

 

This
Warrant Certificate shall not be entitled to any benefit under the
Warrant Agreement or be valid or obligatory for any purpose, and no
Warrant evidenced hereby may be exercised, unless this Warrant
Certificate has been countersigned by the manual signature of the
Warrant Agent.

 

 

 

[Signature
page follows]

  

A-3

 

 

 

 

 

 

 

 

 

 

 

 

 

IN
WITNESS WHEREOF, the Company and Warrant Agent have caused this
instrument to be duly executed as of __________ __,
20__.

 

 

 

“Company”

 

ENDRA
LIFE SCIENCES INC.

 

By:                                                                            

Name:                                                                            

Title:                                                                            

 

 

 

“Warrant
Agent”

 

CORPORATE
STOCK TRANSFER, INC.

 

By:                                                                            

Name:                                                                            

Title:                                                                            

 

 

 

 

 

A-4

 

 

[REVERSE]

 

___________________________________

 

ENDRA LIFE SCIENCES INC.

 

______________________________________

 

ELECTION TO PURCHASE

[To be
executed by the registered holder in order to exercise
warrant]

 

 

The
undersigned Registered Holder irrevocably elects to exercise
     
                 
                 
                 
             Warrants
represented by this Warrant Certificate, and to purchase the shares
of Common Stock issuable upon the exercise of such Warrants, and
requests that certificates for such shares shall be issued in the
name of

 

 

______________________________________________________________________________________________________________

 

(PLEASE
TYPE OR PRINT NAME AND ADDRESS)

 

 

______________________________________________________________________________________________________________

 

(SOCIAL
SECURITY OR TAX IDENTIFICATION NUMBER)

 

 

and be
delivered to

 

______________________________________________________________________________________________________________

 

 

______________________________________________________________________________________________________________

 

(PLEASE
TYPE OR PRINT NAME AND ADDRESS)

 

 

and, if
such number of Warrants shall not be all the Warrants evidenced by
this Warrant Certificate, that a new Warrant Certificate for the
balance of such Warrants be registered in the name of, and
delivered to, the Registered Holder at the address stated
below:

 

Dated:
____________________

 

____________________________________

(SIGNATURE)

 

 

____________________________________

(ADDRESS)

 

 

____________________________________

(TAX
IDENTIFICATION NUMBER)

 

 

Signature
Guaranteed: _______________________________________________

 

Signature must conform in all respects to the name of the Holder as
specified on the face of this Warrant Certificate. If Warrant
Shares, or a Warrant Certificate evidencing unexercised Warrants,
are to be issued in a name other than that of the Holder hereof or
are to be delivered to an address other than the address of such
Holder as shown on the books of the Warrant Agent, the above
signature must be guaranteed by a an Eligible Guarantor Institution
(as that term is defined in Rule 17Ad-15 of the Securities Exchange
Act of 1934, as amended).

 

A-5

 

 

______________________________________

 

 

FORM OF ASSIGNMENT

[To
be completed and signed only upon transfer of warrant]

 

 

FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto
_______________________ the
right represented by the within Warrant Certificate to
purchase ________________
shares of common stock of ENDRA LIFE
SCIENCES INC. to which the within Warrant Certificate relates and
appoints ______________________________
attorney to transfer said right on the
books of ENDRA LIFE SCIENCES INC. with full power of substitution
in the premises.

 

Dated: ____________________

 

 

 

____________________________________

Printed
name of Holder

 

 

____________________________________

 

Signature
of Holder (signature must conform in all respects to name of holder
as specified on the front page of the Warrant
Certificate)

 

 

____________________________________

 

Title
of Signatory (if Holder is not a natural person)

 

 

ADDRESS
OF TRANSFEREE:

____________________________________

____________________________________

____________________________________

____________________________________

 

Signature
Guaranteed By:

_______________________________________________

 

Signature must conform in all respects to the name of the Holder as
specified on the face of this Warrant Certificate. If Warrant
Shares, or a Warrant Certificate evidencing unexercised Warrants,
are to be issued in a name other than that of the Holder hereof or
are to be delivered to an address other than the address of such
Holder as shown on the books of the Warrant Agent, the above
signature must be guaranteed by an Eligible Guarantor Institution
(as that term is defined in Rule 17Ad-15 of the Securities Exchange
Act of 1934, as amended).

 

 

 

 

 A-6

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